Power-One Announces Second Quarter 2009 Results

CAMARILLO, Calif.--(BUSINESS WIRE)--Jul. 23, 2009-- Power-One, Inc. (NASDAQ: PWER) (the “Company”), a leading provider of power conversion and power management solutions, today announced that net sales were $91.2 million for the second quarter ended June 28, 2009, a decrease of 39% from $149.3 million in the second quarter of 2008. The net loss attributable to common stockholders, was $6.8 million, or $0.08

per share, compared to $3.9 million, or $0.04 per share, for the same period last year. Included in the net loss for the second quarter of 2009 was $3.9 million of restructuring charges which were primarily due to severance charges related to the previously announced plant closure in the Dominican Republic. The negative impact of the decline in sales on the second quarter results was partially offset by a net gain of $5.3 million on the repurchase of the Company’s 8% senior secured convertible notes due 2013.

The difficult market environment continued to influence the Company’s sales during the quarter and resulted in a weakening in demand for power conversion products. Bookings of $89.0 million yielded a book to bill ratio of 0.98 in the second quarter of 2009.

For the second quarter of 2009, gross margin was 19.9% compared to 14.2% in the first quarter of 2009, and 20.5% in the year ago quarter. The sequential improvement in gross margin from the first quarter of 2009 was largely attributable to the cost reduction initiatives implemented by the Company in previous quarters. In addition, S,G&A, engineering, quality assurance and amortization expenses decreased 32% to $21.3 million compared with $31.2 million for the second quarter of 2008.

The Company continues to realign its global manufacturing resources and execute aggressive actions to streamline operations and reduce costs. During the second quarter, the Company announced plans to close the Dominican Republic facility and expects to realize an annual savings of approximately $14 to $15 million from the closure. Other restructuring efforts reduced the Company’s headcount by approximately 300, which resulted in a year-to-date headcount reduction of 1,300, or 29%.

Richard Thompson, Chief Executive Officer, commented, “While the market environment continued to impact our sales during the quarter, we remained focused on increasing overall operational efficiency and further decreasing our cost structure. Gross margin improved despite lower revenues, and we are on track to complete the transfer of production from the Dominican Republic facility, which will have a positive impact on our results in later periods.”

Continuing, Mr. Thompson said, “The renewable energy market continues to show increasing promise having ramped throughout the last quarter. Additionally, our book to bill ratio improved for the first time in over 12 months suggesting that the demand curve may have reached an inflection point.”

Business Outlook

Due to the current economic uncertainty and poor demand visibility, the Company is not providing financial guidance for the third quarter and full year 2009.

Earnings Conference Call

Power-One will discuss its 2009 second quarter results today beginning at 2:00 p.m. Pacific Time. 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. For information on Power-One and its products, visit the Company’s Web site at www.power-one.com.

Safe Harbor Statement

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 within the meaning of the Private Securities Litigation Reform Act of 1995, and may include statements regarding anticipated future productivity. It is important to note that future performance and actual results could differ materially from those discussed in or underlying such forward-looking statements as a result of risks and uncertainties that cannot be predicted or quantified and that are beyond the Company’s control. Important factors that could cause actual results to differ materially include, but are not limited to: economic conditions in general and business conditions in the power supplies and renewable energy markets; foreign exchange rates; the Company’s ability to improve its operational and supply chain efficiencies; competitive factors such as pricing and technology; the timing and results achieved in completing product manufacturing transitions to Company facilities in China or other low-cost locations; the threat of a prolonged economic slowdown or a lengthy or severe recession; continued volatility of the financial markets, including fluctuations in interest rates and trading prices of the Company's equity securities; the results of pending legal proceedings; the Company’s ability to secure market share in higher margin, high-growth markets; the market growth of product sectors targeted by the Company as sectors of focus; and the Company’s ability to increase working capital. Additional information concerning factors that could cause actual results to differ materially from expectations expressed in this press release are described in the Company's reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 from time to time, which are also available through the Company's Website at www.power-one.com

or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at www.sec.gov. Power-One undertakes 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						Six Months Ended
		June 28,			June 29,			June 28,			June 29,
			2009			2008			2009			2008

	NET SALES	$	91,169		$	149,273		$	189,009		$	267,031
	COST OF GOODS SOLD		73,028			118,692			157,003			215,124
	GROSS PROFIT		18,141			30,581			32,006			51,907

	GENERAL AND ADMINISTRATIVE
	Selling, general and administrative		13,653			18,834			26,839			39,048
	Engineering and quality assurance		7,234			11,796			14,742			23,824
	Amortization of intangibles		372			540			774			1,408
	Restructuring costs		3,882			-			5,013			-
	Goodwill impairment		-			-			56,999			-
	Total expenses		25,141			31,170			104,367			64,280

	LOSS FROM OPERATIONS		(7,000	)		(589	)		(72,361	)		(12,373	)

	INTEREST AND OTHER INCOME (EXPENSE):
	Interest income		17			165			222			383
	Interest expense		(2,211	)		(3,149	)		(4,336	)		(5,120	)
	Other income (expense), net		3,182			(968	)		8,296			(2,686	)
	Total interest and other income (expense)		988			(3,952	)		4,182			(7,423	)

	LOSS BEFORE INCOME TAXES		(6,012	)		(4,541	)		(68,179	)		(19,796	)

	PROVISION (BENEFIT) FOR INCOME TAXES		446			240			(406	)		(200	)
	EQUITY IN EARNINGS FROM JOINT VENTURE		134			872			275			2,048
	NET LOSS	$	(6,324	)	$	(3,909	)	$	(67,498	)	$	(17,548	)

	PREFERRED STOCK DIVIDEND AND ACCRETION		506			-			506

	NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(6,830	)	$	(3,909	)	$	(68,004	)	$	(17,548	)

	BASIC AND DILUTED LOSS PER SHARE	$	(0.08	)	$	(0.04	)	$	(0.77	)	$	(0.20	)

	BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING		88,005			87,554			87,934			87,473


POWER-ONE, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
(UNAUDITED)



		June 28,			December 28,
			2009			2008

	ASSETS

	CURRENT ASSETS:
	Cash and cash equivalents	$	75,681		$	28,414
	Accounts receivable:
	Trade (net of allowance)		94,531			143,093
	Other		4,512			2,698
	Inventories		81,426			101,608
	Prepaid expenses and other current assets		12,026			11,037

	Total current assets		268,176			286,850

	PROPERTY AND EQUIPMENT, net		50,573			55,381
	INTANGIBLE ASSETS, net		19,392			79,311
	OTHER ASSETS		8,378			7,417

	TOTAL ASSETS	$	346,519		$	428,959

	LIABILITIES, PREFERRED STOCK AND EQUITY

	CURRENT LIABILITIES:
	Bank credit facilities and notes payable	$	17,392		$	26,949
	Accounts payable		65,647			100,658
	Restructuring reserve		5,542			3,651
	Long-term debt, current portion		210			472
	Other accrued expenses and current liabilities		26,478			26,544

	Total current liabilities		115,269			158,274

	LONG-TERM DEBT, less current portion		77,280			70,425
	OTHER LONG-TERM LIABILITIES		16,956			16,041

	REDEEMABLE CONVERTIBLE PREFERRED STOCK		18,051			-

	STOCKHOLDERS' EQUITY:
	Common stock		88			88
	Additional paid-in capital		621,982			618,255
	Accumulated other comprehensive income		38,160			39,645
	Accumulated deficit		(541,267	)		(473,769	)

	Total stockholders' equity		118,963			184,219

	TOTAL LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY	$	346,519		$	428,959


POWER-ONE, INC.
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(UNAUDITED)


		Three Months Ended						Six Months Ended
		June 28,			June 29,			June 28,			June 29,
			2009			2008			2009			2008

	Orders	$	89,001		$	149,292		$	165,855		$	304,387

	Sales	$	91,169		$	149,273		$	189,009		$	267,031

	Operating Loss	$	(7,000	)	$	(589	)	$	(72,361	)	$	(12,373	)

	Net Loss Attributable to Common Stockholders	$	(6,830	)	$	(3,909	)	$	(68,004	)	$	(17,548	)

	Basic and Diluted Loss Per Share	$	(0.08	)	$	(0.04	)	$	(0.77	)	$	(0.20	)

	Basic and Diluted Weighted Average Shares Outstanding		88,005			87,554			87,934			87,473

Source: Power-One, Inc.

Power-One, Inc.
Linda Heller
Senior Vice President, Finance and CFO
805-987-8741
or
Avalon Investor Relations
Kristyn Moll
512-514-6046