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

FORM 10-Q/AAmendment No. 1

(Mark One)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For 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 o    No ý

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 72,826,406 shares of the registrant's common stock, par value $1.00 per share, outstanding on July 25, 2008.



---





EXPLANATORY NOTE

International Rectifier Corporation is filing this amendment (the "Form 10-Q/A") to our Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 2008 (the "Form 10-Q"), filed with the U.S. Securities and Exchange Commission ("SEC") on August 1, 2008, solely to correct a typographical error from
"$32,484" to "$(32,484)" in the line item Comprehensive (loss) income for the nine months ended March 31, 2008 in the table titled "International Rectifier Corporation and Subsidiaries
Unaudited Condensed Consolidated Statements of Compensation Income (Loss) (in thousands)" on page 5 of the Form 10-Q (and now shown on page 4 of this Form 10-Q/A) in
Part I, Item 1Financial Statements.

This
Form 10-Q/A should be read in conjunction with the original Form 10-Q, continues to speak as of the date of the Form 10-Q, and does not modify or update
disclosures in the original Form 10-Q except as noted above. Accordingly, this Form 10-Q/A does not reflect events occurring after the filing of the Form 10-Q or modify or
represent management's view as of the filing date of the Form 10-Q.

2

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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
March 31,

Nine Months Ended
March 31,2008

2007

2008

2007Revenues

$
252,224

$
291,278

$
781,153

$
925,609Cost of sales


185,694


186,677


525,186


563,425Gross profit


66,530


104,601


255,967


362,184Selling and administrative expense


76,060


55,330


212,645


165,371Research and development expense


26,633


31,754


83,287


92,146Amortization of acquisition-related intangible assets


378


394


1,135


1,242Asset impairment, restructuring and other charges (Note 12)


1,916


8,155


1,958


10,322Operating (loss) income


(38,457
)

8,968


(43,058
)

93,103Other expense (income) net


3,846


(3,647
)

11,279


(5,424
)Interest income, net


(6,841
)

(4,619
)

(22,562
)

(8,987
)(Loss) income from continuing operations before income taxes


(35,462
)

17,234


(31,775
)

107,514(Benefit from) provision for income taxes


(13,895
)

12,307


(20,934
)

47,199(Loss) income from continuing operations


(21,567
)

4,927


(10,841
)

60,315(Loss) income from discontinued operations, net of taxes (Note 2)





(2,843
)




4,255Net (loss) income

$
(21,567
)
$
2,084

$
(10,841
)

64,570Net (loss) income per common share:Basic(Loss) income from continuing operations

$
(0.30
)
$
0.07

$
(0.15
)
$
0.83(Loss) income from discontinued operations




$
(0.04
)



$
0.06Net (loss) income per share

$
(0.30
)
$
0.03

$
(0.15
)
$
0.89Diluted(Loss) income from continuing operations

$
(0.30
)
$
0.07

$
(0.15
)
$
0.83(Loss) income from discontinued operations




$
(0.04
)



$
0.06Net (loss) income per share

$
(0.30
)
$
0.03

$
(0.15
)
$
0.89Average common shares outstandingbasic


72,826


72,618


72,817


72,291Average common shares and potentially dilutive securities outstandingdiluted


72,826


73,269


72,817


72,829


The
accompanying notes are an integral part of these statements.

3

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS)

(In thousands)

Three Months Ended
March 31,

Nine Months Ended
March 31,2008

2007

2008

2007Net (loss) income

$
(21,567
)
$
2,084

$
(10,841
)
$
64,570Other comprehensive income (loss):Foreign currency translation adjustments


3,624


(2,408
)

2,339


25,854Unrealized (losses) gains on securities:Unrealized holding losses on available-for-sale securities, net of tax effect of $0, $1,465, $(179) and $1,148, respectively


(1,921
)

(2,232
)

(20,858
)

(1,952
)Unrealized holding gains (losses) on foreign currency forward contract, net of tax effect of $0, $(213), $0 and $(2,110), respectively





71


(2,303
)

3,593Reclassification adjustments of net losses on available-for-sale securities and foreign currency forward contract





(488
)

(821
)

(1,332
)Cumulative translation adjustment reclassified to income upon sale of business





(8,071
)




(8,071
)Other comprehensive income (loss)


1,703


(13,128
)

(21,643
)

18,092Comprehensive (loss) income

$
(19,864
)
$
(11,044
)
$
(32,484
)
$
82,662


The
accompanying notes are an integral part of these statements.

4

---





INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

March 31,
2008

June 30,
2007ASSETSCurrent assets:Cash and cash equivalents

$
287,707

$
853,040Restricted cash


4,341


Short-term investments


111,090


113,901Trade accounts receivable, net


139,294


152,820Inventories


159,391


219,723Current deferred tax assets


11,087


11,087Prepaid expenses and other receivables


66,367


63,451Total current assets


779,277


1,414,022Restricted cash


14,967


14,592Long-term investments


314,166


335,995Property, plant and equipment, net


551,821


573,246Goodwill


131,446


131,446Acquisition-related intangible assets, net


17,724


20,881Long-term deferred tax assets


77,160


71,560Other assets


55,499


85,663Total assets

$
1,942,060

$
2,647,405LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Bank loans

$


$
462Long-term debt, due within one year





543,383Accounts payable


66,185


68,410Accrued salaries, wages and commissions


38,551


40,588Accrued income taxes


840


162,836Current deferred tax liabilities


2,883


2,883Other accrued expenses


102,006


133,463Total current liabilities


210,465


952,025Long-term accrued income taxes


68,061


Long-term deferred tax liabilities





4,188Other long-term liabilities


35,774


41,873Deferred gain on Divestiture (Note 10)


116,059


116,059Total liabilities


430,359


1,114,145Commitments and contingencies (Notes 16, 17 and 18)Stockholders' equity:Common shares


72,811


72,811Capital contributed in excess of par value of shares


969,342


958,417Retained earnings


390,747


401,588Accumulated other comprehensive income


78,801


100,444Total stockholders' equity


1,511,701


1,533,260Total liabilities and stockholders' equity

$
1,942,060

$
2,647,405


The
accompanying notes are an integral part of these statements.

5

---





INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended
March 31,2008

2007Cash flow from operating activities:Net (loss) income

$
(10,841
)
$
64,570Adjustments to reconcile net (loss) income to net cash provided by operating activities:Depreciation and amortization


59,633


59,863Amortization of acquisition-related intangible assets


1,135


1,562Stock compensation expense


7,425


8,110Pre-tax loss on Divestiture, discontinued operations





4,262Loss on sale of investments





745Asset impairment





5,762Debt retirement charge


5,659


Unrealized gain on derivatives





(2,161
)Provision for bad debt


1,253


4,159Provision for inventory write-downs


24,416


31,758Deferred income taxes


1,195


(6,600
)Deferred revenue


(14,064
)

9,361Write-down of investments


4,675


Tax benefit from options exercised


118


3,886Excess tax benefit from options exercised


(81
)

(1,476
)Change in operating assets and liabilities, net


(71,611
)

(68,109
)Net cash provided by operating activities


8,912


115,692Cash flow from investing activities:Additions to property, plant and equipment


(33,922
)

(108,746
)Proceeds from sale of property, plant and equipment


1,446


1,523Cash conveyed as part of Divestiture





(56,964
)Cost associated with Divestiture





(13,217
)Additions to restricted cash


(375
)

(14,485
)Sale or maturities of investments


279,032


317,673Purchase of investments


(262,920
)

(346,771
)Other, net


1,702


(9,544
)Net cash used in investing activities


(15,037
)

(230,531
)Cash flow from financing activities:Repayments of short-term debt


(550,000
)

Repayments of long-term debt





(26,642
)Repayments of obligations under capital lease


(417
)

(288
)Proceeds from exercise of stock options and stock participation plan


174


19,879Excess tax benefit from options exercised


81


1,476Additions to restricted cash


(4,341
)

Other, net


(6,975
)

2,315Net cash used in financing activities


(561,478
)

(3,260
)Effect of exchange rate changes on cash and cash equivalents


2,270


2,955Net decrease in cash and cash equivalents


(565,333
)

(115,144
)Cash and cash equivalents, beginning of period


853,040


482,907Cash and cash equivalents, end of period


287,707


367,763


The accompanying notes are an integral part of these statements.

6

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES        NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS        March 31, 2008

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, low voltage analog and mixed signal integrated circuits ("ICs"), digital 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

The condensed consolidated financial statements have been prepared in accordance with the instructions for 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 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 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 consolidated financial statements and the notes thereto for the year ended June 30, 2007
included in the 2007 Annual Report on Form 10-K filed with the SEC concurrently herewith (the "2007 Annual Report").

Fiscal Year and Quarter

The Company operates on a 52-53 week fiscal year with the fiscal year ending on a Sunday closest to June 30.
The three months ended March 2008 and 2007 consisted of 13 weeks ended on March 31, 2008 and April 1, 2007, respectively. For ease of presenting the accompanying condensed
consolidated financial statements, the fiscal March quarter-end for all periods presented is shown as March 31.

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

7

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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

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.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS")
No. 157, "Fair Value Measurements" ("SFAS No. 157"), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. In
February 2008, the FASB issued FASB Staff Position ("FSP") Financial Accounting Standard ("FAS") 157-1, "Application of FASB Statement No. 157 to FASB Statement No. 13
and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13" ("FSP FAS 157-1"). FSP FAS 157-1 is
effective upon initial adoption of SFAS No. 157. In February 2008, the FASB issued FSP FAS 157-2, "Effective Date of FASB Statement No. 157," which defers the
effective date of Statement No. 157 to fiscal years beginning after November 15, 2008 and interim periods within those fiscal years, for nonfinancial assets and nonfinancial liabilities
that are not recognized or disclosed at fair value on a recurring basis (at least annually). The Company is currently assessing the potential impact that the adoption of SFAS No. 157 will have
on its consolidated financial statements.

In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159 gives the
Company the irrevocable option to carry many financial assets and liabilities at fair values, with changes to fair value recognized in earnings. SFAS No. 159 is effective for the Company
beginning July 1, 2008, although early adoption is permitted. The adoption of SFAS No. 159 is not expected to have a material impact on the Company's consolidated financial statements.

On
July 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of
FASB Statement No. 109" ("FIN 48"). Under FIN 48, differences between the amounts recognized in the consolidated financial statements
prior to the adoption of FIN 48 and the amounts reported as a result of adoption are to be accounted for as a cumulative effect adjustment recorded to retained earnings. The adoption of
FIN 48 had no material impact on the financial statements.

In
December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" ("SFAS No. 141(R)"). Under SFAS No. 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 No. 141(R) will change the Company's accounting treatment for business combinations on a
prospective basis beginning July 1, 2009.

8

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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

In
December 2007, the SEC issued Staff Accounting Bulletin ("SAB") No. 110 ("SAB 110") to permit entities, under certain circumstances, the continued use of the
"simplified" method, in developing estimates of the expected term of "plain-vanilla" share options in accordance with Statement No. 123(R), Share-Based Payment. SAB 110 amended SAB
No. 107 to permit the use of the "simplified" method beyond December 31, 2007. The Company currently uses the "simplified" method to estimate the expected term for share option grants as
the Company does not have enough historical experience to provide a reasonable estimate. The Company will continue to use the "simplified" method until it has enough historical experience to provide a
reasonable estimate of expected term in accordance with SAB 110. SAB 110 was effective for the Company on January 1, 2008.

In
March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133" ("SFAS
No. 161"). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 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 No. 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 is in the process of evaluating the impact of SFAS No. 161 on its consolidated financial statements.

In
April 2008, the FASB issued FSP FAS 142-3, "Determination of the Useful Life of Intangible Assets" ("FSP FAS 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 FASB Statement No. 142, "Goodwill and Other Intangible Assets." FSP
FAS 142-3 is effective for fiscal years and interim periods beginning after December 15, 2008. The Company is currently assessing the potential impact that the adoption of
FSP FAS 142-3 will have on its consolidated financial statements.

In
May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles" ("SFAS No. 162"). SFAS No. 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
accounting principles generally accepted in the United States of America for nongovernmental entities. This statement is effective 60 days following the SEC's approval of the Public Company
Accounting Oversight Board Auditing amendments to Interim Auditing Standards Section 411, "The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles." The
Company is currently assessing the potential impact that the adoption of SFAS No. 162 will have on its consolidated financial statements.

2. Discontinued Operations and the Divestiture

On April 1, 2007 (the last day of the Company's fiscal third quarter), 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
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 and

9

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

2. Discontinued Operations and the Divestiture (Continued)

while
the Company prepared its restated financial statements, a number of matters have developed, as discussed in Note 20, "Subsequent Events," that have raised uncertainties under applicable
accounting standards and guidance as to the recognition of the gain on the Divestiture. Consequently, the Company has deferred recognition of the gain from continuing operations of
$116.1 million. However, the Company has recognized the loss from discontinued operations of $4.3 million.

The
PCS Business consisted of the Company's former Non-Aligned Products ("NAP") and Commodity Products ("CP") segments. Product lines included in the sale were certain
discrete planar MOSFETs, discrete diodes and rectifiers, discrete thyristors, multi-chip modules not containing ICs and certain other specified products.

As
part of the Divestiture, the Company sold operations in Mumbai, India; Borgaro, Italy; Xian, China; Krefeld, Germany; Swansea, Wales; and Halifax, Nova Scotia, Canada as well as
certain equipment and business operations located in Temecula and El Segundo (California), Tijuana (Mexico) and Singapore.

The
following table shows the components of the Divestiture transaction for the three and nine months ended March 31, 2007 (in thousands):

Gross proceeds from sale

$
339,615Costs of disposition


(33,922
)Fair value of Transition Services Agreements


(16,650
)Net proceeds


289,043Net assets sold


(177,246
)Gain on Divestiture, before taxes

$
111,797Deferred gain on Divestiture from continuing operations, before taxes

$
116,059Loss on Divestiture from discontinued operations, before taxes


(4,262
)Gain on Divestiture, before taxes

$
111,797


The
Company has in connection with the Divestiture transaction recorded a tax benefit of $18.1 million, of which $11.7 million was attributed to discontinued operations.

Loss on Divestiture from discontinued operations, before taxes

$
(4,262
)Income tax benefit on Divestiture, discontinued operations


11,714Gain on Divestiture from discontinued operations, after taxes

$
7,452


Under
the terms of the transaction agreement, the Company entered into license agreements pursuant to which it agreed to license certain of its technology related to the PCS Business to
Vishay. In addition, as part of the Divestiture, the Company agreed to transfer certain other technology related to the PCS Business to Vishay. Vishay, in turn, agreed to license back to the Company
such other technology. The Company also entered into certain transition services agreements ("TSAs") for the sale and purchase of specified products, wafer and packaging services, manufacturing and
other support services, for up to three years following the date of the Divestiture. The fair value of these transition

10

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

2. Discontinued Operations and the Divestiture (Continued)

agreements
was recorded at $20.0 million for the transition services the Company will provide to Vishay and $3.4 million for the transition services Vishay will provide to the Company.
The fair value of these agreements is being amortized over the three year life of the TSAs.

Although
the Company divested itself of both the NAP and CP segments, the CP segment results were not included in discontinued operations, as the Company expects to have
significant ongoing involvement based on the significance of the cash flows to be derived from the TSAs with Vishay.

Subsequent
to April 1, 2007, Vishay and the Company commenced discussions 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 parties did not reach agreement on the working capital adjustment within the time limits prescribed by the definitive documents, and
Vishay has taken the position that the discussion should be deferred pending the disclosure of the results of the internal investigation into certain accounting and financial reporting matters (the
"Investigation") conducted by the Audit Committee of the Board of Directors ("Audit Committee"). 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.

On
June 9, 2008, Vishay asserted 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 the 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 the later divestment of the ASBU business. The Company does not believe that Vishay's claims have merit and intends to defend vigorously 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 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 the Company's former manufacturing plant in Borgaro, Italy. The Company
is currently in the process of assessing these claims and obtaining documentation to verify any potential liabilities to the Company. It believes that these claims will not have a material adverse
effect on the Company's business or prospects, and it intends to vigorously defend its rights and position.

The
outcome of any claim or litigation is inherently uncertain and the Company cannot assure its success. An adverse determination could affect the Company's rights and could have a
material adverse effect on its business, consolidated financial position or results of operations.

11

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

2. Discontinued Operations and the Divestiture (Continued)

The
following table presents revenue, operating loss before income taxes and loss (income), net of taxes for discontinued operations for the three and nine months ended March 31,
2007 (in thousands):

Three Months Ended
March 31,

Nine Months Ended
March 31,2007

2007Revenue

$
30,645

$
85,060Operating loss before income taxes

$
(2,155
)
$
(3,572
)Income tax benefit


1,781


375Loss from discontinued operations, net of taxes


(374
)

(3,197
)Loss on Divestiture, before income taxes


(4,262
)

(4,262
)Income tax benefit


1,793


11,714(Loss) gain on Divestiture, net of taxes


(2,469
)

7,452(Loss) income from discontinued operations, net of taxes

$
(2,843
)
$
4,255


The
Company has in connection with the Divestiture transaction recorded a tax benefit of $18.1 million, of which $11.7 million was attributed to discontinued operations.

3. Investments

Available-for-sale securities as of March 31, 2008 are summarized as follows (in thousands):

Amortized
Cost

Gross
Unrealized
Gain

Gross
Unrealized
Loss

Net
Unrealized
(Loss) Gain

Market
ValueShort-Term Investments:Corporate debt

$
35,026

$
117

$
(336
)
$
(219
)
$
34,807U.S. government and agency obligations


75,972


325


(14
)

311


76,283Total short-term investments

$
110,998

$
442

$
(350
)
$
92

$
111,090Long-Term Investments:Corporate debt

$
47,688

$
382

$
(679
)
$
(297
)
$
47,391U.S. government and agency obligations


79,338


3,172


(4
)

3,168


82,506Mortgage-backed securities


103,215


830


(4,808
)

(3,978
)

99,237Asset-backed securities


89,327


366


(4,661
)

(4,295
)

85,032Total long-term investments

$
319,568

$
4,750

$
(10,152
)
$
(5,402
)
$
314,166


12

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

3. Investments (Continued)

Available-for-sale securities as of June 30, 2007 are summarized as follows (in thousands):

Amortized
Cost

Gross
Unrealized
Gain

Gross
Unrealized
Loss

Net
Unrealized
Loss

Market
ValueShort-Term Investments:Corporate debt

$
80,482

$
15

$
(215
)
$
(200
)
$
80,282U.S. government and agency obligations


32,563





(11
)

(11
)

32,552Asset-backed securities


1,070





(3
)

(3
)

1,067Total short-term investments

$
114,115

$
15

$
(229
)
$
(214
)
$
113,901Long-Term Investments:Corporate debt

$
84,216

$
115

$
(372
)
$
(257
)
$
83,959U.S. government and agency obligations


44,062


120


(242
)

(122
)

43,940Mortgage-backed securities


111,388


80


(827
)

(747
)

110,641Asset-backed securities


97,797


70


(412
)

(342
)

97,455Total long-term investments

$
337,463

$
385

$
(1,853
)
$
(1,468
)
$
335,995


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, one of which is a closely held equity security. One of the
investments is Nihon Inter Electronics Corporation ("Nihon"), a related party as further discussed in Note 19, "Related Party Transactions." The value of the Company's investments is subject to
market fluctuations, which, if adverse, could have a material adverse effect on its financial position and if untimely sold due to illiquidity or otherwise at the down turn, could have a material
adverse effect on its operating results. The Company accounts for these available-for-sale investments under SFAS No. 115. These stocks are traded on either the Tokyo
Stock Exchange or the Taiwan Stock Exchange. Dividend income from these companies was $0.2 million for the three months ended March 31, 2008 and 2007, and $0.4 million and
$0.8 million for the nine months ended March 31, 2008 and 2007, respectively.

The
Company also has a strategic investment in the common stock of a non-publicly traded company which is recorded at cost in other long-term assets. As of
March 31, 2008, the recorded cost basis and estimated fair value of this investment was $3.6 million. The estimate of fair value is based on best available information or other estimates
determined by management. The Company did not experience any impairment in value regarding this investment since inception.

The
carrying values of the equity investments included in other long-term assets at March 31, 2008 and June 30, 2007 were $29.8 million and
$48.0 million, respectively, compared to their purchase cost at March 31, 2008 and June 30, 2007 of $26.5 million and $26.5 million, respectively. Unrealized gain
(loss), net of tax, for the three months ended March 31, 2008 and 2007 was $1.1 million and $(3.5) million, respectively; and for the nine months ended March 31, 2008 and
2007 was $(10.7) million and $(6.5) million, respectively, and was included in other comprehensive income. The carrying

13

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

3. Investments (Continued)

values
of the Company's equity investments are subject to market fluctuations, which if adverse, could have a material adverse effect on its financial position and if untimely sold due to illiquidity
or otherwise at the down turn, could have a material adverse effect on its operating results. Although the carrying values of these investments have declined significantly, the Company does not
anticipate that it will dispose of these strategic investments for a loss within the near term.

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 income (loss) net of applicable income taxes. Gains or losses on sales of investment
available-for-sale are recognized on the specific identification basis.

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. During
the three and nine months ended March 31, 2008, the Company recognized $3.8 million and $4.7 million, respectively, in other-than-temporary impairments
relating to certain available-for-sale securities, included in other expense. In the fourth fiscal quarter of 2008, the Company recorded an additional $3.7 million
charge for an other-than-temporary impairment relating to certain available-for-sale securities as a result of declines in their fair values through June 30, 2008.

The
following table summarizes the market value and gross unrealized losses related to available-for-sale investments, aggregated by type of investment and length
of time that individual securities have been held. The unrealized loss position is measured and determined at each fiscal quarter (in thousands):

Securities held for
less than 12 months,
in a loss position at
March 31, 2008

Securities held for
12 months or more,
in a loss position at
March 31, 2008

Total in a loss
position at
March 31, 2008Market
Value

Gross
Unrealized
Losses

Market
Value

Gross
Unrealized
Losses

Market
Value

Gross
Unrealized
LossesCorporate debt

$
24,912

$
(650
)
$
5,746

$
(365
)
$
30,658

$
(1,015
)U.S. government and agency obligations


16,057


(18
)







16,057


(18
)Mortgage-backed securities


37,888


(4,630
)

3,241


(178
)

41,129


(4,808
)Asset-backed securities


33,531


(3,820
)

8,095


(841
)

41,626


(4,661
)Total

$
112,388

$
(9,118
)
$
17,082

$
(1,384
)
$
129,470

$
(10,502
)


14

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

3. Investments (Continued)



Securities held for
less than 12 months,
in a loss position at
June 30, 2007

Securities held for
12 months or more,
in a loss position at
June 30, 2007

Total in a loss position
at June 30, 2007Market
Value

Gross
Unrealized
Losses

Market
Value

Gross
Unrealized
Losses

Market
Value

Gross
Unrealized
LossesCorporate debt

$
76,920

$
(354
)
$
38,287

$
(233
)
$
115,207

$
(587
)U.S. government and agency obligations


54,023


(181
)

17,704


(72
)

71,727


(253
)Mortgage-backed securities


55,923


(599
)

16,779


(228
)

72,702


(827
)Asset-backed securities


46,663


(186
)

17,877


(229
)

64,540


(415
)Total

$
233,529

$
(1,320
)
$
90,647

$
(762
)
$
324,176

$
(2,082
)


The
amortized cost and estimated fair value of investments at March 31, 2008, by contractual maturity, are as follows (in thousands):

Amortized
Cost

Estimated
Fair ValueDue in 1 year or less

$
99,213

$
99,305Due in 1-2 years


65,904


67,410Due in 2-5 years


113,806


115,215Due after 5 years


151,643


143,326Total investments

$
430,566

$
425,256


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 $0.4 million and $0.7 million for the three and nine months ended March 31, 2008, respectively, and gross realized losses were $(0.7)
million and $(1.3) million for the three and nine months ended March 31, 2008, respectively. Gross realized gains were $0.1 million and $0.3 million for the three and nine months
ended March 31, 2007, respectively, and gross realized losses were $(0.4) million and $(1.0) million for the three and nine months ended March 31, 2007, respectively. The cost of
marketable securities sold was determined by the weighted average cost method.

15

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

4. Supplemental Cash Flow Disclosures

Components in the change of operating assets and liabilities, net of effects of acquisitions and the Divestiture (see Note 2, "Discontinued Operations and the Divestiture"), for
the nine months ended March 31, 2008 and 2007 were comprised of the following (in thousands):

Nine Months Ended
March 31,2008

2007Trade accounts receivable

$
14,360

$
(24,379
)Inventories


39,221


(59,784
)Prepaid expenses and other receivables


(554
)

(28,824
)Accounts payable


(348
)

14,390Accrued salaries, wages and other commissions


(2,448
)

(4,630
)Deferred compensation


(1,405
)

3,086Accrued income taxes payable


(102,921
)

275Other accrued expenses


(17,516
)

31,757Changes in operating assets and liabilities

$
(71,611
)
$
(68,109
)


Supplemental
disclosures of cash flow information (in thousands):

Nine Months Ended
March 31,2008

2007Non-cash investing activitiesLiabilities accrued for property, plant and equipment purchases

$
1,487

$
13,994


5. Inventories

Inventories at March 31, 2008 and June 30, 2007 were comprised of the following (in thousands):

March 31, 2008

June 30, 2007Raw materials

$
31,466

$
31,067Work-in-process


67,117


85,383Finished goods


60,808


103,273Total inventories

$
159,391

$
219,723


During
the three and nine months ended March 31, 2008, the Company recorded write-downs to inventories totaling approximately $17.7 million and $18.2 million,
respectively, both associated with products it no longer supports and inventory that has been deemed in excess of future demand. During the three months ended March 31, 2007, the Company
recorded write-downs to inventories totaling approximately $22.1 million related primarily to quality issues with next-generation game station parts ($10.4 million) and
products it no longer supports ($9.6 million).

16

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

6. Goodwill and Acquisition-Related Intangible Assets

At March 31, 2008 and June 30, 2007 acquisition-related intangible assets included the following (in thousands):

March 31, 2008

June 30, 2007Amortization
Periods (Years)

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
AmountAcquisition-related intangible assets:Completed technology


4 - 12

$
29,679

$
(14,552
)
$
15,127

$
29,679

$
(11,849
)
$
17,830Customer lists


5 - 12


5,446


(3,999
)

1,447


5,446


(3,677
)

1,769Intellectual property and other


5 - 12


7,963


(6,813
)

1,150


7,963


(6,681
)

1,282Total acquisition-related intangible assets




$
43,088

$
(25,364
)
$
17,724

$
43,088

$
(22,207
)
$
20,881


As
of March 31, 2008, estimated amortization expense for the next five years is as follows (in thousands): remainder of fiscal year 2008: $1,052; fiscal year 2009: $4,210; fiscal
year 2010: $4,210; fiscal year 2011: $3,948 and fiscal year 2012: $1,595.

The
carrying amount of goodwill by business segment as of March 31, 2008 is as follows (in thousands):

March 31,
2008

June 30,
2007Power Management Devices

$
28,748

$
28,748Energy-Saving Products


36,984


36,984Aerospace and Defense


18,959


18,959Enterprise Power


22,805


22,805PowerStage


3,876


3,876Intellectual Property


20,074


20,074Total goodwill

$
131,446

$
131,446


Subsequent Events

In fourth fiscal quarter of 2008, the Company began 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. After completing the first step in the goodwill impairment analysis, the Company concluded that goodwill related to the PowerStage ("PS"), Power Management Devices ("PMD")
and Intellectual Property ("IP") segments may be impaired. Several factors led to a reduction in forecasted cash flows, including, among others, lower than expected performance in the Company's PS
segment, softening demand and pricing for products in the PMD segment and a significant decline in projected royalty revenue in the IP segment as its broadest

17

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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

MOSFET
patents expire. Based on the preliminary results of the annual assessment of goodwill for impairment, the net book value of three of the Company's reporting units, PS, PMD and IP, exceeded
their estimated fair value. Therefore, the Company is performing the second step of the impairment test to determine the implied fair value of goodwill. While this second step analysis is not
complete, during the quarter ending June 30, 2008, the Company expects to record an impairment charge. A reasonable estimate of the amount of the impairment charge or range of amounts of the
charge cannot be determined at this time.

7. Bank Loans and Long-Term Debt

The following is a summary of the Company's long-term debt and other loans at March 31, 2008 and June 30, 2007 (in thousands):

March 31,
2008

June 30,
2007Foreign accounts receivable financing facilities at rates from 1.625% to 1.825% and other loans

$


$
894Convertible subordinated notes at 4.25 percent due in July 2007 ($550,000 principal amount, plus accumulated fair value adjustment of ($7,049) at June 30,
2007)





542,951Total debt

$


$
543,845


In
July 2000, the Company issued $550.0 million in principal amount of 4.25 percent Convertible Subordinated Notes due July 2007 (the "Notes"). The interest rate was
4.25 percent per year on the principal amount, payable in cash in arrears semi-annually on January 15 and July 15. The Notes were convertible into shares of the
Company's common stock at any time on or before July 16, 2007, at a conversion price of $73.935 per share, subject to certain adjustments. The Notes were subordinated to all of the Company's
existing and future debt. The Company could redeem any of the Notes, in whole or in part, subject to certain call premiums on or after July 18, 2003, as specified in the Notes and related
indenture agreement. In December 2001 and April 2004, the Company entered into transactions with the JPMorgan Chase Bank ("JPM") for $412.5 million and $137.5 million notional amounts,
respectively, which had the effect of converting the interest rate to variable and required that the Notes be marked to market.

On
July 16, 2007, the Company funded the payment in full at maturity of the Notes due on July 16, 2007. The funding included a final interest payment of
$11.7 million. In connection with the final maturity and payment of the Notes, the Company recorded a debt retirement charge of $5.7 million included in other expense during the nine
months ended March 31, 2008.

In
June 2006, the Company's subsidiary in Singapore entered into a Credit Agreement with Bank of America, N.A. ("BoA"). Pursuant to the Credit Agreement, BoA loaned $81.0 million
to the Singapore subsidiary, bearing interest at the rate of the London Interbank Offered Rate plus 1.0 percent and maturing on June 26, 2008. In conjunction with the Credit Agreement,
the Company entered into a guaranty in favor of BoA to guarantee the payment and performance of obligations by its Singapore subsidiary. In January 2007, the Company's subsidiary in Singapore made a
prepayment of

18

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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

$26.0 million
on the loan. The Credit Agreement contained certain financial and other covenants, with which the Company and its Singapore subsidiary were in compliance at March 31, 2007
and June 30, 2006. In May 2007, the Singapore subsidiary prepaid the remaining balance on the loan of $55.0 million.

On
November 6, 2006, the Company entered into a new five-year multi-currency revolving credit facility with a syndicate of lenders including JPM, BoA, HSBC Bank USA,
and Deutsche Bank AG (the "Facility"). The Facility expires in November 2011 and provides a credit line of $150.0 million with an option to increase the Facility limit to $250.0 million.
Up to $75.0 million of the Facility may be used for standby letters of credit and up to $10.0 million may be used for swing-line loans. The Facility bears interest at
(i) local currency rates plus (ii) a margin between 0 percent and 0.25 percent for base rate advances and a margin between 0.875 percent and 1.25 percent for
Euro-currency rate advances, based on the Company's senior leverage ratio. Other advances bear interest as set forth in the credit agreement. The annual commitment fee for the Facility
ranges between 0.175 and 0.25 percent of the unused portion of the total Facility, depending upon the Company's senior leverage ratio. In connection with the Facility, the Company is required
to pledge as collateral shares of certain of its subsidiaries and certain of the Company's subsidiaries are required to guarantee the Facility. At March 31, 2008, the Company had no borrowings
and $4.3 million in letters of credit outstanding under the Facility.

The
Facility has been amended by (together the "Facility Amendments"): an Amendment No. 1 to the Facility dated May 4, 2007, an Amendment No. 2 to the Facility dated
June 27, 2007, an Amendment No. 3 to the Facility dated September 13, 2007, an Amendment No. 4, to the Facility dated December 14, 2007 and an Amendment
No. 5, to the Facility dated March 17, 2008. Pursuant to the Facility Amendments, the Company's lenders under the Facility agreed that, in light of the Investigation, it would not be
deemed in default with respect to certain representations, warranties, covenants and reporting requirements during a period ending not later than July 31, 2008. In addition, pursuant to the
Facility Amendments, the lenders have no obligation to make any extensions of credit under the Facility (other than the renewal of currently outstanding letters of credit in existing amounts) until
(i) the Investigation has been concluded, (ii) the lenders have received a report of the results thereof and revised audited consolidated financial statements, reasonably satisfactory to
the lenders, and (iii) no other default (as defined in the Facility) exists. As set forth in the Facility Amendments, the Company agreed to provide cash collateral for the outstanding letters
of credit under the Facility and paid amendment fees to the lenders. While the Investigation has been concluded, other conditions remain. The Company intends to reinstate the Facility following the
satisfaction of the necessary conditions, but there can be no assurance that it will be successful (see Part II, Item 1A, "Risk Factors  Our liquidity may be subject to the
availability of a credit facility upon acceptable terms and conditions."). Although the Company is not able to access the Facility except for the renewal of outstanding letters of credit, it believes
it has sufficient cash, cash equivalents, investments and cash
flows from operations to meet current foreseeable working capital and other operating cash requirements.

On
July 30, 2008, the Company and the lender parties to the Facility amended the Facility by Amendment No. 6 that extends the current accommodation through
November 30, 2008 and provides that thirty (30) days after the lenders' receipt of and reasonable satisfaction with the form and substance of (i) revised audited consolidated financial
statements for fiscal years 2007, 2006 and 2005,

19

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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

and
(ii) filing with the SEC of the Company's 2007 Annual Report and Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2007, September 30, 2007, December 31,
2007 and March 31, 2008, and if the Company is in a position to satisfy the other applicable conditions of the Facility, the lenders shall notify the Company in writing either (i) that
extensions of credit are available under the Facility to the Company or (ii) that the Facility must be amended on such further terms and conditions as reasonably requested by such lenders.
Pending the receipt of such notice and, if applicable, execution of such further amendment to the Facility, the Company is not able to access the Facility. The Amendment provides that failure by the
Company to provide full cash collateral for the approximately $4.3 million of letters of credit currently outstanding will result in termination of the Amendment.

At
March 31, 2008, the Company had $200.0 million in total lines of credit (including the Facility), of which $4.3 million had been utilized in letters of credit.

8. Other Accrued Expenses

Other accrued expenses at March 31, 2008 and June 30, 2007 were comprised of the following (in thousands):

March 31,
2008

June 30,
2007Accrued sales returns

$
37,562

$
34,561Accrued accounting and legal costs


18,388


8,924Deferred revenue


7,709


21,773Accrued compensation


7,288


10,354Transition services contract liability


6,667


6,665Accrued sales and other taxes


5,408


6,958Accrued Divestiture transaction costs


3,370


4,901Accrued warranty


2,374


2,434Short-term severance liability


1,359


826Due to customers


464


4,535Accrued interest


75


15,749Other


11,342


15,783Total other accrued expenses

$
102,006

$
133,463


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 product sold and country in which the Company does business. In general, for standard products, the Company will
replace 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.

20

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

8. Other Accrued Expenses (Continued)

The
following table details the changes in the Company's warranty reserve for the nine months ended March 31, 2008, which is included in other accrued liabilities (in thousands):

Accrued warranty, June 30, 2007

$
2,434Accruals for warranties issued during the period


3,484Changes in estimates related to pre-existing warranties


(1,086
)Warranty claim settlements


(2,458
)Accrued warranty, March 31, 2008

$
2,374


9. Other Long-Term Liabilities

Other long-term liabilities at March 31, 2008 and June 30, 2007 were comprised of the following (in thousands):

March 31,
2008

June 30,
2007Divested entities tax obligations

$
18,578

$
18,578Deferred compensation


9,144


9,645Transition services contract liability


6,667


11,665Other


1,385


1,985Total other long-term liabilities

$
35,774

$
41,873


In
connection with the Divestiture, the Company recorded a provision of $18.6 million for certain tax obligations with respect to divested entities.

10. Deferred Gain on Divestiture

Since the consummation of the Divestiture and while the Company prepared its restated financial statements, a number of matters have developed, as discussed in Note 20,
"Subsequent Events," that
have raised uncertainties under applicable accounting standards and guidance as to the recognition of the gain on the Divestiture. Consequently, the Company has deferred recognition of the gain from
continuing operations of $116.1 million. However, the Company has recognized the loss from discontinued operations of $4.3 million.

21

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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 31, 2008 (in thousands, except per share data):

Shares

Weighted
Average
Option
Exercise
Price
Per Share

Aggregate
Intrinsic
ValueOutstanding, June 30, 2007


11,754

$
40.72

$
29,921Granted








Exercised


(15
)

12.63


Expired or canceled


(2,242
)

41.85


Outstanding, March 31, 2008


9,497

$
40.63

$
3,641


For
the nine months ended March 31, 2008 and 2007 the Company received $0.2 million and $19.9 million, respectively, for stock options exercised. Total tax benefit
realized for the tax deductions from stock options exercised was $0.1 million and $3.9 million for the nine months ended March 31, 2008 and 2007, respectively.

The
following table summarizes the Restricted Stock Unit ("RSU") activities for the nine months ended March 31, 2008 (in thousands, except per share data):

Restricted
Stock
Units

Weighted
Average
Grant Date
Fair
Value
Per Share

Aggregate
Intrinsic
ValueOutstanding, June 30, 2007


9

$
49.14

$
337Granted








Exercised








Expired or canceled


(3
)

49.44


Outstanding, March 31, 2008


6

$
49.29

$
123


Additional
information relating to the stock option plans, including employee stock options and RSUs, at March 31, 2008 and June 30, 2007 is as follows (in thousands):

March 31,
2008

June 30,
2007Options exercisable


8,546


9,855Options available for grant


4,344


2,932Total reserved common stock shares for stock option plans


13,848


14,695


The
Company's employee stock option plan typically provides terminated employees a period of thirty days from 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. In accordance with SFAS No. 123(R), the extension of the exercise period was deemed to be a
modification of stock

22

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

11. Stock-Based Compensation (Continued)

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 income 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 $2.3 million and $0.5 million for the three and nine months ended March 31, 2008, respectively. The aggregate fair value of the liability awards included in other
accrued expenses was $0.5 million at March 31, 2008.

For
the three and nine months ended March 31, 2008 and 2007, stock-based compensation expense associated with the Company's stock options and RSUs is as follows (in thousands):

March 31, 2008

March 31, 2007Three Months
Ended

Nine months
Ended

Three Months
Ended

Nine months
EndedCost of sales

$
(84
)
$
304

$
282

$
738Selling and administrative expense


(67
)

6,017


2,838


4,895Research and development expense


(274
)

1,104


747


2,477Total stock-based compensation expense

$
(425
)
$
7,425

$
3,867

$
8,110


The
total unrecognized compensation expense for outstanding stock options and RSUs was $9.2 million as of March 31, 2008, and will be recognized, in general, over three
years. The weighted average number of years to recognize the compensation expense is 1.2 years.

The
fair value of the options associated with the above compensation expense for the three and nine months ended March 31, 2008 and 2007, was determined at the date of the grant
using the Black-Scholes option pricing model with the following weighted average assumptions:

Nine months
ended March 31,
2008

Nine months
ended March 31,
2007Expected life


N/A


3.5 yearsRisk free interest rate


N/A


4.7%Volatility


N/A


43.6%Dividend yield


N/A


0%


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, R&D or
selling and administrative expense,

23

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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

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 restructuring initiatives 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." In determining the asset groups, the Company groups assets at the lowest level for which independent identifiable cash flows information is available. In determining whether an asset was
impaired the Company evaluates undiscounted future cash flows and other factors such as changes in strategy and technology. An indicator of impairment loss exists if the undiscounted 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 a discount rate
to the estimated future cash flows that is consistent with the rate used when analyzing potential acquisitions.

Asset
impairment, restructuring, and other charges (credits) represent costs related primarily to the following initiatives:



The
following table summarizes restructuring and related charges incurred during the three and nine months ended March 31, 2008 and 2007 and recorded in asset impairment,
restructuring and other charges as well as the portion of those costs attributable to discontinued operations (in thousands):

Three Months Ended
March 31,

Nine Months Ended
March 31,2008

2007

2008

2007Reported in cost of sales

$


$
460

$


$
1,001Reported in asset impairment, restructuring and other charges:Asset impairment

$


$
5,762

$


$
5,762Severance


1,916


2,743


1,923


4,905Other charges





80


35


828Subtotal


1,916


8,585


1,958


11,495Discontinued operations (1)





(430
)




(1,173
)Total asset impairment, restructuring and other charges

$
1,916

$
8,155

$
1,958

$
10,322


---

The December 2002 Initiative

In December 2002, the Company announced a restructuring initiative to better reposition itself for market conditions at the time and
de-emphasize its commodity business. The restructuring plans included consolidating and closing certain manufacturing sites in designated facilities and discontinuing

24

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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

production
in other facilities that could not support more advanced technology platforms or products. In addition, the Company sought to implement initiatives to lower overhead costs across its
support organizations. As of December 31, 2006, these restructuring activities were substantially completed. The following illustrates the charges the Company recorded in the three and nine
months ended March 31, 2008 and 2007 related to its December 2002 restructuring initiative (in thousands):

Three Months Ended
March 31,

Nine Months Ended
March 31,2008

2007

2008

2007Reported in cost of sales

$


$
460

$


$
1,001Reported in asset impairment, restructuring and other charges:Asset impairment

$


$


$


$
Severance











111Other charges











677Total asset impairment, restructuring and other charges

$


$


$


$
788


Charges
recorded as an element of cost of sales in the three and nine months ended March 31, 2007 represent the costs from the closure of the Company's assembly line in Krefeld,
Germany and the move of these manufacturing activities to its facility in Swansea, Wales. The principal elements of those costs related to startup and transition costs,
including:



Other
charges reflect the costs to relocate equipment related to the consolidation and closing of certain of the Company's manufacturing sites and to discontinue production at designated
facilities. Other costs of $0.7 million in the three months ended March 31, 2007 were principally incurred in connection with the relocation of operations from the Company's Krefeld facility to
its Swansea facility.

The PCS Divestiture Initiative

During fiscal year 2007, in connection with the Divestiture, the Company terminated approximately 100 former PCS employees. The Company
also terminated other operating and support personnel to streamline the organization in connection with the Divestiture. Severance charges for these terminated employees were $2.7 million and
$4.8 million for the three and nine months ended March 31, 2007, respectively.

The
Divestiture included two components of the business. One of these components, the former NAP segment, has been reported as an element of discontinued operations. The other component,
the former CP segment, was not presented as a discontinued operation due to the significance of the Company's ongoing involvement with its TSAs relating to the Divestiture.

25

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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

The
following illustrates the charges the Company recorded in the three and nine months ended March 31, 2008 and 2007 related to its PCS restructuring initiative (in thousands):

Three Months Ended
March 31,

Nine Months Ended
March 31,2008

2007

2008

2007Reported in cost of sales

$


$


$


$
Reported in asset impairment, restructuring and other charges:Asset impairment

$


$
5,762

$


$
5,762Severance





2,743


7


4,794Other charges





40


35


161Total asset impairment, restructuring and other charges

$


$
8,545

$
42

$
10,717


Asset
impairment charges of $5.8 million recorded in the three and nine months ended March 31, 2007 relate to certain property, plant and equipment not acquired by Vishay
in connection with the Divestiture.

Other Activities and Charges

From time to time, the Company also undertakes and executes other smaller scale restructuring initiatives at its local sites. The
following illustrates the charges the Company recorded in the three and nine months ended March 31, 2008 and 2007 (in thousands):

Three Months Ended
March 31,

Nine Months Ended
March 31,2008

2007

2008

2007Reported in cost of sales

$


$


$


$
Reported in asset impairment, restructuring and other charges:Asset impairment

$


$


$


$
Severance


157





157


Other charges (credits)





40





(10
)Total asset impairment, restructuring and other charges (credits)

$
157

$
40

$
157

$
(10
)


Research and Development Facility Closure Initiative

In
the third fiscal quarter of 2008, the Company adopted a plan for the closure of its Oxted, England facility and its El Segundo, California R&D fabrication facility. Severance charges
for the three and nine months ended March 31, 2008 were $1.8 million for both periods. The costs associated with closing and exiting these facilities and severance costs are expected to
total approximately $14.1 million. Of this amount, approximately $12.2 million represents the cash outlay related to this initiative

26

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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

in
future periods. The Company expects the closure and exiting of these two facilities to be completed by the end of the second fiscal quarter of 2010.

Three Months Ended
March 31,

Nine Months Ended
March 31,2008

2007

2008

2007Reported in cost of sales

$


$


$


$
Reported in asset impairment, restructuring and other charges:Asset impairment

$


$


$


$
Severance


1,759





1,759


Other charges











Total asset impairment, restructuring and other charges

$
1,759

$


$
1,759

$



The
following table summarizes the Company's severance accrual for the nine months ended March 31, 2008:

March 31, 2008Accrued severance, June 30, 2007

$
826Charged to asset impairment, restructuring and other charges


1,759Charged to operating expenses


5,771Costs paid


(7,013
)Foreign exchange loss


16Accrued severance, March 31, 2008

$
1,359


13. Segment Information

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



27

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

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 its Chief Operating Decision Maker ("CODM") in making resource allocation decisions or in evaluating performance of the operating segments.

28

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

13. Segment Information (Continued)

The
accounting policies of the segments are the same as those described in Note 1, "Business, Basis of Presentation and Summary of Significant Accounting Policies" of the 2007
Annual Report. The Company's wafer manufacturing facilities fabricate ICs for all business units as necessary and their operating costs are reflected in the segments' cost of revenues on the basis of
product costs. General manufacturing overhead and variances are allocated to the segments based on their percentage of total revenues. Because operating segments are generally defined by the products
they design and sell, they do not make sales to each other. Depreciation and amortization related to the manufacturing of goods is included in gross profit for the segments. 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. The Company does not discretely
allocate assets to its operating segments, nor does the CODM evaluate operating segments using discrete asset information.

For
the three and nine months ended March 31, 2008 and 2007, revenue and gross margin by reportable segments are as follows (in thousands, except percentages):

Three months ended
March 31, 2008

Three months ended
March 31, 2007Business Segment

Revenues

Percentage of
Total

Gross
Margin

Revenues

Percentage of
Total

Gross
MarginPower Management Devices

$
96,179


38.1
%

16.5
%
$
106,387


36.5
%

40.1
%Energy-Saving Products


56,021


22.2


24.1


60,176


20.7


42.1Aerospace and Defense


39,421


15.6


46.8


44,472


15.3


50.5Enterprise Power


25,202


10.0


30.0


21,396


7.3


44.4PowerStage


10,696


4.3


3.9


(10,067
)

(3.4
)

(133.2
)Intellectual Property


10,286


4.1


100.0


9,674


3.3


100.0Ongoing Segments Total


237,805


94.3


27.8


232,038


79.7


41.5Transition Services


14,419


5.7


2.9








Commodity Products











59,240


20.3


14.2Consolidated Total

$
252,224


100.0
%

26.4
%
$
291,278


100.0
%

35.9
%


29

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

13. Segment Information (Continued)



Nine months ended
March 31, 2008

Nine months ended
March 31, 2007Business Segment

Revenues

Percentage of
Total

Gross
Margin

Revenues

Percentage of
Total

Gross
MarginPower Management Devices

$
299,843


38.4
%

21.0
%
$
301,191


32.5
%

35.5
%Energy-Saving Products


150,424


19.3


35.7


182,162


19.7


49.1Aerospace and Defense


117,529


15.0


51.5


121,826


13.2


50.2Enterprise Power


79,128


10.1


41.5


65,758


7.1


49.9PowerStage


58,401


7.5


27.2


54,128


5.8


21.4Intellectual Property


29,384


3.8


100.0


31,303


3.4


100.0Ongoing Segments Total


734,709


94.1


34.8


756,368


81.7


44.1Transition Services


46,444


5.9


1.4








Commodity Products











169,241


18.3


17.1Consolidated Total

$
781,153


100.0
%

32.8
%
$
925,609


100.0
%

39.1
%


No
single customer accounted for more than ten percent of the Company's consolidated revenue for the three and nine months ended March 31, 2008 and 2007.

14. Income Taxes

On July 1, 2007, the Company adopted the provisions of FIN 48. Under FIN 48, differences between the amounts recognized in the consolidated financial statements
prior to the adoption of FIN 48 and the amounts reported as a result of adoption are to be accounted for as a cumulative effect adjustment recorded to retained earnings. The adoption of
FIN 48 had no material impact on the financial statements.

As
of the adoption date, the liability for income taxes associated with uncertain tax positions was $103.9 million. If the benefit were recognized, the release of the liabilities
associated with the uncertain tax positions would result in a benefit to income taxes on the Consolidated Statement of Income of $102.2 million which would reduce the Company's future effective
tax rate.

As
of March 31, 2008, the liability for income tax associated with uncertain tax positions was $60.4 million. If recognized, the liabilities associated with uncertain tax
positions would result in a benefit to income taxes on the Consolidated Statement of Income of $58.7 million which would reduce the Company's future effective tax rate. The change in the
uncertain tax positions from the date of adoption is the result of filing amended returns in the U.S. federal tax jurisdiction for fiscal years 2004 to 2006 and the payment of additional tax of
$44.3 million with the returns, partially offset by the accrual of reserves in certain jurisdictions.

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 31, 2008, the Company
had accrued $30.2 million of interest and penalties related to uncertain tax positions. The change in the interest and penalties from the date of adoption is the result of filing amended
returns in the U.S. federal tax jurisdiction for fiscal years 2004 to 2006 which is comprised of the payment of interest of approximately

30

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

14. Income Taxes (Continued)

$4.2 million
and the reversal of reserves of approximately $13.7 million of penalties and related interest which were partially offset by the accrual of additional interest and
penalties.

The
uncertain tax positions are expected to decrease from the date of adoption by approximately $44.3 million over the next twelve months due to the filing of amended returns and
increases in certain jurisdictions as mentioned. It is reasonably possible there will be other changes to the liability associated with uncertain tax positions due to the expiration of statutes of
limitations, payment of tax on amended returns, and other changes in reserves. Due to the complexity of the restatement, it is not possible to estimate the range of change at this time.

The
Company has determined that in fiscal year 2009 it will file amended U.S. federal income tax returns and consequently will pay approximately $14.2 million in taxes and
$13.2 million in related interest and penalties to the Internal Revenue Service in connection with uncertain tax positions recorded for fiscal years 2001 through 2003.

The
Company conducts business globally and, as a result, files income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company's major tax
jurisdictions are U.S. Federal, California, Japan, U.K. and Singapore. In the normal course of business, the Company is subject to examination by taxing authorities. With few exceptions, at the date
of adoption, the Company is no longer subject to U.S. federal income tax examinations for years before fiscal year end July 1, 2001; California income tax examinations before fiscal year end
July 5, 1998; Japan income tax examinations before fiscal year June 30, 2002; U.K. tax examinations before fiscal year end June 30, 2002; and Singapore tax examination for
assessment year end December 31, 2001.

While
it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes 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's effective tax rate related to continuing operations was 39.2 percent and 71.4 percent for the three months ended March 31, 2008 and 2007, respectively,
and 65.9 percent and 43.9 percent for the nine months ended March 31, 2008 and 2007, respectively. For the fiscal 2008 periods, the Company's effective tax rates differed from the
U.S. federal statutory tax rate of 35 percent, resulting from (a) the benefit of foreign tax credits and R&D credits, (b) lower statutory tax rates in certain foreign
jurisdictions and (c) reversal of reserve for potential penalties and interest thereon as a result of the Company filing amended U.S. federal income tax returns and paying the tax liability for
fiscal years 2004 through 2006, which are partially offset by (y) non deferral of income from certain jurisdictions and (z) a decrease in U.K. deferred tax assets due to the reduction in
tax rate from 30 percent to 28 percent. For the fiscal 2007 periods, the Company's effective tax rate differed than the expected U.S. federal statutory rate of 35 percent
resulting from (a) actual and deemed foreign distributions, (b) an increase in the Company's tax contingency exposure, (c) transfer pricing and (d) state taxes, partially
offset by (w) the release of a valuation allowance, (x) the benefits of foreign tax credits and R&D credits, (y) the benefit of export incentives and (z) lower statutory
rates in certain jurisdictions.

31

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

14. Income Taxes (Continued)

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 as of September 30,
2007 that would limit the Company's utilization of any NOL, credit carryforward or other tax attributes.

The
Company filed in fiscal year 2008 Forms 3115 to correct certain tax accounting methods with respect to fiscal years ended June 30, 2001 and June 30, 2006. As a
consequence of filing the Forms 3115, the Company reversed, throughout fiscal year 2008, approximately $1.2 million of accrued penalties and related interest for the fiscal years ended
June 30, 2001 through June 30, 2006.

15. Net Income per Common Share

Net income per common sharebasic is computed by dividing net income 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 income per common sharediluted is similar to the computation of net income per common
sharebasic except that 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 and the conversion of the Company's Notes using the if-converted method only if the conversion of the bonds results 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. The Company's use of the
if-converted method increases reported net income by the interest expense, net of tax, related to the Notes when computing net income per common sharediluted.

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 31, 2008
and 2007 (in thousands, except per share amount):

Three Months Ended
March 31, 2008Loss
(Numerator)

Shares
(Denominator)

Per Share
AmountNet loss per common sharebasic:Loss from continuing operations

$
(21,567
)

72,826

$
(0.30
)Income from discontinued operations





72,826


Net loss

$
(21,567
)

72,826

$
(0.30
)Effect of dilutive securities:Stock options and restricted stock units:Income from continuing operations

$





$
Income from discontinued operations








Net income

$





$
Net loss per common sharediluted:Loss from continuing operations

$
(21,567
)

72,826

$
(0.30
)Income from discontinued operations





72,826


Net loss

$
(21,567
)

72,826

$
(0.30
)


32

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

15. Net Income per Common Share (Continued)



Three Months Ended
March 31, 2007Income
(Numerator)

Shares
(Denominator)

Per Share
AmountNet income per common sharebasic:Income from continuing operations

$
4,927


72,618

$
0.07Loss from discontinued operations


(2,843
)

72,618


(0.04
)Net income

$
2,084


72,618

$
0.03Effect of dilutive securities:Stock options and restricted stock units:Income from continuing operations

$



651

$
Income from discontinued operations





651


Net income

$



651

$
Net income per common sharediluted:Income from continuing operations

$
4,927


73,269

$
0.07Loss from discontinued operations


(2,843
)

73,269


(0.04
)Net income

$
2,084


73,269

$
0.03




Nine Months Ended
March 31, 2008Loss
(Numerator)

Shares
(Denominator)

Per Share
AmountNet loss per common sharebasic:Loss from continuing operations

$
(10,841
)

72,817

$
(0.15
)Income from discontinued operations





72,817


Net loss

$
(10,841
)

72,817

$
(0.15
)Effect of dilutive securities:Stock options and restricted stock units:Income from continuing operations

$





$
Income from discontinued operations








Net income

$





$
Net loss per common sharediluted:Loss from continuing operations

$
(10,841
)

72,817

$
(0.15
)Income from discontinued operations





72,817


Net loss

$
(10,841
)

72,817

$
(0.15
)


33

---



INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

15. Net Income per Common Share (Continued)



Nine Months Ended
March 31, 2007Income
(Numerator)

Shares
(Denominator)

Per Share
AmountNet income per common sharebasic:Income from continuing operations

$
60,315


72,291

$
0.83Income from discontinued operations


4,255


72,291


0.06Net income

$
64,570


72,291

$
0.89Effect of dilutive securities:Stock options and restricted stock units:Income from continuing operations

$



538

$
Income from discontinued operations





538


Net income

$



538

$
Net income per common sharediluted:Income from continuing operations

$
60,315


72,829

$
0.83Income from discontinued operations


4,255


72,829


0.06Net income

$
64,570


72,829

$
0.89


The
conversion effect of the Company's outstanding Notes into 7,439,000 shares of common stock was not included in the computation of diluted income from continuing operations per share
for the three and nine months ended March 31, 2008 and 2007 because the effect is anti-dilutive.

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 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 it releases substances that 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 the Company to comply with environmental laws and regulations.

As
part of the environmental review process, the Company provided certain disclosures of potential permit violations and other matters to local environmental authorities with respect to
its

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

16. Environmental Matters (Continued)

Mesa,
Arizona and Temecula, California facilities. The Company has taken steps to correct the alleged deficiencies. However, subsequent to the end of its fiscal year ended June 30, 2007, in the
fiscal quarter ended September 30, 2007, the Company received a notification of proposed penalty in Mesa, Arizona from local environmental authorities in the amount of approximately
$2.4 million, which it settled for $98,500 in December 2007. The Company has not yet been assessed any penalties with respect to the disclosures made for its Temecula, California facility.
Additionally, during negotiations for the Divestiture, chemical compounds were discovered in the groundwater underneath one of its 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 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 downgradient 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.

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

16. Environmental Matters (Continued)

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 cleanup the contamination and to recover damages. 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%. 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 who have 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%, the Company does not believe that an adverse
judgment against the Company would be material.

17. Litigation

International Rectifier Securities Litigation.Following IR's disclosure on April 9, 2007 that its Audit Committee was conducting the internal Investigation
into certain revenue recognition errors, a series of putative class action lawsuits was filed against IR in the United States District Court for the Central District of California. Edward R. Koller
filed the first complaint on April 17, 2007, on behalf of a putative class of purchasers of IR stock from October 27, 2005 through April 9, 2007 ("Original Class Period"). The
complaint named as defendants IR and certain of its present and former officers and directors and alleged violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as
amended based upon revenue recognition errors at IR'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 Massachusetts Laborers' Pension Fund and
General Retirement System of the City of Detroit (together, "Co-Plaintiffs") as co-lead plaintiffs.

Co-Plaintiffs
filed a Consolidated Class Action Complaint ("CAC") on January 14, 2008. The CAC purports to extend the Original Class Period by nearly two years, from
July 31, 2003 to August 29, 2007, and added claims based upon the Company's disclosures that certain former officers improperly allocated operating expenses as restructuring charges,
improperly assigned tax liability from higher to lower tax jurisdictions and improperly accounted for tax benefits associated with the granting of stock options. The CAC also named as defendants
several of the Company's former officers. It did not name any of the Company's past or present directors except Eric Lidow and Alex Lidow, who were officers as well.

The
Company filed a motion to dismiss these claims on March 6, 2008, on the grounds that Co-Plaintiffs failed to plead scienter as to the Company; failed to plead loss causation
as to certain of those disclosures; failed to plead an underlying violation of Section 10(b), which is a predicate for a claim under Section 20(a); and improperly expanded the class
period without adequate notice. Co-

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

17. Litigation (Continued)

Plaintiffs
filed an opposition to this motion on April 11, 2008. The Company filed a reply in further support of its motion on April 30, 2008. On May 23, 2008, the Court issued an
order granting defendants' motions to dismiss, without prejudice, on the ground that Co-Plaintiffs failed to plead detailed facts sufficient to give rise to a strong inference of defendants' scienter.
The Court has permitted Co-Plaintiffs to file an amended complaint on or before October 17, 2008.

Governmental Investigations.The Company is cooperating fully with investigators from the SEC Division of Enforcement regarding matters relating to the Audit
Committee Investigation described in the 2007 Annual Report. The Company is currently responding to subpoenas for records from the SEC, and continues to cooperate with the U.S. Attorney's Office and
the Internal Revenue Service who are looking into matters relating to the Audit Committee Investigation and other matters described in the 2007 Annual Report.

IXYS Litigation.On June 22, 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 Company's
complaint alleges that certain IXYS Corporation ("IXYS") MOSFET products infringe the Company's U.S. Patent Nos. 4,959,699, 5,008,725, and 5,130,767. On August 17, 2000, IXYS filed an
answer and counterclaim, and, on February 14, 2001, amended its answer and counterclaim, denying infringement and alleging patent invalidity and unenforceability. 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 September 6, 2005. The jury found that IXYS was infringing
certain claims of Patent No. 4,959,699 and awarded the Company $6.2 million in damages through September 30, 2005. On September 14, 2006, the District Court entered the
final judgment and permanent injunction based on the jury verdict. IXYS again appealed (with a notice of appeal filed after the deadline for doing so). The Federal Circuit lifted its temporary stay,
and the permanent injunction was in effect until it terminated with the expiration of the '699 patent in September 2007. The matter was argued to the Federal Circuit on January 7, 2008. In an
opinion issued February 11, 2008, the Federal Circuit ruled against the Company and reversed the judgment. The proceedings are now at an end, subject only to the possibility that the Supreme
Court will review the case on writ ofcertiorari. The Company filed a petition for such a writ in July 2008.

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. Based on information currently available, management does not
believe that the ultimate resolution of such ordinary course matters have a material adverse effect on the Company's consolidated financial condition, results of operations or cash flows. 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.

18. Commitments and Contingencies

In connection with the Divestiture, the Company included a provision of $18.6 million for certain tax obligations with respect to divested entities.

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

19. Related Party Transactions

As discussed in Note 3, "Investments," the Company holds as a strategic investment common stock of Nihon, a related party. During the fiscal year ended June 30, 2006, the Company
sold 2.6 million shares in Nihon for net proceeds of $19.1 million and recognized $13.6 million of pretax gains recorded in other income. At March 31, 2008, the Company
owned approximately 9.2 percent of the outstanding shares of Nihon. As previously reported, the Company's former CFO was the Chairman of the Board and a director of Nihon until June 28,
2005. In addition, the former general manager of the Company's Japan subsidiary was a director of Nihon until about October 2007 and another member of the Company's Japan subsidiary was a director
from June 28, 2005 through June 30, 2008.

During
the fiscal quarters ended March 31, 2008 and 2007, the Company recorded royalties of approximately $0.02 million and $0.03 million and revenues of
approximately $0.3 million and $0.4 million from Nihon, respectively.

20. Subsequent Events

Subsequent to April 1, 2007, Vishay and the Company commenced discussions 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 parties did not reach agreement on the working capital
adjustment within the time limits prescribed by the definitive documents, and Vishay has taken the position that the discussion should be deferred pending the disclosure of the results of IR's
internal Investigation. 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.

On
June 9, 2008, Vishay asserted that it believes certain forecasts it received from the Company during the Divestiture negotiations related to the ASBU of the PCS Business were
"materially overstated" and "based upon assumptions that the 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, the subsequent operational losses and the costs incurred by Vishay in connection with the later divestment of the ASBU business. The Company does not believe that Vishay's claims have
merit and intends to defend vigorously 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 the Company's former manufacturing plant in Borgaro, Italy.
The Company is currently in the process of assessing these claims and obtaining documentation to verify any potential liabilities to the Company. It believes that these claims will not have a material
adverse effect on the Company's business or prospects, and it intends to vigorously defend its rights and position.

The
outcome of any claim or litigation is inherently uncertain and the Company cannot assure its success. An adverse determination could affect the Company's rights and could have a
material adverse effect on its business, consolidated financial position or results of operations.

The
Facility entered into on November 6, 2006 has been amended by the Facility Amendments. Pursuant to the Facility Amendments, the Company's lenders under the Facility agreed
that, in light of

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

20. Subsequent Events (Continued)

the
Audit Committee Investigation, the Company would not be deemed in default with respect to certain representations, warranties, covenants and reporting requirements during a period ending not later
than July 31, 2008. In addition, pursuant to the Facility Amendments, the lenders have no obligation to make any extensions of credit under the Facility (other than the renewal of currently
outstanding letters of credit in existing amounts) until (i) the Investigation has been concluded, (ii) the lenders have received a report of the results thereof and revised audited
consolidated financial statements, reasonably satisfactory to the lenders, and (iii) no other default (as defined in the Facility) exists. As set forth in the Facility Amendments, the Company
agreed to provide cash collateral for the outstanding letters of credit under the Facility and paid amendment fees to the lenders. While the Investigation has been concluded, other conditions remain.
The Company intends to reinstate the Facility following the satisfaction of the necessary conditions, but there can be no assurance that it will be successful (see Part II, Item 1A,
"Risk Factors  Our liquidity may be subject to the availability of a credit facility upon acceptable terms and conditions"). Although the Company is not able to access the Facility except
for the renewal of outstanding letters of credit, it believes it has sufficient cash, cash equivalents, cash investments and cash flows from operations to meet current foreseeable working capital and
other operating cash requirements.

On
July 30, 2008, the Company and the lender parties to the Facility amended the Facility by Amendment No. 6 that extends the current accommodation through November 30,
2008 and provides that thirty (30) days after the lenders' receipt of and reasonable satisfaction with the form and substance of (i) revised audited consolidated financial
statements for fiscal years 2007, 2006 and 2005, and (ii) filing with the SEC of the Company's 2007 Annual Report and Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 2007, September 30, 2007, December 31, 2007 and March 31, 2008, and if the Company is in a position to satisfy the other applicable conditions of the Facility,
the lenders shall notify the Company in writing either (i) that extensions of credit are available under the Facility to the Company or (ii) that the Facility must be amended on such
further terms and conditions as reasonably requested by such lenders. Pending the receipt of such notice and, if applicable, execution of such further amendment to the Facility, the Company is not
able to access the Facility. The Amendment provides that failure by the Company to provide full cash collateral for the approximately $4.3 million of letters of credit currently outstanding
will result in termination of the Amendment.

In
the third fiscal quarter of 2008, the Company adopted a plan for the closure of its Oxted, England facility and its El Segundo, California R&D fabrication facility. Severance
charges for the three and nine months ended March 31, 2008 were $1.8 million for both periods. The costs associated with closing and exiting these facilities and severance costs are
expected to total approximately $14.1 million. Of this amount, approximately $12.2 million represents the cash outlay related to this initiative in future periods. The Company expects
the closure and exiting of these two facilities to be completed by the end of the second fiscal quarter of 2010.

In
the fourth fiscal quarter of 2008, the Company began 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. After completing the first step
in the goodwill impairment analysis, the Company concluded that the goodwill in the PS, PMD and IP segments may be impaired. Several factors led to a reduction in forecasted cash flows, including,
among others, lower than expected performance in the Company's PS segment, softening demand and pricing for its products in the PMD segment and a significant decline in projected royalty revenue in
the IP

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INTERNATIONAL RECTIFIER CORPORATION AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

March 31, 2008

20. Subsequent Events (Continued)

segment
as its broadest MOSFET patents expire. Based on the preliminary results of the annual assessment of goodwill for impairment, the net book value of three of the Company's reporting units, PS,
PMD and IP, may exceed their estimated fair value. Therefore, the Company is performing the second step of the impairment test to determine the implied fair value of goodwill. While this second step
analysis is not complete, during the quarter ending June 30, 2008, the Company expects to record an impairment charge. A reasonable estimate of the amount of the impairment charge or the range
of amounts of the charge cannot be determined at this time.

In
the fourth fiscal quarter of 2008, the Company began working with its channel partners to determine the best model to support its product portfolio, and initiated programs to support
the service of its original equipment manufacturer customers. The Company anticipates that changes in its distribution model and related programs will likely adversely impact gross margin in the last
quarter of fiscal year 2008 and possibly the first quarter of fiscal year 2009.

In
the fourth fiscal quarter of 2008, we recorded an additional $3.7 million charge for an other-than-temporary impairment relating to certain available-for-sale securities as a
result of declines in their fair values through June 30, 2008.

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PART II.    OTHER INFORMATION

ITEM 6.    EXHIBITS

Exhibit No.

Item and DocumentIndex: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 200231.2

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 200232.1

Certification Pursuant to 18 U.S.C. 1350, Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2

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 CORPORATIONRegistrantDate: August 28, 2008

/s/PETER B. KNEPPERPeter B. Knepper Chief Financial Officer (Acting)
(Duly Authorized Officer and Principal Financial and
Accounting Officer)


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