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International Rectifier Increases Expected Cost Savings from Restructuring Initiatives to $80-85 Million
EL SEGUNDO, Calif.--Dec. 23, 2002--International Rectifier
Corporation (NYSE:IRF) today announced that it expects greater cost
savings than the preliminary targets previously announced for its
restructuring initiatives. Under the initiatives, the company plans to
step up its transition to high-value-added proprietary products, and
expects to save approximately $80-85 million annually. IR had
preliminarily targeted savings of $55-65 million annually.
IR's anticipated savings of approximately $80-85 million annually
upon completion of the restructuring is expected to provide annualized
savings of $30-35 million exiting fiscal 2003 in June, and $70-75
million in annualized savings exiting fiscal 2004. Approximately 80-85
percent of the savings will be reflected in the company's cost of
goods sold.
IR plans to accelerate the transition to its proprietary products
- analog ICs, advanced circuits, and power systems - that have
increased to 54 percent of revenues from 30 percent two years ago.
During this time period, IR's proprietary product revenues grew 52
percent, while revenues from its lower-margin components business
declined 45 percent. In the most recently reported quarter, IR's
proprietary products revenue grew 42 percent year-over-year, nearly
triple the rate of its components business.
IR anticipates taking special charges related to the restructuring
of approximately $180-210 million. The charges consist of
approximately $20-25 million for severances and about $160-185 million
for asset impairment and costs associated with closing or
consolidating older facilities, including less than $5 million of raw
material and work-in-process inventory from these facilities. The
previously announced range for severance charges was $15-20 million.
Of the $180-210 million in special charges, cash charges are
expected to be less than $40 million. The company had $671 million in
cash and cash investments at the end of the most recently reported
quarter, and expects to be cash flow positive for the fiscal year.
For the December quarter, IR expects revenue to be within its
guidance range of flat sequentially, plus or minus 3 percentage
points, and within the year-over-year range of 19-29 percent growth.
IR expects its gross margin for the quarter to be within its
guidance range of 32-34 percent, excluding a one-time inventory charge
of less than $5 million for raw material and work-in-process inventory
at facilities to be closed or consolidated under the restructuring.
CEO Alex Lidow said, "We have realized great success in our
transition to proprietary products over the last couple of years, and
because of this, IR has outperformed the semiconductor industry
through its longest and deepest downturn. While our component business
continues to face market weakness, we are streamlining the company's
manufacturing and operations to focus on our proprietary products."
The company plans to report its financial results and host a
conference call for the quarter ending December on Thursday, January
23, 2003. Additional information on the restructuring program will be
provided at that time.
International Rectifier is a world leader in power management
technology that improves functionality, speed, compactness, and
portability in information technology and other end products. IR's
analog ICs, advanced-circuit devices, power systems, and components
enable Internet hardware to gain speed and reliability, allow portable
electronics to run longer off a single charge, improve automotive fuel
efficiency, and cut energy consumption in home appliances and
industrial motors. The company is the pioneer and market leader in the
$4 billion power MOSFET industry, and over 20 companies are licensed
under its power MOSFET patents. IR serves market leaders around the
world, and more than half its revenue comes from outside the United
States.
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