Power Integrations Reports Second-Quarter Financial Results


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

	Three Months Ended									Six Months Ended
	June 30, 2015			March 31, 2015			June 30, 2014			June 30, 2015			June 30, 2014
RECONCILIATION OF GROSS PROFIT
GAAP gross profit	$	44,018		$	42,292		$	48,736		$	86,310		$	94,713
GAAP gross margin		51.6	%		51.2	%		54.8	%		51.4	%		55.0	%

Stock-based compensation included in cost of revenues		257			249			298			506			517
Amortization of write-up of acquired inventory		-			309			-			309			-
Amortization of acquisition-related intangible assets		961			961			645			1,922			1,290

Non-GAAP gross profit	$	45,236		$	43,811		$	49,679		$	89,047		$	96,520
Non-GAAP gross margin		53.1	%		53.1	%		55.8	%		53.1	%		56.1	%


RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses	$	34,814		$	35,335		$	34,411		$	70,149		$	67,657

Less: Stock-based compensation expense included in operating expenses
Research and development		1,306			1,391			1,339			2,697			2,551
Sales and marketing		878			1,012			864			1,890			1,799
General and administrative		1,309			1,739			1,674			3,048			3,223
Total		3,493			4,142			3,877			7,635			7,573

Amortization of acquisition-related intangible assets		693			750			798			1,443			1,933

Acquisition expenses, severance and transition costs		391			722			-			1,113			-

Non-GAAP operating expenses	$	30,237		$	29,721		$	29,736		$	59,958		$	58,151


RECONCILIATION OF INCOME FROM OPERATIONS
GAAP income from operations	$	9,204		$	6,957		$	14,325		$	16,161		$	27,056
GAAP operating margin		10.8	%		8.4	%		16.1	%		9.6	%		15.7	%

Add: Total stock-based compensation		3,750			4,391			4,175			8,141			8,090
Amortization of write-up of acquired inventory		-			309			-			309			-
Amortization of acquisition-related intangible assets		1,654			1,711			1,443			3,365			3,223
Acquisition expenses, severance and transition costs		391			722			-			1,113			-

Non-GAAP income from operations	$	14,999		$	14,090		$	19,943		$	29,089		$	38,369
Non-GAAP operating margin		17.6	%		17.1	%		22.4	%		17.3	%		22.3	%


RECONCILIATION OF PROVISION (BENEFIT) FOR INCOME TAXES
GAAP provision (benefit) for income taxes	$	628		$	391		$	(2,193	)	$	1,019		$	(1,568	)
GAAP effective tax rate		6.8	%		5.8	%		-15.1	%		6.4	%		-5.7	%

Benefit associated with tax settlement		-			-			(3,331	)		-			(3,331	)
Tax effect of other adjustments to GAAP results		(197	)		(521	)		(115	)		(718	)		(663	)

Non-GAAP provision for income taxes	$	825		$	912		$	1,253		$	1,737		$	2,426
Non-GAAP effective tax rate		5.5	%		6.6	%		6.2	%		6.0	%		6.2	%


RECONCILIATION OF NET INCOME PER SHARE (DILUTED)
GAAP net income	$	8,590		$	6,343		$	16,716		$	14,933		$	29,079

Adjustments to GAAP net income
Stock-based compensation		3,750			4,391			4,175			8,141			8,090
Amortization of write-up of acquired inventory		-			309			-			309			-
Amortization of acquisition-related intangible assets		1,654			1,711			1,443			3,365			3,223
Benefit associated with tax settlement		-			-			(3,331	)		-			(3,331	)
Acquisition expenses, severance and transition costs		391			722			-			1,113			-
Tax effect of items excluded from non-GAAP results		(197	)		(521	)		(115	)		(718	)		(663	)

Non-GAAP net income	$	14,188		$	12,955		$	18,888		$	27,143		$	36,398

Average shares outstanding for calculation of non-GAAP income per share (diluted)		30,034			30,058			31,110			30,075			31,150

Non-GAAP net income per share (diluted)	$	0.47		$	0.43		$	0.61		$	0.90		$	1.17

GAAP income per share	$	0.29		$	0.21		$	0.54		$	0.50		$	0.93

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