Power Integrations Reports Ninth Consecutive Year of Revenue Growth

2010 Revenues Grew 39 Percent to $299.8 Million; Annual Shipments Topped One Billion Units

Fourth-Quarter Revenues Grew 10 Percent Year-Over-Year to $73.0 Million

Company Expands High-Voltage Footprint With Acquisition of Qspeed Semiconductor

SAN JOSE, Calif., Feb. 3, 2011 (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 and fiscal year ended December 31, 2010. Net revenues for the fourth quarter were $73.0 million, up 10 percent compared with the fourth quarter of 2009, and down three percent compared with the third quarter of 2010. Net income was $8.9 million or $0.30 per diluted share, compared with $9.2 million or $0.32 per diluted share in the year-ago quarter and $12.6 million or $0.43 per diluted share in the third quarter of 2010. Gross margin for the fourth quarter was 49.5 percent; operating margin was 15.0 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 fourth quarter was $11.6 million or $0.39 per diluted share, compared with $12.2 million or $0.42 per diluted share in the year-ago quarter and $15.5 million or $0.53 per diluted share, in the third quarter of 2010. Non-GAAP gross margin for the fourth quarter was 49.8 percent; non-GAAP operating margin was 19.5 percent.

Full-year revenues for 2010 were $299.8 million, an increase of 39 percent compared with 2009. Net income for the full year was $1.67 per diluted share, more than double the $0.82 per diluted share reported in the prior year. Non-GAAP net income for the full year was $2.00 per diluted share, an increase of 69 percent from $1.18 per diluted share in the prior year.

Commented Balu Balakrishnan, president and CEO of Power Integrations: "2010 was a landmark year for Power Integrations, as shipments surpassed one billion units and we approached $300 million in annual revenues. We grew our top line by 39 percent, achieving our ninth consecutive year of revenue growth. We also had an excellent year from a profitability standpoint, expanding our non-GAAP operating margin by more than five percentage points and growing our non-GAAP earnings by more than 75 percent."

Balakrishnan continued: "We also made great progress last year in expanding our product portfolio and solidifying our leadership in high-voltage technology to position us for continued growth. We introduced a record eight new product families in 2010, including LinkSwitch™-PH and LinkSwitch-PL for LED lighting, our Zero series for ultra-low standby, and two new members of our Hiper™ series, targeting high-power applications.

"We also expanded our high-voltage technology presence with multiple strategic transactions, including our investment in SemiSouth Laboratories and, most recently, our acquisition of Qspeed Semiconductor, whose high-performance diode technology is a great complement to our new high-power products. The expansion of our high-voltage footprint – both organically and through strategic transactions – is reflected in the growth of our patent portfolio. We received and acquired more than 100 U.S. patents during the year, increasing the size of our U.S. patent holdings by more than a third."

Additional Highlights

• On December 31, 2010 Power Integrations acquired Qspeed Semiconductor, a supplier of high-performance high-voltage diodes, for a price of approximately $7 million in cash. Qspeed diodes utilize a proprietary silicon technology to provide a unique combination of high efficiency and low noise, as well as high-frequency operation, which reduces the cost and size of magnetic components in a power supply.
• In October, Power Integrations announced a strategic investment in SemiSouth Laboratories, a Mississippi-based manufacturer of high-voltage silicon-carbide (SiC) power devices. Power Integrations' investment will facilitate the continued expansion of SemiSouth's SiC fabrication facility and driver adoption of SemiSouth's SiC technology, which enables ultra-efficient power conversion for solar and wind inverters, hybrid/electric vehicles and other high-power applications that benefit from exceptionally high efficiency.
• Power Integrations received and acquired 66 U.S. patents and 10 foreign patents during the fourth quarter. The company had a total of 395 U.S. patents and 211 foreign patents at year end.
• Last month a federal district court awarded Power Integrations double damages in one of its patent-infringement lawsuits against Fairchild Semiconductor, increasing the award to approximately $12.9 million. The ruling followed an earlier finding that Fairchild's infringement of Power Integrations' patents was willful.
• Power Integrations paid a quarterly dividend of $0.05 per share on December 31, 2010. The next quarterly dividend of $0.05 per share will be paid on March 31, 2011 to stockholders of record as of February 28, 2011.

Financial Outlook for First Quarter of 2011

The company issued the following forecast for the first quarter of 2011:

• Revenues are expected to be between $71 million and $77 million;
• Gross margin:

• GAAP: 48 percent plus or minus half a percentage point;
• Non-GAAP: 48 percent to 49 percent (excludes impact of stock-based compensation and acquisition-related amortization);

• Operating expenses:

• GAAP: $25 million, plus or minus $0.5 million;
• Non-GAAP: $22 million, plus or minus $0.5 million (excludes impact of stock-based compensation and amortization of acquisition-related intangibles).

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://investors.powerint.com/">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 $4.5 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 first-quarter 2011 financial performance and the expected effect of its investment in 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; the challenges inherent in integrating acquired businesses; and SemiSouth's ability to develop 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 November 3, 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, LinkSwitch, Hiper, Qspeed, EcoSmart and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners.