News & Events
Intersil Corporation Announces Second Quarter 2002 Financial Results

-- Grows adjusted revenue 10% over previous quarter and 26% over prior year~-- Improves adjusted earnings per share to $0.16, up nearly 130% from year ago~-- Achieves record adjusted gross margins of 53.8%

IRVINE, Calif., July 24, 2002 – Intersil Corporation (NASDAQ: ISIL), a world leader in the design and manufacture of high performance analog and wireless networking solutions, today reported financial results for the second quarter ended June 28, 2002. Adjusted net revenue for the second quarter was $175.5 million, an increase of 10% sequentially and up 26% from the year ago quarter.

Adjusted net income for the second quarter was $23.0 million or $0.16 per diluted share of common stock. This compares to adjusted net income of $9.5 million or $0.07 per diluted share for the comparable quarter of 2001, and $17.8 million or $0.13 per diluted share for the first quarter of 2002. Both revenue and earnings per share results exceeded guidance provided by the company in its financial update following Intersil’s acquisition of Elantec Semiconductor on May 14, 2002. The above adjusted results include Elantec for all periods.

Including amortization of intangibles, a partial quarter of Elantec results, and one-time items, Intersil reported a loss of $18.3 million or $0.15 per share during the quarter. One-time items include merger related costs, certain gains and impairments on assets, and the impact of transitioning to a common method of recognizing distributor revenue for the combined company. Historically, Intersil recognized revenue to North American distributors upon shipment into the distribution channel. Elantec recognized revenue upon shipment from these distributors. Effective this quarter, Intersil will adopt this latter method, ensuring a common policy for the combined company. Including the impact of this change ($14.7 million) and excluding Elantec results prior to the acquisition ($16.5 million), Intersil’s revenue was $144.3 million for the quarter.

Intersil’s second quarter adjusted gross margins reached a record high 53.8%, an increase of 80 basis points from the previous quarter and an increase of 340 basis points from a year ago. The second quarter results marked the fifth consecutive quarterly improvement in Intersil’s gross margins.

“We are pleased with our third consecutive quarter of growth in revenue and fourth consecutive quarter of growth in adjusted earnings per share,” said Rich Beyer, Intersil’s President and CEO. “We’re particularly encouraged that all focus areas of our business grew sequentially, allowing us to beat consensus estimates for both revenue and EPS. Our strongest demand was in consumer-oriented products, including flat panel displays, CD and DVD recordables, and wireless LAN solutions. Design win activity in these areas continued to improve in the second quarter. Orders continue to be strong, growing 12% sequentially and 94% on an annual basis. Our book-to-bill ratio exceeded 1.1 to 1 for the second consecutive quarter. Consequently, we increased our backlog and improved our visibility into the third quarter.

“We continue to make outstanding progress in our integration efforts following the acquisition of Elantec during the quarter, and believe that our results demonstrate that the combined Intersil-Elantec portfolio has strengthened our position as a high performance analog and wireless networking market leader,” said Beyer. “As a combined company our balance sheet remains strong. Our cash balance increased to $609.1 million and the company has no debt. Our days sales outstanding (DSO) decreased slightly to below 45 days and the company achieved $23.7 million in cash flow from operations.”

Regarding the reporting structure of the company, Beyer added, “Going forward, Intersil will provide revenue breakdown on five product groups: Power Management, Elantec, Standard Analog, Wireless Networking, and Automotive. We believe that this new structure will provide better insight into business performance within our focus areas and will isolate reporting on Automotive as we transition out of that product line in the coming quarters. For added convenience, we have also included our previous product group breakdown.”

Results by Product Group
Revenue for Intersil’s Power Management products increased 2% sequentially during the second quarter to $43.7 million in spite of seasonal softness in PC markets. Intersil continued its leadership in power management for desktop microprocessors, and experienced a ramp-up in revenue for power integrated circuits (ICs) targeted at double data rate (DDR) memory and high-end graphics cards. Legend QDI - the largest computer motherboard manufacturer in the People’s Republic of China - announced during the quarter that it has selected Intersil to power the Intel® Pentium® 4 i845G and i845GL processors on their new motherboards. Intersil also continues to win new designs for its Endura™ notebook power solution, which significantly reduces part count and can lower bill of material (BOM) costs by as much as 20% compared to competitive offerings.

Sales of Elantec products increased 16% sequentially during the second quarter to $29.5 million. Revenue for all Elantec products – video and flat panel display, optical storage (CD and DVD recordable) and communications – grew sequentially from the prior quarter. Intersil secured a design win with a major European OEM during the quarter for an advanced laser driver to be used in its dual-writer ‘super-combo’ drives that can read and/or write all CD and DVD disc formats. Intersil’s new product represents the third generation of Elantec’s EL629XC Write programmable laser drivers. Intersil is the global leader in emerging recordable DVD optical storage technology, allowing drive manufacturers to design a single solution for all industry CD and DVD formats.

Intersil’s Standard Analog revenue increased 12% to $33.6 million during the quarter. Intersil continues to win new designs for its 3-volt RS-232 interface devices introduced last year. These standard products are winning designs for use in serial ports for handhelds, PDAs, notebook PCs, DSL modems and set-top boxes because of their low power usage, high-speed operation and small size.

Intersil’s Wireless Networking sales increased 21% from the previous quarter to $59.2 million, due to strong customer demand for the company’s industry-leading PRISM® wireless local area networking (WLAN) solutions. During the quarter, Intersil continued its strong design win momentum with several new products incorporating its PRISM WLAN solutions, which can be easily incorporated into smaller form factors, including miniPCI, miniUSB, CompactFlash™ and, most recently, Secure Digital™ (SD) WLAN cards.

As the market for WLANs continues to segment and grow, Intersil’s PRISM offering is being incorporated into several groundbreaking new customer products. Toshiba's PocketPC e740, the world's first personal digital assistant (PDA) with embedded WLAN, was announced recently. Linksys unveiled its new Instant Wireless™ Ethernet Bridge that extends wireless connectivity to any Ethernet-ready network device, such as a printer, scanner, desktop or notebook PC or game console.

Bromax Communications will incorporate Intersil’s PRISM™ Indigo 54 Mbps 802.11a offering, which provides better range and performance than competitive solutions, in a wireless LAN card that will reach store shelves this fall. Intersil also announced PRISM™ Duette during the quarter – a dual mode 802.11a/g solution – as the company continues to develop and launch leading wireless technologies for global customers.

Automotive product sales declined during the second quarter as expected to $9.4 million due to Intersil’s transition out of automotive and its analog fab consolidation, on target for completion at the end of the third quarter. The fab consolidation is expected to lead to further improvement in total analog margins when completed. As previously announced, the company expects to be effectively out of the automotive business in early 2003.

Summary & Business Outlook
“Overall, we feel very good about our results and accomplishments in our target high performance analog and wireless LAN businesses,” said Beyer. “We believe that we are taking the right steps to improve our value proposition with the world’s leading customers, and are confident that we are well positioned to outperform the semiconductor industry as we have for the past two years.”

“As a result of our strong order rate and increasing demand for our products, we now expect third quarter revenue to increase between 6% to 8% sequentially, or approximately 40% above the prior year,” added Beyer. “We anticipate gross margins of around 54% and adjusted earnings per share of approximately $0.18 for the third quarter. For total calendar year 2002, we now expect revenue growth of 25% to approximately $720 million, an increase of $20 million over our previous guidance.”

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) 809-8965 and providing the operator with the pass code Intersil. International callers may connect to the call by dialing (630) 395-0020. A replay of Intersil’s conference call will be available for one week beginning at 3:30 p.m. Pacific/6:30 p.m. Eastern by calling (800) 945-1620 in the US or (402) 220-3527 Internationally. Confirmation code for the replay is 72402. A live webcast will also be available on Intersil’s Investor Relations homepage at http://www.intersil.com/investor, and a replay will be available until July 31, 2002.

Intersil + Elantec Means More for Our Customers
Intersil Corporation is a global semiconductor leader in the design and manufacture of high performance analog and wireless networking solutions. The acquisition of Elantec Semiconductor, Inc., expanded Intersil’s product portfolios to address four fast growing markets – flat panel displays, optical storage (CD and DVD recordable), power management, and wireless networking. Intersil brings added customer value in providing complete silicon, software and reference design solutions to new products that enhance the computing experience for people wherever they live, work or travel. 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 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 upon 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,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “potential,” “continue,” 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 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 slowdown in the technology sector generally and the semiconductor industry specifically; the rate at which our present and future customers and end-users adopt Intersil’s high performance analog, wireless access, optical storage, and flat panel display technologies and products; the rate at which consumers; the rate at which consumers purchase small handheld Internet appliances, portable computing devices, notebook computers, optical storage (CD and DVD recordable), video and communications technologies and products; the timing, rescheduling or cancellation of significant customer orders; the ability of our customers to manage inventory; 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 our foundry capacity and raw materials; availability, pricing, and quality of third party foundry and assembly and test capacity and raw materials; fluctuations in the manufacturing yields of our third party foundries and assembly and test facilities, and other problems or delays in the fabrication, assembly, testing or delivery of our products; the risks of producing products with new suppliers and at new fabrication and assembly and test facilities; problems or delays that we may face in shifting our products to smaller geometry process technologies; the effectiveness of Intersil’s expense and product cost control and reduction efforts; the risks inherent in acquisitions, including the acquisition of Elantec Semiconductor, Inc. (including integration issues; costs and unanticipated expenditures; changing relationships with customers, suppliers, and strategic partners; potential contractual, employment, and intellectual property issues; risks of not securing regulatory approvals; accounting treatment and charges; and the risks that the acquisition cannot be completed successfully, or that the anticipated benefits of the acquisition are not realized); 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; the quality of Intersil’s products and any repair or replacement costs; the risks and uncertainties associated with Intersil’s global operations, particularly in light of the war on terrorism; the effects of natural disasters, international conflicts and other events beyond our control; the level of orders received and the ability to fill those orders in a given fiscal quarter; and other factors. 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 (“SEC”) (which you may obtain for free at the SEC’s web site at 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 communication and Intersil undertakes no obligation to update or revise these forward-looking statements. PRISM is a registered trademark, and PRISM Indigo, PRISM Duette and Endura are trademarks of Intersil Americas Inc.
Intel, Pentium, Toshiba, Bromax, Linksys and Instant Wireless are trademarks of those respective companies in the United States and certain other countries.
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