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Semtech Announces Third 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 Nine Months Ended
October 28, July 29, October 30, October 28, October 30,
  2012     2012     2011     2012     2011
Q3 2013 Q2 2013 Q3 2012 FY 2013 FY 2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
Net sales $ 160,878 $ 150,704 $ 123,944 $ 428,224 $ 376,569
Cost of sales   64,085     76,179     50,537     201,569     150,588
Gross profit 96,793 74,525 73,407 226,655 225,981
Operating costs and expenses:
Selling, general and administrative 35,646 31,220 25,110 111,684 74,296
Product development and engineering 33,354 32,613 20,489 90,050 61,242
Intangible amortization and impairments   8,212     7,977     4,573     21,767     8,778
Total operating costs and expenses   77,212     71,810     50,172     223,501     144,316
Operating income 19,581 2,715 23,235 3,154 81,665
Interest expense (4,172 ) (4,194 ) - (10,208 ) -
Interest income and other (expense), net   (1,071 )   162     729     (696 )   172
Income (loss) before taxes 14,338 (1,317 ) 23,964 (7,750 ) 81,837
(Benefit) provision for taxes   (2,252 )   (11,339 )   (3,015 )   (36,571 )   5,138
Net income $ 16,590   $ 10,022   $ 26,979   $ 28,821   $ 76,699
 
Earnings per share:
Basic $ 0.25 $ 0.15 $ 0.41 $ 0.44 $ 1.18
Diluted $ 0.25 $ 0.15 $ 0.40 $ 0.43 $ 1.14
 
Weighted average number of shares used in computing earnings per share:
Basic 65,996 65,587 65,440 65,622 65,180
Diluted 67,465 67,165 67,314 67,306 67,539
 

   
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(Table in thousands)
 
October 28, Jan 29,
  2012   2012
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 204,954 $ 227,022
Temporary investments 5,017 83,121
Accounts receivable, net 72,804 49,644
Inventories 73,825 46,995
Deferred tax assets 13,800 5,339
Prepaid taxes 31,740 9,580
Other current assets   18,342   5,611
Total current assets 420,482 427,312
 
Property, plant and equipment, net 100,390 69,713
Long-term investments 8,012 17,522
Deferred income taxes 47,917 -
Goodwill 394,508 129,651
Other intangible assets, net 212,043 66,720
Other assets   21,321   15,403
Total assets $ 1,204,673 $ 726,321
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 51,131 $ 26,699
Accrued liabilities 46,697 32,389
Deferred revenue 4,565 3,853
Current portion - long term debt 46,845 -
Deferred tax liabilities   4,157   4,041
Total current liabilities 153,395 66,982
 
Deferred tax liabilities - non-current 52,316 1,000
Long term debt - less current 289,323 -
Other long-term liabilities 27,713 28,151
-
Shareholders’ equity   681,926   630,188
Total liabilities & shareholders' equity $ 1,204,673 $ 726,321
 

   
SEMTECH CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Table in thousands)
 
 
Nine Months Ended
October 28, October 30,
  2012     2011  
(Unaudited) (Unaudited)
 
Cash flows from operating activities:
Net income $ 28,821 $ 76,699
Adjustments to reconcile net income to net cash provided by operating activities, net of effects of acquisitions
Depreciation, amortization and impairments 35,300 16,084
Effect of acquisition fair value adjustments 33,251 -
Accretion of deferred financing costs and debt discount 1,819 -
Accrued interest expense 186 -
Deferred income taxes (12,586 ) 5,209
Stock-based compensation 16,727 17,149
Excess tax benefits on stock based compensation (3,335 ) (2,327 )
Loss (gain) on disposition of property, plant, and equipment 85 (6 )
Changes in assets and liabilities   (33,489 )   (39,240 )
Net cash provided by operating activities 66,779 73,568
 
 
Cash flows from investing activities:
Purchase of available-for-sale investments (17,122 ) (90,331 )
Proceeds from sales and maturities of available-for-sale investments 104,699 95,122
Proceeds from sales of property, plant, and equipment - 18
Purchase of property, plant, and equipment (18,115 ) (18,007 )
Purchase of intangible assets (250 ) (3,000 )
Acquisitions, net of cash acquired   (491,717 )   -  
Net cash used in investing activities (422,505 ) (16,198 )
 
 
Cash flows from financing activities:
Proceeds from debt issuance, net of discount 347,000 -
Deferred financing cost (8,962 ) -
Payment for interest rate cap (1,100 ) -
Excess tax benefits on stock based compensation 3,335 2,327
Proceeds from issuance of common stock 4,839 35,005
Repurchase of outstanding common stock (269 ) (30,579 )
Payment of long term debt   (11,250 )   -  
Net cash provided by financing activities 333,593 6,753
Effect of exchange rate increase (decrease) on cash and cash equivalents   65     (2 )
 
Net (decrease) increase in cash and cash equivalents (22,068 ) 64,121
Cash and cash equivalents at beginning of period 227,022 119,019
   
Cash and cash equivalents at end of period $ 204,954   $ 183,140  
 

         
SEMTECH CORPORATION
SUPPLEMENTAL INFORMATION - NOTES TO CONSOLIDATED GAAP STATEMENTS OF INCOME
(Tables in thousands - except per share amounts)
 
Three Months Ended Nine Months Ended
October 28, July 29, October 30, October 28, October 30,
  2012     2012     2011     2012     2011  
Stock-based Compensation Expense Q3 2013 Q2 2013 Q3 2012 FY 2013 FY 2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cost of sales $ 313 $ 297 $ 238 $ 841 $ 712
Selling, general and administrative 3,970 2,657 2,757 9,852 11,041
Product development and engineering   2,199     1,965     2,046     6,034     5,396  
Total stock-based compensation expense $ 6,482   $ 4,919   $ 5,041   $ 16,727   $ 17,149  
 
 
Three Months Ended Nine Months Ended
October 28, July 29, October 30, October 28, October 30,
  2012     2012     2011     2012     2011  
Gross Profit - Reconciliation GAAP to Non-GAAP Q3 2013 Q2 2013 Q3 2012 FY 2013 FY 2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
GAAP gross profit $ 96,793 $ 74,525 $ 73,407 $ 226,655 $ 225,981
Adjustments to GAAP gross profit:
Stock-based compensation expense 313 297 238 841 712
Expiration of acquired return rights - (371 ) - (676 ) -
Fair value adjustment related to acquired inventory   4,382     17,726     -     35,024     -  
Non-GAAP gross profit $ 101,488   $ 92,177   $ 73,645   $ 261,844   $ 226,693  
 
 
Three Months Ended Nine Months Ended
October 28, July 29, October 30, October 28, October 30,
  2012     2012     2011     2012     2011  
Net Income - Reconciliation GAAP to Non-GAAP Q3 2013 Q2 2013 Q3 2012 FY 2013 FY 2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
 
GAAP net income $ 16,590 $ 10,022 $ 26,979 $ 28,821 $ 76,699
 
Adjustments to GAAP net income:
Stock-based compensation expense 6,482 4,919 5,041 16,727 17,149
Acquisition related fair value adjustments 4,721 18,065 - 35,918 -
Option and restatement related expenses - - 8 - 194
Transaction and other acquisition related expenses 1,099 606 921 4,737 921
Environmental monitoring and remediation reserves 2,540 - - 2,540 -
Intangible amortization and impairments 8,212 7,977 4,573 21,767 8,778
Reorganization and integration related expenses 1,310 1,151 1,981 16,996 1,981
         
Total before taxes 24,364 32,718 12,524 98,685 29,023
Associated tax effect   (4,884 )   (15,276 )   (4,460 )   (46,034 )   (7,502 )
Total of supplemental information net of taxes   19,480     17,442     8,064     52,651     21,521  
Non-GAAP net income $ 36,070   $ 27,464   $ 35,043   $ 81,472   $ 98,220  
 
Diluted GAAP earnings per share $ 0.25 $ 0.15 $ 0.40 $ 0.43 $ 1.14
Adjustments per above  

0.28

    0.26     0.12     0.78     0.31  
Diluted non-GAAP earnings per share $ 0.53   $ 0.41   $ 0.52   $ 1.21   $ 1.45  
 
 
Three Months Ended Nine Months Ended
October 28, July 29, October 30, October 28, October 30,
  2012     2012     2011     2012     2011  
Tax Impact Associated With Supplemental Information Q3 2013 Q2 2013 Q3 2012 FY 2013 FY 2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Adjustments to GAAP net income:
Stock-based compensation expense $ 119 $ 4,029 $ 2,798 $ 4,884 $ 4,757
Acquisition related fair value adjustments 1,249 4,238 - 6,433 -
Option and restatement related expenses - - 8 - 75
Transaction and other acquisition related expenses 322 296 156 883 156
Environmental monitoring and remediation reserves 707 - - 707 -
Intangible amortization and impairments 1,664 1,495 930 3,388 1,946
Reorganization and integration related expenses 823 2,174 568 3,252 568
Release of prior accrued taxes on foreign earnings - - - 23,443 -
Effect of enacted tax rate changes   -     3,044     -     3,044     -  
Total of associated tax effect $ 4,884   $ 15,276   $ 4,460   $ 46,034   $ 7,502  
 
 
Three Months Ended
October 28, July 29, October 30,
  2012     2012     2011  
Q3 2013 Q2 2013 Q3 2012
(Unaudited) (Unaudited) (Unaudited)
Free Cash Flow:
 
Cash Flow from Operations 54,908 23,605 32,982
Net Capital Expenditure   (7,400 )   (6,085 )   (2,735 )
Free Cash Flow:   47,508     17,520     30,247  
 

   
Q4 FY13 Earnings Per Share Guidance
GAAP to Non-GAAP Reconciliation (net of tax)
Low High
GAAP EPS 0.13 0.17
 
Stock based compensation expense 0.09 0.09
Acquisition related fair value adjustments 0.08 0.08
Amortization of acquired intangibles 0.11 0.11
   
Non-GAAP EPS $ 0.41 $ 0.45
 




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