SOURCE: Intersil

October 17, 2007 16:05 ET

Intersil Corporation Reports Third Quarter 2007 Financial Results

MILPITAS, CA--(Marketwire - October 17, 2007) - Intersil Corporation (NASDAQ: ISIL)

--  Sets quarterly record for orders and revenue
--  Achieves sequential revenue growth of 11%
--  Achieves sequential earnings per share growth of 17%
    

Intersil Corporation (NASDAQ: ISIL), a world leader in the design and manufacture of high performance analog semiconductors, today reported financial results for the quarter ended September 28, 2007. Net revenues for the third quarter were $198.3 million, a 3% increase from $192.9 million in the third quarter of 2006 and an 11% increase from $178.3 million in the second quarter of 2007.

Generally Accepted Accounting Principles (GAAP) Results

For the third quarter of 2007 gross margins were 56.4%. This compares to gross margins of 57.5% in the same quarter last year, and 57.2% in the second quarter of 2007. Operating margins were 19.5%, as compared to operating margins of 22.2% in the same quarter last year, and 18.1% in the second quarter of 2007. Net income was $35.9 million, or $0.27 per diluted share, as compared to net income of $37.7 million, or $0.27 per diluted share in the same quarter last year. For the second quarter of 2007, the Company reported net income of $31.2 million, or $0.23 per diluted share.

Non-GAAP Results

For the third quarter of 2007, non-GAAP gross margins were 57.4%. This compares to gross margins of 58.0% for the same quarter last year, and 57.9% for the second quarter of 2007. Operating margins were 28.6%, as compared to operating margins of 29.9% for the same quarter last year, and 26.9% for the second quarter of 2007. Net income was $49.0 million, or $0.36 per diluted share. This compares to net income of $46.9 million, or $0.33 per diluted share for the same quarter last year, and $42.4 million, or $0.31 per diluted share for the second quarter of 2007.

"Intersil achieved record revenues in the third quarter, driven by strong seasonal demand and record orders across multiple areas of our business," said Rich Beyer, Intersil's Chief Executive Officer. "We exceeded our targets for sequential revenue and earnings per share growth in the quarter, and we are well positioned to capitalize on our design win momentum and aggressive new product release schedule for a strong finish to 2007."

By end market, Intersil's third quarter revenues were as follows: high-end consumer (27.9% of revenues), computing (28.8% of revenues), industrial (23.1% of revenues), and communication (20.2% of revenues). "Sales in the computing and consumer markets grew sequentially due to strong seasonal demand and steadily increasing design wins," said Dave Bell, Intersil's President and Chief Operating Officer. "Sales into the industrial end market also grew nicely. The industrial market experienced a recovery in the third quarter and we began shipping several new products that expand our general purpose served available market. We also expanded our footprint this quarter by acquiring Planet ATE, a privately held, fabless semiconductor supplier to the automated test equipment (ATE) market, and by opening a new design center in Hyderabad, India," said Dave Bell.

During the quarter, the Company generated more than $45 million in free cash flow. The Company used this cash flow, together with existing cash, to repurchase $100 million or approximately 3.2 million shares of its stock under a previously announced stock repurchase program. The Company's Board of Directors has also authorized the payment of a quarterly dividend of $0.10 per share of common stock. The payment of this dividend will be made on November 16, 2007 to shareholders of record as of the close of business on November 6, 2007.

Business Outlook

"For the fourth quarter, we expect continued sequential revenue growth due to a strong seasonal quarter for the computing and consumer sectors," said Rich Beyer. "As a result, we anticipate fourth quarter revenues to increase between 5% and 7% from the third quarter. We expect GAAP earnings per diluted share of approximately $0.31 to $0.32, and non-GAAP earnings per diluted share of approximately $0.38 to $0.39."

Investors and interested parties within the United States may listen to Intersil's conference call on October 17, 2007 at 1:45 p.m. Pacific/4:45 p.m. Eastern by dialing (800) 291-5365 and using the password "Intersil." International callers may connect to the call by dialing (617) 614-3922. A replay of Intersil's conference call will be available for two weeks by dialing (888) 286-8010 in the U.S. or (617) 801-6888 internationally using the access code "22134074." A webcast replay of the conference call will be available for two weeks on the Company's web site at http://www.intersil.com/investor. A copy of this press release may be found on the Company's web site at http://www.intersil.com/investor.

About Intersil

Intersil Corporation is a world leader in the design and manufacture of high-performance analog semiconductors. The Company's products address some of the industry's fastest growing markets, such as, flat panel displays, cell phones, other handheld systems, and notebooks. Intersil's product families address power management functions and analog signal processing functions. Intersil products include ICs for battery management, hot-swap and hot-plug controllers, linear regulators, power sequencers, supervisory ICs, bridge drivers, PWM controllers, switching DC/DC regulators and power MOSFET drivers; optical storage laser diode drivers; DSL line drivers; video and high-performance operational amplifiers; data converters; interface ICs; analog switches and multiplexers; crosspoint switches; voice-over-IP devices; and ICs for military, space and radiation-hardened applications. For more information about Intersil or to find out how to become a member of our winning team, visit the Company's web site and career page at www.intersil.com.

NON-GAAP REPORTING

In addition to GAAP reporting, Intersil reports net income or loss, as well as earnings per share, gross margin and operating margin on a non-GAAP basis. This non-GAAP earnings information excludes stock-based compensation expense, amortization of intangibles and unusual items and their related tax effects. Intersil believes this non-GAAP earnings information provides meaningful insight into the Company's on-going performance and has therefore chosen to provide this information to investors for a more consistent basis of comparison and to emphasize the results of on-going operations. Intersil also uses this information internally to evaluate and manage the Company's operations and to determine performance based incentive compensation. A reconciliation between GAAP and non-GAAP net income is included in the tables below.

FORWARD-LOOKING STATEMENTS

Intersil Corporation press releases and other related comments may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, in connection with the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon Intersil Corporation's ("Intersil") management's current expectations, estimates, beliefs, assumptions, and projections about Intersil's business and industry. Words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "potential," "continue," "goals," "targets," and variations of these words (or negatives of these words) or similar expressions, are intended to identify forward-looking statements. In addition, any statements that refer to projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various risk factors. Intersil does not adopt and is not responsible for any forward-looking statements and projections made by others in this press release. Intersil's Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Intersil filings with the U.S. Securities and Exchange Commission ("SEC") (which you may obtain for free at the SEC's web site at http://www.sec.gov) discuss some of the important risk factors that may affect our business, results of operations, and financial condition. These forward-looking statements are made only as of the date of this communication and Intersil undertakes no obligation to update or revise these forward-looking statements.

                        Intersil Corporation
                Consolidated Statements of Operations
                            Unaudited
         (In US$ millions, except shares and per share amounts)



                              Quarter Ended           Three Quarters Ended
                     -------------------------------  --------------------
                      Sep 28,    Sep 29,    Jun 29,    Sep 28,    Sep 29,
                       2007       2006       2007       2007       2006
                     ---------  ---------- ---------- ---------  ---------
                     (Q3 2007)  (Q3 2006)  (Q2 2007)

Net revenues         $   198.3  $    192.9 $    178.3 $   544.3  $   559.5

  Cost of revenues        86.5        81.9       76.3     234.3      239.2
                     ---------  ---------- ---------- ---------  ---------

Gross profit             111.8       111.0      102.0     310.0      320.3

Expenses
  Research and
   development            34.0        33.5       34.1      98.9       95.2
  Selling, general &
   administrative         33.6        32.3       33.3      96.9      103.1
  Amortization of
   purchased
   intangibles             2.5         2.4        2.4       7.2        7.1
  In-process
   research and
   development             3.0           -          -       3.0          -
                     ---------  ---------- ---------- ---------  ---------
Operating income
 from continuing
 operations               38.7        42.8       32.2     103.9      114.9
  Gain on deferred
   comp investments,
   net                     0.2           -        0.6       1.0          -
  Loss on equity
   investments, net          -           -          -         -       (1.9)
  Interest income          8.1         7.6        8.2      24.2       21.4
                     ---------  ---------- ---------- ---------  ---------
Income before income
 taxes from
 continuing
 operations               47.0        50.4       41.0     129.1      134.4
  Income tax expense      11.0        12.7        9.8      28.8       21.4
                     ---------  ---------- ---------- ---------  ---------
Net income after
 income taxes from
 continuing
 operations               36.0        37.7       31.2     100.3      113.0

Loss from
 discontinued
 operations               (0.2)          -          -      (0.2)         -
  Income tax benefit
   from discontinued
   operations             (0.1)          -          -      (0.1)         -
                     ---------  ---------- ---------- ---------  ---------
Net loss from
 discontinued
 operations               (0.1)          -          -      (0.1)         -

                     ---------  ---------- ---------- ---------  ---------
Net income           $    35.9  $     37.7 $     31.2 $   100.2  $   113.0
                     =========  ========== ========== =========  =========

Earnings per share
  Basic net income
   per share         $    0.27  $     0.27 $     0.23 $    0.75  $    0.80
                     =========  ========== ========== =========  =========
  Diluted net income
   per share         $    0.27  $     0.27 $     0.23 $    0.74  $    0.79
                     =========  ========== ========== =========  =========

Weighted average
 shares
  Basic                  132.1       139.1      133.5     133.6      140.6
                     =========  ========== ========== =========  =========
  Diluted                134.0       141.0      134.5     135.1      143.4
                     =========  ========== ========== =========  =========


Note: FAS123R was adopted at the beginning of fiscal 2006.
Stock compensation recorded in each expense classification
above is as follows:

                              Quarter Ended           Three Quarters Ended
                     -------------------------------  --------------------
                      Sep 28,    Sep 29,    Jun 29,    Sep 28,    Sep 29,
                       2007       2006       2007       2007       2006
                     ---------  ---------- ---------- ---------  ---------

  Cost of sales      $     1.1  $      0.9 $      1.2 $     3.2  $     2.5
  Research and
   development             3.3         4.3        4.6      11.3       12.7
  Selling, general &
   administrative          6.9         7.3        7.0      19.3       21.4

Note: Totals and percentages may not add or calculate precisely due to
rounding.




                           Intersil Corporation
                       Financial Summary (Non-GAAP)
                                Unaudited
    (In US$ millions, except shares, per share amounts and percentages)


                              Quarter Ended           Three Quarters Ended
                     -------------------------------  --------------------
                      Sep 28,    Sep 29,    Jun 29,    Sep 28,    Sep 29,
                       2007       2006       2007       2007       2006
                     ---------  ---------  ---------  ---------  ---------
                     (Q3 2007)  (Q3 2006)  (Q2 2007)

Net revenues         $   198.3  $   192.9  $   178.3  $   544.3  $   559.5

Gross profit         $   113.8  $   111.9  $   103.2  $   314.1  $   322.8
  % of Revenues           57.4%      58.0%      57.9%      57.7%      57.7%

Research and
 development         $    30.7  $    29.2  $    29.5  $    87.6  $    82.5
Selling, general &
 administrative           26.4       25.0       25.7       76.5       81.7

Operating income     $    56.7  $    57.7  $    48.0  $   150.0  $   158.6
  % of Revenues           28.6%      29.9%      26.9%      27.6%      28.3%

Interest income      $     8.1  $     7.6  $     8.2  $    24.2  $    21.4

Income before income
 taxes               $    64.8  $    65.3  $    56.2  $   174.2  $   180.0

Net income           $    49.0  $    46.9  $    42.4  $   131.6  $   131.8
  % of Revenues           24.7%      24.3%      23.8%      24.2%      23.5%

Earnings Per Share
  Basic              $    0.37  $    0.34  $    0.32  $    0.99  $    0.94
  Diluted            $    0.36  $    0.33  $    0.31  $    0.96  $    0.91

Weighted Average
 Shares
  Basic                  132.1      139.1      133.5      133.6      140.6
  Diluted                136.1      142.4      137.4      137.1      144.9

Other Financial
 Metrics:
Free cash flow:
  Cash flow from
   operations        $    56.9  $    63.8  $    72.4  $   173.5  $   168.4
  Proceeds from
   sales of PP&E           0.4        0.3        0.5        5.3        1.1
  Capital
   expenditures          (11.4)      (4.6)      (1.8)     (17.4)     (27.4)
                     ---------  ---------  ---------  ---------  ---------
    Free cash flow   $    45.9  $    59.5  $    71.1  $   161.4  $   142.1
                     =========  =========  =========  =========  =========

Depreciation         $     5.0  $     5.3  $     5.0  $    15.2  $    17.3
                     =========  =========  =========  =========  =========

NOTE:  This financial summary excludes amortization of intangibles, stock
based compensation, including the adoption of FAS123R at the beginning of
fiscal 2006 and unusual items. For operating income only it excludes gains
or losses related to deferred compensation investments. These adjustments
are included in the Financial Bridge table.

Note: Totals and percentages may not add or calculate precisely due to
rounding.




                           Intersil Corporation
                    Financial Bridge: GAAP to Non-GAAP
                                Unaudited
          (In US$ millions, except share and per share amounts)


                              Quarter Ended           Three Quarters Ended
                     -------------------------------  --------------------
                      Sep 28,    Sep 29,    Jun 29,    Sep 28,    Sep 29,
                       2007       2006       2007       2007       2006
                     ---------  ---------  ---------  ---------  ---------
                     (Q3 2007)  (Q3 2006)  (Q2 2007)

Gross profit on GAAP
 basis:              $   111.8  $   111.0  $   102.0  $   310.0  $   320.3
  Stock compensation
   expense                 1.1        0.9        1.2        3.2        2.5
  Manufacturing
   severance
   provision               1.0          -          -        1.0          -
                     ---------  ---------  ---------  ---------  ---------
Gross profit on
 Non-GAAP basis:     $   113.8  $   111.9  $   103.2  $   314.1  $   322.8
                     =========  =========  =========  =========  =========

Operating income on
 GAAP basis:         $    38.7  $    42.8  $    32.2  $   103.9  $   114.9
  Acquisition
   related expenses
   - intangibles
   amortization            2.5        2.4        2.4        7.2        7.1
  Gain on deferred
   comp investments,
   net                     0.2          -        0.6        1.0          -
  Stock compensation
   expense                11.4       12.5       12.8       33.9       36.6
  Manufacturing
   severance
   provision               1.0          -          -        1.0          -
  In-process
   research &
   development             3.0          -          -        3.0          -
                     ---------  ---------  ---------  ---------  ---------
Operating income on
 Non-GAAP basis:     $    56.7  $    57.7  $    48.0  $   150.0  $   158.6
                     =========  =========  =========  =========  =========

Net income on GAAP
 basis:              $    35.9  $    37.7  $    31.2  $   100.2  $   113.0
  Acquisition
   related expenses
   - intangibles
   amortization            2.5        2.4        2.4        7.2        7.1
  Loss on equity
   investments, net          -          -          -          -        1.9
  Stock compensation
   expense                11.4       12.5       12.8       33.9       36.6
  Manufacturing
   severance
   provision               1.0          -          -        1.0          -
  In-process
   research &
   development             3.0          -          -        3.0          -
  Net loss from
   discontinued
   operations              0.1          -          -        0.1          -
  Associated tax
   effects                (4.9)      (4.7)      (4.0)     (13.8)     (13.4)
  Benefits from
   discrete tax
   events                    -       (1.0)         -          -      (13.4)
                     ---------  ---------  ---------  ---------  ---------
Net income on
 Non-GAAP basis:     $    49.0  $    46.9  $    42.4  $   131.6  $   131.8
                     =========  =========  =========  =========  =========

Diluted Non-GAAP
 earnings per share  $    0.36  $    0.33  $    0.31  $    0.96  $    0.91
                     =========  =========  =========  =========  =========

Diluted weighted
 average common
 shares outstanding      134.0      141.0      134.5      135.1      143.4
  Diluted weighted
   average shares
   difference
   attributable to
   FAS 123R                2.1        1.4        2.9        2.0        1.5
                     ---------  ---------  ---------  ---------  ---------
Diluted Non-GAAP
 weighted average
 common shares
 outstanding             136.1      142.4      137.4      137.1      144.9
                     =========  =========  =========  =========  =========

To supplement our consolidated financial statements presented in accordance
with GAAP, we have shown above a non-GAAP (pro forma) presentation of the
Company’s key financial measures, which is adjusted to reflect the GAAP
results excluding stock based compensation expense, amortization of
intangibles, discontinued operations and unusual items. These non-GAAP
presentations of are provided to enhance the reader’s overall understanding
of the comparability of the Company’s financial performance between periods
and in general.

Note: Totals and percentages may not add or calculate precisely due to
rounding.




                           Intersil Corporation
                        Consolidated Balance Sheets
                            (In US$ millions)
                                (unaudited)


                                          Sep 28,     Jun 29,     Dec 29,
                                           2007        2007        2006
                                          Q3 2007     Q2 2007     Q4 2006
Assets                                  ----------- ----------- -----------
Current Assets
  Cash, cash equivalents & short-term
   investments                          $     514.0 $     579.5 $     624.0
  Trade receivables, net                      109.8        95.4        98.1
  Inventories, net                             95.1        93.9        92.4
  Prepaid expenses and other current
   assets                                      11.9        13.1        16.6
  Deferred income taxes                        26.6        23.7        18.5
                                        ----------- ----------- -----------
    Total Current Assets                      757.4       805.6       849.6
Other Assets
  Property, plant & equipment, net            106.2        98.5       101.1
  Purchased intangibles, net                   31.9        25.1        29.9
  Goodwill                                  1,447.4     1,417.2     1,419.8
  Deferred income taxes                        57.0        56.0        67.0
  Long-term investments                        63.8        87.6        78.6
  Other                                        14.6        13.6        13.1
                                        ----------- ----------- -----------
    Total Other Assets                      1,720.9     1,698.0     1,709.5
                                        ----------- ----------- -----------
Total Assets                            $   2,478.3 $   2,503.6 $   2,559.1
                                        =========== =========== ===========

Liabilities and Shareholders' Equity
Current Liabilities
  Trade account payables                $      33.3 $      26.3 $      24.2
  Income taxes payable                         65.3        55.0        44.8
  Deferred net revenue                         11.8        13.0        12.8
  Other accrued items                          54.3        51.2        55.8
                                        ----------- ----------- -----------
    Total Liabilities                         164.7       145.5       137.6

Total Shareholders' Equity                  2,313.6     2,358.1     2,421.5
                                        ----------- ----------- -----------
Total Liabilities and Shareholders'
 Equity                                 $   2,478.3 $   2,503.6 $   2,559.1
                                        =========== =========== ===========


Contact Information

  • Contact:
    Sanjay Arora
    Investor Relations
    Intersil Corporation
    (408) 546-3454
    Email Contact