-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, AMPLT4yoBeQIT/gF0lwDNtgzYrr7CZB5Y5vuUWMIS71lpPoJar25eZv3HWORCG8D LzIARszS6blNXmHRmdHxxw== 0000310568-95-000013.txt : 19950215 0000310568-95-000013.hdr.sgml : 19950215 ACCESSION NUMBER: 0000310568-95-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950101 FILED AS OF DATE: 19950214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICROSEMI CORP CENTRAL INDEX KEY: 0000310568 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 952110371 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08866 FILM NUMBER: 95510919 BUSINESS ADDRESS: STREET 1: 2830 S FAIRVIEW ST STREET 2: PO BOX 26890 CITY: SANTA ANA STATE: CA ZIP: 92704 BUSINESS PHONE: 7149798220 FORMER COMPANY: FORMER CONFORMED NAME: MICROSEMICONDUCTOR CORP DATE OF NAME CHANGE: 19830323 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Reports Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Period Ended January 1, 1995 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 95-2110371 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2830 South Fairview Street, Santa Ana, California 92704 (Address of principal executive offices) (Zip Code) (714) 979-8220 (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 month period (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 outstanding of the issuer's Common Stock, $.20 par value, on February 3, 1995 was 7,623,271. PART I - FINANCIAL INFORMATION Item 1. Financial Statements The financial information for the quarter ended January 1, 1995 and comparative financial information for the prior year, together with the Balance Sheet as of October 2, 1994 are attached hereto and incorporated herein by this reference. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Capital Resources and Liquidity Microsemi Corporation's operations in the first quarter of fiscal year 1995 were funded with internally generated funds and borrowings under the Company's line of credit. Under the current line of credit, the Company can borrow up to $15,000,000, based upon percentages of accounts receivable and inventory balances at certain of the Company's operations. As of January 1, 1995, $8,838,000 was borrowed under this credit facility. A $10,000,000 equipment financing loan was obtained in October 1989; however, in March 1994, the Company refinanced the balance of $1,948,000 then owing on this loan with a new term loan by utilizing funds available under its present line of credit. The new loan requires monthly payments of $100,000 plus interest. At January 1, 1995, the Company had $3,618,000 in cash and cash equivalents. A letter of credit for the Microsemi Santa Ana Industrial Development Bond is carried by a bank in the amount of $5,937,000. This letter of credit guarantees the repayment of a $5,700,000 Industrial Development Bond which was issued in April 1985 at 9.25% per annum through the City of Santa Ana for the construction of improvements and new facilities at the Santa Ana plant. (See also Note 7 to the unaudited consolidated financial statements - Subsequent Events) The Company believes that it can meet its current operating cash requirements and debt service with internally generated funds together with its available borrowing. The Company's revenues continue to be highly dependent on military and aerospace programs. Recent reductions in defense spending had and will continue to have a negative impact on the Company's operations. Furthermore, there have been recent Department of Defense (DOD) announcements of major changes in defense procurement policy, which included official notification, on August 22, 1994, of Department of Defense acquisitions reform to utilize best commercial practices instead of mandatory use of military standard parts. In the past two years, military related business has declined from approximately 60% to 40% of total revenues. This has been more than offset by increases in shipments of commercial, industrial, medical and space related products. In addition, the Company continues to develop commercial applications for its products to offset this decrease. Although the final impact of these most recent changes in Department of Defense procurement practices is not known, management believes that, either through associated cost reductions or increases in shipments of non Department of Defense products, it will not have a significant impact on total future revenues, operations or cash flows. The average collection period on accounts receivable was 55 days for the current three months compared to 57 days for the same period of the last fiscal year. Sales and accounts receivable of the business that was sold in fiscal year 1994 have been excluded from this calculation. The average days sales of products in inventories decreased to 179 days for the first three months of fiscal year 1995 compared to 214 for the corresponding period of fiscal year 1994. This resulted from a lower inventory base, due to the writeoffs of military related inventories in the fourth quarter of fiscal year 1994. Cost of sales and inventories of the business that was sold in fiscal year 1994 have been excluded from this calculation. Order backlog at January 1, 1995 increased to $49,700,000 from $46,300,000 in the prior year. The Company has no significant capital commitments. Certain operations of the Company utilize chemicals considered as hazardous substances. The Company believes that it complies with the procedures required for usage and disposition of the substances; however, improper disposal thereof could have an adverse effect upon the Company's future liquidity or results of operations. RESULTS OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED JANUARY 1, 1995 COMPARED TO THE THIRTEEN WEEKS ENDED JANUARY 2, 1994. Microsemi Corporation is a multinational supplier of high reliability power semiconductors, surface mount and custom diode assemblies for the electronics, computer, telecommunications, defense/aerospace and medical markets. The company's semiconductor products include diodes, transistors and silicon controlled rectifiers(SCR's) which can be used in virtually all electrical and electronic circuits. Typical functions include solid state switching, signal processing, voltage and power regulation, circuit protection and absorption of electrical surges and transient voltage spikes. Technologies for these devices range from the very mature mesa rectifier diodes still used in all power supply applications to the newly designed micro-miniature transient absorbers which are mounted within the cables used to connect computer and telecommunications equipment. Net sales for the first quarter of fiscal year 1995 increased to $27,657,000, or 3%, from $26,929,000 for the first quarter of fiscal year 1994. The increase of $728,000 was due to an increase of $1,643,000 from the continuing businesses as the Company continues to shift more emphasis to the commercial applications of the Company's products, partially offset by the elimination of sales of approximately $915,000 from a subsidiary which was sold in fiscal year 1994. Gross profit increased $212,000, due to an increase of $92,000 from the continuing businesses and to the elimination of $120,000 of gross losses from the business sold in fiscal year 1994. Operating expense for the first quarter of fiscal year 1995 decreased $331,000, compared to the corresponding period of the prior year. The decrease was primarily due to the elimination of operating expenses of the subsidiary that was sold in fiscal 1994. Interest expense decreased $129,000 for the current quarter, compared to the same quarter of the prior fiscal year. This decrease was primarily due to less borrowings to finance operations, resulting from cash generated from profitable operations. The effective tax rate of 38% in the first quarters of fiscal years 1995 and 1994 is the combined result of taxes computed on foreign and domestic income. PART II - OTHER INFORMATION Item 1. Legal Proceedings Inapplicable. Item 2. Changes in Securities Inapplicable. Item 3. Defaults Upon Senior Securities Inapplicable. Item 4. Submission of Matters to a Vote of Security Holders (a) Inapplicable. (b) Inapplicable. (c) Inapplicable. (d) Inapplicable. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: None (b) Reports on Form 8-K: None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MICROSEMI CORPORATION By: David R. Sonksen Vice President - Finance and Chief Financial Officer DATED: February 14, 1995 MICROSEMI CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS PART 1, ITEM 1 January 1, 1995 F-1 MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Balance Sheets (amounts in 000's)
January 1, 1995 October 2, 1994 ASSETS Current assets Cash and equivalents $ 3,618 $ 3,994 Accounts receivable less allowance for doubtful accounts, $2,096 at January 1, 1995 and $2,173 at October 2, 1994 15,612 17,772 Inventories 41,052 40,058 Deferred income taxes 4,076 4,076 Other current assets 1,377 1,197 ------ ------ Total current assets 65,735 67,097 ------ ------ Property and equipment, at cost 51,073 50,776 Less: Accumulated depreciation (27,414) (26,559) ------ ------ 23,659 24,217 ------ ------ Deferred income taxes 1,725 1,725 Other assets 7,180 7,110 ------ ------- $ 98,299 $100,149 ====== ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable to banks and others $ 7,793 $ 9,584 Current maturities of long-term debt 3,490 3,578 Accounts payable and accrued liabilities 16,075 16,879 Income taxes payable 1,702 1,212 Deferred income taxes 716 716 ------ ------- Total current liabilities 29,776 31,969 Deferred income taxes 1,568 1,568 Long-term debt 49,868 50,568 Other long-term liabilities 1,253 1,256 Stockholders' equity Common stock, $.20 par value; authorized 20,000 shares; issued 7,615 shares at January 1, 1995 and 7,595 shares at October 2, 1994 1,523 1,519 Paid-in capital 14,428 14,397 Accumulated deficit (117) (1,128) ------ ------- Total stockholders' equity 15,834 14,788 ------ ------- $ 98,299 $100,149 ====== ======= See accompanying Notes to Unaudited Consolidated Financial Statements. F-2
MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Statements of Operations (amounts in 000's, except earnings per share)
13 Weeks Ended 13 Weeks Ended January 1, 1995 January 2, 1994 Net sales $ 27,657 $ 26,929 Cost of sales 20,653 20,137 ------ ------ Gross profit 7,004 6,792 Operating expenses Selling 1,895 1,789 General and administrative 2,318 2,738 Amortization of goodwill and other intangible assets 49 66 ------ ------ Total operating expenses 4,262 4,593 ------ ------ Income from operations 2,742 2,199 ------ ------ Other income (expense) Interest expense (1,167) (1,296) Interest income 50 - Other 9 (48) Total other expense (1,108) (1,344) ------ ------ Earnings before income taxes 1,634 855 Provision for income taxes 621 324 ------ ------ Net earnings $ 1,013 $ 531 ====== ====== Earnings per share - Primary $ 0.13 $ 0.07 - Fully diluted $ 0.12 $ 0.06 Common and common equivalent shares outstanding - Primary 7,971 7,946 - Fully diluted 11,511 9,013 See accompanying Notes to Unaudited Consolidated Financial Statements.
F-3 MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Statements of Retained Earnings (Accumulated Deficit) (amounts in 000's)
13 Weeks Ended 13 Weeks Ended January 1, 1995 January 2, 1994 Retained earnings (accumulated deficit) at beginning of period $ (1,128) $ 1,007 Net earnings 1,013 531 Translation loss from foreign currency (2) - ------ ----- Retained earnings (accumulated deficit) at end of period $ (117) $ 1,538 See accompanying Notes to Unaudited Consolidated Financial Statements.
F-4 MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Statements of Cash Flows (amounts in 000's)
13 Weeks Ended 13 Weeks Ended January 1, 1995 January 2, 1994 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 1,013 $ 531 Adjustments to reconcile net earnings to net cash provided from operating activities: Depreciation and amortization 900 1,137 Reduction in allowance for doubtful accounts (77) (3) Changes in assets and liabilities: Accounts receivable 2,237 2,325 Inventories (994) (1,003) Other current assets (180) 175 Other assets (117) 83 Accounts payable and accrued liaibilities (804) (1,213) Income taxes payable 490 26 ------ ------ Net cash provided from operating activities 2,468 2,058 ------ ------ CASH FLOWS FROM INVESTING ACTIVITY: Additions to property and equipment (297) (580) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in notes payable to bank and others (1,791) 739 Reduction of long-term debt (788) (1,102) Reduction of other long-term liabilities (3) - Exercise of employee stock options 35 21 ------ ------ Net cash used for financing activities (2,547) (342) ------ ------ Net increase (decrease) in cash and equivalents (376) 1,136 Cash and equivalents at beginning of period 3,994 2,080 Cash and equivalents at end of ------ ------ period $ 3,618 $ 3,216 ====== ====== See accompanying Notes to Unaudited Consolidated Financial Statements.
F-5 MICROSEMI CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS January 1, 1995 1. PRESENTATION OF FINANCIAL INFORMATION The financial information furnished herein is unaudited, but, in the opinion of the management of Microsemi Corporation, includes all adjustments (all of which are normal, recurring adjustments) necessary for a fair presentation of the results of operations for the periods indicated. The results of operations for the first thirteen weeks of the current fiscal year are not necessarily indicative of the results to be expected for the full year. The accompanying consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all informaton and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The financial statements and notes should, therefore, be read in conjunction with the financial statements and notes thereto in the Annual Report for the fiscal year ended October 2, 1994. 2. INVENTORIES For interim reporting purposes, cost of goods sold and inventories are estimated based upon the use of the gross profit method applied to each product line. Inventories used in the computation of cost of goods sold were: January 1, October 2, 1995 1994 (amounts in 000's) Raw materials $ 8,961 $ 9,306 Work in progress 19,717 18,678 Finished goods 12,374 12,074 ------ ------ $ 41,052 $ 40,058 ====== ====== 3. LONG-TERM DEBT Long-term debt consisted of: January 1, October 2, 1995 1994 (amounts in 000's) Industrial Development Bond -bearing interest at 7.875% due May 2000; secured by first deed of trust $ 3,075 $ 3,075 Industrial Development Bond -bearing interest at 9.25% through January 1995, at which time the interest rate will be reset to a rate not to exceed 12%, maturing February 2005; secured by first deed of trust (See Note 7- Subsequent Events) 5,700 5,700 Convertible Subordinated Debentures-bearing interest at 5.875% due 2012 33,281 33,281 Convertible Subordinated Debentures -bearing interest at 10% due 1999 2,000 2,000 Notes payable-bearing interest at ranges of 5-13% due between January 1995 and July 2002 9,302 10,090 ------ ------ 53,358 54,146 Less current portion (3,490) (3,578) ------ ------ $ 49,868 $ 50,568 ====== ====== 4. EARNINGS PER SHARE Earnings per share for the primary basis have been computed based upon the weighted average number of common and common equivalent shares outstanding during the respective periods. Earnings per share for the fully diluted basis have been computed, when the result is dilutive, based upon the assumption that the convertible subordinated debentures had been converted to common stock at the date of issuance, with a corresponding increase in net income to reflect a reduction in related interest expense, net of applicable taxes. 5. STATEMENT OF CASH FLOWS For purposes of the Consolidated Statements of Cash Flows, the Company considers all short-term, highly liquid investments with maturities of three months or less at the date of acquisition to be cash equivalents. Supplementary information 13 weeks ended 13 weeks ended January 1, 1995 January 2, 1994 Cash paid during the period for: (amounts in 000's) Interest $ 755 $ 815 Income taxes $ 123 $ 354 6. DISPOSITIONS On June 8, 1994, the Company completed a transaction with Technology Marketing Incorporated (TMI) to dispose of substantially all of the assets of Omni Technology, Inc. (Omni), a wholly owned subsidiary of the Company. The Company received $200,000 cash, a $300,000 term note receivable, $2,000,000 in 4% redeemable preferred stock and warrants to purchase up to 250,000 shares of TMI's common stock at $1.00 per share. The preferred stock is subject to mandatory redemption over a period of between 10 to 20 years based upon the achievement of certain performance objectives by TMI. No gain or loss was recognized on the transaction. 7. SUBSEQUENT EVENTS Effective February 1, 1995 the Company remarketed its Santa Ana Industrial Development Bond, maturing in February 2005, at a reduced principal amount of $5,350,000 which bears interest at 6.75% per annum. EX-27 2 ARTICLE 5 FIN. DATA SCHEDULE FOR 1ST QUARTER 10-Q
5 1,000 3-MOS OCT-02-1994 OCT-03-1994 JAN-01-1995 3618 0 17708 2096 41052 65735 51073 27414 98299 29776 35281 1523 0 0 0 98299 27657 27657 20653 20653 4262 0 1167 1634 621 1013 0 0 0 1013 .13 .12
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