Power-One (PWER) Acquisition Presentation

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Power-One (PWER) Acquisition Presentation
October 2006
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Disclaimer

• This presentation contains
  forward-looking statements, which are made
  pursuant to the Safe-Harbor provisions of the
  Private Securities Litigation Reform Act of 1995.
  Words such as forecast, expect,
  anticipate, will, looking, believe and
  similar expressions reflecting something other
  than historical fact are intended to identify
  forward-looking statements, but are not the
  exclusive means of identifying such statements.
  Forward-looking statements are not guarantees,
  but rather are predictions of and make certain
  assumptions regarding anticipated future results.
  Please refer to the end of this presentation for
  complete disclaimer.

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Power-One Mission Statement

• To be recognized as the leader in system-level
  power and power management solutions from AC to
  the IC in the communications and high-technology
  markets, utilizing our technical leadership to
  deliver comprehensive low-cost solutions
  providing increasing value to customers,
  employees, and investors

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Power-One Power Supplies Are Everywhere
Our products convert, process purify
electricity to the high levels of quality,
reliability, precise direct current required by
the digital economy

• Over 30 million power supplies shipped
  Silicon

Soon Custom, Alternative Energy, digital motor
controls, specialty transportation systems
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Power Conversion Products for Communications
High-technology Infrastructure Markets
AC/DC Power Powers Telecom, Networking
Industrial Equipment Controls Power at the
System Cabinet
DC/DC Power
Plus Digital Power Management Controls Power on
the Printed Circuit Board
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Power-One Today

• 30 years of success
• One of the worlds top power supply companies
• Broad-line power conversion supplier 100s of
  standard product families
• Over 2,500 employees
• Top brand name quality reputation
• Industry leading Gross Margins
• Five acquisitions since 1999
• Highly-automated worldwide manufacturing
• Strong balance sheet (72M in cash- no debt)
• Revenues est. at 300M in 2006
• Investing 7M/yr in RD for silicon design

(Soon 4000!)
(Soon six!)
(Soon 530-550M)
Today, Power-One is the technology leader in
power a consolidator and a developer of
silicon products
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Where Power-One Excels

• Worldwide Mfg. and RD (Asia, Americas Europe)
• Worldwide Customer Service and Support Including
  Field Applications, Sales Sophisticated IT
  Infrastructure (EDI)
• Technology
• In-house silicon development and packaging
  capabilities
• Digital Power Management, Z-OneTM Digital IBA,
  the first complete power conversion AND power
  management solution
• Density leadership in DC-DC bricks and POLs
• Leadership in AC Front Ends and Telecom Power
  Systems
• Industrys highest efficiency and power density
• Competitive on a world class level
• We are a complete supplier from AC to the IC

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Digital Power Revolution--- ZZZZ
A Digital Power Revolution
Conversion Communications Control
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Power Management and Power Conversion Becomes One
with Digital Technology
Conversion
Communication
Control (Pwr. Mgt.)
Goal 20 Market Share in 5 Years
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The Before Unmanageable with Analog
Analog Controller
48 V
Intermediate Bus Voltage (12V)
BRICK DC/DC Converter
POL
POL
POL
V6
V5
V7
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The After Z-One DIGITAL IBA
Intermediate Bus Voltage (12V)
I2C from Host System
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8-output Power System Comparison
BREAKTHROUGH
200
9
600
lt100
10 in2
3.8 in2
3 Days
8 Weeks
90
100
Virtually Unlimited
Limited
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Results for Z-One Digital Power

• We have a significant head-start on the
  competition
• The Z-series disruptive architecture is a true
  revolution in power
• Licensed technology (second sourcing)
• Benefits in broader/larger market, licensing fees
  technology sharing
• Module 2nd source in Dec. 04 with CD
  Technologies (top 5 supplier)
• Semiconductor Z-affiliate announced with Atmel in
  July05 and with Micrel LDO (Low Drop-Out)
  regulator IC in Sept 06
• Recent announcement Silicon Labs is joining the
  Z-Alliance
• Meeting with other potential partners
• Customers who implement the Z can offer
  products with additional system features and
  benefits and with faster TTM (time to market)
• New markets opened, e.g., Storage Server,
  Military, Aerospace Security (total POL market
  exceeds 1.0 billion)
• Core business is growing as a result of the Z
• 70 Z-One board-level design wins growing (now
  with top 10 cust.)
• Significantly more embedded in the customers
  systems architecture

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Transaction for Power Electronics Group of
Magnetek, Inc.

• Power-One, Inc. has signed a Definitive Agreement
  to acquire the Power Electronics Group (P.E.G.)
  of Magnetek, Inc.
• P.E.G. has been operating essentially as an
  autonomous business unit for many years
• Transaction Closing is expected to be in October
• Power-One has secured 50M of acquisition
  financing via an 18 month loan. We will be
  investigating a variety of options for
  longer-term financing that is more accretive
• The company will use a portion of its cash and
  investments, but will keep 40M on our balance
  sheet. Total post-closing debt, with financing
  will be 65-70M

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Overall Transaction Assets

• Three main factories
• 230K sq. ft. in Shenzen (Baoan) China
• 180K sq. ft. in Valdarno, Italy (Includes RD and
  Admin, with low-cost feeder plant in Hungary)
• 50K sq. ft. in Chatsworth, CA
• Best-in-class RD Center (80 experienced
  engineers)
• Custom product capability
• New applications, like Alternative Energy (AE)
  digital control for motors
• High-volume purchasing leverage

Shenzhen, China
Valdarno, Italy
Chatsworth, California
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Liabilities What Power-One Will Not Get

• Only taking the liabilities of the parent company
  (Magnetek, Inc.) that are for the Power
  Electronics Group
• The transaction does not include the liabilities
  of the parent company
• Fluorescent lighting lawsuit and liabilities will
  remain with Magnetek
• Employee benefits and pension liability of
  Magnetek, Inc. is retained by them

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Excellent Strategic Value

• Purchase price of 72M in cash, plus 17M debt
• Grows Power-Ones revenue by over 50 with
  overall purchase price of approximately 0.5x
  forecasted sales for 2007
• Power-One will become a ½ billion dollar company
  in 2007 forecast sales range from 530M to 550M
  
• Power-One continues to be a consolidator with
  this 6th acquisition in 8 years
• Lowers Overheads Operating Expenses

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Strategic Synergies Importance

1. Accretive in Early 2007
2. RD resources and technologies
3. Size and purchasing power of larger company
4. High-volume, low-cost China operation
5. Alternative Energy initiative
6. European operations expanded
7. Augments top customer base
8. Customs and new applications widen market

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Strategic Synergies Importance 1 Accretive
in Early 2007

• The acquisition is strategic and accretive
• Will be accretive in Q1 of 2007
• Synergies will be additive to earnings per share
• 9M (0.10 per share) in 2007
• 20M (0.22 per share) in 2008
• Although acquisition has lower gross margins than
  Power-One, it also has lower operating costs.
  Post merger will see margins in the high 20s,
  but should gradually increase throughout 2007 to
  above 30, with further improvements into the low
  30s in 2008
• Primary drivers for margin improvement are
  synergies in purchasing and manufacturing
• Operating expenses of 30 of sales will
  immediately decrease into the mid to high 20s
  range gradually decrease throughout 2007 with a
  target goal in the low 20s
• Cash generation expected to begin in 2007

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Strategic Synergies Importance 2 RD
Resources And Technologies

• Experience (breadth and depth) in Italy with 80
  Engineers
• Augments other European Design Centers in
  Switzerland and Slovakia
• Increased IP portfolio
• Low cost for experienced RD personnel
• Products range from smart motor driver and
  control circuits to large 50KW power modules

Custom Power Supplies
Inverters
High Density Data Storage
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Strategic Synergies Importance 2 (Cont) RD
Resources And Technologies

• 90 of products are digital implementations with
  micro/DSP and software
• Fewer competitors - less commoditization
• Higher margins over time
• Greater functionality - market diversity
• Higher performance
• Software-driven with reduced parts count, higher
  reliability
• Augments Power-Ones board-level Z-One
  digital power management capabilities

DSP-based Motor Controls
Digital Smart Appliance Control Management
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Strategic Synergies Importance 3 Size
Purchasing Power Of Larger Company

• Catapults Power-One into becoming the 6th largest
  power supply company in the world from 16th
  position
• Combined sales in 2007 is forecast to be in the
  range of 530M to 550M
• Economy-of-scale facilitates ability to compete
  with the largest competitors in purchasing
  components
• Size and breadth of products are important in
  servicing the Server/Storage markets
• Material purchases is largest part of COGS this
  is the most significant and fastest way to
  achieve synergy

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Strategic Synergies Importance 4
High-volume, Low-cost China Operation

• China manufacturing expertise
• 500 manufacturing people local management for
  5 years
• 230,000 sq. ft. of operations - with capacity
  scaling capability
• Factory is close to current Power-One factory
  that builds the Power Systems product line
• Added manufacturing in China addresses
  high-volume need for future growth
• Critical mass in Asia has been reached with
  Power-One factories handling high-volume demand
  Contract Manufacturers (CM) will continue to
  support mid-volume

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Strategic Synergies Importance 4 (Cont.)
High-volume, Low-cost China Operation

• New China operation reduces cost and increases
  control. Reduces issues with current CM
  arrangement
• Acquisition will increase profitability with
  higher-volume jobs. No dual profits required
• Customers are driving for more control over the
  mfg. process. Main Competitors do not use CMs
• Allows better service and support of local
  customers

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Strategic Synergies Importance 5
Alternative Energy Initiative In Power Inverters

• Solar Wind Fuel Cells
• High reliability and efficiency power converters
• High power-density compact size
• Primary energy source control
• Grid interactive control
• System level control

Compact Fuel Cell Power Conditioners
Wind Power Converters
Photovoltaic Inverters
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Strategic Synergies Importance 5 (Cont)
Alternative Energy Systems
Aurora PVI-Wind Interface adapts solar PV power
inverter for use with wind turbines
Aurora PrePack Panels (Integrated Solar PV power
inversion system)
MultiMode World Inverter (MWI) Tailors power
input from any Alternative Energy Source to any
AC or DC power application (grid interface and/or
local load)
Power conditioners and interfaces for Compact
Fuel Cells
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Strategic Synergies Importance 6 European
Operations Expanded

• Italy 180,000 sq. ft. of RD, Admin,
  Operations
• Impressive RD center
• Specialized products and manufacturing
• Alternative Energy Systems
• Intelligent digital Motor Driver and Controls
• Specialty transportation
• Excellent mid-volume/complex product capability
• Low-cost feeder plant in Hungary (30K sq. ft.)
• Local support for European regional customers

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Strategic Synergies Importance 7
Acquisition Augments Premier Customer Base
Bottom Row Shows Significant Additions to PWER
Base
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Strategic Synergies Importance 8 Customs
New Applications Widen Market

• Adds custom capability to Power-Ones standard
  product offerings
• Large Custom market
• AC/DC Custom market in 2007 is 7B, which is
  more than twice as large as Standard Modified
  AC/DC market. Additionally, the Custom market is
  growing 7-9... more than twice as fast as the
  Standard market.
• Customers have been asking Power-One to do more
  Customs the issue has been RD resources. The
  acquisition will greatly expand the resources.

Digital Business Machines
Segway HT
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Strategic Synergies Importance 8 (Cont) --
Customs New Applications Widen Market

• Other New Applications
• Intelligent motor drive and controls
• Embedded, Variable-Speed Motor Drives
• Temperature Control Boards
• User Interfaces
• Specialty transportation products
• 55kW multi-voltage APSS for European Intercity
  Trains

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Synergistic with Other Products

• Purchasing power of high-volume components will
  carry-over to lower-volume components
• Engineering collaboration between AC/DC RD
• Digital techniques in AC/DC
• Standardization of Custom products
• Capitalize on Power-One distributors and channels
• Cross-selling opportunities, e.g., Telecom
  products

DC Power Systems
Rectifiers
Electronic Power Distribution Unit
Control Unit
Smart Solid-State Circuit Breakers
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Integration Plan

• Objective is to combine both into a stronger
  company
• Will be integrated into Power-Ones functional
  structure
• Allows quick actions and savings functional
  orientation will facilitate integration
• Materials purchasing cost reductions will be
  1st priority
• Move high-volume products from CM to new China
  factory. Note new China factory in Baoan is
  very close to our current factory in Shekou. Both
  are in Shenzhen.
• Shift Italys RD team to focus on much larger
  business deals from smaller to larger (5M -
  10M) projects.  Power One has several large
  deals pending.
• Globally Operations, Engineering, and Marketing
  Sales forces will be combined Day 1

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Integration Status
In-depth discussions, meetings, and site visits
were used both for Due Diligence and Fast-track
integration

• Synergy leadership teams have been identified
  and planning is in place to timely capture savings

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Acquisition Supports PWERs 2006 Goals (In Prior
IR Presentations and Acquisition Impact)
Pre-acquisition Goals Acquisition Impact







? 160M added ? 530-550M in 2007
10-15 growth forecast in 2006
Decrease material costs
? Combination will benefit
Execution of higher-volume projects with Server
Storage customers
? China factory will be used for high-volume
manufacturing
Adding resources in Europe (Slovakia
Switzerland)
? Italy Hungary
Increase AC/DC presence both in channel
products
? Custom AC/DC products
? Alternative Energy, Transportation, Smart
Motor Drive Control Systems
Introduce new products/applications
? Superb RD Center with 80 experienced
engineers
Increase engineering capabilities
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Power-Ones History Strategic Direction
Acquiring PEG of MAG
Custom Products China Mfg.
Silicon Division
Silicon POLs 1st Power Mgt.
Acquired di/dt
High-density Bricks POLs
Silicon Initiative
Silicon RD Center Startup
Power Systems (Europe/Asia)
Power Systems (North America)
DC/DC Bricks (North America)
DC/DC Conversion (Europe)
AC/DC North America
1998
2001
2000
1973
2005
2006
1997
1999
2002
2003
2004
Strategic Direction
Entered Server/Storage markets acquiring Custom
capability
A technology leader in powering communications.
Integrated five acquisitions, developed silicon
digital power mgt.
Strategic shift to communications infrastructure
markets acquisitions
Initial Public Offering (IPO)
Founded as AC/DC power conversion company
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Power-Ones New Global Footprint
Ireland
Slovakia
Andover, MA
Switzerland
Hungary
San Jose, CA
Italy
Chatsworth, CA
Baoan, Shenzhen, China
Camarillo, CA
Dallas, TX
Shekou, Shenzhen, China
Dominican Rep.
Carlsbad, CA
Penang, Malaysia
Singapore
Australia
Manufacturing Centers
NEW Mfg Centers
RD Centers
NEW RD Centers
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Summary of Potential Synergies
P.E.G. Power-One Combined Synergy
Product Orientation Customs Standards Full Product Portfolio the best in power
Operations Strong AC in China (China) Excellent Italy mid-volume/complex product capability Strong DC/DC in Asia Dom. Rep. Strong AC in mid-volume in D.R. Can compete with the largest competitors Combined purchasing power
Increased Sales Strong Customer Relationships Diverse Customer Base 160M Largest datacom customers ATE Transportation Customers Server/Storage ramping Global Sales Presence 300M in 2006 Largest Distribution Base Increased market share Cross-selling opportunities Customers are different increased penetration ½ Billion!
Financials Sound Balance Sheet 75M in Cash Zero debt Very secure financially Ability to fund future growth opportunities
Orientation Power Only Power Only The ONLY top-10 power company that is exclusively power Top Brand-name recognition
Technology/ RD Innovation AC/DC Very High Power Digital Implementations (DSP uControllers) Software/Firmware Very Diverse Applications DC/DC Bricks Digital Power Mgt (Board Level) High efficiency The best in the industry ICs to AC New Applications (Solar/Wind/Utility) Engineering collaboration Increased IP portfolio
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Growth Opportunities

• NEW OPPORTUNITIES
• New Markets
• New Products
• Digital Power

• CORE GROWTH
• Technology Leadership
• High Density/Efficiency
• Broad Product Portfolio

Communications Industrial Markets
Server StorageMarkets
Standard Products
Custom Products
Power Systems(Indoor)
Power Systems(Outdoor Access)
AC/DC Power Supplies
AC/DC Front-ends
DC/DC Bricks
Analog POLs
Z-One Digital Power-Digital POLs-Digital Power
Mgt.
Acquisitions
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Significance of Acquisition for Investors

• Power-One is a consolidator and can compete with
  biggest competitors
• More opportunities with large, global,
  well-funded company in fast-growing markets
• Acquisition is very accretive, very quickly
• Power-One is the only significant Pure Power
  play
• High synergistic and strategic value in the
  acquisition
• Augments and helps fund continuing digital power
  developments
• Power-One forecasts 4th quarter range to be
  between 120-130M with acquisition, depending
  upon closing date 530-550M in 2007.

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Other Power-One Take-a-ways

• 2005 was a return to profitability year (Q3 Q4)
• 2006 is a return to growth Bookings Backlog
  are at the highest levels since 2000. Q3
  Guidance 74-78M
• Telecom Power Systems should be high-growth
  business
• Server Storage design wins will turn into
  revenue (06 forward)
• AC/DC Front-End business is strong, especially
  with new products
• DC/DC products continued strength in market with
  bricks POLs
• Z-One digital power management gaining momentum
• Z-Alliance includes CD Technology, Atmel, and
  now Silicon Laboratories!
• Design-wins growing, multiple platforms, top 10
  customers
• No-bus Z-1000 addresses lower end systems
  power mgt. for free!
• 2nd generation Digital Power Manager now controls
  non-Z-One devices
• Continuing to forecast 10-15 organic growth for
  2006

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Thank You!
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Disclaimer Forward Looking Statements

• This presentation contains forward-looking
  statements, which are made pursuant to the
  Safe-Harbor provisions of the Private Securities
  Litigation Reform Act of 1995. Words such as
  forecast, expect, anticipate, will,
  looking, believe and similar expressions
  reflecting something other than historical fact
  are intended to identify forward-looking
  statements, but are not the exclusive means of
  identifying such statements. Forward-looking
  statements are not guarantees, but rather are
  predictions of and make certain assumptions
  regarding anticipated future results.
  Achievement of actual results are dependent upon
  and will involve a variety of risks and
  uncertainties that could cause actual results to
  differ materially from assumptions and
  predictions. Such risks and uncertainties
  include, but are not limited to, the risk that
  Power-Ones and Magnetek businesses will not be
  integrated successfully distraction of
  management as a result of, and the challenges of
  integration and restructuring associated with the
  transaction or other acquisitions, and the
  challenges of achieving anticipated synergies in
  whole or in part costs related to the
  transaction the possibility that the market for
  the sale of certain products and services may not
  develop as expected Power-Ones ability to
  manage its international operations the risk
  that the process of reconciling certain Magnetek,
  Inc. financial information to U.S. GAAP could
  result in changes to Magnetek financial
  statements that adversely impact the Power-Ones
  pro forma estimates regarding the transaction
  the existence or enactment of adverse U.S. and
  foreign government regulation the risk that the
  development of products and services may not
  proceed as planned adverse general domestic and
  international economic conditions including
  interest rate and currency exchange rate
  fluctuations the difficulty of efficiently
  managing the companys cost structure for capital
  expenditures, materials and overhead, as well as
  operating expenses such as wages and benefits due
  to the vertical integration of the companys
  manufacturing processes the possibility that the
  transaction or other contemplated acquisitions
  may not close the impact of competitive products
  or technologies and competitive pricing
  pressures potential business disruptions,
  including labor unrest, work stoppages, or other
  short or longer term labor disruptions and other
  risks that are described from time to time in
  Power-One's Securities and Exchange Commission
  reports. See Risk Factors in the Companys
  2005 Form 10-K on file with the Securities and
  Exchange Commission for greater detail regarding
  factors that constitute cautionary statements
  with respect to such forward-looking statements,
  including certain risks and uncertainties that
  could cause actual results to differ materially
  from those in such forward-looking statements.
  Readers of this information are cautioned not to
  place undue reliance on these forward-looking
  statements, since, while we believe the
  assumptions on which the forward-looking
  statements are based are reasonable, there can be
  no assurance that these forward-looking
  statements will prove to be accurate. This
  cautionary statement is applicable to all
  forward-looking statements contained in these
  materials. We undertake no obligation to update,
  amend or clarify forward-looking statements,
  whether as a result of new information, future
  events or otherwise.