International Rectifier Reports Breakeven Quarter
16 October 1998
International Rectifier Reports Breakeven Quarter; Company Sees Improving Business Conditions
EL SEGUNDO, Calif.--Oct. 15, 1998--International Rectifier Corp. Thursday reported net income of $34,000 ($0.00 per share) on revenue of $127.5 million in the quarter ended September, compared with net income of $6.1 million ($0.12 per share) on revenue of $133.1 million in the prior-year quarter.Royalties contributed $4.4 million to revenue, compared with $4.5 million in the year-ago quarter. September-quarter gross margin was 28.4 percent, compared with 33.8 percent for the year-ago quarter. The year-to-year decline reflected lower prices.
"Despite continued challenging business conditions, IR remained in the black in our first fiscal quarter," noted Chief Executive Officer Derek Lidow. "We see signs that an industry bottom is forming, and price declines began to moderate in the September quarter.
"In the coming quarters, revenue and earnings growth should improve, reflecting continued strength in the PC market, the resumption of normal shipments to General Motors, higher sales of recently introduced products, and seasonal improvements.
"We believe our sustained market share gains and aggressive cost reductions position IR to continue outperforming our industry as conditions improve in our served markets."
IR's September-quarter unit shipments increased 21 percent year to year and 3 percent sequentially, and the most recent industry figures show that IR continued to gain market share in the first two months of the quarter.
During the quarter, IR reduced its worldwide work force by 5 percent, or more than 200 employees. Selling and administrative expense declined by 5 percent year to year. From June to September, the company cut its inventories by approximately $2 million, and receivables dropped by more than $8 million.
Research & development expense was 15 percent higher than in the year-earlier quarter. September-quarter design wins built on IR's success in setting proprietary power architectures.
Four major PC manufacturers selected IR's new power MOSFETs for their most demanding portable PC designs, and a Japanese computer maker designed IR's new MOSFET/Control IC chipset into the power supply for its most advanced models. Three major suppliers of industrial and appliance motor controls started using the company's new high-voltage ICs and IGBTs.
During the quarter, the Board of Appeals of the Patent and Trademark Office confirmed an International Rectifier power MOSFET patent that covers fundamental and widely used elements of design and structure. This patent is central to more than 20 licensing agreements under the company's power MOSFET patents, and the confirmation strengthens IR's proprietary technology position.
International Rectifier is a major worldwide supplier of power semiconductors, which convert electrical energy to operate power supplies, motor drives, and lighting ballasts. Its patented HEXFET power MOSFETs and IGBTs make IR the world leader in field effect transistors.
The company's technological advances improve the performance and energy efficiency of electronic and electrical equipment in automotive, consumer, computer/peripheral, industrial, lighting, telecom, and government/space applications.
The foregoing material contains some forward-looking statements. 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 regulatory and judicial decisions affecting intellectual property and licensing agreements, the rate of customer inventory adjustments, push-out of delivery dates, product returns, changes in customers' order patterns, the company's mix of product shipments, market and sector conditions that affect our customers, pricing pressures, acceptance of competitors' products, the success of cost-reduction measures, introduction and acceptance of new products, impact on the company's business due to internal systems or systems of suppliers and other third parties adversely affected by year 2000 problems, general economic conditions in the company's markets around the world, and other uncertainties disclosed in the company's filings with the Securities and Exchange Commission.
NOTE: A conference call for investors will begin Thursday at 5:15 p.m. Eastern (2:15 p.m. Pacific). Participants can join the call by dialing 212/896-6166. A taped replay of the call will be available through midnight Pacific time on Wednesday, Oct. 21. The phone number to hear the replay is 800/633-8284. Refer to reservation No. 472 4027 when calling to hear the recording.
INTERNATIONAL RECTIFIER CORP. AND SUBSIDIARIES
Unaudited Consolidated Statement of Income
(In thousands except per share amounts)
Three Months Ended
Sept. 30,
1998 1997
Revenues $127,493 $133,111
Cost of sales 91,283 88,160
Gross profit 36,210 44,951
Selling and administrative expense 24,207 25,348
Research and development expense 10,021 8,731
Operating profit 1,982 10,872
Other income (expense):
Interest, net (2,451) (1,627)
Other, net 518 (148)
Income before income taxes 49 9,097
Provision for income taxes 15 3,002
Net income $ 34 $ 6,095
Net income per common share -- Basic $ 0.00 $ 0.12
Net income per common share -- Diluted $ 0.00 $ 0.12
Average common shares
outstanding -- Basic 51,514 51,150
Average common shares and
potentially dilutive securities
outstanding -- Diluted 51,519 52,011
-0-
INTERNATIONAL RECTIFIER CORP. AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands)
Sept. 30, June 30,
1998 1998
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 31,876 $ 32,294
Short-term investments -- 13,232
Trade accounts receivable, net 121,663 129,738
Inventories 129,058 130,653
Deferred income taxes 8,080 8,080
Prepaid expenses 3,967 3,253
Total current assets 294,644 317,250
Property, plant, and equipment, net 410,561 390,892
Other assets 22,409 27,685
Total assets $727,614 $735,827
Liabilities and Stockholders' Equity
Current liabilities:
Bank loans $ 14,243 $ 28,153
Long-term debt, due within one year 38,928 37,226
Accounts payable 44,207 46,637
Accrued salaries, wages, and
commissions 15,713 15,875
Other accrued expenses 23,530 26,042
Total current liabilities 136,621 153,933
Long-term debt, less current
maturities 159,902 141,528
Other long-term liabilities 16,123 29,352
Deferred income taxes 12,081 11,364
Stockholders' equity:
Common stock 51,528 51,351
Capital contributed in excess
of par value 256,191 255,195
Retained earnings 98,680 98,646
Accumulated other
comprehensive income (3,512) (5,542)
Total stockholders' equity 402,887 399,650
Total liabilities and
stockholders' equity $727,614 $735,827