Intersil Corporation Reports Second Quarter Results

Cash and cash equivalents increased to $225 million at the end of the second quarter. Intersil's board of directors authorized payment of a quarterly dividend of $0.12 per share of common stock. The payment of this dividend will be made on or about August 28, 2015, to shareholders of record as of the close of business on August 18, 2015.

Third Quarter 2015 Outlook

The following forward looking guidance is for the third quarter ending October 2, 2015, based on current business trends and conditions:

 


GAAP

Reconciling items

Non-GAAP

Revenue

$122 - $130 million


$122 - $130 million

Gross margin

Down 150 bps


Down 150 bps

Operating expenses

$60 million +/- $500K

$6 million equity-based compensation

 

$4 million amortization of purchased intangibles

$50 million +/- $500K

Earnings per share

$0.05 to $0.08


$0.12 to $0.15


Table 2. Intersil Q3 2015 Outlook

 

"New business has started ramping, but not at a pace to offset the broader weakness resulting from a sluggish global demand environment," said Necip Sayiner, president and CEO of Intersil. "We continue to be focused on building a highly profitable growth business. While the path to revenue growth is taking longer than we'd like, we feel positive about the progress thus far."

Earnings Call Webcast
Intersil will be hosting a webcast to discuss the quarterly results and outlook today at 1:30 p.m. Pacific Time. To access the webcast, please visit the investor relations page of the company's website at ir.intersil.com. Participants can also dial (866) 700-6067 or +1 (617) 213-8834 and enter the pass code 41566174. A replay of the webcast will be available for two weeks following the conference call on the company website, or may be accessed by dialing (888) 286-8010, international dial +1 (617) 801-6888, using the pass code 99476491.

About Intersil
Intersil Corporation is a leading provider of innovative power management and precision analog solutions. The company's products form the building blocks of increasingly intelligent, mobile and power hungry electronics, enabling advances in power management to improve efficiency and extend battery life. With a deep portfolio of intellectual property and a rich history of design and process innovation, Intersil is the trusted partner to leading companies in some of the world's largest markets, including industrial and infrastructure, mobile computing, automotive and aerospace. For more information about Intersil, visit our website at www.intersil.com.

FORWARD-LOOKING STATEMENTS
Intersil Corporation press releases and other related comments may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, in connection with the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon Intersil's management's current expectations, estimates, beliefs, assumptions and projections about Intersil's business and industry. Words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "potential," "continue," "goals," "targets" and variations of these words (or negatives of these words) or similar expressions, are intended to identify forward-looking statements. In addition, any statements that refer to projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various risk factors. Important factors that may affect our business, future operating results and financial condition include: any faltering in global economic conditions, the highly cyclical nature of the semiconductor industry, intense competition in the semiconductor industry, unsuccessful product development or failure to obtain market acceptance of our products, downturns in the computing market, failure to make or deliver products in a timely manner, unavailability of raw materials, services, supplies or manufacturing capacity, delays in production or in implementing new production techniques, product defects or unreliability of products, adverse results in litigation matters, and other risk factors described in Intersil's Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K and other Intersil filings with the U.S. Securities and Exchange Commission (which you may obtain for free at the SEC's web site at http://www.sec.gov). These forward-looking statements are made only as of the date of this communication and Intersil undertakes no obligation to update or revise these forward-looking statements. Intersil does not adopt and is not responsible for any forward-looking statements and projections made by others in this press release.

Non-GAAP Reporting
To supplement its consolidated financial results presented in accordance with GAAP, Intersil uses non-GAAP financial measures which are adjusted from the most directly comparable GAAP financial measures to exclude certain items, as described in detail below. Management believes that these non-GAAP financial measures reflect an additional and useful way of viewing aspects of the Company's operations that, when viewed in conjunction with Intersil's GAAP results, provide a more comprehensive understanding of the various factors and trends affecting the Company's business and operations. It should also be noted that Intersil's non-GAAP information may be different from the non-GAAP information provided by other companies. Non-GAAP financial measures used by Intersil include:

  • Gross profit;
  • Operating expenses;
  • Provision (benefit) for income taxes;
  • Operating income (loss);
  • Net income (loss);
  • Diluted earnings (loss) per share; and
  • Weighted average shares outstanding – diluted.

The Company presents non-GAAP financial measures because the investor community uses non-GAAP results in its analysis and comparison of historical results and projections of the Company's future operating results. These non-GAAP results exclude acquisition related expense, restructuring and related costs, equity-based compensation expense, and certain other expenses and benefits. Management uses these non-GAAP measures to manage and assess the profitability of the business. These non-GAAP results are also consistent with the way management internally analyzes Intersil's financial results.

There are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. The presentation of non-GAAP financial information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP financial measures. The non-GAAP financial measures supplement, and should be viewed in conjunction with, GAAP financial measures. Investors should review the reconciliations of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the accompanying press release.

As presented in the "Non-GAAP Results" tables in the accompanying press release, each of the non-GAAP financial measures excludes one or more of the following items:

Acquisition related .  Acquisition-related charges are not factored into management's evaluation of potential acquisitions or Intersil's performance after completion of acquisitions, because they are not related to the Company's core operating performance. Adjustments of these items provide investors with a basis to compare Intersil's performance to other companies without the variability caused by purchase accounting. Acquisition-related expenses primarily include:

  • Amortization of acquisition related intangibles, which include acquired intangibles such as purchased technology, patents, customer relationships, trademarks, backlog and non-compete agreements.

Restructuring and related costs . Restructuring charges primarily relate to changes in Intersil's infrastructure in efforts to reduce costs and rebalance its workforce. Restructuring charges (gains) are excluded from non-GAAP financial measures because they are not considered core operating activities. Although Intersil has engaged in various restructuring activities in the past, each has been a discrete event based on a unique set of business objectives. As such, management believes that it is appropriate to exclude restructuring charges (gains) from Intersil's non-GAAP financial measures as it enhances the ability of investors to compare the Company's period-over-period operating results from continuing operations. Restructuring-related charges (gains) primarily include:

  • Severance and retention costs directly related to a restructuring action.
  • Facility closure costs consist of ongoing costs associated with the exit of our leased and owned facilities.
  • Other write-offs such as intangibles related to a restructuring action.

Other adjustments . These items are excluded from non-GAAP financial measures because they are not related to the core operating activities and on-going future operating performance of Intersil. Excluding this data allows investors to better compare Intersil's period-over-period performance without such expense, which Intersil believes may be useful to the investor community. Other adjustments primarily include:

  • Equity-based compensation expense.
  • Legal or governmental judgments, awards, fines or penalties.
  • Income from IP agreement.
  • Write-offs (recoveries) related to Auction Rate Securities.
  • Tax effects of non-GAAP adjustments.
  • Diluted weighted average shares non-GAAP adjustment, for purposes of calculating non-GAAP diluted earnings per share, the GAAP diluted weighted average shares outstanding is adjusted to exclude the benefits of equity-based compensation expense attributable to future services not yet recognized in the financial statements that are treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.

Comparability . The above criteria has been consistently applied when calculating the non-GAAP financial measures for all periods presented in this press release and accompanying tables. During the second quarter of fiscal 2013 we revised our non-GAAP financial information to reduce the types of items excluded from our non-GAAP presentation in an effort to increase comparability of our results with published earnings estimates widely available on the Internet.  In the past we excluded other items such as the compensation expense(benefit) associated with our non-qualified deferred compensation plan, CEO severance costs, loss on interest-rate swaps, and related tax effects of these items, from our non-GAAP financial information. As a result, a non-GAAP financial measure presented in the accompanying press release tables may be different from that presented in a prior press release.

 

Intersil Corporation

Condensed Consolidated Statements of Operations

Unaudited

(In thousands, except percentages and per share amounts)








Quarter Ended


Jul. 3,


Apr. 3,


Jul. 4,


2015


2015


2014


Q2 2015


Q1 2015


Q2 2014







Revenue

$ 132,441


$ 134,153


$ 147,761

Cost of revenue

53,948


53,827


61,953

Gross profit

78,493


80,326


85,808

Gross margin %

59.3%


59.9%


58.1%

Expenses:






Research and development 

33,098


32,017


32,491

Selling, general and administrative 

25,194


25,453


27,076

Amortization of purchased intangibles

4,026


5,561


5,560

Provision for TAOS litigation

-


81,100


-

Total expenses

62,318


144,131


65,127

Operating income (loss)

16,175


(63,805)


20,681

Interest expense and other

(503)


(257)


(384)

(Loss) gain on investments, net

(71)


773


495

Income (loss) before income taxes

15,601


(63,289)


20,792

Income tax (benefit) expense

(22,123)


5,535


7,146

Net income (loss)

$   37,724


$ (68,824)


$   13,646







Earnings (loss) per share: 






Basic

$       0.29


$     (0.53)


$       0.11

Diluted

$       0.28


$     (0.53)


$       0.10







Weighted average shares outstanding:






Basic

131,916


130,513


129,020

Diluted

132,823


130,513


132,214

 

Intersil Corporation

Condensed Consolidated Balance Sheets

Unaudited

(in thousands)








Jul. 3,


Apr. 3,


Jul. 4,


2015


2015


2014

Assets






Current assets:






Cash and cash equivalents 

$    224,962


$    220,900


$    201,241

Trade receivables, net

55,972


51,236


59,121

Inventories

71,816


77,798


65,077

Prepaid expenses and other current assets

6,563


14,301


9,966

Income taxes receivable

1,073


1,129


2,839

Deferred income tax assets

20,724


20,615


15,590

  Total current assets

381,110


385,979


353,834

Non-current assets:






Property, plant and equipment, net

74,224


73,073


75,798

Purchased intangibles, net

24,813


28,839


45,520

Goodwill

565,424


565,424


565,424

Deferred income tax assets

44,493


38,779


55,186

Other non-current assets

33,574


71,297


73,144

  Total non-current assets

742,528


777,412


815,072

Total assets

$ 1,123,638


$ 1,163,391


$ 1,168,906







Liabilities and shareholders' equity






Current liabilities:






Trade payables

$      23,419


$      22,544


$      28,330

Deferred income

15,992


13,442


10,965

Income taxes payable

1,761


5,764


8,370

Provision for TAOS litigation

79,017


79,470


-

Other accrued expenses

53,068


62,362


62,745

  Total current liabilities

173,257


183,582


110,410

Non-current liabilities:






Income taxes payable

2,944


60,661


72,367

Other non-current liabilities

12,244


12,656


17,949

  Total non-current liabilities

15,188


73,317


90,316

Total shareholders' equity

935,193


906,492


968,180

Total liabilities and shareholders' equity

$ 1,123,638


$ 1,163,391


$ 1,168,906

 

Intersil Corporation

Condensed Consolidated Statements of Cash Flows

Unaudited

(In thousands)








Quarter Ended


Jul. 3,


Apr. 3,


Jul. 4,


2015


2015


2014


Q2 2015


Q1 2015


Q2 2014

Operating activities:






Net income (loss)

$   37,724


$ (68,824)


$   13,646

  Depreciation

3,607


4,486


4,785

  Amortization of purchased intangibles

4,026


5,561


5,560

  Equity-based compensation

6,689


5,756


5,585

  Deferred income taxes

(5,823)


373


1,575

  Other

(64)


(1,059)


(55)

  Net changes in operating assets and liabilities

(21,933)


80,502


(17,890)

 Net cash flows provided by operating activities

24,226


26,795


13,206







Investing activities:






Proceeds from investments

-


588


-

Net capital expenditures

(4,997)


(4,990)


(2,066)

 Net cash flows used in investing activities

(4,997)


(4,402)


(2,066)







Financing activities:






Proceeds from equity-based awards, net

1,851


4,355


8,957

Dividends paid

(17,196)


(15,697)


(16,220)

Net cash flows used in financing activities

(15,345)


(11,342)


(7,263)







Effect of exchange rates on cash and cash equivalents

178


(1,367)


28







Net change in cash and cash equivalents

4,062


9,684


3,905







Cash and cash equivalents as of the beginning of the period

220,900


211,216


197,336







Cash and cash equivalents as of the end of the period

$ 224,962


$ 220,900


$ 201,241

 

Intersil Corporation

Non-GAAP Results

Unaudited

(In thousands, except percentages)








Quarter Ended


Jul. 3,


Apr. 3,


Jul. 4,


2015


2015


2014


Q2 2015


Q1 2015


Q2 2014







Non-GAAP gross profit:






GAAP gross profit

$   78,493


$   80,326


$ 85,808

Equity-based compensation COS

436


392


394

  Non-GAAP gross profit

$   78,929


$   80,718


$ 86,202







Non-GAAP gross margin:






GAAP gross margin

59.3%


59.9%


58.1%

Equity-based compensation COS

0.3%


0.3%


0.2%

  Non-GAAP gross margin

59.6%


60.2%


58.3%







Non-GAAP operating expenses:






GAAP operating expenses

$   62,318


$ 144,131


$ 65,128

Provision for TAOS litigation

-


(81,100)


-

Equity-based compensation (excl. COS)

(6,253)


(5,364)


(5,191)

Amortization of purchased intangibles

(4,026)


(5,561)


(5,560)

  Non-GAAP operating expenses

$   52,039


$   52,106


$ 54,377







Non-GAAP operating income:






GAAP operating income (loss)

$   16,175


$  (63,805)


$ 20,681

Provision for TAOS litigation

-


81,100


-

Equity-based compensation

6,689


5,756


5,585

Amortization of purchased intangibles

4,026


5,561


5,560

  Non-GAAP operating income

$   26,890


$   28,612


$ 31,826







Non-GAAP operating margin:






GAAP operating margin

12.2 %


(47.6)%


14.0 %

Excluded items as a percent of revenue

8.1 %


68.9 %


7.5 %

  Non-GAAP operating margin 

20.3 %


21.3 %


21.5 %

 

Intersil Corporation

Non-GAAP Results

Unaudited

(In thousands, except per share amounts)








Quarter Ended


Jul. 3,


Apr. 3,


Jul. 4,


2015


2015


2014


Q2 2015


Q1 2015


Q2 2014







Non-GAAP net income:






GAAP net income (loss)

$37,724


$(68,824)


$13,646

Tax adjustments from non-cash and discrete items

(26,351)


(71)


1,232

Gain on recovery from auction rate securities

-


(588)


-

Equity-based compensation

6,689


5,756


5,585

Amortization of purchased intangibles

4,026


5,561


5,560

Provision for TAOS litigation

-


81,100


-

  Non-GAAP net income

$22,088


$  22,934


$26,023







GAAP weighted average shares - diluted

132,823


130,513


132,214

Non-GAAP adjustment

5,090


6,798


3,527

  Non-GAAP weighted average shares - diluted

137,913


137,311


135,741







Non-GAAP earnings per diluted share:






GAAP earnings per diluted share

$    0.28


$    (0.53)


$    0.10

Excluded items per share impact

(0.12)


0.70


0.09

  Non-GAAP earnings per diluted share

$    0.16


$      0.17


$    0.19







Equity-based compensation expense by classification:






Cost of revenue ("COS")

$     436


$       392


$     394

Research and development 

$  2,658


$    2,751


$  2,046

Selling, general and administrative 

$  3,595


$    2,613


$  3,145

 

Intersil  Corporation  Logo

Logo - http://photos.prnewswire.com/prnh/20140926/148698

 

To view the original version on PR Newswire, visit: http://www.prnewswire.com/news-releases/intersil-corporation-reports-second-quarter-results-300120684.html

SOURCE Intersil Corporation

Contact:
Intersil Corporation
Shannon Pleasant, Intersil Corporation, (512) 382-8444
Email Contact
Web: http://www.intersil.com



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