Semtech Announces Second Quarter Of Fiscal Year 2013 Results

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.

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																	Six Months Ended
			July 29,					April 29,					July 31,							July 29,					July 31,
			2012					2012					2011							2012					2011
			Q2 2013					Q1 2013					Q2 2012							FY 2013					FY 2012
			(Unaudited)					(Unaudited)					(Unaudited)							(Unaudited)					(Unaudited)
Net sales			$	150,704				$	116,642				$	130,254						$	267,346				$	252,625
Cost of sales				76,179					61,305					51,534							137,484					100,051
Gross profit				74,525					55,337					78,720							129,862					152,574
Operating costs and expenses:
Selling, general and administrative				31,220					44,818					22,481							76,038					49,186
Product development and engineering				32,613					24,083					22,228							56,696					40,753
Intangible amortization and impairments				7,977					5,578					2,103							13,555					4,205
Total operating costs and expenses				71,810					74,479					46,812							146,289					94,144
Operating income (loss)				2,715					(19,142	)				31,908							(16,427	)				58,430
Interest expense				(3,404	)				(1,513	)				-							(4,917	)				-
Interest income and other (expense), net				(628	)				(116	)				(117	)						(744	)				(557	)
(Loss) income before taxes				(1,317	)				(20,771	)				31,791							(22,088	)				57,873
(Benefit) provision for taxes				(11,339	)				(22,980	)				4,653							(34,319	)				8,153
Net income			$	10,022				$	2,209				$	27,138						$	12,231				$	49,720
Earnings per share:
Basic			$	0.15					0.03				$	0.41						$	0.19				$	0.76
Diluted			$	0.15				$	0.03				$	0.40						$	0.18				$	0.74
Weighted average number of shares:
Basic				65,587					65,282					65,547							65,435					65,050
Diluted				67,165					67,233					68,186							67,207					67,638

SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Table in thousands)
			July 29,					Jan 29,
			2012					2012
			(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents			$	165,858				$	227,022
Temporary investments				-					83,121
Accounts receivable, net				77,284					49,644
Inventories				75,951					46,995
Deferred tax assets				13,876					5,339
Other current assets				47,063					15,191
Total current assets				380,032					427,312
Property, plant and equipment, net				98,174					69,713
Long-term investments				7,518					17,522
Deferred income taxes				47,411					-
Goodwill				389,806					129,651
Other intangible assets, net				223,095					66,720
Other assets				22,170					15,403
Total assets			$	1,168,206				$	726,321
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable			$	44,052				$	26,699
Accrued liabilities				32,390					32,389
Deferred revenue				5,842					3,853
Current portion - long term debt				21,835					-
Deferred tax liabilities				4,601					4,041
Total current liabilities				108,720					66,982
Deferred tax liabilities - non-current				52,923					1,000
Long term debt - less current				319,788					-
Other long-term liabilities				29,509					28,151
Shareholders’ equity				657,266					630,188
Total liabilities & shareholders' equity			$	1,168,206				$	726,321

SEMTECH CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Table in thousands)
			Six Months Ended
			July 29,						July 31,
			2012						2011
			(Unaudited)						(Unaudited)
Cash flows from operating activities:
Net income			$	12,231					$	49,720
Adjustments to reconcile net income to net cash provided by operations
Depreciation and amortization				13,708						8,811
Amortization of acquisition related fair value adjustments				37,437						-
Accretion of deferred financing costs and debt discount				1,081						-
Accrued interest expense				227						-
Deferred income taxes				(12,425	)					6,239
Stock-based compensation				10,245						12,108
Excess tax benefits on stock based compensation				(2,913	)					(1,719	)
Loss on disposition of property, plant, and equipment				85						7
Changes in assets and liabilities				(47,805	)					(34,580	)
Net cash provided by operating activities				11,871						40,586
Cash flows from investing activities:
Purchase of available-for-sale investments				(10,106	)					(83,830	)
Proceeds from sales and maturities of available-for-sale investments				103,199						50,004
Proceeds from sales of property, plant, and equipment				-						5
Purchase of property, plant, and equipment				(10,715	)					(15,259	)
Acquisitions, net of cash acquired				(491,717	)					-
Net cash used in investing activities				(409,339	)					(49,080	)
Cash flows from financing activities:
Proceeds from debt issue, net of discount				347,000						-
Deferred financing cost				(10,062	)					-
Excess tax benefits on stock based compensation				2,913						1,719
Proceeds from issuance of common stock				2,413						28,896
Repurchase of outstanding common stock				(269	)					(551	)
Payment of debt				(5,625	)					-
Net cash provided by financing activities				336,370						30,064
Effect of foreign currency translation on cash and cash equivalents				(66	)					-
Net (decrease) increase in cash and cash equivalents				(61,164	)					21,570
Cash and cash equivalents at beginning of period				227,022						119,019
Cash and cash equivalents at end of period			$	165,858					$	140,589

SEMTECH CORPORATION
SUPPLEMENTAL INFORMATION - NOTES TO CONSOLIDATED GAAP STATEMENTS OF INCOME
(Tables in thousands - except per share amounts)
			Three Months Ended																	Six Months Ended
			July 29,					April 29,					July 31,							July 29,					July 31,
			2012					2012					2011							2012					2011
Stock-based Compensation Expense			Q2 2013					Q1 2013					Q2 2012							FY 2013					FY 2012
			(Unaudited)					(Unaudited)					(Unaudited)							(Unaudited)					(Unaudited)
Cost of sales			$	297				$	231				$	195						$	528				$	474
Selling, general and administrative				2,657					3,224					2,666							5,881					8,284
Product development and engineering				1,965					1,871					1,760							3,836					3,350
Total stock-based compensation expense			$	4,919				$	5,326				$	4,621						$	10,245				$	12,108
			Three Months Ended																	Six Months Ended
			July 29,					April 29,					July 31,							July 29,					July 31,
			2012					2012					2011							2012					2011
Gross Profit - Reconciliation GAAP to Non-GAAP			Q2 2013					Q1 2013					Q2 2012							FY 2013					FY 2012
			(Unaudited)					(Unaudited)					(Unaudited)							(Unaudited)					(Unaudited)
GAAP gross profit			$	74,525				$	55,337				$	78,720						$	129,862				$	152,574
Adjustments to GAAP gross profit:
Stock-based compensation expense				297					231					195							528					474
Expiration of acquired return rights				(371	)				(305	)				-							(676	)				-
Fair value adjustment related to acquired inventory				17,726					12,916					-							30,642					-
Non-GAAP gross profit			$	92,177				$	68,179				$	78,915						$	160,356				$	153,048
			Three Months Ended																	Six Months Ended
			July 29,					April 29,					July 31,							July 29,					July 31,
			2012					2012					2011							2012					2011
Net Income - Reconciliation GAAP to Non-GAAP			Q2 2013					Q1 2013					Q2 2012							FY 2013					FY 2012
			(Unaudited)					(Unaudited)					(Unaudited)							(Unaudited)					(Unaudited)
GAAP net income			$	10,022				$	2,209				$	27,138						$	12,231				$	49,720
Adjustments to GAAP net income:
Stock-based compensation expense				4,919					5,326					4,621							10,245					12,108
Acquisition related fair value adjustments				18,065					13,133					-							31,198					-
Option and restatement related expenses				-					-					55							-					187
Transaction and other acquisition related expenses				606					3,032					-							3,638
Intangible amortization and impairments				7,977					5,578					2,103							13,555					4,205
Restructuring and integration related expenses				1,151					14,534					-							15,685					-
Total before taxes				32,718					41,603					6,779							74,321					16,500
Associated tax effect				(15,276	)				(25,875	)				(703	)						(41,151	)				(3,042	)
Total of supplemental information net of taxes				17,442					15,728					6,076							33,170					13,458
Non-GAAP net income			$	27,464				$	17,937				$	33,214						$	45,401				$	63,178
Diluted GAAP earnings per share			$	0.15				$	0.03				$	0.40						$	0.18				$	0.74
Adjustments per above				0.26					0.24					0.09							0.50					0.19
Diluted non-GAAP earnings per share			$	0.41				$	0.27				$	0.49						$	0.68				$	0.93
			Three Months Ended																	Six Months Ended
			July 29,					April 29,					July 31,							July 29,					July 31,
			2012					2012					2011							2012					2011
Tax Impact Associated With Supplemental Information			Q2 2013					Q1 2013					Q2 2012							FY 2013					FY 2012
			(Unaudited)					(Unaudited)					(Unaudited)							(Unaudited)					(Unaudited)
Adjustments to GAAP net income:
Stock-based compensation expense			$	4,029				$	737				$	150						$	4,766				$	1,958
Acquisition related fair value adjustments				4,238					675					-							4,913					-
Option and restatement related expenses				-					-					23							-					67
Transaction and other acquisition related expenses				296					60					-							356					-
Intangible amortization and impairments				1,495					705					530							2,200					1,017
Restructuring and integration related expenses				2,174					255					-							2,429					-
Release of prior accrued taxes on foreign earnings				-					23,443					-							23,443					-
Effect of enacted tax rate changes				3,044					-					-							3,044					-
Total of associated tax effect			$	15,276				$	25,875				$	703						$	41,151				$	3,042
			Three Months Ended
			July 29,					April 29,					July 31,
			2012					2012					2011
			Q2 2013					Q1 2013					Q2 2012
			(Unaudited)					(Unaudited)					(Unaudited)
Free Cash Flow:
Cash Flow from Operations				23,605					(11,734	)				34,245
Net Capital Expenditure				(6,085	)				(4,630	)				(7,790	)
Free Cash Flow:				17,520					(16,364	)				26,455

Q3 FY13 Earnings Per Share Guidance
GAAP to Non-GAAP Reconciliation (net of tax)
										Low					High
GAAP EPS										$	0.15				$	0.20
Stock based compensation expense											0.09					0.08
Acquisition related fair value adjustments											0.06					0.07
Amortization of acquired intangibles											0.11					0.10
Non-GAAP EPS										$	0.41				$	0.45

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