INTERSIL ANNOUNCES THIRD QUARTER EARNINGS
- Reports revenue of $113.4 million, exceeding consensus expectations
- Grows power management revenue 41.1% from the previous quarter
- Achieves adjusted earnings per share (EPS) of $.10, beating
consensus estimates
IRVINE, Calif. - October 19, 2001 - Intersil Corporation (NASDAQ: ISIL) today
reported financial results for the quarter ended September 28, 2001. Sales were
$113.4 million, a decline of 4.1% compared to the previous quarter but above
previous guidance. Adjusted net income was $11.1 million, or $.10 per diluted
share of common stock, significantly surpassing consensus expectations.
Including amortization and a one-time tax adjustment, the company recorded a net
loss of $3.3 million.
Intersil's gross margins for the third quarter increased to 50.8%, a 50 basis
point gain from the previous quarter, with improvement in both Wireless Access
and Communications Analog. Intersil continues to maintain one of the strongest
balance sheets in the industry, exiting the third quarter with approximately
$624 million in cash and an 8% reduction in inventory during the quarter.
"Intersil's execution was outstanding during the quarter, particularly in our
Communications Analog business where power management revenues grew 41% from the
second quarter," said Intersil President and CEO, Greg Williams. "Our overall
book-to-bill ratio was greater than one, with orders up more than 26% from the
previous quarter. Intersil improved gross margins and operating expenses, which
contributed to growth in our earnings per share. We continue to outperform the
overall semiconductor industry and we enter the fourth quarter optimistic about
our future."
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RESULTS BY PRODUCT GROUP
WIRELESS ACCESS
Intersil's Wireless Access sales were $29.6 million, a decline of 8.6% from the
second quarter of 2001 due to continued weakness in telecom and fixed wireless
markets. Although sales declined for Wireless Access products during the
quarter, PRISM(R) WLAN product sales were sequentially flat and orders were up
more than 20%, partially due to renewed demand from Intersil's largest
enterprise customer.
"We continue to see strong design activity for our 11 megabit per second (Mbps)
PRISM 2.5 wireless networking solution, which is now built into many notebook
PCs by leading manufacturers including IBM, Hewlett Packard, Panasonic, Compaq
and others," said Williams. "We believe that our strategic alliance for wireless
LAN development with Quanta, the largest notebook manufacturer in Taiwan, is an
important catalyst for embedded wireless technologies in notebooks and
handhelds. We are also encouraged by the rollout of Microsoft(R)'s new
Windows(R) XP operating software, which incorporates 802.11b WLAN drivers as a
standard feature."
"In addition to the notebook design wins, we're excited about innovative new
products that incorporate Intersil's PRISM WLAN chipset, including new wireless
appliances by Panasonic and Sharp," added Williams. "Sharp Corporation, a leader
in LCD TV, has integrated PRISM chipsets into their new AN-SS700 audio/visual
digital transmission system that allows wireless TV reception throughout the
home. We believe these products underscore the widespread adoption of wireless
networking and represent the wide-range of exciting PRISM-based products that
extend beyond traditional PC applications in the home and enterprise."
"Our 11Mbps PRISM product is the most popular wireless LAN radio solution in the
world today," said Williams. "802.11b is the only true global standard and
continues to expand at work, at home and in public places. Wi-Fi (802.11b)
radios now exceed 10 million units worldwide and are helping to create a
significant wireless data infrastructure. We continue to drive new levels of
integration into 802.11 products, making wireless an even more attractive value.
Most notebooks will soon be available with an embedded Intersil WLAN option,
driving even more widespread adoption of Wi-Fi worldwide."
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Intersil plans to begin sampling its new PRISM Indigo(TM) 5 GHz wireless LAN
semiconductors during the fourth quarter. The PRISM Indigo solution will support
the United States 802.11a standard and will leverage Intersil's experience in
high volume WLAN applications. The company will continue to work to establish
global, high-data-rate standards. Intersil is also engaged with customers and
Microsoft to develop solutions that are backward compatible with the millions of
802.11b radios already in place.
COMMUNICATIONS ANALOG
Intersil's Communications Analog sales were $45.7 million during the third
quarter, a 14.8% increase from the previous quarter. The Power Management
portion of the analog business showed particular strength, growing 41.1% from
the second quarter, driven by an aggressive production ramp supporting
Intel(R)'s Pentium(R) 4 microprocessor.
The trend toward faster microprocessors that require more power and support from
complex analog power integrated circuits (ICs) continues. Intersil believes that
its Endura(TM) power management solution offers better quality, performance,
ease of use and reliability than its competitors. This enables customers to
transition quickly from concept to production at the lowest overall cost.
Consequently, Intersil is now the world's leading provider of power solutions
for Intel and AMD high-end desktop platforms, and demand for Intersil's Endura
power management products surpassed expectations during the third quarter.
Intersil continues to gain market share in desktop computers and currently
estimates 50% share of the world's power management ICs to support Intel's
Pentium 4.
"We extended our global lead in desktop power management during the third
quarter and continue to see strong design activity for notebook PCs, servers and
broadband gateways," said Williams. "We plan to add to that lead through our
recently announced power management alliance with Primarion. We'll co-develop a
digital control architecture with Primarion to power the next generation of
multi-Gigahertz PCs, servers and notebooks."
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"Our alliance with Primarion is one more factor in maintaining Intersil's global
leadership in power management for advanced PC and server customers," said
Williams. "Primarion is a startup company that understands high-performance
power delivery to next generation microprocessors. Primarion was started in 1999
by four former Intel executives and now includes both Intel and Intersil as
significant investors. The combination of Intersil and Primarion's engineering
and technical proficiencies coupled with our global leadership in power
management and channels to market will help accelerate the development of
multi-GHz power management solutions. These digital power solutions will help
complement our rich Endura power management portfolio."
Intersil added several new products to its Endura power management family during
the third quarter including the world's first hot swap IC to support InfiniBand
- a new, gigabit-range communications specification for servers and storage
networks that's backed by an industry association of over 200 members.
OTHER ANALOG
As expected, sales of Intersil's other analog products during the quarter
decreased due to seasonality and continued soft demand. Revenue declined 17.4%
during the third quarter to $38.1 million. The company's fab consolidation and
transition out of automotive products is on track for completion by mid-2002,
which should lead to further improvement in total analog margins.
BUSINESS OUTLOOK
"Based on the strength of our power management and wireless access businesses,
we expect sequential revenue growth of 3-5% in the fourth quarter of 2001," said
Williams. "We anticipate gross margins of 51% and expect an increase in earnings
per share (EPS) to approximately $.11. We believe that Intersil is uniquely
positioned to take advantage of the trend towards faster and more powerful
computing and wireless mobility - providing power and wireless networking
solutions that enable connectivity for people at work, at home and on the go."
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Investors and interested parties within the United States may listen to
Intersil's conference call Friday, October 19, at 7:00 a.m. Pacific/10:00 a.m.
Eastern by dialing (877) 917-3406 and providing the operator with the pass code
Intersil. International callers may connect to the call by dialing (212)
547-0149. A replay of Intersil's conference call will be available starting at
9:00 a.m. Pacific/12:00 p.m. Eastern by calling (888) 562-7630 in the US or
(402) 220-6507 internationally. Confirmation code for the replay, available
until October 26, 2001, is 2001. A live webcast will also be available on
Intersil's Internet homepage at http://www.intersil.com/investor/index.asp.
ABOUT INTERSIL
Intersil is a global leader in designing innovative wireless networking and high
performance analog solutions that enable wireless access to video, data and
voice in homes, offices and public places. Creating advanced power management
products, Intersil provides reliable solutions for file servers, portable
information appliances and over half of all computer microprocessors
manufactured today. With a rich high performance analog and mixed signal
portfolio, Intersil brings added value in providing complete silicon, software
and reference design solutions to new products that bring portable connectivity
to people wherever they live, work or travel. Headquartered in Irvine,
California, Intersil has offices in cities throughout the US, Europe and Asia.
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:
http://www.intersil.com.
This press release contains forward-looking statements as defined in Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. Such forward-looking statements are based 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," "believes," "seeks," "estimates,"
"may," "will," and variations of these words or similar expressions, are
intended to identify forward-looking statements. In addition, any statements
that refer to expectations, 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. Important risk factors that may
cause such material differences for Intersil include, but are not limited to:
the recent economic slowdown in the technology sector and the semiconductor
industry; the rate at which consumers adopt small handheld Internet appliances
and portable computing devices in enterprises and in homes; the rate at which
our present and future customers and end-users adopt Intersil's wireless access,
power management, and other analog technologies and products; the timing,
rescheduling or cancellation of significant customer orders; the loss of a key
customer; the qualification, availability and pricing of competing products and
technologies and the resulting effects on sales and pricing of our products;
silicon wafer pricing and the availability and quality of foundry and assembly
capacity and raw materials; the effectiveness of Intersil's expense and product
cost control and reduction efforts; intellectual property disputes, customer
indemnification claims, and other litigation risks; Intersil's ability to
develop, market, and transition to volume production new products and
technologies in a timely manner; risks inherent in acquisitions and
divestitures, such as the anticipated benefits not being realized, integration
issues, unanticipated costs, changing relationships with customers and
suppliers, accounting treatment and charges; the success of our recently public
offering of securities, as well as other risk factors. Intersil's Annual Report
on Form 10-K, recent and forthcoming Quarterly Reports on Form 10-Q, recent
Registration Statement of Form S-3, and other Intersil filings with the U.S.
Securities & Exchange Commission ("SEC") (which you may obtain for free at the
SEC's Web site 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 press release
and Intersil undertakes no obligation to update or revise these forward-looking
statements.
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INTERSIL CORPORATION
FINANCIAL SUMMARY (ADJUSTED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS AND PERCENTAGES)
<Table>
<Caption>
Three Months Ended Nine Months Ended
9/28/01 9/29/00 9/28/01 9/29/00
Revenue $113.4 $166.2 $359.4 $422.1
Year/Year Growth -32% -15%
Gross Margin 57.6 84.1 178.4 196.9
% of Sales 51% 51% 50% 47%
R&D 25.4 22.9 80.6 60.9
SG&A 21.4 32.7 71.2 87.1
Adjusted Operating Income 10.8 28.5 26.6 48.9
% of Sales 10% 17% 7% 12%
Adjusted Net Income 11.1 17.2 28.2 21.7
% of Sales 10% 10% 8% 5%
Adjusted EPS
Basic $ 0.10 $ 0.18 $ 0.27 $ 0.25
Diluted $ 0.10 $ 0.17 $ 0.26 $ 0.23
Weighted Average Shares
Basic 105.7 96.1 105.5 88.3
Diluted 109.1 102.6 108.9 95.3
</Table>
NOTE: This financial summary excludes amortization of intangibles, impairments,
restructuring, extraordinary items and other one-time items.
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INTERSIL CORPORATION
STATEMENTS OF OPERATIONS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<Table>
<Caption>
Three Months Ended Nine Months Ended
9/28/01 9/29/00 9/28/01 9/29/00
REVENUE
Product sales $113.4 $166.2 $359.4 $422.1
COSTS AND EXPENSES
Cost of product sales 55.8 82.1 200.2 225.2
Research and development 25.4 22.9 80.6 60.9
Selling, general and administrative 21.4 32.7 71.2 87.1
Intangible amortization 11.3 5.9 33.6 11.4
Impairment of long-lived assets -- -- 7.6 --
Restructuring -- -- 32.4 --
Other -- -- -- 1.2
------ ------ ------ ------
OPERATING INCOME (LOSS) (0.5) 22.6 (66.2) 36.3
Loss on sale of Malaysian operation -- -- 24.8
Interest, net (5.1) 0.5 (14.9) 14.4
Impairment on investments -- -- 8.2 --
------ ------ ------ ------
Income (loss) before sale of certain assets,
income taxes and extraordinary item 4.6 22.1 (59.5) (2.9)
Operating results of certain operations
disposed of during 2001
Net sales -- 52.4 38.5 158.6
Costs and expenses -- (41.3) (41.4) (119.6)
------ ------ ------ ------
-- 11.1 (2.9) 39.0
Gain on sale of certain operations -- -- 168.4 --
------ ------ ------ ------
-- 11.1 165.5 39.0
------ ------ ------ ------
Income before income taxes and
extraordinary item 4.6 33.2 106.0 36.1
Income taxes 7.9 13.9 57.4 12.2
------ ------ ------ ------
Income (loss) before extraordinary item (3.3) 19.3 48.6 23.9
Extraordinary item -- loss on extinguishment
of debt, net of tax effect -- -- (12.2) (25.5)
------ ------ ------ ------
Income (loss) before cumulative effect of a change
in accounting principle (3.3) 19.3 36.4 (1.6)
Cumulative effect of adoption of SFAS 133,
net of tax effect -- (0.2) -- (0.2)
------ ------ ------ ------
NET INCOME (LOSS) (3.3) 19.1 36.4 (1.8)
Preferred dividends -- -- -- (1.5)
------ ------ ------ ------
NET INCOME (LOSS) TO COMMON SHAREHOLDERS $(3.3) $19.1 $36.4 $(3.3)
====== ====== ====== ======
EPS
Basic
Income (loss) before extraordinary item $(0.03) $0.20 $0.46 $0.25
Extraordinary item -- -- (0.12) (0.29)
------ ------ ------ ------
Net income (loss) $(0.03) $0.20 $0.34 $(0.04)
====== ====== ====== ======
Diluted
Income (loss) before extraordinary item $(0.03) $0.19 $0.44 $0.24
Extraordinary item -- -- (0.11) (0.27)
------ ------ ------ ------
Net income (loss) $(0.03) $0.19 $0.33 $(0.03)
====== ====== ====== ======
WEIGHTED AVERAGE SHARES
Basic 105.7 96.1 105.5 88.3
====== ====== ====== ======
Diluted 105.7 102.6 108.9 95.3
====== ====== ====== ======
</Table>
INTERSIL CORPORATION
BALANCE SHEETS
(IN MILLIONS)
<Table>
<Caption>
September 28, June 29,
2001 2001
------------- --------
ASSETS
Current Assets
Cash $ 624.2 $ 633.3
Trade receivables, net 70.8 62.3
Inventories 66.9 72.5
Prepaid expenses and other current assets 11.4 12.5
Deferred income taxes 21.8 21.8
-------- --------
Total Current Assets 795.1 802.4
Other Assets
Property, plant & equipment, net 136.6 132.6
Intangibles, net 251.8 262.1
Other 27.1 33.9
-------- --------
Total Other Assets 415.5 428.6
-------- --------
TOTAL ASSETS $1,210.6 $1,231.0
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Trade account payables $ 26.1 $ 33.4
Income taxes payable 42.4 39.5
Other accrued items 91.4 101.0
-------- --------
Total Current Liabilities 159.9 173.9
Other Liabilities
Deferred income taxes 6.2 6.2
Total Shareholders' Equity 1,044.5 1,050.9
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,210.6 $1,231.0
======== ========
</Table>
Intersil Corporation
Financial Highlights
(In millions, except per share amounts)
Adjustments to reconcile reported net income applicable to common shareholders
to adjusted net income:
<Table>
<Caption>
Three Months Ended Nine Months Ended
September 28, September 29, September 28, September 29,
2001 2000 2001 2000
------------- ------------- ------------- -------------
Net income (loss) $ (3.3) $ 19.1 $ 36.4 $ (1.8)
a) Amortization of acquisition-related intangibles 11.3 5.9 33.6 11.4
b) Impairment of long-lived assets - - 7.6 -
c) Restructuring - - 32.4 -
d) Impairment on investments - - 8.2 -
e) Loss on sale of Malaysian operation - - - 24.8
f) Operating results of certain operations sold - (11.1) 2.9 (39.0)
g) Gain on sale of certain operations - - (168.4) -
h) Excess inventory charge - - 19.2 -
i) Other - - - 1.2
j) Associated tax effects (2.2) 3.3 38.9 (0.6)
k) Tax rate adjustment 5.2 - 5.2 -
l) Cumulative effect of adoption of SFAS 133 - - - 0.2
m) Loss on extinguishment of debt (net of tax) - - 12.2 25.5
------------- ------------- ------------- -------------
Adjusted Net Income $ 1.11 $ 17.2 $ 28.2 $ 21.7
============= ============= ============= ============
Diluted Adjusted earnings per share $ 0.10 $ 0.17 $ 0.26 $ 0.23
------------- ------------- ------------- -------------
Diluted Adjusted earnings common shares 109.1 102.6 108.9 95.3
------------- ------------- ------------- -------------
Note: Amounts may not add due to rounding.
</Table>
PRISM is a registered trademark, and PRISM Indigo and Endura are trademarks of
Intersil Americas Inc. Intel, Microsoft, AMD, Compaq, IBM, Hewlett Packard,
Sharp, Panasonic, Quanta, Legend, Primarion, Pentium, Duron, Athlon, are
trademarks of those respective companies in the United States and certain other
countries.
All other trademarks mentioned are the property of their respective owners.