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, amortization of acquisition-related intangible assets, and the tax effects of these items. 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 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 second-quarter 2014 financial performance and the statement that Power Integrations believes it is positioned for a strong second half of 2014 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 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 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on February 13, 2014. 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) |
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| Three Months Ended | ||||||||||||
| March 31, 2014 | December 31, 2013 | March 31, 2013 | ||||||||||
| NET REVENUES | $ | 83,073 | $ | 90,412 | $ | 77,040 | ||||||
| COST OF REVENUES | 37,096 | 42,021 | 37,176 | |||||||||
| GROSS PROFIT | 45,977 | 48,391 | 39,864 | |||||||||
| OPERATING EXPENSES: | ||||||||||||
| Research and development | 13,490 | 12,909 | 12,272 | |||||||||
| Sales and marketing | 10,975 | 10,951 | 9,659 | |||||||||
| General and administrative | 7,646 | 8,266 | 7,734 | |||||||||
| Amortization of acquisition-related intangible assets | 1,135 | 1,158 | 1,122 | |||||||||
| Total operating expenses | 33,246 | 33,284 | 30,787 | |||||||||
| INCOME FROM OPERATIONS | 12,731 | 15,107 | 9,077 | |||||||||
| Other income, net | 257 | 497 | 217 | |||||||||
| INCOME BEFORE PROVISION (BENEFIT) FOR INCOME TAXES | 12,988 | 15,604 | 9,294 | |||||||||
| PROVISION (BENEFIT) FOR INCOME TAXES | 625 | (433 | ) | (1,609 | ) | |||||||
| NET INCOME | $ | 12,363 | $ | 16,037 | $ | 10,903 | ||||||
| EARNINGS PER SHARE: | ||||||||||||
| Basic | $ | 0.41 | $ | 0.54 | $ | 0.38 | ||||||
| Diluted | $ | 0.40 | $ | 0.52 | $ | 0.37 | ||||||
| SHARES USED IN PER-SHARE CALCULATION: | ||||||||||||
| Basic | 30,239 | 29,974 | 28,754 | |||||||||
| Diluted | 31,167 | 30,924 | 29,783 | |||||||||
| SUPPLEMENTAL INFORMATION: | ||||||||||||
| Stock-based compensation expenses included in: | ||||||||||||
| Cost of revenues | $ | 219 | $ | 250 | $ | 264 | ||||||
| Research and development | 1,212 | 1,515 | 1,106 | |||||||||
| Sales and marketing | 935 | 1,054 | 829 | |||||||||
| General and administrative | 1,549 | 1,511 | 1,437 | |||||||||
| Total stock-based compensation expense | $ | 3,915 | $ | 4,330 | $ | 3,636 | ||||||
| Cost of revenues includes: | ||||||||||||
| Amortization of acquisition-related intangible assets | $ | 645 | $ | 645 | $ | 645 | ||||||
| Operating expenses include: | ||||||||||||
| Patent-litigation expenses | $ | 1,186 | $ | 1,772 | $ | 1,399 | ||||||
| REVENUE MIX BY END MARKET | ||||||||||||
| Communications | 18 | % | 21 | % | 22 | % | ||||||
| Computer | 10 | % | 11 | % | 10 | % | ||||||
| Consumer | 37 | % | 34 | % | 36 | % | ||||||
| Industrial | 35 | % | 34 | % | 32 | % | ||||||
