Microsemi Reports First Quarter 2013 Results

                 Microsemi Reports First Quarter 2013 Results

-- GAAP and Non-GAAP Gross Margin of 57.6 Percent

-- Non-GAAP Diluted EPS of $0.50, up 28.2 Percent Over $0.39 from Prior Year
Quarter.

-- Net Sales of $247.6 million, up 2.8 Percent Over Prior Year Quarter

PR Newswire

ALISO VIEJO, Calif., Jan. 24, 2013

ALISO VIEJO, Calif., Jan. 24, 2013 /PRNewswire/ --Microsemi Corporation
(Nasdaq: MSCC), a leading provider of semiconductor solutions differentiated
by power, security, reliability and performance, today reported unaudited
results for its first quarter of fiscal 2013 ended Dec. 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20110909/MM66070LOGO)

Net sales for Microsemi's first quarter of fiscal 2013 were $247.6 million, up
2.8 percent over the prior year quarter. GAAP gross margin was 57.6 percent,
improving 540 basis points over the prior year quarter and improving 40 basis
points sequentially. GAAP operating margin was 10.3 percent, improving 1,060
basis points over the prior year quarter and improving 20 basis points
sequentially. GAAP net income for the first quarter of 2013 was $14.2 million
compared to a GAAP net loss of $44.6 million in the prior year quarter and
GAAP net income of $11.6 million in the prior quarter. GAAP diluted earnings
per share for the first quarter of 2013 were $0.16.

For the first quarter of fiscal 2013, non-GAAP gross margin was 57.6 percent,
improving 290 basis points over the prior year quarter and improving 40 basis
points sequentially. Non-GAAP operating margin was 22.9 percent, improving 140
basis points over the prior year quarter. Non-GAAP net income was $45.0
million and non-GAAP diluted earnings per share were $0.50.

"We continue to execute on our long term strategy," stated James J. Peterson,
president and CEO of Microsemi. "In a difficult environment, Microsemi
delivered results within guidance and continued to lay the foundation for
future revenue and profitability growth by improving product mix and gross
margins, paying down our term loan, and implementing a disciplined cost
control program. As we look toward expected recovery in 2013, we will continue
to see accelerating success of Microsemi's total solution approach in the
marketplace."

Business Outlook
Microsemi expects net sales in the second quarter of fiscal year 2013 to
decline 4 percent to 8 percent, sequentially, and expects non-GAAP diluted
earnings per share of between $0.37 and $0.43.

Microsemi regularly announces a quarterly outlook in the form of issuing a
news release and does not undertake to update any of this information between
such public announcements to reflect subsequent events or circumstances.
Please refer to the "SAFE HARBOR" STATEMENT below for risks that may affect
future actual results.

Non-GAAP Financial Measures
For further information regarding Microsemi's non-GAAP financial measures,
please refer to "Notes Reconciling Non-GAAP Financial Information to GAAP
Financial Information" below. GAAP results are reconciled to non-GAAP results
in the accompanying financial tables.

Information for First Quarter 2013 Earnings Conference Call and Webcast:

Date: Thursday, Jan. 24, 2013
Time: 4:45 p.m. EST (1:45 p.m. PST)

To access the webcast, log on to www.microsemi.com, go to the Investors
section and then to Events and Presentations. To listen to the live webcast,
visit this website approximately 15 minutes prior to the start of the call to
register, download and install any necessary audio software. For those unable
to participate during the live webcast, a replay will be available shortly
after the call on the website for 90 days.

To participate in the conference call by telephone, call 877-264-1110 or
706-634-1357 at approximately 4:30 p.m. EST (1:30 p.m. PST). Please provide
the following ID Number: 88746343.

A telephonic replay will be available from 6 p.m. EST (3 p.m. PST) on
Thursday, Jan. 24, 2013 through 11:59 p.m. EST (8:59 p.m. PST) on Thursday,
Jan. 31, 2013. To access the replay, call: 855-859-2056 or 404-537-3406.
Please enter the following ID Number: 88746343.

About Microsemi Corporation
Microsemi Corporation (Nasdaq: MSCC) offers a comprehensive portfolio of
semiconductor and system solutions for communications, defense & security,
aerospace and industrial markets. Products include high-performance,
radiation-hardened and highly reliable analog mixed-signal integrated
circuits, FPGAs, SoCs and ASICs; power management products; timing and voice
processing devices; RF solutions; discrete components; security technologies
and scalable anti-tamper products; Power-over-Ethernet ICs and midspans; as
well as custom design capabilities and services. Microsemi is headquartered in
Aliso Viejo, Calif., and has approximately 3,000 employees globally. Learn
more at www.microsemi.com.

PLEASE READ THE FOLLOWING FACTORS THAT CAN MATERIALLY AFFECT MICROSEMI'S
FUTURE RESULTS.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995: Any statements set forth in the news release that are not entirely
historical and factual in nature are forward-looking statements, including
without limitation statements concerning Microsemi's net sales, margins and
earnings guidance, our belief that Microsemi is positioned for continued
growth, and any other statements or beliefs regarding the company's plans or
expectations. Other examples of forward looking statements that are
incorporated in our current and expected results include, but are not limited
to, statements concerning our expectations that we will be able to
successfully integrate acquired companies and personnel with our existing
operations; expectations that plant consolidations will result in anticipated
cost savings without unanticipated costs or expenses; expectations regarding
tax exposures and future tax rates, our ability to realize deferred tax
assets, and the effect of examinations by US, state or foreign jurisdictions;
expectations regarding competitive conditions; new market opportunities and
emerging applications for our products; the uncertainty of litigation, the
costs and expenses of litigation, and the potential material adverse effect
litigation could have on our business and results of operations; beliefs that
our customers will not cancel orders or terminate or renegotiate their
purchasing relationships with us; expectation that we will not suffer
production delays as a result of a supplier's inability to supply parts; the
effect of events such as natural disasters and related disruptions on our
operations, including, without limitation, the effects of Hurricane Sandy in
the northeast United States; beliefs that we stock adequate supplies of all
materials; beliefs that we will be able to successfully resolve any disputes
and other business matters as anticipated; beliefs that we will be able to
meet our operating cash and capital commitment requirements in the foreseeable
future; critical accounting estimates; expectations regarding our financial
and operating results; expectations regarding our liquidity and capital
resources, including our loan covenants; expectations regarding our
performance and competitive position in future periods; and expectations
regarding our outlook for our end markets. These forward-looking statements
are based on Microsemi's current expectations and are inherently subject to
risks and uncertainties that could cause actual results to differ materially
from those expressed in the forward-looking statements. The potential risks
and uncertainties include, but are not limited to, such factors as continued
negative or worsening worldwide economic conditions or market instability;
downturns in the highly cyclical semiconductor industry; intense competition
in the semiconductor industry and resultant downward price pressure; inability
to develop new technologies and products to satisfy changes in customer demand
or the development by the company's competitors of products that decrease the
demand for Microsemi's products; unfavorable or declining conditions in end
markets; inability of Microsemi's compound semiconductor products to compete
successfully with silicon-based products; production delays related to new
compound semiconductors; variability of the company's manufacturing yields;
the concentration of the factories that service the semiconductor industry;
delays in beginning production, implementing production techniques, resolving
problems associated with technical equipment malfunctions, or issues related
to government or customer qualification of facilities; potential effects of
system outages; the effect of events such as natural disasters and related
disruptions on our operations, including, without limitation, the impact of
Hurricane Sandy in the northeast United States; inability by Microsemi to
fulfill customer demand and resulting loss of customers; variations in
customer order preferences; difficulties foreseeing future demand; rises in
inventory levels and inventory obsolescence; potential non-realization of
expected orders or non-realization of backlog; failure to make sales indicated
by the company's book-to-bill ratio; Microsemi's reliance on government
contracts for a portion of its sales, including impacts of potential
sequestration under the Budget Control Act of 2011; risks related to the
company's international operations and sales, including availability of
transportation services, political instability and currency fluctuations;
increases in the costs of credit and the availability of credit or additional
capital only under more restrictive conditions or not at all; unanticipated
changes in Microsemi's tax provisions, results of tax examinations or exposure
to additional income tax liabilities; changes in generally accepted accounting
principles; principal, liquidity and counterparty risks related to Microsemi's
holdings in securities; environmental or other regulatory matters or
litigation, or any matters involving contingent liabilities or other claims;
the uncertainty of litigation, the costs and expenses of litigation, the
potential material adverse effect litigation could have on Microsemi's
business and results of operations if an adverse determination in litigation
is made, and the time and attention required of management to attend to
litigation; difficulties in determining the scope of, and procuring and
maintaining, adequate insurance coverage; difficulties and costs of protecting
patents and other proprietary rights; the hiring and retention of qualified
personnel in a competitive labor market; acquiring, managing and integrating
new operations, businesses or assets, and the associated diversion of
management attention or other related costs or difficulties; uncertainty as to
the future profitability of acquired businesses, and delays in the realization
of, or the failure to realize, any accretion from acquisition transactions;
any circumstances that adversely impact the end markets of acquired
businesses; and difficulties in closing or disposing of operations or assets
or transferring work, assets or inventory from one plant to another. In
addition to these factors and any other factors mentioned elsewhere in this
news release, the reader should refer as well to the factors, uncertainties or
risks identified in Microsemi's most recent Form 10-K and any subsequent Form
10-Q reports filed by Microsemi with the SEC. Additional risk factors may be
identified from time to time in Microsemi's future filings. The
forward-looking statements included in this release speak only as of the date
hereof, and Microsemi does not undertake any obligation to update these
forward-looking statements to reflect subsequent events or circumstances.
Amounts reported in this release are preliminary and subject to finalization
prior to the filing of our next Form 10-Q.

(Financial Tables Follow)



MICROSEMI CORPORATION
Selected GAAP and Non-GAAP Financial Measures
(Unaudited, in millions except, for percentages and per share amounts)
                                        Quarter Ended
                                        Dec 30,      Sep 30,  Jan 1,
                                        2012         2012     2012
Net sales                               $  247.6     $ 263.1  $ 240.9
Selected GAAP Financial Measures
Gross profit                            $  142.6     $ 150.4  $ 125.7
Gross margin                            57.6%        57.2%    52.2%
Operating income (loss)                 $  25.5      $ 26.6   $ (0.7)
Operating margin                        10.3%        10.1%    (0.3)%
Net income (loss)                       $  14.2      $ 11.6   $ (44.6)
Diluted earnings (loss) per share       $  0.16      $ 0.13   $ (0.52)
Selected Non-GAAP Financial Measures
Gross profit                            $  142.6     $ 150.4  $ 131.9
Gross margin                            57.6%        57.2%    54.7%
Operating income                        $  56.7      $ 64.5   $ 51.8
Operating margin                        22.9%        24.5%    21.5%
Net income                              $  45.0      $ 51.8   $ 33.6
Diluted earnings per share              $  0.50      $ 0.58   $ 0.39



Additional details reconciling the selected GAAP financial measure to the
selected non-GAAP financial measure may be found in the "Schedule Reconciling
Selected Non-GAAP Financial Measures to Comparable GAAP Financial Measures"
and "Notes Reconciling Non-GAAP Financial Information to GAAP Financial
Information".



MICROSEMI CORPORATION
Schedule Reconciling Selected Non-GAAP Financial Measures
to Comparable GAAP Financial Measures
(unaudited, in millions, except for per share amounts)
                                                    Quarter Ended
                                                    Dec 30,  Sep 30,  Jan 1,
                                                    2012     2012     2012
GAAP gross profit                                   $ 142.6  $ 150.4  $ 125.7
Manufacturing profit in acquired inventory (1)      —        —        6.2
Non-GAAP gross profit                               $ 142.6  $ 150.4  $ 131.9
GAAP operating income (loss)                        $ 25.5   $ 26.6   $ (0.7)
Adjustments to GAAP gross profit                    —        —        6.2
Restructuring and other special charges (2)         1.4      0.3      7.8
Amortization of intangible assets (3)               21.7     27.4     24.9
Stock based compensation (4)                        8.1      9.7      7.5
Acquisition costs (5)                               —        0.5      6.1
Non-GAAP operating income                           $ 56.7   $ 64.5   $ 51.8
GAAP net income (loss)                              $ 14.2   $ 11.6   $ (44.6)
Adjustments to GAAP gross profit and operating      31.2     37.9     52.5
income
Thailand flood-related charges (2)                  —        —        3.5
Credit facility issuance and refinancing costs (6)  0.3      0.3      34.0
(Gain) in debt and derivative instruments (7)       (0.3)    (0.2)    (5.1)
Income tax effect on non-GAAP adjustments (8)       (0.4)    2.2      (6.7)
Non-GAAP net income                                 $ 45.0   $ 51.8   $ 33.6
GAAP diluted earnings (loss) per share              $ 0.16   $ 0.13   $ (0.52)
Effect of non-GAAP adjustments on diluted earnings  $ 0.34   $ 0.45   $ 0.91
per share
Non-GAAP diluted earnings per share                 $ 0.50   $ 0.58   $ 0.39
Weighted average diluted shares used in             90.1     88.8     86.2
calculating non-GAAP diluted earnings per share



Additional details reconciling the selected GAAP financial measure to the
selected non-GAAP financial measure may be found in "Notes Reconciling
Non-GAAP Financial Information to GAAP Financial Information".



MICROSEMI CORPORATION
Summary of Schedule Reconciling Selected Non-GAAP Financial Measures
to Comparable GAAP Financial Measures
(unaudited, in millions, except for per share amounts)
                                 Quarter Ended December 30, 2012
                                 GAAP     Non-GAAP Adjustments  Non-GAAP
Net sales                        $ 247.6  $     —               $  247.6
Gross profit                     $ 142.6  $     —               $  142.6
Operating expense                $ 117.1  $     (31.2)          $  85.9
Operating income                 $ 25.5   $     31.2            $  56.7
Interest and other expense, net  $ (8.3)  $     —               $  (8.3)
Income before income taxes       $ 17.2   $     31.1            $  48.3
Provision for income taxes       $ 3.0    $     0.4             $  3.4
Net income                       $ 14.2   $     30.8            $  45.0
Diluted earnings per share       $ 0.16   $     0.34            $  0.50



Additional details reconciling the selected GAAP financial measure to the
selected non-GAAP financial measure may be found in the "Schedule Reconciling
Selected Non-GAAP Financial Measures to Comparable GAAP Financial Measures"
and "Notes Reconciling Non-GAAP Financial Information to GAAP Financial
Information".



MICROSEMI CORPORATION
Consolidated Condensed Statement of Income and Operating Cash Flow
(unaudited, in millions, except per share amounts)
                                            Quarter Ended
                                            Dec 30,  Sep 30,  Jan 1,
                                            2012     2012     2012
Net sales                                   $ 247.6  $ 263.1  $ 240.9
Cost of sales                               105.0    112.7    115.2
Gross profit                                $ 142.6  $ 150.4  $ 125.7
Operating expenses
Selling, general and administrative         $ 51.3   $ 53.6   $ 48.6
Research and development                    43.2     42.8     39.6
Amortization of intangible assets           21.7     27.4     24.9
Acquisition costs                           —        0.5      6.1
Restructuring charges                       0.9      (0.5)    7.2
Total operating expenses                    $ 117.1  $ 123.8  $ 126.4
Operating income (loss)                     $ 25.5   $ 26.6   $ (0.7)
Interest and other (expense), net           (8.3)    (8.6)    (44.2)
Income (loss) before income taxes           $ 17.2   $ 18.0   $ (44.9)
Provision (benefit) for income taxes        3.0      6.4      (0.3)
Net income (loss)                           $ 14.2   $ 11.6   $ (44.6)
Earnings (loss) per share
Basic                                       $ 0.16   $ 0.13   $ (0.52)
Diluted                                     $ 0.16   $ 0.13   $ (0.52)
Weighted-average common shares outstanding
Basic                                       88.5     86.5     85.2
Diluted                                     90.1     88.8     85.2
Operating cash flow                         $ 28.1   $ 55.2   $ 19.2
Capital expenditures                        (8.5)    (9.3)    (12.4)
Free cash flow                              $ 19.6   $ 45.9   $ 6.8



MICROSEMI CORPORATION
Consolidated Balance Sheet
(unaudited, in millions)
                                            Dec 30,    Sep 30,
                                            2012       2012
ASSETS
Current assets
Cash and cash equivalents                   $ 203.3    $ 204.3
Accounts receivable, net                    159.4      153.2
Inventories, net                            158.9      159.1
Deferred income taxes                       20.4       20.4
Other current assets                        23.4       24.3
Total current assets                        $ 565.4    $ 561.3
Property and equipment, net                 116.6      116.1
Goodwill                                    790.2      790.2
Intangible assets, net                      378.3      400.0
Deferred income taxes                       33.6       33.1
Other assets                                33.9       33.9
TOTAL ASSETS                                $ 1,918.0  $ 1,934.6
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable                            $ 68.1     $ 75.4
Accrued liabilities                         71.5       80.2
Current maturity of long-term liabilities   0.8        0.9
Total current liabilities                   $ 140.4    $ 156.5
Credit facility                             751.0      776.0
Deferred income taxes                       24.5       25.1
Other long-term liabilities                 47.3       49.0
Stockholders' equity                        954.8      928.0
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  $ 1,918.0  $ 1,934.6



Notes Reconciling Non-GAAP Financial Information to GAAP Financial Information
To supplement the consolidated financial results prepared in accordance with
Generally Accepted Accounting Principles ("GAAP"), this press release and its
attachments include non-GAAP financial measures that exclude items listed in
the footnotes below. Management excludes these items because it believes that
the non-GAAP measures enhance an investor's overall understanding of our
financial performance and future prospects by being more reflective of our
core operational activities and more comparable with our results over various
periods. Management uses non-GAAP financial measures internally for strategic
decision making, forecasting future results and evaluating current
performance. Guidance is provided only on a non-GAAP basis due to the inherent
difficulty of forecasting the timing or amount of certain items that have been
excluded from the forward-looking non-GAAP measures, and a reconciliation to
the comparable GAAP guidance has not been provided because certain factors
that are materially significant to Microsemi's ability to estimate the
excluded items are not accessible or estimable on a forward-looking basis. By
disclosing non-GAAP financial measures, management intends to provide
investors with a more meaningful, consistent comparison of Microsemi's
operating results and trends for the periods presented. Non-GAAP financial
measures are not prepared in accordance with GAAP; therefore, the information
is not necessarily comparable to other companies' financial information and
should be considered as a supplement to, not a substitute for, or superior to,
the corresponding measures calculated in accordance with GAAP.

The items excluded from GAAP financial results in calculating non-GAAP
financial measures, are set forth below:



    Manufacturing profit in acquired inventory results from
    purchase-accounting adjustments to increase the value of inventory
    acquired to its fair value. As the acquired inventory is sold, the
    associated manufacturing profit in acquired inventory increases cost of
(1) goods sold and reduces gross profit. The manufacturing profit in acquired
    inventory has been excluded to facilitate comparability of gross profit
    between periods. In addition, management excludes the impact of
    manufacturing profit in acquired inventory in internal measurements of
    gross profit as it does not reflect continuing operations of acquired
    operations.
    Restructuring activities involve the closure, sale and consolidation of
    certain Microsemi facilities. As these facilities are not expected to have
    a continuing contribution to operations or are expected to have a
    diminishing contribution during the transition phase, management believes
    excluding such items from Microsemi's operations provides investors with a
    means of evaluating Microsemi's on-going operations. Restructuring and
(2) other special charges include severance and other costs related to
    facilities in the process of closing or already closed. Gain (loss) on
    facility sales or closures relate to gain or loss on property and
    equipment and losses related to property and equipment destroyed in the
    Thailand flood in October 2011. It also includes insurance recoveries on
    losses when or if received. Management excludes these expenses when
    evaluating core operating activities and for strategic decision making,
    forecasting future results and evaluating current performance.
    While amortization of acquisition related intangible assets is expected to
(3) continue in the future, for internal analysis of Microsemi's operations,
    management does not view this expense as reflective of the business'
    current performance.
    Stock based compensation has been excluded as management excludes these
(4) expenses when evaluating operating activities and for strategic decision
    making, forecasting future results and evaluating current performance.
    Under relevant accounting guidance, acquisition costs for business
    combinations are expensed as incurred rather than capitalized into the
(5) purchase price of an acquisition. These costs have been excluded as
    management excludes these expenses when evaluating operating activities
    and for strategic decision making, forecasting future results and
    evaluating current performance.
    Debt issuance and refinancing costs have been excluded as they are
    discrete charges we incurred to issue or refinance our credit facility. In
    the first quarter of 2013 and fourth quarter of 2012, we recorded $0.3
    million in amortization of deferred financing expenses per quarter. In the
(6) first quarter of 2012, we increased our credit facility in conjunction
    with the acquisition of Zarlink and recorded $34.0 million in
    extinguishment expense. Management excludes these expenses from internal
    measurements of credit facility interest rates and in evaluating current
    performance.
    Changes in the fair value of term loan balances outstanding and related
    interest rate swaps do not result in a change to the principal we owe and
    are non-cash amounts that management excludes from internal measurements
    and from forecasting future results. We elected the fair value option in
    accounting for term loan balances outstanding under Microsemi's credit
    facility prior to the October 2011 amendment of our credit facility and
    changes in fair value of the loan balances and related interest rate swaps
    were reflected as adjustments to the income statement. Upon election of
    the fair value option, up front debt issuance costs were immediately
(7) recognized as an expense. We did not elect the fair value option on
    subsequent amendments and are reporting the current term loan balance at
    par. We entered into a foreign currency forward near the end of the fourth
    quarter of 2011 to minimize exposure to USD/CAD exchange rates in
    conjunction with the acquisition of Zarlink. We recognized a $15.4 million
    gain on settlement in the first quarter of 2012 that was offset by a $10.3
    million loss from fair value changes in term loan balances and interest
    rate swaps, all of which we excluded from our non-GAAP results. Subsequent
    to the first quarter of 2012, only interest rate swaps were recorded under
    fair value accounting. Management excludes these gains and losses from
    internal measurements and in evaluating current performance.
    The tax effect on non-GAAP adjustments represents the difference in the
    provision for income taxes that resulted from non-GAAP adjustments to
    pretax income and also certain acquisition-related and nondeductible
(8) stock-based compensation items, non-cash valuation allowance charges and
    releases related to deferred tax assets. These amounts are excluded as
    non-GAAP adjustments as the requirement or releases of valuation allowance
    related to restructuring activities or acquisitions are not viewed by
    management as being reflective of the business' ongoing tax position.



MSCCIR

SOURCE Microsemi Corporation

Website: http://www.microsemi.com
Contact: Financial, John W. Hohener, Executive Vice President and Chief
Financial Officer, +1-949-380-6100; or Investors, Robert C. Adams, Vice
President of Corporate Development, +1-949-380-6100
 
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