-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, poLXkQq11MuT5j+xhJH4j3GZte29e1W+B0uesceVKLosN+Rb2XSWULiKz02nCecM KimPO8d9tnR+9QERtz4gdQ== 0000316793-94-000002.txt : 19940218 0000316793-94-000002.hdr.sgml : 19940218 ACCESSION NUMBER: 0000316793-94-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940217 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL RECTIFIER CORP /DE/ CENTRAL INDEX KEY: 0000316793 STANDARD INDUSTRIAL CLASSIFICATION: 3674 IRS NUMBER: 951528961 STATE OF INCORPORATION: DE FISCAL YEAR END: 0629 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 34 SEC FILE NUMBER: 001-07935 FILM NUMBER: 94510144 BUSINESS ADDRESS: STREET 1: 233 KANSAS ST CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 2137722000 10-Q 1 10-Q MAIN DOCUMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (mark one) [X] Quarterly report pursuant to section 13 or 15 (d) of the securities exchange act of 1934 For the quarterly period ended DECEMBER 31, 1993 [ ] Transition report pursuant to section 13 or 15 (d) of the securities exchange act of 1934 (no fee required) For the transition period from _______ to _______ Commission File NO. 1-7935 International Rectifier Corporation (exact name of registrant as specified in its charter) DELAWARE 95-1528961 (State or other jurisdiction of (IRS employer incorporation or organization) identification number) 233 KANSAS STREET EL SEGUNDO, CALIFORNIA 90245 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (310) 322-3331 NO CHANGE (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] There were 20,342,177 shares of $1 par value common stock outstanding at February 10, 1994. Table of Contents PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements Unaudited Consolidated Statement of Operations for the Three and Six Month Periods Ended December 31, 1993 and December 31, 1992 Consolidated Balance Sheet as of December 31, 1993 (unaudited) and June 30, 1993 Unaudited Consolidated Statement of Cash Flows for the Six Month Periods Ended December 31, 1993 and 1992 Notes to Unaudited Consolidated Financial Statements ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements International Rectifier Corporation and Subsidiaries Unaudited Consolidated Statement of Operations (In thousands except per share amounts) Three Months Ended Six Months Ended December 31, December 31, -------------------- ------------------- 1993 1992 1993 1992 -------- -------- -------- -------- Revenues $ 79,104 $ 70,452 $152,198 $135,432 Cost of sales 53,491 51,035 103,165 99,078 -------- -------- -------- -------- Gross profit 25,613 19,417 49,033 36,354 Selling and administrative expense 16,791 15,502 33,141 30,628 Research and development expense 3,969 3,593 7,779 6,548 -------- -------- -------- -------- Operating profit (loss) 4,853 322 8,113 (822) Other income (expense): Interest - net (794) (445) (1,554) (978) Other - net (297) (1,674) (491) (2,063) -------- -------- -------- -------- Income (loss) before income taxes 3,762 (1,797) 6,068 (3,863) Provision for income taxes 692 196 1,022 8 -------- -------- -------- -------- Net income (loss) $ 3,070 $ (1,993) $ 5,046 $ (3,871) ======== ======== ======== ======== Net income (loss) per share $ 0.15 $ (0.10) $ 0.25 $ (0.19) ======== ======== ======== ======== Average common and common equivalent shares outstanding 20,398 19,982 20,379 19,975 ======== ======== ======== ======== The accompanying notes are an integral part of this statement. International Rectifier Corporation and Subsidiaries Consolidated Balance Sheet (In thousands) December 31, 1993 June 30, (unaudited) 1993 --------- -------- Assets Current assets: Cash and cash equivalents $ 12,026 $ 8,545 Trade accounts receivable (net) 58,279 55,004 Inventories 67,636 62,609 Prepaid expenses 1,809 1,731 -------- -------- Total current assets 139,750 127,889 Property, plant and equipment (net) 139,996 138,518 Investments and long-term notes receivable 2,215 2,251 Other assets 10,426 9,790 -------- -------- Total assets $ 292,387 $ 278,448 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Bank loans $ 27,777 $ 24,007 Long-term debt - due within one year 3,697 3,532 Accounts payable 26,948 27,846 Accrued salaries, wages and commissions 8,083 9,376 Other accrued expenses 7,613 5,012 -------- -------- Total current liabilities 74,118 69,773 Long-term debt, less current maturities 17,545 11,810 Deferred income 1,199 1,402 Other long-term liabilities 8,057 9,073 Deferred income taxes 673 316 Stockholders' equity: Common stock 20,300 20,234 Capital contributed in excess of par value 167,621 167,148 Retained earnings 8,832 3,786 Cumulative translation adjustments (5,958) (5,094) -------- -------- Total stockholders' equity 190,795 186,074 -------- -------- Total liabilities and stockholders' equity $ 292,387 $ 278,448 ======== ======== The accompanying notes are an integral part of this statement. International Rectifier Corporation and Subsidiaries Unaudited Consolidated Statement of Cash Flows (In thousands) Six Months Ended December 31, --------------------- 1993 1992 -------- -------- Cash flow from operating activities: Net income (loss) $ 5,046 $ (3,871) Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 8,527 7,971 Deferred income (203) (262) Deferred income taxes 361 (7) Deferred compensation 759 820 -------- -------- Cash flow from operating activities prior to 14,490 4,651 working capital requirements Change in working capital (9,830) 5,780 -------- -------- Net cash provided by operating activities 4,660 10,431 -------- -------- Cash flow from investing activities: Additions to property, plant and equipment (11,709) (10,347) Investment in non-current assets (1,498) (940) -------- -------- Net cash used in investing activities (13,207) (11,287) -------- -------- Cash flow from financing activities: Proceeds from issuance of bank debt 5,012 1,567 Proceeds from issuance of debt and obligations 8,323 1,119 under capital leases Payments on debt and obligations under capital leases (1,848) (2,078) Net proceeds from issuance of common stock 539 491 Proceeds from (payments on) other long-term liabilities 139 (402) -------- -------- Net cash provided by financing activities 12,165 697 Effect of exchange rate changes on cash and cash equivalents (137) (62) -------- -------- Net increase (decrease) in cash and cash equivalents 3,481 (221) -------- -------- Cash and cash equivalents, beginning of period 8,545 8,547 -------- -------- Cash and cash equivalents, end of period $ 12,026 $ 8,326 ======== ======== The accompanying notes are an integral part of this statement. International Rectifier Corporation Notes to unaudited consolidated financial statements December 31, 1993 1. Basis of Presentation The consolidated financial statements included herein are unaudited, however, they contain all normal recurring accruals which, in the opinion of management, are necessary to present fairly the consolidated financial position of the Company at December 31, 1993 and the consolidated results of operations for the six month periods ended December 31, 1993 and 1992, and cash flows for the six month periods ended December 31, 1993 and 1992. It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than at year end. The results of operations for the six month period ended December 31, 1993, are not necessarily indicative of the results to be expected for the full year. The Company operates on a fiscal year calendar. Normally each fiscal year consists of 52 weeks; however, fiscal 1993 consisted of 53 weeks. The extra week was included in the quarter ended December 31, 1992 which resulted in a 14 week quarter versus the 13 weeks in the comparable 1994 fiscal quarter. The accompanying consolidated financial statements do not include footnotes and certain financial presentations normally required under generally accepted accounting principles and, therefore, should be read in conjunction with the Annual Report on Form 10-K for the year ended June 30, 1993. In the fourth quarter of fiscal 1993 the Company extended the useful life of certain assets. This change positively impacted gross profit in the quarter ended December 31, 1993 by approximately $0.5 million. Effective July 1, 1993, the Company adopted the provisions of Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes" which requires recognition of deferred tax assets and liabilities for temporary differences and net operating loss and tax credit carryforwards. Adoption of SFAS No. 109 had no material impact on the Company's financial position or results from operations. For further disclosure, refer to the quarterly report filed on form 10-Q for the quarter ended September 30, 1993. Certain reclassifications have been made to the prior year's financial statements to conform to current year presentation. 2. Per Share Information Earnings per share are computed by dividing earnings by the weighted average number of common and common stock equivalents outstanding. Stock options outstanding under stock option plans are common stock equivalents. 92,000 common stock equivalents for stock options were utilized in the computation of earnings per share for the six months ended December 31, 1993. No common stock equivalents for stock options were used in the six months ended December 31, 1992 as the impact would have been anti-dilutive. 3. Inventories Inventories are stated at the lower of cost (principally first-in, first-out) or market. Inventories at December 31, 1993 and June 30, 1993 were comprised of the following (in thousands): December 31, 1993 June 30, 1993 Raw materials $ 13,829 $ 12,613 Work-in-process 26,199 24,943 Finished goods 27,608 25,053 -------- -------- $ 67,636 $ 62,609 ======== ======== 4. Long-Term Debt and Other Loans A summary of the Company's long-term debt and other loans at December 31, 1993 is as follows: December 31, 1993 Capitalized lease obligations $ 10,039 Property mortgage notes 4,332 Other 6,871 -------- 21,242 Less current portion of long-term debt (3,697) -------- $ 17,545 ======== 5. Intellectual Property Rights The United States Patent and Trademark Office on October 12, 1993 issued a certificate confirming the patentability of the Company's MOSFET patent, 4,959,699, without any material changes to the claims thereof. This proceeding was initiated by the Harris Corporation prior to the Company's settlement of a patent litigation with Harris in February 1992. In another reexamination proceeding, the Patent and Trademark Office has granted the request of SGS-Thomson Microelectronics, Inc. to reexamine the Company's MOSFET patent, 4,705,759. 6. Settlement Charge In the quarter ended December 31, 1992, the Company reached an agreement for settlement of a lawsuit brought by a supplier against the Company in California Superior Court. Under the terms of the agreement the Company paid the supplier $1 million. In the quarter ended December 31, 1992, the Company recognized a charge of approximately $1.0 million ($1 million payment plus legal fees, less amounts previously provided) related to this settlement. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations for the three and six month periods ended December 31, 1993, as compared to the respective prior year period. The Company operates on a fiscal calendar, under which the fiscal quarter ended December 31, 1993 consisted of 13 weeks compared to 14 weeks in the quarter ended December 31, 1992. Revenues in the quarter ended December 31, 1993 increased to $79.1 million from $70.5 million in the comparable prior year period. Revenues for the six month period ended December 31, 1993 increased to $152.2 million from $135.4 million in the previous year. The Company's revenue increase is primarily a result of rising demand for the Company's key growth products and increased manufacturing output. Year-to-year, electronic products revenues grew by 20 percent. Revenues for the quarters ended December 31, 1993 and 1992 include patent royalties of $2.3 million and $2.7 million, respectively. Gross profit in the three and six month periods ended December 31, 1993 increased to $25.6 million (32.4% of revenues) and $49.0 million (32.2% of revenues), respectively, from $19.4 million (27.6% of revenues) and $36.4 million (26.8% of revenues) in the respective prior year periods. This increase reflects greater manufacturing output and efficiencies and a better product mix. In the fourth quarter of fiscal 1993 the Company extended the useful lives of certain assets. This change positively impacted gross profit in the three and six month periods ended December 31, 1993 by approximately $0.5 million (0.6% of revenues) and $1.0 million (0.7% of revenues), respectively. In the three and six month periods ended December 31, 1993, selling and administrative expenses decreased to 21.2% and 21.8% of revenues ($16.8 million and $33.1 million), respectively, compared to 22.0% and 22.6% of revenues ($15.5 million and $30.6 million) in the respective prior year periods. The Company's research and development program is focused on diversifying its MOSFET product line and expanding the related IGBT product line. Efforts are also directed to the development of smart power ICs (integrated circuits) and other power products that work in combination with MOSFETs and IGBTs to improve system performance. In the three and six month periods ended December 31, 1993, research and development expenditures increased to $4.0 million (5.0% of revenues) and $7.8 million (5.1% of revenues), compared to $3.6 million and $6.5 million (5.1% and 4.8% of revenues) in the respective prior year periods. Net interest expense in the three and six month periods ended December 31, 1993 increased $0.3 million and $0.6 million, respectively, from the comparable prior year periods. The increase in interest expense resulted from increased borrowings, partially offset by lower average interest rates. Results for the quarter ended December 31, 1992 included a $1.0 million charge for settlement of a breach of contract lawsuit brought against the Company. The charge included a $1.0 million payment to the supplier and related legal fees, reduced by amounts previously provided. SEASONALITY The Company has experienced moderate seasonality in its business in recent years. On average, the Company has reported approximately 48% of annual revenues in the first half and approximately 52% in the second half of its fiscal year. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1993, the Company had established $54.8 million in domestic and foreign revolving credit facilities, of which $27.8 million had been borrowed by the Company. Based upon covenant and collateral limitations under the revolving credit facilities, the Company had an additional $17.0 million available for borrowing at December 31, 1993. In addition, at December 31, 1993, the Company had available approximately $13.2 million of unused lease lines of credit for capital equipment. At December 31, 1993, the Company had $12.0 million of cash and cash equivalents on hand, and had made commitments of approximately $5.7 million for capital equipment primarily to expand the Company's assembly and wafer capacity. Although it periodically reevaluates its sources of financing, the Company believes that cash and cash equivalents on hand, anticipated cash flows from operations, and funds available from existing lines will be sufficient to meet its cash requirements for the foreseeable future. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTERNATIONAL RECTIFIER CORPORATION Registrant MICHAEL P. MCGEE ________________ Date: February 11, 1994 Michael P. McGee Vice President, Chief Financial Officer and Principal Accounting Officer PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The following matters were submitted to a vote of stockholders at the Company's Annual Meeting of Stockholders held on November 22, 1993, with the following results: Authority Description of Matter For Withheld 1. Election of Directors: Rochus E. Vogt 15,577,840 218,016 Robert E. Mueller 15,568,052 227,804 For Against Abstentions 2. Amendment to Stock Participation Plan: 13,288,675 2,368,574 138,607 3. Stockholder Proposal to Establish a Compensation Committee: 1,592,558 8,141,354 154,087 4. Stockholder Proposal to Enlarge the Board of Directors: 1,524,193 8,233,734 130,072 5. Ratification of Coopers & Lybrand as Independent Auditors: 15,659,687 62,616 73,553 Broker Non-Vote on Proposals 2 - 5: 4,006,501 -----END PRIVACY-ENHANCED MESSAGE-----