EXHIBIT 99.1
Microsemi Reports Third Quarter Results
IRVINE, Calif., July 28, 2005 (PRIMEZONE) -- Microsemi Corporation (Nasdaq:MSCC) today reported results for its fiscal 2005 third quarter.
-- Net Sales Increased 3 percent in Third Quarter over
Second Quarter
-- Non-GAAP Gross Margins Increased 190 Basis Points over
Second Quarter
-- GAAP Gross Margins Increased 420 Basis Points over
Second Quarter
-- Non-GAAP Net Income Increased 13 percent over Second Quarter
-- GAAP Net Income Increased 63 percent over Second Quarter
-- Positive Book-to-Bill Ratio of 1.08 for Third Quarter
Net sales for the quarter ended July 3, 2005 were $75.2 million, up 17 percent from net sales of $64.1 million in the third quarter of 2004, and up 3 percent from net sales of $73.3 million in the second quarter of 2005. Third quarter non-GAAP net income was $11.5 million, or $0.18 per diluted share, up 92 percent from $6.0 million, or $0.10 per diluted share in the third quarter of last year and up 13 percent from $10.2 million, or $0.16 per diluted share in our second quarter of fiscal year 2005. Non-GAAP gross margins increased to 46.6 percent in the third quarter, a 920 basis point increase over the 37.4 percent in the prior year third quarter and a 190 basis point increase over the 44.7 percent in the second quarter of 2005. Non-GAAP results are explained and reconciled to GAAP results in the attached tables.
James J. Peterson, president and chief executive officer, stated, "Microsemi is executing on a strategy laid out over three years ago that is enabling us to continue to outpace most all of our peers. We remain focused on improving operational efficiencies while leveraging our technical capabilities and new products to grow revenues."
Revenues for the first nine months of fiscal year 2005 were $218.3 million up 23 percent from the $176.8 million for the first nine months of fiscal year 2004. Non-GAAP net income for the first nine months of fiscal year 2005 was up 126 percent at $30.5 million, or $0.47 per diluted share, compared to $13.5 million, or $0.22 per diluted share, in the first nine months of 2004.
For the third quarter, our GAAP net income was up 180 percent at $9.8 million, or $0.15 per diluted share compared to $3.5 million, or $0.06 per diluted share in the third quarter of 2004. GAAP net income for the first nine months of fiscal year 2005 were up 349 percent at $21.1 million, or $0.33 per diluted share compared to $4.7 million, or $0.08 per diluted share in the first nine months of 2004.
The book-to-bill ratio for the quarter was 1.08, which reflects strength in the Company's high reliability semiconductor business and demand for the new high performance analog and mixed signal products.
Business Outlook
For the fourth quarter of 2005, Microsemi expects its sales to increase between 3 and 5 percent sequentially and expects its non-GAAP earnings per diluted share to be $0.18 to $0.20. The Company also expects its non-GAAP gross margin percentage for the fourth quarter to increase by 100 to 180 basis points over the third quarter. Non-GAAP income and non-GAAP margins exclude restructuring costs and other special charges or credits.
Microsemi regularly announces a quarterly outlook in the form of issuing a news release and does not undertake to update any of this information between such public announcements. Please refer to the "SAFE HARBOR" STATEMENT below for risks that may affect future actual results.
About Microsemi Corporation
Microsemi is a leading designer, manufacturer and marketer of high performance analog and mixed signal integrated circuits and high reliability 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 included implanted medical, defense/aerospace and satellite, notebook computers, monitors and LCD TVs, 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. All trademarks are of Microsemi Corporation.
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 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 changes in generally accepted accounting principles, the difficulties regarding the making of estimates and projections, including difficulties with periodic fluctuation and possible changes of numerous factors, difficulties in the hiring and retention of qualified personnel in a competitive labor market, acquiring and integrating new operations or assets, closing or disposing of operations or assets, or difficulties in transferring work from one plant to another, rapidly changing technology and product obsolescence, difficulties predicting the timing and amount of plant closure costs, 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, results 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 unexpected business and economic conditions or adverse changes in current or expected industry conditions, business disruptions, epidemics, disasters, wars or potential future effects of the tragic events of September 11, variations in customer order preferences, reductions or changes in defense spending, fluctuations in the costs of legal co mpliance, including compliance with the Sarbanes-Oxley Act of 2002, fluctuations in other costs of general and administrative kinds, 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 or litigation, difficulties in determining and maintaining adequate insurance coverage, difficulties protecting patents and other proprietary rights, inventory obsolescence and customer qualification of products, manufacturing facilities and processes. 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 and subsequent Form 10-Q reports 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 cor rect any information in this release that is or becomes incorrect.
Investor Inquiries: David R. Sonksen, Microsemi Corporation, Irvine, CA (949) 221-7101.
MICROSEMI CORPORATION
Unaudited Consolidated Income Statements
(In thousands, except per share amounts)
Quarter ended Nine months ended
----------------- -------------------
June 27, July 3, June 27, July 3,
2004 2005 2004 2005
------- ------- -------- --------
NET SALES $64,130 $75,214 $176,820 $218,286
Cost of sales 42,282 41,523 117,540 130,803
------- ------- -------- --------
GROSS MARGIN 21,848 33,691 59,280 87,483
Operating expenses:
Selling, general and
administrative 9,816 15,680 28,876 39,367
Research and development 5,250 4,583 15,362 14,186
Amortization of
intangible assets 302 229 908 688
Restructuring charges
(credit) 1,277 (208) 7,241 2,727
Loss on dispositions of
assets, net -- 95 -- 547
------- ------- -------- --------
Total operating expenses 16,645 20,379 52,387 57,515
------- ------- -------- --------
OPERATING INCOME 5,203 13,312 6,893 29,968
Interest and other
income, net 44 417 179 781
------- ------- -------- --------
INCOME BEFORE INCOME TAXES 5,247 13,729 7,072 30,749
Provision for income taxes 1,732 3,978 2,334 9,686
------- ------- -------- --------
NET INCOME $ 3,515 $ 9,751 $ 4,738 $ 21,063
======= ======= ======== ========
Earnings per share
Basic $ 0.06 $ 0.16 $ 0.08 $ 0.34
======= ======= ======== ========
Diluted $ 0.06 $ 0.15 $ 0.08 $ 0.33
======= ======= ======== ========
Common and common equivalent
shares outstanding:
Basic 59,483 62,013 58,529 61,193
Diluted 62,608 65,697 61,327 64,775
MICROSEMI CORPORATION
Schedule Reconciling Non-GAAP Income to GAAP Income
(in thousands, except per share amounts)
Quarter ended Nine months ended
----------------- -----------------
June 27, July 3, June 27, July 3,
2004 2005 2004 2005
------- ------- ------- -------
GAAP NET INCOME $ 3,515 $ 9,751 $ 4,738 $21,063
======= ======= ======= =======
The non-GAAP amounts have been
adjusted to exclude the
following items:
Excluded from cost of sales
Transitional idle capacity
and inventory abandonments $ 2,157 $ 1,342 $ 4,888 $ 9,014
Excluded from operating expenses
Amortization of intangible
assets 302 229 908 688
Loss on disposition of
assets, net -- 95 -- 547
Impairment of long lived
assets 1,000 -- 1,000 --
Restructuring and other
special charges 277 842 6,241 3,777
------- ------- ------- -------
3,736 2,508 13,037 14,026
Income tax effect 1,232 727 4,302 4,591
------- ------- ------- -------
Net effect of adjustments to
GAAP net income $ 2,504 $ 1,781 $ 8,735 $ 9,435
======= ======= ======= =======
NON-GAAP NET INCOME $ 6,019 $11,532 $13,473 $30,498
======= ======= ======= =======
Schedule Reconciling Reported Financial Ratios
Quarter ended
---------------------------------------------
June 27, 2004 April 3, 2005 July 3, 2005
------------- ------------- ------------
GAAP gross margin 34.1 percent 40.6 percent 44.8 percent
Effect of reconciling
items on gross margin 3.3 percent 4.1 percent 1.8 percent
Non-GAAP gross margin 37.4 percent 44.7 percent 46.6 percent
To supplement the consolidated financial results prepared under
generally accepted accounting principles ("GAAP"), Microsemi uses a
non-GAAP measure of results that does not conform with GAAP.
Microsemi computes non-GAAP results principally by adjusting GAAP
results with a reversal of the impact of acquisition-related charges,
restructuring charges, and non-recurring charges and credits. We
believe that non-GAAP results may give a better indication of
Microsemi's baseline performance from its ongoing operations before
restructuring related and other gains, losses or other charges that
are considered by management to be outside of the company's core
ongoing operating results. In addition, Microsemi's management uses
non-GAAP results to measure performance and 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 "non-GAAP" measures or any other metrics used by other
companies.
MICROSEMI CORPORATION
Non-GAAP Consolidated Income Statements
(In thousands, except per share amounts)
Quarter ended Nine months ended
------------------- -------------------
June 27, July 3, June 27, July 3,
2004 2005 2004 2005
-------- -------- -------- --------
NET SALES $ 64,130 $ 75,214 $176,820 $218,286
Cost of sales 40,125 40,181 112,652 121,789
-------- -------- -------- --------
GROSS MARGIN 24,005 35,033 64,168 96,497
Operating expenses:
Selling, general and
administrative 9,816 14,630 28,876 38,317
Research and development 5,250 4,583 15,362 14,186
-------- -------- -------- --------
Total operating expenses 15,066 19,213 44,238 52,503
-------- -------- -------- --------
OPERATING INCOME 8,939 15,820 19,930 43,994
Interest and other
income, net 44 417 179 781
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 8,983 16,237 20,109 44,775
Provision for income taxes 2,964 4,705 6,636 14,277
-------- -------- -------- --------
NON-GAAP NET INCOME $ 6,019 $ 11,532 $ 13,473 $ 30,498
======== ======== ======== ========
Non-GAAP earnings per share:
Basic $ 0.10 $ 0.19 $ 0.23 $ 0.50
Diluted $ 0.10 $ 0.18 $ 0.22 $ 0.47
Common and common equivalent
shares outstanding:
Basic 59,483 62,013 58,529 61,193
Diluted 62,608 65,697 61,327 64,775
MICROSEMI CORPORATION
Condensed Unaudited Consolidated Balance Sheets
(in thousands)
September 26, July 3,
2004 2005
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 45,118 $ 77,165
Accounts receivable, net 42,219 49,708
Inventories 54,555 54,567
Deferred income taxes 8,490 8,490
Other current assets 1,979 1,613
-------- --------
Total current assets 152,361 191,543
Property and equipment, net 59,098 58,741
Deferred income taxes 8,772 8,772
Goodwill 3,258 3,258
Other intangible assets, net 5,411 4,722
Other assets 4,098 4,088
-------- --------
TOTAL ASSETS $232,998 $271,124
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 43,904 $ 47,019
Long-term liabilities 4,217 3,680
Shareholders' equity 184,877 220,425
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $232,998 $271,124
======== ========
CONTACT:
FINANCIAL CONTACT:
David R. Sonksen, Executive Vice President and CFO
Tel: (949) 221-7101
EDITORIAL CONTACT:
Cliff Silver, Manager, Corporate Communications
Tel: (949) 221-7112
