EL SEGUNDO, Calif.--(BUSINESS WIRE)--July 29, 2004--International
Rectifier (NYSE:IRF) today reported pro forma earnings of $36.6
million (or $0.52 per share) in the June quarter (after including the
dilutive impact of $0.01 per share from the first-time inclusion of
7.4 million shares underlying the Company's convertible debenture).
This compares to $29.8 million (or $0.43 per share) in the March
quarter and $15.4 million (or $0.24 per share) in the prior-year
quarter.
The pro forma June quarter earnings excluded a $9.5 million pretax
charge for ongoing severance and restructuring activities. The pro
forma March quarter earnings excluded $9.9 million in
restructuring-related pretax charges and $5.9 million pretax gain
related to the Hitachi settlement. The prior-year June quarter pro
forma earnings excluded $3.8 million in restructuring-related pretax
charges.
On a GAAP basis, net income was $29.4 million (or $0.42 per share)
in the June quarter versus $26.7 million (or $0.39 per share) in the
March quarter and $13.2 million (or $0.20 per share) in the prior-year
quarter. The calculation of June quarter GAAP earnings per share
included the dilutive impact of 7.4 million shares underlying the
Company's convertible debenture.
Revenues were $298.6 million in the June quarter, up 8 percent
from $275.4 million in the March quarter, and up 31 percent from
$228.4 million in the prior-year quarter. In the June quarter, we
discontinued $14 million of commodity product revenues as previously
announced. If included, these revenues would have meant an overall
growth rate of about 13 percent. Revenues were up across all regions,
led by Asia Pacific, up 14 percent over the March quarter and 60
percent from the prior-year quarter. Sales of high performance analog
ICs and advanced circuit devices grew 10 percent from the prior
quarter and 57 percent from the prior-year quarter. Overall, orders
rose 5 percent from the March quarter and 37 percent over the
prior-year quarter to reach a new record level.
Chief Executive Officer Alex Lidow stated, "Orders grew steadily
throughout the quarter with June being the strongest month. Our
backlog is the highest in the Company's history. It has grown steadily
every quarter for the past seven quarters climbing to over $400
million, up 65 percent from $245 million in the prior year. Our record
backlog of unfilled orders reflects, in part, the success of our
proprietary products in the new generation of desktops, notebooks and
servers combined with the strong growth of corporate IT spending. Our
IT revenue grew 20 percent sequentially and 69 percent from a year
ago."
Distributor shipments of IR products to their customers hit a
record level in the June quarter, up 11 percent over March and 49
percent from the prior-year quarter. IR shipments to distributors
increased 4 percent from the March quarter and 32 percent from the
prior-year quarter, and represented 29 percent of revenues. Pricing
was firm in the June quarter, consistent with earlier guidance.
Royalties in the June quarter were $10.9 million, up slightly from
the March quarter. Cash from operations was $80 million for the
quarter and $163 million for the fiscal year. The Company's cash and
cash investments totaled $836 million at the end of the June quarter.
June quarter gross margin expanded 160 basis points from the March
quarter to 41.2 percent, or within a fraction of IR's all-time record
level. Gross margin on incremental sales exceeded expectations at 59
percent, primarily resulting from a richer mix of proprietary
products.
IR secured over $170 million in design wins in the June quarter
reaching an all-time record. During the quarter, IR won significant
new business in target markets:
- For information technology applications, IR's ICs and advanced
circuit devices including XPhase(TM), DirectFET(TM),
DCBus(TM), and iPOWIR(TM) won leading positions at seven of
the top PC and server companies and two of the top
communications networking companies. In notebooks and
desknotes, IR won 22 new designs for Intel's latest Dothan
platform and 23 P4 mobile-based designs. In desktops, IR
secured three additional designs based on Intel's new
Grantsdale platform. In high performance servers, IR won 26
new designs in platforms using Intel's Nocona processor and
Lindenhurst chipset, and an additional 15 designs in other
processor platforms. IR won 27 new proprietary product designs
at the leading communication networking companies. Across each
of these new platforms, IR's value and unit content is
significantly higher than in previous generations.
- In consumer electronics, Samsung, LG, and Matsushita chose
high performance proprietary analog ICs and advanced circuit
devices from IR to power their plasma, LCD and DLP digital
televisions.
- In energy-efficient appliances, IR won new designs for Sanyo,
Miele, Hitachi, and Carrier programs.
- IR was selected for upcoming Bosch, Delphi, Motorola
Automotive, Siemens VDO, Continental, and TRW programs and for
BMW, Volkswagen, Audi, Ford and DaimlerChrysler vehicles for
integrated starter alternators, electric power steering,
engine preheat systems, and direct fuel injection systems.
- Power systems and advanced circuit devices won new designs for
satellites and defense systems for Lockheed-Martin, General
Dynamics, Honeywell, NASA, and Northrop-Grumman.
Outlook
Alex Lidow noted, "In July, orders continue strong, up
dramatically from the prior-year quarter, with normal seasonal
business patterns being reflected on a sequential basis, most notably
in the automotive and European markets. We have more than 90 percent
backlog coverage of our target revenue for the September quarter. A PC
upgrade cycle is clearly visible, fueled by business customers as
noted in the latest CIO surveys as well as by the leaders in
microprocessors, software, and PCs. Within this backdrop of very
promising market prospects, IR continues to discontinue or divest
commodity, non-strategic product business. Looking at the September
quarter, revenues are expected to grow 1 to 3 percent sequentially
taking into account the planned divestiture of approximately $11
million of products which, if included, would translate into an
equivalent of a 5 to 7 percent growth rate for the overall company. We
expect our overall gross margins to increase 150 basis points or more,
setting record levels in September.
"We continue to see broad end-market demand for our high
performance analog ICs and advanced circuit device orders which are up
54 percent year-over-year. IR's leading design positions will continue
to drive our growth."
For the fiscal year just ended, pro forma net income was $110.8
million (or $1.61 per share) on revenues of $1.06 billion, compared to
prior-year pro forma net income of $48.5 million (or $0.75 per share)
on revenues of $864.4 million. The calculation of fiscal 2004 pro
forma earnings per share included a $0.01 dilutive impact from the 7.4
million shares underlying the Company's convertible debenture. On a
GAAP basis, IR reported a net income of $89.8 million (or $1.31 per
share) for fiscal 2004 compared to a net loss of $89.6 million (or
$1.40 per share) for fiscal 2003.
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 and one-time
income/loss items. 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 March 2002, and with and without the $5.9
million one-time net pretax gain from the settlement with Hitachi. In
connection with the restructuring activities, among other things, the
Company is de-emphasizing some parts of 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 June 30, 2004, March 31, 2004, and June 30, 2003, and
the years ended June 30, 2004 and 2003 (in thousands, except per share
amounts):
For the Quarter Ended
June 30, March 31, June 30,
2004 2004 2003
-------- -------- --------
Net income $29,407 $26,745 $13,238
Costs from restructuring activities (net of
tax benefit) 7,213 7,509 2,157
Other income, net of expenses, from Hitachi
settlement (net of tax benefit) - (4,448) -
-------- -------- --------
Pro forma net income 36,620 29,806 15,395
Conversion of subordinated notes (net of tax
benefit) 2,629 - -
-------- -------- --------
Pro forma net income, diluted $39,249 $29,806 $15,395
======== ======== ========
EPS, basic $0.44 $0.41 $0.21
Effect of dilutive securities (0.02) (0.02) (0.01)
-------- -------- --------
EPS, diluted(1) 0.42 0.39 0.20
Costs from restructuring activities 0.11 0.11 0.04
Other income, net of expenses, from Hitachi
settlement - (0.07) -
Effect of dilutive securities (0.01) - -
-------- -------- --------
Pro forma EPS, diluted(1) $0.52 $0.43 $0.24
======== ======== ========
Basic EPS shares 66,196 65,826 64,165
Effect of dilutive securities:
Convertible subordinated notes 7,439 - -
Stock options 2,554 3,306 1,220
-------- -------- --------
Diluted EPS shares(1) 76,189 69,132 65,385
======== ======== ========
(1) June 30, 2004 quarter includes the dilutive effect from the
conversion of the Company's outstanding convertible subordinated
notes into 7,439,000 shares of common stock, which negatively
impacted actual and pro forma EPS by $0.01 for the quarter. The
conversion effect has not been included in the computation of
actual or pro forma diluted EPS for the quarters ended March 31,
2004 and June 30, 2003, since such effect would be anti-dilutive.
For the Year Ended
June 30, June 30,
2004 2003
--------- ---------
Net income $89,770 $(89,639)
Costs from restructuring activities (net of tax
benefit) 25,453 138,168
Other income, net of expenses, from Hitachi
settlement (net of tax benefit) (4,448) -
--------- ---------
Pro forma net income 110,775 48,529
Conversion of subordinated notes (net of tax
benefit) 11,275 -
--------- ---------
Pro forma net income, diluted $122,050 $48,529
========= =========
EPS, basic $1.37 $(1.40)
Effect of dilutive securities (0.06) -
--------- ---------
EPS, diluted 1.31 (1.40)
Costs from restructuring activities 0.39 2.16
Other income, net of expenses, from Hitachi
settlement (0.07) -
Effect of dilutive securities (0.02) (0.01)
--------- ---------
Pro forma EPS, diluted(2) $1.61 $0.75
========= =========
Basic EPS shares 65,459 63,982
Effect of dilutive securities 2,904 -
--------- ---------
Diluted EPS shares 68,363 63,982
Effect of dilutive securities 7,439 859
--------- ---------
Pro forma diluted EPS shares(2) 75,802 64,841
========= =========
(2) June 30, 2004 pro forma EPS includes the dilutive effect from the
conversion of the Company's outstanding convertible subordinated
notes into 7,439,000 shares of common stock, which impacted fiscal
2004 pro forma EPS by $0.01. The conversion effect has not been
included in the computation of fiscal 2004 actual diluted EPS or
fiscal 2003 actual and pro forma diluted EPS, since such effect
would be anti-dilutive.
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 (including, without limitation,
those associated with our acquisition initiatives); pricing pressures;
unexpected costs or delays 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 and acquisition initiatives); product claims,
litigation, investigations, returns and recalls, and the cost of
defense; introduction, acceptance, availability, and continued demand
and growth of new and high-performance products; delays in
transferring, integrating, 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
212-896-6121 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 7:15 p.m. Eastern time (4:15 p.m. Pacific time) on
Thursday, July 29 until midnight Eastern time (9:00 p.m. Pacific time)
on Tuesday, August 3. To hear the replay, call 800-633-8284 (for
international callers 402-977-9140) and use reservation number
21193652, or use the websites listed above.
XPhase, DCBus, DirectFET, and iPOWIR are trademarks of
International Rectifier.
Centrino, Intel, and Pentium are trademarks of Intel Corporation.
Other names and brands may be claimed as the property of others.
International Rectifier Corporation and Subsidiaries
Consolidated Statement of Operations
(In thousands except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
June 30 June 30
------------------- ---------------------
2004 2003 2004 2003
--------- --------- ----------- ---------
Revenues $298,646 $228,370 $1,060,500 $864,443
Cost of sales 175,753 148,803 649,406 576,633
--------- --------- ----------- ---------
Gross profit 122,893 79,567 411,094 287,810
Selling and administrative
expense 47,007 37,253 164,723 142,499
Research and development
expense 24,882 21,233 92,156 78,904
Amortization of acquisition-
related intangibles 1,404 1,368 5,623 5,364
Impairment of assets,
restructuring and severance 9,508 3,847 33,534 187,890
Other (income) expense, net 609 214 (5,038) 22
Interest (income) expense,
net 717 (757) 1,812 (671)
--------- --------- ----------- ---------
Income (loss) before income
taxes 38,766 16,409 118,284 (126,198)
Provision for (benefit from)
income taxes 9,359 3,171 28,514 (36,559)
--------- --------- ----------- ---------
Net income (loss) $29,407 $13,238 $89,770 $(89,639)
========= ========= =========== =========
Net income (loss) per common
share
Basic $0.44 $0.21 $1.37 $(1.40)
========= ========= =========== =========
Diluted $0.42 $0.20 $1.31 $(1.40)
========= ========= =========== =========
Average common shares
outstanding - basic 66,196 64,165 65,459 63,982
========= ========= =========== =========
Average common shares and
potentially dilutive
securities outstanding
- diluted 76,189 65,385 68,363 63,982
========= ========= =========== =========
International Rectifier Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
(In thousands)
June 30 June 30
2004 2003
----------- -----------
Assets
Current assets:
Cash, cash equivalents and cash investments $560,154 $492,472
Trade accounts receivable 154,911 138,097
Inventories, net 159,908 173,577
Deferred income taxes 44,141 32,211
Prepaid expenses and other receivables 34,096 38,482
----------- -----------
Total current assets 953,210 874,839
Long-term cash investments 276,055 229,020
Property, plant and equipment, net 393,919 346,557
Other assets 393,822 371,436
----------- -----------
Total assets $2,017,006 $1,821,852
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Bank loans $18,866 $17,121
Long-term debt, due within one year 274 1,183
Accounts payable 78,164 86,911
Accrued salaries, wages and commissions 36,510 28,951
Other accrued expenses 81,222 77,567
----------- -----------
Total current liabilities 215,036 211,733
Long-term debt, less current maturities 560,019 579,379
Other long-term liabilities 22,950 14,208
Deferred income taxes 14,789 4,293
Stockholders' equity:
Common stock 66,359 64,186
Capital contributed in excess of par value of
shares 757,168 699,446
Retained earnings 297,685 207,915
Accumulated other comprehensive income 83,000 40,692
----------- -----------
Total stockholders' equity 1,204,212 1,012,239
----------- -----------
Total liabilities and stockholders'
equity $2,017,006 $1,821,852
=========== ===========
CONTACT: International Rectifier
Steve Harrison, 310-252-7731
http://www.irf.com
SOURCE: International Rectifier
