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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 29, 2009oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from            to

Commission file number 1-7935

International Rectifier Corporation(Exact Name of Registrant as Specified in Its Charter)

Delaware(State or Other Jurisdiction of
Incorporation or Organization)

95-1528961(I.R.S. Employer
Identification No.)233 Kansas Street
El Segundo, California(Address of Principal Executive Offices)

90245(Zip Code)


Registrant's
Telephone Number, Including Area Code:(310) 726-8000

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 ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). o Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý

Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No
ý

There were 71,767,792 shares of the registrant's common stock, par value $1.00 per share, outstanding on April 30, 2009.



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TABLE OF CONTENTS



PagePART I.

FINANCIAL INFORMATION

4Item 1.

FINANCIAL STATEMENTS

4UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MARCH 29, 2009
AND MARCH 30, 2008

4UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS FOR THE THREE AND NINE MONTHS ENDED MARCH 29,
2009 AND MARCH 30, 2008

5CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 29, 2009 (UNAUDITED) AND JUNE 29, 2008

6UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED MARCH 29, 2009 AND MARCH 30,
2008

7NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

47Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

64Item 4.

CONTROLS AND PROCEDURES

66PART II.

OTHER INFORMATION

70Item 1.

LEGAL PROCEEDINGS

70Item 1A.

RISK FACTORS

70Item 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

70Item 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

71Item 5.

OTHER INFORMATION

71Item 6.

EXHIBITS

71


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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This document contains "forward-looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements relate to expectations concerning matters that (a) are not historical facts, (b) predict or forecast future events or results, or (c) embody
assumptions that may prove to have been inaccurate. These forward-looking statements involve risks, uncertainties and assumptions. When we use words such as "believe," "expect," "anticipate," "will"
or similar expressions, we are making forward-looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give readers any
assurance that such expectations will prove correct. The actual results may differ materially from those anticipated in the forward-looking statements as a result of numerous factors, many of which
are beyond our control. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, the factors discussed in the sections entitled
"Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." All forward-looking statements attributable to us are expressly qualified in their entirety
by the factors that may cause actual results to differ materially from anticipated results. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect our
opinion only as of the date hereof. We undertake no duty or obligation to revise these forward-looking statements. Readers should carefully review the risk factors described in this document as well
as in other documents we file from time to time with the Securities and Exchange Commission ("SEC").

3

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PART I. FINANCIAL INFORMATION

ITEM 1.    Financial Statements



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS        (In thousands, except per share data)

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Revenues

$
146,642

$
252,224

$
580,862

$
781,153Cost of sales


115,706


185,694


389,191


525,186Gross profit


30,936


66,530


191,671


255,967Selling and administrative expense


51,854


76,060


178,722


212,645Research and development expense


22,379


25,957


71,992


81,258Impairment of goodwill


23,867





23,867


Amortization of acquisition-related intangible assets


1,096


1,054


3,296


3,164Asset impairment, restructuring and other charges


7,117


1,916


56,564


1,958Operating loss


(75,377
)

(38,457
)

(142,770
)

(43,058
)Other expense, net


11,599


3,846


36,807


11,279Interest income, net


(4,091
)

(6,841
)

(8,382
)

(22,562
)Loss before income taxes


(82,885
)

(35,462
)

(171,195
)

(31,775
)Provision for (benefit from) income taxes


(1,163
)

(13,895
)

101,044


(20,934
)Net loss

$
(81,722
)
$
(21,567
)
$
(272,239
)
$
(10,841
)Net loss per common sharebasic

$
(1.13
)
$
(0.30
)
$
(3.75
)
$
(0.15
)Net loss per common sharediluted

$
(1.13
)
$
(0.30
)
$
(3.75
)
$
(0.15
)Average common shares outstandingbasic


72,102


72,826


72,547


72,817Average common shares and potentially dilutive securities outstandingdiluted


72,102


72,826


72,547


72,817


The
accompanying notes are an integral part of these statements.

4

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS        (In thousands)

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Net loss

$
(81,722
)
$
(21,567
)
$
(272,239
)
$
(10,841
)Other comprehensive (loss) income:Foreign currency translation adjustments


2,144


3,624


(82,501
)

2,339Unrealized gains and losses on securities:Unrealized holding gains on available-for-sale securities, net of tax effect of $0, $0, $0 and $(179), respectively


10,857


(1,921
)

10,005


(20,858
)Unrealized holding losses on foreign currency forward contract, net of tax effect of $0 in all periods











(2,303
)Reclassification adjustments of net gains on foreign currency forward contract


(369
)




(452
)

(821
)Other comprehensive (loss) income


12,632


1,703


(72,948
)

(21,643
)Comprehensive loss

$
(69,090
)
$
(19,864
)
$
(345,187
)
$
(32,484
)


The
accompanying notes are an integral part of these statements.

5

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES        CONDENSED CONSOLIDATED BALANCE SHEETS        (In thousands)

March 29,
2009
(Unaudited)

June 29,
2008(1)AssetsCurrent assets:Cash and cash equivalents

$
373,495

$
320,464Restricted cash


2,925


4,341Short-term investments


127,760


101,739Trade accounts receivable, net


82,000


105,384Inventories


161,925


175,856Current deferred tax assets


43


13,072Prepaid expenses and other receivables


47,159


43,993Total current assets


795,307


764,849Restricted cash


15,084


15,012Long-term investments


138,139


303,680Property, plant and equipment, net


385,314


534,098Goodwill


74,955


98,822Acquisition-related intangible assets, net


12,929


16,225Long-term deferred tax assets


10,206


89,576Other assets


42,743


52,650Total assets

$
1,474,677

$
1,874,912Liabilities and Stockholders' EquityCurrent liabilities:Accounts payable

$
60,291

$
77,653Accrued salaries, wages and commissions


20,559


33,022Accrued income taxes


6,817


30,943Current deferred tax liabilities


2,266


2,266Other accrued expenses


82,205


103,355Total current liabilities


172,138


247,239Long-term deferred tax liabilities


3,497


4,828Deferred gain on divestiture


120,172


112,609Other long-term liabilities


80,508


59,285Total liabilities


376,315


423,961Commitments and contingenciesStockholders' equity:Common shares


73,096


72,826Capital contributed in excess of par value of shares


979,677


971,920Treasury stock, at cost


(15,429
)

Retained earnings


66,707


338,946Accumulated other comprehensive (loss) income


(5,689
)

67,259Total stockholders' equity


1,098,362


1,450,951Total liabilities and stockholders' equity

$
1,474,677

$
1,874,912


---

The
accompanying notes are an integral part of these statements.

6

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES        UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS        (In thousands)

Nine Months EndedMarch 29,
2009

March 30,
2008Cash flow from operating activities:Net loss

$
(272,239
)
$
(10,841
)Adjustments to reconcile net loss to net cash (used in) provided by operating activities:Depreciation and amortization


47,088


59,633Amortization of acquisition-related intangible assets


3,296


3,164Stock compensation expense


5,006


7,425Provision for bad debt


262


1,253Provision for inventory write-downs


10,910


24,416Debt retirement charge





5,659Deferred revenue


(1,149
)

(14,064
)Deferred income taxes


78,565


1,195Tax benefit from options exercised


568


118Excess tax benefit from options exercised


(3
)

(81
)Write-down of investments


37,258


4,675Impairment of goodwill


23,867


Impairment of fixed assets


50,853


Loss on sale of investments


4,632


Changes in operating assets and liabilities, net


(28,437
)

(73,640
)Net cash (used in) provided by operating activities


(39,523
)

8,912Cash flow from investing activities:Additions to property, plant and equipment


(12,929
)

(33,922
)Proceeds from sale of property, plant and equipment


576


1,446Additions to restricted cash


(72
)

(375
)Sale or maturities of investments


353,046


279,032Purchase of investments


(239,510
)

(262,920
)Other, net





1,702Net cash provided by (used in) investing activities


101,111


(15,037
)Cash flow from financing activities:Repayments of short-term debt





(550,000
)Repayments of obligations under capital lease





(417
)Proceeds from exercise of stock options


2,964


174Excess tax benefit from options exercised


3


81Reductions (additions) to restricted cash


1,416


(4,341
)Purchase of treasury stock


(15,429
)

Net settlement of restricted stock units


(500
)

Other, net





(6,975
)Net cash used in financing activities


(11,546
)

(561,478
)Effect of exchange rate changes on cash and cash equivalents


2,989


2,270Net increase (decrease) in cash and cash equivalents


53,031


(565,333
)Cash and cash equivalents, beginning of period


320,464


853,040Cash and cash equivalents, end of period

$
373,495

$
287,707


The
accompanying notes are an integral part of these statements.

7

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES        NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Business, Basis of Presentation and Summary of Significant Accounting Policies

Business

International Rectifier Corporation ("IR" or the "Company") designs, manufactures and markets power management semiconductors. Power
management semiconductors address the core challenges of power management, power performance and power conservation, by increasing system efficiency, allowing more compact end-products,
improving features on electronic devices and prolonging battery life.

The
Company pioneered the fundamental technology for power metal oxide semiconductor field effect transistors ("MOSFETs") in the 1970s, and estimates that the majority of the world's
planar power MOSFETs use its technology. Power MOSFETs are instrumental in improving the ability to manage
power efficiently. The Company's products include power MOSFETs, high voltage analog and mixed signal integrated circuits ("HVICs"), low voltage analog and mixed signal integrated circuits ("LVICs"),
digital integrated circuits ("ICs"), radiation-resistant ("RAD-Hard") power MOSFETs, insulated gate bipolar transistors ("IGBTs"), high reliability DC-DC
converters, PowerStage ("PS") modules, and DC-DC converter type applications.

Basis of Presentation

At the beginning of the first quarter of fiscal year 2009, the Company's Chief Executive Officer ("CEO"), who is the Chief Operating
Decision Maker, refined the definition of the Company's business segments by renaming its Aerospace and Defense ("A&D") segment its HiRel ("HR") segment, combining its previously identified PS segment
with its Enterprise Power ("EP") segment and creating a new Automotive Products ("AP") segment which was previously reported within the Energy-Saving Products ("ESP") and Power Management Devices
("PMD") segments. Furthermore, some products that were previously reported under the EP segment moved to PMD. Consequently, the Company now reports in seven segments: EP, PMD, ESP, HR, AP,
Intellectual Property ("IP") and Transition Services ("TS"), as described more fully in Note 13, "Segment Information." Prior year segment presentation has been recast to conform to current
year presentation.

The
condensed consolidated financial statements have been prepared in accordance with the instructions for preparation of a Quarterly Report on Form 10-Q pursuant to
the rules and regulations of the Securities and Exchange Commission ("SEC") and therefore do not include all information and notes normally provided in audited financial statements prepared in
accordance with U.S. generally accepted accounting principles ("GAAP"). The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, which are located in
North America, Europe and Asia. Intercompany balances and transactions have been eliminated in consolidation.

In
the opinion of management, all adjustments (consisting of normal recurring accruals and other adjustments) considered necessary for a fair presentation of the Company's results of
operations, financial position and cash flows have been included. The results of operations for any interim period are not necessarily indicative, nor comparable to the results of operations for any
other interim period or for a full fiscal year. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the Company's annual audited
consolidated financial statements and the notes thereto for the year ended June 29, 2008 included in the Company's Annual Report on

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (Continued)

Form 10-K
for the fiscal year ended June 29, 2008 filed with the SEC on September 15, 2008 (the "2008 Annual Report").

In
the fourth quarter of fiscal year 2008, the Company changed the classification of amortization expense related to certain acquired technology licenses from research and development
expense to amortization of acquisition-related intangible assets expense to conform to industry practice. A reclassification has been made to the prior period consolidated condensed financial
statements to conform to the current year presentation. As a result, the Company's statement of operations reflects a $0.7 million and $2.0 million reclassification of research and
development expense to amortization of acquisition-related intangible asset expense for the three and nine months ended March 29, 2009, respectively, and the statement of cash flows for the
nine months ended March 29, 2009 reflects a reclassification of $2.0 million from changes in operating assets and liabilities, net to amortization of acquisition-related intangible
assets. The statements of operations and cash flows were the only financial statements impacted by this reclassification.

Fiscal year and Quarter

The Company operates on a 52-53 week fiscal year with the fiscal year ending on the Sunday closest to
June 30. The three months ended March 2009 and 2008 consisted of 13 weeks ending on March 29, 2009 and March 30, 2008, respectively.

Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Out-of-Period Adjustments

Included in the results for the three and nine months ended March 29, 2009, are a number of corrections of prior period errors,
some of which increased and some of which decreased net loss. Based on the Company's current financial condition and results of operations, management has determined that these corrections are
immaterial to the financial statements in each applicable prior period and the current periods to date, both individually and in the aggregate.

Adoption of New Accounting Standards

In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS")
No. 157, "Fair Value Measurements" ("SFAS 157"), which established a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required
disclosures about fair value measurement. In February 2008, the FASB issued FASB Staff Position Financial Accounting Standard 157-2, "Partial Deferral of the Effective Date of Statement
157" ("FSP 157-2"), which delayed the effective date of SFAS 157 for all nonrecurring fair value measurements of nonfinancial assets and nonfinancial liabilities until fiscal
years beginning after November 15, 2008. FSP 157-2 is effective upon initial adoption of SFAS 157. The Company adopted

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (Continued)

SFAS 157
at the beginning of the first quarter of fiscal year 2009. The adoption of this statement did not have a material effect on the Company's consolidated financial statements.

In
October 2008, the FASB issued FASB Staff Position Financial Accounting Standard 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset is
Not Active" ("FSP 157-3"). FSP 157-3 clarifies the application of SFAS 157 in cases where a market is not active. The Company has considered the guidance
provided by FSP 157-3 in its determination of estimated fair values, and the impact was not material.

In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 permits the Company to
choose to measure certain financial instruments and certain other items at fair value. This statement requires that unrealized gains and losses on items for which the fair value option has been
chosen, be reported in earnings. The Company adopted SFAS 159 at the beginning of the first quarter of fiscal year 2009, and the adoption had no material effect on the Company's consolidated
financial statements as the Company elected not to measure certain financial instruments and certain other items within the scope of SFAS 159 at fair value.

In
May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS 162"). SFAS 162 is intended to improve financial
reporting by identifying a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with GAAP for
nongovernmental entities. SFAS 162 became effective 60 days following the SEC's approval of the Public Company Accounting Oversight Board amendments to remove the GAAP hierarchy from the
auditing standards, which was November 15, 2008. SFAS 162 did not have a material impact on the Company's consolidated financial statements.

In
December 2008, the FASB issued FASB Staff Position FAS 140-4 and FIN 46(R)-8, "Disclosures by Public Entities (Enterprises) about Transfers of
Financial Assets and Interests in Variable Interest Entities." ("FSP FAS 140-4 and FIN 46(R)-8"). FSP FAS 140-4 and
FIN 46(R)-8 requires additional disclosures about transfers of financial assets and involvement with variable interest entities. FSP FAS 140-4 and
FIN 46(R)-8 is effective for all reporting periods ending after December 15, 2008. The Company adopted FSP FAS 140-4 and
FIN 46(R)-8 at the end of its second quarter of fiscal year 2009 and the adoption did not require additional disclosures.

In
March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS 161").
SFAS 161 amends and expands the disclosure requirements of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") with the intent to provide
users of financial statements with an enhanced understanding of: (i) how and why an entity uses derivative instruments; (ii) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations and (iii) how derivative instruments and related hedged items affect an entity's financial position, financial performance
and cash flows. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The
Company adopted the provisions of SFAS 161 during the third quarter of fiscal year 2009. The Company's derivative activity during the third quarter of fiscal year 2009 was not material to the

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (Continued)

condensed
consolidated financial statements and, therefore, no additional footnote disclosure has been provided.

Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" ("SFAS 141(R)"). Under
SFAS 141(R), an entity is required to recognize the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. It
further requires that acquisition-related costs be recognized separately from the acquisition and expensed as incurred, restructuring costs generally be expensed in periods subsequent to the
acquisition date, and changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense. In addition,
acquired in-process research and development ("R&D") is capitalized as an intangible asset and amortized over its estimated useful life. The adoption of SFAS 141(R) will change the
Company's accounting treatment for business combinations on a prospective basis beginning June 29, 2009.

In
April 2008, the FASB issued FASB Staff Position Financial Accounting Standard 142-3, "Determination of the Useful Life of Intangible Assets"
("FSP 142-3") which amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of a recognized intangible asset
under SFAS No. 142, "Goodwill and Other Intangible Assets." FSP 142-3 is effective for fiscal years beginning after December 15, 2008 and interim periods within those
fiscal years. The Company is in the process of evaluating the impact of FSP 142-3 on its consolidated financial statements.

In
November 2008, the FASB ratified Emerging Issues Task Force Issue No. 08-6, "Equity Method Investment Accounting Considerations" ("EITF 08-6").
EITF 08-6 clarifies the accounting for certain transactions and impairment considerations involving equity method investments. EITF 08-6 is effective for fiscal
years beginning after December 15, 2008, with early adoption prohibited. The Company is in the process of evaluating the impact of EITF 08-6 on its consolidated financial
statements.

In
November 2008, the FASB ratified Emerging Issues Task Force Issue No. 08-7, "Accounting for Defensive Intangible Assets" ("EITF 08-7").
EITF 08-7 clarifies the accounting for certain separately identifiable intangible assets which an acquirer does not intend to actively use but intends to hold to prevent its
competitors from obtaining access to them. EITF 08-7 requires an acquirer in a business combination to account for a defensive intangible asset as a separate unit of accounting
which should be amortized to expense over the period the asset diminishes in value. EITF 08-7 is effective for fiscal years beginning after December 15, 2008, with early
adoption prohibited. The Company is in the process of evaluating the impact of EITF 08-7 on its consolidated financial statements.

In
April 2009, the FASB issued FASB Staff Position Financial Accounting Standard 107-1 and APB 28-1, "Interim Disclosures about Fair Value of Financial
Instruments" ("FSP 107-1 and APB 28-1"). FSP 107-1, and APB 28-1, amends FASB Statement No. 107, "Disclosures about
the Fair Value of Financial Instruments", to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. This FSP also
amends APB Opinion No. 28, "Interim Financial Reporting", to require those disclosures in all interim financial statements. This FSP is effective for interim and annual reporting periods ending
after June 15, 2009.

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1. Business, Basis of Presentation and Summary of Significant Accounting Policies (Continued)

The
Company may early adopt this FSP if it also elects to early adopt FASB Staff Position Financial Accounting Standard 157-4, "Determining Whether a Market Is Not Active and a Transaction
Is Not Distressed" ("FSP 157-4"), and FASB Staff Position Financial Accounting Standard 115-2, and FAS 124-2, "Recognition and Presentation of
Other-Than-Temporary Impairments"("FSP 115-2"). The adoption of FSP FAS 107-1 and APB 28-1 will result in
additional disclosures in the Company's interim periodic financial reports.

In
April 2009, the FASB issued FSP 157-4, "Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly", ("FSP 157-4"). FSP 157-4 provides additional guidance for estimating fair value in accordance with SFAS 157
when the volume and level of activity for the asset or liability have significantly decreased. FSP 157-4 also indicates guidance on identifying circumstances that indicate a
transaction is not orderly. The FSP affirmed that fair value, when the market for an asset is not active, is the price that would be received to sell the asset in an orderly transaction (that is, not
a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions (that is, in the inactive market). The FSP clarifies and includes
additional factors for determining whether there has been a significant decrease in market activity for an asset when the market for that asset is not active. This FSP requires an entity to base its
conclusions about whether a transaction was not orderly on the weight of the evidence. FSP 157-4 is effective for interim and annual periods ending after June 15, 2009, and
shall be applied prospectively. Earlier adoption for periods ending before March 15, 2009, is not permitted. If the Company elects to adopt this FSP early,
FSP FAS 115-2 and FAS 124-2 must also be adopted early. The Company does not believe that the adoption of FSP FAS 157-4 will have
a material impact on its consolidated financial statements.

In
April 2009, the FASB issued FASB Staff Position Financial Accounting Standard No. 115-2, and FAS 124-2, "Recognition and Presentation of
Other-Than-Temporary Impairments". This FSP amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the
guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. Under
this FSP, when an entity does not intend to sell the security and it is more likely than not that the entity will not have to sell the security before recovery of its cost basis, it will recognize the
credit component of an other-than- temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. This FSP applies only to debt
securities. FSP 115-2 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009. Earlier adoption for periods ending before March 15, 2009, is not permitted. If the Company elects to adopt early either FSP FAS 157-4, or
FSP FAS 107-1 and APB 28-1, the Company also is required to early adopt this FSP. Additionally, if an entity elects to early adopt this FSP, it is also
required to early adopt FSP FAS 157-4. The Company does not believe that the adoption of FSP 115-2 will have a material impact on its consolidated financial
statements.

2. Deferred Gain on Divestiture

On April 1, 2007, the Company completed the sale of its Power Control Systems ("PCS") business ("PCS Business") to Vishay Intertechnology, Inc. ("Vishay") for
$339.6 million (the "Divestiture"), including $14.5 million of restricted cash temporarily held in escrow to cover indemnity obligations, if

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. Deferred Gain on Divestiture (Continued)

any,
and the net cash retained from the assets of the entities being sold totaling approximately $49.4 million. Since the consummation of the Divestiture, a number of matters as discussed in
Note 18, "Commitments and Contingencies," raised uncertainties under applicable accounting standards and guidance as to the determination of the gain on the Divestiture. As of fiscal year end
June 29, 2008, the Company had deferred recognition of the gain on the Divestiture of $112.6 million. At the present time, the Company cannot make a determination as to when these
uncertainties will be resolved. During the first quarter of fiscal year 2009, the deferred gain on the Divestiture was increased because certain tax indemnification obligations in respect of divested
entities aggregating to $0.3 million ceased to exist through lapsing of a statute of limitation in a foreign tax jurisdiction. During the second quarter of fiscal year 2009, the deferred gain
on the Divestiture was further increased by $2.3 million due to a correction of a prior period immaterial error related to certain stock rotation and warranty liabilities and by
$1.1 million due to currency translation adjustments on the tax indemnification amount. During the third quarter, the Company reclassified both $5.6 million of a reserve in other
liabilities and $1.1 million of prepaid expenses to the deferred gain as a result of the partial termination of the Transition Product Services Agreement by and among International Rectifier
Corporation, International Rectifier Southeast Asia Pte. Ltd., Vishay Intertechnology, Inc. and Vishay Asia Logistics Pte. Ltd. ("TPSA"). See Note 13, "Segment
Information." The TPSA included certain wafer fabrication and assembly services which were deemed to be below market at the time of the Divestiture. A reserve was established to offset the loss from
the Company providing these services and an asset was established to offset the reduced price paid by the Company to Vishay for certain other transition services provided by Vishay. In addition, the
deferred gain on the Divestiture was decreased by $0.3 million due to a correction of a prior period error related to certain tax indemnifications and further decreased by $0.4 million
due to revisions of estimates resulting from the filing of amended tax returns which impacted the tax indemnification amount. Consequently, as of March 29, 2009, the Company had a deferred gain
on the Divestiture of $120.2 million.

3. Fair Value Measurements

As discussed in Note 1, "Business, Basis of Presentation and Summary of Significant Accounting Policies," the Company adopted SFAS 157 effective the first day of fiscal
year 2009. SFAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands on required disclosures about fair value measurement.
Under SFAS 157, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants as of the measurement date. SFAS 157 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of
unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability developed based on
market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the factors market participants would use in valuing the asset
or liability developed based upon the best information available in the circumstances. The categorization of financial assets and liabilities within the valuation

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Fair Value Measurements (Continued)

hierarchy
is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels (with Level 3 being the lowest) defined as
follows:



Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table sets forth, by Level, the Company's financial assets and liabilities that were measured at fair value on a
recurring basis as of March 29, 2009 (in thousands):

Assets:

Total

(Level 1)

(Level 2)

(Level 3)U.S. government and agency obligations

$
263,753

$
182,165

$
81,588

$
Corporate debt


2,620


1,998


622


Mortgage-backed securities


20,480








20,480Asset-backed securities


22,543








22,543Equity securities


15,916


15,912





4Foreign currency derivatives


164





164


Total

$
325,476

$
200,075

$
82,374

$
43,027Fair value as a percentage of total


100.0
%

61.5
%

25.3
%

13.2
%Level 3 as a percentage of total assets











2.9
%


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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Fair Value Measurements (Continued)

Financial
assets and liabilities measured and recorded at fair value on a recurring basis were presented on the Company's condensed consolidated balance sheet as of March 29, 2009
as follows (in thousands):

Assets:

Total

(Level 1)

(Level 2)

(Level 3)Cash and cash equivalents

$
43,498

$
43,498

$


$
Short-term investments


127,760


100,999


26,761


Prepaid expenses and other receivables


225





225


Long-term investments


138,139


39,665


55,451


43,023Other long-term assets


15,854


15,912


(62
)

4Total

$
325,476

$
200,074

$
82,375

$
43,027


Level 3 Valuation Techniques

Certain financial assets are measured using Level 3 inputs such as pricing models, discounted cash flow methodologies or similar
techniques, and where at least one significant model assumption or input is unobservable. Level 3 inputs are used for financial assets that include certain investment securities for which there
is limited market activity where the determination of fair value requires significant judgment or estimation. Level 3 inputs are also used to value investment securities that include certain
mortgage-backed securities and asset-backed securities for which there was a decrease in the observability of market pricing for these investments. At March 29, 2009, these securities were
valued primarily using independent valuation firm or broker pricing models that incorporate transaction details such as maturity, timing and amount of future cash flows, as well as
assumptions about liquidity and credit valuation adjustments of marketplace participants at March 29, 2009.

The
following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable Level 3
inputs for the three months ended March 29, 2009 (in thousands):

Balance at December 28, 2008

$
61,506Total gains (losses), realized and unrealized:Included in earnings


(5,001
)Included in other comprehensive loss


21Purchases, sales and settlements, net


(13,499
)Net transfers in (out) of Level 3


Balance at March 29, 2009

$
43,027


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3. Fair Value Measurements (Continued)

The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable Level 3
inputs for the nine months ended March 29, 2009 (in thousands):

Balance at June 29, 2008

$
126,275Total gains (losses), realized and unrealized:Included in earnings


(31,288
)Included in other comprehensive loss


8,759Purchases, sales and settlements, net


(60,719
)Net transfers in (out) of Level 3


Balance at March 29, 2009

$
43,027


Losses
attributable to financial assets whose fair value is determined by using Level 3 inputs and included in earnings as shown above consist of
other-than-temporary impairments for investments which are included in other expense and realized losses on sale of securities which are included in interest income.

Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

During the fiscal quarter ended March 29, 2009, the Company had no significant measurements of financial assets or liabilities
at fair value on a nonrecurring basis.

4. Investments

Available-for-sale investments are carried at fair value, inclusive of unrealized gains and losses, and net of discount accretion and premium amortization
computed using the level yield method. Net unrealized gains and losses are included in other comprehensive loss net of applicable income taxes. Gains or losses on sales of
available-for-sale investments are recognized on the first-in, first-out basis.

Available-for-sale
debt securities as of March 29, 2009 are summarized as follows (in thousands):

Amortized
Cost

Gross
Unrealized
Gain

Gross
Unrealized
(Loss)

Net
Unrealized
Gain

Market
ValueShort-Term Investments:Corporate debt

$
1,997

$
1

$


$
1

$
1,998U.S. government and agency obligations


124,877


887


(2
)

885


125,762Total short-term investments

$
126,874

$
888

$
(2
)
$
886

$
127,760Long-Term Investments:Corporate debt

$
608

$
14

$


$
14

$
622U.S. government and agency obligations


91,795


2,715


(16
)

2,699


94,494Mortgage-backed securities


20,265


215





215


20,480Asset-backed securities


22,376


167





167


22,543Total long-term investments

$
135,044

$
3,111

$
(16
)
$
3,095

$
138,139


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Investments (Continued)

Available-for-sale
debt securities as of June 29, 2008 are summarized as follows (in thousands):

Amortized
Cost

Gross
Unrealized
Gain

Gross
Unrealized
(Loss)

Net
Unrealized
Gain (Loss)

Market
ValueShort-Term Investments:Corporate debt

$
34,181

$
44

$
(103
)
$
(59
)
$
34,122U.S. government and agency obligations


67,507


132


(22
)

110


67,617Total short-term investments

$
101,688

$
176

$
(125
)
$
51

$
101,739Long-Term Investments:Corporate debt

$
44,031

$
205

$
(466
)
$
(261
)
$
43,770U.S. government and agency obligations


90,260


1,760


(325
)

1,435


91,695Mortgage-backed securities


96,204


546


(5,492
)

(4,946
)

91,258Asset-backed securities


80,023


272


(3,338
)

(3,066
)

76,957Total long-term investments

$
310,518

$
2,783

$
(9,621
)
$
(6,838
)
$
303,680


The
Company manages its total portfolio to encompass a diversified pool of investment-grade securities. The investment policy is to manage its total cash and investments balances to
preserve principal and maintain liquidity while maximizing the returns on the investment portfolio.

The
Company holds as strategic investments the common and preferred stock of three publicly traded foreign companies, and one closely held equity security. These stocks are traded on
either the Tokyo Stock Exchange or the Taiwan Stock Exchange. Dividend income from these companies was $0.0 million and $0.2 million for the three months ended March 29, 2009 and
March 30, 2008, respectively, and $0.3 million and $0.4 million for the nine months ended March 29, 2009 and March 30, 2008, respectively.

The
carrying values of the equity investments included in other long-term assets at March 29, 2009 and June 29, 2008 were $15.9 million and
$29.2 million, respectively, compared to their purchase cost at March 29, 2009 and June 29, 2008 of $18.9 million and $24.9 million, respectively. The change in
unrealized gain (loss), net of taxes, for the three months ended March 29, 2009 and March 30, 2008 was $(0.2) million and $1.1 million, respectively, and for the nine months ended
March 29, 2009 and March 30, 2008 was $(13.4) million and $(10.7) million, respectively, and was included in other comprehensive loss.

The
Company evaluates securities for other-than-temporary impairment on a quarterly basis. Impairment is evaluated considering numerous factors, and their
relative significance varies depending on the situation. Factors considered include the length of time and extent to which the market value has been less than cost; the financial condition and
near-term prospects of the issuer of the securities; and the intent and ability of the Company to retain the security in order to allow for an anticipated recovery in fair value. If, based
upon the analysis, it is determined that the impairment is other-than-temporary, the security is written down to fair value, and a loss is recognized through earnings.
Other-than-temporary impairments relating to certain available-for-sale securities, for the three months ended March 29, 2009 and
March 30, 2008 were $11.7 million and $3.8 million,

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Investments (Continued)

respectively,
and for the nine months ended March 29, 2009 and March 30, 2008 were $37.3 million and $4.7 million, respectively, and were included in other expense.

The
investments the Company determined were other-than-temporarily impaired were mortgage-backed securities, asset-backed securities, and corporate bonds with
stated maturities ranging from 1 to 27 years (expected maturity from 3 months to 20 years) and an equity investment. As a result, the Company recorded impairment charges in
earnings related to its investments in mortgage-backed securities, asset backed securities and corporate bonds of $5.8 million and $31.3 million for the three and nine months ended
March 29, 2009. In addition, the Company recorded an impairment charge related to its equity investment of $5.9 million for the three and nine months ended March 29, 2009.

As
of March 29, 2009, the Company had $43.0 million in investment positions in mortgage-backed securities and asset-backed securities that were in a loss position and which the
Company does not intend to hold until maturity. These securities were fair valued utilizing a cash flow model which relied upon the Company's tranche specific cash flow projections, the benchmark
yield, assumed collateral performance and tranche specific yield. These investments were determined to be other than temporarily impaired due to the expectation of a prolonged economic slowdown
weighing on the underlying assets of these securities. Such opinion is pervasive in the market. The Company does not believe that it is more likely than not that prices will recover before these
investment positions are sold. Additional information the Company considered in determining that these securities were other than temporarily impaired included quantitative information regarding the
most recent delinquency rate, foreclosure or real estate-owned rate, current credit rating and the rating date, correlation of price change and benchmark yield change, net credit support, coverage
ratio and effective maturity for these securities. Qualitative analysis considered past impairments, changes in prepayment speed and the magnitude of the unrealized loss.

As
a result of the Company's interim period review of its available for sale securities, the Company determined that one of its equity investments was significantly below the original
purchase cost and had been for more than six months. The Company has the intent and ability to hold this investment indefinitely. However, in the Company's judgment, the security's value may not
recover to its purchase cost. Accordingly, the Company has determined that this investment was
other-than-temporarily impaired due to the prolonged downturn in the overall market and recorded an impairment charge of $5.9 million in the current quarter. In reaching
its conclusion, the Company reviewed the financial statements of the issuer, rating agency developments, investment activity in the issuer and price trends for the security.

The
following table summarizes the market value and gross unrealized losses related to available-for-sale debt investments, aggregated by type of investment and
length of time that individual

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Investments (Continued)

securities
have been held. The unrealized loss position is measured and determined at each fiscal quarter (in thousands):

Securities held in a
loss position for less
than 12 months at
March 29, 2009

Securities held in a
loss position for
12 months or more
at March 29, 2009

Total in a loss
position at
March 29, 2009Market
Value

Gross
Unrealized
Losses

Market
Value

Gross
Unrealized
Losses

Market
Value

Gross
Unrealized
LossesU.S. government and agency obligations

$
12,539

$
(18
)
$


$


$
12,539

$
(18
)Total

$
12,539

$
(18
)
$


$


$
12,539

$
(18
)




Securities held in a loss
position for less than
12 months at
June 29, 2008

Securities held in a
loss position for
12 months or more at
June 29, 2008

Total in a loss position
at June 29, 2008Market
Value

Gross
Unrealized
Losses

Market
Value

Gross
Unrealized
Losses

Market
Value

Gross
Unrealized
LossesCorporate debt

$
37,473

$
(485
)
$
6,182

$
(84
)
$
43,655

$
(569
)U.S. government and agency obligations


32,026


(347
)







32,026


(347
)Mortgage-backed securities


43,297


(5,077
)

1,893


(415
)

45,190


(5,492
)Asset-backed securities


31,567


(2,915
)

4,920


(423
)

36,487


(3,338
)Total

$
144,363

$
(8,824
)
$
12,995

$
(922
)
$
157,358

$
(9,746
)


The
amortized cost and estimated fair value of investments at March 29, 2009, by contractual maturity, were as follows (in thousands):

Amortized
Cost

Estimated
Fair ValueDue in 1 year or less

$
126,874

$
127,760Due in 1 - 2 years


75,569


77,672Due in 2 - 5 years


20,985


21,652Due after 5 years


38,490


38,815Total investments

$
261,918

$
265,899


In
accordance with the Company's investment policy which limits the length of time that cash may be invested, the expected disposal dates may be less than the contractual maturity dates
as indicated in the table above.

Gross
realized gains were $1.5 million and $4.6 million for the three and nine months ended March 29, 2009, respectively, and gross realized (losses) were $(0.1)
million and $(9.2) million for the three and nine months ended March 29, 2009, respectively. Gross realized gains were $0.4 million and $0.7 million for the three and nine months
ended March 30, 2008, respectively, and gross realized

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Investments (Continued)

(losses)
were $(0.7) million and $(1.3) million for the three and nine months ended March 30, 2008, respectively.

During
the three and nine months ended March 29, 2009, as a result of sales of available-for-sale securities and recognition of
other-than-temporary impairments on available-for-sale securities, the Company reclassified $2.2 million and $31.9 million, respectively,
from accumulated other comprehensive income to earnings either as a component of interest expense (income) or other expense depending on the nature of the gain (loss).

5. Supplemental Cash Flow Disclosures

Components of the changes in operating assets and liabilities for the nine months ended March 29, 2009 and March 30, 2008 were comprised of the following (in thousands):

Nine Months EndedMarch 29,
2009

March 30,
2008Trade accounts receivable

$
16,542

$
14,360Inventories


(1,469
)

39,221Prepaid expenses and other receivables


(11,713
)

(554
)Accounts payable


(15,254
)

(348
)Accrued salaries, wages and commissions


(11,353
)

(2,448
)Deferred compensation


(1,280
)

(1,405
)Accrued income taxes


4,500


(102,921
)Other accrued expenses


(8,410
)

(19,545
)Changes in operating assets and liabilities

$
(28,437
)
$
(73,640
)


Supplemental
disclosures of cash flow information (in thousands):

Nine Months EndedMarch 29,
2009

March 30,
2008Non-cash investing activities:Liabilities accrued for property, plant and equipment purchases

$
1,112

$
1,487


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

6. Inventories

Inventories at March 29, 2009 and June 29, 2008 were comprised of the following (in thousands):

March 29,
2009

June 29,
2008Raw materials

$
31,420

$
34,046Work-in-process


70,255


67,855Finished goods


60,250


73,955Total inventories

$
161,925

$
175,856


7. Goodwill and Acquisition-Related Intangible Assets

Acquisition Related Intangible Assets

At March 29, 2009 and June 29, 2008, acquisition-related intangible assets included the following (in thousands):

March 29, 2009

June 29, 2008Amortization
Periods
(Years)

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
AmountAcquisition-related intangible assets:Completed technology


4 - 15

$
29,679

$
(18,645
)
$
11,034

$
29,679

$
(15,803
)
$
13,876Customer lists


5 - 12


5,446


(4,434
)

1,012


5,446


(4,107
)

1,339Intellectual property and other


5 - 15


7,963


(7,080
)

883


7,963


(6,953
)

1,010Total acquisition-related intangible assets




$
43,088

$
(30,159
)
$
12,929

$
43,088

$
(26,863
)
$
16,225


As of March 29, 2009, estimated amortization expense for the next five years is as follows (in thousands): remainder of fiscal year 2009:
$1,097; fiscal year 2010: $4,386; fiscal year 2011: $4,125; fiscal year 2012: $1,771; and fiscal year 2013: $231.

Goodwill

The Company assesses the carrying amount of Goodwill in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets,"
which requires that the Company assess the carrying value of goodwill at least annually and more frequently if the Company believes indicators of impairment exist

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Goodwill and Acquisition-Related Intangible Assets (Continued)

The carrying amount of goodwill by ongoing business segment as of March 29, 2009 and June 29, 2008 was as follows (in thousands):

Business Segments:

March 29,
2009

June 29,
2008Power Management Devices

$


$
Energy-Saving Products


33,190


33,190HiRel


18,959


18,959Enterprise Power


22,806


22,806Automotive Products





3,793Intellectual Property





20,074Total goodwill

$
74,955

$
98,822


In
arriving at its decision to perform an interim impairment analysis of the goodwill associated with the Company's reporting units the Company considered a number of factors. These
factors included the decline in the Company's market capitalization, the Company's performance against its business plan and the outlook for the Company's businesses and industry in general. Based on
that evaluation at the end of both the second and third quarters of fiscal year 2009, the Company made a decision to perform an interim impairment analysis of goodwill.

Based
on the results of the interim goodwill impairment analysis at the end of the third quarter of fiscal year 2009, the Company concluded that for the Automotive Products and
Intellectual Property reporting units the carrying amount of goodwill exceeded their fair value determined using a discounted cash flow analysis. As a result, the Company recorded a goodwill
impairment charge of $23.9 million during the third quarter of fiscal year 2009. As a result of this impairment, the Automotive Products and Intellectual Property segments carry no goodwill as
of March 29, 2009.

In
the fourth quarter of fiscal year 2008, the Company performed its annual assessment of goodwill for impairment. During that quarter, the forecasted cash flows of the Company's
reporting units were
updated. This update considered current economic conditions and trends, estimated future operating results, anticipated future economic conditions, and technology. Based on the results of the annual
assessment of goodwill for impairment, the net book value of one of the Company's reporting segments exceeded its estimated fair value determined using a discounted cash flow analysis. Therefore, the
Company recorded during the fourth quarter of fiscal year 2008 goodwill impairment charges of $32.6 million. As a result of this impairment, the PMD segment carries no goodwill.

8. Bank Loans and Long-Term Debt

As of March 29, 2009, the Company had no long-term debt outstanding.

On
November 6, 2006, the Company entered into a five-year multi-currency revolving credit facility with a syndicate of lenders including JPMorgan Chase Bank, Bank of
America, N.A., HSBC Bank USA, and Deutsche Bank AG (the "Facility"). Considering the Company's current liquidity position, the Company terminated the commitments of the lenders to provide further
obligations effective as of November 28, 2008. In connection therewith, on November 26, 2008, the Company and the lenders entered into a letter agreement providing for the termination of
the obligations of each of the parties

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Bank Loans and Long-Term Debt (Continued)

under
the Facility (except for those obligations which by their terms expressly survive termination) upon the payment by the Company of the outstanding fees under the Facility, and the Facility
terminated on November 28, 2008. The payment of outstanding fees did not include any early termination fees.

During
the second quarter of fiscal year 2009, the Company reduced its outstanding letters of credit from $4.3 million to $2.9 million. These letters of credit are secured
by cash collateral provided by the Company in an amount equal to their face amount.

9. Other Accrued Expenses

Other accrued expenses at March 29, 2009 and June 29, 2008 were comprised of the following (in thousands):

March 29,
2009

June 29,
2008Sales returns

$
25,355

$
40,850Accrued accounting and legal costs


20,027


18,884Accrued compensation


4,473


6,679Transition services contract liability (See Note 2)


1,067


6,667Deferred revenue


6,177


7,326Accrued sales and other taxes


3,193


1,583Accrued decommissioning costs


3,154


3,101Accrued warranty


2,129


2,672Accrued utilities


1,459


2,320Short-term severance liability


7,024


1,091Other


8,147


12,182Total other accrued expenses

$
82,205

$
103,355


Warranty

The Company records warranty liabilities at the time of sale for the estimated costs that may be incurred under the terms of its
warranty agreements. The specific warranty terms and conditions vary depending upon the product sold and the country in which the Company does business. In general, for standard products, the Company
will provide customers with replacements parts for defective parts not meeting the Company's published specifications, at no cost to the customers. Factors that affect the liability include historical
and anticipated failure rates of products sold, and cost per claim to satisfy the warranty obligation. If actual results differ from the estimates, the Company revises its estimated warranty liability
to reflect such changes.

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

9. Other Accrued Expenses (Continued)

The
following table details the changes in the Company's warranty reserve for the nine months ended March 29, 2009, which is included in other accrued liabilities (in thousands):

Accrued warranty, June 29, 2008

$
2,672Accruals for warranties issued during the period


2,810Changes in estimates related to pre-existing warranties


1,571Warranty claim settlements


(4,924
)Accrued warranty, March 29, 2009

$
2,129


10. Other Long-Term Liabilities

Other long-term liabilities at March 29, 2009 and June 29, 2008 were comprised of the following (in thousands):

March 29,
2009

June 29,
2008Income taxes payable

$
56,258

$
21,147Divested entities' tax obligations


13,819


20,734Deferred compensation


5,976


9,326Transition services contract liability





5,000Other


4,455


3,078Total other long-term liabilities

$
80,508

$
59,285


The
Company accrued a $1.6 million asset retirement obligation during the third quarter of fiscal year 2009 related to future obligations to remove leasehold improvements and
obligations for the closure of certain owned manufacturing facilities. The initial asset amount related to this obligation was approximately $1.1 million and was recorded as an addition to
buildings and improvements during the third quarter of fiscal year 2009. The Company recorded a charge of $1.3 million during the quarter for depreciation and accretion expense of which
$1.2 million related to prior periods. Of this charge, $1.0 million was recorded in cost of sales and $0.3 million was recorded in selling and administrative expense.

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation

The Company issues new shares to fulfill the obligations under all of its stock-based compensation awards. The following table summarizes the stock option activities for the nine months
ended March 29, 2009 (in thousands, except per share price data):

Shares

Weighted Average Option Exercise Price per Share

Weighted Average Grant Date Fair Value per Share

Aggregate Intrinsic ValueOutstanding, June 29, 2008


9,360

$
40.43




$
2,568Granted


1,974

$
16.47

$
6.95


Exercised


(220
)
$
13.50




$
399Expired or forfeited


(2,893
)
$
41.92





Outstanding, March 29, 2009


8,221

$
34.88




$
1,174


For
the nine months ended March 29, 2009 and March 30, 2008, the Company received $3.0 million and $0.2 million, respectively, for stock options exercised.
The total tax benefit realized for the tax deductions from stock options exercised was $0.5 million and $0.1 million for the nine months ended March 29, 2009 and March 30,
2008, respectively.

The
following table summarizes the Restricted Stock Unit ("RSU") activities for the nine months ended March 29, 2009 (in thousands, except per share price data):

Restricted
Stock
Units

Weighted Average
Grant Date
Fair Value
per ShareOutstanding, June 29, 2008


1

$
48.10Granted


430

$
17.55Vested


(92
)
$
12.06Outstanding, March 29, 2009


339

$
18.07


The
Company's employee stock option plan permits the reduction of a grantee's RSUs for purposes of settling a grantee's income tax obligation. During the nine months ended
March 29, 2009, the Company withheld RSUs representing 41,827 shares to fund a grantee's income tax obligations.

Additional
information relating to the stock option plans, including employee stock options and RSUs at March 29, 2009 and June 29, 2008 is as follows (in thousands):

March 29,
2009

June 29,
2008Options exercisable


6,214


8,621Options and RSUs available for grant


2,969


4,440Total reserved common stock shares for stock option plans


11,529


13,800


The
Company's employee stock option plan typically provides terminated employees a period of thirty (30) days from the date of termination to exercise their vested stock options.
In certain circumstances, the Company has extended that thirty-day period for a period consistent with the plan.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation (Continued)

In
accordance with SFAS No. 123 (Revised 2004) "Share-Based Payment," the extension of the exercise period was deemed to be a modification of stock option terms. Additionally, certain of these
modified awards have been classified as liability awards within other accrued expenses. Accordingly, at the end of each reporting period, the Company determined the fair value of those awards and
recognized any change in fair value in its consolidated statements of operations in the period of change until the awards are exercised, expire or are otherwise settled. As a result of these
modifications and the mark-to-market adjustments of the liability awards included in other accrued expenses, the Company recorded a net credit of $0.0 million and
$0.6 million for the three and nine months ended March 29, 2009, respectively, compared to a net credit of $2.3 million and $0.5 million for the three and nine months ended
March 30, 2008, respectively. The aggregate fair value of the liability awards included in other accrued expenses was $0.0 million at March 29, 2009.

For
the three and nine months ended March 29, 2009 and March 30, 2008, stock-based compensation expense associated with the Company's stock options and RSUs is as follows
(in thousands):

March 29, 2009

March 30, 2008Three Months
Ended

Nine months
Ended

Three Months
Ended

Nine months
EndedCost of sales

$
119

$
253

$
(84
)
$
304Selling and administrative expense


2,071


3,476


(67
)

6,017Research and development expense


445


1,277


(274
)

1,104Total stock-based compensation expense

$
2,635

$
5,006

$
(425
)
$
7,425


During
the second quarter of fiscal year 2009, a one-time $1.8 million decrease in stock option expense was recorded due to a correction of an error in accounting for
stock options issued in prior periods. This one-time decrease primarily affected selling and administrative expense.

The
total unrecognized compensation expense for outstanding stock options and RSUs was $19.2 million as of March 29, 2009, and will be recognized, in general, over three
years from the date of grant, except for one stock option award and one RSU award made to the CEO. The awards to the CEO (which are included in the awards disclosed above), include an option to
purchase 750,000 shares and an award of RSUs in the amount of 250,000 shares made to the CEO during fiscal year 2008 as provided for under his employment agreement. The Company estimated the value of
the option awards for the CEO by using the Black-Scholes options pricing model with the following assumptions: (i) an expected life of the award of 4.6 years; (ii) risk free rate
of 3.2 percent; (iii) Company stock price volatility of 45.0 percent; and (iv) an annual dividend yield on the Company's common stock of 0.0 percent. The total
unrecognized compensation expense for these grants was $9.0 million as of March 29, 2009, and will be recognized over 2.5 years. The weighted average number of years to recognize
the total compensation expense (including that of the CEO) is 1.9 years.

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Table of Contents

INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

11. Stock-Based Compensation (Continued)

The
fair value of the options associated with the above compensation expense for the three and nine months ended March 29, 2009 and March 30, 2008, was determined at the
grant date using the Black-Scholes option pricing model with the following weighted average assumptions:

Nine Months EndedMarch 29,
2009

March 30,
2008Expected life


3.9 years

N/ARisk free interest rate


2.4
%
N/AVolatility


54.3
%
N/ADividend yield


0
%
N/A


12. Asset Impairment, Restructuring and Other Charges

Asset impairment, restructuring and other charges reflect the impact of various cost reduction programs and initiatives implemented by the Company. These programs and initiatives include
the closing of facilities, the termination and relocation of employees and other related activities. Asset impairment, restructuring and other charges include program-specific exit costs recognized
pursuant to SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," severance benefits pursuant to an ongoing benefit arrangement recognized pursuant to SFAS
No. 112, "Employers' Accounting for Postemployment Benefits," and special termination benefits recognized pursuant to SFAS No. 88, "Employers' Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits." Severance costs unrelated to the Company's restructuring initiatives are recorded as an element of cost of sales, research and
development or selling and administrative
expense, depending upon the classification and function of the employee terminated. Restructuring costs were expensed during the period in which all requirements of recognition were met.

Asset
write-downs are principally related to facilities and equipment that will not be used subsequent to the completion of exit or downsizing activities being implemented, and cannot be
sold for amounts in excess of carrying value. The Company recognizes asset impairment in accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"). In determining the asset groups for the purpose of calculating write-downs, the Company groups assets at the lowest level for which identifiable cash flow information is
largely independent of the cash flows of other assets and liabilities. In determining whether an asset was impaired the Company evaluates estimated undiscounted future cash flows and other factors
such as changes in strategy and technology. An indicator of impairment loss exists if the estimated undiscounted future cash flows from the initial analysis are less than the carrying amount of the
asset group. The Company then determines the fair value of the asset group using the present value technique, by applying to the estimated future cash flows a discount rate that is consistent with the
rate used when analyzing potential acquisitions.

Asset
impairment, restructuring and other charges represent costs related primarily to the following:



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)



The
following table summarizes restructuring charges incurred during the three and nine months ended March 29, 2009 and March 30, 2008 related to the restructuring
initiatives discussed below. These charges were recorded in asset impairment, restructuring and other charges (in thousands):

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesAsset impairment

$


$


$
48,885

$
Severance and workforce reduction costs


6,524


1,916


6,905

$
1,923Other charges


593





774


35Total asset impairment, restructuring and other charges

$
7,117

$
1,916

$
56,564

$
1,958


In
addition to the amounts in the table above, $0.9 million of workforce reduction expense related to retention bonuses was recorded in cost of sales during the quarter ended
March 29, 2009 related to the restructuring initiatives as of March 29, 2009.

The
following table summarizes changes in the Company's restructuring related accruals by plan for the nine months ended March 29, 2009, which are included in other accrued
expenses on the balance sheet (in thousands):

Newport,
Wales

El
Segundo

All
OtherAccrued severance and workforce reduction costs, June 29, 2008

$


$


$
1,091Charged to asset impairment, restructuring and other charges


1,794


3,433


1,679Charged to operating expenses





434


Costs paid


(695
)

(648
)

(1,345
)Foreign exchange gains


(9
)




(2
)Accrued severance and workforce reduction costs, March 29, 2009

$
1,090

$
3,219

$
1,423


Fiscal year 2009 and 2008 Initiatives

Newport, Wales Fabrication Facility Consolidation Initiative

The Company adopted a plan during the second quarter of fiscal year 2009 to consolidate its wafer manufacturing operations in Newport,
Wales to reduce manufacturing costs and reduce capacity as a result of a decline in market demand. The plan will continue to be carried out during the remainder of fiscal year 2009 and fiscal year
2010 with an estimated total pre-tax cost of approximately $52.4 million of which $48.9 will be non-cash charges. These charges consist of severance and other workforce
reduction costs of $1.8 million, asset impairment charges of $48.9 and other costs incurred to close or consolidate the facilities of $1.7 million. As a result of the adoption of this
plan, the Company recorded

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)

a
$48.9 million asset impairment charge during the second quarter of fiscal year 2009. No other charges related to this restructuring plan were recorded during the second quarter of fiscal year
2009. The restructuring charge recorded during the third quarter of fiscal year 2009 included $1.8 million of severance and other workforce reduction costs. The charges did not impact any
specific business segment.

Cash
payments for this initiative are estimated to be approximately $3.3 million during fiscal year 2009 and $0.2 million during fiscal year 2010. The following table
summarizes the charges related to the Newport, Wales fabrication facility consolidation initiative for the three and nine months ended March 29, 2009 and March 28, 2008:

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesAsset impairment

$


$


$
48,885

$
Severance and workforce reduction costs


1,794





1,794


Other charges


9





9


Total expense reported in asset impairment, restructuring and other charges


1,803





50,688


Other costs recorded in costs of sales


248





248


Total asset impairment, restructuring and other charges

$
2,051

$


$
50,936

$



El Segundo, California Facility Closure Initiative

The Company adopted a plan for the closure of its El Segundo, California fabrication facility during the second quarter of fiscal year
2009. No costs were recorded under this plan during the second quarter of fiscal year 2009. The plan will continue to be carried out during the
remainder of fiscal year 2009 and fiscal year 2010 with an estimated total pre-tax cost of $11.4 million of which approximately $0.8 million will be non-cash
charges. These charges consist of severance and other workforce reduction costs of $5.4 million and other costs incurred to close or consolidate the facilities of $6.0 million. The
restructuring charge recorded during the third quarter of fiscal year 2009 includes $3.4 million of severance costs and other workforce reduction costs and $1.2 million of other charges
of which $0.7 million were recorded in cost of sales. The charges did not impact any specific business segment.

Cash
payments for this initiative are estimated to be approximately $6.0 million, $2.5 million and $2.1 million during fiscal year 2009, 2010 and thereafter,
respectively. The following table summarizes

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)

the
charges related to the El Segundo fabrication facility initiative for the three and nine months ended March 29, 2009 and March 28, 2008.

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesAsset impairment

$


$


$


$
Severance and workforce reduction costs


3,433





3,433


Other charges


502





502


Total expense reported in asset impairment, restructuring and other charges


3,935





3,935


Workforce reduction and other costs recorded in costs of sales


692





692


Total asset impairment, restructuring and other charges

$
4,627

$


$
4,627

$



Research and Development Facility Closure Initiative

In the third quarter of fiscal year 2008, the Company adopted a plan for the closure of its Oxted, England facility and its El Segundo,
California R&D fabrication facility. The costs associated with closing and exiting these facilities and severance costs are estimated to total
approximately $8.7 million. Of this amount, approximately $6.7 million represents the cash outlay related to this initiative. The Company estimates that the closure and exiting of these
two facilities will be completed by the end of the fourth quarter of fiscal year 2011. Restructuring related cash payments are estimated to be approximately $2.7 million, $2.0 million
and $0.1 million during fiscal year 2009, 2010, and thereafter, respectively.

The
following illustrates the charges the Company recorded in the three and nine months ended March 29, 2009 and March 30, 2008 related to its Research and Development
Facility Closure initiative (in thousands):

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesSeverance

$


$
1,759

$
382

$
1,759Other charges


82





262


Total asset impairment, restructuring and other charges

$
82

$
1,759

$
644

$
1,759


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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)

Other Activities and Charges

On January 15, 2009, the Company received written notification from Vishay terminating certain wafer processing services under
the TPSA effective April 30, 2009. As a result, the Company recorded a charge for severance related to the partial termination of the contract during the third quarter of fiscal year 2009 of
$1.3 million. The Company estimates total cost related to the partial termination of the contract to be $1.3 million, all of which will be cash charges. Actions related to the partial
termination of the contract should be complete by the end of fiscal year 2009. The charges recorded in fiscal year 2008 relate to other smaller scale restructuring initiatives undertaken at local
sites. The following summarizes the charges the Company recorded in the three and nine months ended March 29, 2009 and March 30, 2008 (in thousands) (including those related to the
partial termination of the TPSA):

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other charges:Severance

$
1,297

$
157

$
1,297

$
157Total asset impairment, restructuring and other charges (credits)

$
1,297

$
157

$
1,297

$
157


Fiscal year 2007 Initiatives

PCS Divestiture Initiative

During fiscal year 2007, in connection with the Divestiture, the Company terminated approximately 100 former PCS Business employees.
The Company also terminated other operating and support personnel to streamline the organization in connection with the Divestiture.

The
following illustrates the charges the Company recorded in the three and nine months ended March 29, 2009 and March 30, 2008 related to its PCS Divestiture restructuring
initiative (in thousands):

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesSeverance

$


$


$


$
7Other charges











35Total asset impairment, restructuring and other charges

$


$


$


$
42


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

12. Asset Impairment, Restructuring and Other Charges (Continued)

Other Impairment Charges

In addition to the Newport facility asset impairment of $48.9 million, during the second quarter of fiscal year 2009, the
Company recorded an asset impairment of $1.9 million related to assets removed from service in its Tijuana, Mexico facility and certain contract manufacturing facilities. Since the decision to
remove these assets from service was in response to a reduction in demand and not related to an exit activity, the associated asset impairment charge was recorded in cost of sales, not in asset
impairment, restructuring and other charges.

13. Segment Information

At the beginning of the first quarter of fiscal year 2009, the Company's CEO, who is the Chief Operating Decision Maker, refined the definition of the Company's business segments by
renaming its A&D segment its HR segment, combining its previously identified PS segment with its EP segment and creating a new AP segment which was previously reported within the ESP and PMD segments.
Furthermore, some products that were previously reported under the EP segment are now reported under the PMD segment. Consequently, the Company now reports in seven segments: EP, PMD, ESP, HR, AP, IP,
and TS. Prior year segment presentation has been recast to conform with current year presentation.

Below
is a description of the Company's reportable segments:



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Segment Information (Continued)



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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Segment Information (Continued)

The Company does not allocate assets, sales and marketing, information systems, finance and administrative costs and asset impairment, restructuring and other charges to the operating
segments, as these are not meaningful statistics to the CEO in making resource allocation decisions or in evaluating performance of the operating segments.

Because
operating segments are generally defined by the products they design and sell, they do not make sales to each other. The Company does not directly allocate assets to its
operating segments, nor does the CEO evaluate operating segments using discrete asset information. However, depreciation and amortization related to the manufacturing of goods is included in gross
profit for the segments as part of manufacturing overhead. Due to the Company's methodology for cost build up at the product level, it is impractical to determine the amount of depreciation and
amortization included in each segment's gross profit.

For
the three and nine months ended March 29, 2009 and March 30, 2008, revenue and gross margin by reportable segments were as follows (in thousands, except percentages):

Three Months Ended
March 29, 2009

Three Months Ended
March 30, 2008Business Segment

Revenues

Percentage
of Total

Gross
Margin

Revenues

Percentage
of Total

Gross
MarginPower Management Devices

$
42,593


29.0
%

(3.5
)%
$
83,815


33.3
%

17.1
%Energy-Saving Products


35,272


24.1


34.7


46,734


18.5


21.8HiRel


33,954


23.2


47.1


39,421


15.6


46.8Automotive Products


9,453


6.4


4.2


22,440


8.9


24.0Enterprise Power


11,315


7.7


11.8


35,109


13.9


21.3Ongoing customer segments total


132,587


90.4


21.5


227,519


90.2


24.5Intellectual Property


2,365


1.6


100.0


10,286


4.1


100.0Ongoing segments total


134,952


92.0


22.8


237,805


94.3


27.8Transition Services


11,690


8.0


0.9


14,419


5.7


2.9Consolidated total

$
146,642


100.0
%

21.1
%
$
252,224


100.0
%

26.4
%


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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Segment Information (Continued)



Nine Months Ended
March 29, 2009

Nine Months Ended
March 30, 2008Business Segment

Revenues

Percentage
of Total

Gross
Margin

Revenues

Percentage
of Total

Gross
MarginPower Management Devices

$
180,505


31.1
%

14.8
%
$
265,978


34.0
%

21.6
%Energy-Saving Products


120,830


20.8


40.6


125,698


16.1


33.4HiRel


110,739


19.1


52.4


117,529


15.0


51.5Automotive Products


40,521


7.0


24.8


62,897


8.1


30.7Enterprise Power


67,944


11.7


37.4


133,225


17.1


35.0Ongoing customer segments total


520,539


89.6


32.5


705,327


90.3


32.0Intellectual Property


24,925


4.3


100.0


29,382


3.8


100.0Ongoing segments total


545,464


93.9


35.6


734,709


94.1


34.7Transition Services


35,398


6.1


(7.3
)

46,444


5.9


1.4Consolidated total

$
580,862


100.0
%

33.0
%
$
781,153


100.0
%

32.8
%


14. Income Taxes

Under Accounting Principles Board Opinion No. 28, "Interim Financial Reporting," and FASB Interpretation No. 18, "Accounting for Income Taxes in Interim
Periodsan Interpretation of APB Opinion No. 28," the Company is required to adjust its effective tax rate each quarter to be consistent with the estimated annual effective tax
rate. The Company is also required to record the tax impact of certain discrete items, unusual or infrequently occurring, including changes in judgment about valuation allowances and effects of
changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a year-to-date loss where no tax
benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or lower effective tax rate during a particular quarter,
based upon the mix and timing of actual earnings versus annual projections.

In
the third quarter of 2009, the Company recorded a charge of $12.4 million related to establishing valuation allowances against its current deferred tax assets in the U.S. In
accordance with SFAS No. 109, "Accounting for Income Taxes" (SFAS No. 109), the Company evaluate its deferred income taxes quarterly to determine if valuation allowances are required.
SFAS No. 109 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a
"more likely than not" standard.

As
cumulative pre-tax losses for the current and prior two years in the Company's U.S. federal consolidated group constitute significant negative evidence, positive evidence
of equal or greater significance is needed at a minimum to overcome that negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards. In evaluating
the positive evidence available, expectations as to future taxable income are generally considered insufficient to overcome the negative evidence of recent cumulative losses, even if supported by
detailed forecasts and projections. The Company did examine the four sources which allow the realization of deferred tax assets. They are: carrybacks, reversals of existing temporary differences, tax
planning strategies, and future taxable income exclusive of reversals of existing temporary differences.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Income Taxes (Continued)

Of
the four sources of taxable income, loss carrybacks is the only meaningful one available to support the Company's ability to realize the tax benefit of its remaining U.S. federal
current deferred tax assets. A valuation allowance, therefore, was recorded to the extent that the carryback of current losses did not utilize deferred tax assets and deferred tax liabilities would
not also offset the realization of those assets.

During
the third quarter of fiscal year 2009, the Company filed amended and original returns for prior fiscal years for the U.S. and various foreign jurisdictions. The Company revised
its estimates to its tax provision and recorded a benefit to tax expense in the amount of approximately $7.8 million. The Company recorded a net tax benefit of $1.2 million for the third
quarter of fiscal year 2009. The previously noted $12.4 million in valuation allowances recorded against the Company's deferred tax assets reduced the benefit from its revision to estimates and
the benefit of a loss carryback the Company realized in this quarter.

The
filing of the tax returns revised the Company's FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxesan Interpretation of FASB Statement
No. 109" ("FIN 48") estimated reserves. The FIN 48 Liability decreased by $20.4 million as a result of tax positions taken on certain tax returns. The reserve increased by
$1.3 million due to certain tax positions taken during this quarter. A reduction in the reserve of $1.6 million was recorded due to the lapse of the applicable statutes of limitation. As
of March 29, 2009, the liability for income tax associated with uncertain tax positions was $69.5 million. If recognized, the liabilities associated with uncertain tax positions would
result in a benefit to income taxes on the consolidated statement of operations of $43.4 million which would reduce the Company's future effective tax rate, which represents a decrease of
$11.8 million primarily due to the filing of the tax returns in this quarter.

The
Company's continuing practice is to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of March 29, 2009, the Company
had accrued $40.9 million of interest and penalties related to uncertain tax positions. For the quarter, penalties and interest increased the reserve by $7.9 million, and for the nine
months, increased the reserve by $10.4 million.

While
it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes its reserves for income taxes
represent the most probable outcome. The Company adjusts these reserves, including those for the related interest, in light of changing facts and circumstance.

The
Company received a notice of assessment for the Singapore tax authority due to the late filing of the Singapore subsidiary's fiscal year 2007 income tax return. The assessment of
approximately $14.5 million was based upon the Company's transfer pricing methodology prior to fiscal year 2007. The Company has determined that collection on this assessment is not probable as
the Company believes it is more likely than not that its current transfer pricing methodology will be sustained.

As
noted, during the third quarter of fiscal year 2009, the Company filed amended and original returns for prior fiscal years for the U.S. The Company has filed a claim for refund on the
U.S. income tax returns the total of which ranges from $25 million to $30 million.

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14. Income Taxes (Continued)

The
Company's effective tax rate related to continuing operations was 1.4 percent and 39.2 percent for the three months ended March 29, 2009 and March 30,
2008, respectively and (59.0) percent and 65.9 percent for the nine months ended March 29, 2009 and March 30, 2008, respectively. For the three and nine months ended
March 29, 2009, the Company's effective tax rate differed from the U.S. federal statutory tax rate of 35 percent, resulting from (i) realization of a
year-to-date refund benefit arising from a loss carryback and (ii) revision of estimates arising from the filing of tax returns for several fiscal years partially offset
by (i) valuation allowances recorded on deferred tax assets, (ii) impairment of certain securities, and (iii) non deferral of income from certain foreign jurisdictions. The
Company's effective tax rate will be volatile due to the losses that cannot benefit its tax expense in the U.S. and U.K. in combination with its geographic mix of income which results in profit in
certain foreign jurisdictions with a resulting tax payable.

On
October 3, 2008, U.S. federal legislation was enacted which extended the research and development tax credit provision which allows for retroactive application of R&D tax
credits to January 1, 2008. The legislation also extends the R&D credit provision to December 31, 2010. The fiscal year 2009 benefit and the third and fourth quarter of fiscal year 2008
benefit was recorded in the second quarter of fiscal year 2009. A valuation allowance was also recorded against this benefit.

As
of June 29, 2008, U.S. income taxes have not been provided on approximately $79.3 million of undistributed earnings of foreign subsidiaries since those earnings are
considered to be invested indefinitely. Determination of the amount of unrecognized deferred tax liabilities for temporary differences related to investments in these non-U.S. subsidiaries that are
essentially permanent in duration is not practicable.

Pursuant
to Sections 382 and 383 of the U.S. Internal Revenue Code, the utilization of net operating losses ("NOLs") and other tax attributes may be subject to substantial
limitations if certain ownership changes occur during a three-year testing period (as defined). The Company does not
believe an ownership change has occurred that would limit the Company's utilization of any NOL, credit carry forward or other tax attributes.

15. Net Loss per Common Share

Net loss per common sharebasic is computed by dividing net loss available to common stockholders (the numerator) by the weighted average number of common shares outstanding
(the denominator) during the period. In general, the computation of net loss per common sharediluted is similar to the computation of net loss per common sharebasic except
that when dilutive, the denominator is increased to include the number of additional common shares that would have been outstanding for the exercise of stock options using the treasury stock method
resulting in the dilution of earnings per share. The Company's use of the treasury stock method reduces the gross number of the dilutive shares by the number of shares purchasable from the proceeds of
the options assumed to be exercised.

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15. Net Loss per Common Share (Continued)

The
following table provides a reconciliation of the numerator and denominator of the basic and diluted per-share computations for the three and nine months ended
March 29, 2009 and March 30, 2008 (in thousands, except per share amounts):

Three Months Ended March 29, 2009Loss
(Numerator)

Shares
(Denominator)

Per Share
AmountNet loss per common sharebasic

$
(81,722
)

72,102

$
(1.13
)Effect of dilutive securities:Stock options and restricted stock units








Net loss per common sharediluted

$
(81,722
)

72,102

$
(1.13
)




Three Months Ended March 30, 2008Loss
(Numerator)

Shares
(Denominator)

Per Share
AmountNet loss per common sharebasic

$
(21,567
)

72,826

$
(0.30
)Effect of dilutive securities:Stock options and restricted stock units








Net loss per common sharediluted

$
(21,567
)

72,826

$
(0.30
)




Nine Months Ended March 29, 2009Loss
(Numerator)

Shares
(Denominator)

Per Share
AmountNet loss per common sharebasic

$
(272,239
)

72,547

$
(3.75
)Effect of dilutive securities:Stock options and restricted stock units








Net loss per common sharediluted

$
(272,239
)

72,547

$
(3.75
)




Nine Months Ended March 30, 2008Loss
(Numerator)

Shares
(Denominator)

Per Share
AmountNet loss per common sharebasic

$
(10,841
)

72,817

$
(0.15
)Effect of dilutive securities:Stock options and restricted stock units








Net loss per common sharediluted

$
(10,841
)

72,817

$
(0.15
)


16. Environmental Matters

Federal, state, local and foreign laws and regulations impose various restrictions and controls on the storage, use and discharge of certain materials, chemicals and gases used in
semiconductor manufacturing processes, and on the operation of the Company's facilities and equipment. The Company believes it uses reasonable efforts to maintain a system of compliance and controls
for these

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16. Environmental Matters (Continued)

laws
and regulations. Despite its efforts and controls, from time to time, issues may arise with respect to these matters. However, the Company does not believe that general compliance with such laws
and regulations as now in effect will have a material adverse effect on its results of operations, financial position or cash flows.

Additionally,
under some of these laws and regulations, the Company could be held financially responsible for remedial measures if properties are contaminated or if waste is sent to a
landfill or recycling facility that becomes contaminated. Also, the Company may be subject to common law claims if released substances damage or harm third parties. The Company cannot make assurances
that changes in environmental laws and regulations will not require additional investments in capital equipment and the implementation of additional compliance programs in the future, which could have
a material adverse effect on the Company's results of operations, financial position or cash flows, as could any failure by or violation of the Company to comply with any prior, current or future
environmental laws and regulations.

As
part of the environmental review process, the Company has in prior years provided certain disclosures of potential permit violations and other matters to local environmental
authorities with respect to the Company's Temecula, California facility. The Company has taken steps to correct the alleged deficiencies. However, in October 2008, the Company received a notification
of additional permit violations at such facility. The Company has not yet been assessed any penalties with respect to the disclosures made for alleged violations at that facility. In December 2008,
the enforcement division for the South Coast Air Quality Management District requested information from the Company for the
purposes of determining what further action to take with respect to alleged violations asserted prior to the District's October 2008 notification. In April 2009, the Company received a similar request
with respect to alleged violations set forth in the District's October 2008 notification. The Company has responded to the December 2008 request and is preparing its response to the April 2009
request.

During
negotiations for the Divestiture, chemical compounds were discovered in the groundwater underneath one of the Company's former manufacturing plants in Italy. The Company has
advised appropriate governmental authorities and is awaiting further reply to its inquiries, with no current orders or directives on the matter outstanding from the governmental authorities.

IR
and Rachelle Laboratories, Inc. ("Rachelle"), a former operating subsidiary of the Company that discontinued operations in 1986, were each named a potentially responsible party
("PRP") in connection with the investigation by the United States Environmental Protection Agency ("EPA") of the disposal of allegedly hazardous substances at a major superfund site in Monterey Park,
California ("OII Site"). Certain PRPs who settled certain claims with the EPA under consent decrees filed suit in Federal Court in May 1992 against a number of other PRPs, including the Company, for
cost recovery and contribution under the provisions of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"). The Company has settled all outstanding claims that have
arisen against it out of the OII Site. No claims against Rachelle have been settled. The Company has taken the position that none of the wastes generated by Rachelle were hazardous.

Counsel
for Rachelle received a letter dated August 2001 from the U.S. Department of Justice, directed to all or substantially all PRPs for the OII Site, offering to settle claims
against such parties for all work performed through and including the final remedy for the OII Site. The offer required a

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16. Environmental Matters (Continued)

payment
from Rachelle in the amount of approximately $9.3 million in order to take advantage of the settlement. Rachelle did not accept the offer.

It
remains the position of Rachelle that its wastes were not hazardous. The Company's insurer has not accepted liability, although it has made payments for defense costs for the lawsuit
against the Company. The Company has made no accrual for potential loss, if any; however, an adverse outcome could have a material adverse effect on the Company's results of operations or cash flows.

The
Company received a letter in June 2001 from a law firm representing UDT Sensors, Inc. ("UDT") relating to environmental contamination (chlorinated solvents such as
trichlorethene) purportedly found in UDT's properties in Hawthorne, California. The letter alleges that the Company operated a manufacturing business at that location in the 1970's and/or 1980's and
that it may have liability in connection with the claimed contamination. The Company has made no accrual for any potential losses
since there has been no assertion of specific facts on which to form the basis for determination of liability.

In
November 2007, the Company was named as one of approximately 100 defendants inAngeles Chemical Company, Inc. et al. v. Omega Chemical PRP
Group, LLC et al., No. EDCV07-1471 (TJH) (JWJx) (C.D. Cal.) (the "Angeles Case"). Angeles Chemical Company, Inc. and related entities ("Plaintiffs")
own or operate a facility (the "Angeles Facility") which is located approximately one and a half miles down gradient of the Omega Chemical Superfund Site (the "Omega Site") in Whittier, California.
Numerous parties, including the Company, allegedly disposed of wastes at the Omega Site. Plaintiffs claim that contaminants from the Omega Site migrated in groundwater from the Omega Site to the
Angeles Facility, thereby causing damage to the Angeles Facility. In addition, they claim that the EPA considers them to be responsible for the groundwater plume near the Angeles Facility, which
Plaintiffs contend was caused by disposal activities at the Omega Site. Plaintiffs filed claims based on CERCLA, nuisance and trespass, and also seek declaratory relief. Plaintiffs seek to require the
defendants to investigate and clean-up the contamination and to recover damages. The case has been stayed by the court pending the Environmental Protection Agency's completion of its
remedial investigation. The Company previously entered into a settlement with other parties associated with the Omega Site pursuant to which the Company paid those entities money in exchange for an
agreement to defend and indemnify the Company with regard to certain environmental claims (the "Omega Indemnification"). In that agreement, it was estimated that the Company's volumetric share of
wastes sent to the Omega Site was in the range of 0.08 percent. The Company believes that much, if not all, of the risks associated with the Angeles Case should be covered by the Omega
Indemnification. In addition, the Company has tendered the complaint to several of its insurance carriers, one of which has agreed to defend under a reservation of rights. Therefore, the Company does
not expect its out-of-pocket defense costs to be significant. In addition, in light of the Omega Indemnification, the potential for insurance coverage and the fact that its
volumetric share of Omega Site wastes was less than 0.1 percent, the Company does not believe that an adverse judgment against the Company would be material.

17. Litigation

International Rectifier Securities Litigation.Following the Company's disclosure on April 9, 2007, that its Audit Committee was
conducting an
Internal Investigation into certain revenue recognition

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17. Litigation (Continued)

matters,
a series of putative class action lawsuits was filed against the Company in the United States District Court for the Central District of California. The complaints were filed on behalf of a
putative class of purchasers of Company stock from October 27, 2005 through April 9, 2007, and named as defendants the Company and certain of its present and former officers and
directors. The complaints alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 arising out of alleged accounting irregularities at the Company's Japan
subsidiary. On July 22, 2007, the court consolidated all of the actions under the captionIn re International Rectifier Corporation Securities
Litigation, No. CV 07-02544-JFW (VBKx) (C.D. Cal.), and appointed the Massachusetts Laborers' Pension Fund and the General Retirement System of
the City of Detroit (together, "Lead Plaintiffs") as co-lead plaintiffs.

On
January 14, 2008, Lead Plaintiffs filed a Consolidated Class Action Complaint, which named as defendants several of the Company's former officers, but did not name any of its
past or present directors except Eric Lidow and Alex Lidow. On May 23, 2008, the Court issued an order granting defendants' motions to dismiss, without prejudice, on the ground that Lead
Plaintiffs failed to plead detailed facts sufficient to give rise to a strong inference of defendants' scienter.

On
October 17, 2008, Lead Plaintiffs filed a second amended consolidated class action complaint ("SACC") alleging causes of action for securities fraud and control person
liability against the Company, Alex Lidow, Michael P. McGee, and Robert Grant, and, for control person liability only, against Eric Lidow and purporting to bring suit on behalf of a putative class of
investors who purchased Company securities between July 31, 2003 and February 11, 2008. On November 10, 2008, the Company filed a motion to dismiss the SACC on the grounds that
plaintiffs had failed to plead with particularity facts raising a strong inference that the individuals who spoke on the Company's behalf during the putative class period knew, or were reckless in not
knowing, that the Company's financial statements were inaccurate. On December 31, 2008 the District Court issued an order granting the Company's motion to dismiss plaintiffs' claim for control
person liability and granting, in its entirety, defendant Robert Grant's motion to dismiss. These dismissals were with prejudice. The District Court denied the Company's motion to dismiss the
securities fraud count and denied in their entirety motions to dismiss brought by defendants Alex Lidow, McGee, and Eric Lidow.

On
January 7, 2009 the Court issued orders referring the matter for mediation, setting September 1, 2009 as the last day for a settlement conference, October 26,
2009 as the discovery cutoff, and January 12, 2010 as the first day of trial. On March 17, 2009 plaintiffs filed a motion for certification of the putative class, which is currently set
for hearing on July 13, 2009. Discovery is ongoing.

The
Company intends to defend against the claims asserted against it vigorously.

International Rectifier Derivative Litigation.On August 1, 2008, a partial derivative lawsuit captionedMayers v.
Lidow, No. BC395652, was filed in the Superior Court of the State of California for the County of Los Angeles. The complaint asserts derivative claims, purportedly on behalf of
the Company, against certain of the Company's former officers, and current and former directors, alleging breach of fiduciary duty, unjust enrichment and violations of Section 25402 of the
California Corporations Code (insider trading) in connection with the matters reported in the Company's recent public filings with the SEC. The derivative claims seek damages, disgorgement and
imposition of a

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17. Litigation (Continued)

constructive
trust against the individual defendants purportedly for the benefit of the Company. The complaint also seeks injunctive relief against the current board under a provision of Delaware law
that permits shareholders to apply to the Court of Chancery for a summary order requiring the company to hold an annual shareholders' meeting. The complaint does not seek monetary relief against the
Company.

On
November 13, 2008, plaintiff filed a request for dismissal of Count IV of the complaint (which sought an order under Delaware law requiring IR to hold its 2007 shareholder
meeting) and as to defendants Oleg Khaykin, Richard J. Dahl, Mary B. Cranston, and Tom Lacey, each of whom previously was named only in connection with Count IV.

IR
demurred to plaintiff's complaint on December 22, 2008 and the matter was set for hearing on March 17, 2009. On March 4, 2009, plaintiff notified the Court that
he intended to file an amended complaint in lieu of seeking to further oppose IR's demurrer. That same day, the Court issued an order vacating the March 17, 2009 hearing on demurrer, requiring
plaintiff to file an amended complaint no later than April 3, 2009, and requesting that the parties file a further status update by no later than April 17, 2009. On
March 3, 2009 plaintiff filed an amended complaint. The amended complaint is brought solely as a derivative action and alleges substantially the same causes of action as were alleged
derivatively in the complaint filed August 1, 2008. The Company believes the claims against the Company's directors are without merit and intends to demur to the amended complaint on the
grounds that plaintiff lacks standing to bring this action. The hearing date for the Company's demurrer is set for July 27, 2009.

Litigation Arising from Vishay Proposal.On August 15, 2008, shortly after the Company's disclosure that Vishay Intertechnology,
 Inc.
("Vishay") had made an unsolicited, non-binding proposal to acquire all outstanding shares of the Company, a purported class action complaint captionedHui Zhao v.
International Rectifier Corporation, No. BC396461, was filed in the Superior Court of the State of California for the County of Los Angeles. The complaint named as defendants
the Company and all current directors and alleged that the Vishay proposal was unfair and that acceptance of the offer would constitute a breach of fiduciary duty by the board. Five other
substantively identical complaints
seeking the same relief were filed in the same court and, on October 3, 2008, were consolidated under the caption of the lead case. On October 28, 2008, plaintiffs filed a consolidated
amended complaint purporting to allege claims for breach of fiduciary duty on behalf of a putative class of investors based on the theory that the board breached its fiduciary duty by rejecting the
Vishay proposal.

Also
pending before the same court is a related case captionedCity of Sterling Heights Police Fire Retirement System v. Dahl, No.
BC397326. The City of Sterling complaint, filed August 29, 2008, alleges substantively identical causes of action but is brought nominally on the Company's behalf as a derivative action.

Briefing
on both complaints was coordinated pursuant to a scheduling order issued by the Court on October 15, 2008. On November 21, 2008, defendants demurred to the
complaints on the grounds that plaintiffs in both cases have failed to plead a claim and lack standing to bring the claims on behalf of the Company. In support of the demurrer in Zhao, defendants
further assert that plaintiffs' claims are derivative, not direct, and that because plaintiffs already have filed with the Court pleadings in which they allege that the Vishay offer was undervalued,
they are now estopped from alleging the

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17. Litigation (Continued)

opposite.
Defendants also brought a motion pursuant to California Corporations Code §800 requiring plaintiff City of Sterling to post a bond before continuing with litigation on the
Company's behalf. On December 19, 2008 plaintiffs in both actions filed oppositions to defendants' demurrers. In its opposition, plaintiff City of Sterling noted that it intended to withdraw
its complaint and file an amended complaint after the hearing on the Company's demurrers and motion for bond. On April 16, 2009, the Court sustained defendants' demurrer to the consolidated
amended complaint inZhao, and ordered theZhaoaction to be dismissed with prejudice. Also on
April 16, 2009, the Court granted defendants' motion pursuant to California Corporations Code §800 requiring plaintiff City of Sterling to post a bond in the amount of $50,000 no
later than June 2, 2009, or face dismissal of its action.

The
Company intends to defend against the claims asserted against it in these actions vigorously.

Vishay Offer.On September 10, 2008, Vishay made an additional unsolicited proposal to acquire all outstanding shares of the
Company at a
price of $23.00 per share, and announced its intention to commence a tender offer to purchase all of the Company's shares. In addition, it gave notice of its intention: (a) to nominate three
individuals for election as Class I directors at the 2007 annual meeting scheduled for October 10, 2008, and (b) to present at that meeting proposals to amend the Company's
Bylaws. Vishay's proposed Bylaw amendments provide: (x) that the meeting to elect the Company's Class II directors be held by December 21, 2008; (y) that any adjournment of
a stockholders' meeting at which a quorum is present must be approved by a majority of the shares present at the meeting in person or by proxy; and (z) for an amendment to the Bylaws to repeal
any new Bylaws and Bylaw amendments adopted by the Board of Directors between February 29, 2008 and the 2007 annual
meeting unless approved by the holders of a majority of the outstanding shares of the Company (collectively, "Annual Meeting Actions"). On October 13, 2008, following the 2007 annual meeting,
Vishay withdrew its tender offer.

On
September 10, 2008, Vishay also commenced an action in the Delaware court of Chancery (the "Delaware Action") against the Company and its current directors seeking, among other
things: (a) to compel a meeting of shareholders on or before December 21, 2008 to elect Class II directors to fill the positions of those whose terms expire in 2008; (b) a
declaration that proposed amendments to the Company's Bylaws are valid under Delaware law and the Company's Certificate of Incorporation; and (c) a mandatory injunction requiring the Company to
present such proposed amendments for a vote at the 2007 annual meeting. On October 13, 2008, following the 2007 annual meeting, Vishay withdrew its proposal and filed a Notice of Voluntary
Dismissal of its complaint.

Governmental Investigations.The Company is cooperating fully with investigators from the SEC Division of Enforcement, the Internal
Revenue Service
and the U.S. Attorneys' Office regarding matters relating to the Audit Committee-led Investigation and other matters described in Note 2, "Restatements of Consolidated Financial
Statements," of the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2007 filed with the SEC on August 1, 2008. The Company has responded to
subpoenas for records from the SEC; and the Company will continue to cooperate with these investigators regarding their investigation into these matters.

IXYS Litigation.On June 6, 2000, the Company filedInternational Rectifier Corporation v. IXYS
Corporation, Case No. CV-00-06756-R, in the United States District Court for the Central District of California (the "IXYS IP
Action"). The Company's complaint alleged that certain IXYS Corporation

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17. Litigation (Continued)

("IXYS")
MOSFET products infringed certain of the Company's patents. After proceedings, including a jury trial on damages, in the District Court and an initial appeal, a jury trial on infringement and
damages was held commencing in September 2005, with the jury finding that IXYS was infringing certain claims of Patent No. 4,959,699 and awarding IR $6.2 million in damages through
September 2005. In September 2006, the District Court entered the final judgment and permanent injunction based on the jury verdict. IXYS again appealed. In an opinion issued in February 2008, the
Federal Circuit ruled against IR and reversed the judgment. In July 2008, the Company filed a petition with the Supreme Court of the United States for a writ of certiorari, which was denied in October
2008. The proceedings are now at an end, subject to ancillary motions of the parties regarding fees. On March 24, 2009, IXYS filed a lawsuit in the Superior Court of the State of California,
County of Santa Clara, Case No. 109CV138093, naming the Company and certain others as defendants and alleging malicious prosecution regarding the IXYS IP Action. The complaint seeks damages,
including without limitation, punitive and exemplary damages. The Company has not been served in the case; however, if served, the Company intends to defend against the claims asserted against it in
this action vigorously.

EPC/Alex Lidow Litigation.In September 2008, the Company filed suit in the U.S. District Court for the Central District of California
against
Efficient Power Conversion Corp. ("EPC"), certain of EPC's employees and other defendants (including Alex Lidow, a former chief executive officer and director of the Company, and now a principal of
EPC) alleging improper and unauthorized use and/or misappropriation of certain Company confidential information, trade secrets and technology related to the Company's Gallium Nitride development
program. The complaint also alleges breach of contract and civil racketeering. In response to the suit, one of the defendants, Aixtron AG, has filed a parallel action against the Company in a German
civil court in Aachen, Germany. Judgment in the action in Germany was entered in favor of Aixtron AG and against the Company. In addition, certain of the defendants in the EPC case filed motions in
the U.S. District Court. On February 6, 2009, the U.S. District Court dismissed the EPC case, granting leave to amend the suit and re-file. On March 16, 2009, the Company
refiled the suit in the Los Angeles Superior Court and intends to vigorously pursue its claims in that action and defend the pending parallel case in Aachen, Germany. On March 16, 2009, Alex
Lidow and EPC filed suit in the Los Angeles Superior Court against the Company alleging claims arising out of Lidow's employment with and separation from the Company, and for violations of the
California Labor Code and California Business and Professions Code. The Company intends to vigorously defend against that action.

Angeles. v. Omega.See Note 16, "Environmental Matters."

In
addition to the above, the Company is involved in certain legal matters that arise in the ordinary course of business including without limitation, litigation involving two of its
subcontractor assemblers. The Company intends to pursue its rights and defend against any claims brought by third parties vigorously. However, because of the nature and inherent uncertainties of
litigation, should the outcome of these actions be unfavorable, the Company's business, financial condition, results of operations or cash flows could be materially and adversely affected.

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18. Commitments and Contingencies

In connection with the Divestiture (See Note 2), the Company included in long-term liabilities $19.3 million for certain tax obligations with respect to divested
entities. This estimate has been revised to $14.8 million following the filing of certain amended tax returns and due to currency translation adjustments.

Following
the Divestiture, the Company commenced discussions with Vishay regarding the application of the net working capital adjustment formula in accordance with the terms of the
definitive documents related to the Divestiture. However, the Company did not reach agreement on the working capital adjustment within the time limits prescribed by the definitive documents. As of the
date of this report, Vishay continues to assert a net working capital adjustment in its favor of approximately $20.0 million, and the Company maintains that the proper application of the
contractual formula results in no adjustment to net working capital. The Company does not believe that Vishay's assertions have merit and intends to vigorously defend its position.

Vishay
has advised the Company that it believes certain forecasts it received from the Company during the Divestiture negotiations related to the Automotive Systems Business Unit
("ASBU") of the PCS Business were "materially overstated" and "based upon assumptions that management of the Company at the time knew to be unfounded and unsupportable." As part of its claim, Vishay
also alleged that non-disclosure and concealment of future prospects related to the ASBU business caused Vishay to suffer damages in excess of $50.0 million attributable to, among
other things, the purchase price for ASBU, subsequent operational losses and the costs incurred by Vishay in connection with its subsequent divestment of the ASBU business. The Company does not
believe that Vishay's assertions have merit and intends to vigorously defend its position.

Vishay
has also advised the Company of certain other potential claims, including, but not limited to, certain product quality claims related to PCS Business products transferred to
Vishay but manufactured prior to the consummation of the Divestiture and a claim regarding certain chemicals found in the ground water at its former manufacturing plant in Borgaro, Italy. The Company
believes that these claims will not have a material adverse effect on its business or prospects, and it intends to vigorously defend its rights and position.

During
the third quarter of fiscal year 2009 the Company entered into an amended foundry services agreement with one of its foundry suppliers, under which the Company is entitled to
purchase up to 1,000 silicon wafers per week. Under the terms of the agreement, the Company may be required to advance funds or transfer equipment against future processing charges if the Company does
not purchase minimum required amounts of dies or wafers determined on a quarterly basis. The maximum amount the Company would be required to advance under the agreement is $5.5 million of cash
and equipment, at fair market value, with cash advances limited to a maximum of $2.5 million. If future purchases exceed a minimum level, a portion of the purchase price of these purchases will
be credited against the advance. As of March 29, 2009 the Company had advanced $1.1 million to the foundry which was recorded in prepaid expenses and other receivables on the balance
sheet at March 29, 2009. As of March 29, 2009, the Company believes that the advances will be recovered through future purchases under the agreement.

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

19. Stock Repurchase Program

On October 27, 2008, the Company announced that its Board of Directors authorized a stock repurchase program of up to $100.0 million. Stock repurchases under this program
may be made in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased depend on market conditions and other factors. The stock repurchase
program may be suspended at any time without prior notice. The Company has used and plans to continue to use existing cash to fund the repurchases. All of the shares repurchased by the Company during
the third quarter and nine months year to date March 29, 2009 were purchased in open market transactions through this program. For the three and nine months ended March 29, 2009, the
Company repurchased 663,200 and 1,331,080 shares for $8.0 million and $15.4 million, respectively. As of March 29, 2009 the Company had not cancelled the repurchased shares of
common stock and as such they are reflected as treasury stock in the March 29, 2009 balance sheet.

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

International Rectifier Corporation ("IR") designs, manufactures and markets power management semiconductors. Power management
semiconductors address the core challenges of power management, power performance and power conservation, by increasing system efficiency, allowing more compact end-products, improving
features on electronic devices and prolonging battery life.

We
pioneered the fundamental technology for power metal oxide semiconductor field effect transistors ("MOSFETs") in the 1970s, and estimate that the majority of the world's planar power
MOSFETs use our technology. Power MOSFETs are instrumental in improving the ability to manage power efficiently. Our products include power MOSFETs, high voltage analog and mixed signal integrated
circuits ("HVICs"), low voltage analog and mixed signal integrated circuits ("LVICs"), digital integrated circuits ("ICs"), radiation-resistant ("RAD-Hard") power MOSFETs,
insulated gate bipolar transistors ("IGBTs"), high reliability DC-DC converters, PowerStage ("PS") modules, and DC-DC converter type applications.

During
the quarter ended March 29, 2009, we continued to experience declining demand along with the overall market decline, resulting in a 22.7 percent decline in revenue
in the quarter compared to the prior quarter. During the quarter, we decreased our production output at a rate greater than our revenue declined in order to reduce our inventory, which we decreased by
$13.9 million from the prior quarter. As a result of our decision to significantly reduce production levels, our factory capacity utilization rates declined to abnormally low levels during the
quarter. This low level of factory utilization contributed to lower gross margins during the quarter as we were not able to reduce our fixed manufacturing overhead costs commensurate with our decline
in production. In addition, this low factory utilization increased the unit cost of inventory that was produced but did not ship during the period. As this higher unit cost inventory will be shipped
in future periods, we expect that our gross margins will continue to be negatively impacted. We expect demand visibility to remain uncertain, and we are closely monitoring our production levels and
shipments to our channel distributors to ensure that our manufacturing output matches our customer demand.

We
are proceeding with our plans to consolidate our manufacturing sites in order to reduce our costs. During the second fiscal quarter, we decided to reduce the size of our Newport,
Wales wafer fabrication facility, and we estimate achieving savings from this initiative of about $7.9 million per year beginning in calendar year 2010. Also during the second quarter of fiscal
year 2009, we decided to close our El Segundo, California wafer fabrication facility which we estimate will be completed by the end of calendar year 2010. We estimate that this factory closure will
save us about $12.7 million per year beginning in calendar year 2011.

In
addition to reducing our manufacturing costs, we will continue our efforts to align our operating expense structure with our revenue levels. Although we plan to reduce our
manufacturing and selling and administrative costs in the near term, we expect to maintain our investment levels in new product development in order to meet our longer term revenue goals. Last
quarter, we announced that we planned to reduce our worldwide workforce by about 850 employees for the fiscal year ended June 28, 2009 compared to the fiscal year ended June 29, 2008.
Through the nine months ended March 29, 2009, we have reduced our workforce by more than 75% of our plan. Once these planned headcount reductions are completed by the end of the fiscal year, we
expect to save about $31.0 million on an annualized basis. We expect to incur severance related costs for the 2009 fiscal year of about $13.0 million associated with these reductions.

Our
cash, cash equivalents and investments as of March 29, 2009 totaled $639.4 million compared to $682.0 million as of the quarter ended December 28, 2008.
The quarterly decline in cash and

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investments
was driven primarily by cash used in operations. In addition, during the quarter ended March 29, 2009, we re-purchased about 663,000 shares of our common stock at an
aggregate cost of about $8.0 million.

Results of Operations

Segments

At the beginning of the first quarter of fiscal year 2009, our Chief Executive Officer ("CEO"), who is our Chief Operating Decision
Maker, refined the definition of our Company's business segments by renaming our Aerospace and Defense ("A&D") segment as our HiRel ("HR") segment, combining our previously identified PS segment with
our Enterprise Power ("EP") segment and creating a new Automotive Products ("AP") segment which was previously reported within the Energy-Saving Products ("ESP") and Power Management Devices ("PMD")
segments. Furthermore, some products that were previously reported under the EP segment are now reported under the PMD segment. Consequently, we now report in seven segments: EP, PMD, ESP, HR, AP, IP,
and TS. Prior year segment presentation has been recast to conform with current year presentation. For a description of our reporting segments, see Note 13, "Segment Information", in the notes
to our unaudited condensed consolidated financial statements.

Selected Operating Results

The following table sets forth certain operating results for the three and nine months ended March 29, 2009 and March 30,
2008 as a percentage of revenues (in millions, except percentages):

Three Months Ended

Nine Months EndedMarch 29, 2009

March 30, 2008

March 29, 2009

March 30, 2008Revenues

$
146.6


100.0
%
$
252.2


100.0
%
$
580.8


100.0
%
$
781.2


100.0
%Cost of sales


115.7


78.9


185.7


73.6


389.2


67.0


525.2


67.2Gross profit


30.9


21.1


66.5


26.4


191.6


33.0


256.0


32.8Selling and administrative expense


51.8


35.4


76.1


30.2


178.6


30.8


212.6


27.2Research and development expense


22.4


15.3


26.0


10.3


72.0


12.4


81.3


10.4Impairment of goodwill


23.9


16.3








23.9


4.1





Amortization of acquisition-related intangible assets


1.1


0.8


1.1


0.4


3.3


0.6


3.2


0.4Asset impairment, restructuring and other charges


7.1


4.9


1.9


0.8


56.6


9.7


2.0


0.3Operating loss


(75.4
)

(51.4
)

(38.5
)

(15.3
)

(142.8
)

(24.6
)

(43.1
)

(5.5
)Other expense, net


11.6


7.9


3.8


1.5


36.8


6.3


11.3


1.5Interest income, net


(4.1
)

(2.8
)

(6.8
)

(2.7
)

(8.4
)

(1.4
)

(22.6
)

(2.9
)Loss before income taxes


(82.9
)

(56.5
)

(35.5
)

(14.1
)

(171.2
)

(29.5
)

(31.8
)

(4.1
)Provision for (benefit from) income taxes


(1.2
)

(0.8
)

(13.9
)

(5.5
)

101.0


17.4


(21.0
)

(2.7
)Net loss

$
(81.7
)

(55.7
)%
$
(21.6
)

(8.6
)%
$
(272.2
)

(46.9
)%
$
(10.8
)

(1.4
)%


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Results of Operations for the Three and Nine Months Ended March 29, 2009 compared with the Three and Nine Months Ended March 30, 2008

Revenue and Gross Margin

Ongoing segment revenue, which excludes the TS segment, for the three and nine months ended March 29, 2009 was
$135.0 million and $545.5 million, respectively, compared to $237.8 million and $734.7 million in the comparable three and nine months ended March 30, 2008,
respectively. During this period, revenues decreased by 43.3 percent and 25.8 percent for the three and nine months ended March 29, 2009, respectively, compared to the three and
nine months ended March 30, 2008, respectively. The decline for the three and nine months ended March 29, 2009 was primarily due to a continuing slowdown in the economy, customer draw
down of their inventories and lower sales of our game station related products. Sales declined in all of our segments in the quarterly and year-to-date comparison.

Ongoing
segment gross margin decreased to 22.8 percent for the three months ended March 29, 2009 compared to 27.8 percent for the three months ended March 30,
2008, and increased to 35.6 percent for the nine months ended March 29, 2009 compared to 34.7 percent in the nine months ended March 30, 2008.

Our
quarter gross margin declined from the year ago quarter, primarily due to a $7.9 million decline in royalty revenue which is recorded at 100% gross margin, lower product
revenue which increased our fixed costs as a percentage of revenue, and much lower capacity utilization during the three months
ended March 29, 2009 compared to the three months ended March 30, 2008. During the three months ended March 29, 2009, we incurred $8.8 million of costs associated with
abnormally low factory utilization. The abnormally low factory utilization resulted in excess capacity costs which were recognized in cost of goods sold in the current period. The abnormally low
utilization and excess capacity costs were a result of our decision to reduce our inventory levels during the period. These increased costs associated with our low capacity utilization partially
offset a $14.7 million favorable gross margin impact from the reduction in inventory related costs, which declined from $20.7 million in the three months ended March 30, 2008 to
$6.0 million in the three months ended March 29, 2009. These inventory related costs represent write-offs associated with excess inventory. Since we reduced our production
levels during the quarter, and we were not able to reduce our fixed manufacturing costs at the same rate as our production levels, our manufacturing costs did not decline at the same rate as our
revenue, resulting in decreased margins. In addition, the low factory utilization increased the unit cost of inventory that was produced but did not ship during the period. As this higher unit cost
inventory will be shipped in future periods, we expect to continue to operate at low factory utilization levels, and we expect that our gross margins will continue to be negatively impacted. During
the three months ended March 29, 2009, we also incurred manufacturing employee severance of $0.8 million associated with the lower production levels.

For
the nine months ended March 29, 2009, ongoing segment gross margin increased due to the reduction of inventory related charges and favorable product mix as our higher gross
margin HiRel, ESP and IP business segments contributed a higher percentage of our year-to-date revenue and we experienced steeper revenue declines in our lower gross margin
Power Management Devices and Automotive Products segments. These favorable margin impacts were partially offset by the negative impact of much lower capacity utilization compared to the nine month
period ended March 30, 2008. During the nine months ended March 29, 2009 we also recorded manufacturing employee severance of $4.1 million as a result of headcount reductions in
response to the lower production levels

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Revenue and gross margin by business segments are as follows (in thousands, except percentages):

Three Months Ended
March 29, 2009

Three Months Ended
March 30, 2008Business Segment

Revenues

Percentage
of Total

Gross Margin

Revenues

Percentage
of Total

Gross
MarginPower Management Devices

$
42,593


29.0
%

(3.5
)%
$
83,815


33.3
%

17.1
%Energy-Saving Products


35,272


24.1


34.7


46,734


18.5


21.8HiRel


33,954


23.2


47.1


39,421


15.6


46.8Automotive Products


9,453


6.4


4.2


22,440


8.9


24.0Enterprise Power


11,315


7.7


11.8


35,109


13.9


21.3Ongoing customer segments total


132,587


90.4


21.5


227,519


90.2


24.5Intellectual Property


2,365


1.6


100.0


10,286


4.1


100.0Ongoing segments total


134,952


92.0


22.8


237,805


94.3


27.8Transition Services


11,690


8.0


0.9


14,419


5.7


2.9Consolidated total

$
146,642


100.0
%

21.1
%
$
252,224


100.0
%

26.4
%




Nine Months Ended
March 29, 2009

Nine Months Ended
March 30, 2008Business Segment

Revenues

Percentage
of Total

Gross
Margin

Revenues

Percentage
of Total

Gross
MarginPower Management Devices

$
180,505


31.1
%

14.8
%
$
265,978


34.0
%

21.6
%Energy-Saving Products


120,830


20.8


40.6


125,698


16.1


33.4HiRel


110,739


19.1


52.4


117,529


15.0


51.5Automotive Products


40,521


7.0


24.8


62,897


8.1


30.7Enterprise Power


67,944


11.7


37.4


133,225


17.1


35.0Ongoing customer segments total


520,539


89.6


32.5


705,327


90.3


32.0Intellectual Property


24,925


4.3


100.0


29,382


3.8


100.0Ongoing segments total


545,464


93.9


35.6


734,709


94.1


34.7Transition Services


35,398


6.1


(7.3
)

46,444


5.9


1.4Consolidated total

$
580,862


100.0
%

33.0
%
$
781,153


100.0
%

32.8
%


PMD
revenue for the three months ended March 29, 2009 decreased by 49.2 percent from the three months ended March 30, 2008. PMD revenue for the nine months ended
March 29, 2009 decreased by 32.1 percent from the nine months ended March 30, 2008. The year-over-year and year-to-date decrease in
revenue for our PMD products was due to a continued slowdown in the market, a continued decline in demand for notebooks and other consumer related products as well as declines in demand for our older
generation products. Gross margin for the PMD segment decreased to (3.5) percent and 14.8 percent for the three and nine months ended March 29, 2009, from 17.1 percent and
21.6 percent in the three and nine months ended March 30, 2008, respectively. These quarterly and year-to-date reductions in gross margins were primarily driven
by a significant drop in revenue as we were not able to reduce our fixed manufacturing costs at the same rate as our revenue declined. During the three months ended March 29, 2009, we incurred
$3.2 million of costs associated with abnormally low factory utilization. These increased costs associated with our low capacity utilization offset a $1.9 million favorable gross margin
impact from the reduction in inventory related costs, which declined from $4.9 million in the three months ended March 30, 2008 to $3.0 million in the three months ended
March 29, 2009. During the nine months ended March 29, 2009, we incurred $4.0 million of costs associated with abnormally low factory utilization. These increased costs associated
with our low capacity utilization offset a $1.5 million favorable gross margin impact from the reduction in inventory related costs, which declined from $6.2 million in the nine months
ended March 30, 2008

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to
$4.7 million in the nine months ended March 29, 2009. Also, the gross margin was impacted by a decline in average selling price for the three and nine months ended March 29,
2009 compared with the three and nine months ended March 30, 2008.

ESP
revenue for the three months ended March 29, 2009 decreased by 24.5 percent from the three months ended March 30, 2008. ESP revenue for the nine months ended
March 29, 2009 decreased by 3.9 percent from the nine months ended March 30, 2008. The year-over-year revenue decrease was due to a continued slowdown in
the market and a year-over-year decline for our industrial and consumer appliances related products. The year-to-date revenue decrease was also due to
poor market conditions and a decline in demand for products sold in Plasma Display Panels. Gross margin for the ESP segment was 34.7 percent and 21.8 percent for the three months ended
March 29, 2009 and March 30 2008, respectively, compared to 40.6 percent and 33.4 percent for the nine months ended March 29, 2009 and March 30 2008,
respectively. For the three months ended March 29, 2009 the improvement in gross margin was primarily driven by a significant reduction in inventory related costs which offset costs associated
with lower capacity utilization. During the three months ended March 29, 2009, we recorded an $8.0 million favorable gross margin impact from the reduction in inventory related costs,
which declined from $8.2 million in the three months ended March 30, 2008 to $0.2 million in the three months ended March 29, 2009. This favorable gross margin impact was
partially offset by $2.0 million of costs associated with abnormally low factory utilization. For the nine months ended March 29, 2009 the improvement in gross margin was primarily
driven by improved manufacturing efficiencies as we reduced our manufacturing costs on flat revenue compared to the nine months ended March 30, 2008. During the nine months ended
March 29, 2009, we also recorded a $2.1 million favorable gross margin impact from the reduction in inventory related costs, which declined from $4.2 million in the nine months
ended March 30, 2008 to $2.1 million in the nine months ended March 29, 2009. These favorable gross margin impacts were partially offset by $2.6 million of costs associated
with abnormally low factory utilization. Also, gross margins were impacted by a decline in
average selling price for the three and nine months ended March 29, 2009 compared with the three and nine months ended March 30, 2008.

HiRel
revenue for the three months ended March 29, 2009 decreased by 13.9 percent from the three months ended March 30, 2008. Revenue for the nine months ended
March 29, 2009 decreased by 5.8 percent from the nine months ended March 30, 2008. This revenue decrease was primarily due to lower sales of our satellite and military related
products. Gross margin for the HiRel segment increased to 47.1 percent for the three months ended March 29, 2009, from 46.8 percent in the three months ended March 30,
2008, and increased to 52.4 percent for the nine months ended March 29, 2009, from 51.5 percent for the nine months ended March 30, 2008. The
year-over-year increase in gross margin was primarily due to increased sales of higher margin HiRel products. The year-to-date increase in margin is
mainly attributable to a one-time design change and expedite fee of $1.7 million for a major customer which commands a significantly higher margin than the base business in the
first quarter of fiscal year 2009, partially offset by lower average selling prices.

AP
revenue for the three months ended March 29, 2009 decreased by 57.9 percent from the three months ended March 30, 2008. Revenue for the nine months ended
March 29, 2009 decreased by 35.6 percent from the nine months ended March 30, 2008. The year-over-year and year-to-date revenue
decline was due to a slowdown in the automotive industry and production cuts in the U.S. market. Gross margin for the AP segment decreased to 4.2 percent for the three months ended
March 29, 2009, from 24.0 percent in the three months ended March 30, 2008, and to 24.8 percent for the nine months ended March 29, 2009, from 30.7 percent
for the nine months ended March 30, 2008. These quarterly and year-to-date reductions in gross margins were primarily driven by a significant drop in revenue as we were
not able to reduce our fixed manufacturing costs at the same rate as our revenue declined. In addition, during the three months ended March 29, 2009, we incurred $0.6 million of costs
associated with abnormally low factory utilization. These increased costs associated with our low

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capacity
utilization partially offset a $1.0 million favorable gross margin impact from the reduction in inventory related costs, which declined from $1.8 million in the three months
ended March 30, 2008 to $0.8 million in the three months ended March 29, 2009. During the nine months ended March 29, 2009, we incurred $0.8 million of costs
associated with abnormally low factory utilization. These increased costs associated with our low capacity utilization offset a $0.1 million favorable gross margin impact from the reduction in
inventory related costs, which declined from $1.4 million in the nine months ended March 30, 2008 to $1.3 million in the nine months ended March 29, 2009. Also, gross
margin was impacted by a decline in average selling price for the three and nine months ended March 29, 2009 compared with the three and nine months ended March 30, 2008.

EP
revenue for the three months ended March 29, 2009 decreased by 67.8 percent from the three months ended March 30, 2008. Revenue for the nine months ended
March 29, 2009 decreased by 49.0 percent from the nine months ended March 30, 2008. This decrease was primarily due to lower sales of our game station related products, reduced
content in our newer game station parts and lower sales
to enterprise server customers. Gross margin for the EP segment decreased to 11.8 percent for the three months ended March 29, 2009, from 21.3 percent in the three months ended
March 30, 2008, and an increase to 37.4 percent for the nine months ended March 29, 2009, from 35.0 percent for the nine months ended March 30, 2008. The quarterly
reduction in gross margin was primarily driven by a significant drop in revenue as we were not able to reduce our fixed manufacturing costs at the same rate as our revenue declined. During the three
months ended March 29, 2009, we incurred $0.6 million of costs associated with abnormally low factory utilization. These increased costs associated with our low capacity utilization
partially offset a $3.4 million favorable gross margin impact from the reduction in inventory related costs, which declined from $4.8 million in the three months ended March 30,
2008 to $1.4 million in the three months ended March 29, 2009. In addition, EP gross margins, excluding the negative impacts of reduced volume and under utilization, improved due to
favorable product mix as we shipped less of our lower margin game station products. The year to date improvement in gross margin was primarily driven by lower inventory related charges and favorable
product mix as we shipped fewer of our lower margin game station products. During the nine months ended March 29, 2009 we recorded a $5.4 million favorable gross margin impact from the
reduction in inventory related costs which, declined from $7.3 million in the nine months ended March 30, 2008 to $1.9 million in the nine months ended March 29, 2009.
These favorable gross margin impacts were partially offset by $0.4 million of costs associated with abnormally low factory utilization. Also, the gross margins were impacted by a decline in
average selling price for the three and nine months ended March 29, 2009 compared with the three and nine months ended March 30, 2008.

IP
revenue was $2.4 million for the three months ended March 29, 2009 compared to $10.3 million for the three months ended March 30, 2008. IP revenue was
$24.9 million for the nine months ended March 29, 2009 compared to $29.4 million for the prior nine months ended March 30, 2008. Revenue for the three months ended
March 29, 2009 declined by $7.9 million from the prior year third quarter due to the expiration of our broadest MOSFET patents. Revenue for the nine months ended March 29, 2009
included the recognition of $18.7 million from the one-time amendment of a patent license agreement with one of our principal licensees. We expect that with the expiration of our
broadest MOSFET patents in 2009, our quarterly royalty revenue will not exceed approximately $2.0 million in each of the next several quarters absent the consummation of additional license
agreements.

TS
revenue was $11.7 million for the three months ended March 29, 2009 compared to $14.4 million for the three months ended March 30, 2008. TS revenue was
$35.4 million for the nine months ended March 29, 2009 compared to $46.4 million for the nine months ended March 30, 2008. TS costs for the nine months ended
March 29, 2009 included $2.3 million due to the revision of the deferred gain on the Divestiture related to the PCS business. On January 15, 2009, the Company received a written
notification from Vishay that terminated certain wafer processing services under the Transition Product Services Agreement ("TPSA") entered into by us with Vishay, effective April 30,

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2009.
The revenue received by us from such terminating services represents a majority of the revenue reported under our TS segment. We therefore expect revenues in our TS segment to decline by more
than 70% in the fiscal quarter ended June 28, 2009 compared to the fiscal quarter ended March 29, 2009. In addition, with the expected drop in revenue during the fiscal quarter ended
June 28, 2009, we expect TS segment gross margins in future periods to be negatively impacted by a dramatic reduction in
utilization of our Temecula, California fabrication facility that has provided most of the wafer services to Vishay.

Selling and Administrative Expense

Selling and administrative expense was $51.8 million (35.4 percent of revenue) and $76.1 million
(30.2 percent of revenue) for the three months ended March 29, 2009 and March 30 2008, respectively, and $178.6 million (30.8 percent of revenue) and
$212.6 million (27.2 percent of revenue) for the nine months ended March 29, 2009 and March 30 2008, respectively.

During
the three and nine months ended March 29, 2009, we incurred fees and costs related to the Audit Committee-led Investigation, 2007 annual meeting and contested
proxy fees and costs, and consulting fees and costs associated with preparing and filing our financial statements and tax returns, totaling approximately $2.2 million and $36.4 million
for the three and nine months ended March 29, 2009, as compared to approximately $24.9 million and $64.6 million of costs related solely to the Audit Committee-led
Investigation in the three and nine months ended March 30, 2008. The costs related to the Audit Committee-led Investigation include legal, audit and consulting fees and other costs
associated with the Investigation, reconstruction of the financial results at our Japan subsidiary, and restatement of multiple periods of consolidated financial statements. The 2007 annual meeting
and contested proxy costs, totaling approximately $0.1 million and $15.5 million, in the three and nine months ended March 29, 2009, respectively, and in connection with our
delayed 2007 annual meeting and the unsolicited proposal, tender offer, the Delaware Action and the Annual Meeting Actions initiated by Vishay.

Excluding
all the above mentioned costs, selling and administrative expense decreased by $1.5 million to $49.6 million in the current fiscal quarter as compared to the
prior year fiscal quarter ended March 31, 2008. The decrease is mainly due to lower salary related expenses associated with lower bonuses and headcount, partially off-set by an
increase in stock option expense.

Research and Development Expense

Research and development ("R&D") expense was $22.4 million and $26.0 million (15.3 percent and 10.3 percent
of revenue) for the three months ended March 29, 2009 and March 30, 2008, respectively, and $72.0 million and $81.3 million (12.4 percent and 10.4 percent of
revenue) for the nine months ended March 29, 2009 and March 30, 2008, respectively. The year-over-year and year-to-date decreases of
$3.6 million and $9.3 million in R&D expenses were mainly due to our efforts to size the organization to be in line with our lower revenue level and savings associated with the closure
of two R&D facilities.
We continue to concentrate our R&D activities on developing new platform technologies, such as our recently announced Gallium Nitride ("GaN") technology, as well as our power management ICs and the
advancement and diversification of our HEXFET®, power MOSFET and insulated gate bipolar transistor product lines.

Stock Option Plan Modifications

Our employee stock option plan typically provides terminated employees a period of thirty (30) days from date of termination to
exercise their vested stock options. In certain circumstances, we have extended that thirty-day period for a period consistent with the plan. In accordance with Statement of Financial
Accounting Standard ("SFAS") No. 123 (Revised 2004) "Share-Based Payment,"

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the
extension of the exercise period was deemed to be a modification of the stock option terms. Additionally, certain of these modified awards have been classified as liability awards within other
accrued expenses. Accordingly, at the end of each reporting period, we determine the fair value of those awards and recognize any change in fair value in our consolidated statements of operations in
the period of change until the awards are exercised, expire or are otherwise settled. As a result of these modifications and the mark-to-market adjustments of the liability
awards included in other accrued expenses, we recorded a net credit of $0.0 million and $0.6 million for the three and nine months ended March 29, 2009, respectively, compared to
a net credit of $2.3 million and $0.5 million for the three and nine months ended March 30, 2008, respectively.

Impairment of Goodwill

During the third quarter of fiscal year 2009, we performed an interim impairment analysis of the goodwill associated with our reporting
units. In reaching a decision to perform an interim impairment analysis of the goodwill associated with our reporting units we considered a number of factors. These factors included the decline in our
market capitalization, our performance against plan and the outlook for our businesses and industry in general. Based on that evaluation at the end of both the second and third quarters of fiscal year
2009, we made a decision to perform an interim impairment analysis of goodwill.

Based
on the results of this interim goodwill impairment analysis at the end of the third quarter of fiscal year 2009, we concluded that for the Automotive Products and Intellectual
Property reporting units the carrying amount of goodwill exceeded their fair value determined using a discounted cash
flow analysis. As a result, we recorded a goodwill impairment charge of $23.9 million during the third quarter of fiscal year 2009. As a result of this impairment, the Automotive Products and
Intellectual Property segments carry no goodwill as of March 29, 2009.

Asset Impairment, Restructuring and Other Charges

Asset impairment, restructuring and other charges reflect the impact of cost reduction programs initiated during fiscal year 2009 and
2008 as well as work force reduction actions undertaken as a result of the termination of a wafer fabrication contract. These programs and initiatives include the closing of facilities, the relocation
of equipment and employees, the termination of employees and other related activities. The following table reflects the charges we recorded in the three and nine months ended March 29, 2009 and
March 30, 2008 related to our restructuring initiatives and asset impairments (in thousands):

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesAsset impairment

$


$


$
48,885

$
Severance


6,524


1,916


6,905


1,923Other charges


593





774


35Total asset impairment, restructuring and other charges

$
7,117

$
1,916

$
56,564

$
1,958


In
addition to the amounts in the table above, $0.9 million of workforce reduction costs was recorded in cost of sales during the quarter end March 29, 2009 related to the
restructuring initiatives.

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Fiscal year 2009 and 2008 Restructuring Initiatives

Newport, Wales Fabrication Facility Consolidation Initiative

We adopted a plan during the second quarter of fiscal year 2009 to consolidate our wafer manufacturing operations in Newport, Wales to
reduce manufacturing costs and reduce capacity as a result of a decline in market demand. The plan will continue to be carried out during the remainder of fiscal year 2009 and fiscal year 2010 with an
estimated total pre-tax cost of approximately $52.4 million of which $48.9 million will be non-cash charges. These charges consist of severance and other
workforce reduction costs of $1.8 million, asset impairment charges of $48.9 million and other costs incurred to close or consolidate the facilities of $1.7 million. As a result
of the adoption of this plan, the Company recorded a $48.9 million asset impairment charge during the second quarter of fiscal year 2009. No other charges related to this restructuring plan
were recorded during the second quarter of fiscal year 2009. The restructuring charge recorded during the third quarter of fiscal year 2009 includes $1.8 million of severance and other
workforce reduction costs. The charges did not impact any specific business segment.

Cash
payments for this initiative are estimated to be approximately $3.3 million during fiscal year 2009 and approximately $0.2 million during fiscal year 2010 and will be
funded by cash from operations and cash and securities on hand.

The
following table summarizes the charges related to the Newport, Wales fabrication facility consolidation initiative for the three and nine months ended March 29, 2009 and
March 28, 2008:

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesAsset impairment

$


$


$
48,885

$
Severance workforce reduction costs


1,794





1,794


Other charges


9





9


Total expense reported in asset impairment, restructuring and other charges


1,803





50,688


Other costs recorded in costs of sales


248





248


Total asset impairment, restructuring and other charges

$
2,051

$


$
50,936

$



We
previously estimated cost savings from the Newport, Wales facility consolidation initiative of approximately $8.0 million per year in manufacturing overhead costs, which would
impact cost of sales. Our current estimate of savings is $2.0 million, $7.0 million and $7.9 million for fiscal years 2009, 2010 and thereafter, respectively. We do not anticipate
these cost savings to be offset by additional costs incurred in other locations.

El Segundo, California Facility Closure Initiative

We adopted a plan for the closure of our El Segundo, California fabrication facility during the second quarter of fiscal year 2009. No
costs were recorded under this plan during the second quarter of fiscal year 2009. The plan will continue to be carried out during the remainder of fiscal year 2009 and fiscal year 2010 with an
estimated total pre-tax cost of $11.4 million of which approximately $0.8 million will be non-cash charges. These charges consist of severance and other workforce
reduction costs of $5.4 million and other costs incurred to close or consolidate the facilities of $6.0 million. The restructuring charge recorded during the third quarter of fiscal year
2009 includes $3.4 million of

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severance
costs and other workforce reduction costs and $1.2 million of other charges of which $0.7 million were recorded in cost of sales. The charges did not impact any specific
business segment.

Cash
payments for this initiative are estimated to be approximately $6.0 million, $2.5 million and $2.1 million during fiscal years 2009, 2010 and thereafter,
respectively, and will be funded by cash from operations and cash and securities on hand.

The
following table summarizes the the charges related to the El Segundo fabrication facility initiative for the three and nine months ended March 29, 2009 and March 28,
2008:

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesAsset impairment

$


$


$


$
Severance and workforce reduction costs


3,433





3,433


Other charges


502





502


Total expense reported in asset impairment, restructuring and other charges


3,935





3,935


Workforce reduction and other costs recorded in costs of sales


692





692


Total asset impairment, restructuring and other charges

$
4,627

$


$
4,627

$



We
previously estimated cost savings from the El Segundo, California fabrication facility closure initiative of approximately $12.7 million per year beginning in calendar year
2011. These cost savings will result in reduced manufacturing overhead costs, which will impact cost of sales. Our estimate has not changed and we do not anticipate these cost savings to be offset by
additional costs incurred in other locations.

Research and Development Facility Closure Initiative

In the third quarter of fiscal year 2008, we adopted a plan for the closure of our Oxted, England facility and its El Segundo,
California R&D fabrication facility. The costs associated with closing and exiting these facilities and severance costs are estimated to total approximately $8.7 million. Of this amount,
approximately $6.7 million represents the cash outlay related to this initiative. We estimate that the closure and exiting of these two facilities will be completed by the end of the fourth
quarter of fiscal year 2011. Restructuring related cash payments are estimated to be approximately $2.7 million, $2.0 million and approximately $0.1 million during fiscal year
2009, 2010, and thereafter, respectively.

The
following table summarizes the charges we recorded in the three and nine months ended March 29, 2009 and March 30, 2008 related to our Research and Development Facility
Closure initiative (in thousands):

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesSeverance

$


$
1,759

$
382

$
1,759Other charges


82





262


Total asset impairment, restructuring and other charges

$
82

$
1,759

$
644

$
1,759


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This
restructuring initiative is expected to result in cost savings of approximately $6.3 million and $7.1 million in fiscal years 2009 and 2010 and thereafter,
respectively. These saving will come from reduced salaries and facility overhead reductions and will impact research and development expense. We do not anticipate these cost savings to be offset by
additional cost incurred at other locations.

Other Activities and Charges

On January 15, 2009, the Company received written notification from Vishay terminating certain wafer processing services under
the TPSA effective April 30, 2009. As a result, we recorded a charge for severance related to the partial termination of the contract during the third quarter of fiscal year 2009 of
$1.3 million. We estimate total cost related to the partial termination of the contract to be $1.3 million, all of which will be cash charges. Actions related to the partial termination
of the contract should be complete by the end of fiscal year 2009. The charges recorded in fiscal year 2008 relate to other smaller scale restructuring initiatives undertaken at our local sites. The
following summarizes the charges we recorded in the three and nine months ended March 29, 2009 and March 30, 2008 (in thousands) (including those related to the partial termination of
the TPSA):

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other charges:Severance

$
1,297

$
157

$
1,297

$
157Total asset impairment, restructuring and other charges (credits)

$
1,297

$
157

$
1,297

$
157


Fiscal year 2007 Initiatives

PCS Divestiture Initiative

During fiscal year 2007, in connection with the Divestiture, we terminated approximately 100 former PCS employees. We also terminated
other operating and support personnel to streamline the organization in connection with the Divestiture.

The
following illustrates the charges we recorded in the three and nine months ended March 29, 2009 and March 30, 2008 related to our PCS Divestiture restructuring
initiative (in thousands):

Three Months Ended

Nine Months EndedMarch 29,
2009

March 30,
2008

March 29,
2009

March 30,
2008Reported in asset impairment, restructuring and other chargesSeverance

$


$


$


$
7Other charges











35Total asset impairment, restructuring and other charges

$


$


$


$
42


Other Impairment Charges

In addition to the Newport facility asset impairment of $48.9 million, during the second quarter of fiscal year 2009, we
recorded an asset impairment of $1.9 million related to assets removed from service in our Tijuana, Mexico facility and certain contract manufacturing facilities. Since the decision to remove
these assets from service was in response to a reduction in demand and not related to an

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exit
activity, the associated asset impairment charge was recorded in cost of sales, not in asset impairment, restructuring and other charges.

Other Expense, net

Other expense, net was $11.6 million and $3.8 million for the three months ended March 29, 2009 and
March 30, 2008, respectively, and $36.8 million and $11.3 million for the nine months ended March 29, 2009 and March 30, 2008, respectively. The change is due,
primarily, to
investment impairment charges of $11.7 million and $37.2 million in the three and nine months ended March 29, 2009, respectively. Other expense included a debt retirement charge
of $5.7 million in the three months ended September 30, 2007. Other income and expense, net, includes primarily foreign currency remeasurements and losses, dividend income from our
equity investments and investment impairments.

Interest Income, net

Interest income was $4.4 million and $7.4 million for the three months ended March 29, 2009 and March 30,
2008, respectively, and $10.1 million and $26.1 million for the nine months ended March 29, 2009 and March 30, 2008, respectively, reflecting net realized losses on the
sale of securities and lower prevailing interest rates on lower average cash and investment balances in the current year.

Interest
expense was $0.3 million and $0.6 million for the three months ended March 29, 2009 and March 30, 2008, respectively, primarily reflecting
accelerated amortization of capitalized financing charges related to the terminated revolving credit facility in November 2008. Interest expense was $1.7 million and $3.5 million for the
nine months ended March 29, 2009 and March 30, 2008, respectively, primarily reflecting lower interest expense due to the repayment of the $550.0 million convertible subordinated
notes (the "Notes") on July 16, 2007.

Income Taxes

Under Accounting Principles Board Opinion No. 28, "Interim Financial Reporting," and FASB Interpretation No. 18,
"Accounting for Income Taxes in Interim Periodsan Interpretation of APB Opinion No. 28," we are required to adjust our effective tax rate each quarter to be consistent with the
estimated annual effective tax rate. We are also required to record the tax impact of certain discrete items, unusual or infrequently occurring, including changes in judgment about valuation
allowances and effects of changes in tax laws or rates, in the interim period in which they occur. In addition, jurisdictions with a projected loss for the year or a
year-to-date loss where no tax benefit can be recognized are excluded from the estimated annual effective tax rate. The impact of such an exclusion could result in a higher or
lower effective tax rate during a particular quarter, based upon the mix and timing of actual earnings versus annual projections.

In
the third quarter of 2009, we recorded a charge of $12.4 million related to establishing valuation allowances against our current deferred tax assets in the U.S. In accordance
with SFAS No. 109, we evaluate our deferred income taxes quarterly to determine if valuation allowances are required. SFAS
No. 109 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available evidence using a "more
likely than not" standard.

As
cumulative pre-tax losses for the current and prior two years in our U.S. federal consolidated group constitute significant negative evidence, positive evidence of equal
or greater significance is needed at a minimum to overcome that negative evidence before a tax benefit is recognized for deductible temporary differences and loss carryforwards. In evaluating the
positive evidence available, expectations as to future taxable income is generally considered insufficient to overcome the negative evidence of recent cumulative losses, even if supported by detailed
forecasts and projections. We examined the four sources which allow the realization of deferred tax assets. They are: carrybacks,

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reversals
of existing temporary differences, tax planning strategies, and future taxable income exclusive of reversals of existing temporary differences.

Of
the four sources of taxable income, loss carrybacks is the only meaningful one available to support our ability to realize the tax benefit of our remaining US federal current deferred
tax assets. A valuation allowance, therefore, was recorded to the extent that the carryback of current losses did not utilize deferred tax assets and deferred tax liabilities would not also offset the
realization of those assets.

During
the third quarter of fiscal year 2009, we filed amended and original returns for prior fiscal years for the U.S. and various jurisdictions. We revised our estimates to its Tax
Provision and recorded a benefit to Tax Expense in the amount of approximately $7.8 million. We have filed a claim for refund on the U.S. income tax returns the total of which ranges from
$25 million to $30 million.

Due
to the filing of the tax returns we revised our estimates to our tax provision and recorded a benefit to tax expense in the amount of approximately $7.8 million. We recorded a
tax benefit of $1.2 million for the third quarter of fiscal year 2009. The previously noted $12.4 million in valuation allowances recorded against our deferred tax assets reduced the
benefit from our revision to estimates and the benefit of a loss carryback we realized in this quarter.

Our
effective tax rate related to continuing operations was 1.4 percent and 39.2 percent for the three months ended March 29, 2009 and March 30, 2008,
respectively and (59.0) percent and 65.9 percent for the nine months ended March 29, 2009 and March 30, 2008, respectively. For the three and nine months ended March 29,
2009, our effective tax rate differed from the U.S. federal statutory tax rate of 35 percent, resulting from (i) realization of a year-to-date refund benefit
arising from a loss carryback and (ii) revision of estimates arising from the filing of tax returns for several fiscal years partially offset by (i) valuation allowances recorded on
deferred tax assets,
(ii) impairment of certain securities, and (iii) non deferral of income from certain foreign jurisdictions. Our effective tax rate will be volatile due to the losses that cannot benefit
our tax expense in the US and UK in combination with our geographic mix of income which results in profit in certain foreign jurisdictions with a resulting tax payable.

Liquidity and Capital Resources

At March 29, 2009, we had $373.5 million of total cash (excluding $18.0 million of restricted cash), cash
equivalents and investments, consisting of available-for-sale fixed income and investment-grade securities. As of March 29, 2009 and June 29, 2008, the fair
values of our mortgage-backed and asset-backed securities were $43.0 million (6.7 percent of cash and cash equivalents and short-term and long-term investments)
and $168.2 million (23.2 percent of cash and cash equivalents and short-term and long-term investments), respectively (see Part I, Item 3,
"Quantitative and Qualitative Disclosures about Market Risk," for discussions about our investment strategy). As of the end of the third quarter of fiscal year 2009, we recorded an aggregate of
$37.2 million in charges for other-than-temporary impairments relating to certain available-for-sale securities as a result of declines in their
fair values through March 29, 2009.

Our
cash, cash equivalents and investments at the end of each period were as follows (in thousands):

March 29,
2009

June 29,
2008Cash and cash equivalents

$
373,495

$
320,464Investments


265,899


405,419$
639,394

$
725,883


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Our
cash flows were as follows (in thousands):

Nine Months EndedMarch 29,
2009

March 30,
2008Cash flows (used in) provided by operating activities

$
(39,523
)
$
8,912Cash flows provided by (used in) investing activities


101,111


(15,037
)Cash flows used in financing activities


(11,546
)

(561,478
)Effect of foreign currency exchange rate changes


2,989


2,270Net increase (decrease) in cash and cash equivalents

$
53,031

$
(565,333
)


Cash
used in operating activities is composed of our net loss adjusted for certain non-cash items and changes in operating assets and liabilities. During the nine months
ended March 29, 2009, operating activities used net cash of $39.5 million compared to $8.9 million provided in the nine months ended March 30, 2008. Non-cash
increases to cash flows from operations during the nine months ended March 29, 2009 included $47.1 million of depreciation and amortization, $37.3 million in
write-down of investments, $4.6 million loss on sale of investments, $23.9 million in goodwill impairment, $50.9 million in fixed asset impairments and
$78.6 million in deferred income taxes. Changes in operating assets and liabilities decreased cash by $28.4 million, primarily attributed to decreases in accounts payable, accrued
salaries and wages and other accrued liabilities these cash out flows were partially offset by decreases in trade receivables and inventories.

Cash
provided by investing activities during the nine months ended March 29, 2009 was $101.1 million. Proceeds from sales or maturities of investments were
$353.0 million, offset by $239.5 million of cash used to purchase investments. During the nine months ended March 29, 2009, we invested $12.9 million in capital equipment.

Cash
used in financing activities of $11.5 million primarily reflected stock repurchases and the net settlement of restricted stock units, partially offset by proceeds from the
exercise of stock options, a reduction in restricted cash and other cash in flows.

During
the third quarter we entered into an amended foundry services agreement with certain minimum purchase requirements, which if not met, require cash advances to the foundry to be
credited against future purchases up to a cash advance payment maximum of $2.5 million. As of March 29, 2009 we have advanced the foundry $1.1 million. We estimate that we will
meet the maximum advance payment amount of $2.5 million at some point within the next three fiscal quarters. In addition, we had purchase commitments for capital expenditures of approximately
$2.3 million as of March 29, 2009. We intend to fund capital expenditures and working capital requirements through cash and cash equivalents on hand and anticipated cash flow from
operations.

During
the second quarter of fiscal year 2009 we initiated cost reduction plans at our Newport, Wales, El Segundo, California and Temecula, California wafer fabrication
facilities. We estimate cash out flows for these initiatives will be approximately $10.6 million, $2.7 million and $2.1 million in fiscal years 2009, 2010 and thereafter,
respectively. For all other initiatives, estimated cash outflows are $2.7 million and $2.0 million for fiscal years 2009 and 2010, respectively. Cash payments related to all initiatives
for the nine months ended March 29, 2009 were approximately $2.7 million. We intend to fund these expenditures with cash from operations and cash and cash equivalents on hand.

On
October 27, 2008, we issued a press release announcing that our Board of Directors authorized a stock repurchase program of up to $100.0 million. Repurchases of our
shares of common stock under this program may be made in the open market or through privately negotiated transactions. The timing and actual number of shares repurchased depends on market conditions
and other factors. The stock

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repurchase
program may be suspended at any time without prior notice. As of March 29, 2009, we have repurchased approximately 1.3 million shares for $15.4 million.

As
we previously reported, we terminated our prior multi-currency revolving credit facility in November 2008. We currently have no outstanding line of credit facilities.

As
described in Part II, Item 8, Note 4, "Derivative Financial Instruments," of our Annual Report on Form 10-K for the fiscal year ended
June 29, 2008 filed with the SEC on September 15, 2008 (the "2008 Annual Report"), we had entered into a five-year foreign exchange forward contract in May 2006 with BNP
Paribas (the "Forward Contract") for the purpose of reducing the effect of exchange rate fluctuations on forecasted intercompany purchases by our Japan subsidiary. Under the terms of the Forward
Contract, we were required to exchange 507.5 million Yen for
$5.0 million on a quarterly basis starting in June 2006 and expiring in March 2011. In December 2007, we terminated the Forward Contract and received $2.8 million of cash as part of the
settlement. In accordance with SFAS No. 133 Implementation Issue No. G3 "Cash Flow Hedges, Discontinuation of a Cash Flow Hedge," ("SFAS 133") the net gain at the Forward Contract's
termination date will continue to be reported in accumulated other comprehensive income and recognized over the originally specified time period through March 2011, until it is probable that the
forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period of time thereafter.

In
connection with certain tax matters described in Part I, Item 1, Note 14, "Income Taxes," we are pursuing refunds for income taxes for which we cannot determine
that the realization of the tax refunds of $61.1 million is probable and as such, we have not recognized them as income tax benefits in our financial statements. We have determined that we have
overpaid $49.5 million of income taxes (which is included in the $61.1 million) in Singapore as a result of changes in our transfer pricing of intercompany transactions. We received a
notice of assessment for the Singapore tax authority due to the late filing of the Singapore subsidiary's fiscal year 2007 income tax return. The assessment of approximately $14.5 million was
based upon our transfer pricing methodology prior to fiscal year 2007. We have determined that collection on this assessment is not probable as it is more likely than not that our current transfer
pricing methodology will be sustained.

In
the third quarter of fiscal year 2009 we filed amended U.S. federal income tax returns have claimed a refund the total of which ranges from $25 million to $30 million.

We
believe that our existing cash and cash equivalents, together with funds generated from operations, will be sufficient to meet operating requirements and satisfy existing balance
sheet liability obligations for at least the next twelve months. Our cash and cash equivalents are available to fund continuing operating losses, capital expenditures, our stock repurchase program,
strategic investments, mergers and acquisitions and other potential large-scale cash needs that may arise.

Off-Balance Sheet Arrangements

In addition to the operating lease obligations and purchase commitments discussed in the 2008 Annual Report, we entered into an amended
foundry services agreement during the third quarter of fiscal year 2009. This agreement may require that we advance funds or transfer equipment against future processing charges if we do not purchase
a minimum required amount of wafers. See Note 18, "Commitments and Contingencies", in the notes to unaudited condensed consolidated financial statements for further discussion.

Recent Accounting Pronouncements

Information set forth under Part I, Item 1, Note 1, "Business, Basis of Presentation and Summary of Significant
Accounting PoliciesRecent Accounting Pronouncements" is incorporated herein by reference.

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Critical Accounting Policies and Estimates

Our critical accounting policies and estimates have not changed from our fiscal year ended June 29, 2008, except for the
addition of the following critical accounting policies:

Revenue Recognition and Allowances

In accordance with Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition," we recognize revenue when evidence of an
arrangement exists, pricing is fixed or determinable, collection is reasonably assured, and delivery or performance of service has occurred. We recognize revenue upon shipment or upon delivery,
depending on specific contractual terms and/or shipping terms with the customer. If title transfer and risk of loss are addressed explicitly in a customer contract or by reference to the standard
terms and conditions, those stated terms determine whether the recognition of revenue on product sales to that customer shall be upon either shipment or delivery. If the contract is silent and lacks
reference to our Company's standard terms and conditions, and
barring other contrary information, transfer of title and risk of loss will follow the historical shipping terms for that customer. If revenue is to be recognized upon delivery, such delivery date is
tracked through information provided by the third party shipping company used by us to deliver the product to the customer.

Generally,
we recognize revenue on sales to distributors, or channel partners, using the "sell in" method (i.e. when product is sold to the distributor) rather than the "sell
through" method (i.e. when the product is sold by the distributor to the end user). Certain distributors and other customers have limited rights of return (including stock rotation rights)
and/or are entitled to price protection, where a rebate credit may be provided to the customer if our Company lowers its price on products held in the distributor's inventory. Additionally, in certain
limited cases, we may pre-approve a credit to a distributor to facilitate a particular sale by the distributor to an end customer. Our Company estimates and establishes allowances for
expected future product returns and credits in accordance with Statement of Financial Accounting Standards ("SFAS") No. 48, "Revenue Recognition When Right of Return Exists." We record a
reduction in revenue for estimated future product returns and future credits to be issued to the customer in the period in which revenues are recognized, and for future credits to be issued in
relation to price protection at the time we make changes to our distributor price book. The estimate of future returns and credits is based on historical sales returns, analysis of credit memo data,
and other factors known at the time of revenue recognition. We monitor product returns and potential price adjustments on an ongoing basis.

Revenue
on sales to distributors that act only as fulfillment houses (agents) is deferred until the inventory is sold through to the end customer. We also maintain consignment inventory
arrangements with certain of our customers. Pursuant to these arrangements, our Company delivers products to a customer or a designated third party warehouse based upon the customer's projected needs,
but does not recognize revenue unless and until the customer reports that it has removed the product from the warehouse to incorporate into its end products, and all the other revenue recognition
criteria under SAB 104 are met.

We
recognize royalty revenue in accordance with agreed upon terms when performance obligations are satisfied, the amount is fixed or determinable, and collectability is reasonably
assured. The amount of royalties recognized is often calculated based on the licensees' periodic reporting to us. Any upfront payments are recognized as revenue only if there is no continuing
performance obligation when the license commenced and collectability is reasonably assured. Otherwise, revenue is amortized over the life of the license or according to performance obligations
outlined in the license agreement.

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Fair Value Measurements

In the current market environment, some of our financial assets are more difficult to value or are subject to complex valuation
techniques. SFAS No. 157, "Fair Value Measurements" ("SFAS 157") establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and expands
on required disclosures about fair value measurement. Under SFAS 157, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants as of the measurement date. SFAS 157 also establishes a hierarchy for inputs used in measuring fair value that maximizes the use
of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in
valuing the asset or liability developed based on market data obtained from sources independent from us. Unobservable inputs are inputs that reflect our assumptions about the factors market
participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The categorization of financial assets and liabilities within the
valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is broken down into three levels (with Level 3 being the lowest)
defined as follows:



Certain
financial assets are measured using Level 3 inputs such as pricing models, discounted cash flow methodologies or similar techniques and where at least one significant
model assumption or input is unobservable. Level 3 inputs are used for financial assets that include certain investment securities for which there is limited market activity where the
determination of fair value requires significant judgment or estimation. Level 3 inputs are also used to value investment securities that include certain mortgage-backed securities and
asset-backed securities for which there was a decrease in the observability of market pricing for these investments. At March 29, 2009, these securities were valued primarily using independent
valuation firm or broker pricing models that incorporate transaction details such as maturity, timing and amount of future cash flows, as well as assumptions about liquidity and credit valuation
adjustments of marketplace participants at March 29, 2009.

Other-Than-Temporary Impairment

We evaluate securities for other-than-temporary impairment on a quarterly basis. Impairment is evaluated
considering numerous factors, and their relative significance varies depending on the situation. Factors considered include the length of time and extent to which the market value has been less than
cost; the financial condition and near-term prospects of the issuer of the securities; and our intent and ability to retain the security in order to allow for an anticipated recovery in
fair value. If,

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based
upon the analysis, it is determined that the impairment is other-than-temporary, the security is written down to fair value, and a loss is recognized through earnings.
Other-than-temporary impairments relating to certain available-for-sale securities, for the three months ended March 29, 2009 and
March 30, 2008 were $11.7 million and $3.8 million, respectively, and for the nine months ended March 29, 2009 and March 30, 2008 were $37.2 million and
$4.7 million, and were included in other expense. As of March 29, 2009, our cumulative unrealized losses related to debt instruments classified as
available-for-sale were de minimis (approximately $9.7 million as of June 29, 2008). These unrecognized losses could be recognized in the future if our
other-than-temporary assessment changes.

For
a complete description of what we believe to be the critical accounting policies and estimates that affect our more significant judgments and estimates used in the preparation of our
unaudited condensed consolidated financial statements, please refer to "Management's Discussion and Analysis of Financial Condition and Results of OperationsCritical Accounting Policies
and Estimates" in our Annual Report on Form 10-K for the fiscal year ended June 29, 2008.

Out-of-Period Adjustments

Included in the results for the third quarter and year-to-date period of fiscal year 2009 are a number of corrections of prior period
errors, some of which increased and some of which decreased net loss. Based on our current and historical financial condition and results of operations, management has determined that these
corrections are immaterial both individually and in the aggregate to the financial statements in each applicable prior period and the current periods to date.

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to financial market risks, including fluctuations in interest rates, foreign currency exchange rates and market value
risk related to our investments, including mortgage-backed securities. We use derivative financial instruments primarily to mitigate these risks and as part of our strategic investment program. In the
normal course of business, we also face risks that are either non-financial or non-quantifiable. Such risks principally include country risk, credit risk and legal risk and are
not discussed or quantified in the following analyses, as well as risks set forth under the heading "Factors that May Affect Future Results."

Interest Rates

Our exposure to interest rate risk is primarily through our investment portfolio. The primary objective of our investments in debt
securities is to preserve principal while maximizing yields. To achieve this objective, the returns on our investments in fixed-rate debt are generally based on the three-month LIBOR, or,
if longer term, are generally swapped into U.S. dollar three-month LIBOR-based returns. Based on our investment portfolio and interest rates at March 29, 2009, a 100 basis point increase or
decrease in interest rates would result in an annualized decrease or increase of approximately $3.2 million, respectively, in the fair value of the investment portfolio. Changes in interest
rates may affect the fair value of the investment portfolio; however, unrealized gains or losses are not recognized in net income unless the investments are sold or the loss is considered to be other
than temporary.

Foreign Currency Exchange Rates

We generally hedge currency risks of non-U.S.-dollar-denominated investments in debt securities with offsetting currency
borrowings, currency forward contracts, or currency interest rate swaps. Gains and losses on these non-U.S.-currency investments would generally be offset by corresponding losses and gains
on the related hedging instruments, resulting in negligible net exposure.

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A
significant amount of our revenue, expense, and capital purchasing transactions are conducted on a global basis in several foreign currencies. At various times, we have currency
exposure related to the British Pound Sterling, the Euro and the Japanese Yen. Considering our specific foreign currency exposures, we have exposure to the Japanese Yen, since we have significant
Yen-based revenues without material Yen-based manufacturing costs. To protect against reductions in value and the volatility of future cash flows caused by changes in currency
exchange rates, we have established revenue, expense and balance sheet transaction risk management programs. Currency forward contracts and currency options are generally utilized in these hedging
programs. Our hedging programs seek to reduce, but do not always entirely eliminate, the impact of currency exchange rate movements.

In
May 2006, we entered into the Forward Contract with BNP Paribas for the purpose of reducing the effect of exchange rate fluctuations on forecasted inter-company purchases by our Japan
subsidiary. We had designated the Forward Contract as a cash flow hedge. Under the terms of the Forward Contract, we were required to exchange 507.5 million Yen for $5.0 million on a
quarterly basis starting in June 2006 and expiring in March 2011. In December 2007, we terminated the Forward Contract and received $2.8 million of cash as part of the settlement. In accordance
with SFAS 133, the net gain at the Forward Contract's termination date will continue to be reported in accumulated other comprehensive income and recognized over the originally specified time
period through March 2011, until it is probable that the forecasted transaction will not occur by the end of the originally specified time period or within an additional two-month period
of time thereafter.

We
had approximately $20.4 million and $38.0 million in notional amounts of forward contracts not designated as accounting hedges under SFAS 133 at March 29,
2009 and March 30, 2008, respectively. Net realized and unrealized foreign-currency gains recognized in earnings, as a component of other expense, were $0.1 million and
$0.3 million for the three months ended March 29, 2009 and March 30, 2008, respectively, and $0.4 million and $0.7 million for the nine months ended March 29,
2009 and March 30, 2008, respectively.

Market Value Risk

We carry certain assets at fair value. Generally, for assets that are reported at fair value we use quoted market prices or valuation
models that utilize market data inputs to estimate fair value. In certain cases quoted market prices or market data inputs may not be readily available or availability could be diminished due to
market conditions. In these cases, our estimate of fair value is based on best available information or other estimates determined by management.

At
March 29, 2009, we had $639.4 million of total cash, cash equivalents and investments, consisting of available-for-sale fixed income and
investment-grade securities. We manage our total portfolio to encompass a diversified pool of investment-grade securities. Our investment policy is to manage our total cash and investment balances to
preserve principal and maintain liquidity while maximizing the returns on the investment portfolio. To the extent that our marketable portfolio of investments continues to have strategic value, we
typically do not attempt to reduce or eliminate our market exposure. For securities that we no longer consider strategic, we evaluate legal, market, and economic factors in our decision on the timing
of disposal. We may or may not enter into transactions to reduce or eliminate the market risks of our investments in marketable securities. During the nine months ended March 29, 2009, the fair
values of certain investments declined and we recognized $37.3 million in other-than-temporary impairment relating to certain available-for-sale
securities. See Part II, Item 1A, "Risk FactorsOur investments in certain securities expose us to market risks", set forth in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2008.

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ITEM 4.    CONTROLS AND PROCEDURES

This Report includes the certifications of our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") required by
Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). See Exhibits 31.1 and 31.2. This Item 4 includes information concerning the
controls and control evaluations referred to in those certifications.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
are designed to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including the CEO and CFO, to allow timely decisions regarding required disclosures.

Our
management, under the supervision and with the participation of our CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as
of March 29, 2009. Based on our evaluation and the identification of the material weaknesses in our internal controls over financial reporting, our CEO and CFO concluded that, as of
March 29, 2009, our disclosure controls and procedures were not effective. Management has identified the following control deficiencies that constituted individually or in the aggregate
material weaknesses in our internal control over financial reporting as of March 29, 2009:

1.     We
did not maintain an effective control environment based on the criteria established in the COSO Framework. Specifically,



The
control environment material weaknesses described above contributed to the material weaknesses set forth below.

2.     We
did not maintain effective controls over the completeness and accuracy of our period end financial reporting processes for certain transactions, including controls
with respect to review, supervision and monitoring of certain accounting operations. Specifically,



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3.     We
did not maintain effective controls to ensure proper periodic recognition of revenue transactions were consistent with the nature of our customer relationships.
Specifically, (i) existing Company policy and procedures were not consistently applied and adequately communicated, (ii) controls designed to maintain customer master file and contract
information were not effectively operating and (iii) controls were not effective to detect certain customer sales transactions containing transfer of risk, transfer of title and delivery terms
that were inconsistent with our standard sales terms and conditions. Other customer sale transactions and shipments were recorded in an earlier period than the correct sale transaction period without
a written acknowledgement by the customer.

4.     We
did not maintain effective controls to ensure that accounts payable and accrued liabilities are recorded in the proper period. Specifically, the controls surrounding
our accounts payable and accrued liabilities process failed to ensure the completeness and accuracy over the processing and recording of purchase invoices at period end. Consequently, our accounts
payable and accrued liability balances relating primarily to inventory in transit, construction in progress and other selling and administrative expense may not be properly recorded. In addition, we
did not maintain effective controls to ensure we did not accrue for amounts which had either been paid in prior periods or were included in accounts payable at period end.

5.     We
did not maintain effective controls over the accounting for income taxes, including the accurate determination and reporting of income taxes payable, deferred income
tax assets and liabilities and the related income tax provision. We did not effectively review and monitor the accuracy of the components of the income tax provision calculation and related income
taxes payable. We did not maintain a sufficient complement of personnel with income tax accounting knowledge and expertise to ensure the completeness and accuracy of our income taxes payable, deferred
income tax assets and liabilities, and income tax provision.

Changes in Internal Control Over Financial Reporting

During the third quarter of fiscal year 2009, there were no changes in internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Plans for Remediation of Material Weaknesses

We have engaged in and are continuing to engage in substantial efforts to improve our internal control over financial reporting and
disclosure controls and procedures related to the preparation of our financial statements and disclosures. We have begun the implementation of
some of the measures described below and concentrated our efforts on (i) communicating, both internally and externally, our commitment to a strong effective control environment, high ethical
standards and financial reporting integrity, (ii) certain personnel actions, (iii) comprehensive training for Finance and Accounting Department personnel, (iv) the implementation
of policies and procedures to ensure that we retain important business and accounting records and (v) more rigorous period end reporting policies and procedures.

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We
are in the process of developing and implementing remediation plans to address our material weaknesses. Our remediation plans include many actions that are in various stages of
completion and designed to strengthen our internal controls over financial reporting. They include the following:



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Our
remediation efforts are continuing and we expect to make additional changes to our control environment and accounting and income tax reporting processes that we believe will
strengthen our internal control over financial reporting. We have dedicated considerable resources to the design, implementation, documentation, and testing of our internal controls and although we
believe the steps taken to date have improved the effectiveness of our internal control over financial reporting, we have not completed all the corrective processes and procedures we believe
necessary. Accordingly, we will continue to monitor the effectiveness of our internal control over financial reporting in the areas affected by the material weaknesses and as required, perform
additional procedures, including the use of manual procedures and utilization of external technical advisors to ensure that our financial statements continue to be fairly stated in all material
respects.

Inherent Limitations Over Internal Controls

We do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect
all errors. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Further, the design of a
control system must acknowledge the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. These inherent limitations include the realities
that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the deliberate acts of one or more persons. The
design of any system of controls is based, in part, upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with associated policies or
procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error may occur and not be detected.

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PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

Our disclosures regarding the matters set forth in Note 16, "Environmental Matters," and Note 17, "Litigation," to our
unaudited condensed consolidated financial statements set forth in Part I, Item I, herein, are incorporated herein by reference.

ITEM 1A.    RISK FACTORS

This Quarterly Report on Form 10-Q includes some statements and other information that are not historical facts but
are "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. The materials presented can be identified by the use of forward-looking terminology
such as "anticipate," "believe," "estimate," "expect," "may," "should," "view," or "will" or the negative or other variations thereof. We caution that such statements are subject to a number of
uncertainties, and actual results may differ materially. Factors that could affect our actual results include those set forth under "Item 1A. Risk Factors" in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2008 as supplemented by the factors set forth below in our Quarterly Reports on Form 10-Q for the fiscal
quarters ended September 30, 2008 and December 28, 2008, the factors set forth below and other uncertainties disclosed in our reports filed from time to time with the SEC.

Our operations may be materially and adversely affected by the recent outbreak of Swine Influenza ("swine flu"), or occurrences of other types of pandemics in the future.

Our business operations may be subject to significant interruption or prolonged suspension if any of our manufacturing or operating
facilities or employees experience an outbreak of swine flu or other type of pandemic. An outbreak can result in quarantines or closures of some of our facilities, which would severely disrupt our
operations; the sickness or death of our employees or a general slowdown in the global economy. Any such outbreak may also have a materially adverse effect on demand for our products, which could
severely disrupt our business operations and adversely affect our financial condition and results of operations.

We
have a significant manufacturing assembly facility in Mexico, where there has been a recent swine flu outbreak. While we attempt to make contingency plans, our business could be
materially and adversely affected by the closing of Mexican businesses due to any government ordered shutdown of "nonessential" businesses by disrupting our ability to produce and deliver our
products.

Due
to the uncertainty of any of the foregoing events or other unforeseen consequences of public health problems on financial and economic markets generally, we cannot provide any
estimate of how this might affect our future results.

ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS



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The
following provides information on a monthly basis for the quarter ended March 29, 2009 with respect to the Company's purchases of equity securities:

Period

Total Number of
Shares Purchased

Average Price
Paid per Share

Total Number of
Shares Purchased
as Part of
Publicly Announced
Plans or Programs(1)

Maximum Number
(or Approximate
Dollar Value) of Shares
that May Yet be
Purchased Under the
Plans or ProgramsDecember 29, 2008 to January 25,,2009











January 26, 2009 to February 22, 2009











February 23, 2009 to March, 29, 2009


663,200

$
12.03


663,200

$
84,000,000


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ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

For information on matters submitted to a vote of our Company's shareholders at the 2008 annual meeting of shareholders held on
January 9, 2009, see the information set forth in Part II, Item 4, Submission of Matters to a Vote of Security Holders of our Quarterly Report on Form 10-Q for
the quarter ended December 28, 2008, which is incorporated by this reference into this Item 4.

ITEM 5.    OTHER INFORMATION

(a)   On
May 6, 2009, the Company and Tatum, LLC ("Tatum") entered into a Work Project Agreement ("Consulting Agreement"), pursuant to which Tatum would provide
the general consultation and advisory services of Peter Knepper, the Company's former acting Chief Financial Officer. Under the Consulting Agreement, Tatum would provide Mr. Knepper's services
at an hourly fee of $500 or a daily fee equal to $4,000, in addition to an administrative fee of five percent. Mr. Knepper's compensation from the Consulting Agreement is approximately 70% of
the hourly and daily fees paid thereunder. The Consulting Agreement expires no later than December 31, 2009, provides for no minimum or guaranteed level of services, and provides that in no
event shall services be provided resulting in fees in excess of $120,000.

ITEM 6.    EXHIBITS

Index:3.1

Certificate of Incorporation, as amended to date (incorporated by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-8 filed with the Commission on July 19, 2006; Registration
No. 333-117489)3.2

Bylaws as Amended (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed with the Commission on November 11, 2005)10.1

Amendment to Employment Agreement, dated December 29, 2008, entered into between the Company and Oleg Khaykin (incorporated by reference to Exhibit 10.6 to the Company's Quarter Report on Form 10-Q
filed with the Commission on February 6, 2009)+


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Index:10.2

RSU Award Agreement, dated August 6, 2008, entered into between the Company and Oleg Khaykin (incorporated by reference to Exhibit 10.7 to the Company's Quarter Report on Form 10-Q filed with the Commission
on February 6, 2009)+10.3

Option Award Agreement, dated August 6, 2008, entered into between the Company and Oleg Khaykin (incorporated by reference to Exhibit 10.8 to the Company's Quarter Report on Form 10-Q filed with the
Commission on February 6, 2009)+10.4

Amendment to Offer Letter, dated December 26, 2008, entered into between the Company and Ilan Daskal (incorporated by reference to Exhibit 10.9 to the Company's Quarter Report on Form 10-Q filed with
the Commission on February 6, 2009)+10.5

Amendment to Severance Agreement, dated December 26, 2008, entered into between the Company and Ilan Daskal (incorporated by reference to Exhibit 10.10 to the Company's Quarter Report on Form 10-Q filed
with the Commission on February 6, 2009)+10.6

Amendment to Compensation Agreement Letter, dated December 29, 2008, entered into between the Company and Donald R. Dancer (incorporated by reference to Exhibit 10.11 to the Company's Quarter Report on
Form 10-Q filed with the Commission on February 6, 2009)+10.7

Amendment to Severance Agreement, dated December 29, 2008, entered into between the Company and Donald R. Dancer (incorporated by reference to Exhibit 10.12 to the Company's Quarter Report on Form 10-Q
filed with the Commission on February 6, 2009)+10.7

Amendment to Severance Agreement, dated December 26, 2008, entered into between the Company and Michael Barrow (incorporated by reference to Exhibit 10.14 to the Company's Quarter Report on Form 10-Q
filed with the Commission on February 6, 2009)+10.8

Amendment to Offer Letter, dated December 26, 2008, entered into between the Company and Michael Barrow (incorporated by reference to Exhibit 10.13 to the Company's Quarter Report on Form 10-Q filed
with the Commission on February 6, 2009)+10.8

Revised form of RSU Award Agreement under the Company's 2000 Incentive Plan (Amended and Restated as of November 22, 2004) (incorporated by reference to Exhibit 10.15 to the Company's Quarter Report on
Form 10-Q filed with the Commission on February 6, 2009)+10.9

2000 Incentive Plan Revised Non Employee Director Option Form*+10.10

International Rectifier Corporation Deferred Compensation Plan, Amended and Restated as of January 1, 2009*+10.11

Amendment No. 2 to Consulting Agreement, dated as of April 21, 2009, by and between the Company and Pahl Consulting, Inc.*+10.12

Project Work Agreement, dated as of May 6, 2009, by and between the Company and Tatum, LLC*+10.13

Employment Agreement Amendment, dated as of February 17, 2009, by and between the Company and Donald R. Dancer (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K
filed with the Commission on February 20, 2009)+31.1

Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*31.2

Certification Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*


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Index:32.1

Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*32.2

Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*


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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
RegistrantDate: May 8, 2009

/s/ ILAN DASKAL Ilan Daskal Chief Financial Officer
(Principal Financial and Accounting Officer)


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