International Rectifier Reports Fourth Quarter and Full Year Fiscal 2013 Results

Segment Table Information/Customer Segments

The business segment tables included with this release for the Company’s fiscal quarters ended June 30, 2013, March 24, 2013, and June 24, 2012, respectively, reconcile revenue and gross margin for the Company’s segments to the consolidated total amounts of such measures for the Company.

Annual Report on Form 10-K

The Company expects to file its Annual Report on Form 10-K for the 2013 fiscal year with the Securities and Exchange Commission on Tuesday, August 20, 2013. This financial report will be available for viewing and download at http://investor.irf.com.

NOTE: A conference call will begin today at 2:00 p.m. Pacific time. CEO Oleg Khaykin and CFO Ilan Daskal will discuss the Company’s 2013 fiscal year, June quarter results and September quarter outlook. All participants, both in the U.S. and international, may join the call by dialing 706-679-3195 by 1:55 p.m. Pacific time. In order to join this conference call, participants will be required to provide the Conference Passcode: “International Rectifier”. Participants may also listen over the Internet at http://investor.irf.com. To listen to the live call, please go to the web site at least 15 minutes early to register, download, and install any necessary audio software.

A taped replay of this call will be available from approximately 6:00 p.m. Pacific time on Monday, August 19 through Monday, August 26, 2013. To listen to the replay by phone, call 855-859-2056 or 404-537-3406 for international callers and enter reservation number 40285253. To listen to the replay over the Internet, please go to http://investor.irf.com. The live call and replay will also be available on www.streetevents.com.

About International Rectifier

International Rectifier Corporation (NYSE: IRF) is a world leader in power management technology. IR’s analog, digital, and mixed signal ICs, and other advanced power management products, enable high performance computing and save energy in a wide variety of business and consumer applications. Leading manufacturers of computers, energy efficient appliances, lighting, automobiles, satellites, aircraft, and defense systems rely on IR’s power management solutions to power their next generation products. For more information, go to www.irf.com.

Forward-Looking Statements:

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to expectations concerning matters that (a) are not historical facts, (b) predict or forecast future events or results, or (c) embody assumptions that may prove to have been inaccurate. These forward-looking statements involve risks, uncertainties and assumptions. When we use words such as “believe,” “expect,” “anticipate,” “will”, “outlook” or similar expressions, we are making forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give readers any assurance that such expectations will prove correct. The actual results may differ materially from those anticipated in the forward-looking statements as a result of numerous factors, many of which are beyond our control. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, lower than expected demand or greater than expected order cancellations arising from a decline or volatility in general market and economic conditions and the failure of the market to improve as anticipated; reduced margins from lower than expected factory utilization, higher than expected costs and customer shifts to lower margin products; changes in the timing or amount of costs associated with, or disruptions caused by, our restructuring initiatives; our ability to implement our restructuring initiatives as planned and achieve the anticipated benefits, which may be affected by, among other things: customer requirements, changes in business conditions and/or operational needs, retention of key employees, governmental regulations, delays and increased costs; unexpected costs or delays in implementing our plans to secure and qualify external manufacturing capacity for our products, including the purchase and installation of additional manufacturing equipment and the construction of our new wafer thinning manufacturing facility in Singapore; the effects of longer lead times for certain products on meeting demand and any inability by us to satisfy or to timely satisfy customer demand; volatility or deterioration of capital markets; the adverse impact of regulatory, investigative and legal actions; increased competition in the highly competitive semiconductor business that could adversely affect the prices of our products or our ability to secure additional business; the effects of manufacturing, operational and vendor disruptions; unexpected delays and disruptions in our supply, manufacturing and delivery efforts due to, among other things, supply constraints, equipment malfunction or natural disasters; delays in launching new technology products; our ability to maintain current intellectual property licenses and obtain new intellectual property licenses; costs arising from pending and threatened litigation or claims; the effects of natural disasters; and other uncertainties disclosed in the Company’s reports filed from time to time with the Securities and Exchange Commission, including its most recent reports on Forms 10-K and 10-Q.

 

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share data)

       
Three Months Ended Fiscal Year Ended

June 30,
2013
(Unaudited)

   

March 24,
2013
(Unaudited)

   

June 24,
2012

(Unaudited)

June 30,

2013

   

June 24,

2012

Revenues $ 276,453 $ 224,268 $ 269,675 $ 977,035 $ 1,050,588
Cost of sales   193,386     169,860     199,871     719,930     710,565  
Gross profit 83,067 54,408 69,804 257,105 340,023
 
Selling, general and administrative expense 46,348 43,020 51,284 181,746 200,411
Research and development expense 32,643 28,876 35,052 127,093 135,105
Impairment of goodwill 69,421 69,421
Amortization of acquisition-related intangible assets 1,630 1,663 1,718 6,653 8,369
Asset impairment, restructuring and other charges 2,209 880 16,996
Gain on disposition of property                   (5,410 )
Operating income (loss) 237 (20,031 ) (87,671 ) (75,383 ) (67,873 )
Other expense (income), net 421 (450 ) 154 1,390 4,267
Interest expense (income), net   33     64     (46 )   57     (333 )
Loss before income taxes (217 ) (19,645 ) (87,779 ) (76,830 ) (71,807 )
Provision for (benefit from) income taxes   5,861     1,600     (19,593 )   11,990     (16,757 )
Net loss $ (6,078 ) $ (21,245 ) $ (68,186 ) $ (88,820 ) $ (55,050 )
 
Net loss per common share-basic (1) $ (0.09 ) $ (0.31 ) $ (0.99 ) $ (1.28 ) $ (0.79 )
 
Net loss per common share-diluted (1) $ (0.09 ) $ (0.31 ) $ (0.99 ) $ (1.28 ) $ (0.79 )
 
Average common shares outstanding—basic 69,785 69,273 69,157 69,385 69,270
 
Average common shares and potentially dilutive securities outstanding—diluted 69,785 69,273 69,157 69,385 69,270
 
   

(1)

 

Net income (loss) per common share is computed using the two-class method as required by accounting rules. We do not pay dividends; however, net income must be allocated to unvested restricted stock units (“RSUs”) on which we could pay dividend equivalents. The amount of net income allocated to these RSUs is excluded from income available to common shareholders in the calculation of earnings per share. As we were in a net loss for all fiscal periods presented above, we did not have any income to allocate to unvested RSUs on which we could pay dividend equivalents.

 
 

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

       

June 30,

2013

June 24,

2012

ASSETS
Current assets:
Cash and cash equivalents $ 443,490 $ 305,423
Restricted cash 611 595
Short-term investments 11,056 63,872
Trade accounts receivable, net of allowances of $915 for 2013 and $2,066 for 2012 137,762 168,499
Inventories 232,315 294,702
Current deferred tax assets 4,948 5,110
Prepaid expenses and other receivables   33,002     29,845  
Total current assets 863,184 868,046
Restricted cash 738 940
Long-term investments 15,054
Property, plant and equipment, net 423,338 461,115
Goodwill 52,149 52,149
Acquisition-related intangible assets, net 21,923 28,576
Long-term deferred tax assets 32,792 40,850
Other assets   59,088     65,093  
Total assets $ 1,453,212   $ 1,531,823  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 89,312 $ 88,726
Accrued income taxes 949 750
Accrued salaries, wages and commissions 39,719 40,403
Current deferred tax liabilities
Other accrued expenses   78,414     83,164  
Total current liabilities 208,394 213,043
Long-term deferred tax liabilities 8,970 6,653
Other long-term liabilities   24,530     35,800  
Total liabilities   241,894     255,496  
Commitments and contingencies
Stockholders’ equity:
Preferred shares, $1 par value, authorized: 1,000,000; issued and outstanding: none in 2013 and 2012
Common shares, $1 par value, authorized: 330,000,000; outstanding: 70,399,081 shares in 2013 and 69,231,006 shares in 2012 76,590 75,125
Capital contributed in excess of par value 1,067,841 1,037,736
Treasury stock, at cost; 6,191,082 shares in 2013 and 5,894,882 shares in 2012 (113,175 ) (107,965 )
Retained earnings 201,865 290,685
Accumulated other comprehensive loss   (21,803 )   (19,254 )
Total stockholders’ equity   1,211,318     1,276,327  
Total liabilities and stockholders’ equity $ 1,453,212   $ 1,531,823  
 
       

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 
Three Months Ended Fiscal Year Ended

June 30,
2013
(Unaudited)

   

June 24,
2012
(Unaudited)

June 30,
2013

   

June 24,
2012

Cash flows from operating activities:
Net loss $ (6,078 ) $ (68,186 ) $ (88,820 ) $ (55,050 )
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 22,625 22,865 91,187 84,951
Amortization of acquisition-related intangible assets 1,630 1,718 6,653 8,369
Loss on disposal of fixed assets 703 22 5,036 1,695
Gain on disposition of property (5,410 )
Impairment of long-lived assets 1 2,530 2,792 2,530
Stock compensation expense 5,146 4,032 21,560 16,141
Impairment of goodwill 69,421 69,421
Gain on sale of investments (11 ) (8 ) (55 )
Other-than-temporary impairment of investments 482 350 2,865
Provision for (recovery of) bad debts 4 58 (58 ) 1,015
Provision for inventory write-downs 5,142 7,200 20,421 18,734
(Gain) loss on derivatives 469 (1,050 ) 634 (1,079 )
Deferred income taxes 5,769 (16,346 ) 11,384 (25,183 )
Tax benefit from stock-based awards 1,674
Excess tax benefit from stock-based awards (34 ) (864 )
Changes in operating assets and liabilities, net 21,657 35,860 65,046 (83,461 )
Other   697     (245 )   3,219     4,758  
Net cash provided by operating activities   57,765     58,316     139,396     41,051  
Cash flows from investing activities:
Additions to property, plant and equipment (11,681 ) (31,560 ) (72,605 ) (128,083 )
Proceeds from sale of property, plant and equipment 118 5,524
Sale of investments 48,682 52,131 75,792
Maturities of investments 4,000 32,684 25,500 216,307
Purchase of investments (13,124 ) (9,979 ) (173,383 )
Released from (additions to) restricted cash   2     (165 )   176     524  
Net cash provided by (used in) investing activities   (7,679 )   36,517     (4,659 )   (3,319 )
Cash flows from financing activities:
Proceeds from exercise of stock options 11,132 918 15,474 3,269
Excess tax benefit from stock-based awards 34 864
Purchase of treasury stock (3,145 ) (5,210 ) (26,720 )
Net settlement of restricted stock units for tax withholdings   (3,972 )   (1,750 )   (5,464 )   (4,260 )
Net cash (used in) provided by financing activities 7,160 (3,943 ) 4,800 (26,847 )
Effect of exchange rate changes on cash and cash equivalents   (750 )   (2,967 )   (1,470 )   (4,193 )
Net increase in cash and cash equivalents 56,496 87,923 138,067 6,692
Cash and cash equivalents, beginning of year   386,994     217,500     305,423     298,731  
Cash and cash equivalents, end of year $ 443,490   $ 305,423   $ 443,490   $ 305,423  
 

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