Power Integrations Reports Record Quarterly Revenues and Earnings


POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)

			Three Months Ended									Nine Months Ended
			September 30, 2013			June 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
RECONCILIATION OF GROSS PROFIT
GAAP gross profit			$	48,774		$	46,207		$	38,751		$	134,845		$	111,099
	GAAP gross profit margin			53.2	%		52.6	%		49.7	%		52.5	%		49.1	%

Stock-based compensation included in cost of revenues				296			264			271			824			772
Amortization of write-up of acquired inventory				-			-			1,597			-			2,813
Amortization of acquisition-related intangible assets				645			645			645			1,935			1,189

Non-GAAP gross profit			$	49,715		$	47,116		$	41,264		$	137,604		$	115,873
	Non-GAAP gross profit margin			54.2	%		53.6	%		52.9	%		53.6	%		51.2	%


RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses			$	32,180		$	32,919		$	54,998		$	95,886		$	109,212

Less:	Stock-based compensation expense included in operating expenses
		Research and development		1,485			1,640			1,467			4,231			4,154
		Sales and marketing		964			795			940			2,588			2,433
		General and administrative		1,446			1,629			1,169			4,512			3,161
		Total		3,895			4,064			3,576			11,331			9,748

	Acquisition expenses			-			-			29			-			931

	Amortization of acquisition-related intangible assets			1,121			1,122			1,123			3,365			1,908

	Charge related to SemiSouth			-			-			25,300			-			25,300

Non-GAAP operating expenses			$	27,164		$	27,733		$	24,970		$	81,190		$	71,325


RECONCILIATION OF INCOME FROM OPERATIONS
GAAP income (loss) from operations			$	16,594		$	13,288		$	(16,247	)	$	38,959		$	1,887
	GAAP operating margin			18.1	%		15.1	%		-20.8	%		15.2	%		0.8	%

Add:	Total stock-based compensation			4,191			4,328			3,847			12,155			10,520
	Amortization of write-up of acquired inventory			-			-			1,597			-			2,813
	Amortization of acquisition-related intangible assets			1,766			1,767			1,768			5,300			3,097
	Charge related to SemiSouth			-			-			25,300			-			25,300
	Acquisition expenses			-			-			29			-			931

Non-GAAP income from operations			$	22,551		$	19,383		$	16,294		$	56,414		$	44,548
	Non-GAAP operating margin			24.6	%		22.0	%		20.9	%		22.0	%		19.7	%


RECONCILIATION OF PROVISION FOR INCOME TAXES
GAAP provision (benefit) for income taxes			$	22		$	181		$	(4,941	)	$	(1,406	)	$	13,718
	GAAP effective tax rate			0.1	%		1.3	%		10.0	%		-3.5	%		-45.1	%

One-time charge associated with tax settlement				-			-			-			-			15,749
Tax effect of other adjustments to GAAP results				(776	)		(802	)		(6,873	)		(3,873	)		(7,582	)

Non-GAAP provision for income taxes			$	798		$	983		$	1,932		$	2,467		$	5,551
	Non-GAAP effective tax rate			3.5	%		5.1	%		11.7	%		4.3	%		12.2	%


RECONCILIATION OF NET INCOME (LOSS) PER SHARE (DILUTED)
GAAP net income (loss)			$	16,654		$	13,672		$	(44,406	)	$	41,229		$	(44,121	)

Adjustments to GAAP net income (loss)
	Stock-based compensation			4,191			4,328			3,847			12,155			10,520
	Amortization of write-up of acquired inventory			-			-			1,597			-			2,813
	Amortization of acquisition-related intangible assets			1,766			1,767			1,768			5,300			3,097
	Acquisition expenses			-			-			29			-			931
	Non-cash interest income			-			-			(665	)		-			(1,445	)
	Cost of acquisition-related currency option			-			-			-			-			635
	One-time charge associated with tax settlement			-			-			-			-			15,749
	Charge (gain) related to SemiSouth			-			(497	)		59,237			(497	)		59,237
	Tax effect of items excluded from non-GAAP results			(776	)		(802	)		(6,873	)		(3,873	)		(7,582	)

Non-GAAP net income			$	21,835		$	18,468		$	14,534		$	54,314		$	39,834

Average shares outstanding for calculation of non-GAAP income per share (diluted)				30,652			30,158			29,809			30,237			29,740

Non-GAAP net income per share (diluted)			$	0.71		$	0.61		$	0.49		$	1.80		$	1.34

GAAP income (loss) per share			$	0.54		$	0.45		$	(1.54	)	$	1.36		$	(1.54	)

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