Net Revenues for the Quarter Were $40.3 Million
Non-GAAP Gross Margin Was 52.4 Percent; Non-GAAP Earnings Were
$0.14/Share
SAN JOSE, Calif., April 23, 2009 (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, 2009.
Net revenues for the quarter were $40.3 million, down 22 percent from the first quarter of 2008 and down five percent from the fourth quarter of 2008. Under generally accepted accounting principles (GAAP), net income for the first quarter was $0.4 million, or $0.01 per share, compared with net income of $7.2 million, or $0.22 per diluted share, in the year-ago quarter and a net loss of $20.7 million, or $0.72 per share, in the fourth quarter of 2008. GAAP gross margin for the first quarter was 52.0 percent.
In addition to its GAAP results, the company provided certain non-GAAP measures that exclude stock-based compensation expenses, an asset-impairment charge recognized in the fourth quarter of 2008, and the tax effects of these items. Non-GAAP net income for the first quarter of 2009 was $3.9 million, or $0.14 per diluted share, compared with $10.6 million, or $0.33 per diluted share, in the year-ago quarter and $4.6 million, or $0.15 per diluted share, in the fourth quarter of 2008. Non-GAAP gross margin for the first quarter was 52.4 percent.
Commented Balu Balakrishnan, president and CEO of Power Integrations: "Orders for our products improved as the quarter progressed, including a higher-than-normal level of turns orders, resulting in first-quarter revenues well above our original expectations. We also delivered a higher-than-expected gross margin and decreased our operating expenses significantly."
"While the economic downturn continues to weigh on end-market demand, we remain focused on increasing penetration of our core markets while expanding into new markets such as LED lighting and high-power," continued Balakrishnan. "Design activity remains robust despite the economy, and we are seeing an unprecedented level of focus on energy-efficiency among our customers. Regulatory efficiency specifications continue to tighten, and more manufacturers are now designing products that exceed the required levels of efficiency. We believe our EcoSmart(r) energy-efficiency technology gives us a significant competitive advantage in this environment."
"Given the volatility and short-term nature of recent order patterns, projecting future revenues remains challenging," Balakrishnan added. "While business has picked up significantly since the end of 2008, orders have moderated somewhat following a strong surge in the latter part of March, and we remain cautious about the outlook for end-market demand in light of the weak global economy. Taking these factors into consideration, our current expectation is that our revenues for the second quarter will be between $39 million and $43 million."
Additional Highlights
* Power Integrations repurchased 0.9 million shares during the first quarter for $18 million, completing the $50 million repurchase program announced in October 2008. From February 2008 through February 2009, the company repurchased an aggregate of 4.9 million shares for $100 million. Weighted-average shares outstanding for the first quarter of 2009 were 28.2 million, compared with 32.1 million for the first quarter of 2008. * The company will pay a quarterly dividend of $0.025 per share on June 30, 2009 to stockholders of record as of May 29, 2009. * In February Power Integrations announced that it had achieved a settlement in its patent litigation against BCD Semiconductor. Under the terms of the settlement, BCD accepted a court order prohibiting the sale in the United States of the products involved in the lawsuit, and forbidding the sale of these products for use in end products destined for the U.S. market. * Power Integrations was issued 11 U.S. patents and 7 foreign patents during the first quarter, and now has a total of 257 U.S. and 145 foreign patents.
Second-Quarter Outlook
The company expects its revenues for the second quarter of 2009 to be between $39 million and $43 million. GAAP gross margin is expected to be 48 to 50 percent, including an impact of approximately half a percentage point from stock-based compensation. Second-quarter operating expenses are expected to be between $18 million and $19 million, including approximately $3 million of stock-based compensation expenses and $1 million of patent-litigation expenses.
Conference Call at 1:30 pm Pacific Time
Power Integrations management will hold a conference call today at 1:30 pm Pacific time. Members of the investment community can join the call by dialing 1-877-719-9789 from within the United States or 1-719-325-4807 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://investors.powerint.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 energy-efficiency technology has saved an estimated $3.4 billion of standby energy waste and prevented millions of tons of CO2 emissions. The company's Green Room web site 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 expenses (and the related tax effects thereof) recorded under SFAS 123R, "Share-based Payment," as well as non-recurring, non-cash charges for the write-down of intangible assets. 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, acquisitions and other activity resulting in the creation of intangible assets are a part of the company's business activities, and the write-down or write-off of such assets due to reductions in their estimated value is not reflected in the non-GAAP measures. Also, other companies, including other companies in Power Integrations' industry, may calculate non-GAAP financial measures differently than the company, limiting their usefulness as a comparative measure.
Note Regarding Forward-Looking Statements
The statements in this press release relating to the company's projected second-quarter 2009 financial performance and the competitive advantages created by its energy-efficiency technology 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 management's forward-looking statements. These risks and uncertainties include, but are not limited to: decreases in customer demand greater than the company expects may occur as a result of the current credit and economic crisis; 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; the benefits of the company's cost-reduction efforts may not be as great as the company expects due to delays in implementing such measures or unforeseen costs and expenses that offset the benefits of such measures; 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 March 2, 2009. 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, Dec. 31, March 31,
2009 2008 2008
------------ ------------ ------------
NET REVENUES $ 40,289 $ 42,417 $ 51,840
COST OF REVENUES 19,357 23,472 23,718
------------ ------------ ------------
GROSS PROFIT 20,932 18,945 28,122
------------ ------------ ------------
OPERATING EXPENSES:
Research and development 7,724 14,114 7,752
Sales and marketing 6,222 13,569 7,419
General and administrative 5,682 9,240 5,688
Impairment of intangibles -- 1,958 --
------------ ------------ ------------
Total operating expenses 19,628 38,881 20,859
------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS 1,305 (19,936) 7,263
OTHER INCOME, net 825 1,836 2,012
INCOME (LOSS) BEFORE
PROVISION FOR INCOME TAXES 2,129 (18,100) 9,275
PROVISION FOR INCOME TAXES 1,725 2,553 2,066
------------ ------------ ------------
NET INCOME (LOSS) $ 404 $ (20,653) $ 7,209
============ ============ ============
EARNINGS PER SHARE:
Basic $ 0.01 $ (0.72) $ 0.24
============ ============ ============
Diluted $ 0.01 $ (0.72) $ 0.22
============ ============ ============
SHARES USED IN PER-SHARE
CALCULATION:
Basic 27,048 28,860 30,222
Diluted 28,175 28,860 32,090
SUPPLEMENTAL INFORMATION:
Stock-based compensation
expenses included in:
Cost of revenues $ 162 $ 2,204 $ 424
Research and development 1,836 7,749 1,479
Sales and marketing 995 7,992 1,338
General and administrative 993 4,937 883
------------ ------------ ------------
Total stock-based
compensation expense $ 3,986 $ 22,882 $ 4,124
============ ============ ============
Operating expenses include
the following:
Patent-litigation expenses $ 831 $ 1,012 $ 1,035
============ ============ ============
REVENUE MIX BY PRODUCT FAMILY
TOPSwitch 22% 24% 25%
TinySwitch 45% 42% 44%
LinkSwitch 31% 32% 29%
Other 2% 2% 2%
REVENUE MIX BY END MARKET
Communications 33% 36% 34%
Computer 15% 16% 15%
Consumer 34% 31% 34%
Industrial 18% 17% 17%
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,
2009 2008 2008
--------- --------- ---------
RECONCILIATION OF GROSS PROFIT
GAAP gross profit $ 20,932 $ 18,945 $ 28,122
GAAP gross profit margin 52.0% 44.7% 54.2%
Stock-based compensation expense
included in cost of revenues 162 2,204 424
--------- --------- ---------
Non-GAAP gross profit 21,094 21,149 28,546
--------- --------- ---------
Non-GAAP gross profit margin 52.4% 49.9% 55.1%
RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses $ 19,628 $ 38,881 $ 20,859
Items excluded from non-GAAP operating
expenses:
Stock-based compensation expense
included in operating expenses:
Research and development 1,836 7,749 1,479
Sales and marketing 995 7,992 1,338
General and administrative 993 4,937 883
--------- --------- ---------
Total 3,824 20,678 3,700
--------- --------- ---------
Impairment of intangibles -- 1,958 --
Non-GAAP operating expenses $ 15,803 $ 16,245 $ 17,159
--------- --------- ---------
RECONCILIATION OF INCOME FROM
OPERATIONS
GAAP income from operations $ 1,305 $ (19,936) $ 7,263
GAAP operating margin 3.2% N/A 14.0%
Stock-based compensation included
in cost of revenues 162 2,204 424
Stock-based compensation included
in operating expenses 3,824 20,678 3,700
Impairment of intangibles -- 1,958 --
Non-GAAP income from operations 5,291 4,904 11,387
--------- --------- ---------
Non-GAAP operating margin 13.1% 11.6% 22.0%
RECONCILIATION OF PROVISION FOR
INCOME TAXES
GAAP provision for income taxes 1,725 2,553 2,066
GAAP effective tax rate 81.0% N/A 22.3%
Tax effect of items excluded from
non-GAAP results (450) 429 (752)
Non-GAAP provision for income taxes 2,175 2,124 2,818
--------- --------- ---------
Non-GAAP effective tax rate 35.6% 31.5% 21.0%
RECONCILIATION OF NET INCOME PER
SHARE (DILUTED)
GAAP net income (loss) $ 404 $ (20,653) $ 7,209
Adjustments to GAAP net income (loss)
Total stock-based compensation 3,986 22,882 4,124
Impairment of intangibles -- 1,958 --
Tax effect of items excluded from
non-GAAP results (450) 429 (752)
Non-GAAP net income $ 3,941 $ 4,616 $ 10,581
--------- --------- ---------
Average shares outstanding for
calculation of non-GAAP income per
share (diluted) 28,175 29,845 32,090
--------- --------- ---------
Non-GAAP income per share excluding
stock-based compensation (diluted) $ 0.14 $ 0.15 $ 0.33
========= ========= =========
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 expenses recognized under SFAS
123R, "Share-based payment," as well as non-recurring, non-cash
charges for the write-down of intangible assets.
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, Dec. 31,
2009 2008
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 144,566 $ 167,472
Restricted cash 250 250
Short-term investments 4,945 6,363
Accounts receivable 18,172 13,042
Inventories 28,749 28,468
Note receivable 10,000 10,000
Deferred tax assets 1,272 1,274
Prepaid expenses and other current assets 7,838 7,099
--------- ---------
Total current assets 215,792 233,968
--------- ---------
PROPERTY AND EQUIPMENT, net 56,520 56,911
GOODWILL AND OTHER INTANGIBLE ASSETS 5,460 5,642
DEFERRED TAX ASSETS 14,133 15,362
OTHER ASSETS 2,410 1,195
--------- ---------
Total assets $ 294,315 $ 313,078
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 8,593 $ 9,319
Accrued payroll and related expenses 4,574 15,947
Income taxes payable 556 588
Deferred income on sales to distributors 6,572 4,798
Other accrued liabilities 3,376 2,319
--------- ---------
Total current liabilities 23,671 32,971
--------- ---------
LONG-TERM LIABILITIES
Income taxes payable 20,705 20,426
Total liabilities 44,376 53,397
--------- ---------
STOCKHOLDERS' EQUITY:
Common stock 27 28
Additional paid-in capital 136,117 145,544
Cumulative translation adjustment (104) (57)
Retained earnings 113,899 114,166
--------- ---------
Total stockholders' equity 249,939 259,681
--------- ---------
Total liabilities stockholders' equity $ 294,315 $ 313,078
========= =========
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended
March 31, March 31,
2009 2008
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 404 $ 7,209
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 2,496 2,387
Gain on sale of property, plant and
equipment -- (15)
Stock-based compensation expense 3,986 4,131
Amortization of discount on held-to-
maturity investments (53) (666)
Deferred income taxes 1,232 (479)
Provision for (reduction in provision for)
accounts receivable and other allowances (99) (109)
Excess tax benefit from stock options
exercised (5) (188)
Interest on note receivable -- (12)
Tax benefit associated with employee stock
plans 73 558
Change in operating assets and liabilities:
Accounts receivable (5,031) (2,966)
Inventories (250) (2,164)
Prepaid expenses and other assets (728) 1,022
Accounts payable (894) 793
Taxes payable and other accrued
liabilities (1,055) (770)
Deferred income on sales to distributors 1,774 1,161
--------- ---------
Net cash provided by operating activities 1,850 9,892
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,767) (2,711)
Release of restricted cash -- 950
Purchases of held-to-maturity investments (2,755) (15,854)
Proceeds from sales of held-to-maturity
investments 3,000 86,371
--------- ---------
Net cash provided by (used in) investing
activities (1,522) 68,756
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock 4,117 5,423
Repurchase of common stock (17,635) (5,516)
Repurchase of stock options (9,048) --
Payments of dividends to stockholders (672) --
Excess tax benefit from stock options
exercised 5 188
--------- ---------
Net cash provided by (used in) financing
activities (23,233) 95
--------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (22,905) 78,743
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 167,472 118,353
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 144,567 $ 197,096
========= =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Unpaid property and equipment, net $ 167 $ (518)
--------- ---------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest $ 3 $ --
--------- ---------
Cash paid for income taxes, net of refunds $ 173 $ 277
--------- ---------