SOURCE: Intersil

January 24, 2007 16:05 ET

Intersil Corporation Reports Fourth Quarter and Fiscal 2006 Financial Results

Achieves Record Net Revenues of $740.6 Million in 2006; 23% Increase From 2005; Achieves Record Net Income of $151.9 Million in 2006; 77% Increase From 2005; Generates Over $200 Million in Free Cash Flow in 2006; 50% Increase From 2005

MILPITAS, CA -- (MARKET WIRE) -- January 24, 2007 -- 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 December 29, 2006. Net revenues for the fourth quarter were $181.1 million, a 3% increase from $175.6 million in the fourth quarter of 2005 and a 6% decrease from $192.9 million in the third quarter of 2006.

Generally Accepted Accounting Principles (GAAP) Results

For the fourth quarter of 2006, gross margins were 57.8%. This compares to gross margins of 56.5% in the same quarter last year, and 57.5% in the third quarter of 2006. Operating margins were 20.4%, as compared to operating margins of 22.8% in the same quarter last year, and 22.2% in the third quarter of 2006. Net income was $38.8 million, or $0.28 earnings per diluted share, as compared to net income of $28.7 million, or $0.20 earnings per diluted share in the same quarter last year. For the third quarter of 2006, the Company reported net income of $37.7 million, or $0.27 earnings per diluted share.

For the year ended December 29, 2006, net revenue was $740.6 million, a 23.4% increase from $600.3 million for 2005. Gross margins were 57.4% as compared to 55.8% for the previous year. Operating margins were 20.5% as compared to 16.7% for the previous year. Net income was $151.9 million or $1.07 earnings per diluted share as compared to $85.9 million or $0.59 earnings per diluted share for the previous year.

Non-GAAP Results

For the fourth quarter of 2006, non-GAAP gross margins were 58.2%. This compares to gross margins of 56.6% for the same quarter last year, and 58.0% for the third quarter of 2006. Operating margins were 28.0%, as compared to operating margins of 26.1% for the same quarter last year, and 29.9% for the third quarter of 2006. Net income was $48.2 million, or $0.34 earnings per diluted share. This compares to net income of $39.3 million, or $0.27 earnings per diluted share for the same quarter last year, and $46.9 million, or $0.33 earnings per diluted share for the third quarter of 2006.

For the year ended December 29, 2006, gross margins were 57.8% as compared to 55.9% for the previous year. Net income was $179.9 million or $1.25 earnings per diluted share. This compares to net income of $108.9 million or $0.75 earnings per diluted share for 2005.

"There is no question 2006 was a really fine year for Intersil," stated Rich Beyer, Intersil's Chief Executive Officer. "We achieved record net revenues of $740.6 million for the year. Revenues grew 23% and non-GAAP net income grew 65% over 2005. In addition, we achieved record gross margins of 58.2% for the fourth quarter. This marks the ninth consecutive quarter that we grew gross margins on a non-GAAP basis."

By end market, Intersil's fourth quarter revenues were as follows: high-end consumer (29% of revenues), computing (22% of revenues), industrial (25% of revenues), and communication (24% of revenues). "Revenues in the high-end consumer market experienced strong sequential growth this quarter due to increased market acceptance for our products and seasonality normally experienced in the fourth quarter. We saw a sequential decline in the computing market, primarily due to excessive inventory at the contract manufacturers in Asia. The industrial and communications end markets were also down sequentially due to normal seasonality, excessive inventory in the channel and some weakness in certain communication related product families. Despite the softness experienced in the fourth quarter, this was an excellent year for Intersil. We achieved double digit sequential growth in all four end markets for fiscal year 2006," said Rich Beyer. "Communications grew the fastest, 27%, followed by computing, 26%, high-end consumer, 22% and industrial, 19%."

During the quarter the Company repurchased approximately $100 million or 4.1 million shares of its stock, under a previously announced stock repurchase program. In 2006, Intersil generated more than $200 million in free cash flow and returned approximately $324 million to its investors in the form of stock repurchases and cash dividends.

Business Outlook

"For the first quarter we expect a continuation of the inventory issues currently affecting our industry," said Rich Beyer. "We expect the industrial and communications markets to be sequentially down again due to these issues. As is traditionally anticipated, high-end consumer and computing revenues are expected to be sequentially down due mainly to seasonality. As a result, we currently anticipate Intersil revenues for the first quarter to be between $162M and $168M. We expect GAAP earnings per diluted share of approximately $0.21 to $0.23 and non-GAAP earnings per diluted share of approximately $0.27 to $0.29."

Investors and interested parties within the United States may listen to Intersil's conference call on January 24th at 1:45 p.m. Pacific/4:45 p.m. Eastern by dialing (800) 901-5259 using the password "Intersil." International callers may connect to the call by dialing (617) 786-4514. 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 "93779938." 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 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 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)


                                     Quarters Ended         Years Ended
                               -------------------------- ---------------
                               Dec 29,  Dec 30,  Sep 29,  Dec 29,  Dec 30,
                                 2006     2005     2006     2006     2005
                               -------- -------  -------- -------  -------
                              (Q4 2006)(Q4 2005)(Q3 2006)

Net revenues                   $  181.1 $ 175.6  $  192.9 $ 740.6  $ 600.3

  Cost of revenues                 76.5    76.4      81.9   315.7    265.6
                               -------- -------  -------- -------  -------

Gross profit                      104.6    99.2     111.0   424.9    334.7

Expenses and other income
  Research and development         31.2    29.6      33.5   126.5    118.3
  Selling, general and
   administrative                  34.0    27.1      32.3   137.1    106.5
  Amortization of purchased
   intangibles                      2.4     2.4       2.4     9.5      9.6
  Other expenses, net                 -       -         -       -      0.2
                               -------- -------  -------- -------  -------
Operating income                   37.0    40.1      42.8   151.8    100.1
  Gain (loss) on certain
   investments, net                 0.5       -         -    (1.4)       -
  Interest income, net              8.2     5.8       7.6    29.8     19.0
                               -------- -------  -------- -------  -------
Income from continuing
 operations before income
 taxes                             45.7    45.9      50.4   180.2    119.1
  Income tax expense from
   continuing operations            7.4    16.5      12.7    28.8     32.3
                               -------- -------  -------- -------  -------
Income from continuing
 operations                        38.3    29.4      37.7   151.4     86.8
Discontinued operations
  Income (loss) from
   discontinued operations,
   before taxes                     0.8    (0.8)        -     0.8     (1.0)
  Income tax expense (benefit)
   from discontinued
   operations                       0.3    (0.1)        -     0.3     (0.1)
                               -------- -------  -------- -------  -------
Income (loss) from
 discontinued operations            0.5    (0.7)        -     0.5     (0.9)

                               -------- -------  -------- -------  -------
Net income                     $   38.8 $  28.7  $   37.7 $ 151.9  $  85.9
                               ======== =======  ======== =======  =======

Earnings per share
  Basic
   Continuing operations       $   0.28 $  0.21  $   0.27 $  1.08  $  0.61
   Discontinued operations            -   (0.01)        -    0.01    (0.01)
                               -------- -------  -------- -------  -------
  Net income per share         $   0.28 $  0.20  $   0.27 $  1.09  $  0.60
                               ======== =======  ======== =======  =======

  Diluted
   Continuing operations       $   0.28 $  0.20  $   0.27 $  1.06  $  0.60
   Discontinued operations            -       -         -    0.01    (0.01)
                               -------- -------  -------- -------  -------
  Net income per share         $   0.28 $  0.20  $   0.27 $  1.07  $  0.59
                               ======== =======  ======== =======  =======

Weighted average shares
  Basic                           137.7   141.3     139.1   139.9    142.2
                               ======== =======  ======== =======  =======
  Diluted                         139.5   145.1     141.0   142.4    145.2
                               ======== =======  ======== =======  =======

  Note: FAS123R was adopted at
   the beginning of fiscal
   2006. Stock compensation
   recorded in each expense
   classification above is
   as follows:                       Quarters Ended         Years Ended
                               -------------------------  ----------------
                                Dec 29, Dec 30,  Sep 29,  Dec 29,  Dec 30,
                                 2006    2005     2006     2006     2005
                               -------- ------- --------  -------  -------
  Cost of sales                $    0.8 $   0.2 $    0.9  $   3.2  $   1.1
  Research and development          3.7     1.7      4.3     16.4      7.4
  Selling, general and
   administrative                   6.9     1.5      7.3     28.3      6.7



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


                                  Quarters Ended           Years Ended
                           ----------------------------  -----------------
                           Dec 29,   Dec 30,   Sep 29,   Dec 29,   Dec 30,
                             2006      2005      2006      2006      2005
                           --------  --------  --------  --------  -------
                           (Q4 2006)(Q4 2005)(Q3 2006)
Net revenues               $  181.1  $  175.6  $  192.9  $  740.6  $ 600.3

Gross profit                  105.4      99.4     111.9     428.1    335.8
        % of Sales             58.2%     56.6%     58.0%     57.8%    55.9%

Research and development       27.5      27.9      29.2     110.1    110.9
Selling, general and
 administrative                27.1      25.6      25.0     108.8     99.8

Operating income           $   50.8  $   45.9  $   57.7  $  209.2  $ 125.1
        % of Sales             28.0%     26.1%     29.9%     28.3%    20.8%

Interest and other
 non-operating income           8.8       5.8       7.6      30.3     19.0

Pretax income                  59.6      51.7      65.3     239.5    144.1

Net income                 $   48.2  $   39.3  $   46.9  $  179.9  $ 108.9
        % of Sales             26.6%     22.4%     24.3%     24.3%    18.1%

Earnings Per Share
        Basic              $   0.35  $   0.28  $   0.34  $   1.29  $  0.77
        Diluted            $   0.34  $   0.27  $   0.33  $   1.25  $  0.75

Weighted Average Shares
        Basic                 137.7     141.3     139.1     139.9    142.2
        Diluted               140.7     145.1     142.4     143.9    145.2


        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. These adjustments are
        included in the Financial Bridge table.




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


                                  Quarters Ended            Years Ended
                           ----------------------------  -----------------
                           Dec 29,   Dec 30,   Sep 29,   Dec 29,   Dec 30,
                             2006      2005      2006      2006      2005
                           --------  --------  --------  --------  -------
                           (Q4 2006)(Q4 2005) (Q3 2006)

Net income on GAAP basis:  $   38.8  $   28.7  $   37.7  $  151.9  $  85.9

  Acquisition related
   expenses - intangibles
   amortization                 2.4       2.4       2.4       9.5      9.6
  Loss on certain
   investments, net               -         -         -       1.9        -
  Other expenses, net             -         -         -         -      0.2
  (Gain) loss from
   discontinued operations     (0.8)      0.8         -      (0.8)     1.0
  Stock compensation
   expense*                    11.4       3.4      12.5      48.0     15.2
  Associated tax effects       (3.6)     (2.6)     (4.7)    (17.2)    (9.6)
  Marginal tax provision
   from 2005 cash
   repatriation                   -       6.6         -         -      6.6
  Benefits from discrete
   tax events                     -         -      (1.0)    (13.4)       -
                           --------  --------  --------  --------  -------
Net income on Non-GAAP
 basis:                    $   48.2  $   39.3  $   46.9  $  179.9  $ 108.9
                           ========  ========  ========  ========  =======

Diluted Non-GAAP earnings
 per share                 $   0.34  $   0.27  $   0.33  $   1.25  $  0.75
                           ========  ========  ========  ========  =======

Diluted weighted average
 common shares outstanding    139.5     145.1     141.0     142.4    145.2
  Diluted weighted average
   shares difference
   attributable to FAS123R      1.2         -       1.4       1.5        -
                           --------  --------  --------  --------  -------
Diluted Non-GAAP weighted
 average common shares
 outstanding                  140.7     145.1     142.4     143.9    145.2
                           ========  ========  ========  ========  =======


* includes additional costs recorded in the 2006 periods from adoption of
  FAS123R

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 earnings per share, which is adjusted to reflect the GAAP results
excluding stock based compensation expense, amortization of intangibles,
discontinued operations and unusual items. This non-GAAP presentation of
earnings per share is provided to enhance the reader’s overall
understanding of the comparability of the Company’s financial performance
between periods.


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


                                            Dec 29,    Sep 29,    Dec 30,
                                              2006       2006       2005
                                            ---------  ---------  ---------
Assets
Current Assets
 Cash, cash equivalents and short-term
  investments                               $   624.0  $   689.0  $   555.2
 Trade receivables, net                          98.1      116.2       99.8
 Inventories, net                                92.4       90.6       86.6
 Prepaid expenses and other current assets       16.6       12.9       11.9
 Deferred income taxes                           18.5       24.9       32.8
                                            ---------  ---------  ---------
    Total Current Assets                        849.6      933.6      786.3
Other Assets
 Property, plant and equipment, net             101.1      102.9       96.6
 Purchased intangibles, net                      29.9       32.2       39.3
 Goodwill                                     1,419.8    1,421.7    1,423.7
 Deferred income taxes                           63.9       81.3       65.9
 Long-term investments                           78.6       27.3      157.1
 Other                                           13.1       12.7       14.8
                                            ---------  ---------  ---------
    Total Other Assets                        1,706.4    1,678.1    1,797.4
                                            ---------  ---------  ---------
Total Assets                                $ 2,556.0  $ 2,611.7  $ 2,583.7
                                            =========  =========  =========

Liabilities and Shareholders' Equity
Current Liabilities
 Trade account payables                     $    24.2  $    26.5  $    27.1
 Income taxes payable                            44.8       68.9       58.1
 Deferred net revenue                            12.8       15.2       11.0
 Other accrued items                             55.8       57.2       57.9
                                            ---------  ---------  ---------
    Total Liabilities                           137.6      167.8      154.1

Total Shareholders' Equity                    2,418.4    2,443.9    2,429.6
                                            ---------  ---------  ---------
Total Liabilities and Shareholders' Equity  $ 2,556.0  $ 2,611.7  $ 2,583.7
                                            =========  =========  =========

Contact Information

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