Power Integrations Reports Fourth-Quarter and Full-Year

Power Integrations Reports Fourth-Quarter and Full-Year Financial Results

Power Integrations and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc.

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per-share amounts)


	Three Months Ended									Twelve Months Ended
	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
NET REVENUES	$	150,693		$	121,129		$	114,457		$	488,318		$	420,669

COST OF REVENUES		76,688			61,560			56,232			244,728			207,267

GROSS PROFIT		74,005			59,569			58,225			243,590			213,402

OPERATING EXPENSES:
Research and development		21,921			20,868			18,298			81,711			73,470
Sales and marketing		14,113			13,442			14,241			53,578			52,720
General and administrative		10,028			10,302			10,634			36,895			37,582
Amortization of acquisition-related intangible assets		216			216			378			919			1,577
Litigation settlement		-			-			(168,969	)		-			(168,969	)
Total operating expenses		46,278			44,828			(125,418	)		173,103			(3,620	)

INCOME FROM OPERATIONS		27,727			14,741			183,643			70,487			217,022

OTHER INCOME		630			877			1,852			4,764			5,392

INCOME BEFORE INCOME TAXES		28,357			15,618			185,495			75,251			222,414

PROVISION FOR INCOME TAXES		1,079			798			27,204			4,075			28,946

NET INCOME	$	27,278		$	14,820		$	158,291		$	71,176		$	193,468

EARNINGS PER SHARE:
Basic	$	0.46		$	0.25		$	2.69		$	1.19		$	3.31
Diluted	$	0.45		$	0.24		$	2.64		$	1.17		$	3.24

SHARES USED IN PER-SHARE CALCULATION:
Basic		59,879			59,823			58,854			59,657			58,534
Diluted		61,176			60,852			60,010			60,845			59,632



SUPPLEMENTAL INFORMATION:	Three Months Ended									Twelve Months Ended
	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Stock-based compensation expenses included in:
Cost of revenues	$	713		$	602		$	413		$	1,963		$	1,237
Research and development		2,942			2,976			2,754			10,378			8,423
Sales and marketing		1,740			1,900			1,602			6,290			5,015
General and administrative		3,468			3,880			3,569			12,281			8,672
Total stock-based compensation expense	$	8,863		$	9,358		$	8,338		$	30,912		$	23,347

Cost of revenues includes:
Amortization of acquisition-related intangible assets	$	799		$	799		$	955		$	3,196		$	3,483


	Three Months Ended									Twelve Months Ended
REVENUE MIX BY END MARKET	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Communications		34	%		32	%		29	%		30	%		26	%
Computer		9	%		9	%		6	%		7	%		5	%
Consumer		31	%		31	%		35	%		33	%		35	%
Industrial		26	%		28	%		30	%		30	%		34	%

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, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
RECONCILIATION OF GROSS PROFIT
GAAP gross profit	$	74,005		$	59,569		$	58,225		$	243,590		$	213,402
GAAP gross margin		49.1	%		49.2	%		50.9	%		49.9	%		50.7	%

Stock-based compensation included in cost of revenues		713			602			413			1,963			1,237
Amortization of acquisition-related intangible assets		799			799			955			3,196			3,483

Non-GAAP gross profit	$	75,517		$	60,970		$	59,593		$	248,749		$	218,122
Non-GAAP gross margin		50.1	%		50.3	%		52.1	%		50.9	%		51.9	%


	Three Months Ended									Twelve Months Ended
RECONCILIATION OF OPERATING EXPENSES	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
GAAP operating expenses	$	46,278		$	44,828		$	(125,418	)	$	173,103		$	(3,620	)

Less: Stock-based compensation expense included in operating expenses
Research and development		2,942			2,976			2,754			10,378			8,423
Sales and marketing		1,740			1,900			1,602			6,290			5,015
General and administrative		3,468			3,880			3,569			12,281			8,672
Total		8,150			8,756			7,925			28,949			22,110

Amortization of acquisition-related intangible assets		216			216			378			919			1,577

Non-GAAP operating expenses	$	37,912		$	35,856		$	(133,721	)	$	143,235		$	(27,307	)


	Three Months Ended									Twelve Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
GAAP income from operations	$	27,727		$	14,741		$	183,643		$	70,487		$	217,022
GAAP operating margin		18.4	%		12.2	%		160.4	%		14.4	%		51.6	%

Add: Total stock-based compensation		8,863			9,358			8,338			30,912			23,347
Amortization of acquisition-related intangible assets		1,015			1,015			1,333			4,115			5,060

Non-GAAP income from operations	$	37,605		$	25,114		$	193,314		$	105,514		$	245,429
Non-GAAP operating margin		25.0	%		20.7	%		168.9	%		21.6	%		58.3	%


	Three Months Ended									Twelve Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
GAAP provision for income taxes	$	1,079		$	798		$	27,204		$	4,075		$	28,946
GAAP effective tax rate		3.8	%		5.1	%		14.7	%		5.4	%		13.0	%

Tax effect of adjustments to GAAP results		(725	)		(971	)		(53	)		(2,719	)		(1,955	)

Non-GAAP provision for income taxes	$	1,804		$	1,769		$	27,257		$	6,794		$	30,901
Non-GAAP effective tax rate		4.7	%		6.8	%		14.0	%		6.2	%		12.3	%


	Three Months Ended									Twelve Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
GAAP net income	$	27,278		$	14,820		$	158,291		$	71,176		$	193,468

Adjustments to GAAP net income
Stock-based compensation		8,863			9,358			8,338			30,912			23,347
Amortization of acquisition-related intangible assets		1,015			1,015			1,333			4,115			5,060
Tax effect of items excluded from non-GAAP results		(725	)		(971	)		(53	)		(2,719	)		(1,955	)

Non-GAAP net income	$	36,431		$	24,222		$	167,909		$	103,484		$	219,920

Average shares outstanding for calculation of non-GAAP net income per share (diluted)		61,176			60,852			60,010			60,845			59,632

Non-GAAP net income per share (diluted)	$	0.60		$	0.40		$	2.80		$	1.70		$	3.69

GAAP net income per share (diluted)	$	0.45		$	0.24		$	2.64		$	1.17		$	3.24



POWER INTEGRATIONS, INC.
CALCULATION OF EARNINGS PER SHARE BENEFIT OF SETTLEMENT
(in thousands, except per-share amounts)

	Three Months Ended									Twelve Months Ended
	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Gain from litigation settlement	$	-		$	-		$	168,969		$	-		$	168,969
Tax expense attributed to settlement		-			-			25,543			-			25,543
Litigation settlement net of tax	$	-		$	-		$	143,426		$	-		$	143,426

Earnings per share benefit of settlement (GAAP and non-GAAP)	$	-		$	-		$	2.39		$	-		$	2.41

Diluted average shares outstanding		61,176			60,852			60,010			60,845			59,632

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)


	December 31, 2020			September 30, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	258,874		$	232,014		$	178,690
Short-term marketable securities		190,318			211,926			232,398
Accounts receivable, net		35,910			29,447			24,274
Inventories		102,878			104,805			90,380
Prepaid expenses and other current assets		13,252			14,755			15,597
Total current assets		601,232			592,947			541,339

PROPERTY AND EQUIPMENT, net		166,188			147,719			116,619
INTANGIBLE ASSETS, net		12,506			13,582			16,865
GOODWILL		91,849			91,849			91,849
DEFERRED TAX ASSETS		3,339			2,660			2,836
OTHER ASSETS		28,225			27,311			34,388
Total assets	$	903,339		$	876,068		$	803,896

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	34,712		$	43,623		$	27,433
Accrued payroll and related expenses		14,806			12,892			13,408
Taxes payable		902			379			584
Other accrued liabilities		12,106			9,357			9,051
Total current liabilities		62,526			66,251			50,476

LONG-TERM LIABILITIES:
Income taxes payable		15,588			15,497			14,617
Deferred tax liabilities		75			87			164
Other liabilities		14,739			14,436			14,093
Total liabilities		92,928			96,271			79,350

STOCKHOLDERS' EQUITY:
Common stock		28			28			28
Additional paid-in capital		190,920			181,192			152,117
Accumulated other comprehensive loss		(2,163	)		(2,355	)		(3,130	)
Retained earnings		621,626			600,932			575,531
Total stockholders' equity		810,411			779,797			724,546
Total liabilities and stockholders' equity	$	903,339		$	876,068		$	803,896

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Three Months Ended									Twelve Months Ended
	December 31, 2020			September 30, 2020			December 31, 2019			December 31, 2020			December 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	27,278		$	14,820		$	158,291		$	71,176		$	193,468
Adjustments to reconcile net income to cash provided by operating activities
Depreciation		6,672			6,002			4,928			23,743			19,190
Amortization of intangible assets		1,076			1,076			1,373			4,359			5,213
Loss on disposal of property and equipment		214			19			35			525			249
Stock-based compensation expense		8,863			9,358			8,338			30,912			23,347
Amortization of premium (accretion of discount) on marketable securities		180			204			104			705			(192	)
Deferred income taxes		(692	)		(1,179	)		2,741			(592	)		4,019
Increase (decrease) in accounts receivable allowances for credit losses		(491	)		309			-			(336	)		57
Change in operating assets and liabilities:
Accounts receivable		(5,972	)		(16,884	)		1,545			(11,300	)		(13,259	)
Inventories		1,927			(842	)		(1,670	)		(12,498	)		(9,523	)
Prepaid expenses and other assets		3,020			2,041			902			9,153			(2,132	)
Accounts payable		(668	)		504			(3,920	)		5,697			(6,556	)
Taxes payable and other accrued liabilities		4,959			801			9,492			4,095			10,618
Net cash provided by operating activities		46,366			16,229			182,159			125,639			224,499

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(34,860	)		(14,116	)		(9,789	)		(70,598	)		(24,114	)
Proceeds from sale of property and equipment		320			-			-			651			-
Acquisition of technology licenses		-			-			(675	)		-			(1,026	)
Purchases of marketable securities		(43,637	)		(46,239	)		(71,952	)		(109,703	)		(207,240	)
Proceeds from sales and maturities of marketable securities		64,390			28,033			4,150			151,385			70,334
Net cash used in investing activities		(13,787	)		(32,322	)		(78,266	)		(28,265	)		(162,046	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock		865			3,364			225			10,527			9,908
Repurchase of common stock		-			-			-			(2,636	)		(7,302	)
Payments of dividends to stockholders		(6,584	)		(6,582	)		(5,590	)		(25,081	)		(20,506	)
Net cash used in financing activities		(5,719	)		(3,218	)		(5,365	)		(17,190	)		(17,900	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		26,860			(19,311	)		98,528			80,184			44,553

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		232,014			251,325			80,162			178,690			134,137

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	258,874		$	232,014		$	178,690		$	258,874		$	178,690

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