Press Release Source: Intersil On Wednesday July 21, 2010, 4:05 pm EDT
MILPITAS, CA–(Marketwire – 07/21/10) – Intersil Corporation (NASDAQ:ISIL – News), a worldleader in the design and manufacture of high performance analog and mixedsignal semiconductors, today reported financial results for its secondquarter ended July 2, 2010.
Results of Operations
Net revenues for the second quarter were $219.9 million, a 49% increasefrom $147.3 million in the second quarter of 2009 and a 16% increase from$189.4 million in the first quarter of 2010. Intersil’s second quarterrevenues ranked by end market size were as follows: industrial, 31.7% ofrevenues; computing, 25.4% of revenues; communications, 22.0% of revenues;and high-end consumer, 20.9% of revenues.
Gross margin for the second quarter increased to 58.3%, compared with grossmargin of 54.2% in the same quarter last year, and 56.4% in the firstquarter of 2010.
Operating margin was 14.0% during the second quarter. Net loss was $59.4million, or a loss of $0.48 per diluted share, compared with net income of$6.2 million, or $0.05 per diluted share in the same quarter last year, andnet income of $27.7 million, or $0.22 per diluted share, in the firstquarter of 2010.
Operating income and earnings per share included Techwell acquisitionrelated costs of $6.5 million as well as $5.2 million in incrementalintangible amortization related to Techwell. In addition, income taxexpense includes approximately $81 million in tax reserves for uncertaintax positions identified during a multi-year tax audit. Excluding theeffects of these items, operating profit was $42.5 million or 19.3% ofrevenue and net income was $30.6 million, or $0.25 per diluted share.
“Intersil’s record second quarter revenues exceeded peak levels seen priorto the downturn. We also achieved one of our three 2010 financial goals byreaching 58% gross margin a full two quarters ahead of schedule,” said DaveBell, Intersil’s President and Chief Executive Officer. “As promised, theaddition of Techwell grew our industrial business to become our largest endmarket. Techwell’s stable, higher-margin video processing products shiftour end market balance and are consistent with our strategy to diversifyour product portfolio,” said Bell.
“The consumer market also performed exceptionally well in smartphones,tablets and gaming ahead of the seasonal third quarter build, offsettingthe lower-margin PC business, which was slightly soft during May and June.Many of our businesses continue to outperform due to our manufacturingcapacity and low lead times,” continued Bell.
At the end of the second quarter, Intersil’s cash and short-terminvestments totaled over $339 million, and free cash flow was over $30million for the second quarter.
Intersil’s Board of Directors has authorized the payment of a quarterlydividend of $0.12 per share of common stock. The payment of this dividendwill be made on August 20, 2010 to shareholders of record as of the closeof business on August 10, 2010.
Third Quarter 2010 Outlook
– Revenues are expected to be in the range of $230 million to $238 million (+5% to +8% sequentially)– Research and development expenses are expected to be approximately $50 million– Selling, general and administrative expenses are expected to be approximately $38 million– Stock-based compensation expenses are expected to be approximately $9.3 million– Amortization of intangibles is expected to be approximately $9.4 million– GAAP earnings per diluted share are expected to be in the range of $0.21 to $0.24– Non-GAAP earnings per diluted share (excluding amortization of intangibles) are expected to be in the range of $0.27 to $0.30
“Third quarter computing revenues are expected to be roughly flat comparedto the second quarter. However, continued strong growth in our industrialand high-end consumer markets are expected to drive excellent growth forIntersil as a whole,” said Mr. Bell. “Inventories are at ideal levels, andnew product ramps scheduled in the second half of the year give usconfidence in continued growth throughout the remainder of 2010.”
Intersil will discuss its second quarter financial results during itsscheduled conference call following the market close on July 21st. Thosewishing to participate in the conference call please dial (866) 314-4865,and international participants please dial +1 (617) 213-8050, using thepassword 31012331 at approximately 1:40 p.m. Pacific Time. Those wishing tolisten 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 theconference call on Intersil’s Web site, or may be accessed by dialing (888)286-8010, international dial +1 (617) 801-6888, using the password93489428.
Intersil Corporation is aleader in the design and manufacture of high-performance analog and mixedsignal semiconductors. Intersil’s products address some of the industry’sfastest growing markets, such as flat panel displays, cell phones, otherhandheld systems and notebooks. Intersil’s product families address powermanagement functions and analog signal processing functions. Intersilproducts include ICs for batterymanagement, hot-plug controllers, linear regulators, power sequencers,supervisory ICs, bridge drivers, PWMcontrollers, switching DC/DC regulators, Zilker Labs Digital Power ICsand power MOSFET drivers, optical storage laser diode drivers, DSL linedrivers, D2Audio products, video and high-performance operational amplifiers; high-speed data converters,interface ICs, analogswitches and multiplexers, crosspoint switches, voice-over-IP devices,and ICs for military,space and radiation-hardened applications. For more information aboutIntersil or to find out how to become a member of our winning team, visitIntersil’s Web site and career page at www.intersil.com.
Intersil Corporation Consolidated Statements of Operations Unaudited (In US$ millions, except shares and per share amounts) Quarters Ended Year Ended ————————- —————- July 2, July 3, April 2, July 2, July 3, 2010 2009 2010 2010 2009 ——- ——- ——- ——- ——- (Q2 (Q2 (Q1 (YTD (YTD 2010) 2009) 2010) 2010) 2009)Net revenues $ 219.9 $ 147.3 $ 189.4 $ 409.3 $ 265.5 Cost of revenues 91.7 67.5 82.5 174.1 120.5 ——- ——- ——- ——- ——-Gross profit 128.2 79.8 106.9 235.1 144.9Expenses Research and development 47.2 37.0 41.7 88.9 69.8 Selling, general and administrative 35.6 29.8 31.6 74.7 55.6 Amortization of purchased intangibles 8.1 3.4 2.9 11.0 6.9 Acquisition related costs 6.5 – 1.0 – - Restructuring and other related activities – 0.4 – - 1.9 In-process research and development credit – - – - (0.2) ——- ——- ——- ——- ——-Operating income 30.8 9.2 29.8 60.6 10.9 Gain (loss) on deferred compensation investments (0.3) 1.1 0.3 0.1 0.8 Loss on investments, net (0.1) – (1.1) (1.2) – Interest income 0.8 1.5 0.7 1.5 3.1 Interest expense and fees (3.2) (0.1) (0.2) (3.4) (0.2) ——- ——- ——- ——- ——-Income before income taxes 28.1 11.6 29.6 57.7 14.5 Income tax expense 87.5 5.4 1.9 89.4 5.9 ——- ——- ——- ——- ——-Net (loss) income $ (59.4) $ 6.2 $ 27.7 $ (31.7) $ 8.6 ======= ======= ======= ======= =======(Loss) earnings per share: ——- ——- ——- ——- ——- Basic $ (0.48) $ 0.05 $ 0.22 $ (0.26) $ 0.07 ======= ======= ======= ======= ======= Diluted $ (0.48) $ 0.05 $ 0.22 $ (0.26) $ 0.07 ======= ======= ======= ======= =======Weighted average shares: Basic 123.7 122.2 123.0 123.4 122.0 ======= ======= ======= ======= ======= Diluted 123.7 122.2 123.4 123.4 122.1 ======= ======= ======= ======= =======Other financial metrics: Quarters Ended Year Ended ————————- —————- Stock-based compensation expense by classification: 2010 2009 2010 2010 2009 ——- ——- ——- ——- ——- Cost of revenues $ 0.5 $ 0.7 $ 0.6 $ 1.0 $ 1.3 Research and development 4.1 3.1 2.9 7.0 6.4 Selling, general and administrative 2.8 4.6 3.9 6.7 6.3Note: Totals and percentages may not add or calculate precisely due to rounding. Intersil Corporation Additional Information Unaudited (In US$ millions) Quarters Ended —————————- July 2, July 3, April 2, 2010 2009 2010 ——– ——– ——– (Q2 2010) (Q2 2009) (Q1 2010)Cash flow information: Cash from operations $ 34.8 $ 31.3 $ 36.7 Net capital expenditures 4.3 1.3 2.4 ——– ——– ——– Free cash flow $ 30.5 $ 30.0 $ 34.3 ======== ======== ========EBITDA: Operating income $ 30.8 $ 9.2 $ 29.8 Depreciation 5.3 5.1 4.8 Intangible amortization 8.1 3.4 2.9 Stock-based compensation 7.3 8.4 7.4 ——– ——– ——– EBITDA $ 51.5 $ 26.1 $ 44.9 ======== ======== ========Effect of Techwell acquisition Operating income $ 30.8 $ 9.2 $ 29.8 Acquisition related costs 6.5 – 1.0 Incremental intangible amortization 5.2 – - ——– ——– ——– Operating income excluding Techwell acquisition costs $ 42.5 $ 9.2 $ 30.8 ======== ======== ======== Revenues $ 219.9 $ 147.3 $ 189.4 Operating margin excluding Techwell acquisition costs 19.3% 6.2% 16.3%Effect of tax reserves and Techwell acquisition costs Net (loss) income $ (59.4) $ 6.2 $ 27.7 Unusual tax reserves (benefit) 81.0 3.4 (4.9) Techwell related acquisition costs, net of tax 9.0 – 1.0 ——– ——– ——– Net income excluding tax reserves and Techwell acquisition costs $ 30.6 $ 9.6 $ 23.7 ======== ======== ======== Diluted shares outstanding 123.7 122.2 123.4 Adjusted diluted earnings per share $ 0.25 $ 0.08 $ 0.19 ======== ======== ========Six-month backlog 227.1 139.6 196.8Effect of certain noncash and discrete items: Amortization of intangibles (net of tax) $ 6.2 $ 2.9 $ 2.4 Restructuring and other related activities (net of tax) – 0.4 – Loss on investments (net of tax) 0.1 – 0.8 Stock-based compensation (net of tax) 5.6 7.1 6.1 Unusual tax reserves (benefit) 81.0 3.4 (4.9)Note: Totals and percentages may not add or calculate precisely due to rounding. Intersil Corporation Consolidated Balance Sheets Unaudited (In US$ millions) July 2, January 1, 2010 2010 ——— ———AssetsCurrent assets: Cash, cash equivalents and short-term investments $ 339.5 $ 361.2 Trade receivables, net 102.9 73.6 Inventories, net 95.9 81.2 Prepaid expenses and other current assets 14.9 9.4 Deferred income taxes 27.4 27.4 ——— ——— Total current assets 580.6 552.8Other assets: Property, plant and equipment, net 100.0 102.3 Purchased intangibles, net 155.7 26.6 Goodwill 560.2 314.7 Deferred income taxes 43.9 91.0 Long-term investments 72.5 63.9 Deferred charges and other 76.4 14.5 ——— ——— Total other assets 1,008.6 613.0 ——— ———Total assets $ 1,589.2 $ 1,165.8 ========= =========Liabilities and shareholders’ equityCurrent liabilities: Trade accounts payable $ 45.0 $ 31.5 Income taxes payable 159.6 30.7 Deferred net revenue 14.8 9.7 Other accrued items 77.4 62.8 ——— ——— Total current liabilities 296.8 134.7Long-term debt 297.0 -Total shareholders’ equity 995.5 1,031.1 ——— ———Total liabilities and shareholders’ equity $ 1,589.2 $ 1,165.8 ========= =========Note: Totals and percentages may not add or calculate precisely due to rounding.