Company Expects Year-Over-Year Revenue Growth in the Third Quarter
SAN JOSE, Calif., July 30, 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 June 30, 2009.
Net revenues for the second quarter of 2009 were $49.3 million, down eight percent from the second quarter of 2008 and up 22 percent compared with the prior quarter. Net income for the second quarter was $4.5 million, or $0.16 per diluted share, compared with net income of $7.6 million, or $0.23 per diluted share, in the year-ago quarter, and net income of $0.4 million, or $0.01 per diluted share, in the first quarter of 2009. Gross margin for the second quarter was 49.1 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 second quarter of 2009 was $6.9 million, or $0.25 per diluted share, compared with $10.8 million or $0.33 per diluted share in the year-ago quarter and $3.9 million or $0.14 per diluted share in the first quarter of 2009. Non-GAAP gross margin for the second quarter was 49.7 percent.
Commented Balu Balakrishnan, president and CEO of Power Integrations: "We delivered quarterly revenues well above our original expectations and had an outstanding quarter in terms of profitability and cash flow. We believe that recent design-win momentum is now translating into strong top-line performance. In fact, we had record bookings in the second quarter, and orders have continued at a strong pace in July. While we remain cautious about the global economic outlook, and forecasting revenues remains challenging, we expect our revenues to grow on a year-over-year basis in the third quarter."
Balakrishnan added: "The increasing focus on energy efficiency among policymakers, manufacturers and consumers has increased the rate of design activity in the power-supply industry, giving us more opportunities to increase our market penetration. Our EcoSmart(r) energy-efficiency technology enables outstanding efficiency performance in a highly cost-effective fashion, giving us a competitive advantage whenever there is a meaningful efficiency requirement.
"The rapid ramp of our new LinkSwitch(r)-II product family is a prime example of the value of providing high efficiency at a low cost. LinkSwitch-II offers highly accurate primary-side control, allowing designers to forego expensive, energy-wasting feedback circuitry while meeting even the most stringent efficiency requirements, such as 30 milliwatts of no-load consumption. This combination of performance and cost-effectiveness has made LinkSwitch-II one of the most successful product introductions in our history."
Additional Highlights
* Cash flow from operations was $17.4 million for the second quarter. Free cash flow (defined as cash flow from operations less $1.7 million of capital expenditures) was $15.7 million. * The company ended the second quarter with $159.1 million in cash and investments, an increase of $7.1 million during the quarter. * In May, Power Integrations initiated a $25 million stock-repurchase program, under which it purchased 0.4 million shares during the second quarter for a total of $8.9 million. From February 2008 through June 2009, the company repurchased an aggregate of 5.3 million shares for $108.8 million. Weighted-average shares outstanding for the second quarter of 2009 were 28.0 million, compared with 32.8 million in the second quarter of 2008. * The company will pay a quarterly dividend of $0.025 per share on September 30, 2009 to stockholders of record as of August 31, 2009. * Power Integrations was issued 12 U.S. patents and 19 foreign patents during the second quarter, and now has a total of 269 U.S. and 164 foreign patents.
Third-Quarter Outlook
The company expects its revenues for the third quarter of 2009 to be between $54 million and $58 million. Third-quarter gross margin and operating expenses are expected to be similar to second-quarter levels.
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 1-877-660-8922 from within the United States or 1-719-325-4909 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 $3.6 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 expenses (and the related tax effects thereof) recorded under SFAS 123R, "Share-based Payment." 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 a comparative measure.
Note Regarding Forward-Looking Statements
The statements in this press release relating to the company's projected third-quarter 2009 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 management's 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; 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, 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 Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
NET REVENUES $ 49,250 $ 40,289 $ 53,635 $ 89,539 $105,475
COST OF REVENUES 25,053 19,357 24,829 44,410 48,547
-------- -------- -------- -------- --------
GROSS PROFIT 24,197 20,932 28,806 45,129 56,928
-------- -------- -------- -------- --------
OPERATING EXPENSES:
Research and
development 7,689 7,724 7,979 15,413 15,731
Sales and marketing 5,925 6,222 7,852 12,146 15,271
General and
administrative 5,595 5,682 5,950 11,277 11,638
-------- -------- -------- -------- --------
Total operating
expenses 19,208 19,628 21,781 38,836 42,640
-------- -------- -------- -------- --------
INCOME FROM
OPERATIONS 4,989 1,305 7,025 6,293 14,288
OTHER INCOME, net 754 825 2,265 1,579 4,277
INCOME BEFORE
PROVISION FOR
INCOME TAXES 5,743 2,129 9,290 7,872 18,565
PROVISION FOR INCOME
TAXES 1,214 1,725 1,679 2,939 3,745
-------- -------- -------- -------- --------
NET INCOME $ 4,529 $ 404 $ 7,611 $ 4,933 $ 14,820
======== ======== ======== ======== ========
EARNINGS PER SHARE:
Basic $ 0.17 $ 0.01 $ 0.25 $ 0.18 $ 0.49
======== ======== ======== ======== ========
Diluted $ 0.16 $ 0.01 $ 0.23 $ 0.18 $ 0.46
======== ======== ======== ======== ========
SHARES USED IN
PER-SHARE
CALCULATION:
Basic 26,804 27,048 30,529 26,925 30,375
Diluted 27,987 28,175 32,762 28,052 32,526
SUPPLEMENTAL
INFORMATION:
Stock-based
compensation
expenses included
in:
Cost of revenues $ 264 $ 162 $ 467 $ 426 $ 891
Research and
development 1,080 1,836 1,146 2,916 2,625
Sales and marketing 562 995 1,305 1,557 2,643
General and
administrative 748 993 989 1,741 1,872
-------- -------- -------- -------- --------
Total stock-based
compensation
expense $ 2,654 $ 3,986 $ 3,907 $ 6,640 $ 8,031
======== ======== ======== ======== ========
Operating expenses
include the
following:
Patent-litigation
expenses $ 934 $ 831 $ 633 $ 1,765 $ 1,668
======== ======== ======== ======== ========
REVENUE MIX BY
PRODUCT FAMILY
TOPSwitch 25% 23% 26% 24% 25%
TinySwitch 43% 46% 45% 44% 45%
LinkSwitch 31% 29% 27% 30% 28%
Other 1% 2% 2% 2% 2%
REVENUE MIX BY END
MARKET
Communications 32% 33% 34% 32% 34%
Computer 14% 15% 16% 15% 15%
Consumer 37% 34% 33% 36% 34%
Industrial 17% 18% 17% 17% 17%
POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
-------- -------- -------- -------- --------
RECONCILIATION OF
GROSS PROFIT
GAAP gross profit $ 24,197 $ 20,932 $ 28,806 $ 45,129 $ 56,928
GAAP gross profit
margin 49.1% 52.0% 53.7% 50.4% 54.0%
Stock-based
compensation expense
included in cost of
revenues 264 162 467 426 891
-------- -------- -------- ------------------
Non-GAAP gross
profit $ 24,461 $ 21,094 $ 29,273 $ 45,555 $ 57,819
-------- -------- -------- ------------------
Non-GAAP gross
profit margin 49.7% 52.4% 54.6% 50.9% 54.8%
RECONCILIATION OF
OPERATING EXPENSES
GAAP operating
expenses $ 19,208 $ 19,628 $ 21,781 $ 38,836 $ 42,640
Less: Stock-based
compensation expense
included in
operating expenses:
Research and
development 1,080 1,836 1,146 2,916 2,625
Sales and marketing 562 995 1,305 1,557 2,643
General and
administrative 748 993 989 1,741 1,872
-------- -------- -------- ------------------
Total 2,390 3,824 3,440 6,214 7,140
-------- -------- -------- ------------------
Non-GAAP operating
expenses $ 16,818 $ 15,803 $ 18,341 $ 32,622 $ 35,500
-------- -------- -------- ------------------
RECONCILIATION OF
INCOME FROM
OPERATIONS
GAAP income from
operations $ 4,989 $ 1,305 $ 7,025 $ 6,293 $ 14,288
GAAP operating
margin 10.1% 3.2% 13.1% 7.0% 13.5%
Stock-based
compensation
included in cost
of revenues 264 162 467 426 891
Stock-based
compensation
included in
operating expenses 2,390 3,824 3,440 6,214 7,140
Non-GAAP income from
operations $ 7,643 $ 5,291 $ 10,932 $ 12,934 $ 22,319
-------- -------- -------- ------------------
Non-GAAP operating
margin 15.5% 13.1% 20.4% 14.4% 21.2%
RECONCILIATION OF
PROVISION FOR
INCOME TAXES
GAAP provision for
income taxes $ 1,214 $ 1,725 $ 1,679 $ 2,939 $ 3,745
-------- ------- -------- ------------------
GAAP effective tax
rate 21.1% 81.0% 18.1% 37.3% 20.2%
Tax effect of items
excluded from
non-GAAP results (307) (450) (752) (757) (1,581)
Non-GAAP provision
for income taxes $ 1,521 $ 2,175 $ 2,431 $ 3,696 $ 5,326
-------- -------- -------- ------------------
Non-GAAP effective
tax rate 18.1% 35.6% 18.4% 25.5% 20.0%
RECONCILIATION OF
NET INCOME PER
SHARE (DILUTED)
GAAP net income
(loss) $ 4,529 $ 404 $ 7,611 $ 4,933 $ 14,820
Adjustments to GAAP
net income (loss)
Total stock-based
compensation 2,654 3,986 3,907 6,640 8,031
Tax effect of items
excluded from
non-GAAP results (307) (450) (752) (757) (1,581)
Non-GAAP net income $ 6,876 $ 3,941 $ 10,766 $ 10,817 $ 21,270
-------- -------- -------- ------------------
Average shares
outstanding for
calculation of
non-GAAP income per
share (diluted) 27,987 28,175 32,762 28,052 32,526
-------- -------- -------- ------------------
Non-GAAP income per
share excluding
stock-based
compensation
(diluted) $ 0.25 $ 0.14 $ 0.33 $ 0.39 $ 0.65
======== ======== ======== ==================
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." 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)
June 30, March 31, Dec. 31,
2009 2009 2008
--------- --------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 152,652 $ 144,566 $ 167,472
Restricted cash 250 250 250
Short-term investments 4,931 4,945 6,363
Accounts receivable 14,374 18,172 13,042
Inventories 22,402 28,749 28,468
Note receivable 10,000 10,000 10,000
Deferred tax assets 1,272 1,272 1,274
Prepaid expenses and other
current assets 5,705 7,838 7,099
--------- --------- ---------
Total current assets 211,586 215,792 233,968
--------- --------- ---------
INVESTMENTS 1,296 2,237 1,011
PROPERTY AND EQUIPMENT, net 55,516 56,520 56,911
INTANGIBLE ASSETS, net 3,453 3,635 3,818
GOODWILL 1,824 1,824 1,824
DEFERRED TAX ASSETS 15,084 14,133 15,362
OTHER ASSETS 5,398 174 184
--------- --------- ---------
Total assets $ 294,157 $ 294,315 $ 313,078
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 9,895 $ 8,593 $ 9,319
Accrued payroll and related
expenses 5,611 4,574 15,947
Income taxes payable 297 556 588
Deferred income on sales to
distributors 6,063 6,572 4,798
Other accrued liabilities 2,406 3,376 2,319
--------- --------- ---------
Total current liabilities 24,272 23,671 32,971
--------- --------- ---------
LONG-TERM LIABILITIES
Income taxes payable 21,057 20,705 20,426
--------- --------- ---------
Total liabilities 45,329 44,376 53,397
--------- --------- ---------
STOCKHOLDERS' EQUITY:
Common stock 27 27 28
Additional paid-in capital 131,053 136,117 145,544
Cumulative translation adjustment (7) (104) (57)
Retained earnings 117,755 113,899 114,166
--------- --------- ---------
Total stockholders' equity 248,828 249,939 259,681
--------- --------- ---------
Total liabilities stockholders'
equity $ 294,157 $ 294,315 $ 313,078
========= ========= =========
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
--------- --------- --------- ---------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 4,529 $ 7,611 $ 4,933 $ 14,820
Adjustments to
reconcile net income
to net cash provided
by operating activities
Depreciation and
amortization 2,482 2,462 4,978 4,849
Gain on sale of
property, plant and
equipment (10) 1 (10) (14)
Stock-based compensation
expense 2,655 3,903 6,641 8,034
Amortization of discount
on held-to-maturity
investments 104 (37) 51 (703)
Deferred income taxes (952) 1,651 280 1,172
Provision for (reduction
in provision for)
accounts receivable
and other allowances 184 66 85 (43)
Excess tax benefit from
stock options exercised (6) (548) (11) (736)
Interest on note
receivable -- 12 -- --
Tax benefit associated
with employee stock
plans 110 1,622 183 2,180
Change in operating
assets and liabilities:
Accounts receivable 3,614 (831) (1,417) (3,797)
Inventories 6,284 (1,772) 6,034 (3,936)
Prepaid expenses and
other assets (3,090) (3,365) (3,819) (2,343)
Accounts payable 1,733 3,306 839 4,099
Taxes payable and
other accrued
liabilities 263 973 (792) 203
Deferred income on
sales to distributors (509) 585 1,265 1,746
--------- --------- --------- ---------
Net cash provided
by operating
activities 17,391 15,639 19,240 25,531
--------- --------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property
and equipment (1,721) (1,720) (3,488) (4,431)
Release of restricted
cash -- -- -- 950
Purchases of held-to-
maturity investments -- -- (2,755) (15,854)
Proceeds from held-to-
maturity investments 850 16,001 3,850 102,372
--------- --------- --------- ---------
Net cash provided by
(used in) investing
activities (871) 14,281 (2,393) 83,037
--------- --------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Net proceeds from
issuance of common
stock 1,137 13,403 5,254 18,826
Repurchase of common
stock (8,904) (3,462) (26,539) (8,978)
Repurchase of stock
options -- -- (9,048) --
Payments of dividends
to stockholders (673) -- (1,345) --
Excess tax benefit
from stock options
exercised 6 548 11 736
--------- --------- --------- ---------
Net cash provided by
(used in) financing
activities (8,434) 10,489 (31,667) 10,584
--------- --------- --------- ---------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 8,086 40,409 (14,820) 119,152
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 144,566 197,096 167,472 118,353
--------- --------- --------- ---------
CASH AND CASH
EQUIVALENTS AT
END OF PERIOD $ 152,652 $ 237,505 $ 152,652 $ 237,505
========= ========= ========= =========
SUPPLEMENTAL DISCLOSURE
OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
Unpaid property and
equipment, net $ (429) $ 504 $ (262) $ (14)
========= ========= ========= =========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION
Cash paid for interest $ 3 $ 9 $ 397 $ --
========= ========= ========= =========
Cash paid for income
taxes, net of refunds $ 173 $ 3,584 $ 353 $ 3,861
========= ========= ========= =========