International Rectifier Corporation (NYSE:IRF) today announced financial results for the fourth quarter (ended June 27, 2010) of its fiscal year 2010. Revenue for the fourth quarter fiscal year 2010 was $263.8 million, a 9.1% increase from $241.9 million in the third quarter fiscal year 2010 and a 65.3% increase from $159.6 million in the fourth quarter fiscal year 2009.

International Rectifier reported net income of $29.0 million, or $0.41 per fully diluted share for the fourth quarter fiscal year 2010, compared with a net income of $40.4 million, or $0.56 per fully diluted share, in the prior quarter, and net income of $29.1 million, or $0.40 per share in the fourth quarter fiscal year 2009. The results for the fourth and third quarter fiscal year 2010 included $8.5 million and $23.0 million, respectively, of gross tax benefits. The results for the fourth quarter fiscal year 2009 also included recognition of a $96.1 million deferred gain on the prior divestiture of the Power Control Systems (PCS) business, a $45 million charge arising from the settlement of a securities class action litigation, a $9.6 million tax benefit, a $9.5 million expense recovery from an insurance reimbursement, and a $2.0 million investment impairment charge.

Gross margin was 36.1%, flat compared with the third quarter fiscal year 2010 and up from 20.8% in the fourth quarter fiscal year 2009.

Research and development expenses for the fourth quarter fiscal year 2010 were $26.6 million, up from $25.6 million in the prior quarter.

Selling, general and administrative expenses for the fourth quarter fiscal year 2010 were $45.2 million, compared with $43.1 million in the prior quarter.

Cash, cash equivalents and marketable investments totaled $586.6 million at the end of the fourth quarter fiscal year 2010, including restricted cash of $3.7 million.

Net cash from operating activities for the fourth quarter fiscal year 2010 was $57.9 million.

During the fourth quarter fiscal year 2010, the Company purchased 435,954 shares of its common stock under its existing share repurchase program. The Company had 70,324,178 shares outstanding at the end of the quarter.

First Quarter Outlook

International Rectifier President and Chief Executive Officer Oleg Khaykin stated: “IR has made good progress building growth momentum and improving operational performance over the 2010 fiscal year. As we enter fiscal 2011, we continue to invest in our business focusing on research and development and design wins and driving future growth.

“For the September quarter, our design win activity remains strong and we continue to see increased end-market demand, particularly in our industrial, discrete, and automotive products. We currently expect first quarter revenue to range from $275 million to $280 million and gross margin to be about 37.5%.”

Segment Table Information

The customer segment tables included with this release for the Company’s fiscal quarters ended June 27, 2010, March 28, 2010 and June 28, 2009, respectively, reconcile revenue and gross margin for the Company’s ongoing customer 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 fiscal year 2010 with the Securities and Exchange Commission on Thursday, August 26, 2010. This financial report will be available for viewing and download at http://investor.irf.com.

NOTE: A conference call will begin today at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). 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 5:30 p.m. Pacific time on Thursday, August 26, through Thursday, September 2, 2010. To listen to the replay by phone, call 800-642-1687 or 706-645-9291 for international callers and enter reservation number 91435095. 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” 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, reduced demand arising from a decline or volatility in general market and economic conditions; reduced margins from lower than expected factory utilization and inventory reduction efforts; continued volatility and further deterioration of the capital markets; 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; unexpected costs or delays in implementing our plans to transfer, consolidate and qualify product lines, including product lines at third party contract manufacturers; 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; 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 27,   March 28, June 27,   June 28,
  2010     2010     2010     2009  
Revenues $ 263,796 $ 241,886 $ 895,297 $ 740,419
Cost of sales   168,684     154,576     602,700     515,563  
Gross profit 95,112 87,310 292,597 224,856
Selling, general and administrative expense 45,188 43,135 169,190 262,068
Research and development expense 26,619 25,649 99,310 98,211
Impairment of goodwill 23,867
Amortization of acquisition-related intangible assets 1,094 1,093 4,375 4,408
Asset impairment, restructuring and other charges 35 117 289 56,493
Gain on divestiture               (96,136 )
Operating income (loss) 22,176 17,316 19,433 (124,055 )
Other (income) expense, net (86 ) 318 2,019 39,717
Interest income, net   (2,190 )   (2,573 )   (11,221 )   (11,694 )
Income (loss) before income taxes 24,452 19,571 28,635 (152,078 )
(Provision for) benefit from income taxes   (4,570 )   (20,816 )   (52,192 )   95,339  
Net income (loss) $ 29,022   $ 40,387   $ 80,827   $ (247,417 )
 
Net income (loss) per common share-basic $ 0.41   $ 0.57   $ 1.13   $ (3.42 )
 
Net income (loss) per common share-diluted $ 0.41   $ 0.56   $ 1.13   $ (3.42 )
 
Average common shares outstanding—basic 70,553 70,850 70,958 72,295

Average common shares and potentially dilutive securities outstanding—diluted
71,014 71,176 71,248 72,295
 
INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
(In thousands)
 
  June 27,   June 28, 2009
2010 (1)(2)
ASSETS
Current assets:
Cash and cash equivalents $229,789 $365,761
Restricted cash 1,913 3,925
Short-term investments 309,384 113,247
Trade accounts receivable, net of allowances of $3,725 for 2010 and $5,102 for 2009 156,753 98,515
Inventories 170,168 151,121
Current deferred tax assets 2,085 1,223
Prepaid expenses and other receivables 40,243   27,613  
Total current assets 910,335 761,405
Restricted cash 1,753
Long-term investments 43,751 121,508
Property, plant and equipment, at cost, net 347,745 369,713
Goodwill 74,955 74,955
Acquisition-related intangible assets, net 7,446 11,821
Long-term deferred tax assets 7,738 7,994
Other assets 47,194   53,911  
Total assets $1,440,917   $1,401,307  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $94,646 $62,570
Accrued income taxes 5,764 6,830
Accrued salaries, wages and commissions 32,279 22,325
Current deferred tax liabilities 1,686 2,793
Other accrued expenses 75,259   114,043  
Total current liabilities 209,634 208,561
Long-term deferred tax liabilities 5,334 4,439
Other long-term liabilities 34,504   53,055  
Total liabilities 249,472   266,055  
Commitments and contingencies
Stockholders’ equity:
Common shares, $1 par value, authorized: 330,000,000; issued and outstanding: 70,324,178 shares in 2010 and 71,192,390 shares in 2009 73,518 73,101
Preferred shares, $1 par value, authorized: 1,000,000; issued and outstanding: none in 2010 and 2009
Capital contributed in excess of par value 997,637 981,786
Treasury stock, at cost (48,671 ) (23,632 )
Retained earnings 179,189 98,362
Accumulated other comprehensive income (10,228 ) 5,635  
Total stockholders’ equity 1,191,445   1,135,252  
Total liabilities and stockholders’ equity $1,440,917   $1,401,307  
 

(1)

Certain reclassifications have been made to the previously reported amounts to conform to the current presentation.

(2)

During the second quarter of fiscal year 2010, we determined that in prior years, specifically fiscal years 1998 through 2006, net foreign currency gains of $13.3 million related to intra-company loans with the Company’s foreign subsidiaries which should have been recorded in other expense, net and, as a result, should have impacted net income (loss), were recorded in other comprehensive income. This adjustment is reflected in the June 28, 2009 balance sheet above.
 
INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(In thousands)
 
  Three Months Ended   Fiscal Year Ended
June 27,   June 28, June 27,   June 28,
  2010    

2009 (1)

 
  2010    

2009 (1)

 
Cash flow from operating activities:
Net income (loss) $ 29,022 $ 29,093 $ 80,827 $ (247,417 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 18,648 16,528 70,686 64,003
Amortization of acquisition-related intangible assets 1,094 1,112 4,375 4,408
Loss on disposal of fixed assets 327 559
Stock compensation expense 3,193 2,399 11,419 7,405
Goodwill impairment 23,867
(Gain) loss on sale of investments (1,077 ) (1,221 ) (6,485 ) 3,411
Other-than-temporary impairment of investments 1,290 1,981 3,349 39,239
Provision for bad debt 163 (131 ) (2,168 ) 131
Provision for (recovery of) inventory write-downs 1,627 (183 ) (2,997 ) 10,727
Asset impairment 856 51,709
Gain on derivatives (1,463 ) (1,398 ) (3,427 ) (1,220 )
Divestiture gain (96,136 ) (96,136 )
Deferred income taxes (4,618 ) 21,651 (5,885 ) 104,101
Net settlement of restricted stock units for tax withholdings (37 ) (782 ) (500 )
Tax benefit (charge) from exercise of stock options (228 ) 340
Excess tax benefit from stock options exercised (150 ) (197 ) (3 )
Changes in operating assets and liabilities, net 8,890 19,577 (100,734 ) (5,286 )
Other   967     (3,284 )   3,689     (490 )
Net cash provided by (used in) operating activities   57,876     (9,384 )   52,229     (41,711 )
Cash flow from investing activities:
Additions to property, plant and equipment (19,714 ) (7,864 ) (58,071 ) (20,793 )
Proceeds from sale of property, plant and equipment 478 535 576
Cash conveyed as part of Divestiture (30,000 ) (30,000 )
Withdrawals from deferred compensation plan 2,443
Sale of investments 17,307 46,180 146,667 317,591
Maturities of investments 89,560 35,920 146,060 117,555
Purchase of investments (96,724 ) (49,823 ) (407,399 ) (289,333 )
Redemption of equity investment 2,050
(Additions to) released from restricted cash   (261 )   14,084     259     14,012  
Net cash (used in) provided by investing activities   (9,354 )   8,497     (167,456 )   109,608  
Cash flow from financing activities:
Decrease in restricted cash 1,416
Proceeds from exercise of stock options and stock participation plan 1,158 59 5,629 3,023
Excess tax benefit from options exercised 150 197 3
Purchase of treasury stock   (8,609 )   (8,203 )   (25,039 )   (23,632 )
Net cash used in financing activities (7,301 ) (8,144 ) (19,213 ) (19,190 )
Effect of exchange rate changes on cash and cash equivalents   (487 )   1,297     (1,532 )   (3,410 )
Net increase (decrease) in cash and cash equivalents 40,734 (7,734 ) (135,972 ) 45,297
Cash and cash equivalents, beginning of year   189,055     373,495     365,761     320,464  
Cash and cash equivalents, end of year $ 229,789   $ 365,761   $ 229,789   $ 365,761  
 
(1) Certain reclassifications have been made to the previously reported amounts to conform to the current presentation.
 

For the fiscal years ended June 27, 2010 and June 28, 2009, revenue and gross margin by reportable segments were as follows (in thousands, except percentages):
 
  June 27, 2010   June 28, 2009 (1)
  Percentage   Gross   Percentage   Gross
Business Segment Revenues of Total Margin Revenues of Total Margin
Power management devices $345,610 38.6% 16.5% $233,737 31.6% 10.9%
Energy-saving products 185,404 20.7 40.3 151,090 20.4 36.7
Automotive products 72,932 8.1 24.2 54,061 7.3 21.5
Enterprise power 128,691 14.4 42.3 87,473 11.8 37.1
HiRel 153,213 17.1 51.7 148,266 20.0 51.7
Ongoing customer segments total 885,850 98.9 32.0 674,627 91.1 29.9
Intellectual property 9,447 1.1 100.0 27,673 3.7 100.0
Ongoing segments total 895,297 100.0 32.7 702,300 94.9 32.6
Transition services 38,119 5.1 (11.3)
Consolidated total $895,297 100.0% 32.7% $740,419 100.0% 30.4%
 

For the three months ended June 27, 2010 and March 28, 2010, revenue and gross margin by reportable segments were as follows (in thousands, except percentages):
 
June 27, 2010 March 28, 2010 (1)
Percentage Gross Percentage Gross
Business Segment Revenues of Total Margin Revenues of Total Margin
Power management devices $109,404 41.5% 24.4% $95,021 39.3% 21.1%
Energy-saving products 55,190 20.9 42.9 51,992 21.5 44.7
Automotive products 21,523 8.2 30.6 19,950 8.2 28.3
Enterprise power 34,919 13.2 44.0 32,586 13.5 41.8
HiRel 40,644 15.4 50.8 40,163 16.6 56.2
Ongoing customer segments total 261,680 99.2 35.5 239,712 99.1 35.5
Intellectual property 2,116 0.8 100.0 2,174 0.9 100.0
Ongoing segments total 263,796 100.0 36.1 241,886 100.0 36.1
Transition services
Consolidated total $263,796 100.0% 36.1% $241,886 100.0% 36.1%

For the three months ended June 28, 2009, revenue and gross margin by reportable segments were as follows (in thousands, except percentages):
 
  June 28, 2009 (1)
  Percentage   Gross
Business Segment Revenues of Total Margin
Power management devices $53,853 33.8% (2.0)%
Energy-saving products 30,255 19.0 21.0
Automotive products 12,920 8.1 10.0
Enterprise power 19,534 12.2 36.0
HiRel 37,527 23.5 49.5
Ongoing customer segments total 154,089 96.6 20.9
Intellectual property 2,748 1.7 100.0
Ongoing segments total 156,837 98.3 22.3
Transition services 2,720 1.7 (63.7)
Consolidated total $159,557 100.0% 20.8%
 

(1)

During the fourth quarter of fiscal year 2010, the Company realigned the reporting for certain products within its reportable segments. This realignment was primarily between our Power Management Devices segment and Automotive Products segment with revenue and gross margin for certain products previously reported under our Power Management Devices segment now reported under our Automotive Products segment. These changes resulted in an increase in revenue and gross margin for the Automotive Products and a corresponding decrease in revenue and gross margin for the Power Management Devices segment. Prior periods have been adjusted to reflect this realignment.

Copyright Business Wire 2010