Power Integrations Reports Fourth-Quarter Financial Results



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

			Three Months Ended									Twelve Months Ended

			December 31, 2015			September 30, 2015			December 31, 2014			December 31, 2015			December 31, 2014
RECONCILIATION OF GROSS PROFIT
GAAP gross profit			$	42,916		$	44,161		$	45,805		$	173,387		$	189,570
	GAAP gross margin			49.2	%		49.7	%		52.9	%		50.4	%		54.3	%

Stock-based compensation included in cost of revenues				208			219			231			933			879
Amortization of write-up of acquired inventory				-			-			-			309			-
Amortization of acquisition-related intangible assets				961			961			646			3,844			2,581

Non-GAAP gross profit			$	44,085		$	45,341		$	46,682		$	178,473		$	193,030
	Non-GAAP gross margin			50.5	%		51.0	%		53.9	%		51.9	%		55.3	%


RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses			$	31,867		$	32,378		$	33,940		$	134,394		$	133,774

Less:	Stock-based compensation expense included in operating expenses
		Research and development		1,281			1,277			1,262			5,255			4,784
		Sales and marketing		877			877			962			3,644			3,540
		General and administrative		899			988			1,157			4,935			5,079
		Total		3,057			3,142			3,381			13,834			13,403

	Amortization of acquisition-related intangible assets			666			666			628			2,775			3,190

	Acquisition expenses, severance and transition costs			-			-			809			1,113			809

Non-GAAP operating expenses			$	28,144		$	28,570		$	29,122		$	116,672		$	116,372


RECONCILIATION OF INCOME FROM OPERATIONS
GAAP income from operations			$	11,049		$	11,783		$	11,865		$	38,993		$	55,796
	GAAP operating margin			12.7	%		13.3	%		13.7	%		11.3	%		16.0	%

Add:	Total stock-based compensation			3,265			3,361			3,612			14,767			14,282
	Amortization of write-up of acquired inventory			-			-			-			309			-
	Amortization of acquisition-related intangible assets			1,627			1,627			1,274			6,619			5,771
	Acquisition expenses, severance and transition costs			-			-			809			1,113			809

Non-GAAP income from operations			$	15,941		$	16,771		$	17,560		$	61,801		$	76,658
	Non-GAAP operating margin			18.3	%		18.9	%		20.3	%		18.0	%		22.0	%


RECONCILIATION OF PROVISION (BENEFIT) FOR INCOME TAXES
GAAP provision (benefit) for income taxes			$	(1,446	)	$	698		$	(2,307	)	$	271		$	(2,730	)
	GAAP effective tax rate			-12.8	%		5.7	%		-19.1	%		0.7	%		-4.8	%

Benefit associated with tax settlement				-			-			-			-			(3,331	)
Tax effect of other adjustments to GAAP results				(796	)		(310	)		(2,251	)		(1,824	)		(3,034	)

Non-GAAP provision (benefit) for income taxes			$	(650	)	$	1,008		$	(56	)	$	2,095		$	3,635
	Non-GAAP effective tax rate			-4.0	%		5.9	%		-0.3	%		3.4	%		4.7	%


RECONCILIATION OF NET INCOME PER SHARE (DILUTED)
GAAP net income			$	12,701		$	11,513		$	14,354		$	39,147		$	59,544

Adjustments to GAAP net income
	Stock-based compensation			3,265			3,361			3,612			14,767			14,282
	Amortization of write-up of acquired inventory			-			-			-			309			-
	Amortization of acquisition-related intangible assets			1,627			1,627			1,274			6,619			5,771
	Benefit associated with tax settlement			-			-			-			-			(3,331	)
	Acquisition expenses, severance and transition costs			-			-			809			1,113			809
	Amortization of in-place lease intangible assets			90			30			-			120			-
	Tax effect of items excluded from non-GAAP results			(796	)		(310	)		(2,251	)		(1,824	)		(3,034	)

Non-GAAP net income			$	16,887		$	16,221		$	17,798		$	60,251		$	74,041

Average shares outstanding for calculation
	of non-GAAP income per share (diluted)			29,126			29,298			30,051			29,696			30,829

Non-GAAP net income per share (diluted)			$	0.58		$	0.55		$	0.59		$	2.03		$	2.40

GAAP income per share			$	0.44		$	0.39		$	0.48		$	1.32		$	1.93

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