News & Events
Intersil Announces First Quarter Earnings

— Grows revenue 9% compared to same quarter of 2000
— Achieves adjusted earnings per share (EPS) of $.07, beating consensus estimates by $.02
— Completes Q1 with $600 million cash and zero debt

IRVINE, Calif. – April 25, 2001 – Intersil Holding Corporation (NASDAQ: ISIL) today reported financial results for the quarter ended March 30, 2001. Compared to the same period in the prior year, sales grew 9% to $127.8 million, a 22% decrease from the previous quarter. Adjusted net income, excluding the gain on the sale of the discrete power business and certain one-time charges, was $8.1 million or $.07 per diluted share of common stock. Net income including the one-time items was $38.4 million or $.35 per diluted share of common stock.

"Although industry conditions remain difficult, order cancellations and push-outs have slowed significantly and we maintained a book to bill ratio greater than 0.8 during our first quarter. We also experienced increasing demand for our power management products and strong product design-in activity by many of our wireless access customers," said Greg Williams, Intersil’s President and CEO. "We completed several strategic actions during the first quarter and are enthusiastic about our opportunities for future growth when industry conditions improve."

Intersil’s gross margins for the first quarter were 48% - in line with expectations but down from the previous quarter, primarily due to lower sales. Intersil achieved significant improvement in its balance sheet during the quarter, increasing its cash position to over $600 million while completing a bond tender that eliminated all of the company’s debt.

Results by Product Group

Wireless Access

Intersil’s Wireless Access sales grew 62% from the same quarter in 2000 to $35.9 million.

"Although we’ve seen an order slowdown as many of our customers are experiencing inventory corrections, we are encouraged by recent product design activities for both the enterprise and home markets," said Williams. "We believe that recent decisions by Intel and Microsoft to support IEEE’s 802.11b underscores the widespread acceptance and market penetration of this global WLAN standard and Intersil’s leading solutions."

Intersil is the world’s number one supplier of wireless LAN semiconductors for the enterprise market and continues to win multiple designs for the small office and home markets. During the first quarter of 2001, Intersil won designs with five major laptop PC manufacturers. These programs should reach volume production in the second half of 2001, as laptop PCs become widely available with a built-in wireless LAN option powered by Intersil. In addition, Intersil continues to supply chip sets and firmware for PCMCIA client cards and recently collaborated with Z-Com on the world’s first 802.11b WLAN card in a miniature Compact Flash® form factor.

Intersil also announced a partnership with Philips Components to develop multiple PRISM-based products. Among these products is Philips’ new Net Display Module, the industry’s first in-panel, system-board integrated touch-screen LCD that standardizes the enabling architecture of Internet appliances.

Today Intersil announced the world’s first three-chip 802.11b radio, PRISM 3. PRISM 3 uses Intersil’s unique single-chip medium access controller/baseband processor and a single RF component that provides direct down conversion and integrates several expensive components. PRISM 3 is portable, highly integrated and enables lower bill of material costs while maintaining the radio range and quality of previous PRISM product generations.

"PRISM 3 will make wireless networking even more widespread than it is today," said Williams. "Intersil is well ahead of 802.11b competition, offering unique designs and complementary software for global customers first."

Communications Analog

Intersil’s Communications Analog sales were $42.6 million during the first quarter, down 4% from the same period in 2000.

"Despite a slowdown in the overall communications analog market, we realized solid growth and continued to gain market share within the power management segment," said Williams. "Sales of our power management ICs within communications analog grew 30% over the same quarter of 2000, and gross margins for these products improved significantly over the sequential quarter. We continue to win new designs for our Enduraä family of power management ICs for high-end PCs and network servers. Our desktop PC market share is increasing and we remain the dominant supplier of ICs that power high performance microprocessors and network servers."

"One of the fastest growing areas of the power management market is smart battery ICs, and Intersil recently completed a strategic investment in PowerSmart to develop ICs and software that address these applications," added Williams. "We believe that this strategic alliance will help provide significant growth and extend margins within our communications analog portfolio. Our company is uniquely positioned to provide high-data-rate wireless access and manage power – two market opportunities that offer major growth potential."

Other Analog

Sales of Intersil’s other analog products were $49.3 million during the first quarter of 2001, down 4% from the same quarter of 2000.

"We experienced slowing demand for our other analog products, particularly those aimed at automotive and industrial markets, beginning in the fourth quarter of 2000," said Williams. "This accelerated our decision to exit the automotive IC business and begin a phased closure/sale of our Findlay, Ohio plant operations. Automotive margins are significantly below our communications and other analog products. We anticipate that the consolidation of our manufacturing operations will improve operating performance through increased efficiencies. The plant closure will be completed during the next 12-18 months, while the company continues to pursue potential buyers of the automotive IC business and the facility."

One-time Items

During the first quarter, Intersil completed the sale of its discrete power product group to Fairchild Semiconductor. Upon completion of the sale, Intersil recognized a gain of $168.4 million and recorded net expenses associated with the discrete power business of $2.6 million prior to the sale. Intersil also announced its planned closure of the Findlay facility, recording a charge for the associated impairment of plant and equipment of $7.6 million, and recognized a restructuring charge of $32.4 million primarily related to workforce reductions.

The company recorded an inventory charge of $19.2 million due to the exit of product lines and obsolescence related to changing market conditions. Intersil wrote down an equity investment by $8.2 million during the quarter and eliminated its remaining debt through a successful bond tender, recording an after-tax charge of $12.2 million.

"These actions were taken to help ensure that Intersil remains competitive in the near term while maintaining our strategic focus," added Williams. "As we continue to invest in our future, Intersil dedicated 21% of Q1 sales to research & development."

Business Outlook

"We expect revenue in the second quarter of 2001 to be down 5-8%, which is better than the overall industry outlook, and anticipate that our gross margins will be flat with Q1," said Williams. "Due to improvement in our selling, general and administrative (SG&A) expenses and income generated from our solid balance sheet, we expect earnings per share of approximately $.07 during our second quarter. We believe that our balanced portfolio and strong balance sheet improve our financial stability during current industry conditions, and our focus on wireless access and communications analog markets helps position us for growth when the industry recovers."

Investors and interested parties within the United States may listen to Intersil’s conference call today at 1:30 p.m. Pacific/4:30 p.m. Eastern by dialing (888) 396-9923 and providing the operator with the pass code Intersil. International callers may connect to the call by dialing (630) 395-0346. A replay of Intersil’s conference call will be available starting at 3:30 p.m. Pacific/6:30 p.m. Eastern by calling (888) 568-0389 in the US or (402) 530-7928 Internationally. Confirmation code for the replay, available until May 2, 2001, is 7061. A live webcast will also be available on Intersil’s Internet homepage at http://www.intersil.com/investor/index.asp.

About Intersil

Irvine, California-based Intersil is a leading supplier of semiconductors, reference designs and software for wireless access and communications analog markets. Intersil applies analog, mixed-signal and radio frequency (RF) expertise to the development of products tailored for high-growth communications markets. For more information about Intersil, visit the company's Internet homepage at www.intersil.com

This press release contains information relating to certain projections and business trends that are 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 upon management’s current expectations, estimates, beliefs, assumptions, and projections about our 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 about certain business and market trends 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 Holding Corporation ("Intersil") in connection with the wireless access, communications analog. and other analog markets include, but are not limited to, the rate at which our present and future customers and end-users adopt Intersil’s 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 of foundry and assembly capacity and raw materials; intellectual property disputes; as well as other risk factors detailed from time to time in Intersil’s filings with the U.S. Securities & Exchange Commission ("SEC") which you may obtain for free at the SEC’s website at www.sec.gov. 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.