SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: November 25, 2002
Semtech Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-6395 95-2119684
(State or other jurisdiction of (Commission (IRS Employer Identification No.)
incorporation or organization) File Number)
200 Flynn Road
Camarillo, California 93012-8790
(Address of Principal Executive Offices) (Zip Code)
(805) 498-2111 (Registrant's
telephone number, including area code)
Item 5. Other Events.
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The Registrant issued the press release, filed as Exhibit 99.1 hereto,
on November 25, 2002.
Item 7. Financial Statements and Exhibits.
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Exhibit Number Description of Document
99.1 Press Release of the Registrant dated November 25, 2002.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: November 25, 2002 SEMTECH CORPORATON
By: /s/ David G. Franz, Jr.
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David G. Franz, Jr.
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit Number Description of Document
99.1 Press Release of the Registrant dated November 25, 2002.
Exhibit 99.1
SEMTECH ANNOUNCES THIRD QUARTER RESULTS
1:30 p.m. PT
Monday, November 25, 2002
CAMARILLO, CALIFORNIA, November 25, 2002 - SEMTECH CORPORATION (Nasdaq:
SMTC) today announced results for its fiscal year 2003 third quarter that ended
October 27, 2002.
Sales for the third quarter of fiscal year 2003 were $47.2 million, up 8
percent from sales of $43.7 million in the third quarter of fiscal year 2002. On
a sequential basis, net sales were down 9 percent.
Gross margin in the third quarter of fiscal year 2003 was 56 percent, up
from 55 percent in prior year. Operating income was $8.5 million, which included
one-time costs of $1.2 million for an expected loss on the future sub-lease of
the Company's New York office and asset impairment at the Corpus Christi, Texas
wafer fabrication facility. Operating income was $13.2 million in the second
quarter of fiscal year 2003 and $9.0 million in the third quarter of fiscal year
2002.
Interest and other income in the third quarter included $10.7 million of
pre-tax gain on the repurchase of the Company's convertible subordinated notes.
This gain, which was higher than forecast, was responsible for the increase in
the effective tax rate for the third quarter. The Company's effective tax rate
is expected to return to 25 percent in the fourth quarter.
Net income was $13.0 million or 17 cents per diluted share for the third
quarter of fiscal year 2003. For the third quarter of fiscal year 2002, the
Company reported net income of $9.1 million or 12 cents per diluted share.
Operating cash flow was a positive $10.7 million and $44.4 million for the
third quarter and first nine months of fiscal year 2003, respectively. Semtech's
cash and marketable securities, net of debt, finished the quarter at $226.6
million, up $11.3 million over the second quarter even after the buyback of $7.8
million in common stock. Operating cash flow for all of fiscal year 2003 is
forecasted to be a positive $60.0 million.
Sales for the nine months ended October 27, 2002 were $148.4 million, up 3
percent from $144.8 million in the prior year period. Net income for the first
nine months of fiscal year 2003 was $34.1 million or 44 cents per diluted share,
which compared to net income of $17.3 million or 25 cents per diluted share in
the first nine months of fiscal year 2002.
Results for the first nine months of fiscal year 2003 include $1.2 million
of one-time costs for an expected loss on a sub-lease and asset impairment,
$11.2 million of pre-tax gain on the repurchase of convertible subordinated
notes, and the sale of $862,000 of inventory that was previously written-off.
Included in the prior year nine-month results were one-time costs of $16.7
million for the write-down of inventory, headcount reductions and a Superfund
settlement, and $2.3 million of pre-tax gain on the repurchase of convertible
subordinated notes.
Third Quarter Commentary
Shipments of Portable Power Management and Test and Measurement Products
grew sequentially in the third quarter. Power Management shipments into the
portable equipment markets have increased 239 percent from the third quarter of
last year and represent 19 percent of Semtech's third quarter revenues. Sales of
all other product lines declined in the third quarter. Shipments to desktop
computer customers were down in the quarter as a result of lower available
content and increased competition.
Visibility remains low, as customers are still only placing backlog for
near-term business. Portable Power Management orders were up 42 percent
sequentially, Protection and Desktop/Server Power Management were up slightly
and all other major product lines declined. Orders for Test and Measurement
Products declined sequentially by 50 percent.
Jack Poe, Chairman and CEO commented, "As a result of our new product
development and design win efforts in the areas of portable devices, industrial,
telecom and networking equipment, the Power Management business is much more
diversified. This diversification will continue over the next twelve months, as
we ship new Power Management Products into the industrial and communications
markets."
Mr. Poe added, "The prospects for fiscal year 2004 are improving. Based on
current forecasts, all of our major product lines are expected to grow during
calendar year 2003, with acceleration likely during the second half of the year.
Test and Measurement Products face the toughest growth challenge, especially in
the first half of the year due to the weak ATE market."
Design Wins and Growth Opportunities
While bookings in the third quarter reflected cautious customer order
patterns, new product introductions and design win activity continued unabated.
Five hundred new design wins were recorded in the third quarter with annual
potential revenue of $63.0 million. Cellular phones were the largest end
application in new designs, followed by desktop and notebook computers. The
trend towards more advanced cell phones with color screens has increased the
available content. Design wins for Semtech's patented Combi-Sense(TM) topology
used to power desktop computers should lead to significant market-share
improvement beginning in the second quarter of next year.
Outlook
Semtech estimates that net sales for the fourth quarter of fiscal year 2003
will be in the range of $43.0 to $45.0 million. Turns orders (orders received
and shipped in the same quarter) of approximately 47 percent are required to
achieve this forecast. Gross margin is expected to improve slightly from the
third quarter and earnings are forecasted to be in the range of 9 to 11 cents
per diluted share. The earnings forecast assumes $2.0 million of interest and
other income, which can vary based on the amount of convertible subordinated
debentures repurchased in the quarter.
The Company expects fourth quarter revenues for most product lines to be
flat with the third quarter. Sales out of Test and Measurement and Power
Management for computer gaming applications are expected to decline.
Buyback Update
Semtech spent $61.1 million in the open market during the third quarter of
fiscal year 2003 to buyback 729,300 shares of common stock and $65.2 million
face value of its convertible subordinated notes. An additional $50.0 million
was authorized in September 2002, raising the total amount of the current
buyback program to $200.0 million. Since January 2001, the Company has bought
back $167.6 million in stock and notes under this program.
David Franz, Chief Financial Officer noted, "Our strong cash flow and
weakness in the financial markets allowed the Company to accelerate its buyback
of debentures and stock in the quarter."
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.
Safe Harbor Provision
Statements contained in this release that are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. Forward-looking statements, including projections
and forecasts for revenue and gross margin, involve risks and uncertainties that
could cause actual results to differ materially from those projected. These
risks and uncertainties include worldwide economic conditions, the timing and
duration of semiconductor market upturns or downturns, demand for personal
computers, cellular phones and automated test equipment, demand for
semiconductor devices in general, competitors' actions, relations with large
strategic customers and suppliers, manufacturing costs and yields, demand for
the Company's products in particular, and risks associated with the businesses
of major customers. Other factors that may cause actual results to differ from
the forward-looking statements contained in this press release and that may
affect the Company's prospects in general are described in the Company's filings
with the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise forward-looking statements to reflect subsequent
events or changed assumptions or circumstances.
Investor Relations Contact
John Baumann, Treasurer, Telephone: 805-480-2010
SEMTECH CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands - except per share amounts)
Three Months Ended Nine Months Ended
--------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
October 27, October 28, October 27, October 28,
2002 2001 2002 2001
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Net sales $47,168 $43,745 $148,427 $144,805
Cost of sales 20,736 19,616 63,583 77,595 (c)
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Gross profit 26,432 24,129 84,844 67,210
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Operating costs and expenses:
Selling, general and administrative 8,790 7,982 26,018 25,912
Product development and engineering 7,912 7,150 23,709 22,517
One-time costs 1,202 (a) - 1,202 (a) 2,727 (b)
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Total operating costs and expenses 17,904 15,132 50,929 51,156
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Operating income 8,528 8,997 33,915 16,054
Interest and other income, net 10,649 3,670 13,368 7,920
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Income before provision for taxes 19,177 12,667 47,283 23,974
Provision for taxes 6,137 3,547 13,164 6,713
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Net income $13,040 $9,120 $34,119 $17,261
Earnings per share:
Basic $0.18 $0.13 $0.47 $0.25
Diluted $0.17 $0.12 $0.44 $0.25
Weighted average number of shares:
Basic 73,389 70,605 73,139 69,505
Diluted 76,721 78,338 77,430 77,559
Notes regarding Consolidated Statements of Income:
(a) "One-time costs" of $1.2 million in fiscal year 2003 were for an expected
loss on the future sub-lease of the Company's New York office and asset
impairment at the Corpus Christi, Texas wafer fabrication facility.
(b) "One-time costs" of $2.7 million in fiscal year 2002 were for headcount
reductions and a Superfund settlement.
(c) "Cost of sales" for fiscal year 2002 includes a $14.0 million write-down of
inventory.
SEMTECH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
October 27, January 27,
2002 2002
---------------------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $144,560 $46,300
Temporary investments 232,764 324,870
Receivables, less allowances 21,111 19,181
Inventories 20,070 22,728
Income taxes refundable - 2,019
Deferred income taxes 11,973 11,786
Other current assets 2,955 3,372
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Total current assets 433,433 430,256
Property, plant and equipment, net 52,270 51,516
Investments, maturities in excess of 1
year 106,260 172,332
Deferred income taxes 26,025 27,659
Other assets 5,228 8,638
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TOTAL ASSETS $623,216 $690,401
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $7,148 $7,341
Accrued liabilities 11,578 16,845
Deferred revenue 3,146 1,936
Income taxes payable 2,240 1,099
Other current liabilities 62 65
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Total current liabilities 24,174 27,286
Long-term debt 256,970 364,320
Total Stockholders' equity 342,072 298,795
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 623,216 $ 690,401
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