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Microsemi Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 6, 2012 09:27PM
Microsemi Corp. (MSCC) filed Quarterly Report for the period ended 2012-07-01. Microsemi Corporation has a market cap of $1.72 billion; its shares were traded at around $19.74 with a P/E ratio of 11.9 and P/S ratio of 2.1. Microsemi Corporation had an annual average earning growth of 16.3% over the past 10 years.
Highlight of Business Operations:Net sales increased $42.5 million or 20% between the quarters ended July 1, 2012 (Q3 2012) and July 3, 2011 (Q3 2011) to $259.2 million for Q3 2012 from $216.7 million for Q3 2011 and increased $140.8 million or 23% between the nine months ended July 1, 2012 (2012 YTD) and July 3, 2011 (2011 YTD) to $749.4 million for 2012 YTD from $608.6 million for 2011 YTD. For 2012 YTD, we estimate that approximately 15% to 20% of net sales were derived from acquisitions concluded during the current fiscal year. On July 26, 2012 we announced that we expect that our consolidated net sales for the fourth quarter of fiscal year 2012 will increase to between $262.0 million and $268.0 million.
The fair value of the identified intangible assets for the acquisitions noted above was estimated by performing a discounted cash flow analysis using the income approach. This method includes a forecast of direct revenues and costs associated with the respective intangible assets and charges for economic returns on tangible and intangible assets utilized in cash flow generation. Net cash flows attributable to the identified intangible assets were discounted to their present value at a rate commensurate with the perceived risk. The projected cash flow assumptions considered contractual relationships, customer attrition, eventual development of new technologies and market competition.
At October 2, 2011, we had recorded severance accruals of $2.7 million from reductions in force at our various facilities other than Scottsdale. We recorded additional provisions, primarily related to activities at Microsemi CMPG, for severance and retention payments totaling $7.3 million during the nine months ended July 1, 2012 and also assumed a fair value of $9.8 million in pre-acquisition liabilities recorded by Microsemi CMPG. Severance covered approximately 300 individuals in manufacturing, engineering and sales. Employee severance is expected to be paid within the next twelve months. Contract termination costs relate primarily to remaining obligations under facility leases and are expected to be paid through 2020. During the quarter ended July 1, 2012, we executed an agreement with a landlord that released us from a lease commitment and as a result, we reversed $1.3 million in provision for contract termination costs. Other associated costs related primarily to relocation costs that we incurred for the consolidation of several facilities in Northern California. The following table reflects the related restructuring activities and the accrued liabilities in the consolidated balance sheets at the dates below (amounts in thousands):
Net sales increased $42.5 million or 20% between Q3 2012 and Q3 2011 to $259.2 million for Q3 2012 from $216.7 million for Q3 2011 and increased $140.8 million or 23% between the nine months ended July 1, 2012 (2012 YTD) and July 3, 2011 (2011 YTD) to $749.4 million for 2012 YTD from $608.6 million for 2011 YTD. For 2012 YTD, we estimate that approximately 15% to 20% of net sales were derived from acquisitions concluded during the current fiscal year.
growing electronic content. This is reflected in sequential growth in net sales in Q3 2012 compared to the second and first quarters of 2012. We also believe that international defense sales will increase, enabled in part by our security product offerings, and that Microsemis dollar content in defense programs will increase as our products move up the value chain. While we believe budget uncertainty will affect this end market, we believe our increasing dollar content and market share will result in net sales growth in this end market for the upcoming quarter.
Stocks Discussed: MSCC,