Out Perform

2007 ANNUAL REPORT
Intersil Corporation

 
Fellow Shareholders,

Fiscal 2007 marked another year of exceptional performance and progress for Intersil. We continued to grow faster than our peers and prospered in a demanding business environment. Our accomplishments in 2007 demonstrated that our business model and product strategy provide an excellent foundation for continued success. With this in mind, I am sure that each and every  shareholder will be pleased to hear that, while the leadership at Intersil has changed, our business strategy has not. As CEO of Intersil, my primary focus will be to continue improving the execution of our already proven strategy.

Over the past five years Intersil has achieved its goal of becoming a premier high-performance analog company with a strategy that balances our business across four diverse market segments—consumer, computing, industrial and communications—and product families that feature both highly-differentiated application specific products and general purpose proprietary products.

Despite a challenging business environment in the high-performance analog space, Intersil grew revenues faster than our peers. We achieved $757 million in net revenues, growing 2% over the previous year in a soft analog market. We are clearly executing well and providing significant returns to our shareholders.

Our high-end consumer market had a strong year with revenue in this segment increasing 8% year-over-year. Our success was driven by increasing dollar content in handheld consumer products. In addition, as consumers demand more mobility, we have seen an increasing number of new and innovative handheld applications. Revenue from our products sold into the LCD display market also increased significantly and is expected to continue growing for the next several years.

Intersil is recognized as the leader in high-performance notebook and desktop power and server power management. Annual revenue in our computing market increased 12% over the previous year. Our dollar content as well as market share increased significantly this year for notebook power management products.

In the early part of 2007, an inventory correction drove weakness in our industrial and communication infrastructure markets. However, we maintained a disciplined investment strategy, devoting a disproportionate amount of our research and development dollars to products aimed at these markets. Our design wins increased significantly with this investment strategy, and we believe that we are well positioned to see better than industry growth when these markets recover.

Significant operational milestones were achieved in 2007. We expanded our product portfolio with the acquisition of Planet ATE, a fabless semiconductor supplier to the automated test equipment (ATE) market. The ATE business achieved record net revenues in 2007 and we see tremendous opportunity to broaden our customer base and increase the dollar content with existing customers. We also opened a new design center in Hyderabad, India that will help us accelerate our new product development and support the expansion of our footprint in the Asia-Pacific region.

Outstanding Profitability
We continue to focus on improving profitability. In 2007, we maintained stable gross and operating margins, approximately 57% and 20%, respectively. Our cash generation model remains intact as we generated over $214 million in free cash flow for the year. We have been committed to providing excellent returns to our shareholders. To this end, we returned more than $480 million in cash to our shareholders through share repurchases and quarterly dividends during 2007.

In summary, Intersil achieved steady, well-managed growth in 2007 in the midst of a challenging market environment. It is clear that our business model is successful, and as we look to 2008, we will remain focused on developing industry-leading products and growing revenues faster than the analog sector. We are optimistic about our long-term growth opportunities and expect solid growth across numerous product families during the next year.

In February 2008, I took the reigns from Rich Beyer, whose leadership over the last five years provided the foundation for Intersil’s recent success. During Rich’s tenure, Intersil has clearly transformed itself into one of the best high-performance analog companies in the world and you can expect my focus to be on continuing that level of performance in the coming years.

Finally, I want to thank all of Intersil’s talented and dedicated employees around the world, who are committed to our success and who bring unique value and outstanding service to our customers.
On behalf of the management team at Intersil, we thank you for your continued support.

Sincerely,

David Bell
President and Chief Executive Officer
 
Intersil Corporation 10K report for the fiscal year ended December 28, 2007
 

Exhibit 21

SUBSIDIARIES OF REGISTRANT

INTERSIL CORPORATION
SUBSIDIARIES OF REGISTRANT
AT FEBRUARY 15, 2008
Subsidiary Name

State or Other Jurisdiction of Incorporation

U.S.
Intersil Communications, Inc. Delaware
Elantec Semiconductor, Inc. Delaware
Intersil Americas Inc. Delaware
Intersil Investment Company Delaware
Xicor LLC Delaware
Poweready, Inc. Delaware
Analog Integration Partners, LLC Delaware
Xicor, Inc. Integration Holding Company Delaware
Planet ATE, Inc. California
Asia
Elantec Semiconductor Malaysia Sdn. Bhd. Malaysia
Intersil China Limited Hong Kong, PRC
Intersil K. K. Japan
Intersil YH Korea
Intersil Advanced Technology (Labuan) Ltd. Federation of Labuan, Malaysia
Intersil Services Company Sdn. Bhd. Malaysia
Intersil Pte. Ltd. Singapore
Intersil Ltd. Taiwan
Intersil Analog Services Pvt. Ltd. India
Europe
Intersil S.A. Belgium
Intersil Sarl France
Intersil GmbH Germany
Intersil Srl Italy
Intersil Holding GmbH Switzerland
Intersil Europe Sarl Switzerland
Intersil Wireless B.V. The Netherlands
Intersil Limited United Kingdom
Xicor, GmbH Germany
Intersil Luxembourg Participations Sarl Luxembourg
Elantec Semiconductor U.K. Limited United Kingdom
Intersil Swiss Holding Sarl Switzerland/Delaware
 

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Intersil Corporation:

We consent to the incorporation by reference in the registration statements on Form S-4 (Nos. 333-35052 and 333-46984) and Form S-8 (Nos. 333-117890, 333-88208, 333-31094, 333-50718, 333-50722 and 333-65804) of Intersil Corporation and subsidiaries of our reports dated February 22, 2008, with respect to the consolidated balance sheets of Intersil Corporation and subsidiaries as of December 28, 2007, and December 29, 2006, and the related consolidated statements of operations, shareholders’ equity, comprehensive income and cash flows for each of the years in the two year period ended December 28, 2007, and the related financial statement schedule for each of the years in the two year period ended December 28, 2007, and the effectiveness of internal control over financial reporting as of December 28, 2007, which reports appear in the December 28, 2007, annual report on Form 10-K of Intersil Corporation and subsidiaries.

Our report with respect to the consolidated financial statements of Intersil Corporation and subsidiaries refers to Intersil Corporation and subsidiaries’ adoption of the provisions of Financial Accounting Standards Board Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”, effective December 30, 2006, and also the provisions of Statement of Financial Accounting Standard (SFAS) No. 123R, “Share-Based Payment,” effective December 31, 2005, applying the modified prospective method.

KPMG LLP

February 22, 2008
Orlando, Florida
Certified Public Accountants

 

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-117890) pertaining to the Xicor, Inc. 1998 Employee Stock Purchase Plan, Xicor, Inc. 1990 Incentive and Non-incentive Stock Option Plan, Xicor, Inc. 1998 Nonstatutory Stock Option Plan, Xicor, Inc. 2002 Stock Option Plan, Xicor, Inc. 2000 Director Option Plan, Xicor, Inc. 1995 Director Option Plan, (Form S-8 No. 333-88208) pertaining to the Elantec Semiconductor, Inc. 1983 Stock Option Plan, Elantec Semiconductor, Inc. 1994 Equity Incentive Plan, Elantec Semiconductor, Inc. 1995 Employee Stock Purchase Plan, Elantec Semiconductor, Inc. 1995 Equity Incentive Plan and Elantec Semiconductor, Inc. 2001 Equity Incentive Plan, (Form S-8 No. 333-31094) pertaining to the Intersil Corporation 1999 Equity Compensation Plan and Intersil Corporation Employee Stock Purchase Plan, (Form S-8 No. 333-50718) pertaining to the SiCOM, Inc. 1985 Incentive Stock Option Plan, SiCOM, Inc. 1996 Equity Incentive Plan and Option Issued to Robert W. Putnam, (Form S-8 No. 333-50722) pertaining to the Employee Stock Option Plan of No Wires Needed B.V., (Form S-8 No. 333-65804) pertaining to the Intersil Corporation 1999 Equity Compensation Plan, (Form S-4 No. 333-35052) and (Form S-4 No. 333-46984) and in the related Prospectuses of Intersil Corporation of our report dated February 28, 2006, with respect to the consolidated financial statements and schedule of Intersil Corporation, included in this Annual Report (Form 10-K) for the year ended December 28, 2007.

/s/ Ernst & Young LLP
Certified Public Accountants

Fort Lauderdale, Florida
February 21, 2008

 

Exhibit 31.1

CERTIFICATIONS

I, David B. Bell, certify that:

  1. I have reviewed this annual report on Form 10-K of Intersil Corporation;
     
  2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
     
  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

    a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

    b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

    c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

    d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
  5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

    a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

    b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
/s/ David B. Bell

David B. Bell
President & Chief Executive Officer

Date: February 22, 2008

 

Exhibit 31.2

I, David A. Zinsner, certify that:

  1. I have reviewed this annual report on Form 10-K of Intersil Corporation;
     
  2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
     
  3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
     
  4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

    a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

    b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

    c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

    d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
     
  5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

    a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

    b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
/s/ David B. Bell

David B. Bell
President & Chief Executive Officer

Date: February 22, 2008

 

Exhibit 32

CERTIFICATION

Each of the undersigned hereby certifies, for the purposes of section 1350 of chapter 63 of title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Intersil Corporation (“Intersil”), that the Annual Report of Intersil on Form 10-K for the period ended December 28, 2007, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operation of Intersil. This written statement is being furnished to the Securities and Exchange Commission as an exhibit to such Form 10-K.

Date: February 22, 2008 By: /s/ David B. Bell

David B. Bell
President & Chief Executive Officer
 

Date: February 22, 2008 By: /s/ David A. Zinsner

David A. Zinsner
Chief Financial Officer

 
BOARD OF DIRECTORS

Gary E. Gist, Chairman, Board of Directors
President & Chief Executive Officer,
Palomar Companies LLC

David B. Bell, Director
President & Chief Executive Officer,
Intersil Corporation

Robert W. Conn, Ph.D., Director
Managing Director,
Enterprise Partners Venture Capital

James V. Diller, Director
Previous Chairman of the Board,
Elantec Semiconductor, Inc.

Mercedes Johnson, Director
Sr. Vice President & Chief Financial Officer,
Avago Technologies

Gregory Lang, Director
President & Chief Executive Officer,
Integrated Device Technology, Inc.

Jan Peeters, Director
Chairman and Chief Executive Officer,
Olameter Inc.

Robert N. Pokelwaldt, Director
Retired Chairman and Chief Executive Officer,
YORK International Corporation

James A. Urry, Director
Partner, Court Square Capital

INTERSIL EXECUTIVE OFFICERS
AND KEY CONTACTS


David B. Bell
President & Chief Executive Officer

David A. Zinsner
Vice President & Chief Financial Officer

Michael Althar
Vice President/General Manager,
Specialty Products Group

Terry Brophy
Vice President, Information Systems

Susan Hardman
Vice President/General Manager,
Analog and Mixed Signal Products Group

Vern Kelley
Vice President, Human Resources

Jonathan Kennedy
Corporate Controller

Carlos Laber
Vice President, Worldwide Technology

Davin Lee
Vice President/General Manager,
Automotive, Industrial & Communications
Power Products Group

John Lisi
Corporate Treasurer

Peter Oaklander
Senior Vice President, Worldwide Sales

Sagar Pushpala
Vice President, Worldwide Operations

Andrew Rhind
Vice President/General Manager,
Consumer Power Products Group

Paul Sferrazza
Vice President/General Manager,
Computing Power Products Group

Thomas C. Tokos
Vice President, General Counsel
& Corporate Secretary
INTERSIL FELLOWS

Mike Church
Sandy Fairgrieve
Barry Harvey
Bob Isham
Jason Lin
Larry Pearce
Joe Pierret


INVESTOR RELATIONS

Please contact the Investor Relations department for any investment related questions or to receive additional copies of this report, our annual report on form 10-K, or other financial information free of charge.

Call us at 1-888-468-3774 or write to us at:

Investor Relations
Intersil Corporation
1001 Murphy Ranch Road
Milpitas, CA 95035

Or send an email to: investor@intersil.com

INDEPENDENT AUDITORS

KPMG, LLP

SHAREHOLDER INFORMATION

Our transfer agent can assist you in affecting a change in address or replacing lost stock certificates, as well as a variety of other services:

American Stock Transfer & Trust Co.
59 Maiden Lane, Plaza Level
New York, NY 10038
Phone: 1-800-937-5449
Email: info@amstock.com

DESIGN CENTERS
Irvine, CA
Milpitas, CA
Poway, CA
Palm Bay, FL
North Branch, NJ
Research Triangle Park, NC
Dallas, TX
Harlow, United Kingdom
Bangalore, India
Hyderabad, India

More information is available on the Internet at www.intersil.com

Intersil trades on the NASDAQ Global Select under the ticker symbol ISIL.

Printed in USA/08
© 2008 Intersil Americas Inc.
All rights reserved

Intersil and the Intersil logo are trademarks of Intersil Americas, Inc. Other trademarks mentioned are the property of their respective owner.
 
 
     
     
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