EL SEGUNDO, Calif.--(BUSINESS WIRE)--Jan. 29, 2004--For the
December quarter, International Rectifier Corporation (NYSE:IRF) today
reported pro forma net income of $24.6 million (or $0.36 per share),
which excludes charges for ongoing severance and restructuring
activities previously announced in December 2002, on revenues of
$252.3 million, compared to pro forma net income of $19.8 million (or
$0.30 per share) on revenues of $234.1 million from the September
quarter. For the December quarter, IR reported net income of $16.9
million (or $0.25 per share) compared to net income of $16.7 million
(or $0.25 per share) in the September quarter. Net income in the
December quarter included pretax charges of $10.1 million compared to
$4.0 million in the September quarter. For the prior year quarter
ended December 2002, pro forma net income was $10.1 million (or $0.16
per share) on revenues of $209.5 million. Net loss was ($121.3)
million or ($1.90) per share in that quarter with $179.8 million in
pretax charges.
Revenues increased 8 percent from the September quarter and 20
percent over the prior year quarter. Orders rose 14 percent from the
September quarter and 39 percent from the prior year quarter. Bookings
in information technology were up 17 percent in the December quarter
reflecting IR's continuing success in Intel's Centrino(TM) and
Pentium(R) M platforms. On a product line basis, IR's high performance
analog ICs in information technology grew 18 percent over the
September quarter. Bookings for the consumer market grew, increasing
17 percent from the September quarter led by growth in digital TV,
recordable DVDs, portable digital music players, and smart appliances.
IR shipments to distributors increased 12 percent from the
September quarter and represented 30 percent of revenues versus 33
percent a year ago. Distributor shipments to their customers are
rebounding with average leadtimes now at 8 to 15 weeks, stretching 2
to 5 weeks from the September quarter. Pricing was down less than one
percent, in the December quarter, and is expected to increase over the
next couple quarters.
IR's markets continued to show encouraging signs of a long-term
recovery worldwide, with orders up significantly in all regions.
Bookings in the Asia Pacific region remained the strongest, showing
quarter on quarter growth of 18 percent, followed by Japan and Europe,
up 15 percent and 13 percent respectively.
This quarter, IR received its largest automotive production
program to date for a next generation electric steering program. The
program is valued at approximately $100 million and was awarded by one
of the top three global steering manufacturers. Additionally, the
company is now ramping proprietary product shipments for its first
integrated starter alternator program.
Royalties in the December quarter were $10.6 million, an increase
of approximately $1 million from the September quarter. In January
2004, IR announced that the company and Hitachi, Ltd. and Renesas
Technology Corp. have settled all outstanding litigation in the United
States and Japan between the companies. IR expects to record a
one-time pretax gain of approximately $8 million in the March 2004
quarter as a result of the settlement. The agreement also provides for
a cross-license agreement between IR and Hitachi/Renesas.
December quarter gross margin expanded 170 basis points from the
September quarter to 37.6 percent, exceeding previous guidance. Gross
margin on incremental sales exceeded expectations at 57 percent. The
better than expected margin improvement resulted primarily from a
richer mix of proprietary products and cost savings.
Chief Executive Officer Alex Lidow stated, "In addition to our
strong order growth in every region, we secured over $120 million in
design wins in the December quarter, a pattern that has been
consistently building for some time. In fact, design wins for IR's
high-performance analog ICs more than doubled from the September
quarter, reaching record levels. In addition, our opportunities to
cross-sell our components with our proprietary products are increasing
with the economic recovery."
During the December quarter, IR continued to strengthen its
position in target markets with significant new business demonstrating
the value of its proprietary products:
- IR's ICs and advanced circuits for information technology --
like XPhase(TM), DirectFET(TM), DCBus(TM) and iPOWIR(TM) --
won leading positions at the top three communications
networking companies, four of the top PC and server companies
and with the two leading makers of graphics cards. IR secured
design wins in networking hubs, routers and servers. IR
captured four new designs in Centrino and Pentium M notebooks,
six new Prescott-based Springdale and Grantsdale platform
desktops, and 18 new designs in the next-generation servers
like Intel's upcoming Nocona/Lindenhurst platform. Across all
of the new platforms, IR's value and unit content is
significantly higher than in previous generations.
- In consumer electronics, Samsung, NEC, Pioneer, Fujitsu,
Matsushita and Sony chose high performance proprietary analog
ICs and advanced circuit devices from IR to power their
digital PDP, LCD and DLP television technologies, while a
leading manufacturer of portable digital music players chose
IR to extend battery life for its products.
- IR analog ICs continued to ramp in next-generation appliances
from General Electric, Maytag, Sanyo, and Haier, China's
leading producer.
- IR was selected for upcoming Bosch and Siemens programs and
for BMW, Volkswagen, Audi, and Daimler-Chrysler vehicles for
smart alternators and to power engine cooling systems, active
suspension, electric fan control, new engine preheat systems,
and direct diesel fuel injection systems.
- Power systems and advanced circuit devices are ramping in new
defense programs for F-35 Joint Strike Fighter aircraft,
advanced satellites, and smart missiles for such customers as
Lockheed-Martin, Loral, PerkinElmer, Boeing, Raytheon, and
Northrop-Grumman.
Outlook
Alex Lidow noted, "Orders continue to ramp and backlog coverage is
now over 90 percent. For the March quarter, IR expects revenues to
grow about 5 percent plus or minus a couple points over the December
quarter. We expect our overall gross margins to improve by about 170
to 200 basis points, and we expect to end the fiscal year approaching
all-time record levels. Opportunities to continue to outperform in
this industry in the latest upturn appear better than ever.
Pacesetting design wins from a host of leading companies in key target
markets are converting rapidly into major upside revenue potential
stretching out for several years. We are particularly excited to see
the return of telecom and networking where we saw sequential revenue
growth of 15 percent and 49 percent from a year ago, signaling a
resumption of significant opportunity."
In addition to disclosing results that are determined in
accordance with Generally Accepted Accounting Principles (GAAP), IR
also discloses pro forma or non-GAAP results of operations that
exclude costs related to restructuring activities. IR discloses both
pro forma and actual results of operations in order to allow the users
of its financial statements to assess the Company's operating results
with and without charges associated with the Company's ongoing
restructuring initiatives previously announced in December 2002. In
connection with these activities, among other things, the Company is
de-emphasizing its commodity business and accelerating the move to its
proprietary products. The Company expects to record severance and
restructuring charges as incurred in accordance with SFAS 146,
"Accounting for the Costs Associated with Exit or Disposal
Activities," through approximately calendar year-end 2004.
The following reconciles reported net income and earnings per
share to pro forma net income and earnings per share for the fiscal
quarters ended December 31, 2003, September 30, 2003 and December 31,
2002:
Dec. 31, Sept. 30, Dec. 31,
2003 2003 2002
Reported net income (loss) $16,888 $16,731 $(121,298)
Costs from restructuring activities
(net of tax benefit) 7,668 3,062 131,348
Pro forma net income $24,556 $19,793 $10,050
Reported net income (loss) per common
share, basic $0.26 $0.26 $(1.90)
Costs from restructuring activities
(net of tax benefit) .12 .05 2.06
Pro forma net income per common share,
basic $0.38 $0.31 $0.16
Reported net income (loss) per common
share, diluted $0.25 $0.25 $(1.90)
Costs from restructuring activities (net
of tax benefit) .12 .05 2.06
Effect of dilutive securities (.01) - -
Pro forma net income per common share,
diluted $0.36 $0.30 $0.16
International Rectifier (NYSE:IRF) is a world leader in power
management technology. IR's analog and mixed signal ICs, advanced
circuit devices, integrated power systems and components enable high
performance computing and reduce energy waste in motors, the world's
single largest consumer of electricity. Leading manufacturers of
computers, energy efficient appliances, lighting, automobiles,
satellites, aircraft, and defense systems rely on IR's power
management benchmarks to power their next generation products. For
more information, go to www.irf.com.
The foregoing material includes some "forward-looking statements"
as that term is defined in the Private Securities Litigation Reform
Act of 1995. The materials presented can be identified by the use of
forward-looking terminology such as "anticipate," "believe,"
"estimate," "may," "should," "will," or "expects" or the negative or
variations thereof, whether set out in the text of documents or in
graphs. Such forward-looking statements are subject to a number of
uncertainties and risks, and actual results may differ materially from
those projected. Factors that could affect the company's actual
results include greater than expected costs of implementing company
restructuring plans; changes in assumptions or events that adversely
affect the timing and realization of anticipated cost savings from
restructuring plans and the amount of anticipated charges; the failure
of market demand to materialize as anticipated; the effectiveness of
cost controls and cost reductions; pricing pressures; unexpected costs
associated with cost-reduction efforts, including reductions in force
and the transfer, discontinuance, divestiture or consolidation of
product lines and equipment (including, without limitation, those
associated with the company's restructuring initiatives); product
claims, investigations, returns and recalls; 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 (including,
without limitation, those associated with the company's restructuring
initiatives); company and market impact due to the cancellation or
delays in customer and/or industry programs and/or orders; unfavorable
changes in industry and competitive conditions; economic conditions in
the company's markets around the world and the timing of changes in
market conditions; the company's mix of product shipments; the success
of working capital management programs; failure of suppliers and
subcontractors to meet their delivery commitments; changes in interest
and investment rates; impacts on our business or financial condition
due to changes in currency valuation; impact of changes in accounting
methods; the impact of changes in laws and regulations, including tax,
trade and export regulations and policies; the initiation of or actual
results of any outstanding patent and other litigation, whether
asserted by or against us; impacts on our royalties from patent
licensee redesign, a decline in sales by licensees, or change in
product mix to non-infringing devices; and other uncertainties
disclosed in the company's reports filed with the Securities and
Exchange Commission, including its most recent reports on Form 10-K
and 10-Q. Additionally, 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 time
(2:15 p.m. Pacific time). Participants can join the call by dialing
212.346.7499 or by logging onto 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 from 7:30 p.m. Eastern time (4:30 p.m. Pacific time) on
Thursday, January 29 until midnight Eastern time (9:00 p.m. Pacific
time) on Tuesday, February 3. To hear the replay, call 800.633.8284
(for international callers 402.977.9140) and use reservation number
21180210, or use the websites listed above.
XPhase, DCBus, DirectFET, and iPOWIR are trademarks of
International Rectifier.
Centrino, Pentium are trademarks of Intel Corporation.
International Rectifier Corporation and Subsidiaries
Unaudited Consolidated Statement of Operations
(In thousands except per share amounts)
Three Months Ended Six Months Ended
December 31 December 31
2003 2002 2003 2002
Revenues $252,314 $209,535 $486,443 $421,696
Cost of sales 157,431 147,438 307,416 285,324
Gross profit 94,883 62,097 179,027 136,372
Selling and administrative
expense 38,128 34,964 74,711 69,755
Research and development
expense 22,391 18,562 43,054 38,093
Amortization of acquisition-
related intangibles 1,408 1,327 2,797 2,654
Impairment of assets,
restructuring and severance 10,090 173,815 14,119 177,653
Other (income) expense, net 266 149 527 (159)
Interest (income) expense,
net 379 (127) (416) 534
Income (loss) before income
taxes 22,221 (166,593) 44,235 (152,158)
Provision for (benefit from)
income taxes 5,333 (45,295) 10,616 (41,831)
Net income (loss) $16,888 $(121,298) $33,619 $(110,327)
Net income (loss) per common
share
Basic $0.26 $(1.90) $0.52 $(1.73)
Diluted $0.25 $(1.90) $0.50 $(1.73)
Average common shares
outstanding -- basic 65,176 63,893 64,836 63,847
Average common shares and
potentially dilutive
securities outstanding
-- diluted 68,725 63,893 67,710 63,847
International Rectifier Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
(In thousands)
(Unaudited)
December 31 June 30
2003 2003
Assets
Current assets:
Cash, cash equivalents and cash investments $477,736 $492,472
Trade accounts receivable 150,001 138,097
Inventories, net 162,014 173,577
Deferred income taxes 25,087 32,211
Prepaid expenses and other receivables 35,389 38,482
Total current assets 850,227 874,839
Long-term cash investments 288,987 229,020
Property, plant and equipment, net 362,285 346,557
Other assets 386,839 371,436
Total assets $1,888,338 $1,821,852
Liabilities and Stockholders' Equity
Current liabilities:
Bank loans $26,285 $17,121
Long-term debt, due within one year 309 1,183
Accounts payable 68,742 86,911
Accrued salaries, wages and commissions 27,956 28,951
Other accrued expenses 56,047 77,567
Total current liabilities 179,339 211,733
Long-term debt, less current maturities 568,132 579,379
Other long-term liabilities 16,138 14,208
Deferred income taxes 13,405 4,293
Stockholders' equity:
Common stock 65,495 64,186
Capital contributed in excess of par value of
shares 734,926 699,446
Retained earnings 241,534 207,915
Accumulated other comprehensive income 69,369 40,692
Total stockholders' equity 1,111,324 1,012,239
Total liabilities and stockholders'
equity $1,888,338 $1,821,852
CONTACT: International Rectifier Corporation
Steve Harrison, 310-252-7731
http://www.irf.com
SOURCE: International Rectifier Corporation
