<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
____________
For Quarter Ended May 2, 1999 Commission File Number 1-6395
----------- ------
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 Number)
652 Mitchell Road, Newbury Park, California 91320
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (805) 498-2111
-------------------
N/A
- --------------------------------------------------------------------------------
(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 May 2, 1999:
15,047,147.
- ----------
<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. 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 May 2, 1999, and the results of their operations and their cash flows for the
three months then ended.
2
<PAGE>
SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
May 2, May 3,
1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
NET SALES $33,044 $29,534
Cost of Sales 16,445 15,060
------- -------
Gross Profit 16,599 14,474
------- -------
Operating costs and expenses:
Selling, general and administrative 5,642 4,633
Product development and engineering 4,117 2,945
Acquisition costs - 255
------- -------
Total operating costs and expenses 9,759 7,833
------- -------
Operating Income 6,840 6,641
Interest and other income, net 254 171
------- -------
Income before taxes 7,094 6,812
Provision for taxes 2,341 2,275
------- -------
NET INCOME $ 4,753 $ 4,537
======= =======
Earnings per share:
Net income per share -
Basic $ 0.32 $ 0.31
Diluted $ 0.29 $ 0.29
Weighted average number of shares -
Basic 15,029 14,446
Diluted 16,551 15,744
</TABLE>
3
<PAGE>
SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
May 2, January 31,
1999 1999
(Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $36,276 $41,035
Temporary investments 1,393 1,648
Receivables, less allowances 17,837 15,414
Income taxes refundable - 258
Inventories 18,874 16,803
Other current assets 1,772 1,275
Deferred income taxes 2,155 2,139
------- -------
Total current assets 78,307 78,572
------- -------
Property, plant and equipment, net 13,571 13,417
Other assets 89 89
Deferred income taxes 441 478
------- -------
TOTAL ASSETS $92,408 $92,556
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,267 $ 5,296
Accrued liabilities 3,590 5,102
Income taxes payable 1,344 -
Other current liabilities 1,986 2,330
------- -------
Total current liabilities 13,187 12,728
------- -------
Other long-term liabilities 61 57
------- -------
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value, 40,000,000
authorized
Issued and outstanding 150 152
Additional paid-in capital 30,954 30,461
Retained earnings 52,563 49,411
Treasury shares, at cost (4,184) -
Accumulated other comprehensive income (323) (253)
------- -------
Total shareholders' equity 79,160 79,771
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $92,408 $92,556
======= =======
</TABLE>
4
<PAGE>
SEMTECH CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
-----------------------------------------------
May 2, May 3,
1999 1998
---------------------- ----------------------
<S> <C> <C>
Cash flows from operating activities -
Net income $ 4,753 $ 4,537
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 1,075 878
Deferred income taxes 21 3
Changes in assets and liabilities:
Receivables (2,423) (1,143)
Income taxes refundable 258 -
Inventories (2,071) (1,610)
Other assets (497) (379)
Accounts payable and accrued liabilities (541) (201)
Income taxes payable 1,799 2,138
Other current liabilities (344) (208)
------- -------
Net cash provided by operating activities 2,030 4,015
------- -------
Cash flows from investing activities -
Temporary cash investments 255 -
Additions to property, plant and equipment (1,229) (1,008)
------- -------
Net cash used by investing activities (974) (1,008)
------- -------
Cash flows from financing activities -
Exercise of stock options 855 650
Stock repurchase (6,642) -
Other long-term liabilities 4 4
Other 38 573
------- -------
Net cash provided (used) by financing activities (5,745) 1,227
------- -------
Effect of exchange rate changes on cash (70) 74
Net increase (decrease) in cash and cash equivalents (4,759) 4,308
Cash and cash equivalents at beginning of period 41,035 18,808
------- -------
Cash and cash equivalents at end of period $36,276 $23,116
======= =======
</TABLE>
5
<PAGE>
SEMTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS
(UNAUDITED)
1. Earnings Per Share
- ---------------------
Earnings per share are presented in accordance with Statement of Financial
Accounting Standard (SFAS) No. 128, "Earnings per Share." Basic earnings per
common share are computed using the weighted average number of common shares
outstanding during the period. Diluted earnings per common share include the
incremental shares issuable upon the assumed exercise of stock options.
<TABLE>
<CAPTION>
Three Months Ended
---------------------------------
<S> <C> <C>
May 2, May 3,
1999 1998
---------- ----------
Basic 15,029,000 14,446,000
========== ==========
Diluted 16,551,000 15,744,000
========== ==========
</TABLE>
Options to purchase 31,000 and 53,500 shares were not included in the
computation of first quarter diluted net income per share for fiscal 2000 and
fiscal 1999, respectively, because such options were considered anti-dilutive.
2. Segment Reporting
- --------------------
The Company operates in three reportable segments: Standard Semiconductor
Products, Rectifier and Assembly Products, and Other Products. Included in the
Standard Semiconductor Products segment are the power management, automated test
equipment (ATE), transient voltage suppressors (TVS) and advanced communication
IC product lines. The Rectifier and Assembly Products segment includes the
Company's line of assembly and rectifier products. The Other Products segment
is made up of other custom IC and foundry sales.
The accounting policies of the segments are the same as the Company's accounting
policies for financial reporting purposes. The Company evaluates segment
performance based on net sales and operating income of each segment. Management
does not track segment data or evaluate segment performance on additional
financial information. As such, there are no separately identifiable segment
assets nor is there any separately identifiable statements of income data (below
operating income).
The Company does not track or assign assets to individual reportable segments.
Likewise, depreciation expense and capital additions are also not tracked by
reportable segments.
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
Net Sales (in thousands) May 2, May 3,
1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C>
Standard Semiconductor Products $27,630 $22,818
Rectifier and Assembly Products 3,266 3,658
Other Products 2,148 3,058
------- -------
Total Net Sales $33,044 $29,534
======= =======
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
Operating Income (in thousands) May 2, May 3,
1999 1998
- ----------------------------------------------------------------------------------------
<S> <C> <C>
Standard Semiconductor Products $6,386 $5,128
Rectifier and Assembly Products 144 526
Other Products 310 987
------ ------
Total Net Sales $6,840 $6,641
====== ======
</TABLE>
For the three months ended May 2, 1999 and May 3, 1998, no one customer
accounted for 10% or more of the Company's net sales. A summary of net external
sales by region follows. The Company does not track customer sales by region
for each individual reporting segment.
<TABLE>
<CAPTION>
Three Months Ended
--------------------------------
Net Sales (in thousands) May 2, May 3,
1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
Domestic $12,722 $16,243
Asia-Pacific 16,125 9,156
European 4,197 4,135
------- -------
Total Net Sales $33,044 $29,534
======= =======
</TABLE>
Long lived assets located outside the United States at May 2, 1999 amount to
$3,473,575.
3. 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.
4. 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
generally reserved inventory which is considered obsolete or estimated to be in
excess of 18 months 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>
May 2, 1999
Gross inventories $1,897 $11,347 $ 9,698 $22,942
Total reserves (426) (1,329) (2,313) (4,068)
------ ------- ------- -------
Net inventories $1,471 $10,018 $ 7,385 $18,874
====== ======= ======= =======
January 31, 1999
Gross inventories $1,879 $ 9,906 $ 9,016 $20,801
Total reserves (426) (1,329) (2,243) (3,998)
------ ------- ------- -------
Net inventories $1,453 $ 8,577 $ 6,773 $16,803
====== ======= ======= =======
</TABLE>
7
<PAGE>
5. Comprehensive Income
- -----------------------
On February 2, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income". For year-end financial statements, SFAS No. 130 requires that net
income and all other non-owner changes in equity be displayed in a financial
statement with the same prominence as other consolidated financial statements.
In addition, the standard encourages companies to display the components of
other comprehensive income below the total for net income.
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------
May 2, May 3,
1999 1998
--------------------------------------------------------------------------
<S> <C> <C>
Net Income $4,753 $4,537
Change in foreign currency
translation (70) 74
------- -------
Comprehensive Income $4,683 $4,611
====== ======
</TABLE>
6. Stock Repurchase
- -------------------
On February 2, 1999, the Company announced that its Board of Directors had
approved the repurchase of up to $10 million of its common stock. During the
three months ended May 2, 1999, the Company repurchased 227,500 shares at a cost
of $6.6 million. Of the shares repurchased, 80,667 have been reissued to cover
the exercise of employee stock options. The difference between the cost of the
treasury shares and the re-issuance under the stock option plan was charged
against retained earnings.
7. Lines of Credit
- ------------------
In August of 1998, the Company agreed to a new credit arrangement with a
financial institution for borrowings up to $20,000,000 at an interest rate of 30
day commercial paper plus 2.2 percent that is available through August 2000.
The line of credit consists of two parts, the first facility is a $10,000,000
line of credit for working capital needs and the second facility is a reducing
revolver loan for equipment acquisitions. The available amount under the
reducing revolver loan declines in equal increments over 84 months. As of May
2, 1999, the Company had $9,285,713 available under the reducing revolver
portion. The arrangement is collateralized by the Company's domestic assets and
provides for financial and non-financial covenants. As of May 2, 1999, the
Company had no borrowings outstanding under this credit facility. Through its
foreign subsidiary, the Company also maintains an overdraft credit line in the
amount of 300,000 pounds sterling.
Item 2. Management's Discussion and Analysis of Financial Conditions and
----------------------------------------------------------------
Results of Operations
---------------------
(l) Material Changes in Financial Condition
---------------------------------------
On May 2, 1999, Semtech Corporation (the Company) had working capital of
$65,120,000, compared with $65,844,000 at January 31, 1999. The ratio of current
assets to current liabilities at May 2, 1999, was 5.9 to 1, compared
8
<PAGE>
to 6.2 to 1 at January 31, 1999. The decline was primarily due to the Company's
use of cash to repurchase stock.
In the first three months of fiscal year 2000, the Company used $4,759,000 of
cash and cash equivalents. The decline in cash and cash equivalents was due to
cash outlays for inventory, capital equipment, increased accounts receivable,
year-end supplemental compensation relating to the prior fiscal year and the
repurchase of 227,500 shares of the Company's common stock. Operating cash flow
for the first three months of the year was a positive $2,030,000. During the
first three months of fiscal 2000, the Company used cash of $1,229,000 to pay
for capital equipment purchases.
Efforts by the Company over the past several years to increase Standard
Semiconductor Product segment sales have been effective. New products have been
introduced for use in a wide variety of computer, test and communications
systems. In order to develop, design and manufacture new products, the Company
had to make significant expenditures during the past four years. Such
investments aimed at developing new products, including the hiring of many
design and applications engineers and related equipment, will continue. Semtech
fully intends to continue to invest in those areas that have shown potential for
viable and profitable market opportunities. Certain of these expenditures,
particularly the addition of design engineers, do not generate significant
payback in the short-term. The Company plans to finance these expenditures with
cash generated by operations and cash on-hand.
(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 month periods ended May 2, 1999 and May 3, 1998.
THREE MONTH PERIOD ENDED MAY 2, 1999 COMPARED WITH THE THREE MONTH PERIOD ENDED
- -------------------------------------------------------------------------------
MAY 3, 1998:
- ------------
INDUSTRY TRENDS AND OUTLOOK
As a result of industry-wide trends to lower operating voltages, sub-micron IC
process technology and higher bandwidths, there has been growth in the need for
complex power management, protection, interface and communication solutions.
The Company has been successful in meeting the needs of customers requiring
high-performance analog and mixed-signal solutions. However, with the increased
demand for these solutions has come added competition.
The Company has grown significantly over the past five years due to new product
developments, good relationships with strategic customers, focus on fast growing
market segments and overall favorable industry conditions. Future growth by the
Company will remain dependent on market conditions, economic factors, the
ability to introduce new products and increase operating efficiencies. The
overall health of the electronic components industry and the end-markets for
electronic systems have a large influence on the Company's success. Significant
weakness in the industry, end-markets or economic conditions will adversely
affect the Company's financial performance.
Increased competition and a continued move to short lead times within the
components industry will continue to affect the Company's performance on a
quarterly basis. The Company has experienced declines in customer lead times as
manufacturers move to "just-in-time" inventory systems. Likewise, Semtech
generally has only 60-90 days visibility of future period shipments.
With the increased success and growth in demand for analog and mixed-signal
semiconductors, the Company has seen new competitors enter the market.
9
<PAGE>
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.
RESULT OF OPERATIONS
Net Sales
Net sales for the first quarter ended May 2, 1999 were $33,044,000 compared to
$29,534,000 in the first quarter ended May 3, 1998, an increase of 12%. The
increase in revenues for the first quarter compared to the prior year period was
due to continued improvement in the Company's ability to market and produce its
products used in targeted end-market applications.
End-market applications for the Company's products sold during the first quarter
of fiscal 2000 are estimated to be 40% computer, 28% communications, 23%
industrial (which includes ATE), 6% military/aerospace and 3% foundry sales. For
the prior year's first quarter, end-market applications were estimated to be 42%
computer, 15% communications, 26% industrial, 11% military/aerospace and 6%
foundry. The Company expects to derive more net sales from the communications
market as specific product development and marketing efforts are made in this
market.
Geographically, sales for the first three months of fiscal 2000 were
approximately 38% domestic, 49% to Asian and 13% to European customers. For the
first three months of last fiscal year, domestic sales were 55% of net sales,
Asia was 31% and Europe was 14%. The increase in sales to Asia reflects the
increased use of foreign-based subsidiaries and subcontractors by original
equipment manufacturers (OEMs) for assembling their finished products. Due to
this trend, the Company estimates that two-thirds of all shipments made into
Asia are eventually exported out of the region in finished products.
New orders
New orders received during the first quarter of fiscal year 2000 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 also exceeded
1 to 1. New orders received in the first quarter of this year reflected the
general conditions of the major end-markets and the major manufacturers
supplying these markets. Demand for the Company's Standard Semiconductor
Product segment represented a majority of the new order activity during the
quarter. Orders from ATE customers and the communications market showed the
strongest relative strength within the first quarter of fiscal year 2000. For
the first quarter of last fiscal year, ATE orders were the strongest relative
end-market application for new orders.
While order rates are subject to seasonal factors, overall industry trends have
a more profound effect on orders for each respective quarter. Due to the
significance of computer and computer peripheral markets to the Company, order
rates have been stronger during the third and fourth quarters of the past three
fiscal years. While certain industry trends can potentially outweigh seasonal
factors, order rates are subject to fluctuations.
10
<PAGE>
COSTS AND EXPENSES
Cost of Sales
Gross profit margin as a percentage of net sales was 50% in the first quarter of
fiscal 2000, compared to 49% in the same period last year. The improvement in
gross margin is attributed to increased operating efficiencies associated with
higher shipment levels, higher revenue contribution from products introduced in
the last year, and a favorable shift in product mix towards higher margin
product lines. The product lines included in the Standard Semiconductor Product
segment sell at higher gross margins than the overall corporate average.
Future trends that will effect the Company's gross margin include price changes
over the life of the products, higher gross margins expected from new products
and improved production efficiencies as a result of increased utilization. The
Company has focused its efforts on increasing the number of new products
introduced, particularly those which are proprietary or limited source in
nature. The Company expects that prices for existing products will continue to
decrease over their respective life cycles. The Company does believe it can
further improve its consolidated gross margin to above 50% of net sales over the
next twelve months. Such an expansion in gross margin assumes continued revenue
growth, increased contribution from new products and additional manufacturing
efficiencies.
Operating Expenses
Operating costs and expenses were at 30% of net sales in the first quarter of
fiscal 2000, which was higher than the 27% in the first quarter of fiscal 1999.
Included in the operating expenses for the first quarter ended May 3, 1998, are
one-time costs of $255,000 associated with the acquisition of Acapella Limited.
Operating expenses for the first three months of fiscal year 2000 where higher
than the comparable prior period due to increased spending in the areas of
research and development, strategic marketing, and to a lesser degree in general
and administrative functions. The Company continues to invest heavily in areas
deemed critical for developing and marketing new products. The Company
anticipates that spending on research and development will continue to increase
over time.
Interest and Other Income
Interest and other income of $254,000 was realized in the quarter ended May 2,
1999, compared to interest and other income of $171,000 in the prior year's
first quarter. Other income and expenses for both periods is primarily interest
income.
Provision for Taxes
THE EFFECTIVE TAX RATE FOR THE FIRST QUARTERS OF FISCAL YEARS 2000 AND 1999
REMAINED CONSTANT AT 33%.
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.
Recently Issued Accounting Standards
In 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 is effective in fiscal year 2001 and
11
<PAGE>
management does not expect adoption of this standard to have a material impact
on the Company's financial reporting or results of operations.
YEAR 2000 COMPLIANCE
A significant percentage of the software that runs most of the computers in the
United States relies on two-digit date codes to perform a number of computation
and decision making functions. Commencing on January 1, 2000 these computer
programs may fail from an inability to interpret date codes properly, misreading
"00" for the year 1900 instead of the year 2000.
Semtech is in the final stages of a comprehensive program to identify, evaluate
and address issues associated with the ability of its information technology and
non-information technology systems to properly recognize the Year 2000 in order
to avoid interruption of the operation of these systems and a material adverse
effect on Semtech's operations as a result of the century change. Each of the
information technology software programs that the Company currently uses has
either been certified by its respective vendor as Year 2000 compliant or will be
replaced with software that is so certified prior to December 1999.
Semtech's computer system interfaces with the computers and technology of
different companies, including those of foreign companies. The Company considers
the Year 2000 readiness of its foreign customers and vendors of particular
importance given the general concern that the computer systems abroad may not be
as prepared as those in domestic operations to handle the century change. As
part of its Year 2000 compliance program, Semtech has contacted its significant
vendors and customers to ascertain whether the systems used by such third
parties are Year 2000 compliant. The Company plans to have all Year 2000
compliance initial testing and any necessary conversions completed by December
1999.
Semtech estimates the costs to reprogram, replace and test its information and
non-information technology systems for Year 2000 compliance will be between
$100,000 and $150,000 over the life of the project. However, such expenditures
could increase materially following testing of non-information technology
systems and the evaluation of the Year 2000 compliance status of integral third
party vendors and customers. Costs incurred in connection with Year 2000
compliance efforts will be expensed as incurred.
Semtech currently anticipates that its information technology and non-
information technology systems will be Year 2000 compliant by December 1999,
though no assurances can be given that compliance testing will not detect
unanticipated problems. The Company has evaluated the Year 2000 compliance
status of its top 25 third party suppliers. Based on these evaluations, the
Company can only approximate the likelihood of third party system failures. A
system failure by any of Semtech's significant customers or vendors could have a
material adverse effect on the Company's operations.
The Company believes that the most likely worst case scenario resulting from the
century change could be the inability to produce and ship products at current
rates for an indeterminable period of time, which could have a material adverse
effect on the results of operations and liquidity.
Semtech is developing contingency plans to handle a Year 2000 system failure of
its information and non-information technology systems and to handle any
necessary interactions with the computers and technology of any integral non-
complying third party.
FORWARD LOOKING STATEMENTS
12
<PAGE>
Some statements included in this filing which are not historical in nature are
forward-looking statements within the meaning of the Private Securities
Legislation Act of 1995. Forward looking statements regarding the Company's
future performance and financial results are subject to certain risks and
uncertainties.
The Company cautions investors that there can be no assurance that actual
results or business conditions will not differ materially from those suggested
in such forward-looking statements as a result of various factors, including,
but not limited to, the Company's ability to introduce new products, support
existing and new customers, achieve manufacturing efficiencies, penetrate new
markets and additional end-product applications, and the ability to use equity
incentives to recruit and retain technical talent. In addition, external
factors of risk include the overall health of the electronics industry, certain
end-market applications (including personal computers and test systems),
exposure to regional economic and political conditions and exposure to overall
global economic conditions. As a result of these factors and other items of
risk outlined in this Form 10-Q, the Company's future development efforts
involve a high degree of uncertainty. GIVEN THESE UNCERTAINTIES, THE
SHAREHOLDERS OF THE COMPANY ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH
FORWARD-LOOKING STATEMENTS.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Foreign Currency Risk. As a global enterprise, the Company faces exposure to
adverse movements in foreign currency exchange rates. The Company's foreign
currency exposures may change over time as the level of activity in foreign
markets grows and could have an adverse impact upon the Company's financial
results.
Certain of the Company's assets, including certain bank accounts and accounts
receivable, exist in nondollar-denominated currencies, which are sensitive to
foreign currency exchange rate fluctuations. The nondollar-denominated
currencies are principally German Deutschmarks, British Pounds Sterling and
French Francs. Additionally, certain of the Company's current and long-term
liabilities are denominated principally in British Pounds Sterling currencies,
which are also sensitive to foreign currency exchange rate fluctuations.
Because of the relatively small size of each individual currency exposure, the
Company does not employ hedging techniques designed to mitigate foreign currency
exposures. Likewise, the Company could experience unanticipated currency gains
or losses.
Interest Rate Risk. The Company has a line of credit with a financial
institution at an interest rate of 30 day commercial paper plus 2.2 percent. At
any time, a sharp rise in interest rates could have a material adverse impact
upon the Company's cost of working capital and the interest expense. The Company
does not currently hedge this potential interest rate exposure. As of May 2,
1999 the Company had no long-term debt outstanding.
13
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
The Company is involved in certain legal matters, which are routine to the
nature of its business. Management is of the opinion that the ultimate
resolution of these matters will not have a material adverse effect on its
financial position or results of operations.
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 1999 Annual Meeting of Shareholders of the Company was duly held on June
10, 1999.
(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) Not applicable.
(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 1 of Notes to Unaudited
Consolidated Condensed Financial Statements.
27 -Financial Data Schedule, Article 5
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the three months ended May 2,
1999.
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: June 15, 1999 /S/ John D. Poe
--------------------------------
John D. Poe
Chairman of the Board
and Chief Executive Officer
Date: June 15, 1999 /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 May 2,
1999, which are qualified in their entirety by reference to the Form 10-Q filing
and Form 10-K for the year ended January 31, 1999.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> MAY-02-1999
<CASH> 36276
<SECURITIES> 1393
<RECEIVABLES> 17837
<ALLOWANCES> 0
<INVENTORY> 18874
<CURRENT-ASSETS> 78307
<PP&E> 13571
<DEPRECIATION> 0
<TOTAL-ASSETS> 92408
<CURRENT-LIABILITIES> 13187
<BONDS> 0
0
0
<COMMON> 150
<OTHER-SE> 79010
<TOTAL-LIABILITY-AND-EQUITY> 92408
<SALES> 33044
<TOTAL-REVENUES> 33044
<CGS> 16445
<TOTAL-COSTS> 9759
<OTHER-EXPENSES> (254)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7094
<INCOME-TAX> 2341
<INCOME-CONTINUING> 4753
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4753
<EPS-BASIC> 0.32
<EPS-DILUTED> 0.29
</TABLE>
