<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
[Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the fiscal year ended June 30, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transaction
period from to .
Commission File Number 000-29617
Intersil Holding Corporation
(Exact name of Registrant as specified in its charter)
Delaware 59-3590018
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7585 Irvine Center Drive
Irvine, California 92618
(949) 341-7062
(Address and telephone number
of principal executive offices)
Securities registered under Section 12(b) of the Exchange Act:
None.
Securities registered under Section 12(g) of the Exchange Act:
Title of class Name of each exchange on which registered
-------------- -----------------------------------------
Class A Common Nasdaq Stock Market
Stock par value
$.01 per share
Indicated 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: [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information by
reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
<PAGE>
The approximate aggregate market value of the registrant's voting common stock
held by non-affiliates, computed by reference to the last sale price per share
as of July 31, 2000 was $1,830,306,209.
The number of shares outstanding of the registrant's Class A and Class B Common
Stock as of July 31, 2000 was 44,803,398 and 49,746,482, respectively.
DOCUMENTS INCORPORATED BY REFERENCE
None.
2
<PAGE>
Item 3. Legal Proceedings
From time to time we are involved in legal proceedings arising in the
ordinary course of business. We are presently co-defendants with Harris in a
suit brought by Ericsson alleging patent infringement, which is pending in the
Sherman Division of the United States District Court for the Eastern District of
Texas. Ericsson alleges infringement of four of its patents relating to
telephone subscriber line interface circuits. The suit was initially directed
against Harris; we were joined as defendants in this action on September 1,
1999. Ericsson seeks an injunction (requiring the co-defendants to stop making,
using or selling telephone subscriber line interface circuits which utilize
Ericsson's patents) plus damages, including lost profits and/or a reasonable
royalty, costs of suit, treble damages, prejudgment interest and attorneys'
fees. However, to the extent our liability for damages from this litigation, if
any, arises out of the conduct of the semiconductor business by Harris prior to
closing, this liability will be covered by Harris' agreement in connection with
the acquisition of the semiconductor business to provide us with certain
indemnities.
In addition, Harris is a defendant in an action brought by Geisting &
Associates seeking to recover commissions and receivables allegedly lost as a
result of the termination of Geisting as a sales representative for our PRISM
chip set. The action is pending in the United States District Court for the
Middle District of Florida-Orlando. While Intersil has not been named as a
defendant, we could be liable for any judgment entered against Harris on the
pending claims, and we are conducting the defense of the action. Geisting seeks
damages, including lost profits, and attorneys' fees.
We believe that there is no litigation pending that could have,
individually or in the aggregate, a material adverse effect on our business,
financial condition or results of operations.
Item 8. Financial Statements and Supplementary Data
The following Consolidated Financial Statements, and the related Notes
thereto, of Intersil Holding Corporation and the Independent Certified Public
Accountants' Report are filed as a part of this Report.
3
<PAGE>
INDEX TO FINANCIAL STATEMENTS
INTERSIL HOLDING CORPORATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Certified Public Accountants' Report........................................................... 5
Consolidated Statements of Operations and Comprehensive Income............................................. 6
Consolidated Balance Sheets................................................................................ 7
Consolidated Statements of Cash Flows...................................................................... 8
Consolidated Statement of Shareholders' Equity............................................................. 9
Notes to Consolidated Financial Statements................................................................. 10
</TABLE>
4
<PAGE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT
The Board of Directors
Intersil Holding Corporation
We have audited the accompanying consolidated balance sheet of Harris
Semiconductor Business (Semiconductor Business) (Predecessor), which was wholly
owned by Harris Corporation, as of July 2, 1999 and the related statement of
operations, comprehensive income and cash flows for each of the two fiscal years
in the period ended July 2, 1999 and the six weeks ended August 13, 1999,
respectively. We have also audited the accompanying consolidated balance sheet
of Intersil Holding Corporation (Successor) as of June 30, 2000 and the related
statements of operations, comprehensive income, shareholders' equity, and cash
flows for the 46 weeks ended June 30, 2000. Our audits also included the
financial statement schedule listed at Item 14(a). These financial statements
and financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statements are free of material
misstatement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
The accompanying Predecessor consolidated financial statements were prepared on
the basis of presentation as described in Note A. The results of operations are
not necessarily indicative of the results of operations that would be recorded
by Semiconductor Business on a stand-alone basis.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Intersil Holding
Corporation as the Successor and Predecessor companies at June 30, 2000 and
July 2, 1999 and the consolidated results of their operations and their cash
flows for each of the two years in the period ended July 2, 1999 and for the six
weeks and 46 weeks ended August 13, 1999 and June 30, 2000, respectively, on the
basis described in Note A, in conformity with accounting principles generally
accepted in the United States. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
Jacksonville, Florida Ernst & Young LLP
July 21, 2000
5
<PAGE>
INTERSIL HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR SUCCESSOR
---------------------------- --------------- --------------
FISCAL YEAR ENDED SIX WEEKS ENDED 46 WEEKS ENDED
---------------------------- --------------- --------------
JULY 3, 1998 JULY 2, 1999 AUGUST 13, 1999 JUNE 30, 2000
------------ ------------ --------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
REVENUE
Product sales................................................ $576,836 $532,718 $ 57,336 $596,849
COSTS AND EXPENSES
Cost of product sales........................................ 369,332 349,776 39,681 352,513
Research and development..................................... 75,125 67,079 8,499 69,456
Selling, general and administrative.......................... 98,184 83,998 10,908 97,227
Harris corporate expense allocation.......................... 9,962 9,303 1,164 --
Intangible amortization...................................... 2,292 2,414 326 10,686
In-process research and development.......................... -- -- -- 20,239
Other........................................................ -- -- -- 1,178
-------- -------- --------- --------
Operating income (loss)........................................ 21,941 20,148 (3,242) 45,550
Loss on sale of Malaysian operation.......................... -- -- -- 24,825
Interest expense............................................. 43 129 -- 41,924
Interest income.............................................. (957) (1,360) (111) (3,720)
-------- -------- --------- --------
Income (loss) before income taxes and
extraordinary item........................................ 22,855 21,379 (3,131) (17,479)
Income taxes (benefit)....................................... 9,944 (6,027) (102) (289)
-------- -------- --------- --------
Net income (loss) before extraordinary item.................. 12,911 27,406 (3,029) (17,190)
Extraordinary item--loss on extinguishment of debt, net of
tax effect................................................ -- -- -- (25,518)
-------- -------- --------- --------
NET INCOME (LOSS).............................................. 12,911 27,406 (3,029) (42,708)
Preferred dividends............................................ -- -- -- 5,391
-------- -------- --------- --------
Net income (loss) to common shareholders....................... $ 12,911 $ 27,406 $ (3,029) $(48,099)
======== ======== ========= ========
BASIC AND DILUTED LOSS PER SHARE:
Loss before extraordinary item............................... $ (0.30)
Extraordinary item........................................... $ (0.33)
--------
Net loss..................................................... $ (0.63)
========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (IN MILLIONS):
Basic and diluted............................................ 76.7
========
</TABLE>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
PREDECESSOR PREDECESSOR SUCCESSOR
---------------------------- --------------- --------------
FISCAL YEAR ENDED SIX WEEKS ENDED 46 WEEKS ENDED
---------------------------- --------------- --------------
JULY 3, 1998 JULY 2, 1999 AUGUST 13, 1999 JUNE 30, 2000
------------ ------------ --------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Net income (loss).............................................. $ 12,911 $ 27,406 $(3,029) $(42,708)
Other comprehensive income (loss):
Currency translation adjustments............................. (1,851) (574) 2,475 1,636
-------- -------- ------- --------
Comprehensive income (loss).................................... $ 11,060 $ 26,832 $ (554) $(41,072)
======== ======== ======= ========
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE>
INTERSIL HOLDING CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ -------------
JULY 2, 1999 JUNE 30, 2000
------------ -------------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents....................................................................... $ -- $ 211,940
Trade receivables, less allowances for collection loss ($582 as of July 2, 1999 and $1,341 as of
June 30, 2000)................................................................................ 100,674 111,695
Inventories..................................................................................... 153,822 126,481
Prepaid expenses................................................................................ 3,725 10,645
Income tax receivable........................................................................... 1,527 1,254
Deferred income taxes........................................................................... 3,476 25,768
-------- ---------
Total Current Assets....................................................................... 263,224 487,783
Other Assets
Property, plant and equipment, less allowance for depreciation ($582,616 as of July 2, 1999 and
$36,699 as of June 30, 2000).................................................................. 410,530 225,484
Intangibles, less accumulated amortization ($19,929 as of July 2, 1999 and $10,686
as of June 30, 2000).......................................................................... 45,368 190,150
Other........................................................................................... 42,057 30,521
-------- ---------
Total Other Assets......................................................................... 497,955 446,155
-------- ---------
Total Assets...................................................................................... $761,179 $ 933,938
======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY/BUSINESS EQUITY
Current Liabilities
Trade payables.................................................................................. $ 31,068 $ 36,991
Retirement plan accruals........................................................................ 13,640 6,228
Accrued compensation............................................................................ 19,283 32,398
Accrued interest and sundry taxes............................................................... 3,193 10,512
Other accrued items............................................................................. 16,418 22,734
Distributor reserves............................................................................ 6,542 7,366
Unearned service income......................................................................... 567 129
Long-term debt--current portion................................................................. 360 404
-------- ---------
Total Current Liabilities.................................................................. 91,071 116,762
Other Liabilities
Deferred income taxes........................................................................... 7,022 21,992
Long-term debt.................................................................................. 4,207 116,188
Shareholders' Equity/Business Equity
Preferred Stock, $1,000 par value, 100,000 shares authorized, no shares issued or
outstanding at June 30, 2000.................................................................. -- --
Class A Common Stock, $.01 par value, voting; 300,000,000 shares authorized, 44,773,152 shares
issued and outstanding at June 30, 2000....................................................... -- 448
Class B Common Stock, $.01 par value, non-voting; 300,000,000 shares authorized, 49,746,482
shares issued and outstanding at June 30, 2000................................................ -- 497
Additional paid-in capital...................................................................... -- 719,123
Business equity................................................................................. 661,388 --
Retained deficit................................................................................ -- (42,708)
Accumulated other comprehensive (loss) income................................................... (2,509) 1,636
-------- ---------
Total Shareholders' Equity/Business Equity................................................. 658,879 678,996
-------- ---------
Total Liabilities and Shareholders' Equity/Business Equity................................. $761,179 $ 933,938
======== =========
</TABLE>
See Notes to Consolidated Financial Statements.
7
<PAGE>
INTERSIL HOLDING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PREDECESSOR
PREDECESSOR ---------------
---------------------------- SIX WEEKS
FISCAL YEAR ENDED ENDED
---------------------------- ---------------
JULY 3, 1998 JULY 2, 1999 AUGUST 13, 1999
------------ ------------ ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)............................................ $ 12,911 $ 27,406 $ (3,029)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities
Depreciation............................................... 65,036 78,217 8,747
Amortization............................................... 2,295 2,414 326
Provisions for inventory obsolescence...................... 7,317 3,894 1,919
Write-off of in-process research and development........... -- -- --
Write-off of unearned compensation......................... -- -- --
Loss on sale of Malaysian operation........................ -- -- --
Non-current deferred income taxes.......................... (461) 1,896 (4,756)
Changes in assets and liabilities:
Trade receivables.......................................... 1,270 10,001 14,532
Inventories................................................ (17,176) 22,516 (3,568)
Prepaid expenses........................................... 506 933 674
Trade payables and accrued liabilities..................... (14,399) (13,950) (18,705)
Unearned service income.................................... (32) 319 --
Income taxes............................................... (3,866) (4,486) 4,430
Other...................................................... (5,070) (17,911) 2,812
-------- -------- ---------
Net cash provided by operating activities................ 48,331 111,249 3,382
INVESTING ACTIVITIES:
Proceeds from sale of Malaysian operation...................... -- -- --
Cash paid for acquired business................................ -- (1,335) --
Property, plant and equipment.................................. (90,184) (38,563) (1,887)
-------- -------- ---------
Net cash provided by (used in) investing activities...... (90,184) (39,898) (1,887)
FINANCING ACTIVITIES:
Proceeds from offering....................................... -- -- --
Proceeds from exercise of stock options...................... -- -- --
Proceeds from borrowings..................................... 2,750 800 --
Payments of borrowings....................................... (83) (302) (32)
Net cash transfer and billings from (to) parent.............. 41,844 (67,030) (1,198)
-------- -------- ---------
Net cash provided by (used in) financing activities...... 44,511 (66,532) (1,230)
Effect of exchange rates on cash and cash equivalents........ (2,658) (4,819) 1,177
-------- -------- ---------
Net increase in cash and cash equivalents................ -- -- 1,442
Cash and cash equivalents at the beginning of the
period................................................ -- -- --
-------- -------- ---------
Cash and cash equivalents at the end of the period....... $ -- $ -- $ 1,442
======== ======== =========
SUPPLEMENTAL DISCLOSURES--NON-CASH ACTIVITIES:
Exchange of preferred stock for common stock...................................................................
Common Stock issued in acquisition of No Wires Needed B.V......................................................
Additional paid-in capital from tax benefit on
exercise of non-qualified stock options......................................................................
<CAPTION>
SUCCESSOR
-----------------
46 WEEKS ENDED
-----------------
JUNE 30, 2000
-----------------
<S> <C>
OPERATING ACTIVITIES:
Net income (loss)............................................ $ (42,708)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities
Depreciation............................................... 50,602
Amortization............................................... 10,686
Provisions for inventory obsolescence...................... 23,906
Write-off of in-process research and development........... 20,239
Write-off of unearned compensation......................... 878
Loss on sale of Malaysian operation........................ 24,825
Non-current deferred income taxes.......................... (4,680)
Changes in assets and liabilities:
Trade receivables.......................................... (24,991)
Inventories................................................ (5,668)
Prepaid expenses........................................... (7,737)
Trade payables and accrued liabilities..................... 43,036
Unearned service income.................................... (437)
Income taxes............................................... 2,290
Other...................................................... 20,898
---------
Net cash provided by operating activities................ 111,139
INVESTING ACTIVITIES:
Proceeds from sale of Malaysian operation...................... 52,500
Cash paid for acquired business................................ --
Property, plant and equipment.................................. (38,813)
---------
Net cash provided by (used in) investing activities...... 13,687
FINANCING ACTIVITIES:
Proceeds from offering....................................... 513,114
Proceeds from exercise of stock options...................... 1,985
Proceeds from borrowings..................................... --
Payments of borrowings....................................... (435,204)
Net cash transfer and billings from (to) parent.............. --
---------
Net cash provided by (used in) financing activities...... 79,895
Effect of exchange rates on cash and cash equivalents........ (158)
---------
Net increase in cash and cash equivalents................ 204,563
Cash and cash equivalents at the beginning of the
period................................................ 7,377
---------
Cash and cash equivalents at the end of the period....... $ 211,940
=========
SUPPLEMENTAL DISCLOSURES--NON-CASH ACTIVITIES:
Exchange of preferred stock for common stock................. $ 89,400
=========
Common Stock issued in acquisition of No Wires Needed B.V.... $ 111,348
=========
Additional paid-in capital from tax benefit on
exercise of non-qualified stock options.................... $ 2,132
=========
</TABLE>
See Notes to Consolidated Financial Statements.
8
<PAGE>
INTERSIL HOLDING CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL OTHER
------------------ PAID-IN RETAINED COMPREHENSIVE
CLASS A CLASS B CAPITAL DEFICIT INCOME TOTAL
------- ------- ---------- -------- ------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Initial capitalization at August 14, 1999............. $ 158 $ 509 $ 5,935 $ -- $ -- $ 6,602
Net (loss)............................................ -- -- -- (42,708) -- (42,708)
Shares issued in initial public offering.............. 220 -- 512,894 -- -- 513,114
Shares issued under Stock Option Plan................. 2 -- 4,115 -- -- 4,117
Shares sold to certain executives and foreign
employees........................................... -- -- 878 -- (878) --
Write-off of unearned compensation.................... -- -- -- -- 878 878
Shares issued for acquisition of No Wires Needed
B.V................................................. 30 -- 111,318 -- -- 111,348
Exchange of preferred stock........................... 26 -- 89,374 -- -- 89,400
Exchange of common stock.............................. 12 (12) -- -- -- --
Preferred dividends................................... -- -- (5,391) -- -- (5,391)
Foreign currency translation.......................... -- -- -- -- 1,636 1,636
----- ----- -------- -------- ------- --------
Balance at June 30, 2000.............................. $ 448 $ 497 $719,123 $(42,708) $ 1,636 $678,996
===== ===== ======== ======== ======= ========
</TABLE>
See Notes to Consolidated Financial Statements.
9
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 3, 1998 AND JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND 46 WEEKS ENDED JUNE 30, 2000
NOTE A--ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
Intersil Holding Corporation (Intersil Holding or Successor) was formed on
August 13, 1999 through a series of transactions in which Intersil Holding and
its wholly-owned subsidiary, Intersil Corporation (Intersil), acquired the
semiconductor business (semiconductor business or Predecessor) of Harris
Corporation (Harris) (the acquisition). Intersil Holding currently has no
operations but holds common stock related to its investment in Intersil.
Intersil and its wholly-owned domestic and foreign subsidiaries include the
operations of the Predecessor.
BASIS OF PRESENTATION
The accompanying Successor consolidated financial statements subsequent to
August 13, 1999 include the accounts of Intersil Holding and Intersil
(collectively, the Company). All material intercompany transactions have been
eliminated in consolidation. The consolidated balance sheet as of July 2, 1999
and the consolidated statements of operations, comprehensive income and cash
flows for the fiscal years ended July 3, 1998 and July 2, 1999 and the six weeks
ended August 13, 1999 include the accounts of the semiconductor business, the
Predecessor company.
Accordingly, the consolidated financial statements include the power,
communications, space and defense product lines of Harris' Semiconductor
Business that were purchased in the transaction. The transaction did not include
Harris' semiconductor suppression business or photomask operations or certain
patents in the memory field that were retained by Harris. The semiconductor
business, which was wholly-owned by Harris, designs, manufactures and sells
discrete semiconductors and standard and custom integrated circuits to the
semiconductor markets. The semiconductor business' manufacturing facilities
perform manufacturing operations related to other Harris Semiconductor Product
Lines. The semiconductor business was not a separate legal entity and the assets
and liabilities associated with the semiconductor business were components of a
larger business.
The Predecessor's consolidated statements of operations include all
revenues and costs attributable to the semiconductor business. For cost of
sales, material costs are directly attributable to a product line and are
charged accordingly. Indirect costs are assigned using activity based costing.
Operating expenses (engineering, marketing, and administration & general) have
been allocated to the product lines based on sales or labor, as appropriate.
Harris corporate expense allocations were based on a percentage of the
semiconductor business' net sales. Interest expense was provided on direct
borrowings of the semiconductor business. Interest expense of Harris has not
been allocated to the Semiconductor Business.
All of the allocations and estimates in the Predecessor's combined
statements of operations are based on assumptions that management believes are
reasonable under the circumstances. However, these allocations and estimates are
not necessarily indicative of the costs that would have resulted if the
Semiconductor Business had been operated on a stand alone basis.
The semiconductor business sells products to other affiliated operations of
Harris. Sales to these operations are not material.
ACQUISITION OF HARRIS' SEMICONDUCTOR BUSINESS
The total purchase price of the semiconductor business acquisition was
$614.3 million, which included transaction costs of approximately $7.8 million
and deferred financing costs of $12.2 million (Note H). The consideration paid
by Intersil Holding was $504.3 million in cash of which $420.0 million was
financed
10
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998 AND JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND 46 WEEKS ENDED JUNE 30, 2000
NOTE A--ORGANIZATION AND BASIS OF PRESENTATION--(CONTINUED)
through borrowings from the senior credit facilities, the 13.25% Senior
Subordinated Notes and 13.5% Subordinated Holding "Pay-In-Kind" (PIK) Note and
the issuance of a $90.0 million PIK Note note to Harris.
The acquisition was accounted for using the purchase method of accounting
and, accordingly, the operating results of the Semiconductor Business have been
included in Intersil's consolidated financial statements since the date of
acquisition. The total purchase price was allocated to the assets and
liabilities of the Semiconductor Business based upon their approximate fair
values. The fair values of the net assets acquired exceeded the purchase price
resulting in negative goodwill. This negative goodwill was allocated to the
identified intangibles and property and equipment based on their relative fair
values as follows (in millions).
<TABLE>
<S> <C>
Purchase price:
Cash paid to Harris........................... $ 504.3
13.5% Subordinated PIK Note................... 90.0
Transaction costs and fees.................... 20.0
-------
Total purchase price............................ $ 614.3
=======
</TABLE>
<TABLE>
<CAPTION>
ALLOCATION OF
FAIR VALUE OF EXCESS FAIR ADJUSTED
ACQUIRED ASSETS VALUE FAIR VALUE
--------------- ------------- -------------
<S> <C> <C> <C>
Net current assets.............................. $ 160.6 $ -- $ 160.6
Other........................................... 17.2 -- 17.2
Property and equipment.......................... 481.0 (153.2) 327.8
Developed Technology............................ 80.0 (23.9) 56.1
Customer base................................... 33.0 (10.0) 23.0
In-process research and development............. 29.0 (8.8) 20.2
Assembled workforce............................. 13.5 (4.1) 9.4
------- ------- -------
$ 814.3 $(200.0) $ 614.3
======= ======= =======
Excess fair value of net assets acquired over
purchase price................................ $ 200.0
=======
</TABLE>
The appraisal of the acquired semiconductor business included $20.2 million
of purchased in-process research and development, which was related to various
products under development. This valuation represents the 10 year after-tax cash
flow of this in-process technology using a discount rate of 20%. The acquired
technology had not yet reached technological feasibility and had no future
alternative uses. Accordingly, it was written off at the time of the
acquisition. The remaining identified intangibles (developed technology,
customer base and assembled workforce) are being amortized over 5 to 11 years.
In connection with the acquisition of the semiconductor business, Intersil
formulated a restructuring plan that included the termination of the employment
of 372 employees of the semiconductor business. At
11
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998 AND JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND 46 WEEKS ENDED JUNE 30, 2000
NOTE A--ORGANIZATION AND BASIS OF PRESENTATION--(CONTINUED)
August 13, 1999, Intersil recorded $11.0 million in severance benefits and this
is included in the allocation of the acquisition cost. The severance includes
the following:
<TABLE>
<CAPTION>
NO. OF
LOCATION EMPLOYEES AMOUNTS
--------------------------------------------------------------------- --------- -------------
(IN MILLIONS)
<S> <C> <C>
Europe............................................................... 17 $ 5.6
Malaysia............................................................. 262 1.9
North America........................................................ 93 3.5
--- -----
372 $11.0
=== =====
</TABLE>
For the 46 weeks ended June 30, 2000, approximately $10.1 million of these
restructuring costs had been paid out. As of June 30, 2000, the restructuring
liability was $0.9 million. Intersil Holding will complete the restructing plan
by the end of August 2000.
NOTE B--SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR--The 1998 fiscal year includes the 53 weeks ended July 3, 1998;
fiscal year 1999 includes the 52 weeks ended July 2, 1999; and fiscal year 2000
includes the six weeks ended August 13, 1999 and the 46 weeks ended June 30,
2000.
CASH AND CASH EQUIVALENTS--Intersil Holding considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.
INVENTORIES--Inventories are carried at the lower of standard cost, which
approximates actual cost, determined by the First-In-First-Out (FIFO) method, or
market.
PROPERTY, PLANT AND EQUIPMENT--Machinery and equipment are carried on the
basis of cost. The estimated useful lives of buildings range between 5 and
50 years. The estimated useful lives of machinery and equipment range between 3
and 10 years. Depreciation is computed by the straight-line method using the
estimated useful life of the asset.
REVENUE RECOGNITION--Revenue is recognized from sales to all customers,
including distributors, when a product is shipped. Sales to distributors are
made under agreements which provide the distributors rights of return and price
protection on unsold merchandise they hold. Accordingly, sales are reduced for
estimated returns from distributors and estimated future price reductions of
unsold merchandise held by distributors. Product sales to two distributors for
the fiscal years ended July 3, 1998 and July 2, 1999, and the six weeks ended
August 13, 1999 and 46 weeks ended June 30, 2000 amounted to 19.0%, 16.6%, 29.3%
and 15.7%, respectively, of total product sales.
RESEARCH AND DEVELOPMENT--Research and development costs, consisting of the
cost of designing, developing, and testing new or significantly enhanced
products, are expensed as incurred.
RETIREMENT BENEFITS--Intersil Holding provides retirement benefits to
substantially all employees primarily through a retirement plan having
profit-sharing and savings elements. Contributions by Intersil Holding to the
retirement plan are based on profits and employees' savings with no other
funding requirements. Intersil Holding may make additional contributions to the
fund at its discretion.
12
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998 AND JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND 46 WEEKS ENDED JUNE 30, 2000
NOTE B--SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
The savings element of the retirement plan is a defined contribution plan,
which is qualified under Internal Revenue Service Code Section 401(k). All
employees of the Company may elect to participate in the 401(k) retirement plan
(the "401(k) plan"). Under the 401(k) plan, participating employees may defer a
portion of their pretax earnings up to certain limits prescribed by the Internal
Revenue Service. The Company provides matching contributions under the
provisions of the plan. Employees fully vest in the Company's matching
contributions upon the completion of 7 years of service.
Retirement benefits also include an unfunded limited healthcare plan for
U.S.-based retirees and employees on long-term disability. Intersil Holding
accrues the estimated cost of these medical benefits, which are not material,
during an employee's active service life.
Retirement plans expense was $15.6 million in 1998, $14.8 million in 1999,
$1.4 million for the six weeks ended August 13, 1999 and $10.4 million for the
46 weeks ended June 30, 2000.
INCOME TAXES--For the Predecessor financial statements, the semiconductor
business was included with its parent, Harris, in a consolidated federal income
tax return. Harris required each of its businesses to provide for taxes on
financial statement pre-tax income or loss at applicable statutory tax rates.
United States local amounts receivable or payable for current and prior years'
income taxes were treated as intercompany transactions and were recorded in the
Semiconductor Business equity. Intersil Holding follows the liability method of
accounting for income taxes. International current income taxes payable and
deferred income taxes resulting from temporary differences between the financial
statements and the tax basis of assets and liabilities of Intersil Holding's
international subsidiaries are separately classified on the balance sheet.
ASSET IMPAIRMENT--Intersil Holding accounts for long-lived asset impairment
under Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
The Company recognizes impairment losses on long-lived assets used in operations
when indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets' carrying
amounts. The impairment loss is measured by comparing the fair value of the
asset to its carrying amount. Fair value is estimated based on discounted future
cash flows. Long-lived assets to be disposed of are recorded at the lower of
their carrying amount or estimated fair value less cost to sell.
INTANGIBLES--Intangibles resulting from acquisitions are being amortized by
the straight-line method over five to 11 years. Recoverability of
intangibles is assessed using estimated undiscounted cash flows of related
operations. Intangibles that are not expected to be recovered through future
undiscounted cash flows are charged to expense when identified. Amounts charged
to expense are amounts in excess of the fair value of the intangible asset. Fair
value is determined by calculating the present value of estimated expected
future cash flows using a discount rate commensurate with the risks involved.
FUTURES AND FORWARD CONTRACTS--When Intersil Holding sells products outside
the United States or enters into purchase commitments, the transactions are
frequently denominated in currencies other than U.S. dollars. To minimize the
impact on revenue and cost from currency fluctuations, Intersil Holding enters
into currency exchange agreements that qualify for hedge accounting treatment.
It is Intersil Holding's policy not to speculate in foreign currencies. Currency
exchange agreements are designated as, and are effective as, hedges of foreign
currency commitments. In addition, these agreements are consistent with the
designated currency of the underlying transaction and mature on or before the
underlying transaction. Gains and losses on currency exchange agreements that
qualify as hedges are deferred and recognized as an adjustment of the carrying
amount of the hedged asset, liability or commitment. Gains and losses on
currency exchange
13
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998 AND JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND 46 WEEKS ENDED JUNE 30, 2000
NOTE B--SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
agreements that do not qualify as hedges are recognized in operations based on
changes in the fair market value of the currency exchange agreement.
FOREIGN CURRENCY TRANSLATION--The functional currency for the Malaysian
subsidiary was the U.S. dollar, and for other international subsidiaries it is
the local currency. Assets and liabilities are translated at current rates of
exchange, and income and expense items are translated at the weighted average
exchange rate for the year. The resulting translation adjustments are recorded
as a separate component of shareholders' equity (Business Equity in the
Predecessor's financial statements). Cumulative translation gains (losses) were
$(0.6) million and $1.6 million at July 2, 1999 and June 30, 2000, respectively.
LOSS PER SHARE--Loss per share is computed and presented in accordance with
SFAS No. 128, "Earnings per Share" and the Securities and Exchange Commission
Staff Accounting Bulletin No. 98. Net loss per common share is presented for the
46 weeks ended June 30, 2000 only because it is not meaningful for earlier
periods since the Company did not have common stock outstanding for any of the
earlier periods.
USE OF ESTIMATES--These statements have been prepared in conformity with
accounting principles generally accepted in the United States and require
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATIONS--Certain prior year amounts have been reclassified to
conform with current year classifications.
NOTE C--ACCOUNTING PRONOUNCEMENTS
In June 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. (SFAS) 137, "Accounting for
Derivative Instruments and Hedging Activities--Deferral of the Effective Date of
FASB Statement No. 133." SFAS 137 amends SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities," to defer its effective date to all fiscal
quarters of all fiscal years beginning after June 15, 2000. SFAS 133 establishes
accounting and reporting standards for derivative instruments including
standalone instruments, such as forward currency exchange contracts and interest
rate swaps or embedded derivatives and requires that these instruments be
marked-to-market on an ongoing basis. These market value adjustments are to be
included either in the income statement or shareholders' equity, depending on
the nature of the transaction. The Company is required to adopt SFAS 133 in the
first quarter of its fiscal year 2001. We believe that SFAS 133 will not have a
material adverse effect on the Company's financial position or results of
operations.
In December 1999, the Securities and Exchange Commission issued SAB
No. 101. "Revenue Recognition in Financial Statements," which provides guidance
on the recognition, presentation, and disclosures of revenue in financial
statements filed with the SEC. SAB No. 101 outlines the basic criteria that must
be met to recognize revenue and provides guidance for disclosures related to
revenue recognition policies. We believe that SAB No. 101 will not have a
material adverse effect on the Company's financial position or results of
operations.
14
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998 AND JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND 46 WEEKS ENDED JUNE 30, 2000
NOTE C--ACCOUNTING PRONOUNCEMENTS--(CONTINUED)
In April 2000, the Financial Accounting Standards Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation, an Interpretation of APB Opinion No. 25." Among other issues, that
interpretation clarifies the definition of employees for purposes of applying
Opinion No. 25, the criteria for determining whether a plan qualifies as a
non-compensatory plan, the accounting consequence of various modifications to
the terms of a previously fixed stock option or award and the accounting for an
exchange of stock compensation awards in a business combination. This
interpretation is effective July 1, 2000, but certain conclusions in the
interpretation cover specific events that occur after either December 15, 1998
or January 12, 2000. To the extent that this interpretation covers events
occurring during the period after December 15, 1998, or January 12, 2000, but
before the effective date of July 1, 2000, the effect of applying this
interpretation is recognized on a prospective basis from July 1, 2000. We are
currently reviewing stock grants to determine the impact, if any, that may arise
from implementation of this interpretation, although we do not expect the
impact, if any, to be material to our financial statements.
NOTE D--INVENTORIES
Inventories are summarized below (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
------------- -------------
JULY 2, JUNE 30,
1999 2000
------------- -------------
<S> <C> <C>
Finished products.......................................................... $ 58,041 $ 45,064
Work in process............................................................ 102,457 96,278
Raw materials and supplies................................................. 11,441 7,072
--------- ---------
171,939 148,414
Less inventory reserves.................................................... 18,117 21,933
--------- ---------
$ 153,822 $ 126,481
========= =========
</TABLE>
At July 2, 1999 and June 30, 2000 Intersil Holding was committed to
purchase $22.5 million and $24.9 million, respectively of inventory from
suppliers. Management believes the cost of this inventory approximates current
market value.
15
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE E--PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are summarized below (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
------------- -------------
JULY 2, JUNE 30,
1999 2000
------------- -------------
<S> <C> <C>
Land........................................................................... $ 3,966 $ 3,860
Buildings...................................................................... 266,364 78,940
Machinery and equipment........................................................ 722,816 179,383
--------- ---------
993,146 262,183
Less allowances for depreciation............................................... 582,616 36,699
--------- ---------
$ 410,530 $ 225,484
========= =========
</TABLE>
NOTE F--INTANGIBLES
Intangibles are summarized below (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
------------- -------------
PERIOD OF JULY 2, JUNE 30,
AMORTIZATION 1999 2000
------------- ------------- -------------
<S> <C> <C> <C>
Developed technology............................................ 11 years $ -- $ 56,925
Customer base................................................... 7 years -- 23,482
Assembled workforce............................................. 5 years -- 9,606
Goodwill........................................................ 5-7 years 65,297 110,823
------- ---------
65,297 200,836
Less accumulated amortization................................... 19,929 10,686
------- ---------
$45,368 $ 190,150
======= =========
</TABLE>
16
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE G--LOSS PER SHARE
The following table sets forth the computation of basic and diluted loss
per share (in thousands, except per share amounts):
<TABLE>
<CAPTION>
(SUCCESSOR)
-----------------
<S> <C>
JUNE 30, 2000
---------
Numerator:
Net loss available to common shareholders (numerator for basic and
diluted earnings per share)........................................... $ (48,099)
=========
Denominator:
Denominator for basic earnings per share-weighted average common
shares................................................................ 76,745
Effect of dilutive securities:
Stock options......................................................... --
Warrants.............................................................. --
---------
Denominator for diluted earnings per share-adjusted weighted average
shares................................................................ 76,745
=========
Basic and diluted loss per share........................................... $ (0.63)
=========
</TABLE>
The effect of dilutive securities is not included in the computation for
the 46 weeks ended June 30, 2000 because to do so would be antidilutive.
NOTE H--LONG-TERM DEBT
LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
------------- --------------
JULY 2, 1999 JUNE 30, 2000
------------- --------------
<S> <C> <C>
13.25% Senior Subordinated Notes.......................................... $ -- $112,384
Other..................................................................... 4,567 4,208
------- --------
4,567 116,592
Less current portion...................................................... 360 404
------- --------
$ 4,207 $116,188
======= ========
</TABLE>
17
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE H--LONG-TERM DEBT--(CONTINUED)
Scheduled future principal payments under Intersil Holding's and Intersil's
indebtedness are as follows (in thousands):
<TABLE>
<S> <C>
2001.................................................................... $ 404
2002.................................................................... 416
2003.................................................................... 429
2004.................................................................... 388
2005.................................................................... 373
Thereafter.............................................................. 114,582
--------
$116,592
========
</TABLE>
13.25% Senior Subordinated Notes and Warrants
On August 13, 1999, in connection with the acquisition of the Semiconductor
Business, Intersil completed an offering of 200,000 units consisting of $200
million of its 13.25% Senior Subordinated Notes due 2009 and warrants to
purchase 3,703,707 shares of Class A Common Stock of Intersil Holding. Each unit
consisted of $1,000 principal amount of 13.25% Senior Subordinated Notes of
Intersil and one warrant to purchase 18.5185 shares of Class A Common Stock of
Intersil Holding. The total gross proceeds from the sale of the 13.25% Senior
Subordinated Notes were $194.0 million, net of $6.0 million of deferred
financing fees. The $6.0 million deferred financing fees were treated as
additional interest related to the 13.25% Senior Subordinated Notes and
amortized over the life of the 13.25% Senior Subordinated Notes on an effective
yield method.
The 13.25% Senior Subordinated Notes are unsecured and are fully and
unconditionally guaranteed by Intersil Holding and all of Intersil's current and
future domestic subsidiaries. The 13.25% Senior Subordinated Notes are not
guaranteed by Intersil's foreign subsidiaries. The 13.25% Senior Subordinated
Notes require semi-annual interest payments beginning on February 15, 2000
through maturity on August 15, 2009. The 13.25% Senior Subordinated Notes may be
redeemed at the option of Intersil Holding after August 15, 2004 upon the
payment of certain redemption premiums, although up to 35% of the 13.25% Senior
Subordinated Notes can be redeemed prior to August 15, 2002 with the proceeds of
certain equity offerings and upon the payment of certain redemption premiums.
The 13.25% Senior Subordinated Notes contain various restrictive covenants,
including limitations on the incurrence of additional indebtedness, restrictions
and limitations on payment of dividends, making investments, engaging in
transactions with affiliates, consolidating, merging or transfering assets and
restrictions and limitations on the sales of certain assets, among others. The
13.25% Senior Subordinated Notes also require the maintenance of certain ratios.
Each warrant entitles the holder to purchase 18.5185 shares of Intersil
Holding Class A Common Stock at a price of $.001 per share. The warrants are
exercisable beginning on the first anniversary of their issue date (August 13,
1999) and expire on August 15, 2009. Warrant holders have no voting rights. The
warrants were preliminarily valued at $0.3 million and will be treated as
additional interest related to the 13.25% Senior Subordinated Notes and
amortized over the life of the 13.25% Senior Subordinated Notes on an effective
yield method.
Extinguishment of Debt
On August 13, 1999, in connection with the acquisition of the semiconductor
business, Intersil entered into senior credit facilities with a syndicate of
financial institutions. The senior credit facilities include a $205.0 million
funded term loan facility (the "Tranche B Senior Term Facility") and a revolving
line of
18
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE H--LONG-TERM DEBT--(CONTINUED)
credit (the "Revolving Credit Facility"). The Revolving Credit Facility provides
for up to $70.0 million of which no amounts were outstanding as of June 30,
2000.
The Revolving Credit Facility bears interest ranging from LIBOR + 2.00% to
LIBOR + 3.25%, depending on the results of applicable ratios. The Revolving
Credit Facility matures in 2005.
The senior credit facilities are unconditionally guaranteed, jointly and
severally, by Intersil Holding, Intersil and existing and subsequently acquired
or organized domestic subsidiaries. The Company's obligations and those of the
guarantors under the Senior Credit Facilities are secured by a pledge of all of
Intersil's capital stock and by substantially all of the assets of Intersil
Holding, Intersil and each of Intersil's existing and subsequently acquired or
organized domestic (and, to the extent no adverse consequences will result,
foreign) subsidiaries. The senior credit facilities contain various restrictive
covenants, including, incurrence of indebtedness, payment of dividends, making
certain investments and acquisitions, disposing of assets, among others. The
senior credit facilities also require the maintenance of certain ratios.
Also on August 13, 1999, in connection with the acquisition of the
semiconductor business, Intersil Holding issued to Harris a $90.0 million 11.13%
Seller Holding PIK Note and issued to Citicorp Mezzanine Partners, L.P. a
$30.0 million 13.5% Subordinated Holding PIK Note.
On February 25, 2000, the Company issued 22,000,000 shares of common stock
at a price of $25.00 per share. From the proceeds of the initial public
offering, the Company paid off approximately $419.0 million of debt incurred
through the acquisition of the semiconductor business, including all amounts
then outstanding under the Tranche B Senior Term Facility, the 11.13% Seller
Holding PIK Note and the 13.5% Subordinated PIK Note. In connection with the
early extinguishment of debt, the Company recorded extraordinary charges (net of
tax) of $25.5 million.
Other
The other debt consists of five loans made by agencies of the Commonwealth
of Pennsylvania with maturity dates ranging from 2003 to 2017 and are secured by
Intersil's manufacturing facility in Mountaintop, Pennsylvania, which has a net
carrying value of $4.6 million at July 2, 1999 and $4.2 million at June 30,
2000, respectively. The weighted average interest rate for this debt was 3.0% at
July 2, 1999 and June 30, 2000.
NOTE I--PREFERRED STOCK
Intersil Holding has 100,000 shares of preferred stock authorized, stated
value of $1,000 per share. The rights of holders of preferred stock will be
stipulated at the time of issuance as determined by the board of directors
pursuant to the adoption of a shareholder rights plan. On August 13, 1999,
Intersil Holding sold 83,434 shares of its 12% Series A Cumulative Compounding
Preferred Stock to certain buyers, including Sterling Holding Company, LLC,
Harris and certain members of management. The $83.4 million received from the
sale was used as a cash equity contribution from Intersil Holding to Intersil
for the acquisition of the semiconductor business.
On August 13, 1999, Intersil Holding granted to certain members of
management options to purchase 766.67 shares of Series A Preferred Stock at an
option price of $250 per share, and a sign-on bonus in the aggregate amount of
$575,025, representing the difference between the stated par value and the
option price. The preferred stock options vest immediately. Intersil Holding
recorded compensation expense for the $575,025 as of the grant date.
Concurrent with the initial public offering, Intersil Holding exchanged all
outstanding shares of its 12% Series A Cumulative Compounding Preferred Stock
plus accrued and unpaid dividends for approximately
19
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE I--PREFERRED STOCK--(CONTINUED)
2.6 million shares of its Class A Common Stock. Also, the outstanding options to
purchase 766.67 shares of Series A Preferred Stock were exchanged for options to
purchase 40,881 shares of Class A Common Stock.
NOTE J--LEASE COMMITMENTS
Total rental expense amounted to $6.3 million in fiscal year 1998,
$6.3 million in fiscal year 1999, $0.6 million for the six weeks ended
August 13, 1999 and $5.0 million for the 46 weeks ended June 30, 2000. Future
minimum rental commitments under noncancelable operating leases, primarily used
for land and office buildings amounted to approximately $11.8 million at
June 30, 2000. These commitments for the years following 2000 (which exclude the
estimated rental expense for annually renewable contracts) are: 2001--
$2.4 million, 2002--$1.6 million, 2003--$1.0 million, 2004--$0.6 million,
2005--$0.5 million and $5.7 million thereafter.
NOTE K--BUSINESS EQUITY
Changes in the business equity of the Predecessor's financial statements
are summarized as follows (in thousands):
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX WEEKS ENDED
--------------------------- ---------------
JULY 3, 1998 JULY 2, 1999 AUGUST 13, 1999
------------ ------------ ---------------
<S> <C> <C> <C>
Balance at beginning of period............................................ $646,173 $699,077 $ 658,879
Net income (loss)......................................................... 12,911 27,406 (3,029)
Foreign currency translation adjustments.................................. (1,851) (574) 2,475
Net cash transfers and billings from (to) Harris Corporation.............. 41,844 (67,030) (1,198)
Purchase price elimination................................................ -- -- (657,127)
-------- -------- ---------
Balance at end of period.................................................. $699,077 $658,879 $ --
======== ======== =========
</TABLE>
NOTE L--COMMON STOCK
On February 25, 2000, Intersil Holding completed the filing of a
registration statement with the Securities and Exchange Commission for a public
offering of shares of its Class A Common Stock. Intersil Holding issued
22,000,000 shares of its Class A Common Stock at a price of $25.00 per share.
The net proceeds of this offering, after deducting underwriting discounts and
commissions, were approximately $513.1 million. In connection with the public
offering, Intersil Holding effected a 1-for-1.5 reverse stock split of its Class
A and Class B Common Stock as of February 23, 2000. All references to common
shares in the accompanying financial statements reflect Intersil Holding's
reverse stock split, retroactively applied to all periods presented.
20
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE L--COMMON STOCK--(CONTINUED)
Intersil Holding is authorized to issue 600.0 million shares of Intersil
Holding common stock, par value $0.01 per share, divided into two classes
consisting of 300.0 million shares of Intersil Holding Class A Common Stock and
300.0 million shares of Intersil Holding Class B Common Stock. Holders of
Class A Common Stock are entitled to one vote for each share held and holders of
Class B Common Stock have no voting rights. A holder of either class of Intersil
Holding common stock may convert any or all shares into an equal number of
shares of the other class of Intersil Holding common stock.
On August 13, 1999, Intersil Holding sold 15.76 million shares of Class A
Common Stock and 50.91 million shares of Class B Common Stock for approximately
$5.0 million. The $5.0 million proceeds, along with the $83.4 million proceeds
from the sale of Series A Preferred Stock were used as a cash equity
contribution from Intersil Holding to Intersil for the acquisition of the
semiconductor business.
On August 13, 1999, in connection with the issuance of the 13.5%
Subordinated Holding PIK Note, Intersil Holding issued to Citicorp Mezzanine
Partners, L.P. warrants to purchase 3,703,707 shares of its Class A Common Stock
at an exercise price of $.001 per share, subject to certain anti-dilution
adjustments. These warrants may be exercised at any time after August 13, 2001
and expire on August 15, 2009. As Intersil Holding has prepaid in full the 13.5%
Subordinated Holding PIK Note within 24 months after issuance, the warrants have
become exercisable for 2,222,224 shares of Intersil Holding Class A Common
Stock. The warrants were valued at $0.3 million and were treated as additional
interest related to the 13.5% Subordinated Holding PIK Note.
On May 29, 2000, Intersil Holding acquired 100% of the outstanding capital
stock of Bilthoven, The Netherlands-based No Wires Needed B.V. ("NWN").
Consideration for the acquisition of NWN was 3.35 million shares of Intersil
Holding Class A Common Stock valued at $111.3 million at the date of closing.
(Note Q)
During the 46 weeks ended June 30, 2000, Intersil Holding recorded $0.9
million of unearned compensation for the excess of the fair value of the Class A
Common Stock over the grant price for stock sold to certain executives by the
majority shareholder of Intersil Holding. Upon the Company's initial public
offering, the stock sold became fully vested and the unearned compensation was
written off.
Intersil Holding had an option to purchase 1,161,905 shares from a majority
shareholder at $0.075 per share pursuant to an agreement executed at the initial
capitalization. Intersil Holding repurchased the 1,161,905 shares in January
2000.
In the third quarter of fiscal year 2000, approximately 1.2 million shares
of Class B Common Stock were exchanged for an equivalent number of Class A
Common Stock. The exchanged Class B Common Stock is included in the authorized
and unissued shares.
21
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE M--INCOME TAXES
The provisions for income taxes are summarized below (pro forma for
predecessor financial statements) (in thousands):
<TABLE>
<S> <C>
SUCCESSOR (46 WEEKS ENDED JUNE 30, 2000)
Current taxes:
Federal.................................................................. $ --
State.................................................................... --
Foreign.................................................................. 4,391
------
4,391
Deferred taxes:
Federal.................................................................. (4,198)
State.................................................................... (482)
Foreign.................................................................. --
------
(4,680)
------
Income tax benefit................................................................. $ (289)
======
</TABLE>
<TABLE>
<CAPTION>
SIX WEEKS
ENDED
FISCAL YEAR ENDED --------------
--------------------------- AUGUST 13,
PREDECESSOR JULY 3, 1998 JULY 2, 1999 1999
------------ ------------ --------------
<S> <C> <C> <C>
United States (benefit)................................................... $4,221 $ (6,626) $ (399)
International............................................................. 4,910 1,605 352
State and local (benefit)................................................. 813 (1,006) (55)
------ -------- --------
$9,944 $ (6,027) $ (102)
====== ======== ========
</TABLE>
The benefit related to tax deductions for the Company's stock option plans
is recorded as an increase to additional paid in capital when realized. For the
46 weeks ended June 30, 2000, the Company realized tax benefits of approximately
$2.1 million related to its stock option plans.
In the year 2000, the Malaysian taxing authority converted its income tax
system to a self-assessment system. The new self-assessment system requires
Malaysian corporate taxpayers to begin making estimated tax payments in year
2000 based on year 2000 estimated taxable income. Previously, Malaysian
corporate taxpayers submitted tax payments following the year of assessment. In
fiscal year 1999, the Semiconductor Business made Malaysian taxing payments
based on fiscal year 1998's taxable income. As a result of the change in the
Malaysian taxing system, the semiconductor business was not required to make tax
payments on its fiscal year 1999 Malaysian taxable income, and therefore has not
provided a tax provision for Malaysian taxes for the fiscal year ended July 2,
1999, which would have amounted to approximately $15.1 million. The Malaysian
tax holiday is effective for Intersil's fiscal year ended July 2, 1999 only, and
does not impact the six weeks ended August 13, 1999 or the 46 weeks ended
June 30, 2000.
22
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE M--INCOME TAXES--(CONTINUED)
The components of deferred income tax assets (liabilities) are as follows
(in thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (SUCCESSOR)
--------------------- ----------------------
JULY 2, 1999 JUNE 30, 2000
--------------------- ----------------------
CURRENT NON-CURRENT CURRENT NON-CURRENT
------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Receivables......................................................... $ -- $ -- $ 239 $ --
Inventory........................................................... -- -- 8,664 --
Fixed Assets........................................................ -- -- -- (21,590)
Intangibles......................................................... -- -- -- (14,363)
Accrued Expenses.................................................... -- -- 18,582 --
NOL Carryforward.................................................... -- -- -- 13,961
Depreciation........................................................ -- (7,022) -- --
All other--net...................................................... 3,476 -- (1,717) --
------- ------- -------- ---------
$3,476 $(7,022) $ 25,768 $ (21,992)
======= ======= ======== =========
</TABLE>
A reconciliation of the statutory United States income tax rate to the
Company's effective income tax rate follows:
<TABLE>
<CAPTION>
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
--------------------------- --------------- ---------------
FISCAL YEAR ENDED SIX WEEKS ENDED 46 WEEKS ENDED
--------------------------- --------------- ---------------
JULY 3, 1998 JULY 2, 1999 AUGUST 13, 1999 JUNE 30, 2000
------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C>
Statutory U.S. income tax rate.......................... 35.0% 35.0% 35.0% 35.0%
State taxes............................................. 2.3 (3.1) 1.1 1.1
International income.................................... 5.2 (61.9) (29.7) 7.6
Research credits........................................ (2.9) (2.7) 2.2 0.8
In-process research and development..................... -- -- -- (16.5)
Subpart F............................................... -- -- -- (7.6)
Goodwill amortization................................... 3.5 4.0 (4.9) (1.2)
Effect of sale of Malaysian operations.................. -- -- -- (18.0)
Other items............................................. 0.4 0.5 (0.5) (0.5)
------ ------ ----- -----
Effective income tax rate............................... 43.5% (28.2)% 3.2% 0.7%
====== ====== ===== =====
</TABLE>
United States income taxes have not been provided on undistributed earnings
of international subsidiaries because of Intersil Holding's intention to
reinvest these earnings. The determination of unrecognized deferred U.S. tax
liability for the undistributed earnings of international subsidiaries is not
practicable.
Pretax income (loss) of international subsidiaries was $10.2 million in
fiscal year 1998, $41.9 million in fiscal year 1999, $(1.6) million for the six
weeks ended August 13, 1999 and $21.6 million for the 46 weeks ended June 30,
2000.
Income taxes paid were $14.8 million in fiscal year 1998, $3.4 million in
fiscal year 1999, $0.2 million for the six weeks ended August 13, 1999 and
$0.6 million for the 46 weeks ended June 30, 2000.
The Company has a tax year-end of December 31 for federal and state income
tax purposes and has estimated that as of December 31, 1999, it had a cumulative
federal and state operating loss carryforward of $17.0 million. The federal net
operating loss carryforwards will expire in 2020. The state net operating loss
carryforwards will expire in varying amounts beginning in 2005. Calculated as of
June 30, 2000, the
23
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE M--INCOME TAXES--(CONTINUED)
Company recorded a deferred tax asset associated with federal and state net
operating loss carryforwards of $14.0 million.
The federal and state net operating loss and tax credit carryforwards could
be subject to limitation if, within any three year period prior to the
expiration of the applicable carryforward period, there is a greater than 50%
change in ownership of the Company.
No valuation allowance has been provided in connection with the net
deferred tax asset as the Company expects to be able to utilize its deferred tax
assets against future taxable income. Based on the Company's projected taxable
income and estimates of future profitability, management has concluded that
operating income will more likely than not be sufficient to give rise to income
tax expense to cover all deferred tax assets.
NOTE N--GEOGRAPHIC INFORMATION
Intersil Holding operates exclusively in the semiconductor industry.
Substantially all revenues result from the sale of semiconductor products. All
intercompany revenues and balances have been eliminated.
A summary of the operations by geographic area is summarized below (in
thousands):
<TABLE>
<CAPTION>
(PREDECESSOR) (PREDECESSOR) (SUCCESSOR)
--------------------------- --------------- ---------------
FISCAL YEAR ENDED SIX WEEKS ENDED 46 WEEKS ENDED
--------------------------- --------------- ---------------
JULY 3, 1998 JULY 2, 1999 AUGUST 13, 1999 JUNE 30, 2000
------------ ------------ --------------- ---------------
<S> <C> <C> <C> <C>
United States operations
Net sales............................................... $563,180 $519,555 $ 54,664 $ 574,867
Long-lived assets....................................... 386,333 371,448 366,386 333,668
International
Net sales............................................... 13,656 13,163 2,672 21,982
Long-lived assets....................................... 122,397 121,330 118,277 112,487
</TABLE>
Export sales included in U.S. operations were, $258.4 million in fiscal
year 1998, $254.8 million in fiscal year 1999, $30.4 million for the six weeks
ended August 13, 1999 and $340.3 million for the 46 weeks ended June 30, 2000.
NOTE O--FINANCIAL INSTRUMENTS
The carrying values of accounts receivable, accounts payable and short-term
debt approximates fair value due to the short-term maturities of these assets
and liabilities. The fair value of long-term debt is based on quoted market
prices or pricing models using prevailing financial market information at the
date of measurement.
Letters of credit are issued by Intersil during the ordinary course of
business through major financial institutions as required by certain vendor
contracts. As of June 30, 2000, Intersil had outstanding letters of credit
totaling $2.7 million.
Intersil Holding markets its products for sale to customers, including
distributors, primarily in the United States, Europe and Asia/Pacific. Credit is
extended based on an evaluation of the customer's financial condition and
collateral is generally not required. Intersil Holding maintains an allowance
for losses based upon the expected collectibility of all accounts receivable.
Intersil Holding believes it is adequately reserved with regard to receivables
from its domestic and international customers.
24
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE O--FINANCIAL INSTRUMENTS--(CONTINUED)
In August 1999, Intersil Holding began to use foreign exchange contracts to
hedge anticipated foreign cash flow commitments up to six months. Hedges on
anticipated foreign cash flow commitments do not qualify for deferral and
therefore, gains and losses on changes in the fair market value of the foreign
exchange contracts are recognized in income. Total net gains on foreign exchange
contracts for the 46 weeks ended June 30, 2000 were $3.2 million. At June 30,
2000, open foreign exchange contracts were $30.9 million, all of which were to
hedge anticipated foreign cash flow commitments. For the year ended June 30,
2000, Intersil Holding purchased and sold $87.4 million of foreign exchange
forward contracts.
Prior to August 1999, Intersil Holding used foreign exchange contracts and
options to hedge intercompany accounts and off-balance-sheet foreign currency
commitments. Specifically, these foreign exchange contracts offset foreign
currency denominated inventory and purchase commitments from suppliers, accounts
receivable from and future committed sales to customers and firm committed
operating expenses. Foreign currency financial instruments were used to reduce
the risks that arise from doing business in international markets. Such
contracts generally had a term of one year or less. At July 2, 1999, open
foreign exchange contracts were $22.0 million, all of which were to hedge
off-balance-sheet commitments. Additionally, for the year ended July 2, 1999,
the Semiconductor Business purchased and sold $120.7 million of foreign exchange
forward contracts.
Deferred gains and losses are included on a net basis in the Consolidated
Balance Sheets as other assets and are recorded in operations as part of the
underlying transaction when recognized. At July 2, 1999, Intersil Holding had
deferred foreign exchange contract losses on future commitments of approximately
$28.6 million.
Total open foreign exchange contracts and options at July 2, 1999 and
June 30, 2000, are described in the table below:
JULY 2, 1999
COMMITMENTS TO BUY FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- DEFERRED MATURITIES
CURRENCY FOREIGN CURRENCY U.S. GAINS (IN MONTHS)
------------------------------------------------------------- ---------------- ------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Malaysian Ringgit............................................ 80,589 $19,000 $2,208 1-2
</TABLE>
COMMITMENTS TO SELL FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- DEFERRED MATURITIES
CURRENCY FOREIGN CURRENCY U.S. GAINS (IN MONTHS)
------------------------------------------------------------- ---------------- ------- -------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
French Franc................................................. 10,900 $ 1,857 $ 138 1-2
British Pound................................................ 691 1,094 2 1
</TABLE>
25
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE O--FINANCIAL INSTRUMENTS--(CONTINUED)
JUNE 30, 2000
OPTIONS TO SELL FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- MATURITIES
CURRENCY FOREIGN CURRENCY U.S. (IN MONTHS)
-------- ---------------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Euro.................................................................... 3,000 $ 2,883 5-6
</TABLE>
COMMITMENTS TO SELL FOREIGN CURRENCIES
<TABLE>
<CAPTION>
CONTRACT AMOUNT
--------------------------- MATURITIES
CURRENCY FOREIGN CURRENCY U.S. (IN MONTHS)
-------- ---------------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Euro.................................................................... 16,500 $15,697 1-6
British Pound........................................................... 2,300 3,572 1-6
Japanese Yen............................................................ 1,190,000 11,655 1-7
</TABLE>
NOTE P--EMPLOYEE BENEFIT PLANS
Equity Compensation Plan
On November 5, 1999, Intersil Holding adopted the 1999 Equity Compensation
Plan (the "Plan") which became effective on August 13, 1999 for salaried
officers and key employees. The Plan authorizes the grant of options for up to
7.5 million shares of Intersil Holding Class A Common Stock and can include
(i) options intended to constitute incentive stock options under the Internal
Revenue Code, (ii) non-qualified stock options, (iii) restricted stock,
(iv) stock appreciation rights, and (v) phantom share awards. The exercise price
of each option granted under the Plan shall be determined by a committee of the
Board of Directors (the "Board"). The maximum term of any option shall be ten
years from the date of grant for incentive stock options and ten years and one
day from the date of grant for non-qualified stock options. Options granted
under the Plan are exercisable at the determination of the Board, currently
vesting ratably over approximately 5 years. Employees receiving options under
the Plan may not receive in any one year period options to purchase more than
666,667 shares of common stock. During the 46 weeks ended June 30, 2000,
Intersil Holding granted 1,596,793 options to acquire Intersil Holding Class A
Common Stock at a price of $2.25 per share, 1,239,291 options at a price of
$25.00 per share, and 118,100 options at an average price of $45.65 per share.
The Company accounts for its Equity Compensation Plan in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." As such, compensation expense is recorded on the date of grant only
if the current market price of the underlying stock exceeds the exercise price.
During the 46 weeks ended June 30, 2000, the Company recorded no deferred
compensation. Had compensation cost for the Company's stock option plan been
determined consistent with SFAS Statement No. 123, the Company would have
reported a net loss of $43.7 million for the 46 weeks ended June 30, 2000.
The Company estimates the fair value of each option as of the date of grant
using a Black-Scholes pricing model with the following weighted average
assumptions.
26
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE P--EMPLOYEE BENEFIT PLANS--(CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, 2000
-------------
<S> <C>
Expected volatility............................................................ 0.5
Dividend yield................................................................. --
Risk-free interest rate........................................................ 6.25%
Expected life, in years........................................................ 7
</TABLE>
A summary of the status of the Company's stock option plan as of June 30,
2000, and changes during the 46 weeks then ended are presented in the
table below.
<TABLE>
<CAPTION>
JUNE 30, 2000
---------------------------
WEIGHTED-
AVERAGE
EXERCISE
SHARES PRICE
-------------- ---------
(IN THOUSANDS)
<S> <C> <C>
Outstanding at beginning of period.................................. -- $ --
Granted............................................................. 3,177 15.41
Exercised........................................................... (194) 10.21
Canceled............................................................ (28) 15.20
------ ------
Outstanding at end of period........................................ 2,955 $15.76
====== ======
Exercisable at end of period........................................ 191 $ 2.25
====== ======
Weighted average fair value of options granted...................... $ 5.07
======
</TABLE>
Information with respect to stock options outstanding and stock options
exercisable at June 30, 2000, is as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------------- OPTIONS EXERCISABLE
WEIGHTED- ------------------------
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
EXERCISE PRICE OUTSTANDING LIFE PRICE EXERCISABLE PRICE
--------------------------------------------------- ----------- ----------- --------- ----------- ---------
(IN (IN
THOUSANDS) THOUSANDS)
<S> <C> <C> <C> <C> <C>
$2.25.............................................. 1,458 9.19 $ 2.25 191 $2.25
$25.00............................................. 1,156 9.65 $ 25.00 -- --
$28.50-$42.13...................................... 208 9.89 $ 36.62 -- --
$42.94-$58.50...................................... 133 9.89 $ 47.40 -- --
</TABLE>
Employee Stock Purchase Plan
In February 2000, Intersil Holding adopted the Employee Stock Purchase
Plan ("the ESPP") whereby eligible employees can purchase shares of Intersil
Holding's common stock. Intersil has reserved 1,333,334 shares of common stock
for issuance under the Plan. The ESPP permits employees to purchase common
stock through payroll deductions, which may not exceed 10% of an employee's
compensation, at a price not less than 85% of the market value of the stock on
specified dates. In no event, may any participant purchase more than $25,000
worth of shares in any calendar year and no more than 16,667 shares may be
27
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE P--EMPLOYEE BENEFIT PLANS--(CONTINUED)
purchased by an employee on any purchase date. Unless sooner terminated by the
Board, the ESPP shall terminate upon the earliest of (1) February 28, 2010,
(2) the date on which all shares available for issuance under the ESPP shall
have been sold pursuant to purchase rights exercised under the ESPP, or
(3) the date on which all purchase rights are exercised in connection with a
Corporate Transaction (as defined in the ESPP). As of June 30, 2000, no shares
have been issued under the ESPP.
NOTE Q--ACQUISITION OF NO WIRES NEEDED B.V.
On May 29, 2000, Intersil Holding acquired 100% of the outstanding capital
stock of Bilthoven, The Netherlands-based No Wires Needed B.V. ("NWN").
Consideration for the acquisition of NWN was 3.35 million shares of Intersil
Holding Class A Common Stock valued at $111.3 million at the date of closing.
The NWN acquisition has been accounted for by the purchase method of accounting
and, accordingly, the results of operations of NWN have been included in the
accompanying consolidated financial statements since the acquisition date. The
preliminary purchase price exceeded the fair value of the net tangible assets
acquired by approximately $109.0 million. NWN had completed all in-process
research and development programs prior to its acquisition. Therefore, none of
the preliminary purchase price in excess of the fair value of the net tangible
assets was allocated to purchase in-process research and development. The
preliminary purchase price in excess of fair value of net tangible assets was
allocated to goodwill, which will be amortized on a straight-line basis over
seven years.
The following unaudited pro forma consolidated results of operations are
presented as if the NWN acquisition occurred on August 14, 1999 (in millions,
except per share data):
<TABLE>
<CAPTION>
46 Weeks Ended
June 30, 2000
--------------
<S> <C>
Product sales................................................................ $603.2
Net loss before extraordinary item........................................... (31.7)
Net loss..................................................................... (57.3)
Net loss to common shareholders.............................................. (62.7)
Net loss per basic and diluted share:........................................ (0.79)
</TABLE>
The pro forma results of operations include adjustments to give affect to
additional depreciation and amortization related to the increased value of
acquired assets and identifiable intangibles. The unaudited pro forma
information is not necessarily indicative of the results of operations that
would have occurred had the acquisition actually been made at the beginning of
the period presented or the future results of the combined operations.
NOTE R-- SALE OF INTERSIL'S KUALA LUMPUR, MALAYSIA-BASED SEMICONDUCTOR ASSEMBLY
AND TEST OPERATIONS
On June 30, 2000, Intersil Holding completed the sale of its Kuala Lumpur,
Malaysia-based semiconductor assembly and test operations to ChipPAC, Inc.
("ChipPAC") which, under a multi-year supply agreement, will supply integrated
circuit (IC) assembly and test services to Intersil Holding. Under the terms of
the transaction, ChipPAC acquired all of Intersil's Kuala Lumpur assets,
including a 524,000 square foot semiconductor assembly and test facility,
wireless and analog/mixed-signal capabilities, product distribution center as
well as the operation's management team and approximately 2,900 employees. As
consideration for the sale, Intersil received approximately $52.5 million in
cash and $15.8 million in
28
<PAGE>
INTERSIL HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
YEARS ENDED JULY 3, 1998, JULY 2, 1999, SIX WEEKS ENDED AUGUST 13, 1999,
AND THE 46 WEEKS ENDED JUNE 30, 2000
NOTE R-- SALE OF INTERSIL'S KUALA LUMPUR, MALAYSIA-BASED SEMICONDUCTOR
ASSEMBLY AND TEST OPERATIONS--(CONTINUED)
ChipPAC preferred convertible stock. Intersil Holding recognized a non-recurring
charge of $24.8 million for the loss on sale in connection with the transaction.
NOTE S-- FINANCIAL INFORMATION FOR GUARANTOR AND NON-GUARANTOR SUBSIDIARIES
Intersil Holding is a holding company for Intersil. All of the operations
are conducted through Intersil and its wholly-owned domestic and foreign
subsidiaries. On August 13, 1999, in connection with the acquisition, Intersil
issued the Notes and entered into the Senior Credit Facilities (Note H), which
are fully and unconditionally guaranteed on a joint and several basis by
Intersil Holding (Parent), Intersil and all of Intersil's wholly-owned current
and future domestic subsidiaries (the "Guarantor Subsidiaries"). Intersil's
wholly-owned foreign subsidiaries are not guarantors (the "Non-Guarantor
Subsidiaries"). In management's opinion, separate financial statements of the
Guarantor Subsidiaries and the Non-Guarantor Subsidiaries are not material
to investors.
The condensed consolidating financial information presented below includes
the Predecessor consolidated balance sheet as of July 2, 1999 and the
Predecessor consolidated statements of operations and cash flows for the fiscal
years ended July 3, 1998, and July 2, 1999, and the six weeks ended August 13,
1999 for the Predecessor Guarantor and Non-Guarantor Subsidiaries. The condensed
consolidated balance sheet as of June 30, 2000 and the condensed consolidated
statements of income operations and cash flows for the 46 weeks ended
June 30, 2000 reflect the Parent, Guarantor Subsidiaries and Non-Guarantor
Subsidiaries.
29
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
YEAR ENDED JULY 3, 1998
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE
Product sales.......................................... $609,136 $ 418,721 $(451,021) $576,836
COSTS AND EXPENSES
Cost of product sales.................................. 402,892 388,729 (422,289) 369,332
Research and development............................... 74,466 659 -- 75,125
Selling, general and administrative.................... 79,547 18,637 -- 98,184
Harris corporate expense allocations................... 10,941 (979) -- 9,962
Goodwill amortization.................................. 2,292 -- -- 2,292
-------- --------- --------- --------
Operating income (loss).................................. 38,998 11,675 (28,732) 21,941
Interest net........................................... 40,793 (5,325) (36,382) (914)
-------- --------- --------- --------
Income (loss) before income taxes...................... (1,795) 17,000 7,650 22,855
Income taxes (benefit)................................. (887) (1,418) 12,249 9,944
-------- --------- --------- --------
NET INCOME (LOSS)...................................... $ (908) $ 18,418 $ (4,599) $ 12,911
======== ========= ========= ========
</TABLE>
YEAR ENDED JULY 2, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE
Product sales.......................................... $524,142 $ 480,981 $(472,405) $532,718
COSTS AND EXPENSES
Cost of product sales.................................. 379,282 337,287 (366,793) 349,776
Research and development............................... 67,316 (237) -- 67,079
Selling, general and administrative.................... 65,866 18,132 -- 83,998
Harris corporate expense allocations................... 10,115 (812) -- 9,303
Goodwill amortization.................................. 2,414 -- -- 2,414
-------- --------- --------- --------
Operating income (loss).................................. (851) 126,611 (105,612) 20,148
Interest, net.......................................... 33,894 (4,975) (30,150) (1,231)
-------- --------- --------- --------
Income (loss) before income taxes...................... (34,745) 131,586 (75,462) 21,379
Income taxes (benefit)................................. (39,176) 10,313 22,836 (6,027)
-------- --------- --------- --------
NET INCOME (LOSS)...................................... $ 4,431 $ 121,273 $ (98,298) $ 27,406
======== ========= ========= ========
</TABLE>
30
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
SIX WEEKS ENDED AUGUST 13, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
REVENUE
Product sales.......................................... $ 39,470 $ 129,546 $(111,680) $ 57,336
COSTS AND EXPENSES
Cost of product sales.................................. 37,484 139,292 (137,095) 39,681
Research and development............................... 8,511 (12) -- 8,499
Selling, general and administrative.................... 8,986 1,778 144 10,908
Harris corporate expense allocations................... 1,393 (85) (144) 1,164
Intangible amortization................................ 326 -- -- 326
-------- --------- --------- --------
Operating income (loss).................................. (17,230) (11,427) 25,415 (3,242)
Interest, net.......................................... (161) 50 -- (111)
-------- --------- --------- --------
Income (loss) before income taxes...................... (17,069) (11,477) 25,415 (3,131)
Income taxes (benefit)................................. (4,943) (15) 4,856 (102)
-------- --------- --------- --------
NET INCOME (LOSS)...................................... $(12,126) $ (11,462) $ 20,559 $ (3,029)
======== ========= ========= ========
</TABLE>
46 WEEKS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
SUCCESSOR
------------------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
PARENT SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
-------- ------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
REVENUE
Product sales.............................. $ -- $568,091 $ 527,695 $(498,937) $596,849
COSTS AND EXPENSES
Cost of product sales...................... -- 362,807 499,438 (509,732) 352,513
Research and development................... -- 69,341 115 -- 69,456
Selling, general and administrative........ 123 75,609 21,495 -- 97,227
Harris corporate expense allocation........ -- -- -- -- --
Intangible amortization.................... -- 9,124 1,562 -- 10,686
In-process research and development........ -- 20,239 -- -- 20,239
Other...................................... 300 878 -- -- 1,178
-------- -------- --------- --------- --------
Operating income (loss)...................... (423) 30,093 5,085 10,795 45,550
Loss on sale of Malaysian operation........ -- 24,825 -- -- 24,825
Interest, net.............................. 7,855 30,404 (91) 36 38,204
Equity in subsidiary (loss)................ (19,960) -- -- 19,960 --
-------- -------- --------- --------- --------
Income (loss) before income taxes and
extraordinary item....................... 11,682 (25,136) 5,176 (9,201) (17,479)
Income taxes (benefit)..................... -- 193 (482) -- (289)
-------- -------- --------- --------- --------
Income (loss) before extraordinary item.... 11,682 (25,329) 5,658 (9,201) (17,190)
Extraordinary item--loss on extinguishment
of debt, net of tax effect............... (568) (24,950) -- -- (25,518)
-------- -------- --------- --------- --------
Net income (loss).......................... 11,114 (50,279) 5,658 (9,201) (42,708)
Preferred dividends........................ 5,391 5,391 -- (5,391) 5,391
-------- -------- --------- --------- --------
NET INCOME (LOSS) TO COMMON SHAREHOLDERS... $ 5,723 $(55,670) $ 5,658 $ (3,810) $(48,099)
======== ======== ========= ========= ========
</TABLE>
31
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS
JULY 2, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Trade receivables, net................................. $ 97,043 $ 3,631 $ -- $100,674
Intercompany balances.................................. (139,993) 19,554 120,439 --
Inventories............................................ 86,986 86,049 (19,213) 153,822
Other current assets................................... 7,782 946 -- 8,728
Property, plant and equipment, net..................... 291,645 118,885 -- 410,530
Intangibles, net....................................... 45,368 -- -- 45,368
Investment in subsidiaries............................. 10,907 72,195 (83,102) --
Other non-current assets............................... 39,721 2,336 -- 42,057
-------- --------- --------- --------
Total Assets......................................... $439,459 $ 303,596 $ 18,124 $761,179
======== ========= ========= ========
LIABILITIES AND BUSINESS EQUITY
Trade payables......................................... $ 21,503 $ 9,565 $ -- $ 31,068
Compensation and benefits.............................. 26,120 6,803 -- 32,923
Other current liabilities.............................. 42,778 (8,254) (7,444) 27,080
Other non-current liabilities.......................... 11,229 -- -- 11,229
Business Equity........................................ 337,829 295,482 25,568 658,879
-------- --------- --------- --------
Total Liabilities and Business Equity................ $439,459 $ 303,596 $ 18,124 $761,179
======== ========= ========= ========
</TABLE>
JUNE 30, 2000
<TABLE>
<CAPTION>
SUCCESSOR
------------------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
PARENT SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
-------- ------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents............... $ -- $ 200,237 $ 11,703 $ -- $211,940
Trade receivables, net.................. -- 104,769 6,926 -- 111,695
Intercompany balances................... -- (3,009) 3,009 -- --
Inventories............................. -- 126,313 168 -- 126,481
Other current assets.................... -- 37,295 372 -- 37,667
Property, plant and equipment, net...... -- 223,852 1,632 -- 225,484
Intangibles, net........................ -- 80,888 109,262 -- 190,150
Investment in subsidiaries.............. 719,768 323,526 1,370 (1,044,664) --
Other non-current assets................ -- 28,927 1,594 30,521
-------- ---------- --------- ----------- --------
Total Assets.......................... $719,768 $1,122,798 $ 136,036 $(1,044,664) $933,938
======== ========== ========= =========== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Trade payables.......................... $ -- $ 32,953 $ 4,038 $ -- $ 36,991
Compensation and benefits............... -- 35,254 3,372 -- 38,626
Other current liabilities............... -- 35,823 5,322 -- 41,145
Long-term debt.......................... -- 116,188 -- -- 116,188
Other non-current liabilities........... -- 21,992 -- -- 21,992
Common stock............................ 945 -- -- -- 945
Additional paid-in capital.............. 718,823 300 -- -- 719,123
Retained deficit........................ -- 880,288 121,668 (1,044,664) (42,708)
Accumulated other comprehensive income.. -- -- 1,636 -- 1,636
-------- ---------- --------- ----------- --------
Total Liabilities and Shareholders'
Equity.............................. $719,768 $1,122,798 $ 136,036 $(1,044,664) $933,938
======== ========== ========= =========== ========
</TABLE>
32
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
YEAR ENDED JULY 3, 1998
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...................................... $ (908) $18,418 $ (4,599) $ 12,911
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization.......................... 51,295 16,036 -- 67,331
Provision for inventory obsolescence................... 7,317 -- -- 7,317
Changes in working capital............................. (162,132) 12,669 110,235 (39,228)
-------- ------- --------- --------
Net cash provided by (used in) operating
activities......................................... (104,428) 47,123 105,636 48,331
INVESTING ACTIVITIES:
Property, plant and equipment............................ (49,762) (40,422) -- (90,184)
-------- ------- --------- --------
Net cash used in investing activities................ (49,762) (40,422) -- (90,184)
FINANCING ACTIVITIES:
Proceeds from borrowings............................... 2,750 -- -- 2,750
Payments of borrowings................................. (83) -- -- (83)
Net cash transfer and billings from (to) parent........ 151,523 (4,043) (105,636) 41,844
-------- ------- --------- --------
Net cash provided by (used in) financing
activities......................................... 154,190 (4,043) (105,636) 44,511
Effect of exchange rates on cash......................... -- (2,658) -- (2,658)
-------- ------- --------- --------
Net increase in cash..................................... -- -- -- --
Cash at the beginning of the period...................... -- -- -- --
-------- ------- --------- --------
Cash at the end of the period............................ $ -- $ -- $ -- $ --
======== ======= ========= ========
</TABLE>
YEAR ENDED JULY 2, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...................................... $ 4,431 $ 121,273 $ (98,298) $ 27,406
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization.......................... 59,615 21,016 -- 80,631
Provision for inventory obsolescense................... 3,894 -- -- 3,894
Changes in working capital............................. 144,087 19,084 (163,853) (682)
---------- --------- --------- --------
Net cash provided by (used in) operating
activities......................................... 212,027 161,373 (262,151) 111,249
INVESTING ACTIVITIES:
Cash paid for acquired business.......................... (1,335) -- -- (1,335)
Property, plant and equipment............................ (21,648) (16,915) -- (38,563)
---------- --------- --------- --------
Net cash used in investing activities................ (22,983) (16,915) -- (39,898)
FINANCING ACTIVITIES:
Proceeds from borrowings............................... 800 -- -- 800
Payments of borrowings................................. (302) -- -- (302)
Net cash transfer and billings from (to) parent........ (189,542) (139,639) 262,151 (67,030)
---------- --------- --------- --------
Net cash provided by (used in) financing
activities......................................... (189,044) (139,639) 262,151 (66,532)
Effect of exchange rates on cash......................... -- (4,819) -- (4,819)
---------- --------- --------- --------
Net increase in cash..................................... -- -- -- --
Cash at the beginning of the period...................... -- -- -- --
---------- --------- --------- --------
Cash at the end of the period............................ $ -- $ -- $ -- $ --
========== ========= ========= ========
</TABLE>
33
<PAGE>
INTERSIL HOLDING CORPORATION
SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
SIX WEEKS ENDED AUGUST 13, 1999
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)...................................... $ (11,462) $ (12,126) $ 20,559 $ (3,029)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities
Depreciation and amortization.......................... 2,380 6,693 -- 9,073
Provision for inventory obsolescense................... 1,919 -- -- 1,919
Non-current deferred income taxes...................... -- 4,815 (9,571) (4,756)
Changes in working capital............................. 208,945 128,451 (337,221) 175
---------- --------- --------- --------
Net cash provided by (used in) operating
activities........................................ 201,782 127,833 (326,233) 3,382
INVESTING ACTIVITIES:
Property, plant and equipment............................ (1,020) (867) -- (1,887)
---------- --------- --------- --------
Net cash used in investing activities................ (1,020) (867) -- (1,887)
FINANCING ACTIVITIES:
Payments of borrowings................................. -- 4,535 (4,567) (32)
Net cash transfer and billings from (to) parent........ (200,497) (131,501) 330,800 (1,198)
---------- --------- --------- --------
Net cash provided by (used in) financing
activities........................................ (200,497) (126,966) 326,233 (1,230)
Effect of exchange rates on cash......................... 1,177 -- -- 1,177
---------- --------- --------- --------
Net increase in cash..................................... 1,442 -- -- 1,442
Cash at the beginning of the period...................... -- -- -- --
---------- --------- --------- --------
Cash at the end of the period............................ $ 1,442 $ -- $ -- $ 1,442
========== ========= ========= ========
</TABLE>
46 WEEKS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
SUCCESSOR
-------------------------------------------------------------------------
FOREIGN
GUARANTOR NON-GUARANTOR ELIMINATING
PARENT SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED
--------- ------------ ------------- ----------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................... $ 11,114 $ (50,279) $ 5,658 $(9,201) $ (42,708)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities
Depreciation and amortization............... -- 52,500 8,788 -- 61,288
Provision for inventory obsolescense........ -- 23,906 -- -- 23,906
Write-off of in-process research and
development............................... -- 20,239 -- -- 20,239
Write-off of unearned compensation.......... 878 -- -- -- 878
Loss on sale of Malaysian operations........ -- -- 24,825 -- 24,825
Non-current deferred income taxes........... -- (4,680) -- -- (4,680)
Changes in working capital.................. (527,091) 622,854 (77,573) 9,201 27,391
--------- ---------- --------- ------- ----------
Net cash provided by (used in) operating
activities.............................. (515,099) 664,540 (38,302) -- 111,139
INVESTING ACTIVITIES:
Sale of Malaysian operation................... -- -- 52,500 -- 52,500
Property, plant and equipment................. -- (35,031) (3,782) -- (38,813)
--------- ---------- --------- ------- ----------
Net cash provided by (used in) investing
activities.............................. -- (35,031) 48,718 -- 13,687
FINANCING ACTIVITIES:
Proceeds from offering........................ 513,114 -- -- -- 513,114
Proceeds from exercise of stock options....... 1,985 -- -- -- 1,985
Payments of borrowings........................ -- (435,204) -- -- (435,204)
--------- ---------- --------- ------- ----------
Net cash provided by (used in) financing
activities................................ 515,099 (435,204) -- -- 79,895
Effect of exchange rates on cash and cash
equivalents................................. -- -- (158) -- (158)
--------- ---------- --------- ------- ----------
Net increase in cash and cash equivalents..... -- 194,305 10,258 -- 204,563
Cash at the beginning of the period........... -- 5,932 1,445 -- 7,377
--------- ---------- --------- ------- ----------
Cash and cash equivalents at the end of the
period ..................................... $ -- $ 200,237 $ 11,703 $ -- $ 211,940
========= ========== ========= ======= ==========
</TABLE>
34
<PAGE>
NOTE T--QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED
---------------------------------------------------
OCTOBER 1, DECEMBER 31, MARCH 31, JUNE 30,
1999 1999 2000 2000
---------- ------------ --------- --------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales........................................................ $134.0 $158.1 $ 170.9 $191.2
Gross margin..................................................... 48.3 61.7 69.4 82.6
Income (loss) before extraordinary item.......................... (23.1) (1.7) 2.8 1.8
Extraordinary item............................................... -- -- (25.5) --
------ ------ ------- ------
Net income (loss)................................................ $(23.1) $ (1.7) $ (22.7) $ 1.8
====== ====== ======= ======
Net income (loss) to common shareholders......................... $(24.5) $ (4.2) $ (24.2) $ 1.8
Per Share (Basic):
Income (loss) before extraordinary item........................ $(0.37) $(0.06) $ 0.02 $ 0.02
Extraordinary item............................................. -- -- (0.34) --
------ ------ ------- ------
Net income (loss).............................................. $(0.37) $(0.06) $ (0.32) $ 0.02
====== ====== ======= ======
Per Share (Diluted):
Income (loss) before extraordinary item........................ $(0.37) $(0.06) $ 0.02 $ 0.02
Extraordinary item............................................. -- -- (0.34) --
------ ------ ------- ------
Net income (loss).............................................. $(0.37) $(0.06) $ (0.32) $ 0.02
====== ====== ======= ======
</TABLE>
35
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial
ownership of each holder of 5% or more of the outstanding shares of our Class A
Common Stock (the only voting class of stock) and Class B Common Stock, each
director and each executive officer named in the Summary Compensation Table, and
all directors and officers as a group, as of June 30, 2000. The table does not
include shares of our Class A Common Stock issuable upon conversion of the
warrants and the warrants issued in connection with the 13.5% Subordinated
Holding PIK Note due 2010.
Unless otherwise indicated, the address of each person owning more than 5%
of our outstanding shares is c/o Intersil Holding Corporation, 7585 Irvine
Center Drive, Suite 100, Irvine, California 92618.
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK (1) COMMON STOCK (2)
------------------- ------------------- PERCENT OF ALL
NAME OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT COMMON STOCK (3)
------------------------------- ---------- ------- ---------- ------- ----------------
<S> <C> <C> <C> <C> <C>
Sterling Holding Company, ..... 10,738,026 23.98% 45,214,898 90.89% 59.20%
LLC(4)(5)
Harris Corporation(6) ......... 892,806 2.00% 4,531,584 9.11% 5.74%
1025 W. NASA Boulevard
Melbourne, Florida 32919
Gregory L. Williams(7) ........ 2,090,056 4.67% -- -- 2.21%
W. Russell Morcom(8) .......... 573,570 1.28% -- -- *
Larry W. Sims(9)............... 541,750 1.21% -- -- *
George L. Gidzinski(10)........ 461,098 1.03% -- -- *
Daniel J. Heneghan(11) ........ 392,685 * -- -- *
Karl McCalley ................. 285,006 * -- -- *
Ray D. Odom(12) ............... 357,074 * -- -- *
Julie B. Forbes(13) ........... 277,486 * -- -- *
Lawrence J. Ciaccia(14) ....... 355,238 * -- -- *
Stephen M. Moran............... 33,334 * -- -- *
James A. Urry(15) ............. 32,024 * -- -- *
Gary E. Gist(16) .............. 4,708 * -- -- *
Robert W. Conn................. -- * -- -- *
Jan Peeters.................... 3,034 * -- -- *
Robert N. Pokelwaldt........... -- * -- -- *
All directors, officers and
other management investors as a
group (15 persons) ............ 5,407,063 12.08% -- * 5.72%
</TABLE>
------------------
* Less than 1%.
(1) Does not include shares of Class A Common Stock issuable upon conversion of
Class B Common Stock. A holder of Class B Common Stock may convert any or
all of his shares into an equal number of shares of Class A Common Stock,
provided that such conversion would be permitted only to the extent that
the holder of shares to be converted would be permitted under applicable
law to hold the total number of shares of Class A Common Stock which would
be held after giving effect to the conversion.
(2) Does not include shares of Class B Common Stock issuable upon conversion of
Class A Common Stock. A holder of Class A Common Stock may convert any or
all of his, her or its shares into an equal number of shares of Class B
Common Stock.
(3) Represents the percentage of the total number of shares of Class A Common
Stock and Class B Common Stock combined.
(4) An affiliate of Credit Suisse First Boston Corporation owns an interest in
Sterling and could have the right to acquire up to 1,070,733 shares of
Class A Common Stock.
(5) Citicorp Venture Capital Ltd. owns an interest in Sterling and could have
the right to acquire up to 41,870,193 shares of Class A or Class B Common
Stock. Citicorp Mezzanine Partners, L.P., the general partner of which is
an affiliate of Citicorp Venture Capital, contributed $30.0 million in cash
to our company in exchange for the 13.5%
(Footnotes continued on next page)
36
<PAGE>
(Footnotes continued from previous page)
Subordinated Holding PIK Note due 2010 and warrants to purchase 3,703,707
shares of our Class A Common Stock. We contributed the $30.0 million to
Intersil as a capital contribution. Upon repayment of the 13.5%
Subordinated PIK Note due 2010, the warrants became exercisable for
2,222,224 shares of our Class A Common Stock.
(6) The shares reported by Harris are owned by Manatee Investment Corporation,
a wholly owned subsidiary of Harris. Harris may be deemed to beneficially
own these shares.
(7) Includes 2,053,116 shares owned by Gregory L. Williams and Linda H.
Williams. Does not include 66,667 shares owned by the Gregory L. Williams
and Linda H. Williams Trust dated 1/28/00 FBO a family member, 66,667
shares held by the Gregory L. Williams and Linda H. Williams Trust dated
1/28/00 FBO a family member and 26,667 shares owned by the Gregory L.
Williams and Linda H. Williams Trust dated 1/28/00 FBO certain family
members for which Mr. Willaims disclaims beneficial ownership. Includes
21,798 shares owned by DLJSC, as Trustee for Gregory L. Williams IRA
Account. Includes currently exercisable options to purchase 15,142 shares
of our Class A Common Stock.
(8) Includes 569,027 shares owned by W. Russell Morcom Revocable Trust. Does
not include 66,667 shares owned by W. Russell Morcom Irrevocable Trust FBO
a family member dated 12/23/99 and 66,667 shares owned by W. Russell
Morcom Irrevocable Trust FBO a family member dated 12/23/99 for which
Mr. Morcom disclaims beneficial ownership. Includes currently exercisable
options to purchase 4,543 shares of our Class A Common Stock.
(9) Includes 437,207 shares owned by Larry W. Sims and Elizabeth Sims, 100,000
shares owned by Lesgrat No. 00-1, a trust holding shares on behalf of its
beneficial owners. Does not include 13,334 shares owned by LS Parents Trust
No. 00-1 for which Mr. Sims disclaims beneficial ownership and 13,334
shares owned by ES Parents Trust No. 00-1 for which Mr. Sims disclaims
beneficial ownership. Includes currently exercisable options to purchase
4,543 shares of our Class A Common Stock.
(10) Includes currently exercisable options to purchase 4,543 shares of our
Class A Common Stock.
(11) Includes 389,656 shares owned by Daniel J. Heneghan and Barbara Heneghan.
Includes currently exercisable options to purchase 3,029 shares of our
Class A Common Stock.
(12) Does not include 13,334 shares owned by an Irrevocable Trust U/T/D 12/29/99
for the benefit of a family member and 13,334 shares owned by an
Irrevocable Trust U/T/D 12/29/99 for the benefit of a family member for
which Mr. Odom disclaims beneficial ownership. Includes currently
exercisable options to purchase 3,029 shares of our Class A Common Stock.
(13) Includes 126,259 shares owned by Julie B. Forbes Trust D/T/D 3/23/00,
126,258 shares owned by the Peter K. Forbes Trust D/T/D 3/23/00, 9,456
shares owned by the Peter K. Forbes and Julie B. Forbes Trust dated 1/20/00
FBO a family member and 9,456 shares owned by Peter K. Forbes and Julie B.
Forbes Trust dated 1/20/00 FBO a family member. Includes currently
exercisable options to purchase 6,057 shares of our Class A Common Stock.
(14) Includes 288,570 shares owned by Lawrence J. Ciaccia and Marcia R. Ciaccia
and 66,668 shares owned by the Lawrence J. Ciaccia and Marcia R. Ciaccia
Trust dated 1/20/00.
(15) James A. Urry, who is one of our directors, is affiliated with Sterling in
the capacities described under "Management--Directors and Executive
Officers" and footnote (6) above. All shares reported for Mr. Urry are held
by Sterling, but do not include all shares held by Sterling, which Mr. Urry
may be deemed to beneficially own as a result of his affiliation with
Sterling. Mr. Urry disclaims beneficial ownership of all shares held by
Sterling, except for those shares reported for Mr. Urry, which Mr. Urry has
the right to acquire in exchange for an ownership interest in Sterling.
(16) Gary E. Gist owns an interest in Sterling and could have the right to
exchange that interest for up to 38,186 shares of our common stock.
------------------
Sterling Holding Company, LLC, or Sterling, our principal shareholder, also
owns 7.1% of Class A Common Stock and 100% of Class B Common Stock of Fairchild
Semiconductor International, Inc., one of our competitors. Fairchild
Semiconductor Corporation is a wholly owned subsidiary of Fairchild
Semiconductor International, Inc.
37
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. The Consolidated Financial Statements and related Notes thereto as set
forth under Item 8 of this Report on Form 10-K are incorporated herein by
reference.
2.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS $)
<TABLE>
<CAPTION>
ADDITIONS
CHARGED ADDITIONS BALANCE
BALANCE AT TO COSTS CHARGED DEDUCTION AT
BEGINNING AND TO OTHER FROM END OF
OF PERIOD EXPENSES ACCOUNTS RESERVES PERIOD
---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Valuation and qualifying accounts deducted from the
assets to which they apply:
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
2000................................................... $ 582 $ 423 $ 395 $ 59 $ 1,341
1999................................................... $ 571 $ 487 $ -- $ 476 $ 582
1998................................................... $ 1,336 $ 324 $ -- $ 1,089 $ 571
INVENTORY RESERVE
2000................................................... $ 18,117 $38,074 $ 573 $34,831 $21,933
1999................................................... $ 24,482 $ 8,373 $ 257 $14,995 $18,117
1998................................................... $ 31,736 $ 9,846 $ 120 $17,220 $24,482
DISTRIBUTOR RESERVES
2000................................................... $ 6,542 $37,408 $ -- $36,584 $ 7,366
1999................................................... $ 6,189 $52,965 $ -- $52,612 $ 6,542
1998................................................... $ 11,278 $66,062 $ -- $71,151 $ 6,189
</TABLE>
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and therefore have been
omitted.
(b) No reports on Form 8-K were filed during the quarter ended June 30, 2000.
(c) The following is a list of exhibits required by Item 601 of Regulation S-K
to be filed as part of this Report. Where so indicated by footnote, exhibits
which were previously filed are incorporated by reference. For exhibits
incorporated by reference, the location of the exhibit in the previous filing is
indicated in parentheses.
38
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
---------- -------------------------------------------------------------------------------------------------------
<S> <C>
2.01 Amended and Restated Master Transaction Agreement dated as of June 2, 1999, by and among Intersil
Holding Corporation ("Holding"), Intersil Corporation ("Intersil") and Harris Corporation ("Harris")
(incorporated by reference to Exhibit 2.01 to the Registration Statement on Form S-1 previously filed by
Intersil Holding Corporation on November 10, 1999 (Registration No. 333-90857) ("Registration Statement
on Form S-1")).
2.02 Agreement Concerning Deferred Closings dated as of August 13, 1999, by and among Harris and Intersil
(incorporated by reference to Exhibit 2.02 to the Registration Statement on Form S-1).
2.03 Transition Services Agreement dated as of August 13, 1999, by and among Intersil and Harris
(incorporated by reference to Exhibit 2.03 to the Registration Statement on Form S-1).
2.04 Share Sale Agreement dated August 13, 1999, between Harris Airport Systems (Malaysia) Sdn. Bhd., Harris
Solid State (Malaysia) Sdn. Bhd. and Sapphire Worldwide Investments, Inc. (incorporated by reference to
Exhibit 2.04 to the Registration Statement on Form S-1).
2.05 Agreement for the Sale and Purchase of the Business and Assets of Harris Semiconductor Limited dated as
of August 13, 1999, between Harris Semiconductor Limited and Intersil Limited (incorporated by
reference to Exhibit 2.05 to the Registration Statement on Form S-1).
2.06 Asset Purchase Agreement dated as of August 20, 1999, between Harris Semiconductor Design & Sales Pte.
Ltd. and Intersil Pte. Ltd. (incorporated by reference to Exhibit 2.06 to the Registration Statement on
Form S-1).
2.07 Purchase Agreement of Corporate Quotas of a Limited Liability Company, dated as of August 13, 1999,
between Harris Semiconductor BV, Harris Semiconductor Limited and Intersil (incorporated by reference
to Exhibit 2.07 to the Registration Statement on Form S-1).
2.08 Assignment of Shares, dated as of August 13, 1999, between Intersil and Harris for the transfer by
Harris of all of its shares of Harris Semiconducteurs, Sarl to Intersil (incorporated by reference to
Exhibit 2.08 to the Registration Statement on Form S-1).
2.09 Share Transfer Agreement, dated as of August 1, 1999, between Harris and Intersil for the transfer of
stock of Harris Semiconductor Y.H. (incorporated by reference to Exhibit 2.09 to the Registration
Statement on Form S-1).
2.10 Equity Purchase Agreement, dated as of August 13, 1999, between Harris Advanced Technology (Malaysia)
Sdn. Bhd. and Harris Airport Systems (M) Sdn. Bhd. (incorporated by reference to Exhibit 2.10 to the
Registration Statement on Form S-1).
2.11 Agreement Re: China Subsidiaries, dated as of August 13, 1999, between Harris and Intersil
(incorporated by reference to Exhibit 2.11 to the Registration Statement on Form S-1).
2.12 Agreement Re: Anshan Joint Venture, dated as of August 13, 1999, between Harris Advanced Technology
(Malaysia) Sdn. Bhd. and Harris Airport Systems (M) Sdn. Bhd. (incorporated by reference to Exhibit
2.12 to the Registration Statement on Form S-1).
2.13 Agreement Re: Guangzhou Joint Venture, dated as of August 13, 1999, between Harris Advanced Technology
(Malaysia) Sdn. Bhd. and Harris Airport Systems (M) Sdn. Bhd. (incorporated by reference to Exhibit
2.13 to the Registration Statement on Form S-1).
2.14 Agreement Re: Suzhou Harris, dated as of August 13, 1999, between Harris Advanced Technology (Malaysia)
Sdn. Bhd. and Harris Airport Systems (M) Sdn. Bhd. (incorporated by reference to Exhibit 2.14 to the
Registration Statement on Form S-1).
2.15 Intellectual Property Agreement, dated as of August 13, 1999, among Harris, Harris Semiconductor
Patents, Inc. and Holding (incorporated by reference to Exhibit 2.15 to the Registration Statement on
Form S-1).
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
---------- -------------------------------------------------------------------------------------------------------
<S> <C>
2.16 Patent Assignment and Services Agreement, dated as of August 13, 1999, among Harris, Harris
Semiconductor Patents, Inc. and Holding (incorporated by reference to Exhibit 2.16 to the Registration
Statement on Form S-1).
2.17 License Assignment Agreement, dated as of August 13, 1999, among Harris, Harris Semiconductor Patents,
Inc. and Holding (incorporated by reference to Exhibit 2.17 to the Registration Statement on Form S-1).
2.18 Harris Trademark License Agreement, dated as of August 13, 1999, among Harris, HAL Technologies, Inc.
and Holding (incorporated by reference to Exhibit 2.18 to the Registration Statement on Form S-1).
2.19 Secondary Trademark Assignment and License Agreement, dated as of August 13, 1999, between Harris and
Holding (incorporated by reference to Exhibit 2.19 to the Registration Statement on Form S-1).
2.20 PRISM(R) Intellectual Property Assignment, dated August 13, 1999, between Holding and Intersil
(incorporated by reference to Exhibit 2.20 to the Post-Effective Amendment No. 1 to the Registration
Statement on Form S-1).
2.21 Tax Sharing Agreement, dated as of August 13, 1999, among Holding, Intersil and Choice Microsystems,
Inc. (incorporated by reference to Exhibit 2.21 to the Registration Statement on Form S-1).
2.22 Royalty Agreement, dated as of August 13, 1999, among Harris and Intersil (incorporated by reference to
Exhibit 2.22 to the Registration Statement on Form S-1).
2.23 Option Agreement, dated as of August 13, 1999, among Intersil and Intersil PRISM, LLC. (incorporated by
reference to Exhibit 2.23 to the Registration Statement on Form S-1).
2.24 Stock Purchase Agreement among ChipPAC Limited, ChipPAC, Inc., Sapphire Worldwide Investments, Inc. and
Intersil Corporation dated as of June 30, 2000 (incorporated by reference to Exhibit 2.1 to the Current
Report on Form 8-K previously filed by ChipPAC, Inc. on July 14, 2000 (Commission File No.
333-91641)).
2.25 Share Purchase Agreement dated April 27, 2000 by and among Holding, Intersil B.V., No Wires Needed
B.V., Gilde It Fund B.V., Parnib B.V., 3Com Corporation, Kennet I L.P., Hans B. Van Der Hoek and the
shareholders named therein (incorporated by reference to Exhibit 2.25 to the Report on Form 10-K previously
filed by Intersil Holding Corporation on August 17, 2000).
2.26 Amendment No. 1 to the Share Purchase Agreement dated April 27, 2000 by and among Holding, Intersil
B.V., No Wires Needed B.V., Gilde It Fund B.V., Parnib B.V., 3Com Corporation, Kennet I L.P., Hans B.
Van Der Hoek and the shareholders named therein (incorporated by reference to Exhibit 2.26 to the Report
on Form 10-K previously filed by Intersil Holding Corporation on August 17, 2000).
3.01 Restated Certificate of Incorporation of Holding (incorporated by reference to Exhibit 3.01 to the
Post-Effective Amendment No. 1 to the Registration Statement on Form S-1).
3.02 Bylaws of Holding (incorporated by reference to Exhibit 3.02 to the Registration Statement on Form
S-1).
4.01 Specimen Certificate of Holding's Class A Common Stock (incorporated by reference to Exhibit 4.01 to
Amendment No. 2 to the Registration Statement on Form S-1 (Registration Number 333-95199)).
4.02 Amended and Restated Registration Rights Agreement, dated as of January 21, 2000, by and among Holding,
Sterling Holding Company, L.L.C., Manatee Investment Corporation, Citicorp Mezzanine Partners, L.P. and
the management investors named therein (incorporated by reference to Exhibit 4.02 to the Registration
Statement on Form 8-A previously filed by Intersil Holding Corporation on February 18, 2000).
10.01 Warrant Agreement, dated as of August 13, 1999, between Holding and United States Trust Company of New
York (incorporated by reference to Exhibit 4.01 to the Registration Statement on Form S-1).
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
---------- -------------------------------------------------------------------------------------------------------
<S> <C>
10.02 Purchase Agreement, dated as of August 6, 1999, between Intersil, Holding, Harris Semiconductor, LLC,
Harris Semiconductor (Ohio), LLC, Harris Semiconductor (Pennsylvania), LLC, Choice Microsystems, Inc.,
Credit Suisse First Boston Corporation, J. P. Morgan Securities Inc. and Salomon Smith Barney Inc.
(incorporated by reference to Exhibit 4.02 to the Registration Statement on Form S-1).
10.03 Registration Rights Agreement, dated as of August 6, 1999, between Intersil, Holding, Harris
Semiconductor, LLC, Harris Semiconductor (Ohio), LLC, Harris Semiconductor (Pennsylvania), LLC, Choice
Microsystems, Inc., Credit Suisse First Boston Corporation, J. P. Morgan Securities Inc. and Salomon
Smith Barney Inc. (incorporated by reference to Exhibit 4.03 to the Registration Statement on Form
S-1).
10.04 Indenture, dated as of August 13, 1999, among Intersil, Holding, Harris Semiconductor, LLC, Harris
Semiconductor (Ohio), LLC, Harris Semiconductor (Pennsylvania), LLC, Choice Microsystems, Inc. and
United States Trust Company of New York for 13 1/4% Senior Subordinated Notes due 2009 (incorporated by
reference to Exhibit 10.01 to the Registration Statement on Form S-1).
10.05 Form of 13 1/4% Senior Subordinated Notes due 2009 (included in Exhibit 10.01).
10.06 Credit Agreement, dated as of August 13, 1999, among Intersil, the Lender Parties thereto, Credit
Suisse First Boston, as the Administrative Agent, Salomon Smith Barney, as Syndication Agent, and
Morgan Guaranty Trust Company of New York, as Documentation Agent (incorporated by reference to Exhibit
10.03 to the Registration Statement on Form S-1).
10.07 Amendment No. 1 and Waiver, dated as of January 28, 2000, to the Credit Agreement, dated as of August
13, 1999, among Intersil, Holding, Credit Suisse First Boston, as the Administrative Agent, Salomon
Smith Barney, Syndication Agent, and Morgan Guaranty Trust Company of New York, as Documentation Agent
(incorporated by reference to Exhibit 10.07 to the Amendment No. 2 to the Registration Statement on
Form S-1).
10.08 Subordinated Credit Agreement, dated as of August 13, 1999, among Holding and Citicorp Mezzanine
Partners, L.P. for 13 1/2% Subordinated Pay-In-Kind Note due 2010 (incorporated by reference to Exhibit
10.04 to the Registration Statement on Form S-1).
10.09 Form of 13 1/2% Subordinated Pay-In-Kind Note due 2010 (included in Exhibit 10.04).
10.10 Indenture, dated as of August 13, 1999, among Holding and United States Trust Company of New York for
11.13% Subordinated Pay-In-Kind Notes due 2010 (incorporated by reference to Exhibit 10.06 to the
Registration Statement on Form S-1).
10.11 Form of 11.13% Subordinated Pay-In-Kind Note due 2010 (included in Exhibit 10.06).
10.12 Securities Purchase and Holders Agreement, dated as of August 13, 1999, among Holding, Sterling Holding
Company, LLC, Manatee Investment Corporation, Intersil Prism LLC, Citicorp Mezzanine Partners, L.P.,
William N. Stout and the management investors named therein (incorporated by reference to Exhibit 10.09
to the Registration Statement on Form S-1).
10.13 Option Award Agreement, dated as of August 13, 1999 (incorporated by reference to Exhibit 10.10 to the
Registration Statement on Form S-1).
10.14 Employment Agreement, dated as of August 9, between Intersil and Gregory L. Williams (incorporated by
reference to Exhibit 10.11 to the Registration Statement on Form S-1).
10.15 Agreement between Harris and Local Union No. 1907 International Brotherhood of Electrical Workers,
AFL-CIO (Findlay, OH Facility), effective as of July 1, 1996 (incorporated by reference to Exhibit
10.12 to the Registration Statement on Form S-1).
10.16 Agreement between Harris and Local Union 177 International Union of Electronic, Electrical, Salaried,
Machine and Furniture Workers, AFL-CIO (Mountaintop, PA Facility), effective December 1, 1998
(incorporated by reference to Exhibit 10.13 to the Registration Statement on Form S-1).
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
---------- -------------------------------------------------------------------------------------------------------
<S> <C>
10.17 Machinery and Equipment Loan Agreement, dated September 9, 1996, between Commonwealth of Pennsylvania,
Department of Community and Economic Development and Harris (incorporated by reference to Exhibit 10.14
to the Registration Statement on Form S-1).
10.18 Machinery and Equipment Loan Agreement, dated as of November 3, 1998, between Commonwealth of
Pennsylvania, Department of Community and Economic Development and Harris (incorporated by reference to
Exhibit 10.15 to the Registration Statement on Form S-1).
10.19 Master Agreement, dated as of December 2, 1997, between Harris Semiconductor and Optum Software
(incorporated by reference to Exhibit 10.16 to the Registration Statement on Form S-1).
10.20 Purchase Agreement, dated as of March 14, 1997, between Harris Semiconductor and Praxair, Inc.
(incorporated by reference to Exhibit 10.17 to the Registration Statement on Form S-1).
10.21 Asset Purchase Agreement, dated as of July 2, 1999, by and among Align-Rite International, Inc.,
Align-Rite, Inc. and Harris (incorporated by reference to Exhibit 10.18 to the Registration Statement
on Form S-1).
10.22 Bill of Sale and Assignment, dated as of July 2, 1999, by Harris in favor of Align-Rite International,
Inc. and Align-Rite, Inc. (incorporated by reference to Exhibit 10.19 to the Registration Statement on
Form S-1).
10.23 Lease Agreement, dated as of July 2, 1999, by and among Harris Corporation Semiconductor Business Unit
and Align-Rite, Inc. (incorporated by reference to Exhibit 10.20 to the Registration Statement on Form
S-1).
10.24 Photomask Supply and Strategic Alliance Agreement, dated as of July 2, 1999, by and among Harris,
Align-Rite International, Inc. and Align-Rite, Inc. (incorporated by reference to Exhibit 10.21 to the
Registration Statement on Form S-1).
10.25 Site Services Agreement, dated as of July 2, 1999, by and among Harris Corporation Semiconductor
Business Unit and Align-Rite, Inc. (incorporated by reference to Exhibit 10.22 to the Registration
Statement on Form S-1).
10.26 Software License Agreement, dated as of July 31, 1984, between Harris and Consilium Associates, Inc.
(incorporated by reference to Exhibit 10.23 to the Registration Statement on Form S-1).
10.27 Addendum Software License and Maintenance Agreement, dated as of October 27, 1995, between Harris and
Consilium, Inc. (incorporated by reference to Exhibit 10.24 to the Registration Statement on Form S-1).
10.28 Specialty Gas Supply Agreement, dated as of October 15, 1996, between Air Products and Chemicals, Inc.
and Harris (incorporated by reference to Exhibit 10.25 to the Registration Statement on Form S-1).
10.29 Silicon Wafer Purchase Agreement, dated as of January 1, 1997, between Mitsubishi Silicon America
Corporation and Harris (incorporated by reference to Exhibit 10.26 to the Registration Statement on
Form S-1).
10.30 Nitrogen Supply Agreement, dated as of September 22, 1992, between Harris Corporation Semiconductor
Sector and Liquid Air Corporation Merchant Gases Division (incorporated by reference to Exhibit 10.27
to the Registration Statement on Form S-1).
10.31 Nitrogen Supply System Agreement, Amendment Number 1, dated as of September 15, 1996, between Air
Liquide America Corporation and Harris Corporation Semiconductor Sector (incorporated by reference to
Exhibit 10.28 to the Registration Statement on Form S-1).
10.32 Site Subscription Agreement, dated as of July 1, 1993, between Harris Semiconductor Sector of Harris
and Cadence Design Systems, Inc. (incorporated by reference to Exhibit 10.29 to the Registration
Statement on Form S-1).
</TABLE>
42
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<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
---------- -------------------------------------------------------------------------------------------------------
<S> <C>
10.33 Site Subscription Addendum, dated December 19, 1997, between Harris Semiconductor Sector of Harris and
Cadence Design Systems, Inc. (incorporated by reference to Exhibit 10.30 to the Registration Statement
on Form S-1).
10.34 HMCD--HSS Memorandum of Agreement, dated March 26, 1999, between Harris Microwave Communication
Division and Harris Semiconductor Sector (incorporated by reference to Exhibit 10.31 to the
Registration Statement on Form S-1).
10.35 Investment Agency Appointment and Participation Authorization, dated September 3, 1999, between
Intersil, Intersil Corporation Master Trust and T. Rowe Price Trust Company (incorporated by reference
to Exhibit 10.32 to the Registration Statement on Form S-1).
10.36 Investment Agency Appointment and Participation Authority, dated September 3, 1999, between Intersil
Corporation Master Trust and T. Rowe Price Trust Company (incorporated by reference to Exhibit 10.33 to
the Registration Statement on Form S-1).
10.37 Investment Advisory Agreement (Equity Growth Fund), dated September 3, 1999, between T. Rowe Price
Associates, Inc. and Intersil Corporation Retirement Committee (incorporated by reference to Exhibit
10.34 to the Registration Statement on Form S-1).
10.38 Investment Advisory Agreement (Equity Income Fund), dated September 3, 1999, between T. Rowe Price
Associates, Inc. and Intersil Corporation Retirement Committee (incorporated by reference to Exhibit
10.35 to the Registration Statement on Form S-1).
10.39 Intersil Corporation Retirement Plan (Non-Union), dated September 3, 1999 (incorporated by reference to
Exhibit 10.36 to the Registration Statement on Form S-1).
10.40 Intersil Corporation Retirement Plan (Union), dated September 3, 1999 (incorporated by reference to
Exhibit 10.37 to the Registration Statement on Form S-1).
10.41 Commercial Supply Agreement, dated December 3, 1998, by and between Texas Instruments Incorporated and
Harris (incorporated by reference to Exhibit 10.38 to the Registration Statement on Form S-1).
10.42 Military Supply Agreement, dated December 3, 1998, by and between Texas Instruments Incorporated and
Harris (incorporated by reference to Exhibit 10.39 to the Registration Statement on Form S-1).
10.43 Intellectual Property Agreement, dated December 3, 1998, by and between Texas Instruments Incorporated,
Harris, Harris Advanced Technology (Malaysia) Sdn. Bhd. and Harris Southwest Properties, Inc.
(incorporated by reference to Exhibit 10.40 to the Registration Statement on Form S-1).
10.44 Asset Transfer Agreement, dated December 3, 1998, by and between Texas Instruments Incorporated and
Harris Advanced Technology (Malaysia) Sdn. Bhd. (incorporated by reference to Exhibit 10.41 to the
Registration Statement on Form S-1).
10.45 Military Asset Purchase Agreement, dated October 23, 1998, by and between Texas Instruments
Incorporated, Harris, Harris Advanced Technology (Malaysia) Sdn. Bhd. and Harris Southwest Properties,
Inc. (incorporated by reference to Exhibit 10.42 to the Registration Statement on Form S-1).
10.46 Commercial Asset Purchase Agreement, dated October 23, 1998, by and between Texas Instruments
Incorporated, Harris, Harris Advanced Technology (Malaysia) Sdn. Bhd. and Harris Southwest Properties,
Inc. (incorporated by reference to Exhibit 10.43 to the Registration Statement on Form S-1).
10.47 Certificate of Leasehold Property for Land Office No. 7668 by Harris Advanced Technology (M) Sdn. Bhd.
(incorporated by reference to Exhibit 10.44 to the Registration Statement on Form S-1).
10.48 State Lease for Lot No. 7716 by Harris Advanced Technology (Malaysia) Sdn. Bhd. (incorporated by
reference to Exhibit 10.45 to the Registration Statement on Form S-1).
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
---------- -------------------------------------------------------------------------------------------------------
<S> <C>
10.49 Certificate of Leasehold Property for Land Office No. 7666 by Harris Advanced Technology (M) Sdn. Bhd.
(incorporated by reference to Exhibit 10.46 to the Registration Statement on Form S-1).
10.50 Amendment No. 1, dated as of December 13, 1999, to the Securities Purchase and Holders Agreement by and
among Holding, Sterling Holding Company, LLC, Manatee Investment Corporation, Citicorp Mezzanine
Partners, L.P. and the management investors named therein.
10.51 Amendment No. 2, dated as of May 31, 2000, to the Securities Purchase and Holders Agreement, by and
among Holding, Sterling Holding Company, LLC, Manatee Investment Corporation, Citicorp Mezzanine
Partners, L.P. and the management investors named therein.
10.52 Supply Agreement entered into as of June 30, 2000 by and between ChipPAC Limited and Intersil
Corporation (incorporated by reference to Exhibit 10.33 to the Registration Statement on Form S-1
previously filed by ChipPAC, Inc. on July 14, 2000 (Registration No. 333-39428)).
10.53 Intellectual Property Agreement entered into as of June 30, 2000 between Intersil Corporation and
ChipPAC Limited (incorporated by reference to Exhibit 10.32 to the Registration Statement on Form S-1
previously filed by ChipPAC, Inc. on July 14, 2000 (Registration No. 333-39428)).
10.54 Intersil Holding Corporation 1999 Equity Compensation Plan, effective as of August 13, 1999
(incorporated by reference to Exhibit 10.54 to the Report on Form 10-K previously filed by Intersil
Holding Corporation on August 17, 2000).
10.55 The Intersil Holding Corporation Employee Stock Purchase Plan, effective as of February 25, 2000
(incorporated by reference to Exhibit 10.55 to the Report on Form 10-K previously filed by Intersil
Holding Corporation on August 17, 2000).
21.01 Subsidiaries of Intersil Holding Corporation (incorporated by reference to Exhibit 21.01 to the Report
on Form 10-K previously filed by Intersil Holding Corporation on August 17, 2000).
23.01 Consent of Ernst & Young LLP.*
27.01 Financial Data Schedule (incorporated by reference to Exhibit 27.01 to the Report on Form 10-K previously
filed by Intersil Holding Corporation on August 17, 2000).
</TABLE>
--------------
* Filed herewith.
44
<PAGE>
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Intersil Holding Corporation
/s/ Gregory L. Williams
------------------------------------
Gregory L. Williams
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ Gregory L. Williams
------------------------------------ Chief Executive Officer and Director September 5, 2000
Gregory L. Williams (Principal Executive Officer)
/s/ Daniel J. Heneghan
------------------------------------ Vice President and Chief Financial Officer September 5, 2000
Daniel J. Heneghan (Principal Financial and Accounting Officer)
/s/ Robert W. Conn
------------------------------------ Director September 5, 2000
Robert W. Conn
/s/ Gary E. Gist
------------------------------------ Director September 5, 2000
Gary E. Gist
/s/ Jan Peeters
------------------------------------ Director September 5, 2000
Jan Peeters
/s/ Robert N. Pokelwaldt
------------------------------------ Director September 5, 2000
Robert N. Pokelwaldt
/s/ James A. Urry
------------------------------------ Director September 5, 2000
James A. Urry
</TABLE>
45
