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Intersil Corp. Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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Intersil Corp. (ISIL) filed Quarterly Report for the period ended 2010-10-01.

Intersil Corp. has a market cap of $1.65 billion; its shares were traded at around $13.38 with a P/E ratio of 14.3 and P/S ratio of 2.7. The dividend yield of Intersil Corp. stocks is 3.5%. Intersil Corp. had an annual average earning growth of 10.6% over the past 10 years.ISIL is in the portfolios of PRIMECAP Management, Bruce Kovner of Caxton Associates, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

R&D expenses consist primarily of salaries and costs of employees engaged in product/process research, design and development activities, as well as related subcontracting activities, prototype development, cost of design tools and technology license agreement expenses. R&D expenses increased $9.1 million or 23.6% to $47.5 million during the quarter ended October 1, 2010 from $38.4 million during the quarter ended October 2, 2009. R&D expenses increased $28.1 million or 26.0% to $136.4 million during the three quarters ended October 1, 2010 from $108.2 million during the three quarters ended October 2, 2009. The increases were due primarily to new employees from acquisitions, increased incentive plans in 2010, and lower costs in the first three quarters of 2009 due to short-term cost saving initiatives implemented in response to the changing economy.

SG&A costs primarily include salary and incentive expenses of employees engaged in marketing and selling, as well as salaries and expenses required to perform our human resource, finance, legal and executive functions. SG&A costs increased by $1.5 million or 4.6% to $33.4 million during the quarter ended October 1, 2010 from $31.9 million during the quarter ended October 2, 2009. SG&A costs increased by $13.3 million or 15.2% to $100.6 million during the three quarters ended October 1, 2010 from $87.3 million during the three quarters ended October 2, 2009. The increases were due primarily to new employees from acquisitions, increased incentive plans in 2010, and lower costs in the first three quarters of 2009 due to short-term cost saving initiatives implemented in response to the changing economy.

Amortization of purchased intangible assets increased $6.4 million or 213.6% to $9.3 million in the quarter ended October 1, 2010 from $3.0 million in the quarter ended October 2, 2009. Amortization of purchased intangible assets increased $10.4 million or 105.4% to $20.3 million in the three quarters ended October 1, 2010 from $9.9 million in the three quarters ended October 2, 2009. The increases resulted primarily from the acquisition of Techwell in the second quarter of 2010, slightly offset by certain balances that became fully amortized. We expect amortization of current definite-lived intangible asset balances to decrease by approximately $2.0 million to $7.3 million in the fourth quarter, then steadily decline as certain balances become fully amortized.

In fiscal year 2008, we implemented plans to consolidate our internal foundries, reduce the related workforce and reduce our world-wide workforce by approximately 9%, resulting in an estimated combined annual cost savings between $12 million and $14 million. We recorded minimal restructuring related charges in the quarter and three quarters ended October 1, 2010 compared to $0.4 million in the quarter ended October 2, 2009 and $2.3 million in the three quarters ended October 2, 2009 for employee severance, facility consolidation and other costs associated with our restructuring plans. All current restructuring plans have been completed and we have no remaining restructuring liability.

We have a liability for a qualified deferred compensation plan. We maintain a portfolio of approximately $11.9 million of investments under the plan. Changes in the fair value of the asset are recorded as a (loss) gain on investments and changes in the fair value of the liability are recorded as a component of compensation expense in selling, general and administrative expense. In general, the compensation (benefit) expense is substantially offset by the gains and losses on the investment. During the quarter ended October 1, 2010, we recorded a gain on deferred compensation investments of $0.2 million and an increase in selling, general and administrative expense of $0.3 million. During the three quarters ended October 1, 2010, we recorded a gain on deferred compensation investments of $0.3 million and an increase in selling, general and administrative expense of $0.4 million.

Income tax expense for the quarter ended October 1, 2010 was $3.2 million or 8.9% of income before taxes compared with a benefit of $7.0 million or 134.3% of income before taxes for the quarter ended October 2, 2009. The quarter ended October 1, 2010 included a discrete benefit of $5.9 million which offset non-discrete tax expense of $9.1 million. The discrete charge is due primarily to a decrease in the provision for uncertain tax positions. The quarter ended October 2, 2009 included a $6.2 million benefit related to a reversal of the valuation allowance associated with previously recorded impairments on auction rate securities. The third quarter of 2009 also included the benefit of $1.7 million from the move of our international headquarters. Our tax rate is expected to be approximately 23% to 25% in future quarters, exclusive of any benefit derived from the research tax credit.

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