Power Integrations Announces Preliminary Second-Quarter Results – Expects Shares to Be Delisted from Nasdaq
Power Integrations Inc. announced selected financial results for the quarter ended June 30, 2006. All numbers reported should be considered preliminary as the company is yet to complete its customary close and review procedures. Preliminary net revenue for the second quarter was $41.5 million, an increase of 17% compared to the prior quarter and the year-ago quarter. Revenue for the quarter included a net benefit of $2.7 million from the settlement of prior-period ship-and-debit claims with two of the company's distributors.
Operating expenses for the second quarter included approximately $4 million related to the company's internal investigation regarding practices for granting stock options, as well as the related restatement of the company's historical financial statements. Also included were $0.8 million in expenses related to the company's patent litigation against Fairchild Semiconductor and System General Corp. In May, the company announced a favorable Initial Determination by the judge in its case against System General at the International Trade Commission. The ITC is expected to make its Final Determination in approximately two weeks. The first trial in the company's case against Fairchild is scheduled to begin on October 2.
Cash and investments as of June 30 totaled $124.7 million, down $14.4 million from the prior quarter due primarily to share repurchases. During the second quarter, the company repurchased 1.1 million shares for a total of $19.2 million, completing the $25 million share-repurchase program announced in October 2005. As of June 30, the company had 28.6 million common shares outstanding, a net decrease of 2.2 million shares over the past two years.
The company also announced that it has informed Nasdaq that it does not expect to become current in its SEC filings by the previously announced deadline of August 2, 2006. As a result, the company has been notified by Nasdaq that its shares will be delisted from the Nasdaq Global Market at the opening of the market on August 2.
The company has recently been made aware of new information regarding the potential criteria for determining the accounting treatment for stock options whose grant dates may differ from the originally stated measurement dates. Also, the company has recently been advised to submit its accounting treatment to the SEC for review prior to filing its restated financials. As a result of these and other developments, the company's filings will be delayed beyond the August 2 deadline.
Under Nasdaq Rule 4802(b), the Nasdaq Listing Qualifications Panel is prohibited from allowing the company to remain listed for more than 90 days beyond the Panel's original decision to grant the company a listing extension. The company expects its shares to begin trading on the Pink Sheets beginning on August 2, under the symbol POWI.PK. The company's shares are currently quoted on the Pink Sheets by two market makers, and additional market makers can immediately begin entering quotes. Investors wishing to trade Power Integrations stock may continue to do so through their brokers.
