Exhibit 99.1
Power Integrations Announces Financial Results for Fiscal Year 2006
SAN JOSE, Calif., Jun 5, 2007 (PrimeNewswire via COMTEX News Network) — 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® 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 | |||||||