SOURCE: Intersil

October 21, 2009 16:05 ET

Intersil Corporation Reports Third Quarter 2009 Financial Results

-- Revenues Increase 14% From the Prior Quarter

-- Achieves Free Cash Flow of Over $32 Million

MILPITAS, CA--(Marketwire - October 21, 2009) - Intersil Corporation (NASDAQ: ISIL), a world leader in the design and manufacture of high performance analog and mixed signal semiconductors, today reported financial results for its third quarter ended October 2, 2009.

Results of Operations

Net revenues for the third quarter were $168.3 million, a 23% decrease from $218.7 million in the third quarter of 2008 and a 14% increase from $147.3 million in the second quarter of 2009. Intersil's third quarter revenues by end market were as follows: high-end consumer, 28% of revenues; computing, 34% of revenues; industrial, 19% of revenues; and communications, 19% of revenues.

Gross margin was 54.5%, compared with gross margin of 56.3% in the same quarter last year, and 54.2% in the second quarter of 2009.

Operating margin from continuing operations was 10.4%, compared with 22.9% in the same quarter last year, and 6.2% in the second quarter of 2009. Income from continuing operations was $12.3 million or $0.10 per diluted share, compared with $47.3 million, or $0.38 per diluted share in the same quarter last year, and $6.2 million, or $0.05 per diluted share, in the second quarter of 2009.

Net income was $12.3 million, or $0.10 per diluted share, compared with $47.3 million, or $0.38 per diluted share in the same quarter last year, and $6.2 million, or $0.05 per diluted share, in the second quarter of 2009. Third quarter net income includes a $14.3 million unrealized loss on Intersil's long term auction rate securities and approximately $9.7 million in related tax benefits.

"The third quarter demonstrated the ongoing broad-based recovery within our computing, consumer and now industrial end markets," said Dave Bell, Intersil's President and Chief Executive Officer. "The third quarter exhibited normal seasonality, and we believe that the communications end market is now poised for recovery as well."

"During the quarter, we completed the acquisition of Quellan, which exemplifies our strategy to expand our presence in high-margin communications infrastructure markets," continued Bell. "Quellan's signal integrity products improve the reach and power efficiency of high-speed interconnections within data centers."

At the end of the third quarter, Intersil's cash and short-term investments totaled over $329 million with no debt. Free cash flow was $32.6 million during the third quarter.

Intersil's Board of Directors has authorized the payment of a quarterly dividend of $0.12 per share of common stock. The payment of this dividend will be made on November 20, 2009 to shareholders of record as of the close of business on November 10, 2009.

Fourth Quarter 2009 Outlook

--  Revenues are expected to be in the range of $170 million to $177 million
--  Research and development expenses are expected to decrease slightly to
    approximately $38 million
--  Selling, general and administrative expenses are expected to be roughly
    flat at approximately $33 million
--  Stock-based compensation expense is expected to be approximately $7.8
    million
--  GAAP earnings per diluted share are expected to be in the range of $0.14
    to $0.17
    

"The steady improvement of business conditions in the third quarter gives us confidence in the sustainability of this recovery. Our book-to-bill was above one, and we saw increasing backlog exiting the quarter," said Mr. Bell. "We believe our gross margin will again increase moderately as sales into the industrial and communications end markets grow in the fourth quarter."

Intersil will discuss its third quarter financial results during its scheduled conference call following the market close on October 21st. Those wishing to participate in the conference call please dial (800) 299-0433, and international participants please dial +1 (617) 801-9712, using the password 68224032 at approximately 1:40 p.m. Pacific Time. Those wishing to listen to the call may also do so via webcast on Intersil's Web site: http://www.intersil.com/investor.

A replay of the call will be available for two weeks following the conference call on Intersil's Web site, or may be accessed by dialing (888) 286-8010, international dial +1 (617) 801-6888, using the password 74602051.

About Intersil

Intersil Corporation is a leader in the design and manufacture of high-performance analog and mixed signal semiconductors. Intersil'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-plug controllers, linear regulators, power sequencers, supervisory ICs, bridge drivers, PWM controllers, switching DC/DC regulators, Zilker Labs Digital Power ICs and power MOSFET drivers; optical storage laser diode drivers; DSL line drivers; D2Audio products; video and high-performance operational amplifiers; high-speed 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 Intersil's Web site and career page at www.intersil.com.

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's 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 (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.

                     -- FINANCIAL TABLES TO FOLLOW --


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


                                                           Three Quarters
                                     Quarters Ended             Ended
                               -------------------------  ----------------
                               October  October           October  October
                                  2,       3,     July 3,    2,       3,
                                2009     2008     2009     2009     2008
                               -------  -------  -------- -------  -------
                              (Q3 2009)(Q3 2008)(Q2 2009)(Q3 2009)(Q3 2008)

Net revenues                   $ 168.3  $ 218.7  $  147.3 $ 433.7  $ 638.6

  Cost of revenues                76.5     95.6      67.5   197.0    283.4
                               -------  -------  -------- -------  -------

Gross profit                      91.8    123.1      79.8   236.8    355.2

Expenses
  Research and development        38.4     35.1      37.0   108.2    108.9
  Selling, general and
   administrative                 32.5     31.8      29.8    88.1     95.6
  Amortization of purchased
   intangibles                     3.0      2.8       3.4     9.9      8.8
  Restructuring and other
   related activities              0.4      0.6       0.4     2.3      5.5
  In-process research and
   development charge (credit)       -      2.6         -    (0.2)     2.6
                               -------  -------  -------- -------  -------
Operating income from
 continuing operations            17.5     50.0       9.2    28.4    133.8
  Gain (loss) on deferred comp
   investments                     1.0     (1.3)      1.1     1.8     (1.4)
  Loss on investments, net       (14.3)       -         -   (14.3)    (6.4)
  Interest income, net             1.0      3.1       1.4     3.9     12.1
                               -------  -------  -------- -------  -------
Income from continuing
 operations before income
 taxes                             5.2     51.9      11.6    19.8    138.1
  Income tax expense (benefit)
   from continuing operations     (7.0)     4.6       5.4    (1.1)     5.1
                               -------  -------  -------- -------  -------
Income from continuing
 operations                       12.3     47.3       6.2    20.9    132.9
Discontinued operations
  Income tax benefit from
   discontinued operations           -        -         -       -    (19.4)
                               -------  -------  -------- -------  -------
Income from discontinued
 operations                          -        -         -       -     19.4

                               -------  -------  -------- -------  -------
Net income                     $  12.3  $  47.3  $    6.2 $  20.9  $ 152.4
                               =======  =======  ======== =======  =======

Earnings per share:
  Basic:
    Continuing operations      $  0.10  $  0.38  $   0.05 $  0.17  $  1.07
    Discontinued operations          -        -         -       -     0.16
                               -------  -------  -------- -------  -------
  Net income per share         $  0.10  $  0.38  $   0.05 $  0.17  $  1.23
                               =======  =======  ======== =======  =======

  Diluted:
    Continuing operations      $  0.10  $  0.38  $   0.05 $  0.17  $  1.06
    Discontinued operations          -        -         -       -     0.16
                               -------  -------  -------- -------  -------
  Net income per share         $  0.10  $  0.38  $   0.05 $  0.17  $  1.22
                               =======  =======  ======== =======  =======

Weighted average shares:
  Basic                          122.3    123.2     122.2   122.1    124.2
                               =======  =======  ======== =======  =======
  Diluted                        122.3    124.4     122.2   122.2    125.3
                               =======  =======  ======== =======  =======



Other financial
 metrics:                    Quarters Ended           Three Quarters Ended
                     -------------------------------- ---------------------

Stock-based
 compensation
 expense by          October 2, October 3,  July 3,   October 2, October 3,
 classification:       2009       2008       2009       2009       2008
                     ---------- ---------- ---------- ---------- ----------
  Cost of revenues   $      0.6 $      0.8 $      0.7 $      1.9 $      2.9
  Research and
   development              2.9        3.2        3.1        9.3 $     10.3
  Selling, general
   and administrative       3.4        4.2        4.6        9.7 $     11.0

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


                           Intersil Corporation
                          Additional Information
                                Unaudited
                            (In US$ millions)



                                                        Quarters Ended
                                                    -----------------------
                                                    October October
                                                      2,      3,    July 3,
                                                     2009    2008    2009
                                                    ------- ------- -------
                                                (Q3 2009)(Q3 2008)(Q2 2009)

Cash flow information:
  Cash from operations                              $  34.8 $  39.0 $  31.3
  Net capital expenditures                              2.2     8.7     1.3
                                                    ------- ------- -------
    Free cash flow                                  $  32.6 $  30.3 $  30.0

EBITDA:
  Operating income                                  $  17.5 $  50.0 $   9.2
  Depreciation                                          5.1     5.6     5.1
  Intangible amortization                               3.0     2.8     3.4
  In-process R&D charge                                   -     2.6       -
  Stock-based compensation                              6.9     8.2     8.4
                                                    ------- ------- -------
    EBITDA                                          $  32.5 $  69.3 $  26.1

Six-month backlog                                   $ 143.1 $ 130.3 $ 139.6

Effect of certain noncash and unusual items:
  Amortization of intangibles (net of tax)          $   2.6 $   2.4 $   2.9
  Restructuring and other related activities
   (net of tax)                                         0.3     0.5     0.3
  In-process R&D charge                                   -     2.6       -
  Impairment of ARS (net of tax)                        4.6       -       -
  Stock-based compensation (net of tax)                 5.9     6.9     7.1
  Unusual tax charge related to international HQ move     -       -     3.4


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


                           Intersil Corporation
                        Consolidated Balance Sheets
                                Unaudited
                            (In US$ millions)
                                                        October 2, Jan. 2,
                                                           2009      2009
                                                        --------- ---------
Assets
Current assets:
  Cash, cash equivalents and short-term investments     $   329.6 $   312.6
  Trade receivables, net                                     71.0      66.6
  Inventories, net                                           91.8     109.6
  Prepaid expenses and other current assets                  11.1      12.1
  Deferred income taxes                                      25.7      35.5
                                                        --------- ---------
    Total current assets                                    529.4     536.5
Other assets:
  Property, plant and equipment, net                        102.5     112.8
  Purchased intangibles, net                                 29.5      29.0
  Goodwill                                                  314.9     313.7
  Deferred income taxes                                      81.6      47.0
  Long-term investments                                      64.2      81.3
  Other                                                      14.7      13.2
                                                        --------- ---------
    Total other assets                                      607.4     597.1
                                                        --------- ---------
Total assets                                            $ 1,136.8 $ 1,133.6
                                                        ========= =========

Liabilities and shareholders' equity
Current liabilities:
  Trade accounts payable                                $    33.0 $    22.3
  Income taxes payable                                       11.0       4.0
  Deferred net revenue                                       10.5      10.6
  Other accrued items                                        60.7      71.0
                                                        --------- ---------
    Total current liabilities                               115.1     108.0

Total shareholders' equity                                1,021.7   1,025.6
                                                        --------- ---------
Total liabilities and shareholders' equity              $ 1,136.8 $ 1,133.6
                                                        ========= =========

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