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Intersil Corp. Reports Operating Results (10-Q)

November 10, 2009 | About:
10qk

10qk

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Intersil Corp. (ISIL) filed Quarterly Report for the period ended 2009-10-02.

Intersil Corporation is a leader in the design and manufacture of high-performance analog semiconductors. The Company's products address some of the industry's fastest growing markets, such as, flat panel displays, cell phones, other handheld systems, and notebooks. Intersil's product families address power management functions and analog signal processing functions. Intersil products include ICs for battery management, hot-swap and hot-plug controllers, linear regulators, power sequencers, supervisory ICs, bridge drivers, PWM controllers, switching DC/DC regulators and power MOSFET drivers; optical storage laser diode drivers; DSL line drivers; video and high-performance operational amplifiers; data converters; interface ICs; analog switches and multiplexers; crosspoint switches; voice-over-IP devices; and ICs for military, space and radiation-hardened applications. Intersil Corp. has a market cap of $1.65 billion; its shares were traded at around $13.51 with a P/E ratio of 38.6 and P/S ratio of 2.1. The dividend yield of Intersil Corp. stocks is 3.6%. Intersil Corp. had an annual average earning growth of 15.5% over the past 5 years.

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 $3.3 million or 9.4% to $38.4 million during the quarter ended October 2, 2009 from $35.1 million during the quarter ended October 3, 2008. This increase was primarily due to increased labor costs from acquisitions and strong hiring of new design engineers during 2008. R&D expenses decreased $0.7 million or 0.6% to $108.2 million during the three quarters ended October 2, 2009 from $108.9 million during the three quarters ended October 3, 2008. The decrease was primarily due to cost saving initiatives and reduced incentive accruals substantially offset by increased labor costs from acquisitions and strong hiring of new design engineers during 2008.

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 $0.7 million or 2.3% to $32.5 million during the quarter ended October 2, 2009 from $31.8 million during the quarter ended October 3, 2008. This slight increase was due to increased general incentive accruals compared to the third quarter of 2008 offset by reduced selling incentives due to lower sales. SG&A costs decreased by $7.5 million or 7.8% to $88.1 million during the three quarters ended October 2, 2009 from $95.6 million during the three quarters ended October 3, 2008. The decrease related primarily to cost saving initiatives and reduced incentive accruals.

Amortization of purchased intangible assets increased $0.2 million or 5.3% to $3.0 million in the quarter ended October 2, 2009 from $2.8 million in the quarter ended October 3, 2008. For the three quarters ended October 2, 2009, amortization of purchased intangibles increased $1.1 million or 12.0% to $9.9 million from $8.8 million for the three quarters ended October 3, 2008. The increases for both periods resulted primarily from the three acquisitions in the last three quarters of fiscal 2008 and the Quellan acquisition in the third quarter of 2009. We expect amortization of current definite-lived intangible asset balances to remain essentially flat in the fourth quarter, declining gradually in 2010 as certain balances become fully amortized. This decrease will reduce amortization expense by approximately $1.1 million per quarter by the fourth quarter of 2010.

We recorded charges of $0.4 million in the quarter ended October 2, 2009 compared to $0.6 million in the quarter ended October 3, 2008 for employee severance, facility consolidation and other costs, as a result of these actions. We have recorded charges of $2.3 million for the three quarters ended October 2, 2009 compared to $5.5 million in the three quarters ended October 3, 2008. Other accrued expense on the accompanying consolidated balance sheets includes approximately $0.6 million remaining liability related to the restructurings.

We have a liability for a qualified deferred compensation plan. We maintain a portfolio of approximately $11.1 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 general, the compensation expense (benefit) is substantially offset by the gains and losses on the investment. During the quarter ended October 2, 2009, we recorded a gain on deferred compensation investments of $1.0 million and an increase in compensation expense of $1.0 million. During the three quarters ended October 2, 2009, we recorded a gain on deferred compensation investments of $1.8 million and an increase of compensation expense of $1.8 million.

Net interest income decreased to $1.0 million during the quarter ended October 2, 2009, from $3.1 million during the quarter ended October 3, 2008. Net interest income decreased to $3.9 million during the three quarters ended October 2, 2009, from $12.1 million during the three quarters ended October 3, 2008. The decreases are attributable to a decrease in average cash and investment balances and declining interest rates when compared to the same period last year.

Read the The complete ReportISIL is in the portfolios of PRIMECAP Management.

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