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 |
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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
|
June 30, 2013
|
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 | ||||||||