<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
---------------
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 27, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________.
COMMISSION FILE NO. O-29454
------------------------
POWER-ONE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 77-0420182
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
740 CALLE PLANO, CAMARILLO, CA 93012
(Address of principle executive offices) (Zip code)
Registrant's telephone number, including area code (805) 987-8741
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such a shorter period that the
registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /
As of July 30, 1999 there were outstanding 17,137,851 shares of common
stock, $.001 par value.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
POWER-ONE, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
PART I--FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets--
June 30, 1999 and December 31, 1998.......................................................... 3
Consolidated Statements of Operations--
for the Three Months and the Six Months ended June 30, 1999 and 1998......................... 4
Consolidated Statements of Comprehensive (Loss) Income--
for the Three Months and the Six Months ended June 30, 1999 and 1998......................... 5
Consolidated Statements of Cash Flows--
for the Six Months Ended June 30, 1999 and 1998.............................................. 6
Notes to Consolidated Financial Statements..................................................... 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk..................................... 17
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders............................................ 19
Item 6. Exhibits and Reports on Form 8-K............................................................... 19
SIGNATURES................................................................................................. 20
</TABLE>
2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1--FINANCIAL STATEMENTS
POWER-ONE, INC.
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents............................................................. $ 2,751 $ 10,781
Accounts receivable:
Trade, less allowance for doubtful accounts:
$1,929--1999; $1,402--1998.......................................................... 32,560 17,865
Other............................................................................... 2,205 2,184
Inventories........................................................................... 45,250 32,396
Deferred income tax assets--current................................................... 2,748 1,845
Prepaid expenses and other current assets............................................. 1,210 1,366
--------- ------------
Total current assets............................................................ 86,724 66,437
PROPERTY & EQUIPMENT, net of accumulated depreciation and amortization: $14,840--1999;
$8,045--1998.......................................................................... 44,631 34,608
INTANGIBLE ASSETS, NET.................................................................. 62,943 51,019
OTHER ASSETS............................................................................ 3,208 1,915
--------- ------------
TOTAL ASSETS............................................................................ $ 197,506 $ 153,979
--------- ------------
--------- ------------
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Credit facility....................................................................... $ 49,917 $ 14,680
Current portion of long-term debt..................................................... 3,376 2,912
Current portion of capital leases..................................................... 813 114
Bank overdraft........................................................................ 3,923 --
Accounts payable...................................................................... 13,525 6,273
Accrued payroll and related expenses.................................................. 1,897 1,297
Other accrued expenses................................................................ 10,488 7,582
Deferred income tax liability......................................................... 1,302 1,309
--------- ------------
Total current liabilities....................................................... 85,241 34,167
--------- ------------
LONG TERM DEBT, less current portion.................................................... 5,466 7,645
--------- ------------
LONG TERM CAPITAL LEASES, less current portion.......................................... 1,370 206
--------- ------------
DEFERRED INCOME TAX LIABILITY, noncurrent............................................... 3,667 3,585
--------- ------------
OTHER LIABILITIES....................................................................... 104 114
--------- ------------
STOCKHOLDERS' EQUITY
Common Stock, par value $0.001, 60,000,000 shares Authorized; 17,103,257 and
17,093,227 issued and outstanding at June 30, 1999 and December 31, 1998,
respectively........................................................................ 17 17
Additional paid-in capital............................................................ 92,409 92,368
Accumulated other comprehensive (loss) income......................................... (2,930) 2,177
Retained earnings..................................................................... 12,162 13,700
--------- ------------
Total stockholders' equity...................................................... 101,658 108,262
--------- ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY................................................ $ 197,506 $ 153,979
--------- ------------
--------- ------------
</TABLE>
See accompanying notes.
3
<PAGE>
POWER-ONE, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
-------------------- --------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
NET SALES............................................................. $ 46,568 $ 24,373 $ 81,402 $ 51,046
COST OF GOODS SOLD.................................................... 26,621 14,300 48,274 29,870
--------- --------- --------- ---------
GROSS PROFIT.................................................... 19,947 10,073 33,128 21,176
GENERAL AND ADMINISTRATIVE
Selling............................................................. 5,544 2,362 10,244 4,994
Administrative...................................................... 4,307 1,410 7,083 3,567
Engineering......................................................... 3,332 1,224 6,210 2,399
Quality assurance................................................... 961 641 1,633 1,185
Amortization of intangibles......................................... 1,341 507 3,560 1,014
In process research and development................................. -- -- 3,300 --
--------- --------- --------- ---------
Total expenses.................................................. 15,485 6,144 32,030 13,159
INCOME FROM OPERATIONS................................................ 4,462 3,929 1,098 8,017
OTHER INCOME (EXPENSE)
Interest income..................................................... 2 509 37 915
Interest expense.................................................... (987) (93) (1,710) (185)
Other income, net................................................... (76) 134 276 155
--------- --------- --------- ---------
Total other income (expense).................................... (1,061) 550 (1,397) 885
INCOME (LOSS) BEFORE TAXES............................................ 3,401 4,479 (299) 8,902
INCOME TAXES.......................................................... 1,422 1,431 1,239 2,781
--------- --------- --------- ---------
NET INCOME (LOSS)..................................................... $ 1,979 $ 3,048 $ (1,538) $ 6,121
--------- --------- --------- ---------
--------- --------- --------- ---------
BASIC EARNINGS (LOSS) PER COMMON SHARE................................ $ 0.12 $ 0.18 $ (0.09) $ 0.36
--------- --------- --------- ---------
--------- --------- --------- ---------
DILUTED EARNINGS (LOSS) PER COMMON SHARE.............................. $ 0.11 $ 0.18 $ (0.09) $ 0.35
--------- --------- --------- ---------
--------- --------- --------- ---------
BASIC SHARES OUTSTANDING.............................................. 17,102 17,060 17,099 17,060
--------- --------- --------- ---------
--------- --------- --------- ---------
DILUTED SHARES OUTSTANDING............................................ 17,582 17,323 17,099 17,334
--------- --------- --------- ---------
--------- --------- --------- ---------
</TABLE>
See accompanying notes.
4
<PAGE>
POWER-ONE, INC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SIX MONTHS ENDED
---------------------- ----------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
NET INCOME (LOSS)....................................................... $ 1,979 $ 3,048 $ (1,538) $ 6,121
OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment............................... (2,086) -- (5,107) --
--------- ----------- --------- -----------
COMPREHENSIVE (LOSS) INCOME............................................. $ (107) $ 3,048 $ (6,645) $ 6,121
--------- ----------- --------- -----------
--------- ----------- --------- -----------
</TABLE>
See accompanying notes
5
<PAGE>
POWER-ONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------
JUNE 30, JUNE 30,
1999 1998
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income........................................................................ $ (1,538) $ 6,121
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating
activities:
Depreciation and amortization.......................................................... 6,984 2,257
Purchased in process technology........................................................ 3,300 --
Gain on sale of fixed assets........................................................... 47 --
Deferred income taxes.................................................................. (256) 1
Changes in operating assets and liabilities:
Accounts receivable, net............................................................. (11,358) 2,382
Inventories.......................................................................... (8,090) 3,718
Refundable income taxes.............................................................. 796 2,369
Prepaid expenses and other current assets............................................ 251 (476)
Accounts payable..................................................................... 7,506 (941)
Accrued expenses..................................................................... (23) (659)
Other liabilities.................................................................... (72) --
---------- ---------
Net cash (used in) provided by operating activities................................ (2,453) 14,772
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment.................................................... (12,301) (6,791)
Proceeds from sale of fixed assets....................................................... 112 --
Investment in IPD, net of cash acquired (Note 4)......................................... (28,739) --
Other assets............................................................................. (1,279) 104
---------- ---------
Net cash used in investing activities.............................................. (42,207) (6,687)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from credit facilities.................................................... 34,489 --
Bank overdraft........................................................................... 3,924 --
Proceeds from borrowings on long-term debt............................................... 6,730 --
Repayments of long-term debt........................................................... . (7,803) --
Principal payments under capital lease obligations....................................... (431) --
Sale and issuance of common stock........................................................ 41 --
---------- ---------
Net cash provided by financing activities.......................................... 36,950 --
---------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH.................................................... (320) --
---------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................................... (8,030) 8,085
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................................. 10,781 32,018
---------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................................... $ 2,751 $ 40,103
---------- ---------
---------- ---------
</TABLE>
See accompanying notes
6
<PAGE>
POWER-ONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
UNAUDITED
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------
JUNE 30, JUNE 30,
1999 1998
---------- ---------
<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest............................................................................... $ 1,270 $ 54
Income taxes........................................................................... $ 345 $ 1,750
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
On January 29, 1999, we purchased all of the capital stock of International
Power Devices, Inc. ("IPD") for $29.5 million (See Note 4). In conjunction with
the acquisition, liabilities were assumed as follows (in thousands):
<TABLE>
<S> <C>
Fair value of tangible assets acquired............................ $ 20,529
Fair value of goodwill and other identifiable intangible assets... 18,173
Cash paid for capital stock....................................... (29,500)
---------
Liabilities assumed............................................... $ 9,202
---------
---------
</TABLE>
A capital lease obligation of $242,000 was incurred in the first quarter of 1999
when the we entered into a lease for new equipment.
See accompanying notes
7
<PAGE>
POWER-ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. In the opinion of management, adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the period ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year. For
further information, refer to the consolidated financial statements and notes
thereto for the year ended December 31, 1998, included in our 1998 Annual Report
on Form 10-K.
Our reporting period coincides with the 52- to 53-week period ending on the
Sunday closest to December 31 and our fiscal quarters are the 13 and 14 week
periods ending on the Sunday nearest to March 31, June 30, September 30 and
December 31. For simplicity of presentation, we have described our year-ended
December 27, 1998 as December 31 and the three month and six month periods ended
June 27, 1999 and June 28, 1998 as June 30.
Certain reclassifications have been made to the amounts in the Consolidated
Statement of Operations for the three month and the six month periods ended June
30, 1998 to confirm to the classifications in the three month and the six month
periods ended June 30, 1999.
NOTE 2--INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
Raw materials........................................................ $ 25,764 $ 16,036
Subassemblies-in-process............................................. 6,769 5,001
Finished goods....................................................... 12,717 11,359
--------- ------------
$ 45,250 $ 32,396
--------- ------------
--------- ------------
</TABLE>
NOTE 3--EARNINGS PER SHARE
Basic earnings (loss) per share is computed by dividing net income (loss) by
the weighted average common shares outstanding for the period while diluted
earnings per share also includes the dilutive
8
<PAGE>
POWER-ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 3--EARNINGS PER SHARE (CONTINUED)
impact of stock options. Basic and diluted earnings (loss) per share for the
three month and the six month periods ended June 30 are calculated as follows
(in thousands, except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------------------------- -------------------------------
AVERAGE PER AVERAGE PER
INCOME SHARES SHARE INCOME SHARES SHARE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net income......................................... $ 1,979 $ 3,048
Basic earnings per share:
Shares outstanding............................... 17,102 17,060
--------- --------- --------- ---------
Basic earnings per share......................... 1,979 17,102 $ 0.12 3,048 17,060 $ 0.18
--------- ---------
Dilutive securities--
Stock options.................................... 480 263
--------- --------- --------- ---------
Diluted earnings per share: $ 1,979 17,582 $ 0.11 $ 3,048 17,323 $ 0.18
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1999 JUNE 30, 1998
------------------------------- -------------------------------
AVERAGE PER AVERAGE PER
INCOME SHARES SHARE INCOME SHARES SHARE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net (loss) income.................................. $ (1,538) $ 6,121
Basic (loss) earnings per share:
Shares outstanding............................... 17,099 17,060
--------- --------- --------- ---------
Basic (loss) earnings per share.................. (1,538) 17,099 $ (0.09) 6,121 17,060 $ 0.36
--------- ---------
Dilutive securities--
Stock options.................................... 274
--------- --------- --------- ---------
Diluted (loss) earnings per share: $ (1,538) 17,099 $ (0.09) $ 6,121 17,334 $ 0.35
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
The dilutive effect of options outstanding at June 30, 1999 was not included in
the calculation of diluted loss per share for the six month period ended June
30, 1999 because to do so would have had an anti-dilutive effect as we had a net
loss for the period.The weighted average amount of such options excluded from
the diluted loss per share computation for the six month period ended June 30,
1999 was approximately 425,000.
NOTE 4--ACQUISITIONS
On January 29, 1999, we completed our purchase of International Power
Devices, Inc. ("IPD"), for $31.8 million including certain capitalized lease
obligations and other indebtedness of IPD. The total purchase price was
calculated at $28.3 million, plus approximately $1.2 million of transaction
related costs. In addition, we may pay up to $13 million earnout consideration
to IPD's stockholders based upon IPD's attaining certain defined operational
performance objectives through March 31, 2000. The purchase price was negotiated
at arms length with IPD, with which we had no prior relationship. The source of
funds for the acquisition was a combination of our available cash, as well as
advances totaling approximately $28 million under our existing credit facility.
In a separate transaction, we agreed to acquire IPD's
9
<PAGE>
POWER-ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4--ACQUISITIONS (CONTINUED)
manufacturing facility from a separate partnership for its appraised value. The
purchase of the manufacturing facility was completed in the second quarter of
1999 for approximately $4.3 million and was funded by additional borrowings from
credit facilities.
IPD, a Boston-based company, is a leading supplier of high-density DC/DC
power supplies, which it distributes primarily in North America. High density
DC/DC power technology is preferred in applications using high speed /
low-voltage logic, including the fast growing voice and data communications
industries. IPD sells over 90 models of high-density DC/DC products to leading
OEMs, including Cisco, Newbridge Networks and Nortel. As part of the
acquisition, we also acquired IPD's 49% ownership position in Shenzhen SED-IPD
International Electronic Device Co., Ltd., a joint venture based in Shenzhen,
China. The acquisition was accounted for using the purchase method of
accounting. The net purchase price, plus transaction costs, were allocated to
tangible assets and intangible assets. The excess of the aggregate purchase
price over the estimated fair market values of the net assets acquired was
recognized as goodwill and other identifiable intangible assets, and is being
amortized over periods ranging from five to 15 years. The fair market value of
IPD's assets and liabilities has been included in our balance sheet as of June
30, 1999. The consolidated statements of operations, comprehensive income and of
cash flow for the six months ended June 30, 1999, include five months of IPD's
operations.
In connection with the IPD acquisition, we amended our credit agreement with
lenders to waive certain requirements and amend certain provisions.
The product lines acquired as a result of the IPD acquisition were
substantially similar to purchased technology related to a technology and
license agreement with a company entered on April 2, 1996 for which an
intangible asset was recorded and was being amortized over the term of the
licensing agreement (see Note 5). Consequently, we recorded a charge of
approximately $1.0 million for the unamortized balance of the intangible asset
value related to the agreement in the three month period ended March 31, 1999.
The following unaudited pro forma financial information combines the
consolidated results of operations as if the acquisition of Melcher and IPD had
occurred as of the beginning of the periods presented. Pro forma adjustments
include only the effects of events directly attributable to the transaction that
are expected to have a continuing impact and that are factually supportable. The
pro forma amounts contained in the table below include adjustments for
amortization of intangibles, depreciation expense, assumed interest expense,
assumed decrease in interest earned and deferred taxes.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JUNE 30, JUNE 30,
1999 1998
--------- ---------
(DOLLARS IN
THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Net sales............................................................... $ 83,631 $ 89,250
Net income.............................................................. $ 638 $ 5,012
Basic earnings per common share......................................... $ 0.04 $ 0.29
Diluted earnings per common share....................................... $ 0.04 $ 0.29
</TABLE>
10
<PAGE>
POWER-ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4--ACQUISITIONS (CONTINUED)
The pro forma financial information does not necessarily reflect the
operating results that would have occurred had the acquisition been consummated
as of the above dates, nor is such information indicative of future operating
results.
The allocation of the purchase price is based on preliminary data and could
change when final valuation information is obtained.
NOTE 5--INTANGIBLE ASSETS
Intangible assets include cost in excess of net assets acquired in
connection with the acquisition of the Company in 1995, of Melcher Holding AG
("Melcher") in 1998 and of IPD in the first quarter of 1999 (see Note 4) which
have been allocated among certain intangible items determined by management to
have value, such as the company name, distribution network and product lines.
Provision for amortization has been made based upon the estimated useful lives
of the intangible asset categories, which range from five to 25 years, using the
straight-line method. At June 30, 1999 and December 31, 1998 accumulated
amortization related to these intangible assets totaled $9,175,000 and
$6,743,000, respectively.
Intangible assets at December 31, 1998 also included purchased technology
related to a technology and license agreement (the "Agreement") with a company
entered on April 2, 1996. The Agreement called for total cash payments of
$1,500,000 over approximately two years in return for exclusive rights to
specified technical information. The obligation and asset were recorded at
present value using an implicit interest rate of 8.5%. The asset was being
amortized over the term of the licensing agreement, ten years, using the
straight-line method. Since the technology acquired as a result of the Agreement
was substantially similar to the product lines acquired as a result of the IPD
acquisition, we recorded a charge of approximately $1.0 million for the
unamortized balance of the intangible asset value related to the Agreement in
the three month period ended March 31, 1999. Accumulated amortization on the
license agreement was $384,000 at December 31, 1998.
Increase in intangible assets from December 31, 1998 to June 30, 1999
relates to the intangible assets recorded in connection with the IPD
acquisition. Intangible assets consist of the following (in thousands):
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------- ------------
<S> <C> <C>
Goodwill and Trade Name.............................................. $ 41,146 $ 39,121
Distribution Network................................................. 5,207 5,207
Sales Force.......................................................... 698 790
Product Technology................................................... 19,567 11,632
Assembled Workforce.................................................. 800 --
Customer Relationships............................................... 4,700 --
License Agreement.................................................... -- 1,396
--------- ------------
72,118 58,146
--------- ------------
Less accumulated amortization........................................ 9,175 7,127
--------- ------------
$ 62,943 $ 51,019
--------- ------------
--------- ------------
</TABLE>
11
<PAGE>
ITEM 2-- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
NET SALES. Our net sales increased $30.4 million, or 59.5%, to $81.4
million for the six months ended June 30, 1999 from $51.0 million for the same
period last year. Included in net sales for the first half of 1999 are $22.1
million contributed by Melcher and $18.4 million contributed by IPD since the
date of acquisition. The principal contributors to the $30.4 million increase in
net sales were DC/DC power supplies which contributed $35.7 million, low-range
power supplies, which contributed $5.9 million, and custom power supplies, which
contributed $2.8 million. These increases were offset by declines in our high-
range power supply line of $9.8 million, linear power supplies of $3.4 million
and all other product lines of $0.8 million, net. Excluding Melcher and IPD, our
net sales decreased $10.2 million, or 20.0%, to $40.8 million in the first half
of 1999 from $51.0 million for the comparable period in 1998. This decrease was
primarily due to general weak demand for our high-range and linear power
supplies in the first four months of 1999.
Sales to OEMs in the first six months of 1999 were $60.7 million, or 74.5%
of net sales, up from $29.2 million, or 57.1% of net sales, over the comparable
period in 1998. Sales to Cisco, one of our primary OEM customers, represented
10.9% of net sales. Cisco was the only customer that exceeded 10% of net sales
in the first six months of 1999. Sales in the first six months of 1999 through
distributors were $20.7 million, or 25.5% of net sales, down $1.2 million from
$21.9 million, or 42.9% of net sales, in the same period last year. The lower
percentage of net sales through distributors in the first six months of 1999 is
primarily due to the change in the mix of our customer base, since most of
Melcher's and IPD's customers are OEMs.
Net sales for the three months ended June 30, 1999 increased $22.2 million,
or 91.1%, to $46.6 million compared with $24.4 million for the three months
ended June 30, 1998. The increase in sales for the second quarter was primarily
due to an increase in DC/DC power supplies, which contributed $21.1 million,
low-range power supplies, which contributed $3.5 million, and all other product
lines of $1.1 million, net. These increases were offset by declines in our
high-range power supply line of $1.9 million and linear power supplies of $1.6
million. Excluding Melcher and IPD, our net sales decreased $1.3 million, or
5.5%, to $23.0 million in the second quarter of 1999 from $24.4 million for the
comparable period in 1998. As noted above, this decrease was also due to general
weak demand for our high-range and linear power supplies in the second quarter
of 1999 as compared to the same period last year.
Sales to OEM's in the second quarter of 1999 were $34.9 million, or 74.9% of
net sales, up from $13.4 million over the comparable period in 1998, or 55.0% of
net sales, and up from $25.8 million in the first quarter of 1999, or 74.0% of
net sales. Sales to Cisco represented 13.1% of net sales and was the only
customer that exceeded 10% of net sales in the second quarter of 1999. Sales
through distributors were $11.7 million in the second quarter of 1999, up $0.7
million from $11.0 million over the same period last year, and up from $9.0
million in the first quarter of 1999. As a percent of net sales, sales through
distributors were 25.1% in the second quarter of 1999, down from 45.0% last year
and down from 40.9% in the first quarter of 1999.
Our recent acquisition of IPD has significantly broadened our customer base
by increasing sales to key OEMs and adding new OEMs in the communications
market.
12
<PAGE>
Sales by markets for the six months ended June 30, 1999 and June 30, 1998
were:
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED JUNE ENDED JUNE
30, 1999 30, 1998
------------- -------------
<S> <C> <C>
Communications...................................................... 42.0% 13.3%
Industrial.......................................................... 18.8% 22.8%
Transportation...................................................... 7.9% --
Automatic/semiconductor test equipment.............................. 7.7% 27.3%
Medical............................................................. 7.7% 15.4%
Computer and retail................................................. 4.2% 11.2%
Other............................................................... 11.7% 10.0%
----- -----
Total............................................................. 100.0% 100.0%
----- -----
----- -----
</TABLE>
The changes in our percentage distribution of sales for
automatic/semiconductor test equipment, communications, and transportation
markets are primarily due to the downturn in the automatic/semiconductor test
equipment market and a larger concentration of sales in the communications and
transportation markets by IPD and Melcher, respectively.
During the first six months of 1999, demand for our products increased
significantly. Our combined backlog on June 30, 1999 was $62.5 million, an
increase of 142.3% compared to backlog of $25.8 million on December 31, 1998,
and an increase of $20.3 million, or 48.1% compared to backlog of $42.2 million
on March 31, 1999. Pro forma backlog, which assumes IPD's backlog was in place
at December 31, 1998, increased 105.5% at the end of June 1999 as compared to
year-end 1998. For comparison, our backlog on June 30, 1998 was $19.5 million.
For the quarter ended June 30, 1999 we achieved record bookings of $69.3
million, with much of this growth coming from strong demand in the
communications market, as well as increased demand for our high-power product
line, which are typically sold to the automatic/semiconductor test equipment
market.
GROSS PROFIT. Gross profit increased $12.0 million, or 56.4%, to $33.1
million for the six months ended June 30, 1999 from $21.2 million for the six
months ended June 30, 1998. As a percent of net sales, our gross profit margin
decreased to 40.7% for the first half of 1999 from 41.5% for the same period in
1998. The decline in gross profit margin primarily resulted from the inventory
write-up related purchase accounting adjustments due to the IPD acquisition.
Excluding the non-recurring IPD purchase related adjustments, gross profit
margin would have been 41.6% for the first six months of 1999.
Gross profit for the three months ended June 30, 1999 increased $9.9
million, or 98.0%, to $19.9 million from $10.1 million for the same period last
year. As a percent of net sales, gross profit increased to 42.8% for the second
quarter of 1999 from 41.3% for the second quarter of 1998, primarily due to
Melcher which had a gross profit margin of 43.1%.
SELLING EXPENSE. Selling expense increased $5.2 million, or 105.1%, to
$10.2 million for the six months ended June 30, 1999 from $5.0 million for the
comparable period in 1998. As a percent of net sales, selling expense increased
to 12.6% for the first half of 1999 from 9.8% for the same period last year. The
increase of $5.2 million in the first half of 1999 was primarily due to
Melcher's and IPD's selling expense of $3.9 million and $1.4 million,
respectively. Excluding Melcher and IPD, Power-One's core selling expense
remained unchanged at $5.0 million in the first half of 1999 as compared to the
prior year. The increase in selling expense as a percentage of net sales is
primarily due to Melcher, which has higher selling expenses than Power-One and
IPD as a percentage of net sales.
Selling expense for the three months ended June 30, 1998 increased $3.2
million, or 134.7%, to $5.5 million from $2.4 million for the three months ended
June 30, 1998. The increase in second quarter selling expense was primarily due
to $1.8 million of selling expense related to Melcher, and $1.0 million
13
<PAGE>
related to IPD.As a percent of net sales, selling expense increased to 11.9% for
the second quarter of 1999 from 9.7% for the same period in 1998.
ADMINISTRATIVE EXPENSE. Administrative expense increased $3.5 million, or
98.6%, to $7.1 million for the six months ended June 30, 1999 from $3.6 million
for the six months ended June 30, 1998. As a percent of net sales,
administrative expense increased to 8.7% for the first half of 1999 from 7.0%
for the comparable period in 1998. The increase of $3.5 million was primarily
attributable to Melcher's and IPD's administrative expenses of $1.3 million and
$1.0 million, respectively, as well as an increase of $1.2 million in our core
administrative expense. The increase in our core administrative expense was
primarily due to higher employee costs related to an increase in employee
performance bonuses, higher professional fees and increased depreciation expense
primarily related to the Oracle ERP project.
Administrative expense for the three months ended June 30, 1999 increased
$2.9 million, or 205.5%, to $4.3 million from $1.4 million for the three months
ended June 30, 1998. The increase is primarily due to the additional
administrative expense of $650,000 and $575,000 related to Melcher and IPD,
respectively, as well as an increase of $1.6 million in our core administrative
expense due to higher employee costs related to an increase in employee
performance bonuses and increased depreciation expense. As a percent of net
sales, administrative expense increased to 9.2% for the second quarter of 1999
from 5.8% for the same period in 1998.
ENGINEERING EXPENSE. Engineering expense increased $3.8 million, or 158.9%,
to $6.2 million for the six months ended June 30, 1999 from $2.4 million for the
six months ended June 30, 1998. As a percent of net sales, engineering expense
increased to 7.6% for the first half of 1999 from 4.7% for the comparable period
in 1998. The increase of $3.8 million was primarily due to Melcher's and IPD's
engineering expense of $2.4 million and $1.3 million, respectively.
Engineering expense for the three months ended June 30, 1999 increased $2.1
million, or 172.2%, to $3.3 million from $1.2 million for the three months ended
June 30, 1998. This increase was primarily due to Melcher's and IPD's
engineering expense of $1.2 million and $0.8 million, respectively. As a percent
of net sales, engineering expense increased to 7.2% for the second quarter of
1999 from 5.0% for the same period in 1998.
QUALITY ASSURANCE EXPENSE. Quality assurance expense increased $448,000, or
37.8%, to $1.6 million for the six months ended June 30, 1999 from $1.2 million
for the six months ended June 30, 1998. As a percent of net sales, quality
assurance expense decreased to 2.0% for the first half of 1999 from 2.3% for the
comparable period in 1998. The increase of $448,000 was primarily due to higher
quality assurance expense related to Melcher and IPD.
Quality assurance expense for the three months ended June 30, 1999 increased
$320,000, or 49.9%, to $961,000 from $641,000 for the three months ended June
30, 1998. As a percent of net sales, quality assurance expense decreased to 2.1%
for the second quarter of 1999 from 2.6% for the same period in 1998.
AMORTIZATION EXPENSE. Amortization of intangibles increased $2.5 million,
or 251.1%, to $3.6 million for the six months ended June 30, 1999 from $1.0
million for the same period in 1998. The majority of the increase is
attributable to a $1.0 million charge taken to write-off the unamortized balance
of the intangible asset value of a technology and license agreement related to
substantially similar product technology acquired as a result of the IPD
acquisition. The balance of the increase is due to five months of amortization
of the intangibles initially recorded upon the acquisition of IPD on January 29,
1999 totaling approximately $768,000, as well as $836,000 of amortization of
intangibles related to the Melcher acquisition. For the three months ended June
30, 1999, amortization of intangibles expense increased $834,000, or 164.5%, to
$1.3 million from $507,000 for the comparable period last year.
14
<PAGE>
IN PROCESS RESEARCH & DEVELOPMENT. In connection with the IPD acquisition,
we recorded a one time charge of $3.3 million for purchased in-process
technology that had not reached technological feasibility.
INCOME FROM OPERATIONS. As a result of the items discussed above, income
from operations decreased $6.9 million, or 86.3%, to $1.1 million for the six
months ended June 30, 1999 from $8.0 million for the comparable period in 1998.
The lower income from operations for the first half of 1999 resulted from
several significant non-recurring items totaling approximately $5.1 million,
including an $0.8 million inventory write-up related purchase accounting
adjustment for IPD, $1.0 million write-off of a previously acquired technology
license, and $3.3 million charge for in-process research and development.
Excluding these items, income from operations would have been $6.2 million. For
the three months ended June 30, 1999, income from operations increased $533,000,
or 13.6%, to $4.5 million from $3.9 million for the comparable period in 1998.
INTEREST INCOME. Interest income decreased $878,000, or 96.0% to $37,000
for the six months ended June 30, 1999 from $915,000 for the six months ended
June 30, 1998. Interest income for the three months ended June 30, 1999
decreased $507,000 to $2,000. The decrease is primarily due to the decrease in
short-term, interest-bearing financial instruments due to cash used for the
Melcher acquisition in the third quarter of 1998.
INTEREST EXPENSE. Interest expense increased $1.5 million, or 824.3%, to
$1.7 million for the six months ended June 30, 1999 from $185,000 for the
comparable period in 1998. For the three months ended June 30, 1999, interest
expense increased $894,000 to $987,000 from $93,000 for the same period last
year. The increase is primarily due to advances under our credit facilities to
finance the IPD acquisition, as well as additional investments in facilities and
capital equipment to increase our capacity to support the rapid growth in our
business.
OTHER INCOME (EXPENSE), NET. Other income, net, increased $121,000, to
$276,000 for the six months ended June 30, 1999 from $155,000 for the six months
ended June 30, 1998. Other income increased primarily due to gains on sales of
fixed assets and foreign currency transactions. Other expense, net, for the
second quarter of 1999 was $76,000 compared to other income, net, of $134,000 in
the comparable period last year. This expense was primarily due to the write-off
of leasehold improvements related to Power-One's facilities in Mexico.
INCOME TAXES. The provision for income taxes decreased to $1.2 million for
the six months ended June 30, 1999 from $2.8 million income tax for the
comparable period in 1998. The recorded loss for the first half of 1999 did not
generate a significant income tax benefit primarily due to the $3.3 million
charge for in-process research and development and $768,000 amortization of
goodwill related to the IPD acquisition, both of which were nondeductible for
tax purposes. The income tax provision for the three months ended June 30, 1999
remained substantially unchanged at $1.4 million compared to the same period in
1998
LIQUIDITY AND CAPITAL RESOURCES
Our cash and cash equivalents balance decreased $8.0 million, or 74.5% from
$10.8 million at December 31, 1998 to $2.8 million at June 30, 1999. The primary
source of cash for the first six months of 1999 consisted of net borrowings from
credit facilities of $34.5 which was primarily used to finance the purchase of
IPD and its manufacturing facility. The primary uses of cash for the first six
months of 1999 consisted of $28.3 million for the purchase of IPD, $1.2 million
of transaction costs, $12.3 million for the acquisition of property and
equipment and $2.5 million for operating activities.
The $2.5 million used for operating activities was primarily attributable to
cash earnings from operations of $8.7 million (net income plus depreciation,
amortization and in-process research and development charge) offset by $11.2
million used in working capital. The $11.2 million use of working
15
<PAGE>
capital was primarily due to an increase in accounts receivable and inventories
of $11.4 million and $8.1 million, respectively, offset by an increase in
accounts payable of $7.5 million.
The $12.3 million for acquisition of property and equipment included
approximately $4.3 million for the purchase of IPD's manufacturing facility,
$2.5 million for hardware, software and implementation support related to our
Oracle ERP system conversion, and the balance reflected additional property,
plant and capital equipment expenditures consistent to support our growth plans.
We have a $50 million revolving line of credit in the U.S. which bears
interest on amounts outstanding payable quarterly based on our leverage ratio
and one of the following rates as selected by us: LIBOR plus 1.0% to 2.25%, or
the bank's base rate plus 0% to 1.25%. The credit agreement (a) provides for
restrictions on additional borrowings, leases and capital expenditures; (b)
prohibits us, without prior approval, from paying dividends, liquidating,
merging, consolidating or selling our assets or business; and (c) requires us to
maintain a specified net worth, minimum working capital and certain ratios of
current liabilities and total debt to net worth. At June 30, 1999, amounts
outstanding under our line of credit in the U.S. were $45.5 million.
As a result of the Melcher acquisition, we have various credit facilities
with banks in Switzerland and Germany which can be drawn upon in the form of
term loans. The aggregate credit limit for all such credit facilities is
approximately $13.6 million. Melcher's credit facilities in Switzerland bear
interest on amounts outstanding payable at various time intervals and market
rates based on Swiss LIBOR plus a margin ranging from 1.25% to 2.00%. Some of
Melcher's credit agreements require Melcher to maintain certain financial
covenants and to provide certain financial reports to the lenders, none of which
materially restricts Melcher. At June 30, 1999, short-term and long-term amounts
outstanding under Melcher's credit facilities were $4.3 million and $8.8
million, respectively, and Melcher was in compliance with all debt covenants.
As a result of the IPD acquisition, we have an additional line of credit in
the U.S., which bears interest at the bank's prime rate plus 0.75%.Borrowings
are limited to the lesser of $4.5 million or 80% of IPD's eligible accounts
receivable, as defined. At June 30, 1999, amounts outstanding under IPD's line
of credit were $0.2 million.
At June 30, 1999, short-term and long-term amounts outstanding under all
credit facilities with banks were $49.9 million and $8.8 million, respectively.
Borrowings are collateralized by substantially all of our assets.
We currently anticipate that our total capital expenditures for 1999 will be
approximately $16 million, of which approximately $2.8 million represents costs
to complete the implementation of our new Oracle ERP system, approximately $4.6
million represents investments in surface mount technology automation, and
approximately $2.9 million represents investments in manufacturing improvements.
The amount of these anticipated capital expenditures will frequently change
based on future changes in business plans, our financial condition and general
economic conditions.
Based on current plans and business conditions, we believe our existing
working capital and borrowing capacity, coupled with the funds generated from
our operations, will be sufficient to fund our anticipated working capital,
capital expenditures and debt payment requirements for the foreseeable future.
However, if we make a large acquisition, it may be necessary to raise debt or
equity in the private or public securities markets.
YEAR 2000 ISSUE
Many existing computer systems and software programs are coded to accept two
digit entries rather than four digits to define the applicable year. These
systems may, for example, recognize the year "00" as 1900 instead of 2000. If
the problem is not corrected, many systems and computer applications could fail
or create erroneous results.
16
<PAGE>
Our business faces risk from unforeseen problems with our own information
systems and systems of our third party suppliers and customers. To address these
risks, we established a task force in early 1998, and since then have been
actively engaged in ensuring our systems are Year 2000 compliant.
We have substantially completed an extensive review to ensure the internal
readiness of our computer systems and the embedded systems commonly found in
manufacturing equipment such as microcontrollers. We have assessed our products
and they are not date sensitive.
We have also assessed the readiness of our key suppliers, subcontractors and
customers for the Year 2000 calendar change. To date we have received survey
responses from approximately 85% of our most important suppliers, which indicate
that they are aware of the Year 2000 compliance issue and that they intend to be
fully Year 2000 compliant and certified by year-end 1999. We expect the balance
of critical vendors to respond to our surveys by the third quarter of 1999.
In April 1999, we significantly reduced our exposure to the Year 2000
compliance issue by partially implementing a new Oracle ERP system, which is
Year 2000 compliant, in our California and Mexico facilities. However, we may
experience difficulties in completing implementation in California and Mexico
and in installing it in our remaining operations. If we do, it could adversely
affect our business and our operating results.
We are also modifying or replacing, as necessary, other third party software
applications in order to ensure that they are Year 2000 compliant. We expect to
substantially complete the remediation of our computer systems in California,
Mexico and the Dominican Republic by the end of September 1999, before any
potential adverse impact on our business. Melcher, however, has not yet finished
assessing its products or computer systems or the effect that problems with its
suppliers' systems may have on its operations. At this point, Melcher expects to
finish its Year 2000 remediation and testing efforts by the end of the third
quarter of 1999, but Melcher may experience delays, which could adversely affect
Melcher's results of operations.In any event, we do not expect the overall costs
to complete our Year 2000 project to be material. We believe that the most
significant adverse effect on our business related to Year 2000 compliance would
be that some of our smaller and less relied-upon suppliers may not have systems
that are Year 2000 compliant, delaying our receipt of materials from them and
our fulfillment of customers' orders.
ITEM 3--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risks relating to our operations result primarily from changes in
interest rates and changes in foreign currency exchange rates. Our exposure to
interest rate risk results from the financial debt instruments which arise from
transactions entered into during the normal course of business. We may enter
into derivative financial instrument transactions, such as swaps, in order to
manage or reduce our exposure to interest rate changes related to our portfolio
of borrowings.Under no circumstances do we enter into derivative or other
financial instrument transactions for speculative purposes.
DEBT. We are exposed to cash flow risk due to changes in market interest
rates related to our outstanding debt. Short-term borrowings under credit
facilities do not give rise to significant interest rate risk because these
borrowings generally have maturities of less than one year. For example, in
Europe our credit facilities bear interest on borrowings outstanding at various
time intervals and market rates based on Swiss LIBOR, an offshore rate that is
similar to the London Interbank Offered Rate ("LIBOR") plus a margin ranging
from 1.25% to 2.00%. As our long-term debt is drawn from the available credit
facilities in Europe, our principal risk with respect to our long-term debt is
to changes in these market rates. The table below presents principal cash flows
and related weighted average interest rates for our credit facilities and Swiss
franc denominated long-term debt obligations at June 30, 1999 by expected
maturity dates.The information is presented in U.S. dollar equivalents, our
reporting currency, and parenthetically in Swiss francs, where
applicable.Additionally, the U.S. dollar equivalent carrying value of Swiss
franc denominated
17
<PAGE>
debt is sensitive to foreign currency exchange rates. However, a 10% change in
the U.S. dollar exchange rate against the Swiss franc would not have a
significant effect on the future earnings of the Company.
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THERE- AFTER TOTAL
--------- --------- --------- ----- ----- ----------- ---------
(AMOUNTS IN THOUSANDS EXCEPT FOR PERCENTAGES)
<S> <C> <C> <C> <C> <C> <C> <C>
Credit facility:
Variable Rate ($US)........................ 45,664 45,664
Average Interest Rate.................... 7.3% 7.3%
Fixed Rate (CHF 6,614)..................... 4,253 4,253
Average Interest Rate.................... 3.3% 3.3%
Long-term Debt:
Fixed Rate (CHF 13,750).................... 1,608 4,019 2,251 964 -- -- 8,842
Average Interest Rate.................... 6.2% 3.9% 4.0% 5.0% 4.5%
<CAPTION>
VALUE
FAIR
---------
<S> <C>
Credit facility:
Variable Rate ($US)........................ 45,664
Average Interest Rate....................
Fixed Rate (CHF 6,614)..................... 4,253
Average Interest Rate....................
Long-term Debt:
Fixed Rate (CHF 13,750).................... 8,842
Average Interest Rate....................
</TABLE>
FOREIGN CURRENCY. A significant portion of our business operations are
conducted in various countries in Europe. As a result, we have a certain degree
of market risk with respect to our cash flows due to changes in foreign currency
exchange rates when transactions are denominated in currencies other than our
functional currency. Historically, we have not actively engaged in substantial
exchange rate hedging activities, and at June 30, 1999, we had not entered into
any significant foreign exchange contracts.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains statements which, to the extent that they do not
recite historical fact, constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934.The words "believe," "expect," "estimate," "may," "will,"
"could," "plan" or "continue" and similar expressions are intended to identify
forward-looking statements. Such forward-looking information involves important
risks and uncertainties that could materially alter results in the future from
those expressed in any forward-looking statements made by, or on behalf of,
us.These risks and uncertainties include, but are not limited to , our ability
to: manage our growth; maintain existing and form new relationships with
customers; and successfully integrate the businesses of companies that we
acquire, including Melcher and IPD. Other risks and uncertainties include
uncertainties relating to general domestic and international economic
conditions, including interest rate and currency exchange rate fluctuations,
electronics industry market conditions and growth rates, acquisitions, the
cyclical nature of our business, government and regulatory policies,
technological developments and changes in the competitive environment in which
we operate.We caution you that such forward-looking statements are only
predictions and that actual events or results may differ materially. In
evaluating such statements, you should specifically consider the various factors
which could cause actual events or results to differ materially from those
indicated by such forward-looking statements, including the factors that we
discuss in this report and other reports that we file with the Securities and
Exchange Commission.
18
<PAGE>
PART II--OTHER INFORMATION
ITEMS 1 THROUGH 3--NOT APPLICABLE
ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 4, 1999, the Annual Meeting of Stockholders of Power-One, Inc. was
held in Agoura Hills, California.
An election of directors was held with the following individuals being
elected to the Board of Directors of the Company:
<TABLE>
<S> <C>
Dr. Hanspeter Brandli (15,524,141 votes for, 226,327 votes
withheld and 1,349,639 broker
non-votes)
</TABLE>
Other matters voted upon and approved at the meeting, and the number of
affirmative and negative votes cast with respect to each matter were as follows:
To approve the proposal for the Company's Amended and Restated 1996 Stock
Incentive Plan (10,072,043 votes for, 1,879,047 votes against, 24,664 abstaining
and 5,124,353 broker non-votes).
To ratify the selection of Deloitte & Touche LLP as the independent public
accountants for the 1999 fiscal year (15,705,780 votes for, 27,621 votes
against, 17,067 abstaining and 1,349,639 broker non-votes).
ITEM 5--NOT APPLICABLE
ITEM 6--EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit 27--Financial Data Schedule
(b) REPORTS ON FORM 8-K
A Current Report on Form 8-K/A dated January 29, 1999 was filed on April
14, 1999 to provide financial statements and the pro forma financial
information for the IPD acquisition, in accordance with Item 7 of the
Instructions to Form 8-K.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C>
Dated: August 2, 1999 POWER-ONE, INC.
By: /s/ STEVEN J. GOLDMAN
-----------------------------------------
Steven J. Goldman
CHAIRMAN OF THE BOARD, CHIEF
EXECUTIVE OFFICER AND PRESIDENT
By: /s/ EDDIE K. SCHNOPP
-----------------------------------------
Eddie K. Schnopp
SR. VICE PRESIDENT, FINANCE, AND
CHIEF FINANCIAL OFFICER AND SECRETARY
</TABLE>
20
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED CONSOLIDATED BALANCE SHEET AND UNAUDITED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE PERIOD ENDING JUNE 30, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,751
<SECURITIES> 0
<RECEIVABLES> 34,489
<ALLOWANCES> 1,929
<INVENTORY> 45,250
<CURRENT-ASSETS> 86,724
<PP&E> 59,471
<DEPRECIATION> 14,840
<TOTAL-ASSETS> 197,506
<CURRENT-LIABILITIES> 85,241
<BONDS> 5,466
0
0
<COMMON> 17
<OTHER-SE> 101,641
<TOTAL-LIABILITY-AND-EQUITY> 197,506
<SALES> 81,402
<TOTAL-REVENUES> 81,402
<CGS> 48,274
<TOTAL-COSTS> 48,274
<OTHER-EXPENSES> 32,030
<LOSS-PROVISION> 82
<INTEREST-EXPENSE> 1,710
<INCOME-PRETAX> (299)
<INCOME-TAX> 1,239
<INCOME-CONTINUING> (1,538)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,538)
<EPS-BASIC> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
