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