- Consolidation of Broomfield, Colorado Plant
- Closure of Ireland Manufacturing Operations
- Increasing of Operating Margin Target
IRVINE, Calif., April 4, 2005 (PRIMEZONE) -- Microsemi Corporation (Nasdaq:MSCC) today announced that with the successful completion of Phase I and II of its Factory Utilization Enhancement Program, Microsemi will enter into Phase III of the program which will include: 1) consolidating the manufacturing operations of its Broomfield, Colorado high reliability products plant into other Microsemi plants; and, 2) closure of its Ennis, Ireland manufacturing operations. The Phase I and II activities included closure and consolidation of eight plants, and the reduction of companywide headcount from 2,600 to 1,389.
The Colorado plant represents approximately 12% of Microsemi's annual revenues, occupies a 130,000 square foot owned facility and has approximately 165 employees. The Ireland manufacturing plant represents less that 5% of Microsemi's annual revenues, occupies a 62,500 square foot owned facility and has approximately 70 manufacturing employees. Costs associated with the completion of Phase III of our consolidation program are estimated to range from $9 million to $12 million to be incurred over the next 12 to 18 months. These actions are, however, expected to result in annual cost savings of $6 million to $10 million, or for comparison purposes, approximately 250 to 400 basis points of potential improvement in operating margins. At the conclusion of the Phase III consolidation activities, each of the two closed facilities will be sold.
The successful completion of Phase I and II was important to the achievement of our company-wide operating margin objectives. In addition to these Phase III actions, the company has several other strategic initiatives underway which have had, and should continue to have a positive impact on our profitability. These include transferring additional manufacturing operations to offshore locations, our price position program for high reliability products as well as our introduction of an increasing number of new products at higher margins. As a result of our evaluation of the changes in place today, as well as the potential impact of the changes currently contemplated, we have increased our end of fiscal year 2006 operating margin target model (exclusive of employee stock option expense) to 27% from 25%.
The Company is in the process of determining whether assets of either of these plants are impaired in value by this action and if there are impaired assets, the associated impairment charge to be recorded in accordance with FAS 144 (Accounting for Impairment of Long-Lived Assets). In addition, other consolidation associated costs such as inventory, workforce reduction, relocation, transitional idle capacity and reorganization charges will be reported as restructuring costs in accordance with FAS 146 (Accounting for cost of exit or disposal activities), FAS 112 (Accounting for Severance Costs) or FAS 151 (Accounting for Inventory Costs) as applicable, when incurred. All costs associated with these consolidation activities will be excluded from our Non-GAAP reported results.
Microsemi management will conduct a conference call to answer questions related to this announcement on Monday, April 4, 2005 at 1:00 pm EDT (10:00 am PDT). To participate in the conference call by telephone, please call: (877) 264-1110 or (706) 634-1357 at approximately 12:50 am EDT (9:50 am PDT).
A telephonic replay will be available from 3:00 pm EDT (12:00 pm PDT) on Monday, April 4, 2005 through 3:00 pm EDT (12:00 pm PDT) on Monday, April 11, 2005. To access the replay, please call (800) 642-1687 or (706) 645-9291. Please enter the following ID Number: 5277085.
To access the Webcast, please log on to: www.microsemi.com . To listen to the live Webcast, please go to this website approximately fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live Webcast, a replay will be available shortly after the call on the Microsemi Website for 60 days.
About Microsemi
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 include 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.
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, 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 possible 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, 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 correct any information in this release that is or becomes incorrect.