a5480771ex99

a5480771ex99_1.htm

NEWS RELEASE

SEMTECH ANNOUNCES FISCAL YEAR 2008 SECOND QUARTER RESULTS

·	Q2 ORDERS HIGHEST IN SEMTECH HISTORY

·	REVENUE UP 10.7% OVER PREVIOUS QUARTER

·	18% SEQUENTIAL INCREASE IN GAAP EPS

1:30 p.m. PT

Tuesday, August 28, 2007

CAMARILLO, CALIFORNIA, August 28, 2007 - SEMTECH CORPORATION (NASDAQ: SMTC), a leading producer of high performance analog and mixed-signal semiconductors, today reported unaudited financial results for its second quarter of fiscal year 2008 that ended July 29, 2007.

Net sales for the second quarter of fiscal year 2008 were $67 million, up 3.3 percent from the second quarter of fiscal year 2007 and up 10.7 percent when compared to the first quarter of fiscal year 2008.

Net income for the second quarter of fiscal year 2008, computed in accordance with U.S. generally accepted accounting principles (GAAP), was $9.0 million or 13 cents per diluted share. GAAP net income was $8.4 million or 11 cents per diluted share in the second quarter of fiscal year 2007 and was $7.9 million or 11 cents per diluted share in the first quarter of fiscal year 2008. Gross profit margin for the second quarter of fiscal year 2008 was 55.2 percent compared to 54.5 percent in the second quarter of fiscal year 2007 and 54.9 percent in the first quarter of fiscal year 2008.

Non-GAAP net income for the second quarter of fiscal year 2008 was $12.5 million or 18 cents per diluted share. Non-GAAP net income was $11.8 million or 16 cents per diluted share in the second quarter of fiscal year 2007 and was $10.6 million or 14 cents per diluted share in the first quarter of fiscal year 2008. Non-GAAP gross profit margin for the second quarter of fiscal year 2008 was 55.4 percent. Non-GAAP gross profit margin for the second quarter of fiscal year 2007 was 55.0 percent and 55.4 percent in the first quarter of fiscal year 2008. Non-GAAP results exclude the impact of stock based compensation, the amortization of acquisition-related intangibles, expenses associated with Semtech’s ongoing litigation against an insurer, the gain on sale of an unused parcel of land, and expenses related to the Company’s now completed investigation into its historical stock option practices, now completed restatement of past financial statements to correct errors in stock option accounting and ongoing stock option related matters including an inquiry by the SEC, a federal grand jury subpoena, and previously announced derivative litigation.

New orders exceeded shipments, resulting in a book-to-bill ratio above one. Demand was strongest in the areas of computing, industrial and handheld equipment.

Operating expenses for the second quarter of fiscal year 2008 included approximately $0.9 million related to the SEC inquiry, the grand jury subpoena, the previously announced derivative litigation, and other matters related to historical stock option practices. In the first quarter of fiscal year 2008 these expenses were $2.1 million.

Semtech had $234 million of cash, cash equivalents and marketable securities as of July 29, 2007, which was down from $364 million at the end of the first quarter of fiscal year 2008, due primarily to the $150 million accelerated stock buy-back announced in the first quarter of fiscal year 2008.

Mohan Maheswaran, Semtech’s President and Chief Executive Officer, commented, “Semtech had a good second quarter performance driven by strength in several areas of our business. Of particular note were the very strong orders and the strong sequential revenue and EPS growth. In addition, our Power Management business continues its return with another strong quarter. ”

The results announced today are preliminary, as they are subject to customary quarterly independent auditor review procedures. As such, these results are subject to revision until the Company files its Quarterly report on Form 10-Q for the second quarter of fiscal year 2008.

Third Quarter Outlook

Semtech estimates net sales for the third quarter which ends October 28, 2007 will increase fourteen to sixteen percent compared to the second quarter. Non-GAAP earnings for the third quarter are expected to be 21 to 22 cents per diluted share. Non-GAAP earnings for the third quarter are prior to stock-based compensation expense, amortization of intangibles and certain legal expenses. GAAP earnings for the third quarter of fiscal year 2008 are expected to be 15 to 16 cents per diluted share.

About Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements prepared in accordance with GAAP, this release includes a non-GAAP presentation of gross margin, net income and earnings per diluted share. All of these non-GAAP measures exclude stock-based compensation, acquisition related amortization of intangibles, and other items detailed above. These non-GAAP measures are provided to enhance the user's overall understanding of the Company's comparable financial performance between periods. In addition, the Company's management generally excludes such items in managing and evaluating the performance of the business. A further discussion of these non-GAAP financial measures can be found above, and reconciliations of GAAP results for the second quarter of fiscal year 2008 and 2007, respectively and the first quarter of fiscal 2008, appear with the financial statements later in this release. These additional financial measures should not be considered substitutes for any measures derived in accordance with GAAP and may be inconsistent with similar measures presented by other companies.

About Semtech

Semtech Corporation is a leading supplier of analog and mixed-signal semiconductors used in a wide range of computer, industrial and communication applications. Forward-Looking and Cautionary Statements This release contains "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. Forward-looking statements are statements other than historical information or statements of current condition and relate to matters such as future financial performance, future operational performance, the anticipated impact of specific items on future earnings, and our plans, objectives and expectations. Some forward-looking statements may be identified by use of terms such as "expects," "anticipates," "intends," "estimates," "believes,” ”projects,” “should,” “will,” “plans” and similar words.

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include worldwide economic and political conditions, the timing and duration of semiconductor market upturns or downturns, demand for cellular phones, personal computers and automated test equipment, demand for semiconductor devices in general, demand for the Company’s products in particular, competitors’ actions, supply from key third-party silicon wafer foundries and assembly contractors, manufacturing costs and yields, relations with strategic customers, and risks associated with the businesses of major customers. In addition to considering these risks and uncertainties, forward-looking statements should be considered in conjunction with the cautionary statements contained in the “Risk Factors” section and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2007, in the Company’s other filings with the SEC, and in material incorporated therein by reference. In light of the risks and uncertainties inherent in forecasts of revenue and gross margin and in other projected matters, forward-looking statements should not be regarded as representations by the Company that its objectives or plans will be achieved or that any of its operating expectations or financial forecasts will be realized. The Company assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Investor Relations Contact

Todd German, Investor Relations, Telephone: 805-480-2004

SEMTECH CORPORATION

GAAP CONSOLIDATED STATEMENTS OF INCOME

(Table in thousands - except per share amount)

	Three Months Ended				Six Months Ended
	July 29,		July 30,		July 29,		July 30,
	2007		2006		2007		2006
	Q2 2008		Q2 2007		(Unaudited)		(Unaudited)
	(Unaudited)		(Unaudited)

Net sales	$	67,048	$	64,921	$	127,614	$	130,864
Cost of sales		30,058		29,558		57,371		57,590
Gross profit		36,990		35,363		70,243		73,274

Operating costs and expenses:
Selling, general and administrative		17,943		17,512		36,124		32,636
Product development and engineering		10,581		10,189		20,586		20,891
Acquistion related items		275		275		551		640
Insurance recovery litigation legal expenses		324		106		499		266

Total operating costs and expenses		29,123		28,082		57,760		54,433

Operating income		7,867		7,281		12,483		18,841

Interest and other income, net		3,542		3,161		9,257		6,083

Income before taxes		11,409		10,442		21,740		24,924
Provision/(credit) for taxes		2,387		2,012		4,787		4,737

Net income	$	9,022	$	8,430	$	16,953	$	20,187

Earnings per share:
Basic	$	0.13	$	0.12	$	0.24	$	0.28
Diluted	$	0.13	$	0.11	$	0.24	$	0.27

Weighted average number of shares:
Basic		66,984		72,291		69,687		72,433
Diluted		68,844		73,929		71,212		74,311

SEMTECH CORPORATION

Notes to Consolidated GAAP Statements of Income

(Table in thousands - except per share amounts)

(1) - FAS 123R requiring the expensing of stock based compensation was adopted starting in the quarter ended April 30, 2006.

GAAP based results include pre-tax stock based compensation charges as follows:


	Three Months Ended				Six Months Ended
	July 29,		July 30,		July 29,		July 30,
	2007		2006		2007		2006
Stock Option Expense	Q2 2008		Q2 2007
Cost of sales	$	187	$	372	$	497	$	506
Selling, general and administrative		2,662		2,763		4,092		5,422
Product development and engineering		1,101		1,072		1,835		2,260
Total stock-based compensation	$	3,950	$	4,207	$	6,424	$	8,188

SEMTECH CORPORATION

Financial bridge – GAAP to Non-GAAP Statements of Income

(Table in thousands - except per share amounts)

RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT:

Three Months Ended

Six Months Ended

July 29,

July 30,

July 29,

July 30,

2007

2006

2007

2006

Q2 2008

Q2 2007

(Unaudited)

Gross profit, as reported (GAAP)

36,990

35,363

70,243

73,274

Adjustments to GAAP gross profit:

Stock-based compensation expense

187

372

497

506

Expenses related to expired options

Non-GAAP Gross profit

37,177

35,735

70,740

73,780

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME:

	Three Months Ended						Six Months Ended
	July 29,			July 30,			July 29,			July 30,
	2007			2006			2007			2006
	Q2 2008			Q2 2007			Q2 2008			Q2 2007
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Net Income, as reported (GAAP)	$	9,022		$	8,430		$	16,953		$	20,187

Adjustments to GAAP net income:
Acquisition related items		275			275			551			640
Insurance related legal expenses		324			106			499			266
Option and restatement related expenses		875			-			2,951			-
Stock based compensation expense		3,950			4,207			6,424			8,188
Land Sale		-			-			(1,300	)		-
Associated tax effect		(1,929	)		(1,253	)		(2,967	)		(2,344	)

Net Income on a Non-GAAP basis	$	12,517		$	11,765		$	23,111		$	26,937


Diluted GAAP earnings per share	$	0.13		$	0.11		$	0.24		$	0.27
Adjustments per above	$	0.05		$	0.05		$	0.08		$	0.09
Diluted non-GAAP earnings per share	$	0.18		$	0.16		$	0.32		$	0.36

SEMTECH CORPORATION

NON-GAAP STATEMENTS OF INCOME

(Table in thousands - except per share amounts)

	Three Months Ended				Six Months Ended
	July 29,		July 30,		July 29,		July 30,
	2007		2006		2007		2006
	Q2 2008		Q2 2007		(Unaudited)		(Unaudited)
	(Unaudited)		(Unaudited)

Net sales	$	67,048	$	64,921	$	127,614	$	130,864
Cost of sales		29,871		29,186		56,874		57,084
Gross profit		37,177		35,735		70,740		73,780

Operating costs and expenses:
Selling, general and administrative		14,406		14,749		29,081		27,214
Product development and engineering		9,480		9,117		18,751		18,631

Total operating costs and expenses		23,886		23,866		47,832		45,845

Operating income		13,291		11,869		22,908		27,935

Interest and other income, net		3,542		3,161		7,957		6,083

Income before taxes		16,833		15,030		30,865		34,018
Provision for taxes		4,316		3,265		7,754		7,081

Net income	$	12,517	$	11,765	$	23,111	$	26,937

Earnings per share:
Basic	$	0.19	$	0.16	$	0.33	$	0.37
Diluted	$	0.18	$	0.16	$	0.32	$	0.36

Weighted average number of shares:
Basic		66,984		72,291		69,687		72,433
Diluted		68,844		73,929		71,212		74,311

SEMTECH CORPORATION

CONSOLIDATED BALANCE SHEETS

(Table in thousands)

	July 29,		January 28,
	2007		2007
	(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	179,736	$	162,674
Temporary investments		25,945		125,979
Receivables, less allowances		29,170		25,588
Inventories		21,741		20,493
Deferred income taxes		3,646		3,495
Other current assets		10,524		17,698
Total Current Assets		270,762		355,927

Property, plant and equipment, net		36,655		40,573
Long-term investments		28,715		49,827
Other assets		7,869		10,166
Goodwill		32,532		32,687
Other Intangibles		3,732		4,284
Deferred income taxes		25,726		28,190
Total Assets	$	405,991	$	521,654

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
Accounts payable	$	12,603	$	9,909
Accrued liabilities		12,715		14,950
Deferred revenue		2,463		2,151
Deferred income taxes		1,480		1,500
Income taxes payable		2,632		1,974
Total Current Liabilities		31,893		30,484

Other long-term liabilities		7,682		7,450
Deferred income taxes - Non Current		2,569		2,539

Shareholders’ equity		363,847		481,181
Total Liabilities & Equity	$	405,991	$	521,654