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TheStreet Open House

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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