International Rectifier Reports Fourth Quarter and Full Year Fiscal 2014 Results

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; the risk that the transaction with Infineon Technologies AG will not close or that the closing may be delayed; the possibility that the conditions to the closing of the transaction with Infineon Technologies AG may not be satisfied; the risk that competing offers to the transaction with Infineon Technologies AG will be made; the outcome of any legal proceedings related to the transaction with Infineon Technologies AG; the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement entered into with Infineon Technologies AG; general economic conditions; conditions in the markets Infineon Technologies AG and International Rectifier are engaged in; behavior of customers, suppliers and competitors (including their reaction to the transaction); 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 29, 2014

  March 30, 2014   June 30, 2013 June 29, 2014   June 30, 2013
(Unaudited) (Unaudited) (Unaudited)        
Revenues $ 297,587 $ 269,269 $ 276,453 $ 1,106,571 $ 977,035
Cost of sales 191,789   169,135   193,386   707,363   719,930  
Gross profit 105,798 100,134 83,067 399,208 257,105
Selling, general and administrative expense 48,816 45,025 46,348 182,318 181,746
Research and development expense 33,179 32,710 32,643 130,848 127,093
Amortization of acquisition-related intangible assets 1,555 1,605 1,630 6,420 6,653
Asset impairment, restructuring and related charges 1,597   1,624   2,209   5,638   16,996  

Operating income (loss)

20,651 19,170 237 73,984 (75,383 )
Other expense, net 251 451 421 2,974 1,390
Interest (income) expense, net (10 ) 28   33   24   57  
Income (loss) before income taxes 20,410 18,691 (217 ) 70,986 (76,830 )
Provision for (benefit from) income taxes 7,461   (449 ) 5,861   12,253   11,990  
Net income (loss) $ 12,949 $ 19,140 $ (6,078 ) $ 58,733 $ (88,820 )
 
Net income (loss) per common share:
Basic $ 0.18 $ 0.27 $ (0.09 ) $ 0.83 $ (1.28 )
Diluted $ 0.18 $ 0.26 $ (0.09 ) $ 0.81 $ (1.28 )
Weighted average common shares outstanding:
Basic 71,208 71,248 69,785 71,108 69,385
Diluted 72,874 72,728 69,785 72,549 69,385
 
INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
(In thousands)
   
June 29, 2014 June 30, 2013
ASSETS
Current assets:
Cash and cash equivalents $ 588,922 $ 443,490
Restricted cash 635 611
Short-term investments 20,114 11,056
Trade accounts receivable, net of allowances of $352 for 2014 and $915 for 2013 161,723 137,762
Inventories 230,011 232,315
Current deferred tax assets 2,145 4,948
Prepaid expenses and other receivables 26,675   33,002  
Total current assets 1,030,225 863,184
Restricted cash 739 738
Property, plant and equipment, net 391,765 423,338
Goodwill 52,149 52,149
Acquisition-related intangible assets, net 15,503 21,923
Long-term deferred tax assets 31,183 32,792
Other assets 43,976   59,088  
Total assets $ 1,565,540   $ 1,453,212  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 86,256 $ 89,312
Accrued income taxes 2,946 949
Accrued salaries, wages and commissions 47,750 39,719
Current deferred tax liabilities 348
Other accrued expenses 72,968   78,414  
Total current liabilities 210,268 208,394
Long-term deferred tax liabilities 7,817 8,970
Other long-term liabilities 19,809   24,530  
Total liabilities 237,894   241,894  
Commitments and contingencies
Stockholders’ equity:
Preferred shares, $1 par value, authorized: 1,000,000; issued and outstanding: none in 2014 and 2013
Common shares, $1 par value, authorized: 330,000,000; outstanding: 71,520,121 shares in 2014 and 70,399,081 shares in 2013 78,192 76,590
Capital contributed in excess of par value 1,097,665 1,067,841
Treasury stock, at cost: 6,672,216 shares in 2014 and 6,191,082 shares in 2013 (125,785 ) (113,175 )
Retained earnings 260,598 201,865
Accumulated other comprehensive loss 16,976   (21,803 )
Total stockholders’ equity 1,327,646   1,211,318  
Total liabilities and stockholders’ equity $ 1,565,540   $ 1,453,212  
 
INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(In thousands)
   
Three Months Ended Fiscal Year Ended

June 29, 2014
(Unaudited)

 

June 30, 2013
(Unaudited)

June 29, 2014   June 30, 2013
Cash flows from operating activities:
Net income (loss) $ 12,949 $ (6,078 ) $ 58,733 $ (88,820 )
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 21,817 22,625 87,210 91,187
Amortization of acquisition-related intangible assets 1,555 1,630 6,420 6,653
(Gain) loss on disposal of fixed assets (444 ) 703 (264 ) 5,036
Impairment of long-lived assets 80 1 80 2,792
Stock compensation expense 6,467 5,146 26,494 21,560
Gain on sale of investments (36 ) (8 )
Other-than-temporary impairment of investments 350
Provision for (recovery of) bad debts 4 (58 )
Provision for inventory write-downs 1,273 5,142 4,900 20,421
Loss on derivatives 276 469 1,437 634
Deferred income taxes 1,412 5,769 7,338 11,384
Tax benefit from stock-based awards 219 219
Changes in operating assets and liabilities, net 25,690 21,657 (11,190 ) 65,046
Other (999 ) 697   (1,255 ) 3,219  
Net cash provided by operating activities 70,295   57,765   180,086   139,396  
Cash flows from investing activities:
Additions to property, plant and equipment (8,275 ) (11,681 ) (44,111 ) (72,605 )
Proceeds from sale of property, plant and equipment 978 1,003 118
Sale of investments 36 52,131
Maturities of investments 4,000 11,000 25,500
Purchase of investments (9,979 )
Release from restricted cash 13   2   27   176  
Net cash used in investing activities (7,284 ) (7,679 ) (32,045 ) (4,659 )
Cash flows from financing activities:
Proceeds from exercise of stock options 1,508 11,132 14,146 15,474
Purchase of treasury stock (10,012 ) (12,610 ) (5,210 )
Net settlement of restricted stock units for tax withholdings (8,273 ) (3,972 ) (9,433 ) (5,464 )
Net cash (used in) provided by financing activities (16,777 ) 7,160 (7,897 ) 4,800
Effect of exchange rate changes on cash and cash equivalents 1,400   (750 ) 5,288   (1,470 )
Net increase in cash and cash equivalents 47,634 56,496 145,432 138,067
Cash and cash equivalents, beginning of period 541,288   386,994   443,490   305,423  
Cash and cash equivalents, end of period $ 588,922   $ 443,490   $ 588,922   $ 443,490  
 

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