Power Integrations settles with IRS
SAN FRANCISCO—Analog chip vendor Power Integrations Inc. (PI) Monday (Aug. 6) announced it would make a one time payment of $42.6 million to the U.s. Internal Revenue Service (IRS) for taxes and interest for the years 2003 through 2006.
PI (San Jose, Calif.) said the payment, to be made in the third quarter, is related primarily to the revaluation of a license to intellectual property rights to one of its foreign subsidiaries. The agreement permits PI to repatriate approximately $102 million of earnings from its foreign subsidiaries without further U.S. federal income-tax consequences, the company said.
The IRS deal was announced as PI reported second quarter sales that fell short of analysts' expectations and the company's own sales target for the quarter.
PI reported second quarter sales of $76.4 million, up 6 percent from the first quarter and down 5 percent compared with the second quarter of 2011. The company reported a net loss in accordance with generally accepted accounting principles (GAAP) or $7.2 million, or 25 cents per share, compared to a net income of 25 per diluted share in the prior quarter and 35 cents per diluted share in the second quarter of 2011.
The GAAP net loss was primarily attributed to the tax and interest payment. The company said it took a $15.7 million charge for the taxes and interest to be paid, partially offset by the reversal of previously accrued tax liabilities and valuation allowances. Of the $15.7 million charge, approximately $12.7 million relates to taxes and $3 million to interest, PI said.
On a non-GAAP basis, excluding charges, PI reported a net income of $14.6 million, or 49 cents per diluted share, up from a non-GAAP net income of 36 cents per diluted share in the previous quarter and 43 cents per diluted share in the second quarter of 2011.
"Like many of our peers, we have experienced a slowdown in demand of late, and second-quarter revenues fell short of our expectations," said Balu Balakrishnan, PL's president and CEO, in a statement.
PI said in May it expected second quarter sales to be between $78 million and $84 million. Consensus analysts' expectations called for the company to report sales of $81.3 million and non-GAAP earnings per share of 43 cents, according to Yahoo Finance.
PI said it expects sales for the third quarter to be between $76 million and $82 million. Analysts were expecting the company to guide for third quarter sales of about $88.7 million, according to Yahoo Finance.
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