Semtech Corp. reported selected un-audited financial results for its third quarter of fiscal year 2007 that ended October 29, 2006. Net sales for the third quarter of fiscal year 2007 were $63.7 million, up 5% from $60.9 million in the third quarter of fiscal year 2006 and down 2% sequentially when compared to the second quarter of fiscal year 2007. New orders for the third quarter of fiscal year 2007 exceeded shipments, resulting in a positive book-to-bill ratio for the quarter. Semtech had $326.4 million of cash, cash equivalents and marketable securities as of October 29, 2006, which was up $19.0 million from the balance on July 30, 2006.
Mohan Maheswaran, Semtech's President and Chief Executive Officer, commented, "Relative pockets of strength within the third quarter included the medical, military and industrial end-markets. In contrast, demand related to computing and handset applications were well below normal for this time of year. Given limited visibility from our customer base, we are forecasting that sales for the fourth quarter will be down in a range of 6 to 8% as compared with the third quarter. Near-term market conditions aside, Semtech remains focused on completing the restatement process, strategically realigning certain product lines and improving execution."
As previously reported, the company has been engaged in an internal review of its stock option practices in light of an informal SEC inquiry and Federal grand jury subpoena. On July 20, 2006, the company announced that, although the investigation was ongoing, it had concluded that accounting measurement dates for certain stock option grants differ from the measurement dates previously used for such awards. As a result, new accounting measurement dates will apply to the affected option grants. Consequently, the company expects to record additional non-cash compensation expense and expects the amount of such additional expense to be material. The tax consequences associated with these matters are currently being reviewed. As a result of these adjustments, the company expects to restate its financial statements for fiscal years 2002 through 2006. The restatement will also affect financial statements for earlier fiscal years and adjustments for those earlier years will be reflected as part of the opening balances in the financial statements for the restatement period.
Operating expenses for the third quarter of fiscal year 2007 included approximately $4.9 million related to the stock options investigation, SEC inquiry, the grand jury subpoena, the previously announced derivative litigation, the restatement, and related matters.
The company's securities are subject to delisting from The Nasdaq Global Market because the company has not yet filed its Forms 10-Q for the fiscal quarters ended April 30, 2006 and July 30, 2006 ("First Quarter and Second Quarter Forms 10-Q") and is therefore not in compliance with Nasdaq's continued listing standards. The company presented its case to a Nasdaq Listing Qualifications Panel ("Panel") and on August 29, 2006 the Panel granted the company until November 10, 2006 to regain compliance with the continued listing standards. Later, at the request of the company, the Panel granted an extension, setting November 27, 2006 as the deadline for the company to file all required restatements, its First Quarter Form 10-Q, and its Second Quarter Form 10-Q in order to regain compliance with Nasdaq's continued listing standards. The company recently has been notified that the Nasdaq Listing and Hearing Review Council ("Listing Council"), in response to the company's request, has called the Panel's decision for review and has stayed any future Panel determinations to suspend the company's securities from trading until the review process runs its course. If the Listing Council determines it is appropriate, it may grant the company additional time to regain compliance, until the earlier of 60 days from the date of its decision or 180 days from the Panel's decision. The company continues to work diligently to file all required reports with the SEC as quickly as possible and thereby regain compliance with Nasdaq's listing requirements, but it can provide no assurances that it will be able to do so.
