-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FyrL8FVW5kJ0xZweQPexfF6fyaYxhVYJvqrMlWLEadI2p501dZ5lG7I3bI8pD9az ACMDJREjlt9MhISImUb5ig== 0001017062-00-000223.txt : 20000211 0001017062-00-000223.hdr.sgml : 20000211 ACCESSION NUMBER: 0001017062-00-000223 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000102 FILED AS OF DATE: 20000210 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: SEC FILE NUMBER: 000-08866 FILM NUMBER: 532226 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 FORM 10-Q FOR PERIOD ENDING 01/02/2000 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 January 2, 2000 ---------------------------------------------- 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 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 outstanding of the issuer's Common Stock, $.20 par value, on January 24, 2000 was 10,930,504. PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS The unaudited consolidated financial information for the quarter ended January 2, 2000 of Microsemi Corporation and Subsidiaries ("Microsemi" or the "Company") and the comparative unaudited consolidated financial information for the corresponding period of the prior year, together with the balance sheet as of October 3, 1999 are attached hereto and incorporated herein. MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Balance Sheets (amounts in 000's)
January 2, October 3, 2000 1999 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 7,712 $ 7,624 Accounts receivable less allowance for doubtful accounts, $3,958 at January 2, 2000 and $3,805 at October 3, 1999 29,684 31,775 Inventories 55,630 56,925 Deferred income taxes 7,282 7,282 Other current assets 1,774 2,128 --------------- -------------- Total current assets 102,082 105,734 --------------- -------------- Property and equipment, net 54,710 54,946 Deferred income taxes 862 862 Goodwill and other intangible assets, net 12,551 12,218 Other assets 7,592 7,841 --------------- -------------- TOTAL ASSETS $ 177,797 $ 181,601 =============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable to banks and other $ 15,550 $ 18,545 Current maturities of long-term debt 8,888 8,422 Accounts payable 10,555 11,247 Accrued liabilities 17,367 17,292 Income taxes payable 5,866 7,178 --------------- -------------- Total current liabilities 58,226 62,684 --------------- -------------- Long-term debt 29,605 31,381 --------------- -------------- Other long-term liabilities 6,556 5,092 --------------- -------------- Commitments and contingencies Stockholders' equity: Common stock, $.20 par value; authorized 20,000 shares; issued 10,920 at January 2, 2000 and October 3, 1999 2,184 2,184 Capital in excess of par value of common stock 46,695 46,695 Retained earnings 35,527 34,561 Accumulated other comprehensive loss (996) (996) --------------- -------------- Total stockholders' equity 83,410 82,444 --------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 177,797 $ 181,601 =============== ==============
The accompanying notes are an integral part of these statements. MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Income Statements (amounts in 000's, except earnings per share)
Quarter Ended Quarter Ended January 2, 2000 January 3, 1999 --------------- ---------------- Net sales $ 54,588 $ 39,417 Cost of sales 41,020 28,556 ------------------ ---------------- Gross profit 13,568 10,861 ------------------ ---------------- Operating expenses: Selling and administrative 8,426 6,115 Amortization of goodwill and intangible assets 394 285 Research and development 2,345 348 ------------------ ---------------- Total operating expenses 11,165 6,748 ------------------ ---------------- Income from operations 2,403 4,113 ------------------ ---------------- Other income (expense): Interest (1,048) (552) Other 87 116 ------------------ ---------------- Total other expense (961) (436) ------------------ ---------------- Income before income taxes 1,442 3,677 Provision for income taxes 476 1,397 ------------------ ---------------- Net income $ 966 $ 2,280 ================== ================ Earnings per share: -Basic $ 0.09 $ 0.20 ------------------ ---------------- -Diluted $ 0.09 $ 0.20 ================== ================ Weighted average common shares outstanding: -Basic 10,920 11,408 -Diluted 11,027 11,523
The accompanying notes are an integral part of these statements. MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Statements of Cash Flows (amounts in 000's)
Quarter Ended Quarter Ended January 2, 2000 January 3, 1999 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 966 $ 2,280 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,887 1,749 Allowance for doubtful accounts 153 (437) Changes in assets and liabilities: Accounts receivable 1,938 2,209 Inventories 1,295 (1,612) Other current assets 354 (336) Other assets - (1,695) Accounts payable (692) (1,243) Accrued liabilities 75 (881) Income taxes payable 188 1,284 ------------------ ------------------ Net cash provided by operating activities 7,164 1,318 ------------------ ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Investment in an unconsolidated affiliate (251) - Purchases of property and equipment (2,255) (1,029) Change in other assets (229) - ------------------ ------------------ Net cash used in investing activities (2,735) (1,029) ------------------ ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in notes payable to banks and other (2,995) 1,335 Payments on long-term debt (1,310) (1,068) Decrease in other long-term liabilities (36) (26) Repurchases of common stock - (2,785) Exercise of employee stock options - 16 ------------------ ------------------ Net cash used in financing activities (4,341) (2,528) ------------------ ------------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH - (7) ------------------ ------------------ Net increase (decrease) in cash and cash equivalents 88 (2,246) Cash and cash equivalents at beginning of period 7,624 9,610 ------------------ ------------------ Cash and cash equivalents at end of period $ 7,712 $ 7,364 ================== ================== Cash paid during the periods for: Interest $ 1,272 $ 637 ------------------ ------------------ Income taxes $ 92 $ 140 ================== ==================
The accompanying notes are an integral part of these statements. MICROSEMI CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS January 2, 2000 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 quarter of the current fiscal year are not necessarily indicative of the results to be expected for the full year. The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. The unaudited consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto in the Annual Report on Form 10-K for the fiscal year ended October 3, 1999. 2. INVENTORIES For interim reporting purposes, cost of goods sold and inventories are estimated based upon the use of the gross profit method. Inventories used in the computation of cost of goods sold were:
January 2, 2000 October 3, 1999 --------------- --------------- (amounts in 000's) Raw materials $ 12,378 $ 14,002 Work in process 21,171 22,244 Finished goods 22,081 20,679 --------------- --------------- $ 55,630 $ 56,925 =============== ===============
3. CONTINGENCY In Broomfield, Colorado, the owner of a property located adjacent to a manufacturing facility owned by a subsidiary of the Company had filed suit against the subsidiary and other parties, claiming that contaminants migrated to his property, thereby diminishing its value. In August 1995, the subsidiary, together with former owners of the manufacturing facility, agreed to settle the claim and to indemnify the owner of the adjacent property for remediation costs. Although TCE and other contaminants previously used at the facility were present in soil and groundwater on the subsidiary's property, the Company vigorously contested any assertion that the subsidiary was the cause of the contamination. In November 1998, the Company signed an agreement with three former owners of this facility whereby the former owners 1) reimbursed the Company for $530,000 of past costs related to the dispute, 2) assume responsibility for 90% of all future clean-up costs, and 3) indemnify and protect the Company against any and all third-party claims relating to the contamination of the facility. State and local agencies in Colorado are reviewing current data and considering study and cleanup options, and it is not yet possible to predict the future costs for remediation. In the opinion of management, the final outcome of the Broomfield, Colorado environmental matter will not have a material adverse effect on the Company's financial position or results of operations. The Company is involved in various pending litigation arising out of the normal conduct of its business, including those relating to commercial transactions, contracts, and environmental matters. In the opinion of management, the final outcome of these matters will not have a material adverse effect on the Company's financial position or results of operations. 4. COMPREHENSIVE INCOME Effective in the first quarter of fiscal 1999, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes standards for reporting and displaying of comprehensive income and its components in the Company's consolidated financial statements. Comprehensive income is defined in SFAS 130 as the change in equity (net assets) of a business enterprise during the period from transactions and other events and circumstances from non-owner sources. Accumulated other comprehensive loss consists of the change in the cumulative translation adjustment. Total comprehensive income for quarters ended January 2, 2000 and January 3, 1999 was $966,000 and $2,287,000 respectively. 5. EARNINGS PER SHARE Basic earnings per share have been computed based upon the weighted average number of common shares outstanding during the respective periods. Diluted earnings per share have been computed, when the result is dilutive, using the treasury stock method for stock options outstanding during the respective periods. Earnings per share for the quarters ended January 2, 2000 and January 3, 1999 were calculated as follows:
January 2, January 3, 2000 1999 ---------------- -------------- (in 000's, except per share data) BASIC Net income $ 966 $ 2,280 ================ ============== Weighted-average common shares outstanding 10,920 11,408 ================ ============== Basic earnings per share $ 0.09 $ 0.20 ================ ============== DILUTED Net income 966 2,280 ================ ============== Weighted-average common shares outstanding for basic 10,920 11,408 Dilutive effect of stock options 107 115 ---------------- -------------- Weighted-average common shares outstanding on a diluted basis 11,027 11,523 ================ ============== Diluted earnings per share $ 0.09 $ 0.20 ================ ==============
6. RECENTLY ISSUED ACCOUNTING STANDARDS In June 1998, the FASB issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), which will become effective for the Company in fiscal year 2001. SFAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. SFAS 133 is not expected to materially affect the Company's financial position or results of operations. 7. SEGMENT INFORMATION In 1999, the Company adopted SFAS 131. The Company's reportable operating segments are based on geographic location, and the measure of segment profit is income from operations. The Company operates predominantly in a single industry segment as a manufacturer of discrete semiconductors. Geographic areas in which the Company operates include the United States, Ireland, Hong Kong and India. Intergeographic sales primarily represent intercompany sales which are accounted for based on established sales prices between the related companies and are eliminated in consolidation. Financial information by geographic segments is as follows:
Quarter Ended Quarter Ended January 2, 2000 January 3, 1999 ------------------- ------------------- (amounts in 000's) Net sales United States Sales to unaffiliated customers $ 49,311 $ 33,342 Intergeographic sales 4,361 5,016 Europe Sales to unaffiliated customers 4,443 3,980 Intergeographic sales 748 1,201 Asia Sales to unaffiliated customers 834 2,095 Intergeographic sales 964 1,282 Eliminations of intergeographic sales (6,073) (7,499) ------------------- ------------------- 54,588 39,417 =================== =================== Income from operations: United States 2,255 3,695 Europe 148 290 Asia - 128 ------------------- ------------------- Total $ 2,403 $ 4,113 =================== =================== January 2, 2000 October 3, 1999 ------------------- ------------------- (amounts in 000's) Identifiable assets: United States $ 162,983 $ 166,429 Europe 8,129 8,019 Asia 6,685 7,153 ------------------- ------------------- Total $ 177,797 $ 181,601 =================== =================== Capital expenditures: United States $ 2,216 $ 7,712 Europe 21 160 Asia 18 60 ------------------- ------------------- Total $ 2,255 $ 7,932 =================== =================== Depreciation and amortization: United States $ 2,028 $ 8,334 Europe 46 169 Asia 72 315 ------------------- ------------------- Total $ 2,146 $ 8,818 =================== ===================
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Quarterly Report on Form 10-Q includes current beliefs, expectations and other forward looking statements, the realization of which may be impacted by certain important factors discussed below or under "Important Factors Related to Forward-Looking Statements and Associated Risks" and in Form 10-K for the fiscal year ended October 3, 1999. (See Part I, Item 1 and Item 3, and Part II, Item 5, Item 7 and Item 8 and elsewhere therein). The Management's Discussion and Analysis of Financial Condition and Results of Operations and the unaudited consolidated financial statements and notes should be read in conjunction with the Management's Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes thereto in the Annual Report on Form 10-K for the fiscal year ended October 3, 1999. INTRODUCTION - ------------ Microsemi Corporation is a global supplier of commercial and high-reliability analog integrated circuits and power and signal discrete semiconductors serving the satellite, telecommunications, computer and peripherals, military/aerospace, industrial/commercial, and medical markets. The Company's analog and mixed-signal integrated circuit products ("ICs") offer light, sound and power management for desktop and mobile computing platforms as well as other power control applications. Power management generally refers to a class of standard linear integrated circuits ("SLICs") which perform voltage regulation and reference in most electronic systems. The definition of power management has broadened in recent years to encompass other devices and modules, often application specific standard products ("ASSPs"), which address particular aspects of power management, such as audio or display related ICs. This business is composed of both a core platform of traditional SLICs, such as low dropout regulators ("LDOs") and pulse width modulators ("PWMs"), and differentiated ASSPs such as backlight inverters, audio amplification ICs and small computer standard interface ("SCSI") terminators. Major discrete products are silicon rectifiers, zener diodes, low leakage and high voltage diodes, temperature compensated zener diodes, transistors and a family of subminiature high power transient suppressor diodes. The Company also manufactures discrete semiconductors for commercial applications, such as automatic surge protectors, transient suppressor diodes used for telephone applications and computer switching diodes used in computer systems. A partial list of applications of the Company's discrete semiconductor products includes: heart pacer transient shock protector diodes (where the Company believes it is the leading supplier in that market), low leakage diodes, transistors used in jet aircraft engines and high performance test equipment, high temperature diodes used in oil drilling sensing elements operating at 200 degrees centigrade, temperature compensated zener or rectifier diodes used in missile systems, power transistors and other electronic systems. The Company's integrated circuit products are used in computer and data storage, lighting, automotive, telecommunications, test instruments, defense and space equipment, high-quality sound reproduction and data transfer. RESULTS OF OPERATIONS FOR THE QUARTER ENDED JANUARY 2, 2000 COMPARED TO THE - --------------------------------------------------------------------------- QUARTER ENDED JANUARY 3, 1999. - ------------------------------ Net sales for the first quarter of fiscal year 2000 increased $15,171,000 to $54,588,000, from $39,417,000 for the first quarter of fiscal year 1999. The increase includes higher sales of our power management and RF products to the telecommunications and computer/peripheral markets. The increase in sales for the first quarter of fiscal year 2000 included $17,389,000 from the LinFinity Microelectronics, Inc. ("LinFinity") and Microsemi Microwave Products (MMP) divisions, which were acquired in April and June 1999. Excluding sales from LinFinity and MMP, sales for the first quarter of current fiscal year decreased $2,218,000 compared to the same quarter of last year. This decrease was primarily due to lower sales of commercial satellite products. Gross profit increased $2,707,000 to $13,568,000 for the first quarter of fiscal year 2000 from $10,861,000 for the first quarter of fiscal year 1999. However, gross margin percentage for the first quarter of fiscal year 2000 was 24.9%, down from 27.6% in the first quarter of last year. Gross profit in the first quarter of fiscal year 2000 included $5,736,000 from the LinFinity and MMP divisions. Excluding gross profit from LinFinity and MMP, gross profit for the first quarter of current year decreased $3,029,000 compared to the same quarter of last year. This decrease and the decline in gross profit percentage to 21.3% (excluding LinFinity and MMP) were due to lower capacity utilization and shipments in satellite business. Selling and administrative expenses increased $2,311,000 to $8,426,000 for the first quarter of fiscal year 2000 compared to the corresponding period of the prior year. The increase was primarily due to the additions of LinFinity and MMP. Research and development for the first quarter of fiscal year 2000 increased $1,997,000 to $2,345,000 from $348,000 for the first quarter of fiscal year 1999. The increase was due to higher spending to develop power management and RF products for telecommunications, medical and computer markets. Interest expense increased $496,000 due to increases in borrowings to finance the LinFinity and MMP acquisitions. The effective income tax rates of 33% and 38% in the quarters ended January 2, 2000 and January 3, 1999, respectively, were the combined result of taxes computed on consolidated income. The lower effective tax rate in the current quarter is primarily attributable to adjustments to accrual rate due in significant part to a higher proportion of income earned within lower tax rate jurisdictions. CAPITAL RESOURCES AND LIQUIDITY - ------------------------------- Net cash provided by operating activities was $7,164,000 and $1,318,000 for the first quarters of fiscal years 2000 and 1999, respectively. The increase in cash provided by operating activities was primarily attributable to changes in earnings, accounts receivable, inventories and other assets. Net cash used in investing activities was $2,735,000 and $1,029,000 for the first quarters of fiscal years 2000 and 1999, respectively. The increase was primarily due to a higher level of purchases of property and equipment. Net cash used in financing activities was $4,341,000 and $2,528,000 for the first quarters of fiscal years 2000 and 1999, respectively. The cash used in financing activities in the first quarter of fiscal year 2000 was primarily a result of payments on the Company's debt. The net cash used in financing activities in the first quarter of fiscal year 1999 was primarily a result of the repurchases of the Company's common stock. Microsemi Corporation's operations in the quarter ended January 2, 2000 were funded with internally generated funds and borrowings under the Company's revolving line of credit, which expires in March 2003. Under this line of credit, the Company can borrow up to $30,000,000. As of January 2, 2000, $15,500,000 was borrowed and $10,100,000 was available under this credit facility. At January 2, 2000, the Company had $7,712,000 in cash and cash equivalents. The Company is committed by the terms of its revolving line of credit and other credit facilities to make debt service payments on its outstanding indebtedness. Based upon information currently available, the Company believes that it can meet its current operating cash and debt service requirements with internally generated funds together with its available borrowings. IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS - ---------------------------------------------------------------------------- Other than historical information herein, this Form 10-Q is comprised of forward-looking statements, which are based on current expectations of the Company's management and involve a number of risks and uncertainties. The forward-looking statements included herein are based on, among other items, current assumptions that the Company will be able to meet its current operating cash and debt service requirements with internally generated funds and its available line of credit, that it will be able to successfully resolve disputes and other business matters as anticipated, that competitive conditions within the semiconductor, surface mount and custom diode assembly industries will not change materially or adversely, that the Company will retain existing key personnel, that the Company's forecasts will reasonably anticipate market demand for its products, and that there will be no materially adverse change in the Company's operations or business. Adverse changes could result from any number of factors, including fluctuations in economic conditions, potential effects of inflation, lack of earnings visibility, dependence upon a small number of customers or markets, dependence upon suppliers, future capital needs, rapid technological changes, difficulties integrating acquired businesses, ability to realize cost savings or productivity gains, potential cost increases, dependence on key personnel, difficulties regarding hiring and retaining qualified personnel in a competitive labor market, risks of doing business in international markets, and problems of third parties. Other factors that could cause results to vary materially from current expectations are discussed elsewhere in this Form 10-Q or in the Company's Form 10-K filed with the Securities and Exchange Commission for the prior fiscal year. Assumptions relating to the foregoing involve judgments that are difficult to predict accurately and are subject to many factors that can materially affect results. Forecasting and other management decisions are subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and business developments, the impact of which may cause the Company to alter its forecasts, which may in turn affect the Company's results. In light of the factors that can materially affect the forward-looking information included herein, investors are cautioned against placing undue reliance thereon. The inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives or plans of the Company will be achieved, and the Company does not undertake to update such information. Additional factors that could cause results to vary materially from current expectations are discussed under the heading "Important factors related to forward-looking statements and associated risks" in the Company's annual report in the Form 10-K as filed with the Securities and Exchange Commission in December 1999, and elsewhere in that Form 10-K, including but not limited to under the headings, "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the notes to the financial statements. ORDER BACKLOG - ------------- The Company's consolidated order backlog was $69,000,000 at January 2, 2000, compared to $51,000,000 at January 3, 1999 and $66,700,000 at October 3, 1999. The Company's backlog as of any particular date may not be representative of actual sales for any succeeding period because lead times for the release of purchase orders depend upon the scheduling practices of individual customers, the delivery times of new or non-standard products can be affected by scheduling factors and other manufacturing considerations, the rate of booking new orders can vary significantly from month to month, and the possibility of customer changes in delivery schedules, ordering practices, or cancellations of orders. The Company receives minimal notice of some changes that materially affect backlog. YEAR 2000 READINESS DISCLOSURE - ------------------------------ The information below constitutes a "Year 2000 Readiness Disclosure" for purposes of the Year 2000 Information and Readiness Disclosure Act. Microsemi made certain investments in its equipment and business system and application software to ensure the Company is year 2000 ("Y2K") compliant. The Company estimates that the expenses to date for the Y2K project have been approximately $1,800,000. Y2K issues did not have any significant impact on the operations of the Company. However, the Company continues to monitor its operations for any possible adverse effect. Any undetected Y2K issues could result in material adverse effects on the Company, such as failure to efficiently utilize manufacturing capacity, shipping delays, loss of critical data, disrupted communications, product defects, inventory write-offs, waste of inventory and supplies, personal injury, difficulties in managing its operations, errors in accounting, and such indirect adverse effects as claims by third parties against the Company that may relate thereto. In addition, if Y2K problems are experienced by any of the Company's significant customers, suppliers, public utilities, service providers or business partners, or other third parties, this could cause or contribute to delays or interruptions in placing orders, or in delivery of products or services to the Company, or in collection of receivables, or in interruptions in the Company's electrical or telecommunications utilities, such delays or interruptions could have a material adverse effect on the Company's business, financial condition, results of operations and cash flows. In addition, insurance coverage for the risks described above may be unavailable. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Inapplicable. PART II - OTHER INFORMATION Item 1. Legal Proceedings ----------------- Inapplicable Item 2. Changes in Securities --------------------- None Item 3. Defaults Upon Senior Securities ------------------------------- Inapplicable Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibit: Exhibit 27 Unaudited Financial Data Schedule for the three months ended January 2, 2000. (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: /s/ DAVID R. SONKSEN --------------------- David R. Sonksen Vice President - Finance and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer and duly authorized to sign on behalf of the Registrant) DATED: February 9, 2000 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS OCT-01-2000 OCT-04-1999 JAN-02-2000 7,654 58 33,642 3,958 55,630 102,082 104,192 49,482 177,797 58,226 38,493 0 0 2,184 46,695 177,797 54,588 54,588 41,020 41,020 (87) 0 1,048 1,442 476 966 0 0 0 966 .09 .09
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