EX-99.1 2 a4707753ex99.txt SEMTECH EXHIBIT 99.1 Exhibit 99.1 Semtech Second Quarter Sales up 10 Percent Sequentially; Record Gross Margin Achieved in the Quarter CAMARILLO, Calif.--(BUSINESS WIRE)--Aug. 24, 2004-- Greater Than 1:1 Book-to-Bill Ratio SEMTECH CORPORATION (Nasdaq:SMTC), a leading producer of high performance analog and mixed-signal semiconductors, today announced that net sales and net income for its second quarter that ended July 25, 2004 were up significantly over the first quarter and the prior year period. Operating income was 31 percent of net sales in the second quarter and net income represented a 26 percent after-tax-margin. Semtech generated $21.4 million of operating cash flow in the second quarter and spent $13.0 million to buy back 619,000 shares of its common stock. Net sales for the second quarter of fiscal year 2005 were $68.3 million, up 53 percent from $44.6 million in the prior year second quarter. As a result of higher sales and record gross margin, net income for the second quarter of fiscal year 2005 was $17.4 million or 22 cents per diluted share. Net income for the second quarter of last year was $2.4 million or 3 cents per diluted share, which included a pre-tax charge of $6.8 million or net-of-tax 7 cents per diluted share impact related to the Company's calling of its convertible subordinated notes. For the first six months of fiscal year 2005, net sales were up 47 percent to $130.2 million and net income nearly tripled to $32.2 million or 41 cents per diluted share. Net sales in the first six months of fiscal year 2004 were $88.6 million and net income was $10.7 million or 14 cents per share. New orders in the second quarter of fiscal year 2005 exceeded shipments for the period, resulting in a book-to-bill ratio of greater than 1:1. The strongest growth came from the Company's timing and synchronization or SETS product line used in high-speed communications, which saw new orders grow 32 percent over the first quarter. The Human Input Device (HID) unit also saw meaningful order growth, due in part to a new design win for the MicroBuddy(R) device being used in a high volume digital video recorder. Net sales were up 10 percent sequentially in the second quarter of fiscal year 2005 compared to the first quarter, driven by growth in Power Management, HID, SETS, and Protection products. Shipments of Semtech's two largest product lines, Power Management and Protection, are both up more than 50 percent compared to the prior year period. The expansion in sales reflected ongoing demand tied to cellular handsets and consumer electronics, as well as a modest recovery in the computer segment. Jason Carlson, Semtech's President and Chief Executive Officer commented, "I was most pleased with the new orders and shipment levels achieved by our SETS product line in the second quarter. The emerging product lines of SETS and HID have been areas of investment by Semtech for more than 4 years. In the case of SETS, we are penetrating a relatively new end-market for Semtech, where HID represents increased content in portable applications we are already supporting." Third Quarter Outlook Semtech estimates that net sales for the third quarter that ends October 31, 2004 will be up 3 to 5 percent over the second quarter. Turns orders (orders received and shipped in the same quarter) of approximately 32 percent are required to achieve this forecast. Earnings in the third quarter are forecasted to be 23 cents per diluted share. Per the Company's fiscal calendar, the third quarter of fiscal year 2005 will be a 14-week 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 cellular phones, personal computers and automated test equipment, demand for semiconductor devices in general, demand for the Company's products in particular, competitors' actions, supply from key third-party silicon wafer foundries and assembly contractors, manufacturing costs and yields, relations with strategic customers, 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 Six Months Ended July 25, July 27, July 25, July 27, 2004 2003 2004 2003 (Unaudited)(Unaudited)(Unaudited)(Unaudited) Net sales $68,305 $44,569 $130,198 $88,586 Cost of sales 27,470 19,039 52,581 38,199 Gross profit 40,835 25,530 77,617 50,387 Operating costs and expenses: Selling, general and administrative 11,323 9,228 21,664 18,174 Product development and engineering 8,435 7,477 16,342 15,302 Total operating costs and expenses 19,758 16,705 38,006 33,476 Operating income 21,077 8,825 39,611 16,911 Interest and other income (expense), net 1,288 (5,651) 2,182 (2,859) Income before taxes 22,365 3,174 41,793 14,052 Provision for taxes 4,946 762 9,609 3,373 Net income $17,419 $2,412 $32,184 $10,679 ========== ========== ========== =========== Earnings per share: Basic $0.23 $0.03 $0.43 $0.15 Diluted $0.22 $0.03 $0.41 $0.14 Weighted average number of shares: Basic 74,452 73,411 74,339 73,326 Diluted 78,658 76,985 78,737 76,745 Notes regarding Consolidated Statements of Income: 1.) In the six month period ended July 25, 2004, $364,000 of previously written-off inventory was sold. In the six month period ended July 27, 2003, $792,000 of previously written-off inventory was sold. 2.) "Interest and other income (expense), net" includes a $6.8 million charge for the calling of the Company's convertible subordinated notes in the three and six month periods ended July 27, 2003. 3.) "Interest and other income (expense), net" includes a gain on the repurchase of convertible subordinated notes of $2.9 million in the six month period ended July 27, 2003. SEMTECH CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands) July 25, January 25, 2004 2004 (Unaudited) Assets Current assets: Cash and cash equivalents $62,776 $96,314 Temporary investments 100,325 93,044 Receivables, less allowances 25,028 20,362 Inventories 29,335 22,166 Income taxes refundable 5,795 5,795 Deferred income taxes 4,897 5,212 Other current assets 9,341 3,062 Total current assets 237,497 245,955 Property, plant and equipment, net 55,691 49,579 Investments, maturities in excess of 1 year 119,815 86,119 Deferred income taxes 24,092 25,552 Other assets 4,055 1,268 Total Assets $441,150 $408,473 =========== ============== Liabilities and Stockholders' Equity Current liabilities: Accounts payable $18,845 $8,554 Accrued liabilities 10,752 16,894 Income taxes payable 2,537 1,699 Deferred revenue 3,312 1,689 Other current liabilities - 27 Total current liabilities 35,446 28,863 Other long-term liabilities 1,072 - Total Stockholders' equity 404,632 379,610 Total Liabilities and Stockholders' Equity $441,150 $408,473 =========== ============== CONTACT: Semtech Corporation John Baumann, 805-480-2010