International Rectifier to Close El Segundo PlantWednesday, August 22, 2012
El Segundo’s International Rectifier Corp. late Wednesday announced a fiscal fourth quarter loss and a restructuring that includes closing its semiconductor wafer fabrication facility in that city.
The maker of power management chips used in computers, consumer electronics and automobiles last reported employing 4,500 people worldwide, did not specify how many local employees would be affected by the restructuring, which it estimates will save about $10 million a year.
According to the city of El Segundo, International Rectifier employed 537 in the city last year, but it didn’t specify how many of them worked in the headquarters and at the plant.
Operations at the El Segundo plant are expected to wind down by March. A large manufacturing facility in Temecula in Riverside County will be its remaining manufacturing plant in Southern California. International Rectifier will continue to have its corporate headquarters in El Segundo and operate fabrication or assembly plants in San Jose in Northern California, the country of Mexico, and the states of Arizona, Minnesota and Massachusetts.
Executive Officer Oleg Khaykin said the company has had success with new product introductions, but needs to reduce its manufacturing footprint and lower operating expenses in order to return to profitability in a slower global economy. Cost-cutting is expected to save an additional $20 million in annual operating expenses.
The company had considered closing both El Segundo and Newport, Wales facilities in 2009, but put those plans on hold when product demand picked up significantly. The company said it will now downsize but not close the facility in Wales.
“Weak demand in our end markets significantly impacted our results over the 2012 fiscal year,” Khaykin said in a statement. “We continue to believe that our leadership positions in digital power management (and other segments) will enable future growth when demand recovers.”
The company reported a fourth-quarter net loss of $68.2 million (-99 cents a share) for the quarter ended June 24, compared with net income of $39.6 million (55 cents) in the same period a year earlier. Revenue fell 15 percent to less than $270 million.
The results included a $69.4 million goodwill impairment, $4.4 million in asset impairment charges and inventory write-offs related to closing the El Segundo facility, $1.7 million in amortization related to an acquisition, and $1.7 million in severance charges. These were offset slightly by a $21.2 million gross tax benefit.
Minus these one-time items, the net loss would have been 18 cents a share. Analysts surveyed by Thomson Reuters on average expected the company to report an adjusted loss of 15 cents a share on revenue of $261 million.
Shares earlier closed down 69 cents, or 2.6 percent, to $18.47 on the New York Stock Exchange, and were down 6 percent in after-market trading.