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 (including in-place lease intangible assets), the tax effects of these items, and tax charges and benefits associated with the 2017 U.S. tax legislation. The company uses these measures in its financial and operational decision-making and, with respect to one measure, in setting performance targets for compensation purposes. The company believes that these non-GAAP measures offer important analytical tools to help investors understand its operating results, and to facilitate comparability with the results of companies that provide similar measures. These non-GAAP measures have 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. Reconciliations of non-GAAP measures to GAAP measures are attached to this press release.

Note Regarding Forward-Looking Statements

The above statements 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, including changing tariffs and uncertainty regarding trade negotiations, 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’s revenues to decrease or 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 Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on February 14, 2018. 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, BridgeSwitch and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc.

             
POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)
 
 
Three Months Ended Twelve Months Ended

December 31, 2018

September 30, 2018

December 31, 2017

December 31, 2018

December 31, 2017

NET REVENUES $ 93,307 $ 110,085 $ 108,249 $ 415,955 431,755
 
COST OF REVENUES   45,302     53,080     54,221     201,167     218,091  
 
GROSS PROFIT   48,005     57,005     54,028     214,788     213,664  
 
OPERATING EXPENSES:
Research and development 17,965 17,236 17,180 70,580 68,501
Sales and marketing 12,746 12,823 12,743 51,165 49,237
General and administrative 8,796 8,466 9,127 35,496 36,142
Amortization of acquisition-related intangible assets   455     455     513     1,899     2,147  
Total operating expenses   39,962     38,980     39,563     159,140     156,027  
 
INCOME FROM OPERATIONS 8,043 18,025 14,465 55,648 57,637
 
Other income, net   1,297     1,098     796     4,116     2,662  
 
INCOME BEFORE INCOME TAXES 9,340 19,123 15,261 59,764 60,299
 
PROVISION (BENEFIT) FOR INCOME TAXES   (13,396 )   1,456     32,159     (10,220 )   32,690  
 
NET INCOME (LOSS) $ 22,736   $ 17,667   $ (16,898 ) $ 69,984   $ 27,609  
 
EARNINGS PER SHARE:
Basic $ 0.78   $ 0.60   $ (0.57 ) $ 2.38   $ 0.93  
Diluted $ 0.77   $ 0.59   $ (0.57 ) $ 2.32   $ 0.90  
 
SHARES USED IN PER-SHARE CALCULATION:
Basic 29,164 29,365 29,759 29,456 29,674
Diluted 29,651 29,998 29,759 30,147 30,545
 
 
SUPPLEMENTAL INFORMATION:
 
Stock-based compensation expenses included in:
Cost of revenues $ 313 $ 243 $ 436 $ 1,097 $ 1,321
Research and development 1,944 1,634 2,338 7,688 8,496
Sales and marketing 1,222 1,105 1,470 4,729 5,197
General and administrative   1,963     1,416     2,611     8,066     9,663  
Total stock-based compensation expense $ 5,442   $ 4,398   $ 6,855   $ 21,580   $ 24,677  
 
Cost of revenues includes:
Amortization of acquisition-related intangible assets $ 813   $ 814   $ 939   $ 3,253   $ 3,756  
 
General & administrative expenses include:
Patent-litigation expenses $ 2,304   $ 2,305   $ 1,914   $ 8,525   $ 7,839  
 
Other income, net includes:
Amortization of in-place lease intangible assets $ -   $ -   $ -   $ -   $ 180  
 
 
REVENUE MIX BY END MARKET
Communications 20 % 22 % 25 % 20 % 24 %
Computer 6 % 6 % 5 % 5 % 5 %
Consumer 34 % 35 % 37 % 38 % 38 %
Industrial 40 % 37 % 33 % 37 % 33 %
 

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