PDSN Powerdsine

PowerDsine Ltd. (Nasdaq: PDSN), announced today financial results for the third quarter that ended on September 30, 2006. For the third quarter of 2006, sales were $9.6 million, up 16% sequentially from $8.3 million for the second quarter of 2006 and compared to sales of $10.9 million for the third quarter of 2005. The Company reported a net loss for the third quarter of 2006 of $(0.6) million, or $(0.03) per share, up from a net loss of $(1.6) million, or $(0.08) per share, for the second quarter of 2006, and compared to a net income of $0.9 million, or $0.04 per diluted share, for the third quarter of 2005. Non-GAAP net income, excluding non-cash stock-based compensation expenses totaling $1.1 million, was $0.6 million, or $0.03 per share, up from the non-GAAP net loss for the second quarter of 2006 of $(0.3) million, or $(0.01) per share, and compared to non-GAAP net income for the third quarter of 2005 of $1.4 million, or $0.07 per share. Stock-based compensation expense for the second quarter of 2006 and third quarter of 2005 was $1.3 million and $0.5 million, respectively. Operating expenses for the third quarter were $6.3 million, compared to $6.3 million in the second quarter of 2006. As of September 30, 2006, cash, cash equivalents, short term and long-term investments totaled $76.7 million. The weighted average shares outstanding for the third quarter of 2006 were 20 million. Fourth Quarter 2006 Outlook PowerDsine is projecting fourth quarter sequential revenue growth of 10-12% based on the continued growth in both the Company's Power over Ethernet integrated and midspan businesses. Acquisition by Microsemi Corporation The Company also announced today that it has entered into a definitive agreement to be acquired by Microsemi Corporation (Nasdaq: MSCC). With this acquisition, Microsemi, a world leader in the design and manufacture of high performance analog solutions and high reliability semiconductor solutions, expands its portfolio of product offerings to include a broad range of Power over Ethernet solutions and further enhances its strong analog and mixed signal design capabilities. Under the terms of the agreement, each PowerDsine shareholder will receive $8.25 per share in cash and 0.1498 shares of Microsemi common stock for each share of PowerDsine common stock. Based on closing stock prices on October 23, the total consideration values PowerDsine at $11.00 per share, an 18.5% premium to PowerDsine's last closing stock price, for a total consideration of $245 million on a fully-diluted basis, or $168 million net of cash acquired. For more details, please refer to related press release from today. Conference Call Microsemi management, together with PowerDsine management will be hosting a webcast conference call today, October 24, at 8:00 a.m. EDT that will be accessible on Microsemi's website under the Investor Relations and Webcasts section at http://investor.microsemi.com/medialist.cfm. The call will also be available live on the Internet at www.kcsa.com or www.powerdsine.com. Following the call, the webcast will be archived for a period of 30 days. To listen to the conference call live by telephone, dial (877) 264-1110 or (706) 634-1357, using the access code 9607252, approximately ten minutes before the start time. A telephone playback will be available within two hours after the completion of the call and can be accessed by calling (800) 642-1687 or (706) 645-9291 and using the access code 9607252. A replay of the webcast will be available for 30 business days. About PowerDsine PowerDsine Ltd. designs, develops and supplies integrated circuits, modules and systems that enable the implementation of Power over Ethernet in local area networks, providing the capability to deliver and manage electrical power over data network cables. Midspans are sold via leading distributors worldwide. PowerDsine offers integrated products and system solutions to communications equipment manufacturers in the telecom and datacom industries who incorporate them into, or bundle them with, their products. PowerDsine is a founding, active and contributing member of the IEEE 802.3af and 802.3at Task Forces and the Ethernet Alliance. For more information, please visit http://www.powerdsine.com PowerDsine is a registered trademark of PowerDsine Ltd. About Microsemi Corporation Microsemi Corporation, with corporate headquarters in Irvine, California, is a leading designer, manufacturer and marketer of high performance analog and mixed-signal integrated circuits and high reliability semiconductors. The company's semiconductors manage and control or regulate power, protect against transient voltage spikes and transmit, receive and amplify signals. Microsemi's products include individual components as well as integrated circuit solutions that enhance customer designs by improving performance and reliability, battery optimization, reducing size or protecting circuits. The principal markets the company serves included implanted medical, defense/aerospace and satellite, notebook computers, monitors and LCD TVs, automotive and mobile connectivity applications. More information may be obtained by contacting the company directly or by visiting its web site at http://www.microsemi.com. About Power-over-Ethernet Technology PoE is a technology for wired Ethernet, the most widely installed local area network technology in use today. PoE allows the electrical power necessary for the operation of each device, to be carried by data cables rather than by separate power cords. It minimizes the number of wires that must be used in order to install the network, resulting in lower cost, less downtime, easier maintenance and greater installation flexibility. Forward Looking Statements Statements made in this press release that are not historical facts, including statements regarding our expectations of future events or our future financial performance, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions about PowerDsine and the matters covered in this release. You should not place undue reliance on these statements. Actual events or results may differ materially. Many factors may cause our actual results to differ materially from any forward looking statement, including acceptance of new products, costs relating to such products and other factors detailed in PowerDsine�s filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F. The forward-looking statements are made as of this date and PowerDsine does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You may register to receive PowerDsine�s future press releases or to download a complete Digital Investor Kit� including press releases, regulatory filings and corporate materials by clicking on the �Digital Investor Kit�� icon at www.kcsa.com. POWERDSINE LTD. (An Israeli Corporation) CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 2006 (U.S. dollars in thousands) � � September 30, December 31, 2006� 2005� (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 13,401� $ 14,366� Short-term marketable debt securities 26,018� 26,511� Accounts receivable 8,794� 10,257� Inventories 2,057� 1,616� Total current assets 50,270� 52,750� � PROPERTY AND EQUIPMENT - net 1,724� 1,864� � � INVESTMENTS AND OTHER LONG-TERM ASSETS Long-term marketable debt securities 37,329� 35,653� Other Long term Assets 1,944� 2,009� Total long term assets 39,273� 37,662� Total assets $ 91,267� $ 92,276� � � LIABILITIES AND SHAREHOLDERS� EQUITY CURRENT LIABILITIES 9,722� 9,686� � ACCRUED SEVERANCE PAY 2,371� 2,250� � Total liabilities 12,093� 11,936� SHAREHOLDERS� EQUITY 79,174� 80,340� Total liabilities and shareholders' equity $ 91,267� $ 92,276� POWERDSINE LTD. (An Israeli Corporation) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2006 (U.S. dollars in thousands, except per share data) � Three months ended September 30, Nine months ended September 30, 2006� 2005� 2006� 2005� Unaudited Unaudited Unaudited Unaudited � SALES- NET $9,591� $10,872� $25,266� $31,397� COST OF SALES* 4,659� 5,054� 12,494� 14,663� GROSS PROFIT 4,932� 5,818� 12,772� 16,734� � RESEARCH AND DEVELOPMENT EXPENSES* 2,385� 1,742� 7,185� 5,376� SELLING AND MARKETING EXPENSES * 2,745� 2,692� 8,813� 7,113� GENERAL AND ADMINISTRATIVE EXPENSES* 1,518� 1,017� 4,323� 3,384� OTHER INCOME (333) --� (474) --� RESTRUCTURING EXPENSES --� --� 1,545� --� INCOME (LOSS) FROM OPERATIONS (1,383) 367� (8,620) 861� FINANCIAL INCOME � net 823� 587� 2,109� 1,712� INCOME (LOSS) FOR THE PERIOD BEFORE TAXES ON INCOME (560) 954� (6,511) 2,573� TAXES ON INCOME (-) (56) (15) (126) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE -� --� 77� --� NET INCOME (LOSS) FOR THE PERIOD $(560) $898� $( 6,449) $2,447� NET INCOME (LOSS) PER ORDINARY SHARE: Basic $(0.03) $0.05� $(0.32) $0.13� Diluted $(0.03) $0.04� $(0.32) $0.12� WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER ORDINARY SHARE: � Basic 20,032,881� 19,535,152� 19,935,576� 19,460,242� Diluted 20,032,881� 20,770,118� 19,935,576� 20,721,447� � * On March 29, 2005, the SEC published Staff Accounting Bulletin (SAB) No. 107, which provides the Staff�s views on a variety of matters relating to stock-based payments. SAB 107 requires stock-based compensation to be classified in the same expense line items as cash compensation. We have reclassified stock-based compensation from prior periods to correspond to current period presentation within the same operating expense line items as cash compensation paid to employees. POWERDSINE LTD. (An Israeli Corporation) Reconciliation of GAAP to Non-GAAP Financial Measures (U.S. dollars in thousands, except per share data) � STOCK - BASED COMPENSATION EXPENSES INCLUDED IN: Three months ended September 30, Nine months ended September 30, 2006� 2005� 2006� 2005� Unaudited Unaudited Unaudited Unaudited � COST OF SALES $106� $35� $311� $104� RESEARCH AND DEVELOPMENT EXPENSES 266� 166� 826� 492� SELLING AND MARKETING EXPENSES 202� 59� 675� 142� GENERAL AND ADMINISTRATIVE EXPENSES 541� 245� 1,446� 764� TOTAL STOCK - BASED COMPENSATION EXPENSES $1,115� $505� $3,258� $1,502� To supplement our consolidated financial statements presented in accordance with GAAP, we have shown below a pro forma, non-GAAP, measure of net income (loss), which is adjusted from our GAAP results to exclude stock-based compensation and one time restructuring costs. We have provided this non-GAAP measure to enhance the user�s overall understanding of our historical financial performance and to make period to period comparisons more meaningful. Specifically, we believe this non-GAAP measure of net income (loss) provides useful information to both management and investors by excluding stock-based compensation expenses. Non-GAAP net income consists of net income excluding stock based compensation expenses. As noted above, we believe that non-GAAP net income is a useful supplement to net income and other income statement data. Non-GAAP net income should not be considered in isolation by investors as an alternative to net income. Three months ended September 30, Nine months ended September 30, 2006� 2005� 2006� 2005� � GAAP net income (loss) � for the period $(560) $898� $(6,449) $2,447� Stock-based compensation expense 1,115� 505� 3,258� 1,502� Cumulative effect of change in accounting principle --� --� (77) --� One-time restructuring expenses --� --� 1,545� --� Pro-forma (non-GAAP) net income- for the period $555� $1,403� $(1,723) $3,949� PRO-FORMA NET INCOME PER ORDINARY SHARE: $0.03� $0.07� $(0.08) $0.18� WEIGHTED AVERAGE SHARES USED IN COMPUTING PRO FORMA NET INCOME PER ORDINARY SHARE (IN MILLIONS): �����21.8� ����21.4� �����21.5� ����21.4� PowerDsine Ltd. (Nasdaq: PDSN), announced today financial results for the third quarter that ended on September 30, 2006. For the third quarter of 2006, sales were $9.6 million, up 16% sequentially from $8.3 million for the second quarter of 2006 and compared to sales of $10.9 million for the third quarter of 2005. The Company reported a net loss for the third quarter of 2006 of $(0.6) million, or $(0.03) per share, up from a net loss of $(1.6) million, or $(0.08) per share, for the second quarter of 2006, and compared to a net income of $0.9 million, or $0.04 per diluted share, for the third quarter of 2005. Non-GAAP net income, excluding non-cash stock-based compensation expenses totaling $1.1 million, was $0.6 million, or $0.03 per share, up from the non-GAAP net loss for the second quarter of 2006 of $(0.3) million, or $(0.01) per share, and compared to non-GAAP net income for the third quarter of 2005 of $1.4 million, or $0.07 per share. Stock-based compensation expense for the second quarter of 2006 and third quarter of 2005 was $1.3 million and $0.5 million, respectively. Operating expenses for the third quarter were $6.3 million, compared to $6.3 million in the second quarter of 2006. As of September 30, 2006, cash, cash equivalents, short term and long-term investments totaled $76.7 million. The weighted average shares outstanding for the third quarter of 2006 were 20 million. Fourth Quarter 2006 Outlook PowerDsine is projecting fourth quarter sequential revenue growth of 10-12% based on the continued growth in both the Company's Power over Ethernet integrated and midspan businesses. Acquisition by Microsemi Corporation The Company also announced today that it has entered into a definitive agreement to be acquired by Microsemi Corporation (Nasdaq: MSCC). With this acquisition, Microsemi, a world leader in the design and manufacture of high performance analog solutions and high reliability semiconductor solutions, expands its portfolio of product offerings to include a broad range of Power over Ethernet solutions and further enhances its strong analog and mixed signal design capabilities. Under the terms of the agreement, each PowerDsine shareholder will receive $8.25 per share in cash and 0.1498 shares of Microsemi common stock for each share of PowerDsine common stock. Based on closing stock prices on October 23, the total consideration values PowerDsine at $11.00 per share, an 18.5% premium to PowerDsine's last closing stock price, for a total consideration of $245 million on a fully-diluted basis, or $168 million net of cash acquired. For more details, please refer to related press release from today. Conference Call Microsemi management, together with PowerDsine management will be hosting a webcast conference call today, October 24, at 8:00 a.m. EDT that will be accessible on Microsemi's website under the Investor Relations and Webcasts section at http://investor.microsemi.com/medialist.cfm. The call will also be available live on the Internet at www.kcsa.com or www.powerdsine.com. Following the call, the webcast will be archived for a period of 30 days. To listen to the conference call live by telephone, dial (877) 264-1110 or (706) 634-1357, using the access code 9607252, approximately ten minutes before the start time. A telephone playback will be available within two hours after the completion of the call and can be accessed by calling (800) 642-1687 or (706) 645-9291 and using the access code 9607252. A replay of the webcast will be available for 30 business days. About PowerDsine PowerDsine Ltd. designs, develops and supplies integrated circuits, modules and systems that enable the implementation of Power over Ethernet in local area networks, providing the capability to deliver and manage electrical power over data network cables. Midspans are sold via leading distributors worldwide. PowerDsine offers integrated products and system solutions to communications equipment manufacturers in the telecom and datacom industries who incorporate them into, or bundle them with, their products. PowerDsine is a founding, active and contributing member of the IEEE 802.3af and 802.3at Task Forces and the Ethernet Alliance. For more information, please visit http://www.powerdsine.com PowerDsine is a registered trademark of PowerDsine Ltd. About Microsemi Corporation Microsemi Corporation, with corporate headquarters in Irvine, California, is a leading designer, manufacturer and marketer of high performance analog and mixed-signal integrated circuits and high reliability semiconductors. The company's semiconductors manage and control or regulate power, protect against transient voltage spikes and transmit, receive and amplify signals. Microsemi's products include individual components as well as integrated circuit solutions that enhance customer designs by improving performance and reliability, battery optimization, reducing size or protecting circuits. The principal markets the company serves included implanted medical, defense/aerospace and satellite, notebook computers, monitors and LCD TVs, automotive and mobile connectivity applications. More information may be obtained by contacting the company directly or by visiting its web site at http://www.microsemi.com. About Power-over-Ethernet Technology PoE is a technology for wired Ethernet, the most widely installed local area network technology in use today. PoE allows the electrical power necessary for the operation of each device, to be carried by data cables rather than by separate power cords. It minimizes the number of wires that must be used in order to install the network, resulting in lower cost, less downtime, easier maintenance and greater installation flexibility. Forward Looking Statements Statements made in this press release that are not historical facts, including statements regarding our expectations of future events or our future financial performance, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions about PowerDsine and the matters covered in this release. You should not place undue reliance on these statements. Actual events or results may differ materially. Many factors may cause our actual results to differ materially from any forward looking statement, including acceptance of new products, costs relating to such products and other factors detailed in PowerDsine's filings with the Securities and Exchange Commission, including its Annual Report on Form 20-F. The forward-looking statements are made as of this date and PowerDsine does not undertake any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. You may register to receive PowerDsine's future press releases or to download a complete Digital Investor Kit(TM) including press releases, regulatory filings and corporate materials by clicking on the "Digital Investor Kit(TM)" icon at www.kcsa.com. -0- *T POWERDSINE LTD. (An Israeli Corporation) CONDENSED CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 2006 (U.S. dollars in thousands) September 30, December 31, -------------- ------------- 2006 2005 -------------- ------------- (Unaudited) (Audited) -------------- ------------- ASSETS CURRENT ASSETS Cash and cash equivalents $13,401 $14,366 Short-term marketable debt securities 26,018 26,511 Accounts receivable 8,794 10,257 Inventories 2,057 1,616 -------------- ------------- Total current assets 50,270 52,750 -------------- ------------- PROPERTY AND EQUIPMENT - net 1,724 1,864 -------------- ------------- INVESTMENTS AND OTHER LONG-TERM ASSETS Long-term marketable debt securities 37,329 35,653 Other Long term Assets 1,944 2,009 -------------- ------------- Total long term assets 39,273 37,662 -------------- ------------- Total assets $91,267 $92,276 ============== ============= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES 9,722 9,686 -------------- ------------- ACCRUED SEVERANCE PAY 2,371 2,250 -------------- ------------- Total liabilities 12,093 11,936 -------------- ------------- SHAREHOLDERS' EQUITY 79,174 80,340 -------------- ------------- Total liabilities and shareholders' equity $91,267 $92,276 ============== ============= *T -0- *T POWERDSINE LTD. (An Israeli Corporation) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS AND THREE MONTHS PERIODS ENDED SEPTEMBER 30, 2006 (U.S. dollars in thousands, except per share data) Three months ended Nine months ended September 30, September 30, ----------------------- ----------------------- 2006 2005 2006 2005 ----------- ----------- ----------- ----------- Unaudited Unaudited Unaudited Unaudited ----------- ----------- ----------- ----------- SALES- NET $9,591 $10,872 $25,266 $31,397 COST OF SALES* 4,659 5,054 12,494 14,663 ----------- ----------- ----------- ----------- GROSS PROFIT 4,932 5,818 12,772 16,734 RESEARCH AND DEVELOPMENT EXPENSES* 2,385 1,742 7,185 5,376 SELLING AND MARKETING EXPENSES * 2,745 2,692 8,813 7,113 GENERAL AND ADMINISTRATIVE EXPENSES* 1,518 1,017 4,323 3,384 OTHER INCOME (333) -- (474) -- RESTRUCTURING EXPENSES -- -- 1,545 -- ----------- ----------- ----------- ----------- INCOME (LOSS) FROM OPERATIONS (1,383) 367 (8,620) 861 FINANCIAL INCOME - net 823 587 2,109 1,712 ----------- ----------- ----------- ----------- INCOME (LOSS) FOR THE PERIOD BEFORE TAXES ON INCOME (560) 954 (6,511) 2,573 TAXES ON INCOME (-) (56) (15) (126) ----------- ----------- ----------- ----------- CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE - -- 77 -- ----------- ----------- ----------- ----------- NET INCOME (LOSS) FOR THE PERIOD $(560) $898 $( 6,449) $2,447 =========== =========== =========== =========== NET INCOME (LOSS) PER ORDINARY SHARE: Basic $(0.03) $0.05 $(0.32) $0.13 =========== =========== =========== =========== Diluted $(0.03) $0.04 $(0.32) $0.12 =========== =========== =========== =========== WEIGHTED AVERAGE SHARES USED IN COMPUTING NET INCOME (LOSS) PER ORDINARY SHARE: Basic 20,032,881 19,535,152 19,935,576 19,460,242 =========== =========== =========== =========== Diluted 20,032,881 20,770,118 19,935,576 20,721,447 =========== =========== =========== =========== * On March 29, 2005, the SEC published Staff Accounting Bulletin (SAB) No. 107, which provides the Staff's views on a variety of matters relating to stock-based payments. SAB 107 requires stock-based compensation to be classified in the same expense line items as cash compensation. We have reclassified stock-based compensation from prior periods to correspond to current period presentation within the same operating expense line items as cash compensation paid to employees. *T -0- *T POWERDSINE LTD. (An Israeli Corporation) Reconciliation of GAAP to Non-GAAP Financial Measures (U.S. dollars in thousands, except per share data) STOCK - BASED COMPENSATION Three months ended Nine months ended EXPENSES INCLUDED IN: September 30, September 30, ------------------- ------------------- 2006 2005 2006 2005 --------- --------- --------- --------- Unaudited Unaudited Unaudited Unaudited --------- --------- --------- --------- COST OF SALES $106 $35 $311 $104 RESEARCH AND DEVELOPMENT EXPENSES 266 166 826 492 SELLING AND MARKETING EXPENSES 202 59 675 142 GENERAL AND ADMINISTRATIVE EXPENSES 541 245 1,446 764 --------- --------- --------- --------- TOTAL STOCK - BASED COMPENSATION EXPENSES $1,115 $505 $3,258 $1,502 ========= ========= ========= ========= *T To supplement our consolidated financial statements presented in accordance with GAAP, we have shown below a pro forma, non-GAAP, measure of net income (loss), which is adjusted from our GAAP results to exclude stock-based compensation and one time restructuring costs. We have provided this non-GAAP measure to enhance the user's overall understanding of our historical financial performance and to make period to period comparisons more meaningful. Specifically, we believe this non-GAAP measure of net income (loss) provides useful information to both management and investors by excluding stock-based compensation expenses. Non-GAAP net income consists of net income excluding stock based compensation expenses. As noted above, we believe that non-GAAP net income is a useful supplement to net income and other income statement data. Non-GAAP net income should not be considered in isolation by investors as an alternative to net income. -0- *T Three months ended Nine months ended September 30, September 30, ------------------ ----------------- 2006 2005 2006 2005 -------- --------- -------- -------- GAAP net income (loss) - for the period $(560) $898 $(6,449) $2,447 Stock-based compensation expense 1,115 505 3,258 1,502 Cumulative effect of change in accounting principle -- -- (77) -- One-time restructuring expenses -- -- 1,545 -- Pro-forma (non-GAAP) net income- for the period $555 $1,403 $(1,723) $3,949 ======== ========= ======== ======== PRO-FORMA NET INCOME PER ORDINARY SHARE: $0.03 $0.07 $(0.08) $0.18 ======== ========= ======== ======== WEIGHTED AVERAGE SHARES USED IN COMPUTING PRO FORMA NET INCOME PER ORDINARY SHARE (IN MILLIONS): 21.8 21.4 21.5 21.4 ======== ========= ======== ======== *T