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To: wgh613 who wrote (25996)	6/5/2001 8:09:13 AM
From: 2MAR$	Respond to of 37746

Elantec Revises Estimates for Third Quarter Fiscal 2001; Company Announces Plans to Reduce Cost Structure Business Editors MILPITAS, Calif.--(BUSINESS WIRE)--June 5, 2001--Elantec Semiconductor, Inc. (Nasdaq:ELNT), a leader in high performance analog integrated circuits, today announced that revenue for the Company's third quarter of fiscal 2001 will be down approximately 30 to 35 percent sequentially from the Company's second quarter revenue of $30.6 million. The revenue decline from earlier estimates is primarily attributable to continued softness in its communications business. The softness in its communications business has led to a significant reduction in the demand on its internal fab, sort, and test operations. As a result the Company has announced a reduction in its workforce of approximately 15%. The Company's pre-action headcount is approximately 375 employees. The reduction in force will be primarily focused on manufacturing operations in Milpitas, California. In addition to the announced reduction in force, the Company will be shutting down its manufacturing operations for 2 weeks in July. Non-operational employees are also being encouraged to take 10 days off during the quarter. Earnings based on the revised revenue guidance is expected to be between $.06 and $.08 per share for the quarter before the effects of one-time charges associated with the Company's cost reduction plans. Gross margins are expected to be between 51% and 52% before one-time charges. The one-time charges of approximately $2.9 million, to be taken during the third fiscal quarter, will cover severance expenses, obsolete/excess inventory, and equipment write-offs. The expected savings associated with the reduction in force and assets write-offs are approximately $800 thousand per quarter. The 2 weeks shutdown and vacations should save the Company approximately $400 thousand during the fourth fiscal quarter. "Although we have been encouraged with positive signs in our video and optical storage businesses, the continued softness and lack of visibility in communications, and xDSL in particular, has led us to take stronger actions to manage our costs and inventories. We remain positive on the long-term prospects of our DSL business, but, due to the severity of the current slowdown across the communications sector, we feel it is imperative to reduce our manufacturing capacity," said Rich Beyer, President and CEO. "These steps will enable us to align our costs to the realities of the current situation. We will remain well positioned to satisfy demand when our communications business returns to growth." The Company said that new products remain its key focus and that it continues to fund its marketing and development to steadily increase the flow of new products. Its efforts in this area remain solidly on track for this year. Web Broadcast and Instant Replay Elantec will broadcast a conference call today at 6:00 a.m. PST. This event is available through the Company's website located at elantec.com. For those unable to attend the live broadcast, a 5-day broadcast replay will be available shortly after the event. Elantec is also making available a 5-day telephone replay of the conference call which can be accessed by dialing 1-800-405-2236 and entering pass code number 349340.