Power Integrations Reports Fourth-Quarter Financial Results

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 ASC 718-10, amortization of acquisition-related intangible assets and the write-up of acquired inventory, acquisition expenses, severance and transition expenses, the tax effects of these items, and a tax benefit recognized in 2014. The company uses these measures in its own financial and operational decision-making 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 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 measures differently, limiting their usefulness as comparative measures.

Note Regarding Forward-Looking Statements

The statements in this press release regarding the company’s forecast for its first-quarter financial performance 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 change. Due to risks and uncertainties associated with the company's business, actual results could differ materially from those projected or implied by these 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 including its InnoSwitch 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; and unfavorable fluctuations in component costs or operating expenses resulting from changes in commodity prices and/or 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 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 October 30, 2015. 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, InnoSwitch and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners.

 
 
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
                                                 
 
Three Months Ended Twelve Months Ended
 
December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014
NET REVENUES $ 87,289 $ 88,878 $ 86,595 $ 343,989 $ 348,797
 
COST OF REVENUES   44,373     44,717     40,790     170,602     159,227  
 
GROSS PROFIT   42,916     44,161     45,805     173,387     189,570  
 
OPERATING EXPENSES:
Research and development 13,856 13,888 13,667 57,000 54,981
Sales and marketing 10,449 10,463 11,262 43,786 44,606
General and administrative 6,896 7,361 7,574 29,720 30,188
Amortization of acquisition-related intangible assets 666 666 628 2,775 3,190
Acquisition expenses, severance and transition costs   -     -     809     1,113     809  
Total operating expenses   31,867     32,378     33,940     134,394     133,774  
 
INCOME FROM OPERATIONS 11,049 11,783 11,865 38,993 55,796
 
Other income, net   206     428     182     425     1,018  
 
INCOME BEFORE INCOME TAXES 11,255 12,211 12,047 39,418 56,814
 
PROVISION (BENEFIT) FOR INCOME TAXES   (1,446 )   698     (2,307 )   271     (2,730 )
 
NET INCOME $ 12,701   $ 11,513   $ 14,354   $ 39,147   $ 59,544  
 
EARNINGS PER SHARE:
Basic $ 0.45   $ 0.40   $ 0.49   $ 1.35   $ 1.99  
Diluted $ 0.44   $ 0.39   $ 0.48   $ 1.32   $ 1.93  
 
SHARES USED IN PER-SHARE CALCULATION:
Basic 28,483 28,855 29,350 29,001 29,976
Diluted 29,126 29,298 30,051 29,696 30,829
 
 
SUPPLEMENTAL INFORMATION:
 
Stock-based compensation expenses included in:
Cost of revenues $ 208 $ 219 $ 231 $ 933 $ 879
Research and development 1,281 1,277 1,262 5,255 4,784
Sales and marketing 877 877 962 3,644 3,540
General and administrative   899     988     1,157     4,935     5,079  
Total stock-based compensation expense $ 3,265   $ 3,361   $ 3,612   $ 14,767   $ 14,282  
 
Cost of revenues includes:
Amortization of write-up of acquired inventory $ -   $ -   $ -   $ 309   $ -  
Amortization of acquisition-related intangible assets $ 961   $ 961   $ 646   $ 3,844   $ 2,581  
 
General & administrative expenses include:
Patent-litigation expenses $ 1,517   $ 1,500   $ 1,815   $ 5,975   $ 5,657  
 
Other income, net includes:
Amortization of in-place lease intangible assets $ 90   $ 30   $ -   $ 120   $ -  
 
 
REVENUE MIX BY END MARKET
Communications 26 % 26 % 21 % 24 % 18 %
Computer 7 % 7 % 9 % 7 % 10 %
Consumer 34 % 36 % 37 % 36 % 37 %
Industrial 33 % 31 % 33 % 33 % 35 %

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