Revenue for the quarter was affected by the weakening global economy resulting in a lower customer demand across all product lines and geographies. Included in the results for the first quarter of 2009 are a non-cash goodwill impairment charge of $57 million, or $0.65 per share, because of the continued decrease in the company’s share price; a non-cash charge of $6 million, or $0.07 per share, for inventory write-downs; and a restructuring charge of $1.1 million, or $0.01 per share, to right-size the company’s headcount. These charges were partly offset by a gain of $3.1 million, or $0.04 per share, from the repurchase of $7 million in convertible notes.

Gross margin was 14.2% in the first quarter of 2009 compared with 18.1% in the year-ago quarter. The decrease in gross margin was primarily attributable to lower than expected demand resulting in unfavorable plant usage and to increased inventory charges. S,G&A, engineering, quality assurance and amortization expenses decreased 36% year-over-year to $21.1 million compared with $33.1 million in the year-ago quarter.

During the first quarter, Power-One completed the previously announced 1,000 headcount reduction for an anticipated annualized savings of more than $7 million. Since the peak headcount of around 4,900 in summer 2009, the company has reduced headcount by around 28% in order to align costs with the overall drop in demand.

Business Outlook

Due to the present economic uncertainty and poor demand visibility, Power-One is not providing financial guidance for the second quarter and full year 2009.

Richard Thompson, chief executive officer, said, “During the quarter we experienced increased volatility across our markets driven by the continuing uncertainty of the global economy. While our sales are down, gross margin, excluding inventory write-downs, improved over historical levels based on similar run rates and we continued to make progress in lowering expense levels and improving operational efficiencies.”

Continuing, Thompson said, “Despite the difficult market environment that is impacting our near-term results, we are focused on implementing our strategic initiatives, aggressive cost reduction programs and further investing in our Renewable Energy business.”