Microsemi Corporation Reports Third Quarter Results; Revenues Increase 44%; Earnings Increase 500% to $0.23 Per Share.

Business Editors

SANTA ANA, Calif.--(BUSINESS WIRE)--July 25, 2000

Microsemi Corporation (Nasdaq: MSCC) today reported revenues and earnings for its fiscal 2000 third quarter. As previously announced on June 8, 2000, the Company sold its Micro Commercial Components Division (MCC) as part of its program to exit lower-margin business. Additionally, the Company recorded acquisition-related charges for Acquired In-Process Research and Development (IPR&D) in both the third quarter of fiscal 1999 and the second quarter of fiscal 2000. To ensure more meaningful understanding of the ongoing business performance, the information contained in the text of this news release excludes data related to MCC and the two IPR&D charges, whereas in accordance with various reporting guidelines, the data in the accompanying table contains this information.

For the quarter ended July 2, 2000, revenues, excluding results from MCC, increased 44% to $63.6 million compared to $44.1 million for the same period a year ago. Net income for the quarter, excluding MCC, increased 500% to $3.0 million or $0.23 per share diluted compared to $0.5 million or $0.04 per share diluted in the prior year third quarter, excluding MCC and the IPR&D charge. MCC had revenues of $3.1 million and a net loss of $0.2 million or $0.01 per share for the current year's third quarter and revenues of $4.6 million and net income of $0.1 million or $0.01 per share diluted in the third quarter of fiscal year 1999. The IPR&D charge recorded in the third quarter of fiscal 1999 was $1.2 million (net of income tax benefits) or $0.11 per share diluted.

Philip Frey, Jr., Chairman, President and CEO, stated, "Our third quarter results are excellent, and it is especially noteworthy that our growth occurred across the board as we continue to follow a strategy of focusing on high-growth niche applications as well as our base of traditional high-reliability business."

For the first nine months of fiscal 2000, revenues, excluding MCC, increased 47% to $169.8 million compared to $115.6 million during the same period of fiscal 1999. Net income for the first nine months of fiscal 2000, excluding MCC and the IPR&D charge, was $5.9 million or $0.49 per share diluted, an increase of 31% over last year's $4.5 million or $0.40 per share diluted, excluding MCC and the IPR&D charge in that period. MCC had revenues of $12.4 million and a net loss of $0.2 million or $0.02 per share diluted for the first nine months of fiscal year 2000 compared to revenues of $12.1 million and net earnings of $0.3 million or $0.03 per share diluted in the first nine months of fiscal year 1999. The IPR&D charge recorded in the second quarter of fiscal 2000 was $1.7 million (net of income tax benefits), or $0.14 per share diluted.

Frey stated further, "Our 1999 acquisitions, specifically the Linfinity and Microwave divisions, have excelled. Linfinity has grown to 30% of our revenues and the Microwave division grew in the third quarter at a 40% rate year-over-year. It's also very important to note that these greatly improved results have been achieved over a period when we have also increased R&D spending from $0.12 per share in the nine months of fiscal 1999 to $0.45 per share in fiscal 2000."

Microsemi Corporation will conduct a conference call at 1:45 p.m. PDT on July 25, 2000. You can participate in the call by dialing 888/868-9080, or 973/633-1010 ten minutes prior to the scheduled call. A replay of the conference call will be available from 2:00 p.m. PDT on July 25th until 2:00 p.m. PDT on August 1st. You may hear the replay of the conference call by calling 877/375-5163 or 402/220-5651. No reservation number is required. This conference call will also be broadcast live over the Internet and can be accessed by all interested parties at www.vcall.com.

About Microsemi: Microsemi is a leading designer, manufacturer and marketer of analog, mixed-signal and discrete semiconductors. The company's semiconductors manage and regulate power, protect against transient voltage spikes and transmit, receive and amplify signals.

The Company's products include individual components as well as complete circuit solutions that enhance its customers' end products by providing battery optimization, size reduction and circuit protection. The markets the Company serves include mobile connectivity, computer/peripherals, telecommunications, space/satellite, military, medical and industrial/commercial.

"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. For instance, all statements of belief and expectations are forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Potential risks and uncertainties include, but are not limited to, such factors as the difficulties regarding the making of estimates and projections, hiring and retention of qualified technical personnel in a competitive labor market, rapidly changing technology and product obsolescence, the ability to realize cost savings or productivity gains, the ability to improve capacity utilization, potential cost increases, the strength and competitive pricing environment of the marketplace, demand for and acceptance of the company's products, the results of planned development, marketing and promotional campaigns, changes in demand for products, difficulties of foreseeing future demand, effects of limited visibility of future sales, potential non-realization of expected orders or non-realization of backlog, business and economic conditions or adverse changes in current industry conditions, customer order preferences, and fluctuations in market prices of the company's stock, difficulties in implementing company strategies, environmental matters, litigation, difficulties protecting proprietary rights, and inventory obsolescence. 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 and risks identified in the Company's most recent Form 10-K and subsequent Forms 10-Q, and the final prospectus on Form S-3 filed on June 1, 2000 by the Company with the Securities and Exchange Commission. The Company does not undertake to supplement or correct any information in this release that is or becomes incorrect.

                         MICROSEMI CORPORATION

          Condensed Unaudited Consolidated Income Statements
                 (In thousands, except per share data)

                           Three months ended       Nine months ended
                           7/4/99      7/2/00       7/4/99     7/2/00

Net sales               $  48,758   $  66,644    $ 127,666  $ 182,204
Cost of sales              36,790      47,602       94,492    132,435
Gross profit               11,968      19,042       33,174     49,769
Selling, general
 and administrative         8,268      10,282       20,452     28,430
Research and development    1,374       2,953        2,129      8,028
Amortization of goodwill
 and intangibles              391         719          961      1,622
Acquired in-process research
 and development            1,950        ----        1,950      2,510
Operating income (loss)       (15)      5,088        7,682      9,179
Interest expense and
 other, net                (1,048)       (884)      (1,961)    (3,243)
Income (loss) before tax   (1,063)      4,204        5,721      5,936
Provision (benefit) for
 income tax                  (393)      1,387        2,117      1,959
Net income (loss)            (670)      2,817        3,604      3,977
Earnings (loss) per share
Basic                    $  (0.06)  $    0.23    $    0.32   $   0.35
Diluted                  $  (0.06)  $    0.22    $    0.32   $   0.33
Common and common
  equivalent shares outstanding
Basic                      10,915      12,220       11,200     11,419
Diluted                    10,915      13,095       11,313     11,999


            Condensed Unaudited Consolidated Balance Sheets
                            (In thousands)

                                         7/4/99           7/2/00
ASSETS
Cash and cash equivalents              $  7,412        $  25,282
Accounts receivable                      30,655           31,094
Inventories                              64,968           52,422
Other current assets                      8,581           11,053
Property, plant & equipment, net         50,759           54,930
Other assets                             20,060           29,951
TOTAL ASSETS                           $182,435         $204,732

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities                    $ 62,709         $ 45,067
Long-term borrowings                     33,223            9,934
Other long-term liabilities               1,959            6,656
Stockholders' equity                     84,544          143,075
TOTAL LIABILITIES AND
 STOCKHOLDERS' EQUITY                  $182,435         $204,732