Semtech (SMTC) 8-K Semtech Announces Fourth Quarter and Fiscal Year 2012 Results

Exhibit 99.1

Semtech Announces Fourth Quarter and Fiscal Year 2012 Results

• Record Annual Revenue, Gross Profit, Operating Profit and Net Income
• Annual Operating Profit up 19% from Prior Year
• Record 1,087 Design Wins in the Quarter
• Repurchased $20 Million of Company Stock in the Quarter
• Announced Plans for Largest Acquisition in Company History

CAMARILLO, Calif.--(BUSINESS WIRE)--March 7, 2012--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:

• Stock-based compensation expense
• Transaction and other expenses related to acquisition activity due diligence
• Expenses related to class action litigation and ongoing stock option related matters, net of insurance recoveries
• Fair value adjustment of acquired inventory
• Amortization of acquired intangible assets
• Reorganization costs
• Impairment of intangible assets

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

• Net sales are expected to be in the range of $102.0 million to $108.0 million
• GAAP gross profit margin is expected to be flat to up 100 basis points from Q4 2012
• GAAP SG&A expense is expected to be in the range of $23.3 million to $23.6 million
• GAAP R&D expense is expected to be in the range of $19.8 million to $20.6 million
• Stock-based compensation expense, which is included in the preceding estimates, is expected to be approximately $5.9 million, categorized as follows: $0.2 million cost of sales, $4.1 million SG&A, and $1.6 million R&D
• Amortization of acquired intangible assets is expected to be approximately $2.1 million
• GAAP tax rate is expected to be in the range of 9% to 11%
• GAAP earnings are expected to be in the range of 17 to 21 cents per diluted share
• Non-GAAP earnings are expected to be in the range of 28 to 32 cents per diluted share
• Fully diluted share count is expected to be approximately 67.0 million shares
• Capital expenditures are expected to be approximately $5.0 million

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

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