UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended April 2, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 000-29617
INTERSIL CORPORATION
(Exact name of registrant as specified in its charter)
| Delaware | 59-3590018 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification No.) |
675 Trade Zone Boulevard
Milpitas, California 95035
(Address of principal executive offices, including zip code)
(408) 945-1323
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
The number of shares outstanding of the issuer’s classes of common stock as of the close of business on May 11, 2004:
| Title of Each Class |
Number of Shares | |
| Class A common stock par value $.01 per share |
140,159,309 |
INDEX
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| Quarter Ended |
||||||||
| April 2, 2004 |
April 4, 2003 |
|||||||
| (Unaudited) (in thousands, except per share amounts) |
||||||||
| Revenue |
||||||||
| Product sales |
$ | 137,430 | $ | 115,592 | ||||
| Costs, expenses and other income |
||||||||
| Cost of product sales (a) |
59,122 | 49,852 | ||||||
| Research and development |
24,615 | 20,995 | ||||||
| Selling, general and administrative |
21,542 | 22,330 | ||||||
| Amortization of purchased intangibles |
1,166 | 1,784 | ||||||
| Amortization of unearned stock based compensation (b) |
1,552 | 3,352 | ||||||
| Impairment of long-lived assets |
27,010 | — | ||||||
| Restructuring |
— | 1,272 | ||||||
| (Gain) on sale of certain operations disposed during 2001 |
— | (1,428 | ) | |||||
| Operating income |
2,423 | 17,435 | ||||||
| Gain on investments |
3,799 | — | ||||||
| Interest income, net |
3,089 | 2,168 | ||||||
| Income from continuing operations before income taxes |
9,311 | 19,603 | ||||||
| Income tax provision (benefit) from continuing operations |
(13,793 | ) | 5,226 | |||||
| Income from continuing operations |
23,104 | 14,377 | ||||||
| Discontinued operations |
||||||||
| Income (loss) from discontinued operations before income taxes |
6,938 | (1,068 | ) | |||||
| Income tax provision (benefit) from discontinued operations |
2,693 | (407 | ) | |||||
| Income (loss) from discontinued operations |
4,245 | (661 | ) | |||||
| Net income |
$ | 27,349 | $ | 13,716 | ||||
| Basic income per share: |
||||||||
| Income from continuing operations |
$ | 0.17 | $ | 0.11 | ||||
| Income (loss) from discontinued operations |
0.03 | (0.01 | ) | |||||
| Net income |
$ | 0.20 | $ | 0.10 | ||||
| Diluted income per share: |
||||||||
| Income from continuing operations |
$ | 0.16 | $ | 0.10 | ||||
| Income (loss) from discontinued operations |
0.03 | — | ||||||
| Net income |
$ | 0.19 | $ | 0.10 | ||||
| Weighted average common shares outstanding (in millions): |
||||||||
| Basic |
138.0 | 136.6 | ||||||
| Diluted |
140.8 | 140.2 | ||||||
| Dividends declared per common share |
$ | 0.03 | $ | — | ||||
| (a) Cost of product sales includes the following: |
||||||||
| Unearned compensation |
— | $ | 536 | |||||
| (b) Unearned compensation is excluded from the following: |
||||||||
| Research and development |
$ | 819 | $ | 1,243 | ||||
| Selling, general and administrative |
$ | 733 | $ | 2,109 | ||||
See notes to unaudited condensed consolidated financial statements.
1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Quarter Ended | |||||||
| April 2, 2004 |
April 4, 2003 | ||||||
| (Unaudited) (in thousands) | |||||||
| Net income |
$ | 27,349 | $ | 13,716 | |||
| Other comprehensive income: |
|||||||
| Currency translation adjustments |
104 | 45 | |||||
| Reclassification adjustment for realized gains on securities sold |
(1,824 | ) | — | ||||
| Unrealized gain on available-for-sale securities |
— | 705 | |||||
| Comprehensive income |
$ | 25,629 | $ | 14,466 | |||
See notes to unaudited condensed consolidated financial statements.
2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| April 2, 2004 |
January 2, 2004 |
|||||||
| (Unaudited) (in thousands) |
||||||||
| ASSETS | ||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 664,818 | $ | 731,782 | ||||
| Held-to-maturity investments |
86,161 | 87,751 | ||||||
| Trade receivables, less allowances ($4,982 as of April 2, 2004 and $6,988 as of January 2, 2004) |
76,398 | 76,713 | ||||||
| Inventories |
86,144 | 83,631 | ||||||
| Prepaid expenses and other current assets |
10,939 | 10,468 | ||||||
| Deferred income taxes |
25,305 | 39,843 | ||||||
| Total current assets |
949,765 | 1,030,188 | ||||||
| Non-current assets |
||||||||
| Property, plant & equipment, less accumulated depreciation ($113,486 as of April 2, 2004 and $105,263 as of January 2, 2004) |
120,932 | 153,410 | ||||||
| Goodwill and purchased intangibles, less accumulated amortization |
1,088,486 | 1,090,905 | ||||||
| Held-to-maturity investments, less current portion |
211,680 | 144,503 | ||||||
| Other long-term investments |
4,646 | 12,227 | ||||||
| Deferred income taxes |
11,437 | 9,554 | ||||||
| Related party notes |
499 | 499 | ||||||
| Other |
5,785 | 7,561 | ||||||
| Total non-current assets |
1,443,465 | 1,418,659 | ||||||
| Total assets |
$ | 2,393,230 | $ | 2,448,847 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities |
||||||||
| Trade payables |
$ | 16,547 | $ | 16,544 | ||||
| Related party payables |
4,911 | 4,260 | ||||||
| Retirement plan accruals |
3,437 | 3,684 | ||||||
| Accrued compensation |
21,589 | 22,398 | ||||||
| Accrued interest and sundry taxes |
3,544 | 4,142 | ||||||
| Deferred distributor income |
11,596 | 12,105 | ||||||
| Restructuring and exit costs |
4,039 | 5,770 | ||||||
| Litigation accruals |
17,555 | 19,149 | ||||||
| Other accrued items |
16,293 | 20,881 | ||||||
| Customer deposits |
3,432 | 3,841 | ||||||
| Income taxes payable |
37,159 | 83,956 | ||||||
| Total current liabilities |
140,102 | 196,730 | ||||||
| Shareholders’ equity |
||||||||
| Preferred stock, $.01 par value, 100,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Series A Junior Participating preferred stock, $.01 par value, 25,000 authorized, no shares issued or outstanding |
— | — | ||||||
| Class A common stock, $.01 par value, voting; 300,000,000 shares authorized, 140,003,604 shares outstanding at April 2, 2004 and 139,331,417 shares outstanding at January 2, 2004 |
1,400 | 1,393 | ||||||
| Class B common stock, $.01 par value, non-voting; 300,000,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Additional paid-in capital |
2,257,484 | 2,246,402 | ||||||
| Retained earnings |
64,107 | 40,898 | ||||||
| Unearned compensation |
(10,564 | ) | (8,956 | ) | ||||
| Accumulated other comprehensive income |
693 | 2,378 | ||||||
| Treasury shares, at cost |
(59,992 | ) | (29,998 | ) | ||||
| Total shareholders’ equity |
2,253,128 | 2,252,117 | ||||||
| Total liabilities and shareholders’ equity |
$ | 2,393,230 | $ | 2,448,847 | ||||
See notes to unaudited condensed consolidated financial statements.
3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Quarter Ended |
||||||||
| April 2, 2004 |
April 4, 2003 |
|||||||
| (Unaudited) (in thousands) |
||||||||
| Operating activities: |
||||||||
| Net income from continuing operations |
$ | 23,104 | $ | 14,377 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
11,187 | 12,644 | ||||||
| Provisions for inventory obsolescence |
75 | 408 | ||||||
| Severance related expenses |
— | 1,272 | ||||||
| Gain on sale of certain operations |
— | (1,428 | ) | |||||
| Gain on sale of ChipPAC common stock |
(3,799 | ) | — | |||||
| Impairment of long-lived assets |
27,010 | — | ||||||
| Deferred income tax expense |
12,022 | 4,745 | ||||||
| Net income (loss) from discontinued operations |
4,245 | (661 | ) | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Gain on sale of Wireless Networking product group |
(7,900 | ) | — | |||||
| Other adjustments |
— | (12,066 | ) | |||||
| Changes in assets and liabilities: |
||||||||
| Trade receivables |
315 | 3,551 | ||||||
| Inventories |
(2,588 | ) | (2,581 | ) | ||||
| Prepaid expenses and other current assets |
(903 | ) | ||||||