Power Integrations Reports Third Consecutive Quarter of Record Revenues and Net Income

April 28, 2010

Apr 28, 2010 (GlobeNewswire via COMTEX News Network) --

 First-Quarter Revenues Grew 77 Percent Year-Over-Year to $71.5 Million
      Wins First High-Volume Designs With New High-Power Hiper(TM),
                        CAPZero(TM) IC Families

SAN JOSE, Calif., April 28, 2010 (GLOBE NEWSWIRE) -- Power Integrations (Nasdaq:POWI), the leader in high-voltage integrated circuits for energy-efficient power conversion, today announced financial results for the quarter ended March 31, 2010.

Net revenues for the quarter were $71.5 million, an increase of 8 percent compared with the prior quarter and 77 percent compared with the first quarter of 2009. Net income was a record $12.3 million, or $0.42 per diluted share, compared with net income of $9.2 million, or $0.32 per diluted share in the prior quarter and net income of $0.4 million, or $0.01 per share, in the first quarter of 2009. Gross margin for the first quarter was 50.2 percent; operating margin was 20.8 percent.

In addition to its GAAP results, the company provided certain non-GAAP measures that exclude stock-based compensation expenses and the related tax effects. Non-GAAP net income for the first quarter was $14.3 million or $0.49 per diluted share, compared with $12.2 million or $0.42 per diluted share in the prior quarter and $3.9 million or $0.14 per diluted share in the first quarter of 2009. Non-GAAP gross margin for the quarter was 50.5 percent; non-GAAP operating margin was 23.6 percent.

Commented Balu Balakrishnan, president and CEO of Power Integrations: "We achieved record revenues for the third straight quarter, surpassing $70 million in quarterly revenues for the first time ever, and we expanded our non-GAAP operating margin for the fifth straight quarter. Bookings increased dramatically during the quarter and have remained strong in April. While the strength in orders and resulting expansion of our backlog is partly attributable to extended lead times, we believe our revenue growth is being driven mainly by end-market demand as well as greater penetration of our products into the power-supply market."

Balakrishnan continued: "The demand for more energy-efficient power supplies continues to be a key driver in our business. Designers looking to meet standards such as the European Union's new requirements for standby power consumption are increasingly turning to our EcoSmart(R) technology to replace inefficient discrete and passive power supplies. Many manufacturers are tightening their specs beyond the requirements, both of their own volition and in response to incentive programs such as ENERGY STAR(R) and 80 PLUS(R), as OEMs clearly see an advantage in offering greener products.

"During the first quarter we won multiple 80 PLUS high-efficiency designs for a top-tier PC OEM with two new, yet-to-be-announced members of our Hiper family of high-power ICs -- our first high-volume design wins in the high-power segment of the AC-DC market. We have also won our first designs with the brand-new CAPZero family of X-capacitor discharge chips, which complement our EcoSmart technology by further reducing standby power consumption in high-power applications. We expect to begin production shipments of both of these new product families in the second quarter."

Additional Highlights

  --  Cash flow from operations was $16.8 million for the quarter. The company
      had $210.2 million in cash and investments as of March 31, 2010, an
      increase of $14.3 million during the quarter.

  --  Power Integrations repurchased approximately 171,000 shares during the
      quarter for a total of $6.0 million. Approximately $8 million remains
      under the $25 million repurchase authorization announced in May 2009.

  --  The company paid a quarterly dividend of $0.05 per share on March 31.
      The next quarterly dividend of $0.05 per share will be paid on June 30,
      2010 to stockholders of record as of May 28, 2010.

  --  Power Integrations received 7 U.S. patents and 22 foreign patents during
      the quarter, and had a total of 297 U.S. patents and 193 foreign patents
      as of March 31, 2010.


Second-Quarter Outlook

The company expects its second quarter revenues to be in a range of $74 million to $78 million. GAAP gross margin is expected to be between 50 percent and 51 percent, including an impact of approximately half a percentage point from stock-based compensation. Operating expenses are expected to be between $22.5 million and $23.5 million, including approximately $3 million of stock-based compensation expenses.

Conference Call Today at 1:30 p.m. Pacific Time

Power Integrations management will hold a conference call today at 1:30 p.m. Pacific time. Members of the investment community can join the call by dialing 1-877-303-9795 from within the United States or 1-631-291-4581 from outside the U.S. The call will be available via a live and archived webcast on the investor section of the company's website, http://powerintegrations2014.q4web.com.

About Power Integrations

Power Integrations is the leading supplier of high-voltage analog integrated circuits used in energy-efficient power conversion. The company's innovative technology enables compact, energy-efficient power supplies in a wide range of electronic products, in AC-DC, DC-DC and LED lighting applications. Since its introduction in 1998, Power Integrations' EcoSmart(R)energy-efficiency technology has saved an estimated $4 billion of standby energy waste and prevented millions of tons of CO2 emissions. The company's Green Room web site (www.powerint.com/greenroom) provides a wealth of information about "energy vampires" and the issue of standby energy waste, along with a comprehensive guide to energy-efficiency standards around the world. Reflecting the environmental benefits of EcoSmart technology, Power Integrations is included in clean-technology stock indices sponsored by the Cleantech Group (Amex:CTIUS) and Clean Edge (Nasdaq:CELS). For more information, please visit www.powerint.com.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the company's consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation expenses recorded under Accounting Standard Codification 718-20 ("ASC 718-20"), and the related tax effects. The company uses these non-GAAP measures in its own financial and operational decision-making processes and, with respect to one measure, in setting performance targets for employee-compensation purposes. Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company's core operating results and trends, and to facilitate comparability with the company's historical results and with the operating results of other companies that provide similar non-GAAP measures. These non-GAAP measures have certain limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. For example, stock-based compensation is an important component of the company's compensation mix, and will continue to result in significant expenses in the company's GAAP results for the foreseeable future, but is not reflected in the non-GAAP measures. Also, other companies, including companies in Power Integrations' industry, may calculate non-GAAP financial measures differently, limiting their usefulness as comparative measures.

Note Regarding Forward-Looking Statements

The statements in this press release relating to the company's expectation of the timing of production shipments of its new product families and its projected second-quarter 2010 financial performance are forward-looking statements, reflecting management's current forecast. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt changes. Due to risks and uncertainties associated with the company's business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: changes in global macroeconomic conditions that may impact the level of demand for the company's products; the ability of the company to obtain sufficient quantities of wafers in a timely manner from its suppliers; potential changes and shifts in customer demand away from end products that utilize the company's integrated circuits to end products that do not incorporate the company's products; the company's ability to maintain and establish strategic relationships; the effects of competition; customer reaction to the effects of design wins may not be as the company expects; the risks inherent in the development and delivery of complex technologies; the outcome and cost of patent litigation; the company's ability to attract, retain and motivate qualified personnel; the emergence of new markets for the company's products and services; the company's ability to compete in those markets based on timeliness, cost and market demand; unforeseen costs and expenses; and fluctuations in currency exchange rates. In addition, new product introductions and design wins are subject to the risks and uncertainties that typically accompany development and delivery of complex technologies to the marketplace, including product development delays and defects and market acceptance of the new products. These and other risk factors are more fully explained under the caption "Risk Factors" in the company's most recent annual report on Form 10-K, filed with the Securities and Exchange Commission on February 26, 2010. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

                   POWER INTEGRATIONS, INC.
            CONSOLIDATED STATEMENTS OF OPERATIONS
           (in thousands, except per-share amounts)



                                   Three Months Ended

                            March 31,   December  March 31,
                               2010     31, 2009     2009
                            ---------  ---------  ---------
  NET REVENUES               $ 71,507   $ 66,138   $ 40,289


  COST OF REVENUES             35,585     32,322     19,357
                            ---------  ---------  ---------


  GROSS PROFIT                 35,922     33,816     20,932
                            ---------  ---------  ---------

  OPERATING EXPENSES:
  Research and development      8,111      8,214      7,724
  Sales and marketing           6,920      7,127      6,222
  General and
   administrative               6,013      7,227      5,681
                            ---------  ---------  ---------
   Total operating
    expenses                   21,044     22,568     19,627
                            ---------  ---------  ---------

  INCOME FROM OPERATIONS       14,878     11,248      1,305


  OTHER INCOME, net               494        157        824
                            ---------  ---------  ---------

  INCOME BEFORE PROVISION
   FOR
  INCOME TAXES                 15,372     11,405      2,129

  PROVISION FOR INCOME
   TAXES                        3,058      2,221      1,725
                            ---------  ---------  ---------


  NET INCOME                 $ 12,314    $ 9,184      $ 404
                            =========  =========  =========

  EARNINGS PER SHARE:

   Basic                       $ 0.45     $ 0.34     $ 0.01
                            =========  =========  =========

   Diluted                     $ 0.42     $ 0.32     $ 0.01
                            =========  =========  =========

  SHARES USED IN PER-SHARE
   CALCULATION:
   Basic                       27,470     27,106     27,048
   Diluted                     29,358     29,116     28,057


  SUPPLEMENTAL
   INFORMATION:

  Stock-based compensation expenses
   included in:
   Cost of revenues             $ 157      $ 176      $ 162
   Research and
    development                   727      1,115      1,836
   Sales and marketing            410        820        994
   General and
    administrative                733      1,174        993
                            ---------  ---------  ---------
    Total stock-based
     compensation expense     $ 2,027    $ 3,285    $ 3,985
                            =========  =========  =========


  Operating expenses
   include the following:
   Patent-litigation
    expenses                  $ 1,087    $ 2,334      $ 831
                            =========  =========  =========


  REVENUE MIX BY PRODUCT
   FAMILY
   TOPSwitch                      24%        22%        23%
   TinySwitch                     39%        41%        46%
   LinkSwitch                     36%        36%        29%
   Other                           1%         1%         2%

  REVENUE MIX BY END
   MARKET
   Communications                 32%        36%        33%
   Computer                       12%        14%        15%
   Consumer                       36%        33%        34%
   Industrial                     20%        17%        18%

                        POWER INTEGRATIONS, INC.
     RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
                (in thousands, except per-share amounts)



                                              Three Months Ended

                                       March 31,   Dec. 31,  March 31,
                                          2010       2009       2009
                                       ---------  ---------  ---------
  RECONCILIATION OF GROSS PROFIT
  GAAP gross profit                     $ 35,922   $ 33,816   $ 20,932
   GAAP gross profit margin                50.2%      51.1%      52.0%


  Stock-based compensation expense
   included in
  cost of revenues                           157        176        162
                                       ---------  ---------  ---------


  Non-GAAP gross profit                 $ 36,079   $ 33,992   $ 21,094
                                       ---------  ---------  ---------
   Non-GAAP gross profit margin            50.5%      51.4%      52.4%


  RECONCILIATION OF OPERATING
   EXPENSES
  GAAP operating expenses               $ 21,044   $ 22,568   $ 19,627

  Less:
  Stock-based compensation expense
   included in
  operating expenses:
    Research and development                 727      1,115      1,836
    Sales and marketing                      410        820        994

    General and administrative               733      1,174        993
                                       ---------  ---------  ---------

    Total                                  1,870      3,109      3,823
                                       ---------  ---------  ---------


  Non-GAAP operating expenses           $ 19,174   $ 19,459   $ 15,804
                                       ---------  ---------  ---------


  RECONCILIATION OF INCOME FROM
   OPERATIONS
  GAAP income from operations           $ 14,878   $ 11,248    $ 1,305
   GAAP operating margin                   20.8%      17.0%       3.2%

   Stock-based compensation included
    in cost of revenues                      157        176        162
   Stock-based compensation included
    in operating expenses                  1,870      3,109      3,823


  Non-GAAP income from operations       $ 16,905   $ 14,533    $ 5,290
                                       ---------  ---------  ---------
   Non-GAAP operating margin               23.6%      22.0%      13.1%


  RECONCILIATION OF PROVISION FOR
   INCOME TAXES

  GAAP provision for income taxes        $ 3,058    $ 2,221    $ 1,725
                                       ---------  ---------  ---------
   GAAP effective tax rate                 19.9%      19.5%      81.0%

  Tax effect of items excluded from
   non-GAAP results                          (6)      (290)      (450)


  Non-GAAP provision for income taxes    $ 3,064    $ 2,511    $ 2,175
                                       ---------  ---------  ---------
   Non-GAAP effective tax rate             17.6%      17.1%      35.6%


  RECONCILIATION OF NET INCOME PER
   SHARE (DILUTED)
  GAAP net income                       $ 12,314    $ 9,184      $ 404

  Adjustments to GAAP net income
   Total stock-based compensation          2,027      3,285      3,985
   Tax effect of items excluded from
    non-GAAP results                         (6)      (290)      (450)
                                       ---------  ---------  ---------


  Non-GAAP net income                   $ 14,335   $ 12,179    $ 3,939
                                       ---------  ---------  ---------


  Average shares outstanding for
   calculation
  of non-GAAP income per share
   (diluted)                              29,358     29,116     28,057
                                       ---------  ---------  ---------


  Non-GAAP income per share (diluted)     $ 0.49     $ 0.42     $ 0.14
                                       =========  =========  =========


  Note on use of non-GAAP financial
   measures:
  In addition to the company's consolidated financial statements,
   which are prepared according to GAAP, the company provides certain
   non-GAAP financial information that excludes stock-based
   compensation expenses recognized under Accounting Standard
   Codification ("ASC") 718-20, and the related tax effects. The
   company uses these non-GAAP measures in its own financial and
   operational decision-making processes and, with respect to one
   measure, in setting performance targets for employee-compensation
   purposes. Further, the company believes that these non-GAAP
   measures offer an important analytical tool to help investors
   understand the company's core operating results and trends, and to
   facilitate comparability with the company's historical results and
   with the operating results of other companies that provide similar
   non-GAAP measures. These non-GAAP measures have certain limitations
   as analytical tools and are not meant to be considered in isolation
   or as a substitute for GAAP financial information.

               POWER INTEGRATIONS, INC.
             CONSOLIDATED BALANCE SHEETS
                    (in thousands)



                               March 31,   December
                                 2010      31, 2009
                              ----------  ----------
  ASSETS
   CURRENT ASSETS:
    Cash and cash
     equivalents               $ 125,295   $ 134,974
    Restricted cash                  250         250
    Short-term investments        22,129      20,567
    Accounts receivable           27,586      21,756
    Inventories                   31,426      26,248
    Note receivable                   --          --
    Deferred tax assets            1,486       1,389
    Prepaid expenses and
     other current assets         13,130      10,691
                              ----------  ----------

     Total current assets        221,302     215,875
                              ----------  ----------

   INVESTMENTS                    62,562      40,100
   PROPERTY AND EQUIPMENT,
    net                           65,877      62,381
   INTANGIBLE ASSETS, net          2,927       3,099
   GOODWILL                        1,824       1,824
   DEFERRED TAX ASSETS            12,996      14,590

   OTHER ASSETS                    6,683       6,698
                              ----------  ----------

     Total assets              $ 374,171   $ 344,567
                              ==========  ==========

  LIABILITIES AND
   STOCKHOLDERS' EQUITY
   CURRENT LIABILITIES:
    Accounts payable            $ 26,158    $ 16,944
    Accrued payroll and
     related expenses              5,227       6,145
    Income taxes payable             453         478
    Deferred income on sales
     to distributors              11,917       9,040
    Other accrued
     liabilities                   2,543       3,309
                              ----------  ----------
     Total current
      liabilities                 46,298      35,916
                              ----------  ----------

   LONG-TERM LIABILITIES

    Income taxes payable          25,023      23,859
                              ----------  ----------


     Total liabilities            71,321      59,775
                              ----------  ----------

  STOCKHOLDERS' EQUITY:
    Common stock                      28          27
    Additional paid-in
     capital                     157,193     150,021
    Cumulative translation
     adjustment                     (46)           4

    Retained earnings            145,675     134,740
                              ----------  ----------
     Total stockholders'
      equity                     302,850     284,792
                              ----------  ----------
     Total liabilities
      stockholders' equity     $ 374,171   $ 344,567
                              ==========  ==========

                         POWER INTEGRATIONS, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (in thousands)

                                                   Three Months Ended

                                                  March 31,   March 31,
                                                    2010        2009
                                                 ----------  ----------
  CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                      $ 12,314       $ 404
   Adjustments to reconcile net income to net
    cash provided by operating activities
    Depreciation and amortization                     2,933       2,496
    Loss on sale of property, plant and
     equipment                                           13          --
    Stock-based compensation expense                  2,027       3,986
    Amortization of discount (premium) on
     held-to-maturity investments                       350        (53)
    Deferred income taxes                             1,498       1,232
    Provision for (reduction in provision for)
     accounts receivable and other allowances            --        (99)
    Excess tax benefit from stock options
     exercised                                      (1,176)         (5)
    Tax benefit associated with employee stock
     plans                                            2,535          73
    Change in operating assets and liabilities:
     Accounts receivable                            (5,830)     (5,031)
     Inventories                                    (5,185)       (250)
     Prepaid expenses and other assets                (672)       (729)
     Accounts payable                                 6,295       (894)
     Taxes payable and other accrued
      liabilities                                   (1,200)     (1,055)

     Deferred income on sales to distributors         2,877       1,774
                                                 ----------  ----------

      Net cash provided by operating activities      16,779       1,849
                                                 ----------  ----------

  CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment              (3,360)     (1,767)
   Advance for acquisition of business              (1,750)          --
   Purchases of held-to-maturity investments       (27,224)     (2,755)

   Proceeds from held-to-maturity investments         2,850       3,000
                                                 ----------  ----------

    Net cash used in investing activities          (29,484)     (1,522)
                                                 ----------  ----------

  CASH FLOWS FROM FINANCING ACTIVITIES
   Net proceeds from issuance of common stock        10,035       4,117
   Repurchase of common stock                       (6,038)    (17,635)
   Retirement of performance shares for income
    tax withholding                                   (769)          --
   Repurchase of stock options                           --     (9,048)
   Payments of dividends to stockholders            (1,378)       (672)
   Excess tax benefit from stock options
    exercised                                         1,176           5
                                                 ----------  ----------
    Net cash provided by (used in) financing
     activities                                       3,026    (23,233)
                                                 ----------  ----------

  NET DECREASE IN CASH AND CASH EQUIVALENTS         (9,679)    (22,906)

  CASH AND CASH EQUIVALENTS AT BEGINNING OF
   PERIOD                                           134,974     167,472
                                                 ----------  ----------


  CASH AND CASH EQUIVALENTS AT END OF PERIOD      $ 125,295   $ 144,566
                                                 ==========  ==========

  SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
  FINANCING ACTIVITIES:

   Unpaid property and equipment, net               $ 2,918       $ 168
                                                 ==========  ==========

  SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION

   Cash paid for interest                              $ --         $ 3
                                                 ==========  ==========

   Cash paid for income taxes, net of refunds          $ 16       $ 173
                                                 ==========  ==========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Power Integrations, Inc.

CONTACT:  Power Integrations, Inc.
Joe Shiffler
(408) 414-8528
jshiffler@powerint.com

(C) Copyright 2010 GlobeNewswire, Inc. All rights reserved.

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NASDAQ: POWI $117.24 -0.38
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Contact Us

Joe Shiffler
Director, Investor Relations & Corporate Communications
(408) 414-8528
joe@power.com

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Mailing Address:
Power Integrations
Attn: Investor Relations
5245 Hellyer Avenue San Jose, CA. 95138

Transfer Agent:
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P.O. Box 30170
College Station, TX 77842
Phone: (781) 575-2879




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