IR Announces Second Fiscal Quarter Results; 18% Reduction In Worldwide Workforce
International Rectifier Corp. (IR) announced financial results for the fiscal second quarter 2009, ended December 31, 2008. Revenue for the fiscal second quarter 2009 was $189.7 million. Excluding Intellectual Property and Transition Services segment revenue, fiscal second quarter 2009 revenue from ongoing customer segments was $175.8 million, down 17% compared with $212.1 million in the prior quarter and down 26%, compared with $237.4 million reported in the fiscal second quarter 2008.
IR reported a fiscal second quarter 2009 net loss of $186.1 million, or $2.56 per share, compared with a net loss of $4.5 million or $0.06 per share in the prior quarter, and net income of $313 thousand or $0.00 per share in the fiscal second quarter of 2008.
The results for the fiscal second quarter 2009 include a $48.9 million asset impairment charge for the company’s Newport, Wales fabrication facility, a $10.3 million investment impairment charge primarily related to long-term investments to reflect the decline in fair market value of the company’s mortgage- and asset-backed securities, and a $102.5 million tax provision charge related to reserves that have been recorded against the company’s tax assets.
Gross margin, including Intellectual Property and Transition Services segments, was 33.9%. Excluding Intellectual Property and Transition Services segments, fiscal second quarter 2009 ongoing customer segments gross margin was 36.3%, flat compared with the prior quarter. The ongoing customer segments gross margin was up 170 basis points compared with ongoing customer segments gross margin of 34.6% in the second fiscal quarter 2008.
As of the second fiscal quarter 2009, in view of deteriorating market demand, the company initiated a cost reduction effort to reduce headcount. The company expects a total reduction of about 850 jobs, or approximately 18% of the worldwide workforce for the 2009 fiscal year compared to the fiscal year ended June 30, 2008.
The reductions in headcount are expected to save about $33 million on an annualized basis when completed at the end of the 2009 fiscal year. The company expects to incur severance related costs for the 2009 fiscal year of about $10 million associated with these reductions.
Also, the company is planning to close its El Segundo, California fabrication facility and consolidate its production capacity to the company’s Temecula, California fabrication facility. The company expects to complete this by the end of calendar 2010. The closure of this facility is expected to save approximately $12.7 million per year when completed.
The company expects to incur costs of about $20 million over the course of the consolidation and closure of both fabrication facilities.