International Rectifier Reports December-Quarter Results
EL SEGUNDO, Calif.--Jan. 24, 2002--International Rectifier Corporation today reported net income of $10.8 million (or $0.17 per share) on revenues of $172.1 million for the quarter ended December, compared to net income of $46.5 million (or $0.71 per share) on revenues of $268.1 million in the comparable prior-year quarter. In the immediately-preceding quarter, the company posted revenue of $168.5 million and income of $9.6 million (or $0.15 per share).Revenues from proprietary products (analog ICs, advanced-circuit devices, and power systems) rose sequentially by 5 percent. These products now comprise over half of total revenues, compared to 31 percent in the prior-year quarter. Orders for proprietary products grew sequentially by 7 percent and, for the fourth consecutive quarter, represented more than half of total bookings. Distributor orders grew sequentially by 12 percent last quarter, the strongest growth since the quarter ended March 2000. Overall orders grew sequentially by 3 percent.
December-quarter gross margin was 35.2 percent, compared to 35.6 percent in the immediately-preceding quarter. In the year-ago quarter, gross margin was 40.7 percent. 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 PC, automotive, and consumer products segments helped to offset continued weakness in the telecom and industrial markets.
Chief Executive Officer Alex Lidow noted, "Even during the worst downturn in semiconductor history, execution of our business model has made IR inherently more profitable. At what we believe to be the bottom of this industry cycle, our gross margins remain 8 percentage points above our trough in the previous cycle."
During the quarter, IR continued to win significant new business that demonstrates the advantages of its proprietary technology and the strength of its franchise in target markets.
| -- | In the information technology market, analog ICs and advanced-circuit devices from IR won designs in Intel's most advanced desktop platforms, Dell's leading-edge mobile and desktop boxes, and new graphics processors from Nvidia and ATI. |
| -- | In the automotive market, power systems from IR won designs with two industry leaders for variable-speed motor controls. |
| -- | In the defense and aerospace arena, Lockheed Martin won one of the largest contracts in industry history with a prototype Joint Strike Fighter containing about $200,000 of IR content. Plans call for more than 3,000 aircraft over the life of the program. |
| -- | In other defense and aerospace programs, IR's proprietary technology secured more than a dozen new contracts during the December quarter with customers including Lockheed, Northrop Grumman, and Raytheon. |
Alex Lidow noted, "IR continues to leverage proprietary products to increase our content in target applications and expand our market opportunities. A pick-up in the PC market, increased funding for defense and security programs, and greater penetration in the automotive market position IR for significant growth in the second half of this calendar year. We are generating cash from operations, and a cash balance of more than $800 million gives us considerable flexibility to pursue long-term strategic goals."
For the six months ended December, net income of $20.4 million (or $0.31 per share) on revenues of $340.6 million compared to prior-year net income of $88.6 million (or $1.34 per share) on revenues of $517.5 million.
The company expects March-quarter revenues to be flat-to-up $10 million sequentially and June-quarter revenues to increase by $10 million to $20 million sequentially.
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 over 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. We caution 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 our 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 our 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 our 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 our 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 standard time (2:15 p.m. Pacific standard time). Participants can join the call by dialing 212/896-6153 or by logging on to 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 PM Eastern standard time) on Tuesday, January 29. To hear the replay, phone 800/633-8284 (for international callers 858/812-6440) and use reservation No. 2016-3182 or use the websites listed above.
International Rectifier Corporation and Subsidiaries
Unaudited Consolidated Statement of Income
(In thousands except per share amounts)
Three Months Ended Six Months Ended
December 31 December 31
2001 2000 2001 2000
Revenues $172,090 $268,069 $340,579 $517,504
Cost of sales 111,509 158,963 220,085 309,695
Gross profit 60,581 109,106 120,494 207,809
Selling & administrative
expense 30,274 34,704 61,272 68,491
Research & development
expense 16,979 16,685 33,877 31,636
Amortization of acquisition-
related intangibles 971 450 1,936 691
Operating profit 12,357 57,267 23,409 106,991
Other income (expense)
Interest, net 2,053 5,890 4,253 11,781
Other, net 147 474 (131) 975
Income before income taxes 14,557 63,631 27,531 119,747
Provision for income taxes 3,785 17,105 7,158 31,134
Net income $ 10,772 $ 46,526 $ 20,373 $ 88,613
Net income per common share
Basic $ 0.17 $ 0.75 $ 0.32 $ 1.43
Diluted $ 0.17 $ 0.71 $ 0.31 $ 1.34
Average common shares
outstanding - Basic 63,296 62,004 63,274 61,918
Average common shares and
potentially dilutive
securities outstanding
- Diluted 64,970 65,497 64,954 66,079
International Rectifier Corporation and Subsidiaries
Unaudited Consolidated Balance Sheet
(In thousands)
December 31 June 30
2001 2001
(Audited)
Assets
Current assets:
Cash, cash equivalents and
short-term investments $ 537,491 $ 851,361
Trade accounts receivable, net 132,037 138,595
Inventories 179,207 149,375
Deferred income taxes 26,027 31,339
Prepaid expenses and other
receivables 30,956 38,511
Total current assets 905,718 1,209,181
Long-term cash investments 297,256 --
Property, plant and equipment, net 393,217 381,916
Other assets 164,760 155,365
Total assets $1,760,951 $1,746,462
Liabilities and Stockholders' Equity
Current liabilities:
Bank loans $ 18,516 $ 13,343
Long-term debt, due within
one year 1,179 1,363
Accounts payable 63,935 87,130
Accrued salaries, wages and
commissions 16,575 20,414
Other accrued expenses 67,083 73,725
Total current liabilities 167,288 195,975
Long-term debt, less current
maturities 551,071 552,751
Other long-term liabilities 17,546 6,300
Deferred income taxes 17,498 11,779
Stockholders' equity:
Common stock 63,313 63,132
Capital contributed in excess of
par value of shares 680,710 676,783
Retained earnings 269,227 248,854
Accumulated other comprehensive
loss (5,702) (9,112)
Total stockholders' equity 1,007,548 979,657
Total liabilities and stockholders'
equity $1,760,951 $1,746,462