-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MrZO0TZ2MK2ya8PgssPSGBrvA4lgXbIt6VG+IRLSrTtlNWsN3D9Iahyz7rCgg2xT WfajzTNSLrULukm4q5IU1Q== 0000912057-96-009680.txt : 19960517 0000912057-96-009680.hdr.sgml : 19960517 ACCESSION NUMBER: 0000912057-96-009680 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL RECTIFIER CORP /DE/ CENTRAL INDEX KEY: 0000316793 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [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: 96565034 BUSINESS ADDRESS: STREET 1: 233 KANSAS ST CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3103223331 10-Q 1 FORM 10-Q 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, 1996 ----------------------------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO -------------------- --------------------- COMMISSION FILE NUMBER 1-7935 ------------------------------------------------------ INTERNATIONAL RECTIFIER CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 95-1528961 -------------------------------- ----------------------------- (STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION INCORPORATION OR ORGANIZATION) 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 50,808,827 SHARES OF THE REGISTRANT'S COMMON STOCK, PAR VALUE $1.00 PER SHARE, OUTSTANDING ON MAY 13, 1996. TABLE OF CONTENTS PART I. FINANCIAL INFORMATION PAGE REFERENCE --------- ITEM 1. FINANCIAL STATEMENTS Unaudited Consolidated Statement of Income for the Three and Nine Month Periods Ended March 31, 1996 and 1995 2 Consolidated Balance Sheet as of March 31, 1996 (unaudited) and June 30, 1995 3 Unaudited Consolidated Statement of Cash Flows for the Nine Month Periods Ended March 31, 1996 and 1995 4 Notes to Unaudited Consolidated Financial Statements 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7 PART II. OTHER INFORMATION ITEM 6. EXHIBITS 11 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, ----------------------- ----------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Revenues $154,070 $111,867 $421,193 $306,934 Cost of sales 93,976 72,361 259,899 200,122 -------- -------- -------- -------- Gross profit 60,094 39,506 161,294 106,812 Selling and administrative expense 26,634 21,247 74,980 59,680 Research and development expense 7,185 5,538 19,197 14,593 -------- -------- -------- -------- Operating profit 26,275 12,721 67,117 32,539 Other income (expense): Interest, net (560) 301 (279) (1,133) Other, net 283 (52) (367) (541) -------- -------- -------- -------- Income before income taxes 25,998 12,970 66,471 30,865 Provision for income taxes 7,987 2,218 20,412 5,247 -------- -------- -------- -------- Net income $ 18,011 $ 10,752 $ 46,059 $ 25,618 -------- -------- -------- -------- -------- -------- -------- -------- Net income per share (A) $ 0.35 $ 0.21 $ 0.90 $ 0.56 -------- -------- -------- -------- -------- -------- -------- -------- Average common and common equivalent shares outstanding (A) 51,363 50,580 51,326 45,750 -------- -------- -------- -------- -------- -------- -------- --------
(A) Reflects the two-for-one stock split declared on November 20, 1995. The accompanying notes are an integral part of this statement. 2 INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In thousands)
MARCH 31, 1996 JUNE 30, (UNAUDITED) 1995 ----------- -------- ASSETS Current assets: Cash and cash equivalents $ 36,757 $ 50,820 Short-term investments 21,680 3,000 Trade accounts receivable, net 118,436 94,095 Inventories 74,686 73,155 Deferred income taxes 7,209 10,630 Prepaid expenses 3,272 2,112 -------- -------- Total current assets 262,040 233,812 Property, plant and equipment, net 289,413 245,218 Investments and long-term notes receivable 2,289 2,362 Other assets 20,508 14,792 -------- -------- Total assets $574,250 $496,184 -------- -------- -------- -------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Bank loans $ 12,377 $ 17,250 Long-term debt, due within one year 9,771 7,985 Accounts payable 52,918 53,771 Accrued salaries, wages and commissions 10,541 11,517 Other accrued expenses 21,420 15,538 -------- -------- Total current liabilities 107,027 106,061 Long-term debt, less current maturities 46,862 23,881 Deferred income 2,546 675 Other long-term liabilities 12,777 10,311 Deferred income taxes 10,836 10,075 Stockholders' equity: Common stock (A) 50,684 50,360 Preferred shares - - Capital contributed in excess of par value of shares (A) 243,238 240,146 Retained earnings 104,957 58,898 Cumulative currency translation adjustments (4,677) (4,223) -------- -------- Total stockholders' equity $394,202 $345,181 -------- -------- Total liabilities and stockholders' equity $574,250 $496,184 -------- -------- -------- --------
(A) Reflects the two-for-one stock split declared on November 20, 1995. The accompanying notes are an integral part of this statement. 3 INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (In thousands)
NINE MONTHS ENDED MARCH 31, --------------------- 1996 1995 -------- -------- Cash flow from operating activities: Net income $ 46,059 $ 25,618 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 21,715 16,896 Deferred income 1,871 (381) Deferred income taxes 4,207 - Deferred compensation 2,271 1,006 Change in working capital Trade accounts receivable, net (27,849) (23,916) Inventories (2,335) 158 Prepaid expenses (1,219) (454) Accounts payable (816) 13,145 Accrued salaries, wages and commissions (1,010) (163) Other accrued expenses 6,284 5,202 -------- --------- Net cash provided by operating activities 49,178 37,111 -------- --------- Cash flow from investing activities: Additions to property, plant and equipment (66,336) (63,436) Purchase of short-term investments (50,821) (65,523) Proceeds from sale of short-term investments 32,141 26,942 Investment in other noncurrent assets (6,698) (1,916) -------- --------- Net cash used in investing activities (91,714) (103,933) -------- --------- Cash flow from financing activities: Net payments on short-term bank debt (3,809) (10,906) Proceeds from issuance of long-term debt 32,495 6,088 Payments on long-term debt and obligations under capital leases (6,484) (9,849) Net proceeds from issuance of common stock 3,416 99,154 Other 3,610 (2,005) -------- --------- Net cash provided by financing activities 29,228 82,482 -------- --------- Effect of exchange rate changes on cash and cash equivalents (755) 426 -------- --------- Net increase (decrease) in cash and cash equivalents (14,063) 16,086 Cash and cash equivalents beginning of period 50,820 13,051 -------- --------- Cash and cash equivalents end of period $ 36,757 $ 29,137 -------- --------- -------- ---------
The accompanying notes are an integral part of this statement. 4 INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 1996 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, 1996 and the consolidated results of operations and cash flows for the nine month periods ended March 31, 1996 and 1995. 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, 1996 are not necessarily indicative of the results to be expected for the full year. 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, 1995. 2. EARNINGS PER SHARE Earnings per share is computed by dividing earnings by the weighted average number of common and common stock equivalents outstanding. Stock options outstanding under stock option plans are considered common stock equivalents. Common stock equivalents for options of 757,400 and 503,000 shares were utilized in the computation of earnings per share for the three month periods ended March 31, 1996 and 1995, respectively. All share and per share amounts have been retroactively restated to reflect the common stock split on November 20, 1995. 3. INVENTORIES Inventories are stated at the lower of cost (principally first-in, first- out) or market. Inventories at March 31, 1996 (unaudited) and June 30, 1995 were comprised of the following (in thousands): MARCH 31, 1996 JUNE 30, 1995 -------------- ------------- Raw materials $20,641 $19,974 Work-in-process 37,815 32,967 Finished goods 16,230 20,214 ------- ------- $74,686 $73,155 ------- ------- ------- ------- 5 4. LONG-TERM DEBT AND OTHER LOANS A summary of the Company's long-term debt and other loans at March 31, 1996 is as follows (in thousands): MARCH 31, 1996 --------- Capitalized lease obligations payable in varying monthly installments primarily at rates from 6.0% to 12.6% $10,275 Domestic bank loans collateralized by equipment, payable in varying monthly installments at rates from 6.7% to 9.0%, due in 1996 through 2000 18,130 Domestic unsecured bank loan payable in varying monthly installments at a current variable rate of 6.6% to 6.9%, due in 1998 through 2001 15,700 Foreign bank loans collateralized by property and/or equipment, payable in varying monthly installments at rates from 8.0% to 10.8%, due in 1997 through 2000 5,032 Foreign unsecured bank loans payable in varying monthly installments at rates from 2.6% to 8.4%, due in 1998 through 2006 7,496 ------- 56,633 Less current portion of long-term debt 9,771 ------- $46,862 ------- ------- 6 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, 1996 COMPARED WITH THE THREE- AND NINE-MONTH PERIODS ENDED MARCH 31, 1995 The following table sets forth certain items as a percentage of revenues. THREE MONTHS ENDED NINE MONTHS ENDED MARCH 31, MARCH 31, (UNAUDITED) (UNAUDITED) ------------------- ------------------- 1996 1995 1996 1995 -------- -------- -------- -------- Revenues 100.0% 100.0% 100.0% 100.0% Cost of sales 61.0 64.7 61.7 65.2 ----- ----- ----- ----- Gross profit 39.0 35.3 38.3 34.8 Selling and administrative expense 17.3 19.0 17.8 19.4 Research and development expense 4.7 5.0 4.6 4.8 ----- ----- ----- ----- Operating profit 17.0 11.3 15.9 10.6 Interest income (expense), net (0.4) 0.3 (0.1) (0.4) Other expense, net 0.2 0.0 (0.1) (0.2) ----- ----- ----- ----- Income before income taxes 16.8 11.6 15.7 10.0 Provision for income taxes 5.1 2.0 4.8 1.7 ----- ----- ----- ----- Net income 11.7% 9.6% 10.9% 8.3% ----- ----- ----- ----- ----- ----- ----- ----- Revenues for the three months ended March 31, 1996 increased 37.7% to $154.1 million from $111.9 million in the prior year period. Revenues for the nine month period ended March 31, 1996 increased 37.2% to $421.2 million from $306.9 million in the previous year. The Company's revenue increase reflected its ability to address new applications and displace older technologies across a broad and diverse market. Changes in foreign exchange rates decreased revenues by approximately $0.6 million and increased revenues by approximately $2.6 million respectively in the three- and nine-month periods ended March 31, 1996. Revenues in the current quarter included $4.3 million of net patent royalties, versus $2.5 million in the prior year period. Gross profit for the three- and nine-month periods ended March 31, 1996 was 39.0% and 38.3% of revenues ($60.1 million and $161.3 million), respectively, versus 35.3% and 34.8% of revenues ($39.5 million and $106.8 million) in the comparable prior year periods. Gross margin expansion reflected a richer mix of new and value-added products, as well as greater manufacturing volume and efficiencies. 7 In the three- and nine-month periods ended March 31, 1996 administrative expense was 17.3% and 17.8% of revenues ($26.6 million and $75.0 million), respectively, versus 19.0% and 19.4% of revenues ($21.2 million and $59.7 million) in the comparable prior year periods. This decrease as a percentage of revenues reflected improvements in systems, procedures, and operating discipline. In the three- and nine-month periods ended March 31, 1996, the Company's research and development expenditures increased to $7.2 million (4.7% of revenues) and $19.2 million (4.6% of revenues), versus $5.5 million (5.0% of revenues) and $14.6 million (4.8% of revenues) in the comparable prior year periods. The Company's research and development program continues to focus on the advancement and diversification of core growth products and the development of value-added complete solutions that address broad-based power conversion applications in motor controls, power supplies, automotive, and lighting. Compared to the year-ago period, net interest expense in the three months ended March 31, 1996 increased $0.9 million due to interest incurred on a larger debt balance. Net interest expense in the nine months ended March decreased $0.9 million year-to-year primarily due to interest income earned on a higher average short-term investment balance in the current fiscal year and the capitalization of certain interest costs. Changes in foreign-currency exchange rates negatively impacted net income by $0.1 million in the nine month period ending March 31, 1996, but had no impact on the current quarter's results. SEASONALITY The Company has experienced moderate seasonality in its business in recent years. On average over the past three years, the Company has reported approximately 47% of annual revenues in the first half and 53% in the second half of its fiscal year. LIQUIDITY AND CAPITAL RESOURCES At March 31, 1996, the Company maintained cash and cash equivalent balances of $36.8 million and short-term investments of $21.7 million. In addition, the Company had established $70.4 million of domestic and foreign revolving lines of credit, against which $12.4 million had been borrowed. Based on covenant and collateral limitations, the Company had $51.7 million available for borrowing at March 31, 1996. Additionally, the Company had at its disposal $29.0 million of unused bank term-loan facilities and $22.5 million of unused capital equipment credit lines. At March 31, 1996, the Company had made approximately $51.7 million of purchase commitments for capital equipment to be delivered over the next six months. In March 1996, the Company amended its existing $30 million unsecured credit facility with Sanwa Bank California. The amended facility was increased to $49.7 million, consisting of a $5 million revolving line of credit and a $44.7 million term loan. As part of the amended credit facility, prior to December 31, 1996, the Company may borrow up to $25 million. Principal repayments on loans under this part of the facility are required to be made in equal quarterly installments from March 31, 1999 through December 31, 2002. The 8 expiration date of the revolving line of credit was extended to October 31, 1997. Interest rates under the amended facility are now at prime, the bank's cost of funds plus 0.75%, or LIBOR plus 0.75%, at the Company's option. The Company believes that it has adequate liquidity through cash and cash equivalents on hand, short-term investments, anticipated cash flow from operations and funds from existing credit facilities to meet its cash requirements for the foreseeable future. However, the Company may also consider the use of funds from other external sources including, but not limited to, public or private offerings of debt or equity. 9 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 DATE: May 13, 1996 MICHAEL P. MCGEE -------------------------------------------- Michael P. McGee Vice President, Chief Financial Officer and Principal Accounting Officer 10 PART II. OTHER INFORMATION ITEM 6. EXHIBITS 10(a) Amendment to Term Loan Agreement between International Rectifier and Sanwa Bank California dated as of December 29, 1995. 10(b) Amendment to Term Loan Agreement between International Rectifier and Sanwa Bank California dated as of February 29, 1996. 10(c) Amendment to Line of Credit between International Rectifier and Sanwa Bank California dated as of February 29, 1996. 10(d) Term Loan Agreement between International Rectifier and Sanwa Bank California dated as of March 26, 1996. 11 EX-10.(A) 2 EXHIBIT 10(A) AMENDMENT TO TERM LOAN AGREEMENT This First Amendment to Term Loan Agreement (the "Amendment") is made and entered as of December 29, 1995, by and between SANWA BANK CALIFORNIA (the "Bank") and INTERNATIONAL RECTIFIER CORPORATION (the "Borrower") with respect to the following: This Amendment shall be deemed to be a part of and subject to that certain Term Loan Agreement dated as of February 28, 1995, as it may be amended from time to time, and any and all addenda and riders thereto (collectively the "Agreement"). Unless otherwise defined herein, all terms used in this Amendment shall have the same meanings as in the Agreement. To the extent that any of the terms or provisions of this Amendment conflict with those contained in the Agreement, the terms and provisions contained herein shall control. WHEREAS, the Borrower and the Bank mutually desire to modify the Agreement. NOW THEREFORE, for value received and hereby acknowledged, the Borrower and the Bank agree as follows: 1. CHANGE IN TERM LOAN. The first paragraph of Section 2.01 of the Agreement is deleted in its entirety and the following is substituted in lieu thereof: "2.01 TERM LOAN. The Bank agrees to lend to the Borrower in up to 5 drawings in the minimum amount of $1,000,000, upon the Borrower's request made prior to March 31, 1996, (the "Drawdown Period") up to the maximum amount of $25,000,000 (the "Term Loan")". 2. CONFIRMATION OF OTHER TERMS AND CONDITIONS OF THE AGREEMENT. Except as specifically provided in this Amendment, all other terms, conditions and covenants of the Agreement unaffected by this Amendment shall remain unchanged and shall continue in full force and effect and the Borrower hereby covenants and agrees to perform and observe all terms, covenants and agreements provided for in the Agreement, as hereby amended. IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto as of the date first hereinabove written. BANK: BORROWER: SANWA BANK CALIFORNIA INTERNATIONAL RECTIFIER CORPORATION By: /s/ David Carr By: /s/ Michael P. McGee ---------------------------------- ------------------------------------- DAVID CARR, VICE PRESIDENT Michael P. McGee/Vice President - CFO - -------------------------------------- ---------------------------------------- (Name/Title) (Name/Title) By: ------------------------------------- ---------------------------------------- (Name/Title) EX-10.(B) 3 EXHIBIT 10(B) AMENDMENT TO TERM LOAN AGREEMENT This Second Amendment to Term Loan Agreement (the "Amendment") is made and entered into this 29th day of February, 1996, by and between SANWA BANK CALIFORNIA (the "Bank") and INTERNATIONAL RECTIFIER CORPORATION (the "Borrower") with respect to the following: This Amendment shall be deemed to be a part of and subject to that certain Term Loan Agreement dated as of February 28, 1995, as it may be amended from time to time, and any and all addenda and riders thereto (collectively the "Agreement"). Unless otherwise defined herein, all terms used in this Amendment shall have the same meanings as in the Agreement. To the extent that any of the terms or provisions of this Amendment conflict with those contained in the Agreement, the terms and provisions contained herein shall control. WHEREAS, the Borrower and the Bank mutually desire to modify the Agreement. NOW THEREFORE, for value received and hereby acknowledged, the Borrower and the Bank agree as follows: 1. CHANGE IN TERM LOAN. The first paragraph of Section 2.01 of the Agreement is deleted in its entirety and the following is substituted in lieu thereof: "2.01 TERM LOAN. The Bank agrees to lend to the Borrower in up to 5 drawings in the minimum amount of $1,000,000, upon the Borrower's request made prior to March 31, 1996, (the "Drawdown Period") up to the maximum amount of $19,700,000 (the "Term Loan")". 2. CHANGE IN INTEREST. Section 2.01 C. (c) of the Agreement is deleted in its entirety and the following is substituted in lieu thereof: "(c) EURODOLLAR BALANCES. A fixed rate quoted by the Bank for a minimum of 30 days or for such other period of time that the Bank may quote and offer [the "Eurodollar Interest Period"] for Term Balances in the minimum amount of $100,000.00. Such interest rate shall be a percentage equivalent to .75% per annum in excess of the Bank's Eurodollar Rate which is that rate determined by the Bank's Treasury Desk as being the approximate rate at which the Bank could purchase offshore U.S. dollar deposits in an amount approximately equal to the amount of the relevant Term Balance and for a period of time approximately equal to the relevant Eurodollar Interest Period (adjusted for any and all assessments, surcharges and reserve requirements pertaining to the purchase by the Bank of such U.S. dollar deposits) [the "Eurodollar Rate"]. Term Balances based upon the Eurodollar Rate is hereinafter referred to as the "Eurodollar Balances". 3. FINANCIAL CONDITION. Section 5.14(d) of the Agreement is deleted in its entirety and the following is substituted in lieu thereof: "(d) A ratio of the sum of net income, plus depreciation expense, plus amortization expense, plus net interest expense, each for the immediately preceding 4 fiscal quarters to the sum of the current portion of long-term Debt then due for the 4th immediately preceding fiscal quarter, plus net interest expense for the immediately preceding 4 fiscal quarters of not less than 2 to 1". 4. CONFIRMATION OF OTHER TERMS AND CONDITIONS OF THE AGREEMENT. Except as specifically provided in this Amendment, all other terms, conditions and covenants of the Agreement unaffected by this Amendment shall remain unchanged and shall continue in full force and effect and the Borrower hereby covenants and agrees to perform and observe all terms, covenants and agreements provided for in the Agreement, as hereby amended. [PAGE 1 ENDS HERE. SIGNATURES APPEAR ON PAGE 2] IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto as of the date first hereinabove written. BANK: BORROWER: SANWA BANK CALIFORNIA INTERNATIONAL RECTIFIER CORPORATION By: /s/ David Carr By: /s/ Michael P. McGee ------------------- ------------------------- DAVID CARR, VICE PRESIDENT Michael P. McGee/Vice President - CFO -------------------------- ----------------------------------- (Name/Title) (Name/Title) By: ----------------------- ------------------------ (Name/Title) EX-10.(C) 4 EXHIBIT 10(C) AMENDMENT TO LINE OF CREDIT AGREEMENT This Sixth Amendment to Line of Credit Agreement (the "Amendment")is made and entered into this 29th day of February, 1996, by and between SANWA BANK CALIFORNIA (the "Bank") and INTERNATIONAL RECTIFIER CORPORATION (the "Borrower") with respect to the following: This Amendment shall be deemed to be a part of and subject to that certain Line of Credit Agreement dated as of June 30, 1993, as it may be amended from time to time, and any and all addenda and riders thereto (collectively the "Agreement"). Unless otherwise defined here, all terms used in this Amendment shall have the same meanings as in the Agreement. To the extent that any of the terms or provisions of this Amendment conflict with those containned in the Agreement, the terms and provisions contained herein shall control. WHEREAS, the Borrower and the Bank mutually desire to extend and/or modify the Agreement. NOW THEREFORE, for value received and hereby acknowledged, the Borrower and the Bank agree as follows: 1. EXTENSION OF EXPIRATION DATE. Section 1.01(d) of the Agreement is deleted in its entirety and the following is substituted in lieu thereof: "(k) "EXPIRATION DATE": shall mean October 31, 1997 or the date of termination of the Bank's commitment to lend under this Agreement pursuant to Section 8, whichever shall occur first". 2. CHANGE IN INTEREST RATE. Section 2.04(b) and (c) of the Agreement are deleted in their entirety and the following is substituted in lien thereof: "(b) EUROCURRENCY ADVANCES: For Advances denominated in Dollars or in Alternate Currency, a fixed rate quoted by the Bank for one, three, six, nine or twelve months or for such other period of time that the Bank may quote and offer (provided that any such period of time does not extend beyond the Expiration Date) [the "Eurocurrency Interest Period"] for Advances in the minimum amount of $500,000 and in $100,000 increments thereafter. Such interest rate shall be a percentage, rounded upward to the nearest one-hundredth of one percent, equivalent to .75% in excess of the Bank's Eurocurrency Rate for Dollars or such Alternate Currency which is that rate determined by the Bank's Treasury Desk as being the approximate rate at which the Bank could purchase Dollars or Alternate Currency deposits in an amount approximately equal to the amount of the relevant Advance and for a period of time approximately equal to the relevant Eurocurrency Interest Period (adjusted for any and all assessments, surcharges and reserve requirements pertaining to the purchase by the Bank of such Alternate Currency deposits [the "Eurocurrency Rate"]. An Advance which bears interest at the Eurocurrency Rate is hereinafter referred to as the "Eurocurrency Advance". (c) COST OF FUNDS ADVANCES. For Advances denominated in Dollars, the Bank hereby agrees to make advances to the Borrower, at Borrower's election, at a fixed rate for such period of time that the Bank may quote and offer, provided that any such period of time shall be for at least 30 days and provided further that any such period of time does not extend beyond the Expiration Date (the "Cost of Funds Interest Period") for Advances in the minimum amount $500,000 and in $100,000 increments thereafter. Such interest rate shall be a percentage, rounded upward to the nearest one-hundredth of one percent, equivalent to .75% per annum in excess of the rate which the Bank determines in its sole and absolute discretion to be equal to the Bank's cost of acquiring funds (adjusted for any and all assessments, surcharges and reserve requirements pertaining to the borrowing or purchase by the Bank of such funds) in an amount approximately equal to the amount of the relevant Advance and for a period of time approximately equal to the relevant Cost of Funds Interest Period (the Cost of Funds Rate"). Advances based upon the Fixed Rate are hereinafter referred to as "Cost of Funds Advances". 3. CHANGE IN FOREIGN EXCHANGE. The third paragraph of Section 3.01 is deleted in its entirely and the following is substituted in lieu thereof: "At no time, however, shall 10% of the aggregate of the settlement prices of all Foreign Exchange Contracts outstanding (net of designated offsets) exceed $5,000,000 as determined by Bank at the time of purchase or sale of each Foreign Exchange Contract, and provided further, that all Advances and 10% of the aggregate of the settlement prices of all Foreign Exchange Contracts outstanding and the total undrawn amount of all Letters of Credit outstanding (net of designated offsets) plus any partial draws paid by the Bank and not reimbursed by the Borrower may not exceed the Line of Credit." 4. MODIFICATION OF FINANCIAL CONDITION. Section 7.14(d) of the Agreement is deleted in its entirety and the following is substituted in lieu thereof: "(d) A ratio of the sum of net income, plus depreciation expense, plus amortization expense, plus net interest expense, each for the immediately preceding 4 fiscal quarters to the sum of the current portion of long-term Debt then due for the 4th immediately preceding fiscal quarter, plus set interest expense for the immediately preceding 4 fiscal quarters of not less than 2 to 1". 5. CONFIRMATION OF OTHER TERMS AND CONDITIONS OF THE AGREEMENT. Except as specifically provided in this Amendment, all other terms, conditions and covenants of the Agreement unaffected by this Amendment shall remain unchanged and shall continue in full force and effect and the Borrower hereby covenants and agrees to perform and observe all terms, covenants and agreements provided for in the Agreement, as hereby amended. IN WITNESS WHEREOF, this Amendment has been executed by the parties hereto as of the date first hereinabove written. BANK: BORROWER: SANWA BANK CALIFORNIA INTERNATIONAL RECTIFIER CORPORATION By: David Carr By: Michael P. McGee --------------------------------------- ---------------------------- Michael P. McGee / Vice President - CFO DAVID CARR, VICE PRESIDENT --------------------------------------- ---------------------------- (Name/Title) (Name/Title) By: --------------------------------------- ------------------------------------------- (Name/Title) EX-10.(D) 5 EXHIBIT 10(D) TERM LOAN AGREEMENT This Term Loan Agreement (the "Agreement") is made and entered into as of March 26, 1996, by and between SANWA BANK CALIFORNIA (the "Bank") and INTERNATIONAL RECTIFIER CORPORATION (the "Borrower"), on the terms and conditions that follow: SECTION I DEFINITIONS 1.01 CERTAIN DEFINED TERMS: Unless elsewhere defined in this Agreement, the following terms shall have the following meanings (such meanings to be generally applicable to the singular and plural forms of the terms defined): (a) "BUSINESS DAY": shall mean a day other than a Saturday or Sunday on which commercial banks are open for business in California, USA. (b) "CONSOLIDATED OPERATION LOSS": shall mean a loss from operations before other income and expenses, income taxes and extraordinary items as set forth on the Borrower's consolidated statement of income. (c) "DEBT": shall mean all liabilities of the Borrower as set forth on its balance sheet less Subordinated Debt. (d) "DOMESTIC": shall mean the consolidated United States and Mexican maquiladora operations of the Borrower. (e) "EFFECTIVE TANGIBLE NET WORTH": shall mean the Borrower's stated net worth plus Subordinated Debt but less all intangible assets of the Borrower (i.e., goodwill, trademarks, patents, copyrights, organization expense, loans and advances to employees, and similar intangible items), but excluding any cumulative translation adjustments to equity for the value of foreign assets based upon changes in foreign exchange rates and excluding redemption of employee stock options. (f) "ERISA": shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, including (unless the context otherwise requires) any rules or regulations promulgated thereunder. (g) "EVENT OF DEFAULT": shall have the meaning set forth in Section 6. (h) "INDEBTEDNESS": shall mean, with respect to the Borrower, (i) all indebtedness for borrowed money and (ii) for the deferred purchase price of property or services due more than 45 days from the date of payment specified on the invoice for such obligation in respect of which the Borrower is primarily liable as obligor and (iii) obligations under leases which shall have been or should be, in accordance with generally accepted accounting principles, reported as capital leases in respect of which the Borrower is primarily liable. (i) "OBLIGATIONS": shall mean all amounts owing by the Borrower to the Bank pursuant to this Agreement. (j) "PERMITTED DOMESTIC LIENS": shall mean: (i) liens and security interests securing indebtedness owed by the Borrower to the Bank; (ii) liens for taxes, assessments or similar charges either not more than 45 days past due or being contested in good faith; (iii) liens of materialmen, mechanics, warehousemen, or carriers or other like liens arising in the ordinary course of business and securing obligations which are not more than 45 days past due or being contested in good faith; (iv) purchase money liens or purchase money security interests upon or in any property acquired or held by the Borrower in the ordinary course of business to secure indebtedness outstanding on the date hereof or permitted to be incurred under Section 5.09 hereof; (v) liens and security interests which, as of the date hereof, have been disclosed to and approved by the Bank in writing; (vi) liens in connection with workers' compensation, unemployment insurance and such other types of insurance; (vii) liens to secure performance bonds and bid bonds and other similar obligations; (viii) liens resulting from zoning restrictions, easements and such other similar restrictions on the use of real property; and (ix) liens arising from judgments and attachments that would not constitute an Event of Default hereunder. -1- (k) "SUBORDINATED DEBT": shall mean such liabilities of the Borrower which have been subordinated to those owed to the Bank in a manner acceptable to the Bank. 1.02 ACCOUNTING TERMS: All references to financial statements, assets, liabilities, and similar accounting items not specifically defined herein shall mean such financial statements or such items prepared or determined in accordance with generally accepted accounting principles consistently applied and, except where otherwise specified, all financial data submitted pursuant to this Agreement shall be prepared in accordance with such principles. 1.03 OTHER TERMS: Other terms not otherwise defined shall have the meanings attributed to such terms in the California Uniform Commercial Code. SECTION 2 THE TERM LOAN 2.01 TERM LOAN. The Bank agrees to lend to the Borrower in up to 5 drawings in the minimum amount of $1,000,000, upon the Borrower's request made prior to December 31, 1996, (the "Drawdown Period") up to the maximum amount of $25,000,000 (the "Term Loan"). A. PURPOSE. Proceeds from the Term Loan shall be used to finance acquisition of assets. B. TERM LOAN ACCOUNT. The Bank shall maintain on its books a record of account in which the Bank shall make entries setting forth all payments made, the application of such payments to interest and principal, accrued and unpaid interest (if any) and the outstanding principal balance under the Term Loan (the "Term Loan Account"). The Bank shall provide the Borrower with a monthly statement of the Borrower's Term Loan Account, which statement shall be considered to be correct and conclusively binding on the Borrower unless the Borrower notifies the Bank to the contrary within 30 days after the Borrower's receipt of any such statement which it deems to be incorrect. C. INTEREST. Interest shall accrue on the outstanding principal balance or any portion of the outstanding principal balance of the Term Loan at one of the following rates as elected by Borrower: (a) VARIABLE RATE BALANCES. The outstanding principal balance of the Term Loan ("Term Balance") shall bear interest at a rate equal to Bank's Reference Rate per annum, as it may change from time to time ("Variable Rate"). The rate of interest shall be adjusted concurrently with any change in Bank's Reference Rate. The Term Balance bearing interest at the Variable Rate is hereinafter referred to as "Variable Rate Balances". (b) FIXED RATE BALANCES. A fixed rate for such period of time that the Bank may quote and offer in its sole discretion from time to time (the "Fixed Rate"), provided that any such period of time shall be for at least 7 days and provided further that any such period of time does not extend beyond the maturity date of the Term Loan (the "Fixed Rate Interest Period") The Bank shall provide the Borrower with a statement of the Borrower's Fixed Rate, which statement shall be considered to be correct and conclusively binding on the Borrower unless the Borrower notifies the Bank to the contrary within 30 days after the Borrower's receipt of any such statement which it deems to be incorrect. The Term Balance bearing interest at the Fixed Rate is hereinafter referred to as "Fixed Rate Balances". (c) EURODOLLAR BALANCES. A fixed rate quoted by the Bank for a minimum of 30 days or for such other period of time that the Bank may quote and offer [the "Eurodollar Interest Period"] for Term Balances in the minimum amount of $100,000.00. Such interest rate shall be a percentage equivalent to .75% per annum in excess of the Bank's Eurodollar Rate which is that rate determined by the Bank's Treasury Desk as being the approximate rate at which the Bank could purchase offshore U.S. dollar deposits in an amount approximately equal to the amount of the relevant Term Balance and for a period of time approximately equal to the relevant Eurodollar Interest Period (adjusted for any and all assessments, surcharges and reserve requirements pertaining to the purchase by the Bank of such U.S. dollar deposits) [the "Eurodollar Rate"]. Term Balances based upon the Eurodollar Rate is hereinafter referred to as the "Eurodollar Balances". Borrower hereby promises and agrees to pay interest on any Variable Rate Balances monthly in arrears on the first calendar day of each month. -2- Interest on any Eurodollar Balance or any Fixed Rate Balance with a Eurodollar Interest Period or a Fixed Rate Interest Period (hereinafter referred to as an "Interest Period") of 93 or less days shall be paid on the last day of the relevant Eurodollar Interest Period or Fixed Rate Interest Period pertaining to such Eurodollar Balance or Fixed Rate Balance. Interest on any Eurodollar Balance or Fixed Rate Balance with an Eurodollar Interest Period or Fixed Rate Interest Period in excess of 93 days shall be paid quarterly (i.e., on the last day of each 3 month period occurring in such Interest Period) and on the last day of the relevant Eurodollar Interest Period or Fixed Rate Interest Period pertaining to such Eurodollar Balance or Fixed Rate Balance. Interest shall be calculated on a year of 360 days for actual days elapsed. (d) NOTICE OF ELECTION TO ADJUST INTEREST RATE. Upon telephonic notice which shall be received by the Bank at or before 2:00 p.m. (California time) on a business day, the Borrower may elect: (1) That interest on a Variable Rate Balance shall be adjusted to accrue at the Fixed Rate or the Eurodollar Rate; provided, however, that such notice shall be received by the Bank no later than two business days prior to the day (which shall be a business day) on which Borrower requests that interest be adjusted to accrue at the Fixed Rate or Eurodollar Rate. (2) That interest on a Fixed Rate Balance or Eurodollar Balance shall continue to accrue at a newly quoted Fixed Rate or Eurodollar Rate as the case may be or shall be adjusted to commence to accrue at the Variable Rate; provided, however that such notice shall be received by the Bank no later than two business days prior to the last day of the Interest Period or Eurodollar Interest Period pertaining to such Fixed Rate Balance or Eurodollar Balance. If the Bank shall not have received notice as prescribed herein of Borrower's election that interest on any Fixed Rate Balance or Eurodollar Balance shall continue to accrue at the Fixed Rate or Eurodollar Rate as the case may be, Borrower shall be deemed to have elected that interest thereon shall be adjusted to accrue at the Variable Rate upon the expiration of the Interest Period pertaining to such Term Balance. (e) PREPAYMENT. Notwithstanding anything to the contrary in the Agreement, no prepayment shall be made on any Fixed Rate Balance or Eurodollar Balance except on a day which is the last day of the relevant Interest Period or Eurodollar Interest Period pertaining thereto. If the whole or any part of any Fixed Rate Balance or Eurodollar Balance is prepaid by reason of acceleration or otherwise, the Borrower shall upon the Bank's request, promptly pay to and indemnify the Bank for all costs and any loss (including interest) actually incurred by the Bank and any loss (excluding loss of profit resulting from the re-employment of funds) sustained by the Bank as a consequence of such prepayment. Any prepayment shall first be applied to pay accrued interest, then be applied to reduce the principal balance payable on the date set forth in numbered paragraph 3 hereinbelow, and the remaining portion (if any) of such prepayment shall then be applied to pay the principal installment(s) of latest maturity under this Term Loan. (f) INDEMNIFICATION FOR FIXED RATE AND EURODOLLAR RATE COSTS. During any period of time in which interest on any Term Balance is accruing on the basis of the Fixed Rate or Eurodollar Rate, the Borrower shall, upon the Bank's written request, which request shall explain in reasonable detail the reason for such costs or payments, promptly pay to and reimburse the Bank for all costs incurred and payments made by the Bank by reason of any future assessment, reserve, deposit or similar requirements or any surcharge, tax or fee imposed upon the Bank or as a result of the Bank's compliance with any directive or requirement of any regulatory authority pertaining or relating to funds used by the Bank in quoting and determining the Fixed Rate or Eurodollar Rate. (g) CONVERSION FROM FIXED RATE OR EURODOLLAR RATE TO VARIABLE RATE. In the event that the Bank shall at any time determine that the accrual of interest on the basis of the Fixed Rate or Eurodollar Rate (i) is infeasible because the Bank is unable to determine the Fixed Rate or Eurodollar Rate due to the unavailability of U.S. dollar deposits, contracts or certificates of deposit in an amount approximately equal to the amount of the relevant Balance and for a period of time approximately equal to the relevant Interest Period; or (ii) is or has become unlawful or infeasible by reason of the Bank's compliance with any new law, rule, regulation, guideline or order, or any new interpretation of any present law, rule, regulation, guideline or order, then the Bank shall give telephonic notice thereof (confirmed in writing) to the Borrower, in which event any Fixed Rate Balance or Eurodollar Balance shall be deemed to be a Variable Rate Balance and interest shall thereupon immediately accrue at the Variable Rate. -3- D. PRINCIPAL. The Borrower hereby promises and agrees to pay the outstanding principal of the Term Loan as of December 31, 1996, in 15 equal installments of 1/16th of the outstanding principal balance of the Term Loan as of December 31, 1996, commencing on March 31, 1999, and continuing on the last day of each calendar quarter thereafter up to and including September 30, 2002. On December 31, 2002, the Borrower hereby promises and agrees to pay to the Bank the entire unpaid principal balance, together with accrued and unpaid interest. Each payment received by the Bank shall be applied to pay interest then due and unpaid and the remainder thereof (if any) shall be applied to pay principal. E. ACCOUNT DEBIT. Upon prior notice to the Borrower from the Bank, the Borrower hereby authorizes the Bank, if and to the extent payment owed to the Bank under the Term Loan is not made when due, after giving effect to any grace period, to charge, from time to time, against any or all of the Borrower's deposit accounts with the Bank any amount so due. F. COMMITMENT FEE. Borrower agrees to pay to Bank a commitment fee during the Drawdown Period of .25% per annum on the undrawn portion of the Term Loan, payable quarterly in arrears and computed on a year of 360 days for actual days elapsed. 2.02 LIMITATIONS. (a) Notwithstanding anything to the contrary herein, the Borrower shall not be required to make any payment to the Bank with respect to any indemnity required pursuant to Sections 2.01 C.(f) ("Affected Section") unless Bank shall have given notice to Borrower promptly upon the Rosemead Commercial Banking Center of Bank, or its equivalent successor, becoming aware of any circumstance requiring the Borrower to make any payment under an Affected Section; (b) The Borrower shall not be responsible for payment of any amounts payable under any Affected Section to the extent determined to be as a result of the Bank's gross negligence or willful misconduct. (c) The Bank shall use its reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to take any action if the taking of such action would avoid the need for, or reduce the amount of, any additional amounts payable under any Affected Section or not require the prepayment of a Fixed Rate Advance and would not, in the reasonable judgment of the Bank, be otherwise disadvantageous to the Bank. SECTION 3 CONDITIONS OF LENDING 3.01 CONDITIONS PRECEDENT TO THE INITIAL ADVANCE. The obligation of the Bank to make the first extension of credit to or on account of the Borrower hereunder is subject to the conditions precedent that the Bank shall have received before the date of such first extension of credit all of the following, in form and substance satisfactory to the Bank: (a) Evidence that the execution, delivery and performance by the Borrower of this Agreement and any document, instrument or agreement required hereunder have been duly authorized. (b) A flat fee of $49,250.00 which shall include all of Bank's out-of-pocket expenses. (c) Such other evidence as the Bank may reasonably request to establish the consummation of the transaction contemplated hereunder and compliance with the conditions of this Agreement. -4- SECTION 4 REPRESENTATIONS AND WARRANTIES The Borrower hereby makes the following representations and warranties to the Bank, which representations and warranties are continuing: 4.01 STATUS: The Borrower is a corporation duly organized and validly existing under the laws of the State of Delaware and is properly licensed and is qualified to do business and in good standing in, and, where necessary to maintain the Borrower's rights and privileges, has complied in all material respects with the fictitious name statute, of every jurisdiction in which the Borrower is doing business. 4.02 AUTHORITY: The execution, delivery and performance by the Borrower of this Agreement and any instrument, document or agreement required hereunder have been duly authorized and do not and will not: (i) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having application to the Borrower; (ii) result in a breach of or constitute a default under any material indenture or loan or credit agreement or other material agreement, lease or instrument to which the Borrower is a party or by which it or its properties may be bound or affected; or (iii) require any consent or approval of its stockholders or violate any provision of its articles of incorporation or by-laws. 4.03 LEGAL EFFECT: This Agreement constitutes, and any instrument, document or agreement required hereunder when delivered hereunder will constitute, legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms except as the same may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or limiting creditor' rights generally and subject to the availability of equitable remedies. 4.04 FINANCIAL STATEMENTS: All financial statements, financial information and other financial data which may have been or which may hereafter be submitted by the Borrower to the Bank are and have been or will be prepared in accordance with generally accepted accounting principles consistently applied and fairly present in all material respects, as of the date of such statements, information or data, the financial condition or, as applicable, the other information disclosed therein. Since the most recent submission of such financial information or data to the Bank, the Borrower represents and warrants that no material adverse change in the Borrower's financial condition or operations has occurred which has not been fully disclosed to the Bank in writing. 4.05 LITIGATION: Except as have been disclosed to the Bank in writing, there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or the Borrower's properties before any court or administrative agency which could reasonably be expected, if determined adversely to the Borrower, to have a material adverse effect on the Borrower's financial condition or operations. 4.06 TITLE TO ASSETS: The Borrower has good and marketable title to all of its assets. The Domestic assets are not subject to any security interest, encumbrance, lien or claim of any third person except for Permitted Domestic Liens. 4.07 ERISA: If the Borrower has a pension, profit sharing or retirement plan subject to ERISA, such plan has been and will continue to be funded in accordance with its terms and otherwise complies with and continues to comply with the requirements of ERISA, except as disclosed in writing to the Bank prior to the date of this Agreement. 4.08 TAXES: The Borrower has filed all tax returns required to be filed and paid all taxes shown thereon to be due, including interest and penalties, other than such taxes which are currently payable without penalty or interest or those which are being duly contested in good faith. 4.09 REGULATION U: The proceeds of the Advances will not be used to purchase or carry margin stock. 4.10 ENVIRONMENTAL COMPLIANCE: The Borrower has implemented and complied in all material respects with all applicable federal, state and local laws, ordinances, statutes and regulations with respect to hazardous or toxic wastes, substances or related materials, industrial hygiene or environmental conditions. Except as previously disclosed to the Bank in writing, there are no suits, proceedings, claims or disputes pending or, to the knowledge of the Borrower, threatened against or affecting the Borrower or its property claiming violations of any federal, state, or local law ordinance, statute or regulation relating to hazardous or toxic wastes, substances or related materials. -5- SECTION 5 COVENANTS The Borrower covenants and agrees that, during the term of this Agreement, and so long thereafter as the Borrower is indebted to the Bank under this Agreement, the Borrower will, unless the Bank shall otherwise consent in writing: 5.01 PRESERVATION OF EXISTENCE; COMPLIANCE WITH APPLICABLE LAWS: Maintain and preserve its existence and all rights and privileges now enjoyed; not liquidate or dissolve, merge or consolidate with or into, any other business organization, provided however, that Borrower may acquire any other businesses for up to $100,000,0000 in the aggregate; and conduct its business and operations in accordance with all applicable laws, rules and regulations. 5.02 MAINTENANCE OF INSURANCE: Maintain insurance in such amounts and covering such risks as is usually and prudently carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower operates. 5.03 MAINTENANCE OF PROPERTIES: The Borrower shall also maintain and preserve all its properties in good working order and condition in accordance with the general practice of other businesses of similar character and size, ordinary wear and tear excepted. 5.04 PAYMENT OF OBLIGATIONS AND TAXES: Make timely payment of all assessments and taxes and all of its liabilities and obligations unless the same are being contested in good faith by appropriate proceedings with the appropriate court or regulatory agency, provided however that Borrower may make payment of trade payables in accordance with its customary business practices. For purposes hereof, the Borrower's issuance of a check, draft or similar instrument without delivery to the intended payee shall not constitute payment. 5.05 INSPECTION RIGHTS: At any reasonable time and from time to time, permit the Bank or any representative thereof to examine and make copies of the records and visit the properties of the Borrower and discuss the business and operations of the Borrower with any designated representative thereof. If the Borrower shall maintain any records (including, but not limited to, computer generated records or computer programs for the generation of such records) in the possession of a third party, the Borrower hereby agrees to notify such third party to permit the Bank free access to such records at all reasonable times and to provide the Bank with copies of any records which it may reasonably request, all at the Borrower's expense, the amount of which shall be payable within 30 days following demand. 5.06 REPORTING AND CERTIFICATION REQUIREMENTS: Deliver or cause to be delivered to the Bank in form and detail satisfactory to the Bank: (a) Not later than 120 days after the end of each of the Borrower's fiscal years, a copy of the annual audited financial report and Securities Exchange Commission Form 10-K of the Borrower for such year, all certified to as having been prepared in accordance with generally accepted accounting principles consistently applied by a firm of certified public accountants acceptable to Bank, together with the consolidating balance sheets and income statements for the Borrower and its subsidiaries for such year. (b) Not later than 60 days after the end of each fiscal quarter, the Borrower's Securities Exchange Commission Form 10-Q, together with the consolidating balance sheets and income statements for the Borrower and its subsidiaries, each as of the end of such period. (c) Promptly upon the Bank's request, such other information pertaining to the Borrower as the Bank may reasonably request. 5.07 PAYMENT OF DIVIDENDS: Not declare or pay any dividends on any class of stock now or hereafter outstanding except dividends payable solely in the Borrower's capital stock. 5.08 REDEMPTION OR REPURCHASE OF STOCK: Not redeem or repurchase any class of the Borrower's stock now or hereafter outstanding, provided however, Borrower may redeem or repurchase any class of the Borrower's stock in an amount not to exceed $1,000,000.00 in any one fiscal year. -6- 5.09 ADDITIONAL DOMESTIC INDEBTEDNESS: Not, after the date hereof, create, incur or assume, directly or indirectly, any additional Indebtedness nor make any fixed capital expenditure or any commitment therefor, for uses which would be, in accordance with generally accepted accounting principles, reported as Domestic capital leases ("Capital Expenditures") other than (i) Indebtedness or Capital Expenditures owed or to be owed to the Bank or (ii) Indebtedness or Capital Expenditures to trade creditors incurred in the ordinary course of the Borrower's business or (iii) any Indebtedness for Capital Expenditures in the aggregate greater than $75,000,000.00 in any one fiscal year or (iv) Indebtedness owed to other financial institutions under revolving lines of credit or (v) Indebtedness of up to $75,000,000 in connection with any acquisitions. 5.10 LOANS: Not make any loans or advances or extend credit to any third person, including, but not limited to, directors, officers, shareholders, employees, affiliated entities and subsidiaries of the Borrower, except for credit extended in the ordinary course of the Borrower's business as presently conducted, provided however, that Borrower may make loans or advances or extend credit to employees of Borrower in an aggregate amount not to exceed $1,000,000.00 in any one fiscal year and provided further, that Borrower may make loans or advances or extend credit to affiliated entities and subsidiaries of Borrower in an aggregate amount not to exceed $15,000,000.00 in the aggregate. 5.11 LIENS AND ENCUMBRANCES: Not create, assume or permit to exist any security interest, encumbrance, mortgage, deed of trust, or other lien (including, but not limited to, a lien of attachment, judgment or execution) affecting any of the Borrower's Domestic properties, or execute or allow to be filed any financing statement or continuation thereof affecting any of such properties, except for (i) Permitted Domestic Liens or as otherwise provided in this Agreement, (ii) purchase money security interests or capital leases of up to $75,000,000 for equipment including mortgage financing for the Borrower's Temecula, California property in any one fiscal year. 5.12 TRANSFER ASSETS: Not, after the date hereof, sell, contract for sale, convey, transfer, assign, lease or sublet, any of its assets except in the ordinary course of business as presently conducted by the Borrower, which ordinary course of business includes, but is not limited to, sale-leasebacks of equipment and, then, only at then prevailing market rates for such assets. 5.13 CHANGE IN NATURE OF BUSINESS: Not make any material change in the fundamental nature of its business as existing or conducted as of the date hereof. 5.14 FINANCIAL CONDITION: Maintain at all times: (a) A minimum consolidated Effective Tangible Net Worth of at least $175,000,000.00 plus, in each case, 50% of annual net income, the proceeds of any equity issuance, conversion of debt into equity and any grant of rights to subscribe for shares of the Borrower, commencing with the fiscal year-end June 30, 1994. (b) A ratio of consolidated Debt to consolidated Effective Tangible Net Worth of not more than 0.90 to 1. (c) A ratio of consolidated current assets to consolidated current liabilities of not less than 1.75 to 1. For the purposes hereof, outstanding Advances under the Line of Credit and under any other revolving lines of credit (whether with Bank or a third party) shall be included in consolidated current liabilities. (d) A ratio of the sum of net income, plus depreciation expense, plus amortization expense, plus net interest expense, each for the immediately preceding 4 fiscal quarters to the sum of the current portion of long-term Debt then due for the 4th immediately preceding fiscal quarter, plus net interest expense for the immediately preceding 4 fiscal quarters of not less than 2 to 1. 5.15 COMPENSATION OF EMPLOYEES: Compensate its employees for services rendered at an hourly rate at least equal to the minimum hourly rate prescribed by any applicable federal or state law or regulation. 5.16 NOTICE: Give the Bank prompt written notice of any and all (i) Events of Default; (ii) litigation, arbitration or administrative proceedings to which the Borrower is a party and in which the claim or liability exceeds $1,000,000; and (iii) other matters, other than matters of a general economic nature (other than those matters relating primarily to the Borrower or the industries in which the Borrower conducts its businesses) which have resulted in, or could reasonably be expected to, result in a material adverse change in the financial condition or business operations of the Borrower. 5.17 CONSOLIDATED OPERATING LOSS: Not incur for any two consecutive quarters a cumulative Consolidated Operating Loss in excess of $10,000,000.00. -7- 5.18 ENVIRONMENTAL COMPLIANCE. The Borrower shall: (a) Implement and comply in all material respects with all applicable federal, state and local laws, ordinances, statutes and regulations with respect to hazardous or toxic wastes, substances or related materials, industrial hygiene as to environmental conditions. (b) Own, use, generate, manufacture, store, handle, treat, release or dispose of any hazardous or toxic wastes, substances or related materials, only if such ownership or use would not result in a material adverse change in the Borrower's financial condition, operations or assets. (c) Give prompt written notice of any discovery of or suit, proceeding, claim, dispute, threat, inquiry or filing respecting hazardous or toxic wastes, substances or related materials. (d) At all times indemnify and hold harmless Bank from and against any and all liability arising out of the use, generation, manufacture, storage, handling, treatment, disposal or presence of hazardous or toxic wastes, substances or related materials, other than liability arising out of the Bank's gross negligence or willful misconduct. SECTION 6 EVENTS OF DEFAULT Any one or more of the following described events shall constitute an event of default (an "Event of Default") under this Agreement: 6.01 NON-PAYMENT: The Borrower shall fail to pay any Obligations within 10 days of when due. 6.02 PERFORMANCE UNDER THIS AND OTHER AGREEMENTS: The Borrower shall fail in any material respect to perform or observe any term, covenant or agreement contained in this Agreement or in any document, instrument or agreement evidencing or relating to any Indebtedness of the Borrower, other than immaterial Indebtedness described in clause (ii) of Section 1.01(h) (whether such Indebtedness is owed to the Bank or to third persons if such failure would permit such third persons to accelerate the Indebtedness), and any such failure (exclusive of the payment of money to the Bank under this Agreement or under any other instrument, document or agreement, which failure shall constitute and be an immediate Event of Default if not paid when due or when demanded to be due, but after giving effect to any grace period therefore) shall continue for more than 30 days after written notice from the Bank to the Borrower of the existence and character of such Event of Default. 6.03 REPRESENTATIONS AND WARRANTIES; FINANCIAL STATEMENTS: Any representation or warranty made by the Borrower under or in connection with this Agreement or any financial statement given by the Borrower or any guarantor shall prove to have been incorrect in any material respect when made or given or when deemed to have been made or given. 6.04 INSOLVENCY: The Borrower shall: (i) become insolvent or be unable to pay its debts as they mature; (ii) make an assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount of its properties and assets; (iii) file a voluntary petition in bankruptcy or seeking reorganization or to effect a plan or other arrangement with creditors; (iv) file an answer admitting the material allegations of an involuntary petition relating to bankruptcy or reorganization or join in any such petition; (v) become or be adjudicated a bankrupt; (vi) apply for or consent to the appointment of, or consent that an order be made, appointing any receiver, custodian or trustee, for itself or any of its properties, assets or businesses; or (vii) any receiver, custodian or trustee shall have been appointed for all or substantial part of its properties, assets or businesses and shall not be discharged within 60 days after the date of such appointment. 6.05 EXECUTION: Any writ of execution or attachment or any judgment lien which individually exceeds $2,000,000 or which, in the aggregate, exceeds $5,000,000.00 shall be issued against any property of the Borrower and shall not be discharged or bonded against or released within 60 days after the issuance or attachment of such writ or lien. 6.06 SUSPENSION: The Borrower shall voluntarily suspend the transaction of business or allow to be suspended, terminated, revoked or expired any permit, license or approval of any governmental body materially necessary to conduct the Borrower's business as now conducted. -8- 6.07 CHANGE IN OWNERSHIP: There shall occur a sale, transfer, disposition or encumbrance (whether voluntary or involuntary to), or an agreement shall be entered into to do so with, any Person or group of Persons (as such terms are defined pursuant to Federal securities laws) with respect to more than 20% of the issued and outstanding capital stock of the Borrower and, as a result thereof, such Person or group of Persons has the ability to direct or cause the direction of the management and policies of the Borrower. SECTION 7 REMEDIES ON DEFAULT Upon the occurrence and during the continuation of any Event of Default, the Bank may, at its sole and absolute election, without demand and only upon such notice as may be required by law: 7.01 ACCELERATION: Declare any or all of the Borrower's Indebtedness owing to the Bank, whether under this Agreement or any other document, instrument or agreement, immediately due and payable, whether or not otherwise due and payable. 7.02 CEASE EXTENDING CREDIT: Cease extending credit to or for the account of the Borrower under this Agreement or under any other agreement now existing or hereafter entered into between the Borrower and the Bank. 7.03 TERMINATION: Terminate this Agreement as to any future obligation of the Bank without affecting the Borrower's Obligations to the Bank or the Bank's rights and remedies under this Agreement or under any other document, instrument or agreement. 7.04 NON-EXCLUSIVITY OF REMEDIES: Exercise one or more of the Bank's rights set forth herein or seek such other rights or pursue such other remedies as may be provided by law, in equity or in any other agreement now existing or hereafter entered into between the Borrower and the Bank, or otherwise. SECTION 8 MISCELLANEOUS 8.01 DEFAULT INTEREST RATE: The Borrower shall pay the Bank interest on any indebtedness or amount payable under this Agreement, from the date that such indebtedness or amount became due or was demanded to be due until paid in full, at a rate which is 3% in excess of the Variable Rate otherwise provided under this Agreement. 8.02 RELIANCE: Each warranty, representation, covenant, obligation and agreement contained in this Agreement shall be conclusively presumed to have been relied upon by the Bank regardless of any investigation made or information possessed by the Bank and shall be cumulative and in addition to any other warranties, representations, covenants and agreements which the Borrower now or hereafter shall give, or cause to be given, to the Bank in writing, other than those implied hereunder. 8.03 ATTORNEYS' FEES: In the event of any action in relation to this Agreement or any document, instrument or agreement executed with respect to, evidencing or securing the Obligations, the prevailing party, in addition to all other sums to which it may be entitled, shall be entitled to reasonable attorneys' fees. -9- 8.04 NOTICES: All notices, payments, requests, information and demands which either party hereto may desire, or may be required to give or make to the other party hereto, shall be given or made to such party by hand delivery or through deposit in the United States mail, postage prepaid, or by telecopier addressed as set forth below or to such other address as may be specified from time to time in writing by either party to the other. TO THE BORROWER: TO THE BANK: INTERNATIONAL RECTIFIER CORPORATION SANWA BANK CALIFORNIA 233 Kansas Street 9000 East Valley Blvd. El Segundo, CA 90245 Rosemead, CA 91770 Attn: Treasury Department Attn: David Carr Vice President Telecopier No. (310) 640-6575 Telecopier No. (818) 312-5751 8.05 WAIVER: Neither the failure nor delay by the Bank in exercising any right hereunder or under any document, instrument or agreement mentioned herein shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder or under any other document, instrument or agreement mentioned herein preclude other or further exercise thereof or the exercise of any other right; nor shall any waiver of any right or default hereunder, or under any other document, instrument or agreement mentioned herein, constitute a waiver of any other right or default or constitute a waiver of any other default of the same or any other term or provision. 8.06 CONFLICTING PROVISIONS: To the extent the provisions contained in this Agreement are inconsistent with those contained in any other document, instrument or agreement executed pursuant hereto, the terms and provisions contained herein shall control. Otherwise, such provisions shall be considered cumulative. 8.07 BINDING EFFECT; ASSIGNMENT: This Agreement shall be binding upon and inure to the benefit of the Borrower and the Bank and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. The Bank may sell, assign or grant participations in amounts of $5,000,000 or greater, in all or any portion of its rights and benefits hereunder, provided, however, that Bank will not make any assignment without the Borrower's prior written consent that would be (i) not to any Federal Reserve Bank as collateral (ii) to more than one bank or a syndication of banks, or (iii) to any assignee in the semi-conductor industry. The Borrower agrees that, in connection with any such sale, grant or assignment, the Bank may deliver to the prospective buyer, participant or assignee financial statements and other relevant information relating to the Borrower if such third party agrees in writing to abide by the confidentiality provisions of Section 8.12 hereof. 8.08 JURISDICTION: This Agreement, and any documents, instruments or agreements mentioned or referred to herein shall be governed by and construed according to the laws of the State of California, to the jurisdiction of whose courts the parties hereby submit. 8.09 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE BORROWER AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISIONS HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. 8.10 HEADINGS: The headings herein set forth are solely for the purpose of identification and have no legal significance. -10- 8.11 ENTIRE AGREEMENT: This Agreement and all documents, instruments and agreements mentioned herein constitute the entire and complete understanding of the parties with respect to the transactions contemplated hereunder. All previous conversations, memoranda and writings between the parties pertaining to the transactions contemplated hereunder not incorporated or referenced in this Agreement or in such documents, instruments and agreements are superseded hereby. 8.12 CONFIDENTIALITY: The Bank shall, and shall cause its officers, employees, directors, agents, legal counsel and other professional advisors to, hold all non-public information obtained pursuant to this Agreement in accordance with its customary procedures for handling confidential information of this nature and in accordance with safe and sound banking practices. The Bank shall use its best efforts to notify the Borrower prior to any disclosure of any such non-public information, unless prohibited by applicable law, rule, regulation or order. 8.13 IMMATERIALITY: Notwithstanding anything herein to the contrary, any breach of any representations and warranties contained in Section 4 hereof or the covenants in Sections 5.01, 5.03, 5.04, 5.11, 5.12 or 5.18 shall not be deemed to be an Event of Default or prohibit any extension of credit hereunder if, in the aggregate, such defaults could not reasonably be expected to have a material adverse effect on the Borrower's financial condition, operations or assets. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first hereinabove written. BANK: BORROWER: SANWA BANK CALIFORNIA INTERNATIONAL RECTIFIER CORPORATION By: /s/ David Carr By: /s/ Michael P. McGee ---------------------------------- --------------------------------------------------- Name: David Carr Name: Michael P. McGee -------------------------------- ------------------------------------------------- Title: Vice President Title: Vice President - Chief Financial Officer ------------------------------- ------------------------------------------------ Attest: By: --------------------------------------------------- Name: ------------------------------------------------- Title: ------------------------------------------------
-11- EX-27 6 EXHIBIT 27 FDS
5 1,000 9-MOS JUN-30-1996 JUL-01-1995 MAR-31-1996 36,757 21,680 119,376 940 74,686 262,040 439,494 150,081 574,250 107,027 46,862 0 0 50,684 343,518 574,250 421,193 421,193 259,899 259,899 94,177 39 279 66,471 20,412 46,059 0 0 0 46,059 0.90 0.90
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