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Previous: SOUTHERN OHIO COAL CO, U-6B-2, 1996-02-07 |
Next: POPE & TALBOT INC /DE/, SC 13G, 1996-02-07 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the Quarterly Period Ended December 31, 1995
------------------------------------------------
or
--- Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
------- ------
Commission File No. 0-8866
MICROSEMI CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-2110371
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2830 South Fairview Street, Santa Ana, California 92704
--------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(714) 979-8220
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 month period (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
The number of shares outstanding of the issuer's Common Stock, $.20 par value,
on January 19, 1996 was 7,801,636.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The unaudited consolidated financial information for the quarter ended
December 31, 1995 of Microsemi Corporation and Subsidiaries (the "Company")and
the comparative unaudited consolidated financial information for the
corresponding period of the prior year, together with the balance sheet as of
October 1, 1995 are attached hereto and incorporated herein by this reference.
<PAGE>
<TABLE>
MICROSEMI CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(amounts in 000's)
<CAPTION>
December 31, 1995 October 1, 1995
----------------- ---------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 3,117 $ 3,965
Accounts receivable less allowance for doubtful accounts,
$1,903 at December 31, 1995 and $2,018 at October 1, 1995 19,647
20,191
Inventories 43,981 43,281
Deferred income taxes 5,471 5,471
Other current assets 2,664 4,375
------- -------
Total current assets 74,880 77,283
------- -------
Property and equipment, at cost 53,205 52,044
Less: Accumulated depreciation (29,389) (28,442)
------- -------
23,816 23,602
------- -------
Deferred income taxes 569 569
------- -------
Other assets 3,506 3,361
------- -------
$ 102,771 $ 104,815
</TABLE>
<TABLE>
======= =======
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities
Notes payable to banks and others $ 3,445 $ 4,561
Current maturities of long-term debt 2,075 2,328
Accounts payable and accrued liabilities 19,320 19,952
Income taxes payable 2,862 4,016
Deferred income taxes 712 712
------- -------
Total current liabilities 28,414 31,569
------- -------
Deferred income taxes 1,864 1,864
------- -------
Long-term debt 47,767 48,158
------- -------
Other long-term liabilities 2,235 2,114
------- -------
Stockholders' equity
Common stock, $.20 par value; authorized 20,000 shares; issued
7,796 shares at December 31, 1995 and 7,789 shares at October 1, 1995 1,559
1,558
Paid-in capital 14,664 14,644
Retained earnings 6,268 4,908
------- -------
Total stockholders' equity 22,491 21,110
------- -------
$ 102,771 $ 104,815
======= =======
<FN>
See accompanying Notes to Unaudited Consolidated
Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(amounts in 000's, except earnings per share)
<CAPTION>
13 Weeks Ended 13 Weeks Ended
December 31, 1995 January 1, 1995
----------------- ---------------
<S> <C> <C>
Net sales $ 35,299 $ 27,657
Cost of sales 26,096 20,653
------ ------
Gross profit 9,203 7,004
------ ------
Operating expenses
Selling 2,076 1,895
General and administrative 3,171 2,318
Amortization of goodwill and other intangible assets 57 49
------ ------
Total operating expenses 5,304 4,262
------ ------
Income from operations 3,899 2,742
------ ------
Other income (expense)
Interest expense (net) (1,228) (1,117)
Other (207) 9
------ ------
Total other expense (1,435) (1,108)
------ ------
Earnings before income taxes 2,464 1,634
Provision for income taxes 1,035 621
------ ------
Net earnings $ 1,429 $ 1,013
====== ======
Earnings per share
- Primary $ 0.17 $ 0.13
====== ======
- Fully diluted $ 0.15 $ 0.12
====== ======
Common and common equivalent shares outstanding
- Primary 8,266 7,971
- Fully diluted 11,789 11,511
<FN>
See accompanying Notes to Unaudited Consolidated
Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Retained Earnings (Accumulated Deficit)
(amounts in 000's)
<CAPTION>
13 Weeks Ended 13 Weeks Ended
December 31, 1995 January 1, 1995
----------------- ---------------
<S> <C> <C>
Retained earnings (accumulated deficit) at beginning of period $ 4,908 $ (1,128)
Net earnings 1,429 1,013
Translation loss from foreign currency (69) (2)
----- -------
Retained earnings (accumulated deficit) at end of period $ 6,268 $ (117)
===== =======
<FN>
See accompanying Notes to Unaudited Consolidated
Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
MICROSEMI CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
(amounts in 000's)
<CAPTION>
13 Weeks Ended 13 Weeks Ended
December 31, 1995 January 1, 1995
----------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,429 $ 1,013
Adjustments to reconcile net earnings to net cash provided
from operating activities:
Depreciation and amortization 1,003 900
Decrease in allowance for doubtful accounts (115) (77)
Translation loss on foreign currency (69) (2)
Changes in assets and liabilities:
Accounts receivable 659 2,237
Inventories (700) (994)
Other current assets 1,711 (180)
Other assets (201) (115)
Accounts payable and accrued liabilities (632) (804)
Income taxes payable (1,154) 490
------ ------
Net cash provided from operating activities 1,931 2,468
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (1,161) (297)
------ ------
Net cash used for investing activities (1,161) (297)
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in notes payable to banks and others (1,116) (1,791)
Reduction of long-term debt (644) (788)
Increase in (reduction of) other long-term liabilities 121 (3)
Exercise of employee stock options 21 35
------ ------
Net cash used for financing activities (1,618) (2,547)
------ ------
Net decrease in cash and cash equivalents (848) (376)
Cash and cash equivalents at beginning of period 3,965 3,994
------ ------
Cash and cash equivalents at end of period $ 3,117 $ 3,618
====== ======
<FN>
See accompanying Notes to Unaudited Consolidated
Financial Statements.
</FN>
</TABLE>
<PAGE>
MICROSEMI CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
1. PRESENTATION OF FINANCIAL INFORMATION
The financial information furnished herein is unaudited, but, in the opinion of
the management of Microsemi Corporation, includes all adjustments (all of which
are normal, recurring adjustments) necessary for a fair presentation of the
results of operations for the periods indicated. The results of operations for
the first fiscal quarter of the current fiscal year are not necessarily
indicative of the results to be expected for the full year.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and, therefore, do not include
all information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. The financial statements and notes should,
therefore, be read in conjunction with the financial statements and notes
thereto in the Annual Report on Form 10-K for the fiscal year ended October 1,
1995.
2. INVENTORIES
For interim reporting purposes, cost of goods sold and inventories are estimated
based upon the use of the gross profit method applied to each product line.
<TABLE>
Inventories used in the computation of cost of goods sold were:
<CAPTION>
December 31, 1995 October 1, 1995
----------------- ---------------
(amounts in 000's)
<S> <C> <C>
Raw materials $ 10,374 $ 10,367
Work in progress 20,744 20,847
Finished goods 12,863 12,067
------ ------
$ 43,981 $ 43,281
====== ======
</TABLE>
<PAGE>
3. LONG-TERM DEBT
<TABLE>
Long-term debt consisted of:
<CAPTION>
December 31, 1995 October 1, 1995
----------------- ---------------
(amounts in 000's)
<S> <C> <C>
Industrial Development Bond-bearing interest at
7.875% due in installments from 1996 to 2000;
secured by first deed of trust $ 2,905 $ 2,905
Industrial Development Bond-bearing interest at
6.75% due in installments from 1998 to 2005;
secured by first deed of trust 5,350 5,350
Convertible Subordinated Debentures-bearing
interest at 5.875% due in March 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 March 1996 and July 2002 6,306 6,950
------ ------
49,842 50,486
Less current portion (2,075) (2,328)
------ ------
$ 47,767 $ 48,158
====== ======
</TABLE>
The Company's 5.875% Convertible Subordinated Debentures require annual sinking
fund payments in the amount of 5% of the principal amount thereof, commencing in
March 1997, less the principal amount of converted or redeemed debentures.
4. EARNINGS PER SHARE
Earnings per share for the primary basis have been computed based upon the
weighted average number of common and common equivalent shares outstanding
during the respective periods. Earnings per share for the fully diluted basis
have been computed, when the result is dilutive, based upon the assumption that
the convertible subordinated debt 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.
<PAGE>
5. STATEMENT OF CASH FLOWS
For purposes of the Consolidated Statements of Cash Flows, the Company considers
all short-term, highly liquid investments with maturities of three months or
less at the date of acquisition to be cash equivalents.
<TABLE>
Supplementary information
- -------------------------
<CAPTION>
13 weeks ended 13 weeks ended
December 31, 1995 January 1, 1995
----------------- ---------------
Cash paid during the period for: (amounts in 000's)
<S> <C> <C>
Interest $ 541 $ 755
Income taxes $ 2,189 $ 123
</TABLE>
6. CONTINGENCY
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 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 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
Microsemi Corporation is a multinational supplier of high reliability
power semiconductors, surface mount and custom diode assemblies for the
electronics, computer, telecommunications, defense/aerospace and medical
markets. The Company's semiconductor products include diodes, transistors and
silicon controlled rectifiers (SCR's) which can be used in virtually all
electrical and electronic circuits. Typical functions include solid state
switching, signal processing, voltage and power regulation, circuit protection
and absorption of electrical surges and transient voltage spikes. Technologies
for these devices range from the very mature mesa rectifier diodes still used in
all power supply applications to the newly designed micro-miniature transient
absorbers, which are mounted within the cables used to connect computer and
telecommunications equipment.
<PAGE>
Capital Resources and Liquidity
Microsemi Corporation's operations in the first quarter of fiscal year
1996 were funded with internally generated funds and borrowings from 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 December
31, 1995, $2,935,000 was borrowed under this credit facility. At December 31,
1995, the Company had $3,117,000 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 and carries interest currently at 6.75% per
annum, through the City of Santa Ana for the construction of improvements and
new facilities at the Santa Ana plant. The terms require principal payments of
$350,000 in 1996, 1997 and 1998; $100,000 from 1999 to 2004 and $3,700,000 in
2005.
The Company believes that it can meet its current operating cash and debt
service requirements with internally generated funds together with its available
borrowing capacity.
The average collection period of accounts receivable was 51 days for the
first quarter of fiscal year 1996 compared to 55 days for the same period of
fiscal year 1995.
The average days sales of products in inventories decreased to 153 days
for the first thirteen weeks of fiscal year 1996 from 179 days for the
corresponding period of fiscal year 1995. This primarily resulted from higher
sales in the current quarter.
The Company has no other significant capital commitments.
Order backlog at December 31, 1995 increased to $66,600,000 from
$49,700,000 at January 1, 1995.
RESULTS OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED DECEMBER 31, 1995 COMPARED TO
THE QUARTER ENDED JANUARY 1, 1995.
Net sales for the first quarter of fiscal year 1996 increased 28% to
$35,299,000, from $27,657,000 for the first quarter of fiscal year 1995. The
increase of $7,642,000 was primarily due to higher volume of shipments in
commercial and commercial space products.
Gross profit increased $2,199,000 to $9,203,000 for the first quarter of
fiscal year 1996 from $7,004,000 for the first quarter of fiscal year 1995 as
the result of higher sales; however, as a percentage of sales, gross profit
remained relatively constant at 26% and 25% for the first quarters of fiscal
years 1996 and 1995, respectively.
Operating expenses for the first thirteen weeks of fiscal year 1996
increased $1,042,000, compared to the corresponding period of the prior year;
however, operating expense decreased slightly as a percentage of sales.
<PAGE>
The effective tax rates of 42% and 38% in the first quarters of fiscal
years 1996 and 1995, respectively, are the combined result of taxes computed on
foreign and domestic income.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Inapplicable.
Item 2. Changes in Securities
---------------------
Inapplicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Inapplicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
(a) Inapplicable.
(b) Inapplicable.
(c) Inapplicable.
(d) Inapplicable.
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
Exhibit 11.3 Unaudited computation of Earnings Per
Share for the thirteen weeks ended
December 31, 1995 and January 1, 1995
Exhibit 27.5 Unaudited Financial Data Schedule for the
quarter ended December 31, 1995
(b) Reports on Form 8-K:
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MICROSEMI CORPORATION
By: /DAVID R. SONKSEN/
----------------------------
David R. Sonksen
Vice President - Finance and
Chief Financial Officer
(Principal Financial Officer
and Chief Accounting Officer
and duly authorized to sign on
behalf of the Registrant)
DATED: February 6, 1996
<PAGE>
<TABLE>
Exhibit 11.3
Microsemi Corporation and Subsidiaries
Unaudited Earnings Per Share
(in thousands, except per share data)
<CAPTION>
13 weeks ended 13 weeks ended
December 31, 1995 January 1, 1995
----------------- ---------------
<S> <C> <C>
PRIMARY
Net earnings $ 1,429 $ 1,013
====== ======
Outstanding shares 7,796 7,615
Equivalent shares from stock options 470 356
------ ------
Common and common equivalent shares 8,266 7,971
====== ======
Earnings per share $ 0.17 $ 0.13
====== ======
FULLY DILUTED
Net earnings $ 1,429 $ 1,013
Interest savings from conversion of convertible debt,
net of income taxes 323 333
------ ------
$ 1,752 $ 1,346
====== ======
Outstanding shares 7,796 7,615
Equivalent shares from stock options 470 373
Convertible shares 3,523 3,523
------ ------
Common and common equivalent shares 11,789 11,511
====== ======
Earnings per share $ 0.15 $ 0.12
====== ======
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-29-1996
<PERIOD-START> OCT-02-1995
<PERIOD-END> DEC-31-1995
<CASH> 3117
<SECURITIES> 0
<RECEIVABLES> 21550
<ALLOWANCES> 1903
<INVENTORY> 43981
<CURRENT-ASSETS> 74880
<PP&E> 53205
<DEPRECIATION> 29389
<TOTAL-ASSETS> 102771
<CURRENT-LIABILITIES> 28414
<BONDS> 47767
0
0
<COMMON> 1559
<OTHER-SE> 20932
<TOTAL-LIABILITY-AND-EQUITY> 102771
<SALES> 35299
<TOTAL-REVENUES> 35299
<CGS> 26096
<TOTAL-COSTS> 26096
<OTHER-EXPENSES> 207
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1228
<INCOME-PRETAX> 2464
<INCOME-TAX> 1035
<INCOME-CONTINUING> 1429
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1429
<EPS-PRIMARY> .17
<EPS-DILUTED> .15
<PAGE>
</TABLE>
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