Intersil Corporation (ISIL), a world leader in the design and manufacture of high performance analog and mixed signal semiconductors, today reported financial results for its second quarter ended July 2, 2010.Results of Operations
Net revenues for the second quarter were $219.9 million, a 49% increase from $147.3 million in the second quarter of 2009 and a 16% increase from $189.4 million in the first quarter of 2010. Intersil’s second quarter revenues ranked by end market size were as follows: industrial, 31.7% of revenues; computing, 25.4% of revenues; communications, 22.0% of revenues; and high-end consumer, 20.9% of revenues.
Gross margin for the second quarter increased to 58.3%, compared with gross margin of 54.2% in the same quarter last year, and 56.4% in the first quarter of 2010.
Operating margin was 14.0% during the second quarter. Net loss was $59.4 million, or a loss of $0.48 per diluted share, compared with net income of $6.2 million, or $0.05 per diluted share in the same quarter last year, and net income of $27.7 million, or $0.22 per diluted share, in the first quarter of 2010.
Operating income and earnings per share included Techwell acquisition related costs of $6.5 million as well as $5.2 million in incremental intangible amortization related to Techwell. In addition, income tax expense includes approximately $81 million in tax reserves for uncertain tax positions identified during a multi-year tax audit. Excluding the effects of these items, operating profit was $42.5 million or 19.3% of revenue and net income was $30.6 million, or $0.25 per diluted share.
"Intersil’s record second quarter revenues exceeded peak levels seen prior to the downturn. We also achieved one of our three 2010 financial goals by reaching 58% gross margin a full two quarters ahead of schedule," said Dave Bell, Intersil’s President and Chief Executive Officer. "As promised, the addition of Techwell grew our industrial business to become our largest end market. Techwell’s stable, higher-margin video processing products shift our end market balance and are consistent with our strategy to diversify our product portfolio," said Bell.
"The consumer market also performed exceptionally well in smartphones, tablets and gaming ahead of the seasonal third quarter build, offsetting the lower-margin PC business, which was slightly soft during May and June. Many of our businesses continue to outperform due to our manufacturing capacity and low lead times," continued Bell.
At the end of the second quarter, Intersil’s cash and short-term investments totaled over $339 million, and free cash flow was over $30 million for the second quarter.
Intersil’s Board of Directors has authorized the payment of a quarterly dividend of $0.12 per share of common stock. The payment of this dividend will be made on August 20, 2010 to shareholders of record as of the close of business on August 10, 2010.
-- Revenues are expected to be in the range of $230 million to $238
million (+5% to +8% sequentially)
-- Research and development expenses are expected to be approximately $50
million
-- Selling, general and administrative expenses are expected to be
approximately $38 million
-- Stock-based compensation expenses are expected to be approximately $9.3
million
-- Amortization of intangibles is expected to be approximately $9.4
million
-- GAAP earnings per diluted share are expected to be in the range of
$0.21 to $0.24
-- Non-GAAP earnings per diluted share (excluding amortization of
intangibles) are expected to be in the range of $0.27 to $0.30
"Third quarter computing revenues are expected to be roughly flat compared to the second quarter. However, continued strong growth in our industrial and high-end consumer markets are expected to drive excellent growth for Intersil as a whole," said Mr. Bell. "Inventories are at ideal levels, and new product ramps scheduled in the second half of the year give us confidence in continued growth throughout the remainder of 2010."
Intersil will discuss its second quarter financial results during its scheduled conference call following the market close on July 21st. Those wishing to participate in the conference call please dial (866) 314-4865, and international participants please dial +1 (617) 213-8050, using the password 31012331 at approximately 1:40 p.m. Pacific Time. Those wishing to listen to the call may also do so via webcast on Intersil’s Web site: http://www.intersil.com/investor .
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