Power Integrations Reports Third-Quarter Financial Results


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, 2017			June 30, 2017			September 30, 2016			September 30, 2017			September 30, 2016
RECONCILIATION OF GROSS PROFIT
GAAP gross profit	$	55,713		$	53,447		$	49,842		$	159,636		$	142,115
GAAP gross margin		50.1	%		49.7	%		49.0	%		49.3	%		49.5	%

Stock-based compensation included in cost of revenues		391			351			348			885			731
Amortization of acquisition-related intangible assets		939			939			939			2,817			2,846

Non-GAAP gross profit	$	57,043		$	54,737		$	51,129		$	163,338		$	145,692
Non-GAAP gross margin		51.3	%		50.9	%		50.3	%		50.5	%		50.7	%


RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses	$	39,654		$	39,250		$	36,724		$	116,464		$	106,769

Less: Stock-based compensation expense included in operating expenses
Research and development		2,173			2,351			1,934			6,158			5,343
Sales and marketing		1,441			1,189			1,303			3,727			3,229
General and administrative		2,521			2,436			2,204			7,052			5,914
Total		6,135			5,976			5,441			16,937			14,486

Amortization of acquisition-related intangible assets		514			537			582			1,634			1,859

Non-GAAP operating expenses	$	33,005		$	32,737		$	30,701		$	97,893		$	90,424


RECONCILIATION OF INCOME FROM OPERATIONS
GAAP income from operations	$	16,059		$	14,197		$	13,118		$	43,172		$	35,346
GAAP operating margin		14.4	%		13.2	%		12.9	%		13.3	%		12.3	%

Add: Total stock-based compensation		6,526			6,327			5,789			17,822			15,217
Amortization of acquisition-related intangible assets		1,453			1,476			1,521			4,451			4,705

Non-GAAP income from operations	$	24,038		$	22,000		$	20,428		$	65,445		$	55,268
Non-GAAP operating margin		21.6	%		20.5	%		20.1	%		20.2	%		19.2	%


RECONCILIATION OF PROVISION FOR INCOME TAXES
GAAP provision for income taxes	$	448		$	760		$	591		$	531		$	1,530
GAAP effective tax rate		2.6	%		5.2	%		4.4	%		1.2	%		4.2	%

Tax effect of adjustments to GAAP results		(751	)		(736	)		(328	)		(3,020	)		(854	)

Non-GAAP provision for income taxes	$	1,199		$	1,496		$	919		$	3,551		$	2,384
Non-GAAP effective tax rate		4.8	%		6.6	%		4.4	%		5.3	%		4.2	%


RECONCILIATION OF NET INCOME PER SHARE (DILUTED)
GAAP net income	$	16,506		$	13,902		$	12,809		$	44,507		$	34,595

Adjustments to GAAP net income
Stock-based compensation		6,526			6,327			5,789			17,822			15,217
Amortization of acquisition-related intangible assets		1,453			1,476			1,521			4,451			4,705
Amortization of in-place lease intangible assets		-			90			90			180			270
Tax effect of items excluded from non-GAAP results		(751	)		(736	)		(328	)		(3,020	)		(854	)

Non-GAAP net income	$	23,734		$	21,059		$	19,881		$	63,940		$	53,933

Average shares outstanding for calculation of non-GAAP income per share (diluted)		30,614			30,454			29,625			30,472			29,480

Non-GAAP net income per share (diluted)	$	0.78		$	0.69		$	0.67		$	2.10		$	1.83

GAAP income per share	$	0.54		$	0.46		$	0.43		$	1.46		$	1.17

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