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 | % | ||||||||||||
