Quarterly Revenues Grew 26 Percent Year-Over-Year to $75.5 Million
SAN JOSE, Calif., Oct 27, 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 September 30, 2010.
Net revenues for the third quarter were $75.5 million, up 26 percent compared with the third quarter of 2009, and down six percent compared with the second quarter of 2010. Net income was $12.6 million or $0.43 per diluted share, compared with $9.2 million or $0.32 per diluted share in the year-ago quarter and $15.6 million or $0.53 per diluted share in the second quarter of 2010. Gross margin for the third quarter was 51.7 percent; operating margin was 20.2 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 third quarter was $15.5 million or $0.53 per diluted share, compared with $10.4 million or $0.36 per diluted share in the year-ago quarter and $17.7 million or $0.60 per diluted share, in the second quarter of 2010. Non-GAAP gross margin for the third quarter was 51.9 percent; non-GAAP operating margin was 24.1 percent.
Commented Balu Balakrishnan, president and CEO of Power Integrations, "As discussed in our earnings announcement last quarter, a transition in our European distribution relationships caused some sales to be accelerated into the second quarter at the expense of third-quarter sales. We believe this timing issue accounted for most of the sequential decrease in our third-quarter revenues. Nevertheless, revenues increased 26 percent versus last year's strong third quarter, and we believe we are on track for full-year revenue growth of between 36 percent and 39 percent."
Balakrishnan continued: "Like many of our peers, we are seeing a moderation in sales as the supply chain digests an apparent excess of inventory. Cyclical fluctuations notwithstanding, we believe we are continuing to gain share in the power-supply market by enabling customers to meet increasingly stringent efficiency specs without adding cost and complexity. In fact, designers looking to cut standby waste all the way to zero can now do so with our new 'Zero' series of products. Our new LinkZero(TM)-AX family, used in conjunction with our recently introduced CapZero(TM) and SenZero(TM) power-saving products, enables designers to achieve 0.00 watts of standby waste in appliances, TVs and other products that utilize an auxiliary power supply."
Additional Highlights
-- Power Integrations paid a quarterly dividend of $0.05 per share on September 30, 2010. The next quarterly dividend of $0.05 per share will be paid on December 31, 2010 to stockholders of record as of November 30, 2010. -- Power Integrations received and acquired a total of 20 U.S. patents and 5 foreign patents during the quarter, and had a total of 329 U.S. patents and 201 foreign patents as of September 30, 2010. -- On October 22, Power Integrations announced a strategic investment in SemiSouth Laboratories, a Mississippi-based manufacturer of high-voltage silicon-carbide (SiC) power devices. Power Integrations' commitment of $30 million, which includes an equity investment in SemiSouth, a technology license and other financial commitments, will help drive the continued expansion of SemiSouth's SiC fabrication facility. The companies will collaborate to drive adoption of SemiSouth's SiC technology, which enables ultra-efficient power conversion for solar and wind inverters, hybrid/electric vehicles and other very high-power applications that benefit from exceptionally high energy efficiency.
Financial Outlook
The company expects its fourth-quarter revenues to be between $67 million and $73 million. Fourth-quarter gross margin is expected to be between 49 percent and 50 percent, with operating expenses between $24 million and $25 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(TM) energy-efficiency technology has saved an estimated $4.4 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 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 projected fourth-quarter 2010 financial performance and its future collaborative efforts with SemiSouth 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; fluctuations in currency exchange rates; and SemiSouth's progress in the development of its technology. 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 (SEC) on August 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, except as otherwise required by the rules and regulations of the SEC.
Power Integrations, EcoSmart, LinkZero, CapZero, SenZero 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 Nine Months Ended
September June 30, September September September
30, 2010 2010 30, 2009 30, 2010 30, 2009
--------- --------- --------- ---------- ----------
NET REVENUES $ 75,452 $ 79,858 $ 60,024 $ 226,817 $ 149,563
COST OF REVENUES 36,447 38,369 30,901 110,402 75,311
--------- --------- --------- ---------- ----------
GROSS PROFIT 39,005 41,489 29,123 116,415 74,252
--------- --------- --------- ---------- ----------
OPERATING EXPENSES:
Research and development 9,348 8,674 6,846 26,133 22,259
Sales and marketing 7,657 7,527 5,744 22,104 17,891
General and
administrative 6,746 6,465 5,465 19,223 16,740
--------- --------- --------- ---------- ----------
Total operating
expenses 23,751 22,666 18,055 67,460 56,890
--------- --------- --------- ---------- ----------
INCOME FROM OPERATIONS 15,254 18,823 11,068 48,955 17,362
OTHER INCOME, net 415 471 178 1,379 1,756
--------- --------- --------- ---------- ----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 15,669 19,294 11,246 50,334 19,118
PROVISION FOR INCOME
TAXES 3,035 3,707 2,094 9,800 5,033
--------- --------- --------- ---------- ----------
NET INCOME $ 12,634 $ 15,587 $ 9,152 $ 40,534 $ 14,085
--------- --------- --------- ---------- ----------
EARNINGS PER SHARE:
Basic $ 0.45 $ 0.56 $ 0.34 $ 1.46 $ 0.52
--------- --------- --------- ---------- ----------
Diluted $ 0.43 $ 0.53 $ 0.32 $ 1.38 $ 0.50
--------- --------- --------- ---------- ----------
SHARES USED IN PER-SHARE
CALCULATION:
Basic 27,894 27,844 26,723 27,737 26,857
Diluted 29,283 29,535 28,431 29,406 28,108
SUPPLEMENTAL
INFORMATION:
Stock-based compensation
expenses included in:
Cost of revenues $ 153 $ 173 $ 188 $ 481 $ 614
Research and
development 1,125 929 340 2,782 3,256
Sales and marketing 727 639 173 1,776 1,729
General and
administrative 930 775 705 2,438 2,446
--------- --------- --------- ---------- ----------
Total stock-based
compensation
expense $ 2,935 $ 2,516 $ 1,406 $ 7,477 $ 8,045
--------- --------- --------- ---------- ----------
Operating expenses
include the following:
Patent-litigation
expenses $ 1,801 $ 1,516 $ 1,473 $ 4,404 $ 3,238
--------- --------- --------- ---------- ----------
REVENUE MIX BY PRODUCT
FAMILY
TOPSwitch 23% 25% 24% 24% 24%
TinySwitch 37% 39% 43% 38% 44%
LinkSwitch 39% 35% 32% 37% 31%
Other 1% 1% 1% 1% 1%
REVENUE MIX BY END
MARKET
Communications 30% 28% 32% 30% 32%
Computer 11% 12% 14% 12% 15%
Consumer 37% 40% 37% 38% 36%
Industrial 22% 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 Nine Months Ended
Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
2010 2010 2009 2010 2009
--------- --------- --------- ---------- ---------
RECONCILIATION OF GROSS PROFIT
GAAP gross profit $ 39,005 $ 41,489 $ 29,123 $ 116,415 $ 74,252
GAAP gross profit margin 51.7% 52.0% 48.5% 51.3% 49.6%
Stock-based compensation included
in cost of revenues 153 173 188 481 614
--------- --------- --------- ---------- ---------
Non-GAAP gross profit $ 39,158 $ 41,662 $ 29,311 $ 116,896 $ 74,866
--------- --------- --------- ---------- ---------
Non-GAAP gross profit margin 51.9% 52.2% 48.8% 51.5% 50.1%
RECONCILIATION OF OPERATING
EXPENSES
GAAP operating expenses $ 23,751 $ 22,666 $ 18,055 $ 67,460 $ 56,890
Less: Stock-based compensation
included in operating expenses:
Research and development 1,125 929 340 2,782 3,256
Sales and marketing 727 639 173 1,776 1,729
General and administrative 930 775 705 2,438 2,446
--------- --------- --------- ---------- ---------
Total 2,782 2,343 1,218 6,996 7,431
--------- --------- --------- ---------- ---------
Non-GAAP operating expenses $ 20,969 $ 20,323 $ 16,837 $ 60,464 $ 49,459
--------- --------- --------- ---------- ---------
RECONCILIATION OF INCOME FROM
OPERATIONS
GAAP income from operations $ 15,254 $ 18,823 $ 11,068 $ 48,955 $ 17,362
GAAP operating margin 20.2% 23.6% 18.4% 21.6% 11.6%
Stock-based compensation included
in cost of revenues 153 173 188 481 614
Stock-based compensation included
in operating expenses 2,782 2,343 1,218 6,996 7,431
--------- --------- --------- ---------- ---------
Non-GAAP income from operations $ 18,189 $ 21,339 $ 12,474 $ 56,432 $ 25,407
--------- --------- --------- ---------- ---------
Non-GAAP operating margin 24.1% 26.7% 20.8% 24.9% 17.0%
RECONCILIATION OF PROVISION FOR
INCOME TAXES
GAAP provision for income taxes $ 3,035 $ 3,707 $ 2,094 $ 9,800 $ 5,033
GAAP effective tax rate 19.4% 19.2% 18.6% 19.5% 26.3%
Tax effect of items excluded from
non-GAAP results (93) (356) (202) (455) (959)
--------- --------- --------- ---------- ---------
Non-GAAP provision for income taxes $ 3,128 $ 4,063 $ 2,296 $ 10,255 $ 5,992
--------- --------- --------- ---------- ---------
Non-GAAP effective tax rate 16.8% 18.6% 18.1% 17.7% 22.1%
RECONCILIATION OF NET INCOME PER
SHARE (DILUTED)
GAAP net income $ 12,634 $ 15,587 $ 9,152 $ 40,534 $ 14,085
Adjustments to GAAP net income
Total stock-based compensation 2,935 2,516 1,406 7,477 8,045
Tax effect of items excluded from
non-GAAP results (93) (356) (202) (455) (959)
--------- --------- --------- ---------- ---------
Non-GAAP net income $ 15,476 $ 17,747 $ 10,356 $ 47,556 $ 21,171
--------- --------- --------- ---------- ---------
Average shares outstanding for
calculation
of non-GAAP income per share
(diluted) 29,283 29,535 28,431 29,406 28,108
--------- --------- --------- ---------- ---------
Non-GAAP income per share (diluted)
$ 0.53 $ 0.60 $ 0.36 $ 1.62 $ 0.75
========= ========= ========= ========== =========
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 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)
September June 30, December
30, 2010 2010 31, 2009
---------- ---------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents $ 164,083 $ 159,775 $ 134,974
Short-term investments 16,039 12,273 20,567
Accounts receivable 7,925 18,282 21,756
Inventories 49,120 35,724 26,248
Notes receivable 5,000 4,750 --
Deferred tax assets 1,452 1,474 1,389
Prepaid expenses and
other current assets 6,279 7,394 10,941
---------- ---------- ----------
Total current assets 249,898 239,672 215,875
---------- ---------- ----------
INVESTMENTS 44,023 56,609 40,100
PROPERTY AND EQUIPMENT,
net 74,280 70,739 62,381
GOODWILL AND INTANGIBLE
ASSETS 15,316 4,579 4,923
DEFERRED TAX ASSETS 14,280 13,796 14,590
OTHER ASSETS 5,550 6,686 6,698
---------- ---------- ----------
Total assets $ 403,347 $ 392,081 $ 344,567
========== ========== ==========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,505 $ 23,109 $ 16,944
Accrued payroll and
related expenses 5,864 6,922 6,145
Taxes payable 1,220 251 478
Deferred income on
sales to distributors 14,849 14,926 9,040
Other accrued
liabilities 3,496 3,481 3,309
---------- ---------- ----------
Total current
liabilities 41,934 48,689 35,916
---------- ---------- ----------
LONG-TERM LIABILITIES:
Income taxes payable 27,457 26,188 23,859
---------- ---------- ----------
Total liabilities 69,391 74,877 59,775
---------- ---------- ----------
STOCKHOLDERS' EQUITY:
Common stock 28 28 27
Additional paid-in
capital 162,764 157,354 150,021
Cumulative translation
adjustment 54 (51) 4
Retained earnings 171,110 159,873 134,740
---------- ---------- ----------
Total stockholders'
equity 333,956 317,204 284,792
---------- ---------- ----------
Total liabilities
stockholders' equity $ 403,347 $ 392,081 $ 344,567
========== ========== ==========
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2010 2009 2010 2009
---------- ---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,634 $ 9,152 $ 40,534 $ 14,085
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 3,343 2,572 9,478 7,550
Loss (gain) on sale of property and
equipment 5 -- (344) (10)
Stock-based compensation expense 2,916 1,406 7,459 8,046
Amortization of premium on held-to-maturity
investments 479 54 1,337 105
Deferred income taxes (461) 1,148 249 1,428
Decrease in accounts receivable and other
allowances (7) (89) (25) (4)
Excess tax benefit from stock options
exercised (48) (87) (939) (102)
Tax benefit associated with employee stock
plans (89) 371 1,951 554
Change in operating assets and liabilities:
Accounts receivable 10,362 (5,976) 13,854 (7,393)
Inventories (13,336) 1,976 (22,796) 8,010
Prepaid expenses and other assets 1,048 (2,332) 4,610 (6,151)
Accounts payable (4,360) 4,674 93 5,514
Taxes payable and other accrued
liabilities 1,299 1,965 4,305 1,173
Deferred income on sales to distributors (77) 1,259 5,808 2,524
---------- ---------- ---------- ----------
Net cash provided by operating activities 13,708 16,093 65,574 35,329
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (8,320) (4,079) (21,833) (7,567)
Proceeds from sale of property and equipment -- -- 1,415 --
Acquisition (8,598) -- (8,598) --
Notes to third parties (2,000) -- (6,750) --
Purchases of held-to-maturity investments -- (22,865) (27,224) (25,620)
Proceeds from held-to-maturity investments 8,341 2,499 26,491 6,349
---------- ---------- ---------- ----------
Net cash used in investing activities (10,577) (24,445) (36,499) (26,838)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 2,524 8,444 17,987 13,698
Repurchase of common stock -- (2,135) (13,960) (28,674)
Repurchase of stock options -- -- -- (9,048)
Retirement of performance shares for income
tax withholding -- -- (769) --
Payments of dividends to stockholders (1,395) (672) (4,163) (2,017)
Excess tax benefit from stock options
exercised 48 87 939 102
---------- ---------- ---------- ----------
Net cash provided by (used in) financing
activities 1,177 5,724 34 (25,939)
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 4,308 (2,628) 29,109 (17,448)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 159,775 152,652 134,974 167,472
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 164,083 $ 150,024 $ 164,083 $ 150,024
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Unpaid property and equipment, net $ 1,008 $ 305 $ 1,008 $ 44
========== ========== ========== ==========
Conversion of notes receivable in connection
with acquisition $ 1,752 $ -- $ 1,752 $ --
========== ========== ========== ==========
Application of prepayment to acquisition $ 1,200 $ -- $ 1,200 $ --
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest $ -- $ -- $ -- $ 397
========== ========== ========== ==========
Cash paid for income taxes, net of refunds $ 1,337 $ (267) $ 1,951 $ 86
========== ========== ========== ==========
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Power Integrations, Inc.
CONTACT: Powe
Integrations, Inc.
Joe Shiffler
(408) 414-8528
jshiffler@powerint.com
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