Further Stock Stress at Semtech

Staff Reporter -- Electronic News, 7/20/2006

Semtech Corp. today said it will restate its historical financial statements amid the company's stock option granting-related troubles.

The chip company been engaged in an internal review of its stock option practices since the SEC launched an inquiry into the company in mid-June. Today the company announced that the special committee assembled to conduct the review has found errors in the dating of stock options granted from fiscal years 1998 through 2003.

Consequently, Semtech said it expects to record a significant amount of additional non-cash compensation expenses. The tax consequences that may result from these matters have not yet been determined, and, as a result of these adjustments, Semtech expects to restate its financial statements for fiscal years 2002 through 2006.

The committee's investigation is still pending, Semtech said. The company intends to file its restated financial statements and its quarterly report for the period ended April 30 "as soon as practicable" after the investigation is concluded.  

The company is not alone in having to restate earnings. Rambus this week also announced that stock option granting issues would force it to restate its earnings and that it faces possible Nasdaq delisting.

Like Rambus, Semtech has been mired in the industry-wide stock option trouble for weeks. In June, Semtech received word from Nasdaq that its securities are subject to delisting because the company has not filed its Form 10-by the extended June 14 deadline. The company is scheduled for a hearing before a Nasdaq listing qualifications panel within the next two weeks, where it will ask for additional time to remedy the filing.  

The company also announced that it 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, makes claims against present and former directors and executive officers. Semtech said it is evaluating the lawsuit and will respond to it in due course.