News & Events
Intersil Corporation Announces Third Quarter 2002 Financial Results

-- Grows revenue 9% over previous quarter and 43% over prior year~-- Improves adjusted net income to $26.6 million or $0.19 per share~-- Beats company revenue and earnings guidance

IRVINE, CA, October 23, 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 third quarter ended October 4, 2002. Net revenue for the third quarter was $191.3 million, an increase of 9% from the adjusted net revenue of the previous quarter and 43% from a year ago. Excluding the amortization of intangibles and the tax effect of acquisition related expenses, adjusted net income for the third quarter was $26.6 million or $0.19 per diluted share of common stock. This compares to adjusted net income of $23.0 million or $0.16 per diluted share for the second quarter of 2002 and $12.2 million or $0.09 per diluted share for the comparable quarter of 2001. Both revenue and adjusted earnings per share (EPS) results exceeded guidance provided in Intersil’s financial update on September 4, 2002.

Net income on a generally accepted accounting principles (GAAP) basis for the third quarter of 2002 was $3.6 million or $0.03 per diluted share, compared to a net loss of $18.3 million or $0.15 per diluted share for the prior quarter and a net loss of $3.3 million or $0.03 per diluted share for the same period a year ago.

Intersil’s third quarter gross margins reached 54.0%, an increase of 20 basis points from the previous quarter and an increase of 300 basis points from a year ago. Gross margin improvement came primarily from increasing sales volumes and cost reduction programs, resulting in the sixth consecutive quarter of gross margin expansion.

“With the integration of Elantec virtually complete, Intersil continued its solid execution in the third quarter and continues to be among the fastest growing companies in the semiconductor industry,” said Rich Beyer, Intersil’s president and CEO. “Our focus on high growth markets is enabling Intersil to outpace the overall industry and to deliver better than expected financial results. We experienced particularly strong demand for wireless networking and power management products, with revenues up 26% and 7% from the previous quarter, respectively. Intersil improved adjusted earnings per share 19% sequentially and 111% on an annual basis, marking our fifth consecutive quarter of EPS improvement.”

“The company’s balance sheet remains strong with approximately $600 million in cash and no debt,” adds Beyer. “Our days sales outstanding (DSO) remains slightly below 45 days and the company generated $21 million in cash flow from ongoing operating activities during the quarter.”

Results by Product Group
Revenue for Intersil’s Power Management products reached a record $46.9 million during the third quarter, an increase of 7% from the prior quarter and 16% from the third quarter of 2001. Intersil continues to gain market share in power management for desktop PCs and high-end file servers, while ramping product sales to support notebook PCs, double data-rate (DDR) memory and high-end graphics cards. Among a series of design wins in the quarter, Intersil announced that Gigabyte, a leading PC motherboard manufacturer based in Taiwan, has selected Intersil’s Endura™ products to power both the microprocessor and double data rate (DDR) memory for their award-winning Intel® Pentium® 4 platforms that incorporate DDR memory.

Sales of Elantec™ products decreased 15% sequentially and increased 21% year-over-year during the third quarter to $25.0 million. The company’s optical storage and flat panel display business was impacted during the third quarter as OEM customers adjusted inventories as a result of slowing PC sales. During the third quarter, Philips announced an alliance with Intersil to create a reference design based on a Philips chip set and an Elantec laser driver that will support the industry’s fastest DVD recording. Intersil also reaffirmed its position as the world’s leading supplier of laser drivers by introducing the industry’s first laser diode driver to support the emerging Blu-Ray standard, which enables five times the capacity of today’s DVD recording technology.

Intersil’s Standard Analog revenue increased 1% sequentially and 7% from the prior year to $33.9 million during the third quarter as we continue to see expanding acceptance of our analog MUX and interface products. Intersil’s broad portfolio of Standard Analog products serves a wide array of computing, communications, test and instrumentation, medical and other applications.

Intersil’s Wireless Networking sales increased 26% from the previous quarter and 152% year-over-year to a record $74.6 million, due to continued demand for the company’s industry-leading PRISM® wireless local area networking (WLAN) solutions. Microsoft Corporation announced the launch of a Wi-Fi-based (802.11b) Broadband Networking product line during the quarter that uses the Intersil PRISM WLAN solution and includes base stations, client cards and network and USB adapters. Intersil continued to expand its market leadership in wireless networking with the introduction of its 802.11a PRISM Indigo™ solution, which began production shipments during the quarter. PRISM Indigo offers the industry’s best performance and lowest cost bill of materials. Intersil is now sampling its new PRISM Duette™, the industry’s most highly integrated dual-band 802.11a, b, g WLAN solution, and will be demonstrating its capabilities for select customers, media and analysts at COMDEX Fall 2002.

Automotive product sales were $10.8 million in the third quarter as Intersil ramped production to support last-time purchases from automotive customers. Intersil successfully completed the expected consolidation/closure of its Findlay, Ohio analog fab and completed the sale of the facility at the end of the quarter.

Business Outlook
Looking ahead, Beyer said, “As we are all aware, the semiconductor industry has not yet returned to robust growth and as a result we are more cautious in our near-term outlook. We now expect total year revenue to slightly exceed our previous guidance of $720 million, representing approximately 25% growth over 2001. We currently expect sequential revenue growth of 1 to 3% for the fourth quarter, and approximately 35% over the comparable quarter in the prior year. We anticipate adjusted earnings per share to grow about 5% sequentially to $0.20 as we continue to achieve sales growth while controlling expenses.”

Investors and interested parties within the United States may listen to Intersil's conference call today at 4:30 p.m. Eastern/1:30 p.m. Pacific by dialing (877) 601-3546 and providing the operator with the pass code Intersil. International callers may connect to the call by dialing (712) 271-0561. A replay of Intersil’s conference call will be available for one week beginning at 6:30 p.m. Eastern/3:30 p.m. Pacific by calling (800) 839-2338 in the US or (402) 998-1081 Internationally. Confirmation code for the replay is 102302. A live webcast will also be available on Intersil’s Investor Relations homepage at http://www.intersil.com/investor. A replay will be available until October 30, 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 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; and the risks 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, Elantec and Endura are trademarks of Intersil Americas Inc. and its subsidiaries.
Gigabyte, Philips and Microsoft are trademarks of those respective companies in the United States and certain other countries.
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