10-Q

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TABLE OF CONTENTS

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 2009
or
o	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 (State or Other Jurisdiction of Incorporation or Organization)	95-1528961 (I.R.S. Employer Identification No.)
233 Kansas Street El Segundo, California (Address of Principal Executive Offices)	90245 (Zip Code)

Registrant's Telephone Number, Including Area Code: (310) 726-8000

        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 ý No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

        There were 71,767,792 shares of the registrant's common stock, par value $1.00 per share, outstanding on April 30, 2009.

TABLE OF CONTENTS

			Page
PART I.		FINANCIAL INFORMATION	4
	Item 1.	FINANCIAL STATEMENTS	4
		UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 29, 2009 AND MARCH 30, 2008	4
		UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE THREE AND NINE MONTHS ENDED MARCH 29, 2009 AND MARCH 30, 2008	5
		CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 29, 2009 (UNAUDITED) AND JUNE 29, 2008	6
		UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 29, 2009 AND MARCH 30, 2008	7
		NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	8
	Item 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	47
	Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	64
	Item 4.	CONTROLS AND PROCEDURES	66
PART II.		OTHER INFORMATION	70
	Item 1.	LEGAL PROCEEDINGS	70
	Item 1A.	RISK FACTORS	70
	Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	70
	Item 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	71
	Item 5.	OTHER INFORMATION	71
	Item 6.	EXHIBITS	71

2

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to expectations concerning matters that (a) are not historical facts, (b) predict or forecast future events or results, or (c) embody assumptions that may prove to have been inaccurate. These forward-looking statements involve risks, uncertainties and assumptions. When we use words such as "believe," "expect," "anticipate," "will" or similar expressions, we are making forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give readers any assurance that such expectations will prove correct. The actual results may differ materially from those anticipated in the forward-looking statements as a result of numerous factors, many of which are beyond our control. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the factors discussed in the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." All forward-looking statements attributable to us are expressly qualified in their entirety by the factors that may cause actual results to differ materially from anticipated results. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinion only as of the date hereof. We undertake no duty or obligation to revise these forward-looking statements. Readers should carefully review the risk factors described in this document as well as in other documents we file from time to time with the Securities and Exchange Commission ("SEC").

3

PART I. FINANCIAL INFORMATION

ITEM 1.    Financial Statements

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

		Three Months Ended						Nine Months Ended
		March 29, 2009			March 30, 2008			March 29, 2009			March 30, 2008
Revenues		$	146,642		$	252,224		$	580,862		$	781,153
Cost of sales			115,706			185,694			389,191			525,186
	Gross profit		30,936			66,530			191,671			255,967
Selling and administrative expense			51,854			76,060			178,722			212,645
Research and development expense			22,379			25,957			71,992			81,258
Impairment of goodwill			23,867			—			23,867			—
Amortization of acquisition-related intangible assets			1,096			1,054			3,296			3,164
Asset impairment, restructuring and other charges			7,117			1,916			56,564			1,958
	Operating loss		(75,377	)		(38,457	)		(142,770	)		(43,058	)
Other expense, net			11,599			3,846			36,807			11,279
Interest income, net			(4,091	)		(6,841	)		(8,382	)		(22,562	)
	Loss before income taxes		(82,885	)		(35,462	)		(171,195	)		(31,775	)
Provision for (benefit from) income taxes			(1,163	)		(13,895	)		101,044			(20,934	)
	Net loss	$	(81,722	)	$	(21,567	)	$	(272,239	)	$	(10,841	)
Net loss per common share—basic		$	(1.13	)	$	(0.30	)	$	(3.75	)	$	(0.15	)
Net loss per common share—diluted		$	(1.13	)	$	(0.30	)	$	(3.75	)	$	(0.15	)
Average common shares outstanding—basic			72,102			72,826			72,547			72,817
Average common shares and potentially dilutive securities outstanding—diluted			72,102			72,826			72,547			72,817

The accompanying notes are an integral part of these statements.

4

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

			Three Months Ended						Nine Months Ended
			March 29, 2009			March 30, 2008			March 29, 2009			March 30, 2008
Net loss			$	(81,722	)	$	(21,567	)	$	(272,239	)	$	(10,841	)
Other comprehensive (loss) income:
	Foreign currency translation adjustments			2,144			3,624			(82,501	)		2,339
	Unrealized gains and losses on securities:
		Unrealized holding gains on available-for-sale securities, net of tax effect of $0, $0, $0 and $(179), respectively		10,857			(1,921	)		10,005			(20,858	)
		Unrealized holding losses on foreign currency forward contract, net of tax effect of $0 in all periods		—			—			—			(2,303	)
	Reclassification adjustments of net gains on foreign currency forward contract			(369	)		—			(452	)		(821	)
		Other comprehensive (loss) income		12,632			1,703			(72,948	)		(21,643	)
Comprehensive loss			$	(69,090	)	$	(19,864	)	$	(345,187	)	$	(32,484	)

The accompanying notes are an integral part of these statements.

5

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

			March 29, 2009 (Unaudited)			June 29, 2008(1)
Assets
Current assets:
	Cash and cash equivalents		$	373,495		$	320,464
	Restricted cash			2,925			4,341
	Short-term investments			127,760			101,739
	Trade accounts receivable, net			82,000			105,384
	Inventories			161,925			175,856
	Current deferred tax assets			43			13,072
	Prepaid expenses and other receivables			47,159			43,993
		Total current assets		795,307			764,849
Restricted cash				15,084			15,012
Long-term investments				138,139			303,680
Property, plant and equipment, net				385,314			534,098
Goodwill				74,955			98,822
Acquisition-related intangible assets, net				12,929			16,225
Long-term deferred tax assets				10,206			89,576
Other assets				42,743			52,650
		Total assets	$	1,474,677		$	1,874,912
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		$	60,291		$	77,653
	Accrued salaries, wages and commissions			20,559			33,022
	Accrued income taxes			6,817			30,943
	Current deferred tax liabilities			2,266			2,266
	Other accrued expenses			82,205			103,355
		Total current liabilities		172,138			247,239
Long-term deferred tax liabilities				3,497			4,828
Deferred gain on divestiture				120,172			112,609
Other long-term liabilities				80,508			59,285
		Total liabilities		376,315			423,961
Commitments and contingencies
Stockholders' equity:
	Common shares			73,096			72,826
	Capital contributed in excess of par value of shares			979,677			971,920
	Treasury stock, at cost			(15,429	)		—
	Retained earnings			66,707			338,946
	Accumulated other comprehensive (loss) income			(5,689	)		67,259
		Total stockholders' equity		1,098,362			1,450,951
		Total liabilities and stockholders' equity	$	1,474,677		$	1,874,912

(1)

The consolidated balance sheet as of June 29, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The accompanying notes are an integral part of these statements.

6

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

			Nine Months Ended
			March 29, 2009			March 30, 2008
Cash flow from operating activities:
	Net loss		$	(272,239	)	$	(10,841	)
	Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
		Depreciation and amortization		47,088			59,633
		Amortization of acquisition-related intangible assets		3,296			3,164
		Stock compensation expense		5,006			7,425
		Provision for bad debt		262			1,253
		Provision for inventory write-downs		10,910			24,416
		Debt retirement charge		—			5,659
		Deferred revenue		(1,149	)		(14,064	)
		Deferred income taxes		78,565			1,195
		Tax benefit from options exercised		568			118
		Excess tax benefit from options exercised		(3	)		(81	)
		Write-down of investments		37,258			4,675
		Impairment of goodwill		23,867			—
		Impairment of fixed assets		50,853			—
		Loss on sale of investments		4,632			—
		Changes in operating assets and liabilities, net		(28,437	)		(73,640	)
Net cash (used in) provided by operating activities				(39,523	)		8,912
Cash flow from investing activities:
	Additions to property, plant and equipment			(12,929	)		(33,922	)
	Proceeds from sale of property, plant and equipment			576			1,446
	Additions to restricted cash			(72	)		(375	)
	Sale or maturities of investments			353,046			279,032
	Purchase of investments			(239,510	)		(262,920	)
	Other, net			—			1,702
Net cash provided by (used in) investing activities				101,111			(15,037	)
Cash flow from financing activities:
	Repayments of short-term debt			—			(550,000	)
	Repayments of obligations under capital lease			—			(417	)
	Proceeds from exercise of stock options			2,964			174
	Excess tax benefit from options exercised			3			81
	Reductions (additions) to restricted cash			1,416			(4,341	)
	Purchase of treasury stock			(15,429	)		—
	Net settlement of restricted stock units			(500	)		—
	Other, net			—			(6,975	)
Net cash used in financing activities				(11,546	)		(561,478	)
Effect of exchange rate changes on cash and cash equivalents				2,989			2,270
Net increase (decrease) in cash and cash equivalents				53,031			(565,333	)
Cash and cash equivalents, beginning of period				320,464			853,040
Cash and cash equivalents, end of period			$	373,495		$	287,707

The accompanying notes are an integral part of these statements.

7

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

    

1. Business, Basis of Presentation and Summary of Significant Accounting Policies

Business

        International Rectifier Corporation ("IR" or the "Company") designs, manufactures and markets power management semiconductors. Power management semiconductors address the core challenges of power management, power performance and power conservation, by increasing system efficiency, allowing more compact end-products, improving features on electronic devices and prolonging battery life.

        The Company pioneered the fundamental technology for power metal oxide semiconductor field effect transistors ("MOSFETs") in the 1970s, and estimates that the majority of the world's planar power MOSFETs use its technology. Power MOSFETs are instrumental in improving the ability to manage power efficiently. The Company's products include power MOSFETs, high voltage analog and mixed signal integrated circuits ("HVICs"), low voltage analog and mixed signal integrated circuits ("LVICs"), digital integrated circuits ("ICs"), radiation-resistant ("RAD-Hard™") power MOSFETs, insulated gate bipolar transistors ("IGBTs"), high reliability DC-DC converters, PowerStage ("PS") modules, and DC-DC converter type applications.

Basis of Presentation

        At the beginning of the first quarter of fiscal year 2009, the Company's Chief Executive Officer ("CEO"), who is the Chief Operating Decision Maker, refined the definition of the Company's business segments by renaming its Aerospace and Defense ("A&D") segment its HiRel ("HR") segment, combining its previously identified PS segment with its Enterprise Power ("EP") segment and creating a new Automotive Products ("AP") segment which was previously reported within the Energy-Saving Products ("ESP") and Power Management Devices ("PMD") segments. Furthermore, some products that were previously reported under the EP segment moved to PMD. Consequently, the Company now reports in seven segments: EP, PMD, ESP, HR, AP, Intellectual Property ("IP") and Transition Services ("TS"), as described more fully in Note 13, "Segment Information." Prior year segment presentation has been recast to conform to current year presentation.

        The condensed consolidated financial statements have been prepared in accordance with the instructions for preparation of a Quarterly Report on Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and therefore do not include all information and notes normally provided in audited financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, which are located in North America, Europe and Asia. Intercompany balances and transactions have been eliminated in consolidation.

        In the opinion of management, all adjustments (consisting of normal recurring accruals and other adjustments) considered necessary for a fair presentation of the Company's results of operations, financial position and cash flows have been included. The results of operations for any interim period are not necessarily indicative, nor comparable to the results of operations for any other interim period or for a full fiscal year. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the Company's annual audited consolidated financial statements and the notes thereto for the year ended June 29, 2008 included in the Company's Annual Report on

8

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (Continued)

Form 10-K for the fiscal year ended June 29, 2008 filed with the SEC on September 15, 2008 (the "2008 Annual Report").

        In the fourth quarter of fiscal year 2008, the Company changed the classification of amortization expense related to certain acquired technology licenses from research and development expense to amortization of acquisition-related intangible assets expense to conform to industry practice. A reclassification has been made to the prior period consolidated condensed financial statements to conform to the current year presentation. As a result, the Company's statement of operations reflects a $0.7 million and $2.0 million reclassification of research and development expense to amortization of acquisition-related intangible asset expense for the three and nine months ended March 29, 2009, respectively, and the statement of cash flows for the nine months ended March 29, 2009 reflects a reclassification of $2.0 million from changes in operating assets and liabilities, net to amortization of acquisition-related intangible assets. The statements of operations and cash flows were the only financial statements impacted by this reclassification.

Fiscal year and Quarter

        The Company operates on a 52-53 week fiscal year with the fiscal year ending on the Sunday closest to June 30. The three months ended March 2009 and 2008 consisted of 13 weeks ending on March 29, 2009 and March 30, 2008, respectively.

Estimates

        The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period. Actual results could differ from those estimates.

Out-of-Period Adjustments

        Included in the results for the three and nine months ended March 29, 2009, are a number of corrections of prior period errors, some of which increased and some of which decreased net loss. Based on the Company's current financial condition and results of operations, management has determined that these corrections are immaterial to the financial statements in each applicable prior period and the current periods to date, both individually and in the aggregate.

Adoption of New Accounting Standards

        In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 157, "Fair Value Measurements" ("SFAS 157"), which established a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement. In February 2008, the FASB issued FASB Staff Position Financial Accounting Standard 157-2, "Partial Deferral of the Effective Date of Statement 157" ("FSP 157-2"), which delayed the effective date of SFAS 157 for all nonrecurring fair value measurements of nonfinancial assets and nonfinancial liabilities until fiscal years beginning after November 15, 2008. FSP 157-2 is effective upon initial adoption of SFAS 157. The Company adopted

9

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (Continued)

SFAS 157 at the beginning of the first quarter of fiscal year 2009. The adoption of this statement did not have a material effect on the Company's consolidated financial statements.

        In October 2008, the FASB issued FASB Staff Position Financial Accounting Standard 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active" ("FSP 157-3"). FSP 157-3 clarifies the application of SFAS 157 in cases where a market is not active. The Company has considered the guidance provided by FSP 157-3 in its determination of estimated fair values, and the impact was not material.

        In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 permits the Company to choose to measure certain financial instruments and certain other items at fair value. This statement requires that unrealized gains and losses on items for which the fair value option has been chosen, be reported in earnings. The Company adopted SFAS 159 at the beginning of the first quarter of fiscal year 2009, and the adoption had no material effect on the Company's consolidated financial statements as the Company elected not to measure certain financial instruments and certain other items within the scope of SFAS 159 at fair value.

        In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with GAAP for nongovernmental entities. SFAS 162 became effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to remove the GAAP hierarchy from the auditing standards, which was November 15, 2008. SFAS 162 did not have a material impact on the Company's consolidated financial statements.

        In December 2008, the FASB issued FASB Staff Position FAS 140-4 and FIN 46(R)-8, "Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities." ("FSP FAS 140-4 and FIN 46(R)-8"). FSP FAS 140-4 and FIN 46(R)-8 requires additional disclosures about transfers of financial assets and involvement with variable interest entities. FSP FAS 140-4 and FIN 46(R)-8 is effective for all reporting periods ending after December 15, 2008. The Company adopted FSP FAS 140-4 and FIN 46(R)-8 at the end of its second quarter of fiscal year 2009 and the adoption did not require additional disclosures.

        In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS 161"). SFAS 161 amends and expands the disclosure requirements of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") with the intent to provide users of financial statements with an enhanced understanding of: (i) how and why an entity uses derivative instruments; (ii) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations and (iii) how derivative instruments and related hedged items affect an entity's financial position, financial performance and cash flows. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company adopted the provisions of SFAS 161 during the third quarter of fiscal year 2009. The Company's derivative activity during the third quarter of fiscal year 2009 was not material to the

10

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (Continued)

condensed consolidated financial statements and, therefore, no additional footnote disclosure has been provided.

Recent Accounting Pronouncements

        In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" ("SFAS 141(R)"). Under SFAS 141(R), an entity is required to recognize the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred, restructuring costs generally be expensed in periods subsequent to the acquisition date, and changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense. In addition, acquired in-process research and development ("R&D") is capitalized as an intangible asset and amortized over its estimated useful life. The adoption of SFAS 141(R) will change the Company's accounting treatment for business combinations on a prospective basis beginning June 29, 2009.

        In April 2008, the FASB issued FASB Staff Position Financial Accounting Standard 142-3, "Determination of the Useful Life of Intangible Assets" ("FSP 142-3") which amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of a recognized intangible asset under SFAS No. 142, "Goodwill and Other Intangible Assets." FSP 142-3 is effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. The Company is in the process of evaluating the impact of FSP 142-3 on its consolidated financial statements.

        In November 2008, the FASB ratified Emerging Issues Task Force Issue No. 08-6, "Equity Method Investment Accounting Considerations" ("EITF 08-6"). EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving equity method investments. EITF 08-6 is effective for fiscal years beginning after December 15, 2008, with early adoption prohibited. The Company is in the process of evaluating the impact of EITF 08-6 on its consolidated financial statements.

        In November 2008, the FASB ratified Emerging Issues Task Force Issue No. 08-7, "Accounting for Defensive Intangible Assets" ("EITF 08-7"). EITF 08-7 clarifies the accounting for certain separately identifiable intangible assets which an acquirer does not intend to actively use but intends to hold to prevent its competitors from obtaining access to them. EITF 08-7 requires an acquirer in a business combination to account for a defensive intangible asset as a separate unit of accounting which should be amortized to expense over the period the asset diminishes in value. EITF 08-7 is effective for fiscal years beginning after December 15, 2008, with early adoption prohibited. The Company is in the process of evaluating the impact of EITF 08-7 on its consolidated financial statements.

        In April 2009, the FASB issued FASB Staff Position Financial Accounting Standard 107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial Instruments" ("FSP 107-1 and APB 28-1"). FSP 107-1, and APB 28-1, amends FASB Statement No. 107, "Disclosures about the Fair Value of Financial Instruments", to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. This FSP also amends APB Opinion No. 28, "Interim Financial Reporting", to require those disclosures in all interim financial statements. This FSP is effective for interim and annual reporting periods ending after June 15, 2009.

11

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (Continued)

The Company may early adopt this FSP if it also elects to early adopt FASB Staff Position Financial Accounting Standard 157-4, "Determining Whether a Market Is Not Active and a Transaction Is Not Distressed" ("FSP 157-4"), and FASB Staff Position Financial Accounting Standard 115-2, and FAS 124-2, "Recognition and Presentation of Other-Than-Temporary Impairments"("FSP 115-2"). The adoption of FSP FAS 107-1 and APB 28-1 will result in additional disclosures in the Company's interim periodic financial reports.

        In April 2009, the FASB issued FSP 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly", ("FSP 157-4"). FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS 157 when the volume and level of activity for the asset or liability have significantly decreased. FSP 157-4 also indicates guidance on identifying circumstances that indicate a transaction is not orderly. The FSP affirmed that fair value, when the market for an asset is not active, is the price that would be received to sell the asset in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions (that is, in the inactive market). The FSP clarifies and includes additional factors for determining whether there has been a significant decrease in market activity for an asset when the market for that asset is not active. This FSP requires an entity to base its conclusions about whether a transaction was not orderly on the weight of the evidence. FSP 157-4 is effective for interim and annual periods ending after June 15, 2009, and shall be applied prospectively. Earlier adoption for periods ending before March 15, 2009, is not permitted. If the Company elects to adopt this FSP early, FSP FAS 115-2 and FAS 124-2 must also be adopted early. The Company does not believe that the adoption of FSP FAS 157-4 will have a material impact on its consolidated financial statements.

        In April 2009, the FASB issued FASB Staff Position Financial Accounting Standard No. 115-2, and FAS 124-2, "Recognition and Presentation of Other-Than-Temporary Impairments". This FSP amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. Under this FSP, when an entity does not intend to sell the security and it is more likely than not that the entity will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than- temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. This FSP applies only to debt securities. FSP 115-2 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Earlier adoption for periods ending before March 15, 2009, is not permitted. If the Company elects to adopt early either FSP FAS 157-4, or FSP FAS 107-1 and APB 28-1, the Company also is required to early adopt this FSP. Additionally, if an entity elects to early adopt this FSP, it is also required to early adopt FSP FAS 157-4. The Company does not believe that the adoption of FSP 115-2 will have a material impact on its consolidated financial statements.

2. Deferred Gain on Divestiture

        On April 1, 2007, the Company completed the sale of its Power Control Systems ("PCS") business ("PCS Business") to Vishay Intertechnology, Inc. ("Vishay") for $339.6 million (the "Divestiture"), including $14.5 million of restricted cash temporarily held in escrow to cover indemnity obligations, if

12

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Deferred Gain on Divestiture (Continued)

any, and the net cash retained from the assets of the entities being sold totaling approximately $49.4 million. Since the consummation of the Divestiture, a number of matters as discussed in Note 18, "Commitments and Contingencies," raised uncertainties under applicable accounting standards and guidance as to the determination of the gain on the Divestiture. As of fiscal year end June 29, 2008, the Company had deferred recognition of the gain on the Divestiture of $112.6 million. At the present time, the Company cannot make a determination as to when these uncertainties will be resolved. During the first quarter of fiscal year 2009, the deferred gain on the Divestiture was increased because certain tax indemnification obligations in respect of divested entities aggregating to $0.3 million ceased to exist through lapsing of a statute of limitation in a foreign tax jurisdiction. During the second quarter of fiscal year 2009, the deferred gain on the Divestiture was further increased by $2.3 million due to a correction of a prior period immaterial error related to certain stock rotation and warranty liabilities and by $1.1 million due to currency translation adjustments on the tax indemnification amount. During the third quarter, the Company reclassified both $5.6 million of a reserve in other liabilities and $1.1 million of prepaid expenses to the deferred gain as a result of the partial termination of the Transition Product Services Agreement by and among International Rectifier Corporation, International Rectifier Southeast Asia Pte. Ltd., Vishay Intertechnology, Inc. and Vishay Asia Logistics Pte. Ltd. ("TPSA"). See Note 13, "Segment Information." The TPSA included certain wafer fabrication and assembly services which were deemed to be below market at the time of the Divestiture. A reserve was established to offset the loss from the Company providing these services and an asset was established to offset the reduced price paid by the Company to Vishay for certain other transition services provided by Vishay. In addition, the deferred gain on the Divestiture was decreased by $0.3 million due to a correction of a prior period error related to certain tax indemnifications and further decreased by $0.4 million due to revisions of estimates resulting from the filing of amended tax returns which impacted the tax indemnification amount. Consequently, as of March 29, 2009, the Company had a deferred gain on the Divestiture of $120.2 million.

3. Fair Value Measurements

        As discussed in Note 1, "Business, Basis of Presentation and Summary of Significant Accounting Policies," the Company adopted SFAS 157 effective the first day of fiscal year 2009. SFAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement. Under SFAS 157, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. SFAS 157 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The categorization of financial assets and liabilities within the valuation

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Fair Value Measurements (Continued)

hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels (with Level 3 being the lowest) defined as follows:

•

Level 1—Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date. The Company's financial assets valued using Level 1 inputs include money market funds, treasury bonds, and marketable equity securities that are valued using quoted market prices.

•

Level 2—Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. The Company's financial assets and liabilities valued using Level 2 inputs include agency bonds, corporate debt securities, certain mortgage-backed securities and foreign currency hedges, whose fair values are determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

•

Level 3—Inputs include management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation. The Company's financial assets valued using Level 3 inputs include asset-backed securities, certain mortgage-backed securities and other equity investments. See the section below entitled Level 3 Valuation Techniques for a discussion of how the Company determines fair value for investments using Level 3 inputs.

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

        The following table sets forth, by Level, the Company's financial assets and liabilities that were measured at fair value on a recurring basis as of March 29, 2009 (in thousands):

Assets:	Total			(Level 1)			(Level 2)			(Level 3)
U.S. government and agency obligations	$	263,753		$	182,165		$	81,588		$	—
Corporate debt		2,620			1,998			622			—
Mortgage-backed securities		20,480			—			—			20,480
Asset-backed securities		22,543			—			—			22,543
Equity securities		15,916			15,912			—			4
Foreign currency derivatives		164			—			164			—
Total	$	325,476		$	200,075		$	82,374		$	43,027
Fair value as a percentage of total		100.0	%		61.5	%		25.3	%		13.2	%
Level 3 as a percentage of total assets											2.9	%

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Fair Value Measurements (Continued)

        Financial assets and liabilities measured and recorded at fair value on a recurring basis were presented on the Company's condensed consolidated balance sheet as of March 29, 2009 as follows (in thousands):

Assets:	Total		(Level 1)		(Level 2)			(Level 3)
Cash and cash equivalents	$	43,498	$	43,498	$	—		$	—
Short-term investments		127,760		100,999		26,761			—
Prepaid expenses and other receivables		225		—		225			—
Long-term investments		138,139		39,665		55,451			43,023
Other long-term assets		15,854		15,912		(62	)		4
Total	$	325,476	$	200,074	$	82,375		$	43,027

Level 3 Valuation Techniques

        Certain financial assets are measured using Level 3 inputs such as pricing models, discounted cash flow methodologies or similar techniques, and where at least one significant model assumption or input is unobservable. Level 3 inputs are used for financial assets that include certain investment securities for which there is limited market activity where the determination of fair value requires significant judgment or estimation. Level 3 inputs are also used to value investment securities that include certain mortgage-backed securities and asset-backed securities for which there was a decrease in the observability of market pricing for these investments. At March 29, 2009, these securities were valued primarily using independent valuation firm or broker pricing models that incorporate transaction details such as maturity, timing and amount of future cash flows, as well as assumptions about liquidity and credit valuation adjustments of marketplace participants at March 29, 2009.

        The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable Level 3 inputs for the three months ended March 29, 2009 (in thousands):

Balance at December 28, 2008		$	61,506
Total gains (losses), realized and unrealized:
	Included in earnings		(5,001	)
	Included in other comprehensive loss		21
Purchases, sales and settlements, net			(13,499	)
Net transfers in (out) of Level 3			—
Balance at March 29, 2009		$	43,027

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Fair Value Measurements (Continued)

        The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable Level 3 inputs for the nine months ended March 29, 2009 (in thousands):

Balance at June 29, 2008		$	126,275
Total gains (losses), realized and unrealized:
	Included in earnings		(31,288	)
	Included in other comprehensive loss		8,759
Purchases, sales and settlements, net			(60,719	)
Net transfers in (out) of Level 3			—
Balance at March 29, 2009		$	43,027

        Losses attributable to financial assets whose fair value is determined by using Level 3 inputs and included in earnings as shown above consist of other-than-temporary impairments for investments which are included in other expense and realized losses on sale of securities which are included in interest income.

Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

        During the fiscal quarter ended March 29, 2009, the Company had no significant measurements of financial assets or liabilities at fair value on a nonrecurring basis.

4. Investments

        Available-for-sale investments are carried at fair value, inclusive of unrealized gains and losses, and net of discount accretion and premium amortization computed using the level yield method. Net unrealized gains and losses are included in other comprehensive loss net of applicable income taxes. Gains or losses on sales of available-for-sale investments are recognized on the first-in, first-out basis.

        Available-for-sale debt securities as of March 29, 2009 are summarized as follows (in thousands):

		Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Net Unrealized Gain		Market Value
Short-Term Investments:
Corporate debt		$	1,997	$	1	$	—		$	1	$	1,998
U.S. government and agency obligations			124,877		887		(2	)		885		125,762
	Total short-term investments	$	126,874	$	888	$	(2	)	$	886	$	127,760
Long-Term Investments:
Corporate debt		$	608	$	14	$	—		$	14	$	622
U.S. government and agency obligations			91,795		2,715		(16	)		2,699		94,494
Mortgage-backed securities			20,265		215		—			215		20,480
Asset-backed securities			22,376		167		—			167		22,543
	Total long-term investments	$	135,044	$	3,111	$	(16	)	$	3,095	$	138,139

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Investments (Continued)

        Available-for-sale debt securities as of June 29, 2008 are summarized as follows (in thousands):

		Amortized Cost		Gross Unrealized Gain		Gross Unrealized (Loss)			Net Unrealized Gain (Loss)			Market Value
Short-Term Investments:
Corporate debt		$	34,181	$	44	$	(103	)	$	(59	)	$	34,122
U.S. government and agency obligations			67,507		132		(22	)		110			67,617
	Total short-term investments	$	101,688	$	176	$	(125	)	$	51		$	101,739
Long-Term Investments:
Corporate debt		$	44,031	$	205	$	(466	)	$	(261	)	$	43,770
U.S. government and agency obligations			90,260		1,760		(325	)		1,435			91,695
Mortgage-backed securities			96,204		546		(5,492	)		(4,946	)		91,258
Asset-backed securities			80,023		272		(3,338	)		(3,066	)		76,957
	Total long-term investments	$	310,518	$	2,783	$	(9,621	)	$	(6,838	)	$	303,680

        The Company manages its total portfolio to encompass a diversified pool of investment-grade securities. The investment policy is to manage its total cash and investments balances to preserve principal and maintain liquidity while maximizing the returns on the investment portfolio.

        The Company holds as strategic investments the common and preferred stock of three publicly traded foreign companies, and one closely held equity security. These stocks are traded on either the Tokyo Stock Exchange or the Taiwan Stock Exchange. Dividend income from these companies was $0.0 million and $0.2 million for the three months ended March 29, 2009 and March 30, 2008, respectively, and $0.3 million and $0.4 million for the nine months ended March 29, 2009 and March 30, 2008, respectively.

        The carrying values of the equity investments included in other long-term assets at March 29, 2009 and June 29, 2008 were $15.9 million and $29.2 million, respectively, compared to their purchase cost at March 29, 2009 and June 29, 2008 of $18.9 million and $24.9 million, respectively. The change in unrealized gain (loss), net of taxes, for the three months ended March 29, 2009 and March 30, 2008 was $(0.2) million and $1.1 million, respectively, and for the nine months ended March 29, 2009 and March 30, 2008 was $(13.4) million and $(10.7) million, respectively, and was included in other comprehensive loss.

        The Company evaluates securities for other-than-temporary impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the length of time and extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer of the securities; and the intent and ability of the Company to retain the security in order to allow for an anticipated recovery in fair value. If, based upon the analysis, it is determined that the impairment is other-than-temporary, the security is written down to fair value, and a loss is recognized through earnings. Other-than-temporary impairments relating to certain available-for-sale securities, for the three months ended March 29, 2009 and March 30, 2008 were $11.7 million and $3.8 million,

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Investments (Continued)

respectively, and for the nine months ended March 29, 2009 and March 30, 2008 were $37.3 million and $4.7 million, respectively, and were included in other expense.

        The investments the Company determined were other-than-temporarily impaired were mortgage-backed securities, asset-backed securities, and corporate bonds with stated maturities ranging from 1 to 27 years (expected maturity from 3 months to 20 years) and an equity investment. As a result, the Company recorded impairment charges in earnings related to its investments in mortgage-backed securities, asset backed securities and corporate bonds of $5.8 million and $31.3 million for the three and nine months ended March 29, 2009. In addition, the Company recorded an impairment charge related to its equity investment of $5.9 million for the three and nine months ended March 29, 2009.

        As of March 29, 2009, the Company had $43.0 million in investment positions in mortgage-backed securities and asset-backed securities that were in a loss position and which the Company does not intend to hold until maturity. These securities were fair valued utilizing a cash flow model which relied upon the Company's tranche specific cash flow projections, the benchmark yield, assumed collateral performance and tranche specific yield. These investments were determined to be other than temporarily impaired due to the expectation of a prolonged economic slowdown weighing on the underlying assets of these securities. Such opinion is pervasive in the market. The Company does not believe that it is more likely than not that prices will recover before these investment positions are sold. Additional information the Company considered in determining that these securities were other than temporarily impaired included quantitative information regarding the most recent delinquency rate, foreclosure or real estate-owned rate, current credit rating and the rating date, correlation of price change and benchmark yield change, net credit support, coverage ratio and effective maturity for these securities. Qualitative analysis considered past impairments, changes in prepayment speed and the magnitude of the unrealized loss.

        As a result of the Company's interim period review of its available for sale securities, the Company determined that one of its equity investments was significantly below the original purchase cost and had been for more than six months. The Company has the intent and ability to hold this investment indefinitely. However, in the Company's judgment, the security's value may not recover to its purchase cost. Accordingly, the Company has determined that this investment was other-than-temporarily impaired due to the prolonged downturn in the overall market and recorded an impairment charge of $5.9 million in the current quarter. In reaching its conclusion, the Company reviewed the financial statements of the issuer, rating agency developments, investment activity in the issuer and price trends for the security.

        The following table summarizes the market value and gross unrealized losses related to available-for-sale debt investments, aggregated by type of investment and length of time that individual

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Investments (Continued)

securities have been held. The unrealized loss position is measured and determined at each fiscal quarter (in thousands):

		Securities held in a loss position for less than 12 months at March 29, 2009					Securities held in a loss position for 12 months or more at March 29, 2009				Total in a loss position at March 29, 2009
		Market Value		Gross Unrealized Losses			Market Value		Gross Unrealized Losses		Market Value		Gross Unrealized Losses
U.S. government and agency obligations		$	12,539	$	(18	)	$	—	$	—	$	12,539	$	(18	)
	Total	$	12,539	$	(18	)	$	—	$	—	$	12,539	$	(18	)

		Securities held in a loss position for less than 12 months at June 29, 2008					Securities held in a loss position for 12 months or more at June 29, 2008					Total in a loss position at June 29, 2008
		Market Value		Gross Unrealized Losses			Market Value		Gross Unrealized Losses			Market Value		Gross Unrealized Losses
Corporate debt		$	37,473	$	(485	)	$	6,182	$	(84	)	$	43,655	$	(569	)
U.S. government and agency obligations			32,026		(347	)		—		—			32,026		(347	)
Mortgage-backed securities			43,297		(5,077	)		1,893		(415	)		45,190		(5,492	)
Asset-backed securities			31,567		(2,915	)		4,920		(423	)		36,487		(3,338	)
	Total	$	144,363	$	(8,824	)	$	12,995	$	(922	)	$	157,358	$	(9,746	)

        The amortized cost and estimated fair value of investments at March 29, 2009, by contractual maturity, were as follows (in thousands):

		Amortized Cost		Estimated Fair Value
Due in 1 year or less		$	126,874	$	127,760
Due in 1 - 2 years			75,569		77,672
Due in 2 - 5 years			20,985		21,652
Due after 5 years			38,490		38,815
	Total investments	$	261,918	$	265,899

        In accordance with the Company's investment policy which limits the length of time that cash may be invested, the expected disposal dates may be less than the contractual maturity dates as indicated in the table above.

        Gross realized gains were $1.5 million and $4.6 million for the three and nine months ended March 29, 2009, respectively, and gross realized (losses) were $(0.1) million and $(9.2) million for the three and nine months ended March 29, 2009, respectively. Gross realized gains were $0.4 million and $0.7 million for the three and nine months ended March 30, 2008, respectively, and gross realized

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Investments (Continued)

(losses) were $(0.7) million and $(1.3) million for the three and nine months ended March 30, 2008, respectively.

        During the three and nine months ended March 29, 2009, as a result of sales of available-for-sale securities and recognition of other-than-temporary impairments on available-for-sale securities, the Company reclassified $2.2 million and $31.9 million, respectively, from accumulated other comprehensive income to earnings either as a component of interest expense (income) or other expense depending on the nature of the gain (loss).

5. Supplemental Cash Flow Disclosures

        Components of the changes in operating assets and liabilities for the nine months ended March 29, 2009 and March 30, 2008 were comprised of the following (in thousands):

		Nine Months Ended
		March 29, 2009			March 30, 2008
Trade accounts receivable		$	16,542		$	14,360
Inventories			(1,469	)		39,221
Prepaid expenses and other receivables			(11,713	)		(554	)
Accounts payable			(15,254	)		(348	)
Accrued salaries, wages and commissions			(11,353	)		(2,448	)
Deferred compensation			(1,280	)		(1,405	)
Accrued income taxes			4,500			(102,921	)
Other accrued expenses			(8,410	)		(19,545	)
	Changes in operating assets and liabilities	$	(28,437	)	$	(73,640	)

        Supplemental disclosures of cash flow information (in thousands):

		Nine Months Ended
		March 29, 2009		March 30, 2008
Non-cash investing activities:
	Liabilities accrued for property, plant and equipment purchases	$	1,112	$	1,487

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Inventories

        Inventories at March 29, 2009 and June 29, 2008 were comprised of the following (in thousands):

		March 29, 2009		June 29, 2008
Raw materials		$	31,420	$	34,046
Work-in-process			70,255		67,855
Finished goods			60,250		73,955
	Total inventories	$	161,925	$	175,856

7. Goodwill and Acquisition-Related Intangible Assets

Acquisition Related Intangible Assets

        At March 29, 2009 and June 29, 2008, acquisition-related intangible assets included the following (in thousands):

				March 29, 2009							June 29, 2008
		Amortization Periods (Years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Acquisition-related intangible assets:
Completed technology			4 - 15	$	29,679	$	(18,645	)	$	11,034	$	29,679	$	(15,803	)	$	13,876
Customer lists			5 - 12		5,446		(4,434	)		1,012		5,446		(4,107	)		1,339
Intellectual property and other			5 - 15		7,963		(7,080	)		883		7,963		(6,953	)		1,010
	Total acquisition-related intangible assets			$	43,088	$	(30,159	)	$	12,929	$	43,088	$	(26,863	)	$	16,225

        As of March 29, 2009, estimated amortization expense for the next five years is as follows (in thousands): remainder of fiscal year 2009: $1,097; fiscal year 2010: $4,386; fiscal year 2011: $4,125; fiscal year 2012: $1,771; and fiscal year 2013: $231.

Goodwill

        The Company assesses the carrying amount of Goodwill in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets," which requires that the Company assess the carrying value of goodwill at least annually and more frequently if the Company believes indicators of impairment exist

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Goodwill and Acquisition-Related Intangible Assets (Continued)

        The carrying amount of goodwill by ongoing business segment as of March 29, 2009 and June 29, 2008 was as follows (in thousands):

Business Segments:		March 29, 2009		June 29, 2008
Power Management Devices		$	—	$	—
Energy-Saving Products			33,190		33,190
HiRel			18,959		18,959
Enterprise Power			22,806		22,806
Automotive Products			—		3,793
Intellectual Property			—		20,074
	Total goodwill	$	74,955	$	98,822

        In arriving at its decision to perform an interim impairment analysis of the goodwill associated with the Company's reporting units the Company considered a number of factors. These factors included the decline in the Company's market capitalization, the Company's performance against its business plan and the outlook for the Company's businesses and industry in general. Based on that evaluation at the end of both the second and third quarters of fiscal year 2009, the Company made a decision to perform an interim impairment analysis of goodwill.

        Based on the results of the interim goodwill impairment analysis at the end of the third quarter of fiscal year 2009, the Company concluded that for the Automotive Products and Intellectual Property reporting units the carrying amount of goodwill exceeded their fair value determined using a discounted cash flow analysis. As a result, the Company recorded a goodwill impairment charge of $23.9 million during the third quarter of fiscal year 2009. As a result of this impairment, the Automotive Products and Intellectual Property segments carry no goodwill as of March 29, 2009.

        In the fourth quarter of fiscal year 2008, the Company performed its annual assessment of goodwill for impairment. During that quarter, the forecasted cash flows of the Company's reporting units were updated. This update considered current economic conditions and trends, estimated future operating results, anticipated future economic conditions, and technology. Based on the results of the annual assessment of goodwill for impairment, the net book value of one of the Company's reporting segments exceeded its estimated fair value determined using a discounted cash flow analysis. Therefore, the Company recorded during the fourth quarter of fiscal year 2008 goodwill impairment charges of $32.6 million. As a result of this impairment, the PMD segment carries no goodwill.

8. Bank Loans and Long-Term Debt

        As of March 29, 2009, the Company had no long-term debt outstanding.

        On November 6, 2006, the Company entered into a five-year multi-currency revolving credit facility with a syndicate of lenders including JPMorgan Chase Bank, Bank of America, N.A., HSBC Bank USA, and Deutsche Bank AG (the "Facility"). Considering the Company's current liquidity position, the Company terminated the commitments of the lenders to provide further obligations effective as of November 28, 2008. In connection therewith, on November 26, 2008, the Company and the lenders entered into a letter agreement providing for the termination of the obligations of each of the parties

22

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Bank Loans and Long-Term Debt (Continued)

under the Facility (except for those obligations which by their terms expressly survive termination) upon the payment by the Company of the outstanding fees under the Facility, and the Facility terminated on November 28, 2008. The payment of outstanding fees did not include any early termination fees.

        During the second quarter of fiscal year 2009, the Company reduced its outstanding letters of credit from $4.3 million to $2.9 million. These letters of credit are secured by cash collateral provided by the Company in an amount equal to their face amount.

9. Other Accrued Expenses

        Other accrued expenses at March 29, 2009 and June 29, 2008 were comprised of the following (in thousands):

		March 29, 2009		June 29, 2008
Sales returns		$	25,355	$	40,850
Accrued accounting and legal costs			20,027		18,884
Accrued compensation			4,473		6,679
Transition services contract liability (See Note 2)			1,067		6,667
Deferred revenue			6,177		7,326
Accrued sales and other taxes			3,193		1,583
Accrued decommissioning costs			3,154		3,101
Accrued warranty			2,129		2,672
Accrued utilities			1,459		2,320
Short-term severance liability			7,024		1,091
Other			8,147		12,182
	Total other accrued expenses	$	82,205	$	103,355

Warranty

        The Company records warranty liabilities at the time of sale for the estimated costs that may be incurred under the terms of its warranty agreements. The specific warranty terms and conditions vary depending upon the product sold and the country in which the Company does business. In general, for standard products, the Company will provide customers with replacements parts for defective parts not meeting the Company's published specifications, at no cost to the customers. Factors that affect the liability include historical and anticipated failure rates of products sold, and cost per claim to satisfy the warranty obligation. If actual results differ from the estimates, the Company revises its estimated warranty liability to reflect such changes.

23

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. Other Accrued Expenses (Continued)

        The following table details the changes in the Company's warranty reserve for the nine months ended March 29, 2009, which is included in other accrued liabilities (in thousands):

Accrued warranty, June 29, 2008	$	2,672
Accruals for warranties issued during the period		2,810
Changes in estimates related to pre-existing warranties		1,571
Warranty claim settlements		(4,924	)
Accrued warranty, March 29, 2009	$	2,129

10. Other Long-Term Liabilities

        Other long-term liabilities at March 29, 2009 and June 29, 2008 were comprised of the following (in thousands):

		March 29, 2009		June 29, 2008
Income taxes payable		$	56,258	$	21,147
Divested entities' tax obligations			13,819		20,734
Deferred compensation			5,976		9,326
Transition services contract liability			—		5,000
Other			4,455		3,078
	Total other long-term liabilities	$	80,508	$	59,285

        The Company accrued a $1.6 million asset retirement obligation during the third quarter of fiscal year 2009 related to future obligations to remove leasehold improvements and obligations for the closure of certain owned manufacturing facilities. The initial asset amount related to this obligation was approximately $1.1 million and was recorded as an addition to buildings and improvements during the third quarter of fiscal year 2009. The Company recorded a charge of $1.3 million during the quarter for depreciation and accretion expense of which $1.2 million related to prior periods. Of this charge, $1.0 million was recorded in cost of sales and $0.3 million was recorded in selling and administrative expense.

24

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation

        The Company issues new shares to fulfill the obligations under all of its stock-based compensation awards. The following table summarizes the stock option activities for the nine months ended March 29, 2009 (in thousands, except per share price data):

		Shares			Weighted Average Option Exercise Price per Share		Weighted Average Grant Date Fair Value per Share		Aggregate Intrinsic Value
Outstanding, June 29, 2008			9,360		$	40.43		—	$	2,568
	Granted		1,974		$	16.47	$	6.95		—
	Exercised		(220	)	$	13.50		—	$	399
	Expired or forfeited		(2,893	)	$	41.92		—		—
Outstanding, March 29, 2009			8,221		$	34.88		—	$	1,174

        For the nine months ended March 29, 2009 and March 30, 2008, the Company received $3.0 million and $0.2 million, respectively, for stock options exercised. The total tax benefit realized for the tax deductions from stock options exercised was $0.5 million and $0.1 million for the nine months ended March 29, 2009 and March 30, 2008, respectively.

        The following table summarizes the Restricted Stock Unit ("RSU") activities for the nine months ended March 29, 2009 (in thousands, except per share price data):

		Restricted Stock Units			Weighted Average Grant Date Fair Value per Share
Outstanding, June 29, 2008			1		$	48.10
	Granted		430		$	17.55
	Vested		(92	)	$	12.06
Outstanding, March 29, 2009			339		$	18.07

        The Company's employee stock option plan permits the reduction of a grantee's RSUs for purposes of settling a grantee's income tax obligation. During the nine months ended March 29, 2009, the Company withheld RSUs representing 41,827 shares to fund a grantee's income tax obligations.

        Additional information relating to the stock option plans, including employee stock options and RSUs at March 29, 2009 and June 29, 2008 is as follows (in thousands):

	March 29, 2009		June 29, 2008
Options exercisable		6,214		8,621
Options and RSUs available for grant		2,969		4,440
Total reserved common stock shares for stock option plans		11,529		13,800

        The Company's employee stock option plan typically provides terminated employees a period of thirty (30) days from the date of termination to exercise their vested stock options. In certain circumstances, the Company has extended that thirty-day period for a period consistent with the plan.

25

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation (Continued)

In accordance with SFAS No. 123 (Revised 2004) "Share-Based Payment," the extension of the exercise period was deemed to be a modification of stock option terms. Additionally, certain of these modified awards have been classified as liability awards within other accrued expenses. Accordingly, at the end of each reporting period, the Company determined the fair value of those awards and recognized any change in fair value in its consolidated statements of operations in the period of change until the awards are exercised, expire or are otherwise settled. As a result of these modifications and the mark-to-market adjustments of the liability awards included in other accrued expenses, the Company recorded a net credit of $0.0 million and $0.6 million for the three and nine months ended March 29, 2009, respectively, compared to a net credit of $2.3 million and $0.5 million for the three and nine months ended March 30, 2008, respectively. The aggregate fair value of the liability awards included in other accrued expenses was $0.0 million at March 29, 2009.

        For the three and nine months ended March 29, 2009 and March 30, 2008, stock-based compensation expense associated with the Company's stock options and RSUs is as follows (in thousands):

		March 29, 2009				March 30, 2008
		Three Months Ended		Nine months Ended		Three Months Ended			Nine months Ended
Cost of sales		$	119	$	253	$	(84	)	$	304
Selling and administrative expense			2,071		3,476		(67	)		6,017
Research and development expense			445		1,277		(274	)		1,104
	Total stock-based compensation expense	$	2,635	$	5,006	$	(425	)	$	7,425

        During the second quarter of fiscal year 2009, a one-time $1.8 million decrease in stock option expense was recorded due to a correction of an error in accounting for stock options issued in prior periods. This one-time decrease primarily affected selling and administrative expense.

        The total unrecognized compensation expense for outstanding stock options and RSUs was $19.2 million as of March 29, 2009, and will be recognized, in general, over three years from the date of grant, except for one stock option award and one RSU award made to the CEO. The awards to the CEO (which are included in the awards disclosed above), include an option to purchase 750,000 shares and an award of RSUs in the amount of 250,000 shares made to the CEO during fiscal year 2008 as provided for under his employment agreement. The Company estimated the value of the option awards for the CEO by using the Black-Scholes options pricing model with the following assumptions: (i) an expected life of the award of 4.6 years; (ii) risk free rate of 3.2 percent; (iii) Company stock price volatility of 45.0 percent; and (iv) an annual dividend yield on the Company's common stock of 0.0 percent. The total unrecognized compensation expense for these grants was $9.0 million as of March 29, 2009, and will be recognized over 2.5 years. The weighted average number of years to recognize the total compensation expense (including that of the CEO) is 1.9 years.

26

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation (Continued)

        The fair value of the options associated with the above compensation expense for the three and nine months ended March 29, 2009 and March 30, 2008, was determined at the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:

	Nine Months Ended
	March 29, 2009			March 30, 2008
Expected life		3.9 years		N/A
Risk free interest rate		2.4	%	N/A
Volatility		54.3	%	N/A
Dividend yield		0	%	N/A

12. Asset Impairment, Restructuring and Other Charges

        Asset impairment, restructuring and other charges reflect the impact of various cost reduction programs and initiatives implemented by the Company. These programs and initiatives include the closing of facilities, the termination and relocation of employees and other related activities. Asset impairment, restructuring and other charges include program-specific exit costs recognized pursuant to SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," severance benefits pursuant to an ongoing benefit arrangement recognized pursuant to SFAS No. 112, "Employers' Accounting for Postemployment Benefits," and special termination benefits recognized pursuant to SFAS No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits." Severance costs unrelated to the Company's restructuring initiatives are recorded as an element of cost of sales, research and development or selling and administrative expense, depending upon the classification and function of the employee terminated. Restructuring costs were expensed during the period in which all requirements of recognition were met.

        Asset write-downs are principally related to facilities and equipment that will not be used subsequent to the completion of exit or downsizing activities being implemented, and cannot be sold for amounts in excess of carrying value. The Company recognizes asset impairment in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"). In determining the asset groups for the purpose of calculating write-downs, the Company groups assets at the lowest level for which identifiable cash flow information is largely independent of the cash flows of other assets and liabilities. In determining whether an asset was impaired the Company evaluates estimated undiscounted future cash flows and other factors such as changes in strategy and technology. An indicator of impairment loss exists if the estimated undiscounted future cash flows from the initial analysis are less than the carrying amount of the asset group. The Company then determines the fair value of the asset group using the present value technique, by applying to the estimated future cash flows a discount rate that is consistent with the rate used when analyzing potential acquisitions.

        Asset impairment, restructuring and other charges represent costs related primarily to the following:

•

Newport Fabrication Facility Consolidation

•

El Segundo Fabrication Facility Closure

27

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)

•

Research and Development Facility Closure Initiative

•

Termination of the Vishay TPSA (Described under Other Activities and Charges below)

        The following table summarizes restructuring charges incurred during the three and nine months ended March 29, 2009 and March 30, 2008 related to the restructuring initiatives discussed below. These charges were recorded in asset impairment, restructuring and other charges (in thousands):

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Asset impairment	$	—	$	—	$	48,885	$	—
	Severance and workforce reduction costs		6,524		1,916		6,905	$	1,923
	Other charges		593		—		774		35
Total asset impairment, restructuring and other charges		$	7,117	$	1,916	$	56,564	$	1,958

        In addition to the amounts in the table above, $0.9 million of workforce reduction expense related to retention bonuses was recorded in cost of sales during the quarter ended March 29, 2009 related to the restructuring initiatives as of March 29, 2009.

        The following table summarizes changes in the Company's restructuring related accruals by plan for the nine months ended March 29, 2009, which are included in other accrued expenses on the balance sheet (in thousands):

	Newport, Wales			El Segundo			All Other
Accrued severance and workforce reduction costs, June 29, 2008	$	—		$	—		$	1,091
Charged to asset impairment, restructuring and other charges		1,794			3,433			1,679
Charged to operating expenses		—			434			—
Costs paid		(695	)		(648	)		(1,345	)
Foreign exchange gains		(9	)		—			(2	)
Accrued severance and workforce reduction costs, March 29, 2009	$	1,090		$	3,219		$	1,423

Fiscal year 2009 and 2008 Initiatives

Newport, Wales Fabrication Facility Consolidation Initiative

        The Company adopted a plan during the second quarter of fiscal year 2009 to consolidate its wafer manufacturing operations in Newport, Wales to reduce manufacturing costs and reduce capacity as a result of a decline in market demand. The plan will continue to be carried out during the remainder of fiscal year 2009 and fiscal year 2010 with an estimated total pre-tax cost of approximately $52.4 million of which $48.9 will be non-cash charges. These charges consist of severance and other workforce reduction costs of $1.8 million, asset impairment charges of $48.9 and other costs incurred to close or consolidate the facilities of $1.7 million. As a result of the adoption of this plan, the Company recorded

28

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)

a $48.9 million asset impairment charge during the second quarter of fiscal year 2009. No other charges related to this restructuring plan were recorded during the second quarter of fiscal year 2009. The restructuring charge recorded during the third quarter of fiscal year 2009 included $1.8 million of severance and other workforce reduction costs. The charges did not impact any specific business segment.

        Cash payments for this initiative are estimated to be approximately $3.3 million during fiscal year 2009 and $0.2 million during fiscal year 2010. The following table summarizes the charges related to the Newport, Wales fabrication facility consolidation initiative for the three and nine months ended March 29, 2009 and March 28, 2008:

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Asset impairment	$	—	$	—	$	48,885	$	—
	Severance and workforce reduction costs		1,794		—		1,794		—
	Other charges		9		—		9		—
Total expense reported in asset impairment, restructuring and other charges			1,803		—		50,688		—
	Other costs recorded in costs of sales		248		—		248		—
Total asset impairment, restructuring and other charges		$	2,051	$	—	$	50,936	$	—

El Segundo, California Facility Closure Initiative

        The Company adopted a plan for the closure of its El Segundo, California fabrication facility during the second quarter of fiscal year 2009. No costs were recorded under this plan during the second quarter of fiscal year 2009. The plan will continue to be carried out during the remainder of fiscal year 2009 and fiscal year 2010 with an estimated total pre-tax cost of $11.4 million of which approximately $0.8 million will be non-cash charges. These charges consist of severance and other workforce reduction costs of $5.4 million and other costs incurred to close or consolidate the facilities of $6.0 million. The restructuring charge recorded during the third quarter of fiscal year 2009 includes $3.4 million of severance costs and other workforce reduction costs and $1.2 million of other charges of which $0.7 million were recorded in cost of sales. The charges did not impact any specific business segment.

        Cash payments for this initiative are estimated to be approximately $6.0 million, $2.5 million and $2.1 million during fiscal year 2009, 2010 and thereafter, respectively. The following table summarizes

29

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)

the charges related to the El Segundo fabrication facility initiative for the three and nine months ended March 29, 2009 and March 28, 2008.

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Asset impairment	$	—	$	—	$	—	$	—
	Severance and workforce reduction costs		3,433		—		3,433		—
	Other charges		502		—		502		—
Total expense reported in asset impairment, restructuring and other charges			3,935		—		3,935		—
	Workforce reduction and other costs recorded in costs of sales		692		—		692		—
Total asset impairment, restructuring and other charges		$	4,627	$	—	$	4,627	$	—

Research and Development Facility Closure Initiative

        In the third quarter of fiscal year 2008, the Company adopted a plan for the closure of its Oxted, England facility and its El Segundo, California R&D fabrication facility. The costs associated with closing and exiting these facilities and severance costs are estimated to total approximately $8.7 million. Of this amount, approximately $6.7 million represents the cash outlay related to this initiative. The Company estimates that the closure and exiting of these two facilities will be completed by the end of the fourth quarter of fiscal year 2011. Restructuring related cash payments are estimated to be approximately $2.7 million, $2.0 million and $0.1 million during fiscal year 2009, 2010, and thereafter, respectively.

        The following illustrates the charges the Company recorded in the three and nine months ended March 29, 2009 and March 30, 2008 related to its Research and Development Facility Closure initiative (in thousands):

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Severance	$	—	$	1,759	$	382	$	1,759
	Other charges		82		—		262		—
Total asset impairment, restructuring and other charges		$	82	$	1,759	$	644	$	1,759

30

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)

Other Activities and Charges

        On January 15, 2009, the Company received written notification from Vishay terminating certain wafer processing services under the TPSA effective April 30, 2009. As a result, the Company recorded a charge for severance related to the partial termination of the contract during the third quarter of fiscal year 2009 of $1.3 million. The Company estimates total cost related to the partial termination of the contract to be $1.3 million, all of which will be cash charges. Actions related to the partial termination of the contract should be complete by the end of fiscal year 2009. The charges recorded in fiscal year 2008 relate to other smaller scale restructuring initiatives undertaken at local sites. The following summarizes the charges the Company recorded in the three and nine months ended March 29, 2009 and March 30, 2008 (in thousands) (including those related to the partial termination of the TPSA):

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges:
	Severance	$	1,297	$	157	$	1,297	$	157
Total asset impairment, restructuring and other charges (credits)		$	1,297	$	157	$	1,297	$	157

Fiscal year 2007 Initiatives

PCS Divestiture Initiative

        During fiscal year 2007, in connection with the Divestiture, the Company terminated approximately 100 former PCS Business employees. The Company also terminated other operating and support personnel to streamline the organization in connection with the Divestiture.

        The following illustrates the charges the Company recorded in the three and nine months ended March 29, 2009 and March 30, 2008 related to its PCS Divestiture restructuring initiative (in thousands):

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Severance	$	—	$	—	$	—	$	7
	Other charges		—		—		—		35
Total asset impairment, restructuring and other charges		$	—	$	—	$	—	$	42

31

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)

Other Impairment Charges

        In addition to the Newport facility asset impairment of $48.9 million, during the second quarter of fiscal year 2009, the Company recorded an asset impairment of $1.9 million related to assets removed from service in its Tijuana, Mexico facility and certain contract manufacturing facilities. Since the decision to remove these assets from service was in response to a reduction in demand and not related to an exit activity, the associated asset impairment charge was recorded in cost of sales, not in asset impairment, restructuring and other charges.

13. Segment Information

        At the beginning of the first quarter of fiscal year 2009, the Company's CEO, who is the Chief Operating Decision Maker, refined the definition of the Company's business segments by renaming its A&D segment its HR segment, combining its previously identified PS segment with its EP segment and creating a new AP segment which was previously reported within the ESP and PMD segments. Furthermore, some products that were previously reported under the EP segment are now reported under the PMD segment. Consequently, the Company now reports in seven segments: EP, PMD, ESP, HR, AP, IP, and TS. Prior year segment presentation has been recast to conform with current year presentation.

        Below is a description of the Company's reportable segments:

•

The PMD segment consists of the Company's discrete power MOSFETs, excluding its Low Voltage DirectFET® products. These products are multi-market in nature and therefore add value across a wide-range of applications and markets. The PMD segment targets power supply, data processing, and industrial and commercial battery-powered applications.

•

The ESP segment includes the Company's HVICs, digital control ICs, micro-electronic relay ICs, motion control modules and IGBTs. ESP targets solutions in variable-speed motion controls for washing machines, refrigerators, air conditioners, fans, pumps and compressors; advanced lighting products such as fluorescent lamps, high intensity discharge lamps, cold cathode fluorescent tubes and light-emitting diodes; and consumer applications such as plasma televisions, liquid crystal display ("LCD") television and class D audio systems. These products provide multiple technologies to deliver completely integrated design platforms specific to these customers.

•

The HR segment includes the Company's RAD-Hard™ power management modules, RAD-Hard™ power MOSFETs, RAD-Hard™ ICs, and the Company's RAD-Hard™ DC/DC converters as well as other high-reliability power components that address power management requirements in satellites, launch vehicles, aircraft, ships, submarines, and other defense and high-reliability applications including an expanding interest in heavy industry and biomedical. HR's strategy is to apply multiple technologies to deliver highly efficient power delivery in applications that operate in naturally harsh environments like space and undersea as well as applications that require a high level of reliability to address issues of safety, cost of failure or difficulty in replacement, like medical applications.

32

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Segment Information (Continued)

•

The EP segment includes the Company's LVICs (including XPhase® and SupIRBuck™), iPOWIR integrated PowerStages and low-voltage DirectFET® Power MOSFETs. Products within the EP segment are focused on data center applications (such as servers, storage, routers and switches), notebooks, graphics cards, gaming consoles and other computing and consumer applications. Generally, these products contain multiple differentiated technologies and are targeted to be combined as system solutions to the Company's customers for their next generation applications that require a higher level of performance and technical service.

•

The AP segment consists of the Company's automotive qualified HVICs, intelligent power switch ICs, power MOSFETs including DirectFET® and IGBTs. These products were previously reported in the ESP and PMD segments. The AP segment products are focused solely on automotive customers and applications that require a high level of reliability, quality and performance. The Company's automotive product portfolio provides high performance and energy saving solutions for a broad variety of automotive systems, ranging from typical 12V power net applications up to 1200V hybrid electric vehicle power management solutions. The Company's automotive expertise comprises supplying products for AC and DC motor drives of all power classes, actuator drivers, automotive lighting (such as high intensity discharge lamps), direct fuel injection in diesel and gasoline engines, hybrid electric vehicle power train and peripheral systems in micro, mild, full and plug hybrids or electric vehicles, as well as for body electronic systems like glow plugs, Positive Temperature Coefficient ("PTC") heater, electric power steering, fuel pumps, Heating Ventilation and Air Conditioning ("HVAC") and rear wipers. The Company's automotive designs address both application-specific solutions (application-specific integrated circuits ("ASICs") and application-specific standard parts ("ASSPs")) and generic high volume products for multi original equipment manufacturer ("OEM") platform usage.

•

The IP segment includes revenues from the sale of the Company's technologies and manufacturing process know-how, in addition to the operating results of the Company's patent licensing and settlements of claims brought against third parties. IP segment revenue is dependent on the unexpired portion of the Company's licensed MOSFET patents. Some of the Company's power MOSFET patents have expired in calendar year 2007 and the broadest have expired in calendar year 2008. Certain of the licensed MOSFET patents remain in effect through 2010. With the expiration of the Company's broadest MOSFET patents, most of its IP segment revenue ceased during the fourth quarter of fiscal year 2008; however, the Company continues, from time to time, to enter into opportunistic licensing arrangements that it believes are consistent with its business strategy. The strategy within the IP segment is to concentrate on creating and using the Company's IP primarily for the design and development of new value-added products, along with opportunistic licensing.

•

The TS segment consists of the operating results of the transition services, including wafer fabrication, assembly, product supply, test and other manufacturing-related support services being supplied to Vishay as part of the Divestiture. Vishay terminated certain wafer processing services under the TPSA effective April 30, 2009. The revenue from such terminating services represents a majority of the revenue reported under the TS segment.

33

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Segment Information (Continued)

        The Company does not allocate assets, sales and marketing, information systems, finance and administrative costs and asset impairment, restructuring and other charges to the operating segments, as these are not meaningful statistics to the CEO in making resource allocation decisions or in evaluating performance of the operating segments.

        Because operating segments are generally defined by the products they design and sell, they do not make sales to each other. The Company does not directly allocate assets to its operating segments, nor does the CEO evaluate operating segments using discrete asset information. However, depreciation and amortization related to the manufacturing of goods is included in gross profit for the segments as part of manufacturing overhead. Due to the Company's methodology for cost build up at the product level, it is impractical to determine the amount of depreciation and amortization included in each segment's gross profit.

        For the three and nine months ended March 29, 2009 and March 30, 2008, revenue and gross margin by reportable segments were as follows (in thousands, except percentages):

		Three Months Ended March 29, 2009								Three Months Ended March 30, 2008
Business Segment		Revenues		Percentage of Total			Gross Margin			Revenues		Percentage of Total			Gross Margin
Power Management Devices		$	42,593		29.0	%		(3.5	)%	$	83,815		33.3	%		17.1	%
Energy-Saving Products			35,272		24.1			34.7			46,734		18.5			21.8
HiRel			33,954		23.2			47.1			39,421		15.6			46.8
Automotive Products			9,453		6.4			4.2			22,440		8.9			24.0
Enterprise Power			11,315		7.7			11.8			35,109		13.9			21.3
	Ongoing customer segments total		132,587		90.4			21.5			227,519		90.2			24.5
Intellectual Property			2,365		1.6			100.0			10,286		4.1			100.0
	Ongoing segments total		134,952		92.0			22.8			237,805		94.3			27.8
Transition Services			11,690		8.0			0.9			14,419		5.7			2.9
	Consolidated total	$	146,642		100.0	%		21.1	%	$	252,224		100.0	%		26.4	%

34

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Segment Information (Continued)

		Nine Months Ended March 29, 2009								Nine Months Ended March 30, 2008
Business Segment		Revenues		Percentage of Total			Gross Margin			Revenues		Percentage of Total			Gross Margin
Power Management Devices		$	180,505		31.1	%		14.8	%	$	265,978		34.0	%		21.6	%
Energy-Saving Products			120,830		20.8			40.6			125,698		16.1			33.4
HiRel			110,739		19.1			52.4			117,529		15.0			51.5
Automotive Products			40,521		7.0			24.8			62,897		8.1			30.7
Enterprise Power			67,944		11.7			37.4			133,225		17.1			35.0
	Ongoing customer segments total		520,539		89.6			32.5			705,327		90.3			32.0
Intellectual Property			24,925		4.3			100.0			29,382		3.8			100.0
	Ongoing segments total		545,464		93.9			35.6			734,709		94.1			34.7
Transition Services			35,398		6.1			(7.3	)		46,444		5.9			1.4
	Consolidated total	$	580,862		100.0	%		33.0	%	$	781,153		100.0	%		32.8	%

14. Income Taxes

        Under Accounting Principles Board Opinion No. 28, "Interim Financial Reporting," and FASB Interpretation No. 18, "Accounting for Income Taxes in Interim Periods—an Interpretation of APB Opinion No. 28," the Company is required to adjust its effective tax rate each quarter to be consistent with the estimated annual effective tax rate. The Company is also required to record the tax impact of certain discrete items, unusual or infrequently occurring, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

        In the third quarter of 2009, the Company recorded a charge of $12.4 million related to establishing valuation allowances against its current deferred tax assets in the U.S. In accordance with SFAS No. 109, "Accounting for Income Taxes" (SFAS No. 109), the Company evaluate its deferred income taxes quarterly to determine if valuation allowances are required. SFAS No. 109 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a "more likely than not" standard.

        As cumulative pre-tax losses for the current and prior two years in the Company's U.S. federal consolidated group constitute significant negative evidence, positive evidence of equal or greater significance is needed at a minimum to overcome that negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards. In evaluating the positive evidence available, expectations as to future taxable income are generally considered insufficient to overcome the negative evidence of recent cumulative losses, even if supported by detailed forecasts and projections. The Company did examine the four sources which allow the realization of deferred tax assets. They are: carrybacks, reversals of existing temporary differences, tax planning strategies, and future taxable income exclusive of reversals of existing temporary differences.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Income Taxes (Continued)

        Of the four sources of taxable income, loss carrybacks is the only meaningful one available to support the Company's ability to realize the tax benefit of its remaining U.S. federal current deferred tax assets. A valuation allowance, therefore, was recorded to the extent that the carryback of current losses did not utilize deferred tax assets and deferred tax liabilities would not also offset the realization of those assets.

        During the third quarter of fiscal year 2009, the Company filed amended and original returns for prior fiscal years for the U.S. and various foreign jurisdictions. The Company revised its estimates to its tax provision and recorded a benefit to tax expense in the amount of approximately $7.8 million. The Company recorded a net tax benefit of $1.2 million for the third quarter of fiscal year 2009. The previously noted $12.4 million in valuation allowances recorded against the Company's deferred tax assets reduced the benefit from its revision to estimates and the benefit of a loss carryback the Company realized in this quarter.

        The filing of the tax returns revised the Company's FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes—an Interpretation of FASB Statement No. 109" ("FIN 48") estimated reserves. The FIN 48 Liability decreased by $20.4 million as a result of tax positions taken on certain tax returns. The reserve increased by $1.3 million due to certain tax positions taken during this quarter. A reduction in the reserve of $1.6 million was recorded due to the lapse of the applicable statutes of limitation. As of March 29, 2009, the liability for income tax associated with uncertain tax positions was $69.5 million. If recognized, the liabilities associated with uncertain tax positions would result in a benefit to income taxes on the consolidated statement of operations of $43.4 million which would reduce the Company's future effective tax rate, which represents a decrease of $11.8 million primarily due to the filing of the tax returns in this quarter.

        The Company's continuing practice is to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of March 29, 2009, the Company had accrued $40.9 million of interest and penalties related to uncertain tax positions. For the quarter, penalties and interest increased the reserve by $7.9 million, and for the nine months, increased the reserve by $10.4 million.

        While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes its reserves for income taxes represent the most probable outcome. The Company adjusts these reserves, including those for the related interest, in light of changing facts and circumstance.

        The Company received a notice of assessment for the Singapore tax authority due to the late filing of the Singapore subsidiary's fiscal year 2007 income tax return. The assessment of approximately $14.5 million was based upon the Company's transfer pricing methodology prior to fiscal year 2007. The Company has determined that collection on this assessment is not probable as the Company believes it is more likely than not that its current transfer pricing methodology will be sustained.

        As noted, during the third quarter of fiscal year 2009, the Company filed amended and original returns for prior fiscal years for the U.S. The Company has filed a claim for refund on the U.S. income tax returns the total of which ranges from $25 million to $30 million.

36

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Income Taxes (Continued)

        The Company's effective tax rate related to continuing operations was 1.4 percent and 39.2 percent for the three months ended March 29, 2009 and March 30, 2008, respectively and (59.0) percent and 65.9 percent for the nine months ended March 29, 2009 and March 30, 2008, respectively. For the three and nine months ended March 29, 2009, the Company's effective tax rate differed from the U.S. federal statutory tax rate of 35 percent, resulting from (i) realization of a year-to-date refund benefit arising from a loss carryback and (ii) revision of estimates arising from the filing of tax returns for several fiscal years partially offset by (i) valuation allowances recorded on deferred tax assets, (ii) impairment of certain securities, and (iii) non deferral of income from certain foreign jurisdictions. The Company's effective tax rate will be volatile due to the losses that cannot benefit its tax expense in the U.S. and U.K. in combination with its geographic mix of income which results in profit in certain foreign jurisdictions with a resulting tax payable.

        On October 3, 2008, U.S. federal legislation was enacted which extended the research and development tax credit provision which allows for retroactive application of R&D tax credits to January 1, 2008. The legislation also extends the R&D credit provision to December 31, 2010. The fiscal year 2009 benefit and the third and fourth quarter of fiscal year 2008 benefit was recorded in the second quarter of fiscal year 2009. A valuation allowance was also recorded against this benefit.

        As of June 29, 2008, U.S. income taxes have not been provided on approximately $79.3 million of undistributed earnings of foreign subsidiaries since those earnings are considered to be invested indefinitely. Determination of the amount of unrecognized deferred tax liabilities for temporary differences related to investments in these non-U.S. subsidiaries that are essentially permanent in duration is not practicable.

        Pursuant to Sections 382 and 383 of the U.S. Internal Revenue Code, the utilization of net operating losses ("NOLs") and other tax attributes may be subject to substantial limitations if certain ownership changes occur during a three-year testing period (as defined). The Company does not believe an ownership change has occurred that would limit the Company's utilization of any NOL, credit carry forward or other tax attributes.

15. Net Loss per Common Share

        Net loss per common share—basic is computed by dividing net loss available to common stockholders (the numerator) by the weighted average number of common shares outstanding (the denominator) during the period. In general, the computation of net loss per common share—diluted is similar to the computation of net loss per common share—basic except that when dilutive, the denominator is increased to include the number of additional common shares that would have been outstanding for the exercise of stock options using the treasury stock method resulting in the dilution of earnings per share. The Company's use of the treasury stock method reduces the gross number of the dilutive shares by the number of shares purchasable from the proceeds of the options assumed to be exercised.

37

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Net Loss per Common Share (Continued)

        The following table provides a reconciliation of the numerator and denominator of the basic and diluted per-share computations for the three and nine months ended March 29, 2009 and March 30, 2008 (in thousands, except per share amounts):

		Three Months Ended March 29, 2009
		Loss (Numerator)			Shares (Denominator)		Per Share Amount
Net loss per common share—basic		$	(81,722	)		72,102	$	(1.13	)
Effect of dilutive securities:
	Stock options and restricted stock units		—			—		—
Net loss per common share—diluted		$	(81,722	)		72,102	$	(1.13	)

		Three Months Ended March 30, 2008
		Loss (Numerator)			Shares (Denominator)		Per Share Amount
Net loss per common share—basic		$	(21,567	)		72,826	$	(0.30	)
Effect of dilutive securities:
	Stock options and restricted stock units		—			—		—
Net loss per common share—diluted		$	(21,567	)		72,826	$	(0.30	)

		Nine Months Ended March 29, 2009
		Loss (Numerator)			Shares (Denominator)		Per Share Amount
Net loss per common share—basic		$	(272,239	)		72,547	$	(3.75	)
Effect of dilutive securities:
	Stock options and restricted stock units		—			—		—
Net loss per common share—diluted		$	(272,239	)		72,547	$	(3.75	)

		Nine Months Ended March 30, 2008
		Loss (Numerator)			Shares (Denominator)		Per Share Amount
Net loss per common share—basic		$	(10,841	)		72,817	$	(0.15	)
Effect of dilutive securities:
	Stock options and restricted stock units		—			—		—
Net loss per common share—diluted		$	(10,841	)		72,817	$	(0.15	)

16. Environmental Matters

        Federal, state, local and foreign laws and regulations impose various restrictions and controls on the storage, use and discharge of certain materials, chemicals and gases used in semiconductor manufacturing processes, and on the operation of the Company's facilities and equipment. The Company believes it uses reasonable efforts to maintain a system of compliance and controls for these

38

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. Environmental Matters (Continued)

laws and regulations. Despite its efforts and controls, from time to time, issues may arise with respect to these matters. However, the Company does not believe that general compliance with such laws and regulations as now in effect will have a material adverse effect on its results of operations, financial position or cash flows.

        Additionally, under some of these laws and regulations, the Company could be held financially responsible for remedial measures if properties are contaminated or if waste is sent to a landfill or recycling facility that becomes contaminated. Also, the Company may be subject to common law claims if released substances damage or harm third parties. The Company cannot make assurances that changes in environmental laws and regulations will not require additional investments in capital equipment and the implementation of additional compliance programs in the future, which could have a material adverse effect on the Company's results of operations, financial position or cash flows, as could any failure by or violation of the Company to comply with any prior, current or future environmental laws and regulations.

        As part of the environmental review process, the Company has in prior years provided certain disclosures of potential permit violations and other matters to local environmental authorities with respect to the Company's Temecula, California facility. The Company has taken steps to correct the alleged deficiencies. However, in October 2008, the Company received a notification of additional permit violations at such facility. The Company has not yet been assessed any penalties with respect to the disclosures made for alleged violations at that facility. In December 2008, the enforcement division for the South Coast Air Quality Management District requested information from the Company for the purposes of determining what further action to take with respect to alleged violations asserted prior to the District's October 2008 notification. In April 2009, the Company received a similar request with respect to alleged violations set forth in the District's October 2008 notification. The Company has responded to the December 2008 request and is preparing its response to the April 2009 request.

        During negotiations for the Divestiture, chemical compounds were discovered in the groundwater underneath one of the Company's former manufacturing plants in Italy. The Company has advised appropriate governmental authorities and is awaiting further reply to its inquiries, with no current orders or directives on the matter outstanding from the governmental authorities.

        IR and Rachelle Laboratories, Inc. ("Rachelle"), a former operating subsidiary of the Company that discontinued operations in 1986, were each named a potentially responsible party ("PRP") in connection with the investigation by the United States Environmental Protection Agency ("EPA") of the disposal of allegedly hazardous substances at a major superfund site in Monterey Park, California ("OII Site"). Certain PRPs who settled certain claims with the EPA under consent decrees filed suit in Federal Court in May 1992 against a number of other PRPs, including the Company, for cost recovery and contribution under the provisions of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). The Company has settled all outstanding claims that have arisen against it out of the OII Site. No claims against Rachelle have been settled. The Company has taken the position that none of the wastes generated by Rachelle were hazardous.

        Counsel for Rachelle received a letter dated August 2001 from the U.S. Department of Justice, directed to all or substantially all PRPs for the OII Site, offering to settle claims against such parties for all work performed through and including the final remedy for the OII Site. The offer required a

39

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. Environmental Matters (Continued)

payment from Rachelle in the amount of approximately $9.3 million in order to take advantage of the settlement. Rachelle did not accept the offer.

        It remains the position of Rachelle that its wastes were not hazardous. The Company's insurer has not accepted liability, although it has made payments for defense costs for the lawsuit against the Company. The Company has made no accrual for potential loss, if any; however, an adverse outcome could have a material adverse effect on the Company's results of operations or cash flows.

        The Company received a letter in June 2001 from a law firm representing UDT Sensors, Inc. ("UDT") relating to environmental contamination (chlorinated solvents such as trichlorethene) purportedly found in UDT's properties in Hawthorne, California. The letter alleges that the Company operated a manufacturing business at that location in the 1970's and/or 1980's and that it may have liability in connection with the claimed contamination. The Company has made no accrual for any potential losses since there has been no assertion of specific facts on which to form the basis for determination of liability.

        In November 2007, the Company was named as one of approximately 100 defendants in Angeles Chemical Company, Inc. et al. v. Omega Chemical PRP Group, LLC et al ., No. EDCV07-1471 (TJH) (JWJx) (C.D. Cal.) (the "Angeles Case"). Angeles Chemical Company, Inc. and related entities ("Plaintiffs") own or operate a facility (the "Angeles Facility") which is located approximately one and a half miles down gradient of the Omega Chemical Superfund Site (the "Omega Site") in Whittier, California. Numerous parties, including the Company, allegedly disposed of wastes at the Omega Site. Plaintiffs claim that contaminants from the Omega Site migrated in groundwater from the Omega Site to the Angeles Facility, thereby causing damage to the Angeles Facility. In addition, they claim that the EPA considers them to be responsible for the groundwater plume near the Angeles Facility, which Plaintiffs contend was caused by disposal activities at the Omega Site. Plaintiffs filed claims based on CERCLA, nuisance and trespass, and also seek declaratory relief. Plaintiffs seek to require the defendants to investigate and clean-up the contamination and to recover damages. The case has been stayed by the court pending the Environmental Protection Agency's completion of its remedial investigation. The Company previously entered into a settlement with other parties associated with the Omega Site pursuant to which the Company paid those entities money in exchange for an agreement to defend and indemnify the Company with regard to certain environmental claims (the "Omega Indemnification"). In that agreement, it was estimated that the Company's volumetric share of wastes sent to the Omega Site was in the range of 0.08 percent. The Company believes that much, if not all, of the risks associated with the Angeles Case should be covered by the Omega Indemnification. In addition, the Company has tendered the complaint to several of its insurance carriers, one of which has agreed to defend under a reservation of rights. Therefore, the Company does not expect its out-of-pocket defense costs to be significant. In addition, in light of the Omega Indemnification, the potential for insurance coverage and the fact that its volumetric share of Omega Site wastes was less than 0.1 percent, the Company does not believe that an adverse judgment against the Company would be material.

17. Litigation

        International Rectifier Securities Litigation.    Following the Company's disclosure on April 9, 2007, that its Audit Committee was conducting an Internal Investigation into certain revenue recognition

40

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. Litigation (Continued)

matters, a series of putative class action lawsuits was filed against the Company in the United States District Court for the Central District of California. The complaints were filed on behalf of a putative class of purchasers of Company stock from October 27, 2005 through April 9, 2007, and named as defendants the Company and certain of its present and former officers and directors. The complaints alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 arising out of alleged accounting irregularities at the Company's Japan subsidiary. On July 22, 2007, the court consolidated all of the actions under the caption In re International Rectifier Corporation Securities Litigation, No. CV 07-02544-JFW (VBKx) (C.D. Cal.), and appointed the Massachusetts Laborers' Pension Fund and the General Retirement System of the City of Detroit (together, "Lead Plaintiffs") as co-lead plaintiffs.

        On January 14, 2008, Lead Plaintiffs filed a Consolidated Class Action Complaint, which named as defendants several of the Company's former officers, but did not name any of its past or present directors except Eric Lidow and Alex Lidow. On May 23, 2008, the Court issued an order granting defendants' motions to dismiss, without prejudice, on the ground that Lead Plaintiffs failed to plead detailed facts sufficient to give rise to a strong inference of defendants' scienter.

        On October 17, 2008, Lead Plaintiffs filed a second amended consolidated class action complaint ("SACC") alleging causes of action for securities fraud and control person liability against the Company, Alex Lidow, Michael P. McGee, and Robert Grant, and, for control person liability only, against Eric Lidow and purporting to bring suit on behalf of a putative class of investors who purchased Company securities between July 31, 2003 and February 11, 2008. On November 10, 2008, the Company filed a motion to dismiss the SACC on the grounds that plaintiffs had failed to plead with particularity facts raising a strong inference that the individuals who spoke on the Company's behalf during the putative class period knew, or were reckless in not knowing, that the Company's financial statements were inaccurate. On December 31, 2008 the District Court issued an order granting the Company's motion to dismiss plaintiffs' claim for control person liability and granting, in its entirety, defendant Robert Grant's motion to dismiss. These dismissals were with prejudice. The District Court denied the Company's motion to dismiss the securities fraud count and denied in their entirety motions to dismiss brought by defendants Alex Lidow, McGee, and Eric Lidow.

        On January 7, 2009 the Court issued orders referring the matter for mediation, setting September 1, 2009 as the last day for a settlement conference, October 26, 2009 as the discovery cutoff, and January 12, 2010 as the first day of trial. On March 17, 2009 plaintiffs filed a motion for certification of the putative class, which is currently set for hearing on July 13, 2009. Discovery is ongoing.

        The Company intends to defend against the claims asserted against it vigorously.

        International Rectifier Derivative Litigation.    On August 1, 2008, a partial derivative lawsuit captioned Mayers v. Lidow, No. BC395652, was filed in the Superior Court of the State of California for the County of Los Angeles. The complaint asserts derivative claims, purportedly on behalf of the Company, against certain of the Company's former officers, and current and former directors, alleging breach of fiduciary duty, unjust enrichment and violations of Section 25402 of the California Corporations Code (insider trading) in connection with the matters reported in the Company's recent public filings with the SEC. The derivative claims seek damages, disgorgement and imposition of a

41

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. Litigation (Continued)

constructive trust against the individual defendants purportedly for the benefit of the Company. The complaint also seeks injunctive relief against the current board under a provision of Delaware law that permits shareholders to apply to the Court of Chancery for a summary order requiring the company to hold an annual shareholders' meeting. The complaint does not seek monetary relief against the Company.

        On November 13, 2008, plaintiff filed a request for dismissal of Count IV of the complaint (which sought an order under Delaware law requiring IR to hold its 2007 shareholder meeting) and as to defendants Oleg Khaykin, Richard J. Dahl, Mary B. Cranston, and Tom Lacey, each of whom previously was named only in connection with Count IV.

        IR demurred to plaintiff's complaint on December 22, 2008 and the matter was set for hearing on March 17, 2009. On March 4, 2009, plaintiff notified the Court that he intended to file an amended complaint in lieu of seeking to further oppose IR's demurrer. That same day, the Court issued an order vacating the March 17, 2009 hearing on demurrer, requiring plaintiff to file an amended complaint no later than April 3, 2009, and requesting that the parties file a further status update by no later than April 17, 2009. On March 3, 2009 plaintiff filed an amended complaint. The amended complaint is brought solely as a derivative action and alleges substantially the same causes of action as were alleged derivatively in the complaint filed August 1, 2008. The Company believes the claims against the Company's directors are without merit and intends to demur to the amended complaint on the grounds that plaintiff lacks standing to bring this action. The hearing date for the Company's demurrer is set for July 27, 2009.

        Litigation Arising from Vishay Proposal.    On August 15, 2008, shortly after the Company's disclosure that Vishay Intertechnology,  Inc. ("Vishay") had made an unsolicited, non-binding proposal to acquire all outstanding shares of the Company, a purported class action complaint captioned Hui Zhao v. International Rectifier Corporation, No. BC396461, was filed in the Superior Court of the State of California for the County of Los Angeles. The complaint named as defendants the Company and all current directors and alleged that the Vishay proposal was unfair and that acceptance of the offer would constitute a breach of fiduciary duty by the board. Five other substantively identical complaints seeking the same relief were filed in the same court and, on October 3, 2008, were consolidated under the caption of the lead case. On October 28, 2008, plaintiffs filed a consolidated amended complaint purporting to allege claims for breach of fiduciary duty on behalf of a putative class of investors based on the theory that the board breached its fiduciary duty by rejecting the Vishay proposal.

        Also pending before the same court is a related case captioned City of Sterling Heights Police Fire Retirement System v. Dahl, No. BC397326. The City of Sterling complaint, filed August 29, 2008, alleges substantively identical causes of action but is brought nominally on the Company's behalf as a derivative action.

        Briefing on both complaints was coordinated pursuant to a scheduling order issued by the Court on October 15, 2008. On November 21, 2008, defendants demurred to the complaints on the grounds that plaintiffs in both cases have failed to plead a claim and lack standing to bring the claims on behalf of the Company. In support of the demurrer in Zhao, defendants further assert that plaintiffs' claims are derivative, not direct, and that because plaintiffs already have filed with the Court pleadings in which they allege that the Vishay offer was undervalued, they are now estopped from alleging the

42

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. Litigation (Continued)

opposite. Defendants also brought a motion pursuant to California Corporations Code §800 requiring plaintiff City of Sterling to post a bond before continuing with litigation on the Company's behalf. On December 19, 2008 plaintiffs in both actions filed oppositions to defendants' demurrers. In its opposition, plaintiff City of Sterling noted that it intended to withdraw its complaint and file an amended complaint after the hearing on the Company's demurrers and motion for bond. On April 16, 2009, the Court sustained defendants' demurrer to the consolidated amended complaint in Zhao, and ordered the Zhao action to be dismissed with prejudice. Also on April 16, 2009, the Court granted defendants' motion pursuant to California Corporations Code §800 requiring plaintiff City of Sterling to post a bond in the amount of $50,000 no later than June 2, 2009, or face dismissal of its action.

        The Company intends to defend against the claims asserted against it in these actions vigorously.

        Vishay Offer.    On September 10, 2008, Vishay made an additional unsolicited proposal to acquire all outstanding shares of the Company at a price of $23.00 per share, and announced its intention to commence a tender offer to purchase all of the Company's shares. In addition, it gave notice of its intention: (a) to nominate three individuals for election as Class I directors at the 2007 annual meeting scheduled for October 10, 2008, and (b) to present at that meeting proposals to amend the Company's Bylaws. Vishay's proposed Bylaw amendments provide: (x) that the meeting to elect the Company's Class II directors be held by December 21, 2008; (y) that any adjournment of a stockholders' meeting at which a quorum is present must be approved by a majority of the shares present at the meeting in person or by proxy; and (z) for an amendment to the Bylaws to repeal any new Bylaws and Bylaw amendments adopted by the Board of Directors between February 29, 2008 and the 2007 annual meeting unless approved by the holders of a majority of the outstanding shares of the Company (collectively, "Annual Meeting Actions"). On October 13, 2008, following the 2007 annual meeting, Vishay withdrew its tender offer.

        On September 10, 2008, Vishay also commenced an action in the Delaware court of Chancery (the "Delaware Action") against the Company and its current directors seeking, among other things: (a) to compel a meeting of shareholders on or before December 21, 2008 to elect Class II directors to fill the positions of those whose terms expire in 2008; (b) a declaration that proposed amendments to the Company's Bylaws are valid under Delaware law and the Company's Certificate of Incorporation; and (c) a mandatory injunction requiring the Company to present such proposed amendments for a vote at the 2007 annual meeting. On October 13, 2008, following the 2007 annual meeting, Vishay withdrew its proposal and filed a Notice of Voluntary Dismissal of its complaint.

        Governmental Investigations.    The Company is cooperating fully with investigators from the SEC Division of Enforcement, the Internal Revenue Service and the U.S. Attorneys' Office regarding matters relating to the Audit Committee-led Investigation and other matters described in Note 2, "Restatements of Consolidated Financial Statements," of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2007 filed with the SEC on August 1, 2008. The Company has responded to subpoenas for records from the SEC; and the Company will continue to cooperate with these investigators regarding their investigation into these matters.

        IXYS Litigation.    On June 6, 2000, the Company filed International Rectifier Corporation v. IXYS Corporation, Case No. CV-00-06756-R, in the United States District Court for the Central District of California (the "IXYS IP Action"). The Company's complaint alleged that certain IXYS Corporation

43

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

17. Litigation (Continued)

("IXYS") MOSFET products infringed certain of the Company's patents. After proceedings, including a jury trial on damages, in the District Court and an initial appeal, a jury trial on infringement and damages was held commencing in September 2005, with the jury finding that IXYS was infringing certain claims of Patent No. 4,959,699 and awarding IR $6.2 million in damages through September 2005. In September 2006, the District Court entered the final judgment and permanent injunction based on the jury verdict. IXYS again appealed. In an opinion issued in February 2008, the Federal Circuit ruled against IR and reversed the judgment. In July 2008, the Company filed a petition with the Supreme Court of the United States for a writ of certiorari, which was denied in October 2008. The proceedings are now at an end, subject to ancillary motions of the parties regarding fees. On March 24, 2009, IXYS filed a lawsuit in the Superior Court of the State of California, County of Santa Clara, Case No. 109CV138093, naming the Company and certain others as defendants and alleging malicious prosecution regarding the IXYS IP Action. The complaint seeks damages, including without limitation, punitive and exemplary damages. The Company has not been served in the case; however, if served, the Company intends to defend against the claims asserted against it in this action vigorously.

        EPC/Alex Lidow Litigation.    In September 2008, the Company filed suit in the U.S. District Court for the Central District of California against Efficient Power Conversion Corp. ("EPC"), certain of EPC's employees and other defendants (including Alex Lidow, a former chief executive officer and director of the Company, and now a principal of EPC) alleging improper and unauthorized use and/or misappropriation of certain Company confidential information, trade secrets and technology related to the Company's Gallium Nitride development program. The complaint also alleges breach of contract and civil racketeering. In response to the suit, one of the defendants, Aixtron AG, has filed a parallel action against the Company in a German civil court in Aachen, Germany. Judgment in the action in Germany was entered in favor of Aixtron AG and against the Company. In addition, certain of the defendants in the EPC case filed motions in the U.S. District Court. On February 6, 2009, the U.S. District Court dismissed the EPC case, granting leave to amend the suit and re-file. On March 16, 2009, the Company refiled the suit in the Los Angeles Superior Court and intends to vigorously pursue its claims in that action and defend the pending parallel case in Aachen, Germany. On March 16, 2009, Alex Lidow and EPC filed suit in the Los Angeles Superior Court against the Company alleging claims arising out of Lidow's employment with and separation from the Company, and for violations of the California Labor Code and California Business and Professions Code. The Company intends to vigorously defend against that action.

        Angeles. v. Omega.    See Note 16, "Environmental Matters."

        In addition to the above, the Company is involved in certain legal matters that arise in the ordinary course of business including without limitation, litigation involving two of its subcontractor assemblers. The Company intends to pursue its rights and defend against any claims brought by third parties vigorously. However, because of the nature and inherent uncertainties of litigation, should the outcome of these actions be unfavorable, the Company's business, financial condition, results of operations or cash flows could be materially and adversely affected.

44

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

18. Commitments and Contingencies

        In connection with the Divestiture (See Note 2), the Company included in long-term liabilities $19.3 million for certain tax obligations with respect to divested entities. This estimate has been revised to $14.8 million following the filing of certain amended tax returns and due to currency translation adjustments.

        Following the Divestiture, the Company commenced discussions with Vishay regarding the application of the net working capital adjustment formula in accordance with the terms of the definitive documents related to the Divestiture. However, the Company did not reach agreement on the working capital adjustment within the time limits prescribed by the definitive documents. As of the date of this report, Vishay continues to assert a net working capital adjustment in its favor of approximately $20.0 million, and the Company maintains that the proper application of the contractual formula results in no adjustment to net working capital. The Company does not believe that Vishay's assertions have merit and intends to vigorously defend its position.

        Vishay has advised the Company that it believes certain forecasts it received from the Company during the Divestiture negotiations related to the Automotive Systems Business Unit ("ASBU") of the PCS Business were "materially overstated" and "based upon assumptions that management of the Company at the time knew to be unfounded and unsupportable." As part of its claim, Vishay also alleged that non-disclosure and concealment of future prospects related to the ASBU business caused Vishay to suffer damages in excess of $50.0 million attributable to, among other things, the purchase price for ASBU, subsequent operational losses and the costs incurred by Vishay in connection with its subsequent divestment of the ASBU business. The Company does not believe that Vishay's assertions have merit and intends to vigorously defend its position.

        Vishay has also advised the Company of certain other potential claims, including, but not limited to, certain product quality claims related to PCS Business products transferred to Vishay but manufactured prior to the consummation of the Divestiture and a claim regarding certain chemicals found in the ground water at its former manufacturing plant in Borgaro, Italy. The Company believes that these claims will not have a material adverse effect on its business or prospects, and it intends to vigorously defend its rights and position.

        During the third quarter of fiscal year 2009 the Company entered into an amended foundry services agreement with one of its foundry suppliers, under which the Company is entitled to purchase up to 1,000 silicon wafers per week. Under the terms of the agreement, the Company may be required to advance funds or transfer equipment against future processing charges if the Company does not purchase minimum required amounts of dies or wafers determined on a quarterly basis. The maximum amount the Company would be required to advance under the agreement is $5.5 million of cash and equipment, at fair market value, with cash advances limited to a maximum of $2.5 million. If future purchases exceed a minimum level, a portion of the purchase price of these purchases will be credited against the advance. As of March 29, 2009 the Company had advanced $1.1 million to the foundry which was recorded in prepaid expenses and other receivables on the balance sheet at March 29, 2009. As of March 29, 2009, the Company believes that the advances will be recovered through future purchases under the agreement.

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. Stock Repurchase Program

        On October 27, 2008, the Company announced that its Board of Directors authorized a stock repurchase program of up to $100.0 million. Stock repurchases under this program may be made in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased depend on market conditions and other factors. The stock repurchase program may be suspended at any time without prior notice. The Company has used and plans to continue to use existing cash to fund the repurchases. All of the shares repurchased by the Company during the third quarter and nine months year to date March 29, 2009 were purchased in open market transactions through this program. For the three and nine months ended March 29, 2009, the Company repurchased 663,200 and 1,331,080 shares for $8.0 million and $15.4 million, respectively. As of March 29, 2009 the Company had not cancelled the repurchased shares of common stock and as such they are reflected as treasury stock in the March 29, 2009 balance sheet.

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

        International Rectifier Corporation ("IR") designs, manufactures and markets power management semiconductors. Power management semiconductors address the core challenges of power management, power performance and power conservation, by increasing system efficiency, allowing more compact end-products, improving features on electronic devices and prolonging battery life.

        We pioneered the fundamental technology for power metal oxide semiconductor field effect transistors ("MOSFETs") in the 1970s, and estimate that the majority of the world's planar power MOSFETs use our technology. Power MOSFETs are instrumental in improving the ability to manage power efficiently. Our products include power MOSFETs, high voltage analog and mixed signal integrated circuits ("HVICs"), low voltage analog and mixed signal integrated circuits ("LVICs"), digital integrated circuits ("ICs"), radiation-resistant ("RAD-Hard™") power MOSFETs, insulated gate bipolar transistors ("IGBTs"), high reliability DC-DC converters, PowerStage ("PS") modules, and DC-DC converter type applications.

        During the quarter ended March 29, 2009, we continued to experience declining demand along with the overall market decline, resulting in a 22.7 percent decline in revenue in the quarter compared to the prior quarter. During the quarter, we decreased our production output at a rate greater than our revenue declined in order to reduce our inventory, which we decreased by $13.9 million from the prior quarter. As a result of our decision to significantly reduce production levels, our factory capacity utilization rates declined to abnormally low levels during the quarter. This low level of factory utilization contributed to lower gross margins during the quarter as we were not able to reduce our fixed manufacturing overhead costs commensurate with our decline in production. In addition, this low factory utilization increased the unit cost of inventory that was produced but did not ship during the period. As this higher unit cost inventory will be shipped in future periods, we expect that our gross margins will continue to be negatively impacted. We expect demand visibility to remain uncertain, and we are closely monitoring our production levels and shipments to our channel distributors to ensure that our manufacturing output matches our customer demand.

        We are proceeding with our plans to consolidate our manufacturing sites in order to reduce our costs. During the second fiscal quarter, we decided to reduce the size of our Newport, Wales wafer fabrication facility, and we estimate achieving savings from this initiative of about $7.9 million per year beginning in calendar year 2010. Also during the second quarter of fiscal year 2009, we decided to close our El Segundo, California wafer fabrication facility which we estimate will be completed by the end of calendar year 2010. We estimate that this factory closure will save us about $12.7 million per year beginning in calendar year 2011.

        In addition to reducing our manufacturing costs, we will continue our efforts to align our operating expense structure with our revenue levels. Although we plan to reduce our manufacturing and selling and administrative costs in the near term, we expect to maintain our investment levels in new product development in order to meet our longer term revenue goals. Last quarter, we announced that we planned to reduce our worldwide workforce by about 850 employees for the fiscal year ended June 28, 2009 compared to the fiscal year ended June 29, 2008. Through the nine months ended March 29, 2009, we have reduced our workforce by more than 75% of our plan. Once these planned headcount reductions are completed by the end of the fiscal year, we expect to save about $31.0 million on an annualized basis. We expect to incur severance related costs for the 2009 fiscal year of about $13.0 million associated with these reductions.

        Our cash, cash equivalents and investments as of March 29, 2009 totaled $639.4 million compared to $682.0 million as of the quarter ended December 28, 2008. The quarterly decline in cash and

47

investments was driven primarily by cash used in operations. In addition, during the quarter ended March 29, 2009, we re-purchased about 663,000 shares of our common stock at an aggregate cost of about $8.0 million.

Results of Operations

Segments

        At the beginning of the first quarter of fiscal year 2009, our Chief Executive Officer ("CEO"), who is our Chief Operating Decision Maker, refined the definition of our Company's business segments by renaming our Aerospace and Defense ("A&D") segment as our HiRel ("HR") segment, combining our previously identified PS segment with our Enterprise Power ("EP") segment and creating a new Automotive Products ("AP") segment which was previously reported within the Energy-Saving Products ("ESP") and Power Management Devices ("PMD") segments. Furthermore, some products that were previously reported under the EP segment are now reported under the PMD segment. Consequently, we now report in seven segments: EP, PMD, ESP, HR, AP, IP, and TS. Prior year segment presentation has been recast to conform with current year presentation. For a description of our reporting segments, see Note 13, "Segment Information", in the notes to our unaudited condensed consolidated financial statements.

Selected Operating Results

        The following table sets forth certain operating results for the three and nine months ended March 29, 2009 and March 30, 2008 as a percentage of revenues (in millions, except percentages):

		Three Months Ended										Nine Months Ended
		March 29, 2009					March 30, 2008					March 29, 2009					March 30, 2008
Revenues		$	146.6		100.0	%	$	252.2		100.0	%	$	580.8		100.0	%	$	781.2		100.0	%
Cost of sales			115.7		78.9			185.7		73.6			389.2		67.0			525.2		67.2
	Gross profit		30.9		21.1			66.5		26.4			191.6		33.0			256.0		32.8
Selling and administrative expense			51.8		35.4			76.1		30.2			178.6		30.8			212.6		27.2
Research and development expense			22.4		15.3			26.0		10.3			72.0		12.4			81.3		10.4
Impairment of goodwill			23.9		16.3			—		—			23.9		4.1			—		—
Amortization of acquisition-related intangible assets			1.1		0.8			1.1		0.4			3.3		0.6			3.2		0.4
Asset impairment, restructuring and other charges			7.1		4.9			1.9		0.8			56.6		9.7			2.0		0.3
	Operating loss		(75.4	)	(51.4	)		(38.5	)	(15.3	)		(142.8	)	(24.6	)		(43.1	)	(5.5	)
Other expense, net			11.6		7.9			3.8		1.5			36.8		6.3			11.3		1.5
Interest income, net			(4.1	)	(2.8	)		(6.8	)	(2.7	)		(8.4	)	(1.4	)		(22.6	)	(2.9	)
	Loss before income taxes		(82.9	)	(56.5	)		(35.5	)	(14.1	)		(171.2	)	(29.5	)		(31.8	)	(4.1	)
Provision for (benefit from) income taxes			(1.2	)	(0.8	)		(13.9	)	(5.5	)		101.0		17.4			(21.0	)	(2.7	)
	Net loss	$	(81.7	)	(55.7	)%	$	(21.6	)	(8.6	)%	$	(272.2	)	(46.9	)%	$	(10.8	)	(1.4	)%

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Results of Operations for the Three and Nine Months Ended March 29, 2009 compared with the Three and Nine Months Ended March 30, 2008

Revenue and Gross Margin

        Ongoing segment revenue, which excludes the TS segment, for the three and nine months ended March 29, 2009 was $135.0 million and $545.5 million, respectively, compared to $237.8 million and $734.7 million in the comparable three and nine months ended March 30, 2008, respectively. During this period, revenues decreased by 43.3 percent and 25.8 percent for the three and nine months ended March 29, 2009, respectively, compared to the three and nine months ended March 30, 2008, respectively. The decline for the three and nine months ended March 29, 2009 was primarily due to a continuing slowdown in the economy, customer draw down of their inventories and lower sales of our game station related products. Sales declined in all of our segments in the quarterly and year-to-date comparison.

        Ongoing segment gross margin decreased to 22.8 percent for the three months ended March 29, 2009 compared to 27.8 percent for the three months ended March 30, 2008, and increased to 35.6 percent for the nine months ended March 29, 2009 compared to 34.7 percent in the nine months ended March 30, 2008.

        Our quarter gross margin declined from the year ago quarter, primarily due to a $7.9 million decline in royalty revenue which is recorded at 100% gross margin, lower product revenue which increased our fixed costs as a percentage of revenue, and much lower capacity utilization during the three months ended March 29, 2009 compared to the three months ended March 30, 2008. During the three months ended March 29, 2009, we incurred $8.8 million of costs associated with abnormally low factory utilization. The abnormally low factory utilization resulted in excess capacity costs which were recognized in cost of goods sold in the current period. The abnormally low utilization and excess capacity costs were a result of our decision to reduce our inventory levels during the period. These increased costs associated with our low capacity utilization partially offset a $14.7 million favorable gross margin impact from the reduction in inventory related costs, which declined from $20.7 million in the three months ended March 30, 2008 to $6.0 million in the three months ended March 29, 2009. These inventory related costs represent write-offs associated with excess inventory. Since we reduced our production levels during the quarter, and we were not able to reduce our fixed manufacturing costs at the same rate as our production levels, our manufacturing costs did not decline at the same rate as our revenue, resulting in decreased margins. In addition, the low factory utilization increased the unit cost of inventory that was produced but did not ship during the period. As this higher unit cost inventory will be shipped in future periods, we expect to continue to operate at low factory utilization levels, and we expect that our gross margins will continue to be negatively impacted. During the three months ended March 29, 2009, we also incurred manufacturing employee severance of $0.8 million associated with the lower production levels.

        For the nine months ended March 29, 2009, ongoing segment gross margin increased due to the reduction of inventory related charges and favorable product mix as our higher gross margin HiRel, ESP and IP business segments contributed a higher percentage of our year-to-date revenue and we experienced steeper revenue declines in our lower gross margin Power Management Devices and Automotive Products segments. These favorable margin impacts were partially offset by the negative impact of much lower capacity utilization compared to the nine month period ended March 30, 2008. During the nine months ended March 29, 2009 we also recorded manufacturing employee severance of $4.1 million as a result of headcount reductions in response to the lower production levels

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        Revenue and gross margin by business segments are as follows (in thousands, except percentages):

		Three Months Ended March 29, 2009								Three Months Ended March 30, 2008
Business Segment		Revenues		Percentage of Total			Gross Margin			Revenues		Percentage of Total			Gross Margin
Power Management Devices		$	42,593		29.0	%		(3.5	)%	$	83,815		33.3	%		17.1	%
Energy-Saving Products			35,272		24.1			34.7			46,734		18.5			21.8
HiRel			33,954		23.2			47.1			39,421		15.6			46.8
Automotive Products			9,453		6.4			4.2			22,440		8.9			24.0
Enterprise Power			11,315		7.7			11.8			35,109		13.9			21.3
	Ongoing customer segments total		132,587		90.4			21.5			227,519		90.2			24.5
Intellectual Property			2,365		1.6			100.0			10,286		4.1			100.0
	Ongoing segments total		134,952		92.0			22.8			237,805		94.3			27.8
Transition Services			11,690		8.0			0.9			14,419		5.7			2.9
	Consolidated total	$	146,642		100.0	%		21.1	%	$	252,224		100.0	%		26.4	%

		Nine Months Ended March 29, 2009								Nine Months Ended March 30, 2008
Business Segment		Revenues		Percentage of Total			Gross Margin			Revenues		Percentage of Total			Gross Margin
Power Management Devices		$	180,505		31.1	%		14.8	%	$	265,978		34.0	%		21.6	%
Energy-Saving Products			120,830		20.8			40.6			125,698		16.1			33.4
HiRel			110,739		19.1			52.4			117,529		15.0			51.5
Automotive Products			40,521		7.0			24.8			62,897		8.1			30.7
Enterprise Power			67,944		11.7			37.4			133,225		17.1			35.0
	Ongoing customer segments total		520,539		89.6			32.5			705,327		90.3			32.0
Intellectual Property			24,925		4.3			100.0			29,382		3.8			100.0
	Ongoing segments total		545,464		93.9			35.6			734,709		94.1			34.7
Transition Services			35,398		6.1			(7.3	)		46,444		5.9			1.4
	Consolidated total	$	580,862		100.0	%		33.0	%	$	781,153		100.0	%		32.8	%

        PMD revenue for the three months ended March 29, 2009 decreased by 49.2 percent from the three months ended March 30, 2008. PMD revenue for the nine months ended March 29, 2009 decreased by 32.1 percent from the nine months ended March 30, 2008. The year-over-year and year-to-date decrease in revenue for our PMD products was due to a continued slowdown in the market, a continued decline in demand for notebooks and other consumer related products as well as declines in demand for our older generation products. Gross margin for the PMD segment decreased to (3.5) percent and 14.8 percent for the three and nine months ended March 29, 2009, from 17.1 percent and 21.6 percent in the three and nine months ended March 30, 2008, respectively. These quarterly and year-to-date reductions in gross margins were primarily driven by a significant drop in revenue as we were not able to reduce our fixed manufacturing costs at the same rate as our revenue declined. During the three months ended March 29, 2009, we incurred $3.2 million of costs associated with abnormally low factory utilization. These increased costs associated with our low capacity utilization offset a $1.9 million favorable gross margin impact from the reduction in inventory related costs, which declined from $4.9 million in the three months ended March 30, 2008 to $3.0 million in the three months ended March 29, 2009. During the nine months ended March 29, 2009, we incurred $4.0 million of costs associated with abnormally low factory utilization. These increased costs associated with our low capacity utilization offset a $1.5 million favorable gross margin impact from the reduction in inventory related costs, which declined from $6.2 million in the nine months ended March 30, 2008

50

to $4.7 million in the nine months ended March 29, 2009. Also, the gross margin was impacted by a decline in average selling price for the three and nine months ended March 29, 2009 compared with the three and nine months ended March 30, 2008.

        ESP revenue for the three months ended March 29, 2009 decreased by 24.5 percent from the three months ended March 30, 2008. ESP revenue for the nine months ended March 29, 2009 decreased by 3.9 percent from the nine months ended March 30, 2008. The year-over-year revenue decrease was due to a continued slowdown in the market and a year-over-year decline for our industrial and consumer appliances related products. The year-to-date revenue decrease was also due to poor market conditions and a decline in demand for products sold in Plasma Display Panels. Gross margin for the ESP segment was 34.7 percent and 21.8 percent for the three months ended March 29, 2009 and March 30 2008, respectively, compared to 40.6 percent and 33.4 percent for the nine months ended March 29, 2009 and March 30 2008, respectively. For the three months ended March 29, 2009 the improvement in gross margin was primarily driven by a significant reduction in inventory related costs which offset costs associated with lower capacity utilization. During the three months ended March 29, 2009, we recorded an $8.0 million favorable gross margin impact from the reduction in inventory related costs, which declined from $8.2 million in the three months ended March 30, 2008 to $0.2 million in the three months ended March 29, 2009. This favorable gross margin impact was partially offset by $2.0 million of costs associated with abnormally low factory utilization. For the nine months ended March 29, 2009 the improvement in gross margin was primarily driven by improved manufacturing efficiencies as we reduced our manufacturing costs on flat revenue compared to the nine months ended March 30, 2008. During the nine months ended March 29, 2009, we also recorded a $2.1 million favorable gross margin impact from the reduction in inventory related costs, which declined from $4.2 million in the nine months ended March 30, 2008 to $2.1 million in the nine months ended March 29, 2009. These favorable gross margin impacts were partially offset by $2.6 million of costs associated with abnormally low factory utilization. Also, gross margins were impacted by a decline in average selling price for the three and nine months ended March 29, 2009 compared with the three and nine months ended March 30, 2008.

        HiRel revenue for the three months ended March 29, 2009 decreased by 13.9 percent from the three months ended March 30, 2008. Revenue for the nine months ended March 29, 2009 decreased by 5.8 percent from the nine months ended March 30, 2008. This revenue decrease was primarily due to lower sales of our satellite and military related products. Gross margin for the HiRel segment increased to 47.1 percent for the three months ended March 29, 2009, from 46.8 percent in the three months ended March 30, 2008, and increased to 52.4 percent for the nine months ended March 29, 2009, from 51.5 percent for the nine months ended March 30, 2008. The year-over-year increase in gross margin was primarily due to increased sales of higher margin HiRel products. The year-to-date increase in margin is mainly attributable to a one-time design change and expedite fee of $1.7 million for a major customer which commands a significantly higher margin than the base business in the first quarter of fiscal year 2009, partially offset by lower average selling prices.

        AP revenue for the three months ended March 29, 2009 decreased by 57.9 percent from the three months ended March 30, 2008. Revenue for the nine months ended March 29, 2009 decreased by 35.6 percent from the nine months ended March 30, 2008. The year-over-year and year-to-date revenue decline was due to a slowdown in the automotive industry and production cuts in the U.S. market. Gross margin for the AP segment decreased to 4.2 percent for the three months ended March 29, 2009, from 24.0 percent in the three months ended March 30, 2008, and to 24.8 percent for the nine months ended March 29, 2009, from 30.7 percent for the nine months ended March 30, 2008. These quarterly and year-to-date reductions in gross margins were primarily driven by a significant drop in revenue as we were not able to reduce our fixed manufacturing costs at the same rate as our revenue declined. In addition, during the three months ended March 29, 2009, we incurred $0.6 million of costs associated with abnormally low factory utilization. These increased costs associated with our low

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capacity utilization partially offset a $1.0 million favorable gross margin impact from the reduction in inventory related costs, which declined from $1.8 million in the three months ended March 30, 2008 to $0.8 million in the three months ended March 29, 2009. During the nine months ended March 29, 2009, we incurred $0.8 million of costs associated with abnormally low factory utilization. These increased costs associated with our low capacity utilization offset a $0.1 million favorable gross margin impact from the reduction in inventory related costs, which declined from $1.4 million in the nine months ended March 30, 2008 to $1.3 million in the nine months ended March 29, 2009. Also, gross margin was impacted by a decline in average selling price for the three and nine months ended March 29, 2009 compared with the three and nine months ended March 30, 2008.

        EP revenue for the three months ended March 29, 2009 decreased by 67.8 percent from the three months ended March 30, 2008. Revenue for the nine months ended March 29, 2009 decreased by 49.0 percent from the nine months ended March 30, 2008. This decrease was primarily due to lower sales of our game station related products, reduced content in our newer game station parts and lower sales to enterprise server customers. Gross margin for the EP segment decreased to 11.8 percent for the three months ended March 29, 2009, from 21.3 percent in the three months ended March 30, 2008, and an increase to 37.4 percent for the nine months ended March 29, 2009, from 35.0 percent for the nine months ended March 30, 2008. The quarterly reduction in gross margin was primarily driven by a significant drop in revenue as we were not able to reduce our fixed manufacturing costs at the same rate as our revenue declined. During the three months ended March 29, 2009, we incurred $0.6 million of costs associated with abnormally low factory utilization. These increased costs associated with our low capacity utilization partially offset a $3.4 million favorable gross margin impact from the reduction in inventory related costs, which declined from $4.8 million in the three months ended March 30, 2008 to $1.4 million in the three months ended March 29, 2009. In addition, EP gross margins, excluding the negative impacts of reduced volume and under utilization, improved due to favorable product mix as we shipped less of our lower margin game station products. The year to date improvement in gross margin was primarily driven by lower inventory related charges and favorable product mix as we shipped fewer of our lower margin game station products. During the nine months ended March 29, 2009 we recorded a $5.4 million favorable gross margin impact from the reduction in inventory related costs which, declined from $7.3 million in the nine months ended March 30, 2008 to $1.9 million in the nine months ended March 29, 2009. These favorable gross margin impacts were partially offset by $0.4 million of costs associated with abnormally low factory utilization. Also, the gross margins were impacted by a decline in average selling price for the three and nine months ended March 29, 2009 compared with the three and nine months ended March 30, 2008.

        IP revenue was $2.4 million for the three months ended March 29, 2009 compared to $10.3 million for the three months ended March 30, 2008. IP revenue was $24.9 million for the nine months ended March 29, 2009 compared to $29.4 million for the prior nine months ended March 30, 2008. Revenue for the three months ended March 29, 2009 declined by $7.9 million from the prior year third quarter due to the expiration of our broadest MOSFET patents. Revenue for the nine months ended March 29, 2009 included the recognition of $18.7 million from the one-time amendment of a patent license agreement with one of our principal licensees. We expect that with the expiration of our broadest MOSFET patents in 2009, our quarterly royalty revenue will not exceed approximately $2.0 million in each of the next several quarters absent the consummation of additional license agreements.

        TS revenue was $11.7 million for the three months ended March 29, 2009 compared to $14.4 million for the three months ended March 30, 2008. TS revenue was $35.4 million for the nine months ended March 29, 2009 compared to $46.4 million for the nine months ended March 30, 2008. TS costs for the nine months ended March 29, 2009 included $2.3 million due to the revision of the deferred gain on the Divestiture related to the PCS business. On January 15, 2009, the Company received a written notification from Vishay that terminated certain wafer processing services under the Transition Product Services Agreement ("TPSA") entered into by us with Vishay, effective April 30,

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2009. The revenue received by us from such terminating services represents a majority of the revenue reported under our TS segment. We therefore expect revenues in our TS segment to decline by more than 70% in the fiscal quarter ended June 28, 2009 compared to the fiscal quarter ended March 29, 2009. In addition, with the expected drop in revenue during the fiscal quarter ended June 28, 2009, we expect TS segment gross margins in future periods to be negatively impacted by a dramatic reduction in utilization of our Temecula, California fabrication facility that has provided most of the wafer services to Vishay.

Selling and Administrative Expense

        Selling and administrative expense was $51.8 million (35.4 percent of revenue) and $76.1 million (30.2 percent of revenue) for the three months ended March 29, 2009 and March 30 2008, respectively, and $178.6 million (30.8 percent of revenue) and $212.6 million (27.2 percent of revenue) for the nine months ended March 29, 2009 and March 30 2008, respectively.

        During the three and nine months ended March 29, 2009, we incurred fees and costs related to the Audit Committee-led Investigation, 2007 annual meeting and contested proxy fees and costs, and consulting fees and costs associated with preparing and filing our financial statements and tax returns, totaling approximately $2.2 million and $36.4 million for the three and nine months ended March 29, 2009, as compared to approximately $24.9 million and $64.6 million of costs related solely to the Audit Committee-led Investigation in the three and nine months ended March 30, 2008. The costs related to the Audit Committee-led Investigation include legal, audit and consulting fees and other costs associated with the Investigation, reconstruction of the financial results at our Japan subsidiary, and restatement of multiple periods of consolidated financial statements. The 2007 annual meeting and contested proxy costs, totaling approximately $0.1 million and $15.5 million, in the three and nine months ended March 29, 2009, respectively, and in connection with our delayed 2007 annual meeting and the unsolicited proposal, tender offer, the Delaware Action and the Annual Meeting Actions initiated by Vishay.

        Excluding all the above mentioned costs, selling and administrative expense decreased by $1.5 million to $49.6 million in the current fiscal quarter as compared to the prior year fiscal quarter ended March 31, 2008. The decrease is mainly due to lower salary related expenses associated with lower bonuses and headcount, partially off-set by an increase in stock option expense.

Research and Development Expense

        Research and development ("R&D") expense was $22.4 million and $26.0 million (15.3 percent and 10.3 percent of revenue) for the three months ended March 29, 2009 and March 30, 2008, respectively, and $72.0 million and $81.3 million (12.4 percent and 10.4 percent of revenue) for the nine months ended March 29, 2009 and March 30, 2008, respectively. The year-over-year and year-to-date decreases of $3.6 million and $9.3 million in R&D expenses were mainly due to our efforts to size the organization to be in line with our lower revenue level and savings associated with the closure of two R&D facilities. We continue to concentrate our R&D activities on developing new platform technologies, such as our recently announced Gallium Nitride ("GaN") technology, as well as our power management ICs and the advancement and diversification of our HEXFET®, power MOSFET™ and insulated gate bipolar transistor product lines.

Stock Option Plan Modifications

        Our employee stock option plan typically provides terminated employees a period of thirty (30) days from date of termination to exercise their vested stock options. In certain circumstances, we have extended that thirty-day period for a period consistent with the plan. In accordance with Statement of Financial Accounting Standard ("SFAS") No. 123 (Revised 2004) "Share-Based Payment,"

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the extension of the exercise period was deemed to be a modification of the stock option terms. Additionally, certain of these modified awards have been classified as liability awards within other accrued expenses. Accordingly, at the end of each reporting period, we determine the fair value of those awards and recognize any change in fair value in our consolidated statements of operations in the period of change until the awards are exercised, expire or are otherwise settled. As a result of these modifications and the mark-to-market adjustments of the liability awards included in other accrued expenses, we recorded a net credit of $0.0 million and $0.6 million for the three and nine months ended March 29, 2009, respectively, compared to a net credit of $2.3 million and $0.5 million for the three and nine months ended March 30, 2008, respectively.

Impairment of Goodwill

        During the third quarter of fiscal year 2009, we performed an interim impairment analysis of the goodwill associated with our reporting units. In reaching a decision to perform an interim impairment analysis of the goodwill associated with our reporting units we considered a number of factors. These factors included the decline in our market capitalization, our performance against plan and the outlook for our businesses and industry in general. Based on that evaluation at the end of both the second and third quarters of fiscal year 2009, we made a decision to perform an interim impairment analysis of goodwill.

        Based on the results of this interim goodwill impairment analysis at the end of the third quarter of fiscal year 2009, we concluded that for the Automotive Products and Intellectual Property reporting units the carrying amount of goodwill exceeded their fair value determined using a discounted cash flow analysis. As a result, we recorded a goodwill impairment charge of $23.9 million during the third quarter of fiscal year 2009. As a result of this impairment, the Automotive Products and Intellectual Property segments carry no goodwill as of March 29, 2009.

Asset Impairment, Restructuring and Other Charges

        Asset impairment, restructuring and other charges reflect the impact of cost reduction programs initiated during fiscal year 2009 and 2008 as well as work force reduction actions undertaken as a result of the termination of a wafer fabrication contract. These programs and initiatives include the closing of facilities, the relocation of equipment and employees, the termination of employees and other related activities. The following table reflects the charges we recorded in the three and nine months ended March 29, 2009 and March 30, 2008 related to our restructuring initiatives and asset impairments (in thousands):

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Asset impairment	$	—	$	—	$	48,885	$	—
	Severance		6,524		1,916		6,905		1,923
	Other charges		593		—		774		35
Total asset impairment, restructuring and other charges		$	7,117	$	1,916	$	56,564	$	1,958

        In addition to the amounts in the table above, $0.9 million of workforce reduction costs was recorded in cost of sales during the quarter end March 29, 2009 related to the restructuring initiatives.

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Fiscal year 2009 and 2008 Restructuring Initiatives

Newport, Wales Fabrication Facility Consolidation Initiative

        We adopted a plan during the second quarter of fiscal year 2009 to consolidate our wafer manufacturing operations in Newport, Wales to reduce manufacturing costs and reduce capacity as a result of a decline in market demand. The plan will continue to be carried out during the remainder of fiscal year 2009 and fiscal year 2010 with an estimated total pre-tax cost of approximately $52.4 million of which $48.9 million will be non-cash charges. These charges consist of severance and other workforce reduction costs of $1.8 million, asset impairment charges of $48.9 million and other costs incurred to close or consolidate the facilities of $1.7 million. As a result of the adoption of this plan, the Company recorded a $48.9 million asset impairment charge during the second quarter of fiscal year 2009. No other charges related to this restructuring plan were recorded during the second quarter of fiscal year 2009. The restructuring charge recorded during the third quarter of fiscal year 2009 includes $1.8 million of severance and other workforce reduction costs. The charges did not impact any specific business segment.

        Cash payments for this initiative are estimated to be approximately $3.3 million during fiscal year 2009 and approximately $0.2 million during fiscal year 2010 and will be funded by cash from operations and cash and securities on hand.

        The following table summarizes the charges related to the Newport, Wales fabrication facility consolidation initiative for the three and nine months ended March 29, 2009 and March 28, 2008:

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Asset impairment	$	—	$	—	$	48,885	$	—
	Severance workforce reduction costs		1,794		—		1,794		—
	Other charges		9		—		9		—
Total expense reported in asset impairment, restructuring and other charges			1,803		—		50,688		—
	Other costs recorded in costs of sales		248		—		248		—
Total asset impairment, restructuring and other charges		$	2,051	$	—	$	50,936	$	—

        We previously estimated cost savings from the Newport, Wales facility consolidation initiative of approximately $8.0 million per year in manufacturing overhead costs, which would impact cost of sales. Our current estimate of savings is $2.0 million, $7.0 million and $7.9 million for fiscal years 2009, 2010 and thereafter, respectively. We do not anticipate these cost savings to be offset by additional costs incurred in other locations.

El Segundo, California Facility Closure Initiative

        We adopted a plan for the closure of our El Segundo, California fabrication facility during the second quarter of fiscal year 2009. No costs were recorded under this plan during the second quarter of fiscal year 2009. The plan will continue to be carried out during the remainder of fiscal year 2009 and fiscal year 2010 with an estimated total pre-tax cost of $11.4 million of which approximately $0.8 million will be non-cash charges. These charges consist of severance and other workforce reduction costs of $5.4 million and other costs incurred to close or consolidate the facilities of $6.0 million. The restructuring charge recorded during the third quarter of fiscal year 2009 includes $3.4 million of

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severance costs and other workforce reduction costs and $1.2 million of other charges of which $0.7 million were recorded in cost of sales. The charges did not impact any specific business segment.

        Cash payments for this initiative are estimated to be approximately $6.0 million, $2.5 million and $2.1 million during fiscal years 2009, 2010 and thereafter, respectively, and will be funded by cash from operations and cash and securities on hand.

        The following table summarizes the the charges related to the El Segundo fabrication facility initiative for the three and nine months ended March 29, 2009 and March 28, 2008:

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Asset impairment	$	—	$	—	$	—	$	—
	Severance and workforce reduction costs		3,433		—		3,433		—
	Other charges		502		—		502		—
Total expense reported in asset impairment, restructuring and other charges			3,935		—		3,935		—
	Workforce reduction and other costs recorded in costs of sales		692		—		692		—
Total asset impairment, restructuring and other charges		$	4,627	$	—	$	4,627	$	—

        We previously estimated cost savings from the El Segundo, California fabrication facility closure initiative of approximately $12.7 million per year beginning in calendar year 2011. These cost savings will result in reduced manufacturing overhead costs, which will impact cost of sales. Our estimate has not changed and we do not anticipate these cost savings to be offset by additional costs incurred in other locations.

Research and Development Facility Closure Initiative

        In the third quarter of fiscal year 2008, we adopted a plan for the closure of our Oxted, England facility and its El Segundo, California R&D fabrication facility. The costs associated with closing and exiting these facilities and severance costs are estimated to total approximately $8.7 million. Of this amount, approximately $6.7 million represents the cash outlay related to this initiative. We estimate that the closure and exiting of these two facilities will be completed by the end of the fourth quarter of fiscal year 2011. Restructuring related cash payments are estimated to be approximately $2.7 million, $2.0 million and approximately $0.1 million during fiscal year 2009, 2010, and thereafter, respectively.

        The following table summarizes the charges we recorded in the three and nine months ended March 29, 2009 and March 30, 2008 related to our Research and Development Facility Closure initiative (in thousands):

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Severance	$	—	$	1,759	$	382	$	1,759
	Other charges		82		—		262		—
Total asset impairment, restructuring and other charges		$	82	$	1,759	$	644	$	1,759

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        This restructuring initiative is expected to result in cost savings of approximately $6.3 million and $7.1 million in fiscal years 2009 and 2010 and thereafter, respectively. These saving will come from reduced salaries and facility overhead reductions and will impact research and development expense. We do not anticipate these cost savings to be offset by additional cost incurred at other locations.

Other Activities and Charges

        On January 15, 2009, the Company received written notification from Vishay terminating certain wafer processing services under the TPSA effective April 30, 2009. As a result, we recorded a charge for severance related to the partial termination of the contract during the third quarter of fiscal year 2009 of $1.3 million. We estimate total cost related to the partial termination of the contract to be $1.3 million, all of which will be cash charges. Actions related to the partial termination of the contract should be complete by the end of fiscal year 2009. The charges recorded in fiscal year 2008 relate to other smaller scale restructuring initiatives undertaken at our local sites. The following summarizes the charges we recorded in the three and nine months ended March 29, 2009 and March 30, 2008 (in thousands) (including those related to the partial termination of the TPSA):

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges:
	Severance	$	1,297	$	157	$	1,297	$	157
Total asset impairment, restructuring and other charges (credits)		$	1,297	$	157	$	1,297	$	157

Fiscal year 2007 Initiatives

PCS Divestiture Initiative

        During fiscal year 2007, in connection with the Divestiture, we terminated approximately 100 former PCS employees. We also terminated other operating and support personnel to streamline the organization in connection with the Divestiture.

        The following illustrates the charges we recorded in the three and nine months ended March 29, 2009 and March 30, 2008 related to our PCS Divestiture restructuring initiative (in thousands):

		Three Months Ended				Nine Months Ended
		March 29, 2009		March 30, 2008		March 29, 2009		March 30, 2008
Reported in asset impairment, restructuring and other charges
	Severance	$	—	$	—	$	—	$	7
	Other charges		—		—		—		35
Total asset impairment, restructuring and other charges		$	—	$	—	$	—	$	42

Other Impairment Charges

        In addition to the Newport facility asset impairment of $48.9 million, during the second quarter of fiscal year 2009, we recorded an asset impairment of $1.9 million related to assets removed from service in our Tijuana, Mexico facility and certain contract manufacturing facilities. Since the decision to remove these assets from service was in response to a reduction in demand and not related to an

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exit activity, the associated asset impairment charge was recorded in cost of sales, not in asset impairment, restructuring and other charges.

Other Expense, net

        Other expense, net was $11.6 million and $3.8 million for the three months ended March 29, 2009 and March 30, 2008, respectively, and $36.8 million and $11.3 million for the nine months ended March 29, 2009 and March 30, 2008, respectively. The change is due, primarily, to investment impairment charges of $11.7 million and $37.2 million in the three and nine months ended March 29, 2009, respectively. Other expense included a debt retirement charge of $5.7 million in the three months ended September 30, 2007. Other income and expense, net, includes primarily foreign currency remeasurements and losses, dividend income from our equity investments and investment impairments.

Interest Income, net

        Interest income was $4.4 million and $7.4 million for the three months ended March 29, 2009 and March 30, 2008, respectively, and $10.1 million and $26.1 million for the nine months ended March 29, 2009 and March 30, 2008, respectively, reflecting net realized losses on the sale of securities and lower prevailing interest rates on lower average cash and investment balances in the current year.

        Interest expense was $0.3 million and $0.6 million for the three months ended March 29, 2009 and March 30, 2008, respectively, primarily reflecting accelerated amortization of capitalized financing charges related to the terminated revolving credit facility in November 2008. Interest expense was $1.7 million and $3.5 million for the nine months ended March 29, 2009 and March 30, 2008, respectively, primarily reflecting lower interest expense due to the repayment of the $550.0 million convertible subordinated notes (the "Notes") on July 16, 2007.

Income Taxes

        Under Accounting Principles Board Opinion No. 28, "Interim Financial Reporting," and FASB Interpretation No. 18, "Accounting for Income Taxes in Interim Periods—an Interpretation of APB Opinion No. 28," we are required to adjust our effective tax rate each quarter to be consistent with the estimated annual effective tax rate. We are also required to record the tax impact of certain discrete items, unusual or infrequently occurring, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

        In the third quarter of 2009, we recorded a charge of $12.4 million related to establishing valuation allowances against our current deferred tax assets in the U.S. In accordance with SFAS No. 109, we evaluate our deferred income taxes quarterly to determine if valuation allowances are required. SFAS No. 109 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a "more likely than not" standard.

        As cumulative pre-tax losses for the current and prior two years in our U.S. federal consolidated group constitute significant negative evidence, positive evidence of equal or greater significance is needed at a minimum to overcome that negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards. In evaluating the positive evidence available, expectations as to future taxable income is generally considered insufficient to overcome the negative evidence of recent cumulative losses, even if supported by detailed forecasts and projections. We examined the four sources which allow the realization of deferred tax assets. They are: carrybacks,

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reversals of existing temporary differences, tax planning strategies, and future taxable income exclusive of reversals of existing temporary differences.

        Of the four sources of taxable income, loss carrybacks is the only meaningful one available to support our ability to realize the tax benefit of our remaining US federal current deferred tax assets. A valuation allowance, therefore, was recorded to the extent that the carryback of current losses did not utilize deferred tax assets and deferred tax liabilities would not also offset the realization of those assets.

        During the third quarter of fiscal year 2009, we filed amended and original returns for prior fiscal years for the U.S. and various jurisdictions. We revised our estimates to its Tax Provision and recorded a benefit to Tax Expense in the amount of approximately $7.8 million. We have filed a claim for refund on the U.S. income tax returns the total of which ranges from $25 million to $30 million.

        Due to the filing of the tax returns we revised our estimates to our tax provision and recorded a benefit to tax expense in the amount of approximately $7.8 million. We recorded a tax benefit of $1.2 million for the third quarter of fiscal year 2009. The previously noted $12.4 million in valuation allowances recorded against our deferred tax assets reduced the benefit from our revision to estimates and the benefit of a loss carryback we realized in this quarter.

        Our effective tax rate related to continuing operations was 1.4 percent and 39.2 percent for the three months ended March 29, 2009 and March 30, 2008, respectively and (59.0) percent and 65.9 percent for the nine months ended March 29, 2009 and March 30, 2008, respectively. For the three and nine months ended March 29, 2009, our effective tax rate differed from the U.S. federal statutory tax rate of 35 percent, resulting from (i) realization of a year-to-date refund benefit arising from a loss carryback and (ii) revision of estimates arising from the filing of tax returns for several fiscal years partially offset by (i) valuation allowances recorded on deferred tax assets, (ii) impairment of certain securities, and (iii) non deferral of income from certain foreign jurisdictions. Our effective tax rate will be volatile due to the losses that cannot benefit our tax expense in the US and UK in combination with our geographic mix of income which results in profit in certain foreign jurisdictions with a resulting tax payable.

Liquidity and Capital Resources

        At March 29, 2009, we had $373.5 million of total cash (excluding $18.0 million of restricted cash), cash equivalents and investments, consisting of available-for-sale fixed income and investment-grade securities. As of March 29, 2009 and June 29, 2008, the fair values of our mortgage-backed and asset-backed securities were $43.0 million (6.7 percent of cash and cash equivalents and short-term and long-term investments) and $168.2 million (23.2 percent of cash and cash equivalents and short-term and long-term investments), respectively (see Part I, Item 3, "Quantitative and Qualitative Disclosures about Market Risk," for discussions about our investment strategy). As of the end of the third quarter of fiscal year 2009, we recorded an aggregate of $37.2 million in charges for other-than-temporary impairments relating to certain available-for-sale securities as a result of declines in their fair values through March 29, 2009.

        Our cash, cash equivalents and investments at the end of each period were as follows (in thousands):

	March 29, 2009		June 29, 2008
Cash and cash equivalents	$	373,495	$	320,464
Investments		265,899		405,419
	$	639,394	$	725,883

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        Our cash flows were as follows (in thousands):

	Nine Months Ended
	March 29, 2009			March 30, 2008
Cash flows (used in) provided by operating activities	$	(39,523	)	$	8,912
Cash flows provided by (used in) investing activities		101,111			(15,037	)
Cash flows used in financing activities		(11,546	)		(561,478	)
Effect of foreign currency exchange rate changes		2,989			2,270
Net increase (decrease) in cash and cash equivalents	$	53,031		$	(565,333	)

        Cash used in operating activities is composed of our net loss adjusted for certain non-cash items and changes in operating assets and liabilities. During the nine months ended March 29, 2009, operating activities used net cash of $39.5 million compared to $8.9 million provided in the nine months ended March 30, 2008. Non-cash increases to cash flows from operations during the nine months ended March 29, 2009 included $47.1 million of depreciation and amortization, $37.3 million in write-down of investments, $4.6 million loss on sale of investments, $23.9 million in goodwill impairment, $50.9 million in fixed asset impairments and $78.6 million in deferred income taxes. Changes in operating assets and liabilities decreased cash by $28.4 million, primarily attributed to decreases in accounts payable, accrued salaries and wages and other accrued liabilities these cash out flows were partially offset by decreases in trade receivables and inventories.

        Cash provided by investing activities during the nine months ended March 29, 2009 was $101.1 million. Proceeds from sales or maturities of investments were $353.0 million, offset by $239.5 million of cash used to purchase investments. During the nine months ended March 29, 2009, we invested $12.9 million in capital equipment.

        Cash used in financing activities of $11.5 million primarily reflected stock repurchases and the net settlement of restricted stock units, partially offset by proceeds from the exercise of stock options, a reduction in restricted cash and other cash in flows.

        During the third quarter we entered into an amended foundry services agreement with certain minimum purchase requirements, which if not met, require cash advances to the foundry to be credited against future purchases up to a cash advance payment maximum of $2.5 million. As of March 29, 2009 we have advanced the foundry $1.1 million. We estimate that we will meet the maximum advance payment amount of $2.5 million at some point within the next three fiscal quarters. In addition, we had purchase commitments for capital expenditures of approximately $2.3 million as of March 29, 2009. We intend to fund capital expenditures and working capital requirements through cash and cash equivalents on hand and anticipated cash flow from operations.

        During the second quarter of fiscal year 2009 we initiated cost reduction plans at our Newport, Wales, El Segundo, California and Temecula, California wafer fabrication facilities. We estimate cash out flows for these initiatives will be approximately $10.6 million, $2.7 million and $2.1 million in fiscal years 2009, 2010 and thereafter, respectively. For all other initiatives, estimated cash outflows are $2.7 million and $2.0 million for fiscal years 2009 and 2010, respectively. Cash payments related to all initiatives for the nine months ended March 29, 2009 were approximately $2.7 million. We intend to fund these expenditures with cash from operations and cash and cash equivalents on hand.

        On October 27, 2008, we issued a press release announcing that our Board of Directors authorized a stock repurchase program of up to $100.0 million. Repurchases of our shares of common stock under this program may be made in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased depends on market conditions and other factors. The stock

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repurchase program may be suspended at any time without prior notice. As of March 29, 2009, we have repurchased approximately 1.3 million shares for $15.4 million.

        As we previously reported, we terminated our prior multi-currency revolving credit facility in November 2008. We currently have no outstanding line of credit facilities.

        As described in Part II, Item 8, Note 4, "Derivative Financial Instruments," of our Annual Report on Form 10-K for the fiscal year ended June 29, 2008 filed with the SEC on September 15, 2008 (the "2008 Annual Report"), we had entered into a five-year foreign exchange forward contract in May 2006 with BNP Paribas (the "Forward Contract") for the purpose of reducing the effect of exchange rate fluctuations on forecasted intercompany purchases by our Japan subsidiary. Under the terms of the Forward Contract, we were required to exchange 507.5 million Yen for $5.0 million on a quarterly basis starting in June 2006 and expiring in March 2011. In December 2007, we terminated the Forward Contract and received $2.8 million of cash as part of the settlement. In accordance with SFAS No. 133 Implementation Issue No. G3 "Cash Flow Hedges, Discontinuation of a Cash Flow Hedge," ("SFAS 133") the net gain at the Forward Contract's termination date will continue to be reported in accumulated other comprehensive income and recognized over the originally specified time period through March 2011, until it is probable that the forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period of time thereafter.

        In connection with certain tax matters described in Part I, Item 1, Note 14, "Income Taxes," we are pursuing refunds for income taxes for which we cannot determine that the realization of the tax refunds of $61.1 million is probable and as such, we have not recognized them as income tax benefits in our financial statements. We have determined that we have overpaid $49.5 million of income taxes (which is included in the $61.1 million) in Singapore as a result of changes in our transfer pricing of intercompany transactions. We received a notice of assessment for the Singapore tax authority due to the late filing of the Singapore subsidiary's fiscal year 2007 income tax return. The assessment of approximately $14.5 million was based upon our transfer pricing methodology prior to fiscal year 2007. We have determined that collection on this assessment is not probable as it is more likely than not that our current transfer pricing methodology will be sustained.

        In the third quarter of fiscal year 2009 we filed amended U.S. federal income tax returns have claimed a refund the total of which ranges from $25 million to $30 million.

        We believe that our existing cash and cash equivalents, together with funds generated from operations, will be sufficient to meet operating requirements and satisfy existing balance sheet liability obligations for at least the next twelve months. Our cash and cash equivalents are available to fund continuing operating losses, capital expenditures, our stock repurchase program, strategic investments, mergers and acquisitions and other potential large-scale cash needs that may arise.

Off-Balance Sheet Arrangements

        In addition to the operating lease obligations and purchase commitments discussed in the 2008 Annual Report, we entered into an amended foundry services agreement during the third quarter of fiscal year 2009. This agreement may require that we advance funds or transfer equipment against future processing charges if we do not purchase a minimum required amount of wafers. See Note 18, "Commitments and Contingencies", in the notes to unaudited condensed consolidated financial statements for further discussion.

Recent Accounting Pronouncements

        Information set forth under Part I, Item 1, Note 1, "Business, Basis of Presentation and Summary of Significant Accounting Policies—Recent Accounting Pronouncements" is incorporated herein by reference.

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Critical Accounting Policies and Estimates

        Our critical accounting policies and estimates have not changed from our fiscal year ended June 29, 2008, except for the addition of the following critical accounting policies:

Revenue Recognition and Allowances

        In accordance with Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," we recognize revenue when evidence of an arrangement exists, pricing is fixed or determinable, collection is reasonably assured, and delivery or performance of service has occurred. We recognize revenue upon shipment or upon delivery, depending on specific contractual terms and/or shipping terms with the customer. If title transfer and risk of loss are addressed explicitly in a customer contract or by reference to the standard terms and conditions, those stated terms determine whether the recognition of revenue on product sales to that customer shall be upon either shipment or delivery. If the contract is silent and lacks reference to our Company's standard terms and conditions, and barring other contrary information, transfer of title and risk of loss will follow the historical shipping terms for that customer. If revenue is to be recognized upon delivery, such delivery date is tracked through information provided by the third party shipping company used by us to deliver the product to the customer.

        Generally, we recognize revenue on sales to distributors, or channel partners, using the "sell in" method (i.e. when product is sold to the distributor) rather than the "sell through" method (i.e. when the product is sold by the distributor to the end user). Certain distributors and other customers have limited rights of return (including stock rotation rights) and/or are entitled to price protection, where a rebate credit may be provided to the customer if our Company lowers its price on products held in the distributor's inventory. Additionally, in certain limited cases, we may pre-approve a credit to a distributor to facilitate a particular sale by the distributor to an end customer. Our Company estimates and establishes allowances for expected future product returns and credits in accordance with Statement of Financial Accounting Standards ("SFAS") No. 48, "Revenue Recognition When Right of Return Exists." We record a reduction in revenue for estimated future product returns and future credits to be issued to the customer in the period in which revenues are recognized, and for future credits to be issued in relation to price protection at the time we make changes to our distributor price book. The estimate of future returns and credits is based on historical sales returns, analysis of credit memo data, and other factors known at the time of revenue recognition. We monitor product returns and potential price adjustments on an ongoing basis.

        Revenue on sales to distributors that act only as fulfillment houses (agents) is deferred until the inventory is sold through to the end customer. We also maintain consignment inventory arrangements with certain of our customers. Pursuant to these arrangements, our Company delivers products to a customer or a designated third party warehouse based upon the customer's projected needs, but does not recognize revenue unless and until the customer reports that it has removed the product from the warehouse to incorporate into its end products, and all the other revenue recognition criteria under SAB 104 are met.

        We recognize royalty revenue in accordance with agreed upon terms when performance obligations are satisfied, the amount is fixed or determinable, and collectability is reasonably assured. The amount of royalties recognized is often calculated based on the licensees' periodic reporting to us. Any upfront payments are recognized as revenue only if there is no continuing performance obligation when the license commenced and collectability is reasonably assured. Otherwise, revenue is amortized over the life of the license or according to performance obligations outlined in the license agreement.

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Fair Value Measurements

        In the current market environment, some of our financial assets are more difficult to value or are subject to complex valuation techniques. SFAS No. 157, "Fair Value Measurements" ("SFAS 157") establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement. Under SFAS 157, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. SFAS 157 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on market data obtained from sources independent from us. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The categorization of financial assets and liabilities within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels (with Level 3 being the lowest) defined as follows:

•

Level 1—Inputs are based on quoted market prices for identical assets or liabilities in active markets at the measurement date. Our financial assets valued using Level 1 inputs include money market funds, treasury bonds, and marketable equity securities that are valued using quoted market prices.

•

Level 2—Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Our financial assets and liabilities valued using Level 2 inputs include agency bonds, corporate debt securities, certain mortgage-backed securities and foreign currency hedges, whose fair values are determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.

•

Level 3—Inputs include management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation. Our financial assets valued using Level 3 inputs include asset-backed securities, certain mortgage-backed securities and other equity investments.

        Certain financial assets are measured using Level 3 inputs such as pricing models, discounted cash flow methodologies or similar techniques and where at least one significant model assumption or input is unobservable. Level 3 inputs are used for financial assets that include certain investment securities for which there is limited market activity where the determination of fair value requires significant judgment or estimation. Level 3 inputs are also used to value investment securities that include certain mortgage-backed securities and asset-backed securities for which there was a decrease in the observability of market pricing for these investments. At March 29, 2009, these securities were valued primarily using independent valuation firm or broker pricing models that incorporate transaction details such as maturity, timing and amount of future cash flows, as well as assumptions about liquidity and credit valuation adjustments of marketplace participants at March 29, 2009.

Other-Than-Temporary Impairment

        We evaluate securities for other-than-temporary impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the length of time and extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer of the securities; and our intent and ability to retain the security in order to allow for an anticipated recovery in fair value. If,

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based upon the analysis, it is determined that the impairment is other-than-temporary, the security is written down to fair value, and a loss is recognized through earnings. Other-than-temporary impairments relating to certain available-for-sale securities, for the three months ended March 29, 2009 and March 30, 2008 were $11.7 million and $3.8 million, respectively, and for the nine months ended March 29, 2009 and March 30, 2008 were $37.2 million and $4.7 million, and were included in other expense. As of March 29, 2009, our cumulative unrealized losses related to debt instruments classified as available-for-sale were de minimis (approximately $9.7 million as of June 29, 2008). These unrecognized losses could be recognized in the future if our other-than-temporary assessment changes.

        For a complete description of what we believe to be the critical accounting policies and estimates that affect our more significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates" in our Annual Report on Form 10-K for the fiscal year ended June 29, 2008.

Out-of-Period Adjustments

        Included in the results for the third quarter and year-to-date period of fiscal year 2009 are a number of corrections of prior period errors, some of which increased and some of which decreased net loss. Based on our current and historical financial condition and results of operations, management has determined that these corrections are immaterial both individually and in the aggregate to the financial statements in each applicable prior period and the current periods to date.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        We are exposed to financial market risks, including fluctuations in interest rates, foreign currency exchange rates and market value risk related to our investments, including mortgage-backed securities. We use derivative financial instruments primarily to mitigate these risks and as part of our strategic investment program. In the normal course of business, we also face risks that are either non-financial or non-quantifiable. Such risks principally include country risk, credit risk and legal risk and are not discussed or quantified in the following analyses, as well as risks set forth under the heading "Factors that May Affect Future Results."

Interest Rates

        Our exposure to interest rate risk is primarily through our investment portfolio. The primary objective of our investments in debt securities is to preserve principal while maximizing yields. To achieve this objective, the returns on our investments in fixed-rate debt are generally based on the three-month LIBOR, or, if longer term, are generally swapped into U.S. dollar three-month LIBOR-based returns. Based on our investment portfolio and interest rates at March 29, 2009, a 100 basis point increase or decrease in interest rates would result in an annualized decrease or increase of approximately $3.2 million, respectively, in the fair value of the investment portfolio. Changes in interest rates may affect the fair value of the investment portfolio; however, unrealized gains or losses are not recognized in net income unless the investments are sold or the loss is considered to be other than temporary.

Foreign Currency Exchange Rates

        We generally hedge currency risks of non-U.S.-dollar-denominated investments in debt securities with offsetting currency borrowings, currency forward contracts, or currency interest rate swaps. Gains and losses on these non-U.S.-currency investments would generally be offset by corresponding losses and gains on the related hedging instruments, resulting in negligible net exposure.

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        A significant amount of our revenue, expense, and capital purchasing transactions are conducted on a global basis in several foreign currencies. At various times, we have currency exposure related to the British Pound Sterling, the Euro and the Japanese Yen. Considering our specific foreign currency exposures, we have exposure to the Japanese Yen, since we have significant Yen-based revenues without material Yen-based manufacturing costs. To protect against reductions in value and the volatility of future cash flows caused by changes in currency exchange rates, we have established revenue, expense and balance sheet transaction risk management programs. Currency forward contracts and currency options are generally utilized in these hedging programs. Our hedging programs seek to reduce, but do not always entirely eliminate, the impact of currency exchange rate movements.

        In May 2006, we entered into the Forward Contract with BNP Paribas for the purpose of reducing the effect of exchange rate fluctuations on forecasted inter-company purchases by our Japan subsidiary. We had designated the Forward Contract as a cash flow hedge. Under the terms of the Forward Contract, we were required to exchange 507.5 million Yen for $5.0 million on a quarterly basis starting in June 2006 and expiring in March 2011. In December 2007, we terminated the Forward Contract and received $2.8 million of cash as part of the settlement. In accordance with SFAS 133, the net gain at the Forward Contract's termination date will continue to be reported in accumulated other comprehensive income and recognized over the originally specified time period through March 2011, until it is probable that the forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period of time thereafter.

        We had approximately $20.4 million and $38.0 million in notional amounts of forward contracts not designated as accounting hedges under SFAS 133 at March 29, 2009 and March 30, 2008, respectively. Net realized and unrealized foreign-currency gains recognized in earnings, as a component of other expense, were $0.1 million and $0.3 million for the three months ended March 29, 2009 and March 30, 2008, respectively, and $0.4 million and $0.7 million for the nine months ended March 29, 2009 and March 30, 2008, respectively.

Market Value Risk

        We carry certain assets at fair value. Generally, for assets that are reported at fair value we use quoted market prices or valuation models that utilize market data inputs to estimate fair value. In certain cases quoted market prices or market data inputs may not be readily available or availability could be diminished due to market conditions. In these cases, our estimate of fair value is based on best available information or other estimates determined by management.

        At March 29, 2009, we had $639.4 million of total cash, cash equivalents and investments, consisting of available-for-sale fixed income and investment-grade securities. We manage our total portfolio to encompass a diversified pool of investment-grade securities. Our investment policy is to manage our total cash and investment balances to preserve principal and maintain liquidity while maximizing the returns on the investment portfolio. To the extent that our marketable portfolio of investments continues to have strategic value, we typically do not attempt to reduce or eliminate our market exposure. For securities that we no longer consider strategic, we evaluate legal, market, and economic factors in our decision on the timing of disposal. We may or may not enter into transactions to reduce or eliminate the market risks of our investments in marketable securities. During the nine months ended March 29, 2009, the fair values of certain investments declined and we recognized $37.3 million in other-than-temporary impairment relating to certain available-for-sale securities. See Part II, Item 1A, "Risk Factors—Our investments in certain securities expose us to market risks", set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008.

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ITEM 4.    CONTROLS AND PROCEDURES

        This Report includes the certifications of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the controls and control evaluations referred to in those certifications.

Evaluation of Disclosure Controls and Procedures

        Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including the CEO and CFO, to allow timely decisions regarding required disclosures.

        Our management, under the supervision and with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of March 29, 2009. Based on our evaluation and the identification of the material weaknesses in our internal controls over financial reporting, our CEO and CFO concluded that, as of March 29, 2009, our disclosure controls and procedures were not effective. Management has identified the following control deficiencies that constituted individually or in the aggregate material weaknesses in our internal control over financial reporting as of March 29, 2009:

        1.     We did not maintain an effective control environment based on the criteria established in the COSO Framework. Specifically,

•

We have not yet had a sufficient period of time to complete the assessment of the effectiveness of our newly implemented training and communication programs which emphasize to our employees the importance of accountability and compliance.

•

We did not maintain complete and accurate business records to support certain transactions and accounting records. Our controls with respect to the creation, maintenance and retention of complete and accurate business records in such areas were not effective.

•

We did not maintain in certain areas of our finance and accounting department, sufficient resources with an appropriate level of technical knowledge, experience and training commensurate with the demands of our financial reporting requirements.

•

We did not maintain effective controls over the restriction of access to incompatible functions within certain business system applications, giving rise to the opportunity to record or process transactions inconsistent with the user's roles and responsibilities.

        The control environment material weaknesses described above contributed to the material weaknesses set forth below.

        2.     We did not maintain effective controls over the completeness and accuracy of our period end financial reporting processes for certain transactions, including controls with respect to review, supervision and monitoring of certain accounting operations. Specifically,

•

We did not maintain effective controls to ensure that journal entries were consistently prepared with sufficient support or documentation or that journal entries were reviewed and approved to ensure the accuracy and completeness of the entries recorded.

•

We did not maintain effective controls over the preparation of our financial statements with respect to the accounting of non-routine transactions. Controls over the analysis, documentation,

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and review and approval of the accounting and reporting of non-routine transactions have not been effectively designed.

•

We did not maintain effective controls over the completeness and accuracy over the calculation of foreign currency exchange rates.

        3.     We did not maintain effective controls to ensure proper periodic recognition of revenue transactions were consistent with the nature of our customer relationships. Specifically, (i) existing Company policy and procedures were not consistently applied and adequately communicated, (ii) controls designed to maintain customer master file and contract information were not effectively operating and (iii) controls were not effective to detect certain customer sales transactions containing transfer of risk, transfer of title and delivery terms that were inconsistent with our standard sales terms and conditions. Other customer sale transactions and shipments were recorded in an earlier period than the correct sale transaction period without a written acknowledgement by the customer.

        4.     We did not maintain effective controls to ensure that accounts payable and accrued liabilities are recorded in the proper period. Specifically, the controls surrounding our accounts payable and accrued liabilities process failed to ensure the completeness and accuracy over the processing and recording of purchase invoices at period end. Consequently, our accounts payable and accrued liability balances relating primarily to inventory in transit, construction in progress and other selling and administrative expense may not be properly recorded. In addition, we did not maintain effective controls to ensure we did not accrue for amounts which had either been paid in prior periods or were included in accounts payable at period end.

        5.     We did not maintain effective controls over the accounting for income taxes, including the accurate determination and reporting of income taxes payable, deferred income tax assets and liabilities and the related income tax provision. We did not effectively review and monitor the accuracy of the components of the income tax provision calculation and related income taxes payable. We did not maintain a sufficient complement of personnel with income tax accounting knowledge and expertise to ensure the completeness and accuracy of our income taxes payable, deferred income tax assets and liabilities, and income tax provision.

Changes in Internal Control Over Financial Reporting

        During the third quarter of fiscal year 2009, there were no changes in internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Plans for Remediation of Material Weaknesses

        We have engaged in and are continuing to engage in substantial efforts to improve our internal control over financial reporting and disclosure controls and procedures related to the preparation of our financial statements and disclosures. We have begun the implementation of some of the measures described below and concentrated our efforts on (i) communicating, both internally and externally, our commitment to a strong effective control environment, high ethical standards and financial reporting integrity, (ii) certain personnel actions, (iii) comprehensive training for Finance and Accounting Department personnel, (iv) the implementation of policies and procedures to ensure that we retain important business and accounting records and (v) more rigorous period end reporting policies and procedures.

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        We are in the process of developing and implementing remediation plans to address our material weaknesses. Our remediation plans include many actions that are in various stages of completion and designed to strengthen our internal controls over financial reporting. They include the following:

Control Environment—In fiscal year 2008, Richard J. Dahl, Thomas A. Lacey and Mary B. Cranston were elected to our Board of Directors as independent outside Directors. Mr. Dahl became Chairman of the Board of Directors in May 2008.

In fiscal year 2008, Oleg Khaykin was appointed our CEO and subsequentlyelected to our Board of Directors and our acting CEO Don Dancer was appointed Chief Administrative Officer. In June 2007, the Corporate Internal Audit function began reporting administratively to the General Counsel and directly to the Audit Committee, and in June 2008, we created the new position of Vice President of Compliance, encompassing the internal audit function. The Vice President of Compliance reports directly to the Audit Committee and administratively to the General Counsel. In July 2008, we appointed Timothy Bixler as Vice President, General Counsel and Secretary and in October 2008 we appointed Ilan Daskal as our Executive Vice President and CFO. Our leadership team, together with its recent additions is committed to implementing and maintaining a strong control environment, high ethical standards and financial reporting integrity.

In early fiscal year 2008, an updated "Hot-line" process was established to receive and transmit anonymous complaints including any relating to accounting or audit matters.

Period End Financial Reporting Process—We have hired various personnel with an appropriate level of accounting knowledge, experience and training in the application of generally accepted accounting principles ("GAAP") commensurate with our financial reporting requirements. In December 2008 and February 2009, we hired a Vice President, Corporate Controller, and a Director, Financial Reporting, respectively, both reporting directly to the CFO. We believe we have adequately engaged a sufficient complement of skilled personnel and we will continue to supplement our accounting staff with external advisors and technical accounting staff, as needed. We have implemented certain analytical procedures as part of our closing process to ensure that we have additional monitoring controls designed to improve the accuracy of our financial statements. Additionally, we continue to improve and implement more rigorous period end reporting processes to include improved controls and procedures involving journal entry review and approval, account reconciliations, accuracy of foreign currency exchange rates and supporting documentation including manually prepared spreadsheets.

Training—Training has commenced and is continuing on our policies and procedures concerning: (i) ethics and integrity, (ii) revenue recognition and sales return and warranty obligations, (iii) accounting for asset impairment, severance and restructuring charges, (iv) accrued liabilities for acquisition of property and equipment along with goods and services received and (v) income tax accounting including transfer pricing. We have reinforced the importance of understanding GAAP and we have implemented an annual training requirement.

Accrual Reporting—Remediation efforts have been undertaken to create company-wide awareness for the need to properly record liabilities as incurred. We have initiated and completed a supplemental training program with senior executive management and their respective administrative assistants focusing on how to recognize and properly respond to situations where and how liabilities are incurred, recorded and reported. Additionally, we will implement review procedures to ensure we do not accrue for amounts which had either been paid or were included in accounts payable at period end.

Records Retention—We are implementing a record retention policy which addresses our requirements of evidence to support our important business and accounting records and we have

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purchased and installed a third party software tool to improve the quality of our account reconciliations.

Revenue Recognition—We have designed and are implementing a centralized customer master file function to ensure proper handling of creations, changes or deletions to customer master file information. We are conducting training on new and revised policies and procedures for: (i) ethics and integrity (ii) revenue recognition and (iii) order processing. We are currently implementing enhancements to our information technology systems to automate the recognition of revenue according to contractual terms and conditions regarding transfer of title and risk of loss. We have implemented quarterly self-audits on transactions performed by customer service. Our corporate internal audit function has implemented procedures to review shipping and billing records to ensure that we recognize revenue in the proper accounting period.

Accounting for Income Taxes—We continue to assess and train our tax professionals in order to ensure adequate technical and accounting expertise commensurate with our needs to properly consider and apply GAAP for income taxes. In November 2008, we hired a Director of Tax, who reports directly to the Vice President of Tax. Until we develop a technically strong and knowledgeable team, we will continue to engage external technical advisers to assist us with the evaluation of complex tax issues.

We are increasing the level of review of the preparation of the quarterly and annual income tax provision calculations, allocations and methodologies. We are improving the process, procedures and documentation standards relating to the preparation of the income tax provision calculations. We are correcting the methodology and accounting for certain types of foreign-earned income that is subject to taxation currently, rather than deferred until the earnings are remitted. We are evaluating the implementation of new tax software to facilitate the computation of our tax provision.

        Our remediation efforts are continuing and we expect to make additional changes to our control environment and accounting and income tax reporting processes that we believe will strengthen our internal control over financial reporting. We have dedicated considerable resources to the design, implementation, documentation, and testing of our internal controls and although we believe the steps taken to date have improved the effectiveness of our internal control over financial reporting, we have not completed all the corrective processes and procedures we believe necessary. Accordingly, we will continue to monitor the effectiveness of our internal control over financial reporting in the areas affected by the material weaknesses and as required, perform additional procedures, including the use of manual procedures and utilization of external technical advisors to ensure that our financial statements continue to be fairly stated in all material respects.

Inherent Limitations Over Internal Controls

        We do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a control system must acknowledge the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the deliberate acts of one or more persons. The design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error may occur and not be detected.

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PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

        Our disclosures regarding the matters set forth in Note 16, "Environmental Matters," and Note 17, "Litigation," to our unaudited condensed consolidated financial statements set forth in Part I, Item I, herein, are incorporated herein by reference.

ITEM 1A.    RISK FACTORS

        This Quarterly Report on Form 10-Q includes some statements and other information that are not historical facts but are "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. The materials presented can be identified by the use of forward-looking terminology such as "anticipate," "believe," "estimate," "expect," "may," "should," "view," or "will" or the negative or other variations thereof. We caution that such statements are subject to a number of uncertainties, and actual results may differ materially. Factors that could affect our actual results include those set forth under "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended June 30, 2008 as supplemented by the factors set forth below in our Quarterly Reports on Form 10-Q for the fiscal quarters ended September 30, 2008 and December 28, 2008, the factors set forth below and other uncertainties disclosed in our reports filed from time to time with the SEC.

         Our operations may be materially and adversely affected by the recent outbreak of Swine Influenza ("swine flu"), or occurrences of other types of pandemics in the future.

        Our business operations may be subject to significant interruption or prolonged suspension if any of our manufacturing or operating facilities or employees experience an outbreak of swine flu or other type of pandemic. An outbreak can result in quarantines or closures of some of our facilities, which would severely disrupt our operations; the sickness or death of our employees or a general slowdown in the global economy. Any such outbreak may also have a materially adverse effect on demand for our products, which could severely disrupt our business operations and adversely affect our financial condition and results of operations.

        We have a significant manufacturing assembly facility in Mexico, where there has been a recent swine flu outbreak. While we attempt to make contingency plans, our business could be materially and adversely affected by the closing of Mexican businesses due to any government ordered shutdown of "nonessential" businesses by disrupting our ability to produce and deliver our products.

        Due to the uncertainty of any of the foregoing events or other unforeseen consequences of public health problems on financial and economic markets generally, we cannot provide any estimate of how this might affect our future results.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)

None



(b)

None



(c)

Purchase of Equity Securities

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        The following provides information on a monthly basis for the quarter ended March 29, 2009 with respect to the Company's purchases of equity securities:

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
December 29, 2008 to January 25,,2009		—		—		—		—
January 26, 2009 to February 22, 2009		—		—		—		—
February 23, 2009 to March, 29, 2009		663,200	$	12.03		663,200	$	84,000,000

(1)

On October 27, 2008, the Company announced that its Board of Directors had authorized a stock repurchase program of up to $100.0 million. This plan may be suspended at anytime without prior notice.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        For information on matters submitted to a vote of our Company's shareholders at the 2008 annual meeting of shareholders held on January 9, 2009, see the information set forth in Part II, Item 4, Submission of Matters to a Vote of Security Holders of our Quarterly Report on Form 10-Q for the quarter ended December 28, 2008, which is incorporated by this reference into this Item 4.

ITEM 5.    OTHER INFORMATION

        (a)   On May 6, 2009, the Company and Tatum, LLC ("Tatum") entered into a Work Project Agreement ("Consulting Agreement"), pursuant to which Tatum would provide the general consultation and advisory services of Peter Knepper, the Company's former acting Chief Financial Officer. Under the Consulting Agreement, Tatum would provide Mr. Knepper's services at an hourly fee of $500 or a daily fee equal to $4,000, in addition to an administrative fee of five percent. Mr. Knepper's compensation from the Consulting Agreement is approximately 70% of the hourly and daily fees paid thereunder. The Consulting Agreement expires no later than December 31, 2009, provides for no minimum or guaranteed level of services, and provides that in no event shall services be provided resulting in fees in excess of $120,000.

ITEM 6.    EXHIBITS

Index:
	3.1	Certificate of Incorporation, as amended to date (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-8 filed with the Commission on July 19, 2006; Registration No. 333-117489)
	3.2	Bylaws as Amended (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed with the Commission on November 11, 2005)
	10.1	Amendment to Employment Agreement, dated December 29, 2008, entered into between the Company and Oleg Khaykin (incorporated by reference to Exhibit 10.6 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+

71

Index:
	10.2	RSU Award Agreement, dated August 6, 2008, entered into between the Company and Oleg Khaykin (incorporated by reference to Exhibit 10.7 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+
	10.3	Option Award Agreement, dated August 6, 2008, entered into between the Company and Oleg Khaykin (incorporated by reference to Exhibit 10.8 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+
	10.4	Amendment to Offer Letter, dated December 26, 2008, entered into between the Company and Ilan Daskal (incorporated by reference to Exhibit 10.9 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+
	10.5	Amendment to Severance Agreement, dated December 26, 2008, entered into between the Company and Ilan Daskal (incorporated by reference to Exhibit 10.10 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+
	10.6	Amendment to Compensation Agreement Letter, dated December 29, 2008, entered into between the Company and Donald R. Dancer (incorporated by reference to Exhibit 10.11 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+
	10.7	Amendment to Severance Agreement, dated December 29, 2008, entered into between the Company and Donald R. Dancer (incorporated by reference to Exhibit 10.12 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+
	10.7	Amendment to Severance Agreement, dated December 26, 2008, entered into between the Company and Michael Barrow (incorporated by reference to Exhibit 10.14 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+
	10.8	Amendment to Offer Letter, dated December 26, 2008, entered into between the Company and Michael Barrow (incorporated by reference to Exhibit 10.13 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+
	10.8	Revised form of RSU Award Agreement under the Company's 2000 Incentive Plan (Amended and Restated as of November 22, 2004) (incorporated by reference to Exhibit 10.15 to the Company's Quarter Report on Form 10-Q filed with the Commission on February 6, 2009)+
	10.9	2000 Incentive Plan Revised Non Employee Director Option Form*+
	10.10	International Rectifier Corporation Deferred Compensation Plan, Amended and Restated as of January 1, 2009*+
	10.11	Amendment No. 2 to Consulting Agreement, dated as of April 21, 2009, by and between the Company and Pahl Consulting, Inc.*+
	10.12	Project Work Agreement, dated as of May 6, 2009, by and between the Company and Tatum, LLC*+
	10.13	Employment Agreement Amendment, dated as of February 17, 2009, by and between the Company and Donald R. Dancer (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Commission on February 20, 2009)+
	31.1	Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
	31.2	Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

72

Index:
	32.1	Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
	32.2	Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

*

Denotes document submitted herewith.

+

Denotes compensation agreement or arrangement.

73

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 8, 2009	/s/ ILAN DASKAL Ilan Daskal Chief Financial Officer (Principal Financial and Accounting Officer)

74

EX-10.9

Exhibit 10.9

INTERNATIONAL RECTIFIER CORPORATION

2000 INCENTIVE PLAN

(Amended and Restated as of November 22, 2004)

NON-EMPLOYEE DIRECTOR NONQUALIFIED STOCK OPTION AGREEMENT

THIS OPTION AGREEMENT is between INTERNATIONAL RECTIFIER CORPORATION, a Delaware corporation (the “Company”), and                      (the “Optionee”).  Pursuant to the International Rectifier Corporation 2000 Incentive Plan (Amended and Restated as of November 22, 2004) (the “Plan”), the Company has granted a nonqualified stock option to purchase authorized but unissued or treasury shares of Common Stock, $1.00 par value, of the Company as described below on the terms and conditions attached hereto and in the Plan:

Grant Date:		,
Number of Shares:		(1)
Exercise Price per Share:	$	(1)
Vesting Schedule:	331/3% per year on each of the first three anniversaries of Grant Date (1), (2)
Expiration Date:		(2)

(1)Subject to adjustment under Section 5.2 of the Plan.

(2)Subject to accelerated vesting and/or early termination as provided in Section 2.5 or 5.2 of the Plan and Section 4 of the attached Terms and Conditions, if the Optionee ceases to serve as a Non-Employee Director of the Company or in certain other circumstances set forth in the Plan or this Agreement.  See the Terms and Conditions and the Plan for other exceptions and additional details regarding the Option.

INTERNATIONAL RECTIFIER CORPORATION	OPTIONEE
(a Delaware Corporation)
By:
(signature)	(signature)
	Address
	City, State, Zip Code

TERMS AND CONDITIONS

1.           Exercisability of Option.  Subject to earlier termination of the Option as provided in this Agreement or the Plan and changes and adjustments contemplated by the Plan, the Option shall vest and become exercisable in installments of 33 1/3 % of the aggregate number of shares set forth on the facing page (subject to adjustment) on each of the 1st, 2nd, and 3rd anniversaries of the Grant Date.  The Option may be exercised only to the extent the Option is exercisable.

·Cumulative Exercisability.  To the extent the Optionee does not in any year purchase all the shares that the Optionee may then exercise, the Optionee has the right cumulatively thereafter to purchase any shares not so purchased until the Option terminates or expires.

·No Fractional Shares.  Fractional share interests shall be disregarded, but may be cumulated.

·Minimum Exercise.  No fewer than 100 shares may be purchased at any one time, unless the number purchased is the total number at the time exercisable under the Option.

2.           Method of Exercise of Option.  To the extent exercisable, the Option may be exercised by the delivery to the Company of a written notice stating the number of shares to be purchased pursuant to the Option and accompanied by payment made in cash or by check payable to the order of the Company in the full amount of the purchase price of the shares and any amounts required to satisfy applicable withholding taxes.  Other payment methods may be permitted only if expressly authorized by the Administrator with respect to this Option or all options under the Plan, consistent with Section 2.2.2 of the Plan.

3.           Continuance of Service as a Non-Employee Director Required.  The vesting schedule generally requires continued service through each applicable vesting date as a condition to the vesting of the applicable installment and rights and benefits under this Agreement.  Partial service, even if substantial, during any vesting period will not entitle the Optionee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of service, except as expressly provided in Section 4 below or under the Plan.

4.           Effect of Termination of Service as a Non-Employee Director.  If the Optionee’s service as a Non-Employee Director of the Company terminates, the Option and all other rights and benefits under this Agreement terminate, except that the vesting of the Option may be accelerated and the Optionee may at any time within the following applicable period after termination exercise the Option to the extent set forth below, with respect to the applicable reason for the termination of service.

·Resignation or Retirement.  If an Optionee’s service as a Non-Employee Director of the Company terminates after five consecutive years of service on the Board as a result of his or her voluntary resignation or a voluntary decision not to stand for re-election, the vesting of any Option held for at least six months will immediately accelerate so that it is fully exercisable, but it will remain exercisable only until

2

the earlier of (a) three years from the date of termination of services as a Non-Employee Director or (b) the expiration of the term of the Option. If an Optionee’s service as a Non-Employee Director of the Company terminates prior to five consecutive years of service on the Board as a result of his or her voluntary resignation or a decision not to stand for re-election, any Option held for at least six months which is not then exercisable shall terminate and any portion of such Option which is then exercisable will remain exercisable only until the earlier of (a) three months from the date of such termination or (b) the expiration of the term of the Option.

·Death or Total Disability.  If an Optionee’s service as a Non-Employee Director of the Company terminates as a result of his or her death or Total Disability, the vesting of any Option held for at least six months will immediately accelerate so that it is fully exercisable but, it will remain exercisable only until the earlier of (a) three years from the date of death or Total Disability or (b) the expiration of the term of the Option.

·Other Termination.  If an Optionee’s service as a Non-Employee Director of the Company terminates for any reason other than his or her voluntary resignation or voluntary decision not to stand for re-election, or death or Total Disability, any Option which is then unexercisable will immediately accelerate so that it is fully exercisable, but it will remain exercisable only until the earlier of (a) three years from the date of termination of services as a Non-Employee Director or (b) the expiration of the term of the Option.

Subject to the express provisions of this Section 4 and the provisions of Section 5 below, the terms and conditions of the Plan and changes and adjustments contemplated by the Plan, the vesting of an Option granted less than six months prior to the applicable termination event (a “Short-Term Option”) will not automatically occur but the Board in its sole discretion may accelerate the vesting of up to 20% of the Option as of the time of the termination event, in which case the Option will become exercisable six months after the Grant Date and the Option will remain exercisable until the expiration of the applicable exercise period set forth above in this Section 4 as if the Option had been held six months at the time of termination of service.

5.           Possible Acceleration and Termination of Awards Upon Change in Control; Adjustments.

Without limiting the generality of Subsection 5.2 of the Plan or the authority of the Administrator under the Plan, upon the occurrence of (or, as the circumstances may require, immediately prior to) a Change in Control Event, the Option will become immediately exercisable unless prior to the Change in Control Event the Board determines that benefits under all Options granted pursuant to the Plan will not accelerate upon occurrence of the Change in Control Event, or determines that only certain or limited benefits under all Options granted pursuant to the Plan will be accelerated and the extent to which they will be accelerated, and/or establishes a different time in respect of such Change in Control Event for such acceleration.

6.           Notices.  Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Company at its principal office, to the attention of the Corporate Secretary and to the Optionee at the address given beneath the Optionee’s signature, or at such other address as either party may hereafter designate in writing to the other.

7.           Optionee not a Stockholder.  Neither the Optionee nor any other person entitled to exercise the Option shall have any of the rights or privileges of a stockholder of the Company as to any shares of Common Stock not actually issued and delivered to Optionee prior to delivery of the exercise price and satisfaction of all other conditions precedent to the due exercise of the Option and delivery of shares.

3

8.           Effect of Award Agreement.  This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company except to the extent the Committee or the Board determines otherwise, consistent with the terms of the Plan.

9.           Choice of Law.  The construction, interpretation, performance and enforcement of the Option and this Agreement shall be governed by the laws of the State of California.

10.         Defined Terms.  Capitalized terms used and not otherwise defined herein shall have the meaning assigned to such terms in the Plan.

11.         Plan.  The Option and all rights of Optionee thereunder are subject to, and the Optionee agrees to be bound by, all of the terms and conditions of the provisions of the Plan, including but not limited to Section 5.2 (Adjustments; Acceleration) and Section 5.10 (Governing Law/Construction/Severability).  Optionee acknowledges receipt of a copy of the Plan, which is made a part hereof by this reference.  Unless otherwise expressly provided in other Sections of this Agreement, provisions of the Plan that confer discretionary authority on the Committee or the Board do not (and shall not be deemed to) create any additional rights in the Optionee not expressly set forth above.

4

EX-10.10

Exhibit 10.10

International Rectifier Corporation

Deferred Compensation Plan

Master Plan Document

Amended and Restated

Effective January 1, 2009

TABLE OF CONTENTS

		Page
1.1	“Account Balance”	1
1.2	“Annual Deferral Amount”	1
1.3	“Annual Installment Method”	1
1.4	“Base Salary”	2
1.5	“Beneficiary”	2
1.6	“Beneficiary Designation Form”	2
1.7	“Board”	2
1.8	“Bonus”	2
1.9	“Change in Control”	3
1.10	“Change in Control Termination”	4
1.11	“Change in Control Termination Benefit”	4
1.12	“Claimant”	4
1.13	“Code”	4
1.14	“Committee”	4
1.15	“Company”	4
1.16	“Company Contribution Account”	4
1.17	“Company Contribution Amount”	4
1.18	“Death Benefit”	4
1.19	“Deferral Account”	5
1.20	“Director”	5
1.21	“Director Fees”	5
1.22	“Disability” or “Disabled”	5
1.23	“Disability Benefit”	5
1.24	“Election Form”	5
1.26	“Employer(s)”	5
1.27	“ERISA”	6
1.28	“First Plan Year”	6
1.29	“Participant”	6
1.30	“Plan”	6
1.31	“Plan Agreement”	6

i

TABLE OF CONTENTS

(continued)

		Page
1.32	“Plan Year”	6
1.33	“Retirement,” “Retire(s)” or “Retired”	6
1.34	“Retirement Benefit”	7
1.35	“Scheduled Distribution”	7
1.36	“Separation from Service”	7
1.38	“Specified Employee”	8
1.39	“Subsidiary”	8
1.40	“Termination Benefit”	9
1.41	“Trust”	9
1.42	“Unforeseeable Emergency”	9
1.43	“Years of Service”	9

ii

INTERNATIONAL RECTIFIER CORPORATION
DEFERRED COMPENSATION PLAN
Amended and Restated
Effective January 1, 2009

Purpose

The purpose of this Plan is to provide specified benefits to Directors and a select group of management or highly compensated Employees who contribute materially to the continued growth, development and future business success of International Rectifier Corporation, a Delaware corporation, and its subsidiaries, if any, that sponsor this Plan.  This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA.

This Plan is intended to comply with all applicable law, including Code Section 409A and related Treasury guidance and Regulations, and shall be operated and interpreted in accordance with this intention.

ARTICLE I

DEFINITIONS

For the purposes of this Plan, unless otherwise clearly apparent from the context, the following phrases or terms shall have the following indicated meanings:

1.1           “Account Balance” shall mean, with respect to a Participant, an entry on the records of the Employer equal to the sum of (i) the Participant’s Deferral Account balance and (ii) the Participant’s Company Contribution Account balance.  The Committee may establish such other subaccounts as are advisable in the administration of this Plan.  The Account Balance, and each other specified account balance, shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to the Participant, or his or her Beneficiary, pursuant to this Plan.

If a Participant is both an Employee and a Director and participates in the Plan in each capacity, then separate Account Balances (and separate subaccounts, if applicable) shall be established for such Participant as a device for the measurement and determination of the (a) amounts deferred under the Plan that are attributable to the Participant’s status as an Employee, and (b) amounts deferred under the Plan that are attributable to the Participant’s status as a Director.

1.2           “Annual Deferral Amount” as to a Participant shall mean that portion of the Participant’s Base Salary, Bonus and Director Fees that the Participant defers in accordance with Article 3 for any one Plan Year, without regard to whether such amounts are withheld and credited during such Plan Year.  In the event of a Participant’s Retirement, Disability, death or Separation from Service prior to the end of a Plan Year, the Participant’s Annual Deferral Amount for that Plan Year shall be the actual amount withheld prior to such event.

1.3           “Annual Installment Method” shall be an annual installment payment over the number of years selected by the Participant in accordance with this Plan, calculated as

1

follows:  (i) for the first annual installment, the Participant’s vested Account Balance shall be calculated as of the close of business on or around the last business day that occurs prior to the commencement of the Participant’s Plan benefits, and (ii) for remaining annual installments, the Participant’s remaining vested Account Balance (which shall continue to be adjusted pursuant to Section 3.8 over the period that installment payments are made) shall be calculated as of the close of business on or around the business day that occurs on or about the next anniversary of the first annual installment payment to the Participant or on or around the first day of each Plan Year following the Plan Year in which the Participant Retires or experiences a Change in Control Termination, whichever payment timing is selected by the Committee in its sole discretion in the circumstances.  Each annual installment shall be calculated by multiplying the applicable balance by a fraction, the numerator of which is one and the denominator of which is the remaining number of annual payments due the Participant.  By way of example, if the Participant elects a ten (10) year Annual Installment Method for the Retirement Benefit, the first payment shall be 1/10 of the vested Account Balance, calculated as described in this definition.  The following year, the payment shall be 1/9 of the vested Account Balance, calculated as described in this definition.

1.4           “Base Salary” with respect to a Participant shall mean the Participant’s annual cash compensation relating to services performed for an Employer during the applicable Plan Year, excluding distributions from nonqualified deferred compensation plans, bonuses (including, without limitation, Bonuses), commissions, overtime, fringe benefits, stock options, stock appreciation rights, restricted stock, stock units, performance shares, performance units, other incentive payments (whether or not related to stock), non-monetary awards, relocation expenses, director fees (including, without limitation, Director Fees) and other fees, severance pay, and automobile and other allowances paid to a Participant.  Base Salary shall be calculated before reduction for compensation voluntarily deferred or contributed by the Participant pursuant to all qualified or nonqualified plans of any Employer and shall be calculated to include amounts not otherwise included in the Participant’s gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b) pursuant to plans established by any Employer; provided, however, that all such amounts will be included in compensation only to the extent that, had there been no such plan, the amount would have been payable in cash to the Employee and otherwise would have been included in the Participant’s Base Salary for the relevant year.

1.5           “Beneficiary” as to a Participant shall mean one or more persons, trusts, estates or other entities that are entitled, in accordance with Article 10, to receive the Participant’s benefits under this Plan upon the death of the Participant.

1.6           “Beneficiary Designation Form” shall mean the form established from time to time by the Committee that a Participant must complete, sign and return to the Committee in order to designate one or more Beneficiaries in accordance with Article 10.

1.7           “Board” shall mean the board of directors of the Company.

1.8           “Bonus” with respect to a Participant shall mean any cash compensation, in addition to Base Salary, earned by the Participant for services rendered for an Employer during the applicable Plan Year, payable to the Participant under any Employer’s annual, semi-annual or quarterly bonus plans and/or short or long-term incentive plans.

2

1.9“Change in Control” shall mean the occurrence of a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of a corporation, as determined in accordance with this Section.

In order for an event described below to constitute a Change in Control with respect to a Participant, except as otherwise provided in part (b)(ii) of this Section, the applicable event must relate to the corporation for which the Participant is providing services, the corporation that is liable for payment of the Participant’s Account Balance (or all corporations liable for payment if more than one), as identified by the Committee in accordance with Treas. Reg. §1.409A-3(i)(5)(ii)(A)(2), or such other corporation identified by the Committee in accordance with Treas. Reg. §1.409A-3(i)(5)(ii)(A)(3).

In determining whether an event shall be considered a “change in the ownership,” a “change in the effective control” or a “change in the ownership of a substantial portion of the assets” of a corporation, the following provisions shall apply:

(a)A “change in the ownership” of the applicable corporation shall occur on the date on which any one person, or more than one person acting as a group, acquires ownership of stock of such corporation that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of such corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(v).  If a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of such corporation, or to have effective control of such corporation within the meaning of part (b) of this Section, and such person or group acquires additional stock of such corporation, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the ownership” of such corporation.

(b)A “change in the effective control” of the applicable corporation shall occur on either of the following dates:

(i)            The date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of such corporation possessing 30% or more of the total voting power of the stock of such corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi).  If a person or group is considered to possess 30% or more of the total voting power of the stock of a corporation, and such person or group acquires additional stock of such corporation, the acquisition of additional stock by such person or group shall not be considered to cause a “change in the effective control” of such corporation; or

(ii)           The date on which a majority of the members of the applicable corporation’s board of directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of such corporation’s board of directors before the date of the appointment or election, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vi).  In determining whether the event described in the preceding sentence has occurred, the applicable corporation to

3

which the event must relate shall only include a corporation identified in accordance with Treas. Reg. §1.409A-3(i)(5)(ii) for which no other corporation is a majority shareholder.

(c)           A “change in the ownership of a substantial portion of the assets” of the applicable corporation shall occur on the date on which any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the corporation that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the corporation immediately before such acquisition or acquisitions, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii).  A transfer of assets shall not be treated as a “change in the ownership of a substantial portion of the assets” when such transfer is made to an entity that is controlled by the shareholders of the transferor corporation, as determined in accordance with Treas. Reg. §1.409A-3(i)(5)(vii)(B).

1.10         “Change in Control Termination” shall mean the Participant’s Separation from Service with the Company and all other Employers for any reason, other than a termination due to the Participant’s death or Disability, that occurs upon or during the two (2) year period following the occurrence of a Change in Control.  If a Participant is both an Employee and a Director, a Change in Control Termination shall not occur unless and until the Participant is no longer an Employee and is no longer a Director.

1.11         “Change in Control Termination Benefit” shall mean the benefit set forth in Article 5.

1.12         “Claimant” shall have the meaning set forth in Section 15.1.

1.13         “Code” shall mean the United States Internal Revenue Code of 1986, as it may be amended from time to time.

1.14         “Committee” shall mean the committee described in Article 13.

1.15         “Company” shall mean International Rectifier Corporation, a Delaware corporation, and any successor to all or substantially all of the Company’s assets or business.

1.16         “Company Contribution Account” as to a Participant shall mean (i) the sum of the Participant’s Company Contribution Amounts, plus (ii) amounts credited (net of amounts debited, which may result in an aggregate negative number) to the Participant’s Company Contribution Account in accordance with this Plan, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to the Participant’s Company Contribution Account.

1.17         “Company Contribution Amount” as to a Participant shall mean, for any one Plan Year, the amount determined in accordance with Section 3.4 with respect to that Participant.

1.18         “Death Benefit” shall mean the benefit set forth in Article 9.

4

1.19“Deferral Account” as to a Participant shall mean (i) the sum of all of the Participant’s Annual Deferral Amounts, plus (ii) amounts credited (net of amounts debited, which may result in an aggregate negative number) to the Participant’s Deferral Account in accordance with this Plan, less (iii) all distributions made to the Participant or his or her Beneficiary pursuant to this Plan that relate to his or her Deferral Account.

1.20“Director” shall mean any member of the Board.

1.21“Director Fees” with respect to a Director shall mean the annual cash fees paid to the Director from the Company, including cash retainer fees and cash meetings fees, as compensation for serving on the Board for the applicable Plan Year.

1.22“Disability” or “Disabled” shall mean that a Participant is either (a) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (b) by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Participant’s Employer.  For purposes of this Plan, a Participant shall be deemed Disabled if determined to be totally disabled by the Social Security Administration.  A Participant shall also be deemed Disabled if determined to be disabled in accordance with the applicable disability insurance program of such Participant’s employer, provided that the definition of “disability” applied under such disability insurance program complies with the requirements of this Section.

1.23“Disability Benefit” shall mean the benefit set forth in Article 8.

1.24“Election Form” shall mean the form, which may be in electronic format, established from time to time by the Committee that a Participant must complete, sign and return to the Committee in order to make an election under this Plan.

1.25“Employee” shall mean a person who is an employee of any Employer.

1.26“Employer(s)” shall mean

(a)Except as otherwise provided in part (b) of this Section, the Company and/or any of its Subsidiaries (now in existence or hereafter formed or acquired) that have been selected by the Board to participate in this Plan and have adopted this Plan as a sponsor (or, as the context may require, the Company or other Employer that actually employs the Participant in question).

(b)For the purpose of determining whether a Participant has experienced a Separation from Service, the term “Employer” shall mean:

(i)            The entity for which the Participant performs services and with respect to which the legally binding right to compensation deferred or contributed under this Plan arises; and

5

(ii)           All other entities with which the entity described above would be aggregated and treated as a single employer under Code Section 414(b) (controlled group of corporations) and Code Section 414(c) (a group of trades or businesses, whether or not incorporated, under common control), as applicable.

1.27“ERISA” shall mean the United States Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

1.28“First Plan Year” shall mean the period beginning July 5, 2004 and ending December 31, 2004.

1.29“Participant” shall mean any Employee or Director (i) in the case of an Employee, who is selected to participate in this Plan, (ii) who elects to participate in this Plan, and (iii) who signs, completes and submits to the Company an executed Plan Agreement, Election Form and Beneficiary Designation Form, which are accepted by the Committee.  (The term “Participant” includes, to the extent required by the context, any current or former Employee or Director with a remaining Account Balance under this Plan, regardless of whether he or she is eligible to defer additional compensation under this Plan.)

1.30“Plan” shall mean the International Rectifier Corporation Deferred Compensation Plan, which shall be evidenced by this instrument and by each Plan Agreement, as they may be amended from time to time.

1.31“Plan Agreement” shall mean a written agreement, as it may be amended from time to time, which is entered into by and between an Employer and a Participant.  Each Plan Agreement executed by a Participant and the Participant’s Employer shall provide for the entire benefit to which such Participant is entitled under this Plan; should there be more than one Plan Agreement, the Plan Agreement bearing the latest date of acceptance by the Employer shall supersede all previous Plan Agreements in their entirety and shall govern such entitlement.  The terms of any Plan Agreement may be different for any Participant, and any Plan Agreement may provide additional benefits not set forth in this Plan or limit the benefits otherwise provided under this Plan; provided, however, that any such additional benefits or benefit limitations must be agreed to by both the Employer and the Participant.

1.32“Plan Year” shall, except for the First Plan Year, mean a period beginning on January 1 of each calendar year and continuing through December 31 of such calendar year.

1.33“Retirement,” “Retire(s)” or “Retired” shall mean, with respect to an Employee, a Separation from Service for any reason other than the Participant’s death or Disability, or a Change in Control Termination, that occurs on or after the date on which the sum of the Employee’s age and full Years of Service equals at least sixty (60); and shall mean with respect to a Director, a Separation from Service.  If a Participant is both an Employee and a Director and participates in the Plan in each capacity, (a) the determination of whether the Participant qualifies for Retirement as an Employee shall be made when the Participant experiences a Separation from Service as an Employee and such determination shall only apply to the applicable Account Balance established in accordance with Section 1.1 for amounts deferred under the Plan as an Employee, and (b) the determination of whether the Participant

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qualifies for Retirement as a Director shall be made at the time the Participant experiences a Separation from Service as a Director and such determination shall only apply to the applicable Account Balance established in accordance with Section 1.1 for amounts deferred under the Plan as a Director.

1.34         “Retirement Benefit” shall mean the benefit set forth in Article 6.

1.35         “Scheduled Distribution” shall mean the distribution set forth in Section 4.1.

1.36         “Separation from Service” shall mean a termination of services provided by a Participant to his or her Employer, whether voluntarily or involuntarily, other than by reason of death or Disability, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h).  In determining whether a Participant has experienced a Separation from Service, the following provisions shall apply:

(a)           For a Participant who provides services to an Employer as an Employee, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur when such Participant has experienced a termination of employment with such Employer.  A Participant shall be considered to have experienced a termination of employment when the facts and circumstances indicate that the Participant and his or her Employer reasonably anticipate that either (i) no further services will be performed for the Employer after a certain date, or (ii) that the level of bona fide services the Participant will perform for the Employer after such date (whether as an Employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by such Participant (whether as an Employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services to the Employer if the Participant has been providing services to the Employer less than 36 months).

If a Participant is on military leave, sick leave, or other bona fide leave of absence, the employment relationship between the Participant and the Employer shall be treated as continuing intact, provided that the period of such leave does not exceed 6 months, or if longer, so long as the Participant retains a right to reemployment with the Employer under an applicable statute or by contract.  If the period of a military leave, sick leave, or other bona fide leave of absence exceeds 6 months and the Participant does not retain a right to reemployment under an applicable statute or by contract, the employment relationship shall be considered to be terminated for purposes of this Plan as of the first day immediately following the end of such 6-month period.  In applying the provisions of this paragraph, a leave of absence shall be considered a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Employer.

(b)           For a Participant who provides services to an Employer as an independent contractor, except as otherwise provided in part (c) of this Section, a Separation from Service shall occur upon the expiration of the contract (or in the case of more than one contract, all contracts) under which services are performed for such Employer, provided that the expiration of such contract(s) is determined by the Committee to constitute a good-faith and complete termination of the contractual relationship between the Participant and such Employer.

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(c)           For a Participant who provides services to an Employer as both an Employee and an independent contractor, a Separation from Service generally shall not occur until the Participant has ceased providing services for such Employer both as an Employee and as an independent contractor, as determined in accordance with the provisions set forth in parts (a) and (b) of this Section, respectively.  Similarly, if a Participant either (i) ceases providing services for an Employer as an independent contractor and begins providing services for such Employer as an Employee, or (ii) ceases providing services for an Employer as an Employee and begins providing services for such Employer as an independent contractor, the Participant will not be considered to have experienced a Separation from Service until the Participant has ceased providing services for such Employer in both capacities, as determined in accordance with the applicable provisions set forth in parts (a) and (b) of this section.

Notwithstanding the foregoing provisions in this part (c), if a Participant provides services for an Employer as both an Employee and as a Director, to the extent permitted by Treas. Reg. §1.409A-1(h)(5) the services provided by such Participant as a Director shall not be taken into account in determining whether the Participant has experienced a Separation from Service as an Employee, and the services provided by such Participant as an Employee shall not be taken into account in determining whether the Participant has experienced a Separation from Service as a Director.

1.37         “Similar Plan” shall mean a plan required to be aggregated with this Plan under Treas. Reg. §1.409A-1(c)(2)(i).

1.38         “Specified Employee” shall mean any Participant who is determined to be a “key employee” (as defined under Code Section 416(i) without regard to paragraph (5) thereof) for the applicable period, as determined annually by the Committee in accordance with Treas. Reg. §1.409A-1(i).  In determining whether a Participant is a Specified Employee, the following provisions shall apply:

(a)           The Committee’s identification of the individuals who fall within the definition of “key employee” under Code Section 416(i) (without regard to paragraph (5) thereof) shall be based upon the 12-month period ending on each December 31st (referred to below as the “identification date”).  In applying the applicable provisions of Code Section 416(i) to identify such individuals, “compensation” shall be determined in accordance with Treas. Reg. §1.415(c)-2(a) without regard to (i) any safe harbor provided in Treas. Reg. §1.415(c)-2(d), (ii) any of the special timing rules provided in Treas. Reg. §1.415(c)-2(e), and (iii) any of the special rules provided in Treas. Reg. §1.415(c)-2(g); and

(b)           Each Participant who is among the individuals identified as a “key employee” in accordance with part (a) of this Section shall be treated as a Specified Employee for purposes of this Plan if such Participant experiences a Separation from Service during the 12-month period that begins on the April 1st following the applicable identification date.

1.39         “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Company.

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1.40         “Termination Benefit” shall mean the benefit set forth in Article 7.

1.41         “Trust” shall mean one or more trusts established by the Company in accordance with Article 16.

1.42         “Unforeseeable Emergency” shall mean a severe financial hardship of the Participant resulting from (a) an illness or accident of the Participant, the Participant’s spouse, the Participant’s Beneficiary or the Participant’s dependent (as defined in Code Section 152 without regard to paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof), (b) a loss of the Participant’s property due to casualty, or (c) such other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant, all as determined by the Committee based on the relevant facts and circumstances.

1.43         “Years of Service” shall mean the total number of whole years in which a Participant has been employed by one or more Employers.  A Participant’s whole years of employment for this purpose shall be determined by dividing (i) the total number of calendar days that the Participant was employed by one or more Employers (with employment by multiple Employers on any single calendar day counted only as one day of employment), by (ii) 365; with any fractional year of service rounded down to the next whole number.  If a Participant incurs a severance from employment and is later re-employed, all days of employment (including pre- and post-break in employment service) with one or more Employers will be aggregated for this purpose.

ARTICLE II

SELECTION, ENROLLMENT, ELIGIBILITY

2.1           Selection by Committee.  Participation in this Plan shall be limited to Directors and, as determined by the Committee in its sole discretion, a select group of management and highly compensated Employees.  From that group of eligible Employees, the Committee shall select, in its sole discretion, those Employees who may actually participate in this Plan.  Unless otherwise provided by the Board, each Director may participate in this Plan.

2.2           Enrollment and Eligibility Requirements; Commencement of Participation.

(a)           As a condition to participation, each Director or selected Employee who is eligible to participate in this Plan shall complete, execute and return to the Committee a Plan Agreement, an Election Form and a Beneficiary Designation Form.  In addition, the Committee shall establish from time to time such other enrollment requirements as it determines are advisable in its sole discretion.  Except as provided in the next sentence, with respect to any Plan Year after the First Plan Year each Director or selected Employee must complete these requirements before the first day of that Plan Year in order to participate in this Plan for that Plan Year; provided that the Committee may, in its sole discretion, establish other deadlines with respect to Election Forms to defer one or more Bonuses payable to any Participant or class of Participants.  A person who first becomes a Director or is otherwise first selected as an Employee eligible to participate in this Plan during a Plan Year, as determined in accordance with Treas. Reg. §1.409A-2(a)(7)(ii) and the “plan aggregation” rules provided in Treas. Reg.

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§1.409A-1(c)(2), must complete these requirements within thirty (30) days after he or she first becomes a Director or is first selected to participate in this Plan, as applicable, in order to participate in this Plan for that Plan Year, and, in such event, such person’s participation in this Plan shall not commence earlier than the date determined by the Committee pursuant to Section 2.2(b) and such person shall not be permitted to defer under this Plan any portion of his or her Base Salary, Bonus and/or Director Fees that are paid with respect to services performed prior to his or her participation commencement date.  If a deferral election made in accordance with this Section 2.2(a) relates to compensation earned based upon a specified performance period, the amount eligible for deferral shall be equal to (i) the total amount of compensation for the performance period, multiplied by (ii) a fraction, the numerator of which is the number of days remaining in the service period after the Participant’s deferral election is made, and the denominator of which is the total number of days in the performance period.

(b)           Each Employee or Director who is eligible to participate in this Plan shall commence participation in this Plan on the date that the Committee determines, in its sole discretion, that the Employee or Director has met all enrollment requirements set forth in this Plan and required by the Committee, including returning all required documents to the Committee within the specified time period.  The Committee shall process such Participant’s deferral election as soon as administratively practicable after such deferral election is submitted to and accepted by the Committee.  After completing the participation requirements described in this Section 2.2, a Participant shall not, unless otherwise expressly required by the Committee, be required to again complete the enrollment process described in this Section 2.2 in order to participate in this Plan in any subsequent Plan Year; provided that the Committee may require Participants to complete new deferral elections each year and may require a Participant who ceases to make deferrals to this Plan for any period of time to re-enroll pursuant to this Section 2.2.

(c)           If an Employee or a Director fails to meet all requirements contained in this Section 2.1 within the period required, that Employee or Director shall not be eligible to participate in this Plan during such Plan Year.

2.3           Termination of a Participant’s Eligibility.  If the Committee determines in its sole discretion that an Employee Participant no longer qualifies as a member of a select group of management or highly compensated employees, as membership in such group is determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA, or that the inclusion of Directors in this Plan could violate any applicable law or jeopardize the status of this Plan as a plan intended to be “unfunded” and “maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1), the Committee shall have the right, in its sole discretion, to prevent the Participant from making future deferral elections for future Plan Years.  In the event that a Participant is no longer eligible to defer compensation under this Plan, the Participant’s Account Balance shall nevertheless continue to be adjusted pursuant to Section 3.8 until the Participant’s Plan benefits are paid in accordance with the terms of this Plan and, to the maximum extent permitted by law, the Participant shall continue to have the ability to make Measurement Fund elections pursuant to Section 3.8 until such payment occurs.

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ARTICLE III

DEFERRAL COMMITMENTS, COMPANY CONTRIBUTION AMOUNTS, VESTING, CREDITING, TAXES

3.1           Minimum Deferrals.

(a)           Annual Deferral Amount.  For each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary, Bonus and/or Director Fees, as applicable, that at the time of the election is expected to result in the following minimum amounts for each deferral elected:

Deferral	Minimum Amount
Base Salary and/or Bonus	$5,000 in the aggregate
Director Fees	$0

If the Committee determines, in its sole discretion, prior to the beginning of a Plan Year that a Participant has made an election that reasonably will result in a deferral for less than the stated minimum amounts, or if no election is made, the amount deferred shall be zero.

(b)           Short Plan Year.  Notwithstanding the foregoing, if a Participant first becomes a Participant after the first day of a Plan Year, the minimum Annual Deferral Amount shall be an amount equal to the minimum set forth above, multiplied by a fraction, the numerator of which is the number of complete months remaining in the Plan Year and the denominator of which is 12.

3.2           Maximum Deferral.

(a)           Annual Deferral Amount.  Subject to Sections 3.2(b) and (c), for each Plan Year, a Participant may elect to defer, as his or her Annual Deferral Amount, Base Salary, Bonus and/or Director Fees up to the following maximum percentages for each deferral elected:

Deferral	Maximum Percentage
Base Salary	75%
Bonus	90%
Director Fees	90%

(b)           Short Plan Year.  If a Participant first becomes a Participant after the first day of a Plan Year, the maximum Annual Deferral Amount shall be limited to the amount of compensation not yet earned by the Participant as of the date the Participant submits a Plan Agreement and Election Form to the Committee for acceptance.

(c)           Other Maximum Limit.  In no event shall the maximum amount of Base Salary that a Participant may defer to this Plan in any one year exceed (i) the Participant’s total Base Salary, less (ii) the sum of the maximum amount that the Participant could elect to defer to the plan described in Section 401(k) of the Code maintained by the Company or the Participant’s Employer in which the Participant is eligible to participate (if any) for that year plus the amount(s) that the Participant may elect to contribute to any qualified welfare benefit plan of the Company or another Employer for that year for medical, healthcare, insurance, or similar

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benefits coverage.  The minimum deferral limits of Section 3.1 shall not apply with respect to a Participant for a Plan Year if the amount determined pursuant to the preceding sentence is less than the applicable minimum amount determined in accordance with Section 3.1.

3.3           Election to Defer; Effect of Election Form.

(a)           First Plan Year.  In connection with a Participant’s commencement of participation in this Plan, the Participant shall make an irrevocable deferral election for the Plan Year in which the Participant commences participation in this Plan, along with such other elections as the Committee deems necessary or desirable under this Plan.  For these elections to be valid, the Election Form must be completed and signed by the Participant, timely delivered to the Committee (in accordance with Section 2.2) and accepted by the Committee.

(b)           Subsequent Plan Years.  For each succeeding Plan Year, an irrevocable deferral election for that Plan Year, and such other elections as the Committee deems necessary or desirable under this Plan, shall be made by timely delivering a new Election Form to the Committee, in accordance with its rules and procedures, before the end of the Plan Year preceding the Plan Year for which the election is made.  If no such Election Form is timely delivered for a Plan Year, the Annual Deferral Amount shall be zero for that Plan Year.

(c)           Cancellation of Deferral Elections.  Notwithstanding anything else contained herein to the contrary, if a Participant receives a hardship distribution under any plan described in Section 401(k) of the Code maintained by the Company or the Participant’s Employer or any of their respective affiliates, the Participant may not make any deferrals to this Plan for the remainder of the Plan Year.

3.4           Withholding and Crediting of Annual Deferral Amounts.  For each Plan Year, the Base Salary portion of the Participant’s Annual Deferral Amount for that Plan Year shall be withheld from each regularly scheduled Base Salary payroll payment for the Participant in equal amounts, as adjusted from time to time for increases and decreases in the Participant’s Base Salary.  The Bonus and/or Director Fees portion of the Participant’s Annual Deferral Amount for that Plan Year shall be withheld at the time the Participant’s Bonus and/or Director Fees are or otherwise would be paid to the Participant with respect to service in that Plan Year, whether or not this occurs during the Plan Year itself.  Annual Deferral Amounts shall be credited to a Participant’s Deferral Account at the time such amounts would otherwise have been paid to the Participant.  The Committee may, with respect to the First Plan Year and any one or more Plan Years thereafter, establish and announce prior to that Plan Year such other rules regarding the Base Salary, Bonus and/or Director Fees to be covered by deferral elections made with respect to that Plan Year as the Committee may determine to be advisable in its sole discretion.

3.5           Company Contribution Amount.

(a)           For each Plan Year, an Employer may be required to credit amounts to a Participant’s Company Contribution Account in accordance with employment or other agreements entered into between the Participant and the Employer.  Such amounts shall be credited on the date or dates prescribed by such agreements.

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(b)           For each Plan Year, an Employer, in its sole discretion, may, but is not required to, credit any amount it desires to any Participant’s Company Contribution Account under this Plan.  The Company Contribution Amount described in this Section 3.4(a), if any, shall be credited on a date or dates to be determined by the Employer making the contribution and, in the absence of such a determination, the date or dates determined by the Committee in its sole discretion.

(c)           Any amount credited to a Participant’s Company Contribution Account pursuant to Sections 3.5(a) and/or (b) with respect to a Plan Year shall be the Participant’s Company Contribution Amount for that Plan Year.  The amount so credited to a Participant may be smaller or larger than the amount credited to any other Participant, and the amount credited to any Participant for a Plan Year may be zero, even though one or more other Participants receive a Company Contribution Amount for that Plan Year.

3.6           Crediting of Amounts after Benefit Distribution.  Notwithstanding any provision in this Plan to the contrary, should the complete distribution of a Participant’s vested Account Balance occur prior to the date on which any portion of (i) the Annual Deferral Amount that a Participant has elected to defer in accordance with Section 3.3, or (ii) the Company Contribution Amount, would otherwise be credited to the Participant’s Account Balance, such amounts shall not be credited to the Participant’s Account Balance, but shall promptly be paid to the Participant in a manner determined by the Committee in its reasonable discretion.

3.7           Vesting.

(a)           A Participant shall at all times be 100% vested in his or her Deferral Account.

(b)           A Participant shall be vested in his or her Company Contribution Account in accordance with the vesting schedule(s) set forth in his or her Plan Agreement, employment agreement or any other agreement entered into between the Participant and his or her Employer.  If not addressed in such agreements, a Participant shall vest in his or her Company Contribution Account in accordance with the schedule declared by the Committee in its sole discretion.

3.8           Crediting/Debiting of Account Balances.  In accordance with, and subject to, the rules and procedures that are established from time to time by the Committee, in its reasonable discretion, a Participant’s Account Balance shall be adjusted from time to time in accordance with the following rules:

(a)           Measurement Funds.  The Committee shall select from time to time certain mutual funds, insurance company separate accounts, indexed rates or other methods (the “Measurement Funds”) for the purpose of crediting or debiting additional amounts to Participants’ Account Balances.  Following a Change in Control, the number and general type(s) of Measurement Funds offered shall not be substantially diminished.  The Committee may, in its sole discretion but subject to the preceding sentence, discontinue, substitute or add a Measurement Fund.  Each such action will take effect not earlier than the first day of the first calendar quarter that begins at least thirty (30) days after the day on which the Committee gives Participants advance written notice of such change, or if necessary to comply with applicable

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laws, rules or regulations or is otherwise due to circumstances beyond the control of the Company, such other date designated by the Committee in its reasonable discretion.

(b)           Election of Measurement Funds.

(i)            Participant’s First Plan Year.  A Participant, in connection with his or her initial deferral election in accordance with Section 3.3(a), shall elect, on the Election Form, the manner in which his or her Annual Deferral Amount and/or Company Contribution Amount will be allocated among one or more Measurement Fund(s) (as described in Section 3.8(a)) for purposes of determining the amounts to be credited or debited to his or her Account Balance.  If a Participant does not elect any of the Measurement Funds as described in the previous sentence, the Participant’s Annual Deferral Amount and/or Company Contribution Amount shall automatically be allocated into the lowest-risk Measurement Fund, as determined by the Committee in its reasonable discretion.

(ii)           Subsequent Plan Years.  For each succeeding Plan Year, a Participant, in connection with his or her annual deferral election in accordance with Section 3.3(b), may (but is not required to) elect, on the Election Form, the manner in which his or her Annual Deferral Amount and/or Company Contribution Amount for such Plan Year will be allocated among one or more Measurement Fund(s) (as described in Section 3.8(a)) for purposes of determining the amounts to be credited or debited to his or her Account Balance.  If a Participant does not elect Measurement Funds in accordance with the previous sentence, the Participant’s Annual Deferral Amount and/or Company Contribution Amount for such Plan Year shall automatically be allocated among the Measurement Funds in accordance with the Election Form most recently filed by the Participant and accepted by the Committee; provided that the Committee may, in its sole discretion, provide that such amounts shall automatically be allocated into the lowest-risk Measurement Fund, as determined by the Committee in its reasonable discretion.

(iii)          Changing Elections.  At any time during a Plan Year, a Participant may (but is not required to) elect, by submitting an Election Form to the Committee that is accepted by the Committee, to change the portion of his or her Account Balance allocated to each previously elected Measurement Fund; provided, however, the cumulative number of such elections cannot exceed three (3) per calendar quarter.  If an election is made in accordance with the previous sentence, it shall apply as of the first business day deemed reasonably practicable by the Committee, in its reasonable discretion, and shall continue thereafter for each subsequent day in which the Participant participates in this Plan, unless changed in accordance with the previous sentence.  The Committee may further limit the number of Measurement Fund changes that a Participant may elect, provided that a Participant shall be entitled to elect such a change not less frequently than quarterly.  The Committee may provide that any change shall not take effect until a date that is not later than the first business day of the calendar quarter following the Committee’s receipt of such an election.

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(c)           Proportionate Allocation.  In making any election described in Section 3.8(a), the Participant shall specify on the Election Form in increments of one percent (1%), the percentage of his or her Annual Deferral Amount or Company Contribution Amount, or in the case of a reallocation, the percentage of his or her Account Balance, to be allocated to a Measurement Fund.  A Participant’s Measurement Fund elections must total one hundred percent (100%).  The Committee may require that a Participant’s percentage election with respect to any particular Measurement Fund selected by the Participant be no less than ten percent (10%).  Unless otherwise expressly provided by the Committee, a Participant’s Measurement Fund election(s) shall apply on a pro rata basis to each of the Participant’s accounts under this Plan and a Participant may not make separate Measurement Fund elections for his or her Deferral Account and/or Company Contribution Account.

(d)           Crediting or Debiting Method.  The performance of each Measurement Fund (either positive or negative) will be determined by the Committee, in its reasonable discretion, based on the performance of the Measurement Funds themselves.  A Participant’s Account Balance shall be credited or debited on a daily basis based on the performance of each Measurement Fund selected by the Participant for the corresponding period of time (with such credit or debit calculated as though the portion of the Participant’s Account Balance allocated to that Measurement Fund for the applicable period of time had actually been invested in that Measurement Fund for that period of time), such performance being determined by the Committee in its reasonable discretion.

(e)           No Actual Investment.  Notwithstanding any other provision of this Plan that may be interpreted to the contrary, the Measurement Funds are to be used for measurement purposes only, and a Participant’s election of any such Measurement Fund, the allocation of his or her Account Balance thereto, the calculation of additional amounts and the crediting or debiting of such amounts to a Participant’s Account Balance shall not be considered or construed in any manner as an actual investment of his or her Account Balance in any such Measurement Fund.  In the event that the Company or the Trustee (as that term is defined in the Trust), in its own discretion, decides to invest funds in any or all of the investments on which the Measurement Funds are based, no Participant shall have any rights in or to such investments themselves.  Without limiting the foregoing, a Participant’s Account Balance shall at all times be a bookkeeping entry only and shall not represent any investment made on his or her behalf by the Company or the Trust.  Each Participant shall at all times remain an unsecured creditor of the Company with respect to his or her Plan benefits.

3.9           FICA and Other Taxes.

(a)           Annual Deferral Amounts.  For each Plan Year in which an Annual Deferral Amount is being withheld from a Participant, the Participant’s Employer(s) may, in its or their reasonable discretion, either withhold from that portion of the Participant’s Base Salary and/or Bonus that is not being deferred, in a manner determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such Annual Deferral Amount or reduce the Participant’s Annual Deferral Amount by the amount necessary to satisfy such withholding obligation.

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(b)Company Contribution Account.  When a Participant becomes vested in a portion of his or her Company Contribution Account, the Participant’s Employer(s) may, in its or their reasonable discretion, either withhold from that portion of the Participant’s Base Salary and/or Bonus that is not deferred, in a manner determined by the Employer(s), the Participant’s share of FICA and other employment taxes on such Company Contribution Amount or reduce the vested portion of the Participant’s Company Contribution Account by the amount necessary to satisfy such withholding obligation.

(c)Distributions.  The Participant’s Employer(s), or the trustee of the Trust, may withhold from any payments made to a Participant under this Plan all federal, state and local income, employment and other taxes required to be withheld by the Employer(s), or the trustee of the Trust, in connection with such payments, in amounts and in a manner to be determined in the reasonable discretion of the Employer(s) and the trustee of the Trust.

(d)Participant Responsibility.  Except as provided above in this Section 3.9, each Participant shall be wholly responsible and liable for all income, employment, and other taxes that may result from compensation deferred under this Plan, the adjustment of Account Balances pursuant to Section 3.8, and the payment of benefits under this Plan.

ARTICLE IV

SCHEDULED DISTRIBUTION, UNFORESEEABLE EMERGENCIES

4.1Scheduled Distribution.  On each annual Election Form, a Participant may irrevocably elect to receive a Scheduled Distribution for each type of compensation (Base Salary, Bonus and/or Director Fees) deferred pursuant to the Election Form.  Subject to the other terms and conditions of this Plan, each Scheduled Distribution elected shall be paid out during a sixty (60) day period commencing immediately after the first day of any Plan Year designated by the Participant.  The Plan Year designated by the Participant for payment of a Scheduled Distribution may be no earlier than the fourth Plan Year following the Plan Year in which the compensation subject to the Scheduled Distribution Election was actually deferred.  By way of example, if a Scheduled Distribution is elected for Base Salary that is deferred/credited to the Plan during the 2005 Plan Year, the earliest Plan Year that the Participant could elect for a Scheduled Distribution from such Base Salary is 2009 (in which case such Scheduled Distribution would become payable during a sixty (60) day period commencing January 1, 2009).  Each Scheduled Distribution shall be a lump sum payment in an amount that is equal to the portion of Base Salary, Bonus and/or Director Fees that the Participant elected to have distributed as a Scheduled Distribution, plus amounts credited or debited in the manner provided in Section 3.8 on that amount.  Each Scheduled Distribution shall be calculated as of the close of business on or around the date on which such Scheduled Distribution becomes payable, as reasonably determined by the Committee.

4.2Other Benefits Take Precedence Over Scheduled Distributions.  Should a Participant become entitled to the distribution of a benefit under Article 5, 6, 7, 8, or 9 prior to the date on which such Participant’s Scheduled Distribution is payable, any portion of such Participant’s Base Salary, Bonus and/or Director Fees, plus amounts credited or debited thereon, that is subject to a Scheduled Distribution election under Section 4.1 shall not be paid in accordance with Section 4.1, but shall be paid in accordance with the other applicable Article.

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4.3Unforeseeable Emergencies.  If a Participant experiences an Unforeseeable Emergency prior to the occurrence of a distribution event described in Articles 5 through 9, as applicable, the Participant may petition the Committee to receive a partial or full payout from the Plan.  The payout, if any, from the Plan shall not exceed the lesser of (i) the Participant’s vested Account Balance, calculated as of the close of business on or around the date for such payout, as determined by the Committee in accordance with provisions set forth below, or (ii) the amount necessary to satisfy the Unforeseeable Emergency, plus amounts necessary to pay Federal, state, or local income taxes or penalties reasonably anticipated as a result of the distribution.  A Participant shall not be eligible to receive a payout from the Plan to the extent that the Unforeseeable Emergency is or may be relieved (A) through reimbursement or compensation by insurance or otherwise, (B) by liquidation of the Participant’s assets, to the extent the liquidation of such assets would not itself cause severe financial hardship or (C) by cessation of deferrals under this Plan.

If the Committee, in its sole discretion, approves a Participant’s petition for payout from the Plan, the date for such payout shall be the date on which such Committee approval occurs and such payout shall be distributed to the Participant in a lump sum no later than 60 days after such date.  In addition, in the event of such approval the Participant’s outstanding deferral elections under the Plan shall be canceled.

ARTICLE V

CHANGE IN CONTROL TERMINATION BENEFIT

5.1Change in Control Termination Benefit.  A Participant who experiences a Change in Control Termination shall receive, as a Change in Control Termination Benefit, his or her vested Account Balance.

5.2Payment of Change in Control Termination Benefit.  The Change in Control Termination Benefit shall be paid to the Participant in the same form in which such Participant elected to receive his or her Retirement Benefit, regardless of whether the Participant is otherwise eligible to Retire on the date of his or her Change in Control Termination.  The payment of the Participant’s Change in Control Benefit shall be made, or installment payments shall commence, no later than ninety (90) days after the date of the Participant’s Change in Control Termination.  In the event of a lump sum payment, the Participant’s vested Account Balance shall be calculated as of the close of business on or around the last business day to occur prior to the date of payment of the Participant’s benefit.  Any installment payments shall be calculated and paid in accordance with the Annual Installment Method.

ARTICLE VI

RETIREMENT BENEFIT

6.1Retirement Benefit.  A Participant who Retires shall receive, as a Retirement Benefit, his or her vested Account Balance.

6.2Payment of Retirement Benefit.  A Participant, in connection with his or her commencement of participation in this Plan, shall elect on an Election Form to receive the Retirement Benefit in a lump sum or pursuant to an Annual Installment Method of 5, 10, 15 or

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20 years.  Once made, a Participant may not revoke or change any such election.  If a Participant does not make any election with respect to the payment of the Retirement Benefit in connection with his or her commencement of participation in this Plan, then such Participant shall be deemed to have elected to receive the Retirement Benefit in a lump sum.  The payment of the Participant’s Retirement Benefit shall be made, or installment payments shall commence, no later than ninety (90) days following (i) the first day after the end of the six-month period immediately following the date on which the Participant experiences a Separation from Service if the Participant is a Specified Employee or (ii) for all other Participants, the date of the Participant’s Retirement.  In the event of a lump sum payment, the Participant’s vested Account Balance shall be calculated as of the close of business on or around the last business day to occur prior to the payment of the Participant’s benefit.  Any installment payments shall be calculated and paid in accordance with the Annual Installment Method.

ARTICLE VII

TERMINATION BENEFIT

7.1Termination Benefit.  A Participant who experiences a Separation from Service that is not a Retirement or Change in Control Termination shall receive, as a Termination Benefit, his or her vested Account Balance.

7.2Payment of Termination Benefit.  The Termination Benefit shall be paid to the Participant in a lump sum payment within ninety (90) days following (i) the first day after the end of the 6-month period immediately following the date on which the Participant experiences such Separation from Service if the Participant is a Specified Employee and (ii) for all other Participants, the date on which the Participant experiences a Separation from Service.  The Participant’s vested Account Balance shall be calculated as of the close of business on or around the last business day to occur prior to the date of payment of the Participant’s benefit.

ARTICLE VIII

DISABILITY BENEFIT

8.1Disability Benefit.  Upon a Participant’s Disability, the Participant shall receive a Disability Benefit, which shall be equal to the Participant’s vested Account Balance.

8.2Payment of Disability Benefit.  The Disability Benefit shall be paid to the Participant in a lump sum payment no later than ninety (90) days after the Participant becomes Disabled.  The Participant’s vested Account Balance shall be calculated as of the close of business on or around the last business day to occur prior to the date of payment of the Participant’s benefit.

ARTICLE IX

DEATH BENEFIT

9.1Death Benefit.  The Participant’s Beneficiary(ies) shall receive a Death Benefit upon the Participant’s death, which will be equal to the Participant’s vested Account Balance.

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9.2Payment of Death Benefit.  The Death Benefit shall be paid to the Participant’s Beneficiary(ies) in a lump sum payment no later than ninety (90) days after the Participant’s death.  The Participant’s vested Account Balance shall be calculated as of the close of business on or around the last business day to occur prior to the date of payment of the Participant’s benefit.

ARTICLE X

BENEFICIARIES

10.1Beneficiary.  Each Participant shall have the right, at any time, to designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under this Plan to a beneficiary upon the death of a Participant.  The Beneficiary designated under this Plan may be the same as or different from the Beneficiary designation under any other plan of an Employer in which the Participant participates.

10.2Beneficiary Designation; Change; Spousal Consent.  A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Committee or its designated agent.  A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee’s rules and procedures, as in effect from time to time.  If a married Participant wishes to designate a person other than his or her spouse as Beneficiary, the Committee may require (as a condition precedent to the effectiveness of such designation) that such designation be consented to in writing by the spouse.  Upon the dissolution of marriage of a Participant, any designation of the Participant’s former spouse as a Beneficiary shall be treated as though the Participant’s former spouse had predeceased the Participant, unless (i) the Participant executes another Beneficiary designation that complies with this Section 10.2 and that clearly names such former spouse as a Beneficiary, or (ii) a court order presented to the Committee prior to distribution on behalf of the Participant explicitly requires the Participant to continue to maintain the former spouse as the Beneficiary.  In any case in which the Participant’s former spouse is treated under the Participant’s Beneficiary designation as having predeceased the Participant, no heirs or other beneficiaries of the former spouse shall receive benefits from the Plan as a Beneficiary of the Participant except as provided otherwise in the Participant’s Beneficiary designation.  Upon the acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be canceled.  The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death.

10.3Acknowledgment.  No designation or change in designation of a Beneficiary shall be effective unless signed by the Participant (and by the Participant’s spouse, to the extent required pursuant to Section 10.2) and until received in writing by the Committee or its designated agent.

10.4No Beneficiary Designation.  If a Participant fails to designate a Beneficiary as provided in Sections 10.1, 10.1 and 10.2 or, if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the Participant’s designated Beneficiary shall be deemed to be his or her surviving spouse.  If the Participant has no surviving spouse, the duly appointed and currently acting personal

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representative of the Participant’s estate (which shall include either the Participant’s probate estate or living trust) shall be deemed to be the Participant’s Beneficiary.  If a Participant dies and his or her benefits become payable to the Participant’s Beneficiary, but the Beneficiary’s death occurs before such payment can actually be made, payment shall be made to the Beneficiary’s surviving spouse.  If there is no surviving spouse to receive any benefits payable in accordance with the preceding sentence, the duly appointed and currently acting personal representative of the Beneficiary’s estate (which shall include either the Beneficiary’s probate estate or living trust) shall be the Beneficiary.

10.5Doubt as to Beneficiary.  If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its reasonable discretion, to cause the Participant’s Employer to withhold such payments until this matter is resolved to the Committee’s reasonable satisfaction.

10.6Discharge of Obligations.  The payment of benefits under this Plan to a Beneficiary shall fully and completely discharge all Employers and the Committee from all further obligations under this Plan with respect to the Participant and that Participant’s Plan Agreement.

ARTICLE XI

LEAVE OF ABSENCE

11.1Paid Leave of Absence.  If a Participant is authorized by the Participant’s Employer to take a paid leave of absence and such leave of absence does not constitute a Separation from Service, (i) the Participant shall continue to be considered eligible for the benefits provided in Articles 4, 5, 6, 7, 8, or 9 in accordance with the provisions of those Articles, and (ii) the Annual Deferral Amount shall continue to be withheld during such paid leave of absence in accordance with Section 3.3.

11.2Unpaid Leave of Absence.  If a Participant is authorized by the Participant’s Employer to take an unpaid leave of absence from the employment of the Employer for any reason, and such leave of absence does not constitute a Separation from Service, then such Participant will continue to be eligible for the benefits provided in Articles 4, 5, 6, 7, 8, or 9 in accordance with the provision of those Articles.  During the unpaid leave of absence, the Participant shall not be allowed to make any additional deferral elections.  However, if the Participant returns to employment, any deferral election that the Participant had previously made that would apply to compensation earned by the Participant upon the Participant’s return from leave shall continue to apply.  Additionally, the Participant may elect to defer an Annual Deferral Amount for the Plan Year following his or her return to employment and for every Plan Year thereafter while a Participant in the Plan, provided such deferral elections are otherwise allowed and an Election Form is delivered to and accepted by the Committee for each such election in accordance with Section 3.3 above.

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ARTICLE XII

TERMINATION OF THE PLAN, AMENDMENT OR MODIFICATION

12.1Termination of this Plan.  Although each Employer anticipates that it will continue this Plan for an indefinite period of time, there is no guarantee that any Employer will continue this Plan or will not terminate this Plan at any time in the future.  Accordingly, each Employer reserves the right to discontinue its sponsorship of this Plan and/or to terminate this Plan at any time with respect to all of its participating Employees and Directors, by action of its board of directors.  In the event of a Plan termination no new deferral elections shall be permitted for the affected Participants and such Participants shall no longer be eligible to receive new company contributions.  However, after the Plan termination the Account Balances of such Participants shall continue to be credited with Annual Deferral Amounts attributable to a deferral election that was in effect prior to the Plan termination to the extent deemed necessary to comply with Code Section 409A and related Treasury Regulations, and additional amounts shall continue to be credited or debited to such Participants’ Account Balances pursuant to Section 3.8.  The Measurement Funds available to Participants following the termination of the Plan shall be comparable in number and type to those Measurement Funds available to Participants in the Plan Year preceding the Plan Year in which the Plan termination is effective.  In addition, following a Plan termination, Participant Account Balances shall remain in the Plan and shall not be distributed until such amounts become eligible for distribution in accordance with the other applicable provisions of the Plan.  Notwithstanding the preceding sentence, to the extent permitted by Treas. Reg. §1.409A-3(j)(4)(ix), the Employer may provide that upon termination of the Plan, all Account Balances of the Participants shall be distributed, subject to and in accordance with any rules established by such Employer deemed necessary to comply with the applicable requirements and limitations of Treas. Reg. §1.409A-3(j)(4)(ix).

12.2Amendment.  Any Employer may, at any time, amend or modify this Plan in whole or in part with respect to that Employer by the action of its board of directors (or its designate); provided, however, that:  (i) no amendment or modification shall be effective to decrease the value of a Participant’s vested Account Balance in existence at the time the amendment or modification is made, calculated as if the Participant had experienced a Separation from Service as of the effective date of the amendment or modification or, if the amendment or modification occurs after the date upon which the Participant was eligible to Retire, the Participant had Retired as of the effective date of the amendment or modification, nor shall any amendment or modification materially and adversely affect the Participant’s rights to be credited with additional amounts on such vested Account Balance pursuant to Section 3.8 or otherwise materially and adversely affect the Participant’s rights with respect to such vested Account Balance, and (ii) no amendment or modification of this Section 12.1 shall be effective.  The amendment or modification of this Plan shall not affect any Participant or Beneficiary who has become entitled to the payment of benefits under this Plan as of the date of the amendment or modification.  A change in the Measurement Funds offered under this Plan shall not constitute an amendment or modification that is materially adverse to the Participant’s rights with respect to the Participant’s Account Balance for purposes of the first sentence of this Section 12.2; provided that such a change is consistent with the provisions of Section 3.8(a) applicable upon and following a Change in Control.

12.3Plan Agreement.  Despite the provisions of Sections 12.1 and 12.2, if a Participant’s Plan Agreement contains benefits or limitations that are not in this Plan document, the Employer may only amend or terminate such provisions with the written consent of the Participant.

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12.4Effect of Payment.  The full payment of a Participant’s vested Account Balance under Article 4, 5, 6, 7, 8, or 9, whichever is applicable, of this Plan shall completely discharge all obligations to the Participant and his or her designated Beneficiaries under this Plan and with respect to the Participant’s Plan Agreement.

ARTICLE XIII

ADMINISTRATION

13.1Committee Duties.  This Plan shall be administered by a Committee, which shall consist of the Board, or such committee as the Board shall appoint.  Members of the Committee may be Participants in this Plan.  The Committee shall act at meetings by affirmative vote of a majority of the members of the Committee.  Any action permitted to be taken at a meeting may be taken without a meeting if, prior to such action, a unanimous written consent to the action is signed by all members of the Committee and such written consent is filed with the minutes of the proceedings of the Committee.  The Chairman or any other member or members of the Committee designated by the Chairman may execute any certificate or other written direction on behalf of the Committee.  When making a determination or calculation, the Committee shall be entitled to rely on information furnished by a Participant or the Company.  Any individual serving on the Committee who is a Participant shall not vote or act on any matter relating solely to himself or herself.

13.2Committee Authority.  The Committee shall enforce this Plan in accordance with its terms, shall be charged with the general administration of this Plan, and shall have all powers necessary to accomplish its purposes, including, but not by way of limitation, the following:

·To select the Measurement Funds available from time to time;

·To construe and interpret the terms and provisions of this Plan;

·To compute and certify to the amount and kind of benefits payable to Participants and their Beneficiaries, to determine the time and manner in which such benefits are paid, and to determine the amount of any withholding taxes to be deducted pursuant to Section 3.9;

·To maintain all records that may be necessary for the administration of this Plan;

·To provide for the disclosure of all information and the filing or provision of all reports and statements to Participants, Beneficiaries or governmental agencies as shall be required by law;

·To make and publish such rules for the regulation of this Plan and procedures for the administration of this Plan as are not inconsistent with the terms hereof;

·To administer this Plan’s claims procedures;

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·To approve election forms and procedures for use under this Plan; and

·To appoint a plan recordkeeper or any other agent, and to delegate to them such powers and duties in connection with the administration of this Plan as the Committee may from time to time prescribe.

13.3Agents.  In the administration of this Plan, the Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit (including acting through a duly appointed representative) and may from time to time consult with counsel who may be counsel to any Employer.

13.4Binding Effect of Decisions.  Except as expressly provided in Section 15.6 with respect to an arbitrator’s de novo review of determinations related to claims arising upon or following the occurrence of a Change in Control, the decision or action of the Committee with respect to any question arising out of or in connection with the administration, interpretation and application of this Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this Plan.

13.5Indemnity of Committee.  The members of the Committee shall serve without compensation for their services hereunder.  The Committee is authorized at the expense of the Company to employ such legal counsel and/or Plan recordkeeper as it may deem advisable to assist in the performance of its duties hereunder.  Expenses and fees in connection with the administration of this Plan shall be paid by the Company.  All Employers shall, to the fullest extent permitted by law, indemnify and hold harmless the members of the Committee and any Employee to whom the duties of the Committee may be delegated against any and all claims, losses, damages, expenses or liabilities arising from any action or failure to act with respect to this Plan, except in the case of willful misconduct by the Committee, any of its members, or any such Employee.

13.6Employer Information.  To enable the Committee to perform its functions, the Company and each Employer shall supply full and timely information to the Committee on all matters relating to the compensation of its Participants, the date and circumstances of the Retirement, Disability, death, Change in Control Termination or Separation from Service of its Participants, and such other pertinent information as the Committee may reasonably require.

13.7Statements.  Under procedures established by the Committee, a Participant shall be provided a statement on no less than an annual basis with respect to such Participant’s Account as of the last day of the preceding calendar year.

ARTICLE XIV

OTHER BENEFITS AND AGREEMENTS

14.1Coordination with Other Benefits.  The benefits provided for a Participant and Participant’s Beneficiary under this Plan are in addition to any other benefits available to such Participant under any other plan or program for employees of the Participant’s

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Employer.  This Plan shall supplement and shall not supersede, modify or amend any other such plan or program except as may otherwise be expressly provided.

ARTICLE XV

CLAIMS PROCEDURES

15.1Presentation of Claim.  Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee a written claim for a determination with respect to the benefits payable to such Claimant pursuant to this Plan.  If such a claim relates to the contents of a notice received by the Claimant, the claim must be made within sixty (60) days after such notice was received by the Claimant.  All other claims must be made within one hundred eighty (180) days of the date on which the event that caused the claim to arise occurred.  The claim must state with particularity the determination desired by the Claimant.

15.2Notification of Decision.

(a)With respect to claims other than a claim for a Disability Benefit, the Committee shall consider a Claimant’s claim within a reasonable time, but no later than ninety (90) days after receiving the claim.  If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial ninety (90) day period.  In no event shall such extension exceed a period of ninety (90) days from the end of the initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination.  The Committee shall notify the Claimant in writing:

(i)that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or

(ii)that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:

(1)the specific reason(s) for the denial of the claim, or any part of it;

(2)specific reference(s) to pertinent provisions of this Plan upon which such denial was based;

(3)a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary;

(4)an explanation of the claim review procedure set forth in Section 15.3; and

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(5)a statement of the Claimant’s right to bring an arbitration pursuant to Section 15.6 or, to the extent required by law, a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

(b)With respect to a claim for a Disability Benefit, the Committee shall consider a Claimant’s claim within a reasonable time, but no later than 45 days after receipt of a claim for a Disability Benefit.  If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to termination of the initial 45-day period.  In no event may the extension period exceed 30 days from the end of the initial 45-day period.  The notice shall describe the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination.  If, prior to the end of the first 30-day extension period, the Committee determines that, due to circumstances beyond the Plan’s control, a decision cannot be rendered within that extension period, the period for making the determination may be extended for an additional 30 days, so long as the Committee notifies the Claimant prior to the expiration of the first 30-day extension period of the circumstances requiring the extension and the date as of which the Committee expects to render a decision. This notice of extension shall specifically describe the standards on which entitlement to a Disability Benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues, and that the Claimant has at least 45 days within which to provide the specified information.  The Committee shall notify the Claimant in writing

(i)that the Claimant’s requested determination has been made, and that the claim has been allowed in full; or

(ii)that the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:

(1)the specific reason(s) for the denial of the claim, or any part of it;

(2)specific reference(s) to pertinent provisions of this Plan upon which such denial was based;

(3)a description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary;

(4)an explanation of the claim review procedure set forth in Section 15.3;

(5)if an internal rule, guideline, protocol or similar criteria (“internal standard”) was relied upon in making the determination, a copy of the internal standard or a statement that the internal standard was relied upon and that a copy of the internal standard shall be provided to the Claimant free of charge upon request; and

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(6)a statement of the Claimant’s right to bring an arbitration pursuant to Section 15.6 or, to the extent required by law, a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

15.3Review of a Denied Claim.  On or before sixty (60) days (180 days for a claim for a Disability Benefit) after receiving a notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Committee a written request for a review of the denial of the claim.  The Claimant (or the Claimant’s duly authorized representative):

(i)may, upon request and free of charge, have reasonable access to, and copies of, all documents, records and other information relevant to the claim for benefits;

(ii)may submit written comments or other documents; and/or

(iii)may request a hearing, which the Committee, in its sole discretion, may grant.

15.4Decision on Review.

(a)With respect to a claim other than for a Disability Benefit, the Committee shall render its decision on review promptly, and no later than sixty (60) days after the Committee receives the Claimant’s written request for a review of the denial of the claim.  If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial sixty (60) day period.  In no event shall such extension exceed a period of sixty (60) days from the end of the initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination.  In rendering its decision, the Committee shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

(i)specific reasons for the decision;

(ii)specific reference(s) to the pertinent Plan provisions upon which the decision was based;

(iii)a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and

(iv)a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).

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(b)With respect to a claim for a Disability Benefit, the Committee shall render its decision or review promptly, and no later than 45 days after the Committee receives the Claimant’s written request for a review of the denial of the claim.  If the Committee determines that special circumstances require an extension of time for processing the claim, written notice of the extension shall be furnished to the Claimant prior to the termination of the initial 45-day period.  In no event shall such extension exceed a period of 45 days from the end of the initial period.  The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Committee expects to render the benefit determination.  In rendering its decision, the Committee shall take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.  The decision must be written in a manner calculated to be understood by the Claimant, and it must contain:

(i)specific reasons for the decision;

(ii)specific reference(s) to the pertinent Plan provisions upon which the decision was based;

(iii)a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Claimant’s claim for benefits;

(iv)a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a); and

(v)if an internal standard was relied upon in making the determination, a copy of the internal standard or a statement that the internal standard shall be provided to the Claimant free of charge upon request.

15.5Pre and Post-Change in Control Procedures.  With respect to claims made prior to the occurrence of a Change in Control, a Claimant’s compliance with the foregoing provisions of this Article 15 is a mandatory prerequisite to a Claimant’s right to commence arbitration pursuant to Section 15.6 with respect to any claim for benefits under this Plan.  With respect to claims made upon and after the occurrence of a Change in Control, the Claimant may proceed directly to arbitration in accordance with Section 15.6 and need not first satisfy the foregoing provisions of this Article 15.

15.6Arbitration of Claims.  All claims or controversies arising out of or in connection with this Plan, that the Company or any Employer may have against any Claimant, or that any Claimant may have against the Company or any Employer or against any of their respective officers, directors, employees or agents acting in their capacity as such, shall, subject to the initial review provided for in the foregoing provisions of this Article 15 that are effective with respect to claims brought prior to the occurrence of a Change in Control, be resolved through arbitration as provided in this Section 15.6.  The decision of an arbitrator on any issue, dispute, claim or controversy submitted for arbitration, shall be final and binding upon the

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Company, each Employer and the Claimant and that judgment may be entered on the award of the arbitrator in any court having proper jurisdiction.  With respect to claims arising upon or following the occurrence of a Change in Control (but not with respect to any determination made by the Committee prior to the Change in Control), the arbitrator shall review de novo any claim previously considered by the Committee pursuant to this Article 15.

Except as otherwise provided in this procedure or by mutual agreement of the parties, any arbitration shall be administered:  (1) in accordance with the then-current Model Employment Arbitration Procedures of the American Arbitration Association (“AAA”) before an arbitrator who is licensed to practice law in the state in which the arbitration is convened; or (2) if locally available, the Judicial Arbitration & Mediation Services, Inc. (“JAMS”), in accordance with the JAMS procedures then in effect.  The party who did not initiate the claim can designate between JAMS or AAA (the “Tribunal”).  The arbitration shall be held in the city in which the Claimant is or was last employed by the Company in the nearest Tribunal office or at a mutually agreeable location.  Pre-hearing and post-hearing procedures may be held by telephone or in person as the arbitrator deems necessary.

The arbitrator shall be selected as follows: if the parties cannot agree on an arbitrator, the Tribunal (JAMS or AAA) shall then provide the names of nine (9) available arbitrators experienced in business employment matters along with their resumes and fee schedules.  Each party may strike all names on the list it deems unacceptable.  If more than one common name remains on the list of all parties, the parties shall strike names alternately until only one remains.  The party who did not initiate the claim shall strike first.  If no common name remains on the lists of the parties, the Tribunal shall furnish an additional list or lists until an arbitrator is selected.

The arbitrator shall interpret this Plan, any applicable Company policy or rules and regulations, any applicable substantive law (and the law of remedies, if applicable) of the state in which the claim arose or applicable federal law (any such law to be applicable only to the extent consistent with Section 17.9).  In reaching his or her decision, the arbitrator shall have no authority to change or modify any lawful Company policy, rule or regulation, or this Plan.  The arbitrator, and not any federal, state or local court or agency, shall have exclusive and broad authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Plan, including but not limited to, any claim that all or any part of this Plan is voidable.

The arbitrator shall have authority to entertain a motion to dismiss and/or motion for summary judgment by any party and shall apply the standards governing such motions under the Federal Rules of Civil Procedure.

Each party shall have the right to subpoena witnesses and documents for the arbitration hearing by requesting a subpoena from the arbitrator.  Any such request shall be served on all other parties, who shall advise the arbitrator in writing of any objections that the party may have to issuance of the subpoena within ten (10) calendar days of receipt of the request.

At least thirty (30) calendar days before the arbitration, the parties must exchange lists of witnesses, including any expert(s), and copies of all exhibits intended to be used at the

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arbitration.

All expenses of such arbitration, including the fees and expenses of the counsel for the Claimant, shall be borne by the Company unless it is finally determined that the Claimant did not commence the arbitration in good faith and had no reasonable basis therefore.  Any reimbursement for such expenses by the Company shall be paid by the end of the taxable year following the taxable year in which the Claimant incurred the expense.

Notwithstanding the foregoing, if the claim is for a Disability Benefit, the following rules apply:  (1) the Employer will not assert that a Claimant has failed to exhaust administrative remedies if the Claimant does not submit to arbitration; (2) any applicable statute of limitations or other similar defense is tolled during the time the arbitration is pending, and (3) the Claimant may only submit to arbitration after exhausting the claims procedure described above.

ARTICLE XVI

THE TRUST

16.1Establishment of the Trust.  In order to provide assets from which to fulfill the obligations of the Participants and their beneficiaries under this Plan, the Company may establish a trust by a trust agreement with a third party, the trustee, to which each Employer may, in its discretion, contribute cash or other property, including securities issued by the Company, to provide for the benefit payments under this Plan, (the “Trust”).

16.2Interrelationship of this Plan and the Trust.  The provisions of this Plan and the applicable Plan Agreement shall govern the rights of a Participant to receive distributions pursuant to this Plan.  The provisions of the Trust shall govern the rights of the Employers, Participants and the creditors of the Employers to the assets transferred to the Trust.  Each Employer shall at all times remain liable to carry out its obligations under this Plan.

16.3Distributions From the Trust.  Each Employer’s obligations under this Plan may be satisfied with Trust assets distributed pursuant to the terms of the Trust, and any such distribution shall reduce the Employer’s obligations under this Plan.

ARTICLE XVII

MISCELLANEOUS

17.1Status of Plan.  This Plan is intended to be a plan that is not qualified within the meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1).  This Plan shall be administered and interpreted (a) to the extent possible in a manner consistent with the intent described in the preceding sentence, and (b) in accordance with Code Section 409A and related Treasury guidance and Regulations to avoid the imputation of any tax, penalty or interest under Code Section 409A.

17.2Unsecured General Creditor.  Each Employer’s obligation under this Plan shall be merely that of an unfunded and unsecured promise of the Employer to pay money in the future, and the rights of the Participants and Beneficiaries shall be no greater than those of

29

unsecured general creditors.  Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, claims, or interest in any specific property or assets of the Company or any Employer.  No assets of the Company or any other Employer shall be held under any trust (except as provided in Article 16), or held in any way as collateral security for the fulfilling of the obligations of the Company or other Employer under this Plan.  Any and all of each Employer’s assets shall be, and remain, the general unpledged, unrestricted assets of the Employer.

17.3Employer’s Liability.  An Employer’s liability for the payment of benefits shall be defined only by this Plan and the Plan Agreement, as entered into between the Employer and a Participant.  An Employer shall have no obligation to a Participant under this Plan except as expressly provided in this Plan and his or her Plan Agreement.  Each Employer shall be liable for the payment of amounts deferred under this Plan (as adjusted pursuant to Section 3.8) with respect to a Participant to the extent that such amounts would have otherwise been payable to the Participant by that Employer.

17.4Nonassignability.  Neither a Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are expressly declared to be, unassignable and non-transferable.  No part of the amounts payable shall, prior to actual payment, be subject to seizure, attachment, garnishment (except to the extent the Participant’s Employer may be required to garnish amounts from payments due under this Plan pursuant to applicable law) or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.  If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the amount, if any, payable hereunder, or any part thereof, the Committee, in its sole discretion, may cancel such distribution or payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Committee shall direct.

17.5Not a Contract of Employment.  The terms and conditions of this Plan shall not be deemed to constitute a contract of employment between any Employer and the Participant.  Such employment is hereby acknowledged to be an “at will” employment relationship that can be terminated at any time for any reason, or no reason, with or without cause, and with or without notice, unless expressly provided in a written employment agreement.  Nothing in this Plan or in any Plan Agreement or other document related to this Plan shall constitute such an employment agreement or shall otherwise be deemed to give a Participant the right to be retained in the service of any Employer, either as an Employee or a Director, or to interfere with the right of any Employer to discipline or discharge the Participant at any time.

17.6Furnishing Information.  A Participant or his or her Beneficiary will cooperate with the Committee by furnishing any and all information requested by the Committee and take such other actions as may be requested in order to facilitate the administration of this

30

Plan and the payments of benefits hereunder, including but not limited to taking such physical examinations as the Committee may deem necessary to obtain or maintain any insurance on the life of the Participant as contemplated by Section 17.17.

17.7Terms.  Whenever any words are used herein in the masculine, they shall be construed as though they were in the feminine in all cases where they would so apply; and whenever any words are used herein in the singular or in the plural, they shall be construed as though they were used in the plural or the singular, as the case may be, in all cases where they would so apply.

17.8Captions.  The captions of the articles, sections and paragraphs of this Plan are for convenience only and shall not control or affect the meaning or construction of any of its provisions.

17.9Governing Law.  Subject to ERISA, the provisions of this Plan shall be construed and interpreted according to the internal laws of the State of California without regard to its conflicts of laws principles.

17.10Notice.  Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified U.S. mail, postage prepaid, to the address below:

International Rectifier Corporation

Attn: Director, Global Compensation

101 N. Sepulveda Avenue

El Segundo, CA 90245

(310) 726-8000

Any notice or filing required or permitted to be given to a Participant under this Plan shall be sufficient if in writing and hand-delivered, or sent by registered or certified U.S. mail, postage prepaid, to the last address of the Participant reflected on the payroll records (or, in the case of a Director, Board records) of the Company.

Any such notice shall be deemed given as of the date of delivery or, if delivery is made by registered or certified U.S. mail, as of the date shown on the postmark on the receipt for registration or certification.  The Company or a Participant may change its address pursuant to the foregoing by furnishing a written notice pursuant to the foregoing to the other, which notice shall include the person’s new address and make specific reference to the importance of the notice.

17.11Successors.  The provisions of this Plan shall bind and inure to the benefit of the Participant’s Employer and its successors and assigns and the Participant and the Participant’s Beneficiaries.

17.12Spouse’s Interest.  The interest in the benefits hereunder of a spouse of a Participant who has predeceased the Participant shall automatically pass to the Participant and shall not be transferable by such spouse in any manner, including but not limited to such spouse’s will, nor shall such interest pass under the laws of intestate succession.

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17.13Validity.  In case any provision of this Plan shall be illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal or invalid provision had never been inserted herein.

17.14Incompetent.  If the Committee determines in its reasonable discretion that a benefit under this Plan is to be paid to a minor, a person declared incompetent or to a person incapable of handling the disposition of that person’s property, the Committee may direct payment of such benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or incapable person.  The Committee may require proof of minority, incompetence, incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit.  Any payment of a benefit shall be a payment for the account of the Participant and the Participant’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under this Plan for such payment amount.

17.15Court Order.  The Committee is authorized to comply with any court order in any action in which this Plan or the Committee has been named as a party, including any action involving a determination of the rights or interests in a Participant’s benefits under this Plan.  Notwithstanding the foregoing, the Committee shall interpret this provision in a manner that is consistent with applicable tax law, including but not limited to guidance issued after the effective date of this Plan.

17.16Insurance.  The Employers, on their own behalf or on behalf of the trustee of the Trust, and, in their sole discretion, may apply for and procure insurance on the life of the Participant, in such amounts and in such forms as the Trust may choose.  The Employers or the trustee of the Trust, as the case may be, shall be the sole owner and beneficiary of any such insurance.  The Participant shall have no interest whatsoever in any such policy or policies, and at the request of the Employers shall submit to medical examinations and supply such information and execute such documents as may be required by the insurance company or companies to whom the Employers have applied for insurance.

17.17Additional Special Rules Regarding Deferred Payment.  If any portion of a Participant’s Account Balance under this Plan is required to be included in income by the Participant prior to receipt due to a failure of this Plan to comply with the requirements of Code Section 409A and related Treasury Regulations, the Committee may determine that such Participant shall receive a distribution from the Plan in an amount equal to the lesser of (i) the portion of his or her Account Balance required to be included in income as a result of the failure of the Plan to comply with the requirements of Code Section 409A and related Treasury Regulations, or (ii) the unpaid vested Account Balance.

17.18Construction Consistent With Applicable Tax Rules.  The Committee shall, to the maximum extent reasonably possible, interpret all provisions of this Plan in a manner that is consistent with all applicable laws, rules and regulations and the intended tax consequences of this Plan (including, without limitation, guidance that may be issued after the effective date of this Plan).

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17.19Domestic Relations Orders.  If necessary to comply with a domestic relations order, as defined in Code Section 414(p)(1)(B), pursuant to which a court has determined that a spouse or former spouse of a Participant has an interest in the Participant’s benefits under this Plan, the Committee shall have the right to immediately distribute the spouse’s or former spouse’s interest in the Participant’s benefits under this Plan to such spouse or former spouse.

17.20Small Benefit Exception.  Notwithstanding the foregoing, the Committee may, in its sole discretion and as determined by it in writing, pay the benefits in a single lump sum if the sum of all benefits payable to the Participant under this Plan and all Similar Plans is less than or equal to the applicable dollar amount under Section 402(g)(1)(B) of the Code.

17.21Conflict of Interest Exception, Etc.  Notwithstanding the foregoing, the Committee may, in its sole discretion, pay benefits in a single lump sum if permitted under Treas. Reg. §1.409A-3(j)(4)(iii).  In addition, the Committee may, in its sole discretion, accelerate the payment of benefits if and to the extent permitted under any of the other exceptions specified in Treas. Reg. §1.409A-3(j)(4) to the general rule in Section 409A of the Code prohibiting accelerated payments, provided that the terms of Section 17.20 of the Plan shall govern whether benefits will be paid in a single lump sum pursuant to the small benefit exception contained in Treas. Reg. §1.409A-3(j)(4)(v).

IN WITNESS WHEREOF, the Company has caused the undersigned, its duly authorized officer, to execute this Plan document as of this 31st day of December, 2008.

“Company”
International Rectifier Corporation,
a Delaware corporation
By:
Print Name:		Lawrence A. Michlovich
Title:	Assistant Secretary

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EX-10.11

Exhibit 10.11

AMENDMENT NO.  2 TO CONSULTING AGREEMENT

This Amendment No. 2 to Consulting Agreement is entered into as of April 21, 2009 by and between International Rectifier Corporation (“Company”), having a principal place of business at 233 Kansas Street, El Segundo, California 90245, and Pahl Consulting, Inc., with a place of business at 703 Pier Avenue, Suite B712, Hermosa Beach, California 90254 (“Consultant”).

R E C I T A L S

WHEREAS, Company and Consultant have previously entered into a certain Consulting Agreement effective as of April 16, 2008 (“Consulting Agreement”), pursuant to which the Company retained Consultant as an independent contractor consultant, and Consultant acted in such capacity, to provide the Company certain consulting services, all on the terms and conditions set forth therein;

WHEREAS, Company and Consultant have previously entered into a certain Amendment No. 1 to Consulting Agreement entered into as of October 16, 2008, pursuant to which the Company and Consultant extended the term of the Consulting  Agreement;

WHEREAS, Company and Consultant wish to further amend the term of the Consulting Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

The first sentence of Section 4 is hereby amended in its entirety to read as follows:  “The term of this Agreement shall commence on the Effective Date and terminate on December 31, 2009 (“Term”).”

Except as expressly set forth herein, the Consulting agreement remains unmodified and in full force and effect.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above.

International Rectifier Corporation		Pahl Consulting, Inc.
By:		By:
Name:	Ilan Daskal		Linda J. Pahl
Title:	Chief Financial Officer

EX-10.12

Exhibit 10.12

Project Work Agreement

May 6, 2009

Mr. Lawrence A. Michlovich

Vice President and Assistant General Counsel

International Rectifier Corporation

101 N. Sepulveda Blvd.

El Segundo, CA 90245

Dear Mr. Michlovich:

Tatum, LLC (“Tatum,” “we,” or “us”) is pleased that International Rectifier Corporation (the “Company,” “you” or “your”) has selected us to perform certain consulting services on behalf of the Company (the “Services”).  This letter along with the terms and conditions attached as Exhibit A and any other schedules or exhibits attached hereto which are incorporated herein by reference (collectively, the “Agreement”) confirms our mutual understanding of the terms and conditions upon which the Services will be provided.

As previously discussed, we will provide general consultation and advisory services, as requested by the Company from time to time.

Any additional Services requested by you from time to time are subject to Tatum’s consent.  You acknowledge that Tatum’s success in performing the Services depends on the participation, cooperation, and support of your management.  Accordingly, you will designate a management-level individual to be responsible for overseeing the Services.  You acknowledge that the Services are limited to those which the Company’s management has determined will meet its objectives.  Throughout the course of providing the Services, we will meet with your representative to discuss the findings and recommendations resulting from the Services.

The Services will be performed under the lead and direction of Peter Knepper and will be performed by employees, members and/or subcontractors of Tatum (collectively, the “Tatum Resources”); provided that the Company’s consent shall be obtained prior to use of any resource other than Mr. Knepper.

We will provide the Services to you beginning on May 6, 2009, and unless terminated in accordance with Exhibit A, through December 31, 2009.

In consideration for the Services provided, you will pay us either an hourly fee equal to $500 or a daily fee equal to $4,000 for Mr. Knepper’s services, at the sole discretion of the Company.

In addition to our standard professional service fees, we will charge an administrative fee equal to 5% of our professional service fees, which covers ancillary administrative costs such as technology, communication, and supplies.  In addition, you will reimburse Tatum directly for all reasonable travel and out-of-pocket expenses incurred by Tatum or the Tatum Resources in performing the Services.

Notwithstanding anything from the contrary contained herein, in no event shall the total fees payable under this Agreement exceed $120,000 nor shall you be required to provide Services in excess of that amount.

Prior to providing any Services, the parties and any individual providing Services hereunder shall enter into a separate confidentiality agreement protecting the confidential information of the Company, as mutually agreed between the parties.

We appreciate the opportunity to serve you and believe this Agreement accurately reflects our mutual understanding of the terms upon which the Services will be provided.  We would be pleased to discuss

this Agreement with you at your convenience.  If the foregoing is in accordance with your understanding, please sign a copy of this Agreement and return it to my attention.

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Sincerely,

Tatum, LLC

James L. Buxbaum — Managing Partner, Los Angeles

Accepted and agreed:

International Rectifier Corporation

By:
Name:	Lawrence Michlovich
Title:	Assistant Secretary
Date:	May 6, 2009

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Exhibit A

Terms and Conditions

1.            Relationship of the Parties.  The parties agree that Tatum and the Tatum Resources will be serving the Company as independent contractors for all purposes and not as employees, agents, or partners of or joint venturers with the Company.  Tatum and the Tatum Resources will have control over the order and sequence of the Services and the specific hours worked and will not be subject to Company withholding of income or employment taxes.  The Tatum Resources will not be or serve as an employee, manager, officer, or director of the Company, nor will the Tatum Resources have any authority or control over the employees of the Company or the authority to sign any documents on behalf of the Company, including, without limitation, checks and other means of payment, federal or state securities filings, tax filings, or representations and warranties.  Accordingly, the Company will not (i) give or require the Tatum Resources to use the titles “Chief Financial Officer,” “Chief Information Officer,” “Chief Operating Officer,” or any other title that suggests such individual is an employee, manager, officer, or director of the Company, (ii) represent or require the Tatum Resources to represent to any third party that the Tatum Resources are anything other than consultants to the Company, or (iii) require or request that the Tatum Resources supervise or control the employees of the Company or sign any documents on behalf of the Company.

2.            Payment Terms.  Payments to Tatum should be made within 30 days of receipt of invoice by electronic transfer in accordance with the instructions set forth below or such alternative instructions as provided by Tatum from time to time.  Any amounts not paid when due may be subject to a periodic service charge equal to the lesser of 1.5% per month and the maximum amount allowed under applicable law, until such amounts are paid in full, including assessed service charges.  In lieu of terminating this Agreement, Tatum may suspend the provision of Services if amounts owed are not paid in accordance with the terms of this Agreement.

Bank Name:  Wells Fargo, N.A.

Branch:  San Francisco

Account Name:  Tatum, LLC

Account Number:  4121546642

Routing Number for ACH Payments:  121000248

Swift Code:  WFBIUS6S

Please reference Company name in the body of the payment.

3.            Effective Date and Termination.

(a)           This Agreement will be effective as of the earlier of (i) the date Tatum begins providing Services to the Company, and (ii) the date of the last signature to this Agreement as indicated on the signature page.

(b)           After the expiration of any minimum term, if any, either party may terminate this Agreement by providing the other party a minimum of 30 days’ advance written notice and such termination will be effective as of the date specified in such notice, provided that such date is no earlier than 30 days after the date of delivery of the notice; provided however, the Company may terminate any particular requested Services on written notice.  Tatum will continue to provide, and the Company will continue to pay for, any Services not terminated until the termination effective date.

(c)           Tatum may terminate this Agreement immediately upon written notice to the Company if: (i) the Company is engaged in or asks Tatum to engage in or ignore any illegal or unethical activity; (ii) the Tatum Resource ceases to be a member, employee or subcontractor of Tatum for any reason; (iii) the Tatum Resource becomes disabled; or (iv) the Company fails to pay any amounts due to Tatum when due.  For purposes of this Agreement, disability will be defined by the applicable policy of disability insurance or, in the absence of such insurance, by Tatum’s management acting in good faith.  Notwithstanding the foregoing, in lieu of terminating this Agreement under (ii) and (iii) above, upon the mutual agreement of the parties, the Tatum Resource may be replaced by another Tatum member, employee or subcontractor.

(d)           In the event that a party commits a breach of this Agreement, other than for the reasons described in the above Section, and fails to cure the same within 10 days following delivery by the non-breaching party of written notice specifying the nature of the breach, the non-breaching party may terminate this Agreement effective upon written notice of such termination.

(e)           The expiration or termination of this Agreement will not destroy or diminish the binding force and effect of any of the provisions of this Agreement that expressly, or by reasonable implication, come into or continue

4

in effect on or after such expiration or termination, including, without limitation, provisions relating to payment of fees and expenses (including witness fees and expenses), hiring the Tatum Resources, governing law, arbitration, and limitation of liability.

4.            Hiring Tatum Resource Outside of a Tatum Agreement.  The parties recognize and agree that Tatum is responsible for introducing the Tatum Resources to the Company. Therefore, if, at any time during the term of this Agreement and for the 12-month period following the termination or expiration of this Agreement other than in connection with this Agreement or another Tatum agreement, the Company or any of its subsidiaries or affiliates employs any Tatum Resource, or engages any Tatum Resource as an independent contractor, the Company will pay Tatum a placement fee in an amount equal to 45% of Tatum’s Annualized Fees (as defined below).  The amount will be due and payable to Tatum upon written demand to the Company.  “Annualized Fees” means the equivalent of what Tatum would receive under this Agreement for the Tatum Resource on a full-time annual basis plus the maximum amount of any bonus for which Tatum was eligible with respect to the then-current bonus year for the Tatum Resource.

5.            Warranties and Disclaimers.  Except as otherwise expressly set forth herein, it is understood that Tatum does not have a contractual obligation to the Company other than to provide the Services using commercially reasonably efforts in accordance with industry standards.  The Company acknowledges that any information, including any resources delivered through Tatum’s proprietary information and technology system, will be provided by Tatum as a tool to be used in the discretion of the Company.  Tatum will not be responsible for any action taken by the Company in following or declining to follow any of Tatum’s or the Tatum Resources’ advice or recommendations.Tatum disclaims all other warranties, whether express, implied or statutory.Without limiting the foregoing, Tatum makes no representation or warranty as to the accuracy or reliability of reports, projections, certifications, opinions, representations, or any other information prepared or made by Tatum or the Tatum Resources (collectively, the “Information”) even if derived from Tatum’s intellectual capital, and Tatum will not be liable for any claims of reliance on the Information or that the Information does not comply with federal, state or local laws or regulations.  The Services are for the sole benefit of the Company and not any unnamed third parties.  The Services will not constitute an audit, review, or compilation, or any other type of financial statement reporting or attestation engagement that is subject to the rules of the AICPA or other similar state or national professional bodies and will not result in an opinion or any form of assurance on internal controls.

6.            Limitation of Liability.  The liability of Tatum in any and all categories and for any and all causes arising out of this Agreement, whether based in contract, tort, negligence, strict liability or otherwise will, in the aggregate, not exceed the actual fees paid by the Company to Tatum over the previous two months’ of the Agreement.  In no event will Tatum be liable for incidental, consequential, punitive, indirect or special damages, including, without limitation, any interruption or loss of business, profit or goodwill.  As a condition for recovery of any liability, the Company must assert any claim against Tatum within three months after discovery or 60 days after the termination or expiration of this Agreement, whichever is earlier.

7.            Governing Law, Arbitration, and Witness Fees.

(a)           This Agreement will be governed by and construed in accordance with the laws of the State of California, without regard to conflicts of laws provisions.

(b)           If the parties are unable to resolve any dispute arising out of or in connection with this Agreement, the parties agree and stipulate that any such disputes will be settled by binding arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (“AAA”).  The arbitration will be conducted in the Los Angeles, California office of the AAA by a single arbitrator selected by the parties according to the rules of the AAA, and the decision of the arbitrator will be final and binding on both parties.  In the event that the parties fail to agree on the selection of the arbitrator within 30 days after either party’s request for arbitration under this Section, the arbitrator will be chosen by the AAA.  The arbitrator may in his or her discretion order documentary discovery but will not allow depositions without a showing of compelling need.  The arbitrator will render his or her decision within 90 days after the call for arbitration.  Judgment on the award of the arbitrator may be entered in and enforced by any court of competent jurisdiction.  The arbitrator will have no authority to award damages in excess or in contravention of this Agreement and may not amend or disregard any provision of this Agreement, including this Section.  Notwithstanding the foregoing, either party may seek appropriate injunctive relief from any court of competent jurisdiction, and Tatum may pursue payment of undisputed amounts through any court of competent jurisdiction.

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(c)           Except to the extent arising from Mr. Knepper’s service as an employee of the Company, in the event any member or employee of Tatum (including, without limitation, any Tatum Resource) is requested or authorized by the Company or is required by government regulation, subpoena, or other legal process to produce documents or appear as witnesses in connection with any action, suit or other proceeding initiated by a third party against the Company or by the Company against a third party, the Company will, so long as Tatum is not a party to the proceeding in which the information is sought, reimburse Tatum for its member’s or employee’s professional time (based on customary rates) and expenses, as well as the reasonable fees and expenses of its counsel (including the allocable cost of in-house counsel), incurred in responding to such requests.

8.            Miscellaneous.

(a)           This Agreement constitutes the entire agreement between the parties with regard to the subject matter hereof and supersede any and all agreements, whether oral or written, between the parties with respect to its subject matter.  No amendment or modification to this Agreement will be valid unless in writing and signed by both parties.

(b)           If any portion of this Agreement is found to be invalid or unenforceable, such provision will be deemed severable from the remainder of this Agreement and will not cause the invalidity or unenforceability of the remainder of this Agreement, except to the extent that the severed provision deprives either party of a substantial portion of its bargain.

(c)           Neither party will be deemed to have waived any rights or remedies accruing under this Agreement unless such waiver is in writing and signed by the party electing to waive the right or remedy.  The waiver by any party of a breach or violation of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach of such provision or any other provision of this Agreement.

(d)           Neither party will be liable for any delay or failure to perform under this Agreement (other than with respect to payment obligations) to the extent such delay or failure is a result of an act of God, war, earthquake, civil disobedience, court order, labor dispute, or other cause beyond such party’s reasonable control.

(e)           The Company may not assign its rights or obligations under this Agreement without the express written consent of Tatum.  Nothing in this Agreement will confer any rights upon any person or entity other than the parties hereto and their respective successors and permitted assigns and the Tatum Resources.

(f)            The Company agrees to reimburse Tatum for all reasonable costs and expenses incurred by Tatum in enforcing collection of any monies due under this Agreement, including, without limitation, reasonable attorneys’ fees.

(g)           Subject to the Company’s prior written consent, the Company agrees to allow Tatum to use the Company’s logo and name on Tatum’s website and other marketing materials for the sole purpose of identifying the Company as a client of Tatum.  Tatum will not use the Company’s logo or name in any press release or general circulation advertisement without the Company’s prior written consent.

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EX-31.1

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EXHIBIT 31.1

CERTIFICATION

I, Oleg Khaykin, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of International Rectifier Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 8, 2009

/s/ OLEG KHAYKIN
Oleg Khaykin
Chief Executive Officer
(Principal Executive Officer)

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EXHIBIT 31.1

EX-31.2

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EXHIBIT 31.2

CERTIFICATION

I, Ilan Daskal, certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of International Rectifier Corporation;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 8, 2009

/s/ ILAN DASKAL
Ilan Daskal
Chief Financial Officer
(Principal Financial and Accounting Officer)

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EXHIBIT 31.2

EX-32.1

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EXHIBIT 32.1

CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350

        The undersigned, Oleg Khaykin, the Chief Executive Officer of International Rectifier Corporation (the "Company"), pursuant to 18 U.S.C. §1350, hereby certifies that:

(i)

the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 29, 2009 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(ii)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Report.

Date: May 8, 2009

/s/ OLEG KHAYKIN
Oleg Khaykin
Chief Executive Officer
(Principal Executive Officer)

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EXHIBIT 32.1

EX-32.2

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EXHIBIT 32.2

CERTIFICATION
PURSUANT TO
18 U.S.C. SECTION 1350

        The undersigned, Ilan Daskal, the Chief Financial Officer of International Rectifier Corporation (the "Company"), pursuant to 18 U.S.C. §1350, hereby certifies that:

(i)

the Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended March 29, 2009 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(ii)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Report.

Date: May 8, 2009

/s/ ILAN DASKAL
Ilan Daskal
Chief Financial Officer
(Principal Financial and Accounting Officer)

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EXHIBIT 32.2