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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1
Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934.
For the fiscal year ended December 28, 2001
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 000-29617
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INTERSIL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 59-3590018
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7585 Irvine Center Drive
Irvine, California 92618
(949) 341-7062
(Address and telephone number of principal executive offices)
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Securities registered under Section 12(b) of the Exchange Act:
None.
Securities registered under Section 12(g) of the Exchange Act:
Title of class
Class A Common Stock par value $.01 per share
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Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: [X] Yes [_] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
The approximate aggregate market value of the registrant's voting common
stock held by non-affiliates, computed by reference to the last sale price per
share as of March 1, 2002 was $2,568,904,007.
The number of shares outstanding of the registrant's Class A and Class B
Common Stock as of March 1, 2002 was 90,622,241 and 16,282,475, respectively.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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Explanatory Note
Pursuant to Rule 12b-15 of the Securities Exchange Act of 1934, Intersil
Corporation hereby amends its Form 10-K for the fiscal year ended December 28,
2001 by amending and restating Items 11, 12, 13 and 14 in their entirety.
i
Item 11. Executive Compensation
Compensation Tables
The following table sets forth, for fiscal year 2001, for the six-month
transition period ended December 29, 2000 and for fiscal year 2000, information
regarding the cash compensation paid by Intersil, as well as other compensation
paid or accrued for such year, to each of the executive officers of Intersil
named below, in all capacities in which they served.
Summary Compensation Table
Dollars in thousands
Long-Term
Compensation
------------------
Annual Compensation Awards Payouts
---------------------------- ---------- -------
Other Annual Securities
Name and Principal Fiscal Compensation Underlying LTIP All Other
Position Year* Salary Bonus(1) (2)(3)(4) Options(5) Payouts Compensation(6)
- ------------------ ------ ------ -------- ------------ ---------- ------- ---------------
Gregory L. Williams..... 2001 $550.0 $770.5 -- 250,000 -- $98.3
President and Chief 2000(S) $270.2 $274.2 $ 17.9 100,000 -- $52.1
Executive Officer 2000 $399.6 $577.7 $430.1 140,000 -- $29.3
Daniel J. Heneghan...... 2001 $300.0 $348.2 -- 100,000 -- $45.1
Vice President, Chief 2000(S) $150.0 $ 83.1 $273.6 40,000 -- $20.7
Financial Officer and 2000 $179.7 $212.6 -- 63,334 $17.2 $10.4
Assistant Secretary
Larry J. Ciaccia........ 2001 $225.0 $165.4 -- 80,000 -- $30.4
Vice President and 2000(S) $110.4 $105.8 -- 25,000 -- $15.9
General Manager, 2000 $147.4 $149.6 -- 63,334 -- $ 0.3
Wireless Networking
Rick E. Furtney......... 2001 $205.3 $204.7 -- 80,000 -- $30.3
Vice President and 2000(S) $ 98.6 $ 85.5 -- 25,000 -- $ 3.9
General Manager, High 2000 $121.7 $ 31.3 -- 23,334 -- $13.5
Performance Analog
Stephen M. Moran........ 2001 $227.7 $177.3 $ 71.1 47,500 -- $ 5.2
Vice President, 2000(S) $100.0 $ 42.3 -- 17,500 -- $ 1.7
General Counsel and 2000 $ 83.1 $ 50.0 $ 68.0 23,334 -- $ 0.2
Secretary
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* 2001 is the fiscal year ended December 28, 2001, 2000(S) is the transition
period which extended from July 1, 2000 through December 29, 2000 and 2000
is the fiscal year ended June 30, 2000.
(1) This category includes the Executive Incentive Plan bonus for all officers.
It also includes additional bonuses paid in fiscal year 2001 to Mr.
Williams ($300,000), Mr. Heneghan ($160,000), Mr. Ciaccia ($28,000), Mr.
Furtney ($32,000) and Mr. Moran ($81,250). Fiscal year 2000 amounts reflect
a disruption bonus for Mr. Heneghan of $25,000 and a signing bonus for Mr.
Moran of $50,000.
(2) Except for Mr. Moran, none of the executive officers named in the Summary
Compensation Table received personal benefits in excess of $50,000 or 10%
of annual salary and bonus for fiscal year 2001. Mr. Moran's personal
benefit included a tax equalization payment ($68,136) and estate planning
fees ($3,000).
(3) Except for Mr. Heneghan, none of the executive officers named in the
Summary Compensation Table received personal benefits in excess of $50,000
or 10% of annual salary and bonus for the 2000(S) reporting period. Mr.
Heneghan's personal benefit included relocation expenses and applicable
taxes associated with his relocation to the corporate offices in Irvine,
CA.
1
(4) Except for Mr. Williams, none of the executive officers named in the
Summary Compensation Table received personal benefits in excess of $50,000
or 10% of annual salary and bonus for fiscal year 2000. Mr. Williams'
personal benefit included relocation expenses and applicable taxes
associated with his relocation to the corporate offices in Irvine, CA.
(5) All stock options were granted under the Intersil Corporation 1999 Equity
Compensation Plan. The stock option grants terminate ten years from date of
grant. Grants issued prior to August 2000 vest over a five year period--20%
upon each of the first five anniversary dates of the grant. Grants issued
from August 2000 to date, including those reflected in the table for fiscal
year 2001, vest over a four year period--25% upon each of the first four
anniversary dates of the grant--as authorized by the Compensation Committee
of the Intersil Board of Directors.
(6) Amounts reported reflect contributions and allocations to defined
contribution retirement plans and the value of insurance premiums for term
life insurance and disability insurance.
2
The following table provides information concerning stock options granted to
the executive officers named in the Summary Compensation Table during fiscal
year 2001.
Fiscal Year 2001 Option/SAR Grants
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term(4)
--------------------------------------------- ------------------------------
Percentage
Number of of All Options
Securities Granted to All
Underlying Employees Exercise Expiration
Options(1) in Period(2) Price Date(3) 5% 10%
---------- -------------- -------- ---------- -------------- ---------------
Gregory L. Williams..... 50,000 2.3% $21.25 01/02/2011 $ 668,201 $ 1,693,351
50,000 2.3% $15.00 04/02/2011 $ 471,671 $ 1,195,307
75,000 3.4% $34.50 07/02/2011 $ 1,627,265 $ 4,123,809
75,000 3.4% $26.29 10/01/2011 $ 1,240,023 $ 3,142,462
Daniel J. Heneghan...... 20,000 0.9% $21.25 01/02/2011 $ 267,280 $ 677,341
20,000 0.9% $15.00 04/02/2011 $ 188,668 $ 478,123
30,000 1.4% $34.50 07/02/2011 $ 650,906 $ 1,649,523
30,000 1.4% $26.29 10/01/2011 $ 496,009 $ 1,256,985
Larry J. Ciaccia........ 12,500 0.6% $21.25 01/02/2011 $ 167,050 $ 423,338
12,500 0.6% $15.00 04/02/2011 $ 117,918 $ 298,827
27,500 1.3% $34.50 07/02/2011 $ 596,664 $ 1,512,063
27,500 1.3% $26.29 10/01/2011 $ 454,675 $ 1,152,236
Rick E. Furtney......... 12,500 0.6% $21.25 01/02/2011 $ 167,050 $ 423,338
12,500 0.6% $15.00 04/02/2011 $ 117,918 $ 298,827
27,500 1.3% $34.50 07/02/2011 $ 596,664 $ 1,512,063
27,500 1.3% $26.29 10/01/2011 $ 454,675 $ 1,152,236
Stephen M. Moran........ 8,750 0.4% $21.25 01/02/2011 $ 116,935 $ 296,336
8,750 0.4% $15.00 04/02/2011 $ 82,542 $ 209,179
15,000 0.7% $34.50 07/02/2011 $ 325,453 $ 824,762
15,000 0.7% $26.29 10/01/2011 $ 248,005 $ 628,492
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(1) These options vest in twenty-five percent increments on the first four
anniversaries of the grant date.
(2) A total of 2,197,575 options were granted to Intersil employees under the
Intersil 1999 Equity Compensation Plan during the fiscal year ended
December 28, 2001.
(3) The options will expire ten years after the grant date.
(4) Represents the potential realizable value of the underlying shares of
Intersil common stock at the expiration date based on an assumed annual
appreciation rate of 5% and 10%, set by the SEC. The amounts shown are not
intended to forecast future appreciation in the price of Intersil Class A
common stock.
3
The following table sets forth information regarding the number and value
of options held by the executive officers named in the Summary Compensation
Table at the end of fiscal year 2001.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values*
Number of Securities Net Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Year-End Year-End(1)
------------------------- -------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Gregory L. Williams......... 68,142 437,000 $648,951 $3,087,650
Daniel J. Heneghan.......... 25,695 180,668 $191,281 $1,286,112
Larry J. Ciaccia............ 18,916 149,418 $110,194 $1,033,962
Rick E. Furtney............. 10,916 117,418 $ 40,594 $ 755,562
Stephen M. Moran............ 9,040 79,294 $ 40,594 $ 546,124
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* Columns for Shares Acquired on Exercise and Value Realized are not
applicable and have been omitted.
(1) Reflects net pre-tax amounts determined by subtracting the exercise price
from $33.70 per share, the fair market value of common stock at the end of
fiscal year 2001.
Employment Contracts, Termination of Employment and Change in Control
Arrangements
Employment Agreement with Gregory L. Williams. Intersil entered into an
employment agreement with Mr. Williams for him to serve as Intersil's chief
executive officer. His employment agreement provides for an annual base salary
of $550,000, subject to increases and annual performance bonuses at the
discretion of the Intersil board of directors, and reimbursement for
reasonable business expenses, legal expenses and tax and estate planning
expenses. The agreement also provides for Mr. Williams to receive Intersil's
standard benefits. The term of the agreement is for 60 months from August 13,
1999, subject to automatic renewal for successive one year terms unless either
Intersil or Mr. Williams gives prior notice of non-renewal. However, Mr.
Williams may in his sole discretion resign upon 90 days notice. Mr. Williams
is subject to a non-competition covenant during the term of the agreement and
for a period of one year following termination or expiration of the agreement.
Mr. Williams is not required to relocate to a place of employment more than 20
miles from Irvine, California without his written consent.
If Mr. Williams is terminated without cause (which includes resignation
after a demotion), he will receive:
. full vesting of his stock options (with the full option term to exercise
such options);
. a payment equal to 100% of his base salary and target performance bonus
for the year of termination, which is to be paid within 14 days of the
termination; and
. continued participation in the Intersil group insurance plans for him
and his eligible family members for one year after the termination.
Following a change in control of Intersil, if Mr. Williams' employment is
terminated by Intersil or Mr. Williams in connection with the change in
control, or he notifies Intersil of his resignation within 90 days after the
change in control, he will receive:
. full vesting of his stock options (with the full option term to exercise
such options); and
. a payment equal to 300% of his base salary and target performance bonus
for the year of termination or resignation, which is to be paid within
14 days of the later of the change in control or Intersil's receipt of
Mr. Williams' notice of resignation.
4
Furthermore, if Mr. Williams is employed by Intersil at the time of a change in
control, or was terminated without cause (which includes a demotion) within the
preceding six months before a change in control, his stock options will
immediately vest. A "change in control" means:
. the sale or other disposition (other than by way of merger or
consolidation), in one or more transactions, of all or substantially all
of the assets of Intersil or its affiliates to any person or group;
. the consummation of any transaction or transactions (including any
merger or consolidation) the result of which is that any person or
group, other than Citicorp Venture Capital Ltd., CCT Partners VI, LP and
their affiliates, becomes the beneficial owner, directly or indirectly,
of more (A) than 50% of the voting stock of Intersil or (B) of the
common stock of Intersil than Citicorp Venture Capital Ltd., CCT
Partners VI, LP and their affiliates; or
. the adoption of a plan relating to the liquidation or dissolution of
Intersil.
If Mr. Williams resigns within 30 days of a demotion in connection with a
significant acquisition or business combination transaction (including any
merger or consolidation) that does not result in a change in control, he will
receive:
. full vesting of his stock options (with the full option term to exercise
such options); and
. a payment equal to 300% of his base salary and target performance bonus
for the year of resignation, which is to be paid in three installments
over two years
If any of the benefits Mr. Williams would receive under this agreement are
subject to excise tax, then Mr. Williams will receive an additional amount
equal to the excise tax and any tax owed by Mr. Williams on this additional
amount.
Employment Agreement with Daniel J. Heneghan. Intersil entered into an
employment agreement with Mr. Heneghan for him to serve as Intersil's vice
president and chief financial officer. His employment agreement provides for an
annual base salary of $300,000, subject to increases and annual performance
bonuses at the discretion of the Intersil board of directors, and reimbursement
for reasonable business expenses, legal expenses and tax and estate planning
expenses. The agreement also provides for Mr. Heneghan to receive Intersil's
standard benefits. The term of the agreement is for 36 months from March 16,
2001, subject to automatic renewal for successive one year terms unless either
Intersil or Mr. Heneghan gives prior notice of non-renewal. Mr. Heneghan also
has the option to extend his employment term for an additional year if a change
in control of Intersil occurs within three months before or after the end of
his employment term. Furthermore, Mr. Heneghan may in his sole discretion
resign upon 90 days notice. Mr. Heneghan is subject to a non-competition
covenant during the term of the agreement and for a period of one year
following termination or expiration of the agreement. Mr. Heneghan is not
required to relocate to a place of employment more than 20 miles from Irvine,
California without his written consent.
If Mr. Heneghan is terminated without cause (which includes resignation
after a demotion), he will receive:
. full vesting of his stock options (with the full option term to exercise
such options);
. a payment equal to 200% of his base salary and target performance bonus
for the year of termination, which is to be paid over 24 months; and
. continued participation in the Intersil group insurance plans for him
and his eligible family members for one year after the termination.
However, if Mr. Heneghan is terminated without cause (which includes a
demotion) within six months before or 12 months after a change in control, he
will receive this cash amount within 14 days of the later of such termination
or change in control. Furthermore, in the event of a change in control, if Mr.
Heneghan is employed by Intersil at the time of the change in control, or was
terminated without cause (which includes a
5
demotion) within the preceding six months before the change in control, his
stock options will vest and he will have the full option term to exercise such
options. In Mr. Heneghan's agreement, a change in control has the same
definition as in Mr. Williams' agreement. However, Intersil is preparing to
enter into an amendment to Mr. Heneghan's employment agreement that would also
state that any change in control under the executive change in control
severance benefits agreements to be entered into with certain other named
executive officers of Intersil would be a change in control under Mr.
Heneghan's employment agreement. The terms of these agreements have not yet
been finalized. If any of the benefits Mr. Heneghan would receive under this
agreement are subject to excise tax, then Mr. Heneghan will receive an
additional amount covering the excise tax and any tax owed by Mr. Heneghan on
this additional amount.
Other Change in Control Arrangements. Intersil has an equity compensation
plan and related stock option agreements with Messrs. Ciaccia, Furtney and
Moran that provide for full vesting of all of the executive's stock options if
within six months before or 12 months after a change in control the executive's
employment is involuntarily terminated without cause or the executive
voluntarily terminates his employment for good reason. The executive will also
then have the shorter of a period of 24 months or the remaining term of the
option to exercise such options. "Good reason" means a termination of
employment at the executive's initiative following the occurrence of one or
more of the following events:
. a material diminution of the executive's duties, responsibilities, title
or reporting lines as they existed immediately prior to the change of
control;
. a reduction in the executive's annual salary, incentive compensation or
other employee benefits;
. any failure to secure the agreement of any successor corporation or
other entity to Intersil to fully assume Intersil's obligations under
these agreements or the Intersil 1999 Equity Compensation Plan;
. a relocation of the executive's principal place of employment to a
location that increases by more than 50 miles the distance the executive
is required to commute from his primary residence immediately prior to
the change in control, unless such relocation is to Intersil's west
coast headquarters located in Irvine, California; or
. any material unremedied breach by Intersil of the terms and conditions
of these agreements or the Intersil 1999 Equity Compensation Plan.
"Change in control" means the happening of any of the following:
. any person, other than (a) Intersil or any of its subsidiaries, (b) a
trustee or other fiduciary holding securities under an employee benefit
plan of Intersil or any of its subsidiaries, (c) an underwriter
temporarily holding securities pursuant to an offering of such
securities, (d) a corporation owned, directly or indirectly, by the
stockholders of Intersil in substantially the same proportion as their
ownership of stock of Intersil, (e) a participant or any group, or (f)
Intersil's original shareholders or their affiliates is or becomes the
beneficial owner, directly or indirectly, of securities of Intersil (not
including in the securities beneficially owned by such person any
securities acquired directly from the Intersil or its subsidiaries)
representing more than 25% of either the then outstanding shares of
Intersil common stock or the combined voting power of Intersil's then
outstanding securities;
. the incumbent directors, which are the individuals who serve on
Intersil's board of directors as of the effective date of Intersil's
1999 Equity Compensation Plan or individuals whose election or
nomination for election was approved by a vote of at least a majority of
the incumbent directors then constituting the board, cease for any
reason to constitute at least a majority of the board;
. the consummation of a merger or consolidation of Intersil in which the
shareholders of Intersil immediately prior to such merger or
consolidation, would not, immediately after the merger or consolidation,
beneficially own, directly or indirectly, shares representing in the
aggregate 50% or more of the combined voting power of the securities of
the corporation issuing cash or securities in the merger or
consolidation (or of its ultimate parent corporation, if any); or
6
. the Intersil shareholders approve a plan of complete liquidation or
dissolution of the Intersil, or there is consummated an agreement for
the sale or disposition by the Intersil of all or substantially all of
Intersil's assets, other than a sale or disposition by Intersil of all
or substantially all of Intersil's assets to an entity, at least 50% of
the combined voting power of the voting securities of which are owned by
persons in substantially the same proportion as their ownership of
Intersil immediately prior to such sale.
Retirement and Savings Program
Intersil provides retirement benefits to substantially all employees
primarily through a retirement plan having profit-sharing and savings elements.
Contributions by Intersil to the retirement plan are based on profits and
employees' savings with no other funding requirements. Intersil is able to make
additional contributions to the fund at its discretion.
The savings element of the retirement plan is a defined contribution plan,
which is qualified under Internal Revenue Service Code Section 401(k). All
employees of Intersil may elect to participate in the 401(k) retirement plan
(the "401(k) plan"). Under the 401(k) plan, participating employees may defer a
portion of their pretax earnings up to certain limits prescribed by the
Internal Revenue Service. Intersil provides matching contributions under the
provisions of the plan. Employees fully vest in Intersil's matching
contributions upon the completion of seven years of service.
Retirement benefits also include an unfunded limited healthcare plan for
U.S.-based retirees and employees on long-term disability. Intersil accrues the
estimated cost of these medical benefits, which are not material, during an
employee's active service life.
7
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of March 1, 2002 with respect
to shares of each class of common stock beneficially owned by (i) each person
or group that is known to Intersil to be the beneficial owner of more than 5%
of each class of outstanding common stock, (ii) each director and named
executive officer of Intersil and (iii) all directors and executive officers of
Intersil as a group. Unless otherwise specified, all shares are directly held.
In general, each share of Intersil Class A common stock is convertible into one
share of Intersil Class B common stock, and each share of Intersil Class B
common stock is convertible into one share of Intersil Class A common stock.
This table does not include shares of Intersil Class A common stock issuable
upon conversion of the warrants issued in connection with the 13.5%
Subordinated Holding PIK Note.
Unless otherwise indicated, the address of each person owning more than 5%
of Intersil's outstanding shares is c/o Intersil Corporation, 7585 Irvine
Center Drive, Suite 100, Irvine CA 92618.
Class A Class B
Common Stock(1) Common Stock(2) Combined
--------------------- --------------------- ---------------------
Shares Shares Shares
Owned Percent(3) Owned Percent(3) Owned Percent(4)
---------- ---------- ---------- ---------- ---------- ----------
FMR Corp.(5)............ 13,560,004 14.96% -- -- 13,560,004 12.68%
Sterling Holding
Company, LLC(6)........ 2,004,244 2.21% 16,282,475 100% 18,286,719 17.11%
Gregory L. Williams(7).. 1,667,482 1.84% -- -- 1,667,482 1.56%
Daniel J. Heneghan(8)... 307,449 * -- -- 307,449 *
Lawrence J. Ciaccia(9).. 274,488 * -- -- 274,488 *
Rick Furtney(10)........ 107,098 * -- -- 107,098 *
Stephen M. Moran(11).... 35,708 * -- -- 35,708 *
James A. Urry(12)....... 39,524 * -- -- 39,524 *
Gary E. Gist(13)........ 49,674 * -- -- 49,674 *
Robert W. Conn(14)...... 15,000 * -- -- 15,000 *
Jan Peeters(14)......... 15,000 * -- -- 15,000 *
Robert N.
Pokelwaldt(14)......... 15,000 * -- -- 15,000 *
All directors and
executive officers as a
group (13 persons)..... 2,701,475 2.98% -- -- 2,701,475 2.53%
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* Represents less than 1%
(1) Does not include shares of Intersil Class A common stock issuable upon
conversion of Intersil Class B common stock. A holder of Intersil Class B
common stock may convert any or all of his shares into an equal number of
shares of Intersil Class A common stock, provided that such conversion
would be permitted only to the extent that the holder of shares to be
converted would be permitted under applicable law to hold the total number
of shares of Intersil Class A common stock which would be held after
giving effect to the conversion.
(2) Does not include shares of Intersil Class B common stock issuable upon
conversion of Intersil Class A common Stock. A holder of Intersil Class A
common stock may convert any or all of his shares into an equal number of
shares of Intersil Class B common stock.
(3) Percentages are derived using the number of shares of Intersil Class A or
Intersil Class B common stock and all common stock outstanding as of
February 28, 2002.
(4) Percentages are derived using the total number of shares of Intersil Class
A and Intersil Class B common stock outstanding as of February 28, 2002.
(5) Based solely on information obtained from a Schedule 13G amendment filed
by FMR Corp. on February 14, 2002. The address of FMR Corp. is 82
Devonshire Street, Boston, MA 02109.
(6) Citicorp Venture Capital Ltd. owns an interest in Sterling, but disclaims
beneficial ownership of the shares reported herein. The address of
Sterling Holding Company, LLC is c/o Citicorp Venture Capital Ltd., 399
Park Avenue, New York, NY 10022.
8
(7) Includes 1,577,542 shares owned by Gregory L. Williams and Linda M.
Williams. Includes 21,798 shares owned by DLJSC, as Trustee for Gregory L.
Williams IRA Account. Includes currently exercisable options to purchase
68,142 shares of our Class A common stock.
(8) Includes 281,754 shares owned by Daniel J. Heneghan and Barbara Heneghan.
Includes currently exercisable options to purchase 25,695 shares of
Intersil Class A common stock.
(9) Includes 185,570 shares owned by Lawrence J. Ciaccia and Marcia R.
Ciaccia, 66,668 shares owned by the Lawrence J. Ciaccia and Marcia R.
Ciaccia Trust dated 1/20/00 and 3,334 shares owned by Joseph Ciaccia.
Includes currently exercisable options to purchase 18,916 shares of
Intersil Class A common stock.
(10) Includes currently exercisable options to purchase 10,916 shares of
Intersil Class A common stock.
(11) Includes currently exercisable options to purchase 9,040 shares of
Intersil Class A common stock.
(12) James A. Urry, a director of Intersil, is a partner with Citicorp Venture
Capital Ltd., which is an affiliate of Sterling, as described in footnote
6 above. Mr. Urry disclaims beneficial ownership of all shares held by
Sterling, which he may be deemed to beneficially own as a result of his
affiliation with Sterling, except for those shares reported for Mr. Urry.
Includes currently exercisable options to purchase 7,500 shares of
Intersil Class A common stock.
(13) Includes 37,825 shares owned by Gary E. Gist and Kristin Gist. Includes
currently exercisable options to purchase 7,500 shares of Intersil Class A
common stock.
(14) Includes currently exercisable options to purchase 15,000 shares of
Intersil Class A common stock.
9
Item 13. Certain Relationships and Related Transactions
Citicorp Mezzanine Partners, L.P. contributed $30.0 million in cash to us in
exchange for the 13.5% Subordinated PIK Note due 2010 and warrants to purchase
3,703,707 shares of our Class A common stock. The 13.5% Subordinated PIK Note
due 2010 was repaid in full with the proceeds of our initial public offering
and, as a result of early repayment, the number of shares subject to such
warrants were reduced to 2,222,224 shares. We contributed the $30.0 million
from Citicorp Mezzanine Partners, L.P. to Intersil Communications as a capital
contribution. The general partner of Citicorp Mezzanine Partners, L.P. is an
affiliate of Citicorp Venture Capital Ltd. Citicorp Venture Capital Ltd. owns
an interest in Sterling Holding Corporation, LLC, or Sterling, one of our
principal shareholders. Sterling also owns approximately 25.3% of Class A
common stock of Fairchild Semiconductor International, Inc., one of our
competitors, and approximately 27.1% of Class A common stock of ChipPAC, Inc.,
one of our suppliers. We own approximately 2.2% of Class A common stock of
ChipPAC, Inc.
Sterling, Harris and certain members of our senior management entered into a
Shareholders' Agreement containing certain agreements among the shareholders
regarding our capital stock and corporate governance. We exercised our option
under the Shareholders' Agreement to repurchase from Sterling a total of
1,833,333 shares of Class A common stock for an aggregate purchase price of
$137,500 to reissue to our employees.
We purchased from Harris selected portions of the semiconductor business.
Harris entered into with us various agreements, including the Intellectual
Property Agreement, the Patent Assignment and Services Agreement, the License
Assignment Agreement, the Secondary Trademark Assignment and License Agreement,
the Harris Trademark License Agreement and the Royalty Agreement.
--The Intellectual Property Agreement provides for the assignment by Harris
to us of its entire ownership, right, title and interest in some intangible
property rights owned by Harris and specific to the semiconductor business.
--The Patent Assignment and Services Agreement provides for the assignment
by Harris to us, subject to pre-existing license rights, of about 1,300 patent
rights. Harris retained the rights to some patents for up to three years before
assigning their entire right, title and interest therein to us (provided that
the patents are not in litigation at the time, and no royalties are owed on
licenses to the patents). During the interim preceding the assignment of these
retained patents, Harris granted us a worldwide, royalty-free, non-exclusive
license thereto, without the right to sublicense.
--The License Assignment Agreement provides for the assignment by Harris to
us of certain license agreements that may be assigned without the consent of
third party licensors and licensees and also provides that Harris will provide
us with the economic benefit of certain other material license agreements that
may not be assigned without the consent of third party licensors and licensees.
--The Secondary Trademark Assignment and License Agreement provides for the
assignment by Harris to us of some trademarks related to products of the
semiconductor business and provides that we grant back to Harris worldwide,
non-exclusive, royalty-free licenses recognizing transitional use of some
visible trademarks assigned by Harris to us.
--The Harris Trademark License Agreement provides for the grant by Harris to
us of non-exclusive, royalty-free licenses recognizing transitional use of some
visible trademarks and product-embedded trademarks, which embedded trademarks
will not be eliminated until the relevant product is discontinued.
--The Royalty Agreement provides for our payment to Harris of 2% of the net
sales for the Prism(R) chipsets that are compliant with the IEEE standards
802.11-1997 and 802.116, but excludes any chipsets that have had substantial
redesigns since the contract date. This obligation exists until August 13,
2004.
10
In June 2000, we sold our assembly and test facilities in Malaysia along
with related intellectual property to ChipPAC in exchange for $52.5 million in
cash and preferred stock of ChipPAC that has an aggregate liquidation
preference of $17.5 million. We also assigned to ChipPAC patents, copyrights
and technical information used exclusively in or associated exclusively with
our assembly and test facilities in Malaysia and granted ChipPAC a worldwide,
nonexclusive, royalty-free license under other of our patents, copyrights and
technical information that is also used in or related to the operation of the
assembly and test facilities in Malaysia. Any intellectual property rights in
the bonding diagrams, test programs, mask works and test boards uniquely
related to our products for which ChipPAC will provide packaging and test
services under the supply agreement are licensed to ChipPAC only for use in
providing those services. We also entered into a long term joint services
agreement with ChipPAC in connection with the sale under which each party is
required to assist the other in a smooth transition of each party's operations
following the sale.
Under our supply agreement with ChipPAC, we have agreed to continue to use
their facilities to provide 100% (until June 30, 2003), 90% (from July 1, 2003
to June 30, 2004) and 80% (from July 1, 2004 to June 30, 2005) of our
semiconductor package configuration assembly and test requirements for all
products assembled and tested at the Malaysian facility on the date of the
supply agreement and any new or additional products we may develop after that
date. In addition, ChipPAC will ensure that we are allocated 100% of the
utilized capacity that was in place on the date of the supply agreement. One of
the principal shareholders of ChipPAC is an affiliate of Sterling, one of our
principal shareholders. The terms of the agreements listed above were the
result of arms-length negotiations and in our opinion are no less favorable to
us than those that could be obtained from non-affiliated parties.
On March 16, 2001, Intersil sold the assets of its discrete power products
business to Fairchlld Semiconductor, Inc. for approximately $338 million in
cash and the assumption by Fairchild of certain liabilities of the product
group. An affiliate of Sterling is the beneficial owner of approximately 25.3%
of the outstanding capital stock of Fairchild. The terms of this transaction
were the result of arms-length negotiations and in Intersil's opinion are no
less favorable to Intersil than those that could be obtained from a non-
affiliated party.
11
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. The Consolidated Financial Statements and related Notes thereto as
set forth under Item 8 of this Report on Form 10-K are incorporated herein by
reference.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(In Thousands $)
Additions
Charged Additions
Balance at to Costs Charged Deduction Balance at
Beginning and to Other From End of
of Period Expenses Accounts Reserves Period
---------- --------- --------- --------- ----------
Valuation and qualifying
accounts deducted from
the assets to which they
apply
Allowance for
Uncollectible Accounts
2001.................... $ 736 $ 535 $ 500 $ 1,237 $ 534
2000(S)................. $ 1,341 $ 650 $ -- $ 1,255 $ 736
2000.................... $ 582 $ 423 $ 395 $ 59 $ 1,341
1999.................... $ 571 $ 487 $ -- $ 476 $ 582
Inventory Reserve
2001.................... $28,864 $23,160 $ -- $22,398 $29,626
2000(S)................. $21,933 $17,927 $1,100 $12,096 $28,864
2000.................... $18,117 $38,074 $ 573 $34,831 $21,933
1999.................... $24,482 $ 8,373 $ 257 $14,995 $18,117
Distributor Reserves
2001.................... $ 8,002 $19,100 $ -- $23,310 $ 3,792
2000(S)................. $ 7,366 $18,954 $ -- $18,318 $ 8,002
2000.................... $ 6,542 $37,408 $ -- $36,584 $ 7,366
1999.................... $ 6,189 $52,965 $ -- $52,612 $ 6,542
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.
(b) The Company filed a current report on Form 8-K on October 19, 2001 to
disclose the issuance of a press release announcing financial results for the
third quarter ended September 28, 2001.
(c) For the list of exhibits required by Item 601 of Regulation S-K to be
filed as part of this Report, see the Index to Exhibits following the Signature
Page, which is incorporated herein by reference.
12
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
/s/ Stephen M. Moran
By: _________________________________
Stephen M. Moran
Vice President, General Counsel and
Secretary
April 10, 2002
INDEX TO EXHIBITS
Exhibit
No. Description
------- -----------
2.01 Amended and Restated Master Transaction Agreement dated as of June 2,
1999, by and among Intersil Corporation (formerly Intersil Holding
Corporation) ("Intersil"), Intersil Communications, Inc. (formerly
Intersil Corporation) ("ICI") and Harris Corporation ("Harris")
(incorporated by reference to Exhibit 2.01 to the Registration
Statement on Form S-1 previously filed by Intersil on November 10,
1999 (Registration No. 333-90857) ("Registration Statement on Form S-
1")).
2.02 Agreement Concerning Deferred Closings dated as of August 13, 1999, by
and among Harris and ICI (incorporated by reference to Exhibit 2.02 to
the Registration Statement on Form S-1).
2.03 Intellectual Property Agreement, dated as of August 13, 1999, among
Harris, Harris Semiconductor Patents, Inc. and Intersil (incorporated
by reference to Exhibit 2.15 to the Registration Statement on Form S-
1).
2.04 Patent Assignment and Services Agreement, dated as of August 13, 1999,
among Harris, Harris Semiconductor Patents, Inc. and Intersil
(incorporated by reference to Exhibit 2.16 to the Registration
Statement on Form S-1).
2.05 License Assignment Agreement, dated as of August 13, 1999, among
Harris, Harris Semiconductor Patents, Inc. and Intersil (incorporated
by reference to Exhibit 2.17 to the Registration Statement on Form S-
1).
2.06 Harris Trademark License Agreement, dated as of August 13, 1999, among
Harris, HAL Technologies, Inc. and Intersil (incorporated by reference
to Exhibit 2.18 to the Registration Statement on Form S-1).
2.07 Secondary Trademark Assignment and License Agreement, dated as of
August 13, 1999, between Harris and Intersil (incorporated by
reference to Exhibit 2.19 to the Registration Statement on Form S-1).
2.08 PRISM(R) Intellectual Property Assignment, dated August 13, 1999,
between Intersil and ICI (incorporated by reference to Exhibit 2.20 to
the Post-Effective Amendment No. 1 to the Registration Statement on
Form S-1).
2.09 Tax Sharing Agreement, dated as of August 13, 1999, among Intersil,
ICI and Choice Microsystems, Inc. (incorporated by reference to
Exhibit 2.21 to the Registration Statement on Form S-1).
2.10 Royalty Agreement, dated as of August 13, 1999, among Harris and ICI
(incorporated by reference to Exhibit 2.22 to the Registration
Statement on Form S-1).
2.11 Option Agreement, dated as of August 13, 1999, among ICI and Intersil
PRISM, LLC. (incorporated by reference to Exhibit 2.23 to the
Registration Statement on Form S-1).
2.12 Stock Purchase Agreement among ChipPAC Limited, ChipPAC, Inc.,
Sapphire Worldwide Investments, Inc. and Intersil dated as of June 30,
2000 (incorporated by reference to Exhibit 2.1 to the Current Report
on Form 8-K previously filed by ChipPAC, Inc. on July 14, 2000
(Commission File No. 333-91641)).
2.13 Share Purchase Agreement dated April 27, 2000 by and among Intersil,
Intersil B.V., No Wires Needed B.V., Gilde It Fund B.V., Parnib B.V.,
3Com Corporation, Kennet I L.P., Hans B. Van Der Hoek and the
shareholders named therein (incorporated by reference to Exhibit 2.25
to the Annual Report on Form 10-K previously filed by Intersil on
August 17, 2000) ("Annual Report on Form 10-K, 2000").
2.14 Amendment No. 1 to the Share Purchase Agreement dated April 27, 2000
by and among Intersil, Intersil B.V., No Wires Needed B.V., Gilde It
Fund B.V., Parnib B.V., 3Com Corporation, Kennet I L.P., Hans B. Van
Der Hoek and the shareholders named therein (incorporated by reference
to Exhibit 2.26 to the Annual Report on Form 10-K, 2000).
Exhibit
No. Description
------- -----------
3.01 Restated Certificate of Incorporation of Intersil (incorporated by
reference to Exhibit 3.01 to the Post-Effective Amendment No. 1 to the
Registration Statement on Form S-1).
3.02 Bylaws of Intersil (incorporated by reference to Exhibit 3.02 to the
Registration Statement on Form S-1).
4.01 Specimen Certificate of Intersil's Class A Common Stock (incorporated
by reference to Exhibit 4.01 to Amendment No. 2 to the Registration
Statement on Form S-1 (Registration Number 333-95199)).
4.02 Amended and Restated Registration Rights Agreement, dated as of
January 21, 2000, by and among Intersil, Sterling Holding Company,
L.L.C., Manatee Investment Corporation, Citicorp Mezzanine Partners,
L.P. and the management investors named therein (incorporated by
reference to Exhibit 4.02 to the Registration Statement on Form 8-A
previously filed by Intersil on February 18, 2000).
10.01 Warrant Agreement, dated as of August 13, 1999, between Intersil and
United States Trust Company of New York (incorporated by reference to
Exhibit 4.01 to the Registration Statement on Form S-1).
10.02 Purchase Agreement, dated as of August 6, 1999, between ICI, Intersil,
Harris Semiconductor, LLC, Harris Semiconductor (Ohio), LLC, Harris
Semiconductor (Pennsylvania), LLC, Choice Microsystems, Inc., Credit
Suisse First Boston Corporation, J. P. Morgan Securities Inc. and
Salomon Smith Barney Inc. (incorporated by reference to Exhibit 4.02
to the Registration Statement on Form S-1).
10.03 Registration Rights Agreement, dated as of August 6, 1999, between
ICI, Intersil, Harris Semiconductor, LLC, Harris Semiconductor (Ohio),
LLC, Harris Semiconductor (Pennsylvania), LLC, Choice Microsystems,
Inc., Credit Suisse First Boston Corporation, J. P. Morgan Securities
Inc. and Salomon Smith Barney Inc. (incorporated by reference to
Exhibit 4.03 to the Registration Statement on Form S-1).
10.04 Credit Agreement, dated as of August 13, 1999, among Intersil, the
Lender Parties thereto, Credit Suisse First Boston, as the
Administrative Agent, Salomon Smith Barney, as Syndication Agent, and
Morgan Guaranty Trust Company of New York, as Documentation Agent
(incorporated by reference to Exhibit 10.03 to the Registration
Statement on Form S-1).
10.05 Amendment No. 1 and Waiver, dated as of January 28, 2000, to the
Credit Agreement, dated as of August 13, 1999, among ICI, Intersil,
Credit Suisse First Boston, as the Administrative Agent, Salomon Smith
Barney, Syndication Agent, and Morgan Guaranty Trust Company of New
York, as Documentation Agent (incorporated by reference to Exhibit
10.07 to the Amendment No. 2 to the Registration Statement on Form S-
1).
10.06 Securities Purchase and Holders Agreement, dated as of August 13,
1999, among Intersil, Sterling Holding Company, LLC, Manatee
Investment Corporation, Intersil Prism LLC, Citicorp Mezzanine
Partners, L.P., William N. Stout and the management investors named
therein (incorporated by reference to Exhibit 10.09 to the
Registration Statement on Form S-1).
10.07 Option Award Agreement, dated as of August 13, 1999 (incorporated by
reference to Exhibit 10.10 to the Registration Statement on Form S-1).
10.08 Agreement between Harris and Local Union No. 1907 International
Brotherhood of Electrical Workers, AFL-CIO (Findlay, OH Facility),
effective as of July 1, 1996 (incorporated by reference to Exhibit
10.12 to the Registration Statement on Form S-1).
Exhibit
No. Description
------- -----------
10.09 Master Agreement, dated as of December 2, 1997, between Harris
Semiconductor and Optum Software (incorporated by reference to Exhibit
10.16 to the Registration Statement on Form S-1).
10.10 Purchase Agreement, dated as of March 14, 1997, between Harris
Semiconductor and Praxair, Inc. (incorporated by reference to Exhibit
10.17 to the Registration Statement on Form S-1).
10.11 Photomask Supply and Strategic Alliance Agreement, dated as of July 2,
1999, by and among Harris, Align-Rite International, Inc. and Align-
Rite, Inc. (incorporated by reference to Exhibit 10.21 to the
Registration Statement on Form S-1).
10.12 Software License Agreement, dated as of July 31, 1984, between Harris
and Consilium Associates, Inc. (incorporated by reference to Exhibit
10.23 to the Registration Statement on Form S-1).
10.13 Addendum Software License and Maintenance Agreement, dated as of
October 27, 1995, between Harris and Consilium, Inc. (incorporated by
reference to Exhibit 10.24 to the Registration Statement on Form S-1).
10.14 Specialty Gas Supply Agreement, dated as of October 15, 1996, between
Air Products and Chemicals, Inc. and Harris (incorporated by reference
to Exhibit 10.25 to the Registration Statement on Form S-1).
10.15 Silicon Wafer Purchase Agreement, dated as of January 1, 1997, between
Mitsubishi Silicon America Corporation and Harris (incorporated by
reference to Exhibit 10.26 to the Registration Statement on Form S-1).
10.16 Nitrogen Supply Agreement, dated as of September 22, 1992, between
Harris Corporation Semiconductor Sector and Liquid Air Corporation
Merchant Gases Division (incorporated by reference to Exhibit 10.27 to
the Registration Statement on Form S-1).
10.17 Nitrogen Supply System Agreement, Amendment Number 1, dated as of
September 15, 1996, between Air Liquide America Corporation and Harris
Corporation Semiconductor Sector (incorporated by reference to Exhibit
10.28 to the Registration Statement on Form S-1).
10.18 Site Subscription Agreement, dated as of July 1, 1993, between Harris
Semiconductor Sector of Harris and Cadence Design Systems, Inc.
(incorporated by reference to Exhibit 10.29 to the Registration
Statement on Form S-1).
10.19 Site Subscription Addendum, dated December 19, 1997, between Harris
Semiconductor Sector of Harris and Cadence Design Systems, Inc.
(incorporated by reference to Exhibit 10.30 to the Registration
Statement on Form S-1).
10.20 Intersil Corporation Retirement Plan (Non-Union), dated September 3,
1999 (incorporated by reference to Exhibit 10.36 to the Registration
Statement on Form S-1).
10.21 Intersil Corporation Retirement Plan (Union), dated September 3, 1999
(incorporated by reference to Exhibit 10.37 to the Registration
Statement on Form S-1).
10.22 Intellectual Property Agreement, dated December 3, 1998, by and
between Texas Instruments Incorporated, Harris, Harris Advanced
Technology (Malaysia) Sdn. Bhd. and Harris Southwest Properties, Inc.
(incorporated by reference to Exhibit 10.40 to the Registration
Statement on Form S-1).
10.23 Certificate of Leasehold Property for Land Office No. 7668 by Harris
Advanced Technology (M) Sdn. Bhd. (incorporated by reference to
Exhibit 10.44 to the Registration Statement on Form S-1).
10.24 State Lease for Lot No. 7716 by Harris Advanced Technology (Malaysia)
Sdn. Bhd. (incorporated by reference to Exhibit 10.45 to the
Registration Statement on Form S-1).
Exhibit
No. Description
------- -----------
10.25 Certificate of Leasehold Property for Land Office No. 7666 by Harris
Advanced Technology (M) Sdn. Bhd. (incorporated by reference to
Exhibit 10.46 to the Registration Statement on Form S-1).
10.26 Amendment No. 1, dated as of December 13, 1999, to the Securities
Purchase and Holders Agreement by and among Intersil, Sterling Holding
Company, LLC, Manatee Investment Corporation, Citicorp Mezzanine
Partners, L.P. and the management investors named therein
(incorporated by reference to Exhibit 10.50 to the Registration
Statement on Form S-1 previously filed by Intersil Corporation on
August 28, 2000 (Registration No. 333-44606)).
10.27 Amendment No. 2, dated as of May 31, 2000, to the Securities Purchase
and Holders Agreement, by and among Intersil, Sterling Holding
Company, LLC, Manatee Investment Corporation, Citicorp Mezzanine
Partners, L.P. and the management investors named therein
(incorporated by reference to Exhibit 10.51 to the Registration
Statement on Form S-1 previously filed by Intersil Corporation on
August 28, 2000 (Registration No. 333-44606)).
10.28 Supply Agreement entered into as of June 30, 2000 by and between
ChipPAC Limited and Intersil (incorporated by reference to Exhibit
10.33 to the Registration Statement on Form S-1 previously filed by
ChipPAC, Inc. on July 14, 2000 (Registration No. 333-39428)).
10.29 Intellectual Property Agreement entered into as of June 30, 2000
between Intersil and ChipPAC Limited (incorporated by reference to
Exhibit 10.32 to the Registration Statement on Form S-1 previously
filed by ChipPAC, Inc. on July 14, 2000 (Registration No. 333-39428)).
10.30 Intersil Corporation 1999 Equity Compensation Plan, amended and
restated, effective as of August 31, 2001.*
10.31 Intersil Corporation Employee Stock Purchase Plan, effective as of
February 25, 2000 (incorporated by reference to Exhibit 10.55 to the
Annual Report on Form 10-K, 2000).
10.32 Amended and Restated Employment Agreement, dated as of March 30, 2001,
between Intersil and Gregory L. Williams.*
10.33 Employment Agreement, dated as of March 16, 2001, between Intersil and
Daniel J. Heneghan.*
10.34 Intersil Corporation 1999 Equity Compensation Plan Executive Officer
Terms and Conditions, effective as of August 13, 2000.*
21.01 Subsidiaries of Intersil.**
23.02 Consent of Ernst & Young, LLP.**
- --------
*Filed herewith.
**Previously filed.