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IRVINE, Calif., Jul 22, 2004 (BUSINESS WIRE) --
-- Net Sales Increase 11 Percent over Prior Quarter and 27 Percent
over Year Ago Quarter
-- Book-to-Bill Ratio 1.13
-- Pro Forma Net Income at a Record Level Increased 329 Percent over
Year-Ago Quarter
-- GAAP Net Income Increases 192 Percent over Year-Ago Quarter
Microsemi Corp. (Nasdaq:MSCC) today reported results for its fiscal 2004 third quarter.
Net sales for the quarter ended June 27, 2004 were $64.1 million, up 11 percent from net sales of $57.7 million in the prior quarter, and up 27 percent from net sales of $50.5 million in the year-ago third quarter. Third quarter pro forma net income was a record $6.0 million, or $0.10 per share diluted, up 329 percent from $1.4 million and $0.02 per share diluted in the year-ago third quarter and up 46 percent from the $4.1 million and $0.07 per share diluted in the prior quarter. Pro forma gross margin was 37.4 percent in the third quarter, up 130 basis points from the prior quarter and up 510 basis points from the year-ago quarter.
Including amortization of acquisition related intangible assets, restructuring costs, and other special charges and credits as reflected in the attached reconciliation of GAAP to Pro forma results, Microsemi reported GAAP earnings in the third quarter of $3.5 million or $0.06 per diluted share, up 192 percent from $1.2 million or $0.02 per diluted share in the year-ago quarter and up from the $1.1 million loss or $0.02 loss per diluted share in the prior quarter.
"We continue to grow our business in our high-performance analog mixed signal and high-reliability discrete markets and improve our gross margins significantly," said James J. Peterson, president and CEO. He also stated, "These results again demonstrate the strength in our diversification in both products and markets."
The book-to-bill ratio for the quarter was 1.13.
Business Outlook
Sequentially sales are expected to be up 5 to 7 percent. Pro forma earnings per share diluted for the fourth quarter are expected to be $0.11 to $0.12. GAAP-based earnings, excluding restructuring-related costs related to our plant consolidations program, are expected to be $0.10 to $0.11 per share diluted, reflecting the recurring $0.2 million after tax charge for amortization of acquisition-related intangible costs. Sequentially, pro forma gross margin percentage is expected to increase 90 to 140 basis points.
About Microsemi
Microsemi is a leading designer, manufacturer and marketer of high-performance analog and mixed-signal integrated circuits and high-reliability discrete semiconductors. The company's semiconductors manage and control or regulate power, protect against transient voltage spikes and transmit, receive and amplify signals.
Microsemi's products include individual components as well as integrated circuit solutions that enhance customer designs by improving performance and reliability, battery optimization, reducing size or protecting circuits. The principal markets the company serves include implanted medical, military/aerospace and satellite, notebook computers and monitors, automotive and mobile connectivity applications.
More information may be obtained by contacting the company directly or by visiting its Web site at http://www.microsemi.com.
PLEASE READ THE FOLLOWING FACTORS THAT CAN MATERIALLY AFFECT MICROSEMI'S FUTURE RESULTS.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Any statements set forth in the news release that are not entirely historical and factual in nature are forward-looking statements. For instance, all statements of belief and expectations, all statements related to our plans, and all statements concerning future results are forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Potential risks and uncertainties include, but are not limited to, such factors as the possible adverse impact of difficulties regarding any of the following: the making of estimates and projections, the hiring and retention of qualified personnel in a competitive labor market, integrating operations or assets, closing or disposing of operations or assets, acquisitions of businesses or assets, rapidly changing technology and product obsolescence, the potential inability to realize cost savings or productivity gains and to improve capacity utilization, potential cost increases, weakness or competitive pricing environment of the marketplace, uncertain demand for and acceptance of the company's products, risk of failure of in-process or planned development or marketing and promotional campaigns, changes in demand for products, difficulties foreseeing future demand, effects of limited visibility of future sales, potential non-realization of expected orders or non-realization of backlog, product returns, product liability, and other potential adverse business or economic conditions or adverse changes in current or expected conditions, business disruptions, industry downturns, epidemics, disasters, wars or potential future effects of the tragic events of Sept. 11, variations in customer order preferences, fluctuations in market prices of the company's common stock and potential unavailability of additional capital on favorable terms, difficulties in implementing company strategies, dealing with environmental matters, litigation or governmental or customer qualification of our products, manufacturing facilities and processes, difficulties in determining and maintaining adequate insurance coverage and uninsured risks, difficulties protecting patents and other proprietary rights, inventory obsolescence. In addition to these factors and any other factors mentioned elsewhere in this news release, the reader should refer as well to the factors, uncertainties or risks identified in the company's most recent Form 10-K or subsequent Forms 10-Q and 8-K filed by Microsemi with the SEC. Additional risk factors shall be identified from time to time in Microsemi's future filings. Microsemi does not undertake to supplement or correct any information in this release that is or becomes incorrect.
(Financial Tables Follow)
MICROSEMI CORPORATION
Unaudited Consolidated Income Statements
(In thousands, except per share amounts)
Quarter ended Nine months ended
June 29, June 27, June 29, June 27,
2003 2004 2003 2004
NET SALES $ 50,534 $ 64,130 $144,620 $176,820
Cost of sales 34,230 42,282 100,560 117,540
GROSS MARGIN 16,304 21,848 44,060 59,280
Operating expenses:
Selling, general and
administrative 9,351 9,816 27,459 28,876
Research and development 4,974 5,250 14,762 15,362
Amortization of intangible
assets 303 302 1,016 908
Restructuring charges - 1,277 686 7,241
Gain on sales of assets, net - - (2,393) -
Total operating expenses 14,628 16,645 41,530 52,387
OPERATING INCOME 1,676 5,203 2,530 6,893
Interest and other income
(expense), net 69 44 (96) 179
INCOME BEFORE INCOME TAXES 1,745 5,247 2,434 7,072
Provision for income taxes 576 1,732 803 2,334
Income before cumulative effect
of a change in accounting
principle 1,169 3,515 1,631 4,738
Cumulative effect of a change in
accounting principle, net of
income taxes - - (14,655) -
NET INCOME (LOSS) $ 1,169 $ 3,515 $(13,024)$ 4,738
Basic and Diluted earnings (loss)
per share
Earnings before a change in
accounting principle $ 0.02 $ 0.06 $ 0.03 $ 0.08
Change in accounting principle - - (0.25) -
Earnings (loss) per share $ 0.02 $ 0.06 $ (0.22)$ 0.08
Common and common equivalent
shares outstanding:
Basic 57,910 59,483 57,862 58,529
Diluted 59,156 62,608 58,550 61,327
MICROSEMI CORPORATION
Schedule Reconciling GAAP Earnings to Pro Forma Earnings
(in thousands)
Quarter ended Nine months ended
June 29, June 27, June 29, June 27,
2003 2004 2003 2004
GAAP NET INCOME (LOSS) $ 1,169 $ 3,515 $(13,024)$ 4,738
The pro forma amounts have been
adjusted to exclude the following
items:
Excluded from cost of sales
Non-recurring
restructuring-related
expenses $ - $ 2,157 $ 1,770 $ 4,888
Excluded from operating expenses
Amortization of intangible assets 303 302 1,016 908
Cumulative effect of a change in
accounting principle for goodwill - - 22,705 -
Gain on sales of assets, net - - (2,393) -
Impairment of long-lived asset - 1,000 - 1,000
Restructuring related costs - 277 686 6,241
303 3,736 23,784 13,037
Income tax effect 100 1,232 8,406 4,302
Net effect of adjustments to GAAP
net income $ 203 $ 2,504 $ 15,378 $ 8,735
PRO FORMA NET INCOME $ 1,372 $ 6,019 $ 2,354 $13,473
Schedule Reconciling Reported Financial Ratios
Quarter ended
June 29, 2003 March 28, 2004 June 27, 2004
GAAP gross margin 32.3% 33.3% 34.1%
Effect of reconciling items
on gross margin - 2.8% 3.3%
Pro forma gross margin 32.3% 36.1% 37.4%
To supplement the consolidated financial results prepared under generally accepted accounting principles ("GAAP"), Microsemi uses a non-GAAP conforming, or pro forma measure of results that equals GAAP results adjusted to exclude certain costs, expenses and gains. Pro forma results give an indication of Microsemi's baseline performance in regard to the operating results before gains, losses or other charges that are considered by management to be outside of the company's core operating results. In addition, pro forma results are among the primary indicators management uses as a basis for planning and forecasting future periods. These measures are not in accordance with, or an alternative for, GAAP and may be materially different from pro forma measures used by other companies. Microsemi computes pro forma results principally by adjusting GAAP results with the impact of acquisition-related charges, restructuring charges, and other non-recurring charges and credits.
MICROSEMI CORPORATION
Pro Forma Consolidated Income Statements
(In thousands, except per share amounts)
Quarter ended Nine months ended
June 29, June 27, June 29, June 27,
2003 2004 2003 2004
NET SALES $ 50,534 $ 64,130 $144,620 $176,820
Cost of sales 34,230 40,125 98,790 112,652
GROSS MARGIN 16,304 24,005 45,830 64,168
Operating expenses:
Selling, general and
administrative 9,351 9,816 27,459 28,876
Research and development 4,974 5,250 14,762 15,362
Total operating expenses 14,325 15,066 42,221 44,238
OPERATING INCOME 1,979 8,939 3,609 19,930
Interest and other income
(expense), net 69 44 (96) 179
INCOME BEFORE INCOME TAXES 2,048 8,983 3,513 20,109
Provision for income taxes 676 2,964 1,159 6,636
PRO FORMA NET INCOME $ 1,372 $ 6,019 $ 2,354 $ 13,473
Pro Forma Earnings per share:
Basic $ 0.02 $ 0.10 $ 0.04 $ 0.23
Diluted $ 0.02 $ 0.10 $ 0.04 $ 0.22
Common and common equivalent
shares outstanding:
Basic 57,910 59,483 57,862 58,529
Diluted 59,156 62,608 58,550 61,327
MICROSEMI CORPORATION
Condensed Unaudited Consolidated Balance Sheets
(in thousands)
Sept. 28, 2003 June 27, 2004
ASSETS
Current Assets:
Cash and cash equivalents $ 29,353 $ 41,160
Accounts receivable, net 28,866 33,837
Inventories 53,679 58,555
Deferred income taxes 5,239 5,239
Other current assets 1,234 2,906
Total current assets 118,371 141,697
Property and equipment, net 62,973 61,444
Deferred income taxes 10,162 10,162
Goodwill 3,258 3,258
Other intangible assets, net 6,622 5,714
Other assets 4,257 4,262
TOTAL ASSETS $ 205,643 $ 226,537
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 31,203 $ 42,613
Long-term debt 449 406
Other long-term liabilities 4,131 3,940
Stockholders' equity 169,860 179,578
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 205,643 $ 226,537
SOURCE: Microsemi Corp.
Microsemi Corp., Irvine David R. Sonksen (Investors), 949-221-7101 or Cliff Silver (Media), 949-221-7112
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