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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended October 1, 1995
---------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ________ to ________
Commission file number # 0-8866
MICROSEMI CORPORATION
---------------------
(Exact name of Registrant as specified in its charter)
Delaware 95-2110371
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2830 South Fairview Street, Santa Ana, CA 92704
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 979-8220
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
$.20 par value Common Stock
---------------------------
(Title of class)
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 aggregate market value of the Common Stock held by non-affiliates of the
registrant, based upon the closing sale price of the Common Stock on December 1,
1995 was approximately $61,925,000 on the NASDAQ national market system. Shares
of Common Stock held by each officer and director and by each person who owns 5%
or more of the outstanding Common Stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
The number of outstanding shares of Common Stock on December 1, 1995 was
approximately 7,791,000.
Documents Incorporated by Reference
- -----------------------------------
Part III: Portions of the definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on or about February 27, 1996. This proxy statement will
be filed no later than 120 days after the close of Registrant's fiscal year
ended October 1, 1995.
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PART I
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ITEM 1. BUSINESS
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INTRODUCTION
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Microsemi Corporation (the "Company") was incorporated in Delaware in 1960.
Its name was changed from Microsemiconductor Corporation in February 1983. The
principal executive offices of the Company are located at 2830 South Fairview
Street, Santa Ana, California 92704 and its telephone number is (714) 979-8220.
Unless the context otherwise requires, the "Company" and "Microsemi" refer to
Microsemi Corporation and its consolidated subsidiaries.
Microsemi Corporation is a multinational supplier of high-reliability
discrete semiconductors, surface mounted assemblies and hi-rel screening and
testing services. Microsemi's power conditioning semiconductor products and
custom assemblies are employed by the Company's customers in a wide array of
aerospace, defense, medical and other applications ranging from the space
shuttles and the U.S. Navy's Trident submarine to heart pacemakers, medical and
x-ray equipment, automotive, computer and automation products and communications
equipment.
PRODUCTS.
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The Company's products include a broad line of discrete semiconductors and
other electronic component products and services principally for military,
aerospace, medical, computer and telecommunications high reliability
applications. These components are used throughout the electronics industry,
with almost all electronic equipment employing zener diodes and rectifiers to
control the direction of electrical current flow, to regulate voltage and to
protect sensitive circuitry from line surges and transient voltage spikes. Major
products are silicon rectifiers, zener diodes, low leakage and high voltage
diodes, temperature compensated zener diodes and a family of subminiature high
power transient suppressor diodes.
A partial list of additional applications of the Company's products and
services includes: heart pacer transient shock protector diodes (where the
Company believes it is the leading supplier in that market), low leakage diodes
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
currently serves a broad group of customers including Hughes, ITT, Bausch
Telcom, Motorola, Nokia, Lockheed-Martin, Raytheon, AT&T, Medtronics and Loral.
The Company also manufactures semiconductors for a number of commercial
applications, such as automatic surge protectors, transient suppressor diodes
used for telephone applications and computer switching diodes used in many
computer systems.
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MARKETING.
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The Company's marketing strategy has been to concentrate sales efforts in
high reliability and specialty markets. These markets require superior product
performance and technical assistance to satisfy demanding customer needs.
The Company's products are marketed through domestic electronic component
sales representatives and through salesmen directly to original equipment
manufacturers and government agencies. The Company also employs industrial
distributors to service its customers' needs for standard catalog products. For
fiscal year 1995, the Company's domestic direct sales force accounted for 44% of
the Company's sales, while sales representatives and distributors accounted for
approximately 21% and 15%, respectively. The Company has direct sales offices in
Los Angeles, Long Island, Phoenix, Boston, Santa Ana, Denver, Chicago, West Palm
Beach, Minneapolis, Hong Kong and Ireland. Sales to foreign customers, made
through 36 overseas sales representatives and distributors, accounted for
approximately 20% of fiscal year 1995 sales.
No one customer accounts for more than 4% of the Company's revenue. However,
approximately 35% of the Company's business is to customers whose principal
sales are to the U.S. Government.
In the ordinary course of business, Microsemi Corporation enters into
purchase agreements with some of its major customers to supply the Company's
products over periods of up to 18 months.
RESEARCH AND DEVELOPMENT.
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The Company spent approximately $755,000, $922,000 and $828,000 in fiscal
years 1995, 1994 and 1993, respectively, for research and development, none of
which was customer sponsored.
The principal focus of the Company's research and development activities has
been to improve processes and to develop new products that support the growth of
its high reliability and commercial businesses.
MANUFACTURING AND SUPPLIERS.
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The Company's principal domestic semiconductor manufacturing operations are
located in Santa Ana, California; Broomfield, Colorado; Scottsdale, Arizona and
Watertown, Massachusetts. Each operates independently with its own wafer
processing, assembly, testing and high reliability testing and screening
departments.
The Company's domestic semiconductor plants manufacture and process all
products and assemblies starting from purchased silicon wafers and piece parts.
Manufacturing and processing operations are controlled in accordance with
military as well as other rigid commercial and industrial specifications.
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A major portion of the Company's semiconductor manufacturing effort takes
place after the semiconductor is assembled. Parts are tested a number of times,
visually screened and environmentally subjected to shock, vibration, "burn in"
and electrical tests in order to prove reliability.
The Company's Bombay, India facility assembles a commercial zener diode line
for the purpose of competing in the lower cost commercial and consumer markets.
This plant also performs subcontract coil manufacturing for one of the Company's
customers.
The Company's Hong Kong subsidiary, Microsemi (H.K.) Ltd., produces diode
products for major commercial customers. The Hong Kong subsidiary utilizes diode
chips manufactured in U.S. plants and assembles, tests and finishes the
products. The plant is approved for assembly of certain military specified
diodes.
The Company's Ennis, Ireland operation manufactures diodes, rectifiers,
zeners, thyristors and transistors and supports the other Microsemi operations.
This plant is Defense Electronics Supply Center (DESC) approved in the U.S. to
screen high reliability product to MIL-S-19500 and is also European Space Agency
qualified. A Trading Company has been established at this facility for
stocking/shipping products from U.S. and Asian locations for European customers.
The Company purchases silicon wafers, glass sleeves, tungsten slugs and lead
wires from domestic and foreign suppliers generally on long-term purchase
commitments which are cancelable with 30 to 90 day notice. With the exception of
glass sleeves for the Santa Ana and Watertown high reliability diode products
and glass to metal sealed parts for a portion of the Santa Ana and Scottsdale
computer diode and zener diode business, all material is available from multiple
sources. In the case of sole source items, the Company has never suffered
production delays as a result of vendors' inability to supply the parts. The
Company stocks what it believes are adequate supplies of all materials based
upon backlog, delivery lead time and anticipated new business.
The Company's component testing and screening operations purchase
semiconductor die and assembled components. These parts are available from a
number of leading semiconductor manufacturers.
The Company's surface mounted assembly operations design custom circuit
boards and purchase component parts. These parts are then assembled using pick
and place machines as well as other sophisticated test equipment, to meet
customer requirements.
FOREIGN OPERATIONS
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The Company conducts a portion of its operations outside the United States
and its business is subject to risks associated with many factors beyond its
control, such as fluctuations in foreign currency rates, instability of foreign
economies and governments, and changes in U.S. and foreign laws and policies
affecting trade and investment. The Company owns or leases manufacturing and
assembling facilities in Ennis, Ireland; Bombay, India and Hong Kong and is in
the process of
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establishing a joint venture in The People's Republic of China. Although the
Company has not experienced any materially adverse effects with respect to its
foreign operations arising from such factors, there can be no assurance that
such problems will not arise in the future.
SALES TO FOREIGN CUSTOMERS
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Sales to foreign customers represented approximately 20%, 17% and 12% of net
sales for the 1995, 1994 and 1993 fiscal years, respectively. Foreign sales may
be subject to political and economic risks, including political instability,
changes in import/export regulations, tariffs and freight rates and difficulties
in collecting receivables and enforcing contracts generally. Although the
Company has not experienced any materially adverse effects with respect to sales
to foreign customers, changes in current tariff structures, exchange rates or
other trade policies could adversely affect the Company's sales to foreign
customers or the collection of receivables generated from such sales.
ORDER BACKLOG.
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The Company's consolidated order backlog at October 1, 1995 (primarily for
delivery within nine months) was $62,700,000 as compared to $47,600,000 at
October 2, 1994. Although total backlog has increased by 32%, the mix of new
orders reflects a flat demand in military related business and an increase in
commercial, industrial, medical and space business. See discussion of changes in
military procurement practices in Management's Discussion and Analysis of
Financial Condition and Results of Operations.
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. For these reasons, and because of the possibility of customer changes
in delivery schedules or cancellations of orders, the Company's backlog as of
any particular date may not be representative of actual sales for any succeeding
period.
A portion of the Company's sales are to military and aerospace markets which
are subject to the business risk of changes in governmental appropriations and
changes in national defense policies and priorities. See discussion of changes
in military procurement practices in Management's Discussion and Analysis of
Financial Condition and Results of Operations. All of the Company's contracts
with prime U.S. Government's contractors contain customary provisions permitting
termination at any time at the convenience of the U.S. Government or the prime
contractor upon payment to the Company for costs incurred plus a reasonable
profit. Certain contracts are also subject to price renegotiation in accordance
with U.S. Government sole source procurement provisions. No material contract of
the Company has been terminated or renegotiated.
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COMPETITION.
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The Company competes primarily in the discrete semiconductor market,
particularly in the area of high reliability components. The Company has
numerous competitors across all of its product lines. In the defense market
sector, the Company possesses the major share of the market. In the
commercial/industrial arena, there are numerous competitors such as Motorola,
Inc., General Instruments Corp., ITT Corp. and National Semiconductor who are
significantly larger than Microsemi and have greater resources. Competition in
certain of its product lines is dependent on price and performance. Competition
in the high reliability area is dependent less on price and more on product
reliability and performance. The Company believes that it competes effectively
in all areas of business in which it is engaged.
CHANGES IN TECHNOLOGY
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The power semiconductor market is subject to technological change and changes
in industry standards. To remain competitive, the Company must continue to
devote resources to advance process technologies, to increase product
performance, to improve manufacturing yields and to improve the mix between the
Company's shipment of military and commercial product and between its high cost
and low cost products. There can be no assurance that the Company's competitors
will not develop new technologies that are substantially equivalent or superior
to the Company's technology.
PROPRIETARY RIGHTS
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The Company generally does not have, nor does it generally intend to apply
for, patent protection on any aspect of its technology. The Company believes
that patents often provide only narrow protection and patents require public
disclosure of information which may otherwise be subject to trade secret
protection. The Company's reliance upon protection of some of its technology as
"trade secrets" will not necessarily protect the Company from the use by other
persons of its technology, or their use of technology that is similar or
superior to that which is embodied in the Company's trade secrets. There can be
no assurance that others will not be able to independently duplicate or exceed
the Company's technology in whole or in part. No assurances can be made that the
Company will be able to maintain the confidentiality of the Company's
technology, dissemination of which could have a material adverse effect on the
Company's business. In addition, litigation may be necessary to determine the
scope and validity of the Company's proprietary rights. In instances in which
the Company holds any patents on a product line, the patents are not known to
have any material current value. Also there can be no assurance that any patents
held by the Company will not be challenged, invalidated or circumvented, or that
the rights granted thereunder will provide competitive advantages to the
Company.
MANUFACTURING RISKS
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The Company's manufacturing processes are highly complex, require advanced
and costly equipment and are continuously being modified in an effort to improve
yields and product performance.
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Minute impurities or other difficulties in the manufacturing process can lower
yields. In addition, California and the Pacific Rim are known to contain various
earthquake faults. The Company's operations could be materially adversely
affected if production at any of its major facilities were interrupted. There
can be no assurance that the Company will not experience manufacturing
difficulties in the future.
EMPLOYEES.
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On October 1, 1995, the Company employed 1,591 persons domestically including
85 in engineering, 1,320 in manufacturing, 92 in marketing and 94 in general
management and administration. Additionally, 714 persons were employed in the
Company's Hong Kong, Bombay, India, and Ennis, Ireland operations.
None of the Company's employees is represented by a labor union. The Company
has experienced no work stoppage. The Company believes its employee relations
are good.
DEPENDENCE ON KEY PERSONNEL
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The Company's future performance is significantly dependent on the continued
active participation of members of its current management. The Company does not
have written employment contracts with its employees. Should one or more of the
Company's key management employees leave or otherwise become unavailable to the
Company, the Company's business and results of operations may be materially
adversely affected.
POSSIBLE VOLATILITY OF STOCK PRICES
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The market prices of securities issued by technology companies, including the
Company, have been volatile. The securities of many technology companies have
experienced extreme price and volume fluctuations, which have often been not
necessarily related to the companies' respective operating performances. Quarter
to quarter variations in operating results, changes in earnings estimates by
analysts, announcements of technological innovations or new products,
announcements of major contract awards, events involving other companies in the
industry and other events or factors may have a significant impact on the market
price of the Company's Common Stock.
PRODUCT LIABILITY
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The Company's business exposes it to potential liability risks that are
inherent in the manufacturing and marketing of high-reliability electronic
components for critical applications. No assurances can be made that the
Company's product liability insurance coverage is adequate or that present
coverage will continue to be available at acceptable costs, or that a product
liability claim would not adversely affect the business or financial condition
of the Company.
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CHANGE OF CONTROL PROVISIONS
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The Company's Certificate of Incorporation, Bylaws, Shareholder Rights Plan
and certain employment compensation plans contain provisions that make it more
difficult for a third party to acquire, or that may discourage a third party
from attempting to acquire, control of the Company. In addition, as a Delaware
corporation, the Company is subject to the restrictions imposed under Section
203 of the Delaware General Corporation Law which prevent the Company from
engaging in certain change of control transactions with certain of its
stockholders under certain circumstances.
ENVIRONMENTAL REGULATION
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While the Company believes that it has the environmental permits necessary to
conduct its business and that its activities conform to present environmental
regulations, increased public attention has been focused on the environmental
impact of semiconductor operations. The Company, in the conduct of its
manufacturing operations, has handled and does handle materials that are
considered hazardous, toxic or volatile under federal, state and local laws and,
therefore, are subject to regulations relating to their use, storage, discharge
and disposal. No assurances can be made that the risk of accidental release of
such materials can be completely eliminated. In addition, the Company operates
or owns facilities located on or near real property that may formerly have been
used in ways that involved such materials. In the event of a violation of
environmental laws, the Company could be held liable for damages and the costs
of remediation, and, along with the rest of the semiconductor industry, is
subject to variable interpretations and governmental priorities concerning
environmental laws and regulations. Environmental statutes have been interpreted
to provide for joint and several liability and strict liability regardless of
actual fault. There can be no assurance that the Company and its subsidiaries
will not be required to incur costs to comply with, or that the operations,
business, or financial condition of the Company will not be materially adversely
affected by, current or future environmental laws or regulations.
ITEM 2. PROPERTIES
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The Company's headquarters are located in a building complex located in Santa
Ana, California. This complex contains general offices, engineering and
manufacturing space. The Company also leases or owns office, engineering and
production facilities in Scottsdale, Arizona; Broomfield, Colorado; Mooresville,
North Carolina; Garland, Texas; Watertown, Massachusetts; Ennis, Ireland;
Bombay, India and Hong Kong. As described in Note 8 to the Consolidated
Financial Statements, the acquisitions of certain land, buildings and additions
were accomplished through the issuance of Industrial Development Bonds. Deeds of
trust on the properties were granted as security for the bonds.
The Company believes that its existing facilities are well-maintained and in
good operating condition and that they are adequate for its immediately
foreseeable business needs.
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ITEM 3. LEGAL PROCEEDINGS
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The State of Washington, Department of Ecology has proposed finding that the
Company is a potentially liable party for the study and cleanup of certain
hazardous substances which allegedly contaminate what has come to be known as
the Yakima Railroad Area Site. The State of Washington claims that the Company
was one of the potentially liable parties that arranged for the disposal of
those hazardous substances through Cameron-Yakima Incorporated, a company that
the State of Washington claims has caused or contributed to the contamination on
the site through its operation of a hazardous waste treatment facility. The
Company has denied liability because it has not completed its investigation of
the allegations. Due to the preliminary nature of this matter, it is not
possible to predict any outcome.
In Broomfield, Colorado, the owner of a property located adjacent to a
manufacturing facility owned by a subsidiary of the Company 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 from 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; however, there can be no assurance that recourse will be
available against third parties. 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 or the allocation thereof among
potentially responsible parties.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None.
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PART II
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ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
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(a) Market Information
The Company's Common Stock is traded on the over-the-counter market
under the NASDAQ symbol MSCC. The following table sets forth the high and low
closing prices at which the Company's Common Stock traded as reported on the
NASDAQ National Market System.
HIGH LOW
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Fiscal Year ended October 1, 1995
1st Quarter............................... 5 3/8 4 1/8
2nd Quarter.............................. 5 5/8 4 5/8
3rd Quarter............................... 9 1/8 5 1/8
4th Quarter............................... 14 9 1/8
HIGH LOW
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Fiscal Year ended October 2, 1994
1st Quarter............................... 6 3/8 3 7/8
2nd Quarter.............................. 5 4
3rd Quarter............................... 6 1/16 4 1/8
4th Quarter............................... 6 4 1/8
(b) Approximate Number of Common Equity Security Holders
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Approximate Number of
Record Holders
Title of Class (as of October 1, 1995)
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Common Stock, $.20 Par Value 616 (1)
(1) The number of stockholders of record includes the beneficial holders
of shares held in "nominee" or "street name", as a unit.
(c) Dividends
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The Company has no current plans to pay dividends.
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ITEM 6. SELECTED FINANCIAL DATA
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<TABLE>
<CAPTION>
For the five fiscal years in the period ended
October 1, 1995
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1995 1994 1993 1992(2) 1991
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(Amounts in 000's except per share amounts)
<S> <C> <C> <C> <C> <C>
Selected Income Statement Data:
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Net sales $ 133,881 $ 119,230 $ 123,816 $ 88,719 $ 82,722
Gross profit $ 35,795 $ 22,438 $ 28,729 $ 22,261 $ 21,962
Operating expenses $ 20,279 $ 20,579 $ 19,938 $ 14,794 $ 13,129(1)
Income (loss) before extraordinary
items and accounting change $ 6,053 $ (2,130) $ 1,763 $ 1,053 $ 1,819
Income (loss) per share before
extraordinary items and
accounting change
Primary $ .74 $ (.28) $ .23 $ .14 $ .24
Fully diluted $ .62 $ (.28) $ .21 $ .14 $ .24
Average common and
common equivalent shares
Primary 8,213 7,573 7,753 7,579 7,531
Fully diluted 11,861 7,573 9,043 7,864 9,991
Selected Balance Sheet Data:
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Working capital $ 45,714 $ 35,128 $ 35,315 $ 33,826 $ 33,953
Total assets $ 104,815 $ 100,149 $ 105,469 $ 111,918 $ 95,998
Long-term debt $ 48,158 $ 50,568 $ 51,871 $ 54,037 $ 50,117
Stockholders' equity $ 21,110 $ 14,788 $ 16,835 $ 13,758 $ 12,048
</TABLE>
(1) Includes estimated loss on disposition of companies of $651,000 for
fiscal year 1991.
(2) In July 1992, the Company acquired substantially all of the assets of
the Semiconductor Products Division of Unitrode Corporation (renamed
Micro USPD, Inc.)
The selected financial data should be read in conjunction with the
Consolidated Financial Statements. See Notes 5 and 11 to the Consolidated
Financial Statements for discussions of the reduction in carrying value of
assets and dispositions, respectively, which affect the comparability of the
information presented in the above table.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
---------------------
CAPITAL RESOURCES & LIQUIDITY
- -----------------------------
Microsemi Corporation's operations in 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 $20,000,000 based
upon percentages of certain accounts receivable and inventory balances at
certain of the Company's operations. As of October 1, 1995, $4,410,000 was
borrowed under this credit facility. A $10,000,000 equipment financing loan,
originally obtained in October 1989 and refinanced under this credit line in
March of 1994, was fully repaid in July 1995. At October 1, 1995, the Company
had $3,965,000 in cash and cash equivalents.
A letter of credit for the Microsemi Santa Ana Industrial Development
Revenue Bond is carried by a bank in the amount of $5,557,000. This letter of
credit guarantees the repayment of a $5,350,000 Industrial Development Revenue
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. The Bond was remarketed, effective February 1, 1995, reducing the
interest rate to 6.75% per annum. The new terms required principal payments of
$350,000 in 1996, 1997 and 1998; $100,000 from 1999 to 2004 and $3,700,000 in
2005.
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.
The Company's revenues continue to be 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 were Department
of Defense (DOD) announcements of major changes in defense procurement policy,
which included official notification, on August 22, 1994, of Department of
Defense acquisition 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 50% to 35% of total revenues.
The decrease in shipments of military related parts 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 the
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 of the Company (see
Note 5 to the Consolidated Financial Statements).
The average collection period on accounts receivable was 52 days for the
current fiscal year compared to 56 days for the last fiscal year. Sales and
accounts receivable of the business that was sold in fiscal year 1994 have been
excluded from this calculation.
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The average days sales of product in inventories decreased to 155 days for
fiscal year 1995 compared to 164 days for fiscal year 1994. Costs of sales and
inventories of the business that was sold in fiscal year 1994 have been excluded
from this calculation.
The Company has no significant capital commitments.
Effective September 28, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS 109), which
mandates a liability method for computing deferred income taxes. The cumulative
effect of adopting this standard increased fiscal year 1993 net income by
$1,250,000 and earnings per share by $.16. As required by SFAS 109, this
accounting change was retroactively reflected in the first quarter of fiscal
year 1993.
RESULTS OF OPERATIONS FOR THE FISCAL YEAR 1995 COMPARED TO THE FISCAL YEAR 1994.
- --------------------------------------------------------------------------------
Net sales for fiscal year 1995 increased to $133,881,000, or 12%, from
$119,230,000 for fiscal year 1994. The increase of $14,651,000 was due to higher
volumes of shipments of commercial, industrial and telecommunications products,
reflecting the Company's effort to shift toward these markets and the increase
of demand in the electronics industry in general.
Gross profit increased $13,357,000 to $35,795,000 for the current fiscal
year from $22,438,000 for the prior year. In fiscal year 1994, cost of sales
included a $7,258,000 reduction in the carrying values of certain military and
non-military related inventories to reflect their estimated net realizable
values (see further discussion under Results of Operations for the Fiscal Year
1994 Compared to the Fiscal Year 1993). Without this reduction, gross profit for
fiscal year 1994 would have been $29,696,000, or 25% of sales compared to 27%
for the current fiscal year. The remaining increase in gross profit as a
percentage of sales in fiscal year 1995 compared to fiscal year 1994 was
primarily due to higher absorption of fixed overhead costs as a result of
increased production.
General and administrative expenses for fiscal year 1995 increased
$2,038,000; however, general and administrative expenses as a percentage of
revenue have remained relatively consistent at 9% for fiscal year 1995 and 1994.
The effective income tax (benefit) rates of 41% and (39%) for the fiscal
year 1995 and 1994, respectively, are the combined results of income taxes
(benefits) computed on foreign and domestic income (loss).
RESULTS OF OPERATIONS FOR THE FISCAL YEAR 1994 COMPARED TO THE FISCAL YEAR 1993.
- --------------------------------------------------------------------------------
During the fourth quarter of fiscal year 1994, the Company determined that
it should reduce the carrying value of military related inventories and other
assets and certain non-military related assets by $9,973,000 where there had
been a permanent reduction of their value. A major portion of these charges
directly resulted from changes in military procurement policies and practices
which called for the use of commercial products instead of a mandatory use of
Military Standard parts. Management believed this action to be necessary due to
Department of Defense announcements of major changes
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in defense procurement policy, which included official notification, on August
22, 1994, of Department of Defense acquisition reform to utilize best commercial
practices instead of mandatory use of military standard parts. These changes in
DOD policy created uncertainties as to the future level of the Company's defense
related business. Consequently, the Company conducted a revaluation of its
military related inventory and related assets used in the more complex military
standard parts production, and has revalued these assets to reflect their
estimated net realizable values on the basis of projected utilization and market
value. In addition, the carrying values of certain other non-military related
assets were reduced to reflect their estimated net realizable values. These
reductions of carrying values of other non-military assets related principally
to (1) a dispute, which arose in the fourth quarter, relating to inventories
previously on consignment and a related note receivable, (2) a purchase offer
received in the fourth quarter for a building the Company offered for sale in
1994, and (3) a reduction in the net realizable values of certain inventories
and investments. Of the $9,973,000 non-cash charge, approximately $7,258,000
related to the reductions in the carrying values of military and non-military
related inventories which was charged to cost of sales in fiscal 1994. The
remaining amount of the non-cash charge of $2,715,000 comprised reductions in
carrying values of other military and non-military related assets which has been
included as a component of operating expenses in fiscal year 1994. (See Note 5
to the Consolidated Financial Statements).
The one week difference between fiscal years 1994 (52 weeks) and 1993 (53
weeks) did not have a significant impact on the results of operations of the
Company.
Net sales for 1994 decreased to $119,230,000 or 4% from $123,816,000 for
fiscal year 1993. The decrease of $4,586,000 was primarily due to $4,435,000
from the businesses that were sold in fiscal year 1993, $3,095,000 from the
business that was sold in the fiscal year 1994 and partially offset by an
increase of $2,944,000 from the continuing businesses.
Gross profit decreased $6,291,000 or 22% to $22,438,000 for the fiscal year
1994 from $28,729,000 for the prior year. The decrease in gross profit resulted
principally from the reduction, during the fourth quarter of fiscal 1994, in the
carrying values of military and certain non-military related inventories of
$7,258,000 to reflect their net realizable values (see further discussion above)
and a decrease of $1,131,000 from the business that was sold in the fiscal year
1994. These decreases were partially offset by the elimination of $631,000 in
gross losses from the businesses sold during fiscal year 1993 and an increase of
$1,467,000 due to increased sales from the continuing businesses.
Recurring operating expenses for fiscal year 1994 decreased $2,074,000,
compared to fiscal year 1993. The decrease was due to the elimination of
$1,244,000 of expenses incurred by the businesses that were sold in fiscal years
1993 and 1994 and to a decrease of $830,000 from continuing businesses primarily
due to a continuing effort to contain expenses.
Interest expense decreased $682,000 for the fiscal year 1994 compared to
the prior fiscal year. This decrease was due to lower borrowings during 1994 as
compared to 1993.
14
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
Microsemi Corporation, Index to Financial Statements
----------------------------------------------------
<TABLE>
<CAPTION>
1. Consolidated Financial Statements Page
--------------------------------- ----
<S> <C> <C>
Report of Independent Accountants 16
Consolidated Balance Sheets at October 1, 1995 and October 2, 1994 17
Consolidated Statements of Operations for each of the three fiscal years
in the period ended October 1, 1995 18
Consolidated Statements of Stockholders' Equity for each of the three
fiscal years in the period ended October 1, 1995 19
Consolidated Statements of Cash Flows for each of the three fiscal years
in the period ended October 1, 1995 20
Notes to Consolidated Financial Statements 21
2. Financial Statement Schedules
-----------------------------
Schedules for the fiscal years ended October 1, 1995, October 2, 1994 and October 3,
1993.
Schedules
---------
VIII - Valuation and Qualifying Accounts 37
IX - Short Term Borrowings 38
X - Supplementary Income Statement Information 39
</TABLE>
Financial statement schedules not listed above are either omitted
because they are not applicable or the required information is shown
in the consolidated financial statements or in the notes thereto.
15
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- ---------------------------------
To the Board of Directors
and Stockholders of
Microsemi Corporation
In our opinion, the consolidated financial statements and financial statement
schedules listed in the accompanying index present fairly, in all material
respects, the financial position of Microsemi Corporation and its subsidiaries
at October 1, 1995 and October 2, 1994, and the results of their operations and
their cash flows for each of the three fiscal years in the period ended October
1, 1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in fiscal year 1993.
PRICE WATERHOUSE LLP
Costa Mesa, California
December 13, 1995
16
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(amounts in 000's)
<TABLE>
<CAPTION>
October 1, October 2,
ASSETS 1995 1994
---- ----
<S> <C> <C>
Current assets
Cash and cash equivalents $ 3,965 $ 3,994
Accounts receivable, less allowance for doubtful accounts of
$2,018 in 1995 and $2,173 in 1994 20,191 17,772
Inventories 43,281 40,058
Deferred income taxes 5,471 4,076
Other current assets 4,375 1,197
------- -------
TOTAL CURRENT ASSETS 77,283 67,097
------- -------
Property and equipment, net 23,602 24,217
------- -------
Deferred income taxes 569 1,725
------- -------
Other assets 3,361 7,110
------- -------
$ 104,815 $ 100,149
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable to bank and others $ 4,561 $ 9,584
Current maturities of long-term debt 2,328 3,578
Accounts payable and accrued liabilities 19,952 16,879
Income taxes payable 4,016 1,212
Deferred income taxes 712 716
------- -------
TOTAL CURRENT LIABILITIES 31,569 31,969
------- -------
Deferred income taxes 1,864 1,568
------- -------
Long-term debt 48,158 50,568
------- -------
Other long-term liabilities 2,114 1,256
------- -------
Commitments and contingencies (Notes 8 & 10)
Stockholders' equity
Common stock, $.20 par value; authorized 20,000 shares; issued
7,789 in 1995 and 7,595 in 1994 1,558 1,519
Capital in excess of par value of stock 14,644 14,397
Retained earnings (accumulated deficit) 4,908 (1,128)
------- -------
TOTAL STOCKHOLDERS' EQUITY 21,110 14,788
------- -------
$ 104,815 $ 100,149
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
17
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(amounts in 000's, except earnings per share)
For each of the three fiscal years in the period ended October 1, 1995
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net sales $ 133,881 $ 119,230 $ 123,816
Cost of sales 98,086 96,792 95,087
------- -------- ---------
GROSS PROFIT 35,795 22,438 28,729
------- -------- ---------
Operating expenses
Selling 7,864 7,450 7,796
General and administrative 12,201 10,163 11,572
Amortization of goodwill and other intangible assets 214 251 570
Reduction in carrying value of assets - 2,715 -
------- -------- ---------
TOTAL OPERATING EXPENSES 20,279 20,579 19,938
------- -------- ---------
INCOME FROM OPERATIONS 15,516 1,859 8,791
------- -------- ---------
Other income (expense)
Interest expense, net (5,022) (5,094) (5,817)
Others (234) (282) (144)
------- -------- ---------
TOTAL OTHER EXPENSE (5,256) (5,376) (5,961)
------- -------- ---------
Earnings (loss) before income taxes and
cumulative effect of accounting change 10,260 (3,517) 2,830
Provision (benefit) for income taxes 4,207 (1,387) 1,067
------- -------- ---------
EARNINGS (LOSS) BEFORE CUMULATIVE EFFECT
OF ACCOUNTING CHANGE 6,053 (2,130) 1,763
Cumulative effect of change in the method of accounting
for income taxes - - 1,250
------- -------- ---------
NET EARNINGS (LOSS) $ 6,053 $ (2,130) $ 3,013
======= ======== =========
PRIMARY EARNINGS (LOSS) PER SHARE
Earnings (loss) before cumulative effect of accounting change $ .74 $ (.28) $ .23
==== ==== ====
Net earnings (loss) $ .74 $ (.28) $ .39
==== ==== ====
FULLY DILUTED EARNINGS (LOSS) PER SHARE
Earnings (loss) before cumulative effect of accounting change $ .62 $ (.28) $ .21
==== ==== ====
Net earnings (loss) $ .62 $ (.28) $ .35
==== ==== ====
</TABLE>
The accompanying notes are an integral part of these statements.
18
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(amounts in 000's)
For each of the three fiscal years in the period ended October 1, 1995
<TABLE>
<CAPTION>
Capital in Retained
Common Stock excess of earnings
------------ par value (accumulated
Shares Amount of stock deficit) Total
------ ------ -------- -------- -----
<S> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 27, 1992 7,518 $ 1,504 $ 14,253 $ (1,999) $ 13,758
Net income - - - 3,013 3,013
Exercise of employee stock options 30 6 65 - 71
Currency translation loss - - - (7) (7)
----- ----- ------ ------- --------
BALANCE AT OCTOBER 3, 1993 7,548 $ 1,510 $ 14,318 $ 1,007 $ 16,835
Net loss - - - (2,130) (2,130)
Exercise of employee stock options 47 9 79 - 88
Currency translation loss - - - (5) (5)
----- ----- ------ ------- --------
BALANCE AT OCTOBER 2, 1994 7,595 $ 1,519 $ 14,397 $ (1,128) $ 14,788
Net income - - - 6,053 6,053
Exercise of employee stock options 194 39 247 - 286
Currency translation loss - - - (17) (17)
----- ----- ------ ------- --------
BALANCE AT OCTOBER 1, 1995 7,789 $ 1,558 $ 14,644 $ 4,908 $ 21,110
===== ===== ====== ===== ======
</TABLE>
The accompanying notes are an integral part of these statements.
19
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(amounts in 000's)
For each of the three fiscal years in the period ended October 1, 1995
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net earnings (loss) $ 6,053 $ (2,130) $ 3,013
Adjustments to reconcile net earnings (loss) to net cash provided from
operating activities:
Cumulative effect of change in method of accounting for income
taxes - - (1,250)
Depreciation and amortization 3,888 4,491 5,246
Allowance for doubtful accounts (155) 290 582
Reserve on notes receivable and other assets 1,070 - 418
Reduction in carrying value of assets - 9,973 -
Loss on disposition of assets 354 75 320
Deferred income taxes 53 (1,762) (219)
Translation loss on foreign currency (17) (5) (7)
Change in assets and liabilities, net of acquisitions and dispositions:
Accounts receivable (2,264) (929) 1,416
Inventories (3,223) (3,036) 448
Other current assets (536) (271) 51
Other assets 490 455 1,487
Accounts payable and accrued liabilities 3,073 767 (1,767)
Income taxes payable 2,804 (937) 966
Other long-term liabilities 938 - (2,103)
------ ----- --------
Net cash provided from operating activities 12,528 6,981 8,601
------ ----- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property and equipment (3,765) (2,522) (3,839)
Proceeds from sales of assets - 200 337
Increase in other assets (315) - (85)
------ ----- --------
Net cash used for investing activities (4,080) (2,322) (3,587)
------ ----- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in notes payable to bank and others (5,023) (442) (3,694)
Proceeds from long-term debt 988 3,117 -
Reduction of long-term debt (4,648) (5,419) (1,767)
Decrease in other long-term liabilities (80) (89) -
Exercise of employee stock options 286 88 71
------ ----- --------
Net cash used for financing activities (8,477) (2,745) (5,390)
------ ----- --------
Net increase (decrease) in cash and cash equivalents (29) 1,914 (376)
Cash and cash equivalents at beginning of year 3,994 2,080 2,456
------ ----- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,965 $ 3,994 $ 2,080
====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
20
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
- -----------------------
The Company designs and manufactures a broad line of discrete semiconductors and
other electronic component products and provides related services principally
for military, aerospace, medical, computer, telecommunications and other
electronics markets. Major products are silicon rectifiers, zener diodes, low
leakage and high voltage diodes, temperature compensated zener diodes and a
family of subminiature high power transient suppressor diodes.
Fiscal Year
- -----------
The Company reports results of operations on the basis of fifty-two and fifty-
three week periods. The three fiscal years in the period ended October 1, 1995
consisted of fifty-two weeks in 1995 and 1994, and fifty-three weeks in 1993.
Principles of Consolidation
- ---------------------------
The consolidated financial statements include the accounts of Microsemi
Corporation and its wholly-owned subsidiaries. All significant intercompany
transactions have been eliminated.
Inventories
- -----------
Inventories are stated at the lower of cost or market. Cost is determined by the
first-in, first-out method except for inventories at the Scottsdale, Arizona
subsidiary, for which cost is determined using the last-in, first-out method
(see Note 2).
Property and Equipment
- ----------------------
Property and equipment are stated at cost. Depreciation is computed on the
straight-line method over the estimated useful lives or leasehold periods, as
appropriate. Maintenance and repairs are charged to expense as incurred and the
costs of additions and betterments that increase the useful lives of the assets
are capitalized.
Income Taxes
- ------------
Effective September 28, 1992, the Company adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes". The
adoption of SFAS 109 changes the Company's method of accounting for income taxes
from the deferred method (APB 11) to an asset and liability
21
<PAGE>
approach. SFAS 109 requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences between
the financial statement and tax bases of assets and liabilities at the
applicable enacted tax rates. See further discussion under Note 7.
Investments
- -----------
The Company's investment in certain unconsolidated affiliates are stated at the
lower of cost or estimated net realizable value.
Earnings Per Share
- ------------------
Earnings per common and common equivalent share have been computed based upon
the weighted average number of common and common equivalent shares outstanding.
Outstanding stock options are included as common stock equivalents when the
effect on earnings per share is dilutive. Earnings per share for the fully
diluted basis have been computed, when the result is dilutive, based on 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.
The weighted average number of primary common and common equivalent shares was
8,213,000 in 1995, 7,573,000 in 1994 and 7,753,000 in 1993. Shares for the
computation of fully diluted earnings per share were 11,861,000 in 1995,
7,573,000 in 1994 and 9,043,000 in 1993.
Intangible Assets
- -----------------
Intangible assets, arising principally from differences between the cost of
acquired companies and the underlying values at dates of acquisition, are
amortized on a straight-line basis over periods not exceeding ten years.
Concentration of Credit Risk and Foreign Sales
- ----------------------------------------------
The Company is potentially subject to concentrations of credit risk consisting
principally of trade receivables. Concentrations of credit risk exist because
the Company relies on a significant portion of customers whose principal sales
are to the U.S. Government. In addition, sales to foreign customers represented
approximately 20%, 17% and 12% of net sales for fiscal years 1995, 1994 and
1993, respectively. These sales were principally to customers in Europe and
Asia. The Company maintains reserves for potential credit losses and such losses
have been within management's expectations.
Reclassifications
- -----------------
Certain fiscal year 1994 and 1993 balances have been reclassified to conform to
fiscal year 1995 presentation.
22
<PAGE>
2. INVENTORIES
Inventories used in the computation of cost of goods sold were:
<TABLE>
<CAPTION>
October 1, October 2, October 3,
1995 1994 1993
---- ---- ----
(amounts in 000's)
<S> <C> <C> <C>
Raw materials $10,367 $ 9,306 $10,101
Work in process 20,847 18,678 21,264
Finished goods 12,067 12,074 13,333
------ ------ ------
$43,281 $40,058 $44,698
====== ====== ======
</TABLE>
Inventories in the amount of $8,043,000 at Microsemi Scottsdale are stated at
cost under the last-in, first-out (LIFO) method. Had the first-in, first-out
method been used, total inventories would have been approximately $100,000,
$1,100,000 and $1,400,000 higher at each fiscal year end for 1995, 1994 and
1993, respectively. The LIFO valuation method had the effect of increasing gross
profit by $1,000,000, $300,000 and $1,100,000 in fiscal years 1995, 1994 and
1993, respectively.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following:
<TABLE>
<CAPTION>
October 1, October 2,
Asset Life 1995 1994
---------- ---- ----
(amounts in 000's)
<S> <C> <C> <C>
Buildings 20-40 years $ 15,951 $ 15,372
Property and equipment 3-10 years 28,552 28,340
Furniture and fixtures 5-10 years 961 926
Leasehold improvements Life of lease 1,336 2,005
------- -------
46,800 46,643
Accumulated depreciation (28,442) (26,559)
Land 3,641 3,641
Construction in progress 1,603 492
------- -------
$ 23,602 $ 24,217
======= =======
</TABLE>
Depreciation expense was $3,674,000, $4,238,000 and $4,644,000 in fiscal years
1995, 1994 and 1993, respectively.
At October 1, 1995, land and buildings located at the Santa Ana, California
manufacturing and headquarters facility were pledged to the City of Santa Ana
under the provisions of the loan agreement with the Santa Ana Industrial
Development Authority. The land and building of the Microsemi Colorado
subsidiary were pledged to the City of Broomfield, Colorado under the provisions
of the loan agreement with the Colorado Industrial Development Authority. The
buildings in Watertown,
23
<PAGE>
Massachusetts and in Ennis, Ireland are pledged to Unitrode Corporation under
the provisions of the related acquisition agreement.
4. OTHER ASSETS
Other assets consisted of the following:
<TABLE>
<CAPTION>
October 1, October 2,
1995 1994
---- ----
(amounts in 000's)
<S> <C> <C>
Investments in unconsolidated affiliates $ 303 $1,042
Deferred financing expenses, net 1,523 1,303
Cash surrender value of life insurance 344 312
Goodwill and other intangible assets, net 96 143
Notes receivable 289 2,521
Collateralized notes receivable 598 1,599
Others 208 190
----- -----
$3,361 $7,110
===== =====
</TABLE>
Accumulated amortization for deferred financing expenses, goodwill and other
intangible assets amounted to $2,293,000 and $2,093,000 as of October 1, 1995
and October 2, 1994, respectively.
As of October 1, 1995, Microsemi has a loan of $598,000 to an unaffiliated
company collateralized by its property interest in a building in Allen, Texas.
24
<PAGE>
5. REDUCTION IN CARRYING VALUE OF ASSETS
In September 1994, the Company recorded a charge to reduce the carrying value of
military related inventories and other assets and certain non-military related
assets where there has been a permanent reduction in value.
The charge comprised the following components (amounts in 000's):
<TABLE>
<CAPTION>
Fiscal Year
Ended
Military related assets October 2, 1994
---------------
<S> <C>
Inventories $ 5,995
Other assets 558
Equipment 507
-----
7,060
-----
Non-military related assets
Inventories 1,263
Other assets 1,250
Building 400
-----
2,913
-----
Total $ 9,973
=====
</TABLE>
A major portion of these charges directly resulted from Department of Defense
(DOD) announcements of major changes in defense procurement policy which
included official notification, on August 22, 1994, of DOD acquisition reform to
utilize best commercial practices instead of mandatory use of military standard
parts. These changes in DOD procurement policies required the Company to conduct
a revaluation of its military related inventory and other assets used in the
more complex military standard parts production, resulting in a revaluation of
these assets to reflect their estimated net realizable values on the basis of
projected utilization and market value.
In addition, the carrying values of certain other non-military related assets
were reduced to reflect their estimated net realizable values. These reductions
of carrying values related principally to (1) a dispute, which arose in the
fourth quarter, relating to inventories previously on consignment and a related
note receivable, (2) a purchase offer received in the fourth quarter for a
building the Company offered for sale in 1994, and (3) a reduction in the net
realizable values of certain inventories and investments.
The reductions in the carrying values of inventories totaling $7,258,000 were
charged to cost of sales in fiscal year 1994. The remaining charge for the
reduction in carrying values of the other assets totaling $2,715,000 was
included as a component of operating expenses in fiscal year 1994.
25
<PAGE>
6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities consisted of:
<TABLE>
<CAPTION>
October 1, October 2,
1995 1994
---- ----
(amounts in 000's)
<S> <C> <C>
Accounts payable $ 6,774 $ 4,596
Accrued payroll, vacation and related taxes 8,392 6,570
Other accrued expenses 4,786 5,713
------ -----
$ 19,952 $ 16,879
====== ======
</TABLE>
7. INCOME TAXES
Pretax income (loss) from continuing operations was taxed under the following
jurisdictions:
<TABLE>
<CAPTION>
For each of the three fiscal years in
the period ended October 1, 1995
--------------------------------
1995 1994 1993
---- ---- ----
(amounts in 000's)
<S> <C> <C> <C>
Domestic $ 7,750 $ (4,188) $ 1,559
Foreign 2,510 671 1,271
------ ------ -----
Total $ 10,260 $ (3,517) $ 2,830
====== ====== =====
</TABLE>
The provision (benefit) for income taxes consisted of the following components:
<TABLE>
<CAPTION>
For each of the three fiscal years in
the period ended October 1, 1995
--------------------------------
1995 1994 1993
---- ---- ----
(amounts in 000's)
<S> <C> <C> <C>
Current
Federal $ 3,295 $ 92 $ 235
State 293 20 205
Foreign 566 263 346
Deferred 53 (1,762) 281
----- ------ -----
$ 4,207 $ (1,387) $ 1,067
===== ====== =====
</TABLE>
During fiscal year 1993 the Company adopted SFAS 109 which requires that the tax
benefits of all deductible temporary differences and loss carryforwards existing
at the beginning of the fiscal year be recognized at current enacted tax rates.
The cumulative effect of adopting this standard increased fiscal 1993 net income
by $1,250,000.
26
<PAGE>
Deferred tax assets (liabilities) comprise the following:
<TABLE>
<CAPTION>
October 1, October 2,
1995 1994
---- ----
(amounts in 000's)
<S> <C> <C>
Accounts receivable $ 698 $ 788
Inventories 1,118 1,539
Other assets 1,949 1,682
Fixed asset bases 441 967
Accrued employee benefit expenses 2,216 1,732
Accrued other expenses 1,195 668
Loss and credit carryforwards 1,227 1,899
------- -------
Gross deferred tax assets 8,844 9,275
------- -------
Deferred tax asset valuation allowance (2,804) (2,804)
------- -------
Inventory bases (712) (780)
Depreciation (1,672) (2,174)
Other (192) -
------- -------
Gross deferred tax liabilities (2,576) (2,954)
------- -------
$ 3,464 $ 3,517
======= =======
</TABLE>
The following is a reconciliation of income tax computed at the federal
statutory rate to the Company's actual tax expense:
<TABLE>
<CAPTION>
For the three fiscal
years in the period ended
October 1, 1995
---------------
1995 1994 1993
---- ---- ----
(amounts in 000's)
<S> <C> <C> <C>
Tax computed at statutory rate $ 3,488 $(1,196) $ 962
State taxes, net of federal benefit 655 (220) 177
Tax effect of earnings of foreign subsidiaries (853) (347) (521)
Effect of differences between tax bases and
book bases of assets acquired - - 134
Foreign taxes 566 263 346
Other differences, net 351 113 (31)
------- ------ ------
$ 4,207 $(1,387) $ 1,067
======= ====== ======
</TABLE>
27
<PAGE>
The Company has the following tax loss carryforwards available as of October 1,
1995:
<TABLE>
<CAPTION>
Amount Expiration Date
------ ---------------
(amounts in 000's)
<S> <C> <C>
Purchased net operating loss carryforwards $ 1,168 2003
Capital loss carryforwards $ 2,317 1996
</TABLE>
Tax benefits realized in future periods from the purchased net operating losses
will be reflected as adjustments to goodwill and other intangible assets which
were recorded at the time of the acquisition of the related subsidiaries. All or
a portion of the capital loss carryforward amount may be utilized to offset
future capital gains.
No provision has been made for future U.S. income taxes on the undistributed
earnings of foreign operations since they have been, for the most part,
indefinitely reinvested in these operations. Determination of the amount of
unrecognized deferred tax liability for temporary differences related to the
undistributed earnings of the Company's foreign operations is not practicable.
At the end of fiscal year 1995, the undistributed earnings aggregated
approximately $11,770,000.
8. DEBT
<TABLE>
<CAPTION>
Long-term debt consisted of: October 1, October 2,
1995 1994
---- ----
(amounts in 000's)
<S> <C> <C>
Industrial Development Bond-bearing interest at
7.875% due May 2000; secured by first deed of trust $ 2,905 $ 3,075
Industrial Development Bond-bearing interest at 6.75%
due February 2005; secured by first deed of trust 5,350 5,700
Convertible Subordinated Debentures-bearing interest
at 5.875% due 2012 33,281 33,281
Convertible Subordinated Notes-bearing interest
at 10% due 1999 2,000 2,000
Notes payable-bearing interest at ranges of 5 - 13%
due between October 1995 and July 2002 6,950 10,090
------ ------
50,486 54,146
Less current portion (2,328) (3,578)
------ ------
$ 48,158 $ 50,568
====== ======
</TABLE>
28
<PAGE>
Sinking fund payment requirements under the Industrial Development Bonds, and
other long-term debt maturities, including the current portion, during the next
five years are as follows (amounts in 000's):
<TABLE>
<S> <C>
1996 $ 2,328
1997 1,479
1998 2,869
1999 3,114
2000 2,643
Thereafter 38,053
------
$ 50,486
======
</TABLE>
The Company has a $5,557,000 letter of credit which has been issued by a major
domestic bank to secure payment of principal and interest on the City of Santa
Ana Industrial Development Revenue Bond. An annual commitment fee of 1.9% is
charged on the letter of credit. There are no compensating balance requirements,
however, the letter of credit agreement requires the Company to make collateral
payments of $350,000 on February 1, 1996, February 1, 1997 and February 1, 1998
totaling $1,050,000 to ensure the availability of funds for the payment of
principal scheduled for February 1, 1998. In addition, the agreement contains
provisions regarding net worth and working capital. The Company was in
compliance with the aforementioned covenants at October 1, 1995.
In February 1987 the Company sold $40,250,000 of 5.875% convertible subordinated
debentures due 2012. The debentures are convertible into common stock at $13.55
per share. As of March 1, 1989 they have become redeemable at 104.7% of par plus
accrued interest, declining annually to par on March 1, 1997. Deferred debt
issuance costs of $1,023,000 are included in other assets and are being
amortized over the life of the debentures on a straight-line basis. In fiscal
years 1987, 1988, 1989 and 1991, the Company repurchased a total of $6,969,000
of these debentures to take advantage of favorable market conditions.
The Company maintains a revolving credit facility with a domestic bank which
will continue through July 1996. Under the credit facility the Company can
borrow up to $20,000,000. The credit line has an interest rate of prime plus
1 1/2%. Funds availability is determined by set percentages of certain accounts
receivable and inventory balances at certain of the Company's operations and
borrowings are secured by substantially all of the assets of the Company. At
October 1, 1995, the balance on this credit facility amounted to $4,410,000
($11,234,000 at October 2, 1994) including $534,000 ($2,022,000 at October 2,
1994) in term loans.
In October 1989, the Company obtained a $10,000,000 five year, fully amortizing
term loan with a bank having monthly principal and interest payments of $219,000
per month. In March of 1994, the Company refinanced the remaining balance of
this loan of $1,948,000 with a term loan under its line of credit. This loan was
fully repaid in July of 1995.
In June 1992, the Company obtained $2,000,000 from an officer and two existing
shareholders to finance a portion of an acquisition completed in fiscal year
1992. The related $2,000,000 of 10% convertible debentures are due in 1999 and
convertible into common stock at $1.875 per share.
29
<PAGE>
Notes payable to bank and others at October 1, 1995 included a demand note
payable to the former owner of the Bombay, India facility for $53,000 ($53,000
at October 2, 1994) and $598,000 ($162,000 at October 2, 1994) due to a
financial institution in Ireland under an accounts receivable discounting
agreement. In December 1991, the subsidiary in Hong Kong consolidated and
refinanced its debt with a five year term loan. At October 1, 1995 the loan
balance amounted to $385,000 ($693,000 at October 2, 1994).
9. STOCK OPTIONS AND EMPLOYEE BENEFIT PLANS
Stock Options
- -------------
Under the terms of an incentive stock option plan adopted in fiscal year 1982
and amended in fiscal year 1985, nontransferable options to purchase common
stock may be granted to certain key employees. 750,000 shares have been reserved
for issuance under the terms of the plan. The options may be exercised within
ten years from the date they are granted, subject to early termination upon
death or cessation of employment, and are exercisable in installments determined
by the Board of Directors. For certain significant shareholders, the exercise
period is limited to five years and the exercise price is higher.
In December 1986, the Board of Directors adopted another incentive stock option
plan (The 1987 Plan) which reserved an additional 750,000 shares of common stock
for issuance. The 1987 Plan was approved by the shareholders in February 1987
and is for the purpose of securing for the Company and its shareholders the
benefits arising from stock ownership by selected officers, directors and other
key executives and management employees. The plan provides for the grant by the
Company of stock options, stock appreciation rights, shares of common stock or
cash. As of October 1, 1995, only options have been granted under the 1987 Plan.
The options may be exercised within ten years from the date they are granted,
subject to early termination upon death or cessation of employment, and are
exercisable in installments determined by the Board of Directors. For certain
significant shareholders, the exercise period is limited to five years and the
exercise price is higher.
In August 1989, the Board of Directors approved a plan whereby if an employee so
elects, his/her current stock option agreement would be amended to reduce the
original number of stock options to be granted to one-half, and to reduce the
option price to the average of the closing prices of the Company's common stock
over the two week period following August 30, 1989. The exercise date for the
options remained unchanged. Under this plan, 173,625 stock options were canceled
at prices ranging from $5.625 to $10.625 per share and the respective option
price was reduced to $2.70 per share.
At their annual meeting on February 25, 1994, the shareholders approved several
amendments to the 1987 Plan which 1) extend its termination date to December 15,
2000; 2) increase initially from 750,000 to 850,000 the number of shares
available for grants; 3) increase on the first day of each fiscal year, the
number of shares available for grant in increments of 2% of the Company's issued
and outstanding shares of common stock; 4) set a limit on the number of options
or shares which may be granted to any one individual in any year; 5) eliminate
limitations on the Board of Directors' designating one or more committees of any
size or composition to administer the 1987 Plan; and 6) provide for automatic
grants of stock options to non-employee directors.
30
<PAGE>
Activity and price information regarding the plans are as follows:
<TABLE>
<CAPTION>
Stock Options
-------------
Shares Price Range
------ -----------
<S> <C> <C>
Outstanding September 27, 1992 702,025 $1.000 - $2.750
Granted 10,000 $5.625
Exercised (30,500) $1.000 - $2.750
Expired or canceled (26,750) $1.000 - $2.750
--------
Outstanding October 3, 1993 654,775 $1.000 - $5.625
Granted 179,500 $3.875 - $5.000
Exercised (46,123) $1.000 - $5.000
Expired or canceled (21,750) $1.000 - $2.750
--------
Outstanding October 2, 1994 766,402 $1.000 - $5.625
--------
Granted 156,800 $2.000 - $5.000
Exercised (194,629) $1.000 - $5.000
Expired or canceled (12,300) $1.000 - $5.000
--------
Outstanding October 1, 1995 716,273 $1.000 - $5.625
========
</TABLE>
Stock options exercisable were 414,264, 469,202 and 394,757 at October 1, 1995,
October 2, 1994 and October 3, 1993, respectively. Remaining shares available
for grant at October 1, 1995, October 2, 1994 and October 3, 1993 under the
plans were 175,816, 176,725 and 256,225, respectively. All options were granted
at the fair market value of the Company's shares of common stock on the date of
grant.
Employee Benefit Plans
- ----------------------
The Microsemi Corporation Profit Sharing Plan, adopted by the Board of Directors
in fiscal year 1984, covers substantially all full-time employees who meet
certain minimum employment requirements. Annual contributions to the plan are
determined by the Board of Directors. Total employee benefit charges to income
amounted to approximately $2,882,000, $2,059,000, and $1,744,000 in fiscal years
1995, 1994 and 1993, respectively. Portions of the profit sharing plan are
deferred for payment to participating employees based upon various minimum
requirements through the Microsemi Corporation Employee Stock Ownership Plan
(ESOP) and the Microsemi Corporation Deferred Profit Sharing/Savings Plan
(401(k) Plan). A brief description of each deferred plan follows:
31
<PAGE>
ESOP
- ----
The plan's trust was authorized to invest primarily in the Company's common
stock and debentures. The trust acquired 15,100 shares of common stock on the
open market in fiscal year 1993. No shares were purchased in fiscal years 1994
and 1995. In December 1993, the Board of Directors decided to terminate the
plan. Upon receipt of the termination approval from the Internal Revenue
Service, the assets of the plan were distributed to the participants in fiscal
year 1995.
401(k) Plan
- -----------
Participating employees may elect to contribute up to 15% of their eligible
wages. The Company is committed to match 50% of employee contributions, not
exceeding 3% of the employee's wages. The Company contributed approximately
$583,000, $338,000 and $245,000 to this plan during fiscal years 1995, 1994 and
1993, respectively.
Supplemental Retirement Plan
- ----------------------------
In fiscal year 1994 the Company adopted a supplemental retirement plan which
provides certain long-term employees with retirement benefits based upon a
certain percentage of the employees' salaries. At October 1, 1995 and October 2,
1994 the Company's estimated liability for the plan was $1,406,000 and
$1,041,000, respectively.
10. COMMITMENTS AND CONTINGENCIES
The Company occupies premises under operating lease agreements expiring through
2006. Aggregate future minimum rentals payable under these leases are (amounts
in 000's):
<TABLE>
<S> <C>
1996 $ 977
1997 899
1998 881
1999 851
2000 873
Thereafter 5,581
------
$ 10,062
======
</TABLE>
Rental expense charged to income was $1,472,000 in fiscal year 1995, $1,297,000
in fiscal year 1994 and $1,814,000 in fiscal year 1993. The aforementioned
amounts are net of sublease income amounting to $145,000 and $117,000 in fiscal
years 1995 and 1993, respectively. The Company had no sublease income in fiscal
year 1994.
In July 1994, the Company received a letter from the State of Washington
Department of Ecology stating that it proposed finding the Company a potentially
liable party for alleged contamination of real property and ground water in
Yakima County, Washington. The letter alleges that the Company arranged for
disposal or treatment of the contaminates or arranged with a transporter for the
disposal or treatment of the contaminates in Yakima County. The Company disputes
the proposed finding of potential liability status.
32
<PAGE>
In Broomfield, Colorado, an owner of 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 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;
however, there can be no assurance that recourse will be available against third
parties. 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 or the allocation thereof among potentially responsible
parties. In the opinion of management, based in part on the opinion of legal
counsel, the final outcome of the Yakima, Washington and Broomfield, Colorado
environmental matters 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 commerical transactions,
contracts, and environmental matters. In the opinion of management, based in
part on the opinion of legal counsel, the final outcome of these matters will
not have a material adverse effect on the Company's financial position or
results of operations.
11. DISPOSITIONS
In October 1992, the Company sold the net assets of Hybritek, a subsidiary of
Sertech Labs, Inc. for $70,000 in cash; in November 1992, the Company sold
Microsemi Assembly and Test, Inc. for $25,000 in cash and a $22,000 short-term
note receivable; in June, 1993, the Company sold the assets of Micro-CeramX, a
manufacturer of ceramic chip capacitors for $100,000 in cash and a $740,000 note
receivable, and Bikor, a manufacturer of switching power supplies for $180,000
in cash plus notes receivable and certain contingent payments.
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, Corporation (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 a warrant 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.
The Company received no payments from TMI during fiscal year 1995. The Company
repossessed certain assets from TMI in June 1995 and sold a substantial portion
of these repossessed assets at an auction in October 1995. A reserve has been
established at October 1, 1995 to state the remaining assets at their estimated
net realizable values.
33
<PAGE>
12. GEOGRAPHIC AREAS
The following table presents sales, income from operations and identifiable
assets and liabilities by geographic areas for fiscal years 1995, 1994 and 1993:
<TABLE>
<CAPTION>
SALES TO INCOME (LOSS)
UNAFFILIATED FROM
GEOGRAPHIC AREAS CUSTOMERS OPERATIONS ASSETS - LIABILITIES
---------------- --------- ---------- ------ -----------
(amounts in 000's)
<S> <C> <C> <C> <C>
1995:
UNITED STATES $ 120,263 $ 13,050 $ 91,031 $ 79,978
EUROPE 12,725 1,348 6,460 2,602
ASIA 893 1,118 7,324 1,125
------- ------ ------- ------
TOTAL $ 133,881 $ 15,516 $ 104,815 $ 83,705
======= ====== ======= ======
1994:
UNITED STATES $ 111,408 $ 769 $ 88,845 $ 82,280
EUROPE 7,218 1,308 4,968 1,944
ASIA 604 (218) 6,336 1,137
------- ------ ------- ------
TOTAL $ 119,230 $ 1,859 $ 100,149 $ 85,361
======= ====== ======= ======
1993:
UNITED STATES $ 117,059 $ 7,022 $ 94,170 $ 84,599
EUROPE 6,071 880 4,173 2,214
ASIA 686 889 7,126 1,821
------- ------ ------- ------
TOTAL $ 123,816 $ 8,791 $ 105,469 $ 88,634
======= ====== ======= ======
</TABLE>
34
<PAGE>
13. STATEMENT OF CASH FLOWS
For purposes of the Consolidated Statement of Cash Flows, the Company considers
all short-term, highly liquid investments with maturities of three months or
less at date of acquisition to be cash equivalents.
<TABLE>
<CAPTION>
For the three fiscal
years in the period
ended October 1, 1995
---------------------
Supplementary information: 1995 1994 1993
---- ---- ----
(amounts in 000's)
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ 6,184 $ 4,867 $ 5,383
===== ===== =====
Income taxes $ 1,350 $ 1,269 $ 444
===== ===== =====
</TABLE>
14. RESEARCH AND DEVELOPMENT
Research and development expenses charged to cost of sales and expenses were
$755,000, $922,000 and $828,000, for the fiscal years 1995, 1994 and 1993,
respectively.
35
<PAGE>
15. UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
Selected financial data are as follows:
<TABLE>
<CAPTION>
Quarters ended in fiscal year 1995
----------------------------------
(amounts in 000's, except earnings per share)
January 1, April 2, July 2, Oct. 1,
1995 1995 1995 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $27,657 $32,441 $36,138 $37,645
Gross profit $ 7,004 $ 8,114 $ 9,602 $11,075
Net earnings $ 1,013 $ 1,348 $ 1,698 $ 1,994
Primary earnings per share $ 0.13 $ 0.17 $ 0.21 $ .24
Fully diluted earnings per share $ 0.12 $ 0.15 $ 0.17 $ .20
</TABLE>
<TABLE>
<CAPTION>
Quarters ended in fiscal year 1994
----------------------------------
(amounts in 000's, except earnings per share)
January 2, April 3, July 3, Oct. 2,
1994 1994 1994 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 26,929 $30,705 $30,336 $31,260
Gross profit (loss) $ 6,792 $ 7,834 $ 7,898 $ (86)
Net earnings (loss) $ 531 $ 790 $ 1,096 $(4,547)
Primary earnings (loss) per share $ 0.07 $ 0.10 $ 0.14 $ (.60)
Fully diluted earnings (loss) per share $ 0.06 $ 0.09 $ 0.12 $ (.60)
</TABLE>
36
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS
(amounts in 000's)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Balance at Charged to Charged Deductions - Balance
beginning costs and to other recoveries at end of
Classification of period expenses accounts and write-offs period
- -------------- --------- -------- -------- -------------- ---------
<S> <C> <C> <C> <C> <C>
October 1, 1995
Allowance for doubtful accounts and
reserve for returns $ 2,173 $ 421 $ - $ (576) $ 2,018
===== ===== ===== ===== =====
Reserve for investments in unconsolidated
affiliates $ 237 $ - $ - $ - $ 237
===== ===== ===== ===== =====
October 2, 1994
Allowance for doubtful accounts and
reserve for returns $ 1,709 $ 569 $ - $ (105) $ 2,173
===== ===== ===== ===== =====
Reserve for investments in unconsolidated
affiliates $ 237 $ - $ - $ - $ 237
===== ===== ===== ===== =====
October 3, 1993
Allowance for doubtful accounts and
reserve for returns $ 2,111 $ 582 $ (21) $ (963) $ 1,709
===== ===== ===== ===== =====
Reserve for investments in unconsolidated
affiliates $ 19 $ 218 $ - $ - $ 237
===== ===== ===== ===== =====
</TABLE>
37
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
SCHEDULE IX - SHORT TERM BORROWINGS
(amounts in 000's)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E Column F
- -------- -------- -------- -------- -------- --------
Weighted
Maximum Average average
Weighted amount Amount interest
Balance average outstanding outstanding rate
at end interest during during the during the
Category of aggregate short-term borrowings of period rate the period period(A) period(B)
- ------------------------------------------- --------- -------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
October 1, 1995
Banks $ 4,482 15.0% $ 8,696 $ 7,160 12.8%
====== ===== ====== ====== =====
October 2, 1994
Banks $ 9,386 11.1% $ 11,754 $ 10,481 9.6%
====== ===== ====== ====== =====
October 3, 1993
Banks $ 9,927 8.8% $ 13,884 $ 12,452 8.7%
====== ===== ====== ====== =====
</TABLE>
(A) The average amount outstanding during the period was determined by dividing
the total of the month end amounts outstanding by the number of months.
(B) The weighted average interest rate during the period was determined by
dividing the total amount of interest paid during the period by the average
amount outstanding during the period.
38
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
Column A Column B
- -------- --------
Charges to cost and expenses
----------------------------
Items Fiscal years ended
- ----- --------------------------------------
(amounts in 000's)
October 1, October 2, October 3,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Maintenance and repairs $ 1,602 $ 1,636 $ 1,876
===== ===== =====
Depreciation and amortization
of intangible assets and deferred credits $ 214 $ 251 $ 570
===== ===== =====
Taxes other than payroll
and income taxes $ 705 $ 876 $ 1,159
===== ===== =====
</TABLE>
39
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
----------------------------------------------------
None
PART III
--------
Items 10, 11, 12 and 13 are omitted since the Registrant intends to file a
definitive proxy statement with the Securities and Exchange Commission pursuant
to Regulation 14A within 120 days after the end of Registrant's fiscal year
ended October 1, 1995. The information required by those Items is set forth in
that certain proxy statement and such information is incorporated in this Form
10-K.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
----------------------------------------------------------------
(a) 1. Financial Statements. See Index under Item 8.
2. Financial Statement Schedules. See Index under Item 8.
3. Exhibits:
The exhibits which are filed with this report are listed in the
Exhibit Index.
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed by the Company during
the fiscal quarter ended October 1, 1995:
The unaudited proforma condensed consolidated statement of
operations of Microsemi Corporation and subsidiaries for the fiscal
year ended October 2, 1994 reflecting the disposition of Omni
Technology Corporation as it had taken place on October 3, 1993.
40
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, 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
Dated: December 21, 1995
41
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(Continued)
3. Exhibits.
EXHIBIT INDEX
Sequential
Exhibit Page
Number Description Number
2.1 Agreement for Purchase and Sale of Omni Assets dated as of May 18,
1994 between Omni Technology Corporation, a California corporation and
a wholly owned subsidiary of the Registrant ("Omni"), and Technology
Marketing, Incorporated, a California corporation ("TMI") including
the following ancillary documents: (a) Negotiable Promissory Note
dated June 2, 1994; (b) Certificate of Determination for Series A
Preferred Stock of TMI filed June 8, 1994; (c) Security Agreement
dated June 2, 1994; (d) Sublease dated June 2, 1994; and (e)
Intercreditor and Subordination Agreement dated June 2, 1994 among
Concord Growth Corporation, a California corporation, Omni, and the
Registrant (Additional Schedules and Exhibits are not included
pursuant to Item 601(b)(2) of Regulation S-K) (24)
3 Restated Certificate of Incorporation and Bylaws of the Registrant
(1)
4 Form of Indenture, including form of 5 7/8% Convertible Subordinated
Debenture due 2012 (2)
4.1 Subordinated Convertible Note Purchase Agreement dated June 26, 1992
among the Registrant and the Purchasers named therein and Exhibit A
hereto, a form of Subordinated Convertible Note
10.1 1984 Incentive Stock Option Plan (as amended December 13, 1984) (3)
10.2 Form of Incentive Stock Option Agreement pursuant to 1984
Incentive Stock Option Plan (3)
10.3 Form of Stock Option Agreement, dated October 17, 1985,
between the Registrant and members of the Registrant's Board
of Directors (1)
10.4 Limited Partnership Agreement for Testing Laboratory
Limited Partnership, effective October 30, 1985, between HDJ
Enterprises, Inc. (General Partner), and the Registrant,
Milt D. Coggins, Jr., Dick L. Jones and Harry D. Jones
(Limited Partners); Arizona Electronic Standard
Laboratories, Inc. Stock Acquisition and Option Agreement
dated October 30,
<PAGE>
1985 among Delbert F. Serbousek and Phyllis J. Serbousek,
Arizona Electronic Standards Laboratories, Inc., the
Registrant and Testing Laboratory Limited Partnership; and
Stock Sale and Amendment to Stock Purchase Agreement and
Loan Agreement, dated October 30, 1985, among Delbert F.
Serbousek and Phyllis J. Serbousek; Arizona Electronic
Standard Laboratories, Inc.; and the Registrant (4)
10.5 Credit Agreement between the Registrant and Security
Pacific National Bank, dated as of September 3, 1984, and
First Amendment to Credit Agreement dated as of May 1, 1985
(1)
10.6 Lease dated June 29, 1982 between Ulrich Layher and MSC
Phoenix, Inc. (1)
10.7 Plan of acquisition of Bikor, Inc. (Exhibit 2.1) (5)
10.8 Plan of acquisition of RPM, Enterprises (Exhibit 2.2) (5)
10.9 Plan of acquisition of Surface Mounted Technology
Corporation (Exhibit 2.3) (5)
10.10 Plan of acquisition of Micro Assembly & Test, Inc.
(Exhibit 2.4) (5)
10.11 1986 Nonqualified Stock Option Plan of the Registrant
(Exhibit 10.9) (5)
10.12 Agreement between Berney Construction, Inc. and the
Registrant (Exhibit 10.10) (5)
10.13 The Registrant's 1987 Stock Plan (6)
10.14 Indenture dated as of February 1, 1985, and related Loan
Agreement and Reimbursement Agreement both dated as of
February 1, 1985, relating to the Industrial Revenue Bonds
issued to finance additions to the Santa Ana facility of the
Registrant (2)
10.15 Stock Sale Agreement, dated November 12, 1987 between
Coors Porcelain Company and the Registrant, relating to the
acquisition of Coors Components, Inc. (7)
10.16 Press Release distributed by the Registrant on November
12, 1987, announcing the acquisition of Coors Components,
Inc. (7)
10.17 Letter Agreement dated as of September 16, 1987 by and
among the Registrant, AVX Corporation ("AVX") and Vitarel
Microelectronics, Inc. ("Vitarel") (7)
10.18 Stock, Loan and Equipment Agreement dated as of November
24, 1987 by and among the Registrant, AVX and
<PAGE>
Vitarel (7)
10.19 Security and Loan Agreement dated as of November 24, 1987
by and among the Registrant, AVX and Vitarel (7)
10.20 Press Release distributed by the Registrant on November
25, 1987, announcing the investment in Vitarel (7)
10.21 Letter Agreement dated June 19, 1987 between Testing
Laboratory Limited Partnership ("TLLP"), HDJ Enterprises,
Inc. ("HDJ"), Arizona Electronic Standards Laboratories,
Inc. ("AESL") and the Registrant(8)
10.22 First Amendment to Limited Partnership Agreement for TLLP
dated June 19, 1987 by and among the Registrant, Milt
D.Coggins, Jr., Dick L. Jones and Harry D. Jones (8)
10.23 Loan Agreement (Term) dated July 8, 1987 for $1,414,867
executed by the Registrant, AESL, Amerihold, Inc. and TLLP
(8)
10.24 Loan Agreement (Revolving) dated July 8, 1987 for $500,000
executed by the Registrant, AESL, Amerihold, Inc. and TLLP
(8)
10.25 Mutual Release and Settlement Agreement dated June 19,
1987, executed by AESL, TLLP, HDJ, the Registrant, Nancy L.
Jones, Harry D. Jones, Milton D. Coggins, Jr., Dick L. Jones
and The Harry D. Jones and Nancy L. Jones Revocable Trust;
unexecuted by Delbert F. Serbousek, Phyllis J. Serbousek and
Commercial State Bank (8)
10.26 Deed of Trust, dated July 8, 1987, by AESL, as Trustor to
Title Insurance Company of Minnesota, as Trustee for the
Registrant, as Beneficiary and recorded in the Official
Records of Maricopa County, Arizona, July 9, 1987 (8)
10.27 Reorganization Agreement dated as of August 27, 1987 among
the Registrant, Microsemi Test Number 3 and Omni Technology
Corporation (8)
10.28 Asset Purchase Agreement dated October 12, 1987 among
Microsemi Test Equipment, Inc., a subsidiary of the
Registrant, Custom Test Technologies, Inc., Stanley E. Wood,
John Sullivan and Bernard Elbinger, relating to the
acquisition of the assets and operations of Custom Test
Technologies, Inc. (8)
10.29 Subscription Agreement dated July 24, 1987 between the
Registrant and Diodes Incorporated for the subscription of
800,000 shares of Diodes
<PAGE>
Incorporated (8)
10.30 Management and Asset Purchase Agreement dated August 7,
1987, between Microcap Corporation, a wholly-owned
subsidiary of Registrant, and Cernetics Corporation (8)
10.31 Certificate of Sale dated December 3, 1987 of BT
Commercial Corporation ("BT"), and agreed to by Omni
Technology Corporation, a subsidiary of the Registrant
("Omni"), relating to the sale by BT to Omni of certain
assets of Pacific Reliability Corporation(8)
10.32 Agreement of Purchase and Sale of Stock dated April 6,
1988, between General Microcircuits, Inc. and the Registrant
relating to the purchase of all of the outstanding stock of
General Microcircuits (9)
10.33 Agreement of Purchase and Sale of Stock dated May 25,
1988, between Distributed Microtechnology, Inc. ("DM") and
the Registrant relating to the purchase of all of the
outstanding stock of DM (9)
10.34 Assignment of Lease between DM and Westshore Enterprises
assigning all interest to DM of the Lease dated February 24,
1986, between National Western -Providence Equity Fund and
Westshore Enterprises, Inc. for the premises located at 1592
N. Batavia, Unit 7B, Orange, California (9)
10.35 Asset Purchase and Sale Agreement dated May 31, 1988,
between the Registrant and Universal Microtechnologies, Inc.
for the purchase of the assets of Universal
Microtechnologies (9)
10.36 Recapitalization Agreement executed on September 28, 1988,
effective as of July 1, 1988, between the Registrant, AVX
Corporation and Vitarel Microelectronics, Inc. regarding the
recapitalization of Vitarel Microelectronics, Inc. (9)
10.37 Stock Purchase Agreement dated as of February 17, 1989 by
and between Avnet, Inc., a New York corporation, and Salem
Scientific, Inc., a Microsemi Company, a Delaware
corporation and a wholly-owned subsidiary of the Registrant
(10)
10.38 Agreement for Purchase and Sale of Assets dated November
2, 1989 between Microsemi Corp.-Scottsdale, an Arizona
corporation and Yubo International Incorporation, a
California corporation (11)
10.39 Purchase and Sale Agreement dated November 14, 1989 among
Universal Microtechnologies, Inc., a Delaware corporation,
the Registrant and Dowty Electronics Company of Brandon,
Vermont, a New Jersey
<PAGE>
corporation (12)
10.40 Stock Purchase Agreement dated October 23, 1989 between
GRT Acquisition Corporation, a California corporation and
the Registrant (13)
10.41 Third Amendment to Credit Agreement between the Registrant
and Security Pacific National Bank dated as of March 10,
1989 (14)
10.42 Fourth Amendment to Credit Agreement between the
Registrant and Security Pacific National Bank dated as of
June 1, 1989 (14)
10.43 Form of Installment Note dated as of October 20, 1989
relating to the borrowing by the Registrant of $10,000,000
from Sanwa Business Credit Corporation (the "Installment
Note") (14)
10.44 Form of Security Agreement dated as of October 20, 1989,
entered into by the Registrant for the benefit of Sanwa
Business Credit Corporation, relating to the Installment
Note (14)
10.45 Form of Security Agreement dated as of October 20, 1989,
entered into by Microsemi Corp.-Scottsdale for the benefit
of Sanwa Business Credit Corporation relating to the
Installment Note (14)
10.46 Form of Security Agreement dated as of October 20, 1989,
entered into by Microsemi Corp.-Colorado for the benefit of
Sanwa Business Credit Corporation relating to the
Installment Note (14)
10.47 Second Amended and Restated Credit Agreement dated as of
November 1, 1989 by and between the Registrant and Security
Pacific National Bank (15)
10.48 First Amendment and Forbearance to the Registrant's Second
Amended and Restated Credit Agreement dated as of November
1, 1990 (15)
10.49 Confirmation dated December 10, 1990 from Security Pacific
National Bank concerning the extension of the Registrant's
line of credit and standby letters of credit to February 1,
1991 (15)
10.50 Asset Purchase Agreement dated May 17, 1991 among ST-
Semiconductors of Indiana, Inc., an Indiana corporation
("ST"), Lane Jorgensen, Joseph Kaszycki and Peter Klein, the
ST stockholders, Microsemi ST-S, Inc., a Delaware
corporation and subsidiary of the Registrant ("MSUB"), the
Registrant, and INB National Bank, a national association
("INB"), pertaining to the purchase by MSUB of the ST assets
from INB, together Exhibits A, B, C and H thereto (16)
<PAGE>
10.51 Credit Agreement dated July 3, 1991 between ST, MSUB and
INB (16)
10.52 Assignment and Assumption Agreement dated September 23,
1991 by and among Dynamic Circuits, Inc., a California
corporation ("Dynamic"), Surface Mounted Technology
Corporation, a California corporation ("SMTC") and the
Registrant, pertaining to Dynamic's purchase from SMTC of
the SMTC assets, together with the following supplemental
documentation: (a) Letter of Intent dated August 14, 1991
(and Addendum thereto); (b) Equipment Lease Agreement; (c)
Promissory Note; and (d) Security Agreement (16)
10.53 Loan and Security Agreement dated December 6, 1991 between
CoastFed Business Credit Corporation, a California
corporation ("Coastfed"), and the Registrant, together with
the following related documentation: (a) Accounts Collateral
Security Agreement; (b) Inventory Collateral Security
Agreement; (c) Equipment Collateral Security Agreement; and
(d) Continuing Guaranty, executed by the following
subsidiaries of the Registrant as guarantor: General
Microcircuits, Inc., Microsemi Corp.-Scottsdale and
Microsemi Corp.-Colorado (16)
10.54 Asset Purchase Agreement dated May 28, 1992 between Micro
USPD, Inc., a Delaware corporation and wholly-owned
subsidiary of the Registrant
("Micro USPD"), and
Unitrode Corporation, a Maryland corporation ("Unitrode")
(17)
10.55 Irish Acquisition Agreement dated July 2, 1992 among
Unitrode Ireland, Ltd., an Irish corporation and wholly-
owned subsidiary of Unitrode; Unitrode B.V., a Dutch
corporation and wholly-owned subsidiary of Unitrode; and
Micro (Bermuda), Ltd., a Bermudian corporation and wholly-
owned subsidiary of the Registrant ("Micro Bermuda") (18)
10.56 Dutch Acquisition Agreement dated July 2, 1992 among
Unitrode Europe B.V., a Dutch corporation and wholly-owned
subsidiary of Unitrode;
Unitrode; and Micro
Bermuda (19)
10.57 Extension Agreement and Amendment, dated July 2, 1992
among Coastfed, the Registrant and certain subsidiaries of
the Registrant (20)
10.58 Form of Guarantees given by the Registrant to Midland Bank
plc with regard to the obligations of Hybritek Limited dated
September 3, 1992 and of Hybritek UK Limited dated October
7, 1992, both United Kingdom companies and indirect, wholly-
owned subsidiaries of the Registrant (20)
<PAGE>
10.59 Asset Sale Agreement dated October 16, 1992 between
Hybritek Limited and Hybritek UK Limited, both United
Kingdom companies and indirect, wholly-owned subsidiaries of
the Registrant (20)
10.60 Share Sale and Purchase Agreement Relating to Hybritek UK
Limited dated October 28, 1992 among Hybritek Limited, a
United Kingdom company and indirect wholly-owned subsidiary
of the
Registrant; the Registrant;
and Rood Technology UK Limited, a United Kingdom
company (20), excluding the following schedules:
First Schedule Warranties
Second Schedule Deed of Indemnity
Third Schedule Short Particulars of the
Property
Fourth Schedule Limitations
Annexure 1 Assets List
10.61 Stock Sale and Assignment Agreement dated November 9, 1992
among the Registrant, Microsemi Assembly and Test, Inc., a
California corporation and wholly-owned subsidiary of the
Registrant, and Ian S. Scott (20)
10.62 Asset Purchase Agreement dated as of November 24, 1992 by
and between the Registrant and GI Corporation, a Delaware
corporation (20)
10.63 Amendment Agreement dated as of December 15, 1992 between
Coastfed and the Registrant and certain of its subsidiaries
(20)
10.64 Promissory Note dated December 21, 1992 made by the
Registrant and payable to Norman Wechsler in the original
principal amount of $150,000 and extension letter agreement
dated April 23, 1993 (21)
10.65 Waiver and First Amendment to Reimbursement Agreement
dated as of January 8, 1993 between the Registrant and Bank
of America NT&SA with respect to the Reimbursement Agreement
(See Exhibit 10.14) dated as of February 1, 1988 (21)
10.66 Senior Note Purchase Agreement dated March 25, 1993
between the Registrant and Norman Wechsler, including as an
exhibit thereto the form of Senior Promissory Note dated
March 25, 1993 (21)
10.67 Agreement for Purchase and Sale of Micro-Ceramx Assets
dated June 25, 1993 between Micro-Ceramx Technology, Inc., a
Utah corporation, formerly known as Microcap Corporation and
a wholly-owned subsidiary of the Registrant and Custom
Ceramic Products, Inc., a California corporation (21)
10.68 Agreement for Purchase and Sale of Bikor Assets dated June
30, 1993 between Bikor Corporation, a California
<PAGE>
corporation and a wholly-owned subsidiary of the Registrant
and BMA, Inc., a California corporation (21)
10.69 Letter dated August 31, 1993 from Unitrode to the
Registrant providing for amendments with respect to the
Asset Purchase Agreement (See Exhibit 10.54) dated May 28,
1992 between Micro USPD and Unitrode excluding exhibits as
follows (22):
Amendments to Promissory Notes dated as of September 3, 1993
between Micro USPD and Unitrode and the respective
Promissory Notes dated July 2, 1992 attached as exhibits
thereto
10.70 Amended and Restated Loan and Security Agreement dated as
of August 1, 1993 between Micro Quality Semiconductor, Inc.,
a California corporation, and a wholly-owned subsidiary of
the Registrant ("Micro Quality") and The CIT Group/Credit
Finance, Inc. excluding exhibits as follows (22):
Second Amended and Restated Promissory Note
Term Note
Permitted Liens and Security Interests
List of Locations of Collateral
10.71 Guaranty dated August 1, 1993 by the Registrant respecting
Micro Quality's obligations to The CIT Group/Credit Finance,
Inc. (22)
10.72 Agreement dated March 30, 1994 between Coastfed and the
Registrant, Microsemi Corp.-Scottsdale, Microsemi Corp.-
Colorado, General Microcircuits, Inc., Micro-USPD, Inc. and
Omni Technology Corporation (23)
10.73 Amendment to the Registrant's 1987 Stock Plan. (25)
10.74 Executive Compensation Plans and Arrangements (26)
<PAGE>
10.75 Bill of Sales Purchase agreement between Telcon Universal
Inc. and MIcrosemi Corporation. (26)
10.76 Supplemental to financing documents (Indenture of Trust and
Loan agreement) relating to Industrial Development Authority
of the City of Santa Ana, 1985 Industrial Development
Revenue Bonds Microsemi Corporation Project) dated as of
January 15, 1995. (26)
10.77 Amendments of the 1987 Microsemi Corporation Stock Plan.
Adopted on May 16, 1995. (27)
23.1 Consent of Independent Accountants.
27.4 Financial data schedule for the fiscal year ended October 1,
1995.
(1) Filed in Registration Statement (No. 33-3845) and incorporated herein by
this reference.
(2) Filed in Registration Statement (No. 33-11967) and incorporated herein
by this reference.
(3) Filed with the Registrant's S-8 dated January 27, 1986 and incorporated
herein by this reference.
(4) Filed with the Registrant's 10-K for fiscal year ended September 29,
1985 and incorporated herein by this reference.
(5) Incorporated by reference to the indicated Exhibit to the Registrant's
Annual Report on Form 10-K filed with the Commission for the fiscal year
ended September 28, 1986.
(6) Incorporated by reference from Exhibit A to the Registrant's definitive
Proxy Statement dated January 19, 1987.
(7) Incorporated by reference to the indicated Exhibit to the Registrant's
Current Report on Form 8-K filed with the Commission on or about
December 23, 1987.
(8) Incorporated by reference to the indicated Exhibit to the Registrant's
Annual Report on Form 10-K filed with the Commission for the fiscal year
ended September 27, 1987.
(9) Incorporated by reference to the indicated Exhibit to the Registrant's
Annual Report on Form 10-K filed with the Commission for the fiscal year
ended October 2, 1988.
<PAGE>
(10) Incorporated by reference to Exhibit 10.33 to the Registrant's Current
Report on Form 8-K, as amended, as filed with the Commission on or about
April 6, 1989.
(11) Incorporated by reference to Exhibit 10.34 to the Registrant's Current
Report on Form 8-K, as filed with the Commission on or about December 22,
1989.
(12) Incorporated by reference to Exhibit 10.35 to the Registrant's Current
Report on Form 8-K, as filed with the Commission on or about December 22,
1989.
(13) Incorporated by reference to Exhibit 10.36 to the Registrant's Current
Report on Form 8-K, as filed with the Commission on or about December 22,
1989.
(14) Incorporated by reference to the indicated Exhibit to the Registrant's
Annual Report on Form 10-K filed with the Commission for the fiscal year
ended October 1, 1989.
(15) Incorporated by reference to the indicated Exhibit to the Registrant's
Annual Report on Form 10-K filed with the Commission for the fiscal year
ended September 30, 1990.
(16) Incorporated by reference to the indicated Exhibit to the Registrant's
Annual Report on Form 10-K filed with the Commission for the fiscal year
ended September 29, 1991.
(17) Incorporated by reference to Exhibit 2.1 to the Registrant's Form 8
Amendment No. 1, as filed with the Commission on September 8, 1992, to its
Current Report on Form 8-K dated July 2, 1992.
(18) Incorporated by reference to Exhibit 2.2 to the Registrant's Form 8
Amendment No. 1, as filed with the Commission on September 8, 1992, to its
Current Report on Form 8-K dated July 2, 1992.
(19) Incorporated by reference to Exhibit 2.3 to the Registrant's Form 8
Amendment No. 1, as filed with the Commission on September 8, 1992, to its
Current Report on Form 8-K dated July 2, 1992.
(20) Incorporated by reference to the indicated Exhibit to the Registrant's
Annual Report on Form 10-K filed with the Commission for the fiscal year
ended September 27, 1992.
(21) Incorporated by reference to the indicated Exhibit to the Registrant's
Quarterly Report on Form 10-Q filed with the Commission for the fiscal
quarter ended July 4, 1993.
(22) Incorporated by reference to the indicated Exhibit to the Registrant's
Annual Report on Form 10-K filed with the Commission for the fiscal year
ended October 3, 1993.
(23) Incorporated by reference to the indicated Exhibit to the Registrant's
Quarterly Report on Form 10-Q filed with the Commission for the fiscal
quarter ended April 3, 1994.
<PAGE>
(24) Incorporated by reference to the indicated Exhibit to the Registrant's
Current Report on Form 8-K, as filed with the Commission dated June 8, 1994.
(25) Incorporated by reference to the indicated Exhibit to the Registrant's
Current Report on Form 10-K as filed with the Commission for the fiscal year
ended October 2, 1994.
(26) Incorporated by reference to the indicated Exhibit to the Registrant's
Quarterly Report on Form 10-Q filed with the Commission for the fiscal
quarter ended April 2, 1995.
(27) Incorporated by reference to the indicated Exhibit to the Registrant's
Quarterly Report on Form 10-Q filed with the Commission for the fiscal
quarter ended July 2, 1995.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (files nos. 33-2607, 33-16711 and 2-77708) of Microsemi
Corporation of our report dated December 13, 1995, appearing on page 16 of this
Form 10-K.
PRICE WATERHOUSE LLP
Costa Mesa, California
December 21, 1995
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
MICROSEMI CORPORATION AND SUBSIDIARIES FINANCIAL DATA SCHEDULE FOR THE FISCAL
YEAR ENDED OCTOBER 1, 1995 (AMOUNTS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-01-1995
<PERIOD-START> OCT-03-1994
<PERIOD-END> OCT-01-1995
<CASH> 3,965
<SECURITIES> 0
<RECEIVABLES> 22,209
<ALLOWANCES> 2,018
<INVENTORY> 43,281
<CURRENT-ASSETS> 77,283
<PP&E> 52,044
<DEPRECIATION> 28,442
<TOTAL-ASSETS> 104,815
<CURRENT-LIABILITIES> 31,569
<BONDS> 48,158
0
0
<COMMON> 1,558
<OTHER-SE> 19,552
<TOTAL-LIABILITY-AND-EQUITY> 104,815
<SALES> 133,881
<TOTAL-REVENUES> 133,881
<CGS> 98,086
<TOTAL-COSTS> 98,086
<OTHER-EXPENSES> 234
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,022
<INCOME-PRETAX> 10,260
<INCOME-TAX> 4,207
<INCOME-CONTINUING> 6,053
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,053
<EPS-PRIMARY> .74
<EPS-DILUTED> .62
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