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Semtech Announces Fourth Quarter and Fiscal Year 2012 Results


CAMARILLO, Calif.--(BUSINESS WIRE)-- Semtech Corporation (Nasdaq: SMTC), a leading supplier of analog and mixed-signal semiconductors, today reported unaudited financial results for its fourth quarter and fiscal year 2012, which ended January 29, 2012.

Net revenue for the fourth quarter of fiscal year 2012 was $104.0 million, down 10.5 percent from the fourth quarter of fiscal year 2011 and down 16.1 percent from the third quarter of fiscal year 2012. Net revenue for the full fiscal year 2012 was $480.6 million, up 5.7 percent from fiscal year 2011.

Net income for the fourth quarter of fiscal year 2012, computed in accordance with U.S. generally accepted accounting principles (GAAP), was $12.4 million or 19 cents per diluted share. This compares to GAAP net income of $26.0 million or 39 cents per diluted share in the fourth quarter of fiscal year 2011 and GAAP net income of $27.0 million or 40 cents per diluted share in the third quarter of fiscal year 2012. For the full fiscal year 2012, net income was $89.1 million or $1.32 per diluted share, up from $72.6 million or $1.12 per diluted share in fiscal year 2011.

GAAP gross profit margin for the fourth quarter of fiscal year 2012 was 57.4 percent compared to 60.2 percent in the fourth quarter of fiscal year 2011 and 59.2 percent in the third quarter of fiscal year 2012. GAAP gross profit margin for the full fiscal year 2012 was 59.4 percent compared to 59.0 percent in fiscal year 2011.

To facilitate the complete understanding of comparable financial performance between periods, Semtech also presents performance results net of certain non-cash and one-time items. Semtech's non-GAAP results exclude the following items:

Excluding the items listed above, non-GAAP net income for the fourth quarter of fiscal year 2012 was $21.6 million or 32 cents per diluted share. Non-GAAP net income was $31.0 million or 47 cents per diluted share in the fourth quarter of fiscal year 2011 and was $35.0 million or 52 cents per diluted share in the third quarter of fiscal year 2012. Non-GAAP net income for the full fiscal year 2012 was $119.8 million or $1.78 per diluted share. This compares to Non-GAAP net income for fiscal year 2011 of $110.2 million or $1.71 per diluted share.

Non-GAAP gross profit margin for the fourth quarter of fiscal year 2012 was 57.6 percent. Non-GAAP gross profit margin for the fourth quarter of fiscal year 2011 was 60.5 percent and 59.4 percent in the third quarter of fiscal year 2012. Non-GAAP gross profit margin for the full fiscal year 2012 was 59.6 percent, which compares to 59.9 percent Non-GAAP gross profit margin for fiscal year 2011.

As of January 29, 2012 Semtech had $327.7 million in cash, cash equivalents and marketable securities. This compares to $317.5 million in cash, cash equivalents and marketable securities at the end of the third quarter of fiscal year 2012 and $258.3 million in cash, cash equivalents and marketable securities at the end of fiscal year 2011. During the quarter Semtech used $20.0 million to repurchase approximately 0.9 million shares of stock.

Mohan Maheswaran, Semtech's President and Chief Executive Officer, stated, "We achieved fourth quarter of fiscal year 2012 results in line with our prior expectations, reflecting seasonal trends, overall market softness, and the impact of flooding in Thailand. Despite a challenging environment, Semtech posted a record number of design wins, launched 21 new products, and announced plans to acquire Gennum Corporation. Semtech's performance continues to deliver increasing value to shareholders. Fiscal Year 2012 was another outstanding year for the company with record revenues, record gross margins, record operating profit and record earnings per share. We believe we are uniquely positioned in some very attractive markets and fiscal year 2013 promises to be another very exciting growth year for the company."

The results announced today are preliminary, as they are subject to the annual audit by the Company's independent registered public accounting firm. As such, these results are subject to revision until the Company will have filed its annual report on Form 10-K for fiscal year 2012.

First Quarter of Fiscal Year 2013 Outlook

Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements prepared in accordance with GAAP, this release includes a non-GAAP presentation of gross profit, net income and earnings per diluted share and free cash flow. To provide additional insight into the Company's first quarter outlook, this release includes a presentation of forward-looking non-GAAP earnings per diluted share. A further discussion of these non-GAAP financial measures can be found above. The non-GAAP gross profit, net income and earnings per diluted share measures exclude stock-based compensation, amortization of acquired intangible assets, and the other items detailed above. The non-GAAP presentation of free cash flow excludes capital expenditures. These non-GAAP measures are provided to enhance the user's overall understanding of the Company's comparable financial performance between periods. In addition, the Company's management generally excludes the items noted above when managing and evaluating the performance of the business. The financial statements provided with this release include reconciliations of GAAP results for the fourth quarter of fiscal years 2012 and 2011, the third quarter of fiscal year 2012, the full fiscal years 2012 and 2011; a reconciliation of forward-looking earnings per diluted share for the first quarter of fiscal year 2013; and a calculation of free cash flow. These additional financial measures should not be considered substitutes for any measures derived in accordance with GAAP and may be inconsistent with similar measures presented by other companies.

Forward-Looking and Cautionary Statements

This report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than historical information or statements of current condition and relate to matters such as future financial performance, future operational performance, the anticipated impact of specific items on future earnings, and our plans, objectives and expectations. These forward-looking statements are identified by the use of such terms and phrases as "intends," "goal," "estimate," "expect," "project," "plans," "anticipates," "should," "will," "designed to," "believe," and other similar expressions which generally identify forward-looking statements. Forward-looking statements involve known and unknown risks and uncertainties that could cause actual results and events to differ materially from those projected. Important factors that could cause actual results to differ materially include, but are not limited to: the continuation and/or pace of key trends considered to be main contributors to the Company's growth, such as demand for increased network bandwidth, demand for increasing energy efficiency in the Company's products or end use applications of the products, demand for increasing miniaturization of electronic components; shifts in demand among target customers, and other comparable changes in projected or anticipated markets; adequate supply of components and materials from our suppliers, and of our products from our third-party manufacturers, to include disruptions due to natural causes or disasters, or related extraordinary weather events; the Company's ability to forecast and achieve anticipated revenues and earnings estimates in light of periodic economic uncertainty, to include impacts arising from European and global economic dynamics; the Company's ability to manage expenses to achieve anticipated amounts; and the amount and timing of expenditures for capital equipment deemed necessary or advisable by the Company. Additionally, forward-looking statements should be considered in conjunction with the cautionary statements contained in the "Risk Factors" section and elsewhere in the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2011, in the Company's other filings with the SEC, and in material incorporated therein by reference. In light of the significant uncertainties inherent in the forward-looking information included herein, any such forward-looking information should not be regarded as representations by the Company that its objectives or plans will be achieved or that any of its operating expectations or financial forecasts will be realized. Investors are cautioned not to place undue reliance on any forward-looking information contained herein. The Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

About Semtech

Semtech Corporation is a leading supplier of analog and mixed-signal semiconductors for high-end consumer, computing, communications and industrial equipment. Products are designed to benefit the engineering community as well as the global community. The company is dedicated to reducing the impact it, and its products, have on the environment. Internal green programs seek to reduce waste through material and manufacturing control, use of green technology and designing for resource reduction. Publicly traded since 1967, Semtech is listed on the NASDAQ Global Select Market under the symbol SMTC. For more information, visit http://www.semtech.com.

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Semtech and the Semtech logo are marks of Semtech Corporation.

 
SEMTECH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Table in thousands - except per share amount)
 
  Three Months Ended   Twelve Months Ended
January 29,   October 30,   January 30, January 29,   January 30,
2012 2011 2011 2012 2011
Q4 2012 Q3 2012 Q4 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
Net sales $ 104,032 $ 123,944 $ 116,270 $ 480,601 $ 454,502
Cost of sales   44,368     50,537     46,264     194,956   186,196
Gross profit 59,664 73,407 70,006 285,645 268,306
 
Operating costs and expenses:
Selling, general and administrative 26,333 25,110 23,637 100,629 110,404
Product development and engineering 19,335 20,489 18,517 80,577 69,624
Intangible amortization   2,075     4,573     2,304     10,853   9,520
Total operating costs and expenses 47,743 50,172 44,458 192,059 189,548
 
Operating income 11,921 23,235 25,548 93,586 78,758
Interest and other income (expense), net   421     729     66     593   574
Income before taxes 12,342 23,964 25,614 94,179 79,332
Provision for taxes (benefits) (46 ) (3,015 ) (389 ) 5,092 6,760
Net income $ 12,388   $ 26,979   $ 26,003   $ 89,087 $ 72,572
 
Earnings per share:
Basic $ 0.19 $ 0.41 $ 0.41 $ 1.37 $ 1.16
Diluted $ 0.19 $ 0.40 $ 0.39 $ 1.32 $ 1.12
 
Weighted average number of shares:
Basic 64,856 65,440 63,506 65,099 62,339
Diluted 66,776 67,314 66,213 67,350 64,523
 

 
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Table in thousands)
 
  January 29,   January 30,
2012 2011
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 227,022 $ 119,019
Temporary investments 83,121 112,237
Accounts receivable, net 49,644 50,610
Inventories 46,995 47,719
Deferred tax assets 5,339 13,369
Other current assets   15,191   10,744
Total current assets 427,312 353,698
 
Property, plant and equipment, net 69,713 56,778
Long-term investments 17,522 27,086
Goodwill 129,651 129,651
Other intangible assets, net 66,720 74,823
Other assets   15,403   17,907
Total assets $ 726,321 $ 659,943
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 26,699 $ 29,629
Accrued liabilities 32,389 55,842
Deferred revenue 3,853 5,020
Deferred tax liabilities   4,041   3,334
Total current liabilities 66,982 93,825
 
Deferred tax liabilities - non-current 1,000 11,120
Other long-term liabilities 28,151 26,383
 
Shareholders' equity   630,188   528,615
Total liabilities & shareholders' equity $ 726,321 $ 659,943
 

 
SEMTECH CORPORATION

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Table in thousands)
 
  Twelve Months Ended
January 29,   January 30,
2012 2011
(Unaudited)
 
Cash flows from operating activities:
Net income $ 89,087 $ 72,572
Adjustments to reconcile net income to net cash provided by operations
Depreciation and amortization 18,543 16,448
Impairment of acquired intangible assets 2,470 -
Deferred income taxes (2,023 ) 3,184
Stock-based compensation 24,020 29,010
Excess tax benefits on stock based compensation (2,279 ) (891 )
Loss on disposition of property, plant, and equipment 1,022 69
Changes in assets and liabilities   (31,008 )   (26,591 )
Net cash provided by operations activities 99,832 93,801
 
 
Cash flows from investing activities:
Purchase of available-for-sale investments (93,330 ) (168,802 )
Proceeds from sales and maturities of available-for-sale investments 131,748 110,987
Proceeds from sales of property, plant, and equipment 46 76
Purchase of property, plant, and equipment (21,564 ) (25,537 )
Purchase of intangible assets   (3,000 )   -  
Net cash used in investing activities 13,900 (83,276 )
 
 
Cash flows from financing activities:
Excess tax benefits on stock based compensation 2,279 891
Proceeds from issuance of common stock 42,661 29,823
Repurchase of outstanding common stock   (50,665 )   (2,819 )
Net cash provided by financing activities (5,725 ) 27,895
Effect of foreign currency translation on cash and cash equivalents   (4 )   1  
 
Net increase in cash and cash equivalents 108,003 38,421
Cash and cash equivalents at beginning of period 119,019 80,598
   
Cash and cash equivalents at end of period $ 227,022   $ 119,019  
 

 
SEMTECH CORPORATION
SUPPLEMENTAL INFORMATION - NOTES TO CONSOLIDATED GAAP STATEMENTS OF INCOME
(Tables in thousands - except per share amounts)
 
  Three Months Ended   Twelve Months Ended
January 29,   October 30,   January 30, January 29,   January 30,
2012 2011 2011 2012 2011
Stock-based Compensation Expense Q4 2012 Q3 2012 Q4 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cost of sales $ 272 $ 238 $ 325 $ 983 $ 1,802
Selling, general and administrative 4,798 2,757 3,797 15,839 19,310
Product development and engineering   1,802     2,046     1,962     7,198     7,898  
Total stock-based compensation expense $ 6,872   $ 5,041   $ 6,084   $ 24,020   $ 29,010  
 
 
Three Months Ended Twelve Months Ended
January 29, October 30, January 30, January 29, January 30,
2012 2011 2011 2012 2011
Gross Profit - Reconciliation GAAP to Non-GAAP Q4 2012 Q3 2012 Q4 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
GAAP gross profit $ 59,664 $ 73,407 $ 70,006 $ 285,645 $ 268,306
Adjustments to GAAP gross profit:
Stock-based compensation expense 272 238 325 983 1,802
Fair value adjustment related to acquired inventory   -     -     -     -     2,311  
Non-GAAP gross profit $ 59,936   $ 73,645   $ 70,331   $ 286,628   $ 272,419  
 
 
Three Months Ended Twelve Months Ended
January 29, October 30, January 30, January 29, January 30,
2012 2011 2011 2012 2011
Net Income - Reconciliation GAAP to Non-GAAP Q4 2012 Q3 2012 Q4 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
GAAP net income $ 12,388 $ 26,979 $ 26,003 $ 89,087 $ 72,572
 
Adjustments to GAAP net income:
Stock-based compensation expense $ 6,872 $ 5,041 $ 6,084 $ 24,020 $ 29,010
Transaction and other expenses 1,963 921 - 2,884 -
Legal expenses related to stock option matters 5 8 289 199 13,590
Fair value adjustment related to acquired inventory - - - - 2,311
Amortization of acquired intangible assets 2,075 2,103 2,304 8,383 9,520
Impairment of acquired intangible assets 2,470 - 2,470 -
Reorganization costs   -     1,981     -     1,981     -  
Total before taxes 10,915 12,524 8,677 39,937 54,431
Associated tax effect   (1,687 )   (4,460 )   (3,710 )   (9,189 )   (16,833 )
Total of supplemental information net of taxes   9,228     8,064     4,967     30,748     37,598  
Non-GAAP net income $ 21,616   $ 35,043   $ 30,970   $ 119,835   $ 110,170  
 
Diluted GAAP earnings per share $ 0.19 $ 0.40 $ 0.39 $ 1.32 $ 1.12
Adjustments per above $ 0.13     0.12     0.08     0.46     0.59  
Diluted non-GAAP earnings per share $ 0.32   $ 0.52   $ 0.47   $ 1.78   $ 1.71  
 
 
Three Months Ended Twelve Months Ended
January 29, October 30, January 30, January 29, January 30,
2012 2011 2011 2012 2011
Tax Impact Associated With Supplemental Information Q4 2012 Q3 2012 Q4 2011 FY 2012 FY 2011
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Adjustments to GAAP net income:
Stock-based compensation expense $ 936 $ 2,798 $ 2,551 $ 5,693 $ 9,170
Transaction and other expenses 398 156 - 555 -
Legal expenses related to stock option matters 2 8 794 77 4,909
Fair value adjustment related to acquired inventory - - - - 878
Amortization of acquired intangible assets 351 674 365 2,040 1,876
Impairment of acquired intangible assets 256 - 256 -
Reorganization costs   -     568     -     568     -  
Total of associated tax effect $ 1,687   $ 4,460   $ 3,710   $ 9,189   $ 16,833  
 
 
Three Months Ended
January 29, October 30, January 30,
2012 2011 2011
Q4 2012 Q3 2012 Q4 2011
(Unaudited) (Unaudited) (Unaudited)
Free Cash Flow:
 
Cash Flow from Operations 26,264 32,982 29,195
Net Capital Expenditure   (3,529 )   (2,735 )   (7,521 )
Free Cash Flow:   22,735     30,247     21,674  
 

Q1 FY13 Earnings Per Share Guidance

GAAP to Non-GAAP Reconciliation (net of tax)
Low High
GAAP EPS 0.17 0.21
 
Stock based compensation expense 0.08 0.08
Amortization of acquired intangibles 0.03 0.03
   
Non-GAAP EPS   0.28     0.32  
 

Semtech Corporation
Linda Brewton, 805-480-2004
webir@semtech.com

Source: Semtech Corporation

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