<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For Quarter Ended November 2, 1997 Commission File Number 1-6395
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SEMTECH CORPORATION
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(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 Number)
652 Mitchell Road, Newbury Park, California 91320
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (805) 498-2111
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N/A
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark, whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant has required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days
Yes X No
----- -----
Number of shares of Common Stock, $0.01 par value, outstanding at November 2,
1997: 7,045,483.
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<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements
--------------------
The consolidated condensed financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. As discussed in Note 1, the Company
acquired Edge Semiconductor Incorporated on October 2, 1997. The transaction
was accounted for as a pooling of interests and likewise, all financial
information presented includes the combined results of both the Company and Edge
Semiconductor.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed financial
statements be read in conjunction with the consolidated financial statements and
the notes thereto included in the Company's latest Annual Report on Form 10-K.
In the opinion of the Company, these unaudited statements contain all
adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the financial position of Semtech Corporation and subsidiaries as
of November 2, 1997, and the results of their operations and their cash flows
for the three and nine months then ended.
2
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SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT FOR PER SHARE FIGURES)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
NOVEMBER 2, OCTOBER 27, NOVEMBER 2, OCTOBER 27,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $26,533 $18,370 $74,266 $50,529
Cost of sales 13,743 10,621 39,209 29,184
------- ------- ------- -------
Gross profit 12,790 7,749 35,057 21,345
Operating expenses 6,613 4,660 18,731 12,840
------- ------- ------- -------
Operating income 6,177 3,089 16,326 8,505
Acquisition costs 1,210 - 1,210 -
Interest and other (income), net (113) (50) (241) (70)
------- ------- ------- -------
Income before taxes 5,080 3,139 15,357 8,575
Provision for taxes 1,690 1,043 5,134 2,866
------- ------- ------- -------
NET INCOME $ 3,390 $ 2,096 $10,223 $ 5,709
======= ======= ======= =======
NET INCOME PER SHARE:
Primary $ 0.42 $ 0.30 $ 1.30 $ 0.80
======= ======= ======= =======
Fully diluted $ 0.42 $ 0.29 $ 1.29 $ 0.80
======= ======= ======= =======
</TABLE>
See accompanying notes.
3
<PAGE>
SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NOVEMBER 2, JANUARY 26,
1997 1997
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $15,408 $ 9,439
Temporary investments 1,463 757
Receivables, net 13,294 9,120
Income taxes refundable - 68
Inventories 16,270 14,454
Other current assets 854 919
Deferred income taxes 926 637
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TOTAL CURRENT ASSETS 48,215 35,394
------- -------
PROPERTY, PLANT AND EQUIPMENT, NET 11,511 9,416
OTHER ASSETS 65 226
DEFERRED INCOME TAXES 284 302
------- -------
TOTAL ASSETS $60,075 $45,338
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ - $ 254
Accounts payable 4,968 5,585
Accrued liabilities 4,251 2,646
Income taxes payable 1,055 664
Other current liabilities 1,260 660
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TOTAL CURRENT LIABILITIES 11,534 9,809
------- -------
LONG-TERM DEBT, LESS CURRENT MATURITIES 484 1,256
OTHER LONG-TERM LIABILITIES 28 287
SHAREHOLDERS' EQUITY:
Common Stock, $0.01 par value, 40,000,000 authorized 86 84
Additional paid-in capital 16,296 12,610
Retained earnings 31,794 21,571
Cumulative translation adjustment (147) (279)
------- -------
TOTAL SHAREHOLDERS' EQUITY 48,029 33,986
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $60,075 $45,338
======= =======
</TABLE>
See accompanying notes.
4
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SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------
NOVEMBER 2, OCTOBER 27,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES -
Net income $10,223 $ 5,709
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 1,980 1,513
Deferred income taxes (271) (242)
Tax benefit from stock option transactions 2,079 192
Changes in assets and liabilities:
Receivables (4,174) (739)
Income taxes refundable 68 (3)
Inventories (1,816) (2,380)
Other assets 226 (243)
Accounts payable and accrued liabilities 988 74
Income taxes payable 391 240
Other current liabilities 600 (325)
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NET CASH PROVIDED BY OPERATING ACTIVITIES 10,294 3,796
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES -
Temporary investments (706) -
Additions to property, plant and equipment (4,075) (2,964)
------- -------
NET CASH USED BY INVESTING ACTIVITIES (4,781) (2,964)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES -
Additions to debt - 809
Repayment of debt (1,026) (816)
Stock options exercised 1,609 135
Other long-term liabilities (259) (59)
Other -
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 324 69
------- -------
Effect of exchange rate changes on cash 132 79
Net increase in cash and cash equivalents 5,969 980
Cash and cash equivalents at beginning of period 9,439 7,175
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $15,408 $ 8,155
======= =======
</TABLE>
See accompanying notes.
5
<PAGE>
SEMTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. ACQUISITION -
On October 2, 1997, Semtech Corporation (the "Company") entered into, and
consummated, an Agreement and Plan of Merger (the "Merger Agreement") among the
Company, ESI Acquisition Corp., a wholly-owned subsidiary of the Company, and
Edge Semiconductor Incorporated ("Edge"). Pursuant to the Merger Agreement,
Semtech issued 749,977 shares of its common stock to all the shareholders of
Edge and all the holders of options and warrants to purchase shares of common
stock of Edge. The Company acquired Edge to integrate and complement its
existing businesses and technology. The completion of the acquisition of Edge
was announced in a press release issued by the Company on October 3, 1997.
The acquisition of Edge Semiconductor by the Company was accounted for as a
pooling of interests transaction. As a result, Edge now is a wholly-owned
subsidiary of the Company. All financial data of the Company at November 2,
1997 and January 26, 1997 and for the three and nine months ended November 2,
1997 and October 27, 1996 have been restated to include the operating results of
Edge, including earnings per share calculations based on the number of shares
issued under the agreement.
The following table shows the effect of Edge's results of operations on the
combined companies. Costs of $808,000 on an after tax basis associated with the
Company's acquisition of Edge are included in Semtech's net income.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
NOVEMBER 2, OCTOBER 27, NOVEMBER 2, OCTOBER 27,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SEMTECH - REVENUES $23,133 $17,093 $65,142 $45,994
EDGE - REVENUES 3,400 1,277 9,124 4,535
------- ------- ------- -------
COMBINED REVENUES $26,533 $18,370 $74,266 $50,529
SEMTECH - NET INCOME $ 2,782 $ 1,974 $ 8,810 $ 5,100
EDGE - NET INCOME 608 122 1,413 609
------- ------- ------- -------
COMBINED NET INCOME $ 3,390 $ 2,096 $10,223 $ 5,709
</TABLE>
2. INCOME TAXES -
The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109. Under SFAS No. 109,
deferred income tax assets or liabilities are computed based on the temporary
differences between the financial statement and income tax bases of assets and
liabilities using the statutory marginal income tax rate in effect
6
<PAGE>
for the years 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.
The income tax provision for the nine months ended November 2, 1997
consisted of income tax expense of $4,797,000 on the income of the Company's
U.S. operations (primarily North American and Asian based-sales) and income tax
expense of $337,000 on the income from the Company's foreign operation
(primarily European based sales). In the prior year nine month period ended
October 27, 1996, the Company incurred income tax expense of $2,745,000 on the
income of the Company's U.S. operations and income tax expense of $121,000 on
income from the Company's foreign operation.
3. INCOME PER SHARE -
Primary and fully diluted net income per share of common stock has been
computed based on the weighted average number of common and common equivalent
shares outstanding, as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
NOVEMBER 2, OCTOBER 27, NOVEMBER 2, OCTOBER 27,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
PRIMARY............... 8,098,000 7,066,000 7,860,000 7,093,000
========= ========= ========= =========
FULLY DILUTED......... 8,098,000 7,152,000 7,921,000 7,101,000
========= ========= ========= =========
</TABLE>
In February 1997, the Financial Accounting Standards Board introduced SFAS
No. 128 "Earnings per Share" and SFAS No. 129 "Disclosure of Information About
Capital Structure". SFAS No. 128 revises and simplifies the computation of
earnings per share and requires certain additional disclosures. SFAS No. 129
requires additional disclosure regarding the Company's capital structure. Both
standards will be adopted in the fourth quarter of fiscal year 1998. Management
does not expect the adoption of SFAS No. 129 to have material effect on the
Company's financial position or results of operations. The Company has not yet
evaluated the impact of adopting SFAS No. 128 on earnings per share.
4. TEMPORARY INVESTMENTS -
Temporary investments consist of commercial paper and government and
corporate obligations with original maturities in excess of three months and are
carried at cost, which approximates market.
5. INVENTORIES -
The commercial semiconductor industry and the markets in which the Company's
products are used are characterized by rapid changes and short product life
cycles. Consistent with the industry, the Company has experienced declines in
average selling prices over the life of its product lines. The Company has
fully reserved inventory which is obsolete or in
7
<PAGE>
excess of one year's demand, and has provided reserves for declines in selling
price below cost. Inventories consisted of the following:
<TABLE>
<CAPTION>
Raw Work in Finished Total
(thousands) Materials process goods
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NOVEMBER 2, 1997
Gross inventory $2,638 $11,514 $ 7,298 $21,450
Total reserves (776) $(1,002) (3,402) (5,180)
------ ------- ------- -------
Net inventory $1,862 $10,512 $ 3,896 $16,270
====== ======= ======= =======
JANUARY 26, 1997
Gross inventory $2,895 $ 9,469 $ 4,619 $16,983
Total reserves (702) $ (460) (1,367) (2,529)
------ ------- ------- -------
Net inventory $2,193 $ 9,009 $ 3,252 $14,454
====== ======= ======= =======
</TABLE>
6. LONG-TERM DEBT -
Long-term debt at November 2, 1997 is made up solely of a single note
payable. The note payable is a variable rate loan used for the acquisition of
equipment with a remaining principal balance of $484,000.
7. LINE OF CREDIT -
In August 1992, and amended in September 1996, the Company entered into a
credit arrangement with a financial institution for a line of credit for up to
$7,500,000 at an interest rate of 30 day commercial paper plus 2.5 percent. The
line of credit is made up of two parts, the first part being a $4,000,000 line
for working capital needs and the second part being a $3,500,000 line for
equipment acquisition. Both portions of the line of credit extend through
September 1998. The arrangement is collateralized by the Company's domestic
assets and contains provisions regarding current ratios, debt to worth, and net
worth. As of November 2, 1997, the Company had no borrowings outstanding under
this credit facility.
8. SIGNIFICANT CUSTOMERS -
For the nine months ended November 2, 1997 and October 27, 1996, no one
customer represented 10% of the Company's net sales.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and
----------------------------------------------------------------
Results of Operations
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(l) Material Changes in Financial Condition
---------------------------------------
Under the pooling of interest treatment of the Company's October 2, 1997
acquisition of Edge Semiconductor, all financial statements and discussions
reflect the combined results of the two companies, including prior periods
presented.
At November 2, 1997, Semtech had working capital of $36,681,000, which
represents an increase of $11,096,000 or 43% over the $25,585,000 of working
capital at January 26, 1997. The increase was primarily due to the Company's
profitability during the nine month period and the addition of paid in capital
generated from the exercise of employee stock options.
The Company increased its cash and cash equivalents by approximately $6
million during the first three quarters of fiscal year 1998. The increase in
cash and cash equivalents was mostly due to the Company's profitability during
the period and was only partially offset by an increase in receivables and cash
outlays for inventory, capital equipment, acquisition related costs and payments
of accrued items. Operating cash flow for the first nine months of the year was
$10,294,000. Major factors effecting operating cash flows include
profitability, increased inventory levels, increased accounts receivable and the
tax benefits of employee stock options exercised. Because the Company has
historically had relatively low depreciation expense, operating cash flow is
largely driven by the ability to generate net income.
During the first three quarters of fiscal year 1998, the Company used cash
of $4,075,000 to pay for capital equipment purchases and $1,026,000 to repay
outstanding debt. The ratio of current assets to current liabilities at
November 2, 1997, was 4.2 to 1, compared to 3.6 to 1 at January 26, 1997. The
following leverage ratios indicate the extent to which the Company has been
financed with debt:
<TABLE>
<CAPTION>
NOVEMBER 2, JANUARY 26,
1997 1997
----------- -----------
<S> <C> <C>
Long-term debt as a % of total capitalization* 1.0% 3.6%
Total debt to total capitalization* 1.0% 4.3%
</TABLE>
* Total capitalization is defined as the sum of long-term debt and
shareholders' equity.
In order to develop, design and manufacture new products, the Company has
had to make significant investments over the past several years. Investments
aimed at developing new products, including the addition of many design and
applications engineers and related equipment, will continue. The Company fully
intends to continue to invest in those areas that have shown potential for
viable and profitable market opportunities. Certain of these investments,
particularly the addition of design engineers, will probably not generate
significant payback in the short-term. The Company plans to finance these
investments with cash generated by operations and cash on-hand. In the past,
9
<PAGE>
the Company has relied on operating cash flows and selective use of bank
borrowings to finance business investments.
(2) Material Changes in Results of Operations
-----------------------------------------
The following information is provided to further explain certain financial
information shown in the Consolidated Condensed Statements of Income for the
three and nine month periods ended November 2, 1997 and October 27, 1996,
respectively.
THREE AND NINE MONTH PERIODS ENDED NOVEMBER 2, 1997 COMPARED WITH THE THREE AND
- -------------------------------------------------------------------------------
NINE MONTH PERIODS ENDED OCTOBER 27, 1996:
- -----------------------------------------
INDUSTRY TRENDS AND OUTLOOK -
Semtech experienced increased acceptance of its commercial product lines and
significantly broadened its customer base over the last three fiscal years.
Efforts have been made to increase market share for existing products and to
develop new products for serving primarily commercial markets. In addition,
with the acquisition of Edge Semiconductor the Company has broadened the market
segments and customer base from which it derives its revenue.
While the Company has been successful in growing revenues and net income,
future growth and success is dependent on new products, market conditions and
increased operating efficiencies. Customers in main-stream markets, such as the
computer industry and certain communications segments, continue to order product
with short lead-times. As a result, the Company generally has only 90-120 days
visibility of future period shipments for many of its product lines.
With a portion of the Company's sales coming from retail computer and
computer related applications, the Company's results reflect some seasonality,
with demand levels for this segment being higher in the third and fourth
quarters of the year in comparison to the first and second quarters. A large
percentage of such computer related sales are to customers located in the Asia-
Pacific region. While these Asian-based customers represent a notable percentage
of net sales, the Company estimates that nearly two-thirds of sales into the
Asian region are to sub-contractors and off-shore assembly operations of
manufacturers that are supplying the North American and European markets.
Although some seasonality and geographic trends have influenced sales levels in
recent years, overall industry trends and Company specific conditions have
greater effect on quarterly results.
New products introduced over the last twelve to eighteen months have been
aimed at further diversifying the Company's product offering and penetrating new
applications. Notebook computers, cellular handsets, communications and
industrial applications are specific examples of new design efforts. While
efforts are being made to increase the rate of new product introductions,
enhancements are also being made to existing devices to reduce cost and maintain
market share. Investment in design and applications are intended to further
transition the Company's revenue sources away from foundry services and more
towards standard, custom and proprietary products.
10
<PAGE>
With the increased success and growth in demand for semiconductors, the
Company has seen new competitors enter the market. In addition, existing
competitors have become more aggressive in protecting market share and customer
relationships. Typical of the semiconductor industry, the Company has
experienced declines in average selling prices over the life of its product
lines. Efforts to offset this decline include increasing units shipped, finding
new applications for existing products and introduction of new products.
Management will continue to take steps to offset the impact of declines in
average selling prices, however, there is no assurance that these efforts will
be successful.
REVENUES -
Revenues for the third quarter ended November 2, 1997 were $26,533,000
compared to $18,370,000 in the third quarter ended October 27, 1996, an increase
of 44%. Revenues for the nine months ended November 2, 1997 were $74,266,000,
which represented an increase of 47% over the $50,529,000 recorded in the nine
months ended October 27, 1996. The increase in revenues for the third quarter
and first three quarters of fiscal year 1998 was due to continued improvement in
the Company's ability to market and produce its products used in computer,
communications, automated test equipment (ATE) and other strategic end-market
applications.
The Company estimates that shipments made during the third quarter of fiscal
1998 were for use in the following end-market applications: 46% computer, 15%
communications, 7% industrial, 14% military and aerospace, 5% for foundry
services and 13% automated test equipment (ATE). While sales for computer
related applications continues to represent the largest market segment, the
Company has successfully diversified computer related applications and end
customers. Sales to communications customers are still closely tied to demand
for the Company's line of transient voltage suppressors (TVS) used in
datacommunications and telecommunications applications. Efforts are underway to
increase sales to communications customers beyond just TVS devices. Sales of
circuits used by ATE manufacturers have grown dramatically due to increased
demand for test equipment and increased market share.
Semtech has aggressively pursued opportunities in several markets designed
to grow revenues and establish market share for power management, protection and
interface products. Some of the new products designed for use in the power
management area are industry standard parts. Industry standard parts are
comparable in function to other devices and have multiple manufacturers of the
part. Proprietary or limited source products tend to have distinguishable
features and one or limited manufacturing sources. Semtech estimates that
approximately 40% of its net sales are derived from proprietary or limited
source products. The TVS and ATE product lines constitute the largest
percentage of the Company's proprietary parts. Ongoing design efforts look to
increase the number of proprietary parts due to their resilient demand and
generally higher margin contribution.
Shipments to customers located in the Asia-Pacific region were 32% of the
net sales for fiscal 1998's third quarter, which was down from the 33% of net
sales the region represented in the comparable quarter of last year. The Company
estimates that two-thirds of sales into the Asia-Pacific region are to sub-
contractors and offshore assembly operations of manufacturers that are supplying
North American and European end-market demand. Sales to European
11
<PAGE>
customers were 15% of total sales for the third quarter of this year, which
compared to 13% of net sales in the third quarter of fiscal year 1997.
New orders received during the third quarter were more than net shipments,
resulting in a book-to-bill ratio of greater than 1 to 1. The book-to-bill
ratio for the comparable three month period last year was also above 1 to 1.
Bookings for the three and nine months ended November 2, 1997 reflected
accelerated demand for the Company's products and favorable end-market
application conditions.
As a result of investments in research and development, the Company has seen
increased design win activities associated with the introduction of new
products. For the first nine months of fiscal 1998, Semtech introduced over
twenty new product families and secured more than one hundred and thirty design
wins, which were supported by initial purchase orders. New products have been
focused at increasing the Company's market share and growing overall end-market
applications.
COSTS AND EXPENSES -
COST OF GOODS SOLD -
Gross profit margins as a percentage of net sales was 48% in the third
quarter of fiscal 1998, compared to 42% in the same period last year. For the
nine months ended November 2, 1997 and October 27, 1996, gross margins were 47%
and 42%, respectively. The improvement in gross margins is attributed to higher
contribution from ATE, TVS and other higher-margin product lines and increased
operating efficiencies associated with higher shipment levels. Decreases in the
average selling of certain industry standard products (namely power management
ICs) experienced during the first half of fiscal 1998 have been partially offset
by reduced manufacturing costs per unit. Continued efforts are being made to
further reduce cost on existing products as well as to increase emphasis on new
product sales that typically command much higher gross profit margins.
Future gross margin performance will be affected by the above noted changes
as well as shipment rates, product mix, productivity levels and price changes.
Average selling prices, product mix, capacity utilization and shipment rates for
new products will continue to have the most significant impact on margins.
OPERATING EXPENSES -
Operating costs and expenses were at 25% of net sales in the third quarter
of fiscal 1998, which equaled the 25% in the third quarter of fiscal 1997.
Operating expenses for the first three quarters of both fiscal year 1998 and
fiscal year 1997 were also at 25% of net sales. While operating expenses
remained constant as a percentage of net sales, absolute dollar spending did
increase. The Company has added a significant number of key employees and
related infrastructure over the last eighteen months designed to support the
long-term growth of the Company.
With dedicated design activities occurring in Santa Clara and San Diego,
California, the Company has aggressively pursued additional design and layout
talent needed to foster new product development. The Company has also pursued
design capabilities in other remote locations and intends to continue to take
12
<PAGE>
steps to attract and retain technical talent worldwide. Headcount additions
have also been made on applications and strategic marketing talent needed to
support growth objectives. Added headcount and overall support of development
will continue to result in higher research and development (R&D) spending
levels. The Company hopes to offset some of the increased R&D expense with
decreased expenses as a percentage of sales in general and administrative
activities. Such a percentage decrease in operating expenses other than R&D
will be dependent on the Company's ability to grow revenues.
For the first nine months of fiscal year 1998, the Company has added a
significant amount of technical resources. The Company has approximately 30
technical persons dedicated to research and development activities. Additions
to design as well as field applications support have doubled the Company's
resources in these areas over the last eighteen months.
OTHER -
Interest and other income of $113,000 was realized in the quarter ended
November 2, 1997, compared to interest and other income of $50,000 in the prior
year's third quarter. For the nine month period ended November 2, 1997, the
Company had interest and other income of $241,000 compared to interest and other
income of $70,000 for the period ended October 27, 1996. Interest and other
income for all periods is primarily interest income.
In the third quarter of fiscal year 1998, the Company recorded $1,210,000 of
one-time costs related to the acquisition of Edge Semiconductor Incorporated.
The acquisition costs are principally the charges of the attorneys, auditors and
investment bankers that assisted the Company in completing the transaction.
NEW AUTHORITATIVE PRONOUNCEMENTS -
In February 1997, the Financial Accounting Standards Board introduced SFAS
No. 128 "Earnings per Share" and SFAS No. 129 "Disclosure of Information About
Capital Structure". Both standards will be adopted in the fourth quarter of
fiscal year 1998. Management does not expect the adoption of SFAS No. 129 to
have material effect on the Company's financial position or results of
operations. The Company has not yet evaluated the impact of adopting SFAS No.
128 on earnings per share.
13
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
The Company is involved in legal 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 condensed financial statements.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) The 1997 Annual Meeting of Shareholders of the Company was duly held on June
5, 1997.
(b) Inapplicable, as (i) proxies for the meeting were solicited pursuant to
Regulation 14 under the Act; (ii) there was no solicitation in opposition to
the management's nominees as listed in the Proxy Statement; and (iii) all of
such nominees were duly elected.
(c) Other matters voted upon at the meeting (i) Amendment of the Company's 1994
Long-term Stock Incentive Plan in which there were 3,061,702 affirmative
votes, 1,024,288 negative votes, and 28,448 abstaining votes (ii) Amendment
to the Company's Certificate of Incorporation to (a) increase the number of
authorized shares and (b) authorization of a new class of shares, in which
there were 3,124,233 affirmative votes, 1,015,981 negative votes, and 15,640
abstaining votes and (iii) Amendment to the Company's Certificate of
Incorporation to eliminate cumulative voting for the election of Directors
in which there were 3,369,342 affirmative votes, 531,291 negative votes, and
213,805 abstaining votes.
(d) Not applicable
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits
11.1 -Computation of per share earnings - See Note 3 of Notes to
Consolidated Condensed Financial Statements.
27 -Financial Data Schedule, Article 5
(b) Reports on Form 8-K
On October 30, 1997 the Company filed a report on Form 8-K to report the
acquisition of Edge Semiconductor Incorporated. The acquisition was previously
reported on a Form S-3 report filed with the Securities and Exchange Commission
on October 10, 1997.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SEMTECH CORPORATION
-------------------
Registrant
Date: December 16, 1997 /S/ John D. Poe
--------------------------------
John D. Poe
President and
Chief Executive Officer
Date: December 16, 1997 /S/ David G. Franz, Jr.
--------------------------------
David G. Franz, Jr.
Vice President Finance, Chief
Financial Officer, and
Secretary
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
NOVEMBER 2, 1997, WHICH ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE FORM
10-Q FILING AND FORM 10-K FOR THE YEAR ENDED JANUARY 26, 1997.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-1-1998
<PERIOD-START> AUG-4-1997
<PERIOD-END> NOV-2-1997
<CASH> 15,408
<SECURITIES> 1,463
<RECEIVABLES> 13,294
<ALLOWANCES> 0
<INVENTORY> 16,270
<CURRENT-ASSETS> 48,215
<PP&E> 11,511
<DEPRECIATION> 0
<TOTAL-ASSETS> 60,075
<CURRENT-LIABILITIES> 11,534
<BONDS> 0
0
0
<COMMON> 86
<OTHER-SE> 47,943
<TOTAL-LIABILITY-AND-EQUITY> 60,075
<SALES> 26,533
<TOTAL-REVENUES> 26,533
<CGS> 13,743
<TOTAL-COSTS> 13,743
<OTHER-EXPENSES> 6,613
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11
<INCOME-PRETAX> 5,080
<INCOME-TAX> 1,690
<INCOME-CONTINUING> 3,390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,390
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.42
</TABLE>
