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, 2018			September 30, 2018			December 31, 2017			December 31, 2018			December 31, 2017
RECONCILIATION OF GROSS PROFIT
GAAP gross profit	$	48,005		$	57,005		$	54,028		$	214,788		$	213,664
GAAP gross margin		51.4	%		51.8	%		49.9	%		51.6	%		49.5	%

Stock-based compensation included in cost of revenues		313			243			436			1,097			1,321
Amortization of acquisition-related intangible assets		813			814			939			3,253			3,756

Non-GAAP gross profit	$	49,131		$	58,062		$	55,403		$	219,138		$	218,741
Non-GAAP gross margin		52.7	%		52.7	%		51.2	%		52.7	%		50.7	%


RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses	$	39,962		$	38,980		$	39,563		$	159,140		$	156,027

Less:Stock-based compensation expense included in operating expenses
Research and development		1,944			1,634			2,338			7,688			8,496
Sales and marketing		1,222			1,105			1,470			4,729			5,197
General and administrative		1,963			1,416			2,611			8,066			9,663
Total		5,129			4,155			6,419			20,483			23,356

Amortization of acquisition-related intangible assets		455			455			513			1,899			2,147

Non-GAAP operating expenses	$	34,378		$	34,370		$	32,631		$	136,758		$	130,524


RECONCILIATION OF INCOME FROM OPERATIONS
GAAP income from operations	$	8,043		$	18,025		$	14,465		$	55,648		$	57,637
GAAP operating margin		8.6	%		16.4	%		13.4	%		13.4	%		13.3	%

Add:Total stock-based compensation		5,442			4,398			6,855			21,580			24,677
Amortization of acquisition-related intangible assets		1,268			1,269			1,452			5,152			5,903

Non-GAAP income from operations	$	14,753		$	23,692		$	22,772		$	82,380		$	88,217
Non-GAAP operating margin		15.8	%		21.5	%		21.0	%		19.8	%		20.4	%


RECONCILIATION OF PROVISION (BENEFIT) FOR INCOME TAXES
GAAP provision (benefit) for income taxes	$	(13,396	)	$	1,456		$	32,159		$	(10,220	)	$	32,690
GAAP effective tax rate		-143.4	%		7.6	%		210.7	%		-17.1	%		54.2	%

Impact of U.S. tax legislation		(9,687	)		-			37,524			(9,687	)		37,524
Tax effect of adjustments to GAAP results		(3,846	)		(167	)		(6,267	)		(5,361	)		(9,287	)

Non-GAAP provision (benefit) for income taxes	$	137		$	1,623		$	902		$	4,828		$	4,453
Non-GAAP effective tax rate		0.9	%		6.5	%		3.8	%		5.6	%		4.9	%


RECONCILIATION OF NET INCOME (LOSS) PER SHARE (DILUTED)
GAAP net income (loss)	$	22,736		$	17,667		$	(16,898	)	$	69,984		$	27,609

Adjustments to GAAP net income (loss)
Stock-based compensation		5,442			4,398			6,855			21,580			24,677
Amortization of acquisition-related intangible assets		1,268			1,269			1,452			5,152			5,903
Amortization of in-place lease intangible assets		-			-			-			-			180
Impact of U.S. tax legislation		(9,687	)		-			37,524			(9,687	)		37,524
Tax effect of items excluded from non-GAAP results		(3,846	)		(167	)		(6,267	)		(5,361	)		(9,287	)

Non-GAAP net income	$	15,913		$	23,167		$	22,666		$	81,668		$	86,606

Average shares outstanding for calculation of non-GAAP net income per share (diluted)		29,651			29,998			30,692			30,147			30,545

Non-GAAP net income per share (diluted)	$	0.54		$	0.77		$	0.74		$	2.71		$	2.84

GAAP net income (loss) per share	$	0.77		$	0.59		$	(0.57	)	$	2.32		$	0.90

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