Power Integrations Announces Strong Second Quarter 2002 Results

July 24, 2002
Year-over-year revenue increased 28 percent on record unit shipments

Q22002 Balance Sheet
Q22002 Income Statement

SAN JOSE, CALIF. – July 24, 2002 -- Power Integrations, Inc. (Nasdaq:POWI) today announced financial results for its second quarter ended June 30, 2002.

Net revenues for the second quarter of 2002 increased 15 percent to $27.1 million from $23.7 million in the first quarter of 2002 and 28 percent from $21.2 million in the second quarter of 2001. Net income for the second quarter increased 34 percent sequentially to $2.1 million, or $0.07 per diluted share, from $1.6 million, or $0.05 per diluted share. For the same period last year, the company reported net income of $0.67 million, or $0.02 per diluted share.

"The strong results for the quarter were driven by growth across all of our market segments," said Balu Balakrishnan, president and chief executive officer of Power Integrations. "It is evident that our efforts to diversify our revenue stream and broaden our customer base have been successful. Further penetration of existing markets also fueled growth during the second quarter, confirming that these markets are migrating towards our highly integrated solution."

"TOPSwitch GX and TinySwitch II continue to gain acceptance, and design activity remains strong. These products are enabling us to grow market share in key applications such as LCD monitors, consumer appliances, DVD players, cell phone chargers, and desktop computers and servers. Also, we have released to production both our recently announced DC to DC product (DPA-Switch), and our linear replacement product, which we have named LinkSwitch. We have received positive feedback from customers on both products as we now begin the customer design-in phase. These two new products combined with TOPSwitch GX and TinySwitch II have more than doubled our addressable markets to $1.6 billion. For the first time in the history of our company, we are able to offer products that cost-effectively address the entire 0 to 250W range in the AC to DC market and 0 to 100W range in the DC to DC market."

"Also, we further strengthened our market leadership by enhancing our intellectual property portfolio. During the quarter, we were issued three U.S. and six foreign patents, bringing the total to 45 U.S. and 58 foreign patents."

"Finally, we are very pleased with the continued improvements in our financial model. While our gross margin declined slightly as a result of product-mix shifts, our ability to maintain conservative spending levels and grow revenues enabled us to improve our operating margin from 1.8 percent in the second quarter of last year to 9.4 percent. Our balance sheet has never been stronger. We ended the quarter with a record $96.4 million in cash, an increase of $12.3 million from last quarter, and reduced inventory by $5.6 million to $14.0 million. We believe the company is well positioned to execute on its long-term growth objectives."

Future Outlook

The following statements are based on current expectations. These statements are forward looking, and actual results may differ materially.

Based on currently available information, the company estimates revenues in the third quarter to grow 2 to 6 percent sequentially. Gross margin is expected to be similar to the second quarter. Operating expenses are expected to increase 2 to 3 percent sequentially as the company increases its investment on new product and market development. As a result of the above, earnings per share in the third quarter should be in the range of $0.07 to $0.09.

In line with previously stated guidance, the company currently anticipates full-year 2002 revenue to grow 10 to 15 percent from 2001 and to achieve EPS of $0.25 to $0.30. Based on the data from the first half of the year and current projections, the company has revised its expectations for revenue mix by market for 2002 as follows: Communications - 39 percent, Consumer - 26 percent, Computer - 23 percent, Industrial - 6 percent and All Other - 6 percent.

Conference Call

Power Integrations will broadcast its conference call discussion of its 2002 second quarter results and other developments for the company live over the Internet on Wednesday, July 24, 2002, 1:30 P.M. PDT (4:30 P.M. EDT). Interested parties may access the conference call over the Internet through the Investor Relations section of the Power Integrations web site at www.powerint.com. To listen to the live call, please go to the web site at least 15 minutes early to download and install any necessary audio software. A replay of the conference call will be indexed and archived on the company's site and will be available two hours following completion of the event.

Safe Harbor Statement

This press release contains forward-looking statements, which reflect management's current forecast of certain aspects of the company's future business. These forward looking statements are based on current information which we have assessed, but which by its nature, is subject to rapid and even abrupt changes. Forward looking statements are denoted by the use of such words and phrases as "will", "expect", "believe", "should", "anticipate", "outlook", "if" and similar words and phrases that look toward future events or performance. The company's actual results could differ materially from those projected or implied by our forward looking statements due to risks and uncertainties associated with the company's business. These risks include, but are not limited to, changes and shifts in customer demand away from products that integrate the company's ICs to products that do not. Other factors include, but are not limited to, our ability to maintain and establish strategic relationships; the effects of competition; the risks inherent in the development and delivery of complex technologies; our ability to attract, retain and motivate qualified personnel; the emergence of new markets for our products and services, and our ability to compete in those markets based on timeliness, cost and market demand; and our limited financial resources. New product introductions are subject to the risks and uncertainties that typically accompany development and delivery of complex technologies to the market place, including product development delays and defects. We more fully discuss these and other risk factors in the company's most recent reports on Form 10-K and Form 10-Q filed with the Securities and Exchange Commission.

About Power Integrations

Power Integrations, Inc. is a leading supplier of high-voltage analog integrated circuits for use in AC to DC and DC to DC power conversion. For more information, visit the company's web site at: www.powerint.com or contact the company at 5245 Hellyer Ave., San Jose, Calif. 95138; (408) 414-9200.

NASDAQ: POWI $119.08 -1.23
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