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INVESTMENT HIGHLIGHTS INVESTMENT HIGHLIGHTS
A P
ROVEN
M
ANAGEMENT
T
EAM
Power-Ones management has a track record of
stability and conservative financial reporting
practices. Steve Goldman has been CEO since
1990 and an officer of the company since 1982.
Bill Yeates joined the company as President and
COO in January, 2000. Mr. Yeates has over 15
years of experience in the communications
industry. Ed Schnopp, CFO, has been with the
company since 1981.
Power-Ones senior managers took the company
public in 1997 and have since executed five
acquisitions, two secondary public offerings, and
two stock splits.
S
ALES
G
ROWTH
Net sales increased $12.4 million, or 21.9%, to
$68.7 million for the quarter ended March 31,
2004 from $56.3 million for the quarter ended
March 31, 2003. The increase was attributable to
strength across all product lines as the market
recovery continued.
Power-One expects to see continued quarter-over-
quarter revenue increases in 2004 as the market
recovery gains momentum and demand continues
to increase. Moreover, Power-Ones management
believes that the Company may outpace the
market recovery later in the year as the Company
gains traction with its new maXyz products.
THE COMPANY
Power-One is one of the top power-conversion equipment
manufacturers in the world and is ranked in the S&P 500.
Customers include Internet and telecommunications
service providers and equipment manufacturers.
Power-Ones corporate structure provides semi-
autonomous business units with access to substantial
financial, logistical, and technical resources and the
flexibility to proactively adapt to changing market
conditions. With corporate headquarters in Camarillo,
CA, Power-One has manufacturing and R&D locations
in China, Dominican Republic, Ireland, Norway,
Slovakia, Switzerland, and the United States.
A comprehensive product line combined with global
presence positions Power-One as a preferred source of
communications-infrastructure power solutions. These
high-reliability products are also used in critical
applications such as test equipment and other high-end
industrial applications. Power-conversion solutions
include:
- DC-DC converters that change DC voltages into
different DC values. Typical circuit-board level
applications include reducing 12 volts to 2.5 volts to
power semiconductors.
- AC-DC power supplies that convert utility AC power
into DC voltages. Systems level applications include
transforming 110 volts AC into multiple DC voltages,
such as 1.8, 3.3, and 12 volts, to power semiconductors,
disk drives, and fans.
- Telecom DC energy systems that transform utility AC
power into 24 or 48 volts DC to provide power for
telecom central offices and cell sites. These energy
systems also charge batteries to provide backup power
when utility power fails.
Nasdaq symbol:
PWER
Recent price:
5/5/04: 9.30
Trading range (52-wk):
$5.76 - 14.38
2003 EPS:
$(0.22)
2003 Revenues:
$256M
Book Value Per Share:
$3.29
Shares outstanding:
83.4M
Price/book:
2.82
Share float:
64.6M
Insider holdings:
18.8M
Market capitalization:
$775.9M
Debt/equity:
0.7%
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
16
12
8
6
4
PWER
C
ORPORATE
P
ROFILE
M
AY
2004
Power-One
740 Calle Plano Camarillo, CA 93012
www.power-one.com INVESTMENT HIGHLIGHTS
(CONT.)
Page 2
S
TRATEGIES
F
OR
I
MPROVING
G
ROSS
M
ARGINS
Power-One has been successful in reducing
component costs through the use of a
procurement cost reduction strategy that
includes outsourcing and Volume Purchase
Agreements (VPAs). These VPAs have been
negotiated based on the higher combined
materials and components usage of all divisions.
Manufacturing costs continue to be reduced
through strategic and product-specific
initiatives. Strategic initiatives have included
transferring options to lower-cost manufacturing
locations. Product-specific initiatives are based
on matching customer schedule and cost
requirements, volumes, and product life cycles to
the optimal manufacturing solution.
Alternatives include choosing among Power-
Ones internal production facilities, joint
ventures, and selective outsourcing.
Development of these options has provided
Power-One with the vehicle needed to remain
competitive in the marketplace and continue to
focus on improving gross margins.
A
N
I
NVESTMENT IN
M
ANY
C
OMMUNICATIONS
C
OMPANIES
An investment in Power-One is effectively a
diversified investment in the companies that
comprise the global datacom and telecom
infrastructure. A partial listing of Power-Ones
customers includes: Alcatel, Avaya, Cisco
Systems, Ericsson, Extreme Networks, Hauwei,
Lucent, Motorola, Nortel Networks, Samsung,
and Siemens. Power-One is one of only a few
power supply manufacturers with the product
breadth to provide power solutions to
communications service providers as well as
communications equipment manufacturers.
Power-One is positioned as a one-stop-shop
for communications-infrastructure power-
conversion products.
Manufacturing-technology
investments have reduced costs
for a wide range of products.
The high-volume surface mount
technology line (above) facilitates
low-cost assembly of DC-DC
converters that are miniature in
comparison to the telecom power
plants being configured in
automated work cells (right). Page 3
S
UCCESSFUL
R&D I
NVESTMENTS
In addition to possessing extensive-technical resources and
an in-depth understanding of customers applications, a
strong balance sheet uniquely positioned Power-One to
pursue advanced-technology product development during
an economic downturn in order to capitalize on the next
upturn. The result was the development and introduction
of our maXyz family, an industry-leading silicon-based
product line. The first silicon product line in the X Series
was introduced in April 2003, the X3015.
For the three months ended March 31, 2004, engineering
and quality assurance expense increased $1.4 million, or
15.6%, to $10.5 million for the quarter ended March 31,
2004 from $9.1 million for same period in 2003. As a
percentage of net sales, engineering and quality assurance
expense was 15.3% for the quarter ended March 31, 2004
compared to 16.1% for the same period in 2003. These
investments have supported an aggressive strategy of
broadening our available market with intellectual-property-
rich products such as the maXyz family. The maXyz family includes both semiconductor Point of Load (POL)
products, such as the X Series, and full POL modules such
as the Y Series.
The exciting new maXyz products have received
impressive editorial coverage in electronics-industry
publications and wide-spread interest from customers. The
introduction of the maXyz X3015P was a significant
strategic shift for Power-One because it involved
establishing a new strategic business unit, the Silicon Power
Solutions Division, chartered with the development of a
product that would utilize a fabless semiconductor business
model.
G
LOBAL
M
ANUFACTURING
& L
OGISTICS
Power-Ones AC-DC and DC-DC manufacturing
facilities in the Dominican Republic and Slovakia,
collectively conform to ISO9000 and ISO14001
standards. Both facilities are augmented by joint
ventures and contract manufacturers in Asia.
Regionally based Product Application Teams in
Norway, Australia, China, Singapore, and Texas
support the development and availability of customer
specific DC energy system configurations.
A high level of vertical integration is combined with
a selected outsourcing strategy. Vertical integration
facilitates quick responses for low-volume high mix.
Outsourcing for high-volume products helps to
balance fluctuations in customer demand.
Extensive planning and capital-equipment capacities
provide Power-One with the ability to quickly
respond to ramp ups in customer production
schedules. An Oracle Enterprise Resource Planning
(ERP) system facilitates timely planning responses.
Quick-changeover surface mount technology lines
provide extensive production capacity.
In addition to internal development, Power-Ones
R&D strategy includes acquisitions of, and joint
ventures with, other leading-edge technology
companies. The 2003 acquisition of di/dt, Inc.
provided Power-One with a comprehensive range of
high power density DC-DC converters that received
numerous finalist placements and product of the year
awards.
The acquisition of di/dt, Inc.
added many new products with
industry-leading power densities to
Power-Ones portfolio.
The maXyz Y5117P
is the industrys first
vertical form-factor
point-of-load (POL)
converter completely
compatible with
high-speed, surface-mount-
technology production processes. This unique
combination saves board space and production costs.
The maXyz X3015P is an industry
leader in providin