Power-One Announces Fourth Quarter 2007 Results

Power-One, Inc. (NASDAQ: PWER) today announced that net sales for the fourth fiscal quarter ended December 31, 2007 were $132.3 million, compared with $116.2 million for the fourth quarter of 2006. Net loss for the fourth quarter ended December 31, 2007 was $6.5 million, or $0.07 per share, compared with a net loss of $14.2 million, or $0.16 per share in the fourth quarter 2006. For Fiscal 2007, sales increased by 51% to $511.6 million, while net loss was $36.4 million or $0.42 per share compared with sales of $338.0 million and net loss of $14.6 million or $0.17 per share for Fiscal 2006. Legal expenses for the patent lawsuit against Artesyn for the fourth quarter were $1.8 million, and are expected to be substantially reduced in Q1. The 51% year-over-year revenue growth was driven mainly from the late 2006 acquisition of Magnetek’s Power Electronics Group (PEG), in addition to excellent growth in the renewable energy inverter market, and higher sales in certain traditional products. Fourth quarter bookings were $123 million compared with $118 million in the third quarter of 2007. While the Company was in range for its sales guidance, earnings per share were slightly lower. This was primarily due to a less than expected improvement in gross margin. Factory inefficiencies and logistics costs negatively affected gross profit and had an approximate $0.02 per share negative effect on earnings. Bill Yeates, Chief Executive Officer, commented, "This has been a challenging quarter and year for Power-One, but we have been improving our sales each quarter of the year. While we achieved many of our targets for this last quarter, not everything went as well as planned. We have made significant progress throughout the year in a number of areas including reducing our SG&A and improving sales by over 50%, but made only modest improvements in gross margin. Although the Company continued to make improvements in the materials’ costs of approximately 1.5% over the prior quarter, this was mostly offset by a negative effect in factory and logistics’ costs. As a result, the margin improvements were not as good as planned. The Company’s highest priority is to improve our gross margin. We have now closed operations at our Dallas, Texas and Hungary facilities and made reductions in other high-cost locations. In order to further align its cost structure, the company will be shifting additional significant operations from higher-cost to lower-cost locations, and reducing SG&A. The Company’s primary focus in regards to gross profit is to increase the utilization of our China factory to attain economies of scale and shorten our supply chain to reduce logistics’ costs.” Mr. Yeates concluded, "With the announced changes of last year beginning to take effect, along with a shift of more products to lower-cost areas, we will see improvements in our gross profit. When this is coupled with the sales opportunities that we have due to Power-One’s technology, product portfolio, and world-class customers, we believe that 2008 will be a year of growth and profitability for the company.” Future Outlook: For the first quarter of 2008, the Company anticipates that net sales will be in the range of $130 to $135 million. Net loss is expected to be in the range of $0.04 to $0.07 per share in the first quarter. Earnings Conference Call Power-One will be holding a conference call with investors and analysts on Thursday, February 7, 2008 at 2:00 p.m. PT. The call will be available over the Internet through the Company’s investor relations Web site at www.power-one.com. To listen to the call, please go to the Web site at least 10 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, the webcast will be available on the investor relations section of the Company’s Web site at www.power-one.com throughout the current quarter. About Power-One: Power-One designs and manufactures energy-efficient power conversion and power management solutions for alternative/renewable energy, routers, data storage and servers, wireless communications, optical networking, medical diagnostics, military, railway controls, semiconductor test equipment, and custom applications. Power-One, with headquarters in Camarillo, CA, has global sales offices, manufacturing, and R&D operations in Asia, Europe, and the Americas. Please visit www.power-one.com for more information. Statements made in this press release which state the Company's or management's intentions, beliefs, expectations or predictions for the future are forward-looking statements. It is important to note that actual results could differ materially from those discussed in such forward-looking statements. Important factors that could cause actual results to differ materially include, but are not limited to, the possibility that the market for the sale of certain products and services may not develop as expected; the difficulties of efficiently managing the company’s cost structure for capital expenditures, materials and overhead, as well as operating expenses such as wages and benefits due to the vertical integration of the company’s manufacturing processes; the Company’s ability to achieve and execute upon planned movement(s) of the location of manufacturing of selected products, specifically the achievement of projected manufacturing realignment to and increase in manufacturing utilization and output in the Company’s China facilities; the Company’s ability to achieve anticipated reductions in manufacturing costs following relocation of applicable manufacturing sites; the Company’s ability to achieve anticipated improvements in gross margins, and/or reductions in SG&A expenses; the impact of competitive products or technologies and competitive pricing pressures; and the Company’s ability to secure, maintain, defend, enforce, and protect claimed intellectual property rights, including patents issued and patents applied for and to manage the costs related to such activities. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company's SEC filings, which may be obtained by contacting the Company or the SEC. These filings are also available through the Company's web site at http://www.power-one.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at http://www.sec.gov. We undertake no obligation to publicly update or revise any forward-looking statement. POWER-ONE, INC. CONSOLIDATED STATEMENT OF OPERATIONS (In thousands, except per share data) (UNAUDITED)           Three Months Ended Twelve Months Ended December 30, December 31, December 30, December 31,   2007     2006     2007     2006     NET SALES $ 132,344 $ 116,171 $ 511,613 $ 338,048 COST OF GOODS SOLD   104,477     95,867     406,528     245,434   GROSS PROFIT 27,867 20,304 105,085 92,614   EXPENSES: Selling, general and administrative 18,663 19,265 76,020 63,903 Engineering and quality assurance 12,139 11,535 48,828 38,582 Amortization of intangible assets 1,014 1,751 4,400 3,999 Restructuring costs 77 446 3,117 385 Asset impairment   3     -     1,193     -   Total expenses 31,896 32,997 133,558 106,869   INCOME (LOSS) FROM OPERATIONS (4,029 ) (12,693 ) (28,473 ) (14,255 )   INTEREST AND OTHER INCOME (EXPENSE): Interest income 242 272 1,230 2,085 Interest expense (2,028 ) (1,173 ) (7,904 ) (1,406 ) Other income (expense), net   (809 )   (632 )   1,173     (1,779 ) Total interest and other income (expense) (2,595 ) (1,533 ) (5,501 ) (1,100 )   INCOME (LOSS) BEFORE INCOME TAXES (6,624 ) (14,226 ) (33,974 ) (15,355 )   PROVISION (BENEFIT) FOR INCOME TAXES   (172 )   1     2,396     (730 )   NET INCOME (LOSS) $ (6,452 ) $ (14,227 ) $ (36,370 ) $ (14,625 )   BASIC EARNINGS (LOSS) PER SHARE $ (0.07 ) $ (0.16 ) $ (0.42 ) $ (0.17 ) DILUTED EARNINGS (LOSS) PER SHARE $ (0.07 ) $ (0.16 ) $ (0.42 ) $ (0.17 )   BASIC WEIGHTED AVERAGE SHARES OUTSTANDING (1)   87,325     86,527     87,052     86,144   DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING (1)   87,325     86,527     87,052     86,144       (1) Basic weighted average shares outstanding (WASO) is utilized for periods with a net loss. This is due to the fact that diluted WASO would be anti-dilutive for these periods. Diluted WASO is utilized for periods with net income. POWER-ONE, INC. CONSOLIDATED BALANCE SHEET (In thousands) (UNAUDITED)           December 30, December 31,   2007     2006     ASSETS   CURRENT ASSETS: Cash and cash equivalents $ 28,364 $ 34,422 Available for sale investments 7,477 11,365 Accounts receivable: Trade (net of allowance) 129,984 122,533 Other 5,634 7,208 Inventories 105,930 111,893 Prepaid expenses and other current assets   7,487     12,971     Total current assets 284,876 300,392   PROPERTY & EQUIPMENT, net 62,809 66,831 INTANGIBLE ASSETS, net 82,748 80,027 OTHER ASSETS   1,163     2,021     TOTAL ASSETS $ 431,596   $ 449,271     LIABILITIES & EQUITY   CURRENT LIABILITIES: Bank credit facilities and notes payable $ 21,843 $ 26,349 Accounts payable 107,751 91,572 Restructuring reserve 6,726 10,272 Long-term debt, current portion 52,338 1,925 Other accrued expenses and current liabilities   24,410     26,119     Total current liabilities 213,068 156,237   LONG-TERM DEBT, less current portion 550 52,363 OTHER LONG-TERM LIABILITIES 18,552 17,443   STOCKHOLDERS' EQUITY: Common stock 87 87 Additional paid-in capital 615,040 611,300 Accumulated other comprehensive income 40,527 29,536 Accumulated deficit   (456,228 )   (417,695 )   Total stockholders' equity   199,426     223,228     TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 431,596   $ 449,271   POWER-ONE, INC. FINANCIAL HIGHLIGHTS (In thousands, except per share data) (UNAUDITED)             Three Months Ended Twelve Months Ended December 30, December 31, December 30, December 31,   2007     2006     2007     2006     Orders $ 122,680 $ 106,222 $ 492,181 $ 327,860   Sales $ 132,344 $ 116,171 $ 511,613 $ 338,048   Operating Income (Loss) $ (4,029 ) $ (12,693 ) $ (28,473 ) $ (14,255 )   Net Income (Loss) $ (6,452 ) $ (14,227 ) $ (36,370 ) $ (14,625 )   Basic Earnings (Loss) Per Share (1) $ (0.07 ) $ (0.16 ) $ (0.42 ) $ (0.17 ) Diluted Earnings (Loss) Per Share (1) $ (0.07 ) $ (0.16 ) $ (0.42 ) $ (0.17 )   Basic Weighted Average Shares Outstanding (1) 87,325 86,527 87,052 86,144 Diluted Weighted Average Shares Outstanding (1) 87,325 86,527 87,052 86,144     (1) Basic weighted average shares outstanding (WASO) is utilized for periods with a net loss. This is due to the fact that diluted WASO would be anti-dilutive for these periods. Diluted WASO is utilized for periods with net income.