Power Integrations Reports Record Quarterly Revenues and Net Income

Friday, October 23, 2009 8:01 AM

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 August 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          Nine Months Ended
                  Sept. 30,  June 30,   Sept. 30,  Sept. 30,  Sept. 30,
                    2009       2009       2008       2009       2008
                  --------   --------   --------   --------   --------
 NET REVENUES     $ 60,024   $ 49,250   $ 53,816   $149,563   $159,291
 COST OF REVENUES   30,901     25,053     24,659     75,311     73,206
                  --------   --------   --------   --------   --------
 GROSS PROFIT       29,123     24,197     29,157     74,252     86,085
                  --------   --------   --------   --------   --------
 OPERATING
  EXPENSES:
 Research and
  development        6,846      7,689      7,022     22,259     22,753
 Sales and
  marketing          5,744      5,925      7,058     17,891     22,329
 General and
  administrative     5,465      5,594      6,418     16,740     18,056
                  --------   --------   --------   --------   --------
   Total
    operating
    expenses        18,055     19,208     20,498     56,890     63,138
                  --------   --------   --------   --------   --------
 INCOME FROM
   OPERATIONS       11,068      4,989      8,659     17,362     22,947
 OTHER INCOME, net     178        754      1,600      1,756      5,877
 INCOME BEFORE
  PROVISION FOR
  INCOME TAXES      11,246      5,743     10,259     19,118     28,824
  PROVISION FOR
  INCOME TAXES       2,094      1,214      2,622      5,033      6,367
                  --------   --------   --------   --------   --------
 NET INCOME        $ 9,152    $ 4,529    $ 7,637    $14,085   $ 22,457
                  --------   --------   --------   --------   --------
 EARNINGS PER
  SHARE:
   Basic            $ 0.34     $ 0.17     $ 0.25     $ 0.52     $ 0.74
                  --------   --------   --------   --------   --------
   Diluted          $ 0.32     $ 0.16     $ 0.23     $ 0.50     $ 0.69
                  --------   --------   --------   --------   --------
 SHARES USED IN
  PER-SHARE
  CALCULATION:
  Basic             26,723     26,804     30,791     26,857     30,515
  Diluted           28,431     27,944     32,582     28,108     32,548
 SUPPLEMENTAL
  INFORMATION:
 Stock-based
  compensation
  expenses
  included in:
   Cost of
    revenues       $   188    $   264    $   386    $   614   $  1,278
   Research and
    development        339      1,080      1,397      3,256      4,021
   Sales and
    marketing          172        562      1,243      1,729      3,886
   General and
    administrative     705        748      1,023      2,445      2,895
                  --------   --------   --------   --------   --------
   Total stock
    -based
    compensation
    expense        $ 1,404    $ 2,654    $ 4,049    $ 8,044   $ 12,080
                  --------   --------   --------   --------   --------
 Operating
  expenses include
  the following:
   Patent
    -litigation
    expenses       $ 1,473     $  934    $   735    $ 3,238    $ 2,403
                  --------   --------   --------   --------   --------
 REVENUE MIX BY
  PRODUCT FAMILY
   TOPSwitch            24%        25%        26%        24%        26%
   TinySwitch           43%        43%        44%        44%        45%
   LinkSwitch           32%        31%        28%        31%        27%
   Other                 1%         1%         2%         1%         2%
 REVENUE MIX BY
  END MARKET
   Communications       32%        32%        32%        32%        33%
   Computer             14%        14%        16%        15%        16%
   Consumer             37%        37%        34%        36%        34%
   Industrial           17%        17%        18%        17%        17%


                    POWER INTEGRATIONS, INC.
     RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
              (in thousands, except per-share amounts)
                       Three Months Ended           Nine Months Ended
                  Sept. 30,  June 30,   Sept. 30,  Sept. 30,  Sept.

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