SAN JOSE, Calif., June 5, 2007 (PRIME NEWSWIRE) -- Power Integrations (Pink Sheets:POWI) today released complete financial results for the fiscal year ended December 31, 2006. The company's 2006 consolidated statements of operations and consolidated balance sheets, as well as certain supplemental information, are contained in the tables accompanying this press release.
As previously disclosed, the company's 2006 net revenues totaled $162.4 million, an increase of 13 percent compared to the prior year. Gross margin calculated under generally accepted accounting principles (GAAP) was 54.6 percent, which included a positive impact of approximately one margin point from the ship-and-debit settlements recorded by the company during the second quarter of 2006.
Operating expenses on a GAAP basis totaled $84.8 million, including $14.2 million in stock-based compensation expenses. Also included in operating expenses were $13.7 million in expenses related to the company's special investigation and the related financial-statement restatement, as well as $7.0 million in expenses related to patent litigation. Net income under GAAP was $9.4 million, or $0.31 per diluted share.
On a non-GAAP basis which excludes expenses for stock-based compensation, full-year gross margin was 55.3 percent. Non-GAAP net income, which excludes stock-based compensation expenses and the related tax effects, was $21.8 million, or $0.71 per diluted share.
The company has virtually completed its closing and review procedures for the first quarter of 2007, and intends to report final results for that period as soon as practicable.
About Power Integrations
Power Integrations, Inc. is the leading supplier of high-voltage analog integrated circuits used in power conversion. The company's breakthrough integrated-circuit technology enables compact, energy-efficient power supplies in a wide range of electronic products, in both AC-DC and DC-DC applications. The company's EcoSmart(r) energy-efficiency technology, which dramatically reduces energy waste, has saved consumers and businesses around the world more than an estimated $2.2 billion on their electricity bills since its introduction in 1998. For more information, visit the company's website at 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 Statement of Financial Accounting Standards No. 123R, "Share-based Payment," which requires the recognition of expenses relating to share-based payments such as stock options. The company uses these non-GAAP measures in its own financial and operational decision-making processes and 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. 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. 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.
POWER INTEGRATIONS, INC.
2006 CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
------- ------- ------- ------- ---------
NET REVENUES $35,253 $41,465 $44,404 $41,281 $162,403
COST OF REVENUES 16,908 17,359 20,355 19,172 73,794
------- ------- ------- ------- --------
GROSS PROFIT 18,345 24,106 24,049 22,109 88,609
------- ------- ------- ------- --------
OPERATING EXPENSES:
Research and development 5,809 6,018 6,331 6,257 24,415
Sales and marketing 6,227 6,497 6,330 6,658 25,712
General and
administrative 8,389 8,133 10,210 7,916 34,648
------- ------- ------- ------- --------
Total Operating
Expenses 20,425 20,648 22,871 20,831 84,775
------- ------- ------- ------- --------
INCOME (LOSS) FROM
OPERATIONS (2,080) 3,458 1,178 1,278 3,834
OTHER INCOME, net 1,278 1,494 1,585 1,567 5,924
------- ------- ------- ------- --------
INCOME (LOSS) BEFORE
PROVISION FOR INCOME
TAXES (802) 4,952 2,763 2,845 9,758
PROVISION (BENEFIT) FOR
INCOME TAXES (23) 446 102 (192) 333
------- ------- ------- ------- --------
NET INCOME (LOSS) $ (779) $ 4,506 $ 2,661 $ 3,037 $ 9,425
======= ======= ======= ======= ========
EARNINGS (LOSS)
PER SHARE:
Basic $ (0.03) $ 0.15 $ 0.09 $ 0.11 $ 0.32
======= ======= ======= ======= ========
Diluted $ (0.03) $ 0.15 $ 0.09 $ 0.10 $ 0.31
======= ======= ======= ======= ========
SHARES USED IN PER-
SHARE CALCULATION:
Basic 29,582 29,356 28,650 28,658 29,059
Diluted 29,582 30,955 29,832 30,656 30,819
SUPPLEMENTAL INFORMATION:
Stock-based compensation
expenses included in:
Cost of revenues $ 47 $ 412 $ 448 $ 343 $ 1,250
Research and
development 1,198 1,119 1,019 993 4,329
Sales and marketing 1,491 1,473 1,311 1,231 5,506
General and
administrative 1,139 1,120 1,045 1,071 4,375
------- ------- ------- ------- --------
Total stock-based
compensation
expense $ 3,875 $ 4,124 $ 3,823 $ 3,638 $ 15,460
======= ======= ======= ======= ========
Operating expenses
include the following:
Patent-litigation
expenses $ 2,863 $ 823 $ 1,797 $ 1,482 $ 6,965
======= ======= ======= ======= ========
Special investigation/
restatement expenses $ 1,937 $ 4,020 $ 4,941 $ 2,799 $ 13,697
======= ======= ======= ======= ========
POWER INTEGRATIONS, INC.
SUPPLEMENTAL RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
TO 2006 GAAP RESULTS
(in thousands, except per-share amounts)
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Full Year
------- ------- ------- ------- ---------
RECONCILIATION OF GROSS
PROFIT MARGIN
GAAP gross profit $18,345 $24,106 $24,049 $22,109 $88,609
GAAP gross profit
margin 52.0% 58.1% 54.2% 53.6% 54.6%
Stock-based compensation
expense included in cost
of revenues 47 412 448 343 1,250
-------------------------------------------
Non-GAAP gross profit
excluding stock-based
compensation 18,392 24,518 24,497 22,452 89,859
-------------------------------------------
Non-GAAP gross profit
margin 52.2% 59.1% 55.2% 54.4% 55.3%
RECONCILIATION OF
OPERATING MARGIN
GAAP income (loss) from
operations $(2,080) $ 3,458 $ 1,178 $ 1,278 $ 3,834
GAAP operating margin -5.9% 8.3% 2.7% 3.1% 2.4%
Stock-based compensation
expense included in cost
of revenues and operating
expenses:
Cost of revenues 47 412 448 343 1,250
Research and
development 1,198 1,119 1,019 993 4,329
Sales and marketing 1,491 1,473 1,311 1,231 5,506
General and
administrative 1,139 1,120 1,045 1,071 4,375
-------------------------------------------
Total 3,875 4,124 3,823 3,638 15,460
-------------------------------------------
Non-GAAP income from
operations excluding
stock-based compensation 1,795 7,582 5,001 4,916 19,294
-------------------------------------------
Non-GAAP operating
margin 5.1% 18.3% 11.3% 11.9% 11.9%
RECONCILIATION OF NET
INCOME (LOSS) PER SHARE
(DILUTED)
GAAP net income (loss) $ (779) $ 4,506 $ 2,661 $ 3,037 $ 9,425
Adjustments to GAAP net
income (loss)
Total stock-based
compensation 3,875 4,124 3,823 3,638 15,460
Tax effect of stock-
based compensation (478) (942) (825) (829) (3,074)
Non-GAAP income excluding
stock-based compensation $ 2,618 $ 7,688 $ 5,659 $ 5,846 $21,811
-------------------------------------------
Average shares outstanding
for calculation of non-
GAAP income per share
(diluted) 31,652 30,955 29,832 30,656 30,819
-------------------------------------------
Non-GAAP income per share
excluding stock-based
compensation (diluted) $ 0.08 $ 0.25 $ 0.19 $ 0.19 $ 0.71
===========================================
Note on use of non-GAAP financial measures:
Effective January 1, 2006, Power Integrations adopted SFAS 123R,
which requires the company to recognize compensation expenses
relating to stock-based payments. 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, and the related
tax effects. The company uses these non-GAAP measures in its own
financial and operational decision-making processes and 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.
2006 QUARTERLY CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31 June 30 Sept. 30 Dec. 31
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $101,224 $ 91,462 $101,505 $124,937
Restricted cash -- -- -- 1,300
Short-term investments 30,960 26,291 21,443 2,506
Accounts receivable 13,749 15,509 13,668 10,489
Inventories 17,923 23,192 26,859 28,280
Deferred tax assets 1,306 1,401 1,520 1,929
Prepaid expenses and
other current assets 1,380 1,075 4,094 4,009
-------- -------- -------- --------
Total current assets 166,542 158,930 169,089 173,450
-------- -------- -------- --------
PROPERTY AND EQUIPMENT, net 50,698 53,242 53,727 53,475
INVESTMENTS 6,916 6,913 5,409 3,999
DEFERRED TAX ASSETS 9,314 9,995 10,847 13,756
OTHER ASSETS 16,864 16,656 16,599 16,179
-------- -------- -------- --------
TOTAL ASSETS $250,334 $245,736 $255,671 $260,859
======== ======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,207 $ 11,220 $ 11,868 $ 8,592
Accrued payroll and
related expenses 5,031 6,919 6,934 8,668
Income taxes payable 9,870 10,622 11,503 14,509
Deferred income on sales
to distributors 4,439 5,353 5,385 4,901
Other accrued liabilities 2,985 3,976 5,961 3,423
-------- -------- -------- --------
Total current liabilities 32,532 38,090 41,651 40,093
-------- -------- -------- --------
STOCKHOLDERS' EQUITY:
Common stock 30 29 29 29
Additional paid-in capital 142,665 127,942 131,652 135,307
Cumulative translation
adjustment (115) (53) (50) 4
Retained earnings 75,222 79,728 82,389 85,426
-------- -------- -------- --------
Total stockholders' equity 217,802 207,646 214,020 220,766
-------- -------- -------- --------
Total liabilities and
stockholders' equity $250,334 $245,736 $255,671 $260,859
======== ======== ======== ========