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EX-99.1 - EX-99.1 - SEMTECH CORPa14-7649_1ex99d1.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported)  March 5, 2014

 

Semtech Corporation

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

(State or Other Jurisdiction of Incorporation)

 

1-6395

 

95-2119684

(Commission File Number)

 

(IRS Employer Identification No.)

 

 

 

200 Flynn Road

 

 

Camarillo, California

 

93012-8790

(Address of Principal Executive Offices)

 

(Zip Code)

 

805-498-2111

(Registrant’s Telephone Number, Including Area Code)

 

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 2.02.  Results of Operations and Financial Condition

 

Semtech Corporation (the “Company”),  issued a press release and held a conference call on March 5, 2014. The press release announced its consolidated financial results for the three and twelve months ended January 26, 2014.  During the conference call, the Company discussed these financial results.  The transcript of the conference call is filed as Exhibit 99.1 and is hereby incorporated by reference in its entirety. The information in this Form 8-K and the exhibit attached hereto is being furnished (not filed) under Item 2.02 of Form 8-K. The transcript has been selectively edited to facilitate the understanding of the information communicated during the conference call.

 

During the conference call, the Company discussed non-GAAP measures of gross profit, net income, earnings per diluted share and free cash flow.  To provide additional insight into the Company’s first quarter outlook for fiscal year 2015, the conference call included a discussion of forward-looking non-GAAP earnings per diluted share.  The non-GAAP gross profit, net income and earnings per diluted share measures exclude the following items:

 

·                  Stock-based compensation expense

 

·                  Acquisition related fair value adjustments

 

·                  Transaction and integration related expenses

 

·                  Intangible amortization and impairments

 

·                  Release of prior accrued taxes on foreign earnings

 

·                  Option related expenses

 

·                  Effect of enacted tax rate changes

 

·                  Charges directly related to the strategic realignment, including:

 

                 Impairment of goodwill

 

                 Impairment of fixed assets

 

                 Write-down of inventory

 

                 Write-down of net U.S. deferred tax assets

 

The non-GAAP discussion of free cash flow excludes capital expenditures.  These non-GAAP measures are provided to enhance the user’s overall understanding of the Company’s comparable financial performance between periods. In addition, the Company’s management generally excludes the items noted above when managing and evaluating the performance of the business. Below are reconciliations of these non-GAAP measures to their most comparable GAAP results for the fourth quarter of fiscal years 2014 and 2013 and the third quarter of fiscal year 2014, and a reconciliation of forward-looking non-GAAP earnings per diluted share to its most comparable GAAP measure for the first quarter of fiscal year 2015.  These additional non-GAAP financial measures should not be considered substitutes for any measures derived in accordance with GAAP and may be inconsistent with similar measures presented by other companies.

 

RECONCILIATION OF NON-GAAP MEASURES TO COMPARABLE GAAP FINANCIAL MEASURES

(Tables in thousands - except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

January 26,

 

October 27,

 

January 27,

 

January 26,

 

January 27,

 

 

 

2014

 

2013

 

2013

 

2014

 

2013

 

Stock-based Compensation Expense

 

Q4 2014

 

Q3 2014

 

Q4 2013

 

Q4 2014

 

Q4 2013

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

Cost of sales

 

$

519

 

$

413

 

$

377

 

$

1,665

 

$

1,218

 

Selling, general and administrative

 

193

 

3,449

 

5,113

 

12,071

 

14,965

 

Product development and engineering

 

2,268

 

2,967

 

2,311

 

10,854

 

8,345

 

Total stock-based compensation expense

 

$

2,980

 

$

6,829

 

$

7,801

 

$

24,590

 

$

24,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

January 26,

 

October 27,

 

January 27,

 

January 26,

 

January 27,

 

 

 

2014

 

2013

 

2013

 

2014

 

2012

 

Gross Profit - Reconciliation GAAP to Non-GAAP

 

Q4 2014

 

Q3 2014

 

Q4 2013

 

Q4 2014

 

Q4 2013

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

53,805

 

$

83,411

 

$

87,957

 

$

335,211

 

314,612

 

Adjustments to GAAP gross profit:

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

519

 

413

 

377

 

1,665

 

1,218

 

Expiration of acquired return rights

 

-

 

-

 

-

 

-

 

(676)

 

Acquisition related fair value adjustments

 

-

 

-

 

4,382

 

2,408

 

39,406

 

Restructuring charges

 

16,776

 

-

 

-

 

16,776

 

-

 

Impairment Charges

 

4,342

 

-

 

-

 

4,342

 

-

 

Non-GAAP gross profit

 

$

75,442

 

$

83,824

 

$

92,716

 

$

360,401

 

$

354,560

 

 

2



 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

January 26,

 

October 27,

 

January 27,

 

January 26,

 

January 27,

 

 

 

2014

 

2013

 

2013

 

2014

 

2012

 

Net Income - Reconciliation GAAP to Non-GAAP

 

Q4 2014

 

Q3 2014

 

Q4 2013

 

Q4 2014

 

Q4 2013

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

(210,808)

 

$

12,453

 

$

13,118

 

$

(164,466)

 

$

41,939

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to GAAP net income:

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

$

2,980

 

$

6,829

 

$

7,801

 

$

24,590

 

$

24,528

 

Acquisition related fair value adjustments

 

339

 

338

 

4,721

 

3,762

 

40,638

 

Transaction and integration related expenses

 

(1,873)

 

607

 

2,377

 

168

 

24,110

 

Environmental monitoring and remediation reserves 

 

-

 

-

 

1,500

 

-

 

4,040

 

Intangible amortization and impairments

 

6,587

 

7,349

 

8,177

 

31,602

 

29,944

 

Restructuring charges

 

3,086

 

-

 

-

 

3,086

 

-

 

Impairment charges

 

59,075

 

-

 

-

 

59,075

 

-

 

Goodwill impairment

 

116,686

 

 

 

 

 

116,686

 

 

 

Writeoff of deferred financing costs and refinancing fees

 

-

 

-

 

-

 

8,773

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

Total before taxes

 

186,880

 

15,123

 

24,576

 

247,742

 

123,260

 

Associated tax effect

 

39,400

 

(3,477)

 

(4,632)

 

23,318

 

(50,667)

 

Total of supplemental information net of taxes

 

226,280

 

11,646

 

19,944

 

271,060

 

72,593

 

Non-GAAP net income

 

$

15,472

 

$

24,099

 

$

33,062

 

$

106,594

 

$

114,532

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted GAAP earnings per share

 

$

(3.12)

 

$

0.18

 

$

0.19

 

$

(2.44)

 

$

0.62

 

Adjustments per above

 

3.35

 

0.17

 

0.30

 

3.99

 

1.08

 

Diluted non-GAAP earnings per share

 

$

0.23

 

$

0.35

 

$

0.49

 

$

1.55

 

$

1.70

 

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

January 26,

 

October 27,

 

January 27,

 

January 26,

 

January 27,

 

 

 

2014

 

2013

 

2013

 

2014

 

2013

 

Tax Impact Associated With Supplemental Information

 

Q4 2014

 

Q3 2014

 

Q4 2013

 

Q4 2014

 

Q4 2013

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments to GAAP net income:

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

$

893

 

$

1,293

 

$

235

 

5,985

 

$

5,120

 

Acquisition related fair value adjustments

 

(13)

 

111

 

1,221

 

734

 

7,794

 

Transaction and integration related expenses

 

208

 

202

 

545

 

887

 

4,746

 

Environmental monitoring and remediation reserves 

 

-

 

-

 

596

 

-

 

1,303

 

Intangible amortization and impairments

 

1,405

 

1,871

 

2,035

 

7,768

 

5,217

 

Release of prior accrued taxes on foreign earnings

 

-

 

-

 

-

 

-

 

23,443

 

Restructuring charges

 

1,865

 

-

 

-

 

1,865

 

-

 

Impairment charges

 

9,432

 

-

 

-

 

9,432

 

-

 

Goodwill impairment

 

-

 

-

 

-

 

-

 

-

 

Valuation allowance

 

(53,191)

 

-

 

-

 

(53,191)

 

-

 

Write off of deferred financing costs and refinancing fees

 

-

 

-

 

-

 

3,202

 

-

 

Effect of enacted tax rate changes

 

-

 

-

 

-

 

-

 

3,044

 

Total of associated tax effect

 

(39,400)

 

$

3,477

 

$

4,632

 

$

(23,318)

 

$

50,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

 

 

 

 

January 26,

 

October 27,

 

January 27,

 

 

 

 

 

 

 

2014

 

2013

 

2013

 

 

 

 

 

 

 

Q4 2014

 

Q3 2014

 

Q4 2013

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

Free Cash Flow:

 

 

 

 

 

 

 

 

 

 

 

Cash Flow from Operations

 

$

30,598

 

$

28,939

 

35,189

 

 

 

 

 

Net Capital Expenditure

 

(6,411)

 

(7,185)

 

(5,151)

 

 

 

 

 

Free Cash Flow:

 

$

24,187

 

$

21,754

 

$

30,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Q1 FY15 Earnings Per Share Guidance

 

 

 

 

 

 

 

 

 

 

 

GAAP to Non-GAAP Reconciliation (net of tax)

 

 

 

 

 

 

 

 

 

 

 

 

 

Low

 

High

 

 

 

 

 

 

 

GAAP EPS

 

$

0.10

 

$

0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation expense

 

0.08

 

0.08

 

 

 

 

 

 

 

Transaction and integration related expenses

 

0.01

 

0.01

 

 

 

 

 

 

 

Amortization of acquired intangibles

 

0.09

 

0.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP EPS

 

$

0.28

 

$

0.32

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Item 9.01.  Financial Statements and Exhibits

 

(d) Exhibits

 

Exhibit No.

 

Description

99.1

 

Transcript of conference call on March 5, 2014 discussing financial results for the three months and year ended January 26, 2014. (This Exhibit 99.1 is being furnished and shall not be deemed “filed” as set forth in Item 2.02 hereof.)

 

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SIGNATURE

 

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 hereunto duly authorized.

 

 

Date: March 7, 2014

 

SEMTECH CORPORATION

 

 

 

 

 

 

 

 

 

By:

/s/ Emeka Chukwu

 

 

 

Emeka Chukwu

 

 

 

Chief Financial Officer

 

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