Exhibit 99.1
Power Integrations Reports Second-Quarter Financial Results
Non-GAAP gross margin for Q2 was 51.9%; non-GAAP earnings were $0.49/diluted share
GAAP gross margin was 49.4%; GAAP net loss of $0.25/share reflects one-time tax charge
Announces resolution of tax audit and substantial reduction in future effective tax rate
SAN JOSE, Calif.--(BUSINESS WIRE)--August 6, 2012--Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended June 30, 2012. Net revenues for the second quarter were $76.4 million, up six percent from the prior quarter and down five percent compared with the second quarter of 2011. GAAP gross margin for the quarter was 49.4 percent; operating margin was 12.3 percent. The company reported a GAAP net loss for the quarter of $7.2 million or $0.25 per share, driven by a one-time net charge of $15.7 million associated with the tax settlement described below. The second-quarter net loss compares to net income of $0.25 per diluted share in the prior quarter and $0.35 per diluted share in the second quarter of 2011.
In addition to its GAAP results, the company provided certain non-GAAP financial measures that exclude stock-based compensation expenses, acquisition-related costs and expenses, non-cash interest income, the tax effects of these items, and the one-time charge associated with the tax settlement. Non-GAAP gross margin for the second quarter was 51.9 percent, an increase of 310 basis points sequentially; non-GAAP operating margin was 20.7 percent, up 340 basis points sequentially.
Non-GAAP net income for the quarter was $14.6 million or $0.49 per diluted share, compared with $0.36 per diluted share in the prior quarter and $0.43 per diluted share in the second quarter of 2011. The company’s non-GAAP effective tax rate for the second quarter was 9.0 percent, reflecting a reduction in the company’s expected full-year 2012 non-GAAP tax rate to approximately 13 percent, compared with the prior expectation of a full-year rate in the high teens.
The company today announced a settlement with the U.S. Internal Revenue Service that resolves the IRS audit of the company’s taxes for the years 2003 through 2006. The settlement includes the following elements:
- During the third quarter of 2012 Power Integrations will make a one-time payment of $42.6 million in taxes and interest relating primarily to the revaluation of a license to certain intellectual property rights of the company to one of its foreign subsidiaries. As noted above, the company’s GAAP results for the second quarter include a one-time net charge of $15.7 million reflecting the taxes and interest to be paid, partially offset by the reversal of previously accrued tax liabilities and valuation allowances. Of the $15.7 million charge, approximately $12.7 million relates to taxes and $3.0 million to interest.
- The company expects a substantial reduction in its ongoing effective tax rates. Specifically, the company expects its 2013 GAAP and non-GAAP effective tax rates to be in the high single digits. For the remaining two quarters of 2012 the GAAP and non-GAAP effective tax rates are expected to be approximately 18 percent and 13 percent, respectively.
- The agreement permits Power Integrations to repatriate approximately $102 million of earnings from its foreign subsidiaries without further U.S. federal income-tax consequences.
Commented Balu Balakrishnan, president and CEO of Power Integrations: “Like many of our peers, we have experienced a slowdown in demand of late, and second-quarter revenues fell short of our expectations. However, our non-GAAP gross margin expanded by more than three percentage points thanks to continued execution on our cost-reduction efforts and a more favorable end-market mix during the quarter. In all, our non-GAAP gross margin is up nearly five points in the past three quarters, and we expect it to remain above the 50-percent benchmark in the second half of the year. The combination of a higher gross margin and our lower tax rate will help support our earnings and cash flow even in the face of a muted demand environment.”
Additional Highlights
- On May 1 the company completed its acquisition of CT-Concept Technologie AG, a Swiss developer of highly efficient drivers for high-voltage IGBT modules, for approximately $116 million net of cash acquired.
- Cash flow from operations was $27.7 million for the quarter.
- The company paid a dividend of $0.05 per share on June 29, 2012. The next dividend of $0.05 per share will be paid on September 28, 2012 to stockholders of record as of August 31, 2012.
- Power Integrations received or acquired 25 U.S. patents and 13 non-U.S. patents during the quarter and had a total of 499 U.S. patents and 360 non-U.S. patents as of June 30, 2012.
Financial Outlook
The company issued the following forecast for the third quarter of 2012:
- Third-quarter revenues are expected to be between $76 million and $82 million.
- Non-GAAP gross margin is expected to be 51.5 percent, plus or minus 50 basis points (calculated by excluding from GAAP gross profit approximately $0.3 million of stock-based compensation, $0.6 million of amortization of acquisition-related intangible assets, and $1.5 million of amortization of the write-up of acquired inventory). GAAP gross margin is expected to be between 48 percent and 49 percent.
- Non-GAAP operating expenses are expected to be $25.2 million, plus or minus $0.5 million. (Excludes from GAAP operating expenses approximately $4 million of stock-based compensation expenses and approximately $1 million of amortization expense for acquisition-related intangible assets). GAAP operating expenses are expected to be between $30 million and $31 million.
- The third-quarter GAAP and non-GAAP effective tax rates are expected to be approximately 18 percent and 13 percent, respectively.
Conference Call Today at 1:45 p.m. Pacific Time
Power Integrations management will hold a conference call today at 1:45 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.
About Power Integrations
Power Integrations, Inc., is a Silicon Valley-based supplier of high-performance electronic components used in high-voltage power-conversion systems. The company’s integrated circuits and diodes enable compact, energy-efficient AC-DC power supplies for a vast range of electronic products including mobile devices, TVs, PCs, appliances, smart utility meters and LED lights. CONCEPT IGBT driver systems enhance the efficiency, reliability and cost of high-power applications such as industrial motor drives, solar and wind energy systems, electric vehicles and high-voltage DC transmission. Since its introduction in 1998, Power Integrations’ EcoSmart® energy-efficiency technology has prevented billions of dollars’ worth of energy waste and millions of tons of carbon emissions. Reflecting the environmental benefits of the company’s products, Power Integrations’ stock is included in the NASDAQ® Clean Edge® Green Energy Index, The Cleantech Index®, and the Ardour Global IndexSM. For more information, including design-support tools and resources, please visit www.powerint.com; visit Power Integrations’ Green Room for a comprehensive guide to energy-efficiency standards around the world.
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 718-10, acquisition-related expenses, amortization of acquisition-related intangible assets and the fair-value write-up of acquired inventory, non-cash interest income, the tax effects of these items and the one-time tax charge described above. 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 third-quarter and second-half 2012 financial performance and the expected effect of higher gross margin and lower tax rate on earnings and cash flow are forward-looking statements reflecting management's current expectations and beliefs. 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, which 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 effects of competition, which may cause the company to decrease its selling prices for its products; the outcome and cost of patent litigation, which may affect sales of the company’s products or could result in higher expenses and charges than currently expected; unforeseen costs and expenses; unfavorable fluctuations in component costs resulting from changes in commodity prices and/or the exchange rate between the U.S. dollar and the Japanese yen; and the challenges inherent in integrating and forecasting the performance of acquired businesses. 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 that may cause actual results to differ 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 May 8, 2012. 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 and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners.
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| POWER INTEGRATIONS, INC. |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
| (in thousands, except per-share amounts) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | Three Months Ended | | Six Months Ended |
| | | | | June 30, 2012 | | March 31, 2012 | | June 30, 2011 | | June 30, 2012 | | June 30, 2011 |
| NET REVENUES | | | $ | 76,382 | | | $ | 71,773 | | | $ | 80,184 | | | $ | 148,155 | | | $ | 156,946 | |
| | | | | | | | | | | | | |
| COST OF REVENUES | | | 38,627 | | | | 37,181 | | | | 42,558 | | | | 75,807 | | | | 82,897 | |
| | | | | | | | | | | | | |
| GROSS PROFIT | | | | 37,755 | | | | 34,592 | | | | 37,626 | | | | 72,348 | | | | 74,049 | |
| | | | | | | | | | | | | |
| OPERATING EXPENSES: | | | | | | | | | | |
| Research and development | | | 12,066 | | | | 10,640 | | | | 10,195 | | | | 22,706 | | | | 20,218 | |
| Sales and marketing | | | 8,419 | | | | 8,111 | | | | 8,076 | | | | 16,530 | | | | 16,296 | |
| General and administrative | | | 6,687 | | | | 6,603 | | | | 6,141 | | | | 13,291 | | | | 12,616 | |
| Amortization of acquisition-related intangible assets | | | 757 | | | | 28 | | | | 28 | | | | 785 | | | | 56 | |
| Acquisition expenses | | | 413 | | | | 489 | | | | - | | | | 902 | | | | - | |
| Total operating expenses | | | 28,342 | | | | 25,871 | | | | 24,440 | | | | 54,214 | | | | 49,186 | |
| | | | | | | | | | | | | |
| INCOME FROM OPERATIONS | | | 9,413 | | | | 8,721 | | | | 13,186 | | | | 18,134 | | | | 24,863 | |
| | | | | | | | | | | | | |
| Non-cash interest income | | | 623 | | | | 157 | | | | - | | | | 780 | | | | - | |
| Cost of acquisition-related currency option | | | (635 | ) | | | - | | | | - | | | | (635 | ) | | | - | |
| Other income (expense), net | | | 207 | | | | 458 | | | | 461 | | | | 665 | | | | 903 | |
| | | | | | | | | | | | | |
| INCOME BEFORE PROVISION FOR INCOME TAXES | | | 9,608 | | | | 9,336 | | | | 13,647 | | | | 18,944 | | | | 25,766 | |
| | | | | | | | | | | | | |
| PROVISION FOR INCOME TAXES | | | 16,784 | | | | 1,875 | | | | 3,048 | | | | 18,659 | | | | 5,313 | |
| | | | | | | | | | | | | |
| NET INCOME (LOSS) | | $ | (7,176 | ) | | $ | 7,461 | | | $ | 10,599 | | | $ | 285 | | | $ | 20,453 | |
| | | | | | | | | | | | | |
| EARNINGS (LOSS) PER SHARE: | | | | | | | | | | |
| Basic | | | | $ | (0.25 | ) | | $ | 0.26 | | | $ | 0.37 | | | $ | 0.01 | | | $ | 0.71 | |
| Diluted | | | | $ | (0.25 | ) | | $ | 0.25 | | | $ | 0.35 | | | $ | 0.01 | | | $ | 0.68 | |
| | | | | | | | | | | | | |
| SHARES USED IN PER-SHARE CALCULATION: | | | | | | | | | | |
| Basic | | | | | 28,619 | | | | 28,227 | | | | 28,938 | | | | 28,423 | | | | 28,784 | |
| Diluted | | | | | 28,619 | | | | 29,435 | | | | 30,346 | | | | 29,624 | | | | 30,271 | |
| | | | | | | | | | | | | |
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| SUPPLEMENTAL INFORMATION: | | | | | | | | | | |
| | | | | | | | | | | | | |
| Stock-based compensation expenses included in: | | | | | | | | | | |
| Cost of revenues | | $ | 256 | | | $ | 245 | | | $ | 216 | | | $ | 501 | | | $ | 455 | |
| Research and development | | | 1,566 | | | | 1,120 | | | | 980 | | | | 2,687 | | | | 1,791 | |
| Sales and marketing | | | 746 | | | | 747 | | | | 543 | | | | 1,493 | | | | 1,210 | |
| General and administrative | | | 1,074 | | | | 919 | | | | 705 | | | | 1,992 | | | | 1,492 | |
| Total stock-based compensation expense | | $ | 3,642 | | | $ | 3,031 | | | $ | 2,444 | | | $ | 6,673 | | | $ | 4,948 | |
| | | | | | | | | | | | | |
| Cost of revenues includes: | | | | | | | | | | |
| Amortization of write-up of acquired inventory | | $ | 1,136 | | | $ | 80 | | | $ | 148 | | | $ | 1,216 | | | $ | 210 | |
| Amortization of acquisition-related intangible assets | | $ | 459 | | | $ | 85 | | | $ | 85 | | | $ | 544 | | | $ | 170 | |
| | | | | | | | | | | | | |
| Operating expenses include: | | | | | | | | | | |
| Patent-litigation expenses | | $ | 1,409 | | | $ | 1,296 | | | $ | 1,210 | | | $ | 2,705 | | | $ | 2,467 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| REVENUE MIX BY END MARKET | | | | | | | | | | |
| Communications | | | 24 | % | | | 27 | % | | | 28 | % | | | 25 | % | | | 30 | % |
| Computer | | | | 12 | % | | | 12 | % | | | 13 | % | | | 12 | % | | | 12 | % |
| Consumer | | | | 36 | % | | | 40 | % | | | 36 | % | | | 38 | % | | | 36 | % |
| Industrial | | | | 28 | % | | | 21 | % | | | 23 | % | | | 25 | % | | | 22 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| 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, 2012 | | March 31, 2012 | | June 30, 2011 | | | June 30, 2012 | | June 30, 2011 |
| RECONCILIATION OF GROSS PROFIT | | | | | | | | | | | | | |
| GAAP gross profit | | $ | 37,755 | | | | $ | 34,592 | | | | $ | 37,626 | | | | $ | 72,348 | | | $ | 74,049 | |
| GAAP gross profit margin | | | 49.4 | % | | | | 48.2 | % | | | | 46.9 | % | | | | 48.8 | % | | | 47.2 | % |
| | | | | | | | | | | | | |
| Stock-based compensation included in cost of revenues | | | 256 | | | | | 245 | | | | | 216 | | | | | 501 | | | | 455 | |
| Amortization of write-up of acquired inventory | | | 1,136 | | | | | 80 | | | | | 148 | | | | | 1,216 | | | | 210 | |
| Amortization of acquisition-related intangible assets | | | 459 | | | | | 85 | | | | | 85 | | | | | 544 | | | | 170 | |
| | | | | | | | | | | | | |
| Non-GAAP gross profit | | $ | 39,606 | | | | $ | 35,002 | | | | $ | 38,075 | | | | $ | 74,609 | | | $ | 74,884 | |
| Non-GAAP gross profit margin | | | 51.9 | % | | | | 48.8 | % | | | | 47.5 | % | | | | 50.4 | % | | | 47.7 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| RECONCILIATION OF OPERATING EXPENSES | | | | | | | | | | | | | |
| GAAP operating expenses | | $ | 28,342 | | | | $ | 25,871 | | | | $ | 24,440 | | | | $ | 54,214 | | | $ | 49,186 | |
| | | | | | | | | | | | | |
Less: Stock-based compensation expense included in operating expenses | | | | | | | | | | |
| Research and development | | | 1,566 | | | | | 1,120 | | | | | 980 | | | | | 2,687 | | | | 1,791 | |
| Sales and marketing | | | 746 | | | | | 747 | | | | | 543 | | | | | 1,493 | | | | 1,210 | |
| General and administrative | | | 1,074 | | | | | 919 | | | | | 705 | | | | | 1,992 | | | | 1,492 | |
| Total | | | 3,386 | | | | | 2,786 | | | | | 2,228 | | | | | 6,172 | | | | 4,493 | |
| | | | | | | | | | | | | |
| Acquisition expenses | | | 413 | | | | | 489 | | | | | - | | | | | 902 | | | | - | |
| | | | | | | | | | | | | |
| Amortization of acquisition-related intangible assets | | | 757 | | | | | 28 | | | | | 28 | | | | | 785 | | | | 56 | |
| | | | | | | | | | | | | |
| Non-GAAP operating expenses | | $ | 23,786 | | | | $ | 22,568 | | | | $ | 22,184 | | | | $ | 46,355 | | | $ | 44,637 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| RECONCILIATION OF INCOME FROM OPERATIONS | | | | | | | | | | | | | |
| GAAP income from operations | | $ | 9,413 | | | | $ | 8,721 | | | | $ | 13,186 | | | | $ | 18,134 | | | $ | 24,863 | |
| GAAP operating margin | | | 12.3 | % | | | | 12.2 | % | | | | 16.4 | % | | | | 12.2 | % | | | 15.8 | % |
| | | | | | | | | | | | | |
Add: Total stock-based compensation | | | 3,642 | | | | | 3,031 | | | | | 2,444 | | | | | 6,673 | | | | 4,948 | |
| Amortization of write-up of acquired inventory | | | 1,136 | | | | | 80 | | | | | 148 | | | | | 1,216 | | | | 210 | |
| Amortization of acquisition-related intangible assets | | | 1,216 | | | | | 113 | | | | | 113 | | | | | 1,329 | | | | 226 | |
| Acquisition expenses | | | 413 | | | | | 489 | | | | | - | | | | | 902 | | | | - | |
| | | | | | | | | | | | | |
| Non-GAAP income from operations | | $ | 15,820 | | | | $ | 12,434 | | | | $ | 15,891 | | | | $ | 28,254 | | | $ | 30,247 | |
| Non-GAAP operating margin | | | 20.7 | % | | | | 17.3 | % | | | | 19.8 | % | | | | 19.1 | % | | | 19.3 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| RECONCILIATION OF PROVISION FOR INCOME TAXES | | | | | | | | | | | | | |
| GAAP provision for income taxes | | $ | 16,784 | | | | $ | 1,875 | | | | $ | 3,048 | | | | $ | 18,659 | | | $ | 5,313 | |
| GAAP effective tax rate | | | 174.7 | % | | | | 20.1 | % | | | | 22.3 | % | | | | 98.5 | % | | | 20.6 | % |
| | | | | | | | | | | | | |
| One-time charge associated with tax settlement | | | 15,749 | | | | | - | | | | | - | | | | | 15,749 | | | | - | |
| Tax effect of other adjustments to GAAP results | | | (405 | ) | | | | (304 | ) | | | | (225 | ) | | | | (709 | ) | | | (629 | ) |
| | | | | | | | | | | | | |
| Non-GAAP provision for income taxes | | $ | 1,440 | | | | $ | 2,179 | | | | $ | 3,273 | | | | $ | 3,619 | | | $ | 5,942 | |
| Non-GAAP effective tax rate | | | 9.0 | % | | | | 16.9 | % | | | | 20.0 | % | | | | 12.5 | % | | | 19.1 | % |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| RECONCILIATION OF NET INCOME (LOSS) PER SHARE (DILUTED) | | | | | | | | | | |
| GAAP net income (loss) | | $ | (7,176 | ) | | | $ | 7,461 | | | | $ | 10,599 | | | | $ | 285 | | | $ | 20,453 | |
| | | | | | | | | | | | | |
| Adjustments to GAAP net income (loss) | | | | | | | | | | | | | |
| Stock-based compensation | | | 3,642 | | | | | 3,031 | | | | | 2,444 | | | | | 6,673 | | | | 4,948 | |
| Amortization of write-up of acquired inventory | | | 1,136 | | | | | 80 | | | | | 148 | | | | | 1,216 | | | | 210 | |
| Amortization of acquisition-related intangible assets | | | 1,216 | | | | | 113 | | | | | 113 | | | | | 1,329 | | | | 226 | |
| Acquisition expenses | | | 413 | | | | | 489 | | | | | - | | | | | 902 | | | | - | |
| Non-cash interest income | | | (623 | ) | | | | (157 | ) | | | | - | | | | | (780 | ) | | | - | |
| Cost of acquisition-related currency option | | | 635 | | | | | - | | | | | - | | | | | 635 | | | | - | |
| One-time charge associated with tax settlement | | | 15,749 | | | | | - | | | | | - | | | | | 15,749 | | | | - | |
| Tax effect of items excluded from non-GAAP results | | | (405 | ) | | | | (304 | ) | | | | (225 | ) | | | | (709 | ) | | | (629 | ) |
| | | | | | | | | | | | | |
| Non-GAAP net income | | $ | 14,587 | | | | $ | 10,713 | | | | $ | 13,079 | | | | $ | 25,300 | | | $ | 25,208 | |
| | | | | | | | | | | | | |
Average shares outstanding for calculation of non-GAAP income per share (diluted) | | | 29,792 | | | | | 29,435 | | | | | 30,346 | | | | | 29,624 | | | | 30,271 | |
| | | | | | | | | | | | | |
| Non-GAAP net income per share (diluted) | | $ | 0.49 | | | | $ | 0.36 | | | | $ | 0.43 | | | | $ | 0.85 | | | $ | 0.83 | |
| | | | | | | | | | | | | |
| GAAP income (loss) per share | | $ | (0.25 | ) | | | $ | 0.25 | | | | $ | 0.35 | | | | $ | 0.01 | | | $ | 0.68 | |
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| POWER INTEGRATIONS, INC. |
| CONSOLIDATED BALANCE SHEETS |
| (in thousands) |
| | | | | | | | |
| | | | | | | |
| | | June 30, 2012 | | March 31, 2012 | | December 31, 2011 |
| ASSETS | | | | | | |
| CURRENT ASSETS: | | | | | | |
| Cash and cash equivalents | | $ | 73,360 | | $ | 147,155 | | $ | 139,836 |
| Short-term marketable securities | | | 60,068 | | | 66,855 | | | 40,899 |
| Accounts receivable | | | 17,966 | | | 16,696 | | | 9,396 |
| Inventories | | | 48,555 | | | 42,851 | | | 52,010 |
| Deferred tax assets | | | 893 | | | 890 | | | 892 |
| Prepaid expenses and other current assets | | | 7,758 | | | 6,222 | | | 7,068 |
| Total current assets | | | 208,600 | | | 280,669 | | | 250,101 |
| | | | | | | |
| MARKETABLE SECURITIES | | | - | | | - | | | 32,041 |
| PROPERTY AND EQUIPMENT, net | | | 91,738 | | | 89,695 | | | 88,241 |
| INTANGIBLE ASSETS, net | | | 51,422 | | | 8,663 | | | 8,852 |
| GOODWILL | | | 77,354 | | | 14,786 | | | 14,786 |
| DEFERRED TAX ASSETS | | | 7,120 | | | 12,716 | | | 12,387 |
| OTHER ASSETS | | | 43,380 | | | 43,724 | | | 26,511 |
| Total assets | | $ | 479,614 | | $ | 450,253 | | $ | 432,919 |
| | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | |
| CURRENT LIABILITIES: | | | | | | |
| Accounts payable | | $ | 21,108 | | $ | 15,165 | | $ | 16,532 |
| Accrued payroll and related expenses | | | 6,650 | | | 5,279 | | | 5,911 |
| Taxes payable | | | 37,936 | | | - | | | - |
| Deferred tax liabilities | | | 1,961 | | | - | | | - |
| Deferred income on sales to distributors | | | 11,270 | | | 9,373 | | | 7,883 |
| Other accrued liabilities | | | 2,514 | | | 2,661 | | | 2,305 |
| Total current liabilities | | | 81,439 | | | 32,478 | | | 32,631 |
| | | | | | | |
| LONG-TERM LIABILITIES | | | | | | |
| Income taxes payable | | | 7,364 | | | 35,190 | | | 34,368 |
| Deferred tax liabilities | | | 4,185 | | | - | | | - |
| Pension liability | | | 622 | | | - | | | - |
| | | | | | | |
| Total liabilities | | | 93,610 | | | 67,668 | | | 66,999 |
| | | | | | | |
| STOCKHOLDERS' EQUITY: | | | | | | |
| Common stock | | | 29 | | | 28 | | | 28 |
| Additional paid-in capital | | | 181,203 | | | 168,918 | | | 158,646 |
| Accumulated other comprehensive income | | | 145 | | | 398 | | | 50 |
| Retained earnings | | | 204,627 | | | 213,241 | | | 207,196 |
| Total stockholders' equity | | | 386,004 | | | 382,585 | | | 365,920 |
| Total liabilities and stockholders' equity | | $ | 479,614 | | $ | 450,253 | | $ | 432,919 |
| | | | | | | | | | |
| | | | | | | | | | |
| POWER INTEGRATIONS, INC. |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
| (in thousands) |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended |
| | | June 30, 2012 | | March 31, 2012 | | June 30, 2011 | | | June 30, 2012 | | June 30, 2011 |
| CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | | | | |
| Net income (loss) | | $ | (7,176 | ) | | $ | 7,461 | | | $ | 10,599 | | | | $ | 285 | | | $ | 20,453 | |
| Adjustments to reconcile net income (loss) to cash provided by operating activities | | | | | | | | | |
| Depreciation | | | 3,895 | | | | 3,732 | | | | 3,790 | | | | | 7,627 | | | | 7,472 | |
| Amortization of intangible assets | | | 1,290 | | | | 189 | | | | 243 | | | | | 1,479 | | | | 486 | |
| Gain on sale of property and equipment | | | - | | | | (1 | ) | | | (41 | ) | | | | (1 | ) | | | (41 | ) |
| Stock-based compensation expense | | | 3,642 | | | | 3,031 | | | | 2,444 | | | | | 6,673 | | | | 4,948 | |
| Amortization of premium on marketable securities | | | 258 | | | | 309 | | | | 420 | | | | | 567 | | | | 859 | |
| Non-cash interest income | | | (623 | ) | | | (157 | ) | | | - | | | | | (780 | ) | | | - | |
| Deferred income taxes | | | 5,161 | | | | (327 | ) | | | 427 | | | | | 4,834 | | | | 826 | |
| Increase (decrease) in accounts receivable allowances | | | (14 | ) | | | - | | | | 15 | | | | | (14 | ) | | | 37 | |
| Excess tax benefit from stock options exercised | | | (276 | ) | | | (198 | ) | | | (299 | ) | | | | (474 | ) | | | (697 | ) |
| Tax benefit associated with employee stock plans | | | 749 | | | | 782 | | | | 755 | | | | | 1,531 | | | | 1,538 | |
| Change in operating assets and liabilities: | | | | | | | | | | | |
| Accounts receivable | | | 1,964 | | | | (7,300 | ) | | | 5,230 | | | | | (5,336 | ) | | | (2,392 | ) |
| Inventories | | | 4,958 | | | | 9,161 | | | | 8,879 | | | | | 14,119 | | | | 7,915 | |
| Prepaid expenses and other assets | | | 1,528 | | | | 1,306 | | | | 1,613 | | | | | 2,834 | | | | 3,048 | |
| Accounts payable | | | 2,310 | | | | 1,485 | | | | (1,352 | ) | | | | 3,795 | | | | (4,260 | ) |
| Taxes payable and other accrued liabilities | | | 8,180 | | | | 604 | | | | 1,993 | | | | | 8,784 | | | | 1,468 | |
| Deferred income on sales to distributors | | | 1,897 | | | | 1,490 | | | | 248 | | | | | 3,387 | | | | (1,021 | ) |
| Net cash provided by operating activities | | | 27,743 | | | | 21,567 | | | | 34,964 | | | | | 49,310 | | | | 40,639 | |
| | | | | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | | | | |
| Purchases of property and equipment | | | (1,283 | ) | | | (7,471 | ) | | | (5,271 | ) | | | | (8,754 | ) | | | (12,519 | ) |
| Proceeds from sale of property and equipment | | | - | | | | 2 | | | | 2,249 | | | | | 2 | | | | 2,249 | |
| Other assets | | | - | | | | - | | | | (808 | ) | | | | - | | | | (808 | ) |
| Acquisitions | | | (113,360 | ) | | | - | | | | (13 | ) | | | | (113,360 | ) | | | (6,914 | ) |
| Increase in financing lease receivables | | | - | | | | (383 | ) | | | (2,179 | ) | | | | (383 | ) | | | (7,821 | ) |
| Collections of financing lease receivables | | | - | | | | 299 | | | | 103 | | | | | 299 | | | | 205 | |
| Loan to SemiSouth | | | - | | | | (18,000 | ) | | | (3,000 | ) | | | | (18,000 | ) | | | (3,000 | ) |
| Purchases of marketable securities | | | - | | | | - | | | | - | | | | | - | | | | (11,508 | ) |
| Proceeds from maturities of marketable securities | | | 6,403 | | | | 6,065 | | | | 5,330 | | | | | 12,468 | | | | 6,630 | |
| Net cash used in investing activities | | | (108,240 | ) | | | (19,488 | ) | | | (3,589 | ) | | | | (127,728 | ) | | | (33,486 | ) |
| | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | |
| Net proceeds from issuance of common stock | | | 7,864 | | | | 6,457 | | | | 6,958 | | | | | 14,321 | | | | 14,246 | |
| Repurchase of common stock | | | - | | | | - | | | | (4,384 | ) | | | | - | | | | (4,384 | ) |
| Payments of dividends to stockholders | | | (1,438 | ) | | | (1,415 | ) | | | (1,448 | ) | | | | (2,853 | ) | | | (2,885 | ) |
| Excess tax benefit from stock options exercised | | | 276 | | | | 198 | | | | 299 | | | | | 474 | | | | 697 | |
| Net cash provided by financing activities | | | 6,702 | | | | 5,240 | | | | 1,425 | | | | | 11,942 | | | | 7,674 | |
| | | | | | | | | | | | |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | (73,795 | ) | | | 7,319 | | | | 32,800 | | | | | (66,476 | ) | | | 14,827 | |
| | | | | | | | | | | | |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | | | 147,155 | | | | 139,836 | | | | 137,694 | | | | | 139,836 | | | | 155,667 | |
| | | | | | | | | | | | |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | | $ | 73,360 | | | $ | 147,155 | | | $ | 170,494 | | | | $ | 73,360 | | | $ | 170,494 | |
CONTACT:
Power Integrations, Inc.
Joe Shiffler, 408-414-8528
jshiffler@powerint.com
