-----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, PZ/T4hvrmKzXGFXJ0WjzcPwFM7Rtyu79nVSM8hKy5xSiU0qlInZUKuyOLVyHF67p hUYUWZvzo0NaPA/z41+zIQ== 0000316793-94-000007.txt : 19940520 0000316793-94-000007.hdr.sgml : 19940520 ACCESSION NUMBER: 0000316793-94-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940517 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: 1934 Act SEC FILE NUMBER: 001-07935 FILM NUMBER: 94529043 BUSINESS ADDRESS: STREET 1: 233 KANSAS ST CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3103223331 10-Q 1 10-Q 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 March 31, 1994 [ ] 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 20,350,077 shares of $1 par value common stock outstanding at May 13, 1994. Table of Contents PART I. FINANCIAL INFORMATION Page Reference ITEM 1. Financial Statements Unaudited Consolidated Statement of Operations for the Three and Nine Month Periods Ended March 31, 1994 and March 31, 1993 Consolidated Balance Sheet as of March 31, 1994 (unaudited) and June 30, 1993 Unaudited Consolidated Statement of Cash Flows for the Nine Month Periods Ended March 31, 1994 and 1993 Notes to Unaudited Consolidated Financial Statements ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION NONE 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 Nine Months Ended March 31, March 31, ------------------- ------------------- 1994 1993 1994 1993 -------- -------- -------- -------- Revenues $ 84,252 $ 70,572 $236,450 $ 206,004 Cost of sales 56,142 50,059 159,307 149,137 -------- -------- -------- -------- Gross profit 28,110 20,513 77,143 56,867 Selling and administrative expense 17,465 15,827 50,606 46,455 Research and development expense 4,201 3,606 11,980 10,154 -------- -------- -------- -------- Operating profit 6,444 1,080 14,557 258 Other income (expense): Interest - net (1,161) (574) (2,715) (1,552) Other - net (218) (180) (709) (2,243) -------- -------- -------- -------- Income (loss) before income taxes 5,065 326 11,133 (3,537) Provision for income taxes 859 201 1,881 209 -------- -------- -------- -------- Net income (loss) $ 4,206 $ 125 $ 9,252 $ (3,746) ======== ======== ======== ======== Net income (loss) per share $ 0.21 $ 0.01 $ 0.46 $ (0.18) ======== ======== ======== ======== Average common and common equivalent shares outstanding 20,477 20,299 20,412 20,040 ======== ======== ======== ======== The accompanying notes are an integral part of this statement. International Rectifier Corporation and Subsidiaries Consolidated Balance Sheet (In thousands) March 31, 1994 June 30, (unaudited) 1993 ----------- ----------- Assets Current assets: Cash and cash equivalents $ 13,026 $ 8,545 Trade accounts receivable (net) 63,045 55,004 Inventories 69,661 62,609 Prepaid expenses 2,174 1,731 ----------- ----------- Total current assets 147,906 127,889 Property, plant and equipment (net) 152,005 138,518 Investments and long-term notes receivable 2,242 2,251 Other assets 11,368 9,790 ----------- ----------- Total assets $ 313,521 $ 278,448 =========== =========== Liabilities and Stockholders' Equity Current liabilities: Bank loans $ 29,204 $ 24,007 Long-term debt - due within one year 5,788 3,532 Accounts payable 30,074 27,846 Accrued salaries, wages and commissions 8,342 9,376 Other accrued expenses 8,985 5,012 ----------- ----------- Total current liabilities 82,393 69,773 Long-term debt, less current maturities 24,611 11,810 Deferred income 1,199 1,402 Other long-term liabilities 9,101 9,073 Deferred income taxes 607 316 Stockholders' equity: Common stock 20,345 20,234 Capital contributed in excess of par value 168,022 167,148 Retained earnings 13,038 3,786 Cumulative translation adjustments (5,795) (5,094) ----------- ----------- Total stockholders' equity 195,610 186,074 ----------- ----------- Total liabilities and stockholders' equity $ 313,521 $ 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) Nine Months Ended March 31, ------------------ 1994 1993 -------- -------- Cash flow from operating activities: Net income (loss) $ 9,252 $ (3,746) Adjustments to reconcile to net cash provided by operating activities: Depreciation and amortization 13,286 12,777 Deferred income (203) (387) Deferred income taxes 294 (7) Deferred compensation 1,158 1,116 -------- -------- Cash flow from operating activities prior to 23,787 9,753 working capital requirements Change in working capital (10,840) 6,385 -------- -------- Net cash provided by operating activities 12,947 16,138 -------- -------- Cash flow from investing activities: Additions to property, plant and equipment (19,080) (15,463) Investment in non-current assets (2,818) (2,398) -------- -------- Net cash used in investing activities (21,898) (17,861) -------- -------- Cash flow from financing activities: Proceeds from issuance of (payments on) bank debt 5,592 (258) Proceeds from issuance of debt and obligations 9,972 4,281 under capital leases Payments on debt and obligations under capital leases (3,162) (3,753) Net proceeds from issuance of common stock 985 1,823 Proceeds from (payments on) other long-term liabilities 206 (888) -------- -------- Net cash provided by financing activities 13,593 1,205 Effect of exchange rate changes on cash and cash equivalents (161) 9 -------- -------- Net increase (decrease) in cash and cash equivalents 4,481 (509) -------- -------- Cash and cash equivalents, beginning of period 8,545 8,547 -------- -------- Cash and cash equivalents, end of period $ 13,026 $ 8,038 ======== ======== The accompanying notes are an integral part of this statement. International Rectifier Corporation Notes to unaudited consolidated financial statements March 31, 1994 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 March 31, 1994 and the consolidated results of operations for the nine month periods ended March 31, 1994 and 1993, and cash flows for the nine month periods ended March 31, 1994 and 1993. 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 nine month period ended March 31, 1994, 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 40 weeks in the nine month period ended March 31, 1993 versus 39 weeks in the comparable 1994 fiscal period. 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 March 31, 1994 by approximately $0.6 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. 108,000 common stock equivalents for stock options were utilized in the computation of earnings per share for the nine months ended March 31, 1994. No common stock equivalents for stock options were used in the nine months ended March 31, 1993 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 March 31, 1994 and June 30, 1993 were comprised of the following (in thousands): March 31, 1994 June 30, 1993 Raw materials $ 12,556 $ 12,613 Work-in-process 28,407 24,943 Finished goods 28,698 25,053 -------- -------- $ 69,661 $ 62,609 ======== ======== 4. Long-Term Debt and Other Loans A summary of the Company's long-term debt and other loans at March 31, 1994 is as follows: March 31, 1994 Capitalized lease obligations $ 18,828 Property mortgage notes 4,522 Other 7,049 -------- 30,399 Less current portion of long-term debt (5,788) -------- $ 24,611 ======== 5. Litigation Oral argument took place on May 2, 1994 before the Court of Appeals for the Federal Circuit on the appeal by SGS-Thomson Microelectronics, Inc., from the rulings in 1993 of the Federal District Court in Los Angeles, California, dismissing the claims of SGS against the Company for infringement of U.S. patents 4,495,513; 4,712,127; and 4,553,314. The Company's action against SGS and its Italian affiliate, SGS-Thomson Microelectronics, S.r.L., for infringement of the Company's U.S. patents 5,008,725 and 5,130,167 is scheduled for trial beginning June 14, 1994. 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 $1.0 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 nine month periods ended March 31, 1994, as compared to the respective prior year period. The Company operates on a fiscal calendar, under which the nine months ended March 31, 1994 consisted of 39 weeks compared to 40 weeks in the nine months ended March 31, 1993. Revenues in the quarter ended March 31, 1994 increased to $84.3 million from $70.6 million in the comparable prior year period. Revenues for the nine month period ended March 31, 1994 increased to $236.5 million from $206.0 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 27 percent. Revenues for the quarters ended March 31, 1994 and 1993 include patent royalties of $2.0 million and $2.7 million, respectively. Gross profit in the three and nine month periods ended March 31, 1994 increased to $28.1 million (33.4% of revenues) and $77.1 million (32.6% of revenues), respectively, from $20.5 million (29.1% of revenues) and $56.9 million (27.6% 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 nine month periods ended March 31, 1994 by approximately $0.6 million (0.7% of revenues) and $1.6 million (0.7% of revenues), respectively. In the three and nine month periods ended March 31, 1994, selling and administrative expenses decreased to 20.7% and 21.4% of revenues ($17.5 million and $50.6 million), respectively, compared to 22.4% and 22.6% of revenues ($15.8 million and $46.5 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 nine month periods ended March 31, 1994, research and development expenditures increased to $4.2 million (5.0% of revenues) and $12.0 million (5.1% of revenues), compared to $3.6 million and $10.2 million (5.1% and 4.9% of revenues) in the respective prior year periods. Net interest expense in the three and nine month periods ended March 31, 1994 increased $0.6 million and $1.2 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 nine months ended March 31, 1993 include a $1.0 million charge for settlement of a breach of contract lawsuit brought against the Company. 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 March 31, 1994, the Company had established $57.0 million in domestic and foreign revolving credit facilities, of which $29.2 million had been borrowed by the Company. Based upon covenant and collateral limitations under the revolving credit facilities, the Company had $16.1 million available for borrowing at March 31, 1994. In addition, at March 31, 1994, the Company had available approximately $20.5 million of unused lease lines of credit for capital equipment. At March 31, 1994, the Company had $13.0 million of cash and cash equivalents on hand, and had made commitments of approximately $6.0 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 credit 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: May 13, 1994 Michael P. McGee Vice President, Chief Financial Officer and Principal Accounting Officer PART II. OTHER INFORMATION NONE -----END PRIVACY-ENHANCED MESSAGE-----