EX-99 3 a4522720ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Semtech Announces Strong Third Quarter Results CAMARILLO, Calif.--(BUSINESS WIRE)--Nov. 24, 2003-- New Orders Up 23 Percent Sequentially; Net Sales and EPS Exceed Forecast; Outlook for 8 to 10 Percent Sales Growth in Fourth Quarter Semtech Corporation (Nasdaq:SMTC), a leading producer of high performance analog and mixed-signal semiconductors, today announced that net sales for its third quarter of fiscal year 2004 increased 8 percent compared to the second quarter. This exceeded the Company's prior forecast. Gross margin, operating income and earnings per share for the quarter also improved ahead of forecast. Net sales for the third quarter that ended October 26, 2003 were $48.1 million, up from $44.6 million in the second quarter and $47.2 million in the prior year third quarter. Net income for the third quarter of fiscal year 2004 was $9.3 million or 12 cents per diluted share. Gross margin was 58.0 percent in the third quarter of fiscal year 2004, up from 57.3 percent in the second quarter and 56.0 percent in the prior year period. Third quarter operating income increased 26 percent over the previous quarter and 30 percent compared to the prior year quarter. The increase in operating income reflected improved sales and increased contribution from higher margin products. Net sales for the first nine months of fiscal year 2004 were $136.7 million and net income was $19.9 million or 26 cents per diluted share. For the first nine months of fiscal year 2003, net sales were $148.4 million and net income was $34.1 million or 44 cents per diluted share. Interest and other income/expense for both nine month periods include gains related to the Company's repurchase of convertible subordinated debentures. The first nine months of the current fiscal year include the expense of calling the remaining outstanding convertible subordinated debentures. New orders in the third quarter of fiscal year 2004 increased 23 percent compared to the prior quarter. This resulted in the Company's highest quarterly book-to-bill ratio in the last 4 years and best order volume since the fourth quarter of fiscal year 2001. Demand was particularly strong for Power Management products used in notebook computers, cellular handsets and other handheld devices. Jason Carlson, Semtech's President and Chief Executive Officer, commented, "Our performance in portable applications has been outstanding. Building off our strength in Power and Protection, we are now starting to win designs for Human Input Devices (HID) used to control touch-pads, pointing sticks and keyboards. Improved demand for products used in more capital intensive end-markets, like test, industrial and communication systems are also driving sales growth and higher gross margin." Two of Semtech's emerging product lines recorded impressive order growth during the quarter. Orders for the Company's SETS and Networking/Industrial Power Management product lines both grew sequentially in excess of 35 percent. In addition, an initial design win for HID products was recorded with a major notebook OEM. These three emerging product lines contribute to Semtech's outlook for sales growth and margin expansion over the coming year. Fourth Quarter Outlook Based on beginning backlog entering the quarter, Semtech estimates that net sales for the fourth quarter of fiscal year 2004 will be up 8 to 10 percent over the third quarter. Turns orders (orders received and shipped in the same quarter) of approximately 35 percent are required to achieve this forecast. Gross margin and operating income should improve. Earnings per diluted share in the fourth quarter are forecasted to be 14 cents. Mr. Carlson added, "As the end-markets have improved, our customer base has begun to give us more visibility. This has allowed us to build some backlog, which has reduced our reliance on turns orders to below 50 percent for the first time in three quarters." Semtech spent $3.1 million on the repurchase of common stock in the third quarter and expects to continue to buyback shares under its current buyback program. The Company ended the third quarter with $260.3 million of cash and investments, up $14.5 million from the prior 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 and political 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. SEMTECH CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In thousands -- except per share amounts) Three Months Ended Nine Months Ended Oct. 26, Oct. 27, Oct. 26, Oct. 27, 2003 2002 2003 2002 Net sales $48,112 $47,168 $136,698 $148,427 Cost of sales 20,230 20,736 58,429 63,583 Gross profit 27,882 26,432 78,269 84,844 Operating costs and expenses: Selling, general and administrative 9,271 8,790 27,445 26,018 Product development and engineering 7,533 7,912 22,835 23,709 One-time costs - 1,202 - 1,202 Total operating costs and expenses 16,804 17,904 50,280 50,929 Operating income 11,078 8,528 27,989 33,915 Interest and other (expense) income, net 1,103 10,649 (1,756) 13,368 Income before provision for taxes 12,181 19,177 26,233 47,283 Provision for taxes 2,923 6,137 6,296 13,164 Net income $9,258 $13,040 $19,937 $34,119 Earnings per share: Basic $0.13 $0.18 $0.27 $0.47 Diluted $0.12 $0.17 $0.26 $0.44 Weighted average number of shares: Basic 73,704 73,389 73,449 73,139 Diluted 77,902 76,721 77,154 77,430 Notes regarding Consolidated Statements of Income: 1.) In the nine month period ended October 26, 2003, $949,000 of previously written-off inventory was sold. In the nine month period ended October 27, 2002, $862,000 of previously written-off inventory was sold. 2.) "Interest and other (expense) income, net" includes a $6.8 million charge for the calling of the Company's convertible subordinated notes in the nine month period ended October 26, 2003. 3.) "Interest and other (expense) income, net" includes a gain on the repurchase of convertible subordinated notes of $2.9 million in the nine month period ended October 27, 2003 and a gain of $11.2 million in the nine month period ended October 27, 2002. SEMTECH CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) Oct. 26, Jan. 26, 2003 2003 (Unaudited) Assets Current assets: Cash and cash equivalents $90,310 $137,041 Temporary investments 91,961 273,382 Receivables, less allowances 20,614 17,676 Inventories 20,974 16,351 Income taxes refundable 5,795 - Deferred income taxes 5,767 11,731 Other current assets 3,550 2,267 Total current assets 238,971 458,448 Property, plant and equipment, net 48,891 51,547 Investments, maturities in excess of 1 year 78,013 78,624 Deferred income taxes 24,779 27,143 Other assets 365 4,784 Total Assets $391,019 $620,546 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $10,182 $5,725 Accrued liabilities 14,539 26,596 Income taxes payable 2,454 3,593 Deferred revenue 1,876 1,583 Other current liabilities 14 39 Total current liabilities 29,065 37,536 Long-term debt - 241,570 Total Stockholders' equity 361,954 341,440 Total Liabilities and Stockholders' Equity $391,019 $620,546 CONTACT: Semtech Corporation John Baumann, 805-480-2010 (Investor Relations)