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) July 19, 2006
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Semtech Corporation
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(Exact Name of Registrant as Specified in Its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
1-6395 95-2119684
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(Commission File Number) (IRS Employer Identification No.)
200 Flynn Road
Camarillo, California 93012-8790
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(Address of Principal Executive Offices) (Zip Code)
805-498-2111
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(Registrant's Telephone Number, Including Area Code)
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(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:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
Item 4.02(a)
As previously reported, the Company has been engaged in an internal review
of its stock option practices in light of an informal SEC inquiry. On June
9, 2006, the Audit Committee, with the assistance of independent counsel
and forensic accountants, commenced an internal investigation of the
Company's stock option practices and associated accounting. On July 12,
2006, the Board of Directors appointed a Special Committee to continue the
Audit Committee investigation. The Special Committee is comprised of
members who had not served the Company or the Board in any capacity prior
to December 2002. The Special Committee has not completed its work or
reached final conclusions and is continuing its investigation.
The initial phase of the investigation has focused on the processes used
to establish option exercise prices and obtain approvals of stock option
grants, including procedures relating to initial stock option grants to
newly-hired employees, and the related measurement dates used for
financial reporting purposes. Although the investigation is ongoing, the
Committee has concluded that, pursuant to the requirements of Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees
(APB 25), the accounting measurement dates for certain stock options
granted primarily during fiscal years 1998 through 2003 (which roughly
correspond to calendar years 1997 through 2002) 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 that may result from these matters have
not yet been determined. 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.
The Company believes that the additional non-cash compensation expense
under APB 25 will not affect its current cash position or previously
reported revenues. Although future operating results are not expected to
be significantly impacted by the adjustments related to past stock option
practices, expenses arising from management's review, the Special
Committee's investigation, related litigation and other associated
activities will be recorded in the periods incurred and are expected to be
significant.
Management, the Special Committee and the Audit Committee have discussed
the above matters with Ernst & Young LLP, the Company's independent
registered public accounting firm.
On July 19, 2006 the Board of Directors, in consultation with management,
the Audit Committee, and the Special Committee and with the concurrence of
Ernst & Young LLP, determined that financial statements and the related
reports of its independent public accountants, earnings press releases,
and similar communications previously issued by the Company should not be
relied upon due to the pending restatement of its historical financial
statements.
Because the review is still ongoing, the aggregate amount of additional
non-cash stock-based compensation expense has not been determined, nor has
the amount of such expense to be recorded in any specific period or in any
future period been determined.
Management is evaluating the impact of this matter on its internal
controls over financial reporting and its reports thereon for fiscal years
2005 and 2006. The Company's disclosure controls and procedures are also
being reevaluated.
The Special Committee is working to complete its investigation in a timely
manner and the Company intends to file its restated financial statements
and its quarterly report for the period ended April 30, 2006 as soon as
practicable after the Special Committee's investigation is concluded. As
previously announced, the Company received a Staff Determination letter
from Nasdaq on June 15, 2006 indicating that the Company's securities are
subject to delisting because the Company has not yet filed its Form 10-Q
for the fiscal quarter ended April 30, 2006 and is therefore not in
compliance with the continued listing standard in Nasdaq Marketplace Rule
4310(c)(14). The Company has requested a hearing before a Nasdaq Listing
Qualifications Panel ("Panel") to review the Staff Determination. At the
hearing, which will occur within the next two weeks, the Company will ask
the Panel for additional time to remedy the late filing and to restate its
financial statements. There can be no assurance that the Panel will grant
the additional time or that the Company will maintain its Nasdaq listing.
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The press release issued by the Company on July 20, 2006 in connection
with this matter is attached hereto as Exhibit 99.1
Item 8.01. Other Events
The Company has been served with a third stockholder derivative lawsuit
related to stock option practices, which was filed in the United States
District Court for the Central District of California. This case, which
names the Company as a nominal defendant, seeks to bring derivative claims
on behalf of the Company against certain of its present and former
directors and executive officers. The Company is evaluating the lawsuit
and will respond to it in due course.
Item 9.01. Financial Statements and Exhibits
(c) Exhibits
Exhibit 99.1 Press Release of the Company dated July 20, 2006
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: July 20, 2006 SEMTECH CORPORATION
By: /s/ David G. Franz, Jr.
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David G. Franz, Jr.
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit Number Description of Document
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Exhibit 99.1 Press Release of the Company dated July 20, 2006
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