10-Q 1 d10q.txt QUARTERLY REPORT ENDED 04/01/2001 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 April 1, 2001 -------------------------------------------- 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.) 2381 Morse Avenue, Irvine, California 92614 ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (949) 221-7100 ------------------------------------------------------------------------------- (Registrant's telephone number, including area code) 2830 S. Fairview Street, Santa Ana, California 92704 ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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, $.20 par value, outstanding on April 19, 2001 was 13,967,380. PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS The unaudited consolidated financial information for the quarter and six months ended April 1, 2001 of Microsemi Corporation and Subsidiaries ("Microsemi" or the "Company") and the comparative unaudited consolidated financial information for the corresponding periods of the prior year, together with the balance sheet as of October 1, 2000, are attached hereto and incorporated herein. 2 MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Balance Sheets (amounts in thousands, except per share data)
October 1, 2000 April 1, 2001 --------------- ------------- (restated - Note 2) ASSETS Current assets: Cash and cash equivalents $ 30,460 $ 34,100 Accounts receivable less allowance for doubtful accounts, $5,767 at October 1, 2000 and $5,314 at April 1, 2001 33,029 34,980 Inventories 52,553 51,090 Deferred income taxes 8,392 8,392 Other current assets 2,020 3,655 ---------- ---------- Total current assets 126,454 132,217 Property and equipment, net 55,458 57,111 Deferred income taxes 2,688 2,688 Goodwill and other intangible assets, net 22,559 21,231 Other assets 3,639 1,536 ---------- ---------- TOTAL ASSETS $ 210,798 $ 214,783 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 1,037 $ 36 Current maturities of long-term debt 1,230 1,234 Accounts payable 11,489 11,646 Accrued liabilities 23,992 21,963 Income taxes payable 8,549 5,693 ---------- ---------- Total current liabilities 46,297 40,572 ---------- ---------- Long-term debt 9,651 8,980 ---------- ---------- Other long-term liabilities 5,160 5,031 ---------- ---------- Commitments and contingencies (note 3) Stockholders' equity: Preferred stock, 1,000 shares authorized; none issued, 100 shares designated as Series A, $1.00 par value - - Common stock, $.20 par value; authorized 20,000 shares; issued 13,794 at October 1, 2000 and 13,967 at April 1, 2001 2,759 2,793 Capital in excess of par value of common stock 105,161 107,298 Retained earnings 42,807 51,175 Accumulated other comprehensive loss (1,037) (1,066) ---------- ---------- Total stockholders' equity 149,690 160,200 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 210,798 $ 214,783 ========== ==========
The accompanying notes are an integral part of these statements. 3 MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Income Statements (amounts in thousands, except per share data)
Quarter Ended Quarter Ended ------------- ------------- April 2, 2000 April 1, 2001 (restated - Note 2) Net sales $ 60,972 $ 63,131 Cost of sales 43,805 42,578 ------------------- ---------------- Gross profit 17,167 20,553 ------------------- ---------------- Operating expenses: Selling, general and administrative 9,722 9,944 Amortization of goodwill and other intangible assets 509 686 Research and development 2,730 3,774 Acquired in-process research and development 2,510 - ------------------- ---------------- Total operating expenses 15,471 14,404 ------------------- ---------------- Operating income 1,696 6,149 ------------------- ---------------- Other (expense) income: Interest, net (1,333) 198 Other, net (65) 24 ------------------- ---------------- Total other (expense) income (1,398) 222 ------------------- ---------------- Income before income taxes 298 6,371 Provision for income taxes 99 2,102 ------------------- ---------------- Net income $ 199 $ 4,269 =================== ================ Earnings per share: -Basic $ 0.02 $ 0.31 =================== ================ -Diluted $ 0.02 $ 0.29 =================== ================ Weighted average common and common equivalent shares outstanding: -Basic 11,118 13,915 -Diluted 11,809 14,689
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)
Six Months Ended Six Months Ended ------------------ ---------------- April 2, 2000 April 1, 2001 (restated - Note 2) Net sales $115,560 $126,136 Cost of sales 84,816 85,609 -------- -------- Gross profit 30,744 40,527 -------- -------- Operating expenses: Selling, general and administrative 18,148 19,884 Amortization of goodwill and other intangible assets 903 1,359 Research and development 5,075 7,197 Acquired in-process research and development 2,510 - -------- -------- Total operating expenses 26,636 28,440 -------- -------- Operating income 4,108 12,087 -------- -------- Other (expense) income: Interest, net (2,381) 356 Other, net 22 46 -------- -------- Total other (expense) income (2,359) 402 -------- -------- Income before income taxes 1,749 12,489 Provision for income taxes 578 4,121 -------- -------- Net income $ 1,171 $ 8,368 ======== ======== Earnings per share: -Basic $ 0.11 $ 0.60 -Diluted $ 0.10 $ 0.57 ======== ======== Weighted average common and common equivalent shares outstanding: -Basic 11,019 13,913 -Diluted 11,418 14,679
The accompanying notes are an integral part of these statements. 5 MICROSEMI CORPORATION AND SUBSIDIARIES Unaudited Consolidated Statements of Cash Flows (amounts in thousands)
Six Months Ended Six Months Ended April 2, 2000 April 1, 2001 ------------------- ------------------ (restated - Note 2) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,171 $ 8,368 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 5,747 6,063 Provision for doubtful accounts 888 (453) Acquired in-process research and development 2,510 - Changes in assets and liabilities: Accounts receivable (1,710) (1,498) Inventories 377 1,410 Other current assets 332 (1,635) Other assets - 900 Accounts payable 395 157 Accrued liabilities 1,247 (1,030) Income taxes payable 118 (2,842) ------------ ------------ Net cash provided by operating activities 11,075 9,440 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Payment for acquisition (1,548) - Investment in an unconsolidated affiliate (251) - Purchases of property and equipment (5,454) (6,590) Change in other assets 392 863 ------------ ------------ Net cash used in investing activities (6,861) (5,727) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Decrease in notes payable to banks and other (5,007) (1,001) Payments on long-term debt (2,722) (667) Decrease in other long-term liabilities (9) (127) Exercises of employee stock options 2,138 1,751 ------------ ------------ Net cash used in financing activities (5,600) (44) ------------ ------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH (2) (29) ------------ ------------ Net (decrease) increase in cash and cash equivalents (1,388) 3,640 Cash and cash equivalents at beginning of period 7,624 30,460 ------------ ------------ Cash and cash equivalents at end of period $ 6,236 $ 34,100 ============ ============
The accompanying notes are an integral part of these statements. 6 MICROSEMI CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS April 1, 2001 1. PRESENTATION OF FINANCIAL INFORMATION The financial information furnished herein is unaudited, but in the opinion of 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 six months 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 1, 2000. 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:
October 1, 2000 April 1, 2001 ------------------- ----------------- (restated - Note 2) (amounts in thousands) Raw materials $ 12,503 $ 12,623 Work in process 22,239 21,758 Finished goods 17,811 16,709 ------------ ------------- $ 52,553 $ 51,090 ============ =============
During the first quarter of fiscal year 2001, the Company changed its method of determining the cost of inventories at its Scottsdale subsidiary ("Scottsdale") from the last-in, first-out ("LIFO") method to the first-in, first-out ("FIFO") method. The Company believes that the FIFO method is preferable since it will enhance the comparability of the Company's financial statements by changing to the predominant method utilized in its industry and will conform all inventories of the Company to the same accounting method. In addition, Scottsdale has experienced improvements in productivity and permanent declines in inventory costs. Accordingly, the FIFO method will result in a better matching of revenues and costs and measurement of operating results. The Company has also applied to the Internal Revenue Service to change to the FIFO inventory costing method for income tax purposes. As required by Accounting Principles Board Opinion No. 20, Accounting Changes, all previously reported results have been restated to reflect the retroactive application of this accounting change as of the beginning of fiscal year 2000. The effect of the restatement was to increase retained earnings at October 1, 2000 by $39,000. The respective effects on net income for the three-month and six-month periods ended April 2, 2000 were immaterial. 7 3. CONTINGENCY In Broomfield, Colorado, the owner of a property located adjacent to a manufacturing facility owned by a subsidiary of the Company had notified 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 that owner of the adjacent property for remediation costs. Although TCE and other contaminants previously used at the facility are present in soil and groundwater on the subsidiary's property, the Company vigorously contests any assertion that the subsidiary is 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, 2) assumed responsibility for 90% of all future clean-up costs, and 3) agreed to indemnify and protect the Company against any and all third-party claims relating to the contamination of the facility. An Integrated Corrective Action Plan has been submitted to the State of Colorado. State and local agencies in Colorado are reviewing current data and considering study and cleanup options, and it is not yet possible to predict 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, results of operations or cash flows. The Company is involved in various pending litigation matters, arising out of the normal conduct of its business, including from time to time litigation 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, results of operations or cash flows. 4. COMPREHENSIVE INCOME Comprehensive income is defined 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 of the Company for the quarters ended April 2, 2000 and April 1, 2001 was $192,000 and $4,269,000, respectively. Total comprehensive income for the six months ended April 2, 2000 and April 1, 2001 was $1,158,000 and $8,339,000, respectively. 8 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 and giving effect to issuance of shares upon conversion of debt during the respective periods. Earnings per share for the respective quarters and respective six months ended April 2, 2000 and April 1, 2001 were calculated as follows:
Quarter Ended Six Months Ended --------------------------------- ------------------------------ April 2, April 1, April 2, April 1, 2000 2001 2000 2001 -------------- -------------- ------------- ------------- (restated - (restated - Note 2) Note 2) (amounts in thousands, except per share data) BASIC Net income $ 199 $ 4,269 $ 1,171 $ 8,368 ============== ============== ============= ============= Weighted-average common shares outstanding 11,118 13,915 11,019 13,913 ============== ============== ============= ============= Basic earnings per share $ 0.02 $ 0.31 $ 0.11 $ 0.60 ============== ============== ============= ============= DILUTED Net income $ 199 $ 4,269 $ 1,171 $ 8,368 Interest savings from assumed conversions of convertible debt, net of income taxes - 29 - 59 -------------- -------------- ------------- ------------- Net income assuming conversions $ 199 $ 4,298 $ 1,171 $ 8,427 ============== ============== ============= ============= Weighted-average common shares outstanding for basic 11,118 13,915 11,019 13,913 Dilutive effect of stock options 691 607 399 599 Dilutive effect of convertible debt - 167 - 167 -------------- -------------- ------------- ------------- Weighted-average common shares outstanding on a diluted basis 11,809 14,689 11,418 14,679 ============== ============== ============= ============= Diluted earnings per share $ 0.02 $ 0.29 $ 0.10 $ 0.57 ============== ============== ============= =============
6. RECENTLY ISSUED ACCOUNTING STANDARD In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" was issued, which establishes new standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. The Company adopted SFAS No. 133 in fiscal year 2001; however, the adoption of the new statement did not have any material impact on the consolidated results of operations, financial position or cash flows of the Company. 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. 9 The Company operates predominantly in a single industry segment as a manufacturer of discrete semiconductors and whole-circuit solutions. Geographic areas in which the Company operates include the United States, Europe and Asia. 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: Six Months Ended ----------------------------------- April 2, 2000 April 1, 2001 ------------------ ------------- (restated - Note 2) (amounts in thousands) Net sales: United States Sales to unaffiliated customers $105,091 $111,338 Intergeographic sales 8,843 13,608 Europe Sales to unaffiliated customers 8,773 12,995 Intergeographic sales 1,790 2,364 Asia Sales to unaffiliated customers 1,696 1,803 Intergeographic sales 1,799 2,299 Eliminations of intergeographic sales (12,432) (18,271) -------- -------- $115,560 $126,136 ======== ======== Income (loss) from operations: United States $ 3,749 $ 11,425 Europe 366 515 Asia (7) 147 -------- -------- Total $ 4,108 $ 12,087 ======== ======== Capital expenditures: United States $ 5,393 $ 6,434 Europe 21 156 Asia 40 - -------- -------- Total $ 5,454 $ 6,590 ======== ======== Depreciation and amortization: United States $ 5,508 $ 5,829 Europe 93 118 Asia 146 116 -------- -------- Total $ 5,747 $ 6,063 ======== ======== October 1, 2000 April 1, 2001 ------------------ ------------- (restated - Note 2) (amounts in thousands) Identifiable assets: United States $195,693 $198,049 Europe 8,401 10,298 Asia 6,704 6,436 -------- -------- Total $210,798 $214,783 ======== ======== 10 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 adversely impacted by any of the factors discussed below or the additional factors referenced under the heading "Important Factors Related to Forward-Looking Statements and Associated Risks," found below. This Management's Discussion and Analysis of Financial Condition and Results of Operations and the accompanying 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 consolidated financial statements and notes thereto in the Annual Report on Form 10-K for the fiscal year ended October 1, 2000. INTRODUCTION ------------ Microsemi Corporation is a leading designer, manufacturer and marketer of analog, mixed-signal and discrete semiconductors. The Company's semiconductors manage and regulate power, protect against transient voltage spikes and transmit, receive and amplify signals. Microsemi's products include individual components as well as whole-circuit solutions that enhance customer end products by providing battery optimization, reducing size or protecting circuits. Microsemi's commercial products are used in dynamic high growth mobile connectivity applications, including mobile phones and handheld Internet devices, and broadband communications applications such as base stations, wireless LAN, and cable and fiber optic systems. These high growth opportunities have emerged from ongoing capabilities in designing and manufacturing semiconductors for military, satellite and medical applications. The Company serves several end markets of the semiconductor industry. These end markets include battery-operated products, communications and Internet infrastructure, and military and aerospace. Battery-operated products include portable digital assistants (PDAs), mobile phones, portable or implantable medical equipment, hearing aids, notebook computers and wireless web tablets. The Company's diverse customer base includes Motorola, Lockheed Martin, Seagate, Mitsubishi, Guidant, Samsung, Medtronic, Boeing, Palm, Dell and Compaq. Results Of Operations For The Quarter Ended April 2, 2000 Compared To The Quarter Ended April 1, 2001. Net sales increased $2.1 million, from $61.0 million for the second quarter of fiscal year 2000 to $63.1 million for the second quarter of fiscal year 2001. The increase was primarily attributable to higher sales of power management, TVS and RF/Microwave products to the mobile connectivity and telecommunications markets, as well as sales to the military and space/satellite customers, offset by a decline in products sold to the low-end PC and mobile telephone markets. Also, the Company sold the assets of its Micro Commercial Components division ("MCC") and closed this division in June 2000. MCC had revenues of $3.7 million for the quarter ended April 2, 2000. Gross profit increased $3.4 million, from $17.2 million for the second quarter of fiscal year 2000 to $20.6 million for the second quarter of fiscal year 2001. As a percentage of sales, gross profit was 28.2% for the second quarter of fiscal year 2000, compared to 32.6% for the second quarter of fiscal year 2001. This increase was due primarily to higher capacity utilization and the recent shift in revenues from lower-margin commodity products in the computer/peripherals and industrial markets to higher-margin application- specific products in the mobile connectivity, telecommunications, medical and commercial satellite markets which is expected to continue for the remainder of the year. MCC had contributed $0.5 million toward Microsemi's gross profit for the second quarter of fiscal year 2000. Selling, general and administrative expenses increased from $9.7 million for the second quarter of fiscal year 2000 to $9.9 million for the second quarter of fiscal year 2001, primarily due to increased expenditures to support the increase in sales. 11 Research and development expense increased $1.0 million, from $2.7 million for second quarter of fiscal year 2000 to $3.8 million for the second quarter of fiscal year 2001. The increase was primarily due to higher spending to develop power management and RF/Microwave products for the mobile connectivity, telecommunications and medical markets. The effective income tax rate was 33.0% in the quarters ended April 2, 2000 and April 1, 2001, respectively. Results Of Operations For The Six Months Ended April 2, 2000 Compared To The Six Months Ended April 1, 2001. Net sales increased $10.5 million, from $115.6 million for the first six months of fiscal year 2000 to $126.1 million for the first six months of fiscal year 2001. The increase was primarily attributable to higher sales of power management, TVS and RF/Microwave products to the mobile connectivity and telecommunications markets, as well as sales to the military and space/satellite customers, offset by a decline in products sold to the low-end PC and mobile telephone markets. Also, the Company sold the assets of its Micro Commercial Components division ("MCC") and closed this division in June 2000. MCC had revenues of $7.2 million for the six months ended April 2, 2000. Gross profit increased $9.8 million, from $30.7 million for the six months of fiscal year 2000 to $40.5 million for the six months of fiscal year 2001. As a percentage of sales, gross profit was 26.6% for first six months of fiscal year 2000, compared to 32.1% for the corresponding period of fiscal year 2001. This increase was due primarily to higher capacity utilization and the recent shift in revenues from lower-margin commodity products in the computer/peripherals and industrial markets to higher-margin application-specific products in the mobile connectivity, telecommunications, medical and commercial satellite markets which is expected to continue for the remainder of the year. MCC had contributed $1.0 million toward Microsemi's gross profit for the first six months of fiscal year 2000. Selling, general and administrative expenses increased $1.7 million from $18.2 million for the first six months of fiscal year 2000 to $19.9 million for the first six months of fiscal year 2001, primarily due to increased expenditures to support the increase in sales. Research and development expense increased $2.1 million, from $5.1 million for the first six months of fiscal year 2000 to $7.2 million for the first six months of fiscal year 2001. The increase was primarily due to higher spending on development of power management and RF/Microwave products for the mobile connectivity, telecommunications and medical markets. The effective income tax rate was 33.0% in the six months ended April 2, 2000 and April 1, 2001, respectively. Capital Resources And Liquidity Net cash provided by operating activities was $11.1 million and $9.4 million for the first six months of fiscal years 2000 and 2001, respectively. The net cash provided by operating activities was $1.7 million less in the first six months of fiscal year 2001 than had been provided in the same period of fiscal year 2000 as a result of the combined impact of greater net income during the first six months of fiscal year 2001, more than offset by the combined effect of differences in miscellaneous non-cash financial statement items, such as the provision for returns and doubtful accounts, acquired in-process research and development, inventories, other current assets, accrued liabilities and taxes. Net cash used in investing activities was $6.9 million and $5.7 million in the six months ended April 2, 2000 and April 1, 2001, respectively. The net cash used in investing activities was $1.2 million less in the first six months of fiscal year 2001 than it had been in the first six months of fiscal year 2000 primarily due to the payment for an acquisition in fiscal year 2000 partially offset by a higher amount of purchases of property and equipment in the first six months of fiscal year 2001. 12 Net cash used in financing activities was $5.6 million and $0.04 million for the first six months of fiscal years 2000 and 2001, respectively. The net cash used in financing activities was $5.6 million less in the first six months of fiscal year 2001 than it had been in the first six months of fiscal year 2000 primarily as a result of repayments of a larger portion of the Company's debt partially offset by proceeds from exercises of employee stock options in the first six months of fiscal year 2000. Microsemi's operations in the six months ended April 1, 2001 were funded with internally generated funds. The Company has maintained a credit line with a bank, from which it can borrow up to $30 million. The credit line is secured by substantially all of the assets of the Company. This credit line expires in March 2003. As of April 1, 2001, there were no funds borrowed under this credit facility. The credit line includes a facility to issue letters of credit, and $4.1 million was outstanding in the form of letters of credit as of April 1, 2001. At April 1, 2001, Microsemi had $34.1 million in cash and cash equivalents. Based upon information currently available, management believes that Microsemi can meet its current operating cash and debt service requirements with internally generated funds together with its available borrowings. 13 IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS ---------------------------------------------------------------------------- Some of the statements in this report or incorporated by reference are forward- looking, including, without limitation, the statements under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations". These statements include those that contain words like "may," "will," "could," "should," "project," "believe," "anticipate," "expect," "plan," "estimate," "forecast," "potential," "intend," "maintain," "continue" and variations of these words or comparable words. In addition, all of the non- historical information herein is forward-looking, include any statement or implication about a future time, result or other circumstance. Forward-looking statements are not a guarantee of future performance and involve risks and uncertainties. Actual results may differ substantially from the results that the forward-looking statements suggest for various reasons. These forward-looking statements are made only as of the date of this report. Microsemi does not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements included in this report are based on, among other items, current assumptions that Microsemi will be able to meet its current operating cash and debt service requirements, that Microsemi will be able to successfully resolve disputes and other business matters as anticipated, that competitive conditions within the analog, mixed signal and discrete semiconductor, integrated circuit or custom component assembly industries will not affect the Company materially or adversely, that Microsemi will retain existing key personnel, that Microsemi's forecasts will reasonably anticipate market demand for its products, and that there will be no other material adverse change in its operations or business. Other factors that could cause results to vary materially from current expectations are referred to elsewhere in this report. Assumptions relating to the foregoing involve judgments that are difficult to make and future circumstances that are difficult to predict accurately or correctly. 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 Microsemi to alter its internal forecasts, which may in turn affect results or expectations. Microsemi Corporation does not undertake to announce publicly these changes that may occur in our expectations after the periods presented herein. Readers are cautioned against giving undue weight to any of the forward-looking statements. Adverse changes to our results could result from any number of factors, including for example fluctuations in economic conditions, potential effects of inflation, lack of earnings visibility, dependence upon certain customers or markets, dependence upon suppliers, future capital needs, rapid technological changes, difficulties in 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. The inclusion of forward-looking information should not be regarded as a representation by Microsemi or any other person that its objectives or plans will be achieved. 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 annual report in the Form 10-K as filed with the Securities and Exchange Commission in December 2000, 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 included therein. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Inapplicable. 14 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 --------------------------------------------------- (a) An election of the Board of Directors was held at the annual meeting of Stockholders on February 28, 2001. (b) Names and personal information about the nominees to the Board of Directors were included in the Proxy Statement dated January 17, 2001. (c) Votes were received for each of the nominees to the Board of Directors as follows: For Withheld ---------- -------- Philip Frey, Jr. 11,826,974 626,292 Joseph M. Scheer 11,826,446 626,820 Brad Davidson 11,828,146 625,120 James J. Peterson 11,828,456 624,810 H.K. Desai 11,828,346 624,920 Robert B. Phinizy 11,826,733 626,533 Martin H. Jurick 11,828,246 625,020 Votes were received for the amendments of the Microsemi 1987 Stock Plan, including increasing of the number of shares available under the plan as follows: For 6,787,070 Against 4,173,877 Abstain 13,082 Non-votes 2,850,475 Item 5. Other information ----------------- Inapplicable Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits: None (b) Reports on Form 8-K: None 15 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 Executive Vice President and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer and duly authorized to sign on behalf of the Registrant) DATED: May 14, 2001 16