MICROSEMI CORP - 10-Q Quarterly Report

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 27, 2004

¨	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

95-2110371

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2381 Morse Avenue, Irvine, California 92614

(Address of principal executive offices) (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 ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

The number of shares of the issuer’s Common Stock, $0.20 par value, outstanding on July 22, 2004 was 59,630,184.

PART I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

The unaudited consolidated income statements for the quarter and nine months ended June 27, 2004 of Microsemi Corporation and Subsidiaries (“Microsemi”, “the Company”, “we”, “our”, “ours” and “us”), the unaudited consolidated statements of cash flows for the nine months ended June 27, 2004, and the comparative unaudited consolidated financial information for the corresponding periods of the prior year, together with the balance sheets as of June 27, 2004 (unaudited) and as of September 28, 2003, are included herein.

MICROSEMI CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(amounts in thousands, except per share data)


	September 28, 2003			June 27, 2004
				(Unaudited)
ASSETS

Current assets:
Cash and cash equivalents	$	29,353		$	41,160
Accounts receivable, net of allowance for doubtful accounts, $1,445 at September 28, 2003 and $1,351 at June 27, 2004		28,866			33,837
Inventories		53,679			58,555
Deferred income taxes		5,239			5,239
Other current assets		1,234			2,906

Total current assets		118,371			141,697

Property and equipment, net		62,973			61,444
Deferred income taxes		10,162			10,162
Goodwill		3,258			3,258
Other intangible assets, net		6,622			5,714
Other assets		4,257			4,262

TOTAL ASSETS	$	205,643		$	226,537

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Notes payable	$	121		$	121
Current maturity of long-term debt		89			89
Accounts payable		11,918			14,289
Accrued liabilities		14,910			22,287
Income taxes payable		4,165			5,827

Total current liabilities		31,203			42,613

Long-term debt		449			406

Other long-term liabilities		4,131			3,940

Stockholders’ equity (see Note 10):
Preferred stock, $1.00 par value; authorized 1,000 shares; none issued		—			—
Common stock, $0.20 par value; authorized 100,000 shares; issued and outstanding 58,204 and 59,598 at September 28, 2003 and June 27, 2004, respectively		5,821			11,921
Capital in excess of par value of common stock		120,134			119,023
Retained earnings		43,915			48,653
Accumulated other comprehensive loss		(10	)		(19	)

Total stockholders’ equity		169,860			179,578

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	205,643		$	226,537

The accompanying notes are an integral part of these statements

MICROSEMI CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Income Statements

(amounts in thousands, except earnings per share)


	Quarters Ended
	June 29, 2003		June 27, 2004
Net sales	$	50,534	$	64,130
Cost of sales		34,230		42,282

Gross profit		16,304		21,848

Operating expenses:
Selling, general and administrative		9,351		9,816
Research and development		4,974		5,250
Amortization of intangible assets		303		302
Restructuring charges		—		1,277

Total operating expenses		14,628		16,645

Operating income		1,676		5,203

Other income (expense):
Interest, net		67		56
Other, net		2		(12	)

Total other income		69		44

Income before income taxes		1,745		5,247

Provision for income taxes		576		1,732

NET INCOME	$	1,169	$	3,515

Earnings per share:
Basic	$	0.02	$	0.06

Diluted	$	0.02	$	0.06

Common and common equivalent shares outstanding:
Basic		57,910		59,483

Diluted		59,156		62,608

The accompanying notes are an integral part of these statements.

MICROSEMI CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Income Statements

(amounts in thousands, except earnings per share)


	Nine Months Ended
	June 29, 2003			June 27, 2004
Net sales	$	144,620		$	176,820
Cost of sales		100,560			117,540

Gross profit		44,060			59,280

Operating expenses:
Selling, general and administrative		27,459			28,876
Research and development		14,762			15,362
Amortization of intangible assets		1,016			908
Restructuring charges		686			7,241
Gain on sales of assets, net		(2,393	)		—

Total operating expenses		41,530			52,387

Operating income		2,530			6,893

Other income (expense):
Interest, net		(71	)		197
Other, net		(25	)		(18	)

Total other income (expense)		(96	)		179

Income before income taxes		2,434			7,072
Provision for income taxes		803			2,334

Income before cumulative effect of a change in accounting principle		1,631			4,738

Cumulative effect of a change in accounting principle, net of income taxes		(14,655	)		—

Net income (loss)	$	(13,024	)	$	4,738

Basic and Diluted earnings (loss) per share:
Earnings before cumulative effect of a change in accounting principle	$	0.03		$	0.08
Cumulative effect of a change in accounting principle		(0.25	)		—

Earnings (loss) per share	$	(0.22	)	$	0.08

Common and common equivalent shares outstanding:
-Basic		57,862			58,529

-Diluted		58,550			61,327

The accompanying notes are an integral part of these statements.

MICROSEMI CORPORATION AND SUBSIDIARIES

Unaudited Consolidated Statements of Cash Flows

(amounts in thousands)


	Nine Months Ended
	June 29, 2003			June 27, 2004
Cash flows from operating activities:
Net income (loss)	$	(13,024	)	$	4,738
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		7,936			9,065
Provision for doubtful accounts		220			65
(Gain) loss on dispositions and retirements of assets		(850	)		87
Impairment of goodwill, net of income taxes		14,655			—
Changes in assets and liabilities
Accounts receivable		3,699			(5,036	)
Inventories		(1,002	)		(4,876	)
Other current assets		(120	)		(250	)
Accounts payable		(2,263	)		2,371
Accrued liabilities		(561	)		7,377
Income taxes payable		714			1,662
Other long-term liabilities		(16	)		(191	)

Net cash provided by operating activities		9,388			15,012

Cash flows from investing activities:
Purchases of property and equipment		(8,504	)		(8,137	)
Changes in other assets		1,338			(5	)
Proceeds from sales of assets		3,627			—

Net cash used in investing activities		(3,539	)		(8,142	)

Cash flows from financing activities:

Payments of long-term debt		(3,960	)		(43	)
Exercise of employee stock options		318			4,989

Net cash provided by (used in) financing activities		(3,642	)		4,946

Effect of exchange rate changes on cash		3			(9	)

Net increase in cash and cash equivalents		2,210			11,807
Cash and cash equivalents at beginning of period		23,060			29,353

Cash and cash equivalents at end of period	$	25,