SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 28, 2003
INTERSIL CORPORATION
(Exact name of Registrant as specified in its charter)
| Delaware | | 000-29617 | | 59-3590018 |
| (State or other jurisdiction | | (Commission File | | (IRS Employer |
| of incorporation) | | Number) | | Identification No.) |
| 675 Trade Zone Boulevard, Milpitas, CA | | 95035 |
| (Address of principal executive offices) | | (Zip Code) |
(408) 945-1323
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
ITEM 2. Acquisition or Disposition of Assets
On August 28, 2003, Intersil Corporation, a Delaware corporation (“Intersil” or “the Company”), completed the sale of its Wireless Networking product group to GlobespanVirata, Inc., a Delaware corporation (“GlobespanVirata”), in accordance with the terms of the Asset Purchase Agreement between Intersil and GlobespanVirata dated July 15, 2003. Pursuant to the Asset Purchase Agreement, GlobespanVirata agreed to pay Intersil $250,000,000 and 15,462,185 shares of GlobespanVirata common stock. A copy of the press release issued by Intersil announcing the completion of this transaction is filed as an exhibit hereto, and is hereby incorporated by reference.
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements of business acquired.
Not Applicable.
(b) Pro forma financial information.
The required pro forma financial information is filed herein.
(c) Exhibits.
2.01 Asset Purchase Agreement between Intersil Corporation and GlobespanVirata, Inc.,
dated July 15, 2003.
99.01 Press release issued by Intersil Corporation on August 28, 2003.
Intersil Corporation
Pro Forma Financial Information
The following unaudited pro forma consolidated financial information for the Company gives effect to the August 28, 2003 sale of substantially all of the assets of the Wireless Networking product group to GlobespanVirata. The accounts receivable and accounts payable of the product group incurred prior to the acquisition were not sold, and accordingly no adjustments have been made for these items. The unaudited pro forma consolidated balance sheet as of July 4, 2003 is presented as if the transaction had occurred as of that date. The unaudited pro forma consolidated statements of operations for the 53 weeks ended January 3, 2003 and the 26 weeks ended July 4, 2003 are presented as if the transaction had occurred at the beginning of the earliest period presented (i.e. December 29, 2001, the first day of Intersil’s fiscal year). The pro forma consolidated financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the period ended January 3, 2003 and the unaudited consolidated financial statements and notes thereto included in the Company’s Quarterly Reports on Form 10Q for the periods ended April 4, 2003 and July 4, 2003. The pro forma information may not necessarily be indicative of what the Company’s results of operations or financial position would have been had the transaction been in effect as of and for the periods presented, nor is such information necessarily indicative of the Company’s results of operations or financial position for any future period or date.
Intersil Corporation
Pro Forma Condensed Consolidated Balance Sheet – Unaudited
July 4, 2003
($ in thousands)
| | | | | | (1) | | | | |
| | | Intersil | | | Pro Forma | | | (1) | |
| | | as Reported
| | | Adjustments
| | | Pro Forma
| |
Assets | | | | | | | | | | | | |
Current Assets | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 532,598 | | | $ | 250,000 | | | $ | 782,598 | |
Short-term investments | | | 19,994 | | | | — | | | | 19,994 | |
Trade receivables, net | | | 97,217 | | | | — | | | | 97,217 | |
Inventories, net | | | 70,470 | | | | — | | | | 70,470 | |
Prepaid expenses and other current assets | | | 8,907 | | | | — | | | | 8,907 | |
Assets held for sale | | | 254,016 | | | | (254,016 | ) | | | — | |
Deferred income taxes | | | 39,852 | | | | — | | | | 39,852 | |
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Total Current Assets | | | 1,023,054 | | | | (4,016 | ) | | | 1,019,038 | |
Other Assets | | | | | | | | | | | | |
Property, plant and equipment, net | | | 159,258 | | | | (238 | )(5) | | | 159,020 | |
Goodwill, net | | | 1,059,514 | | | | — | | | | 1,059,514 | |
Intangibles, net | | | 47,797 | | | | — | | | | 47,797 | |
Investments | | | 106,676 | | | | 114,796 | (5) | | | 221,472 | |
Deferred income taxes | | | 880 | | | | — | | | | 880 | |
Related party notes | | | 1,000 | | | | — | | | | 1,000 | |
Other | | | 9,502 | | | | — | | | | 9,502 | |
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Total Other Assets | | | 1,384,627 | | | | 114,558 | | | | 1,499,185 | |
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Total Assets | | $ | 2,407,681 | | | | 110,542 | | | | 2,518,223 | |
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Liabilities and Shareholders’ Equity | | | | | | | | | | | | |
Current Liabilities | | | | | | | | | | | | |
Trade payables | | $ | 43,699 | | | $ | — | | | $ | 43,699 | |
Retirement plan accruals | | | 6,690 | | | | 185 | (4) | | | 6,875 | |
Accrued compensation | | | 19,860 | | | | 2,096 | (4) | | | 21,956 | |
Accrued interest and sundry taxes | | | 4,818 | | | | — | | | | 4,818 | |
Deferred margin | | | 12,967 | | | | — | | | | 12,967 | |
Exit costs | | | 1,297 | | | | — | | | | 1,297 | |
Restructuring costs | | | 5,777 | | | | — | | | | 5,777 | |
Other accrued items | | | 20,889 | | | | 32,750 | (3) | | | 53,639 | |
Sales reserves | | | 3,896 | | | | 295 | (4) | | | 4,191 | |
Liabilities held-for-sale | | | 25,174 | | | | (25,174 | ) | | | — | |
Income taxes payable | | | 36,843 | | | | 12,525 | (4) | | | 49,368 | |
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Total Current Liabilities | | | 181,910 | | | | 22,677 | | | | 204,587 | |
Shareholders’ Equity | | | | | | | | | | | | |
Common stock | | | 1,370 | | | | — | | | | 1,370 | |
Additional paid-in capital | | | 2,224,428 | | | | 11,762 | (2) | | | 2,236,190 | |
Retained earnings | | | 12,176 | | | | 76,103 | (6) | | | 88,279 | |
Unearned compensation | | | (14,003 | ) | | | — | | | | (14,003 | ) |
Accumulated other comprehensive income | | | 1,800 | | | | — | | | | 1,800 | |
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Total Shareholders’ Equity | | | 2,225,771 | | | | 87,865 | | | | 2,313,636 | |
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Total Liabilities and Shareholders’ Equity | | $ | 2,407,681 | | | | 110,542 | | | | 2,518,223 | |
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Intersil Corporation
Pro Forma Condensed Consolidated Statement of Operations – Unaudited
For the 12 Months Ended January 3, 2003
($ in thousands, except share and per share amounts)
| | | Intersil as
Reported
| | | (1)
Pro Forma
Adjustments
| | | (1)
Pro
Forma
| |
Product Sales | | $ | 649,718 | | | $ | (230,159 | ) | | $ | 419,559 | |
Cost of product sales | | | 312,624 | | | $ | (114,474 | ) | | | 198,150 | |
Research and development | | | 131,044 | | | | (53,100 | ) | | | 77,944 | |
Selling, general and administrative | | | 111,728 | | | | (22,130 | ) | | | 89,598 | |
Amortization of intangibles and unearned compensation | | | 24,611 | | | | (3,325 | ) | | | 21,286 | |
In-process research and development | | | 53,816 | | | | — | | | | 53,816 | |
Impairment of long-lived assets | | | 6,159 | | | | (250 | ) | | | 5,909 | |
Restructuring | | | 5,324 | | | | (580 | ) | | | 4,744 | |
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Operating income (loss) | | | 4,412 | | | | (36,300 | ) | | | (31,888 | ) |
Interest, net | | | (11,268 | ) | | | — | | | | (11,268 | ) |
Gain (loss) on investments | | | (1,736 | ) | | | 3,000 | | | | 1,264 | |
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Income (loss) before income taxes | | | 13,944 | | | | (33,300 | ) | | | (19,356 | ) |
Income taxes | | | 18,914 | | | | (9,512 | ) | | | 9,402 | |
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Net loss | | $ | (4,970 | ) | | | (23,788 | ) | | | (28,758 | ) |
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Net income per common share: | | | | | | | | | | | | |
Basic | | $ | (0.04 | ) | | $ | (0.19 | ) | | $ | (0.23 | ) |
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Diluted | | $ | (0.04 | ) | | $ | (0.19 | ) | | $ | (0.23 | ) |
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Weighted average common shares outstanding (in millions): | | | | | | | | | | | | |
Basic | | | 125.6 | | | | 125.6 | | | | 125.6 | |
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Diluted | | | 125.6 | | | | 125.6 | | | | 125.6 | |
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Intersil Corporation
Pro Forma Condensed Consolidated Statement of Operations – Unaudited
For the 6 Months Ended July 4, 2003
($ in thousands, except share and per share amounts)
| | | Intersil as Reported
| | | (1) Pro Forma Adjustments
| | (1) Pro Forma
| |
Product sales | | $ | 241,090 | | | $ | — | | $ | 241,090 | |
Cost of product sales | | | 104,304 | | | | — | | | 104,304 | |
Research and development | | | 43,875 | | | | — | | | 43,875 | |
Selling, general and administrative | | | 44,655 | | | | — | | | 44,655 | |
Amortization of purchased intangibles and unearned stock based compensation | | | 10,855 | | | | — | | | 10,855 | |
Restructuring | | | 1,418 | | | | — | | | 1,418 | |
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Operating income | | | 35,983 | | | | — | | | 35,983 | |
Gain on investments | | | 592 | | | | — | | | 592 | |
Interest, net | | | (4,171 | ) | | | — | | | (4,171 | ) |
Gain on sale of certain operations disposed of during 2001 | | | 1,428 | | | | — | | | 1,428 | |
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Income from before income taxes | | | 42,174 | | | | — | | | 42,174 | |
Income taxes | | | 10,394 | | | | — | | | 10,394 | |
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Net income | | | 31,780 | | | | — | | | 31,780 | |
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Net income per common share: | | | | | | | | | | | |
Basic | | $ | 0.09 | | | $ | 0.14 | | $ | 0.23 | |
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Diluted | | $ | 0.09 | | | $ | 0.13 | | $ | 0.22 | |
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Weighted average common shares outstanding (in millions): | | | | | | | | | | | |
Basic | | | 136.9 | | | | 136.9 | | | 136.9 | |
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Diluted | | | 141.0 | | | | 141.0 | | | 141.0 | |
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Intersil Corporation
Notes to Pro Forma Condensed Consolidated Financial Statements
Note 1—These unaudited pro forma financial statements present results of operations as if the sale of the Wireless Networking product group occurred as of December 29, 2001 (the first day of Intersil’s fiscal year) and present financial position as if the sale occurred on July 4, 2003. The pro forma adjustments include the elimination of the operating results of the Wireless Networking product group for the periods presented, as well as additional adjustments described below. The proceeds from the acquisition consisted of $250.0 million in cash and $114.4 million in GlobespanVirata common stock.
Note 2—In connection with the sale of the Wireless Networking product group, Intersil accelerated and changed the expiration date of options belonging to certain employees within the product group. In accordance with the Financial Accounting Standards Board Interpretation No. 44, “Accounting for Certain Transactions Involving Stock Compensation”, Intersil would record a charge of approximately $11.8 million with the offset being included as additional paid-in-capital.
Note 3— In connection with the sale, Intersil recorded $19.0 million in accruals related to legal costs associated with patent infringement suits for which Intersil has indemnified GlobespanVirata. Intersil also recorded liabilities of $13.2 million for certain costs related to the transaction, including legal fees, investment banking fees, audit fees, and other costs. Additionally, approximately $0.5 million of accrued liabilities originally designated as “held-for-sale” were reclassified into Intersil’s balance sheet as those liabilities were no longer deemed to be “held-for-sale” per the final asset purchase agreement.
Note 4—Approximately $0.2 million of retirement plan accruals originally designated as “held-for-sale” were reclassified into Intersil’s balance sheet as those liabilities were no longer deemed to be “held-for-sale” per the final asset purchase agreement. Similarly, $2.1 million and $0.3 million of accrued compensation liabilities and sales reserve liabilities, respectively, were reclassified into Intersil’s balance sheet, as those liabilities were no longer deemed to be “held-for-sale” per the final asset purchase agreement. Also, $12.5 million of deferred tax liabilities, which originally were classified as “held-for-sale” as they related to sale, were reclassified into income taxes payable upon the closing of the deal in accordance with Statement of Financial Accounting Standards (SFAS) No. 109, “Accounting for Income Taxes.”
Note 5—Intersil received approximately $114.4 million in GlobespanVirata common stock as a portion of the transactions proceeds. Additionally, investments of $0.4 million originally designated as “held-for-sale” were reclassified into Intersil’s balance sheet as those assets were no longer deemed to be “held-for-sale” per the final asset purchase agreement. Additionally, $0.2 million of property, plant and equipment that was originally not deemed “held-for-sale” was removed from the Intersil balance sheet as these assets were included in the final asset purchase agreement.
Note 6—The pro forma balance sheet reflects an adjustment to retained earnings of $71.1 million representing the net gain on the sale of the Wireless Networking product group.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| INTERSIL CORPORATION |
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| By: | | /s/ Daniel J. Heneghan |
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| | | Daniel J. Heneghan Vice President, Chief Financial Officer |
Date: September 12, 2003
EXHIBIT INDEX
| Number | | Exhibit |
2.01 | | Asset Purchase Agreement between Intersil Corporation and GlobespanVirata, Inc., dated July 15, 2003 (incorporated by reference to Exhibit 99.2 to the Current Report on Form 8-K/A filed by GlobespanVirata, Inc. on July 28, 2003). |
| |
99.01 | | Press Release dated August 28, 2003. |
