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Microsemi Management Discusses Q1 2012 Results - Earnings Call Transcript

Our non-GAAP gross margin was up, however, 110 basis points from the 53.6% reported in the year ago first quarter. We expect our non-GAAP gross margin to increase between 20 and 30 basis points next quarter due primarily to product mix. Our GAAP gross margin was 52.2%, which differed from the non-GAAP due only to non-cash purchase accounting adjustments related to the Zarlink acquisition and was down 490 basis points from the 57.1% in the fourth quarter of 2011, but up 70 basis points from the 51.5% in our prior year first quarter.

This quarter, non-GAAP selling, general and administrative expenses were $40.5 million or 16.8% of sales, compared to $38.1 million or 16.7% of sales in the fourth quarter and compared to $32.5 million or 17.6% of sales in the first quarter of last year. This dollar increase was due to the acquisition of Zarlink.

For the second quarter, we expect total SG&A to decrease between $0.5 million and $1 million. Compared to the first quarter, the SG&A change includes the addition of Zarlink for a full quarter, but will be offset by savings as a result of cost controls and spending efficiencies within the company.

Research and development costs were $39.6 million or 16.4% of sales, compared to $32.4 million or 14.3% of sales in the fourth quarter and compared to $24 million or 13% of sales in the year ago first quarter, again, with the increase in dollars due primarily to Zarlink.

For the second quarter, we expect total R&D to increase between $300,000 and $800,000. Compared to the first quarter, the R&D change includes the addition of Zarlink for a full quarter.

Our non-GAAP operating income was $51.8 million or 21.5% of sales, compared to $59.7 million or 26.3% of sales in the fourth quarter of 2011 or $42.4 million or 23% in the prior year first quarter.

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