EL SEGUNDO, Calif., Apr 28, 2005 (BUSINESS WIRE) -- International Rectifier Corporation (NYSE: IRF) today
reported adjusted earnings of $41.7 million (or $0.56 per share) for
the March quarter -- a 40 percent increase over the prior-year
quarter. This compares to $44.8 million (or $0.62 per share) for the
December quarter. For the March, December, and prior-year quarter,
adjusted earnings excluded $8.1 million, $6.8 million, and $9.9
million in pretax charges, respectively, for severance and
restructuring activities announced in December 2002. A one-time $5.9
million net pretax gain from a patent settlement also is excluded from
March 2004 adjusted earnings.
On a GAAP basis, net income increased $35.6 million (or $0.48 per
share) for the March quarter versus $26.7 million (or $0.39 per share)
for the prior-year quarter and was $39.5 million (or $0.55 per share)
in the December 2004 quarter.
Chief Executive Officer Alex Lidow stated, "Our focus on
proprietary product sales resulted in a record gross margin of 44.4
percent, an increase of 110 basis points from the December quarter and
480 basis points from the prior-year quarter. IR's proprietary product
revenues grew 19 percent over the prior-year quarter. We generated
$142 million in cash from operations through the first nine months of
fiscal 2005 and ended the third quarter with over $850 million in
total cash and cash investments."
Revenues were $281.9 million in the March quarter compared to
$275.4 million in the prior-year quarter. Revenues declined 6 percent
from the December quarter, reflecting the planned discontinuation of
low margin products and normal seasonal patterns in the consumer and
information technology sectors. Revenues from high performance analog
ICs and advanced circuit devices grew 24 percent from the prior-year
quarter and now comprise 59 percent of revenues. Overall, proprietary
products represent 70 percent of product revenues.
Proprietary product orders rose 10 percent from the December
quarter and represented 76 percent of total company orders compared to
66 percent in the prior-year quarter. Company bookings were up 7
percent from the December quarter, led by an increase in power systems
used in energy-saving applications, automotive systems and
high-reliability aerospace systems. The company achieved a steady
increase in orders each month throughout the quarter. That strength
has continued in April with orders up over January levels.
IR shipments into the distributor channel declined 6 percent from
the December quarter while distributor shipments to their customers
were down 2 percent. Pricing was down 1.5 percent from the prior
period, consistent with the company's expectations.
Proprietary product design wins reached record levels in the March
quarter. In automotive, Bosch, Continental Temic, Osram and SiemensVDO
selected International Rectifier for their advanced technology
programs, such as high intensity discharge (HID) lighting and engine
preheat systems. Whirlpool, Midea (China's second largest appliance
manufacturer), Sanyo and Philips chose International Rectifier's ICs
and advanced circuit devices for energy-efficient appliance and
lighting applications.
Industry leaders in the information technology sector selected
IR's products for 19 new notebook and desktop designs for Intel's
latest platforms. In high performance servers, IR won 35 new designs
with the leading server suppliers in current- and next-generation
systems, including those with dual-core and multi-processor platforms.
Outlook
In the June quarter, revenues are expected to remain at March
levels, plus or minus 4 percent. IR currently has more than 80 percent
backlog coverage of target revenue for the June quarter. Overall gross
margin is expected to be flat sequentially, plus or minus a point.
Lidow stated, "We are on track to achieve our target that we set
in January to realize a 50 percent gross margin by June 2006. Two
major factors driving the growth of power management are the
accelerating demand for energy-conserving products and an emerging
technology shift in IT. Energy conservation continues to be a major
focal point in world economies and IR's power management solutions are
proving vital in helping to meet the challenges. In fact, we've seen
our revenues grow 58 percent year to date in energy-conserving
appliance and lighting applications.
"In information technology, WiMAX is opening up a new IT growth
frontier allowing for increased communications bandwidth. This expands
opportunities for IR on both the transmission and reception ends of
the market, while opening up significant new markets for increased
power management content in the new generation of base stations,
enterprise servers, notebook computers, digital TVs, and Class D
audio. WiMAX will greatly increase the utility of mobile products such
as notebook computers and PDAs, accelerating demand for these
products. This new dynamic will add significantly to our robust
notebook business which saw orders up over 90 percent in the first
nine months of fiscal 2005.
"Over the past four quarters, International Rectifier has added
over $200 million in new business at 71 percent incremental gross
margin. During that same period we have been awarded more than half a
billion dollars of new design wins which will contribute to IR's
growth over the next four to six quarters. With these successes, we're
on track to reach our target of 50 percent company gross margin by
June 2006. Beyond that, we see even higher levels."
In addition to disclosing results that are determined in
accordance with Generally Accepted Accounting Principles (GAAP), IR
also discloses adjusted or non-GAAP results of operations that exclude
costs related to restructuring activities and one-time income/loss
items. IR discloses both adjusted and actual results of operations 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, and with and without one-time income/loss items, if
any. 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 2005.
The following reconciles reported net income and earnings per
share ("EPS") to adjusted net income and EPS for the fiscal quarters
ended March 31, 2005, December 31, 2004 and March 31, 2004 (in
thousands, except per share amounts):
For the Quarter Ended
March 31, December 31, March 31,
2005 2004 2004
(unaudited) (unaudited) (unaudited)
----------- ----------- -----------
Net income $35,673 $39,514 $26,745
Costs from restructuring activities
(net of tax) 5,994 5,274 7,509
Other income, net of expenses, from
Hitachi settlement (net of tax) - - (4,448)
----------- ----------- -----------
Adjusted net income 41,667 44,788 29,806
Conversion of subordinated notes
(net of tax) 1,552 2,312 -
----------- ----------- -----------
Adjusted net income, diluted $43,219 $47,100 $29,806
=========== =========== ===========
EPS, basic $0.53 $0.59 $0.41
Effect of dilutive securities (0.05) (0.04) (0.02)
----------- ----------- -----------
EPS, diluted (1) 0.48 0.55 0.39
Costs from restructuring activities 0.08 0.07 0.11
Other income, net of expenses, from
Hitachi settlement - - (0.07)
----------- ----------- -----------
Adjusted EPS, diluted (1) $0.56 $0.62 $0.43
=========== =========== ===========
Basic EPS shares 67,795 66,929 65,826
Effect of dilutive securities:
Convertible subordinated notes 7,439 7,439 -
Stock options 2,088 2,122 3,306
----------- ----------- -----------
Diluted EPS shares (1) 77,322 76,490 69,132
=========== =========== ===========
(1) The March 31, 2005 quarter included the dilutive effect from
the conversion of the Company's outstanding convertible subordinated
notes into 7,439,000 shares of common stock ("the Shares"), which
impacted reported and adjusted diluted EPS by ($0.03) and ($0.04),
respectively. The December 31, 2004 quarter included the dilutive
effect from the conversion of the Shares, which impacted reported and
adjusted diluted EPS by ($0.03). The conversion effect was not
included in the computation of actual or adjusted diluted EPS for the
March 31, 2004 quarter, since such effect would have been
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 the failure of market demand to materialize as
anticipated (and the product mix of that demand); unexpected costs or
delays associated with cost-reduction and margin improvement efforts,
including reductions in force and the transfer, discontinuance,
divestiture or consolidation of product lines and equipment (whether
or not associated with the company's restructuring and acquisition
initiatives); 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
effectiveness of cost controls and cost reductions (including, without
limitation, that associated with our acquisition initiatives); pricing
pressures; quality and product disputes, 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; company and market impact
due to the cancellation or delays in customer and/or industry programs
and/or orders; unfavorable changes in industry conditions; economic
conditions in the company's markets around the world and the timing of
changes in market conditions; the success of working capital
management programs; 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 and the timing of
completion of necessary compliance certifications; the impact of
changes in laws and regulations, including tax, trade and export
regulations and policies; impacts on our royalties from patent
licensee redesign, a decline in sales by licensees (due to market
conditions or otherwise), 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 report on Forms 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, April 28 until 7:15 p.m. Eastern time (4:15 p.m. Pacific
time) on Tuesday, May 3. To hear the replay, call 800-633-8284 (for
international callers 402-977-9140) and use reservation number
21230146, or use the websites listed above.
XPhase, 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
Unaudited Consolidated Statement of Income
(In thousands except per share amounts)
Three Months Ended Nine Months Ended
March 31 March 31
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues $281,871 $275,411 $892,656 $761,854
Cost of sales 156,604 166,236 504,571 473,653
--------- --------- --------- ---------
Gross profit 125,267 109,175 388,085 288,201
Selling and administrative
expense 40,756 43,005 128,034 117,717
Research and development
expense 27,323 24,221 80,379 67,274
Amortization of acquisition-
related intangibles 1,473 1,421 4,369 4,218
Impairment of assets,
restructuring and severance
charges 8,077 9,907 21,599 24,026
Other (income) expense, net 169 (6,174) 825 (5,647)
Interest (income) expense, net (638) 1,512 1,728 1,095
--------- --------- --------- ---------
Income before income taxes 48,107 35,283 151,151 79,518
Provision for income taxes 12,434 8,538 38,384 19,155
--------- --------- --------- ---------
Net income $35,673 $26,745 $112,767 $60,363
========= ========= ========= =========
Net income per common share
Basic $0.53 $0.41 $1.68 $0.93
========= ========= ========= =========
Diluted $0.48 $0.39 $1.55 $0.89
========= ========= ========= =========
Average common shares
outstanding - basic 67,795 65,826 67,080 65,166
========= ========= ========= =========
Average common shares and
potentially dilutive
securities outstanding -
diluted 77,322 69,132 76,559 68,184
========= ========= ========= =========
International Rectifier Corporation and Subsidiaries
Unaudited Condensed Consolidated Balance Sheet
(In thousands)
March 31 June 30
2005 2004
----------- -----------
Assets
Current assets:
Cash, cash equivalents and cash investments $556,075 $560,154
Trade accounts receivable 167,030 154,911
Inventories, net 171,748 159,908
Deferred income taxes 48,447 44,141
Prepaid expenses and other receivables 67,379 34,096
----------- -----------
Total current assets 1,010,679 953,210
Long-term cash investments 296,341 276,055
Property, plant and equipment, net 477,767 393,919
Other assets 388,143 393,822
----------- -----------
Total assets $2,172,930 $2,017,006
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Bank loans $20,003 $18,866
Long-term debt, due within one year 224 274
Accounts payable 73,175 78,164
Accrued salaries, wages and commissions 27,382 36,510
Other accrued expenses 104,705 81,222
----------- -----------
Total current liabilities 225,489 215,036
Long-term debt, less current maturities 547,128 560,019
Other long-term liabilities 33,214 22,950
Deferred income taxes - 14,789
Stockholders' equity:
Common stock 68,109 66,358
Capital contributed in excess of par value
of shares 802,664 757,169
Retained earnings 410,452 297,685
Accumulated other comprehensive income 85,874 83,000
----------- -----------
Total stockholders' equity 1,367,099 1,204,212
----------- -----------
Total liabilities and stockholders'
equity $2,172,930 $2,017,006
=========== ===========
SOURCE: International Rectifier Corporation
International Rectifier Corporation
Steve Harrison, 310-252-7731
http://www.irf.com
