Exhibit 99.1
Semtech Announces Fourth Quarter Results;
Operating Income Up 22 Percent from the Third Quarter;
Nineteenth Consecutive Year of Positive Operating Cash Flow
CAMARILLO, Calif.--(BUSINESS WIRE)--March 6, 2006--Semtech Corporation
(NASDAQ:SMTC), a leading producer of high performance analog and mixed-signal
semiconductors, today announced financial results for its fourth quarter of
fiscal year 2006 that ended January 29, 2006.
Net sales for the fourth quarter of fiscal year 2006 were $64.4 million, up
6 percent from $60.9 million in the third quarter of fiscal year 2006 and up 10
percent from $58.4 million in the fourth quarter of fiscal year 2005.
Net income for the fourth quarter of fiscal year 2006 was $13.3 million or
18 cents per diluted share. Net income was $12.1 million or 16 cents per diluted
share in the fourth quarter of fiscal year 2005. Operating income in the fourth
quarter of fiscal year 2006 was up 22 percent compared to the third quarter.
Operating cash flow was approximately $20.0 million for the fourth quarter
and $66.0 million for all of fiscal year 2006. This was Semtech's nineteenth
consecutive year of positive operating cash flow. The Company repurchased
724,000 shares of its common stock at a cost of $13.9 million in the fourth
quarter. For all of fiscal year 2006, the Company repurchased approximately 2.7
million shares, or approximately 4 percent of the outstanding shares. Semtech
ended fiscal year 2006 with $278.2 million of cash and investments and no
long-term debt.
New orders in the fourth quarter of fiscal year 2006 were down 2 percent
compared to the third quarter, but increased 26 percent compared to the prior
year fourth quarter. New orders exceeded shipments in the fourth quarter of
fiscal year 2006, resulting in a book-to-bill ratio above one.
The growth in sales in the fourth quarter of fiscal year 2006 was led by
the fourth consecutive quarter of record shipments of Protection Products which
are used in a variety of portable, video and networking applications. Sales of
test and measurement products used in automated test equipment (ATE) increased
45 percent sequentially, and represented 6 percent of total sales in the
quarter. Power Management product line sales declined 6 percent compared to the
third quarter, primarily as a result of lower shipments of power products used
in cellular phone handsets. Protection products used in cellular phone handsets
and other portable devices continued to grow.
Demand by end-markets reflected seasonal strength in the consumer driven
markets and improvement in the ATE space. Telecommunications and broadband
applications remained strong. Design-win activity in the fourth quarter suggests
a better diversification of customers and end-applications for Semtech products.
John D. "Jack" Poe, Semtech's Chairman and acting Chief Executive Officer,
commented on the fourth quarter, "Semtech improved its operating performance in
the fourth quarter. Sales grew 6 percent, gross margin increased to 56.5 percent
and cash generation remained strong. Over the last quarter, the Company's
research and development efforts were prioritized around projects that will
deliver proprietary solutions with competitive advantages. Sales and marketing
objectives were also reviewed. We expect these steps to lead to improvements in
new product introductions and design wins in the second half of fiscal year 2007
and beyond."
Mr. Poe added, "While the first half of the year is typically impacted by
seasonal trends in consumer products, the healthy semiconductor industry
conditions and a broadening of the Company's end-markets are encouraging."
Consistent with purchase accounting treatment, the fourth quarter of fiscal
year 2006 includes a pre-tax expense of $409,000 for the amortization of
intangibles related to the June 2005 acquisition of XEMICS. The fourth quarter
also includes $501,000 of pre-tax legal costs related to Semtech's litigation
against an insurer.
Net income for all of fiscal year 2006 was $43.0 million or 57 cents per
diluted share, which is net of 6 cents per share of after-tax expense for the
amortization of acquisition-related intangibles. Net income for fiscal year 2005
was $58.9 million or 75 cents per diluted share.
First Quarter Outlook
Semtech estimates that net sales for the first quarter that ends April 30,
2006 will be in the range of up 1 to 3 percent compared to the fourth quarter.
Turns orders (orders received and shipped in the same quarter) of approximately
39 percent are required to achieve this forecast. GAAP earnings in the first
quarter are forecasted to be 13 or 14 cents per diluted share. Semtech will
begin to expense stock options in the first quarter of fiscal year 2007. Stock
based compensation is expected to reduce earnings by $4.3 to $4.8 million,
pre-tax, or approximately 4 cents per share in the first quarter. Insurance suit
legal costs and amortization of intangibles are expected to reduce earnings by 1
cent per share in the quarter. Earnings for the first quarter prior to stock
option expense, amortization of intangibles and certain legal expenses are
expected to be 18 or 19 cents per diluted share.
About Semtech
Semtech Corporation is a leading supplier of analog and mixed-signal
semiconductors used in a wide range of computer, industrial and communication
applications.
Forward-Looking and Cautionary Statements
This release 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. Some
forward-looking statements may be identified by use of terms such as "expects,"
"anticipates," "intends," "estimates," "believes," "projects," "should," "will,"
"plans" and similar words.
Forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those projected. These risks and
uncertainties include worldwide economic and political conditions, the timing
and duration of semiconductor market upturns or downturns, demand for cellular
phones, personal computers and automated test equipment, demand for
semiconductor devices in general, demand for the Company's products in
particular, competitors' actions, supply from key third-party silicon wafer
foundries and assembly contractors, manufacturing costs and yields, relations
with strategic customers, and risks associated with the businesses of major
customers. In addition to considering these risks and uncertainties,
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,
2005, in the Company's other filings with the SEC, and in material incorporated
therein by reference. In light of the risks and uncertainties inherent in
forecasts of revenue and gross margin and in other projected matters,
forward-looking statements 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. The Company
assumes no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
SEMTECH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Table in thousands - except per share amounts)
Three Months Ended Twelve Months Ended
------------------------ -----------------------
January 29, January 30, January 29, January 30,
2006 2005 2006 2005
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited)
Net sales $64,373 $58,427 $239,405 $253,612
Cost of sales 28,023 25,357 104,996 105,705
----------- ----------- ----------- -----------
Gross profit 36,350 33,070 134,409 147,907
----------- ----------- ----------- -----------
Operating costs and
expenses:
Selling, general and
administrative 11,750 10,865 44,680 43,820
Product development
and engineering 9,437 8,324 37,534 33,492
Acquisition related
items 409 - 4,954 -
Insurance related
legal expenses and
(settlements), net 501 482 (129) 629
----------- ----------- ----------- -----------
Total operating costs
and expenses 22,097 19,671 87,039 77,941
----------- ----------- ----------- -----------
Operating income 14,253 13,399 47,370 69,966
Interest and other
income, net 2,020 1,980 7,286 6,304
----------- ----------- ----------- -----------
Income before taxes 16,273 15,379 54,656 76,270
Provision for taxes 3,014 3,270 11,671 17,382
----------- ----------- ----------- -----------
Net income $13,259 $12,109 $42,985 $58,888
============ =========== ========== ===========
Earnings per share:
Basic $0.18 $0.16 $0.59 $0.79
Diluted $0.18 $0.16 $0.57 $0.75
Weighted average
number of shares:
Basic 72,845 74,067 73,436 74,187
Diluted 75,365 77,758 75,992 78,124
Notes regarding Consolidated Statements of Income:
1.) The three month and twelve month periods ended January 29, 2006
consisted of thirteen weeks and fifty-two weeks, respectively. The
three month and twelve month periods ended January 30, 2005
consisted of thirteen and fifty-three weeks, respectively.
2.) In the twelve month period ended January 29, 2006, $198,000 of
previously written-off inventory was sold. In the twelve month
period ended January 30, 2005, $507,000 of previously written-off
inventory was sold.
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
January 29, January 30,
2006 2005
----------- -----------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $65,543 $82,154
Temporary investments 130,185 108,167
Receivables, less allowances 27,194 22,098
Inventories 23,678 24,734
Deferred income taxes 7,649 7,255
Other current assets 8,759 6,026
----------- -----------
Total current assets 263,008 250,434
Property, plant and equipment, net 56,957 55,674
Investments, maturities in excess of 1 year 82,458 111,577
Deferred income taxes 23,692 26,916
Goodwill 33,377 -
Other intangibles 5,476 -
Other assets 10,763 13,324
----------- -----------
Total Assets $475,731 $457,925
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $12,325 $9,504
Accrued liabilities 11,064 11,697
Income taxes payable 1,079 3,495
Deferred revenue 1,432 2,879
Deferred income taxes 2,410 1,443
----------- -----------
Total current liabilities 28,310 29,018
Deferred income taxes 3,369 2,131
Other long-term liabilities 5,478 2,410
Total Stockholders' equity 438,574 424,366
----------- -----------
Total Liabilities and Stockholders' Equity $475,731 $457,925
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CONTACT: Semtech Corporation
John Baumann, 805-480-2010 (Investor Relations)