International Rectifier Reports Rising Earnings
27 July 1999
International Rectifier Reports Rising Earnings
EL SEGUNDO, Calif.--July 27, 1999--International Rectifier Corp. Tuesday reported net income of $3.3 million ($0.06 per share) on revenue of $147.5 million in the quarter ended June, excluding nonrecurring items.The company reported $0.4 million ($0.01 per share) on revenue of $133.8 million in the year-ago quarter.
After nonrecurring items, the company reported a net loss of $29.6 million ($0.57 per share) in the current quarter. These items included a noncash, pre-tax charge of $33.9 million ($0.65 per share) associated with SOP 98-5, an AICPA-mandated change in accounting principles for start-up costs, and a charge associated with employee severances.
In the quarter ended June, revenue increased sequentially by $10 million, led by strength in automotive applications, lighting, motor drives and telecom power supplies, as well as the distribution channel.
IR's unit shipments increased 28 percent year-to-year and 13 percent sequentially. Royalties contributed $8.0 million in the quarter, compared with $7.4 million in the preceding and $4.0 million in the year-ago quarters.
Excluding the impact of SOP 98-5 accounting standards, gross margin was 28.8 percent, essentially unchanged from the preceding and year-ago periods. After the one-time effect of the SOP 98-5, June-quarter gross margin was 26.9 percent.
For the year ended June 1999, International Rectifier reported net income of $6.1 million ($0.12 per share) on revenue of $545.4 million, excluding nonrecurring items. IR reported net income of $16.5 million ($0.32 per share) on revenue of $551.9 million in the prior year. After nonrecurring items, the company reported a net loss of $5.8 million ($0.11 per share) in fiscal 1999.
The company reported that June-quarter orders rose by 27 percent year-to-year and were unchanged sequentially. IR enters the first quarter of fiscal 2000 with backlog shippable in the period running 10 percent higher than in the March quarter. Orders and sell-through of IR product in the distribution channel reached record levels in the June quarter.
Alex Lidow, chief executive officer, commented, "Business conditions continue to improve: Pricing is firming, the recovery is spreading to a broader base, and distributors are ordering aggressively to keep up with growing end demand.
"IR is adding momentum with recent share gains and design wins for leading-edge digital cell phones, systems using Intel Corp.'s Pentium(R) III microprocessor, and power ICs for automotive and motor controls.
"We expect to override the seasonal drop typical for September- quarter revenues and to accelerate revenue growth in December and the following quarters. Continued price stability, cost reductions, and a richer business mix will lift gross margins, and lower sales and administrative expense will contribute positive earnings leverage."
During the quarter, the company announced several major technology developments targeted to specific high-growth applications. IR's new high-voltage MOSFETs combine multiple technologies to deliver benchmark performance in power supplies for servers and routers. New low-voltage trench MOSFETs sharply increase switching efficiency in portable electronic equipment.
A family of low-voltage MOSFETs using advanced planar technology simplify and shrink power circuits in automotive applications and uninterruptible power supplies. The company also introduced a new chipset built around a unique 1200-volt power IC that increases reliability and simplifies circuitry in industrial motor drives.
At the end of June, International Rectifier improved its cash flow and increased its flexibility by securing financing of $155 million to replace existing debt, and an undrawn $70 million revolver.
International Rectifier provides enabling technologies for products that work smarter, run cooler and increase productivity per watt.
IR sets the standard for performance and system architecture in power electronics for next-generation products in portable electronics, Internet infrastructure, industry, automotive, satellites and home appliances. It's patented HEXFET(R) power MOSFETs, power ICs, modules and subsystems, and related components make IR a world leader in power conversion.
The foregoing material contains some forward-looking statements. 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 delays in or higher-than-anticipated expenses associated with implementing planned cost reductions; the effectiveness of cost controls; the impact of changes in accounting methods; the impact of export controls; delays in transferring and ramping production lines or completing customer qualifications; the accuracy of customers' forecasts; 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 the company's customers and licensees; pricing pressures; acceptance of competitors' products; introduction, acceptance and availability of new products; the ability of suppliers and subcontractors to meet their delivery commitments to the company; 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 today at 2:15 p.m. Pacific time. Participants can join the call by dialing 212/896-6091. A taped replay of the call will be available through noon Pacific time on Sunday, Aug. 1. The phone number to hear the replay is 800/633-8284. Please refer to reservation No. 1223-7312 when you call to hear the recording.
International Rectifier Corp. and Subsidiaries
Consolidated Balance Sheet
(In thousands)
June 30, June 30,
1999 1998
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 31,497 $ 32,294
Short-term investments 8,900 13,232
Trade accounts receivable, net 131,659 129,738
Inventories 108,463 130,653
Deferred income taxes 16,078 8,080
Prepaid expenses and other
receivables 9,677 3,253
Total current assets 306,274 317,250
Property, plant and equipment, net 380,504 390,892
Other assets 22,307 27,685
Total assets $ 709,085 $ 735,827
Liabilities and Stockholders' Equity
Current liabilities:
Bank loans $ 14,996 $ 28,153
Long-term debt, due within one year 8,047 37,226
Accounts payable 64,809 46,637
Accrued salaries, wages and
commissions 19,546 15,875
Other accrued expenses 33,234 26,042
Total current liabilities 140,632 153,933
Long-term debt, less current
maturities 158,418 141,528
Other long-term liabilities 7,142 29,352
Deferred income taxes 6,619 11,364
Stockholders' equity:
Common stock 51,781 51,351
Capital contributed in excess of
par value 257,746 255,195
Retained earnings 92,868 98,646
Accumulated other comprehensive income (6,121) (5,542)
Total stockholders' equity 396,274 399,650
Total liabilities and
stockholders' equity $ 709,085 $ 735,827
-0-
International Rectifier Corp. and Subsidiaries
Unaudited Consolidated Statement of Operations
(In thousands except per share amounts)
Three Months Ended Twelve Months Ended
June 30, June 30,
1999 1998 1999 1998
Revenues $147,491 $133,782 $545,371 $551,891
Cost of sales 107,743 94,933 393,379 375,727
Gross profit 39,748 38,849 151,992 176,164
Selling and
administrative expense 25,013 25,551 98,193 104,661
Research and
development expense 9,947 10,827 40,512 39,132
Restructuring and
severance charges 8,320 -- 24,520 --
Operating profit
(loss) (3,532) 2,471 (11,233) 32,371
Other income (expense):
Interest, net (2,909) (1,780) (11,120) (7,288)
Other, net 1,208 (99) 53,509 (494)
Income (loss) before
income taxes and
cumulative effect of
accounting change (5,233) 592 31,156 24,589
Provision (benefit)
for income taxes (1,777) 195 10,780 8,114
Income (loss) before
cumulative effect of
accounting change (3,456) 397 20,376 16,475
Cumulative effect of
change in accounting
principle, net of
income tax benefit
of $5,431 26,154 -- 26,154 --
Net income (loss) $(29,610) $ 397 $ (5,778) $ 16,475
Net income (loss) per
common share:
Basic:
Income (loss) before
cumulative effect
of accounting
change $ (0.07) $ 0.01 $ 0.39 $ 0.32
Cumulative effect
of change in
accounting
principle (0.50) -- (0.50) --
Net income (loss) $ (0.57) $ 0.01 $ (0.11) $ 0.32
Diluted:
Income (loss) before
cumulative effect
of accounting
change $ (0.07) $ 0.01 $ 0.39 $ 0.32
Cumulative effect
of change in
accounting
principle (0.50) -- (0.50) --
Net income (loss) $ (0.57) $ 0.01 $ (0.11) $ 0.32
Average common shares
outstanding -- basic 51,721 51,338 51,612 51,248
Average common shares
and potentially
dilutive securities
outstanding -- diluted 51,721 51,507 51,788 51,674