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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-Q
 
x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the Quarterly Period Ended June 30, 2002
 
or
 
¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from ____ to ____
 
Commission File No. 0-8866
 

 
MICROSEMI CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
(State or other jurisdiction of
incorporation or organization)
 
2381 Morse Avenue, Irvine, California
(Address of principal executive offices)
 
95-2110371
(I.R.S. Employer
Identification No.)
 
92614
(Zip Code)
 
(949) 221-7100
(Registrant’s telephone number, including area code)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     X     No           
 
The number of shares of the issuer’s Common Stock, $0.20 par value, outstanding on June 30, 2002 was 28,885,040.
 


PART I—FINANCIAL INFORMATION
 
Item 1.    FINANCIAL STATEMENTS
 
The unaudited consolidated income statements for the quarter and nine months ended June 30, 2002 of Microsemi Corporation and Subsidiaries (“Microsemi” or the “Company”), the Company’s unaudited consolidated statements of cash flows for the nine months ended June 30, 2002, and the comparative unaudited consolidated financial information for the corresponding periods of the prior year, together with the Company’s unaudited condensed balance sheets as of June 30, 2002 and as of September 30, 2001, are attached hereto and incorporated herein.

2


MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Balance Sheets
(amounts in thousands, except par value per share)
 
    
September 30,
2001

    
June 30,
2002

 
ASSETS
                 
Current assets:
                 
Cash and cash equivalents
  
$
24,808
 
  
$
26,340
 
Accounts receivable less allowance for doubtful accounts, $3,584 at September 30, 2001 and
$4,086 at June 30, 2002
  
 
37,950
 
  
 
31,111
 
Inventories
  
 
58,889
 
  
 
56,870
 
Deferred income taxes
  
 
12,277
 
  
 
12,276
 
Other current assets
  
 
2,072
 
  
 
2,520
 
    


  


Total current assets
  
 
135,996
 
  
 
129,117
 
Property and equipment, net
  
 
63,380
 
  
 
65,279
 
Deferred income taxes
  
 
1,671
 
  
 
1,671
 
Goodwill and other intangible assets, net
  
 
37,306
 
  
 
34,831
 
Other assets
  
 
1,818
 
  
 
1,489
 
    


  


TOTAL ASSETS
  
$
240,171
 
  
$
232,387
 
    


  


LIABILITIES AND STOCKHOLDERS’ EQUITY
                 
Current liabilities:
                 
Notes payable
  
$
9,766
 
  
$
9,879
 
Current maturities of long-term debt
  
 
3,573
 
  
 
211
 
Accounts payable
  
 
11,385
 
  
 
8,408
 
Accrued liabilities
  
 
22,158
 
  
 
17,024
 
Income taxes payable
  
 
6,862
 
  
 
5,194
 
    


  


Total current liabilities
  
 
53,744
 
  
 
40,716
 
    


  


Long-term debt
  
 
6,078
 
  
 
4,373
 
    


  


Other long-term liabilities
  
 
4,960
 
  
 
4,631
 
    


  


Commitments and contingencies (Note 3)
                 
Stockholders’ equity:
                 
Common stock, $.20 par value; authorized 100,000 shares;issued and outstanding 28,248 and
28,885 at September 30,2001 and June 30, 2002, respectively
  
 
5,650
 
  
 
5,777
 
Capital in excess of par value of common stock
  
 
110,729
 
  
 
115,580
 
Retained earnings
  
 
60,096
 
  
 
62,460
 
Accumulated other comprehensive loss
  
 
(1,086
)
  
 
(1,150
)
    


  


Total stockholders’ equity
  
 
175,389
 
  
 
182,667
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
240,171
 
  
$
232,387
 
    


  


 
The accompanying notes are an integral part of these statements.

3


MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Income Statements
(amounts in thousands, except earnings per share)
 
    
Quarter Ended

 
    
July 1,
2001

  
June 30,
2002

 
Net sales
  
$
60,089
  
$
51,466
 
Cost of sales
  
 
39,623
  
 
35,740
 
    

  


Gross profit
  
 
20,466
  
 
15,726
 
    

  


Operating expenses:
               
Selling, general and administrative
  
 
9,464
  
 
9,895
 
Amortization of goodwill and other intangible assets
  
 
670
  
 
965
 
Research and development
  
 
4,094
  
 
6,116
 
Restructuring charges
  
 
—  
  
 
335
 
Asset impairments
  
 
—  
  
 
80
 
    

  


Total operating expenses
  
 
14,228
  
 
17,391
 
    

  


Operating income (loss)
  
 
6,238
  
 
(1,665
)
    

  


Other income (expense):
               
Interest, net
  
 
162
  
 
(159
)
Other, net
  
 
221
  
 
2,928
 
    

  


Total other income
  
 
383
  
 
2,769
 
    

  


Income before income taxes
  
 
6,621
  
 
1,104
 
Provision for income taxes
  
 
2,185
  
 
364
 
    

  


Net income
  
$
4,436
  
$
740
 
    

  


Earnings per share:
               
—Basic
  
$
0.16
  
$
0.03
 
    

  


—Diluted
  
$
0.15
  
$
0.03
 
    

  


Weighted average common and common equivalent shares outstanding:
               
—Basic
  
 
27,992
  
 
28,877
 
    

  


—Diluted
  
 
29,820
  
 
29,423
 
    

  


 
The accompanying notes are an integral part of these statements.

4


MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Income Statements
(amounts in thousands, except earnings per share)
 
    
Nine Months Ended

 
    
July 1,
2001

  
June 30,
2002

 
Net sales
  
$
186,225
  
$
163,453
 
Cost of sales
  
 
125,232
  
 
107,554
 
    

  


Gross profit
  
 
60,993
  
 
55,899
 
    

  


Operating expenses:
               
Selling, general and administrative
  
 
29,348
  
 
29,102
 
Amortization of goodwill and other intangible
  
 
2,029
  
 
2,901
 
Research and development
  
 
11,291
  
 
17,063
 
Restructuring charges
  
 
—  
  
 
4,070
 
Asset impairments
  
 
—  
  
 
1,687
 
    

  


Total operating expenses
  
 
42,668
  
 
54,823
 
    

  


Operating income
  
 
18,325
  
 
1,076
 
    

  


Other income (expense):
               
Interest, net
  
 
518
  
 
(489
)
Other, net
  
 
267
  
 
2,942
 
    

  


Total other income
  
 
785
  
 
2,453
 
    

  


Income before income taxes
  
 
19,110
  
 
3,529
 
Provision for income taxes
  
 
6,306
  
 
1,165
 
    

  


Net income
  
$
12,804
  
$
2,364
 
    

  


Earnings per share:
               
—Basic
  
$
0.46
  
$
0.08
 
    

  


—Diluted
  
$
0.44
  
$
0.08
 
    

  


Weighted average common and common equivalent shares outstanding:
               
—Basic
  
 
27,882
  
 
28,605
 
    

  


—Diluted
  
 
29,512
  
 
29,799
 
    

  


 
The accompanying notes are an integral part of these statements.

5


MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
(amounts in thousands)
 
    
Nine Months Ended

 
    
July 1,
2001

    
June 30,
2002

 
Cash flows from operating activities:
                 
Net income
  
$
12,804
 
  
$
2,364
 
Adjustments to reconcile net income to net cash provided by operating activities:
                 
Depreciation and amortization
  
 
9,192
 
  
 
10,593
 
Bad dept expense
  
 
(1,866
)
  
 
663
 
Gain on retirement and disposition of assets
  
 
(400
)
  
 
(3,088
)
Impairment of assets
  
 
—  
 
  
 
1,679
 
Stock based compensation for services provided
  
 
459
 
  
 
—  
 
Changes in assets and liabilities, net of dispositions:
                 
Accounts receivable
  
 
1,175
 
  
 
5,025
 
Inventories
  
 
2,821
 
  
 
(1,536
)
Other current assets
  
 
(2,254
)
  
 
(448
)
Other assets
  
 
1,350
 
  
 
—  
 
Accounts payable
  
 
(2,700
)
  
 
(2,977
)
Accrued liabilities
  
 
(2,359
)
  
 
(4,851
)
Income taxes payable
  
 
(2,999
)
  
 
(1,668
)
    


  


Net cash provided by operating activities
  
 
15,223
 
  
 
5,756
 
    


  


Cash flows from investing activities:
                 
Purchases of property and equipment
  
 
(10,665
)
  
 
(16,158
)
Changes in other assets
  
 
259
 
  
 
(227
)
Proceeds from sales of assets
  
 
1,020
 
  
 
12,643
 
    


  


Net cash used in investing activities
  
 
(9,386