<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1994
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________________ TO _____________________
COMMISSION FILE NO. 1-7935
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INTERNATIONAL RECTIFIER CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-1528961
- - - ----------------------------------- -----------------------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) NUMBER)
233 KANSAS STREET
EL SEGUNDO, CALIFORNIA 90245
- - - ------------------------------------------ ----------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 322-3331
NO CHANGE
- - - --------------------------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT
WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO
----- ------
THERE WERE 20,395,823 SHARES OF $1 PAR VALUE COMMON STOCK OUTSTANDING AT
NOVEMBER 14, 1994.
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
PAGE
REFERENCE
---------
ITEM 1. FINANCIAL STATEMENTS
Unaudited Consolidated Statement of
Operations for the Three Month Periods
Ended September 30, 1994 and 1993 2
Consolidated Balance Sheet as of
September 30, 1994 (unaudited) and
June 30, 1994 3
Unaudited Consolidated Statement of
Cash Flows for the Three Month
Periods Ended September 30, 1994
and 1993 4
Notes to Unaudited Consolidated
Financial Statements 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
ITEM 6. Exhibits and Reports on Form 8-K 9
PART II. OTHER INFORMATION
NONE
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1994 1993
------------ ----------
<S> <C> <C>
Revenues $92,253 $73,094
Cost of sales 60,739 49,674
-------- ---------
Gross profit 31,514 23,420
Selling and administrative expense 18,486 16,350
Research and development expense 4,111 3,810
-------- ---------
Operating profit 8,917 3,260
Other income (expense):
Interest, net (912) (760)
Other, net (179) (194)
-------- ---------
Income before income taxes 7,826 2,306
Provision for income taxes 1,328 330
-------- ---------
Net income $ 6,498 $ 1,976
-------- ---------
-------- ---------
Net income per share $ 0.32 $ 0.10
-------- ---------
-------- ---------
Average common and common equivalent shares
outstanding 20,596 20,360
-------- ---------
-------- ---------
</TABLE>
The accompanying notes are an integral part of this statement.
2
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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994 JUNE 30,
(UNAUDITED) 1994
-------------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,610 $ 13,051
Trade accounts receivable, net 76,071 67,595
Inventories 75,288 73,429
Prepaid expenses 2,542 2,779
----------- -----------
Total current assets 165,511 156,854
Property, plant and equipment, net 167,542 158,567
Investments and long-term notes receivable 2,236 2,248
Other assets 13,200 12,905
----------- -----------
Total assets $348,489 $330,574
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank loans $ 34,853 $ 27,205
Long-term debt, due within one year 6,614 6,105
Accounts payable 38,549 36,965
Accrued salaries, wages and commissions 8,959 10,264
Other accrued expenses 9,648 9,150
----------- -----------
Total current liabilities 98,623 89,689
Long-term debt, less current maturities 28,605 26,817
Deferred income 1,103 1,199
Other long-term liabilities 9,238 9,320
Deferred income taxes 617 606
Stockholders equity:
Common stock 20,392 20,352
Capital contributed in excess of par value 168,508 168,078
Retained earnings 25,998 19,500
Cumulative translation adjustments (4,595) (4,987)
----------- -----------
Total stockholders' equity 210,303 202,943
----------- -----------
Total liabilities and stockholders' equity $348,489 $330,574
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1994 1993
---------- ----------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 6,498 $ 1,976
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 5,365 4,214
Deferred income (95) (126)
Deferred income taxes - (78)
Deferred compensation 165 470
------------ ------------
Cash flow from operating activities prior to
working capital requirements 11,933 6,456
Change in working capital (8,749) (3,591)
------------ ------------
Net cash provided by operating activities 3,184 2,865
------------ ------------
Cash flow from investing activities:
Additions to property, plant and equipment (13,267) (5,825)
Investment in other noncurrent assets (709) (256)
------------ ------------
Net cash used in investing activities (13,976) (6,081)
------------ ------------
Cash flow from financing activities:
Proceeds from issuance of short-term bank
debt, net 7,403 3,007
Proceeds from issuance of long-term debt 3,098 3,038
Payments on long-term debt and obligations
under capital leases (1,208) (992)
Net proceeds from issuance of common stock 470 509
Other (459) (150)
------------ ------------
Net cash provided by financing activities 9,304 5,412
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents 47 39
------------ -------------
Net increase (decrease) in cash and
cash equivalents (1,441) 2,235
Cash and cash equivalents beginning of year 13,051 8,545
------------ ------------
Cash and cash equivalents end of year $ 11,610 $ 10,780
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
1. BASIS OF PRESENTATION
The consolidated financial statements included herein are unaudited,
however, they contain all normal recurring accruals which, in the opinion
of management, are necessary to present fairly the consolidated financial
position of the Company at September 30, 1994 and the consolidated results
of operations and cash flows for the three month periods ended September
30, 1994 and 1993. It should be understood that accounting measurements at
interim dates inherently involve greater reliance on estimates than at year
end. The results of operations for the three month period ended September
30, 1994 are not necessarily indicative of the results to be expected for
the full year.
The accompanying consolidated financial statements do not include footnotes
and certain financial presentations normally required under generally
accepted accounting principles and, therefore, should be read in
conjunction with the Annual Report on Form 10-K for the year ended June 30,
1994.
2. EARNINGS PER SHARE
Earnings per share is computed by dividing earnings by the weighted average
number of common and common stock equivalents outstanding. Stock options
outstanding under stock option plans are considered common stock
equivalents. Common stock equivalents for stock options of 212,200 and
84,000 were utilized in the computation of earnings per share for the three
month periods ended September 30, 1994 and 1993, respectively.
3. INVENTORIES
Inventories are stated at the lower of cost (principally first-in, first-
out) or market. Inventories at September 30, 1994 (unaudited) and June 30,
1994 were comprised of the following (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, 1994 JUNE 30, 1994
------------------ --------------
<S> <C> <C>
Raw materials $15,579 $15,118
Work-in-process 29,734 26,965
Finished goods 29,975 31,346
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$75,288 $73,429
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------- -------
</TABLE>
5
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4. LONG-TERM DEBT AND OTHER LOANS
A summary of the Company's long-term debt and other loans at September 30,
1994 is as follows (in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30,
1994
-------------
<S> <C>
Capitalized lease obligations payable in varying monthly
installments primarily at rates from 6.9% to 16.6% $ 15,625
10.55% property mortgage due in equal monthly installments
to 2011 4,275
Domestic bank loans collateralized by equipment, payable
in varying monthly installments at rates from
7.1% to 9.0%, due in 1995 through 1999 6,105
Foreign bank loans collateralized by property and/or
equipment, payable in varying monthly installments at
rates from 6.5% to 10.8%, due in 1997 through 2000 4,724
Foreign unsecured bank loans payable in varying monthly
installments at rates from 4.0% to 11.9%, due in 1998
through 2006 4,490
---------
35,219
Less current portion of long-term debt (6,614)
---------
$28,605
---------
---------
</TABLE>
5. ENVIRONMENTAL MATTERS
On July 18, 1994, the Company received a letter from the State of
Washington Department of Ecology (the "Department") notifying the Company
of a proposed finding that the Company is a potentially liable person
("PLP") for alleged PCE contamination (also known as perchloroethylene,
tetrachloroethylene, and other names) ("PCE") of real property and
groundwater in Yakima County, Washington. The letter alleges that the
Company arranged for disposal or treatment of the PCE or arranged with a
transporter for the disposal or treatment of the PCE in Yakima County. The
Company replied on August 11, 1994 to this letter and stated that it has
not contributed to PCE or other solvent contamination at the Yakima County
site and that it should not be designated a PLP. On October 11, 1994 the
Company received a letter from the Department notifying the Company of its
finding that the Company is a PLP in the above matter.
6
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6. INTELLECTUAL PROPERTY
Certain of the Company's fundamental power MOSFET patents have been
subjected, and continue to be subjected, to reexamination in the United
States Patent and Trademark Office ("PTO"). In September 1994 the PTO
undertook the reexamination of U.S. patent 5,008,725, one of the Company's
principal power MOS transistor patents. This patent has previously been
confirmed on reexamination.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1994 COMPARED
WITH THE THREE MONTHS ENDED SEPTEMBER 30, 1993
The following table sets forth certain items as a percentage of revenues.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
(UNAUDITED)
1994 1993
---- ----
<S> <C> <C>
Revenues 100.0% 100.0%
Cost of sales 65.8 68.0
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Gross profit 34.2 32.0
Selling and administrative expense 20.1 22.3
Research and development expense 4.5 5.2
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Operating profit 9.6 4.5
Interest expense, net (1.0) (1.0)
Other expense, net (0.2) (0.3)
------ ------
Income before income taxes 8.4 3.2
Provision for income taxes 1.4 0.5
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Net income 7.0% 2.7%
------ ------
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</TABLE>
Revenues for the three months ended September 30, 1994 increased 26.2% to $92.3
million from $73.1 million in the prior year period. The Company's revenue
increase reflected rising demand for the Company's power MOSFETs and related
devices, which resulted in a 29% increase in revenues from these products.
Revenues from the thyristor and rectifier product lines increased 20% which
reflected unseasonally strong demand in Europe. Changes in foreign exchange
rates positively impacted revenues by approximately $1.0 million. Revenues in
the current quarter included $2.2 million of net patent royalties compared to
$2.4 million in the prior year period.
7
<PAGE>
Gross profit for the three months ended September 30, 1994 was 34.2% of revenues
($31.5 million) versus 32.0% of revenues ($23.4 million) in the prior year
period. The increased margin reflected greater manufacturing volume and
efficiencies in both the Company's growth and mature products.
In the three months ended September 30, 1994, selling and administrative expense
was 20.1% of revenues ($18.5 million) versus 22.3% of revenues ($16.4 million)
in the prior year period. The decreased percentage reflects the Company's
continued commitment to reducing operating expenses as a percentage of revenues.
In the three months ended September 30, 1994, the Company's research and
development expenditures increased $0.3 million to $4.1 million (4.5% of
revenues) from $3.8 million (5.2% of revenues) in the prior year period. The
Company's research and development program was, and continues to be, focused on
the advancement and diversification of the HEXFET product line, the expansion of
the related IGBT products and the development of Control ICs and power products
that work in combination with HEXFETs and IGBTs to improve system performance.
SEASONALITY
The Company has experienced moderate seasonality in its business in recent
years. On average over the past three years, the Company has reported
approximately 47% of annual revenues in the first half and 53% in the second
half of its fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1994, the Company had established $79.0 million in domestic and
foreign revolving credit facilities, of which $34.9 million had been borrowed by
the Company. Based upon covenant and collateral limitations under the revolving
credit facilities, the Company had $23.9 million available for borrowing at
September 30, 1994. In addition, at September 30, 1994 the Company had
available $16.6 million of unused lines of credit for capital equipment, $11.6
million of cash and cash equivalents and had made purchase commitments of
approximately $9.2 million for capital equipment.
The Company intends to spend approximately $75.0 million (of which $4.9
million has been spent through September 30, 1994) to expand wafer
fabrication capacity at its HEXFET America facility, most of which is expected
to be expended in fiscal 1995. In addition, the Company intends to spend
approximately $35.0 million (of which $10.2 million had been spent in the
three months ended September 30, 1994) to expand and maintain assembly
capacity, to enhance its Management Information Systems
infrastructure and to maintain its existing facilities. The Company intends
to fund these capital expenditures and meet its short-term liquidity
requirements through cash and cash equivalents on hand, anticipated cash flows
from operations, funds available from existing credit facilities and from funds
received from any Offerings. In particular, the Company has filed a registration
statement on Form S-3 dated October 28, 1994, for the public sale of 5,175,000
shares of its common stock, the proceeds of which will be used to expand the
Company's wafer fabrication capacity at its HEXFET America facility, provide
funds for capital expenditures,
8
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repay debt and for general corporate purposes including working capital.
The Company is also negotiating with the Industrial Development Authority of the
County of Riverside, California for an issuance of $25.0 million of taxable
industrial development bonds which will be indirectly backed by the U.S.
Department of Housing and Urban Development. The proceeds will be loaned to IR
for the expansion at HEXFET America and will be collateralized by the real
property at HEXFET America. However, there can be no assurance that any
financing will be available under cost-effective terms.
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter ended
September 30, 1994 and no events have occurred which would
require one to be filed.
9
<PAGE>
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
November 14, 1994 /S/ MICHAEL P. MCGEE
----------------------------------------
Michael P. McGee
Vice President,
Chief Financial Officer and
Principal Accounting Officer
10
<PAGE> PART II. OTHER INFORMATION
NONE
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> SEP-30-1994
<EXCHANGE-RATE> 1
<CASH> 11,610
<SECURITIES> 0
<RECEIVABLES> 76,780
<ALLOWANCES> 709
<INVENTORY> 75,288
<CURRENT-ASSETS> 165,511
<PP&E> 167,542
<DEPRECIATION> 114,884
<TOTAL-ASSETS> 348,489
<CURRENT-LIABILITIES> 98,623
<BONDS> 0
<COMMON> 20,392
0
0
<OTHER-SE> 189,911
<TOTAL-LIABILITY-AND-EQUITY> 348,489
<SALES> 92,263
<TOTAL-REVENUES> 92,263
<CGS> 60,739
<TOTAL-COSTS> 60,739
<OTHER-EXPENSES> 22,597
<LOSS-PROVISION> 83
<INTEREST-EXPENSE> 912
<INCOME-PRETAX> 7,826
<INCOME-TAX> 1,328
<INCOME-CONTINUING> 6,498
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,498
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
