International Rectifier Reports September-Quarter Results
EL SEGUNDO, Calif.--Oct. 25, 2001--International Rectifier Corp. today reported net income of $9.6 million (or $0.15 per share) on revenues of $168.5 million for the quarter ended September, compared to net income of $42.1 million (or $0.63 per share) on revenues of $249.4 million in the comparable prior-year quarter.In the prior quarter, the company posted revenue of $185.1 million and income of $15.1 million (or $0.23 per share), excluding an $86.4 million pretax restructuring charge. Including the charge, the company reported a net loss of $48.8 million (or $0.78 per share) in the June quarter.
Revenues from proprietary products (analog ICs, advanced-circuit devices and power systems) rose by 8 percent year-to-year. These products now comprise 48 percent of total revenues, compared to 30 percent in the prior-year quarter. Orders for proprietary products grew by 4 percent sequentially and, for the third consecutive quarter, represented more than half of total bookings. Overall orders grew by 3 percent.
September-quarter gross margin was 35.6 percent, compared to 39.6 percent in the year-ago quarter. In the prior quarter, gross margin was 38.8 percent before and 18.1 percent after the charge. Strength in higher-margin proprietary products helped to counter the impact of lower production volumes for components and a decline in component prices.
Shipments to the consumer products, automotive and defense/aerospace segments increased by 37 percent year-to-year and helped to offset industry weakness in the information technology and industrial markets.
During the quarter, IR proprietary products gained sole-source positions in seven new defense programs and six new satellite programs for industry leaders, including Lockheed Martin, Raytheon, Boeing and Northrup Grumman. Analog ICs, advanced-circuit devices and recently introduced iPowir modules won key designs to power Intel's latest-generation processors. IR now dominates power management for mobile processors and holds its highest share ever in desktops and workstations from Dell, IBM, Hewlett-Packard, Compaq, and a number of tier-two box suppliers. IR holds a dominant share in power management for energy-efficient appliances, most recently winning sole-source position on the motor drive for the next-generation washer from Sharp Electronics. The company began ramping shipments of proprietary electric power steering modules for a platform that will debut on a leading European vehicle in the next model year.
The company expects revenues to be flat-to-up $5 million in the December quarter, increase by another $5 to $10 million in the March quarter, and outperform the industry growth rate in the June quarter.
Chief Executive Officer Alex Lidow noted, "Our business model has continued to significantly lessen the impact of the worst downturn in semiconductor history. Just this week, the World Semiconductor Trade Statistics forecasted that industry revenues will drop by 29 percent in the nine months ended September. Over the same period, our revenues have declined by only 7 percent. We think we have reached the bottom of this cycle, and our gross margins remain just 6 percentage points off their peak. We continue to capture more silicon content in target applications and believe our design wins will add significant momentum when business turns up. Meanwhile, a cash balance of $815 million gives IR the flexibility to advance our strategic interests and ensure the company's financial well-being."
International Rectifier is a world leader in power management technology that improves functionality, speed, compactness and portability in information technology and other end products. IR's analog ICs, advanced-circuit devices, power systems and components enable Internet hardware to gain speed and reliability, allow portable electronics to run longer off a single charge, improve automotive fuel efficiency, and cut energy consumption in home appliances and industrial motors. The company is the pioneer and market leader in the $4 billion power MOSFET industry, and more than 20 companies are licensed under its power MOSFET patents. IR serves market leaders around the world, and more than half its revenue comes from outside the United States.
The foregoing material includes some forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The company cautions that such statements are subject to a number of uncertainties, and actual results may differ materially. Factors that could affect the company's actual results include the failure of market demand to materialize as anticipated; greater-than-expected weakness or program or order postponements in the information technology segments of its business; the effectiveness of cost controls and cost reductions; litigation and other unexpected costs associated with cost-reduction efforts, including reductions in force and the transfer and consolidation of product lines; the effectiveness of integration of acquisitions into the company's operations and the transfer and consolidation of product lines; the ability or the timing of the company to achieve strategic acquisitions and the effect of associated costs; the accuracy of customers' forecasts; push-out of delivery dates; product returns; market and sector conditions that affect the company's customers, licensees and suppliers; introduction, acceptance, availability, and continued demand and growth of new and high-performance products; delays in transferring and ramping production lines or completing customer qualifications; company and market impact due to the cancellation of customer and/or industry programs; the company's mix of product shipments; availability of adequate capacity and unanticipated costs of refurbishment or replacement of equipment; pricing pressures; failure of suppliers and subcontractors to meet their delivery commitments; unfavorable changes in industry and competitive conditions; impact of any disruption in, or increased cost of, electricity and/or other critical supplies; economic conditions in the company's markets around the world and the timing of changes in market conditions; changes in interest and investment rates; impacts on the company's business or financial condition due to changes in currency valuation or to the euro conversion; impact of changes in accounting methods; the impact of changes in laws and regulations, including tax, trade, and export regulations and policies; the actual results of any outstanding litigation; and other uncertainties disclosed in the company's reports filed with the Securities and Exchange Commission, including its most recent report on form 10-K. To the foregoing factors should be added the financial and other ramifications of terrorist actions.
Note: A conference call will begin today at 5:15 p.m. Eastern daylight time (2:15 p.m. Pacific daylight time). Participants can join the call by dialing 212/896-6040 or by logging onto the Internet at http://www.irf.com, http://www.vcall.com or http://www.streetevents.com at least 15 minutes ahead of the start time. A replay of the call will be available through 4:15 p.m. Pacific standard time (7:15 p.m. Eastern standard time) on Tuesday, Oct. 30. To hear the replay, phone 800/633-8284 (for international callers 858/812-6440) and use reservation No. 1974-4936 or use the Web sites listed above.
International Rectifier Corp. and Subsidiaries
Consolidated Balance Sheet
(In thousands)
Sept. 30,
2001 June 30,
(Unaudited) 2001
Assets
Current assets:
Cash, cash equivalents and short-term
investments $ 815,432 $ 851,361
Trade accounts receivable, net 131,382 138,595
Inventories 171,340 149,375
Deferred income taxes 28,683 31,339
Prepaid expenses and other receivables 41,489 38,511
Total current assets 1,188,326 1,209,181
Property, plant and equipment, net 387,809 381,916
Other assets 146,873 155,365
Total assets $ 1,723,008 $1,746,462
Liabilities and Stockholders' Equity
Current liabilities:
Bank loans $ 20,393 $ 13,343
Long-term debt, due within one year 1,272 1,363
Accounts payable 63,199 87,130
Accrued salaries, wages and commissions 21,129 20,414
Other accrued expenses 53,978 73,725
Total current liabilities 159,971 195,975
Long-term debt, less current maturities 552,361 552,751
Other long-term liabilities 6,812 6,300
Deferred income taxes 12,138 11,779
Stockholders' equity:
Common stock 63,272 63,132
Capital contributed in excess of par
value of shares 679,932 676,783
Retained earnings 258,455 248,854
Accumulated other comprehensive loss (9,933) (9,112)
Total stockholders' equity 991,726 979,657
Total liabilities and
stockholders' equity $ 1,723,008 $ 1,746,462
International Rectifier Corp. and Subsidiaries
Unaudited Consolidated Statement of Income
(In thousands, except per share amounts)
Three Months Ended
Sept. 30,
2001 2000
Revenues $ 168,489 $ 249,435
Cost of sales 108,576 150,732
Gross profit 59,913 98,703
Selling & administrative expense 30,998 33,787
Research & development expense 16,898 14,951
Amortization of acquisition-related
intangibles 965 241
Operating profit 11,052 49,724
Other income (expense)
Interest, net 2,200 5,891
Other, net (278) 501
Income before income taxes 12,974 56,116
Provision for income taxes 3,373 14,029
Net income $ 9,601 $ 42,087
Net income per common share
Basic $ 0.15 $ 0.68
Diluted $ 0.15 $ 0.63
Average common shares outstanding -- Basic 63,253 61,831
Average common shares and potentially
dilutive securities outstanding -- Diluted 64,937 66,661