10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended January 25, 2004

OR

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from              to             

Commission file number 1-6395

SEMTECH CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	95-2119684
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

200 Flynn Road, Camarillo, California, 93012-8790

(Address of principal executive offices, Zip Code)

Registrant’s telephone number, including area code: (805) 498-2111

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
None	None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock par value $.01 per share

Rights to Purchase Series X Junior Participating Preferred Stock

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2.)     Yes  x    No  ¨

The aggregate market value of the voting stock held by non-affiliates of the registrant as of July 25, 2003 (the last business day of the Company’s most recently completed second fiscal quarter) was approximately $846,248,538. Stock held by directors, officers and shareholders owning 5% or more of the outstanding common stock (as reported on Schedules 13D and 13G) were excluded as they may be deemed affiliates. This determination of affiliate status is not a conclusive determination for any other purpose.

The number of shares of the Registrant’s common stock outstanding at April 1, 2004 was 74,324,246.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the following documents are incorporated by reference in Part III of this report: Definitive Proxy Statement in connection with registrant’s annual meeting of shareholders to be held on June 10, 2004.

SEMTECH CORPORATION

INDEX TO FORM 10-K

FOR THE YEAR ENDED JANUARY 25, 2004

		Page
PART I
Item 1	Business	2
Item 2	Properties	18
Item 3	Legal Proceedings	18
Item 4	Submission of Matters to a Vote of Security Holders	18
PART II
Item 5	Market for the Registrant’s Common Equity and Related Stockholder Matters	19
Item 6	Selected Financial Data	20
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 7A	Quantitative and Qualitative Disclosures About Market Risks	31
Item 8	Financial Statements and Supplementary Data	32
Item 9	Changes in or Disagreements with Accountants on Accounting and Financial Disclosure	53
Item 9A	Controls and Procedures	53
PART III
Item 10	Directors and Executive Officers of the Registrant	54
Item 11	Executive Compensation
Item 12	Security Ownership of Certain Beneficial Owners and Management	54
Item 13	Certain Relationships and Related Transactions
Item 14	Principal Accounting Fees and Services
PART IV
Item 15	Exhibits, Financial Statement Schedules and Reports on Form 8-K	55
	Signatures	58

This Annual Report on Form 10-K for the year ended January 25, 2004 (the “Form 10-K”) contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or the future financial performance of the Company. Some forward-looking statements may be identified by use of such terms as “expects,” “anticipates,” “intends,” “estimates,” “believes” and words of similar import. These forward-looking statements relate to plans, objectives and expectations for future operations.

In light of the risks and uncertainties inherent in all such projected operational matters, the inclusion of forward-looking statements in this Form 10-K should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved or that any of the Company’s operating expectations will be realized. Net sales and results of operations are difficult to forecast and could differ materially from those projected in the forward-looking statements contained in this Form 10-K for the reasons detailed in the “Risk Factors” section of this Form 10-K, beginning on page 10 or elsewhere in this Form 10-K. We assume no obligation to update any of the forward- looking statements after the date of this Form 10-K.

PART I

ITEM 1. BUSINESS

General

We are a leading supplier of analog and mixed-signal semiconductors and were incorporated in Delaware in 1960. We design, produce and market a broad range of products that are sold principally to customers in the computer, communications and industrial markets. Our products are designed into a wide variety of end applications, including notebook and desktop computers, computer gaming systems, personal digital assistants (PDAs), cellular phones, wireline networks, wireless base stations and test systems. Our end-customers are primarily original equipment manufacturers and their suppliers, including Agilent, Cisco, Compal Electronics, Dell, Hewlett Packard, IBM, Intel, Lucky Goldstar, Microsoft, Motorola, Quanta Computer, Samsung, Sony and Unisys.

Overview of the Semiconductor Industry

The semiconductor industry is broadly divided into analog and digital semiconductor products. Analog semiconductors condition and regulate “real world” functions such as temperature, speed, sound and electrical current. Digital semiconductors process binary information, such as that used by computers. Mixed-signal devices incorporate both analog and digital functions into a single chip and provide the ability for digital electronics to interface with the outside world.

The market for analog and mixed-signal semiconductors differs from the market for digital semiconductors. The analog and mixed-signal industry is characterized by significantly longer product life cycles than the digital industry. In addition, analog semiconductor manufacturers tend to have lower capital investment requirements for manufacturing because their facilities tend to be less dependent than digital producers on state-of-the-art production equipment. The end-product markets for analog and mixed-signal semiconductors are smaller, more varied and more specialized than the relatively standardized digital semiconductor product markets.

Another difference between the analog and digital markets is the amount of available talented labor. The analog industry relies more heavily than the digital industry on design and applications talent to distinguish its products from one another. While digital expertise is extensively taught in universities due to its overall market size, analog and mixed-signal expertise tends to be learned over time based on experience and hands-on training. Consequently, personnel with this training are scarce, a fact that makes it difficult for new suppliers to quickly gain significant market share.

The markets for computer and communications products today are characterized by several trends that we believe are driving demand for our products. Electronic systems are being designed to operate at increasingly lower operating voltages, battery-powered devices such as handheld computers and cellular telephones are proliferating, and devices are becoming smaller and requiring higher levels of integration. We have designed our products to

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address these needs by providing solutions that extend battery life, meet tighter voltage requirements, improve the human interface of systems, and support higher transmission and processor speeds. As communications functions are increasingly integrated into a range of systems and devices, these products require analog processing capabilities and the number and size of our end-markets grows. Finally, industrial, medical, consumer and other end-market applications have increasingly incorporated data processing and communications features into their finished system, which in turn has broadened the opportunities for selling our analog and mixed-signal devices.

Advancements in digital processing technology typically drive the need for corresponding advancements in analog and mixed-signal solutions. We believe that the diversity of our applications allows us to take advantage of areas of relative market strength and limits our vulnerability to competitive pressure in any one area.

Semtech End-Markets

A majority of our products are sold to customers in the computer, communications and industrial markets. Until nine years ago, we had largely been focused on serving the military and aerospace market. We used the desktop segment of the computer market as our first major entry into the commercial marketplace for our circuits. Six years ago, approximately half of our revenues were derived from desktop computer related applications. In recent years, we have seen relative growth from the communications and industrial markets as a percentage of the total. We have also seen a greater diversification within our computer market segment, beyond our initial focus on desktop computer applications. For the fiscal year ended January 25, 2004, our revenues from the computer and communications end-markets were 40% each. The remaining 20% of net sales were from industrial, military and aerospace, and various other end-markets.

Computer market applications include notebook and desktop computers, computer gaming systems, and PDAs. End-product applications for our products within the communication market include local area networks, wide area networks, cellular phones and base stations. Industrial applications include automated test equipment (ATE), medical devices and factory automation systems. We believe that our diversity in the end-markets provides stability to our business and opportunity for growth.

The following table depicts our main product lines and their end-product applications:

Semtech’s Main Product Lines	Specific End-Product Applications
	Computer	Communications	Industrial
Power Management	Desktop PCs, servers, workstations, notebook computers, add-on cards, PDAs, computer gaming systems	Cellular phones, network cards, routers and hubs, telecom network boards	Power supplies, industrial systems
Protection	Notebook computers, PDAs, USB ports, LAN cards	Cellular phones, base stations, DSL equipment, routers and hubs	Handled measurement or instrumentation devices
Test and Measurement	Workstations	Cellular base stations, routers and hubs, SONET networks	Automated test equipment
Advanced Communications		SONET networks, routers, hubs, switches, fiber modems
Human Input Devices	Notebook computers, PDAs	Cellular phones, web phones	Touch screen, consumer appliances and security systems

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Business Strategy

Our objective is to be the leading supplier of analog and mixed-signal devices to the fastest growing segments of our target markets, particularly within the computer, communications and industrial segments. We intend to leverage our pool of skilled technical personnel to develop new products, or, where appropriate, use acquisitions, to serve the fastest growing segments of these markets. In order to capitalize on our strengths in analog and mixed-signal processing design, developing and marketing, we intend to pursue the following strategies:

Maintain our leading analog design expertise

We have developed a strategy to invest heavily in human resources needed to define and market high-performance products. We have been able to add to our engineering design talent through acquisitions. In general, our staff engineers have work experience in the analog and the mixed-signal industry ranging from 10 to 15 years. We have built a team of experienced engineers who combine industry expertise with advanced semiconductor design expertise to meet customer requirements and enable our customers to get their products to market rapidly. We intend to leverage this strategy to achieve new levels of integration, power reduction and miniaturization, enabling our customers to achieve leading performance in their products.

Leverage outsourced semiconductor fabrication capacity

We outsource most of our production and manufacturing in order to focus more of our resources on defining, developing and selling our products. We use outside wafer foundries that are based in Asia, the United States and Europe. Our largest wafer source is a foundry based in China. We believe that outsourcing provides us numerous benefits, including capital efficiency, the flexibility to adopt and leverage emerging process technologies without significant investment risk and a more variable cost of goods, which provides us with greater operating flexibility.

Focus on fast-growing market segments

We have chosen to target the analog segments of the fastest growing end-markets. We intend to enhance this growth potential by focusing on specific products within the analog and mixed-signal market, including high-end personal computers, notebook computers, PDAs, cellular phones, wide area and local area networks and test systems. These products are characterized by their need for leading-edge, high-performance analog and mixed-signal semiconductor technology.

Continue to release unique new products and achieve new design wins

We are focused on developing unique, new, high-margin products to serve our target markets. These markets have experienced growing consumer demand for increased product performance at competitive price points. We also focus on achieving design wins for our products with current and future customers. Design wins are indications by the customers that they intend to incorporate our products into new designs. Our technical talent works closely with our customers in securing design wins, developing new products and in implementing and integrating our products into their systems.

Diversify into new markets

We intend to enter new markets that complement our existing operations through internal development of new products and by strategic acquisitions. Our focus during fiscal year 2004 was to expand our presence within the markets of portable devices, networking and more broad-based industrial applications. A large amount of design and marketing talent was focused on developing products for these markets. We believe strategic acquisitions will allow us to expand our pool of skilled technical personnel, as well as expand the range of complementary products that we offer. We have acquired four companies over the past eight years that have permitted us to successfully enter new market segments and develop new products.

Concentrate on cross-selling our products and services

We consider the ability to sell additional products and services to our existing customers as a major opportunity. Many of our large customers produce a wide variety of end-products that require analog and mixed-signal products. By leveraging existing relationships, we believe that we will be able to sell a wider variety of our products to these organizations. In addition, we believe the high level of our technical expertise in our marketing department permits it to identify and capitalize on cross-selling opportunities.

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Product Segments

We have two product segments

Standard Semiconductor Products. Included in Standard Semiconductor Products are integrated circuits (ICs) and discrete components designed for use in standard and specific applications. Standard Semiconductor Products represented approximately 95% of our overall net sales for fiscal year 2004. The main product lines within our Standard Semiconductor Products are described below.

• Power Management Circuits. Power management circuits control, alter, regulate and condition the electrical pulses that flow through electronics. The highest volume product types within the power management product line are switching voltage regulators, combination switching and linear regulators, smart regulators and charge pumps. The primary application for these products is power regulation for computer, communications and industrial systems. In fiscal year 2004, power management represented more than half of the Standard Semiconductor Products segment. Internally, we divide the power management product line into three sub-product groups, entitled portable power management, desktop/server power management and networking/industrial power management.

• Protection Products. The highest volume type of protection products we design and market are transient voltage suppressors (TVS). TVS devices provide protection for electronic systems where large voltage spikes (called transients), such as electrostatic discharge generated by the human body, can permanently damage voltage-sensitive components. We also have developed filter and termination devices that can be sold as a complement to TVS devices. Specific protection product applications are found in computer, data-communications, telecommunications and industrial markets.

• Test and Measurement Circuits. We design and market a wide variety of test and measurement products, namely pin electronics, timing, clock distribution, parametric measurement, and ECL clock/logic products for use in ATE, workstations and communication infrastructure equipment.

• Human Input Devices (HID). We offer a line of human input devices that include touch-screen and touch-pad controllers, pointing stick devices and battery management circuits. Some of these products, including our MicroBuddy® product family, also perform a system management function in the end-products they are used in. These products are designed to handle human input and battery functions in portable systems such as notebook computers, PDAs and cellular phones. They also have applications in security, consumer appliances and other industrial applications.

• Advanced Communication Circuits. Through internal investment and several acquisitions, we have developed a line of highly proprietary advanced communication ICs, which perform specialized timing and synchronization functions in high-speed networks. Our primary product offering in this area is our “SETS” product family. Our Advanced Communication ICs are used in metropolitan, wide area, and wireless networks.

Rectifier, Assembly and Other Products. Rectifiers, assemblies and other products are older-technology products. Rectifier, Assembly and Other Products represented approximately 5% of our overall net sales for fiscal year 2004.

• Rectifiers. We have several different categories of silicon rectifiers, which are primarily used to convert alternating current to direct current. These products are sold mainly to military, aerospace, industrial equipment and medical equipment customers.

• Assemblies. A rectifier assembly is a package of rectifiers of one or more types, sometimes encased in epoxy or silicon by various molding techniques, constituting one or more basic rectifier circuits. We also offer some non-rectifier assemblies such as voltage multipliers. Assemblies are used in x-ray scanners, microwave ovens, aircraft engines, avionics equipment, airport radar and other specialized applications.

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• Other Products. We produce and sell other products that are not part of our main product segment. Included in the other products are custom and application specific integrated circuits (ASICs) and wafer foundry services for other semiconductor manufacturers.

For further financial information on these segments, refer to the information contained in Note 15. “Business Segments and Concentrations of Risk”, in the Notes to Consolidated Financial Statements included in Item 8.

Intellectual Capital and Product Development

We believe that our emphasis on the development of our intellectual capital and introduction of new proprietary product designs are key to our success. Recruiting and retaining technical talent is the foundation for developing and selling new products into the marketplace. In the past, we have added experienced engineers through the acquisition of companies. We have recruited additional talent through our strategy of establishing multiple design center locations throughout the United States and the world.

Circuit design engineers are our most valuable engineers. Circuit designers perform the critical task of designing and laying out integrated circuits. As of January 25, 2004, we employed more than 80 circuit designers and layout engineers. A majority of these individuals have senior-level expertise in the design, development and layout of circuits targeted for use in power management, protection, test, measurement and communication applications. We also employ a limited number of engineers that specialize in the development of software, sometimes referred to as firmware that is incorporated into certain of our HID and advanced communications products. We intend to make further investments in research and development in the future, including increasing our employee headcount, investing in design and development equipment and supporting our development efforts overall.

We have dedicated design centers in Santa Clara, California; Raleigh, North Carolina; Austin, Texas; Glasgow, Scotland; and Romsey, England. In addition, dedicated test and measurement circuit design occurs at our San Diego location, and HID design and protection product design occurs at our Camarillo, California, headquarters.

We spent $30.4 million or 16% of net sales on product development and engineering in fiscal year 2004. Product development and engineering costs were $31.3 million or 16% of net sales and $29.7 million or 16% of net sales in fiscal years 2003 and 2002, respectively.

Sales and Marketing

Sales made directly to original equipment manufacturers during fiscal year 2004 were approximately 49% of net sales. The remaining 51% of net sales were made through independent distributors. We have direct sales personnel located throughout the United States, who manage the sales activities of independent sales representative firms and independent distributors within North America. We expense our advertising costs as they are incurred.

We operate internationally primarily through our wholly-owned Swiss subsidiary, Semtech International AG. Semtech International serves the European markets through its wholly-owned subsidiaries based in France, Germany and the United Kingdom. Semtech International maintains branch sales offices, either directly or through one of its wholly owned subsidiaries, in Taiwan, Korea and Japan and has a small representative office located in Shanghai, China. Independent representatives and distributors are also used to serve customers throughout the world. Some of our distributors and sales representatives may also offer products from our competitors, as is customary in the industry.

Customers, Sales Data and Backlog

For fiscal year 2004, we estimate that more than 1,000 customers purchased our products either directly from us or through our authorized distributors. The following is a representative sample of our customers by end-markets:

Representative Customers by End-Markets:

Computer	Communications	Industrial
Dell	Cisco	Agilent Tech.
HP/Compaq	Motorola	LTX
IBM	Nortel	Rockwell
Intel	Samsung	Siemens
Microsoft	Sony	Unisys

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Our customers include major computer and peripheral manufacturers and their subcontractors, ATE manufacturers, data communications and telecommunications equipment vendors, and a variety of large and small companies serving the industrial, automotive, aerospace and military markets.

During fiscal years 2004, 2003 and 2002, foreign sales constituted 69%, 67% and 62%, respectively, of our net sales. Approximately 88% of foreign sales in fiscal year 2004 were to customers located in the Asia-Pacific region, as compared to approximately 90% in fiscal year 2003 and approximately 85% in fiscal year 2002. The remaining foreign sales were to customers in Europe.

No end-customer accounted for 10% or more of net sales in fiscal years 2004 and 2003. In fiscal year 2002, one of our ATE end customers and its subcontractors accounted for approximately 13% of net sales. For fiscal years 2004, 2003 and 2002, one of our Asian distributors accounted for approximately 10%, 14% and 12%, respectively, of net sales. For fiscal year 2004, another one of our Asian distributors accounted for approximately 14% of net sales.

Our backlog of orders as of the end of fiscal years 2004, 2003 and 2002 were approximately $45.4 million, $26.6 million and $40.1 million, respectively. Nearly all backlog is deliverable within six months; experience has shown that short-delivery lead times are required by most customers. A backlog analysis at any given time gives little indication of our future business except on a short-term basis, principally within the next 45 days. We do not have any significant contracts with our customers calling for shipments over a period of more than 18 months.

Manufacturing Capabilities

As part of our business strategy, we outsource a majority of our manufacturing functions to third-party contractors that fabricate silicon wafers and package and test our products. We perform a very limited amount of test and probe activities in our Camarillo and San Diego, California facilities.

We sold our Santa Clara, California wafer fabrication facility in 2001 and in December of 2002, we stopped production at our last remaining commercial wafer fabrication facility located in Corpus Christi, Texas. Our Reynosa, Mexico facility now fabricates a very small amount of silicon and performs the packaging activity needed to support our rectifier and assembly products. In fiscal year 2004, we purchased wafers from eight different third-party wafer foundries and used more than 20 different manufacturing processes, including various Bipolar, High-Speed Bipolar, CMOS, and Bi-CMOS processes.

For fiscal year 2004, we supported approximately 5% of our end product sales with wafers that were fabricated internally. The remaining 95% of our end products were supported with finished silicon wafers purchased from outside wafer foundries. Only our rectifier and assembly products were supported by internal wafer production in fiscal year 2004. All of our products, with the exception of the rectifier and assembly product lines, are packaged and tested by outside subcontractors.

Unlike digital products, our products are less reliant on state-of-the-art manufacturing and more reliant on design and applications support. As a result, our outside wafer foundries tend to be significantly less costly than state-of-the-art digital fabrication facilities and likewise utilize equipment that is less subject to obsolescence.

We use outside wafer foundries that are based in Asia, the United States and Europe. Our largest wafer source is a foundry based in China. In fiscal year 2004, this Chinese foundry provided 62% of our total silicon requirements in terms of wafers purchased. Virtually all the silicon we use will be sourced from outside foundries in fiscal year 2005 in order to take advantage of the best available technology, leverage the capital investment of others and reduce our operating costs associated with manufacturing assets and increase the variable component of our cost of goods sold. While we do have some redundancy of fab processes by using multiple outside foundries, any interruption of supply by one or more of these foundries could materially impact us. Likewise, we maintain some amount of business interruption insurance to help reduce the risk of wafer supply interruption, but we are not fully insured against such risk.

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While we rely on third-party wafer foundries for a majority of our wafer needs, in a few cases we have made prepayments in order to reserve a minimum level of capacity, transferred equipment to a foundry in return for capacity reservation, or otherwise have a contract that guarantees us some amount of capacity. In some cases, we have also negotiated pricing for the reserved wafers.

Despite the divestiture of our own internal wafer fab facilities in favor of outside wafer foundries for sourcing a majority of our silicon needs, we do maintain internal process development capabilities. These departments work closely with our outside foundry partners on the improvement and development of process capabilities.

We use third-party contractors to perform assembly and test operations. A majority of our assembly and test activity is conducted by third-party contractors that are based in Malaysia, the Philippines and China. We have an operations office located in the Philippines that supports and coordinates some of the worldwide shipment of products. We have installed our own test equipment at some of our packaging and testing subcontrators in order to ensure a certain level of capacity, assuming the subcontractor has ample employees to operate the equipment.

In the case of both outside wafer foundries and package and test subcontractors, our arrangements with these vendors are designed to provide some assurance of capacity but are not expected to assure access to all the manufacturing capacity we may need in the future.

Our products are made from basic materials (principally silicon, metals and plastics), all of which are widely available from a number of suppliers.

Competition

The analog and mixed-signal semiconductor industry is highly competitive, and we expect competitive pressures to continue. Our ability to compete effectively and to expand our business will depend on our ability to continue to recruit applications and design talent, our ability to introduce new products and the rate at which we introduce these new products to offset the generally short product life cycles. Our industry is characterized by decreasing unit selling prices over the life of a product. We believe we compete effectively based upon our ability to capitalize on efficiencies and economies of scale in production and sales, and our ability to maintain or improve our productivity and product yields to reduce manufacturing costs.

We are in direct and active competition, with respect to one or more of our product lines, with at least 30 manufacturers of such products, of varying size and financial strength. A number of these competitors are dependent on semiconductor products as their principal source of income, and some are much larger than we are. The number of our competitors has grown due to expansion of the market segments in which we participate. We consider our primary competitors to include Texas Instruments, National Semiconductor, Linear Technology, Maxim Integrated Products, Fairchild Semiconductor and Intersil Semiconductor, all with respect to our power management products; ST Microelectronics N.V. and Microsemi with respect to our protection products; Analog Devices, Maxim Integrated Products, ON Semiconductors and Micrel Semiconductor, all with respect to our test and measurement products; Silicon Laboratories and Zarlink Semiconductor with respect to our advanced communications products; and Alps Electronics and Synaptics Inc. with respect to our HID products.

Intellectual Property and Licenses

Our business is highly reliant on the design talents, technical abilities, applications knowledge, and creativity of our employees. We attempt to protect our intellectual property by filing patent applications, trademark applications, and copyright registrations. We consider these actions to be helpful in maintaining a competitive advantage, but do not believe that patents and other intellectual property rights create definitive competitive barriers to entry.

At this time, we do not license our patents or products. We do, however, license certain technology from other companies. We do not consider any of the licensed technology to be material in terms of royalties payable, and we believe the duration and other terms of the licenses are appropriate for our needs.

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Environmental Matters

On February 7, 2000, we were notified by the United States Environmental Protection Agency (EPA) with respect to the Casmalia Disposal Site in Santa Barbara, California. We were included in the Superfund program to clean up this disposal site due to our use of this site for waste disposal. We accepted a settlement offer from the EPA and certain State agencies under which we were required to pay approximately $783,000 with respect to the wastes at the Casmalia Disposal Site attributable to us. We recorded $765,000 of the proposed settlement amount as an accrued liability in fiscal year 2002 and recorded an accrued liability to cover the remainder in fiscal year 2003. We paid approximately $732,000 of the settlement into escrow in April 2003, and we paid the remainder in October 2003 when the settlement became effective.

On June 22, 2001, we were notified by the California Department of Toxic Substances Control (“State”) that we may have liability associated with the clean-up of the one-third acre Davis Chemical Company site in Los Angeles, California. We have been included in the clean-up program because we are one of the companies that used the Davis Chemical Company site for waste recycling and/or disposal between 1949 and 1990. The Company has joined with other potentially responsible parties in an effort to resolve this matter with the State. The group has entered into a Consent Order with the State that requires the group to perform a soils investigation at the site. The soils investigation has been completed and submitted to the State for review. The State has the right to require the removal of contaminated soils and to expand the scope of work to include investigation of groundwater contamination. The Consent Order does not require the group to remediate the site. Our share of the cost of the soils investigation was not material and has been expensed. At this time, there is not a specific proposal or budget with respect to additional studies or the clean-up of the site. Thus, no reserve has been established for this matter.

In November, 2003 we and other members of the Davis Chemical Site group received notices under Proposition 65 from Consumer Defense Group Action (“CDGA”) alleging violations of California’s Proposition 65 occurring in connection with the site. Proposition 65 prohibits the discharge of listed chemicals in a manner that reaches or threatens to reach a source of drinking water and requires warnings on products or locations known to contain listed chemicals. The notice letter sent by the CDGA is a prerequisite for bringing a private enforcement action. Although the statutory notice period expired in January 2004, the Company is unaware of any lawsuit having been filed against it or any member of the group. Thus, no reserve has been established for this Proposition 65 matter.

We used an environmental firm, specializing in hydrogeology, to perform periodic monitoring of the groundwater at the facility in Newbury Park, California that we leased for approximately forty years. We vacated the building in May 2002. Certain contaminants have been found in the local groundwater. Monitoring results over a number of years indicate that contaminants are coming from adjacent facilities. It is currently not possible to determine the ultimate amount of future clean-up costs, if any, that may be required of us for this site. There are no claims pending with respect to environmental matters at the Newbury Park site. Accordingly, no reserve for clean-up has been provided at this time.

Employees

As of January 25, 2004, we had 587 full-time employees. There were 133 employees in research and development, 116 in sales, marketing and field services, and 66 in general, administrative and finance. The remaining 272 employees support operational activities, including product and test engineering, manufacturing, distribution and quality functions. We have never had a work stoppage and only our Mexican operation has unionized employees. Our employee relations during the last fiscal year have been, and remain, satisfactory. Competition for key design and application engineers is significant.

During fiscal year 2003, we reduced a limited amount of headcount associated with the closure of our Corpus Christi, Texas wafer fabrication facility. In fiscal year 2004, we reduced a limited amount of headcount associated with our test and measurement and power management product lines.

Government Regulations

We are required to comply with numerous government regulations that are normal and customary to manufacturing businesses that operate in our markets and operating locations.

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Our sales that serve the military and aerospace markets primarily consist of products from the Rectifier, Assembly, and Other Products segment that have been qualified to be sold in these markets by the U.S. Department of Defense (DOD). In order to maintain these qualifications, we must comply with certain specifications promulgated by the DOD. As part of maintaining these qualifications, we are routinely audited by DOD personnel. Based on current specifications, we believe we can maintain our qualifications for the foreseeable future. However, these specifications could be modified by the DOD in the future or we could become subject to other government requirements, which could make the manufacturing of these products more difficult and thus, could adversely impact our profitability in those product lines. The U.S. State Department has determined that a small number of special assemblies from the Rectifier, Assembly, and Other Products segment are subject to the International Traffic in Arms Regulations (ITAR). We have a Technical Assistance Agreement in place that permits us to assemble these products in Mexico. Shipment of these products internationally requires a State Department license. Sales of products subject to the ITAR are not material relative to the total sales of the Company.

Available Information

We maintain a website at www.semtech.com. We make available free of charge, either by direct access or a link to the SEC website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. Our reports filed with, or furnished to, the SEC are also available directly at the SEC’s website at www.sec.gov.

RISK FACTORS

You should carefully consider and evaluate all of the information in this Form 10-K, including the risk factors listed below. The risks described below are not the only ones facing our company. Additional risks not now known to us or that we currently deem immaterial may also impair our business operations.

If any of these risks actually occur, our business could be materially harmed. If our business is harmed, the trading price of our common stock could decline.

This Form 10-K also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this Form 10-K. We undertake no duty to update any of the forward-looking statements after the date of this Form 10-K.

Economic decline may have adverse consequences for our business

We sell our products into several commercial markets, primarily the computer, communication and industrial end-markets, whose performance is tied to the overall economy. Many of these industries were severely impacted in calendar years 2001 and 2002 due to an economic slowdown in the United States and globally. If economic conditions were to once again worsen or a wider global slowdown were to occur, demand for our products may be reduced. In addition, economic slowdowns may also affect our customers’ ability to pay for our products. Accordingly, economic slowdowns may harm our business.

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The cyclical nature of the electronics and semiconductor industries may limit our ability to maintain or increase revenue and profit levels during industry downturns

The semiconductor industry is highly cyclical and has experienced significant downturns, which are characterized by reduced product demand, production overcapacity, increased levels of inventory, industry-wide fluctuations in the demand for semiconductors and the erosion of average selling prices. The occurrence of these conditions has adversely affected our business in the past. In fiscal year 2002, our net sales declined by 26% compared to the prior year as a result of a dramatic slowdown in the industry. Past downturns in the semiconductor industry have resulted in a sudden impact on the semiconductor and capital equipment markets. Consequently, any future downturns in the semiconductor industry may harm our business.

We compete against larger, more established entities and our market share may be reduced if we are unable to respond to our competitors effectively

The semiconductor industry is intensely competitive and is characterized by price erosion, rapid technological change and design and other technological obsolescence. We compete with domestic and international semiconductor companies, many of which have substantially greater financial and other resources with which to pursue engineering, manufacturing, marketing and distribution of their products. Some of these competitors include: Texas Instruments, National Semiconductor, Linear Technology, Maxim Integrated Products, Fairchild Semiconductor and Intersil Semiconductor, with respect to our power management products; ST Microelectronics N.V., with respect to our protection products; Analog Devices, Maxim Integrated Products, ON Semiconductor and Micrel Semiconductor, with respect to our test and measurement products; Zarlink Semiconductor and Silicon Laboratories, with respect to our advanced communications products; and Alps Electric and Synaptics Inc., with respect to our HID products. We expect continued competition from existing competitors as well as competition from new entrants in the semiconductor market. Our ability to compete successfully in the rapidly evolving area of integrated circuit technology depends on several factors, including:

• success in designing and manufacturing new products that implement new technologies;

• protection of our processes, trade secrets and know-how;

• maintaining high product quality and reliability;

• pricing policies of our competitors;

• performance of competitors’ products;

• ability to deliver in large volume on a timely basis;

• marketing, manufacturing and distribution capability; and

• financial strength.

To the extent that our products achieve market success, competitors typically seek to offer competitive products or lower prices, which, if successful, could harm our business.

Fluctuations and seasonality and economic downturns in any of our end-markets may have adverse consequences for our business

Many of our products are used in personal computers and related peripherals. For the fiscal year ended January 25, 2004, approximately 40% of our sales are used in computer applications. Industry-wide fluctuations in demand for desktop and notebook computers have in the past, and may in the future, harm our business. In addition, our past results have reflected some seasonality, with demand levels being higher in computer segments during the third and fourth quarters of the year in comparison to the first and second quarters.

For the fiscal year ended January 25, 2004, shipment of our products to the automated test equipment (ATE) customers represented approximately 12% of our net sales. Consequently, a downturn in the ATE market may adversely affect our business.

In fiscal year 2004, we saw demand from cellular phone manufacturers increase throughout the year, and we estimated 32% of our sales in the fourth quarter of fiscal year 2003 were tied to this end-market application. Any decline in the number of cellular phones made, especially feature-rich phones with color displays, could adversely affect our business.

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We obtain many essential components and materials and certain critical manufacturing services from a limited number of suppliers and subcontractors, including foreign-based entities

Our reliance on a limited number of outside subcontractors and suppliers for silicon wafers, packaging, test and certain other processes involves several risks, including potential inability to obtain an adequate supply of required components and reduced control over the price, timely delivery, reliability and quality of components. These risks may be attributable to several factors, including limitation on resources, labor problems, equipment failures or the occurrence of natural disasters. There can be no assurance that problems will not occur in the future with suppliers or subcontractors. Disruption or termination of our supply sources or subcontractors could significantly delay our shipments and harm our business. Delays could also damage relationships with current and prospective customers. Any prolonged inability to obtain timely deliveries or quality manufacturing or any other circumstances that would require us to seek alternative sources of supply or to manufacture or package certain components internally could limit our growth and harm our business.

Most of our outside subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located in foreign countries, including China, Malaysia, the Philippines and Germany. For fiscal year 2004, approximately 62% of our silicon in terms of finished wafers, was supplied by a third-party foundry in China, and this percentage could be even higher in future years. While we do have some redundancy of fab processes by using multiple outside foundries, any interruption of supply by one or more of these foundries could materially impact us. Likewise, we maintain some amount of business interruption insurance to help reduce the risk of wafer supply interruption, but we are not fully insured against such risk.

A majority of our package and test operations are performed by third-party contractors that are based in Malaysia, the Philippines and China. Our international business activities, in general, are subject to a variety of potential risks resulting from certain political and economic uncertainties. Any political turmoil or trade restrictions in these countries, particularly China, could limit our ability to obtain goods and services from these suppliers and subcontractors. The effect of an economic crisis or a political turmoil on our suppliers located in these countries may impact our ability to meet the demands of our customers. If we find it necessary to transition the goods and services received from our existing suppliers or subcontractors to other firms, we would likely experience an increase in production costs and a delay in production associated with such a transition, both of which could have a significant negative effect on our operating results, as these risks are substantially uninsured.

We may be unsuccessful in developing and selling new products required to maintain or expand our business

We operate in a dynamic environment characterized by price erosion, rapid technological change and design and other technological obsolescence. Our competitiveness and future success depend on our ability to achieve design wins for our products with current and future customers and introduce new or improved products that meet customer needs while achieving favorable margins. A failure to achieve design wins, to introduce these new products in a timely manner or to achieve market acceptance for these products, could harm our business.

The introduction of new products presents significant business challenges because product development commitments and expenditures must be made well in advance of product sales. The success of a new product depends on accurate forecasts of long-term market demand and future technological developments, as well as on a variety of specific implementation factors, including:

• timely and efficient completion of process design and development;

• timely and efficient implementation of manufacturing and assembly processes;

• product performance;

• the quality and reliability of the product; and

• effective marketing, sales and service.

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The failure of our products to achieve market acceptance due to these or other factors could harm our business.

Our products may be found to be defective, product liability claims may be asserted against us and we may not have sufficient liability insurance

One or more of our products may be found to be defective after shipment, requiring a product replacement, recall or a software solution, that would cure the defect but impede performance of the product. We may also be subject to product returns which could impose substantial costs and harm our business.

Product liability claims may be asserted with respect to our technology or products. While we maintain some insurance, there can be no assurance that we have obtained a sufficient amount of insurance coverage, that asserted claims will be within the scope of coverage of the insurance, or that we will have sufficient resources to satisfy any asserted claims.

The costs associated with our general product warranty policy and our indemnification of certain customers, distributors, and other parties could be higher in future periods

Our general warranty policy provides for repair or replacement of defective parts or a refund of the purchase price. In certain instances, we have agreed to other warranty terms, including some indemnification provisions, that could prove to be significantly more costly. If there is a substantial increase in the rate of customer claims, if our estimate of probable losses relating to identified warranty exposures prove inaccurate, or our efforts to contractually limit liability prove inadequate, we may record a charge against future cost of sales. Other than the customer dispute resolved in March 2003, over at least the last decade, warranty expense has been immaterial to our financial statements.

We indemnify certain customers, distributors, and other parties for damages, costs, and attorneys fees for certain matters, such as acts or omission of Company employees or if our products are alleged to infringe third-party intellectual property rights. In some cases there are limits on and exceptions to our potential liability for this indemnification. We cannot estimate the amount of potential future payments, if any, that we might be required to make as a result of these agreements. Over at least the last decade, we have not incurred any significant expense as a result of these agreements. Accordingly, we have not accrued any amounts for such indemnification obligations. However, there can be no assurances that we will not incur expense under these indemnification provisions in the future.

Our share price could be subject to extreme price fluctuations, and shareholders could have difficulty trading shares

The markets for high technology companies in particular have been volatile, and the market price of our common stock has been and may continue to be subject to significant fluctuations. Fluctuations could be in response to operating results, announcements of technological innovations and market conditions for technology stocks in general. Additionally, the stock market in recent years has experienced extreme price and volume fluctuations that often have been unrelated to the operating performance of individual companies. These market fluctuations, as well as general economic conditions, may adversely affect the price of our common stock.

In the past, securities class action litigation has often been instituted against a company following periods of volatility in the company’s stock price. This type of litigation, if filed against us, could result in substantial costs and divert our management’s attention and resources.

In addition, the future sale of a substantial number of shares of common stock by us or by our existing stockholders may have an adverse impact on the market price of the shares of common stock. There can be no assurance that the trading price of our common stock will remain at or near its current level.

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We sell and trade with foreign customers, which subjects our business to increased risks applicable to international sales

Sales to foreign customers accounted for approximately 69% of net sales in the fiscal year ended January 25, 2004. Sales to our customers located in Taiwan and Korea constituted 28% and 21%, respectively, of net sales for fiscal year 2004. International sales are subject to certain risks, including unexpected changes in regulatory requirements, tariffs and other barriers, political and economic instability, difficulties in accounts receivable collection, difficulties in managing distributors and representatives, difficulties in staffing and managing foreign subsidiary operations and potentially adverse tax consequences. These factors may harm our business. Our use of the Semtech name may be prohibited or restricted in some countries, which may negatively impact our sales efforts. In addition, substantially all of our foreign sales are denominated in U.S. dollars and currency exchange fluctuations in countries where we do business could harm us by resulting in pricing that is not competitive with prices denominated in local currencies.

The outbreak of severe acute respiratory syndrome (SARS) or other heath related issues, could impact our customer or supply base, especially in Asia

A large percentage of our sales are to customers located in Asia and a large percentage of our products are manufactured in Asia. Our largest customer base in Asia is located in Taiwan. Our largest wafer source is located in China. SARS or other health related issues could have a negative impact on consumer demand, on travel needed to secure new business, on transportation of our products from our suppliers or to our customers, or on workers needed to manufacture our products or our customers’ products.

Our foreign currency exposures may change over time as the level of activity in foreign markets grows and could have an adverse impact upon financial results

As a global enterprise, we face exposure to adverse movements in foreign currency exchange rates. Certain of our assets, including certain bank accounts, exist in nondollar-denominated currencies, which are sensitive to foreign currency exchange rate fluctuations. The nondollar-denominated currencies are principally the Euro, Swiss Francs, and British Pounds Sterling. If the value of the United States dollar weakens relative to these specific currencies, our cost of doing business in terms of United States dollars goes up. With the growth of our international business, our foreign currency exposures may grow and under certain circumstances, could harm our business.

We do a very limited amount of hedging of our foreign exchange exposure. In some cases, we purchase forward contracts that lock in our right to purchase foreign currencies at an agreed upon rate. In other cases, we convert United Sates dollars into foreign currency in advance of the expected payment. The use of forward contracts to hedge foreign exchange exposure may be required to be marked-to-market each quarter and likewise, can create volatility in net income not directly tied to our operating results.

Our future operating results may fluctuate, fail to match past performance or fail to meet expectations

Our operating results may fluctuate in the future, may fail to match our past performance or fail to meet the expectations of analysts and investors. Our operating results may fluctuate as a result of:

• general economic conditions in the countries where we sell our products;

• seasonality and variability in the computer market and our other end-markets;

• the timing of new product introductions by us and our competitors;

• product obsolescence;

• the scheduling, rescheduling or cancellation of orders by our customers;

• the cyclical nature of demand for our customers’ products;

• our ability to develop new process technologies and achieve volume production;

• changes in manufacturing yields;

• movements in exchange rates, interest rates or tax rates;

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• the availability of adequate supply commitments from our outside suppliers; and

• the manufacturing and delivery capabilities of our subcontractors.

As a result of these factors, our past financial results are not necessarily indicative of our future results.

We receive a significant portion of our revenues from a small number of customers and the loss of any one of these customers or failure to collect a receivable from them could adversely affect our operations and financial position

Historically, we have had significant customers that individually accounted for 10% or more of consolidated revenues in certain quarters or represented 10% or more of net accounts receivables at any given date. The identity of our largest customers has varied from year to year. In fiscal year 2002, one of our ATE end-customers, including its subcontractors, accounted for approximately 13% of net sales. For fiscal year 2004, two of our Asian distributors accounted for approximately 14% and 10%, respectively, of net sales. As of the end of fiscal year 2004, one of these Asian distributors accounted for approximately 11% of net accounts receivable. Receivables from our customers are not secured by any type of collateral and likewise, are subject to the risk of being uncollectible.

We primarily conduct our sales on a purchase order basis, rather than pursuant to long-term supply contracts. The loss of any significant customer, any material reduction in orders by any of our significant customers, the cancellation of a significant customer order or the cancellation or delay of a customer’s significant program or product could harm our business.

We have acquired and may continue to acquire other companies and may be unable to successfully integrate these companies into our operations

In the past, we have expanded our operations through strategic acquisitions, and we may continue to expand and diversify our operations with additional acquisitions. If we are unsuccessful in integrating these companies into our operations or if integration is more difficult than anticipated, then we may experience disruptions that could harm our business. Some of the risks that may affect our ability to integrate acquired companies include those associated with:

• unexpected losses of key employees or customers of the acquired company;

• conforming the acquired company’s standards, processes, procedures and controls with our operations;

• coordinating new product and process development;

• hiring additional management and other critical personnel; and

• increasing the scope, geographic diversity and complexity of our operations.

We must commit resources to product production prior to receipt of purchase commitments and could lose some or all of the associated investment

Sales are made primarily on a current delivery basis, pursuant to purchase orders that may be revised or cancelled by our customers without penalty, rather than pursuant to long-term supply contracts. Some contracts require that we maintain inventories of certain products at levels above the anticipated needs of our customers. As a result, we must commit resources to the production of products without binding purchase commitments from customers. Our inability to sell products after we devote significant resources to them could harm our business.

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The loss of any of our key personnel or the failure to attract or retain the specialized technical and management personnel could impair our ability to grow our business

Our future success depends upon our ability to attract and retain highly qualified technical, marketing and managerial personnel. We are dependent on a relatively small group of key technical personnel with analog and mixed-signal expertise. Personnel with highly skilled managerial capabilities, analog and mixed-signal design expertise are scarce and competition for personnel with these skills is intense. There can be no assurance that we will be able to retain existing key employees or that we will be successful in attracting, integrating or retaining other highly qualified personnel in the future. If we are unable to retain the services of existing key employees or are unsuccessful in attracting new highly qualified employees, our business could be harmed.

We are subject to government regulations which impose operational requirements

We and our suppliers are subject to a variety of United States federal, foreign, state and local governmental laws, rules and regulations, including those related to the use, storage, handling, discharge or disposal of certain toxic, volatile or otherwise hazardous chemicals used in the manufacturing process. If we or our suppliers were to incur substantial additional expenses to acquire equipment or otherwise comply with environmental regulations, product costs could significantly increase, thus harming our business. We are also subject to laws, rules, and regulations related to export licensing and customs requirements, including the North American Free Trade Agreement and State Department and Commerce Department rules. Failure to comply with present or future laws, rules and regulations of any kind that govern our business could result in suspension of all or a portion of production, cessation of all or a portion of operations, or the imposition of significant administrative, civil, or criminal penalties, any of which could harm our business.

Major earthquakes may cause us significant losses

Our corporate headquarters, a portion of our assembly and research and development activities and certain other critical business operations are located near major earthquake fault lines. We do not maintain earthquake insurance and could be harmed in the event of a major earthquake.

Terrorist attacks, war and other acts of violence may negatively affect our operations and your investment

Terrorist attacks, such as the attacks that took place on September 11, 2001, wars, such as the war in Iraq, and other acts of violence, such as those that may result from the increasing tension in the Middle East and the Korean peninsula, or any other national or international crisis, calamity or emergency, may result in interruption to the business activities of many entities, business losses and overall disruption of the U.S. economy at many levels. These events or armed conflicts may directly impact our physical facilities or those of our customers and suppliers. Additionally, these events or armed conflicts may cause some of our customers or potential customers to reduce the level of expenditures on their services and products that ultimately may reduce our revenue. The consequences of these reductions are unpredictable, and we may not be able to foresee events that could have an adverse effect on our business. For example, as a result of these events, insurance premiums for businesses may increase and the scope of coverage may be decreased. Consequently, we may not be able to obtain adequate insurance coverage for our business and properties. A “high” or “Orange” or “severe” or “Red” threat condition announced by the Homeland Security Advisory System or similar agency and any consequent effect on the transportation industry may adversely affect our ability to timely import materials from our suppliers located outside the United States or impact our ability to deliver our products to our customers without incurring significant delays. To the extent that these disruptions result in delays or cancellations of customer orders, a general decrease in corporate spending, or our inability to effectively market our services and products, our business and results of operations could be harmed.

We may be unable to adequately protect our intellectual property rights

We pursue patents for some of our new products and unique technologies, but we rely primarily on a combination of nondisclosure agreements and other contractual provisions, as well as our employees’ commitment to confidentiality

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and loyalty, to protect our know-how and processes. We intend to continue protecting our proprietary technology, including through trademark and copyright registrations and patents. Despite this intention, we may not be successful in achieving adequate protection. Our failure to adequately protect our material know-how and processes could harm our business. There can be no assurance that the steps we take will be adequate to protect our proprietary rights, that our patent applications will lead to issued patents, that others will not develop or patent similar or superior products or technologies, or that our patents will not be challenged, invalidated, or circumvented by others. Furthermore, the laws of the countries in which our products are or may be developed, manufactured or sold may not protect our products and intellectual property rights to the same extent as laws in the United States.

The semiconductor industry is characterized by frequent claims of infringement and litigation regarding patent and other intellectual property rights. Due to the number of competitors, patent infringement is an ongoing risk since other companies in our industry could have patent rights that may not be identifiable when we initiate development efforts. Litigation may be necessary to enforce our intellectual property rights and we may have to defend ourselves against infringement claims. Any such litigation could be very costly and may divert our management’s resources. If one of our products is found to infringe, we may have liability for past infringement and may need to seek a license going forward. If a license is not available or if we are unable to obtain a license on terms acceptable to us, we would either have to change our product so that it does not infringe or stop making the product.

We could be required to register as an investment company and become subject to substantial regulation that would interfere with our ability to conduct our business

The Investment Company Act of 1940 requires the registration of companies which are engaged primarily in the business of investing, reinvesting or trading in securities, or which are engaged in the business of investing, reinvesting, owning, holding or trading in securities and which own or propose to acquire investment securities with a value of more than 40% of the company’s assets on an unconsolidated basis (other than U.S. government securities and cash). We are not engaged primarily in the business of investing, reinvesting or trading in securities, and we intend to invest our cash and cash equivalents in U.S. government securities to the extent necessary to take advantage of the 40% safe harbor. To manage our cash holdings, we invest in short-term instruments consistent with prudent cash management and the preservation of capital and not primarily for the purpose of achieving investment returns. U.S. government securities generally yield lower rates of income than other short-term instruments in which we have invested to date. Accordingly, investing substantially all of our cash and cash equivalents in U.S. government securities could result in lower levels of interest income and net income.

If we were deemed an investment company and were unable to rely upon a safe harbor or exemption under the Investment Company Act, we would among other things be prohibited from engaging in certain businesses or issuing certain securities. Certain of our contracts might be voidable, and we could be subject to civil and criminal penalties for noncompliance.

We are subject to review by taxing authorities, including the Internal Revenue Service

We are subject to review by domestic and foreign taxing authorities, including the Internal Revenue Service (IRS). The IRS recently completed a routine review of our 1995 through 2001 tax filings. The proposed audit adjustments will not have a material impact on our financial statements.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the information in this Form 10-K and in the documents that are incorporated by reference, including the risk factors in this section, contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In many cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of these terms and other comparable terminology. These statements are only predictions. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including the risks faced by us described above and elsewhere in this Form 10-K.

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ITEM 2. PROPERTIES

Our headquarters facility is located in Camarillo, California where we own an approximately 85,000 square foot building that was built in March 2002. The original parcel on which the headquarters is located will accommodate substantial expansion, and we purchased a vacant lot adjacent to the headquarters when it became available in fiscal year 2003. Prior to occupying the Camarillo headquarters, we leased a facility in Newbury Park, California. The Camarillo facility supports a very limited amount of test and probe activity, as well as all of our inside sales, marketing and administrative offices. The Camarillo facility serves as the business headquarters for our Rectifier, Assembly and Other Products segment and all the product lines that make up the Standard Semiconductor Products segment, with the exception of our test and measurement product line that is headquartered in San Diego, California.

We own a 30,000 square foot building in Reynosa, Mexico that supports the production needs of our rectifier and assembly product lines.

We also lease a 44,000 square foot facility in Corpus Christi, Texas, which housed a wafer fabrication line, production testing and certain engineering functions for our protection product line (part of the Standard Semiconductor Products segment). In December 2002, we stopped production in the Corpus Christi facility as part of the strategic move to obtain nearly all of our silicon wafers from outside sources. The Corpus Christi lease runs through December 2021, but we have the ability to terminate it in 2011. We are investigating sublease opportunities and exploring other alternatives with respect to this property.

Our San Diego, California facility is an approximately 25,000 square foot building that houses design, test and administrative functions and serves as the business headquarters for our test and measurement product line (part of the Standard Semiconductor Product segment). The lease on this facility runs through September 2009.

We also lease space to house certain of our other design, sales and marketing and operations facilities in Santa Clara, California, Raleigh, North Carolina; Austin, Texas; China; England; France; Germany; Japan; Korea; the Philippines; Scotland; Switzerland; and Taiwan. Some space in New York City that previously housed our HID product group has been sublet and we are seeking subtenants for the remaining space.

In December 2000, we purchased a parcel of land in San Diego, California for approximately $7.9 million and began exploring plans to build a facility to support our test and measurement product line. We deferred the project due to the significant downturn in the product line’s business. We are exploring the possible sale of this parcel of land.

We believe that our existing leased and owned space is more than adequate for our current operations, and that suitable replacement and additional space will be available in the future on commercially reasonable terms.

ITEM 3. LEGAL PROCEEDINGS

We periodically become subject to legal proceedings in the ordinary course of our business. During fiscal year 2003, Maxim Integrated Products, Inc. announced that it had filed a patent infringement lawsuit against us. This lawsuit was settled during the fourth quarter of fiscal year 2004 on confidential terms that have no material effect on our financial condition. We are not currently involved in any legal proceedings that we believe will materially and adversely affect our business.

On June 22, 2001, we were notified by the California Department of Toxic Substances Control (“State”) that we may have liability associated with the clean-up of the one-third acre Davis Chemical Company site in Los Angeles, California. We have been included in the clean-up program because we are one of the companies that used the Davis Chemical Company site for waste recycling and/or disposal between 1949 and 1990. We have joined with other potentially responsible parties in an effort to resolve this matter with the State. The group has entered into a Consent Order with the State that requires the group to perform a soils investigation at the site. The soils investigation has been completed and submitted to the State for review. The State has the right to require the removal of contaminated soils and to expand the scope of work to include investigation of groundwater contamination. The Consent Order does not require the group to remediate the site. Our share of the cost of the soils investigation was not material and has been expensed. At this time there is not a specific proposal or budget with respect to additional studies or the clean-up of the site. Thus, no reserve has been established for this matter.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the fourth quarter of the fiscal year covered by this report, no matter was submitted to a vote of the security holders through the solicitation of proxies or otherwise.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Market Information

Our common stock is traded on the Nasdaq National Market under the symbol “SMTC.” The following table sets forth, for the periods indicated, the high and low sale prices of our common stock, as reported on the Nasdaq National Market, giving effect to all stock splits through the date hereof.

	High		Low
Fiscal year ending January 26, 2003:
First Quarter	$	39.72	$	28.32
Second Quarter	$	37.43	$	18.05
Third Quarter	$	23.10	$	8.72
Fourth Quarter	$	18.39	$	10.67
Fiscal year ending January 25, 2004:
First Quarter	$	17.09	$	11.45
Second Quarter	$	17.94	$	14.09
Third Quarter	$	23.20	$	14.99
Fourth Quarter	$	27.14	$	20.06

Holders

On April 1, 2004, the reported last sale price of our common stock on the Nasdaq National Market was $23.36 per share. As of April 1, 2004, we had approximately 9,558 common stockholders of record.

Dividends

The payment of dividends on our common stock is within the discretion of our board of directors. Currently, we intend to retain earnings to finance the growth of our business. We have not paid cash dividends on our common stock during the two most recent fiscal years and the board of directors does not expect to declare cash dividends on the common stock in the foreseeable future.

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ITEM 6. SELECTED FINANCIAL DATA

The selected historical financial data for each of the fiscal years in the five-year period ended January 25, 2004 have been derived from our audited financial statements. Such information for the three fiscal years ended January 25, 2004 is contained in and should be read in conjunction with our audited financial statements and accompanying notes included in this Form 10-K.

Consolidated Statements of Income Data:

	Fiscal Year Ended
	Jan. 30, 2000		Jan. 28, 2001		Jan. 27, 2002		Jan. 26, 2003		Jan. 25, 2004
Net Sales	$	173,768	$	256,685	$	191,210	$	192,958	$	192,079
Cost of Sales		82,731		111,819		97,920		83,097		81,332
Gross Profit		91,037		144,866		93,290		109,861		110,747
Operating costs and expenses:
Selling, general & administrative		27,206		36,164		33,798		34,426		37,207
Product development & engineering		20,342		32,008		29,744		31,336		30,371
One-time costs		531		—		2,727		13,202		—
Total operating costs and expenses		48,079		68,172		66,269		78,964		67,578
Operating income		42,958		76,694		27,021		30,897		43,169
Interest and other income (expense), net		1,146		9,334		9,095		15,187		(451	)
Income before taxes		44,104		86,028		36,116		46,084		42,718
Provision for taxes		14,709		25,808		10,113		11,903		10,252
Net income	$	29,395	$	60,220	$	26,003	$	34,181	$	32,466
Earnings per share:
Basic	$	0.48	$	0.91	$	0.37	$	0.47	$	0.44
Diluted	$	0.42	$	0.79	$	0.33	$	0.44	$	0.42
Weighted average number of shares:
Basic		61,670		66,247		69,983		73,013		73,570
Diluted		70,630		76,527		77,747		77,789		77,504

Consolidated Balance Sheet Data:

	Balances as of
	Jan. 30, 2000		Jan. 28, 2001		Jan. 27, 2002		Jan. 26, 2003		Jan. 25, 2004
Cash, cash equivalents and investments	$	63,291	$	530,979	$	543,502	$	489,047	$	275,477
Working capital		96,687		530,737		402,970		420,912		217,092
Total assets		149,350		677,288		690,401		620,546		408,473
Convertible subordinated notes		—		400,000		364,320		241,570		—
Total stockholders’ equity	$	125,482	$	242,357	$	298,795	$	341,440	$	379,610

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with “Selected Consolidated Financial Data” and our consolidated financial statements and related notes included elsewhere in this Form 10-K. In addition to historical information, the discussion in this Form 10-K contains certain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated by these forward-looking statements due to factors, including but not limited to, those set forth under “Risk Factors” and elsewhere in this Form 10-K. We assume no obligation to update any of the forward-looking statements after the date of this Form 10-K.

Overview

We design, produce and market a broad range of products that are sold principally to customers in the computer, communications and industrial markets. Our products are designed into a wide variety of end applications, including notebook and desktop computers, computer gaming systems, personal digital assistants (PDAs), cellular phones, wireline networks, wireless base stations and automated test equipment (ATE). Products within the communications market include products for local area networks, metro and wide area networks, cellular phones and base stations. Industrial applications include ATE, medical devices and factory automation systems. Our end-customers are primarily original equipment manufacturers and their suppliers, including Agilent, Cisco, Compal Electronics, Dell, Hewlett Packard, IBM, Intel, Lucky Goldstar, Microsoft, Motorola, Quanta Computer, Samsung, Sony and Unisys.

We recognize product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectibility is probable. Product design and engineering revenue is recognized during the period in which services are performed. We defer revenue recognition on shipment of certain products to distributors where return privileges exist until the products are sold through to end-users. Gross profit is equal to our net sales less our cost of sales. Our cost of sales includes materials, shipping costs, direct labor and overhead. We determine the cost of inventory by the first-in, first-out method. Our operating costs and expenses generally consist of selling, general and administrative (SG&A), product development and engineering costs (R&D), costs associated with acquisitions, and other operating related charges.

Most of our sales to customers are made on the basis of individual customer purchase orders. Many large commercial customers include terms in their purchase orders, which provide liberal cancellation provisions. Trends within the industry toward shorter lead-times and “just-in-time” deliveries have resulted in our reduced ability to predict future shipments. As a result, we rely on orders received and shipped within the same quarter for a significant portion of our sales. Sales made directly to original equipment manufacturers during fiscal year 2004 were 49% of net sales. The remaining 51% of net sales were made through independent distributors.

We divide and operate our business based on two reportable segments: Standard Semiconductor Products and Rectifier, Assembly and Other Products. We evaluate segment performance based on net sales and operating income of each segment. We do not track segment data or evaluate segment performance on additional financial information. We do not track balance sheet items by individual reportable segments. As such, there are no separately identifiable segment assets nor are there any separately identifiable statements of income data (below operating income). The Standard Semiconductor Products segment makes up the vast majority of overall sales and includes our power management, protection, test and measurement, advanced communications and human input device product lines. The Rectifier, Assembly and Other Products segment includes our line of assembly and rectifier devices, which are the remaining products from our founding as a supplier into the military and aerospace market. It also includes other products made up of custom integrated circuits and foundry sales.

Our business involves reliance on foreign-based entities. Most of our outside subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located in foreign countries, including China, Malaysia, the Philippines and Germany. For the fiscal year ended January 25, 2004, approximately 62% of our silicon in terms of wafers purchased was manufactured in China. Foreign sales for fiscal year 2004 constituted approximately 69% of our net sales. Approximately 88% of foreign sales in fiscal year 2004 were to customers located in the Asia-Pacific region. The remaining sales were to customers in Europe.

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In the past, we have made several small acquisitions in order to increase our pool of skilled technical personnel and penetrate new market segments such as test and measurement, advanced communications and system management devices. These acquisitions include: USAR Systems Incorporated; Practical Sciences, Inc.; Acapella Limited; and Edge Semiconductor. The acquisitions of USAR, Acapella and Edge were accounted for as poolings of interests.

Critical Accounting Policies and Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

On an ongoing basis, we evaluate and discuss with our audit committee our estimates, including those related to our allowance for doubtful accounts and sales returns, inventory reserves, asset impairments and income taxes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Our critical accounting policies and estimates do not vary between our two reportable segments. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies, among others, affect the significant judgments and estimates we use in the preparation of our consolidated financial statements:

Accounting for Temporary and Long-Term Investments

Our temporary and long-term investments consist of government, bank and corporate obligations. Temporary investments have original maturities in excess of three months, but mature within twelve months of the balance sheet date. Long-term investments have maturities in excess of one year from the date of the balance sheet. We classify our investments as “available for sale” because we expected to possibly sell some securities prior to maturity. We included $118,000, $1.4 million and $3.8 million of unrealized gain, net of tax, in the comprehensive income portion of our Consolidated Statements of Stockholders’ Equity and Comprehensive Income for fiscal year 2004, fiscal year 2003 and fiscal year 2002, respectively.

Allowance for Doubtful Accounts

We evaluate the collectibility of our accounts receivable based on a combination of factors. If we are aware of a customer’s inability to meet its financial obligations to us, we record an allowance to reduce the net receivable to the amount we reasonably believe we will be able to collect from the customer. For all other customers, we recognize allowances for doubtful accounts based on the length of time the receivables are past due, the current business environment and our historical experience. If the financial condition of our customers were to deteriorate or if economic conditions worsen, additional allowances may be required in the future.

Revenue Recognition

We recognize product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectibility is probable. Product design and engineering revenue is recognized during the period in which services are performed. We defer revenue recognition on shipment of certain products to distributors where return privileges exist until the products are sold through to end-users. In addition, we record a provision for estimated sales returns in the same period as the related revenues are recorded. We base these estimates on historical sales returns and other known factors. Actual returns could be different from our estimates and current provisions for sales returns and allowances, resulting in future charges to earnings.

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Inventory Valuation

Our inventories are stated at lower of cost or market and consist of materials, labor and overhead. We determine the cost of inventory by the first-in, first-out method. At each balance sheet date, we evaluate our ending inventories for excess quantities and obsolescence. This evaluation includes analyses of sales levels by product and projections of future demand. In order to state our inventory at lower of cost or market, we maintain reserves against our inventory. If future demand or market conditions are less favorable than our projections, a write-down of inventory may be required, and would be reflected in cost of goods sold in the period the revision is made.

Contingencies and Litigation

We are involved in various disputes and litigation matters as a claimant and as defendant. We record any amounts recovered in these matters when collection is certain. We record liabilities for claims against us when the losses are probable and estimable. Any amounts recorded are based on reviews by outside counsel, in-house counsel and management. Actual results may differ from estimates.

Accounting for Income Taxes

As part of the process of preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves us estimating our actual current tax exposure together with assessing temporary differences resulting from differing treatment of items such as deferred revenue for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the statement of operations.

Significant management judgment is required in determining our provision for income taxes, deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. Management continually evaluates our deferred tax asset as to whether it is likely that the deferred tax assets will be realized. If management ever determined that our deferred tax asset was not likely to be realized, a write-down of that asset would be required and would be reflected as a cost in the accompanying period.

Results of Operations

Fiscal Year 2004 Compared With Fiscal Year 2003

Net Sales. Net sales for fiscal year 2004 were $192.1 million, a less than a 1% decline compared to $192.9 million for fiscal year 2003. Semiconductor and electronics industry conditions, as well as overall macro economic conditions were weak during the first half of fiscal year 2004 but improved during the second half of the year.

Presented below are the estimated sales by end-market. End-products in the computer end-market include notebook and desktop computers, graphics applications, PDAs and computer gaming systems. Communications include cellular phone handsets, wireless base stations, set-top boxes, and networking, broadband and long-hail communications infrastructure equipment. The end-market for industrial/other products includes traditional industrial and automation equipment, power supplies, military, aerospace and medical applications.

(fiscal years, in thousands)	2004				2003
End-Markets	Net Sales		% total		Net Sales		% total		Change
Computer	$	76,809	40	%	$	94,549	49	%	-20	%
Communications	$	76,046	40	%	$	57,887	30	%	32	%
Industrial/Other	$	39,224	20	%	$	40,522	21	%	-2	%
Net sales	$	192,079	100	%	$	192,958	100	%	0	%

Within the computer end-market category, sales to notebook computer customers increased during fiscal year 2004 but were more than offset by a decline in sales of products used in desktop computers and computer gaming

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systems. Sales in the communications category were most impacted by increased sales of products used in cellular handsets. The small decline in the industrial end-market category reflected a modest decline in sales into the automated test equipment (ATE) market.

Standard Semiconductor Products represented 95% of net sales in fiscal year 2004, while 5% were represented by the Rectifier, Assembly and Other Products segment. Details on net sales by reportable segment are presented below.

(fiscal years, in thousands)	2004				2003
Reportable Segment	Net Sales		% total		Net Sales		% total		Change
Standard Semiconductor Products	$	182,522	95	%	$	183,235	95	%	0	%
Rectifier, Assembly and Other Products	$	9,557	5	%	$	9,723	5	%	-2	%
Net Sales	$	192,079	100	%	$	192,958	100	%	0	%

Increased sales of Standard Semiconductor Products reflected strength in portable applications such as notebook computers and cellular phones but was partially offset by weakness in desktop computers and computer gaming systems. Strength in these end-applications was partially offset by weakness in the desktop computer, ATE and other capital intensive end-market segments.

Sales of our Rectifier, Assembly and Other Products segment shrank in fiscal year 2004 due to declining demand for these older technology products and other non-strategic product offerings, which we have de-emphasized due to their lower growth and profit margin opportunities.

Gross Profit. Gross profit for fiscal year 2004 was $110.7 million, compared to $109.9 million for the prior year. This increase was due to higher gross margin on products sold as compared to prior years. We continue to try and develop new products that are more complex, which in turn generally provides for higher gross margin. Our gross margin was 58% for fiscal year 2004, compared to a gross margin of 57% for fiscal year 2003.

In fiscal year 2004 and fiscal year 2003, we sold $1.4 million and $1.3 million, respectively, of inventory of the Standard Semiconductor Products segment that had been reserved during the second quarter of fiscal year 2002.

Operating Costs and Expenses. Operating costs and expenses were $67.6 million for the fiscal year 2004, down from $79.0 million in fiscal year 2003. Detailed below are the operating costs and expenses for fiscal years 2004 and 2003.

(fiscal years, in thousands)	2004				2003
Operating Costs & Exp.	Costs/Exp.		% sales		Costs/Exp.		% sales		Change
Selling, general and administrative	$	37,207	19	%	$	34,426	18	%	8	%
Product development and engineering	$	30,371	16	%	$	31,336	16	%	-3	%
One-time costs	$	—	0	%	$	13,202	7	%	-100	%
Total operating costs and expenses	$	67,578	35	%	$	78,964	41	%	-14	%

The increase in selling, general and administrative costs in fiscal year 2004 reflects added headcount in the area of marketing and field applications support. The decline in product development and engineering costs, also referred to as research and development (R&D), was mostly due to lower spending not related to salaries and headcount levels.

Operating costs and expenses for fiscal year 2003 include one-time costs of $13.2 million; which included $12.0 million of cost associated with the Standard Semiconductor Products segment for the settlement of a customer dispute, $852,000 of cost not assigned to a reportable segment for an expected loss on the future sub-lease of the our New York office and $350,000 of cost assigned to a reportable segment for asset impairment at the Corpus Christi, Texas wafer fabrication facility.

Operating costs and expenses for fiscal year 2004 did not include any significant one-time costs.

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Operating Income. Operating income was $43.2 million in fiscal year 2004, up from operating income of $30.9 million in fiscal year 2003. Operating income was impacted by improvement in gross margin and lower operating costs and expenses.

We evaluate segment performance based on net sales and operating income of each segment. Detailed below is operating income by reportable segment.

(fiscal years, in thousands)	2004				2003
Reportable Segment	Op. Income		% total		Op. Income			% total		Change
Standard Semiconductor Products	$	40,402	94	%	$	29,927		97	%	35	%
Rectifier, Assembly and Other Products	$	2,767	6	%	$	2,172		7	%	27	%
One-time costs	$	—	0	%	$	(1,202	)	-4	%	-100	%
Total operating income	$	43,169	100	%	$	30,897		100	%	40	%

Operating income for the Standard Semiconductor Products increased in fiscal year 2004, having benefited by an increase in gross margin and a decline in one-time costs. Standard Semiconductor Products segment operating income in fiscal year 2003 was negatively impacted by a one-time cost of $12.0 million for the settlement of a customer dispute.

Operating income for the Rectifier, Assembly and Other Products segment improved in fiscal year 2004 due to lower spending and better manufacturing efficiencies.

Interest and Other Income (Expense), Net. Net interest and other income and expense was a net expense of $451,000 for fiscal year 2004, down from income of $15.2 million in fiscal year 2003. Interest, other income and expenses includes interest income from investments, interest expense associated with our previously outstanding convertible subordinated notes, and gain and expense on the extinguishment of debt.

The decline in net interest and other income and expense in fiscal year 2004 was mostly due to a one-time cost of $6.8 million for the retirement of debt, partially offset by $2.9 million of gain on the extinguishment of debt. The interest income portion of this category was lower in fiscal year 2004 due to lower rates of return on our investments as compared to the prior year. Interest and other income in fiscal year 2003 included $12.7 million of gain on the extinguishment of debt.

Provision for Taxes. Provision for income taxes was $10.3 million for fiscal year 2004, compared to $11.9 million in fiscal year 2003. The effective tax rate for fiscal year 2004 and fiscal year 2003 were 24% and 26%, respectively. The decline is due to increased sales by our foreign-based subsidiaries that are in lower tax jurisdictions.

Fiscal Year 2003 Compared With Fiscal Year 2002

Net Sales. Net sales for fiscal year 2003 were $193.0 million, an increase of 1% compared to $191.2 million for fiscal year 2002. Semiconductor and electronics industry conditions, as well as overall macro economic conditions remained weak during fiscal year 2003, following difficult market conditions in fiscal year 2002.

Presented below are the estimated sales by end-market. End-products included in the computer end-market include notebook and desktop computers, graphics applications, PDAs and computer gaming systems. Communications include cellular phone handsets, wireless base stations, set-top boxes, and networking, broadband and long-hail communications infrastructure equipment. The end-market for industrial/other products includes traditional industrial and automation equipment, power supplies, military, aerospace and medical applications.

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(fiscal years, in thousands)	2003				2002
End-Markets	Net Sales		% total		Net Sales		% total		Change
Computer	$	94,550	49	%	$	76,484	40	%	24	%
Communications	$	57,887	30	%	$	61,187	32	%	-5	%
Industrial/Other	$	40,521	21	%	$	53,539	28	%	-24	%
Net sales	$	192,958	100	%	$	191,210	100	%	1	%

Weak unit demand coupled with declines in average selling prices impacted the ability to grow net sales in fiscal year 2003. The computer end-market category was benefited by gains in notebook computer and computer gaming related products that was partially offset by declines in the desktop computer segment. Sales into the communications end-market category were impacted by overall weak conditions in both wireless and wireline applications. The decline in the industrial /other end-market category was largely due to weakness in the ATE market.

Standard Semiconductor Products represented 95% of net sales in fiscal year 2003, while 5% were represented by the Rectifier, Assembly and Other Products segment. Details on net sales by reportable segment are presented below.

(fiscal years, in thousands)	2003				2002
Reportable Segment	Net Sales		% total		Net Sales		% total		Change
Standard Semiconductor Products	$	183,235	95	%	$	175,881	92	%	4	%
Rectifier, Assembly and Other Products	$	9,723	5	%	$	15,329	8	%	-37	%
Net Sales	$	192,958	100	%	$	191,210	100	%	1	%

Sales of our Standard Semiconductor Products segment increased 4% in fiscal year 2003, while Rectifier, Assembly and Other Products’ sales declined 37%. Increased sales of Standard Semiconductor Products reflected strength in computer and portable applications, such as notebook computers and cellular phones. Strength in these end-applications was partially offset by weakness in the desktop computer, ATE and other capital intensive end-market segments.

Sales of our Rectifier, Assembly and Other Products segment shrank in fiscal year 2003 due to declining demand for these older technology products and other non-strategic product offerings, which we have de-emphasized due to their lower growth and profit margin opportunities.

Gross Profit. Gross profit for fiscal year 2003 was $109.9 million, compared to $93.3 million for the prior year. This increase was due to slightly higher sales and higher gross margin due in part to the absence of a write-down of inventory and discontinuation of certain products that occurred in fiscal year 2002. Our gross margin was 57% for fiscal year 2003, compared to a gross margin of 49% for fiscal year 2002.

The write-down of inventory and discontinuation of certain products during fiscal year 2002 was the result of a critical review we conducted during that year. A severe industry downturn and a related drop in demand from end-customers made certain inventories excess and obsolete, and certain product lines non-strategic. Of the $14.0 million write-down of inventory and discontinuation of certain products, $13.4 million was associated with the Standard Semiconductor Products segment and $550,000 with the Rectifier, Assembly and Other Products segment. In fiscal year 2003 and fiscal year 2002, we sold $1.3 million and $68,000, respectively, of inventory of the Standard Semiconductor Products segment that had been reserved during the second quarter of fiscal year 2002.

Operating Costs and Expenses. Operating costs and expenses were $79.0 million, or 41% of net sales, for the fiscal year 2003. Operating costs and expenses for fiscal year 2002 were $66.3 million, or 35% of net sales. Detailed below are the operating costs and expenses for fiscal years 2003 and 2002.

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(fiscal years, in thousands)	2003				2002
Operating Costs & Exp.	Costs/Exp.		% sales		Costs/Exp.		% sales		Change
Selling, general and administrative	$	34,426	18	%	$	33,798	18	%	2	%
Product development and engineering	$	31,336	16	%	$	29,744	15	%	5	%
One-time costs	$	13,202	7	%	$	2,727	1	%	384	%
Total operating costs and expenses	$	78,964	41	%	$	66,269	34	%	19	%

The increase in absolute dollars of operating costs and expenses was the result of modest increases in spending in the areas of sales, general and administration and research and development. The increase in absolute dollars of operating costs and expenses was also impacted by higher one-time costs in fiscal year 2003.

Operating costs and expenses for fiscal year 2003 include one-time costs of $13.2 million; which included $12.0 million of cost associated with the Standard Semiconductor Products segment for the settlement of a customer dispute, $852,000 of cost not assigned to a reportable segment for an expected loss on the future sub-lease of the our New York office and $350,000 of cost assigned to a reportable segment for asset impairment at the Corpus Christi, Texas wafer fabrication facility.

Operating costs and expenses for fiscal year 2002 include one-time costs not assigned to a reportable segment of $2.0 million associated with an approximate 200-person reduction in headcount made in the first half of the year and one-time cost not assigned to a reportable segment of $765,000 associated with a pending Superfund settlement. As of January 26, 2003, substantially all of the one-time headcount reduction costs have been paid out in cash.

Operating Income. Operating income was $30.9 million in fiscal year 2003, up from operating income of $27.0 million in fiscal year 2002. Operating income was impacted by a slight increase in net sales and improvement in gross margin.

We evaluate segment performance based on net sales and operating income of each segment. Detailed below is operating income by reportable segment.

(fiscal years, in thousands)	2003					2002
Reportable Segment	Op. Income			% total		Op. Income			% total		Change
Standard Semiconductor Products	$	29,927		97	%	$	25,439		94	%	18	%
Rectifier, Assembly and Other Products	$	2,172		7	%	$	4,310		16	%	-50	%
One-time costs	$	(1,202	)	-4	%	$	(2,728	)	-10	%	-56	%
Total operating income	$	30,897		100	%	$	27,021		100	%	14	%

Operating income for the Standard Semiconductor Products segment increased in fiscal year 2003, having benefited by an increase in sales and higher gross margin. Standard Semiconductor Products segment operating income in fiscal year 2003 was negatively impacted by a one-time cost of $12.0 million for the settlement of a customer dispute. Gross margin and operating income for the Standard Semiconductor Products segment was negatively impact in fiscal year 2002 by a $13.4 million write-down of inventory and discontinuation of certain products within the Standard Semiconductor Products segment.

The Rectifier, Assembly and Other Products operating income decline in fiscal year 2003 reflected poor efficiencies associated with a lower sales level.

Interest and Other Income, Net. Net interest and other income of $15.2 million was realized in fiscal year 2003, up from $9.1 million in fiscal year 2002. Other income and expenses includes interest income from investments, interest expense associated with our outstanding convertible subordinated notes, and gain on the extinguishment of debt. The increase in interest and other income in fiscal year 2003 was mostly due to $12.7 million of gain on the extinguishment of debt. The interest income portion of Interest and Other Income for fiscal year 2003 was down due to lower rates of return on our investments as compared to the prior year. Interest and other income in fiscal year 2002 included $2.3 million of gain on the extinguishment of debt.

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Provision for Taxes. Provision for income taxes was $11.9 million for the fiscal year ended January 26, 2003, compared to $10.1 million in the fiscal year ended January 27, 2002. The effective tax rate for fiscal year 2003 and fiscal year 2002 were 26% and 28%, respectively. The decline is due to increased sales by our foreign-based subsidiaries that are in lower tax jurisdictions.

Selected Quarterly Financial Data (Unaudited)

The following tables set forth our unaudited consolidated statements of income data for each of the eight quarterly periods ended January 25, 2004, as well as that data expressed as a percentage of our net sales for the quarters presented. You should read this information in conjunction with our consolidated financial statements and related notes appearing in this Form 10-K. We have prepared this unaudited consolidated information on a basis consistent with our audited consolidated financial statements, and, in the opinion of our management, it reflects all normal recurring adjustments that we consider necessary for a fair presentation of our financial position and operating results for the quarters presented. You should not draw any conclusions about our future results from the operating results for any quarter.

	Quarters Ended
	Apr. 28, 2002			July 28, 2002			Oct. 27, 2002			Jan. 26, 2003			Apr. 27, 2003			July 27, 2003			Oct. 26, 2003			Jan. 25, 2004
Net Sales	$	49,188		$	52,071		$	47,168		$	44,531		$	44,017		$	44,569		$	48,112		$	55,381
Cost of Sales		21,108			21,739			20,736			19,514			19,160			19,039			20,230			22,903
Gross Profit		28,080			30,332			26,432			25,017			24,857			25,530			27,882			32,478
Operating costs and expenses:
Selling, general & administrative		8,412			8,816			8,790			8,408			8,946			9,228			9,271			9,762
Product development & engineering		7,524			8,273			7,912			7,627			7,825			7,477			7,533			7,536
One-time costs		—			—			1,202			12,000			—			—			—			—
Total operating costs and expenses		15,936			17,089			17,904			28,035			16,771			16,705			16,804			17,298
Operating income (loss)		12,144			13,243			8,528			(3,018	)		8,086			8,825			11,078			15,180
Interest and other income (expense), net		1,179			1,540			10,649			1,819			2,792			(5,651	)		1,103			1,305
Income (loss) before taxes		13,323			14,783			19,177			(1,199	)		10,878			3,174			12,181			16,485
Provision (benefit) for taxes		3,331			3,696			6,137			(1,261	)		2,611			762			2,923			3,956
Net income	$	9,992		$	11,087		$	13,040		$	62		$	8,267		$	2,412		$	9,258		$	12,529
Earnings per share:
Basic	$	0.14		$	0.15		$	0.18		$	0.00		$	0.11		$	0.03		$	0.13		$	0.17
Diluted	$	0.13		$	0.14		$	0.17		$	0.00		$	0.11		$	0.03		$	0.12		$	0.16
Weighted average number of shares:
Basic		72,681			73,348			73,389			73,056			73,236			73,411			73,704			73,941
Diluted		78,997			78,627			76,721			76,243			76,522			76,985			77,902			78,736
	Quarter Ended
	Apr. 28, 2002			July 28, 2002			Oct. 27, 2002			Jan. 26, 2003			Apr. 27, 2003			July 27, 2003			Oct. 26, 2003			Jan. 25, 2004
Net Sales		100	%		100	%		100	%		100	%		100	%		100	%		100	%		100	%
Cost of Sales		43	%		42	%		44	%		44	%		44	%		43	%		42	%		41	%
Gross Profit		57	%		58	%		56	%		56	%		56	%		57	%		58	%		59	%
Operating costs and expenses:
Selling, general & administrative		17	%		17	%		19	%		19	%		20	%		21	%		19	%		18	%
Product development & engineering		15	%		16	%		17	%		17	%		18	%		17	%		16	%		14	%
One-time costs		0	%		0	%		3	%		27	%		0	%		0	%		0	%		0	%
Total operating costs and expenses		32	%		33	%		38	%		63	%		38	%		37	%		35	%		31	%
Operating income (loss)		25	%		25	%		18	%		-7	%		18	%		20	%		23	%		27	%
Interest and other income (expense), net		2	%		3	%		23	%		4	%		6	%		-13	%		2	%		2	%
Income (loss) before taxes		27	%		28	%		41	%		-3	%		25	%		7	%		25	%		30	%
Provision (benefit) for taxes		7	%		7	%		13	%		-3	%		6	%		2	%		6	%		7	%
Net income		20	%		21	%		28	%		0	%		19	%		5	%		19	%		23	%

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Liquidity and Capital Resources

We evaluate segment performance based on net sales and operating income of each segment. We do not track segment data or evaluate segment performance or additional financial information. As such, there are no separately identifiable segment assets and liabilities.

On February 14, 2000, we completed a private offering of $400.0 million principal amount of convertible subordinated notes that bear interest at the rate of 4 ¹/2% per annum and are convertible into our common stock at a conversion price of $42.23 per share. The notes were due in 2007 and were callable beginning in February of 2003.

Through an ongoing buyback program, we had bought back and retired a portion of the convertible subordinated notes in open market transactions. On July 18, 2003, we called the remaining $165.0 million outstanding balance of the convertible subordinated notes.

As of January 25, 2004, we had working capital of $217.1 million, compared with $420.9 million as of January 26, 2003. The ratio of current assets to current liabilities as of January 25, 2004 was 8.5 to 1, compared to 12.2 to 1 as of January 26, 2003. The decrease in working capital as of January 25, 2004 was mostly the result of a decline in cash and cash equivalents and temporary investments that were used to retire $241.6 million of long-term debt during the fiscal year.

Cash provided by operating activities was $35.7 million for fiscal year 2004, compared to $62.6 million for fiscal year 2003. Net operating cash flows were impacted by non-cash charges for depreciation and amortization of $9.0 million and $9.6 million in fiscal years 2004 and 2003, respectively.

Net operating cash flows in fiscal year 2004 were most positively impacted by net income of $32.5 million and by a decline in deferred income taxes, loss on extinguishment of debt, increase in accounts payable, tax benefit from stock option exercises and declines in other assets. These were partially offset by increases in receivables, inventories, income taxes refundable, other assets, and declines in accrued liabilities, income taxes payable and other liabilities.

Investing activities provided $164.3 million in fiscal year 2004 compared to $132.9 million in the prior fiscal year. Investing activities for both periods consist of changes in temporary investments and long-term investments, and cash used for capital expenditures.

Our financing activities used $241.0 million during fiscal year 2004 and $105.0 million in the prior fiscal year period. Financing activities in fiscal year 2004 reflect the proceeds from stock option exercises, which were more than offset by cash used to retire long-term debt and repurchase common stock. Financing activities for fiscal year 2003 reflect the proceeds from stock option exercises and the reissuance of treasury stock, which was more than offset by cash used to repurchase long-term debt and common stock.

In order to develop, design and manufacture new products, we have incurred significant expenditures during the past five years. We expect to continue these investments aimed at developing new products, including the hiring of many design and applications engineers and related purchase of equipment. Our intent is to continue to invest in those areas that have shown potential for viable and profitable market opportunities. Certain of these expenditures, particularly the addition of design engineers, do not generate significant payback in the short-term. We plan to finance these expenditures with cash generated by operations and investments.

Purchases of new capital equipment were made to complete our corporate headquarters in Camarillo, California, expand our test capacity and support other engineering functions, including product design and qualification. These purchases were funded from our operating cash flows and cash reserves. We believe that operating cash flows together with cash reserve are sufficient to fund operations and capital expenditures for the foreseeable future.

Off-Balance Sheet Arrangements

We do not have any transactions, arrangements and other relationships with unconsolidated subsidiaries or affiliated entities that are reasonably likely to affect our liquidity or capital resources. We do not have any unconsolidated subsidiaries or affiliated entities. We have no special purpose or limited purpose entities that provided off-balance sheet financing, liquidity or market or credit risk support, engage in leasing, hedging, research and development services, or other relationships that expose us to liability that is not reflected on the face of the financial statements.

29

Noted below under “Contractual Obligations” are various commitments we have associated with our business such as lease commitments, open purchase obligations and other items, that are not recorded as liabilities on our balance sheet, since we have not yet received the related goods or services as of January 25, 2004.

Contractual Obligations

Presented below is a summary of our contractual obligations as of January 25, 2004.

(in thousands)	Payments due by period
	Less than 1 year		2-3 years		4-5 years		After 5 years		Total
Long-term debt	$	—	$	—	$	—	$	—	$	—
Operating leases		1,667		2,597		2,278		2,229		8,771
Open capital purchase commitments		4,178		—		—		—		4,178
Other open purchase commitments		11,550		—		—		—		11,550
Wafer purchase obligation		5,231		—		—		—		5,231
Other long-term liabilities		—		—		—		—		—
Total contractual cash obligations	$	22,626	$	2,597	$	2,278	$	2,229	$	29,730

As of January 25, 2004, we had approximately $8.8 million in operating lease commitments that extend over an eight-year period. The portion of these operating lease payments due during fiscal year fiscal 2005 is approximately $1.6 million.

Capital purchase commitments and other open purchase commitments are for the purchase of plant, equipment, raw material, supplies and services. They are not recorded as liabilities on our balance sheet as of January 25, 2004, as we have not yet received the related goods or taken title to the property.

We have a contract (“wafer purchase obligation” in table above) with one of our third-party wafer foundries in which we guarantee that wafer foundry a certain minimum level of quarterly business. Under the contract, which runs from April of 2003 until June of 2004, we have agreed to buy approximately $3.0 million of fabricated silicon wafers on a calendar quarter basis from this foundry. If we do not meet this minimum obligation on a quarterly basis, we are obligated to pay the difference. We can earn back any shortfall in a given quarter by purchasing more wafers in a subsequent quarter.

Inflation

Inflationary factors have not had a significant effect on our performance over the past several years. A significant increase in inflation would affect our future performance.

Recently Issued Accounting Standards

In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective as of July 1, 2003. The adoption of this pronouncement did not have a material impact on our results of operations or our financial position.

In May 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this pronouncement did not have a material impact on our results of operations or our financial position.

In January 2003, the FASB issued FASB Interpretation No. (“FIN”) 46, “Consolidation of Variable Interest Entities,” which was originally effective on July 1, 2003. In December 2003, the FASB deferred the effective date for applying the provisions of FIN 46 to March 31, 2004 for interests held by public companies in variable interest entities or potential variable interest entities created before February 1, 2003. We have completed our evaluation of the provisions of FIN 46 and do not have any significant interests in variable interest entities. Accordingly, the adoption of FIN 46 did not have a material impact on our results of operations or our financial position.

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Internet Access to Semtech Financial Documents

We maintain a website at www.semtech.com. We make available free of charge, either by direct access or a link to the SEC website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. Our reports filed with, or furnished to, the SEC are also available directly at the SEC’s website at www.sec.gov.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Foreign Currency Risk

As a global enterprise, we face exposure to adverse movements in foreign currency exchange rates. Because of the relatively small size of each individual currency exposure, we do a very limited amount of hedging techniques designed to mitigate foreign currency exposures. Likewise, we could experience unanticipated currency gains or losses. Our foreign currency exposures may change over time as the level of activity in foreign markets grows and could have an adverse impact upon our financial results.

In fiscal year 2004, we entered into a forward contract to purchase 2.8 million Swiss Francs in fiscal year 2005 in exchange for $2.0 million. The forward contract was entered into as a partial hedge against future tax payments in Swiss Francs. We recognized $236,000 of unrealized gain on this contract as part of interest and other income in fiscal year 2004.

Certain of our assets, including certain bank accounts and accounts receivable, exist in nondollar-denominated currencies, which are sensitive to foreign currency exchange rate fluctuations. The nondollar-denominated currencies are principally the Euro, Swiss Francs and British Pounds Sterling. Additionally, certain of our current and long-term liabilities are denominated principally in British Pounds Sterling currency, which are also sensitive to foreign currency exchange rate fluctuations.

Substantially all of our foreign sales are denominated in United States dollars. Currency exchange fluctuations in countries where we do business could harm our business by resulting in pricing that is not competitive with prices denominated in local currencies.

Interest Rate and Market Risk

As of January 25, 2004, we had no long-term debt outstanding. We do not currently hedge any potential interest rate exposure.

Interest rates affect our return on excess cash and investments. A significant decline in interest rates would reduce the amount of interest income generated from our excess cash and investments. Our investments are subject to market risk, primarily interest rate and credit risk. Our investments are managed by a limited number of outside professional managers within investment guidelines set by us. Such guidelines include security type, credit quality and maturity and are intended to limit market risk by restricting our investments to high quality debt instruments with relatively short-term maturities.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

SEMTECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

THREE YEARS ENDED JANUARY 25, 2004

(In thousands, except earnings per share data)

	2004			2003			2002
NET SALES	$	192,079		$	192,958		$	191,210
Cost of sales		81,332			83,097			97,920
Gross profit		110,747			109,861			93,290
Operating costs and expenses:
Selling, general and administrative		37,207			34,426			33,798
Product development and engineering		30,371			31,336			29,744
One-time costs		—			13,202			2,727
Total operating costs and expenses		67,578			78,964			66,269
Operating income		43,169			30,897			27,021
Interest expense		(4,162	)		(15,125	)		(18,917	)
Interest and other income		3,711			30,312			28,012
Income before taxes		42,718			46,084			36,116
Provision for taxes		10,252			11,903			10,113
NET INCOME	$	32,466		$	34,181		$	26,003
Earnings per share -
Basic	$	0.44		$	0.47		$	0.37
Diluted	$	0.42		$	0.44		$	0.33
Weighted average number of shares -
Basic		73,570			73,013			69,983
Diluted		77,504			77,789			77,747

See accompanying notes.

32

SEMTECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF JANUARY 25, 2004 AND JANUARY 26, 2003

(In thousands, except share data)

	2004		2003
ASSETS
Current assets:
Cash and cash equivalents	$	96,314	$	137,041
Temporary investments		93,044		273,382
Receivables, less allowances of $656 in 2004 and $619 in 2003		20,362		17,676
Inventories		22,166		16,351
Income taxes refundable		5,795		—
Deferred income taxes		5,212		11,731
Other current assets		3,062		2,267
Total current assets		245,955		458,448
Property, plant and equipment, net		49,579		51,547
Investments, maturities in excess of 1 year		86,119		78,624
Deferred income taxes		25,552		27,143
Other assets		1,268		4,784
TOTAL ASSETS	$	408,473	$	620,546
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,554	$	5,725
Accrued liabilities		16,894		26,596
Income taxes payable		1,699		3,593
Deferred revenue		1,689		1,583
Other current liabilities		27		39
Total current liabilities		28,863		37,536
Convertible subordinated debentures		—		241,570
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value, 250,000,000 authorized 74,120,684 issued and outstanding in 2004 and 74,006,614 issued and 73,165,414 outstanding in 2003		742		740
Treasury stock, 841,200 at cost in 2003		—		(9,072	)
Additional paid-in capital		189,945		182,524
Retained earnings		188,321		165,640
Accumulated other comprehensive income		602		1,608
Total Stockholders’ equity		379,610		341,440
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	408,473	$	620,546

See accompanying notes.

33

SEMTECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

THREE YEARS ENDED JANUARY 25, 2004

(In thousands, except share amounts)

	Common Stock				Additional Paid- in Capital		Retained Earnings			Treasury Stock, at Cost			Accumulated Other Comprehensive Income (Loss)			Stockholders' Equity
	Number of Shares (#)		Amount
Balance at January 28, 2001	68,116,382		$	682	$	111,303	$	131,718		$	(1,018	)	$	(328	)	$	242,357
Comprehensive income:
Net income	—			—		—		26,003			—			—			26,003
Change in unrealized gains on investments, net of taxes	—			—		—		—			—			3,782			3,782
Translation adjustment	—			—		—		—			—			304			304
Comprehensive income	—			—		—		—			—			—			30,089
Treasury stock repurchase	(1,187,500	)		—		—		—			(32,226	)		—			(32,226	)
Treasury stock reissued	1,230,000			—		—		(26,262	)		33,244			—			6,982
Exercise of stock options	3,989,691			40		21,575		—			—			—			21,615
Tax benefit from exercised stock options	—			—		29,978		—			—			—			29,978
Balance at January 27, 2002	72,148,573		$	722	$	162,856	$	131,459		$	—		$	3,758		$	298,795
Comprehensive income:
Net income	—			—		—		34,181			—			—			34,181
Change in unrealized gains on investments, net of taxes	—			—		—		—			—			(2,388	)		(2,388	)
Translation adjustment	—			—		—		—			—			238			238
Comprehensive income	—			—		—		—			—			—			32,031
Treasury stock repurchase	(841,200	)		—		—		—			(9,072	)		—			(9,072	)
Exercise of stock options	1,858,041			18		11,660		—			—			—			11,678
Tax benefit from exercised stock options	—			—		8,008		—			—			—			8,008
Balance at January 26, 2003	73,165,414		$	740	$	182,524	$	165,640		$	(9,072	)	$	1,608		$	341,440
Comprehensive income:
Net income	—			—		—		32,466			—			—			32,466
Change in unrealized gains on investments, net of taxes	—			—		—		—			—			(1,276	)		(1,276	)
Translation adjustment	—			—		—		—			—			270			270
Comprehensive income	—			—		—		—			—			—			31,460
Treasury stock repurchase	(350,000	)		—		—		—			(7,038	)		—			(7,038	)
Treasury stock reissued	971,200			1		—		(9,785	)		16,110			—			6,326
Exercise of stock options	334,070			1		1,346		—			—			—			1,347
Tax benefit from exercised stock options	—			—		6,075		—			—			—			6,075
Balance at January 25, 2004	74,120,684		$	742	$	189,945	$	188,321		$	—		$	602		$	379,610

See accompanying notes.

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SEMTECH CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE YEARS ENDED JANUARY 25, 2004

	2004			2003			2002
Cash flows from operating activities:
Net Income	$	32,466		$	34,181		$	26,003
Adjustments to reconcilenet income to net cash provided by operations:
Depreciation and amortization		9,000			9,581			10,327
Deferred income taxes		8,110			571			(18,516	)
Loss (gain) on disposition of property, plant and equipment		(41	)		557			(302	)
Loss (gain) on extinguishment of debt		3,909			(12,718	)		(2,283	)
Provision for doubtful accounts		118			29			160
Tax benefit of stock option exercises		6,075			8,008			29,978
Changes in assets and liabilities:
Receivables		(2,804	)		1,476			18,594
Inventories		(5,815	)		6,377			9,742
Income taxes refundable		(5,795	)		2,019			(2,019	)
Other assets		(756	)		2,298			681
Accounts payable		2,829			(1,616	)		(5,593	)
Accrued liabilities		(9,702	)		9,751			(2,080	)
Deferred revenue		106			(353	)		(113	)
Income taxes payable		(1,894	)		2,494			343
Other liabilities		(13	)		(26	)		(202	)
Net cash provided by operations		35,793			62,629			64,720
Cash flows from investing activities:
Temporary investments, net		179,400			49,700			(173,370	)
Investments, maturing in excess of 1 year, net		(7,833	)		93,108			(112,253	)
Proceeds from sale of property, plant and equipment		102			—			731
Purchases of property, plant and equipment		(7,495	)		(9,914	)		(20,812	)
Net cash provided by investing activities		164,174			132,894			(305,704	)
Cash flows from financing activities:
Exercise of stock options		1,347			11,678			21,615
Repurchase of treasury stock		(7,038	)		(9,072	)		(32,226	)
Reissuance of treasury stock		6,326			—			6,982
Repurchase of convertible subordinated notes		(72,356	)		(107,626	)		(32,573	)
Retirement of convertible subordinated notes		(169,243	)		—			—
Net cash used in financing activities		(240,964	)		(105,020	)		(36,202	)
Effect of exchange rate changes on cash and cash equivalents		270			238			304
Net increase/(decrease) in cash and cash equivalents		(40,727	)		90,741			(276,882	)
Cash and cash equivalents at beginning of period		137,041			46,300			323,182
Cash and cash equivalents at end of period	$	96,314		$	137,041		$	46,300

See accompanying notes.

35

SEMTECH CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Business

Semtech Corporation and its directly and indirectly wholly-owned subsidiaries (Semtech International AG, Semtech Corpus Christi Corporation, Semtech Corpus Christi SA de CV, Semtech Limited, Semtech Germany GmbH, Semtech France SARL, Semtech Switzerland GmbH, Semtech San Diego Corporation and Semtech New York Corporation, together, the Company) is a leading supplier of analog and mixed-signal semiconductors. The Company designs, manufacturers and markets a wide range of products for commercial applications, the majority of which are sold into the communications, industrial and computer markets. The end-customers for the Company’s products are primarily original equipment manufacturers, or OEMs, that produce and sell electronics. The Company’s primary facilities are in Camarillo, Santa Clara and San Diego, California; St. Gallen, Switzerland; Reynosa, Mexico; and Glasgow and Romsey, United Kingdom.

Fiscal Year

The Company reports results on the basis of fifty-two and fifty-three week periods. The Company’s fiscal year ends on the last Sunday of January. The fiscal years ended January 25, 2004, January 26, 2003 and January 27, 2002 each consisted of fifty-two weeks.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Semtech Corporation and its wholly-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated.

Translation

The assets and liabilities of the Company’s foreign subsidiaries are translated using currency exchange rates at fiscal year end. Income statement items are translated at average exchange rates prevailing during the period. The translation gains or losses are included in accumulated other comprehensive income (loss) in the accompanying consolidated financial statements. Transaction gains and losses are included in the determination of net income and have been insignificant.

Cash, Cash Equivalents and Investments

The Company considers all highly liquid investments with an original maturity of 90 days or less to be cash equivalents. The Company maintains cash balances and investments in highly qualified financial institutions. At various times such amounts are in excess of insured limits. The Company has small amounts of restricted cash that is pledged or subject to withdrawal restrictions; these amounts are not material to cash and cash equivalents balances. The Company accounts for its investments, which are all available for sale securities, under the provisions of Statement of Financial Accounting Standards (SFAS) No. 115, “Accounting for Certain Investments in Debt and Securities.” Investments consist of government and corporate obligations. The Company’s investment policy restricts investments to high credit quality investments with limits on the length to maturity and the amount invested with any one issuer. These investments, especially corporate obligations, are subject to default risk.

Inventories

Inventories are stated at the lower of cost or market and consist of materials, labor and overhead. Cost is determined by the first-in, first-out method.

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Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is computed primarily using the straight-line method over the following estimated useful lives: buildings for either thirty or thirty-nine years; leasehold improvements for the lesser of estimated useful life or lease term; machinery and equipment for two to six years; and furniture and office equipment for three to seven years. Maintenance and repairs are charged to expense as incurred and the costs of additions and betterments that increase the useful lives of the assets are capitalized. When property or equipment are disposed of, the cost and related accumulated depreciation and amortization are removed from the accounts and any gain or loss is included in operations. Depreciation expense was $8.2 million, $9.3 million and $9.8 million in fiscal years 2004, 2003 and 2002, respectively.

Software Development Costs

In accordance with SFAS No. 86, “Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed,” development costs related to software products are expensed as incurred until the technological feasibility of the product has been established. The cost of purchased software is capitalized when related to a product which has achieved technological feasibility or that has an alternative future use. Software development costs incurred prior to achieving technological feasibility as well as certain licensing costs are charged to product development and engineering expense as incurred.

Capitalized software development costs are reported at the lower of unamortized cost or net realizable value. Commencing upon initial product release, these costs are amortized based on the straight-line method over the estimated life, or a ratio of current revenues to total anticipated revenues, generally three years. Fully amortized software costs are removed from the financial records. As of January 25, 2004 and January 26, 2003, $75,000 and $246,000, respectively, of net capitalized software costs are included in “Other assets” in the accompanying consolidated balance sheets. Amortization expense of capitalized software costs totaled $171,000, $255,000 and $550,000 in fiscal years 2004, 2003 and 2002, respectively, and are included in “Cost of Sales” in the accompanying consolidated statements of income.

Income Taxes

Deferred income tax assets or liabilities are computed based on the temporary differences between the financial statement and income tax basis of assets and liabilities, using the statutory marginal income tax rate in effect for the years in which the differences are expected to reverse. Deferred income tax expense or benefit is based on the changes in the deferred income tax assets or liabilities from period to period.

U.S. federal and state income taxes have not been provided for the undistributed earnings of the Company’s foreign operations. The Company policy is to leave the income permanently reinvested offshore. The amount of earnings designated as indefinitely reinvested offshore is based upon the actual deployment of such earnings in the Company’s offshore assets and expectations of the future cash needs of U.S. and foreign entities. Income tax considerations are also a factor in determining the amount of foreign earnings to be repatriated.

Revenue Recognition

The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectibility is probable. Product design and engineering revenue is recognized during the period in which services are performed. The Company defers revenue recognition on shipment of certain products to distributors where return privileges exist until the products are sold through to end -users.

Product Development and Engineering

Product development and engineering costs are charged to expense as incurred.

Advertising Costs

Advertising costs are charged to expense as incurred.

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Earnings per Share

Basic earnings per common share are computed using the weighted average number of common shares outstanding during the period. Diluted earnings per common share incorporate the incremental shares issuable upon the assumed exercise of stock options. The weighted average number of shares used to compute basic earnings per share in fiscal years 2004, 2003 and 2002 were 73,570,000, 73,013,000 and 69,983,000, respectively. Diluted earnings per share is computed by dividing net income for the period by the weighted average number of common shares outstanding, plus the dilutive effect of its outstanding stock options (“common stock equivalents”), or 77,504,000, 77,789,000 and 77,747,000 in fiscal years 2004, 2003 and 2002, respectively.

Options to purchase approximately 3,372,071, 3,092,990 and 215,000 shares were not included in the computation of fiscal years 2004, 2003, and 2002 diluted net income per share because such options were considered anti-dilutive. Shares associated with the Company’s outstanding convertible subordinated debentures are not included in the computation of net income per share as they are anti-dilutive.

Stock-Based Compensation

The Company accounts for its employee stock plan under the intrinsic value method prescribed by Accounting Principles Board Opinion (“APB”) No. 25, “Accounting for Stock Issued to Employees,” and related interpretations, and has adopted the disclosure-only provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” and as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure, an amendment of FASB Statement No. 123.”

SFAS No. 123, and as amended by SFAS No. 148, permits companies to recognize, as expense over the vesting period, the fair value of all stock-based awards on the date of grant. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. Because the Company’s stock-based compensation plans have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, management believes that the existing option valuation models do not necessarily provide a reliable single measure of the fair value of awards from the plan. Therefore, as permitted, the Company applies the existing accounting rules under APB No. 25 and provides pro forma net income and pro forma net income per share disclosures for stock-based awards made during the year as if the fair value method defined in SFAS No. 123, as amended, had been applied. Net income and net income per share for each of the three years ended January 25, 2004 would have been reduced to the following pro forma amounts.

Pro forma net income:

(fiscal years, in thousands, except per share data)	2004			2003			2002
Net income as reported	$	32,466		$	34,181		$	26,003
Additional pro forma compensation expense		34,243			34,370			33,529
Tax benefit of pro forma compensation expense		(9,428	)		(8,867	)		(9,388	)
Pro forma net income	$	7,651		$	8,678		$	1,862
Pro forma earnings per share - basic	$	0.10		$	0.12		$	0.03
Pro forma earnings per share - diluted	$	0.10		$	0.11		$	0.02

The pro forma effect on net income for fiscal years 2004, 2003, and 2002, may not be representative of the pro forma effect on net income of future years because the SFAS No. 123 method of accounting for pro forma compensation expense has not been applied to options granted prior to January 30, 1995.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. Option valuation models also require the input of highly subjective assumptions such as expected option life and expected stock price volatility. The following assumptions were applied: (i) expected dividend yields of 0% for all periods, (ii) expected volatility rates of 71% for 2004, 88% for 2003 and 86% for 2002, (iii) expected lives of 4 to 6 years for all years, and (iv) risk-free interest rates ranging from 2.14% to 7.01% for all years.

38

Fair Value of Financial Instruments

The Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are carried at cost, which approximate their fair market value due to the short-term nature of those instruments. The fair value of long-term debt obligations is estimated based on current interest rates available to the Company for debt instruments with similar terms, degrees of risk and remaining maturities. The carrying value of these obligations approximate their fair values.

Foreign Exchange Contracts

In fiscal year 2004, the Company entered into a forward contract to purchase 2.8 million Swiss Francs in fiscal year 2005 in exchange for $2.0 million. The forward contract was entered into as a partial hedge against future tax payments in Swiss Francs. The Company recognized $236,000 of unrealized gain on this contract as part of interest and other income in fiscal year 2004.

Recently Issued Accounting Standards

In May 2003, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity,” effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective as of July 1, 2003. The adoption of this pronouncement did not have a material impact on the results of operations or the financial position of the Company.

In May 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. The adoption of this pronouncement did not have a material impact on the results of operations or the financial position of the Company.

In January 2003, the FASB issued FASB Interpretation No. (“FIN”) 46, “Consolidation of Variable Interest Entities,” which was originally effective on July 1, 2003. In December 2003, the FASB deferred the effective date for applying the provisions of FIN 46 to March 31, 2004 for interests held by public companies in variable interest entities or potential variable interest entities created before February 1, 2003. The Company has completed its evaluation of the provisions of FIN 46 and does not have any significant interests in variable interest entities. Accordingly, the adoption of FIN 46 did not have a material impact on the results of operations or the financial position of the Company.

Reclassifications

Certain prior year balances have been reclassified to be consistent with current year presentation.

Estimates Used by Management

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. Stock and Convertible Subordinated Debt Repurchase Programs

On January 4, 2001, the Company announced that its board of directors had approved a program to repurchase up to $50.0 million of its common stock and registered convertible subordinated notes. In fiscal year 2002, the Company indicated that its Board had authorized an additional $50.0 million in buybacks, increasing the total amount authorized under the buyback program to $100.0 million. In fiscal year 2003, the Company indicated that its Board

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had authorized an additional $100.0 million in buybacks, increasing the total amount authorized under the buyback program to $200.0 million. In the first quarter of fiscal year 2004, the Company indicated that its Board had authorized an additional $75.0 million in buybacks, increasing the total amount authorized under the buyback program to $275.0 million. On July 18, 2003, the Company called the remaining outstanding balance of convertible subordinated notes and amended the buyback program to authorize only the repurchase of common stock. This buyback program expired with $13.1 million of unused authorization on January 25, 2004.

As of January 25, 2004, the Company had repurchased 2,421,200 shares of its common stock at a cost of $49.4 million under this program. All repurchased shares of common stock have been reissued as a result of stock option exercises. As of January 25, 2004, the Company had repurchased 234,999 convertible subordinated notes (face value of $1,000 each) for $212.5 million in cash in open market transactions. The Company retired all repurchased notes and called the remaining convertible subordinated notes on July 18, 2003.

In fiscal year 2004, the Company repurchased 76,569 convertible subordinated notes (face value of $1,000 each), resulting in a pre-tax net gain of $2.9 million. In fiscal year 2003, the Company repurchased 122,750 convertible subordinated notes (face value of $1,000 each), resulting in a pre-tax gain of $12.7 million. In fiscal year 2002, the Company repurchased 35,680 convertible subordinated notes (face value of $1,000 each), resulting in a pre-tax gain of $2.3 million.

Subsequent to the end of fiscal year 2004, the Company announced that its board of directors had approved a new program to repurchase up to $50.0 million of its common stock.

3. One-Time Costs

Operating income for fiscal year 2003 includes one-time charges of $13.2 million. A one-time charge of $12.0 million associated with the Standard Semiconductor Products segment was recorded in the fourth quarter of fiscal year 2003 to settle a customer dispute. Under the terms of the settlement, the Company agreed to pay the customer $12.0 million in cash in two equal annual installments, plus rebates on the future purchase of certain products. The $12.0 million expense for the cash portion of the settlement was reflected in the Company’s income statement as a one-time charge under “Operating costs and expenses” in the fourth quarter of fiscal year 2003.

In the third quarter of fiscal year 2003, the Company recorded a one-time charge of $1.2 million, which included $852,000 of cost for an expected loss on the future sub-lease of the Company’s New York office and $350,000 of cost for asset impairment at the Corpus Christi, Texas wafer fabrication facility.

Operating income for fiscal year 2002 includes one-time charges of: $14.0 million for the write-down of inventory and discontinuation of certain products; approximately $2.0 million associated with headcount reductions; and $765,000 associated with a pending Superfund settlement.

The write-down of inventory and discontinuation of certain products in fiscal year 2002 was the result of a critical review conducted during the second quarter. A severe industry downturn and a related drop in demand from end- customers made certain inventories excess and obsolete, and certain product lines non-strategic. Of the $14.0 million write-down of inventory and discontinuation of certain products, $13.4 million was associated with the Standard Products segment, $550,000 with the Rectifier, Assembly and Other Products segment.

Headcount reductions in fiscal year 2002 were associated with the sale of the Company’s Santa Clara, California wafer fabrication facility and general reductions in response to lower sales levels.

4. Disposition of Assets

On April 23, 2001, the Company sold its Santa Clara, California wafer fab facility to STI Foundry, Inc. In exchange for approximately $1.6 million of assets associated with the facility, the Company received $1.0 million in cash and approximately a $1.4 million receivable for either future inventory or cash. The Company expected to eventually recognize $855,000 of gain on the sale of the wafer fab as compensation was received from the buyer. As of January 25, 2004, only $724,000 of this expected gain has been realized and reported as a gain, with the remainder of the gain still unrecognized as the Company is uncertain of the ultimate collectibility of the receivable.

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5. Temporary and Long-Term Investments

Temporary and long-term investments consist of government, bank and corporate obligations. Temporary investments have original maturities in excess of three months, but mature within twelve months of the balance sheet date. Long-term investments have maturities in excess of one year from the date of the balance sheet. The Company classifies its investments as “available for sale” because they expect to possibly sell some securities prior to maturity. The Company’s investments are subject to market risk, primarily interest rate and credit risk. The Company’s investments are managed by a limited number of outside professional managers within investment guidelines set by the Company. Such guidelines include security type, credit quality and maturity and are intended to limit market risk by restricting the Company’s investments to high quality debt instruments with relatively short-term maturities.

The Company included $118,000 and $1.4 million of unrealized gain, net of tax, in the comprehensive income portion of the Consolidated Statements of Stockholders’ Equity and Comprehensive Income for fiscal year 2004 and fiscal year 2003, respectively.

Temporary and long-term investments consist of the following security types, stated at fair market value:

For fiscal year 2004, investments generated interest income of $7.4 million and in fiscal year 2003, investments generated interest income of $18.1 million. In fiscal year 2004, investments generated interest income of $3.2 million from government issues and $4.2 million from corporate and money market issues. In fiscal year 2003, investments generated interest income of $6.2 million from government issues and $11.9 million from corporate and money market issues. As of January 26, 2003, all of the Company’s investments mature on various dates through fiscal year 2005.

6. Inventories

Inventories consist of the following:

(fiscal years, in thousands)	2004		2003
Raw materials	$	579	$	536
Work in progress		14,809		9,449
Finished goods		6,778		6,366
Total Inventories	$	22,166	$	16,351

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7. Property, Plant and Equipment

Property, plant and equipment consist of the following:

(fiscal years, in thousands)	2004		2003
Property	14,213		14,213
Buildings	17,025		17,429
Leasehold improvements	2,199		1,855
Machinery and equipment	43,068		39,275
Furniture and office equipment	13,954		12,614
Construction in progress	318		564
Property, plant and equipment, gross	90,777		85,950
Less accumulated depreciation and amortization	(41,199	)	(34,403	)
Property, plant and equipment, net	49,578		51,547

8. Convertible Subordinated Debentures

On February 14, 2000, the Company completed a private offering of $400.0 million principal amount of convertible subordinated notes that pay interest semiannually at a rate of 4 ¹/2% and were convertible into common stock at a conversion price of $42.23 per share. The notes were due on February 1, 2007 and were callable by the Company on or after February 6, 2003.

In connection with these convertible subordinated notes, the Company incurred $11.5 million in underwriter fees and other costs. The underwriter fees and other costs are amortized as interest expense using the effective interest method for outstanding notes and written off against the gain for those notes repurchased and retired prior to maturity. The Company has used the net proceeds of the offering for general corporate purposes, including working capital, expansion of sales, marketing and customer service capabilities, and product development.

For fiscal year 2003 and fiscal year 2002, the Company incurred $15.1 million and $18.9 million, respectively, in interest expense associated with these convertible subordinated notes. As of January 26, 2003, $241.6 million of the convertible subordinated notes were still outstanding, reflecting the Company’s repurchase of 158,430 of its convertible subordinated notes (face value of $1,000 each) for $140.2 million in cash in open market transactions. The Company recognized a pre-tax net gain on the repurchase of these convertible subordinated notes of $12.7 million in fiscal year 2003 and $2.3 million in fiscal year 2002. Reported gains on the repurchase of convertible subordinated notes are net of prepaid issuance costs.

On July 18, 2003, the Company called the remaining outstanding balance of convertible subordinated notes (see Note 2. “Stock and Convertible Subordinated Debt Repurchase Programs”).

9. Accrued Liabilities

Accrued liabilities consist of the following:

(fiscal years, in thousands)	2004		2003
Accrued interest	$	—	$	5,417
Payroll and related		6,784		4,798
Commissions		735		766
Due customer		6,000		12,000
Other		3,375		3,615
Accrued liabilities	$	16,894	$	26,596

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10. Income Taxes

The provision for taxes consist of the following:

(fiscal years, in thousands)	2004			2003			2002
Current:
Federal	$	5,853		$	8,948		$	5,412
State		3,297			357			3,446
Foreign		1,731			3,666			506
Subtotal		10,881			12,971			9,364
Deferred:
Federal		870			(1,685	)		3,424
State		(1,499	)		317			(2,274	)
Foreign		—			300			(401	)
Subtotal		(629	)		(1,068	)		749
Provision for taxes	$	10,252		$	11,903		$	10,113

The change in the net deferred tax asset differs from the deferred tax provision to the extent of tax deductions obtained for non-qualified stock options in excess of the current tax liabilities, which has been offset by an entry to additional paid-in capital.

The components of the net deferred income tax assets at January 25, 2004 and January 26, 2003 are as follows:

Net current refundable and deferred income taxes:

(fiscal years, in thousands)	2004			2003
Deferred tax assets:
Payroll and related	$	795		$	1,091
Deferred revenue		1,251			1,121
Inventory reserve		3,118			3,233
Bad debt reserve		53			158
Income Tax Refundable / NOL		5,796			6,011
Other deferred assets		(6	)		117
Net current deferred income taxes	$	11,007		$	11,731

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Net long-term deferred income taxes:

(fiscal years, in thousands)	2004			2003
Deferred tax assets:
Inventory valuation	$	(673	)	$	(540	)
Research and development charges		3,767			2,864
Research credit carryforward		16,811			14,997
Manufacturing investment credit carryforward		699			627
AMT credit carryforward		83			383
NOL carryforward		32,843			35,387
Environmental		2			314
Dispute settlement charges		4,889			4,805
Other deferred assets		243			92
Total long-term deferred assets		58,664			58,929
Deferred tax liabilities:
Depreciation and amortization		(408	)		(776	)
Total long-term deferred liabilities		(408	)		(776	)
Subtotal		58,256			58,153
Valuation reserve		(32,704	)		(31,010	)
Net long-term deferred income taxes	$	25,552		$	27,143

Realization of the net deferred tax assets is dependent on generating sufficient taxable income during the periods in which temporary differences will reverse. Although realization is not assured, management believes it is more likely than not that the net deferred tax assets will be realized. The amount of the net deferred tax assets considered realizable, however, could be adjusted in the near term if estimates of future taxable income during the reversal periods are revised. The change in valuation reserve reflected in the following reconciliation excludes valuation reserves that have been set up against deferred tax assets that were generated from stock option exercise activity.

As of January 25, 2004, the Company had net operating loss carryforwards available of approximately $95.8 million and $18.0 million for federal and state income tax purposes, respectively, which can be used to offset taxable income, expiring though 2023.

Approximately $21.0 million of net operating loss and tax credit deferred tax assets and the corresponding amount of valuation allowances were created as a result of stock option exercises. To the extent this portion of net operating loss and tax credit deferred tax assets are realized and the corresponding amount of valuation allowance is reduced, shareholders’ equity or additional paid-in capital will be credited.

The provision for taxes reconciles to the amount computed by applying the statutory federal rate to income before taxes as follows:

(fiscal years, in thousands)	2004			2003			2002
Federal income tax at statutory rate	$	14,951		$	17,326		$	13,015
State income taxes, net of federal benefit		2,013			1,181			1,384
Foreign taxes at rates less than domestic rates		(4,797	)		(9,792	)		(2,944	)
Tax credits generated		—			(1,630	)		(5,639	)
Changes in valuation reserve		1,694			3,885			3,241
Permanent differences		(3,422	)		1,392			872
Other		(187	)		(459	)		184
Provision for taxes	$	10,252		$	11,903		$	10,113

As of January 25, 2004, the Company had approximately $89.8 million of unremitted income related to the Company’s wholly-owned European subsidiaries. U.S. federal and state income taxes have not been provided for

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the undistributed earnings of the Company’s foreign operations. The Company’s policy is to leave the income permanently reinvested offshore. The amount of earnings designated as indefinitely reinvested to offshore is based upon the actual deployment of such earnings in the Company’s offshore assets and expectations of the future cash needs of the Company’s U.S. and foreign entities. Income tax considerations are also a factor in determining the amount of foreign earnings to be repatriated.

As of January 25, 2004, the Company had federal and state research credits available of approximately $11.1 million and $8.9 million for federal and state income tax purposes, respectively, which can be used to offset taxable income, expiring through 2023. As of January 25, 2004, the Company had California Manufacturer’s Investment credits available of approximately $1.1 million which can be used to offset taxable income. These credits will expire between 2006 and 2010. As of January 25, 2004, the Company had California Manufacturer’s Investment credits available of approximately $1.0 million which can be used to offset taxable income. These credits will expire between 2006 and 2010. As of January 25, 2004, the Company had California Manufacturer’s Investment credits available of approximately $1.0 million which can be used to offset taxable income. These credits will expire between 2006 and 2010.

11. Commitments and Contingencies

The Company leases facilities and certain equipment under operating lease arrangements expiring in various years through fiscal year 2015. The aggregate minimum annual lease payments under leases in effect on January 25, 2004 are as follows:

(fiscal years, in thousands)
Fiscal year ending:
2005	$	1,667
2006		1,387
2007		1,210
2008		1,167
2009		1,111
Thereafter		2,229
Total minimum lease commitments	$	8,771

Annual rent expense, net of sublease income, was $2.1 million, $2.1 million, and $1.4 million for fiscal years 2004, 2003, and 2002, respectively.

The Company’s general warranty policy provides for repair or replacement of defective parts or a refund of the purchase price. In certain instances, the Company has agreed to other warranty terms, including some indemnification provisions, that could prove to be significantly more costly. If there is a substantial increase in the rate of customer claims, if the Company’s estimates of probable losses relating to identified warranty exposures prove inaccurate, or its efforts to contractually limit liability prove inadequate, the Company may record a charge against future cost of sales. Other than the customer dispute resolved in March 2003, over at least the last decade, warranty expense has been immaterial to the Company’s financial statements.

The Company indemnifies certain customers, distributors, and other parties for damages, costs, and attorneys fees for certain matters, such as acts or omissions of Company employees or if the Company’s products are alleged to infringe third-party intellectual property rights. In some cases there are limits on and exceptions to the Company’s potential liability for this indemnification. The Company cannot estimate the amount of potential future payments, if any, that the Company might be required to make as a result of these agreements. Over at least the last decade, the Company has not incurred any significant expense as a result of these agreements. Accordingly, the Company has not accrued any amounts for such indemnification obligations. However, there can be no assurances that the Company will not incur expense under these indemnification provisions in the future.

On March 28, 2003, the Company announced that it had resolved a customer dispute. Under the terms of the settlement, the Company agreed to pay the customer $12.0 million in cash in two equal annual installments, plus rebates on the future purchase of certain products by the customer over a two year period. The rebates, which can be up to 10%, are dependent upon the amount of eligible products the customer purchases. The Company paid the first $6.0 million installment in the first quarter of fiscal year 2004 and paid the second $6.0 million installment in the

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first quarter of fiscal year 2005. Amounts accrued for the rebates during fiscal year 2004 are not material. The Company is vigorously pursuing insurance coverage for the full value of the settlement, although it is unable to estimate the size of the eventual insurance settlement, if any, or to give a tentative date for when an insurance settlement might be reached.

On June 22, 2001, the Company was notified by the California Department of Toxic Substances Control (“State”) that it may have liability associated with the clean-up of the one-third acre Davis Chemical Company site in Los Angeles, California. The Company has been included in the clean-up program, because it is one of the companies that used the Davis Chemical Company site for waste recycling and/or disposal between 1949 and 1990. The Company has joined with other potentially responsible parties in an effort to resolve this matter with the State. The group has entered into a Consent Order with the State that requires the group to perform a soils investigation at the site. The soils investigation has been completed and submitted to the State for review. The State has the right to require the removal of contaminated soils and to expand the scope of work to include investigation of groundwater contamination. The Consent Order does not require the group to remediate the site. The Company’s share of the cost of the soils investigation was not material and has been expensed. At this time there is not a specific proposal or budget with respect to additional studies or the clean-up of the site. Thus, no reserve has been established for this matter.

In November 2003, the Company and other members of the Davis Chemical Site group received notices under Proposition 65 from Consumer Defense Group Action (“CDGA”) alleging violations of California’s Proposition 65 occurring in connection with the site. Proposition 65 prohibits the discharge of listed chemicals in a manner that reaches or threatens to reach a source of drinking waters and requires warnings on products or locations known to contain listed chemicals. The notice letter sent by the CDGA is a prerequisite for bringing a private enforcement action. Although the statutory notice period expired in January 2004, the Company is unaware of any lawsuit having been filed against it or any member of the group. Thus, no reserve has been established for this Proposition 65 matter.

The Company used an environmental consulting firm, specializing in hydrogeology, to perform periodic monitoring of the groundwater at the facility in Newbury Park, California that it leased for approximately forty years. Certain contaminants have been found in the local groundwater. Monitoring results over a number of years indicate that contaminants are coming from adjacent facilities. It is currently not possible to determine the ultimate amount of possible future clean-up costs, if any, that may be required of the Company for this site. There are no claims pending with respect environmental matters at the Newbury Park site. Accordingly, no reserve for clean up has been provided at this time.

Effective June 11, 1998, the Company’s board of directors approved a Stockholder Protection Agreement to issue a Right for each share of common stock outstanding on July 31, 1998 and each share issued thereafter (subject to certain limitations). These Rights, if not cancelled by the Board of Directors, can be exercised into a certain number of Series X Junior Participating Preferred Stock after a person or group of affiliated persons acquire 25% or more of the Company’s common stock and subsequently allow the holder to receive certain additional Company or acquirer common stock if the Company is acquired in a hostile takeover.

From time to time, the Company is approached by persons seeking payment based on the Company’s alleged use of their intellectual property. The Company is also periodically named as a defendant in lawsuits involving intellectual property and other matters that are routine to the nature of its business. Management is of the opinion that the ultimate resolution of all such pending matters will not have a material adverse effect on the accompanying consolidated financial statements.

The Company has agreed to indemnify the directors and some Company executives against certain liabilities incurred in connection with their duties as directors or executives of the Company.

12. Stockholders’ Equity

The Company has various stock option plans that provide for granting options to purchase shares of the Company’s common stock to employees, directors and consultants of the Company. The plans provide for the granting of options which meet the Internal Revenue Code qualifications to be incentive stock options, as well as nonstatutory options. Under these plans, the option price must be at least equal to the fair market value of the Company’s

46

common stock at the date of the grant for incentive stock options. Most incentive stock options expire within ten years from the date of grant. Generally, the options vest in equal annual increments over three to four years from the date of grant.

The plans provide for the issuance of 12,800,000 shares over the remaining life of the plans. The plans also provide for the further issuance of up to 8,000,000 additional shares, if authorized by the board, which are reacquired in the open market or in a private transaction.

Stock option information with respect to the Company’s stock option plans is as follows (in thousands), except share exercise prices:

(fiscal years, in thousands)	2004				2003				2002
	Shares Under Option		Weighted Average Exercise Price		Shares Under Option		Weighted Average Exercise Price		Shares Under Option		Weighted Average Exercise Price
Options outstanding, beginning of year	14,920		$	12.28	14,643		$	11.11	19,162		$	8.54
Granted	2,685		$	17.38	3,017		$	16.38	1,638		$	25.90
Cancelled	(514	)	$	21.28	(882	)	$	19.54	(937	)	$	15.88
Exercised	(1,305	)	$	5.86	(1,858	)	$	6.28	(5,220	)	$	5.49
Options outstanding, end of year	15,786		$	13.38	14,920		$	12.28	14,643		$	11.11
Options exercisable at the end of year	9,862		$	10.54	9,574		$	8.72	9,051		$	6.78
Weighted average fair value of options granted during year			$	11.38			$	11.71			$	20.83

Information about stock options outstanding at January 25, 2004 is summarized as follows:

(share amounts in thousands) Exercise Prices	Number Outstanding 1/25/04	Weighted Average Exercise Price		Weighted Average Remaining Contract Life	Number Exercisable 1/25/04	Weighted Average Exercise Price
$  0.31-$  4.60	3,475	$	2.96	3.7 Years	3,475	$	2.96
$  4.61-$  9.20	2,549	$	6.43	4.1 Years	2,547	$	6.42
$  9.21-$13.80	814	$	12.72	8.2 Years	226	$	12.53
$13.81-$18.40	5,572	$	15.64	8.2 Years	1,665	$	14.77
$18.41-$23.00	509	$	20.46	7.3 Years	309	$	19.88
$23.01-$27.60	2,188	$	25.40	6.8 Years	1,348	$	25.47
$27.61-$32.20	506	$	29.63	7.8 Years	183	$	30.01
$32.21-$36.80	118	$	33.62	7.1 Years	66	$	33.76
$36.81-$41.40	49	$	38.31	5.4 Years	39	$	38.30
$41.41-$46.00	6	$	41.59	6.5 Years	4	$	41.59
$  0.31-$46.00	15,786	$	13.38	6.3 Years	9,862	$	10.54

13. Interest and Other Income

Interest and other income, net, consist of the following:

(fiscal years, in thousands)	2004			2003			2002
Interest income	$	7,409		$	18,140		$	25,458
Gain (loss) on sale of assets		109			(207	)		302
Gain (loss) on the retirement of debt		(3,903	)		12,719			2,284
Foreign currency transaction losses		(61	)		(229	)		(30	)
Miscellaneous (expense) income		157			(111	)		(2	)
Interest and other income, net	$	3,711		$	30,312		$	28,012

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14. Statements of Cash Flows

In connection with the sale of the Santa Clara wafer fab facility (see Note 4. “Disposition of Assets”), the Company has utilized $875,000 in discounts for the purchase of inventory from STI Foundry, Inc. during fiscal year 2002. Income taxes paid in fiscal years 2004, 2003, and 2002, were $3.0 million, $1.7 million and $349,000, respectively. For those same periods, the Company paid interest in the amounts of $9.2 million, $15.1 million and $18.0 million, respectively.

In fiscal year 2004, the Company transferred $403,000 of equipment to one of its third-party wafer foundries in exchange for discounts on future wafer purchases.

15. Business Segments and Concentrations of Risk

As of January 25, 2004, the Company operates in two reportable segments: Standard Semiconductor Products and Rectifier, Assembly and Other Products. In previous years, the Company had a segment entitled Other Products, which in fiscal year 2003 and fiscal year 2002 were 0.5% and 2%, respectively, of net sales. The Other Product Category was combined with the Rectifier and Assembly Products segment in fiscal year 2003, and is now referred to as the Rectifier, Assembly and Other Products segment. The Rectifier, Assembly and Other Products segment has represented less than 10% of net sales for the last three fiscal years.

The Standard Semiconductor Products segment makes up the vast majority of overall sales and includes the power management, protection, test and measurement, advanced communications and human input device product lines. The Rectifier, Assembly and Other Products segment includes the Company’s line of assembly and rectifier devices, which are the remaining products from its original founding as a supplier into the military and aerospace market. It also includes other products made up of custom integrated circuit and foundry sales.

The accounting policies of the segments are the same as those described above in the summary of significant accounting policies. The Company evaluates segment performance based on net sales and operating income of each segment. Management does not track segment data or evaluate segment performance on additional financial information. As such, there are no separately identifiable segment assets nor is there any separately identifiable statements of income data (below operating income).

The Company does not track or assign assets to individual reportable segments. Likewise, depreciation expense and capital additions are also not tracked by reportable segments.

Net sales by segment are:

(fiscal years, in thousands)	2004		2003		2002
Standard Semiconductor Products	$	182,522	$	183,235	$	175,881
Rectifier, Assembly and Other Products		9,557		9,723		15,329
Total net sales	$	192,079	$	192,958	$	191,210

Operating income by segment is:

(fiscal years, in thousands)	2004		2003			2002
Standard Semiconductor Products	$	40,402	$	29,927		$	25,439
Rectifier, Assembly and Other Products		2,767		2,172			4,310
One-time costs		—		(1,202	)		(2,728	)
Total operating income	$	43,169	$	30,897		$	27,021

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One-time charges of $13.2 million were recorded in fiscal year 2003. One-time costs of $12.0 million for the settlement of a customer dispute was associated with the Standard Semiconductor Product segment. One-time costs of $1.2 million in fiscal year 2003 that are not assigned to a reportable segment included $852,000 of cost for an expected loss on the future sub-lease of the Company’s New York office and $350,000 of cost for asset impairment at the Corpus Christi, Texas wafer fabrication facility.

Of the $14.0 million write-down of inventory and discontinuation of certain products that occurred in fiscal year 2002, $13.4 million was associated with the Standard Products segment, $550,000 with the Rectifier, Assembly and Other Products segment.

The one-time charges of $2.7 million in fiscal year 2002, not assigned to a reportable segment, included one-time costs of $2.0 million associated with headcount reductions and one-time costs of $765,000 associated with a pending Superfund settlement.

No end-customer accounted for 10% or more of net sales in fiscal year 2004. In fiscal year 2002, Agilent Technologies, one of the Company’s ATE end-customers, and its subcontractors, accounted for approximately 13% of net sales. For fiscal years 2004, 2003 and 2002, one of the Company’s Asian distributors accounted for approximately 10%, 14% and 12%, respectively, of net sales. For fiscal year 2004, another one of our Asian distributors accounted for approximately 14% of net sales.

As of the end of fiscal years 2004, 2003 and 2002, one of the Company’s Asian distributors accounted for approximately 11%, 11% and 17%, respectively, of net accounts receivable. Receivables from customers are not secured by any type of collateral.

The Company does not track customer sales by region for each individual reporting segment. A summary of net external sales by region follows:

(fiscal years, in thousands)	2004		2003		2002
Domestic	$	59,927	$	62,901	$	73,025
Asia-Pacific		115,936		117,220		100,426
Europe		16,216		12,837		17,759
Total Net Sales	$	192,079	$	192,958	$	191,210

Long-lived assets located outside the United States as of the end of fiscal years 2004, 2003 and 2002 were approximately $11.3 million, $9.3 million and $7.2 million, respectively.

The Company relies on a limited number of outside subcontractors and suppliers for silicon wafers, packaging and certain other tasks. Disruption or termination of supply sources or subcontractors could delay shipments and could have a material adverse effect on the Company. Several of the Company’s outside subcontractors and suppliers, including third-party foundries that supply silicon wafers, are located in foreign countries, including China, Malaysia, the Philippines and Germany. A significant amount of the Company’s assembly and test operations are conducted by third-party contractors in Malaysia and the Philippines, and the largest source of silicon wafers come from an outside foundry located in China.

49

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Stockholders and Board of Directors of Semtech Corporation

We have audited the accompanying consolidated balance sheets of Semtech Corporation (a Delaware corporation) and subsidiaries as of January 25, 2004 and January 26, 2003 the related consolidated statements of income, stockholders’ equity and comprehensive income and cash flows for the two years then ended. Our audits also included the financial statement schedule listed in the Index at Item 15(a). These financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. The consolidated financial statements and financial statement schedule of Semtech Corporation, for the fiscal year ended January 27, 2002 was audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those statements in their report dated April 2, 2002.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Semtech Corporation and subsidiaries as of January 25, 2004 and January 26, 2003 and the consolidated results of their operations and their cash flows for the two years then ended in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

ERNST & YOUNG LLP

Los Angeles, California

March 26, 2004

50

This is a copy of the audit report previously issued by Arthur Andersen LLP in connection with Semtech Corporation filing on Form 10-K for the year ended January 27, 2002. This audit report has not been reissued by Arthur Andersen LLP in connection with this filing on Form 10-K. See Exhibit 23.2 for further discussion. The balance sheet as of January 28, 2001, referred to in this report has not been included in the accompanying financial statements.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors of Semtech Corporation:

We have audited the accompanying consolidated balance sheets of Semtech Corporation (a Delaware corporation) and subsidiaries as of January 27, 2002 and January 28, 2001, and the related consolidated statements of income, stockholders’ equity and comprehensive income, and cash flows for each of the three years in the period ended January 27, 2002. These financial statements and the schedule referred to below are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Semtech Corporation and subsidiaries as of January 27, 2002 and January 28, 2001, and the results of their operations and their cash flows for each of the three years in the period ended January 27, 2002, in conformity with accounting principles generally accepted in the United States of America.

Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule II - Valuation and Qualifying Accounts is presented for purposes of additional analysis and is not a required part of the basic financial statements. This information has been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ Arthur Andersen LLP

ARTHUR ANDERSEN LLP

Los Angeles, California

April 2, 2002

51

SCHEDULE II

SEMTECH CORPORATION AND SUBSIDIARIES

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

THREE YEARS ENDED JANUARY 25, 2004

	Balance at Beginning of Year		Charged to Costs and Expenses		Deductions			Balance at End of Year
Year ended January 27, 2002
Allowance for doubtful accounts	$	1,100,000	$	160,000	$	(287,000	)	$	973,000
Year ended January 26, 2003
Allowance for doubtful accounts	$	973,000	$	29,000	$	(383,000	)	$	619,000
Year ended January 25, 2004
Allowance for doubtful accounts	$	619,000	$	118,000	$	(81,000	)	$	656,000

52

ITEM 9. CHANGES IN OR DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

On June 18, 2002, the Company dismissed Arthur Andersen LLP (“Arthur Andersen”) and engaged Ernst & Young LLP to serve as the Company’s independent auditors for the fiscal year 2003. These decisions were authorized and directed by the Company’s Board of Directors upon recommendation of its Audit Committee.

Arthur Andersen’s reports on the Company’s consolidated financial statements for each of the fiscal years ended January 27, 2002 and January 28, 2001 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During the fiscal years ended January 27, 2002 and January 28, 2001 and through June 18, 2002, there were no disagreements with Arthur Andersen on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure which, if not resolved to Arthur Andersen’s satisfaction, would have caused it to make reference to the subject matter in connection with its reports; and there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

During the fiscal years ended January 27, 2002 and January 28, 2001 and through June 18, 2002, the Company did not consult Ernst & Young LLP with respect to the application of accounting principles to a specified transaction, either completed or proposed, the type of audit opinion that might be rendered on our consolidated financial statements, or any other matter or reportable event as set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.

The Company provided Arthur Andersen a copy of the foregoing disclosures, and Arthur Andersen provided a letter, dated June 24, 2002, stating that it has found no basis for disagreement with such statements. See Exhibit 16.1 hereto.

ITEM 9A. CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of Company’s disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that such disclosure controls and procedures were effective in alerting them in a timely manner to material information relating to the Company (and its consolidated subsidiaries) required to be included in its periodic reports filed with the Securities and Exchange Commission.

53

PART III

Items 10 (except the information required to be disclosed regarding our Code of Ethics under Item 406 of Regulation S-K), 11, 12 (except the information required to be disclosed regarding securities authorized for issuance under equity compensation plans under Item 201(d) of Regulation S-K), 13 and 14 are incorporated by reference from the Company’s Definitive Proxy Statement in connection with its annual meeting of shareholders to be held on June 10, 2004.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

We have adopted a written Code of Conduct that applies to everyone in the Company, including our Chief Executive Officer and Chief Financial Officer. A copy of our Code of Conduct is attached to this report as Exhibit 14. Other information called for by Part III, Item 10 is incorporated by reference from the Company’s Definitive Proxy Statement in connection with its annual meeting of shareholders to be held on June 10, 2004.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth information with respect to shares of common stock that may be issued under our equity compensation plans as of January 25, 2004.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the issued column)
Equity compensation plans approved by security holders	8,157,489	$	8.22	7,780,915
Equity compensation plans not approved by security holders	7,628,204	$	18.89	381,778
Total	15,785,693	$	13.38	8,162,693

Equity compensation plans not approved by security holders include the Non-Director and Non-Executive Officer Long-Term Stock Incentive Plan that was approved by our board of directors in fiscal year 2000. The Non-Director and Non-Executive Officer Long-Term Stock Incentive Plan allows for the issuance of options for up to 8,000,000 shares of our common stock to non-directors and non-executive officers. This number has been adjusted for stock splits and under the terms of the plan, is subject to further adjustment in the event that the number of outstanding shares of our common stock are adjusted by reason of a stock split, stock dividend, or the like. Further, any shares granted under the plan that are forfeited back to the Company because of a failure to meet an award contingency or condition are available for delivery pursuant to new awards granted under the plan. All securities remaining available for future issuance under equity compensation plans not approved by security holders are related to the Non-Director and Non-Executive Officer Long-Term Stock Incentive Plan.

Included in the outstanding options portion of equity compensation plans not approved by security holders are non-plan grants of options to our non-employee directors that occurred in fiscal year 1998 and a non-plan grant of inducement options, within the meaning of Nasdaq rules, to Jason Carlson, our President and Chief Executive Officer, as a recruitment incentive in fiscal year 2003.

The material features of the Non-Director and Non-Executive Officer Long-Term Stock Incentive Plan and the non-plan grants referred to above are substantially similar to the material features of the plans that have been approved by shareholders. See Note 12. “Stockholders’ Equity” to the financial statements included in this Form 10-K. Other information called for by Item 12 is incorporated by reference from the Company’s Definitive Proxy Statement in connection with its annual meeting of shareholders to be held on June 10, 2004.

54

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)(1) The financial statements and the Report of Ernst & Young LLP are included in Part II of this Form 10-K on the pages indicated.

	Page
Index of Financial Statements:
Report of Ernst & Young LLP, Independent Auditors	50
Consolidated statements of income, three years ended January 25, 2004	32
Consolidated balance sheets, January 25, 2004 and January 26, 2003	33
Consolidated statements of stockholders’ equity and comprehensive income, three years ended January 25, 2004	34
Consolidated statements of cash flows, three years ended January 25, 2004	35
Notes to consolidated financial statements	36
Schedule II - Valuation and Qualifying Accounts	52

(a)(2) Schedules other than those listed above are omitted since they are not applicable, not required, or the information required to be set forth herein is included in the consolidated financial statements or notes thereto.

(a) (3) Exhibits

Exhibit No.	Description
3.1  (1)	-	Restated Certificate of Incorporation of Semtech Corporation
3.2  (1)	-	Bylaws of Semtech Corporation
10.1 (2)	-	Agreement of sublease executed on December 23, 1991, effective January 1, 1991, by the Company and the Corpus Christi Airport Development Corporation for a portion of the Company’s plant and facilities
10.2 (3)	-	The Company’s 1994 Long-term Stock Incentive Plan, as amended
10.3 (4)	-	The Company’s 1994 Non-Employee Directors Stock Option Plan, as amended
10.4 (5)	-	Form of Non-Statutory Stock Option Agreement
10.5 (6)	-	The Company’s Long-term Stock Incentive Plan, as amended
10.6 (5)	-	The Company’s Non-Director and Non-Executive Officer Long-Term Stock Incentive Plan, as amended
10.7 (8)	-	Option Award Agreement dated November 4, 2002 with respect to inducement options granted to Jason Carlson
10.8 (8)	-	Form of Option Agreement for Options Awarded to Non-Employee Directors on December 5, 2002

55

10.9	-	Option Agreement dated October 6, 2003 with respect to options granted to Non-Employee Chairman John D. Poe
10.10	-	Termination of Executive Compensation Arrangement
10.11	-	Statement Regarding the Semtech Executive Compensation Plan
10.12	-	Adoption Agreement dated as of January 1, 2004 adopting The Executive Nonqualified “Excess” Plan known as the Semtech Executive Compensation Plan
10.13	-	Plan Document for The Executive Nonqualified “Excess” Plan adopted by Semtech Corporation as of January 1, 2004 (known as the Semtech Executive Compensation Plan)
10.14	-	Trust Agreement dated as of January 1, 2004 between Semtech Corporation and Bankers Trust Company, as Trustee, related to the Semtech Executive Compensation Plan
10.15 (9)	-	Arrangement Regarding Form of Bonuses
10.16	-	Arrangement with Jason Carlson
10.17 (1)	-	Arrangements with John D. Poe
10.18 (10)	-	Stockholder Protection Agreement, dated June 25, 1998, between Semtech Corporation and Chasemellon Shareholder Services as rights agent
14	-	Semtech Corporation Code of Conduct
16.1 (11)	-	Letter regarding change in the Company’s Certifying Accountant
21.1	-	Subsidiaries of the Company
23.1	-	Consent of Ernst & Young LLP
23.2	-	Notice Regarding Consent of Arthur Andersen LLP
31.1	-	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended
31.2	-	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended
32.1	-	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 (As set forth in Exhibit 32.1 hereof, Exhibit 32.1 is being furnished and shall not be deemed “filed”)
32.2	-	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002 (As set forth in Exhibit 32.2 hereof, Exhibit 32.2 is being furnished and shall not be deemed “filed”)

(1) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended October 26, 2003.

(2) Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 1992.

(3) Incorporated by reference to the Company’s Registration Statement on Form S-8 (333-44033) filed January 9, 1998.

(4) Incorporated by reference to the Company’s Registration Statement on Form S-8 (333-00599) filed January 31, 1996.

(5) Incorporated by reference to the Company’s Registration Statement of Form S-8 (333-60396) filed May 8, 2001

56

(6) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended April 28, 2002.

(7) [Reserved]

(8) Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended October 27, 2002.

(9) Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2002

(10) Incorporated by reference to the Registrants Current Report on Form 8-K filed July 16, 1998.

(11) Incorporated by reference to the Company’s Current Report on Form 8-K filed June 25, 2002

(b) Reports on Form 8-K

The Company submitted a report on Form 8-K on November 24, 2003 with respect to a press release dated November 24, 2003 regarding financial results for the third quarter of fiscal year 2004 and forward-looking statements with respect to the Company’s future performance and results.

The Company submitted a report on Form 8-K/A on November 25, 2003 to amend page 2 of the Form 8-K filed on November 24, 2003 to indicate that the filing relates to Items 7, 9, and 12 rather than Items 5 and 7. No changes were made to the press release attached as Exhibit 99.1.

57

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: April 8, 2004	Semtech Corporation
	By:	/s/ Jason L. Carlson
		Jason L. Carlson
		President and Chief Executive Officer

58

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Date: April 8, 2004	/s/ Jason L. Carlson
	Jason L. Carlson
	President and Chief Executive Officer
	Director
Date: April 8, 2004	/s/ David G. Franz Jr.
	David G. Franz, Jr.
	Vice President, Finance and Chief Financial Officer
	(Principal Accounting and Financial Officer)
Date: April 8, 2004	/s/ John D. Poe
	John D. Poe
	Chairman of the Board
Date: April 8, 2004	/s/ Rock N. Hankin
	Rock N. Hankin
	Vice Chairman of the Board
Date: April 8, 2004	/s/ James P. Burra
	James P. Burra
	Director
Date: April 8, 2004	/s/ James T. Lindstrom
	James T. Lindstrom
	Director
Date: April 8, 2004	/s/ John L. Piotrowski
	John L. Piotrowski
	Director
Date: April 8, 2004	/s/ James T. Schraith
	James T. Schraith
	Director

59

EX-10.9

Exhibit 10.9

[Company logo]

LONG-TERM STOCK INCENTIVE PLAN

AWARD AGREEMENT

(NON-EMPLOYEE DIRECTORS)

THIS AGREEMENT, entered into this 6^th day of October 2003, between Semtech Corporation, a Delaware Corporation (the “Company”), and John D. Poe (the “Optionee”).

R E C I T A L S

A. The Company has established the Company’s Long-Term Stock Incentive Plan (the “Plan”) in order to provide members of the Board of Directors (The “Board”) of the Company with an opportunity to acquire shares of the Company’s common stock (“Stock”).

B. The Plan Administrator has determined that it would be in the best interests of the Company and its stockholders to grant the option described in this Agreement to the Optionee as an compensation for services to the Company for the period October 6, 2003 through July 15, 2008, and as an incentive for promoting efforts during such service.

NOW, THEREFORE, it is agreed as follows:

1. Definitions and Incorporation. The terms used in this Agreement shall have the meanings given to such terms in the Plan. The Plan is hereby incorporated in and made a part of this Agreement as if fully set forth herein. The Optionee hereby acknowledges that he or she has received a copy of the Plan.

2. Grant of Option. Pursuant to the Plan, the Company hereby grants to the Optionee as of the date hereof the option to purchase all or any part of an aggregate of 45,960 shares of Stock (the “Option”), subject to adjustment in accordance with Section 3(d) of the Plan. The Option is not intended to qualify as an incentive stock option under the Internal Revenue Code of 1986, as amended.

3. Option Price. The price to be paid for Stock upon exercise of the Option or any part thereof shall be $20.67 per share (the “Exercise Price”).

4. Right to Exercise. Subject to the conditions set forth in this Agreement, the right to exercise the Option shall accrue as follows, with no portion of the right to exercise accruing on any other date (e.g. no pro-ration) except as specifically set forth in this Agreement or the Plan.

Date	Number of Shares
July 15, 2004	9,192
July 15, 2005	9,192
July 15, 2006	9,192
July 15, 2007	9,192
July 15, 2008	9,192

The vesting scheduled for any year will not occur, and that portion of the Option will be forfeited, if the Optionee has not attended three of the four most recently scheduled Board meetings. Absence due to illness of the Optionee or illness or death of a member of Optionee’s family will be an exception and will not prevent vesting.

5. Early Termination of Service. Notwithstanding any other provision of this Agreement, including Section 8, Section 9, or Section 10 hereof, no portion of the Option may be exercised for six months after the date of the award.

6. Securities Law Requirements. No part of the Option shall be exercised if counsel to the Company determines that any applicable registration requirement under the Securities Act of 1933, as amended (the “Securities Act”) or any other applicable requirement of Federal or State law has not been met.

7. Term of Option. The Option shall terminate in any event on the earliest of (a) October 5, 2013 at 11:59 PM, (b) the expiration of the period described in Section 8 below, or (c) the expiration of the period described in Section 9 below.

8. Exercise Following Cessation of Service. If the Optionee’s service with the Company terminates for any reason, or no reason, whether voluntarily or involuntarily, with or without cause, other than death, disability or board retirement (as defined below), any portion of the Option granted hereunder held by such person which is not then exercisable shall terminate and any portion of the Option which is then exercisable may be exercised within ninety (90) consecutive days after the date of such cessation or until the expiration of the stated term of the Option, whichever period is shorter.

9. Exercise Following Death, Disability or Board Retirement. Notwithstanding any provision in the Plan to the contrary, if the Optionee’s service with the Company ceases by reason of the Optionee’s death, disability or board retirement (as defined below), the right to exercise the Option shall immediately accrue only for that portion of the Option scheduled to vest during the next twelve months. The shares subject to the Option that are vested as of the date of the event and those which are accelerated as described above shall, subject to Section 5 above, be exercisable for three (3) years after the date of cessation or until the expiration of the stated term of the Option, whichever period is shorter.

For purposes hereof, “board retirement” means termination of an Optionee’s services as a member of the Board (a) after ten (10) years of service as a Director or, (b) after five (5) years of service as a Director if the Director is sixty-five (65) years of age at the time of termination.

If the Optionee dies or suffers a disability within the three-year period following board retirement, the vested portion of the Option shall remain fully exercisable for three (3) years after the death or disability or until the expiration of the stated term of the Option, whichever period is shorter. In case of death, the exercise may be made by the Optionee’s designated beneficiary or, if no such beneficiary has been designated, by the Optionee’s estate or by the person or persons who acquire the right to exercise it by bequest or inheritance provided that such person consents in writing to abide by and be subject to the terms of the Plan and this Agreement and such writing is delivered to the President or Chairman of the Company.

10. Exercise Following Change of Control. Notwithstanding any other provision to the contrary contained herein, subject to the provisions of Section 3(d) of the Plan, in the event of a Change in Control (as defined below), any outstanding Options shall automatically become fully vested and exercisable as of the date of the Change in Control, whether or not then exercisable, without any further action on the part of the Board, the stockholders or any committee established by the Board to administer the Plan. For purposes hereof, a “Change in Control” shall mean (i) a merger or consolidation in which the stockholders of the Company immediately prior to such merger or consolidation do not hold, immediately after such merger or consolidation, more than 50% of the combined voting power of the surviving or acquiring entity (or parent corporation thereof), or (ii) the sale of substantially all of the assets of the Company or assets representing over 50% of the operating revenues of the Company, or (iii) any person shall become the beneficial owner of over 50% of the Company’s outstanding Stock or the combined voting power of the Company’s then outstanding voting securities entitled to vote generally, or become a controlling person as defined in Rule 405 promulgated under the Securities Act.

11. Nontransferability. The Option shall be exercisable during the Optionee’s lifetime only by the Optionee and shall be nontransferable, except that the Optionee may transfer all or any part of the Option by will or by the laws of descent and distribution. Except as otherwise provided herein, any attempted alienation, assignment, pledge, hypothecation, attachment, execution or similar process, whether voluntary or involuntary, with respect to all or any part of the Option or any right thereunder, shall be null and void and, at the Company’s option, shall cause all of the Optionee’s rights under this Agreement to terminate.

12. Effect of Exercise. Upon exercise of all or any part of the Option, the number of shares of Stock subject to option under this Agreement shall be reduced by the number of shares with respect to which such exercise is made.

13. Exercise of Option. The Option may be exercised by delivering to the Company (a) a written notice of exercise in substantially the form prescribed from time to time by the Plan Administrator and (b) full payment of the exercise price or each share of Stock purchased under the Option. Such notice shall specify the number of shares of Stock with respect to which the Option is exercised and shall be signed by the person exercising the Option. If the Option is exercised by a person other than the Optionee, such notice shall be accompanied by

proof, satisfactory to the Company, of such person’s right to exercise the Option. The purchase price shall be payable (a) in U.S. dollars in cash (by check), (b) by delivery of shares of stock registered in the name of the Optionee having a fair market value at the time of exercise equal to the amount of the purchase price, (c) any combination of the payment of cash and the delivery of stock, or (d) as otherwise approved by the Plan Administrator in its sole and absolute discretion.

14. Withholding Taxes. The Company may require the Optionee to deliver payment of any withholding taxes (in addition to the purchase price) with respect to the difference between the purchase price and the fair market value of the Stock acquired upon exercise.

15. Issuance of Shares. Subject to the foregoing conditions, the Company, as soon as reasonably practicable after receipt of a proper notice of exercise and without transfer or issue tax or other incidental expense to the person exercising the Option, shall deliver to such person at the principal office of the Company, or such other location as may be acceptable to the Company and such person, one or more certificates for the shares of Stock with respect to which the Option is exercised. Such shares shall be fully paid and nonassessable and shall be issued in the name of such person. However, at the request of the Optionee, such shares may be issued in the names of the Optionee and his or her spouse as (a) joint tenants with right of survivorship, (b) community property, or (c) tenants in common without right of survivorship.

16. Rights as a Stockholder. Neither the Optionee nor any other person entitled to exercise the Option shall have any rights as a stockholder of the Company with respect to the stock subject to the Option until a certificate for such shares has been issued to him or her upon exercise of the Option.

17. Notices. Any notice to the Company contemplated by this Agreement shall be addressed to it in care of its President; and any notice to the Optionee shall be addressed to him or her at the address on file with the Company on the date hereof or at such other address as he or she may hereafter designate in writing.

18. Interpretation. The interpretation, construction, performance and enforcement of this Agreement and of the Plan shall lie within the sole discretion of the Plan Administrator, and the Plan Administrator’s determinations shall be conclusive and binding on all interested persons.

19. Choice of Law. This Agreement shall be governed by and construed in accordance with the internal substantive laws (not the law of choice of laws) of the State of California.

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year first above written.

	SEMTECH CORPORATION,
	a Delaware corporation
	By	/s/ David G. Franz, Jr.
Optionee		David G. Franz, Jr.
		Vice President-Finance & CFO
John D. Poe
(Please print Optionee’s name)
Optionee’s Spouse*
(Please print spouse’s name)

Optionee’s state of residence: California

*Include signature and name of Optionee’s spouse if Optionee is married.

EX-10.10

Exhibit 10.10

Termination of Executive Compensation Arrangement

As described in Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q/A for the quarterly period ended July 28, 2002, the Company maintained an arrangement by which variable universal life insurance policies and/or annuities were purchased for executives selected by the Compensation Committee of the Board of Directors, including some named executive officers. This arrangement was terminated as of December 31, 2003 and no further employer contributions will be made under the arrangement. All amounts contributed by the Company were vested and all Company connections to the insurance products were severed.

EX-10.11

Exhibit 10.11

Statement Regarding the Semtech Executive Compensation Plan

The Company has established a deferred compensation plan under which executives selected by the Compensation Committee of the Board of Directors, including named executive officers, may defer up to 100% of their salary, as defined by the plan. Documents related to this plan are attached as Exhibits 10.12, 10.13 and 10.14 of this Form 10K.

As currently implemented, the Company will match dollar for dollar up to the first 20% of employee contributions for the Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer positions; up to the first 15% for participants at the Vice President level; and up to the first 10% for other participants.

EX-10.12

Exhibit 10.12

[PLAN LOGO] [EXECUTIVE BENEFIT SERVICES LOGO]

THE EXECUTIVE

NONQUALIFIED “EXCESS” PLAN^™

ADOPTION AGREEMENT

THIS AGREEMENT is made the 1^st day of January, 2004, by Semtech Corporation (the “Employer”), having its principal office at 200 Flynn Rd., Camarillo, CA 93012 and EXECUTIVE BENEFIT SERVICES, INC. (the “Sponsor”), having its principal office at 4140 ParkLake Avenue, Suite 500, Raleigh, NC 27612.

W I T N E S S E T H:

WHEREAS, the Sponsor has established The Executive Nonqualified Excess Plan^™ (the “Plan”); and

WHEREAS, the Employer desires to adopt the Plan as an unfunded, nonqualified deferred compensation plan: and

WHEREAS, the Employer has been advised by the Sponsor to obtain legal and tax advice from its professional advisors before adopting the Plan, and that the Sponsor disclaims all liability for the legal and tax consequences which result from the elections made by the Employer in this Adoption Agreement;

NOW, THEREFORE, the Employer hereby adopts the Plan in accordance with the terms and conditions set forth in this Adoption Agreement:

ARTICLE I

Terms used in this Adoption Agreement shall have the same meaning as in the Plan, unless some other meaning is expressly herein set forth. The Employer hereby represents and warrants that the Plan has been adopted by the Employer upon proper authorization and the Employer hereby elects to adopt the Plan for the benefit of its Participants as referred to in the Plan. By the execution of this Adoption Agreement, the Employer hereby agrees to be bound by the terms of the Plan.

This Adoption Agreement may only be used in connection with The Executive Nonqualified Excess Plan^™. The Sponsor will inform the Employer of any amendments to the Plan or of the discontinuance or abandonment of the Plan. For questions concerning the Plan, the Employer may call the Sponsor at (919) 833-1042.

© 2003 Executive Benefit Services, Inc.

ARTICLE II

The Employer hereby makes the following designations or elections for the purpose of the Plan [Section references below correspond to Section references in the Plan]:

2.7 Compensation: The “Compensation” of a Participant shall mean all of each Participant’s [check desired option(s)]:

¨	(A)	Compensation received as an Employee reportable in box 1, Wages, Tips and other Compensation, on Form W-2.
x	(B)	Annual base salary.
x	(C)	Annual bonus.
¨	(D)	Long term incentive plan compensation.
¨	(E)	Compensation received as an Independent Contractor reportable on Form 1099.
x	(F)	Commissions.
x	(G)	other [specify]: Royalty Payments.

Notwithstanding the foregoing, Compensation x SHALL ¨ SHALL NOT include Salary Deferral Credits under this Plan and amounts contributed by the Participant pursuant to a Salary Deferral Agreement to another employee benefit plan of the Employer which are not includible in the gross income of the Employee under Section 125, 132(f)(4), 402(e)(3), 402(h) or 403(b) of the Code.

2.8 Crediting Date: The Deferred Compensation Account of a Participant shall be credited with the amount of any Salary Deferral Credits to such account at the time designated below [check desired Crediting Date]:

¨	(A)	The last business day of each Plan Year.
¨	(B)	The last business day of each calendar quarter during the Plan Year.
¨	(C)	The last business day of each month during the Plan Year.
¨	(D)	The last business day of each payroll period during the Plan Year.
x	(E)	Any business day on which Salary Deferral Credits are received by the Sponsor.
¨	(F)	Other [specify]:                                                                                                                                    .

2.10 Disability: The disability of a Participant shall be determined as follows:

x	(A)	The Participant shall be considered to be disabled when he has been determined to be disabled for the purposes of any long term disability insurance covering the Participant that is sponsored by the Employer
¨	(B)	The Participant shall be considered to be disabled when he has been determined to be disabled for purposes of the Federal Social Security Act.
¨	(C)	Other:

2.14 Effective Date [check desired option]:

x	(A)	This is a newly-established Plan, and the Effective Date of the Plan is January 1, 2004.
¨	(B)	This is an amendment and restatement of a plan named                                                   with an effective date of                         . The Effective Date of this amended and restated Plan is                         .
		This is amendment number                 .

2.20 Normal Retirement Date: The Normal Retirement Date of a Participant shall be: [check desired option]:

¨	(A)	The attainment of age         .
¨	(B)	The earlier of age          or the          anniversary of the participation commencement date. The participation commencement date is the first day of the first Plan Year in which the Participant commenced participation in the Plan.
x	(C)	The completion of 10 years of plan participation.
x	(D)	The completion of 5 years of plan participation and attainment of age 59.

2.22 Participating Employer(s): As of the Effective Date, the following Participating Employer(s) are parties to the Plan [list all employer-parties, including the Employer]:

Name of Employer	Address	Telephone No.	EIN
Semtech Corporation	200 Flynn Rd. Camarillo, CA 93012	(805) 389-2703	95-2119684
Semtech Corpus Christi Corporation	200 Flynn Rd. Camarillo, CA 93012	(805) 389-2703	74-2580516
Semtech San Diego Corporation	10021 Willow Creek Rd. San Diego, CA 92131	(858) 695-1808	33-0606952
Semtech New York Corporation	200 Flynn Rd. Camarillo, CA 93012	(805) 389-2703	77-0555306

2.23 Plan: The name of the Plan as applied to the Employer is:

Semtech Executive Compensation Plan.

2.24 Plan Administrator: The Plan Administrator shall be [check desired option]:

¨	(A)	Committee.
¨	(B)	Employer.
x	(C)	Other (specify):	Vice President, Human Resources.

2.25 Plan Year: The Plan Year shall be the 12 consecutive calendar month period ending on the last day of the month of December, and each anniversary thereof.

2.34 Trust: [check desired option]:

x	(A)	The Employer does desire to establish a “rabbi” trust for the purpose of setting aside assets of the Employer contributed thereto for the payment of benefits under the Plan.
¨	(B)	The Employer does not desire to establish a “rabbi” trust for the purpose of setting aside assets of the Employer contributed thereto for the payment of benefits under the Plan.

¨ (C) The Employer desires to establish a “rabbi” trust for the purpose of setting aside assets of the Employer contributed thereto for the payment of benefits under the Plan upon the occurrence of the following event(s):

4.1 Salary Deferral Credits: A Participant may elect to have his Compensation (as selected in Section 2.7 of this Adoption Agreement) reduced by the following annual percentage or amount as designated in writing to the Committee [check the applicable options]:

x	(A)	Annual base salary:
		[Complete the following blanks only if a minimum or maximum deferral is desired]:
		Minimum deferral: $                         or         %
		Maximum deferral: $                         or         %
x	(B)	Annual bonus:
		[Complete the following blanks only if a minimum or maximum deferral is desired]:
		Minimum deferral: $                         or         %
		Maximum deferral: $                         or         %
x	(C)	Other [please specify type, as selected in Section 2.7 of this Adoption Agreement]: Commissions and Royalty Payments
		[Complete the following blanks only if a minimum or maximum deferral is desired]:
		Minimum deferral: $                         or         %
		Maximum deferral: $                         or         %
¨	(D)	Not applicable – no salary deferral provision.

4.1.2 Termination of Salary Deferrals: A Participant may terminate his Salary Deferral Agreement effective as of [check desired option]:

x	(A)	The first full payroll period commencing after the date written notice of the termination is received by the Committee.
¨	(B)	The first day of the Plan Year occurring after the date written notice of the termination is received by the Committee.
¨	(C)	Not applicable – no salary deferral provision.

4.2 Employer Credits: The Employer will make Employer Credits in the following manner [check a maximum of 2 desired option(s)]:

x	(A)	Employer Matching Credits: The Employer may make matching credits to the Deferred Compensation Account of each Participant in an amount determined as follows [check desired option(s)]:
	¨	(i)	% of the Participant’s Salary Deferral Credits.
	¨	(ii)	% of the first         % of the Participant’s Compensation which is elected as a Salary Deferral Credit.
	x	(iii)	An amount determined each Plan Year by the Employer.
	¨	(iv)	The Employer shall not match amounts provided above in excess of $                     or in excess of         % of the Participant’s Compensation per Plan Year.
	¨	(v)	Other:
			_______________________________________________________________________________________________________.
	¨	(vi)	Not applicable – no Employer matching credits provision.

x	(B)	Employer Profit Sharing Credits: The Employer may make profit sharing credits to the Deferred Compensation Account of each Active Participant in an amount determined as follows:
	¨	(i)	Such amount out of the current or accumulated net profit of the Employer for such year as the Employer in its sole discretion shall determine.
	x	(ii)	Such amount as the Employer in its sole discretion shall determine without regard to current or accumulated net profit.
	¨	(iii)	The Employer shall not make profit sharing credits in excess of $                     , or in excess of         % of the Participant’s Compensation per Plan Year.
	¨	(iv)	Other: __________________________________________________________________________________________________
			_______________________________________________________________________________________________________.
	¨	(v)	Not applicable – no Employer profit sharing provision.
¨	(C)		Other [describe]:
			_______________________________________________________________________________________________________
			_______________________________________________________________________________________________________.

5.1 Death of a Participant: If the Participant dies while in Service, the Employer shall pay a benefit to the Beneficiary in an amount equal to the Accrued Benefit of the Participant determined as of the date payments to the Beneficiary commence, plus [check if desired]:

x	(A)	An amount to be determined by the Committee.
¨	(B)	Other [specify]:                                                                                                                       .
¨	(C)	No additional benefits.

6.1 In-Service Withdrawals: In-service withdrawals may be made from the Plan [check desired option]:

x	(A)	Yes.
		(i)	The In-Service Account may be withdrawn only after the account has been established for [check desired option]:
			x	(a)    A minimum of 2 years (insert minimum of 2 years.)
			¨	(b)    Not applicable.
		(ii)	A Participant may defer the date of any scheduled in-service withdrawal by giving notice of the new withdrawal date to the Committee [check desired option]:
			x	(a)    At least 12 (insert minimum of 12) months prior to the scheduled withdrawal date.
			¨	(b)    Not applicable.
¨	(B)	No in-service withdrawals.

6.2 Financial Hardship Withdrawals: Financial hardship withdrawals may be made from the Plan [check desired option]:

x	(A)	Yes.
¨	(B)	No.

6.3 “Haircut” Withdrawals: “Haircut” withdrawals may be made from the Plan [check desired option]:

x	(A)	Yes. If a Participant obtains a “haircut” withdrawal, the Participant shall forfeit 10% (specify percentage not less than 10%) of the amount of withdrawal.
¨	(B)	No “haircut” withdrawals.

6.4 Education Withdrawals: Education withdrawals may be made from the Plan [check desired option]:

x	(A)	Yes.
		(i)	Education withdrawals may be made in installment payments over no more than 6 years.
		(ii)	A Participant may defer the date of any scheduled education withdrawal by giving notice of the new withdrawal date to the Committee [check desired option]:
			x	(a)    At least 12 (insert minimum of 12) months prior to the scheduled withdrawal date.
			¨	(b)    Not applicable.
¨	(B)	No education withdrawals.

7.1 Payment Options: Any benefit payable under the Plan upon a Qualifying Distribution Event may be made to the Participant or his Beneficiary (as applicable) in any of the following payment forms, as selected by the Participant upon his entry into the Plan [check desired option(s)]:

x	(A)	A lump sum in cash as soon as practicable following the date of the Qualifying Distribution Event.
x	(B)	Approximately equal annual installments over a term no longer than 20 years as elected by the Participant upon his entry into the Plan.
	x	(i)	Payment of the benefit shall commence as soon as practicable after the following date [select desired option]:
		¨	(a)    The first business day of the calendar year following the date of the Qualifying Distribution Event.
		¨	(b)    The first business day of the calendar quarter following the date of the Qualifying Distribution Event.
		x	(c)    The first business day of the calendar month following the date of the Qualifying Distribution Event.
		The payment of each annual installment shall be made on the anniversary of the date selected for the commencement of the installment payments in this subsection (i). The amount of the annual installment shall be adjusted on each anniversary date of the commencement of the installment payments for credits or debits to the Participant’s account pursuant to Section 9 of the Plan. Such adjustment shall be made by dividing the balance in the Deferred Compensation Account on each such date (following adjustment on such date) by the number of annual installments remaining to be paid hereunder; provided that the last annual installment due under the Plan shall be the entire amount credited to the Participant’s account on the date of the payment.
	x	(ii)	Notwithstanding the payment option elected by the Participant, the vested Accrued Benefit of the Participant will be distributed in a single lump payment if the amount of such benefit on the date that payment is to commence does not exceed [check desired option]:
		¨	(a)    $ 50,000 (Insert desired cash out amount).
		¨	(b)    Not applicable.
x	(C)	A Participant may defer the date of any scheduled payment by giving notice of the new payment date to the Committee [check desired option]:
	x	(i)	At least 12 (insert minimum of 12) months prior to the scheduled payment date.
	¨	(ii)	Not applicable.
¨	(D)	Other [specify]:                                                                                                               .

8. Vesting: An Active Participant shall be fully vested in the Employer Credits made to the Deferred Compensation Account upon occurrence of the following events [check or complete all that apply]:

x	(A)	Normal Retirement Date.
x	(B)	Death.
x	(C)	Disability.
x	(D)	Completion of that number of Years of Service specified below:

x	(i)	Employer Matching Credits [complete if applicable]:
	¨	(a)	Immediate 100% vesting.
	¨	(b)	100% vesting after          Years of Service.
	¨	(c)	100% vesting at age         .
	x	(d)

Number of Years of Service	Vested Percentage
Less than  1	0	%
1	25	%
2	50	%
3	75	%
4	100	%
5		%
6		%
7		%
8		%
9		%
10 or more		%

For this purpose, Years of Service of a Participant shall be calculated from the date designated below [check desired option]:
	¨	(1)	First Day of Service.
	¨	(2)	Effective Date of the Plan Participation.
	x	(3)	Each Crediting Date. Under this option (3), each Employer Matching Credit shall vest based on the Years of Service of a Participant from the Crediting Date on which each Employer Credit is made to his or her Deferred Compensation Account.

x	(ii)	Employer Profit Sharing Credits [complete if applicable]:
	¨	(a)	Immediate 100% vesting.
	¨	(b)	100% vesting after          Years of Service.
	¨	(c)	100% vesting at age         .
	x	(d)

Number of Years of Service	Vested Percentage
Less than 1	0	%
1	25	%
2	50	%
3	75	%
4	100	%
5		%
6		%
7		%
8		%
9		%
10 or more		%

For this purpose, Years of Service of a Participant shall be calculated from the date designated below [check desired option]:
	¨	(1)	First Day of Service.
	¨	(2)	Effective Date of the Plan Participation.
	x	(3)	Each Crediting Date. Under this option (3), each Employer Profit Sharing Credit shall vest based on the Years of Service of a Participant from the Crediting Date on which each Employer Credit is made to his or her Deferred Compensation Account.

10. Benefit Exchange: The Employer elects to permit the Participant to exchange all or any portion of the vested Accrued Benefit under the Plan for another type of nonqualified benefit [check desired option]:

¨	(A)	Yes.
x	(B)	No.

11. Transfer to Qualified Plan: The Employer elects to permit the Participant to direct the transfer of a portion of his benefit under this Plan to a tax-qualified retirement plan maintained by the Employer [check desired option]:

¨	(A)	Yes. Insert name of Qualified Plan:                                                                                                   .
x	(B)	No.

17. Amendment or Termination of Plan: [check or complete all that apply]:

¨	(A)	Notwithstanding any provision in this Adoption Agreement or the Plan to the contrary, Section              of the Plan shall be amended to read as follows:
		See attached Exhibit             .
¨	(B)	The Plan shall be terminated upon the occurrence of one or more of the following events [check if desired]:
	¨	(i)	The amount of shareholders equity shown on the financial statements of the Employer for each of the two most recent fiscal years is less than $                         .
	¨	(ii)	The aggregate net loss (after tax) as reported on the financial statements of the Employer for the two most recent fiscal years is greater than $                         .
	¨	(iii)	There is a change of control of the Employer. For this purpose, a “change of control” shall be deemed to have occurred if: (A) any person other than an officer who is an Employee of the Employer for at least one year preceding the change of control, acquires or becomes the beneficial owner, directly or indirectly, of securities of the Employer representing         % [insert percentage] or more of the combined voting power of the Employer’s then outstanding securities and thereafter, the membership of the Board becomes such that a majority are persons who were not members of the Board at the time of the acquisition of securities; or (B) the Employer, or its assets, are acquired by or combined with another entity and less than a majority of the outstanding voting shares of such entity after the acquisition or combination are owned, immediately after the acquisition or combination, by the owners of voting shares of the Employer immediately prior to the acquisition or combination.
	¨	(iv)	Other [specify]: ____________________________________________________________________________________________
			_________________________________________________________________________________________________________
			_________________________________________________________________________________________________________
			________________________________________________________________________________________________________.
x	(C)	In the event of a termination of the Plan, the Employer elects that [check if desired]:
	x	(i)	Each Active Participant will become fully vested in the Deferred Compensation Account. [If not checked, the vesting provisions of Section 8 will continue to apply.]
	¨	(ii)	The Deferred Compensation Account will be immediately distributed to each Participant in a single lump sum payment. [If not checked the payment provisions of Section 7 will continue to apply.]

20.9 Construction: The provisions of the Plan and Trust (if any) shall be construed and enforced according to the laws of the State of Delaware, except to the extent that such laws are superseded by ERISA.

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year first above stated.

Semtech Corporation
Name of Employer
By:	/s/ David G. Franz, Jr.
	Authorized Person
	VP-CFO
	Title

NOTE: Execution of this Adoption Agreement creates a legal liability of the Employer with significant tax consequences to the Employer and Participants. The Employer should obtain legal and tax advice from its professional advisors before adopting the Plan. The Sponsor disclaims all liability for the legal and tax consequences which result from the elections made by the Employer in this Adoption Agreement.

The Plan is adopted by the following Participating Employers:

Semtech Corpus Christi Corporation
Name of Employer
By:	/s/ David G. Franz, Jr.
	Authorized Person
	Vice President
	Title
Semtech San Diego Corporation
Name of Employer
By:	/s/ David G. Franz, Jr.
	Authorized Person
	Vice President
	Title
Semtech New York Corporation
Name of Employer
By:	/s/ David G. Franz, Jr.
	Authorized Person
	Vice President
	Title

EX-10.13

Exhibit 10.13

[PLAN LOGO]

THE EXECUTIVE

NONQUALIFIED “EXCESS” PLAN^™

Plan Document

[EXECUTIVE BENEFIT SERVICES LOGO]

© 2003 Executive Benefit Services, Inc.

4140 ParkLake Avenue, Suite 500

Raleigh, NC 27612

[PLAN LOGO]

THE EXECUTIVE

NONQUALIFIED “EXCESS” PLAN^™

TABLE OF CONTENTS

		Page
Section 1.	Purpose:	1
Section 2.	Definitions:	1
2.1	“Accrued Benefit”	1
2.2	“Active Participant”	1
2.3	“Adoption Agreement”	2
2.4	“Beneficiary”	2
2.5	“Board”	2
2.6	“Committee”	2
2.7	“Compensation” .	2
2.8	“Crediting Date”	2
2.9	“Deferred Compensation Account”	2
2.10	“Disability”	2
2.11	“Education Account”	3
2.12	“Education Subaccount”	3
2.13	“Education Recipient”	3
2.14	“Effective Date”	3
2.15	“Employee”	3
2.16	“Employer”	4
2.17	“Employer Credits”	4
2.18	“Independent Contractor”	4
2.19	“In-Service Account”	4
2.20	“Normal Retirement Date”	4
2.21	“Participant”	5
2.22	“Participating Employer”	5
2.23	“Plan”	5
2.24	“Plan Administrator”	5
2.25	“Plan Year”	5
2.26	“Qualifying Distribution Event”	5
2.27	“Retire” or “Retirement”	5
2.28	“Retirement Account”	5
2.29	“Salary Deferral Agreement”	6
2.30	“Salary Deferral Credits”	6
2.31	“Service”	6
2.32	“Sponsor”	6
2.33	“Spouse” or “Surviving Spouse”	6
2.34	“Trust”	6
2.35	“Trustee”	6
2.36	“Years of Service”.	6

i

Section 3.	Participation:	7
Section 4.	Credits to Deferred Compensation Account:	7
4.1	Salary Deferral Credits.	7
4.2	Employer Credits	8
4.3	Deferred Compensation Account	8
Section 5.	Qualifying Distribution Events:	8
5.1	Death of a Participant	8
5.2	Disability of a Participant	9
5.3	Termination of Service	9
5.4	Retirement	9
Section 6.	Distributions While in Service:	9
6.1	In-Service Withdrawals	9
6.2	Financial Hardship Withdrawals	10
6.3	“Haircut” Withdrawals	11
6.4	Education Withdrawals	11
Section 7.	Qualifying Distribution Events Payment Options:	12
7.1	Payment Options	12
7.2	Prepayment	13
Section 8.	Vesting:	13
Section 9.	Accounts; Deemed Investment; Adjustments to Account:	14
9.1	Accounts	14
9.2	Deemed Investments	14
9.3	Adjustments to Deferred Compensation Account	14
Section 10.	Benefit Exchange:	15
Section 11.	Transfer to Qualified Plan:	15
11.1	Maximize Qualified Plan Deferrals	15
11.2	Maximize Qualified Plan Match	16
11.3	Transfer Deferral to Qualified Plan.	16
11.4	Credit Match to Qualified Plan	16
11.5	Compliance with Qualified Plan	17
Section 12.	Administration by Committee:	17
12.1	Membership of Committee	17
12.2	Committee Officers; Subcommittee	17
12.3	Committee Meetings	17
12.4	Transaction of Business	18
12.5	Committee Records	18

ii

12.6	Establishment of Rules	18
12.7	Conflicts of Interest	18
12.8	Correction of Errors	18
12.9	Authority to Interpret Plan	19
12.10	Third Party Advisors	19
12.11	Compensation of Members	19
12.12	Expense Reimbursement	19
12.13	Indemnification	19
Section 13.	Contractual Liability; Trust:	20
13.1	Contractual Liability	20
13.2	Trust	20
Section 14.	Allocation of Responsibilities:	21
14.1	Board.	21
14.2	Committee.	21
14.3	Plan Administrator	21
Section 15.	Benefits Not Assignable; Facility of Payments:	21
15.1	Benefits not Assignable	21
15.2	Payments to Minors and Others	22
Section 16.	Beneficiary:	22
Section 17.	Amendment and Termination of Plan:	23
Section 18.	Communication to Participants:	23
Section 19.	Claims Procedure:	24
19.1	Filing of a Claim for Benefits	24
19.2	Notification to Claimant of Decision	24
19.3	Procedure for Review	25
19.4	Decision on Review	25
19.5	Action by Authorized Representative of Claimant	25
Section 20.	Miscellaneous Provisions:	26
20.1	Set off	26
20.2	Notices	26
20.3	Lost Distributees	26
20.4	Reliance on Data	27
20.5	Receipt and Release for Payments	27
20.6	Headings	27
20.7	Continuation of Employment	27
20.8	Merger or Consolidation; Assumption of Plan	28
20.9	Construction	28

iii

[PLAN LOGO]

THE EXECUTIVE

NONQUALIFIED “EXCESS” PLAN^™

Section 1. Purpose:

By execution of the Adoption Agreement, the Employer has adopted the Plan set forth herein to provide a means by which certain management Employees and Independent Contractors of the Employer may elect to defer receipt of current Compensation from the Employer in order to provide Retirement and other benefits on behalf of such Employees and Independent Contractors of the Employer, as selected in the Adoption Agreement. The Plan is not intended to be a tax-qualified retirement plan under Section 401(a) of the Internal Revenue Code (the “Code”). The Plan is intended to be an unfunded plan maintained primarily for the purpose of providing deferred compensation benefits for a select group of management or highly compensated employees under Sections 201(2), 301(a)(3) and 401(a)(1) of the Employee Retirement Income Security Act of 1974 and independent contractors.

Section 2. Definitions:

As used in the Plan, including this Section 2, references to one gender shall include the other and, unless otherwise indicated by the context:

2.1 “Accrued Benefit” means, with respect to each Participant, the balance credited to his Deferred Compensation Account.

2.2 “Active Participant” means, with respect to any day or date, a Participant who is in Service on such day or date; provided, that a Participant shall cease to be an Active Participant immediately upon a determination by the Committee that the Participant has ceased to be an Employee or Independent Contractor, or that the Participant no longer meets the eligibility requirements of the Plan.

2.3 “Adoption Agreement” means the written agreement pursuant to which the Employer adopts the Plan. The Adoption Agreement is a part of the Plan as applied to the Employer.

2.4 “Beneficiary” means the person, persons, entity or entities designated or determined pursuant to the provisions of Section 16 of the Plan.

2.5 “Board” means the Board of Directors of the Employer, if the Employer is a corporation. If the Employer is not a corporation, “Board” shall mean the Employer.

2.6 “Committee” means the administrative committee provided for in Section 12.

2.7 “Compensation” shall have the meaning designated in the Adoption Agreement.

2.8 “Crediting Date” means the date designated in the Adoption Agreement for crediting the amount of any Salary Deferral Credits to the Deferred Compensation Account of a Participant. Employer Credits may be credited to the Deferred Compensation Account of a Participant on any day that securities are traded on a national securities exchange.

2.9 “Deferred Compensation Account” means the sum of the amounts credited to the Retirement Account, the In-Service Account and the Education Account of each Participant, as applicable. The Deferred Compensation Account of each Participant shall be adjusted as provided in Section 9.

2.10 “Disability” means disability as defined in the Adoption Agreement.

2

2.11 “Education Account” means a separate account to be kept for each Participant that can be divided into one or more Education Subaccounts as described in Section 6.4. The Education Account shall be established, adjusted for payments, credited with Salary Deferral Credits, and credited or debited for deemed investment gains or losses in the same manner and at the same time as such adjustments are made to the Deferred Compensation Account under Section 9 and in accordance with the rules and elections in effect under Section 9.

2.12 “Education Subaccount” means the subaccount of the Education Account which is maintained with respect to an Education Recipient. If the Participant does not designate more than one Education Recipient, the Education Account shall be the Education Subaccount with respect to such Education Recipient.

2.13 “Education Recipient” means the individual designated by the Participant in the Salary Deferral Agreement with respect to whom the Participant will create an Education Subaccount.

2.14 “Effective Date” shall be the date designated in the Adoption Agreement as of which the Plan first becomes effective.

2.15 “Employee” means an individual in the Service of the Employer if the relationship between the individual and the Employer is the legal relationship of employer and employee and if the individual is a highly compensated or management employee of the Employer. An individual shall cease to be an Employee upon the Employee’s termination of Service.

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2.16 “Employer” means the Employer identified in the Adoption Agreement, and any Participating Employer which adopts this Plan. The Employer may be a corporation, a limited liability company, a partnership or sole proprietorship. All references herein to the Employer shall be applied separately to each such Employer as if the Plan were solely the Plan of that Employer.

2.17 “Employer Credits” means the amounts credited to the Participant’s Retirement Account by the Employer pursuant to the provisions of Section 4.2.

2.18 “Independent Contractor” means an individual in the Service of the Employer if the relationship between the individual and the Employer is not the legal relationship of employer and employee. An individual shall cease to be an Independent Contractor upon the termination of the Independent Contractor’s Service. An Independent Contractor shall include a director of the Employer who is not an Employee.

2.19 “In-Service Account” means a separate account to be kept for each Participant, as described in Section 6.1. The In-Service Account shall be established, adjusted for payments, credited with Salary Deferral Credits, and credited or debited for deemed investment gains or losses in the same manner and at the same time as such adjustments are made to the Deferred Compensation Account under Section 9 and in accordance with the rules and elections in effect under Section 9.

2.20 “Normal Retirement Date” of a Participant is designated in the Adoption Agreement. The “Retirement Date” of a Participant means the date the Participant attains his Retirement Age.

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2.21 “Participant” means with respect to any Plan Year an Employee or Independent Contractor who has been designated by the Committee as a Participant and who has entered the Plan or who has an Accrued Benefit under the Plan.

2.22 “Participating Employer” means any trade or business (whether or not incorporated) which adopts this Plan with the consent of the Employer identified in the Adoption Agreement.

2.23 “Plan” means The Executive Nonqualified Excess Plan^™, as herein set out or as duly amended. The name of the Plan as applied to the Employer shall be designated in the Adoption Agreement.

2.24 “Plan Administrator” means the person designated in the Adoption Agreement. If the Plan Administrator designated in the Adoption Agreement is unable to serve, the Employer shall be the Plan Administrator.

2.25 “Plan Year” means the twelve-month period ending on the last day of the month designated in the Adoption Agreement.

2.26 “Qualifying Distribution Event” means the Participant’s Retirement or the termination of Participant’s Service with the Employer for any reason, including as a result of his death or Disability, as described in Section 5.

2.27 “Retire” or “Retirement” means Retirement within the meaning of Section 5.4.

2.28 “Retirement Account” means a separate account to be kept for each Participant, as described in Section 4.3. The Retirement Account shall be established, adjusted for payments, credited with Salary Deferral Credits and Employer Credits, and credited or debited for deemed investment gains or losses in the same manner and at the same time as such adjustments are made to the Deferred Compensation Account under Section 9 and in accordance with the rules and elections in effect under Section 9.

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2.29 “Salary Deferral Agreement” means a written agreement entered into between a Participant and the Employer pursuant to the provisions of Section 4.1

2.30 “Salary Deferral Credits” means the amounts credited to the Participant’s Deferred Compensation Account by the Employer pursuant to the provisions of Section 4.1.

2.31 “Service” means employment by the Employer as an Employee. If the Participant is an Independent Contractor, “Service” shall mean the period during which the contractual relationship exists between the Employer and the Participant.

2.32 “Sponsor” means Executive Benefit Services, Inc.

2.33 “Spouse” or “Surviving Spouse” means, except as otherwise provided in the Plan, the legally married spouse or surviving spouse of a Participant.

2.34 “Trust” means the trust fund established pursuant to Section 13.2, if designated by the Employer in the Adoption Agreement.

2.35 “Trustee” means the trustee, if any, named in the agreement establishing the Trust and such successor or additional trustee as may be named pursuant to the terms of the agreement establishing the Trust.

2.36 “Years of Service” means each Plan Year of Service completed by the Participant. For vesting purposes, Years of Service shall be calculated from the date designated in the Adoption Agreement.

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Section 3. Participation:

The Committee in its discretion shall designate each Employee or Independent Contractor who is eligible to participate in the Plan. An Employee or Independent Contractor designated by the Committee as a Participant who has not otherwise entered the Plan shall enter the Plan and become a Participant as of the date determined by the Committee. A Participant who separates from Service with the Employer and who later returns to Service will not be an Active Participant under the Plan except upon satisfaction of such terms and conditions as the Committee shall establish upon the Participant’s return to Service, whether or not the Participant shall have an Accrued Benefit remaining under the Plan on the date of his return to Service.

Section 4. Credits to Deferred Compensation Account:

4.1 Salary Deferral Credits. To the extent provided in the Adoption Agreement, each Active Participant may elect, by entering into a Salary Deferral Agreement with the Employer, to defer his Compensation from the Employer by a dollar amount or percentage specified in the Salary Deferral Agreement. The amount of the Participant’s Salary Deferral Credit shall be credited by the Employer to the Deferred Compensation Account maintained for the Participant pursuant to Section 9. The following special provisions shall apply with respect to the Salary Deferral Credits of a Participant:

4.1.1 The Employer shall credit to the Participant’s Deferred Compensation Account on each Crediting Date an amount equal to the total Salary Deferral Credit for the period ending on such Crediting Date.

4.1.2 An election pursuant to Section 4.1 shall be made by the Participant by executing and delivering a Salary Deferral Agreement to the Committee. The Salary Deferral Agreement shall become effective with respect to such Participant as of the first full payroll period commencing on or immediately following the first day of the Plan Year which occurs after the date such Salary Deferral Agreement is received by the Committee; provided, that a Participant who first becomes a Participant in the Plan during a Plan Year may enter into a Salary Deferral Agreement to be effective as of the first payroll period next following the date he enters the Plan. A Participant’s election shall continue

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in effect, unless earlier modified by the Participant, until the Service of the Participant is terminated, or, if earlier, until the Participant ceases to be an Active Participant under the Plan.

4.1.3 A Participant may unilaterally modify a Salary Deferral Agreement (either to increase or decrease the portion of his future Compensation which is subject to salary deferral within the percentage limits set forth in Section 4.1 of the Adoption Agreement) by providing a written modification of the Salary Deferral Agreement to the Employer. The modification shall become effective as of the first full payroll period commencing on or immediately following the first day of the Plan Year which occurs after the date such written modification is received by the Committee. The Participant may terminate the Salary Deferral Agreement effective as of the date designated in the Adoption Agreement.

4.1.4 The Committee may from time to time establish policies or rules governing the manner in which Salary Deferral Credits may be made.

4.2 Employer Credits. If designated by the Employer in the Adoption Agreement, the Employer shall cause the Committee to credit to the Deferred Compensation Account of each Active Participant an Employer Credit as determined in accordance with the Adoption Agreement.

4.3 Deferred Compensation Account. Unless otherwise designated by the Participant in the Salary Deferral Agreement, all Salary Deferral Credits made pursuant to Section 4.1 shall be credited to the Retirement Account of the Participant. All Employer Credits made pursuant to Section 4.2 shall be made to the Retirement Account of the Participant. The Retirement Account is a part of the Deferred Compensation Account of a Participant and shall be distributed upon a Qualifying Distribution Event.

Section 5. Qualifying Distribution Events:

5.1 Death of a Participant. If a Participant dies while in Service, the Employer shall pay a benefit to the Participant’s Beneficiary in the amount designated in the Adoption Agreement. Payment of such benefit shall be made by the Employer pursuant to Section 7. If a Participant dies following his Retirement or termination of Service for any

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reason, including Disability, and before all payments to him under the Plan have been made, the balance of the Participant’s vested Accrued Benefit shall be paid by the Employer to the Participant’s Beneficiary pursuant to Section 7, and such balance shall be determined as of the commencement date of the payments.

5.2 Disability of a Participant. If a Participant suffers a Disability while in Service prior to his Normal Retirement Date, he shall terminate Service with the Employer as of the date of the establishment of his Disability, whereupon he shall commence receiving payment of his vested Accrued Benefit, determined as of the commencement date of the payments. Such benefit shall be paid by the Employer as provided in Section 7.

5.3 Termination of Service. If the Service of a Participant with the Employer shall be terminated for any reason other than Retirement, Disability or death, his vested Accrued Benefit shall be paid to him by the Employer as provided in Section 7, and such Accrued Benefit shall be determined as of the commencement date of the payments. If a Participant’s Accrued Benefit is not fully vested at his termination of employment, he shall forfeit that portion of his Accrued Benefit that is not fully vested. If he subsequently returns to Service with the Employer, he shall be treated as a new Participant for purposes of determining the vested portion of his Accrued Benefit.

5.4 Retirement. A Participant who is in Service on or after his Normal Retirement Date shall be eligible to Retire and commence receiving payment of his Accrued Benefit. Payment of such benefit shall be made by the Employer pursuant to Section 7.

Section 6. Distributions While in Service:

6.1 In-Service Withdrawals. If the Employer designates in the Adoption Agreement that in-service withdrawals are permitted under the Plan, a Participant may elect in the Salary Deferral Agreement to withdraw a designated amount from his Deferred

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Compensation Account at the specified time or times designated by the Participant in the Salary Deferral Agreement, and the Participant’s In-Service Account shall be credited with the amount designated for in-service withdrawals. The following special provisions shall apply with respect to the In-Service Account:

6.1.1 Notwithstanding any provision in this Section 6 to the contrary, if Participant incurs a Qualifying Distribution Event prior to the date on which the entire balance of his In-Service Account has been distributed to him, then the balance in the In-Service Account on the date of the Qualifying Distribution Event shall be distributed to him in the same manner and at the same time as his Deferred Compensation Account is distributed to him under Section 7 and in accordance with the rules and elections in effect under Section 7.

6.1.2 If permitted by the Employer in the Adoption Agreement, a Participant may defer the date of any withdrawal from the In-Service Account by giving notice of the new withdrawal date to the Committee within the time limits specified in the Adoption Agreement.

6.2 Financial Hardship Withdrawals. If the Employer designates in the Adoption Agreement that financial hardship withdrawals are permitted under the Plan, a distribution of the Deferred Compensation Account may be made to a Participant on account of financial hardship, subject to the following provisions:

6.2.1 A Participant may, at any time prior to his Retirement or termination of Service for any reason, including Disability, make application to the Committee to receive a distribution in a lump sum of all or a portion of the vested Accrued Benefit credited to his Deferred Compensation Account (determined as of the date the distribution, if any, is made under this Section 6.2) because of an unforeseeable emergency that results in severe financial hardship to the Participant. A distribution because of an unforeseeable emergency shall not exceed the amount required to meet the immediate financial need created by the unforeseeable emergency and not otherwise reasonably available from other resources of the Participant. Examples of an unforeseeable emergency shall include but shall not be limited to those financial needs arising on account of a sudden or unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant.

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6.2.2 The Participant’s request for a distribution on account of financial hardship must be made in writing to the Committee. The request must specify the nature of the financial hardship, the total amount requested to be distributed from the Deferred Compensation Account, and the total amount of the actual expense incurred or to be incurred on account of financial hardship.

6.2.3 If a distribution under this Section 6.2 is approved by the Committee, such distribution will be made as soon as practicable following the date it is approved. The processing of the request shall be completed as soon as practicable from the date on which the Committee receives the properly completed written request for a distribution on account of a financial hardship. If a Participant’s termination of Service occurs after a request is approved in accordance with this Section 6.2.3, but prior to distribution of the full amount approved, the approval of the request shall be automatically null and void and the benefits which the Participant is entitled to receive under the Plan shall be distributed in accordance with the applicable distribution provisions of the Plan. Only one financial hardship distribution shall be made within any Plan Year.

6.2.4 The Committee may from time to time adopt additional policies or rules governing the manner in which such distributions may be made so that the Plan may be conveniently administered.

6.3 “Haircut” Withdrawals. If the Employer designates in the Adoption Agreement that “haircut” withdrawals are permitted under the Plan, a Participant in Service may at his option make one or more withdrawals from his Deferred Compensation Account by written request to the Committee; provided, however, that a Participant who requests a withdrawal under this Section 6.3 shall incur a penalty (the “haircut”) equal to a percentage (not less than 10%), as designated by the Employer in the Adoption Agreement, of the amount withdrawn, and this penalty shall be forfeited from the Deferred Compensation Account of the Participant notwithstanding the provisions of Section 8.

6.4 Education Withdrawals. If the Employer designates in the Adoption Agreement that education withdrawals are permitted under the Plan, a Participant may elect in the Salary Deferral Agreement for a designated percentage or dollar amount of the Salary Deferral Credits to be credited to the Education Account of the Education Recipient designated by the Participant. If the Participant designates more than one Education Recipient, the

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Education Account shall be divided into Education Subaccounts for each Education Recipient, and the Participant may designate in the Salary Deferral Agreement the percentage or dollar amount of each Salary Deferral Credit to be credited to each Education Subaccount. In the absence of a clear designation, all credits made to the Education Account shall be equally allocated to each Education Subaccount. As soon as practicable after the date designated by the Participant in the Salary Deferral Agreement, the Employer shall pay to the Participant the balance in the Education Subaccount with respect to such Education Recipient in the manner designated by the Participant in the Salary Deferral Agreement and permitted by the Employer in the Adoption Agreement. The following special provisions shall apply with respect to the Education Account:

6.4.1 Notwithstanding any provision in this Section 6 to the contrary, if a Participant incurs a Qualifying Distribution Event prior to the date on which the entire balance of the Education Account has been distributed to him, then the balance in the Education Account on the date of the Qualifying Distribution Event shall be distributed to him in the same manner and at the same time as his Deferred Compensation Account is distributed to him under Section 7 and in accordance with the rules and elections in effect under Section 7.

6.4.2 If permitted by the Employer in the Adoption Agreement, a Participant may defer the date of any withdrawal from the Education Account by giving notice of the new withdrawal date to the Committee within the time limits specified in the Adoption Agreement.

Section 7. Qualifying Distribution Events Payment Options:

7.1 Payment Options. The Employer shall designate in the Adoption Agreement the payment options available upon a Qualifying Distribution Event. Upon a Participant’s entry into the Plan, the Participant shall elect among these designated payment options the method under which his vested Accrued Benefit or, in the event of his death, any benefit payable as a result, will be distributed; provided, however, that if permitted by the Employer in the Adoption Agreement, a Participant may change the method of payment by

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giving notice of the new payment method to the Committee within the time limits specified in the Adoption Agreement. In the event the Participant fails to make a valid designation of the payment method, the distribution will be made in a single lump sum payment. Notwithstanding any election made by the Participant, the vested Accrued Benefit of the Participant will be distributed in a single lump sum payment if the amount of such benefit does not exceed the dollar limit specified by the Employer in the Adoption Agreement, if applicable.

7.2 Prepayment. Notwithstanding any other provisions of this Plan, if a Participant or any other person (a “recipient”) is entitled to receive payments under the Plan, the Committee in its sole discretion may direct the Employer to prepay all or any part of the payments remaining to be made to or on behalf of the recipient, or to shorten the payment period. The amount of such prepayment shall be in full satisfaction of the Employer’s obligations hereunder to the recipient and to all persons claiming under or through the recipient with respect to the payments being prepaid. In the event of a partial prepayment, the Committee shall designate which installments are being prepaid and, if applicable, the accounts of the Participant from which such prepayments shall be debited. The Committee’s determinations under this Section 7.2 shall be final and conclusive upon all parties claiming benefits under this Plan.

Section 8. Vesting:

A Participant shall be fully vested in the portion of his Deferred Compensation Account attributable to Salary Deferral Credits, and all income, gains and losses attributable thereto. A Participant shall become fully vested in the portion of his Deferred Compensation Account attributable to Employer Credits, and income, gains and losses attributable thereto, in accordance with the vesting schedule and provisions designated by the Employer in the Adoption Agreement.

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Section 9. Accounts; Deemed Investment; Adjustments to Account:

9.1 Accounts. The Committee shall establish a book reserve account, entitled the “Deferred Compensation Account,” on behalf of each Participant. The Committee shall also establish a Retirement Account, In-Service Account and Education Account as a part of the Deferred Compensation Account of each Participant, if applicable. The amount credited to the Deferred Compensation Account shall be adjusted pursuant to the provisions of Section 9.3.

9.2 Deemed Investments. The Deferred Compensation Account of a Participant shall be credited with an investment return determined as if the account were invested in one or more investment funds made available by the Committee. The Participant shall elect the investment funds in which his Deferred Compensation Account shall be deemed to be invested. Such election shall be made in the manner prescribed by the Committee and shall take effect upon the entry of the Participant into the Plan. The investment election of the Participant shall remain in effect until a new election is made by the Participant. In the event the Participant fails for any reason to make an effective election of the investment return to be credited to his account, the investment return shall be determined by the Committee.

9.3 Adjustments to Deferred Compensation Account. With respect to each Participant who has a Deferred Compensation Account under the Plan, the amount credited to such account shall be adjusted by the following debits and credits, at the times and in the order stated:

9.3.1 The Deferred Compensation Account shall be debited each business day with the total amount of any payments made from such account since the last preceding business day to him or for his benefit.

9.3.2 The Deferred Compensation Account shall be credited on each Crediting Date with the total amount of any Salary Deferral Credits and Employer Credits to such account since the last preceding Crediting Date.

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9.3.3 The Deferred Compensation Account shall be credited or debited on each day securities are traded on a national stock exchange with the amount of deemed investment gain or loss resulting from the performance of the investment funds elected by the Participant in accordance with Section 9.2. The amount of such deemed investment gain or loss shall be determined by the Committee and such determination shall be final and conclusive upon all concerned.

Section 10. Benefit Exchange:

If elected by the Employer in the Adoption Agreement, the Employer and the Participant may enter into an agreement under which the Participant’s vested Accrued Benefit may be exchanged for another nonqualified benefit in accordance with rules established by the Committee.

Section 11. Transfer to Qualified Plan:

If elected by the Employer in the Adoption Agreement and directed by the Participant in the Salary Deferral Agreement, the Employer shall transfer amounts from the Deferred Compensation Account of the Participant to the account of the Participant under a tax-qualified retirement plan maintained by the Employer and identified in the Adoption Agreement (the “Qualified Plan”) in accordance with the following procedures:

11.1 Maximize Qualified Plan Deferrals. As soon as administratively feasible after the end of each Plan Year, the Employer shall determine the amount of Salary Deferral Credits made to the Deferred Compensation Account of the Participant for the Plan Year (excluding the amount of deemed investment gain or loss with respect thereto) which is eligible for transfer to the Qualified Plan. Such amount shall be determined so as to permit the maximum allocation to the account of the Participant under the Qualified Plan for the Plan Year without exceeding the limitations applicable to the Qualified Plan (including by way of illustration and not limitation, the limitations under Sections 402(g) and 401(k)(3) of the Code, and any successors thereto).

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11.2 Maximize Qualified Plan Match. As soon as administratively feasible after the end of each Plan Year, the Employer shall determine the amount of any Employer Credits made as a matching amount to the Deferred Compensation Account of the Participant for the Plan Year (excluding the amount of deemed investment gain or loss with respect thereto) which is eligible for transfer to the Qualified Plan. Such amount shall be determined so as to permit the maximum allocation to the account of the Participant under the Qualified Plan for the Plan Year without exceeding the limitations applicable to the Qualified Plan (including by way of illustration and not limitation, the limitation under Section 401(m)(2) of the Code, and any successors thereto).

11.3 Transfer Deferral to Qualified Plan. No later than two and one-half months following the end of the Plan Year, the Employer shall debit the amount determined under Section 11.1 from the Deferred Compensation Account of the Participant. If the Participant has directed in the Salary Deferral Agreement that such transfer be made, the Employer shall allocate such amount to the account of the Participant under the Qualified Plan. If the Participant has not directed such transfer, the Employer shall distribute such amount from the Deferred Compensation Account to the Participant.

11.4 Credit Match to Qualified Plan. No later than two and one-half months following the end of the Plan Year, the Employer shall debit the amount determined under Section 11.2 from the Deferred Compensation Account of the Participant. If the transfer described in Section 11.3 is made, the Employer shall allocate the amount determined under Section 11.2 to the account of the Participant under the Qualified Plan. If such transfer is not made and the Participant receives a distribution of the amount determined under Section 11.1, the Participant shall forfeit the amount determined under Section 11.2.

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11.5 Compliance with Qualified Plan. In its sole discretion, the Employer may make multiple transfers or distributions under this Section 11 during the Plan Year; provided, however, that no transfers shall be made under this Section 11 if precluded by the terms of the Qualified Plan.

Section 12. Administration by Committee:

12.1 Membership of Committee. The Committee shall consist of at least three individuals who shall be appointed by the Board to serve at the pleasure of the Board. Any member of the Committee may resign, and his successor, if any, shall be appointed by the Board. The Committee shall be responsible for the general administration and interpretation of the Plan and for carrying out its provisions, except to the extent all or any of such obligations are specifically imposed on the Board.

12.2 Committee Officers; Subcommittee. The members of the Committee may elect Chairman and may elect an acting Chairman. They may also elect a Secretary and may elect an acting Secretary, either of whom may be but need not be a member of the Committee. The Committee may appoint from its membership such subcommittees with such powers as the Committee shall determine, and may authorize one or more of its members or any agent to execute or deliver any instruments or to make any payment on behalf of the Committee.

12.3 Committee Meetings. The Committee shall hold such meetings upon such notice, at such places and at such intervals as it may from time to time determine. Notice of meetings shall not be required if notice is waived in writing by all the members of the Committee at the time in office, or if all such members are present at the meeting.

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12.4 Transaction of Business. A majority of the members of the Committee at the time in office shall constitute a quorum for the transaction of business. All resolutions or other actions taken by the Committee at any meeting shall be by vote of a majority of those present at any such meeting and entitled to vote. Resolutions may be adopted or other action taken without a meeting upon written consent thereto signed by all of the members of the Committee.

12.5 Committee Records. The Committee shall maintain full and complete records of its deliberations and decisions. The minutes of its proceedings shall be conclusive proof of the facts of the operation of the Plan.

12.6 Establishment of Rules. Subject to the limitations of the Plan, the Committee may from time to time establish rules or by-laws for the administration of the Plan and the transaction of its business.

12.7 Conflicts of Interest. No individual member of the Committee shall have any right to vote or decide upon any matter relating solely to himself or to any of his rights or benefits under the Plan (except that such member may sign unanimous written consent to resolutions adopted or other action taken without a meeting), except relating to the terms of his Salary Deferral Agreement.

12.8 Correction of Errors. The Committee may correct errors and, so far as practicable, may adjust any benefit or credit or payment accordingly. The Committee may in its discretion waive any notice requirements in the Plan; provided, that a waiver of notice in one or more cases shall not be deemed to constitute a waiver of notice in any other case. With respect to any power or authority which the Committee has discretion to exercise under the Plan, such discretion shall be exercised in a nondiscriminatory manner.

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12.9 Authority to Interpret Plan. Subject to the claims procedure set forth in Section 18 the Plan Administrator and the Committee shall have the duty and discretionary authority to interpret and construe the provisions of the Plan and to decide any dispute which may arise regarding the rights of Participants hereunder, including the discretionary authority to construe the Plan and to make determinations as to eligibility and benefits under the Plan. Determinations by the Plan Administrator and the Committee shall apply uniformly to all persons similarly situated and shall be binding and conclusive upon all interested persons.

12.10 Third Party Advisors. The Committee may engage an attorney, accountant, actuary or any other technical advisor on matters regarding the operation of the Plan and to perform such other duties as shall be required in connection therewith, and may employ such clerical and related personnel as the Committee shall deem requisite or desirable in carrying out the provisions of the Plan. The Committee shall from time to time, but no less frequently than annually, review the financial condition of the Plan and determine the financial and liquidity needs of the Plan. The Committee shall communicate such needs to the Employer so that its policies may be appropriately coordinated to meet such needs.

12.11 Compensation of Members. No fee or compensation shall be paid to any member of the Committee for his Service as such.

12.12 Expense Reimbursement. The Committee shall be entitled to reimbursement by the Employer for its reasonable expenses properly and actually incurred in the performance of its duties in the administration of the Plan.

12.13 Indemnification. No member of the Committee shall be personally liable by reason of any contract or other instrument executed by him or on his behalf as a member of the Committee nor for any mistake of judgment made in good faith, and the Employer shall

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indemnify and hold harmless, directly from its own assets (including the proceeds of any insurance policy the premiums for which are paid from the Employer’s own assets), each member of the Committee and each other officer, employee, or director of the Employer to whom any duty or power relating to the administration or interpretation of the Plan may be delegated or allocated, against any unreimbursed or uninsured cost or expense (including any sum paid in settlement of a claim with the prior written approval of the Board) arising out of any act or omission to act in connection with the Plan unless arising out of such person’s own fraud, bad faith, willful misconduct or gross negligence.

Section 13. Contractual Liability; Trust:

13.1 Contractual Liability. The obligation of the Employer to make payments hereunder shall constitute a contractual liability of the Employer to the Participant. Such payments shall be made from the general funds of the Employer, and the Employer shall not be required to establish or maintain any special or separate fund, or otherwise to segregate assets to assure that such payments shall be made, and the Participant shall not have any interest in any particular assets of the Employer by reason of its obligations hereunder. To the extent that any person acquires a right to receive payment from the Employer, such right shall be no greater than the right of an unsecured creditor of the Employer.

13.2 Trust. If so designated in Section 2.34 of the Adoption Agreement, the Employer may establish a Trust with the Trustee, pursuant to such terms and conditions as are set forth in the Trust Agreement. The Trust, if and when established, is intended to be treated as a grantor trust for purposes of the Code. The establishment of the Trust is not intended to cause Participants to realize current income on amounts contributed thereto, and the Trust shall be so interpreted and administered.

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Section 14. Allocation of Responsibilities:

The persons responsible for the Plan and the duties and responsibilities allocated to each are as follows:

14.1 Board.

(i) To amend the Plan;

(ii) To appoint and remove members of the Committee; and

(iii) To terminate the Plan.

14.2 Committee.

(i) To designate Participants;

(ii) To interpret the provisions of the Plan and to determine the rights of the Participants under the Plan, except to the extent otherwise provided in Section 19 relating to claims procedure;

(iii) To administer the Plan in accordance with its terms, except to the extent powers to administer the Plan are specifically delegated to another person or persons as provided in the Plan;

(iv) To account for the Accrued Benefits of Participants; and

(v) To direct the Employer in the payment of benefits.

14.3 Plan Administrator.

(i) To file such reports as may be required with the United States Department of Labor, the Internal Revenue Service and any other government agency to which reports may be required to be submitted from time to time; and

(ii) To administer the claims procedure to the extent provided in Section 19.

Section 15. Benefits Not Assignable; Facility of Payments:

15.1 Benefits not Assignable. No portion of any benefit credited or paid under the Plan with respect to any Participant shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge the same shall be void, nor shall any

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portion of such benefit be in any manner payable to any assignee, receiver or any one trustee, or be liable for his debts, contracts, liabilities, engagements or torts. Notwithstanding the foregoing, in the event that all or any portion of the benefit of a Participant is transferred to the former spouse of the Participant incident to a divorce, the Committee shall maintain such amount for the benefit of the former spouse until distributed in the manner required by an order of any court having jurisdiction over the divorce, and the former spouse shall be entitled to the same rights as the Participant with respect to such benefit.

15.2 Payments to Minors and Others. If any individual entitled to receive a payment under the Plan shall be physically, mentally or legally incapable of receiving or acknowledging receipt of such payment, the Committee, upon the receipt of satisfactory evidence of his incapacity and satisfactory evidence that another person or institution is maintaining him and that no guardian or committee has been appointed for him, may cause any payment otherwise payable to him to be made to such person or institution so maintaining him. Payment to such person or institution shall be in full satisfaction of all claims by or through the Participant to the extent of the amount thereof.

Section 16. Beneficiary:

The Participant’s Beneficiary shall be the person or persons designated by the Participant on the Beneficiary designation form provided by and filed with the Committee or its designee. If the Participant does not designate a Beneficiary, the Beneficiary shall be his Surviving Spouse. If the Participant does not designate a Beneficiary and has no Surviving Spouse, the Beneficiary shall be the Participant’s estate. The designation of a Beneficiary may be changed or revoked only by filing a new Beneficiary designation form with the Committee or its designee. If a Beneficiary (the “primary Beneficiary”) is receiving or is entitled to receive payments under the Plan and dies before receiving all of the payments due him, the balance to

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which he is entitled shall be paid to the contingent Beneficiary, if any, named in the Participant’s current Beneficiary designation form. If there is no contingent Beneficiary, the balance shall be paid to the estate of the primary Beneficiary. Any Beneficiary may disclaim all or any part of any benefit to which such Beneficiary shall be entitled hereunder by filing a written disclaimer with the Committee before payment of such benefit is to be made. Such a disclaimer shall be made in a form satisfactory to the Committee and shall be irrevocable when filed. Any benefit disclaimed shall be payable from the Plan in the same manner as if the Beneficiary who filed the disclaimer had died on the date of such filing.

Section 17. Amendment and Termination of Plan:

The Board may amend any provision of the Plan or terminate the Plan at any time; provided, that in no event shall such amendment or termination reduce any Participant’s Accrued Benefit as of the date of such amendment or termination, nor shall any such amendment affect the terms of the Plan relating to the payment of such Accrued Benefit.

Notwithstanding the foregoing, the Plan shall be terminated upon the occurrence of one or more of the events designated in the Adoption Agreement. Upon the occurrence of a termination event, the Accrued Benefit of each Participant may become fully vested and payable to the Participant in a lump sum if designated by the Employer in the Adoption Agreement.

Section 18. Communication to Participants:

The Employer shall make a copy of the Plan available for inspection by Participants and their beneficiaries during reasonable hours at the principal office of the Employer.

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Section 19. Claims Procedure:

The following claims procedure shall apply with respect to the Plan:

19.1 Filing of a Claim for Benefits. If a Participant or Beneficiary (the “claimant”) believes that he is entitled to benefits under the Plan which are not being paid to him or which are not being accrued for his benefit, he shall file a written claim therefor with the Plan Administrator. In the event the Plan Administrator shall be the claimant, all actions which are required to be taken by the Plan Administrator pursuant to this Section 19 shall be taken instead by another member of the Committee designated by the Committee.

19.2 Notification to Claimant of Decision. Within 90 days after receipt of a claim by the Plan Administrator (or within 180 days if special circumstances require an extension of time), the Plan Administrator shall notify the claimant of his decision with regard to the claim. In the event of such special circumstances requiring an extension of time, there shall be furnished to the claimant prior to expiration of the initial 90-day period written notice of the extension, which notice shall set forth the special circumstances and the date by which the decision shall be furnished. If such claim shall be wholly or partially denied, notice thereof shall be in writing and worded in a manner calculated to be understood by the claimant, and shall set forth: (i) the specific reason or reasons for the denial; (ii) specific reference to pertinent provisions of the Plan on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material or information is necessary; and (iv) an explanation of the procedure for review of the denial and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under ERISA following an adverse benefit determination on review.

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19.3 Procedure for Review. Within 60 days following receipt by the claimant of notice denying his claim, in whole or in part, or, if such notice shall not be given, within 60 days following the latest date on which such notice could have been timely given, the claimant shall appeal denial of the claim by filing a written application for review with the Committee. Following such request for review, the Committee shall fully and fairly review the decision denying the claim. Prior to the decision of the Committee, the claimant shall be given an opportunity to review pertinent documents and to submit issues and comments in writing.

19.4 Decision on Review. The decision on review of a claim denied in whole or in part by the Plan Administrator shall be made in the following manner:

19.4.1 Within 60 days following receipt by the Committee of the request for review (or within 120 days if special circumstances require an extension of time), the Committee shall notify the claimant in writing of its decision with regard to the claim. In the event of such special circumstances requiring an extension of time, written notice of the extension shall be furnished to the claimant prior to the commencement of the extension. If the decision on review is not furnished in a timely manner, the claim shall be deemed denied as of the close of the initial 60-day period (or the close of the extension period, if applicable).

19.4.2 With respect to a claim that is denied in whole or in part, the decision on review shall set forth specific reasons for the decision, shall be written in a manner calculated to be understood by the claimant, and shall cite specific references to the pertinent Plan provisions on which the decision is based.

19.4.3 The decision of the Committee shall be final and conclusive.

19.5 Action by Authorized Representative of Claimant. All actions set forth in this Section 19 to be taken by the claimant may likewise be taken by a representative of the claimant duly authorized by him to act in his behalf on such matters. The Plan Administrator and the Committee may require such evidence as either may reasonably deem necessary or advisable of the authority to act of any such representative.

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Section 20. Miscellaneous Provisions:

20.1 Set off. Notwithstanding any other provision of this Plan, the Employer may reduce the amount of any payment otherwise payable to or on behalf of a Participant hereunder by the amount of any loan, cash advance, extension of credit or other obligation of the Participant to the Employer that is then due and payable, and the Participant shall be deemed to have consented to such reduction.

20.2 Notices. Each Participant who is not in Service and each Beneficiary shall be responsible for furnishing the Committee or its designee with his current address for the mailing of notices and benefit payments. Any notice required or permitted to be given to such Participant or Beneficiary shall be deemed given if directed to such address and mailed by regular United States mail, first class, postage prepaid. If any check mailed to such address is returned as undeliverable to the addressee, mailing of checks will be suspended until the Participant or Beneficiary furnishes the proper address. This provision shall not be construed as requiring the mailing of any notice or notification otherwise permitted to be given by posting or by other publication.

20.3 Lost Distributees. A benefit shall be deemed forfeited if the Plan Administrator is unable to locate the Participant or Beneficiary to whom payment is due on or before the fifth anniversary of the date payment is to be made or commence; provided, that the deemed investment rate of return pursuant to Section 9.2 shall cease to be applied to the Participant’s account following the first anniversary of such date; provided further, however, that such benefit shall be reinstated if a valid claim is made by or on behalf of the Participant or Beneficiary for all or part of the forfeited benefit.

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20.4 Reliance on Data. The Employer, the Committee and the Plan Administrator shall have the right to rely on any data provided by the Participant or by any Beneficiary. Representations of such data shall be binding upon any party seeking to claim a benefit through a Participant, and the Employer, the Committee and the Plan Administrator shall have no obligation to inquire into the accuracy of any representation made at any time by a Participant or Beneficiary.

20.5 Receipt and Release for Payments. Subject to the provisions of Section 20.1, any payment made from the Plan to or with respect to any Participant or Beneficiary, or pursuant to a disclaimer by a Beneficiary, shall, to the extent thereof, be in full satisfaction of all claims hereunder against the Plan and the Employer with respect to the Plan. The recipient of any payment from the Plan may be required by the Committee, as a condition precedent to such payment, to execute a receipt and release with respect thereto in such form as shall be acceptable to the Committee.

20.6 Headings. The headings and subheadings of the Plan have been inserted for convenience of reference and are to be ignored in any construction of the provisions hereof.

20.7 Continuation of Employment. The establishment of the Plan shall not be construed as conferring any legal or other rights upon any Employee or any persons for continuation of employment, nor shall it interfere with the right of the Employer to discharge any Employee or to deal with him without regard to the effect thereof under the Plan.

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20.8 Merger or Consolidation; Assumption of Plan. No employer-party to the Plan shall consolidate or merge into or with another corporation or entity, or transfer all or substantially all of its assets to another corporation, partnership, trust or other entity (a “Successor Entity”) unless such Successor Entity shall assume the rights, obligations and liabilities of the employer-party under the Plan and upon such assumption, the Successor Entity shall become obligated to perform the terms and conditions of the Plan. Nothing herein shall prohibit the assumption of the obligations and liabilities of the Employer under the Plan by any Successor Entity.

20.9 Construction. The Employer shall designate in the Adoption Agreement the state according to whose laws the provisions of the Plan shall be construed and enforced, except to the extent that such laws are superseded by ERISA.

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EX-10.14

Exhibit 10.14

[EXECUTIVE BENEFIT SERVICES LOGO]

THE EXECUTIVE

NONQUALIFIED “EXCESS” PLAN^™

Semtech Corporation

Trust Agreement

© 2003 Executive Benefit Services, Inc.

TABLE OF CONTENTS

		Page
Section 1.    Trust Fund:		2
1.1	Definitions and Construction	2
1.2	Trust Fund	2
1.3	Non-diversion of Funds	2
Section 2.    Investment and Administration:		3
2.1	Collection of Contributions	3
2.2	General	3
2.3	Appointment of Investment Manager.	3
2.4	Investment Decisions.	4
2.5	Investment in Short-Term Obligation	4
2.6	Trustee’s Administrative Authority.	5
2.7	Substitution of Assets	7
Section 3.    Trustee and Committee:		7
3.1	Committee	7
3.2	Trustee’s Reliance	8
3.3	Legal Counsel	8
3.4	Liability Under the Plan	8
Section 4.    Distributions from the Trust Fund:		9
4.1	General	9
4.2	Direction by the Committee.	9
4.3	Method of Payment	9
4.4	Special Distributions	10
4.5	Payments to Employer	10
Section 5.    Trustee’s and Committee’s Responsibilities:		10
5.1	General Standard of Care	10
5.2	No Liability for Acts of Others	11
Section 6.    Trustee’s Accounts:		11
6.1	Accounts	11
6.2	Valuation of Trust Fund	11
6.3	Reports to the Committee.	11
6.4	Right of Judicial Settlement	12
6.5	Enforcement of Agreement	12
Section 7.    Taxes; Compensation of Trustee:		12
7.1	Taxes	12
7.2	Compensation of Trustee; Expenses	12
Section 8.    Resignation and Removal of Trustee:		13
8.1	Resignation or Removal of Trustee	13
8.2	Appointment of Successor	14
8.3	Succession.	14

8.4	Successor Bound by Agreement	15
Section 9.    Trustee Responsibility Regarding Payments to Trust Beneficiaries When Employer Is Insolvent:		15
9.1	Direction	15
9.2	Insolvency	15
9.3	Resumption of Payments	15
Section 10.    Amendment and Irrevocability:		16
Section 11.    Miscellaneous:		16
11.1	Binding Effect; Assignability	16
11.2	Governing Law	17
11.3	Notices	17
11.4	Severability	18
11.5	Waiver	18
11.6	Non-Alienation	18
11.7	Headings	18
11.8	Construction of Language	18
11.9	Counterparts	18

THE EXECUTIVE NONQUALIFIED EXCESS PLAN™

TRUST AGREEMENT

THIS TRUST AGREEMENT, made as of the 1st day of January, 2004, by and between Semtech Corporation (“Employer”) and BANKERS TRUST COMPANY (“Trustee”).

W I T N E S S E T H :

WHEREAS, the Employer has adopted The Executive Nonqualified Excess Plan^™ (the “Plan”) to provide benefits for certain participants of the Employer and its designated affiliates; and

WHEREAS, the Employer wishes to establish a Trust Fund (as hereinafter defined) to aid it in accumulating the amounts necessary to satisfy its contractual liability to pay benefits under the terms of the Plan; and

WHEREAS, the Employer presently intends to make contributions to this Trust Fund from time to time to be applied in payment of the Employer’s obligations under the Plan; and

WHEREAS, the Employer is obligated to pay all benefits from its general assets to the extent not paid by this Trust Fund, and the establishment of this Trust Fund shall not reduce or otherwise affect the Employer’s continuing liability to pay benefits from such assets, except that the Employer’s liability shall be offset by actual benefit payments made from this Trust Fund;

WHEREAS, the trust established by this Agreement is intended to be a “grantor trust” with the result that the corpus and income of the trust be treated as assets and income of the Employer pursuant to Sections 671 through 679 of the Internal Revenue Code of 1986, as amended (the “Code”); and

WHEREAS, the Employer intends that the Trust Fund shall at all times be subject to the claims of its creditors as herein provided and that the Plan be deemed unfunded within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), solely by virtue of the existence of this Trust;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Employer and the Trustee hereby agree as follows:

Section 1. Trust Fund:

1.1 Definitions and Construction. Unless the context of this Agreement clearly indicates otherwise, the terms defined in the Plan shall, when used herein, have the same meaning as in the Plan. The headings in this Agreement are used for the convenience of reference only and are to be ignored in any constructions of the provisions hereof.

1.2 Trust Fund. The Employer hereby establishes with the Trustee a trust, pursuant to the Plan, in which may be deposited such sums of money as shall from time to time be paid or delivered to or deposited with the Trustee by or with the approval of the Employer in accordance with terms of the Plan. Neither the Trustee nor any Plan participant or beneficiary shall have the right to compel such deposits. All such deposits, all investments and reinvestments thereof and all earnings, appreciation and additions allocable thereto, less losses, depreciation and expenses allocable thereto and any payments made therefrom as authorized under the Plan or this Agreement shall constitute the “Trust Fund.” The Trust Fund shall be held, managed and administered by the Trustee, IN TRUST, and dealt with in accordance with the provisions of this Agreement and in accordance with any funding policy or guidelines established under the Plan that are communicated in writing to the Trustee.

1.3 Non-diversion of Funds. Notwithstanding anything to the contrary contained in this Agreement or any amendment thereto, no part of the Trust Fund other than such expenses, fees, indemnities and taxes properly charged to the Trust Fund under the Plan or this Agreement shall be used for or diverted to purposes other than for the exclusive benefit of Plan participants and their beneficiaries; provided, however, that the Trust Fund shall at all times be subject to the claims of the general creditors of the Employer. Any rights created under the Plan and this Agreement shall be mere unsecured contractual rights of Plan participants and their beneficiaries against the Employer.

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Section 2. Investment and Administration:

2.1 Collection of Contributions. The Trustee shall have no authority over and shall have no responsibility for the administration of the Plan. The Trustee shall be under no duty to enforce the payment of any contribution to the Trust Fund and shall not be responsible for the adequacy of the Trust Fund to satisfy any obligations for benefits expenses and liabilities under the Plan. In addition to making contributions, the Employer, through the Committee, shall furnish the Trustee with such information and data relative to the Plan as is necessary for the proper administration of the Trust Fund.

2.2 General. The Trust Fund shall be held by the Trustee and shall be invested and reinvested as hereinafter provided in this Section 2, without distinction between principal and income and without regard to the restrictions of the laws of any jurisdiction relating to the investment of trust funds.

2.3 Appointment of Investment Manager.

(a) The Committee may, in its discretion, appoint an investment manager (“Investment Manager”) to direct the investment and reinvestment of all or any portion of the Trust Fund. Any such Investment Manager shall either (i) be registered as an investment adviser under the Investment Advisers Act of 1940, as amended (“Investment Advisers Act”); (ii) be a bank, as defined in the Investment Advisers Act; or (iii) be an insurance company qualified to perform investment services under the laws of more than one state.

(b) The Committee shall give written notice to the Trustee of the appointment of an Investment Manager pursuant to Section 2.3(a). Such notice shall include: (i) a specification of the portion of the Trust Fund to which the appointment applies; (ii) a certification by the Committee that the Investment Manager satisfies the requirements of Section 2.3(a)(i), (ii) or (iii); (iii) a copy of the instruments appointing the Investment Manager and evidencing the Investment Manager’s acceptance of the appointment; (iv) directions as to the manner in which the Investment Manager is authorized to give instructions to the Trustee, including the persons authorized to give instructions and the number of signatures required for any written instruction; (v) an acknowledgment by the Investment Manager that it is a fiduciary of the Plan; and (vi) if applicable, a certificate evidencing the Investment Manager’s current registration under the Investment Advisers Act. For purposes of this Agreement, the appointment of an Investment Manager pursuant to this Section 2.3 shall become effective as of the effective date specified in such notice, or, if later, as of the date on which the Trustee receives proper notice of such appointment.

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(c) The Committee shall give written notice to the Trustee of the resignation or removal of an Investment Manager previously appointed pursuant to this Section 2.3. From and after the date on which the Trustee receives such notice, or, if later, the effective date of the resignation or removal specified in such notice, the Committee shall be responsible, in accordance with Section 2.4, for the investment and reinvestment of the portion of the Trust Fund theretofore managed by such Investment Manager, until such time as a successor Investment Manager has been duly appointed pursuant to this Section 2.3.

2.4 Investment Decisions.

(a) The Trustee shall invest and reinvest the Trust Fund in accordance with the directions of the Committee, or, to the extent provided in Section 2.3, in accordance with the directions of an Investment Manager. The Trustee shall be under no duty or obligation to review any investment to be acquired, held or disposed of pursuant to such directions nor to make any recommendation with respect to the disposition or continued retention of any such investment. The Trustee shall have no liability or responsibility for its action or inaction pursuant to the direction of, or its failure to act in the absence of directions from, the Committee or an Investment Manager, except to the extent provided in Section 5.2. The Employer hereby agrees to indemnify the Trustee and hold it harmless from and defend it against any claim or liability which may be asserted against the Trustee by reason of any action or inaction by it pursuant to a direction by the Committee or by an Investment Manager or failing to act in the absence of any such direction.

(b) The Committee or an Investment Manager appointed pursuant to Section 2.3 may, at any time and from time to time, issue orders for the purchase or sale of securities directly to a broker; and in order to facilitate such transaction, the Trustee upon request shall execute and deliver appropriate trading authorizations. Written notification of the issuance of each such order shall be given promptly to the Trustee by the Committee or the Investment Manager, and the execution of each such order shall be confirmed by written advice to the Trustee by the broker. Such notification shall be authority for the Trustee to pay for securities purchased against receipt thereof and to deliver securities sold against payment therefor, as the case may be.

(c) To the extent that neither the Committee nor an Investment Manager furnishes directions as to the investment of the Trust Fund, the Trustee shall invest and reinvest the Trust Fund in any savings account, time or other interest-bearing deposit in or other interest-bearing obligation of any one or more savings banks, savings and loan associations, banks or other financial institutions.

2.5 Investment in Short-Term Obligation. Notwithstanding any provisions of this Section 2 to the contrary, the Trustee, in its sole discretion or in consultation with the Committee, may retain uninvested cash or cash balances, in whatever portion of the Trust Fund that it may deem advisable, without being required to pay interest thereon. Pending investment,

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the Trustee, in its sole discretion, may temporarily invest any funds held or received by it for investment in an investment fund established to invest funds held thereunder in commercial paper or in obligations of, or guaranteed by, the United States government or any of its agencies.

2.6 Trustee’s Administrative Authority.

(a) In addition to and not by way of limitation of any other powers conferred upon the Trustee by law or by other provisions of this Agreement, but subject to the provisions of Section 1.3 and this Section 2, the Trustee is authorized and empowered:

(i) to invest and reinvest part or all of the Trust Fund in accordance with funding policies which may be established by the Committee from time to time in such assets as the Trustee deems appropriate (including common and preferred stocks of the Employer), bonds, debentures, mutual fund shares, notes, commercial paper, treasury bills, options, partnership interests, venture capital investments, any common, commingled, collective trust funds or pooled investment funds (including such funds for which the Trustee serves as investment manager), contracts and policies issued by an insurance company, any interest bearing deposits held by any bank of similar financial institution, and any other real or personal property;

(ii) in accordance with directions from the Committee, to apply for, pay premiums on and maintain in force on the lives of Plan participants, individual ordinary or individual or group term or universal life insurance policies, variable universal life insurance policies, survivorship life insurance policies or annuity policies (“policies”) and to have with respect to such policies all of the rights, powers, options, privileges and benefits usually comprised in the term “incidents of ownership” and normally vested in an owner of such policies, provided, however, that the Trustee has no power to name beneficiaries of any such policies other than the Trust, no power to assign such policies other than to a successor Trustee, or to loan to any person the proceeds of any borrowing against such policies;

(iii) to sell, exchange, convey, transfer or dispose of and also to grant options with respect to any property, whether real or personal, at any time held by it, and any sale may be made by private contract or by public auction, and for cash or upon credit, or partly for cash and partly upon credit, and no person dealing with the Trustee shall be bound to see the application of the purchase money or to inquire into the validity, expediency or propriety of any such sale or other disposition;

(iv) to retain, manage, operate, repair and rehabilitate and to mortgage or lease for any period any real estate held by it and, in its discretion, cause to be formed any corporation or trust to hold tile to any such real property;

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(v) to vote in person or by proxy on any stocks, bonds, or other securities held by it, including any shares of mutual funds held by it, to exercise any options appurtenant to any stocks, bonds or other securities for the conversion thereof into other stocks, bonds or securities, or to exercise any rights to subscribe for additional stocks, bonds or other securities and to make any and all necessary payment therefor and to enter into any voting trust;

(vi) with respect to any investment, to join in, dissent from, or oppose any action or inaction of any corporation, or of the directors, officers or stockholders of any corporation, including, without limitation, any reorganization, recapitalization, consolidation, liquidation, sale or merger;

(vii) to settle, adjust, compromise, or submit to arbitration any claims, debts or damages due or owing to or from the Trust Fund; and

(viii) to deposit any property with any protective, reorganization or similar committee, to delegate power thereto and to pay and agree to pay part of its expenses and compensation and any assessments levied with respect to any property so deposited.

In exercising such powers with respect to any portion of the Trust Fund that is invested pursuant to directions of the Committee or of an Investment Manager, the Trustee shall act in accordance with directions provided by the Committee or Investment Manager. The Trustee shall be under no duty or obligation to review any action to be taken, nor to recommend any action, pursuant to this Section 2.6(a) with respect to any portion of the Trust Fund that is under the direction of the Committee or an Investment Manager. The Trustee shall have no liability or responsibility for its action or inaction pursuant to the direction of, or its failure to act in the absence of directions from, the Committee or an Investment Manager, except to the extent provided in Section 5.2. The Employer hereby agrees to indemnify the Trustee and hold it harmless from and defend it against any claim or liability which may be asserted against the Trustee by reason of any action or inaction by it pursuant to a direction given by the Committee or failing to act in the absence of any such direction.

(b) In addition to and not by way of limitation of any other powers conferred upon the Trustee by law or other provisions of this Agreement, but subject to Section 1.3 and this Section 2, the Trustee is authorized and empowered, in its discretion:

(i) to commence or defend suits or legal proceedings, and to represent the Trust Fund in all suits or legal proceedings in any court or before any other body or tribunal;

(ii) to register securities in its name or in the name of any nominee or nominees with or without indication of the capacity in which the securities shall be held, or to hold securities in bearer form;

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(iii) to borrow or raise monies for the purposes of the Trust from any lender, except the Trustee, in its individual capacity, and for any sum so borrowed to issue its promissory note as Trustee and to secure the repayment thereof by pledging all or any part of the Trust Fund, and no person lending money to the Trustee shall be bound to see the application of the money loaned or to inquire into the validity, expediency of propriety of any such borrowing;

(iv) to make distributions in cash upon the direction of the Committee;

(v) to withhold the appropriate amount of taxes from a participant’s distribution as directed by the Committee;

(vi) to employ such agents, brokers, counsel and accountants as the Trustee shall deem advisable and to be reimbursed by the Employer for their reasonable expenses and compensation;

(vii) to make, execute, acknowledge, and deliver any and all deeds, leases, assignments and instruments; and

(viii) generally to do all acts which the Trustee may deem necessary or desirable for the administration and protection of the Trust Fund.

Notwithstanding any powers granted to the Trustee pursuant to this Agreement or by applicable law, the Trustee shall not have any power that could give the Trust the objective of carrying on a business and dividing the gains therefrom, within the meaning of Section 301.7701-2 of the Treasury Regulations promulgated pursuant to the Code.

2.7 Substitution of Assets. The Employer shall have the right at any time, in its sole discretion, to substitute assets of equal fair market value for any asset held by the Trust. This right is exercisable by the Employer in a nonfiduciary capacity without the approval or consent of any person in a fiduciary capacity.

Section 3. Trustee and Committee:

3.1 Committee. The Employer shall certify to the Trustee the names and specimen signatures of the members of the Committee appointed by the Employer to administer the Plan and give directions to the Trustee. Such certification shall include directions as to the number of signatures required for any communication or direction to the Trustee. The Employer shall promptly give notice to the Trustee of changes in the membership of the Committee. The Committee may also certify to the Trustee the name of any person, together with a specimen

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signature of any such person who is not a member of the Committee, authorized to act for the Committee in relation to the Trustee. The Committee shall promptly give notice to the Trustee of any change in any person authorized to act on behalf of the Committee. For all purposes under this Agreement, until any such notice is received by the Trustee, the Trustee shall be fully protected in assuming that the membership of the committee and the authority of any person certified to act in its behalf remain unchanged.

3.2 Trustee’s Reliance. The Trustee may rely and act upon any certificate, notice or direction of the Committee, or of a person authorized to act on its behalf, or of the Employer or of an Investment Manager which the Trustee believes to be genuine and to have been signed by the person or persons duly authorized to sign such certificate, notice, or direction.

3.3 Legal Counsel. The Trustee may consult with legal counsel (who may be counsel to the Employer) and may charge the expense to the Employer concerning any questions which may arise under this Agreement, and the opinions of such counsel shall be full and complete protection with respect to any action taken, or omitted, by the Trustee hereunder in good faith in accordance with the opinion of such counsel.

3.4 Liability Under the Plan. The duties and obligations of the Trustee shall be limited to those expressly set forth in this Agreement, notwithstanding any reference herein to the Plan. Notwithstanding any other provision of this Trust Agreement, (i) the Trustee and its officers, directors and agents hereunder shall be indemnified and held harmless by the Employer and the Fund to the fullest extent permitted by law against any and all costs, damages, expenses and liabilities including, but not limited to, attorneys’ fees and disbursements reasonably incurred by or imposed upon it in connection with any claim made against it or in which it may be involved by reason of it being, or having been, a Trustee hereunder, to the extent such amounts are not satisfied by fiduciary liability insurance that may or may not be maintained by the Employer, unless such costs, damages, expenses or liabilities are attributable to the negligence or willful misconduct of the Trustee; and (ii) the Employer and the Fund, and their respective

8

officers, directors, trustees, and agents hereunder shall be indemnified and held harmless by the Trustee to the fullest extent permitted by law against any and all costs, damages, expenses and liabilities including, but not limited to, attorneys’ fees and disbursements reasonably incurred by or imposed upon any of them in connection with any claim made against them or in which they may be involved pursuant to this Agreement, to the extent such amounts are not satisfied by fiduciary liability insurance that may or may not be maintained by the Trustee, provided such costs, damages, expenses or liabilities are attributable to the negligence or willful misconduct of the Trustee.

Section 4. Distributions from the Trust Fund:

4.1 General. The Trustee shall make payments from the Trust Fund in such amounts, at such times, and to such persons as the Committee may, from time to time, direct. The Committee shall consider and review any claim for benefits under the Plan in accordance with the procedures established in the Plan.

4.2 Direction by the Committee.

(a) A direction by the Committee to make a distribution from the Trust Fund shall:

(i) be made in writing;

(ii) specify the amount of the payment to be distributed, the date such payment is to be made, the person to whom payment is to be made, and the address to which the payment is to be sent; and

(iii) be deemed to certify to the Trustee that such direction and any payment pursuant thereto are authorized under the terms of the Plan.

(b) The Trustee shall be entitled to rely conclusively on the Committee’s certification of its authority to direct a payment without independent investigation. The Trustee shall have no liability to any person with respect to payments made in accordance with the provisions of this Section 4.

4.3 Method of Payment. Payments of money by the Trustee may be made by its check payable to the order of the payee designated by the Committee and mailed to the payee

9

in care of the Employer. The Trustee shall provide for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect to the payment of benefits pursuant to the terms of the Plan and shall pay amounts withheld to the appropriate taxing authorities or determine that such amounts have been reported, withheld and paid by the Employer.

4.4 Special Distributions. Notwithstanding any other provision of this Trust Agreement to the contrary, if at any time (i) the Trust is finally determined by the Internal Revenue Service (the “IRS”) not to be a “grantor trust,” with the result that the income of the Trust Fund is not treated as income of the Employer pursuant to Sections 671 through 679 of the Code, (ii) a federal tax is finally determined by the IRS to be payable by the Trust beneficiaries, or (iii) the Trustee receives an opinion of counsel satisfactory to it to the effect that it is likely that the IRS will determine that a tax will be payable by the Trust beneficiaries as described in (ii) and it is likely that such determination will be upheld, then the Trust shall immediately terminate and the assets paid as soon as practicable by the Trustee to the Trust beneficiary as directed by the Committee.

4.5 Payments to Employer. Except as expressly provided herein, the Employer shall have no right or power to direct the Trustee to return to the Employer any of the Trust Fund before all payments of benefits have been made pursuant to the Plan. However, if the Trustee determines that the value of the assets of the Trust Fund are in excess of 100% of the amount required to pay the benefits provided under the terms of the Plan, then such excess assets, including both principal and income, shall be returned to the Employer.

Section 5. Trustee’s and Committee’s Responsibilities:

5.1 General Standard of Care. The Trustee, the members of the Committee and any Investment Manager shall at all times discharge their duties with respect to the Trust Fund solely in the interest of the Plan participants and their beneficiaries and with the care, skill, prudence, and diligence that, under the circumstances prevailing, a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.

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5.2 No Liability for Acts of Others. No “fiduciary” (as such term is defined in Section 3(21) of ERISA) under this Agreement shall be liable for an act or omission of another person in carrying out any fiduciary responsibility where such fiduciary responsibility is allocated to such other person by this Agreement or pursuant to a procedure established in this Agreement.

Section 6. Trustee’s Accounts:

6.1 Accounts. The Trustee shall keep accurate and detailed accounts of all investments, reinvestments, receipts and disbursements, and other transactions hereunder, and all such accounts and the books and records relating thereto shall be open to inspection at all reasonable times by the Employer or the Committee or persons designated by them.

6.2 Valuation of Trust Fund. The Trustee shall value or cause to be valued the Trust Fund as of the last business day of each calendar quarter (“Valuation Date”), and shall report to the Committee the value of the Trust Fund as of such date, within a reasonable time after the first day of the month next succeeding each Valuation Date.

6.3 Reports to the Committee.

(a) Within sixty (60) days following the last day of each fiscal year of the Trust, and within sixty (60) days following the effective date of the resignation or removal of the Trustee as provided in Section 8.1, the Trustee shall render to the Committee a written account setting forth all investments, receipts, disbursements and other transactions affecting the Trust Fund or any investment fund, which account shall be signed by the Trustee and mailed to the Committee.

(b) The Committee shall notify the Trustee in writing of any objection or exception to an account so rendered not later than ninety (90) days following the date on which the Account was mailed to the Committee, whereupon the Committee and the Trustee shall cooperate in resolving such objection or exception.

(c) If the Committee has not communicated in writing to the Trustee within ninety (90) days following the mailing of the account to the Committee any exception or objection to the account, the account shall become an account stated at the end of such ninety (90) day period. If the Committee does communicate such an exception or

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objection, as to which it later becomes satisfied, the Committee shall thereupon indicate in writing its approval of the account, or of the account as amended, and the account shall thereupon become an account stated.

(d) Whenever an account shall have become an account stated as aforesaid, such account shall be deemed to be finally settled and shall be conclusive upon the Trustee, the Employer and all persons having or claiming to have any interest in the Trust Fund or under the Plan, and the Trustee shall be fully and completely discharged and released to the same extent as if the account had been settled and allowed by a judgment or decree of a court of competent jurisdiction in an action or proceeding in which the Trustee, the Employer, and all persons having or claiming to have any interest in the Trust Fund or under the Plan were parties.

6.4 Right of Judicial Settlement. Notwithstanding the provisions of Section 6.3, the Trustee, the Committee, and the Employer, or any of them, shall have the right to apply at any time to a court of competent jurisdiction for the judicial settlement of the Trustee’s account. In any such case, it shall be necessary to join as parties thereto only the Trustee, the Committee and the Employer; and any judgment or decree which may be entered therein shall be conclusive upon all persons having or claiming to have any interest in the Trust Fund or under the Plan.

6.5 Enforcement of Agreement. To protect the Trust Fund from expenses which might otherwise be incurred, the Employer and the Committee shall have authority, either jointly or severally, to enforce this Agreement on behalf of all persons claiming any interest in the Trust Fund or under the Plan, and no other person may institute or maintain any action or proceeding against the Trustee or the Trust Fund in the absence of written authority from the Committee or a judgment of a court of competent jurisdiction that in refusing authority the Committee acted fraudulently or in bad faith.

Section 7. Taxes; Compensation of Trustee:

7.1 Taxes. Any taxes that may be imposed upon the Trust Fund or the income therefrom shall be deducted from and charged against the Trust Fund.

7.2 Compensation of Trustee; Expenses. The Trustee shall receive for its services hereunder such compensation as may be agreed upon in writing from time to time by the

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Employer and the Trustee and shall be reimbursed for its reasonable expenses, including counsel fees, incurred in the performance of its duties hereunder. The Trustee shall deduct from and charge against the Trust Fund such compensation and all such expenses unless previously paid by the Employer.

Section 8. Resignation and Removal of Trustee:

8.1 Resignation or Removal of Trustee. The Trustee may resign as trustee hereunder at any time by giving sixty (60) days prior written notice to the Employer. Notwithstanding the preceding, the Trustee may resign immediately upon the occurrence of an unusual event which in the sole discretion of the Trustee affects the viability of the Employer and in such event the Employer shall promptly appoint a qualified successor trustee. The Employer may remove the Trustee as trustee hereunder at any time by giving the Trustee prior written notice of such removal, which shall include notice of the appointment of a successor trustee. Such removal shall take effect not earlier than sixty (60) days following receipt of such notice by the Trustee unless otherwise agreed upon by the Trustee and the Employer. Notwithstanding the foregoing, the Employer may not remove the Trustee following a Change in Control without the written consent of Participants then beneficially entitled to at least eighty percent (80%) of the assets of the Trust. “Change in Control” shall mean the occurrence of any of the following events with respect to the Employer: (A) any consolidation or merger involving the Employer if the shareholders of the Employer immediately before such merger or consolidation do not own, directly or indirectly, immediately following such merger or consolidation, more than fifty percent (50%) of the combined voting power of the outstanding voting securities or interests of the corporation (or its parent corporation) or other entity resulting from such merger or consolidation in substantially the same proportion as their ownership of the shares of the common stock of the Employer immediately before such merger or consolidation; (B) any sale, lease, license, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the business and/or assets of the Employer or assets representing over 50% of the operating revenue of the Employer; or (C) any person (as such term is used in

13

Sections 13(d) and 14(d) of the Exchange Act) who is not, on the effective date of this Trust Agreement, a Controlling Person of the Employer shall become (x) the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of over 50% of the Employer’s outstanding common stock or the combined voting power of the Employer’s then outstanding voting securities entitled to vote generally or (y) a Controlling Person of the Employer.

8.2 Appointment of Successor. In the event of the resignation or removal of the Trustee, a successor trustee shall be appointed by the Employer. Except as is otherwise provided in Section 8.1, such appointment shall take effect upon delivery to the Trustee of an instrument so appointing the successor and an instrument of acceptance executed by such successor, both of which instruments shall be duly acknowledged before a notary public. If within sixty (60) days after notice of resignation shall have been given by the Trustee a successor shall not have been appointed as aforesaid, the Trustee may apply to any court of competent jurisdiction for the appointment of such successor. Notwithstanding the foregoing, any appointment of a successor trustee that occurs following a Change in Control (as defined above) shall be contingent on written consent by Participants then beneficially entitled to at least eighty percent (80%) of the assets of the Trust.

8.3 Succession.

(a) Upon the appointment of a successor hereunder, the Trustee shall transfer and deliver the Trust Fund to such successor; provided, however, that the Trustee may reserve such sum of money as it shall in its sole and absolute discretion deem advisable for payment of its fees and all expenses including counsel fees in connection with the settlement of its account, and any balance of such reserve remaining after the payment of such charges shall be paid over to the successor trustee. If such reserve shall be insufficient to pay such charges, the Trustee shall be entitled to recover the amount of any deficiency from the Employer, from the successor trustee, or from both.

(b) Upon the completion of the succession and the rendering of its final accounts, the Trustee shall have no further responsibilities whatsoever under this Agreement.

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8.4 Successor Bound by Agreement. All the provisions of this Agreement shall apply to any successor trustee with the same force and effect as if such successor had been originally named herein as the trustee hereunder.

Section 9. Trustee Responsibility Regarding Payments to Trust Beneficiaries When Employer Is Insolvent:

9.1 Direction. The Board of Directors and the chief executive officer of the Employer shall have the duty to inform the Trustee in writing if the Employer becomes Insolvent, as hereinafter defined. If the Trustee receives any written certification signed under penalties of perjury by any person other than the Board of Directors or the chief executive officer of the Employer that the Employer has become Insolvent, the Employer shall be deemed to be Insolvent for purposes of this Section 9. When the Trustee has been so informed by the Board of Directors or the chief executive officer of the Employer, or has received such certification from another person, the Trustee shall immediately discontinue payments of benefits to Trust Beneficiaries and shall hold the assets of the Trust for the benefit of the Employer’s general creditors. Nothing in this Agreement shall in any way diminish any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of the Employer with respect to benefits due under the Plan. During the continuance of the Trust, the fees and expenses of the Trustee shall be paid from the Trust Fund if not paid by the Employer or any successor trustee (including a regulatory agency).

9.2 Insolvency. The Employer shall be considered Insolvent for purposes of this Section 9 if: (i) the Employer is unable to pay its debts as they become due; (ii) the Employer is subject to a pending proceeding as a debtor under the United States Bankruptcy Code, or (iii) the Employer is determined to be insolvent by any agency having regulatory authority over the Employer.

9.3 Resumption of Payments. The Trustee shall resume the payment of benefits to Plan participants or their beneficiaries only after the Trustee has determined that the

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Employer is not Insolvent (or is no longer Insolvent). If the Trustee discontinues the payment of benefits from the Trust pursuant to Section 9.1 hereof, and subsequently resumes such payments, the first payment following such discontinuance shall include the aggregate amount of all payments due to Plan participants or their beneficiaries under the terms of the Plan, less the aggregate amount of any payments made to Plan participants or their beneficiaries by the Employer in lieu of the payments provided for hereunder during any such period of discontinuance.

Section 10. Amendment and Irrevocability:

10.1 The Employer may, at any time and from time to time, by instrument in writing executed pursuant to authorization of its Board of Directors, amend in whole or in part any or all of the provisions of this Agreement; provided, however, that: (i) no amendment which affects the rights, duties, fees or responsibilities of the Trustee may be made without the Trustee’s consent; (ii) no amendment shall conflict with the terms of the Plan or alter the fact that the Trust is irrevocable pursuant to Section 10.1 hereof, and (iii) any amendment following a Change in Control, as defined above, shall be contingent upon its receipt of written approval by Participants then beneficially entitled to at least eighty percent (80%) of the assets of the Trust.

10.2 Except as provided in Section 4.5, the Trust created hereunder is irrevocable and shall terminate only upon the complete distribution of the assets of the Trust to the participants or their beneficiaries. In the event that Trust assets remain after the payment of all benefits to the participants or their beneficiaries under the terms of the Plan, the Trust shall be terminated and any remaining assets shall be returned to the Employer.

10.3 Any such amendment shall become effective upon receipt by the Trustee of the instrument of amendment and endorsement thereon by the Trustee of its consent thereto, if such consent is required; provided, however, no such amendment shall be permitted if, in the opinion of counsel to the Employer, any such amendment would cause the Trust to cease to constitute a grantor trust as described in Section 4.4 of this Agreement. Following any such termination as provided in Section 10.1, the powers of the Trustee hereunder shall continue as long as any of the Trust Fund remains in its hands.

Section 11. Miscellaneous:

11.1 Binding Effect; Assignability. This Agreement shall be binding upon, and the powers granted to the Employer and the Trustee, respectively, shall be exercisable by the respective successors and assigns of the Employer and the Trustee. Any entity which shall, by

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merger, consolidation, purchase, or otherwise, succeed to substantially all the trust business of the Trustee shall, upon such succession and without any appointment or other action by the Employer, be and become successor trustee hereunder.

11.2 Governing Law. This Agreement and the trust created and the Trust Fund held hereunder shall be interpreted in accordance with the laws of the state designated by the Employer in Section 17.9 of the Adoption Agreement, except to the extent that such laws are preempted by the federal laws of the United States of America. All contributions to the Trust Fund shall be deemed to take place in the state designated by the Employer in Section 17.9 of the Adoption Agreement.

11.3 Notices. Any communication to the Trustee, including any notice, direction, designation, certification, order, instruction, or objection shall be in writing and signed by the person authorized under the Plan to give the communication. The Trustee shall be fully protected in acting in accordance with these written communications. Any notice required or permitted to be given to a party hereunder shall be deemed given if in writing and hand delivered or mailed, postage prepaid, certified mail, return receipt requested, to such party at the following address or at such other address as such party may by notice specify:

If to the Employer:

Semtech Corporation

200 Flynn Rd.

Camarillo, CA 93012

Attention: Ken Bauer

If to the Trustee:

Bankers Trust Company

665 Locust

Des Moines, IA 50309

Attention: Anji Hayek

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11.4 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity of enforceability of the remaining provisions.

11.5 Waiver. Failure of any party to insist at any time or times upon strict compliance with any provision of this Agreement shall not be a waiver of such provision at such time or any later time unless in a writing designated as a waiver and signed by or on behalf of the party against whom enforcement of the waiver is sought.

11.6 Non-Alienation. No interest, right or claim in or to any part of the Trust Fund or any payment therefrom shall be assignable, transferable or subject to sale, mortgage, pledge, hypothecation, commutation, anticipation, garnishment, attachment, execution, or levy of any kind, and the Trustee and the Committee shall not recognize any attempt to assign, transfer, sell, mortgage, pledge, hypothecate, commute, or anticipate the same, except to the extent required by law.

11.7 Headings. The headings of sections are included solely for convenience of reference. If there is any conflict between such headings and the text of the Agreement, the text shall control.

11.8 Construction of Language. Whenever appropriate in this Agreement, words used in the singular may be read in the plural; words used in the plural may be read in the singular; and words importing the masculine gender shall be deemed equally to refer to the female gender or the neuter. Any reference to a section number shall refer to a section of this Agreement, unless otherwise indicated.

11.9 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

SEMTECH CORPORATION
By:	/s/ David G. Franz, Jr.
	Vice President and Chief Financial Officer
	Authorized Officer
BANKERS TRUST COMPANY
By:
	Trust Officer

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EX-10.16

Exhibit 10.16

Arrangement with Jason Carlson

As an inducement for Mr. Carlson to join Semtech Corporation, the Company agreed that should Mr. Carlson’s services be terminated by the Board of Directors, he will be granted a severance allowance equal to six months salary and benefits continuation upon signing of a non-compete agreement and a full release of all claims and obligations. Vesting of stock options would cease as of the last day that services are actively provided to the Company.

EX-14

Exhibit 14

Semtech Corporation

Code of Conduct

Semtech Corporation is committed to the highest standards of ethical business conduct. All directors, officers and employees of the Company and its worldwide subsidiaries are expected to abide by this Code of Conduct (“Code”) as well as all other Semtech policies, procedures, and business conduct standards set forth in the employee handbook or issued separately, such as policies regarding non-discrimination, confidentiality, and insider trading.

A violation of this Code may result in disciplinary action, up to and including termination of your employment. Disciplinary action also may apply to a supervisor who directs or approves improper actions, or who is aware of those actions but does not act appropriately to correct them. Violations of this Code may also constitute violations of law which may expose you, your supervisor, and the Company to criminal or civil penalties.

All Semtech directors, officers, and employees are expected to

• Abide by all applicable laws, rules and regulations in the locations where the Company operates and that otherwise govern the Company’s business, including Nasdaq listing standards.

• Act with honesty and integrity in carrying out the Company’s business

• You must use your best efforts to deal fairly with the Company’s customers, suppliers, competitors and employees.

• You must not knowingly misrepresent material facts about the Company’s products or make false, deceptive or disparaging claims or comparisons about competitors or their products.

• You must take all reasonable measures to protect the confidentiality of the Company’s non-public information and the non-public information entrusted to the Company by its suppliers and customers. You must not use confidential information for personal advantage.

• You may never harass or retaliate against anyone for reporting a concern about unethical conduct.

• Avoid actual or apparent conflicts between personal interests and Company interests

• You may not, without prior written approval, be employed by, or contract or consult with, any of the Company’s customers, suppliers or competitors or engage in outside business activities that compete with the Company’s interests.

• You may not engage in transactions on behalf of the Company with any member of your family or any entity in which you or a member of your family has a substantial beneficial interest.

• You may not divert from the Company, for your own benefit or otherwise, any business opportunity that belongs to the Company or is discovered through the use of Company property, information, or position.

• You may not hold a financial interest in any of the Company’s customers, suppliers or competitors unless it is a publicly traded company. If the company is publicly traded, you may hold up to 1% of its shares without obtaining Semtech’s advance approval. Any permitted investment must not involve the use of confidential or proprietary information, such as confidential information you might obtain due to Semtech’s business relationship with the other company.

• Support full, fair, accurate, timely and understandable disclosures in the Company’s public communications, including reports and documents filed with or submitted to the Securities and Exchange Commission (“SEC”)

• If you are responsible for maintaining the Company’s financial records or other records, such as quality or personnel records, you must ensure that all transactions are recorded accurately and completely and supported by reasonably detailed documentation. Semtech does not tolerate intentionally false or misleading recordkeeping.

• If you are responsible for maintaining the Company’s financial records or preparing its financial reports, you must do so in good faith and with due care in accordance with generally accepted accounting practices, without misrepresenting material facts or allowing your independent judgment to be subordinated.

• You must cooperate fully with those responsible for preparing a Company report to be filed with the SEC or any other governmental or regulatory agency, or a document or communication that

will be otherwise publicly disseminated by the Company. If you are called upon to provide information, you must give a prompt, complete, and accurate response. You may not knowingly misrepresent or omit material facts.

• You must notify the Chief Financial Officer (“CFO”), Chief Executive Officer (“CEO”) or the Corporate Counsel in writing, or notify the Audit Committee (“Audit Committee”) of the Board of Directors (“Board”) if you become aware of any breach or failure of the Company’s internal controls over financial reporting or if you become aware of any omission, inaccuracy or falsification in any Company financial record or report or any information supporting a financial record or report.

• You must not take any action, directly or indirectly, to unduly or fraudulently influence, coerce, manipulate, or mislead persons preparing the Company’s financial statements or conducting any internal or independent review or audit of the Company’s records, accounts, internal controls or financial statements.

In the case of the CEO, the CFO, the Chief Operating Officer, and Directors, approval means approval by the Audit Committee. In all other cases, approval means approval by the CEO or CFO. If determined to be in Semtech’s best interests, the Company may at any time rescind a previously given approval.

If you have a question about this Code or are unclear about a particular course of action, you should contact the Vice President of Human Resources or the Legal Department. If you believe, in the exercise of reasonable judgment after a review of the facts, that a violation of this Code has occurred, you have a duty to promptly report your concern either to your supervisor or manager, to a manager higher up in your business unit, to the Vice President of Human Resources, to the Legal Department, or by using the confidential reporting system (“hotline”). You may contact the hotline anonymously. Reports to the hotline will be fielded initially by trained consultants who are not Company employees. Reports to the Audit Committee under this Code should be made by using the hotline.

If you request guidance or report questionable behavior or a compliance concern, the Company will endeavor to handle the matter discretely and make every effort, within the limits allowed by law, to maintain confidentiality while fulfilling its obligation to make an adequate review. You will not be subject to retaliation for good faith reporting of a suspected violation of the Code, but you can not become exempt from the consequences of your own action or inaction by reporting it. Generally, prompt and forthright disclosure of an error or wrongdoing will be considered a positive action and will be considered in determining the discipline to be imposed.

In the case of an alleged violation by an executive officer or director or matters involving accounting, internal accounting controls or auditing, the Audit Committee is responsible for determining whether a violation has occurred. The Audit Committee is responsible for determining the appropriate disciplinary actions to be taken in matters involving an executive officer or director. The CEO, or a person designated by the CEO, is responsible for these functions with respect to other employees.

Disciplinary actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code, and shall include written notice to the individual involved that a violation has been determined, censure by the Board or CEO, demotion or re-assignment of the individual involved, suspension with or without pay or benefits and termination of the individual’s employment. In determining what action is appropriate in a particular case, all relevant information shall be taken into account, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violations in the past.

Any waiver of this Code for Directors or executive officers may be made only by the Board and will be promptly disclosed to shareholders along with the reasons for the waiver. Waivers for other personnel may be granted by the CEO or CFO.

This Code of Conduct is Semtech’s written code of ethics under Nasdaq Rule 4350(n) and Securities and Exchange Commission Regulation S-K Item 406. This Code may be amended from time to time by the Board. Amendments will be promptly disclosed to shareholders.

2 of 2

EX-21.1

Exhibit 21.1

Subsidiaries of Semtech Corporation

• Semtech Corpus Christi Corporation (a Texas corporation)

• Semtech Corpus Christi, S.A. de C.V. (una Sociedad Mercantil de Nacionalidad Mexicana)

• Semtech New York Corporation (a Delaware corporation), doing business as Semtech, Semtech HID, Semtech HID and System Management, Semtech Human Input Device and System Management, USAR Systems, USAR

• Semtech San Diego Corporation (a California corporation), doing business as Edge Semiconductor Corporation, Edge Semiconductor, Semtech High Performance Products, Semtech ATE Division, Semtech San Diego, Semtech

• Semtech (International) AG (a Swiss company limited by shares)

• Semtech France SARL

• Semtech Germany GmbH

• Semtech Limited (a private limited company under the Companies Act 1948 to 1967 of the United Kingdom, registered in Scotland)

• Semtech Switzerland GmbH (a Swiss limited liability company)

EX-23.1

Exhibit 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT PUBLIC ACCOUNTANT

We consent to the incorporation by reference in the following Registration Statements:

(i) the Registration Statement on Form S-8 of Semtech Corporation (File No. 033-85156), filed October 14, 1994 with respect to registration of 300,000 shares of the Company’s common stock for the Company’s 1994 Long-Term Stock Incentive Plan;

(ii) the Registration Statement on Form S-8 of Semtech Corporation (File No. 033-85158), with respect to registration of 100,000 shares of the Company’s common stock for the Company’s 1994 Non-Employee Directors’ Stock Option Plan;

(iii) the Registration Statement on Form S-8 of Semtech Corporation (File No. 333-00597), filed January 31, 1996 with respect to registration of 400,000 shares of the Company’s common stock for the Company’s 1994 Long-Term Stock Incentive Plan;

(iv) the Registration Statement on Form S-8 of Semtech Corporation (File No. 333-00599), filed January 31, 1996 with respect to registration of 150,000 shares of the Company’s common stock for the Company’s 1994 Non-Employee Directors Stock Option Plan;

(v) the Registration Statement on Form S-8 of Semtech Corporation (File No. 333-27777) filed May 23, 1997 with respect to registration of 800,000 shares of the Company’s common stock for the 1994-Long Term Stock Incentive Plan;

(vi) the Registration Statement on Form S-8 of Semtech Corporation (File No. 333-44033), filed January 9, 1998 with respect to registration of 800,000 shares of the Company’s common stock for the Company’s 1994 Long-Term Stock Incentive Plan;

(vii) the Registration Statement on Form S-8 of Semtech Corporation (File No. 333-80319), filed June 9, 1999 with respect to registration of 2,150,868 shares of the Company’s common stock for the Company’s Long-Term Stock Incentive Plan;

(viii) the Registration Statement on Form S-3 of Semtech Corporation (File No. 333-95183), filed January 21, 2000 with respect to registration of 495,403 shares of the Company’s common stock in conjunction with the acquisition of USAR Systems, Incorporated;

(ix) the Registration Statement on Form S-8 of Semtech Corporation (File No. 333-50448) filed November 22, 2000 with respect to registration of 4,000,000 shares of the Company’s common stock for the Company’s Non-Director and Non-Executive Officer Long-Term Stock Incentive Plan; and

(x) the Registration Statement on Form S-8 of Semtech Corporation (File No. 333-60396) filed May 8, 2001 with respect to registration of 4,000,000 shares of the Company’s common stock for the Company’s Non-Director and Non-Executive Officer Long-Term Stock Incentive Plan and 200,000 shares of the Company’s common stock for Non-Statutory Stock Option Grants made to Directors in December 1997

of our report dated March 26, 2004, with respect to the consolidated financial statements and schedule of Semtech Corporation included in the Annual Report (Form 10-K) for the year ended January 25, 2004.

/s/ Ernst & Young LLP

ERNST & YOUNG LLP

Los Angeles, California

April 8, 2004

EX-23.2

Exhibit 23.2

NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP

As disclosed in the Form 8-K filed by Semtech Corporation on June 25, 2002, Semtech dismissed Arthur Andersen LLP as its independent public accountants on June 18, 2002 and announced that it had engaged Ernst & Young LLP to replace Arthur Andersen LLP as its independent public accountant.

The Company’s understanding is that the staff of the Securities and Exchange Commission has taken the position that it will not accept consents from Arthur Andersen LLP if the engagement partner and the manager for the company’s audit are no longer with Arthur Andersen LLP. Both the engagement partner and the manager for the Semtech Corporation audit are no longer with Arthur Andersen LLP. As a result, Semtech has been unable to obtain Arthur Andersen LLP’s written consent to the incorporation by reference into registration statements filed by Semtech of its audit report with respect to Semtech’s financial statements as of January 27, 2002 and for the year then ended.

Under these circumstances, Rule 437a under the Securities Act permits the Company to file this Form 10-K without a written consent from Arthur Andersen LLP. As a result, however, Arthur Andersen LLP will not have any liability under Section 11(a) of the Securities Act for any untrue statements of a material fact contained in the financial statements audited by Arthur Andersen LLP or any omissions of a material fact required to be stated therein. Accordingly, you would be unable to assert a claim against Arthur Andersen LLP under Section 11(a) of the Securities Act for any purchases of securities under registration statements made on or after the date of this Form 10-K. To the extent provided in Section 11(b)(3)(C) of the Securities Act, however, other persons who are liable under Section 11(a) of the Securities Act, including Semtech’s officers and directors, may still rely on Arthur Andersen LLP’s original audit report as being made by an expert for purposes of establishing a due diligence defense under Section 11(b) of the Securities Act.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jason L. Carlson, certify that:

1. I have reviewed this annual report on Form 10-K of Semtech Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Omitted per SEC Releases 33-8238 and 33-8392]

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 8, 2004

/s/ Jason L. Carlson

Jason L. Carlson

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, David G. Franz, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Semtech Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) [Omitted per SEC Releases 33-8238 and 33-8392]

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 8, 2004

/s/ David G. Franz, Jr.

David G. Franz, Jr.

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Semtech Corporation (the “Company”) on Form 10-K for the fiscal year ended January 25, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jason L. Carlson, Chief Executive Officer of the Company, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 8, 2004

/s/ Jason L. Carlson

Jason L. Carlson

Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Semtech Corporation and will be retained by Semtech Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

The information contained in this Exhibit 32.1 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Exhibit 32.1 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference to this Exhibit 32.1 in such filing.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Semtech Corporation (the “Company”) on Form 10-K for the fiscal year ended January 25, 2004 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David G. Franz, Jr., Chief Financial Officer, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 8, 2004

/s/ David G. Franz, Jr.

David G. Franz, Jr.

Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Semtech Corporation and will be retained by Semtech Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

The information contained in this Exhibit 32.2 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Exhibit 32.2 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference to this Exhibit 32.2 in such filing.