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 1, 2005
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.) |
1001 Murphy Ranch Road
Milpitas, California 95035
(Address of principal executive offices, including zip code)
(408) 432-8888
(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 10, 2005:
| Title of Each Class |
Number of Shares | |
| Class A common stock par value $.01 per share | 152,868,157 |
INDEX
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
| Quarter Ended |
||||||||
| April 1, 2005 |
April 2, 2004 |
|||||||
| (Unaudited) (in thousands, except share and per share amounts) |
||||||||
| Revenue | ||||||||
| Product sales |
$ | 128,080 | $ | 137,430 | ||||
| Costs, expenses and other income | ||||||||
| Cost of product sales (a) |
57,689 | 59,122 | ||||||
| Research and development |
26,762 | 24,615 | ||||||
| Selling, general and administrative |
24,394 | 21,542 | ||||||
| Amortization of purchased intangibles |
2,491 | 1,166 | ||||||
| Amortization of unearned stock based compensation (b) |
3,751 | 1,552 | ||||||
| Impairment (recovery) of long-lived assets |
(618 | ) | 27,010 | |||||
| Restructuring |
2,845 | — | ||||||
| Other (income) |
(2,000 | ) | — | |||||
| Operating income | 12,766 | 2,423 | ||||||
| Gain on investments |
— | 3,799 | ||||||
| Interest income, net |
3,689 | 3,089 | ||||||
| Income from continuing operations before income taxes |
16,455 | 9,311 | ||||||
| Income tax provision (benefit) from continuing operations |
3,638 | (13,793 | ) | |||||
| Income from continuing operations |
12,817 | 23,104 | ||||||
| Discontinued operations | ||||||||
| Income from discontinued operations before income taxes |
— | 6,938 | ||||||
| Income tax provision from discontinued operations |
— | 2,693 | ||||||
| Income from discontinued operations |
— | 4,245 | ||||||
| Net income |
$ | 12,817 | $ | 27,349 | ||||
| Basic income per share: | ||||||||
| Income from continuing operations |
$ | 0.09 | $ | 0.17 | ||||
| Income from discontinued operations |
— | 0.03 | ||||||
| Net income |
$ | 0.09 | $ | 0.20 | ||||
| Diluted income per share: | ||||||||
| Income from continuing operations |
$ | 0.09 | $ | 0.16 | ||||
| Income from discontinued operations |
— | 0.03 | ||||||
| Net income |
$ | 0.09 | $ | 0.19 | ||||
| Weighted average common shares outstanding (in millions): |
||||||||
| Basic |
143.5 | 138.0 | ||||||
| Diluted |
145.7 | 140.8 | ||||||
| Dividends declared per common share |
$ | 0.04 | $ | 0.03 | ||||
| (a) Cost of product sales includes the following: |
||||||||
| Unearned compensation |
$ | 380 | — | |||||
| (b) Unearned compensation is excluded from the following: |
||||||||
| Research and development |
$ | 2,052 | $ | 819 | ||||
| Selling, general and administrative |
1,699 | 733 | ||||||
| $ | 3,751 | $ | 1,552 | |||||
See notes to unaudited condensed consolidated financial statements.
1
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Quarter Ended |
|||||||
| April 1, 2005 |
April 2, 2004 |
||||||
| (Unaudited) (in thousands and net of associated |
|||||||
| Net income |
$ | 12,817 | $ | 27,349 | |||
| Other comprehensive income: |
|||||||
| Currency translation adjustments |
71 | 104 | |||||
| Reclassification adjustment for realized gains on securities sold |
— | (1,824 | ) | ||||
| Comprehensive income |
$ | 12,888 | $ | 25,629 | |||
See notes to unaudited condensed consolidated financial statements.
2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| April 1, 2005 |
December 31, 2004 |
|||||||
| (unaudited) | ||||||||
| (in thousands) | ||||||||
| ASSETS | ||||||||
| Current assets |
||||||||
| Cash and cash equivalents |
$ | 118,114 | $ | 129,700 | ||||
| Short-term investments |
433,014 | 393,299 | ||||||
| Trade receivables, less allowances ($6,798 as of April 1, 2005 and $7,522 as of December 31, 2004) |
76,161 | 77,919 | ||||||
| Inventories, net |
93,912 | 96,450 | ||||||
| Prepaid expenses and other current assets |
14,415 | 14,649 | ||||||
| Deferred income taxes |
36,600 | 43,175 | ||||||
| Total current assets |
772,216 | 755,192 | ||||||
| Non-current assets |
||||||||
| Property, plant & equipment, less accumulated depreciation ($121,630 as of April 1, 2005 and $124,738 as of December 31, 2004) |
95,621 | 101,354 | ||||||
| Goodwill and purchased intangibles, less accumulated amortization |
1,475,609 | 1,478,762 | ||||||
| Long-term investments |
159,628 | 179,651 | ||||||
| Deferred income taxes |
72,794 | 68,860 | ||||||
| Other |
3,348 | 3,751 | ||||||
| Total non-current assets |
1,807,000 | 1,832,378 | ||||||
| Total assets |
$ | 2,579,216 | $ | 2,587,570 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities |
||||||||
| Trade payables |
$ | 10,740 | $ | 12,135 | ||||
| Related party payables |
7,917 | 6,266 | ||||||
| Retirement plan accruals |
3,903 | 3,806 | ||||||
| Accrued compensation |
23,955 | 21,035 | ||||||
| Accrued interest and sundry taxes |
3,817 | 2,976 | ||||||
| Deferred margin |
11,259 | 11,347 | ||||||
| Restructuring and exit costs |
3,391 | 2,476 | ||||||
| Litigation accruals |
3,397 | 4,141 | ||||||
| Other accrued items |
22,758 | 25,892 | ||||||
| Customer deposits |
1,744 | 1,882 | ||||||
| Income taxes payable |
55,805 | 56,211 | ||||||
| Total current liabilities |
148,686 | 148,167 | ||||||
| Shareholders’ equity |
||||||||
| Preferred stock, $.01 par value, 2,500,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Series A Junior Participating preferred stock, $.01 par value, 25,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Class A common stock, $.01 par value, voting; 300,000,000 shares authorized, 152,380,404 shares outstanding at April 1, 2005 and 151,848,424 shares outstanding at December 31, 2004 |
1,524 | 1,518 | ||||||
| Class B common stock, $.01 par value, non-voting; 300,000,000 shares authorized, no shares issued or outstanding |
— | — | ||||||
| Additional paid-in capital |
2,559,475 | 2,553,855 | ||||||
| Retained earnings |
70,174 | 63,103 | ||||||
| Unearned compensation |
(20,288 | ) | (22,900 | ) | ||||
| Accumulated other comprehensive income |
1,403 | 1,494 | ||||||
| Treasury shares, at cost; 9,525,670 shares at April 1, 2005 and 8,078,670 shares at December 31, 2004 |
(181,758 | ) | (157,667 | ) | ||||
| Total shareholders’ equity |
2,430,530 | 2,439,403 | ||||||
| Total liabilities and shareholders’ equity |
$ | 2,579,216 | $ | 2,587,570 | ||||
See notes to unaudited condensed consolidated financial statements.
3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| Quarter Ended |
||||||||
| April 1, 2005 |
April 2, 2004 |
|||||||
| (Unaudited) (in thousands) |
||||||||
| Operating activities: | ||||||||
| Net income from continuing operations |
$ | 12,817 | $ | 23,104 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
13,096 | 11,187 | ||||||
| Provisions for inventory obsolescence |
482 | 75 | ||||||
| Severance related expenses |
2,845 | — | ||||||
| Gain on sale of equipment |
15 | — | ||||||
| Gain on sale of certain investments |
— | (3,799 | ) | |||||
| Impairment (recovery) of long-lived assets |
(618 | ) | 27,010 | |||||
| Deferred income taxes |
2,054 | 12,022 | ||||||
| Net income from discontinued operations |
— | 4,245 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Gain on sale of Wireless Networking product group |
— | (7,900 | ) | |||||
| Changes in operating assets and liabilities: |
||||||||
| Trade receivables |
1,758 | 315 | ||||||
| Inventories |
2,055 | (2,588 | ) | |||||
| Prepaid expenses and other current assets |
(234 | ) | (903 | ) | ||||
| Trade payables and accrued liabilities |
117 | (8,006 | ) | |||||
| Income taxes |
1,293 | (28,391 | ) | |||||
| Other |
99 | 1,616 | ||||||