International Rectifier Reports Fourth Quarter and Full Year Fiscal 2013 Results

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International Rectifier Reports Fourth Quarter and Full Year Fiscal 2013 Results

EL SEGUNDO, Calif.--(BUSINESS WIRE)-- International Rectifier Corporation (NYS: IRF) today announced financial results for the fourth quarter (which was 14 weeks ending June 30, 2013) of its fiscal year 2013. Revenue was $276.5 million, a 23.3% increase compared to $224.3 million in the prior quarter and a 3% increase from $269.7 million in the prior year quarter. GAAP net loss for the fourth quarter was $6.1 million, or $0.09 per fully diluted share compared to GAAP net loss of $21.2 million, or $0.31 per fully diluted share, in the prior quarter and GAAP net loss of $68.2 million, or $0.99 per fully diluted share in the prior year quarter.

Revenue for fiscal year 2013 was $977 million, a 7% decrease from $1.05 billion in the prior fiscal year. Net loss for fiscal year 2013 was $88.8 million or $1.28 per fully diluted share compared with a net loss of $55.1 million or $0.79 per fully diluted share for fiscal year 2012.


"Fourth quarter revenue exceeded our expectations, increasing significantly as all of our business segments posted strong sequential growth," stated President and Chief Executive Officer Oleg Khaykin. "In addition, our gross margin recovery continued, coming in at the high end of guidance as a result of improving business demand, utilization and mix. Our non-GAAP operating income turned positive in the fourth quarter at $4.5 million, capital expenditures remained below our target of 7% of sales and we increased our cash balance by $52.5 million."

GAAP gross margin for the fourth quarter was 30% compared to 24.3% in the prior quarter and 25.9% in the prior year quarter. GAAP operating income for the fourth quarter was $237 thousand compared to an operating loss of $20 million in the prior quarter and an operating loss of $87.7 million in the prior year quarter.

Cash, cash equivalents and marketable investments increased $52.5 million and totaled $455.9 million at the end of the fourth quarter, including restricted cash of $1.3 million.

Cash provided by operating activities for the quarter was $57.8 million and free cash flow was $46.1 million.

Non-GAAP Results

Non-GAAP net loss for the fourth quarter was $1.2 million, or $0.02 per fully diluted share compared to non-GAAP net loss of $19.8 million, or $0.29 per fully diluted share in the prior quarter and non-GAAP net loss of $10.5 million, or $0.15 per fully diluted share in the prior year quarter.

Non-GAAP gross margin for the fourth quarter was 30.2% compared to GAAP gross margin of 24.3% in the prior quarter (there not being a non-GAAP gross margin in the prior quarter) and non-GAAP gross margin of 27.5% in the prior year quarter. Non-GAAP operating income for the fourth quarter was $4.5 million compared to non-GAAP operating loss of $17.5 million in the prior quarter and non-GAAP operating loss of $10.4 million in the prior year quarter.

Non-GAAP net loss for fiscal year 2013 was $62.6 million or $0.90 per fully diluted share compared with a non-GAAP net loss of $2.2 million or $0.03 per fully diluted share for fiscal year 2012.

The non-GAAP results the Company provides exclude the effects of accelerated depreciation, asset impairment, inventory write-offs associated with our El Segundo fab closure, restructuring costs, severance costs, impairment of goodwill, amortization of intangibles, the associated net tax effects of these items, and discrete tax provisions and benefits. The Company excludes any tax provisions (benefits) that are not directly related to ongoing operations and which are either isolated or cannot be expected to occur again with any regularity or predictability.

A reconciliation of these non-GAAP measures to the Company's reported net income (loss), gross margin (referred to as gross profit in attached schedules) and operating income (loss) in accordance with U.S. GAAP are set forth in the attached schedules below and on our web-site at www.investor.irf.com.

September Quarter Outlook

Mr. Khaykin noted: "Looking ahead to the September quarter which is a typical 13-week period, we see modest growth compared with a normalized 13-week June quarter as demand across our end markets remains stable. As such, we continue to see strong gross margin leverage from rising utilization and manufacturing efficiencies. As a result, we currently expect revenue for the September quarter to range between $260 million to $268 million and GAAP gross margin to range between 33% and 34%."

The following table outlines International Rectifier's current September quarter outlook on a GAAP basis and a non-GAAP basis, based on certain anticipated excluded items:

      
GAAP  Excluded Items  Non-GAAP
Revenue (13-week quarter)$260 to $268 million$260 to $268 million
 
Gross margin33% to 34%0.2% accelerated depreciation33.2% to 34.2%
 
Operating Expenses$77.5 to $78.5 million

$1 to $2 million asset impairment,
restructuring and other charges;
$1.6 million amortization of
acquisition related intangibles

$75 million
 
Other Expense, net$1 million$1 million
 
Tax Expense$6.5 to $7.5 million

$3.5 million income tax adjustments
primarily due to UK rate change

$3 to $4 million
 

Segment Table Information/Customer Segments

The business segment tables included with this release for the Company's fiscal quarters ended June 30, 2013, March 24, 2013, and June 24, 2012, respectively, reconcile revenue and gross margin for the Company's 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 the 2013 fiscal year with the Securities and Exchange Commission on Tuesday, August 20, 2013. This financial report will be available for viewing and download at http://investor.irf.com.

NOTE: A conference call will begin today at 2:00 p.m. Pacific time. CEO Oleg Khaykin and CFO Ilan Daskal will discuss the Company's 2013 fiscal year, June quarter results and September quarter outlook. 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 6:00 p.m. Pacific time on Monday, August 19 through Monday, August 26, 2013. To listen to the replay by phone, call 855-859-2056 or 404-537-3406 for international callers and enter reservation number 40285253. 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 (NYS: 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; 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 EndedFiscal Year Ended

June 30,
2013
(Unaudited)

  

March 24,
2013
(Unaudited)

  

June 24,
2012

(Unaudited)

June 30,

2013

  

June 24,

2012

Revenues$276,453$224,268$269,675$977,035$1,050,588
Cost of sales 193,386  169,860  199,871  719,930  710,565 
Gross profit83,06754,40869,804257,105340,023
 
Selling, general and administrative expense46,34843,02051,284181,746200,411
Research and development expense32,64328,87635,052127,093135,105
Impairment of goodwill69,42169,421
Amortization of acquisition-related intangible assets1,6301,6631,7186,6538,369
Asset impairment, restructuring and other charges2,20988016,996
Gain on disposition of property         (5,410)
Operating income (loss)237(20,031)(87,671)(75,383)(67,873)
Other expense (income), net421(450)1541,3904,267
Interest expense (income), net 33  64  (46) 57  (333)
Loss before income taxes(217)(19,645)(87,779)(76,830)(71,807)
Provision for (benefit from) income taxes 5,861  1,600  (19,593) 11,990  (16,757)
Net loss$(6,078)$(21,245)$(68,186)$(88,820)$(55,050)
 
Net loss per common share-basic (1)$(0.09)$(0.31)$(0.99)$(1.28)$(0.79)
 
Net loss per common share-diluted (1)$(0.09)$(0.31)$(0.99)$(1.28)$(0.79)
 
Average common shares outstanding—basic69,78569,27369,15769,38569,270
 
Average common shares and potentially dilutive securities outstanding—diluted69,78569,27369,15769,38569,270
 
  

(1)

 

Net income (loss) per common share is computed using the two-class method as required by accounting rules. We do not pay dividends; however, net income must be allocated to unvested restricted stock units ("RSUs") on which we could pay dividend equivalents. The amount of net income allocated to these RSUs is excluded from income available to common shareholders in the calculation of earnings per share. As we were in a net loss for all fiscal periods presented above, we did not have any income to allocate to unvested RSUs on which we could pay dividend equivalents.

 
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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands)

    

June 30,

2013

June 24,

2012

ASSETS
Current assets:
Cash and cash equivalents$443,490$305,423
Restricted cash611595
Short-term investments11,05663,872
Trade accounts receivable, net of allowances of $915 for 2013 and $2,066 for 2012137,762168,499
Inventories232,315294,702
Current deferred tax assets4,9485,110
Prepaid expenses and other receivables 33,002  29,845 
Total current assets863,184868,046
Restricted cash738940
Long-term investments15,054
Property, plant and equipment, net423,338461,115
Goodwill52,14952,149
Acquisition-related intangible assets, net21,92328,576
Long-term deferred tax assets32,79240,850
Other assets 59,088  65,093 
Total assets$1,453,212 $1,531,823 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$89,312$88,726
Accrued income taxes949750
Accrued salaries, wages and commissions39,71940,403
Current deferred tax liabilities
Other accrued expenses 78,414  83,164 
Total current liabilities208,394213,043
Long-term deferred tax liabilities8,9706,653
Other long-term liabilities 24,530  35,800 
Total liabilities 241,894  255,496 
Commitments and contingencies
Stockholders' equity:
Preferred shares, $1 par value, authorized: 1,000,000; issued and outstanding: none in 2013 and 2012
Common shares, $1 par value, authorized: 330,000,000; outstanding: 70,399,081 shares in 2013 and 69,231,006 shares in 201276,59075,125
Capital contributed in excess of par value1,067,8411,037,736
Treasury stock, at cost; 6,191,082 shares in 2013 and 5,894,882 shares in 2012(113,175)(107,965)
Retained earnings201,865290,685