Chuck Jones, President
Corporate Knowledge, Inc.
4444 Auckland Avenue
Toluca Lake, CA 91602

September 16, 2006

Dear Chuck,

When International Rectifier (IR) engaged Corporate Knowledge, Inc. (CKI), to reorganize its worldwide fixed assets system, IR had approximately $900 million in assets. IR was also adding approximately $60-$70 million dollars worth of assets per year and had approximately 25,000 distinct assets worldwide. These assets were being administered by 29 part time and 2 fulltime employees at nineteen locations (entities) worldwide.

At the onset, IR's challenges were numerous due to the fact that each local entity tracked its assets independently, and because asset information was distributed across seven different financial systems (some local entities were using Excel spreadsheets). Additionally, there was no enterprise-wide visibility of assets, nor a consistent set of standards and practices. As a result, in many cases, assets remaining on the financial records of one entity had actually been transferred to another entity, had been transferred to IR subcontractors, had been sold, had been retired, or were otherwise unaccounted for. Additionally, there was no unified system for tracking inventory of existing assets, and there were no metrics to measure the life or performance of the asset. There were also instances of property taxes on a single asset being paid by multiple entities.

Because IR did not have the internal resources to commit to a project of this scale and magnitude, IR retained CKI to provide not only the overall project vision, but to also perform the majority of the tasks required to implement a new Fixed Asset system through IR's new centralized Shared Service Operations Center.

At the onset, CKI contacted IR's subject matter experts at each entity to understand the existing processes, issues, and challenges at each location. CKI also obtained consensus for a change in our business culture and for acceptance of a newly designed integrated system. CM provided assistance in consolidating the worldwide fixed asset system into three regional centers that are now managed by six Fixed Asset team members, produced systems and training documentation of all users and customers, and assisted in our investment in training entity personnel on policies, processes, and roles and responsibilities. Additionally, CKI assisted in inventorying and reconciling asset records at all entities.

CKI also created an enterprise wide bar code tagging system using portable hand-held terminals with custom programming to capture all required data so that asset cost, as well as monthly depreciation, could be tracked during the purchasing process and production life of the asset. The tagging system also enabled fixed asset administrators to attach an unlimited number of data files for a particular asset, so that relocation, maintenance, calibration and certification issues for each asset are easily tracked.

Additionally, CKI also implemented an enterprise-wide Fixed Asset web-based database, which allows asset visibility across the organization. This web database enables IR's Fixed Asset owners at all entities to view and investigate assets without the requiring the assistance of IR's Fixed Asset team members. By using the web-based database, Purchasing is now able to negotiate with vendors on a global scale, thus creating a sizeable financial savings on asset purchases. CKI also produced documentation and trained users of this important feature.

During the project implementation, additional requirements were added to the project scope to ensure that the fixed asset implementation was Sarbanes Oxley compliant. CKI worked with both IR's financial and legal teams to ensure that IR's new Fixed Asset systems, policies, and processes were compliant.

As a result of the project implementation, IR can now accurately account for its equipment. Overall, IR has determined that approximately 10 percent of our assets worldwide were retired, thus significantly reducing IR's tax base. Overall, the savings (property taxes), plus future tax reductions alone, will pay for the project within three years. There are also significant additional savings for IR as a result of reduced staffing, faster processing of transactions, and significantly reduced asset research time. Overall, the result is a dramatic reduction in the number of hours spent on asset management.

In conclusion, I want to thank all of your team at CKI. No one individual could have implemented this degree of change without the innovation, expertise, and hard work from a true team of professionals. Without your team's collaboration, the project would not have been implemented.


Bill Field
Project Manager