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Power Integrations Inc. Reports Operating Results (10-Q)

October 31, 2012 | About:
10qk

10qk

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Power Integrations Inc. (POWI) filed Quarterly Report for the period ended 2012-09-30.

Power Integrations, Inc. has a market cap of $867.9 million; its shares were traded at around $30.1 with a P/E ratio of 24.1 and P/S ratio of 2.9. The dividend yield of Power Integrations, Inc. stocks is 0.7%. Power Integrations, Inc. had an annual average earning growth of 12% over the past 10 years.

Highlight of Business Operations:

The amount of Concept net revenues included in the Company's condensed consolidated statements of operations for the three and nine months ended September 30, 2012, was $6.2 million and $10.8 million, respectively, and is included in the pro forma information below to provide supplemental comparable information. The loss of Concept for the same periods of approximately $1.2 million and $2.2 million, respectively, was included in the Company's condensed consolidated statements operations, which includes intangible amortization and amortization of inventory markup. The loss from Concept is estimated because the Company is in the process of integrating Concept's operations and the Company does not maintain product line statements of operations.

Our net revenues were $78.0 million and $226.2 million in the three and nine months ended September 30, 2012, respectively, compared to $75.1 million and $232.0 million in the same periods of 2011. The increase for the three-month period was driven by the inclusion of revenues from Concept of $6.2 million, which we acquired in May 2012. The decrease for the nine-month period reflects lower sales of our products into the communications, computer and consumer end markets, largely as a result of weaker demand generally observed across the broader semiconductor industry, partially offset by the inclusion of Concept revenues of $10.8 million. Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for 64% and 65% of our net revenues in the three and nine months ended September 30, 2012, respectively, compared to 65% of our net revenues in both the three and nine months ended September 30, 2011. Our top two customers, both distributors of our products, collectively accounted for approximately 32% and 33% of our net revenues in the three and nine months ended September 30, 2012, respectively. These same two distributors collectively accounted for approximately 31% of our net revenues in both the three and nine months ended September 30, 2011. International sales accounted for 94% and 95% of our net revenues in the three and nine months ended September 30, 2012, respectively, and 96% of our net revenues in both the three and nine months ended September 30, 2011.

Net revenues. Net revenues consist of revenues from product sales, which are calculated net of returns and allowances. Net revenues for the three and nine months ended September 30, 2012, were $78.0 million and $226.2 million, respectively, compared with $75.1 million and $232.0 million for the same periods in 2011. The increase for the three-month period was driven by the inclusion of revenues from Concept of $6.2 million, which we acquired in May 2012. The decrease for the nine-month period reflects lower sales of our products into the communications, computer and consumer end markets, largely as a result of weaker demand generally observed across the broader semiconductor industry, partially offset by the inclusion of $10.8 million of Concept revenues.

Our effective tax rates for the three and nine months ended September 30, 2012, were 10.0% and (45.1%), respectively, compared to 32.4% and 24.2% for the three months and nine months ended September 30, 2011, respectively. In the nine months ended September 30, 2012, the effective tax rate was negative as a result of the above-mentioned SemiSouth charge and the IRS audit agreement described in Note 9, Provision for Income Taxes, in our Notes to Condensed Consolidated Financial Statements. The audit agreement includes federal and state taxes plus interest charges totaling approximately $44.8 million, partially offset by the reversal of related unrecognized tax benefits and other items of $29.1 million, for a net charge of $15.7 million. Our effective tax rates for the periods ended September 30, 2011, were lower than the statutory rate due primarily to the geographic distribution of our earnings and the beneficial impact of the research and experimentation tax credit.

this period was $28.0 million; we also incurred non-cash depreciation, amortization of intangibles and stock-based compensation expenses of $11.3 million, $0.7 million and $6.6 million, respectively. Additional sources of cash included (1) a $10.2 million decline in inventory due to reduced wafer purchases, (2) a $4.9 million increase in taxes payable and accrued liabilities resulting primarily from an increase in our long-term tax liability and (3) a $2.8 million decrease in prepaid legal fees and prepaid inventory amortization. These sources of cash were partially offset by (1) a $4.5 million increase in accounts receivable due to higher shipments at the end of September compared to December and the timing of sales rebate payments in the fourth quarter of 2010 versus the third quarter of 2011 and (2) a $1.9 million decrease in deferred income on sales to distributors resulting from decreased inventory levels at our distributors.

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