IRVINE, Calif., Nov. 17, 2005 (PRIMEZONE) -- Microsemi Corporation (Nasdaq:MSCC) today reported results for its fiscal year 2005 and fourth quarter.
-- Net Sales for Year Increased 21 percent over Prior Year
-- Net Sales Increased 5 percent in Fourth Quarter
over Third Quarter
-- Non-GAAP Gross Margins Increased 240 Basis Points
over Third Quarter
-- GAAP Gross Margins Increased 350 Basis Points
over Third Quarter
-- Non-GAAP Gross Margins for Year Increased 850 Basis Points
over Prior Year
-- GAAP Gross Margins for Year Increased 1060 Basis Points
over Prior Year
-- Positive Book-to-Bill Ratio of 1.05 for Fourth Quarter
Net sales for Microsemi's fourth quarter, ended October 2, 2005, were $79.2 million, up 16 percent from net sales of $68.0 million in the fourth quarter of 2004, and up 5 percent from net sales of $75.2 million in the third quarter of 2005. Fourth quarter non-GAAP net income was $14.1 million, up 76 percent from $8.0 million in the fourth quarter of last year and up 23 percent from $11.5 million in the third quarter of 2005. Non-GAAP per share net income in the fourth quarter was $0.21 per share diluted, up from $0.13 in the fourth quarter last year and $0.18 in the third quarter of 2005. Non-GAAP gross margins increased to 49.0 percent in the fourth quarter, a 1,010 basis point increase over the 38.9 percent in the prior year fourth quarter and a 240 basis point increase over the 46.6 percent in the third 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 to grow revenues in multiple end markets with new products while also improving manufacturing utilization to improve profitability as demonstrated by these results. As a result, we feel confident that Microsemi can exceed overall industry growth expectations in both our high reliability semiconductor and high performance analog and mixed signal businesses."
Revenues for the full fiscal year 2005 were $297.4 million, up 21 percent from the $244.8 million for fiscal year 2004. Non-GAAP net income for fiscal year 2005 was up 107 percent at $44.6 million, compared to $21.5 million in 2004, or $0.68 per share diluted in fiscal year 2005, compared to $0.35 per share diluted in fiscal year 2004.
For the fourth quarter, the GAAP net income was $8.2 million, up 811 percent compared to $0.9 million in the fourth quarter of 2004. GAAP net income was $9.8 million in the third quarter of fiscal year 2005. GAAP net income per share diluted was $0.12 for the fourth quarter, compared to $0.01 per share diluted in the fourth quarter of fiscal year 2004 and $0.15 per share diluted in the third quarter of fiscal year 2005. GAAP 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.
GAAP net income for fiscal year 2005 was up 421 percent at $29.2 million, compared to $5.6 million in 2004, or $0.45 per share diluted in fiscal year 2005 compared to $0.09 per share diluted in fiscal year 2004.
The book-to-bill ratio for the quarter was 1.05, which reflects strength in the Company's high reliability semiconductor business and demand for its new high performance analog and mixed signal products.
Business Outlook
For the first quarter of 2006, Microsemi expects its sales to increase between 2 and 4 percent sequentially and expects its non-GAAP earnings per diluted share to be $0.21 to $0.23. The Company also expects its non-GAAP gross margin percentage for the first quarter to increase by 80 to 160 basis points over the fourth 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 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 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. LX is a trademark of Microsemi Corporation.
"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 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.
Investor Inquiries: David R. Sonksen, Microsemi Corporation, Irvine, CA (949) 221-7101.
(Financial Tables Follow)
MICROSEMI CORPORATION
Unaudited Consolidated Income Statements
(In thousands, except per share amounts)
Quarter ended Fiscal year ended
------------------- -------------------
Sept. 26, October 2, Sept. 26, October 2,
2004 2005 2004 2005
-------- -------- -------- --------
NET SALES $ 67,985 $ 79,154 $244,805 $297,440
Cost of sales 49,726 40,945 167,266 171,748
-------- -------- -------- --------
GROSS MARGIN 18,259 38,209 77,539 125,692
Operating expenses:
Selling, general
and administrative 10,005 14,995 38,881 54,362
Charge for acceleration
of stock options -- 5,463 -- 5,463
Research and development 4,648 4,751 20,010 18,937
Amortization of
intangible assets 303 231 1,211 919
Restructuring charges 614 905 6,855 3,632
(Gain) loss on dispositions
of assets (383) 550 (383) 1,097
Impairment of long-lived
assets 1,506 -- 2,506 --
-------- -------- -------- --------
Total operating expenses 16,693 26,895 69,080 84,410
-------- -------- -------- --------
OPERATING INCOME 1,566 11,314 8,459 41,282
Interest and other income
(expense), net (366) 783 (187) 1,564
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 1,200 12,097 8,272 42,846
Provision for income taxes 302 3,937 2,636 13,623
-------- -------- -------- --------
NET INCOME $ 898 $ 8,160 $ 5,636 $ 29,223
======== ======== ======== ========
Earnings per share
Basic $ 0.02 $ 0.13 $ 0.10 $ 0.47
======== ======== ======== ========
Diluted $ 0.01 $ 0.12 $ 0.09 $ 0.45
======== ======== ======== ========
Common and common
equivalent shares
outstanding:
Basic 59,693 63,013 59,168 61,639
Diluted 62,574 66,688 61,987 65,233
MICROSEMI CORPORATION
Schedule Reconciling Non-GAAP Income to GAAP Income
(in thousands, except per share amounts)
Quarter ended Fiscal year ended
------------------ ------------------
Sept. 26, Oct. 2, Sept. 26, Oct. 2,
2004 2005 2004 2005
------- ------- ------- -------
GAAP NET INCOME $ 898 $ 8,160 $ 5,636 $29,223
======= ======= ======= =======
The non-GAAP amounts have
been adjusted to exclude
the following items:
Excluded from cost of sales
Transitional idle capacity
and inventory abandonments $ 8,203 $ 566 $13,091 $ 9,580
Excluded from operating
expenses
Amortization of intangible
assets 303 231 1,211 919
(Gain) loss on disposition
of assets (383) 550 (383) 1,097
Impairment of long lived
assets 1,506 -- 2,506 --
Charge for acceleration of
stock options -- 5,463 -- 5,463
Restructuring and other
special charges 1,106 1,799 7,347 5,576
------- ------- ------- -------
10,735 8,609 23,772 22,635
Income tax effect 3,637 2,689 7,939 7,280
------- ------- ------- -------
Net effect of adjustments to
GAAP net income $ 7,098 $ 5,920 $15,833 $15,355
======= ======= ======= =======
NON-GAAP NET INCOME $ 7,996 $14,080 $21,469 $44,578
======= ======= ======= =======
Schedule Reconciling Reported Financial Ratios
Quarter ended
------------------------------------------
September 26, July 3, October 2,
2004 2005 2005
------------ ------------ ------------
GAAP gross margin 26.9 percent 44.8 percent 48.3 percent
Effect of reconciling
items on gross margin 12.0 percent 1.8 percent 0.7 percent
Non-GAAP gross margin 38.9 percent 46.6 percent 49.0 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, non-recurring charges and credits, and special
charges and credits, as determined by Microsemi. We believe that
non-GAAP results may give a helpful indication of Microsemi's
baseline performance from its ongoing operations before restructuring
related and other gains, losses or other charges that are considered
by Microsemi's 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 measures 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 Fiscal year ended
------------------- -------------------
Sept. 26, Oct. 2, Sept. 26, Oct. 2,
2004 2005 2004 2005
-------- -------- -------- --------
NET SALES $ 67,985 $ 79,154 $244,805 $297,440
Cost of sales 41,523 40,379 154,175 162,168
-------- -------- -------- --------
GROSS MARGIN 26,462 38,775 90,630 135,272
Operating expenses:
Selling, general
and administrative 10,005 14,101 38,881 52,418
Research and development 4,648 4,751 20,010 18,937
-------- -------- -------- --------
Total operating expenses 14,653 18,852 58,891 71,355
-------- -------- -------- --------
OPERATING INCOME 11,809 19,923 31,739 63,917
Interest and other
income, net 126 783 305 1,564
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 11,935 20,706 32,044 65,481
Provision for income taxes 3,939 6,626 10,575 20,903
-------- -------- -------- --------
NON-GAAP NET INCOME $ 7,996 $ 14,080 $ 21,469 $ 44,578
======== ======== ======== ========
Non-GAAP earnings per
share:
Basic $ 0.13 $ 0.22 $ 0.36 $ 0.72
Diluted $ 0.13 $ 0.21 $ 0.35 $ 0.68
Common and common equivalent
shares outstanding:
Basic 59,693 63,013 59,168 61,639
Diluted 62,574 66,688 61,987 65,233
MICROSEMI CORPORATION
Condensed Unaudited Consolidated Balance Sheets
(in thousands)
September 26, October 2,
2004 2005
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 45,118 $ 98,149
Accounts receivable, net 42,219 53,233
Inventories 54,555 55,917
Deferred income taxes 8,490 11,957
Other current assets 1,979 2,101
-------- --------
Total current assets 152,361 221,357
Property and equipment, net 59,098 58,366
Deferred income taxes 8,772 9,627
Goodwill 3,258 3,258
Other intangible assets, net 5,411 4,493
Other assets 4,098 4,069
-------- --------
TOTAL ASSETS $232,998 $301,170
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 43,904 $ 43,000
Long-term liabilities 4,217 3,617
Shareholders' equity 184,877 254,553
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $232,998 $301,170
======== ========