Exhibit 99.1
Semtech Announces First Quarter Results
CAMARILLO, Calif.--(BUSINESS WIRE)--May 30, 2006--Semtech
Corporation (NASDAQ:SMTC):
-- Growth in Net Sales, New Orders and Cash
-- Outlook for Continued Expansion in Gross Margin
Semtech Corporation (NASDAQ:SMTC), a leading producer of high
performance analog and mixed-signal semiconductors, today announced
financial results for its first quarter of fiscal year 2007 that ended
April 30, 2006.
Net sales for the first quarter of fiscal year 2007 were $65.9
million, up 17 percent from $56.2 million in the first quarter of
fiscal year 2006 and up 2 percent sequentially when compared to the
fourth quarter of fiscal year 2006.
Net income, computed in accordance with U.S. generally accepted
accounting principles (GAAP), for the first quarter of fiscal year
2007 was $12.0 million or 16 cents per diluted share. GAAP net income
was $10.8 million or 14 cents per diluted share in the first quarter
of fiscal year 2006.
The Company repurchased 790,700 shares of its common stock in the
first quarter of fiscal year 2007, representing a 1 percent reduction
in shares outstanding. Operating cash flow was a positive $16.4
million in the first quarter. Separately, Semtech today announced that
its Board of Directors has authorized an additional $50 million in
stock buyback authorization for future repurchases.
In addition to GAAP results, Semtech reports adjusted net income,
adjusted net income per share and adjusted gross margin, referred to
respectively as "non-GAAP net income", "non-GAAP net income per share"
and "non-GAAP gross margin." A further discussion of these non-GAAP
financial measures can be found below, and reconciliations of GAAP
results for the first quarters of fiscal years 2007 and 2006,
respectively, appear with the financial statements later in this
release.
Non-GAAP net income for the first quarter of fiscal year 2007 was
$14.8 million or 20 cents per diluted share. Non-GAAP gross profit
margin for the first quarter of fiscal year 2007 was 57.8 percent.
Non-GAAP net income was $11.2 million or 15 cents per diluted share in
the first quarter of fiscal year 2006. Non-GAAP results exclude the
impact of stock based compensation, the amortization of
acquisition-related intangibles and legal expenses associated with
Semtech's litigation against an insurer.
New orders were up 4 percent in the first quarter of fiscal year
2007 compared to the fourth quarter. New orders exceeded shipments,
resulting in a book-to-bill ratio above one. Demand was strongest in
the areas of portable electronics, communications equipment and
industrial applications. New designs and higher content in feature
rich consumer devices benefited demand. The computing segment was
impacted by seasonal weakness, which has historically occurred in the
first half of the calendar year.
Mohan Maheswaran, Semtech's President and Chief Executive Officer,
commented, "The first quarter played out as expected, with the Company
achieving sales and order growth, above forecast margin expansion and
strong cash flow. We expect a similar performance in the second
quarter."
Mr. Maheswaran further commented, "Semtech is a highly
differentiated analog and mixed-signal company with a solid operating
model. With a renewed focus on innovative platforms, design wins, and
a global sales strategy, I believe that Semtech can drive profitable
growth well above the industry average for many years to come."
Second Quarter Outlook
Semtech estimates that net sales for the second quarter that ends
July 30, 2006 will be in the range of flat to up 2 percent compared to
the first quarter. Turns orders (orders received and shipped in the
same quarter) of approximately 40 percent are required to achieve this
forecast. GAAP earnings in the second quarter are forecasted to be 15
or 16 cents per diluted share. Stock-based compensation is expected to
reduce earnings by $3.8 to $4.0 million, pre-tax, or approximately 4
cents per diluted share in the second quarter of fiscal year 2007.
Insurance suit legal costs and amortization of intangibles are
expected to reduce earnings by less than 1 cent per share in the
quarter. Interest and other income for the second quarter is
forecasted to be $2.4 million compared to $3.0 million in the first
quarter. Earnings for the second quarter prior to stock-based
compensation expense, amortization of intangibles and certain legal
expenses are expected to be 19 or 20 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 29, 2006, 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
GAAP CONSOLIDATED STATEMENTS OF INCOME
(Table in thousands - except per share amounts)
Three Months Ended
--------------------
April 30, May 1,
2006 2005
--------- ---------
(Unaudited)(Unaudited)
Net sales $65,875 $56,174
Cost of sales (a) 27,838 24,502
-------- --------
Gross profit 38,037 31,672
-------- --------
Operating costs and expenses:
Selling, general and administrative (a) 15,082 10,514
Product development and engineering (a) 10,471 8,633
Acquisition related items 365 -
Insurance related legal expenses 160 594
-------- --------
Total operating costs and expenses 26,078 19,741
-------- --------
Operating income 11,959 11,931
Interest and other income, net 2,972 1,935
-------- --------
Income before taxes 14,931 13,866
Provision for taxes 2,965 3,018
-------- --------
Net income $11,966 $10,848
======== ========
Earnings per share:
Basic $0.16 $0.15
Diluted $0.16 $0.14
Weighted average number of shares:
Basic 72,575 73,845
Diluted 74,715 76,708
(a) FAS 123R was adopted starting in the first quarter ended April 30,
2006.
GAAP based results include pre-tax stock-based compensation
charges as follows:
Cost of sales $37 $-
Selling, general and administrative 2,497 0
Product development and engineering 959 0
------- ------
Total pre-tax stock-based compensation $3,493 $-
======= ======
SEMTECH CORPORATION
Financial Bridge: GAAP to Non-GAAP
(Table in thousands - except per share amounts)
RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT:
Three Months Ended
----------------------
April 30, May 1,
2006 2005
---------- -----------
(Unaudited)(Unaudited)
Gross profit, as reported (GAAP) $38,037 $31,672
Adjustments to GAAP gross profit:
Stock-based compensation expense 37 -
---------- -----------
Non-GAAP gross profit $38,074 $31,672
========== ===========
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME:
Three Months Ended
----------------------
April 30, May 1,
2006 2005
---------- -----------
(Unaudited)(Unaudited)
Net income on GAAP basis $11,966 $10,848
Adjustments to GAAP net income:
Acquisition related items 365 -
Insurance related legal expenses 160 594
Stock-based compensation expense 3,493 -
Associated tax effects (1,228) (238)
---------- -----------
Net income on Non-GAAP basis $14,756 $11,204
========== ===========
Diluted non-GAAP earnings per share $0.20 $0.15
Diluted GAAP weighted average shares
outstanding 74,715 76,708
Diluted weighted average shares attributed to
adoption of FAS 123R 388 -
---------- -----------
Diluted non-GAAP weighted average shares
outstanding 75,103 76,708
FAS 123R became effective and was adopted by the Company during
the first quarter ended April 30, 2006. FAS 123R requires the
Company to estimate the cost of all forms of stock-based compensation,
including employee stock options, and to record a commensurate expense
in the income statement.
To supplement the Company's consolidated financial statements
prepared in accordance to GAAP, the Company has shown a non-GAAP
presentation of gross margin, net income and earnings per diluted
share, which excludes stock-based compensation, acquisition related
amortization of intangibles, and other unusual items. This non-GAAP
presentation of earnings per shares is 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 such items in managing and evaluating the
performance of the business.
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
April January
30, 29,
2006 2006
----------- ---------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $98,965 $65,543
Temporary investments 128,310 130,185
Receivables, less allowances 28,167 27,194
Inventories 25,533 23,678
Deferred income taxes 6,693 6,327
Other current assets 9,402 8,757
----------- ---------
Total current assets 297,070 261,684
Property, plant and equipment, net 54,536 56,957
Investments, maturities in excess of 1 year 56,846 82,458
Deferred income taxes 21,814 23,295
Goodwill 33,033 33,132
Other intangibles 5,111 5,476
Other assets 10,508 10,763
----------- ---------
Total Assets $478,918 $473,765
=========== =========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $10,204 $12,325
Accrued liabilities 10,648 11,064
Income taxes payable 2,405 738
Deferred revenue 1,398 1,432
Deferred income taxes 1,669 562
----------- ---------
Total current liabilities 26,324 26,121
Deferred income taxes 2,736 3,707
Other long-term liabilities 5,723 5,478
Total Stockholders' equity 444,135 438,459
----------- ---------
Total Liabilities and Stockholders' Equity $478,918 $473,765
=========== =========
CONTACT: Semtech Corporation
John Baumann, 805-480-2010