EL SEGUNDO, CA. - July 26, 2001 -- International Rectifier Corporation (IRF/NYSE) today reported results for its fourth fiscal quarter and year ended June 2001. Before a restructuring charge, the company reported fourth-quarter income of $15.1 million (or $0.23 per share) on revenues of $185.1 million, compared to net income of $33.9 million (or $0.52 per share) on revenues of $232.0 million in the prior-year quarter. Including a pre-tax restructuring charge of $86.4 million, IR reported a net loss of $48.8 million (or $0.78 per share).

For the year ended June 2001, excluding the fourth-quarter restructuring charge, the company reported income of $151.6 million (or $2.34 per share) on record revenues of $978.6 million, compared to net income of $68.3 million (or $1.19 per share) on revenues of $753.3 million in the prior year. Including the charge, IR reported record net income of $87.6 million (or $1.35 per share) for the year.

Fourth-quarter results reflected a sharp downturn in key market segments. Shipments into the information technology segment, which accounted for 51 percent of IR's business in the fiscal year, declined in the fourth quarter by 64 percent sequentially. Late in the quarter, weakness in demand also spread to the industrial market segment. Pricing for multi-market products declined sequentially by nearly 8 percentage points, about a point more than the company expected.

In the face of widespread concerns about semiconductor industry conditions through the balance of the calendar year, the company now expects September-quarter revenues to be approximately 5 to 10 percent below the June level and to represent the trough of the current business cycle. Gross margins are expected to bottom-out this quarter at 37 percent, plus or minus a point or so. Fiscal 2002 revenues are now expected to be flat-to-down 10 percent from the prior year.

In light of depressed business conditions, IR is taking steps to align its cost structure with its revised outlook and financial targets. The company recorded an $86.4 million restructuring charge for obsolete inventory ($38.4 million), asset impairment ($45.2 million), and severance ($2.8 million). During the quarter, the company implemented the first phase of a planned 10 percent reduction in worldwide workforce. These measures are expected to reduce costs by approximately $35 million by the end of calendar 2002.

As expected, June-quarter gross margin before the restructuring charge was 38.8 percent, compared to a record 41.6 percent in the March quarter and 38.5 percent in the year-ago quarter. Strength in higher-margin proprietary products helped to counter the decline in component pricing. Including the charge, IR recorded a June-quarter gross margin of 18.1 percent. For the year ended June, gross margin before the fourth-quarter restructuring charge was 40.3 percent versus 35.6 percent in the prior year. Including the charge, fiscal 2001 gross margin was 36.4 percent.

Royalties contributed $13.5 million in the quarter, compared to $13.6 million in the preceding quarter and $11.1 million in the year-ago quarter. For the year ended June 2001, royalties contributed $51.1 million, compared to $36.4 million in the prior year.

Despite what is widely seen as the worst industry downturn in semiconductor history, June-quarter shipments of IR's proprietary products (analog ICs, advanced-circuit devices, and power systems) grew by 25 percent year-to-year. These products now comprise 43 percent of total revenues.

IR continued to penetrate target applications with value-added technology. The company won sole-source positions for its power systems on an undersea fiber-optic cable installation and on two integrated starter-alternator programs for U.S. and European vehicles. Design wins for our analog ICs included the next generation of product from the industry leader in graphics cards and processor power management for latest-generation Pentium®4 motherboards, as well as sole-source designs on high-end Class D audio amplifiers and plasma displays. IR's advanced-circuit devices were designed into motor controls for new energy-efficient appliances and into leading notebook computers built on Pentium®3 SpeedstepTM and AMD AthlonTM platforms. The company also secured sole-source positions for proprietary products designed into six new satellite programs for industry leaders such as Boeing, Lockheed Martin, and Honeywell. Chief Executive Officer Alex Lidow noted, "With every new product cycle, market-leading customers rely more heavily on proprietary power management technology from IR for current- and next-generation products. Our design wins are capturing more silicon content in target applications, which should provide real momentum when industry conditions turn up. Meanwhile, we believe that IR's business model has significantly raised the floor on gross margins compared to previous down-cycles. We are in the strongest financial position in the company's history, and with $850 million in cash, we will continue to invest strategically to lengthen our competitive lead and enhance our profit potential."

Unaudited Consolidated Statement of Income
Consolidated Balance Sheet

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.

The foregoing material includes some forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We caution that such statements are subject to a number of uncertainties, and actual results may differ materially. Factors that could affect the company's actual results include the failure of market demand to materialize as anticipated; greater-than-expected weakness or program or order postponements in the information technology segments of our business; the effectiveness of cost controls and cost reductions; litigation and other unexpected costs associated with cost-reduction efforts, including reductions in force and the transfer and consolidation of product lines; the effectiveness of integration of acquisitions into our operations and the transfer and consolidation of product lines; the ability or the timing of the company to achieve strategic acquisitions and the effect of associated costs; the accuracy of customers' forecasts; push-out of delivery dates; product returns; market and sector conditions that affect our customers, licensees, and suppliers; introduction, acceptance, availability, and continued demand and growth of new and high- performance products; delays in transferring and ramping production lines or completing customer qualifications; company and market impact due to the cancellation of customer and/or industry programs; the company's mix of product shipments; availability of adequate capacity and unanticipated costs of refurbishment or replacement of equipment; pricing pressures; failure of suppliers and subcontractors to meet their delivery commitments; unfavorable changes in industry and competitive conditions; impact of any disruption in, or increased cost of, electricity and/or other critical supplies; economic conditions in the company's markets around the world and the timing of changes in market conditions; changes in interest and investment rates; impacts on our business or financial condition due to changes in currency valuation or to the euro conversion; impact of changes in accounting methods; the impact of changes in laws and regulations, including tax, trade, and export regulations and policies; the actual results of any outstanding litigation; and other uncertainties disclosed in the company's S-3 filing with the Securities and Exchange Commission ("SEC") on October 16, 2000, and the company's reports filed with the SEC, including its most recent reports on forms 10-K and 10-Q.

NOTE: A conference call will begin today at 5:15pm Eastern daylight time (2:15 pm Pacific daylight time). Participants can join the call by dialing 212.896.6061 or by logging onto the Internet Click Here at least 15 minutes ahead of the start time. A replay of the call will be available through 4:15 pm Pacific standard time (7:15 PM Eastern standard time) on Tuesday, July 31. To hear the replay, phone 800.633.8284 (for international callers 858.587.5842) and use reservation # 1915-2778 or Click Here to listen online.
Company contact: Steve Harrison, 310.252.7731