<PAGE>
As filed with the Securities and Exchange Commission on January 9, 1996
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
SEMTECH CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-2119684
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
652 MITCHELL ROAD
NEWBURY PARK, CALIFORNIA 91320
(805) 498-2111
(ADDRESS, INCLUDING ZIP CODE AND
TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOHN D. POE COPIES TO:
PRESIDENT & CHIEF EXECUTIVE OFFICER ROBERT A. MILLER, JR., ESQ.
SEMTECH CORPORATION PAUL, HASTINGS, JANOFSKY & WALKER
652 MITCHELL ROAD 555 S. FLOWER STREET
NEWBURY PARK, CALIFORNIA 91320 LOS ANGELES, CALIFORNIA 90071
(805) 498-2111 (213) 683-6254
(NAME, ADDRESS, INCLUDING ZIP CODE, AND
TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each Proposed Proposed
class of Maximum Maximum
securities to Amount to be Offering Price Aggregate Amount of
be registered Registered Per Share (1) Offering Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value 775,000 Shares $19.375 $15,015,625 $5,177.80
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</TABLE>
(1) Estimate based on last sales price of the Registrant's Common Stock as
reported by the NASDAQ-National Market System on January 5, 1996 pursuant
to Rule 457(c) promulgated under the Securities Act of 1933, as amended.
___________________________________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
SEMTECH CORPORATION
Cross Reference Sheet
Furnished Pursuant to Item 501(b) of Regulation S-K
PART I INFORMATION REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
Item Number and Caption in Form S-3 Location in Prospectus
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<S> <C> <C>
Item 1. Forepart of Registration Statement and Outside Front Cover Page of Prospectus.
Outside Front Cover Page of Prospectus.
Item 2. Inside Front and Outside Back Cover Inside Front and Outside Back Cover
Pages of Prospectus. Pages of Prospectus.
Item 3. Summary Information, Risk Factors and The Company; Risk Factors.
Ratio of Earnings to Fixed Charges.
Item 4. Use of Proceeds. Use of Proceeds.
Item 5. Determination of Offering Price. Plan of Distribution.
Item 6. Dilution. Not Applicable.
Item 7. Selling Securityholders. Selling Securityholders.
Item 8. Plan of Distribution. Outside Front Cover Page; Plan of
Distribution.
Item 9. Description of Securities to be Registered. Incorporation by Reference.
Item 10. Interests of Named Experts and Counsel. Not Applicable.
Item 11. Material Changes. Material Changes; Financial Statements.
Item 12. Incorporation of Certain Information by Incorporation by Reference.
Reference.
Item 13. Disclosure of Commission Position on Not Applicable.
Indemnification for Securities Act
Liabilities.
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor +
+may offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell +
+or the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to registration or qualification under the securities laws +
+of any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated January 9, 1996
PROSPECTUS
- ----------
SEMTECH CORPORATION
_______________
775,000 Shares of Common Stock
_______________
This Prospectus relates to the offering and sale by certain holders (the
"Selling Securityholders") of up to 775,000 shares (the "Shares") of Common
Stock, par value $.01 per share (the "Common Stock"), of Semtech Corporation, a
Delaware corporation ("Semtech" or the "Company").
The Shares being offered hereby are resales of shares acquired by the
Selling Securityholders in connection with the acquisition of Gamma, Inc. (dba
ECI Semiconductor) by the Company in October 1995, which acquisition was
accounted for as a pooling-of-interests under generally accepted accounting
principles. The Shares offered hereby may be sold from time to time through
broker-dealers or otherwise by the Selling Securityholders, or by pledgees,
donees, transferees, agents or other successor in interest. Such sales may be
made on one or more exchanges or in the over-the-counter market (including the
NASDAQ National Market System) or otherwise, at prices and at terms then
prevailing or at prices related to the then current market price, or in
negotiated transactions. No representation is made that any Shares will or will
not be offered for sale. See "Plan of Distribution."
The Shares are being offered for the accounts of the Selling
Securityholders. The Company will not receive any proceeds from the sale of the
shares by the Selling Securityholders. It is not possible at the present time
to determine the price to the public in any sale of the Shares by the Selling
Securityholders and each Selling Securityholder reserves the right to accept or
reject, in whole or in part, any proposed purchase of Shares. Accordingly, the
public offering price and the amount of any applicable underwriting discounts
and commissions will be determined at the time of such sale by the Selling
Securityholders. The aggregate proceeds to the Selling Securityholders from the
sale of the Shares will be the purchase price of the Shares sold less all
applicable commissions and underwriters' discounts, if any. The Company will
pay substantially all the expenses of the offering of the Shares by Selling
Securityholders, estimated to be $46,677.80. See "Selling Securityholders" and
"Plan of Distribution."
The shares of Common Stock of the Company are traded on the NASDAQ National
Market System ("NASDAQ") under the symbol "SMTC." The last reported sales price
of the Company's Common Stock as reported by NASDAQ on January 5, 1996 was
$19.375.
THE OFFERING INVOLVES A HIGH DEGREE OF RISK. FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITHIN AN INVESTMENT IN THE
SHARES, SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
_______________
The date of this Prospectus is January __, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports, proxy and information statements and other information with the
Securities and Exchange Commission (the "SEC"). Copies of such reports, proxy
and information statements and other information can be inspected and copied at
the public reference facilities maintained by the SEC at its principal office
located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the following Regional Offices of the SEC: Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, 14th Floor, Chicago, Illinois 60661; and Seven
World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company's Common Stock is listed on the NASDAQ National Market System
and reports, proxy statements and other information concerning the Company may
be inspected at the offices of the National Association of Securities Dealers,
Inc., 9513 Key West Avenue, Rockville, Maryland 20850.
The Company has filed with the SEC a registration statement on Form S-3
(together with any amendments thereto, the "Registration Statement") under the
Securities Act of 1933 (the "Securities Act"), with respect to the shares of
Common Stock to be offered pursuant to this Prospectus. This Prospectus is part
of the Registration Statement and does not contain all the information set forth
in the Registration Statement, certain portions of which have been omitted
pursuant to the rules and regulations of the SEC. Such additional information
may be obtained from the SEC's principal office in Washington, D.C. Statements
contained in this Prospectus or in any document incorporated by reference in
this Prospectus as to the contents of any contract or other document referred to
herein or therein are not necessarily complete, and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement or such other document, each such statement being
qualified in all respects by such reference.
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<PAGE>
INCORPORATION BY REFERENCE
This Prospectus incorporates by reference certain documents which are not
presented herein or delivered herewith. These documents are available upon
request from Gisela Auchter, Assistant Secretary, Semtech Corporation, 652
Mitchell Road, Newbury Park, California 91320, telephone (805) 498-2111.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of any such person, a copy of any
and all of the information that has been incorporated herein by reference, other
than exhibits to such information, unless such exhibits are specifically
incorporated herein by reference into the information that this Prospectus
incorporates. Requests for such documents should be directed to the person
indicated in the immediately preceding paragraph.
The following documents, which have been filed with the SEC pursuant to the
Exchange Act, are hereby incorporated by reference herein:
(a) Semtech's Annual Report on Form 10-K for the year ended January 29,
1995;
(b) Semtech's Quarterly Reports on Form 10-Q for the quarters ended April
30, 1995, July 30, 1995 and October 29, 1995;
(c) Semtech's Proxy Statement for its annual meeting of stockholders held
on June 8, 1995 (other than the portions thereof identified as not deemed filed
with the SEC);
(d) Semtech's Current Report on Form 8-K, dated October 4, 1995, as amended
on December 19, 1995; and
(e) The description of the Common Stock contained in Semtech's Registration
Statement on Form S-2, filed with the Commission on December 24, 1985, under the
Securities Act.
All documents filed by Semtech pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the termination of
this offering shall be deemed to be incorporated herein by reference and to be a
part hereof from the date of filing of such documents. All information
appearing in this Prospectus or in any document incorporated herein by reference
is not necessarily complete and is qualified in its entirety by the information
and financial statements (including notes thereto) appearing in the documents
incorporated by reference herein and should be read together with such
information and documents. Any statement contained in a document incorporated
or deemed to be incorporated herein by reference shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document that is deemed to
be incorporated herein by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
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<PAGE>
Unless otherwise indicated, the information in this Prospectus and the
financial statements included herein give effect to the acquisition by Semtech
of Gamma, Inc., dba ECI Semiconductor ("ECI"), through the merger of Semtech
Acquisition Corp., a wholly owned subsidiary of Semtech Corporation, with and
into ECI Semiconductor, and to the accounting for such transaction as a pooling
of interests.
THE COMPANY
Semtech Corporation ("Semtech" or the "Company") manufactures and markets a
wide range of semiconductor products designed for use in commercial and military
applications. The Company was incorporated in 1960 in Delaware. The Company's
principal executive offices are located at 652 Mitchell Road, Newbury Park,
California 91320, and its telephone number at that location is (805) 498-2111.
The Company has manufacturing facilities in California, Texas, Mexico and
Scotland.
The Company has traditionally manufactured high quality semiconductors
consisting of silicon rectifiers, rectifier assemblies, high-voltage monolithic
capacitors, transient voltage suppressors and related devices which are mainly
used to convert alternating current into direct current. A majority of these
products were used in military and aerospace applications. In recent years, the
Company has introduced several new product lines designed for use in commercial
(non-military) applications such as personal computers, telecommunications and
data communications. These commercial products include transient voltage
suppressors (TVS) which provide protection from damaging electrical transients
to sensitive components, linear and switching voltage regulators which alter
voltage, DC/DC modules and customized power supplies.
The commercial semiconductor industry and the industries in which the
Company's products are used are characterized by rapid changes and short product
life cycles. While the Company has seen wide acceptance of its newly introduced
commercial products, the markets for the Company's military and aerospace
products remains fiercely competitive.
The Company maintains a domestic sales and marketing organization consisting
of Company sales personnel located in Southern California, Texas and Connecticut
who manage the sales activities of independent sales representative firms and
independent industrial distributors within the United States and Canada. The
Company also maintains sales offices in France, Germany, Scotland and Taiwan to
serve the European and Far East markets. These sales activities are also
supplemented by independent sales representative firms and authorized
distributors. The Company is represented outside the United States and Europe
by other independent sales organizations.
In October 1995, the Company acquired ECI, an analog semiconductor
manufacturer supplying foundry wafers, custom linear and digital arrays, and
general purpose analog semiconductor devices. The acquisition of ECI provides
the Company additional design and
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<PAGE>
production capabilities and an opportunity to fulfill the growing demand for
analog semiconductors in new market applications.
RISK FACTORS
An investment in the Shares offered hereby involves a high degree of risk.
The following risk factors should be considered carefully in evaluating an
investment in the Shares offered hereby.
Sole or Limited Sources of Supply. The Company obtains certain components
and materials necessary for its manufacturing operations from a limited number
of suppliers. The Company's reliance on a limited number of outside
subcontractors for packaging and certain other tasks also 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. There can be no assurance that problems will not occur
in the future with suppliers or subcontractors. Disruption or termination of
the Company's supply sources or subcontractors could delay shipments by the
Company and could have a material adverse effect on the Company's business,
financial condition and results of operations. Delays could also damage
relationships with current and prospective customers. Any prolonged inability
to obtain timely deliveries or any other circumstances that would require the
Company to seek alternative sources of supply or to manufacture or package
certain components internally would have a material adverse effect on the
Company's business, financial condition and results of operations.
Dependence on Key Employees. The Company's future success depends in
significant part upon the continued service of its technical and managerial
personnel. The loss of the services of any of the Company's technical and
managerial personnel could adversely affect the Company's business, financial
condition and results of operations. The Company's future success also heavily
depends on its continuing ability to attract and retain highly qualified
technical, marketing and managerial personnel. Competition for qualified
personnel is intense, particularly for personnel with expertise in the Company's
areas of business. There can be no assurance that the Company will be able to
retain its key managerial and technical employees or that it will be successful
in attracting, assimilating or retaining other highly qualified technical and
managerial personnel in the future.
Protection of Know-How and Trade Secrets; Intellectual Property Claims. Few
of the Company's products are protected by patents. The Company has, however,
devoted significant resources to develop its current level of expertise, and
believes that its integrated circuit design know-how and processes are valuable
assets that have been and will continue to be important to the Company's
business. The Company relies primarily on a combination of nondisclosure
agreements and other contractual provisions, as well as the commitment to
confidentiality and loyalty of its employees, to protect its know-how and
processes. The failure of the Company to adequately protect its material know-
how and processes could have a material adverse effect on the Company's
business, financial condition and results of operations. There can be no
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<PAGE>
assurance that the steps taken by the Company will be adequate to protect its
proprietary rights or that a competitor will not independently develop know-how
or processes similar or superior to those of the Company.
The semiconductor industry is characterized by frequent litigation regarding
patent and intellectual property rights. Litigation, which could result in
substantial cost to and diversion of resources of the Company, may be necessary
to enforce intellectual property rights of the Company or to defend the Company
against infringement claims.
Intense Competition. The semiconductor industry is intensely competitive
and is characterized by price erosion, rapid technological change and design and
other technological obsolescence. The Company competes with domestic and
international semiconductor companies, many of which have substantially greater
financial and other resources than the Company with which to pursue engineering,
manufacturing, marketing and distribution of their products. The Company
expects continued competition from existing competitors as well as competition
from new entrants in the semiconductor market. The ability of the Company 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, adequate sources of
raw materials, protection of Company processes and know-how, maintaining high
product quality and reliability, competitive pricing, efficient production,
customer demand, success of competitors' products and general economic
conditions. Increased competition could result in price reductions, reduced
margins and loss of market share, any of which could materially adversely affect
the Company's business, financial condition and results of operations.
Production Yield Fluctuations. The manufacture of semiconductor products is
a highly complex and precise process. Defects in masks, impurities in the
materials used, contamination of the manufacturing environment, equipment
failure and other difficulties in the fabrication process can cause a
substantial percentage of wafers to be rejected or numerous die on each wafer to
be nonfunctional. Wafer yields can decline without warning, resulting in
substantially higher product costs and inventory shortages. Yield problems may
take substantial time to analyze and correct. While the Company has not
experienced material fluctuations in production yields in the recent past, there
can be no assurance that the Company will not experience production yield
problems in the future, or that any problem of that type will not materially
adversely affect the Company's business, financial condition and results of
operations.
Rapid Technological Change. The business in which the Company is engaged is
characterized by rapid technological change and new process technologies and
enhancements. The Company's competitiveness and future success will depend in
large part upon the technological quality of its products and processes relative
to those of its competitors and its ability both to develop new and enhanced
process technologies and to introduce them at competitive prices and on a timely
and cost-effective basis. The success of the Company in developing,
introducing, selling and supporting new and enhanced technologies depends upon a
variety of factors including timely and efficient completion of process design
and development, timely and efficient implementation of manufacturing processes,
software development, and
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<PAGE>
effective sales, marketing and customer service. The failure to successfully
select, develop, manufacture and market new programs and products, or to enhance
its existing technologies, could materially adversely affect the Company's
business, financial condition and results of operations.
Economic Downturn in Markets; Overcapacity. The Company markets its
products to industries including the telecommunications, consumer, aerospace and
military, computers and peripherals and other industries. A downturn in any of
the Company's markets could materially adversely affect the Company's business,
financial condition and results of operations. In addition, current efforts
being undertaken by companies in the semiconductor manufacturing industry to
increase worldwide semiconductor manufacturing capacity could lead to general
manufacturing overcapacity and to underutilization of the Company's
manufacturing capacity. The Company's ability to achieve future revenue growth
depends in significant part upon its ability to increase market and account
penetration and to maintain current utilization levels of its manufacturing
capacity. There can be no assurance that the Company will be able to maintain
or expand its market share.
Customer Concentration. Historically, the Company has had significant
customers, which individually accounted for greater than 10% of consolidated
revenues. The composition of the Company's largest customers has varied from
year to year. In fiscal year 1995, the top five customers of the Company
accounted for 30% of the Company's revenues during that period. The Company
primarily conducts its sales on a purchase order basis, rather than pursuant to
long-term supply contracts. The loss of any significant customer, any reduction
in orders by any of the Company's significant customers, or the cancellation of
a significant customer order, including reductions or cancellations due to
customer departures from recent buying patterns, financial difficulties of one
or more significant customers, or market, economic or competitive conditions in
the semiconductor industry or in industries that use the Company's customers'
products, could materially adversely affect the Company's business, financial
condition and results of operations.
International Sales and Trade. Sales to foreign customers have accounted
for approximately 25% of net revenues in the fiscal year ended January 29, 1995.
This figure is expected to increase in fiscal year 1996. International sales
may increase in future years. International sales are subject to certain risks,
including unexpected changes in regulatory requirements, fluctuations in
exchange rates, 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. There can be no
assurance that any of these factors will not have a material adverse effect on
the Company's business, financial conditions and results of operations. In
addition, even though the majority of the Company's foreign sales are
denominated in U.S. dollars, currency exchange fluctuations in countries where
the Company does business could materially adversely affect the Company by
resulting in pricing that is not competitive with prices denominated in local
currencies.
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<PAGE>
Environmental Regulations. The Company is subject to a variety of United
States federal, state and local governmental laws, rules and regulations related
to the use, storage, handling, discharge or disposal of certain toxic, volatile
or otherwise hazardous chemicals used in its manufacturing process. Any of
those regulations could require the Company to acquire equipment or to incur
substantial other expenses to comply with environmental regulations. If
substantial additional expenses were incurred by the Company, product costs
could significantly increase, thus materially adversely affecting the Company's
business, financial condition and results of operations. The Company believes
its use, storage, handling, discharge or disposal of such materials complies in
all material respects with applicable governmental regulations and that it has
obtained all material permits necessary to conduct its business. Any failure by
the Company to comply with present or future environmental laws, rules and
regulations could result in fines being imposed on the Company, suspension of
production or cessation of operations, any of which could have a material
adverse effect on the company's business, financial condition and results of
operations.
Volatility of Share Price. The trading prices of the Company's Common Stock
may be subject to wide fluctuations in response to quarterly variations in
operating results, announcements of technological innovations or new programs
and products by the Company or its competitors, or other factors. Those
factors, as well as general economic, political and market conditions, may
adversely affect the market price of the Common Stock.
Product Liability. Product liability claims may be asserted with respect to
the Company's technology or products. Although the Company currently has
product liability insurance, there can be no assurance that the Company has
obtained sufficient insurance coverage, or that the Company will have sufficient
resources, to satisfy any product liability claims.
Impact of Recently Completed Acquisition of ECI Semiconductor. The
Company acquired ECI on October 4, 1995. The acquisition was treated as a
pooling-of-interests under generally accepted accounting principles. While the
Company did an extensive due diligence investigation, the full impact of the
acquisition on the Company, including the customers of ECI and Semtech and their
respective businesses, cannot be forecasted at this time. There can be no
assurance that the acquisition will not cause changes in ECI's relationship with
certain of its customers given that certain of ECI's customers are competitors
of the Company. The loss or changes in buying patterns of any of ECI's
significant customers, primarily their five largest customers, would have an
adverse effect on the Company's business, financial condition and results of
operation.
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<PAGE>
MATERIAL CHANGES
SELECTED FINANCIAL DATA
The following table sets forth summary financial information of the Company
at January 29, 1995, January 30, 1994, January 31, 1993 and for the three years
ended January 29, 1995. Dollar amounts are in thousands, except per share
amounts. This data has been restated to reflect Semtech's acquisition of ECI
which was treated as a pooling-of-interests for accounting purposes. The
information set forth below should be read in conjunction with the Company's
complete financial statements, appearing elsewhere in this Prospectus and with
the Company's Form 10-Q for the quarter ended October 29, 1995, which has been
incorporated herein by reference.
<TABLE>
<CAPTION>
1995 1994 1993
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<S> <C> <C> <C>
Net Sales $34,605 $29,353 $27,554
Gross Profit 11,272 8,440 7,986
Operating Income (Loss) 2,099 500 (4)
Income (Loss) Before Taxes 2,028 300 (53)
Net Income (Loss) $ 1,502 $ 198 $ (103)
- --------------------------------------------------------------------------
Net Income (Loss) per Share:
Primary $ 0.27 $ 0.04 $ (0.02)
Fully Diluted $ 0.25 $ 0.03 $ (0.02)
- --------------------------------------------------------------------------
Total Assets $21,377 $18,260 $17,103
Long-Term Debt, Less Current Maturities $ 799 $ 963 $ 1,060
Working Capital $11,475 $ 9,623 $ 9,142
Total Shareholders' Equity $13,715 $11,697 $11,282
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS RELATING TO THE THREE-
YEAR PERIOD ENDED JANUARY 29, 1995 REFLECTS SEMTECH'S ACQUISITION OF ECI WHICH
ACQUISITION WAS TREATED AS A POOLING-OF-INTERESTS FOR ACCOUNTING PURPOSES. FOR
MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED OCTOBER 29, 1995
(WHICH ALSO REFLECTS THE ACQUISITION OF ECI), REFERENCE IS MADE TO SEMTECH'S
QUARTERLY REPORT ON FORM 10-Q DATED OCTOBER 29, 1995 INCORPORATED BY REFERENCE
INTO THIS PROSPECTUS.
RESULTS OF OPERATIONS
Semtech recorded sales of $34.6 million in fiscal year 1995 compared with
$29.4 million in fiscal 1994 and $27.6 million in 1993. Net income was
$1,502,000 in 1995 compared to $198,000 in 1994. A net loss of $103,000 was
incurred in 1993.
Sales
Sales for fiscal year 1995 increased 18% over fiscal year 1994 and sales for
fiscal year 1994 increased 7% over fiscal year 1993. The increase in fiscal
1995 was primarily due to the increased shipment of products used in personal
computers ("PC's") and datacommunications applications. Semtech introduced
several new products during the year which fueled the revenue growth. Sales
relating to military and aerospace applications decreased by 10% in fiscal 1995
compared to the prior year. Sales of non-military ("commercial") products
increased by approximately 36% over fiscal 1994's levels. Sales to commercial
customers were 70% of total revenue compared to 30% to military and aerospace
customers.
Sales of commercial semiconductor products increased by $6.4 million in 1995
over 1994's levels. This increase is attributable to the Company's ability to
develop new products used in computer, datacommunications, and other commercial
applications. A significant portion of the increase in commercial parts
shipments was to new markets in Japan, Taiwan, and other East Asian countries.
Sales to customers located in the Eastern Asian region were approximately 7% of
the total sales for fiscal 1995. The Company expects that sales into this
region will continue to increase during fiscal year 1996.
Sales to military and aerospace customers dropped by approximately $1.2
million in fiscal year 1995 compared to 1994. The Company believes that the
military market will be flat or decline slightly in fiscal year 1996. As a
result, the Company has made significant investments in developing and producing
new products. Despite the decline in military spending, the Company is committed
to maintaining its position within the military and aerospace industry.
Semtech Limited, a wholly owned subsidiary of the Company that provides
European sales coverage and manufacturing capabilities, increased its shipments
by 42% in 1995 compared to 1994. The increase was reflective of an improvement
in the economic climate in Europe, change in sales management made two years ago
and introduction of new products. While the Company expects sales to grow
moderately in Europe, the expected increase does not match
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those forecasted for other regions. Sales by Semtech Santa Clara (formerly ECI
Semiconductor) increased by $0.7 million in fiscal year 1995.
Orders
New orders received in fiscal year 1995 amounted to $36.3 million,
representing an 11% increase over the $32.7 million in 1994 and an increase of
32% from the Company's orders of $27.6 million in 1993. The fiscal 1995 order
level resulted in a "book to bill" ratio of 1.05 for the year. The growth in
new orders in 1995 over 1994 was primarily attributable to a 27% increase in
bookings of commercial products, while orders for military and aerospace
products declined by 18%.
Over fiscal 1995, Semtech witnessed several new products gain acceptance as
viable solutions for commercial application needs. Most notably, linear
regulators used to power micro-processors and transient voltage suppressors
(TVS) that provide protection against electrical static discharge. In addition,
the Company received interest on several custom designed assemblies used to
power DC to DC applications.
In fiscal 1995 the Company was successful in identifying business
opportunities with several Far East suppliers of computer and telecommunications
products. Orders from Eastern Asia customers represented approximately 14% of
the total orders received in fiscal 1995. As the Eastern Asian region is
forecasted to expand as a supplier and manufacturer of computer and
telecommunication related devices, the Company plans to increase its efforts in
this region.
While the Company expects military budgets to continue to decline, the
Company will attempt to maintain its share of the military and aerospace market.
In 1995 the Company took steps to improve both domestic and foreign direct and
distribution sales coverage by adding and extending agreements with key
distributors. This improved coverage is expected to help unit sales of both
military and commercial products.
The Company ended fiscal year 1995 with $13.2 million in backlogged orders
compared to $11.6 million and $8.2 million at the end of fiscal years 1994 and
1993, respectively. A majority of the Company's backlog is capable of being
shipped within one year. All backlog orders are evidenced by a firm written
purchase order.
Gross Margin
The Company's gross profit margin for fiscal year 1995 was 33% compared to
29% in 1994 and 29% in 1993. This increase was due to added shipments of higher
margin commercial semiconductor products and improved production yields. This
was partially offset by continuing price pressure in the military markets and
manufacturing start-up costs associated with new product lines. Included in the
cost of sales are certain expenditures for engineering costs and process
development which the Company considers to be production related.
The Company expects that gross margin will improve as the mix of commercial
products shipped continues to increase over military and aerospace products.
The Company also intends to continue to pursue any available steps to improve
manufacturing efficiencies. These efforts
-11-
<PAGE>
are expected to be partially offset by a continued decline in military and
aerospace related margins.
Selling, General and Administrative, and Engineering
Costs related to selling, general and administrative, and engineering in
1995 were $7.6 million, representing an increase of 9% over the $6.9 million in
1994 and an increase of 6% compared to the $7.2 million in 1993. The increase
was due to added spending on developing and marketing new commercial products
and performance related supplemental compensation costs. The specific areas in
which Semtech expended more resources were primarily sales, advertising, and
engineering. Operating expenses were 27% of net sales in 1995 versus 27% in
1994 and 29% in 1993. Management expects expenses related to sales, general and
administrative and engineering to increase moderately in fiscal 1996 due to
added costs associated with efforts to grow net sales. The Company expects
operating expenses in fiscal year 1996 as percentage of sales to decrease below
fiscal 1995's level, assuming sales growth is achieved.
Interest and Other Expense
In fiscal year 1995, the Company had interest expense of $160,000 compared
to $149,000 in 1994 and $165,000 in 1993. Semtech had other income of $89,000
in 1995, which included $144,000 of interest income and $5,000 of foreign
currency transaction gains, partially offset by miscellaneous expense of
$60,000. In fiscal 1994, the Company incurred net other expense of $51,000,
comprised of foreign currency transaction losses totaling $29,000, $69,000 of
miscellaneous expenses that included the amortization of intangibles, $8,000
loss on disposition of assets, $108,000 in restructuring charges taken to reduce
headcount in the Corpus Christi and Scotland facilities, and offset by interest
income of $163,000. The cost savings generated through the restructuring were
approximately $100,000 per quarter. In fiscal 1993, the Company had other
income of $116,000, primarily due to interest income of $176,000.
Income Tax Expense
Income tax expense for fiscal 1995 was $526,000 compared to $102,000 and
$50,000 in 1994 and 1993, respectively. The annual tax rate is expected to rise
modestly in fiscal 1996 from fiscal 1995 levels as the Company utilized much of
its research and development ("R&D") credit carryforwards in fiscal 1995. The
Company is in the process of establishing a foreign sales corporation, which
will partially offset the absence of R&D credits. As of fiscal 1995 year-end,
the Company had $391,000 in deferred tax assets, which is net of related
valuation reserves. The valuation reserve has been established in accordance
with SFAS No. 109.
Industry Trends and Outlook
The Company has experienced growth over the past year. A majority of this
growth has emanated from products used in personal computer and
datacommunications applications. The commercial semiconductor industry and the
industries in which the Company's products are used are characterized by rapid
changes and short product life cycles. The market for the Company's military
and aerospace products remains fiercely competitive. The Company plans to
address these issues by focusing efforts on new product development.
-12-
<PAGE>
Typical of the semiconductor industry, the Company expects average selling
prices to decline over the life of its product lines. Semtech intends to offset
this decline by increasing units shipped and continuing to introduce a stream of
new products. Management will take steps to offset the impact of declines in
average selling prices. There is no assurance, however, that these efforts will
be successful.
FINANCIAL CONDITION
During fiscal year 1995, the Company improved its financial condition. The
Company had working capital of $11.5 million as of January 29, 1995, $9.6
million as of January 30, 1994 and $9.1 million as of January 31, 1993. The
increase in working capital for fiscal 1995 was the result of $567,000 of cash
generated by operations. During fiscal 1995, the Company invested approximately
$1 million in capital equipment and approximately $2.0 million in inventory to
support its entry into new commercial markets and expanded foundry operations.
As a result of these actions and repayment of debt, the Company's net cash
balance increased by $108,000 in fiscal 1995. Semtech's working capital ratio
decreased to 2.9 in 1995 from 3.1 in 1994 and 3.3 in 1993. The decrease between
1995 and 1994 was primarily due to significant investment in property, plant,
and equipment and increased accrued liabilities.
The Company maintains a credit facility with a financial institution for
working capital and equipment acquisition. This line provides up to $5 million
of credit and extends until August 1996. This arrangement is collateralized by
the Company's domestic assets and contains covenants regarding current ratios,
debt to worth, and net worth. As of January 29, 1995, the Company borrowed
$175,000 under this line. The Company repaid this amount during the first
quarter of fiscal year 1996. In October 1994, the Company procured a four year
term loan with a commercial bank in the amount of $535,000. The loan was for
the purchase of capital equipment and is collateralized by the related
equipment. The Company's foreign subsidiary also maintains an overdraft credit
line in the amount of 300,000 pounds sterling, and has obtained a commitment
from its bank to expand this line to 1,000,000 pounds sterling. This line is
based on a percentage of foreign assets and is guaranteed by the Company. No
amounts were outstanding under the line at January 29, 1995.
Market conditions for Semtech's military and aerospace products remain
highly competitive. Efforts by the Company over the past several years to
increase commercial semiconductor product sales have been effective. New
products have been introduced for applications such as computer and
telecommunications equipment. These products have improved the margins of the
Company. The improvement in these margins was evident in the Company's fiscal
1995 results, especially in the fourth quarter when gross profit margins
increased to 36%. In order to develop, design and manufacture new products, the
Company has made significant investments over the past several years. Such
investments, aimed at developing additional new products will continue. Semtech
intends to continue to invest in those areas that have shown potential for
viable and profitable market opportunities. The Company plans to finance these
investments with cash generated by operations, cash on-hand, and borrowings from
the Company's credit facilities.
-13-
<PAGE>
In an on-going effort to grow the Company and improve its long-term
financial position, the Company has examined potential acquisitions. Although
no agreements have been reached since the acquisition of ECI, the Company will
continue to investigate possible acquisitions that fit with the Company's
strategic plan. If the Company does choose to consummate such a transaction,
several forms of financing will be examined.
The leverage ratios presented below indicate the extent to which the Company
has been financed with debt. Total debt decreased by $120,000 in fiscal year
1995. This decrease was the result of regular principal payments and conversion
of debentures, partially offset by new borrowings. Existing debt services are
supported by adequate cash flows from operations.
<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Long-term debt as a %
of total capitalization (1) 5.5% 7.6% 8.6%
Total debt as a %
of total capitalization (1) 8.8% 11.0% 10.8%
</TABLE>
(1) Total capitalization is defined as the sum of long-term debt and
shareholders' equity.
During fiscal year 1995, Semtech's purchases of new capital equipment were
$1,049,000. These additions were made primarily to expand manufacturing
capacity and improve efficiency. Funding for these purchases was made from the
Company's operating cash flows, cash reserves, and debt obligations.
During the first nine months of fiscal 1996, the Company has made
significant capital expenditures to upgrade and improve the capacity and
efficiency in the Company's wafer fabrication operation. In the nine months
ended October 29, 1995, the Company committed $4,019,000 for new equipment
purchases. As of January 29, 1995, the Company had approximately $142,000 of
outstanding commitments for machinery and equipment purchases. The Company
believes that current internal cash flows together with cash reserves and
existing credit facilities are sufficient to support these capital expenditures.
Accounts receivable days sales outstanding, calculated by annualizing fourth
quarter results for 1995 and 1994, improved to forty-seven days as of January
29, 1995 from fifty-three days as of January 30, 1994. Days sales outstanding
are impacted by sales within Europe at standard terms of sixty to ninety days.
Inventory turns declined to 3.7 as of January 29, 1995 from 3.8 as of January
30, 1994. This decline was primarily due to the Company's significant
investment in new products inventory and a reduction in military inventory
turnover. All inventory which is obsolete or in excess of one year's demand is
fully reserved.
-14-
<PAGE>
INFLATION
Inflationary factors have not had a significant effect on the Company's
performance over the past three fiscal years. A significant increase in
inflation would affect the Company's future performance.
SELLING SECURITYHOLDERS
The following table sets forth as of January 5, 1996, and upon completion of
the offering described in this Prospectus, information with regard to the
beneficial ownership of the Company's Common Stock by Selling Securityholders.
Such Selling Securityholders may not have a present intention of selling the
Shares and may offer less than the amount of shares indicated.
<TABLE>
<CAPTION>
Shares Beneficially Owned
-------------------------
Shares Beneficially Shares Beneficially
Owned Before Offering/1/ Owned After Offering/3/
--------------------- Shares to --------------------
Number Percentage be Offered/2/ Number Percentage
--------- ---------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Name and Address
- ----------------
Michael Himes 630,226 10.7% 630,226 0 0%
22800 Riva Ridge Road
Los Gatos, CA 95640
Michael Wilson 77,024 1.3% 77,024 0 0%
9510 Sugar Babe Drive
Gilroy, CA 95020
Jim Preston 37,814 0.6% 37,814 0 0%
1504 Emperor Way
Sunnyvale, CA 94087
Troy Speers 14,968 0.3% 14,968 0 0%
48879 Gamay Drive
Fremont, CA 94539
EXTEK Company 14,968 0.3% 14,968 0 0%
P.O. Box 566
</TABLE>
- ----------------
/1/ The persons named in the above table have sole voting and investment power
with respect to all shares beneficially owned by them, subject to community
property laws where applicable.
/2/ The Selling Securityholders may offer less than the amount of Shares
indicated. No representation is made that any Shares will or will not be
offered for sale.
/3/ This assumes that all Shares owned by the Selling Securityholders are
offered and sold. The Selling Securityholders reserve the right to accept
or reject, in whole or in part, any proposed purchase of Shares.
-15-
<PAGE>
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold from time to time by the Selling
Securityholders, or by pledgees, donees, transferees, agents or other successor
in interest. Such sales may be made on one or more exchanges or in the over-
the-counter market (including the NASDAQ National Market System) or otherwise,
at prices and at terms then prevailing or at prices related to the then current
market price, or in negotiated transactions. The Shares may be sold by one or
more of the following: (a) a block trade in which the broker-dealer so engaged
will attempt to sell the Shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker-dealer as principal and resale by such broker-dealer for its account
pursuant to this Prospectus; (c) certain distribution in accordance with the
rules of such exchange; and (d) ordinary brokerage transactions and transactions
in which the broker solicits purchasers. In effecting sales, broker-dealers
engaged by the Selling Securityholders may arrange for other broker-dealers to
participate in the resales.
In connection with distributions of the Shares or otherwise, the Selling
Securityholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the Shares registered hereunder in the course of hedging the positions they
assume with Selling Securityholders. The Selling Securityholders may also enter
into option or other transactions with broker-dealers which require the delivery
to the broker-dealer of the Shares registered hereunder, which the broker-dealer
may resell or otherwise transfer pursuant to this Prospectus. The Selling
Securityholders may also loan or pledge the Shares registered hereunder to a
broker-dealer and the broker-dealer may sell the Shares so loaned, or upon a
default, the broker-dealer may effect sales of the pledged Shares pursuant to
this Prospectus.
Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Securityholders in amounts to
be negotiated in connection with the sale. Such broker-dealers and any other
participating broker-dealers may be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commission under the Securities Act. In addition, any securities covered by
this Prospectus which qualify for sale pursuant to Rule 144 may be sold under
Rule 144 rather than pursuant to this Prospectus.
The Selling Securityholders may agree to indemnify any broker-dealer or
agent that participates in transactions involving sales of the Shares against
certain liabilities, including liabilities arising under the Securities Act.
The Company has agreed to indemnify the Selling Securityholders against certain
liabilities in connection with the offering of the Shares, including liabilities
arising under the Securities Act.
It is not possible at the present time to determine the price to the public
in any sale of the Common Stock by the Selling Securityholders. Accordingly,
the public offering price and the amount of any applicable underwriting
discounts and commissions will be determined at the time of such sale by the
Selling Securityholders. The aggregate proceeds to the Selling
-16-
<PAGE>
Securityholders from the sale of the Common Stock will be the purchase price of
the Common Stock sold less all applicable commissions and underwriters'
discounts, if any. The Company will pay substantially all the expenses incident
to the registration, offering and sale of the Common Stock to the public by
Selling Securityholders other than fees, discounts and commissions of
underwriters, dealers or agents, if any, and transfer taxes.
USE OF PROCEEDS
The Company will not receive any proceeds of the sale of the Shares by the
Selling Shareholders.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been passed
upon by Paul, Hastings, Janofsky & Walker, Los Angeles, California.
EXPERTS
The consolidated financial statements of Semtech Corporation as of January
29, 1995 and January 30, 1994 and for each of the three years in the period
ended January 29, 1995 appearing in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report,
appearing herein, and have been so included in reliance upon the authority of
said firm as experts in accounting and auditing.
-17-
<PAGE>
SEMTECH CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants................................ F-2
Consolidated Balance Sheets as of January 29, 1995 and
January 30, 1994........................................................ F-3
Consolidated Statements of Operations for each of the three years
in the period ended January 29, 1995.................................... F-4
Consolidated Statements of Shareholders' Equity for each of the three
years in the period ended January 29, 1995.............................. F-5
Consolidated Statements of Cash Flows for each of the three years
in the period ended January 29, 1995.................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
Supplemental Schedules:
Schedule II -- Valuation and Qualifying Accounts for the years
ended January 31, 1993, January 30, 1994, January 29, 1995 and
for the nine months ended October 29, 1995 (unaudited)................ F-18
</TABLE>
______________
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders' 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 29, 1995 and
January 30, 1994, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended January 29, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit 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 financial position of Semtech Corporation and
subsidiaries as of January 29, 1995 and January 30, 1994, and the results of
their operations and their cash flows for each of the three years in the period
ended January 29, 1995 in conformity with generally accepted accounting
principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of the
financial statements is the responsibility of the Company's management and is
presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic financial statements. The
schedule has been subjected to the auditing procedures applied in our audits of
the basic financial statements and, in our opinion, fairly states in all
material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Los Angeles, California
December 6, 1995
F-2
<PAGE>
CONSOLIDATED BALANCE SHEETS
===============================================================================
JANUARY 29, 1995 AND JANUARY 30, 1994
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994
===============================================================================
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,261 $ 3,153
Temporary investments 821 1,011
Receivables, less allowances of $281 in 1995
and $320 in 1994 5,367 4,163
Income taxes refundable 71 138
Inventories 7,313 5,341
Other current assets 198 240
Deferred income taxes 352 222
- -------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 17,383 14,268
- -------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT, NET 3,491 3,443
- -------------------------------------------------------------------------------
OTHER ASSETS 464 508
- -------------------------------------------------------------------------------
DEFERRED INCOME TAXES 39 41
- -------------------------------------------------------------------------------
TOTAL ASSETS $21,377 $18,260
===============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $ 175 $ 286
Current maturities of long-term debt 304 149
Accounts payable 2,749 2,377
Accrued liabilities 1,985 1,324
Income taxes payable 476 267
Other current liabilities 219 242
- -------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 5,908 4,645
- -------------------------------------------------------------------------------
LONG-TERM DEBT, LESS CURRENT MATURITIES 799 963
- -------------------------------------------------------------------------------
DEFERRED COMPENSATION 955 955
- -------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Note 11)
SHAREHOLDERS' EQUITY:
COMMON STOCK, $0.01 PAR VALUE, 10,000,000 AUTHORIZED
Issued and outstanding 5,638,409 in 1995 and
5,187,455 in 1994 72 68
Additional paid-in capital 8,296 7,802
Retained earnings 5,565 4,073
Cumulative translation adjustment (218) (246)
- -------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 13,715 11,697
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $21,377 $18,260
===============================================================================
</TABLE>
See accompanying notes.
F-3
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
===============================================================================
THREE YEARS ENDED JANUARY 29, 1995
(Dollars in thousands-except per share amounts)
<TABLE>
<CAPTION>
1995 1994 1993
===============================================================================
<S> <C> <C> <C>
NET SALES $34,605 $29,353 $27,554
Cost of Sales 23,333 20,913 19,568
- -------------------------------------------------------------------------------
GROSS PROFIT 11,272 8,440 7,986
- -------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES:
Selling, general and administrative 7,585 6,944 7,150
Product development and engineering 1,588 996 840
- -------------------------------------------------------------------------------
Total Operating costs and expenses 9,173 7,940 7,990
- -------------------------------------------------------------------------------
OPERATING INCOME (LOSS) 2,099 500 (4)
Interest expense (160) (149) (165)
Other income (expense), net 89 (51) 116
- -------------------------------------------------------------------------------
INCOME (LOSS) BEFORE TAXES 2,028 300 (53)
Provision for taxes 526 102 50
- -------------------------------------------------------------------------------
NET INCOME (LOSS) $ 1,502 $ 198 $ (103)
===============================================================================
EARNINGS PER SHARE:
NET INCOME (LOSS) PER SHARE-
PRIMARY $ 0.27 $ 0.04 $ (0.02)
FULLY DILUTED $ 0.25 $ 0.03 $ (0.02)
===============================================================================
</TABLE>
See accompanying notes.
F-4
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
===============================================================================
THREE YEARS ENDED JANUARY 29, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Common Stock
--------------------------------
Additional Cumulative
Number of Paid-in Retained Translation Shareholders'
Shares Amount Capital Earnings Adjustment Equity
==================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT FEBRUARY 2, 1992 4,977,018 $66 $7,577 $3,978 $ (40) $11,581
Conversions of debentures 26,880 1 26 - - 27
Stock options exercised 13,833 - 26 - - 26
Stock issued for services 28,712 - 7 - - 7
Stock repurchases (4,261) - (8) - - (8)
Translation adjustment - - - - (248) (248)
Net loss - - - (103) - (103)
------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 31, 1993 5,042,182 67 7,628 3,875 (288) 11,282
Conversions of debentures 40,000 - 50 - - 50
Stock options exercised 76,566 1 117 - - 118
Stock issued for services 28,707 - 7 - - 7
Translation adjustment - - - - 42 42
Net income - - - 198 - 198
------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 30, 1994 5,187,455 68 7,802 4,073 (246) 11,697
Conversions of debentures 350,440 3 347 - - 350
Stock options exercised 61,125 1 112 - - 113
Stock issued for services 39,389 - 35 - - 35
Stock repurchase - - - (10) - (10)
Translation adjustment - - - - 28 28
Net income - - - 1,502 - 1,502
------------------------------------------------------------------------------------------------------------------
BALANCE AT JANUARY 29, 1995 5,638,409 $72 $8,296 $5,565 $(218) $13,715
==================================================================================================================
</TABLE>
See accompanying notes.
F-5
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
===============================================================================
THREE YEARS ENDED JANUARY 29, 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
1995 1994 1993
=============================================================================================================================
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,502 $ 198 $ (103)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 997 1,129 1,117
Deferred income taxes (128) (81) 31
Forgiveness of employee debt - - 27
Provision for doubtful accounts (39) 28 (52)
Changes in assets and liabilities net of effects from business acquired:
Receivables (1,165) (599) 655
Income taxes refundable 67 (99) (39)
Inventories (1,972) (699) (16)
Other current assets 42 11 (99)
Other assets 44 (4) (9)
Accounts payable 372 349 491
Accrued liabilities 661 (75) (760)
Income taxes payable 209 227 (120)
Deferred compensation - - 522
Other current liabilities (23) - 6
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 567 385 1,651
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Temporary investments 190 (60) (877)
Additions to property, plant and equipment (1,049) (1,136) (606)
Payment for acquisition, net of cash acquired - - (168)
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (859) (1,196) (1,651)
- -----------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under line of credit (111) 286 -
Proceeds of employee note 39 50 -
Additions to long-term debt 535 98 30
Repayment of long-term debt (194) (285) (344)
Stock options exercised 113 118 26
Purchase and retirement of common stock (10) - (8)
- -----------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 372 267 (296)
- -----------------------------------------------------------------------------------------------------------------------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 28 42 (21)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 108 (502) (317)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,153 3,655 3,972
- -----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,261 $ 3,153 $ 3,655
=============================================================================================================================
</TABLE>
See accompanying notes.
F-6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS Semtech Corporation, (the "Company"), including its wholly owned
subsidiaries, manufactures silicone rectifiers, integrated circuits and
related devices which are used in military, aerospace, industrial and consumer
applications.
FISCAL YEAR The Company reports results on the basis of fifty-two and fifty-
three week periods. The three fiscal years in the period ended January 29,
1995 consisted of fifty-two weeks, fifty-three weeks and fifty-two weeks,
respectively.
REVENUE RECOGNITION The Company recognizes product revenue upon shipment.
Product design and engineering revenue is recognized during the period in
which services are performed.
PRINCIPLES OF CONSOLIDATION The accompanying consolidated financial
statements include the accounts of Semtech Corporation and its wholly owned
subsidiaries including Gamma Inc. (see Footnote 2). All significant inter-
company transactions and accounts have been eliminated.
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.
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 fifty years; leaseholds
for the lesser of estimated useful life or lease term; equipment for two to
five years; and furniture and fixtures for three to five 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.
INCOME TAXES Effective February 1, 1993, the Company changed its method of
accounting for income taxes to comply with the provisions of SFAS No. 109.
Under SFAS No. 109, deferred income tax assets or liabilities are computed
based on the temporary difference between the financial statement and income
tax bases of assets and liabilities using the statutory marginal income tax
rate in effect for the year in which the differences are expected to reverse.
Deferred income tax expenses or credits are based on the changes in the
deferred income tax assets or liabilities from period to period. Prior to
fiscal year 1994, deferred income taxes were provided on temporary differences
between the income or loss determined for financial reporting and income tax
reporting at income tax rates in effect when the differences are expected to
be settled. The change did not have a material effect on the financial
statements. The financial statements of Gamma Inc. have been prepared under
the provisions of SFAS No. 109 for all periods presented.
As of January 29, 1995 and January 30, 1994, approximately $1,445,000 and
$1,245,000 of unremitted income related to the Company's wholly owned foreign
subsidiary is not subject to federal and state income taxes, respectively,
except when such income is paid to the parent company. Federal and state
income taxes have not been provided on this income, as it is management's
intention that these amounts will not be distributed in a taxable transaction.
EARNINGS PER SHARE Primary earnings per common and common equivalent share
(including the effect of stock options and stock warrants as common stock
equivalents) have been computed based on the weighted average number of shares
outstanding of 5,484,815 in 1995, 5,176,116 in 1994, and
F-7
<PAGE>
5,027,590 in 1993. Fully diluted earnings per share are determined on the
assumption that all the convertible debentures were converted at the beginning
of the period under the if-converted method. The weighted average number of
shares used to compute fully diluted earnings per share in fiscal years 1995,
1994, and 1993 were 6,070,225, 5,712,464 and 5,027,590, respectively. The
weighted average number of shares outstanding for fiscal year 1993 did not
include equivalent shares as they would be anti-dilutive.
TRANSLATION The assets and liabilities of the Company's foreign subsidiary
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 the cumulative
translation adjustment in the accompanying financial statements.
2. BUSINESS COMBINATION
On October 4, 1995, the Company entered into an Agreement and Plan of Merger
("Merger Agreement") among the Company, Semtech Acquisition Corp. (a wholly
owned subsidiary of the Company), Gamma Inc. (dba ECI Semiconductor) and the
Shareholders of Gamma Inc. Pursuant to the Merger Agreement, on October 4,
1995, Semtech Acquisition Corp. was merged into Gamma Inc., and Gamma Inc. was
the surviving corporation and became a wholly-owned subsidiary of the Company.
Gamma Inc. was then renamed Semtech Santa Clara Corp. Each share of Gamma
Inc. stock outstanding on October 4, 1995, by virtue of the Merger Agreement,
was exchanged for and converted into fully paid and nonassessable voting
common shares, par value $.01 per share, of Semtech Corporation common stock,
at the exchange rate of 775,000 shares of Semtech Corporation common stock,
for 147,566 shares of Gamma Inc. common stock. The Merger Agreement defines
the terms under which all the outstanding shares of Gamma Inc. were exchanged.
Semtech Corporation acquired Gamma Inc. to integrate and complement its
existing business technology. Gamma Inc. is an analog semiconductor
manufacturer supplying foundry wafers, custom linear and digital arrays, and
general purpose analog semiconductor devices.
The transaction was accounted for as a pooling of interests and, accordingly,
the accompanying consolidated financial statements have been restated as if
the companies had been combined for all periods presented.
Net sales and net income (loss) of Semtech Corporation and Gamma, Inc. prior
to the effect of the pooling were as follows:
<TABLE>
<CAPTION>
(thousands) 1995 1994 1993
-----------------------------------------------------------------------------
<S> <C> <C> <C>
Sales
-----
Semtech $25,810 $21,290 $20,169
Gamma Inc. 8,795 8,063 7,385
------- ------- -------
Combined Sales $34,605 $29,353 $27,554
======= ======= =======
Net Income (Loss)
-----------------
Semtech $ 1,187 $ 103 $ 431
Gamma Inc. 315 95 (534)
------- ------- -------
Combined net income (loss) $ 1,502 $ 198 $ (103)
======= ======= =======
</TABLE>
F-8
<PAGE>
3. TEMPORARY INVESTMENTS
Temporary investments consist of commercial paper and government obligations
with original maturities in excess of three months and were carried at cost,
which approximates market, for fiscal 1993 and 1994 and at market value for
fiscal 1995. In fiscal 1995, the Company adopted SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." At January 29, 1995,
the fair market value of these temporary investments, classified as "available
for sale securities", approximated cost, thus no unrealized holding gains or
losses were reported in the accompanying balance sheet. During fiscal year
1995, the Company had proceeds from sales of available for sale securities and
gross realized losses on these sales of approximately $596,000 and $8,000,
respectively. In addition, the Company holds debt securities of approximately
$195,000 expiring at various dates through 1999.
4. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
Raw Work in Finished
(thousands) Materials process goods Total
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Gross inventory $1,731 $ 5,869 $ 2,494 $10,094
Total reserves (539) (1,146) (1,096) (2,781)
------ ------- -------- -------
Net inventory $1,192 $ 4,723 $ 1,398 $ 7,313
====== ======= ======== =======
1994
Gross inventory $1,474 $ 4,836 $ 2,029 $ 8,339
Total reserves (396) (1,387) (1,215) (2,998)
------ ------- -------- -------
Net inventory $1,078 $ 3,449 $ 814 $ 5,341
====== ======= ======== =======
</TABLE>
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
(thousands) 1995 1994
------------------------------------------------------------------------
<S> <C> <C>
Land $ 162 $ 162
Building 1,024 1,059
Leasehold improvements 1,237 1,214
Machinery and equipment 9,592 8,811
Furniture and office equipment 855 712
------ -------
12,870 11,958
Less accumulated depreciation
and amortization (9,379) (8,515)
------- --------
Total $ 3,491 $ 3,443
======= ========
</TABLE>
F-9
<PAGE>
6. OTHER ASSETS
Included in other assets is a note receivable from an executive officer of
$315,000. It represents the amount due for the purchase of debentures issued
in accordance with the Company's Key Management Convertible Subordinated
Debenture Plan. The debentures, which were purchased by the executive officer
in fiscal 1987, were converted to common stock of the Company during the
current year. This note bears an interest rate of 6.5% and matures on
December 15, 1997.
Principal and interest due under this note will be paid by the Company in the
amount of 5% of the Company's pretax earnings for each fiscal quarter,
beginning with the first quarter of fiscal 1995 and ending with the third
quarter of fiscal 1997. For fiscal 1995, compensation expense in the amount
of $85,000 was recognized by the Company under this agreement.
7. ACCRUED LIABILITIES
Accrued liabilities consisted of the following:
<TABLE>
<CAPTION>
(thousands) 1995 1994
-----------------------------------------------------------
<S> <C> <C>
Payroll and related $1,125 $ 538
Commissions 141 154
Reserve for credit memos 150 150
Environmental 250 250
Other 319 232
------ ------
Total $1,985 $1,324
====== ======
</TABLE>
8. LONG-TERM DEBT AND LINE OF CREDIT
Long-Term debt consisted of the following:
<TABLE>
<CAPTION>
(thousands) 1995 1994
-------------------------------------------------------------
<S> <C> <C>
8.5% convertible subordinated debentures,
due 1996, interest payable semi-annually $ 137 $ 487
Note payable, interest at 8.62%, due in
monthly installments to 1998,
collateralized by capital equipment 490 -
Note payable, interest at 8%, due in
monthly installments to 1996, partially
collateralized by a $112 certificate of
deposit 150 250
Note payable, interest at 11.875%, due
in semi-annual installments to 2003,
collateralized by a building 267 270
Notes payable, bearing interest at 7.25%,
due in monthly installments to 1996,
collateralized by certain equipment. 36 53
</TABLE>
F-10
<PAGE>
<TABLE>
<S> <C> <C>
Obligations under capital leases,
interest at 7.1% to 15%, due in
monthly installments to 1998,
collateralized by certain equipment 23 52
------ ------
1,103 1,112
Less current maturities (304) (149)
------ ------
$ 799 $ 963
====== ======
</TABLE>
Long-term debt matures as follows: $304,000 in 1996, $350,000 in 1997,
$165,000 in 1998, $120,000 in 1999, $34,000 in 2000, and $130,000 thereafter.
For fiscal 1995, the Company's maximum outstanding debt balance was
$1,761,000. In August 1992, as amended in September 1994, the Company entered
into a credit arrangement with a financial institution for a working capital
and equipment acquisition line of credit for up to $5,000,000 extending to
August 1996 at an interest rate of 30 day commercial paper plus 2.65 percent
(8.58% at January 29, 1995). The weighted average interest rates were 7.4%
and 6.5% for 1995 and 1994, respectively. The arrangement is collateralized
by the Company's domestic assets and contains provisions regarding current
ratios, debt to worth, and net worth. As of January 29, 1995, the Company had
$175,000 of borrowings outstanding under this line. The Company also
maintains an overdraft credit line in the amount of 300,000 pounds sterling at
its wholly owned foreign subsidiary, and has obtained a commitment from its
bank to expand the line to 1,000,000 pounds sterling on a formula line basis.
9. DEFERRED COMPENSATION
On September 10, 1989, Gamma Inc. entered into an employment contract with a
shareholder. The agreement guarantees continuing salary payments to the
shareholder upon termination of employment equal to his compensation at the
point of termination, plus certain benefits, for a period of three years. The
liability was originally recorded by the Company in 1989 and increased based
on salary adjustments. The present value of this commitment at January 29,
1995 and January 30, 1994 is $955,000 which is reflected in the accompanying
financial statements.
10. INCOME TAXES
The provision (benefit) for taxes consisted of the following:
<TABLE>
<CAPTION>
(thousands) 1995 1994 1993
-------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 429 $ 177 $ 14
State 124 85 (29)
Foreign 101 (79) 40
----- ----- -----
654 183 25
Deferred:
Federal (100) (66) 18
State (30) (15) 7
Foreign 2 - -
----- ----- -----
Total $ 526 $ 102 $ 50
===== ===== =====
</TABLE>
F-11
<PAGE>
The components of the net deferred income tax assets at January 29, 1995 and
January 30, 1994 are as follows:
Net short-term deferred income taxes:
<TABLE>
<CAPTION>
(thousands) 1995 1994
-----------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Payroll and related $ 474 $ 441
Environmental 100 100
Research and development tax credit 143 113
Reserve for credit memos 60 60
Deferred revenue 31 25
Bad debt reserve 25 34
Other deferred assets 19 45
----- ------
Total deferred income taxes 852 818
Valuation reserve (500) (596)
----- ------
Net short-term deferred income taxes $ 352 $ 222
===== ======
</TABLE>
Net long-term deferred income taxes:
<TABLE>
<CAPTION>
(thousands) 1995 1994
-----------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Inventory valuation $ 773 $ 783
Tax credits 20 152
Accrued compensation 71 72
Other deferred assets 54 19
----- ------
Total long-term deferred assets 918 1,026
----- ------
Deferred tax liabilities:
Depreciation and amortization (111) (128)
Foreign deferred taxes (37) (35)
----- ------
Total long-term deferred liabilities (148) (163)
----- ------
Subtotal 770 863
Valuation reserve (731) (822)
----- ------
Net long-term deferred income taxes $ 39 $ 41
===== ======
</TABLE>
F-12
<PAGE>
The provision for taxes reconciles to the amount computed by applying the
statutory federal rate to income before taxes as follows:
<TABLE>
<CAPTION>
(thousands) 1995 1994 1993
--------------------------------------------------------------------------
<S> <C> <C> <C>
Computed expected tax $ 690 $ 102 $ (18)
State income taxes, net of federal benefit 97 19 (1)
Foreign taxes at rates greater (less) than
domestic rates 2 68 (3)
Utilization of net operating loss and tax
credit carryforwards (31) (13) (98)
Changes in valuation reserve (187) (73) 224
Other (45) (1) (54)
----- ----- -----
Provision for taxes $ 526 $ 102 $ 50
===== ===== =====
</TABLE>
The Company has approximately $163,000 of tax credit carryforwards as of
January 29, 1995 expiring in various years through 2010.
11. COMMITMENTS AND CONTINGENCIES
The Company leases facilities and certain equipment under operating lease
arrangements expiring in various years through 2001. Certain equipment leases
constitute capital leases. The accompanying financial statements include the
assets and liabilities arising from these capital lease obligations.
The aggregate minimum annual lease payments under leases in effect on January
29, 1995 were as follows:
<TABLE>
<CAPTION>
(thousands) Equipment
under Capital Operating
Fiscal Year Ending Leases Leases
------------------------------------------------------------------------------
<S> <C> <C>
1996 $14 $ 659
1997 7 523
1998 4 495
1999 - 282
2000 - 124
Thereafter - 124
--- ------
Total minimum lease commitments $25 $2,207
Less: amount representing interest 2 ======
---
Present value of obligations under capital leases $23
Less: current portion 14
---
Long-term obligations under capital leases $ 9
===
</TABLE>
Annual rent expense was $638,000, $579,000, and $585,000 for fiscal years
1995, 1994, and 1993, respectively. From 1987 through 1994, the Company
subleased a portion of its facilities. Accordingly,
F-13
<PAGE>
amounts received from these agreements were netted against rent expense. The
Company received $10,000 and $58,000 in sublease payments in 1994 and 1993,
respectively.
The Company is a defendant in lawsuits involving matters which are routine to
the nature of its business. Management is of the opinion that the ultimate
resolution of all such matters will not have a material adverse effect on the
accompanying consolidated financial statements.
12. SHAREHOLDERS' EQUITY
STOCK OPTIONS In 1981 the Company adopted an Incentive Stock Option Plan which
provides for granting options to purchase up to 68,510 shares of the Company's
common stock to full-time key employees, including officers and directors. No
options can be granted after November 23, 1991; therefore, options canceled
after this date may not be reissued. As of January 29, 1995, 59,510 shares
have been canceled and may no longer be granted under this plan.
In February 1986, the Company established the 1986 Stock Option Plan which
provides for granting options to purchase up to 250,000 shares of the
Company's common stock to employees, directors and consultants of the Company.
The 1986 plan provides for the granting of options which meet the Internal
Revenue Code requirements for qualification as incentive stock options, as
well as nonstatutory options. Under this Plan, the option price must be at
least equal to the fair market value of the Company's common stock at the date
of the grant for incentive stock options and must equal or exceed the lesser
of (i) 85% of fair market value on the date of grant, or (ii) 85% of fair
market value on the date of exercise for nonstatutory options. Most incentive
stock options expire within ten years from the date of grant. Generally, the
options are exercisable in annual installments beginning one year after, and
expire either five or six years after, the date of grant.
In February 1987, the Company adopted the 1987 Stock Option Plan covering
350,000 shares of the Company's common stock. The 1987 Plan provides for the
granting of options which meet the Internal Revenue Code requirements for
qualification as incentive stock options, and of options which do not meet
such requirements, nonstatutory options. The terms and conditions of options
granted under the 1987 Stock Option Plan are the same as those granted under
the Company's 1986 Stock Option Plan, depending on the designation of the
option.
In 1994, the Company adopted the 1994 Long-Term Stock Incentive Plan and the
1994 Non-Employee Directors Stock Option Plan covering 300,000 shares and
100,000 shares of the Company's common stock, respectively. Both 1994 plans
provide for the granting of options which meet the Internal Revenue Code
requirements for qualification as incentive stock options, and of options
which do not meet such requirements, nonstatutory options. The terms and
conditions of options granted under the 1994 Plans are substantially similar
to those granted under the Company's 1987 and 1986 Plans.
F-14
<PAGE>
Stock option information with respect to the Company's stock option plans is
as follows:
<TABLE>
<CAPTION>
Common Option Aggregate
Shares Available Price Option
Reserved for Grant Options Per Share Price
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at February 2, 1992 612,950 64,850 548,100 $1.00-$4.50 $1,100,075
Granted - (70,000) 70,000 1.50 105,000
Canceled (13,375) 62,317 (75,692) 1.25- 4.50 (210,321)
Exercised (13,833) - (13,833) 1.38- 2.00 (25,791)
------- -------- -------- ----------- ----------
Balance at January 31, 1993 585,742 57,167 528,575 $1.00-$4.50 $ 968,963
Granted - (89,750) 89,750 1.75- 2.38 182,656
Canceled (6,625) 67,409 (74,034) 1.00- 4.50 (154,297)
Exercised (76,566) - (76,566) 1.00- 2.25 (117,066)
------- -------- -------- ----------- ----------
Balance at January 30, 1994 502,551 34,826 467,725 $1.00-$3.13 $ 880,256
Granted - (219,500) 219,500 1.94-$2.63 503,968
Canceled - 54,850 (54,850) 1.00-$3.13 (93,513)
Exercised (61,125) - (61,125) 1.00-$2.00 (113,000)
Additions 400,000 400,000 - - -
------- -------- -------- ----------- ----------
Balance at January 29, 1995 841,426 270,176 571,250 $1.00-$2.63 $1,177,711
======= ======== ======== =========== ==========
</TABLE>
CONVERTIBLE DEBENTURES In March 1986, the Company successfully completed an
offering of $2.3 million of 8.5% Convertible Subordinated Debentures to its
shareholders. The debentures are subordinated to existing and future senior
indebtedness and are convertible at any time into one share of the Company's
common stock at a conversion rate of one common share per $1.00 face value of
debentures. In February 1989 the Company called all outstanding 8.5%
Convertible Subordinated Debentures due in 1996, excluding any such debentures
which were held of record by persons who purchased such debentures pursuant to
the Company's 1986 Key Management Convertible Subordinated Debenture Purchase
Plan. Through January 29, 1995 essentially all of those debentures have been
either converted into common stock of the Company or redeemed by the Company.
On December 17, 1985, the Company adopted a Key Management Convertible
Subordinated Debenture Purchase Plan. An aggregate of $800,000 in principal
amount of the Company's 8.5% Convertible Subordinated Debentures were issuable
under the Debenture Plan, and no debentures were issued after December 31,
1986. Under the Debenture Plan, all debentures were issued at a fair market
value at the time the right to purchase the debentures was granted to an
employee. Debentures were sold with or without periodic vesting and repurchase
restriction and with other terms and conditions established by the
Compensation and Stock Option Committee. An aggregate of $789,000 of
debentures were granted under this plan.
As of January 29, 1995, $581,000 of these debentures were either converted to
common stock of the Company or sold, and $71,000 were repurchased by the
Company. Accordingly, $137,000 of debentures issued under the Company's
Debenture Purchase Plan were outstanding to certain key employees and retirees
of the Company at January 29, 1995.
As of January 29, 1995, 137,000 shares of common stock were reserved for the
conversion of the outstanding subordinated debentures.
F-15
<PAGE>
13. OTHER INCOME AND EXPENSE
Other income and (expense) consisted of the following:
<TABLE>
<CAPTION>
(thousands) 1995 1994 1993
--------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $144 $ 163 $176
Loss on disposition of assets - (8) (7)
Foreign currency transaction gains (losses) 5 (29) (8)
Restructuring costs - (108) -
Miscellaneous expense (60) (69) (45)
---- ----- ----
Total $ 89 $ (51) $116
==== ===== ====
</TABLE>
The restructuring charge for 1994 was the cost of reducing administrative
headcount in the Corpus Christi facility and manufacturing headcount at
Semtech Limited. This restructuring allowed the Company to eliminate the
finance and sales organization within its Corpus Christi operation.
14. STATEMENTS OF CASH FLOWS
The Company had the following non-cash activities for each year:
<TABLE>
<CAPTION>
(thousands) 1995 1994 1993
--------------------------------------------------------------------------
<S> <C> <C> <C>
Non-cash activities -
Debentures converted
to stock $350 $50 $27
Stock issued for services 35 7 7
</TABLE>
Income taxes paid in fiscal years 1995, 1994, and 1993 were $427,000, $27,000,
and $156,000 respectively. For those same periods, the Company paid interest
in the amounts of $163,000, $151,000, and $156,000, respectively.
The Company considers all highly liquid investments with original maturity of
three months or less to be cash equivalents.
15. BUSINESS SEGMENTS
The business of the Company consists of the manufacture and sale of silicon
rectifiers, integrated circuits and related devices which falls within a
single segment. Foreign sales are primarily in Europe and Far East Asia. No
single customer's net sales exceeded 10 percent of total net sales in fiscal
years 1995, 1994 and 1993.
F-16
<PAGE>
A summary of net sales, pre-tax income and identifiable assets for the
Company's domestic and foreign operations follows:
<TABLE>
<CAPTION>
(thousands) 1995 1994 1993
--------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales:
Domestic $28,787 $25,250 $22,694
Foreign 5,818 4,103 4,860
------- ------- -------
Total $34,605 $29,353 $27,554
======= ======= =======
Pre-tax Income (Loss):
Domestic $ 1,761 $ 666 $ (190)
Foreign 267 (366) 137
------- ------- -------
Total $ 2,028 $ 300 $ (53)
======= ======= =======
Identifiable Assets:
Domestic $18,584 $15,516 $14,472
Foreign 2,793 2,744 2,631
------- ------- -------
Total $21,377 $18,260 $17,103
======= ======= =======
</TABLE>
16. SELECTED QUARTERLY DATA (UNAUDITED)
Quarterly data, unaudited, for fiscal 1995 and fiscal 1994 is presented below:
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH FISCAL
QUARTER QUARTER QUARTER QUARTER YEAR
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995
Net Sales $7,584 $8,394 $8,324 $10,303 $34,605
Gross Profit 2,408 2,610 2,589 3,665 11,272
Net Income 169 230 302 801 1,502
Net Income per Share:
Primary .03 .04 .06 .14 .27
Fully Diluted .03 .04 .05 .13 .25
1994
Net Sales $7,619 $7,062 $7,512 $ 7,160 $29,353
Gross Profit 2,065 2,030 2,283 2,062 8,440
Net Income (loss) (104) 40 180 82 198
Net Income (loss) per Share:
Primary (.02) .01 .03 .02 .04
Fully Diluted (.02) .01 .03 .01 .03
</TABLE>
F-17
<PAGE>
SCHEDULE II
SEMTECH CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED JANUARY 31, 1993, JANUARY 30, 1994, JANUARY 29, 1995, AND
FOR THE NINE MONTHS ENDED OCTOBER 29, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
Balance at Charged to Balance at
Beginning Costs and End
of Year Other Expenses Deductions of year
---------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended January 31, 1993:
- ----------------------------
Allowance for doubtful
accounts $343,000 $(3,000) $95,000 $(144,000) $291,000
Year Ended January 30, 1994:
- ----------------------------
Allowance for doubtful
accounts $291,000 $ - $47,000 $ (18,000) $320,000
Year Ended January 29, 1995:
- ----------------------------
Allowance for doubtful
accounts $320,000 $ 4,000 $20,000 $ (63,000) $281,000
Nine Months Ended October 29,
1995 - (Unaudited)
- -----------------------------
Allowance for doubtful
accounts $281,000 $ - $41,000 $ (15,000) $307,000
</TABLE>
F-18
<PAGE>
No dealer, salesman or any other person is authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus, and if given or made, such
information or representations should not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy the shares of Common Stock offered by this
Prospectus, by anyone in any jurisdiction in which such offer to sell or
solicitation is not authorized, or in which the person making such offer is not
qualified to do so or to any person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of the Prospectus nor any distribution of
shares pursuant to this Prospectus shall, under any circumstances, create any
implication that there has been no change in the information set forth or
incorporated by reference herein or in the affairs of the Company since the date
of this Prospectus.
_______________
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information........................ 2
Incorporation by Reference................... 3
The Company.................................. 4
Risk Factors................................. 5
Material Changes............................. 9
Selling Securityholders...................... 15
Plan of Distribution......................... 16
Use of Proceeds.............................. 17
Legal Matters................................ 17
Experts...................................... 17
Index to Consolidated Financial Statements... 18
</TABLE>
775,000 SHARES
SEMTECH CORPORATION
COMMON STOCK
----------
PROSPECTUS
----------
January , 1996
<PAGE>
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The fees and expenses payable by the Company in connection with the sale of
the shares of Common Stock being registered are estimated as follows:
<TABLE>
<CAPTION>
Amount
----------
<S> <C>
SEC Filing Fee............. $ 5,177.80
Legal Fees and Expenses*... $10,000.00
Accounting Fees*........... $30,000.00
Printing Expenses*......... $ 1,500.00
----------
Total*........... $46,677.80
==========
</TABLE>
___________________
*Indicates estimate
Item 15. Indemnification of Directors and Officers.
Section 17 of the Bylaws of the Company, as amended, provides for
indemnification of officers, directors, agents and employees of the Company
generally consistent with the provisions of Section 145 of the Delaware General
Corporation Law. Pursuant to Section 145 of the Delaware General Corporation
Law, a corporation generally has the power to indemnify its present and former
directors, officers, employees and agents against expenses incurred by them in
connection with any suit to which they are, or are threatened to be made, a
party by reason of their serving in such positions so long as they acted in good
faith and in a manner they reasonably believed to be in, or not opposed to, the
best interests of the corporation, and with respect to any criminal action, they
had no reasonable cause to believe their conduct was unlawful. With respect to
suits by or in the right of a corporation, however, indemnification is not
available if such person is adjudged to be liable for negligence or misconduct
in the performance of his duty to the corporation unless the court determines
that indemnification is appropriate. In addition, a corporation has the power
to purchase and maintain insurance for such persons. The statute also expressly
provides that the power to indemnify authorized thereby is not exclusive of any
rights granted under any bylaw, agreement, vote of stockholders or disinterested
directors, or otherwise.
II-1
<PAGE>
As permitted by Section 102 of the Delaware General Corporation Law, the
Company's stockholders have approved and incorporated provisions into the
Company's Certificate of Incorporation, as amended, which among other things,
eliminates a director's personal liability for monetary damages to the Company
and its stockholders arising from a breach of a director's fiduciary duty, to
the fullest extent permitted by the Delaware General Corporation Law as it
presently exists or may hereafter be amended.
The above discussion of the Company's Bylaws, Certificate of Incorporation
and of Section 145 of the Delaware General Corporation Law is not intended to be
exhaustive and is qualified in its entirety by such Bylaws, Certificate of
Incorporation, and statute.
Item 16. Exhibits.
5 Opinion of counsel as to legality of securities being registered.
23.1 Consent of independent public accountants.
23.2 Consent of counsel (included in Exhibit 5).
24.1 Power of Attorney (included herein on the signature page).
27.1 Financial Data Schedule.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this registration statement
or any material change to such information in this registration statement;
Provided, however, that paragraphs (l)(i) and (l)(ii) do not apply if the
-------- -------
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof; and
(3) To remove from registration by means of post-effective amendment
any of the securities which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and had duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Newbury Park, State of California, on January 8,
1996.
SEMTECH CORPORATION
By: /s/ John D. Poe
------------------------------------------------
John D. Poe
President & Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints John D. Poe his true and lawful attorney-in-fact
and agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign this Registration
Statement and any and all amendments (including post-effective amendments) to
this Registration Statement, and to file the same with all exhibits thereto, and
all documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John D. Poe President, Chief Executive January 8, 1996
- -------------------------- Officer and Director
John D. Poe (Principal Executive Officer)
/s/ David G. Franz, Jr. Vice President-Finance, Chief
- -------------------------- Financial Officer, Secretary and January 8, 1996
David G. Franz, Jr. Director (Principal Financial and
Accounting Officer)
/s/ James P. Burra Director January 8, 1996
- --------------------------
James P. Burra
/s/ Rock N. Hankin Director January 8, 1996
- --------------------------
Rock N. Hankin
/s/ Allen H. Orbuch Director January 8, 1996
- ----------------------
Allen H. Orbuch
/s/ James T. Schraith Director January 8, 1996
- ------------------------
James T. Schraith
/s/ Jack O. Vance Director January 8, 1996
- --------------------
Jack O. Vance
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Sequential Page No.
- ----------- ----------- -------------------
5 Opinion of counsel as to legality of securities
being registered.
23.1 Consent of independent public accountants.
23.2 Consent of counsel (included in Exhibit 5).
24.1 Power of Attorney (included herein on
the signature page).
27.1 Financial Data Schedule.
<PAGE>
EXHIBIT 5
---------
Paul, Hastings, Janofsky & Walker
555 S. Flower Street
Twenty-Third Floor
Los Angeles, California 90071
Telephone (213) 683-6000
Facsimile (213) 627-0705
January 8, 1996
Semtech Corporation
652 Mitchell Road
Newbury Park, California 91320
Ladies and Gentlemen:
We are furnishing this opinion of counsel to Semtech Corporation, a
Delaware corporation (the "Company"), for filing as Exhibit 5 to the
Registration Statement on Form S-3 (the "Registration Statement") to be filed by
the Company with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, relating to the resale of up to 775,000 shares (the
"Shares") of its Common Stock, $.01 par value.
We have examined the Certificate of Incorporation and Bylaws, each as
amended to date, of the Company, and the originals, or copies certified or
otherwise identified, of records of corporate action of the Company as furnished
to us by the Company, certificates of public officials and of representatives of
the Company, and such other instruments and documents as we deemed necessary, as
a basis for the opinions hereinafter expressed. In such examination we have
assumed the genuineness of all signatures, the authenticity of all corporate
records and other documents submitted to us and the conformity to original
documents submitted to us as certified or photostatic copies.
Based upon our examination as aforesaid, and in reliance upon our
examination of such questions of law as we deem relevant under the
circumstances, we are of the opinion that the Shares, when purchased as
described in the Registration Statement, will be validly issued, fully paid and
nonassessable.
<PAGE>
Semtech Corporation
January 8, 1996
Page 2
We express no opinion with respect to the applicability or effect of
the laws of any jurisdiction other than the Delaware General Corporation Law.
We hereby consent to the filing of this opinion of counsel as Exhibit
5 to the Registration Statement.
Very truly yours,
/s/ Paul, Hastings, Janofsky & Walker
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our reports
and to all references to our firm included in or made a part of this
Registration Statement on Form S-3.
ARTHUR ANDERSEN LLP
Los Angeles, California
January 9, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEMTECH'S
S-3, WHICH INCLUDES RESTATED FINANCIAL STATEMENTS FOR THE THREE YEARS ENDED
JANUARY 29, 1995 AND AS OF JANUARY 30, 1994 AND JANUARY 31, 1993 WHICH ARE
QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 12-MOS
<FISCAL-YEAR-END> JAN-29-1995 JAN-30-1994 JAN-31-1993
<PERIOD-START> JAN-31-1994 FEB-01-1993 FEB-02-1992
<PERIOD-END> JAN-29-1995 JAN-30-1994 JAN-31-1993
<CASH> 3261 3153 0
<SECURITIES> 821 1011 0
<RECEIVABLES> 5367 4163 0
<ALLOWANCES> 0 0 0
<INVENTORY> 7313 5341 0
<CURRENT-ASSETS> 17383 14268 0
<PP&E> 3491 3443 0
<DEPRECIATION> 0 0 0
<TOTAL-ASSETS> 21377 18260 0
<CURRENT-LIABILITIES> 5908 4645 0
<BONDS> 0 0 0
0 0 0
0 0 0
<COMMON> 72 68 0
<OTHER-SE> 13643 11629 0
<TOTAL-LIABILITY-AND-EQUITY> 21377 18260 0
<SALES> 34605 29353 27554
<TOTAL-REVENUES> 34605 29353 27554
<CGS> 23333 20913 19568
<TOTAL-COSTS> 23333 20913 19568
<OTHER-EXPENSES> 9084 7991 7874
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 160 149 165
<INCOME-PRETAX> 2028 300 (53)
<INCOME-TAX> 526 102 50
<INCOME-CONTINUING> 1502 198 (103)
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 1502 198 (103)
<EPS-PRIMARY> 0.27 0.04 (0.02)
<EPS-DILUTED> 0.25 0.03 (0.02)
</TABLE>
