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IRF - International Rectifier Reports Fourth Quarter and Fiscal Year 2012 Results and Announces Operational Restructuring

Business WirePress Release: International Rectifier Corporation – 43 minutes ago

EL SEGUNDO, Calif.--(BUSINESS WIRE)--

International Rectifier Corporation (IRF) today announced financial results for the fourth quarter (ended June 24, 2012) of its fiscal year 2012. Revenue for the fourth quarter fiscal year 2012 was $269.7 million, an 8.7% increase from $248.1 million in the third quarter fiscal year 2012 and a 15% decrease from $317.2 million in the fourth quarter fiscal year 2011.

International Rectifier reported net loss for the fourth quarter of $68.2 million, or $0.99 per fully diluted share. The fourth quarter results included a $69.4 million goodwill impairment, a $21.2 million gross tax benefit, $4.4 million in asset impairment charges and inventory write-offs associated with the Company’s El Segundo facility closure, $1.7 million in amortization of acquisition related intangibles and $1.7 million in severance charges. Combined, these items negatively impacted fully diluted earnings per share by $0.81.

Revenue for fiscal year 2012 was $1.05 billion, a 10.3% decrease from $1.18 billion in the prior fiscal year. Net loss for fiscal year 2012 was $55.1 million or $0.79 per fully diluted share compared with net income of $166.5 million or $2.33 per fully diluted share for fiscal year 2011.

President and Chief Executive Officer Oleg Khaykin stated: “Weak demand in our end markets significantly impacted our results over the 2012 fiscal year. Despite the challenging end-market environment, we continue to execute well on new product introductions, technology development and design wins. We continue to believe that our leadership positions in digital power management, IGBTs and gallium nitride will enable future growth when demand recovers.”

Gross margin for the fourth quarter was 25.9% compared with 29.8% in the prior quarter and 37.2% in the fourth quarter fiscal year 2011. Fourth quarter cost of sales included $4.4 million in asset impairment charges and inventory write-offs associated with the Company’s El Segundo facility closure that negatively impacted gross margin by 1.6 percentage points.

Research and development expenses for the fourth quarter fiscal year 2012 were $35.1 million compared with $34.8 million in the third quarter fiscal year 2012.

Selling, general and administrative expenses for the fourth quarter fiscal year 2012 were $51.3 million, which included $1.7 million in severance charges, compared with $49.6 million in the third quarter fiscal year 2012.

Operating loss was $87.7 million compared with an operating loss of $7.1 million in the prior quarter and operating income of $30.6 million in the fourth quarter fiscal year 2011. Fourth quarter operating loss included a $69.4 million goodwill impairment, $4.4 million in asset impairment charges and inventory write-offs associated with the company’s El Segundo facility closure, $1.7 million in amortization of acquisition related intangibles and $1.7 million in severance charges. Combined, these items negatively impacted operating loss by $77.2 million.

Cash, cash equivalents and marketable investments at the end of the quarter totaled $385.9 million including $1.5 million in restricted cash, up $19.7 million compared with the prior quarter.

Cash provided by operating activities for the quarter was $58.3 million.

The Company had 69,231,006 shares outstanding at the end of the quarter.

Operational Restructuring Activities

“Given the prolonged weak demand and uncertainty, both in our end-markets and in the overall macroeconomic conditions, we believe this is the right time to resume the operational transformation of the Company in line with our long-term strategy,” said Mr. Khaykin. “We are taking steps to reduce our internal manufacturing footprint and lower our operating expenses in order to align our cost structure with current business conditions.”

Today, the Company announced operational restructuring activities including the closure of its El Segundo, California, fabrication facility. The Company expects to complete the closure of this facility by the end of March 2013. The closure of this facility is expected to save approximately $10 million per year when completed.

In conjunction with the operational restructuring activities, the Company is also resizing its Newport, Wales, fabrication facility, which is expected to continue in several phases through the middle of calendar year 2015. The Company is in the process of finalizing the Newport facility resizing plan, and expects to include an estimate of the cost savings related to this item when it reports its first quarter fiscal year 2013 results.

The Company has also initiated cost reductions in operating expenses. The reduction is expected to save approximately $20 million in operating expenses on an annualized basis starting in the December quarter of 2012.

September Quarter Outlook

Oleg Khaykin noted: “With weak end-market demand in the white goods and industrial end markets, particularly in Asia and Europe, we currently expect September quarter revenue to range between $235 million to $250 million. Gross margin is expected to be about 28%.

“Present difficulties notwithstanding, we continue to be optimistic about our long-term growth prospects and are using the near-term weakness to restructure our manufacturing footprint and operating expenses and increase IR’s future operating leverage,” concluded Mr. Khaykin.

The following table outlines International Rectifier’s projected September quarter outlook:

Revenue $235 to $250 million
Gross margin 28%
Operating expenses
Research and development $34 million
Sales, general and administrative $47 million
Severance charges
$8 to $9 million
Amortization of acquisition related intangibles $1.7 million
Other expense, net $1 million
Foreign tax accruals $3 million


Segment Table Information/Customer Segments

The business segment tables included with this release for the Company’s fiscal quarters ended June 24, 2012, March 25, 2012 and June 26, 2011, respectively, and fiscal years ended June 24, 2012, and June 26, 2011, 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 2012 fiscal year with the Securities and Exchange Commission on Thursday, August 23, 2012. 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 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 Wednesday, August 22, through Wednesday, August 29, 2012. To listen to the replay by phone, call 855-859-2056 or 404-537-3406 for international callers and enter reservation number 13762500. 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 (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.

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