Quarterly Revenues Grew 62 Percent Year-Over-Year, 12 Percent Sequentially to $79.9 Million
SAN JOSE, Calif., Aug 2, 2010 (GlobeNewswire via COMTEX News Network) -- Power Integrations (Nasdaq:POWI), the leader in high-voltage integrated circuits for energy-efficient power conversion, today announced financial results for the quarter ended June 30, 2010.
Net revenues for the quarter were $79.9 million, up 12 percent compared with the prior quarter and 62 percent compared with the second quarter of 2009. Net income was a record $15.6 million, or $0.53 per diluted share, compared with net income of $12.3 million, or $0.42 per diluted share in the prior quarter and net income of $4.5 million, or $0.16 per diluted share, in the second quarter of 2009. Gross margin for the second quarter was 52.0 percent; operating margin was 23.6 percent.
In addition to its GAAP results, the company provided certain non-GAAP financial measures that exclude stock-based compensation expenses and the related tax effects. Non-GAAP net income for the second quarter was $17.7 million or $0.60 per diluted share, compared with $14.3 million or $0.49 per diluted share in the prior quarter and $6.9 million or $0.25 per diluted share in the second quarter of 2009. Non-GAAP gross margin for the quarter was 52.2 percent; non-GAAP operating margin was 26.7 percent.
Commented Balu Balakrishnan, president and CEO of Power Integrations: "Our second-quarter results were strong across the board, with record revenues, significant margin expansion and strong cash flow. Our quarterly revenues have nearly doubled over the past five quarters, and we are almost 50 percent above our pre-recession peak in the third quarter of 2008."
Balakrishnan added: "Tighter energy-efficiency requirements -- both policy- and market-driven -- are transforming the power-supply market, and we believe we are gaining market share by offering innovative products that enable high efficiency without adding cost and complexity. We continue to extend our market leadership and broaden our addressable market with innovative new product families such as our Hiper(TM) products for the high-power market, and the brand-new LinkSwitch(TM)-PL and LinkSwitch-PH, which bring unprecedented integration to the LED lighting market."
Additional Highlights
-- Quarterly cash flow from operations was $35.1 million. The company had
$228.9 million in cash and investments at June 30, 2010, an increase of
$18.7 million from the prior quarter.
-- The company repurchased approximately 225,000 shares of its common stock
during the quarter for $7.9 million.
-- The company paid a quarterly dividend of $0.05 per share on June 30,
2010. The next quarterly dividend of $0.05 per share will be paid on
September 30, 2010 to stockholders of record as of August 31, 2010.
-- Power Integrations received 13 U.S. patents and 3 foreign patents during
the quarter, and had a total of 309 U.S. patents and 196 foreign patents
as of June 30, 2010.
-- Last month, a federal court ruled that Fairchild Semiconductor had
willfully infringed four of Power Integrations' patents, determining
that Fairchild had engaged in "blatant copying" of the company's
patented technologies. In light of the finding of willfulness, Power
Integrations now intends to seek enhancement of the pending damage
award, which currently stands at $6.1 million.
Financial Outlook
Regarding the company's third-quarter outlook, Mr. Balakrishnan noted: "We saw exceptionally strong sales in Europe during the second quarter due to distributor transitions that resulted in some end-customer purchases being pulled into the second quarter. Although this will have the effect of reducing our sequential growth rate in the third quarter, this is simply a matter of timing. Also, our third-quarter sales are likely to be constrained by shortages of our LinkSwitch-II products, which continue to be in high demand. Nevertheless, we expect third-quarter revenues to be in the range of $78 million to $82 million, which would be an increase of 30 percent or more from last year's strong third quarter."
The company added that it expects its third-quarter gross margin to be between 51 percent and 52 percent, with operating expenses between $23.5 million and $24.5 million including approximately $2.7 million of stock-based compensation expenses.
Conference Call Today at 1:45 p.m. Pacific Time
Power Integrations management will hold a conference call today at 1:45 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(TM)energy-efficiency technology has saved an estimated $4.2 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 third-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 quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on May 6, 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, EcoSmart, LinkSwitch, Hiper and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are the property of their respective owners.
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2010 2010 2009 2010 2009
--------- --------- --------- ---------- ---------
NET REVENUES $ 79,858 $ 71,507 $ 49,250 $ 151,365 $ 89,539
COST OF REVENUES 38,369 35,585 25,053 73,954 44,410
--------- --------- --------- ---------- ---------
GROSS PROFIT 41,489 35,922 24,197 77,411 45,129
--------- --------- --------- ---------- ---------
OPERATING EXPENSES:
Research and development 8,674 8,111 7,689 16,785 15,413
Sales and marketing 7,527 6,920 5,925 14,447 12,147
General and
administrative 6,465 6,013 5,594 12,478 11,275
--------- --------- --------- ---------- ---------
Total operating
expenses 22,666 21,044 19,208 43,710 38,835
--------- --------- --------- ---------- ---------
INCOME FROM OPERATIONS 18,823 14,878 4,989 33,701 6,294
OTHER INCOME, net 471 494 754 965 1,578
--------- --------- --------- ---------- ---------
INCOME BEFORE PROVISION FOR
INCOME TAXES 19,294 15,372 5,743 34,666 7,872
PROVISION FOR INCOME
TAXES 3,707 3,058 1,214 6,765 2,939
--------- --------- --------- ---------- ---------
NET INCOME $ 15,587 $ 12,314 $ 4,529 $ 27,901 $ 4,933
========= ========= ========= ========== =========
EARNINGS PER SHARE:
Basic $ 0.56 $ 0.45 $ 0.17 $ 1.01 $ 0.18
========= ========= ========= ========== =========
Diluted $ 0.53 $ 0.42 $ 0.16 $ 0.95 $ 0.18
========= ========= ========= ========== =========
SHARES USED IN PER-SHARE
CALCULATION:
Basic 27,844 27,470 26,804 27,658 26,925
Diluted 29,535 29,358 27,944 29,460 28,009
SUPPLEMENTAL
INFORMATION:
Stock-based compensation expenses
included in:
Cost of revenues $ 173 $ 157 $ 264 $ 330 $ 426
Research and
development 929 727 1,080 1,656 2,916
Sales and marketing 639 410 562 1,049 1,556
General and
administrative 775 733 748 1,508 1,741
--------- --------- --------- ---------- ---------
Total stock-based
compensation
expense $ 2,516 $ 2,027 $ 2,654 $ 4,543 $ 6,639
========= ========= ========= ========== =========
Operating expenses include the
following:
Patent-litigation
expenses $ 1,516 $ 1,087 $ 934 $ 2,603 $ 1,765
========= ========= ========= ========== =========
REVENUE MIX BY PRODUCT FAMILY
TOPSwitch 25% 24% 25% 25% 24%
TinySwitch 39% 39% 43% 39% 44%
LinkSwitch 35% 36% 31% 35% 30%
Other 1% 1% 1% 1% 2%
REVENUE MIX BY END
MARKET
Communications 28% 32% 32% 30% 32%
Computer 12% 12% 14% 12% 15%
Consumer 40% 36% 37% 38% 36%
Industrial 20% 20% 17% 20% 17%
POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2010 2010 2009 2010 2009
--------- --------- --------- --------- ---------
RECONCILIATION OF GROSS PROFIT
GAAP gross profit $ 41,489 $ 35,922 $ 24,197 $ 77,411 $ 45,129
GAAP gross profit margin 52.0% 50.2% 49.1% 51.1% 50.4%
Stock-based compensation included
in cost of revenues 173 157 264 330 426
--------- --------- --------- --------- ---------
Non-GAAP gross profit $ 41,662 $ 36,079 $ 24,461 $ 77,741 $ 45,555
--------- --------- --------- --------- ---------
Non-GAAP gross profit margin 52.2% 50.5% 49.7% 51.4% 50.9%
RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses $ 22,666 $ 21,044 $ 19,208 $ 43,710 $ 38,835
Less: Stock-based compensation
included in operating expenses
Research and development 929 727 1,080 1,656 2,916
Sales and marketing 639 410 562 1,049 1,556
General and administrative 775 733 748 1,508 1,741
--------- --------- --------- --------- ---------
Total 2,343 1,870 2,390 4,213 6,213
--------- --------- --------- --------- ---------
Non-GAAP operating expenses $ 20,323 $ 19,174 $ 16,818 $ 39,497 $ 32,622
--------- --------- --------- --------- ---------
RECONCILIATION OF INCOME FROM OPERATIONS
GAAP income from operations $ 18,823 $ 14,878 $ 4,989 $ 33,701 $ 6,294
GAAP operating margin 23.6% 20.8% 10.1% 22.3% 7.0%
Stock-based compensation
included in cost of revenues 173 157 264 330 426
Stock-based compensation
included in operating expenses 2,343 1,870 2,390 4,213 6,213
--------- --------- --------- --------- ---------
Non-GAAP income from operations $ 21,339 $ 16,905 $ 7,643 $ 38,244 $ 12,933
--------- --------- --------- --------- ---------
Non-GAAP operating margin 26.7% 23.6% 15.5% 25.3% 14.4%
RECONCILIATION OF PROVISION FOR INCOME TAXES
GAAP provision for income taxes $ 3,707 $ 3,058 $ 1,214 $ 6,765 $ 2,939
GAAP effective tax rate 19.2% 19.9% 21.1% 19.5% 37.3%
Tax effect of items excluded from
non-GAAP results (356) (6) (307) (362) (757)
--------- --------- --------- --------- ---------
Non-GAAP provision for income taxes $ 4,063 $ 3,064 $ 1,521 $ 7,127 $ 3,696
--------- --------- --------- --------- ---------
Non-GAAP effective tax rate 18.6% 17.6% 18.1% 18.2% 25.5%
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)
GAAP net income $ 15,587 $ 12,314 $ 4,529 $ 27,901 $ 4,933
Adjustments to GAAP net income
Total stock-based compensation 2,516 2,027 2,654 4,543 6,639
Tax effect of items excluded
from non-GAAP results (356) (6) (307) (362) (757)
--------- --------- --------- --------- ---------
Non-GAAP net income $ 17,747 $ 14,335 $ 6,876 $ 32,082 $ 10,815
--------- --------- --------- --------- ---------
Average shares outstanding for
calculation of non-GAAP income per
share (diluted) 29,535 29,358 27,944 29,460 28,009
--------- --------- --------- --------- ---------
Non-GAAP income per share (diluted)
$ 0.60 $ 0.49 $ 0.25 $ 1.09 $ 0.39
========= ========= ========= ========= =========
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)
(unaudited)
June 30, March 31, December
2010 2010 31, 2009
---------- ---------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $ 159,775 $ 125,295 $ 134,974
Restricted cash 250 250 250
Short-term
investments 12,273 22,129 20,567
Accounts receivable 18,282 27,586 21,756
Inventories 35,724 31,426 26,248
Notes receivable 4,750 -- --
Deferred tax assets 1,474 1,486 1,389
Prepaid expenses and
other current assets 7,144 13,130 10,691
---------- ---------- ----------
Total current assets 239,672 221,302 215,875
---------- ---------- ----------
INVESTMENTS 56,609 62,562 40,100
PROPERTY AND EQUIPMENT,
net 70,739 65,877 62,381
INTANGIBLE ASSETS, net 2,755 2,927 3,099
GOODWILL 1,824 1,824 1,824
DEFERRED TAX ASSETS 13,796 12,996 14,590
OTHER ASSETS 6,686 6,683 6,698
---------- ---------- ----------
Total assets $ 392,081 $ 374,171 $ 344,567
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 23,109 $ 26,158 $ 16,944
Accrued payroll and
related expenses 6,922 5,227 6,145
Taxes payable 251 453 478
Deferred income on
sales to
distributors 14,926 11,917 9,040
Other accrued
liabilities 3,481 2,543 3,309
---------- ---------- ----------
Total current
liabilities 48,689 46,298 35,916
---------- ---------- ----------
LONG-TERM LIABILITIES
Income taxes payable 26,188 25,023 23,859
---------- ---------- ----------
Total liabilities 74,877 71,321 59,775
---------- ---------- ----------
STOCKHOLDERS' EQUITY:
Common stock 28 28 27
Additional paid-in
capital 157,354 157,193 150,021
Cumulative
translation
adjustment (51) (46) 4
Retained earnings 159,873 145,675 134,740
---------- ---------- ----------
Total stockholders'
equity 317,204 302,850 284,792
---------- ---------- ----------
Total liabilities
stockholders'
equity $ 392,081 $ 374,171 $ 344,567
========== ========== ==========
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2010 2009 2010 2009
---------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 15,587 $ 4,529 $ 27,901 $ 4,933
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation and amortization 3,201 2,482 6,134 4,978
Gain on sale of property and equipment (362) (10) (349) (10)
Stock-based compensation expense 2,516 2,655 4,543 6,641
Amortization of discount on
held-to-maturity investments 508 104 858 51
Deferred income taxes (788) (952) 710 280
Provision for (reduction in provision
for) accounts receivable and other
allowances (18) 184 (18) 85
Excess tax benefit from stock options
exercised 285 (6) (891) (11)
Tax benefit associated with employee
stock plans 115 110 2,040 183
Change in operating assets and
liabilities:
Accounts receivable 9,322 3,614 3,492 (1,417)
Inventories (4,275) 6,284 (9,460) 6,034
Prepaid expenses and other assets 4,234 (3,090) 3,562 (3,819)
Accounts payable (1,842) 1,733 4,453 839
Taxes payable and other accrued
liabilities 3,596 263 3,006 (792)
Deferred income on sales to
distributors 3,008 (509) 5,885 1,265
---------- ---------- ---------- ----------
Net cash provided by operating
activities 35,087 17,391 51,866 19,240
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (10,153) (1,721) (13,513) (3,488)
Proceeds from sale of property and
equipment 1,415 -- 1,415 --
Notes to third party (3,000) -- (4,750) --
Purchases of held-to-maturity investments -- -- (27,224) (2,755)
Proceeds from held-to-maturity
investments 15,300 850 18,150 3,850
---------- ---------- ---------- ----------
Net cash provided by (used in) investing
activities 3,562 (871) (25,922) (2,393)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common
stock 5,428 1,137 15,463 5,254
Repurchase of common stock (7,922) (8,904) (13,960) (26,539)
Repurchase of stock options -- -- -- (9,048)
Retirement of performance shares for
income tax withholding -- -- (769) --
Payments of dividends to stockholders (1,390) (673) (2,768) (1,345)
Excess tax benefit from stock options
exercised (285) 6 891 11
---------- ---------- ---------- ----------
Net cash used in financing activities (4,169) (8,434) (1,143) (31,667)
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 34,480 8,086 24,801 (14,820)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 125,295 144,566 134,974 167,472
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 159,775 $ 152,652 $ 159,775 $ 152,652
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Unpaid property and equipment, net $ (1,207) $ (430) $ 1,711 $ (262)
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 1 $ 394 $ 1 $ 397
========== ========== ========== ==========
Cash paid for income taxes, net of
refunds $ 598 $ 180 $ 614 $ 353
========== ========== ========== ==========
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
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