IRVINE, Calif., Jan. 26, 2006 (PRIMEZONE) -- Microsemi Corporation (Nasdaq:MSCC) today reported results for its first quarter of fiscal year 2006.
-- Net Sales for Quarter Increased 18 Percent over Prior Year
Quarter
-- Net Sales Increased 4 Percent in First Quarter over Fourth
Quarter
-- GAAP Diluted Earnings per Share of $0.20 versus $0.08 in
Prior Year Quarter
-- Non-GAAP Diluted Earnings per Share of $0.24 versus $0.14
in Prior Year Quarter
-- GAAP Gross Margins 48.1 Percent
-- Non-GAAP Gross Margins 50.0 Percent
-- GAAP Operating Margins 23.3 Percent
-- Non-GAAP Operating Margins 27.3 Percent
-- Positive Book-to-Bill Ratio of 1.08 for First Quarter
Net sales for Microsemi's first quarter, ended January 1, 2006, were $82.2 million, up 18 percent from net sales of $69.8 million in the first quarter of 2005, and up 4 percent from net sales of $79.2 million in the fourth quarter of 2005. First quarter GAAP net income was $13.8 million, up 160 percent from $5.3 million in the first quarter of 2005 and up 68 percent from GAAP net income of $8.2 million in the fourth quarter of 2005. GAAP diluted earnings per share was $0.20 for the first quarter, compared to $0.08 in the first quarter of 2005 and $0.12 in the fourth quarter of 2005. GAAP gross margins increased to 48.1 percent in the first quarter, a 1,370 basis point increase over the 34.4 percent in the first quarter of 2005 and a 20 basis point decrease from the 48.3 percent in the fourth quarter of 2005. GAAP operating margins increased to 23.3 percent in the first quarter, a 1,220 basis point increase over the 11.1 percent in the first quarter of 2005 and a 900 basis point increase over the 14.3 percent in the fourth quarter of 2005. GAAP operating and net income for the fourth quarter of 2005 included a special pre-tax charge of $5.5 million from the amendment and acceleration of stock options.
For the first quarter, non-GAAP net income was $16.0 million, up 82 percent from $8.8 million in the first quarter of 2005 and up 13 percent from $14.1 million in the fourth quarter of 2005. Non-GAAP diluted earnings per share in the first quarter were $0.24, up from $0.14 in the first quarter of 2005 and $0.21 in the fourth quarter of 2005. Non-GAAP gross margins increased to 50.0 percent in the first quarter, an 890 basis point increase over the 41.1 percent in the first quarter of 2005 and a 100 basis point increase over the 49.0 percent in the fourth quarter of 2005. Non-GAAP operating margins increased to 27.3 percent in the first quarter, an 860 basis point increase over the 18.7 percent in the first quarter of 2005 and a 210 basis point increase over the 25.2 percent in the fourth quarter of 2005. Non-GAAP results are reconciled and explained to GAAP results in the attached tables. Non-GAAP income and non-GAAP operating margins exclude transitional idle capacity and inventory abandonments, amortization of intangible assets, loss on disposition of assets and restructuring and other special charges.
James J. Peterson, President and Chief Executive Officer, stated, "Microsemi's first quarter results met our non-GAAP profit targets of 50 percent gross margins and 27 percent operating margin. We believe this demonstrates our execution in our top line growth as well as our effectiveness in consolidation activities. We believe that we can continue to drive revenue growth with the acceptance of our new products and also leverage efficiencies going forward to drive these margins higher in the coming years."
The book-to-bill ratio for the quarter was 1.08, which reflects strength in the Company's high reliability semiconductor products and demand for its new high performance analog and mixed signal products.
Business Outlook
Based on our strong results and execution of our strategy, we expect that for the second quarter of 2006, our sales will increase between 2 and 4 percent sequentially. On a non-GAAP basis, we expect earnings for the second quarter of 2006 to be $0.24 to $0.26 per diluted share.
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 Corporation, with corporate headquarters in Irvine, California, 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, reliability and battery optimization, reducing size or protecting circuits. The principal markets the company serves include implantable 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.
"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 plans, beliefs, or 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, in the hiring and retention of qualified personnel in a competitive labor market, of acquiring and integrating new operations or assets, or in closing or disposing of operations or assets, or possible difficulties in transferring work from one plant to another, or regarding rapidly changing technology and product obsolescence, difficulties predicting the timing and costs of plant closures, the potential inability to realize cost savings or productivity gains or other impediments to improving capacity utilization, potential cost increases, weakness or competitive pricing environment of the marketplace, uncertain demand for and acceptance of the company's products, unexpected results of in-process or planned development or marketing and promotional campaigns, changes in demand for products, difficulties foreseeing future demand, inventory adjustments by customers, customer order cancellations, 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 and economic conditions or adverse changes in current or expected industry conditions, business disruptions, travel disruptions, embargoes, 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, other regulatory matters, or any matters involving litigation, arbitration, or investigation, difficulties and costs imposed by law, including Section 404 of the Sarbanes-Oxley Act of 2002, difficulties in determining the scope of, and procuring and maintaining, adequate insurance coverage, difficulties, and costs of protecting patents and other proprietary rights, work stoppages, labor issues, inventory obsolescence, difficulties regarding customer qualification of products, manufacturing facilities and processes, and other difficulties managing consolidation or growth, including in the maintenance of internal controls, the implementation of information systems, and the training of personnel. 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 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.
To supplement the consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), we use non-GAAP financial measures (non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP income before taxes, non-GAAP net income, and non-GAAP diluted earnings per share) that exclude certain items such as transitional idle capacity and inventory abandonments, amortization of intangible assets, loss on disposition of assets and restructuring and other special charges. Management excludes these items because it believes that the non-GAAP measures enhance an investor's overall understanding of the Company's financial performance and future prospects by being more reflective of the Company's core operational activities and to be more comparable with the results of the Company over various periods. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. Guidance is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of such items. These items could be materially significant in our GAAP results in any period. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the Company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
Investor Inquiries: David R. Sonksen, Microsemi Corporation, Irvine, CA (949) 221-7101.
The Microsemi Corporation logo can be found at: http://www.primezone.com/newsroom/prs/?pkgid=123
MICROSEMI CORPORATION
Unaudited Consolidated Income Statements
(In thousands, except per share amounts)
Quarter ended
-----------------------------
January 2, January 1,
2005 2006
----------- -----------
NET SALES $ 69,754 $ 82,159
Cost of sales 45,738 42,612
----------- -----------
GROSS MARGIN 24,016 39,547
Operating expenses:
Selling, general and administrative 10,796 14,387
Research and development 4,871 5,077
Amortization of intangible assets 229 229
Restructuring charges 360 641
Loss on dispositions of assets -- 34
----------- -----------
Total operating expenses 16,256 20,368
----------- -----------
OPERATING INCOME 7,760 19,179
Interest and other income, net 101 811
----------- -----------
INCOME BEFORE INCOME TAXES 7,861 19,990
Provision for income taxes 2,594 6,197
----------- -----------
NET INCOME $ 5,267 $ 13,793
=========== ===========
Earnings per share
Basic $ 0.09 $ 0.22
=========== ===========
Diluted $ 0.08 $ 0.20
=========== ===========
Common and common equivalent shares
outstanding:
Basic 60,336 63,996
Diluted 64,154 67,547
MICROSEMI CORPORATION
Schedule Reconciling Non-GAAP Income to GAAP Income
(in thousands, except per share amounts)
Quarter ended
------------------------------
January 2, January 1,
2005 2006
----------- -----------
GAAP NET INCOME $ 5,267 $ 13,793
=========== ===========
The non-GAAP amounts have been adjusted
to exclude the following items:
Excluded from cost of sales
Transitional idle capacity and
inventory abandonments (a) $ 4,674 $ 1,512
Excluded from operating expenses
Amortization of intangible
assets (b) 229 229
Loss on disposition of assets (a) -- 34
Restructuring and other special
charges (a) 360 1,470
----------- -----------
5,263 3,245
Income tax effect on non-GAAP
adjustments 1,737 1,006
----------- -----------
Net effect of adjustments to GAAP
net income $ 3,526 $ 2,239
=========== ===========
NON-GAAP NET INCOME $ 8,793 $ 16,032
=========== ===========
(a) / (b) Please refer to corresponding footnotes below.
MICROSEMI CORPORATION
Schedule Reconciling Reported Financial Ratios
Quarter ended
---------------------------------------------------
January 2, October 2, January 1,
2005 2005 2006
------------ ------------ ------------
GAAP gross
margin 34.4 percent 48.3 percent 48.1 percent
Effect of
reconciling
items on
gross margin 6.7 percent 0.7 percent 1.9 percent
Non-GAAP
gross margin 41.1 percent 49.0 percent 50.0 percent
GAAP operating
margin 11.1 percent 14.3 percent 23.3 percent
Effect of
reconciling
items on
operating
margin 7.6 percent 10.9 percent 4.0 percent
Non-GAAP
operating
margin 18.7 percent 25.2 percent 27.3 percent
To supplement the consolidated financial results prepared in accordance with Generally Accepted Accounting Principles ("GAAP"), we use non-GAAP financial measures (non-GAAP gross margin, non-GAAP operating expenses, non-GAAP operating income, non-GAAP income before taxes, non-GAAP net income, and non-GAAP diluted earnings per share) that exclude certain items such as transitional idle capacity and inventory abandonments, amortization of intangible assets, loss on disposition of assets and restructuring and other special charges. Management excludes these items because it believes that the non-GAAP measures enhance an investor's overall understanding of the Company's financial performance and future prospects by being more reflective of the Company's core operational activities and to be more comparable with the results of the Company over various periods. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. Guidance is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of such items. These items could be materially significant in our GAAP results in any period. By disclosing non-GAAP financial measures, management intends to provide investors with a more meaningful, consistent comparison of the Company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.
The items excluded from the GAAP financial results are set forth below:
(a) The restructuring activities involve the closure and
consolidation of our manufacturing facilities. As these
facilities are not expected to have a continuing contribution
to operations or have a diminishing contribution during the
transition phase, management believes excluding such items
from the Company's operations provides investors with a means
of evaluating the Company's on-going operations. Transitional
idle capacity relates to unused manufacturing capacity and
non-productive manufacturing expenses during the period from
when shutdown activities commence to when a facility is
closed. Inventory abandonments relate to identification
and disposal of inventory that will not be utilized after
a product line is transferred to a new manufacturing location.
Loss on disposition of assets results from abandonment of
non-productive assets in accordance with a restructuring
plan. Restructuring and other special charges includes
severance and other costs related to facilities in the
process of closing or already closed. Management excludes
these expenses when evaluating core operating activities
and for strategic decision making, forecasting future
results and evaluating current performance.
(b) These amounts relate to amortization of acquisition related
intangibles. While this expense is expected to continue in
the future, for internal analysis of the Company's operations,
management does not view this expense as reflective of the
business' current performance.
MICROSEMI CORPORATION
Selected Non-GAAP Financial Information
(in thousands except for per share amounts)
Quarter ended
----------------------------
January 2, January 1,
2005 2006
--------- ---------
GAAP gross margin $ 24,016 $ 39,547
Transitional idle capacity
and inventory abandonments (a) 4,674 1,512
-------- --------
Non-GAAP gross margin $ 28,690 $ 41,059
-------- --------
GAAP operating expenses $ 16,256 $ 20,368
Amortization of intangible
assets (b) (229) (229)
Loss on disposition of
assets (a) -- (34)
Restructuring and other
special charges (a) (360) (1,470)
-------- --------
Non-GAAP operating expenses $ 15,667 $ 18,635
-------- --------
GAAP operating income $ 7,760 $ 19,179
Transitional idle capacity
and inventory
abandonments (a) 4,674 1,512
Amortization of intangible
assets (b) 229 229
Loss on disposition of
assets (a) -- 34
Restructuring and other
special charges (a) 360 1,470
-------- --------
Non-GAAP operating income $ 13,023 $ 22,424
-------- --------
GAAP income before taxes $ 7,861 $ 19,990
Transitional idle capacity
and inventory abandonments (a) 4,674 1,512
Amortization of intangible
assets (b) 229 229
Loss on disposition of
assets (a) -- 34
Restructuring and other
special charges (a) 360 1,470
-------- --------
Non-GAAP income before taxes $ 13,124 $ 23,235
-------- --------
GAAP net income $ 5,267 $ 13,793
Transitional idle capacity
and inventory abandonments (a) 4,674 1,512
Amortization of intangible
assets (b) 229 229
Loss on disposition of
assets (a) -- 34
Restructuring and other
special charges (a) 360 1,470
Income tax effect on
non-GAAP adjustments (1,737) (1,006)
-------- --------
Non-GAAP net income $ 8,793 $ 16,032
-------- --------
GAAP diluted earnings
per share $ 0.08 $ 0.20
Impact of non-GAAP
adjustments on diluted
earnings per share $ 0.06 $ 0.04
-------- --------
Non-GAAP diluted earnings
per share $ 0.14 $ 0.24
-------- --------
(a) / (b) Please refer to corresponding footnotes above.
MICROSEMI CORPORATION
Condensed Unaudited Consolidated Balance Sheets
(in thousands)
October 2, January 1,
2005 2006
--------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 98,149 $ 113,049
Accounts receivable, net 53,233 55,548
Inventories 55,917 57,686
Deferred income taxes 12,921 12,921
Other current assets 2,101 4,724
--------- ---------
Total current assets 222,321 243,928
Property and equipment, net 58,366 57,668
Deferred income taxes 8,074 8,074
Goodwill 3,258 3,258
Other intangible assets, net 4,493 4,263
Other assets 4,069 6,261
--------- ---------
TOTAL ASSETS $ 300,581 $ 323,452
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 42,378 $ 41,713
Long-term liabilities 3,617 3,551
Shareholders' equity 254,586 278,188
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 300,581 $ 323,452
========= =========