Microsemi Reports Fourth Quarter and Fiscal 2004 Results

Irvine, California, UNITED STATES



  -- Net Sales for Fiscal Year 2004 Increased 24% over Fiscal Year 2003
  -- Net Sales for Fourth Quarter Increased 6% over Third Quarter
  -- Net Sales Increased 29% Over Year Ago Fourth Quarter

IRVINE, Calif., Nov. 18, 2004 (PRIMEZONE) -- Microsemi Corporation (Nasdaq:MSCC) today reported results for its fourth quarter ended September 26, 2004 and its full 2004 fiscal year.

For the fourth quarter, net sales were $68.0 million, an increase of 29% from net sales of $52.8 million in the year-ago fourth quarter and an increase of 6% from net sales of $64.1 million in the third quarter. Fourth quarter pro forma net income was $8.0 million, or $0.13 per share diluted, up 264% from $2.2 million, or $0.04 per share diluted, in the year-ago fourth quarter and up 33% from the $6.0 million, or $0.10 per share diluted, in the third quarter. Pro forma gross margins for the fourth quarter were 38.9%, a 150 basis point improvement over the third quarter pro forma gross margins of 37.4% and a 610 basis point improvement over the 32.8% pro forma gross margins in the year ago fourth quarter.

For the fiscal year, net sales were $244.8 million, an increase of 24% compared to last fiscal year's net sales of $197.4 million. Fiscal year 2004 pro forma net income totaled $21.5 million, or $0.35 per share diluted, up 378% from pro forma net income of $4.5 million, or $0.08 per share diluted, in fiscal year 2003.

For the fourth quarter, Microsemi reported GAAP earnings for the fourth quarter of $0.9 million, or $0.01 per share diluted, a decline of 44%, compared to GAAP earnings of $1.6 million, or $0.03 per share diluted, in the year-ago fourth quarter and down 74% from GAAP earnings of $3.5 million, or $0.06 per share diluted, in the third quarter. Gross margins based on GAAP for the fourth quarter were 26.7%, a 740 basis point decline from the third quarter GAAP gross margins of 34.1% and a 450 basis point decline from the 31.2% GAAP gross margins in the year-ago fourth quarter.

For the full fiscal year 2004, Microsemi reported GAAP income of $5.6 million, or $0.09 per share diluted, compared to a loss of $11.5 million, or $0.20 loss per share diluted, in fiscal year 2003.

The book-to-bill ratio for the fourth quarter was 1.05.

"We are very pleased with our results for the fourth quarter," stated James J. Peterson, President and CEO. "Net sales and pro forma earnings have increased for eight consecutive quarters and we have seen continuing strength in our markets."

Business Outlook

Sequentially Microsemi expects its sales for the first quarter to be up two to three percent. Microsemi expects its pro forma earnings per share diluted for the first quarter to be $0.13 to $0.14. Sequentially, Microsemi expects its pro forma gross margin percentage for the first quarter to increase 70 to 130 basis points.

Microsemi regularly announces such an outlook quarterly, in the form of issuing a news release and does not undertake to update any of this information between such public announcements, and please refer to the "SAFE HARBOR" STATEMENT below for risks that may affect future actual results.

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, 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 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 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, rapidly changing technology and product obsolescence, the potential delay or inability to realize cost savings or productivity gains and to improve capacity utilization, potential cost increases including but not limited to the potential costs of compliance with the new accounting and legal requirements mandated in fiscal year 2005 under Section 404 of the Sarbanes-Oxley Act and any costs of related infrastructure weakness, challenges like 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 business and economic conditions or adverse changes in current or expected industry conditions, potential business disruptions, epidemics, disasters, wars or potential future effects of the tragic events of September 11, 2001, 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, or potential challenges dealing with governmental and customer qualification of our products, manufacturing facilities and processes. In addition to these factors and any other factors mentioned elsewhere in this news release, the reader should refer to the factors, uncertainties or risks identified in Microsemi's most recent Form 10-K filed by Microsemi with the SEC and Microsemi's subsequent Forms 10-Q and 8-K, which could identify additional risks. Microsemi may also identify further risks from time to time. Microsemi does not undertake to supplement or correct any information in this release that is or becomes incorrect.

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=1233



                         MICROSEMI CORPORATION
                    Consolidated Income Statements
               (In thousands, except per share amounts)

                            Quarter ended       Fiscal year ended
                         ------------------   --------------------
                        Sept. 28,  Sept. 26,  Sept. 28,  Sept. 26,
                           2003       2004      2003        2004
                         -------    -------   --------    --------
 NET SALES               $52,751    $67,985   $197,371    $244,805
 Cost of sales            36,270     49,837    136,830     167,377
                         -------    -------   --------    --------
 GROSS MARGIN             16,481     18,148     60,541      77,428

 Operating expenses:
  Selling, general
   and administrative      9,547     10,004     37,006      38,880
  Research and
   development             4,606      4,648     19,368      20,010
  Amortization of
   intangible assets         304        304      1,320       1,212
  Restructuring charges       --        614        686       6,855
  Gain on sales of
   assets, net              (212)        --     (2,605)         --
  Impairments of long
   lived assets               --      1,506         --       2,506
                         -------    -------   --------    --------
    Total operating
     expenses             14,245     17,076     55,775      69,463
                         -------    -------   --------    --------

 OPERATING INCOME          2,236      1,072      4,766       7,965

 Interest and other
  income (expense),
  net                         81        126        (15)        305
                         -------    -------   --------    --------
 INCOME BEFORE
  INCOME TAXES             2,317      1,198      4,751       8,270

 Provision for
  income taxes               765        302      1,568       2,636
                         -------    -------   --------    --------

 Income before
  cumulative effect
  of a change in
  accounting principle     1,552        896      3,183       5,634
 Cumulative effect of
  a change in accounting
  principle, net of
  income taxes                --         --    (14,655)         --
                         -------    -------   --------    --------
 NET INCOME(LOSS)        $ 1,552    $   896   $(11,472)   $  5,634
                         =======    =======   ========    ========

 Basic earnings (loss)
  per share
 Earnings before a
  change in accounting
  principle              $  0.03    $  0.02   $   0.05    $   0.10
 Change in accounting
  principle                   --         --      (0.25)         --
                         -------    -------   --------    --------
 Earnings (loss)
  per share              $  0.03    $  0.02   $  (0.20)   $   0.10
                         =======    =======   ========    ========

 Diluted earnings (loss)
  per share
 Earnings before a
  change in accounting
  principle              $  0.03    $  0.01   $   0.05    $   0.09
 Change in accounting
  principle                   --         --      (0.25)         --
                         -------    -------   --------    --------
 Earnings (loss) per
  share                  $  0.03    $  0.01   $  (0.20)   $   0.09
                         =======    =======   ========    ========

 Common and common
  equivalent shares
  outstanding:
   Basic                  58,040     59,693     57,906      59,168
   Diluted                60,306     62,574     59,018      61,987

                         MICROSEMI CORPORATION
       Schedule Reconciling GAAP Earnings to Pro Forma Earnings
                            (in thousands)

                               Quarter ended       Fiscal year ended
                             ------------------   -------------------
                            Sept. 28,  Sept. 26, Sept. 28,   Sept. 26,
                              2003       2004       2003       2004
                             -------    -------   --------    -------
 GAAP NET INCOME (LOSS)      $ 1,552    $   896   $(11,472)   $ 5,634
                             =======    =======   ========    =======

 The pro forma amounts have
 been adjusted to exclude the
 following items:

 Excluded from cost
  of sales
   Transitional idle
    capacity and
    inventory abandonments   $   832    $ 8,314   $  2,602    $13,202

 Excluded from operating
  expenses
   Amortization of intangible
    assets                       304        304      1,320      1,212
   Cumulative effect of a
    change in accounting
    principle for goodwill        --         --     22,705         --
   Gain on sales of assets,
    net                         (212)        --     (2,605)        --
   Impairment of long-lived
    asset                         --      1,506         --      2,506
   Restructuring related
    costs                         --        614        686      6,855
                             -------    -------   --------    -------
                                 924     10,738     24,708     23,775
 Income tax effect               305      3,637      8,711      7,939
                             -------    -------   --------    -------
 Net effect of adjustments
  to GAAP net Income         $   619    $ 7,101   $ 15,997    $15,836
                             =======    =======   ========    =======

 PRO FORMA NET INCOME        $ 2,171    $ 7,997   $  4,525    $21,470
                             =======    =======   ========    =======


 Schedule Reconciling Reported financial Ratios

                                              Quarter ended
                                   ---------------------------------
                                   Sept. 28,    June 27,    Sept. 26,
                                     2003         2004        2004
                                   --------     -------     --------

 GAAP gross margin                    31.2%       34.1%        26.7%
 Effect of reconciling
  items on gross margin                1.6%        3.3%        12.2%
 Pro forma gross margin               32.8%       37.4%        38.9%

     To supplement the consolidated financial results prepared under
     generally accepted accounting principles ("GAAP"), Microsemi uses
     a pro forma measure of results that does not conform with GAAP.
     Our pro forma measure of results equals GAAP results adjusted to
     exclude certain costs, expenses and gains. We believe that pro
     forma results may give an 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 pro forma 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 "pro forma" measures or any other
     metrics used by other companies. Microsemi computes pro forma
     results principally by adjusting GAAP results with a reversal of
     the impact of acquisition-related charges, restructuring charges,
     and other charges and credits.

                        MICROSEMI CORPORATION
               Pro Forma Consolidated Income Statements
               (In thousands, except per share amounts)

                               Quarters ended      Fiscal year ended
                              -----------------   --------------------
                             Sept. 28, Sept. 26,  Sept. 28,  Sept. 26,
                               2003       2004      2003        2004
                              -------   -------   --------    --------
 NET SALES                    $52,751   $67,985   $197,371    $244,805
 Cost of sales                 35,438    41,523    134,228     154,175
                              -------   -------   --------    --------

 GROSS MARGIN                  17,313    26,462     63,143      90,630

 Operating expenses:
  Selling, general and
   administrative               9,547    10,004     37,006      38,880
  Research and development      4,606     4,648     19,368      20,010
                              -------   -------   --------    --------

  Total operating expenses     14,153    14,652     56,374      58,890
                              -------   -------   --------    --------

 OPERATING INCOME               3,160    11,810      6,769      31,740
 Interest and other income
  (expense), net                   81       126        (15)        305
                              -------   -------   --------    --------

 INCOME BEFORE INCOME
  TAXES                         3,241    11,936      6,754      32,045

 Provision for income taxes     1,070     3,939      2,229      10,575
                              -------   -------   --------    --------
 PRO FORMA NET INCOME         $ 2,171   $ 7,997   $  4,525    $ 21,470
                              =======   =======   ========    ========

 Pro Forma Earnings per share:
  Basic                       $  0.04   $  0.13   $   0.08    $   0.36
  Diluted                     $  0.04   $  0.13   $   0.08    $   0.35

 Common and common equivalent
  shares outstanding:
   Basic                       58,040    59,693     57,906      59,168
   Diluted                     60,306    62,574     59,018      61,987

                         MICROSEMI CORPORATION
                 Condensed Consolidated Balance Sheets
                            (in thousands)

                                     Sept. 28, 2003    Sept. 26, 2004
                                     --------------    --------------
             ASSETS

   Current Assets:
     Cash and cash equivalents          $ 29,353          $ 45,118
     Accounts receivable, net             28,866            42,219
     Inventories                          53,679            54,555
     Deferred income taxes                 5,239             8,490
     Other current assets                  1,234             5,447
                                        --------          --------
     Total current assets                118,371           155,829

     Property and equipment, net          62,973            55,629
     Deferred income taxes                10,162             8,772
     Goodwill                              3,258             3,258
     Other intangible assets, net          6,622             5,411
     Other assets                          4,257             4,098
                                        --------          --------

 TOTAL ASSETS                           $205,643          $232,997
                                        ========          ========

 LIABILITIES AND STOCKHOLDERS' EQUITY

   Current liabilities                  $ 31,203          $ 43,487
   Long-term debt                            449               386
   Other long-term liabilities             4,131             4,247
   Stockholders' equity                  169,860           184,877
                                        --------          --------

 TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                   $205,643          $232,997
                                        ========          ========


        

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