8-K

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, DC 20549
______________

FORM 8-K


CURRENT REPORTPURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): November 3, 2011
______________

Power Integrations, Inc.
(Exact name of Registrant as specified in its charter)
______________

Delaware	000-23441	94-3065014
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5245 Hellyer Avenue
San Jose, California 95138-1002
(Address of principal executive offices)

(408) 414-9200
 (Registrant’s telephone number, including area code)

______________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On November 3, 2011 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1.       Press release dated November 3, 2011

SIGNATURE

   Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Power Integrations
	(Registrant)
November 3, 2011	/s/ SANDEEP NAYYAR
(Date)	Sandeep Nayyar
	Chief Financial Officer

EX-99.1

Exhibit 99.1

Power Integrations Reports Third-Quarter Financial Results

Net revenues were $75.1 million; cash flow from operations was $19.4 million

Company repurchased 1.0 million shares during the third quarter; repurchase authorization increased by $30 million

SAN JOSE, Calif.--(BUSINESS WIRE)--November 3, 2011--Power Integrations (Nasdaq: POWI), the leader in high-voltage integrated circuits for energy-efficient power conversion, today announced financial results for the quarter ended September 30, 2011. Net revenues for the third quarter were $75.1 million, down six percent from the prior quarter and down one percent compared with the third quarter of 2010. Net income was $7.5 million or $0.25 per diluted share, compared with $0.35 per diluted share in the prior quarter and $0.43 per diluted share in the third quarter of 2010. Gross margin for the third quarter was 46.7 percent; operating margin was 14.1 percent.

In addition to its GAAP results, the company provided certain non-GAAP financial measures that exclude stock-based compensation expenses, amortization of acquisition-related intangible assets and the fair-value write-up of acquired inventory, and the tax effects of these items. Non-GAAP net income for the quarter was $9.5 million or $0.32 per diluted share, compared with $0.43 per diluted share in the prior quarter and $0.53 per diluted share in the third quarter of 2010. Non-GAAP gross margin for the third quarter was 47.2 percent; non-GAAP operating margin was 16.6 percent.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “Like much of the semiconductor industry, we are experiencing a downturn in demand driven by macroeconomic factors. Third-quarter revenues were down six percent from the prior quarter, but within the range of our guidance. Order rates remain relatively subdued, and we expect sales to decline further in the fourth quarter.”

Balakrishnan continued: “While the current business environment is challenging, we believe our long-term growth drivers are intact. Manufacturers continue to specify more efficient power supplies in response to both regulatory and market forces. Our LED-lighting and high-power businesses continue to ramp. Meanwhile, we have made good progress on cost reductions to help offset the margin impact of higher input costs, and we expect our gross margin to increase in the fourth quarter as a result. We also expect our operating expenses to decrease in the fourth quarter as we have implemented expense-saving measures in response to the weaker business environment.”

Additional Highlights

• Cash flow from operations was $19.4 million for the quarter and totaled $60.0 million for the nine months ended September 30.
• Power Integrations repurchased approximately 1.0 million shares of its common stock during the third quarter for $31.4 million. As of September 30 the company had used $35.8 million of its $50 million repurchase authorization, repurchasing a total of 1.1 million shares. The company’s board of directors has authorized the use of an additional $30 million for share repurchases on top of the $14.2 million that remained at quarter-end.
• The company paid a dividend of $0.05 per share on September 30, 2011. The next dividend of $0.05 per share will be paid on December 30, 2011 to stockholders of record as of November 30.
• Power Integrations was issued 18 U.S. patents and 26 non-U.S. patents during the quarter and had a total of 440 U.S. patents and 293 non-U.S. patents as of September 30.

Financial Outlook for Fourth Quarter of 2011

The company issued the following forecast for the fourth quarter of 2011:

• Revenues are expected to be between $63 million and $69 million;
• Gross margins are expected to increase by approximately 100 basis points compared with the third quarter;
• Operating expenses:
  • GAAP: between $24 million and $25 million;
  • Non-GAAP: between $21.5 million and $22.5 million (excluding approximately $2.4 million of stock-based compensation expenses and less than $0.1 million of amortization expense related to acquisition-related intangible assets).

Conference Call Today at 1:45 p.m. Pacific Time

Power Integrations management will hold a conference call today at 1:45 p.m. Pacific time. Members of the investment community can join the call by dialing 1-877-303-9795 from within the United States or 1-631-291-4581 from outside the U.S. The call will be available via a live and archived webcast on the investor section of the company's website, http://investors.powerint.com.

About Power Integrations

Power Integrations is the leading supplier of high-voltage integrated circuits used in energy-efficient power conversion. The company's innovative technology enables compact, energy-efficient power supplies in a wide range of electronic products, in AC-DC, DC-DC and LED lighting applications. Since its introduction in 1998, Power Integrations' EcoSmart™ energy-efficiency technology has saved an estimated $5 billion of standby energy waste and prevented millions of tons of CO₂ emissions. The company's Green Room web site provides a wealth of information about "energy vampires" and the issue of standby energy waste, along with a comprehensive guide to energy-efficiency standards around the world. Reflecting the environmental benefits of EcoSmart technology, Power Integrations’ stock is included in The Cleantech Index^® and the NASDAQ^® Clean Edge^® Green Energy Index. For more information, please visit www.powerint.com.

Note Regarding Use of Non-GAAP Financial Measures

In addition to the company's consolidated financial statements, which are presented according to GAAP, the company provides certain non-GAAP financial information that excludes stock-based compensation expenses recorded under Accounting Standard Codification 718-10, certain acquisition-related expenses such as the amortization of acquisition-related intangible assets and the fair-value write-up of acquired inventory, and the tax effects of these items. The company uses these non-GAAP measures in its own financial and operational decision-making processes and, with respect to one measure, in setting performance targets for employee-compensation purposes. Further, the company believes that these non-GAAP measures offer an important analytical tool to help investors understand the company’s core operating results and trends, and to facilitate comparability with the operating results of other companies that provide similar non-GAAP measures. These non-GAAP measures have certain limitations as analytical tools and are not meant to be considered in isolation or as a substitute for GAAP financial information. For example, stock-based compensation is an important component of the company’s compensation mix, and will continue to result in significant expenses in the company’s GAAP results for the foreseeable future, but is not reflected in the non-GAAP measures. Also, other companies, including companies in Power Integrations’ industry, may calculate non-GAAP financial measures differently, limiting their usefulness as comparative measures.

Note Regarding Forward-Looking Statements

The statements in this press release relating to the company’s projected fourth-quarter 2011 financial performance are forward-looking statements reflecting management's current forecast. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt changes. Due to risks and uncertainties associated with the company's business, actual results could differ materially from those projected or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to: changes in global macroeconomic conditions that may impact the level of demand for the company’s products; potential changes and shifts in customer demand away from end products that utilize the company's integrated circuits to end products that do not incorporate the company's products; the company's ability to maintain and establish strategic relationships; the effects of competition; the risks inherent in the development and delivery of complex technologies; the outcome and cost of patent litigation; the company's ability to attract, retain and motivate qualified personnel; the emergence of new markets for the company's products and services; the company's ability to compete in those markets based on timeliness, cost and market demand; unforeseen costs and expenses; unfavorable fluctuations in component costs resulting from changes in commodity prices and/or the exchange rate between the U.S. dollar and the Japanese yen; and the challenges inherent in integrating acquired businesses. In addition, new product introductions and design wins are subject to the risks and uncertainties that typically accompany development and delivery of complex technologies to the marketplace, including product development delays and defects and market acceptance of the new products. These and other risk factors are more fully explained under the caption “Risk Factors” in the company's most recent Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (SEC) on August 8, 2011. The company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by the rules and regulations of the SEC.

Power Integrations, EcoSmart, and the Power Integrations logo are trademarks or registered trademarks of Power Integrations, Inc. All other trademarks are property of their respective owners.

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
	Three Months Ended									Nine Months Ended
	September 30, 2011			June 30, 2011			September 30, 2010			September 30, 2011			September 30, 2010
NET REVENUES	$	75,063		$	80,184		$	75,452		$	232,009		$	226,817
COST OF REVENUES		40,020			42,558			36,447			122,917			110,402
GROSS PROFIT		35,043			37,626			39,005			109,092			116,415
OPERATING EXPENSES:
Research and development		10,345			10,195			9,348			30,563			26,133
Sales and marketing		7,990			8,104			7,657			24,342			22,104
General and administrative		6,145			6,141			6,746			18,761			19,223
Total operating expenses		24,480			24,440			23,751			73,666			67,460
INCOME FROM OPERATIONS		10,563			13,186			15,254			35,426			48,955
OTHER INCOME, net		552			461			415			1,455			1,379
INCOME BEFORE PROVISION FOR INCOME TAXES		11,115			13,647			15,669			36,881			50,334
PROVISION FOR INCOME TAXES		3,603			3,048			3,035			8,916			9,800
NET INCOME	$	7,512		$	10,599		$	12,634		$	27,965		$	40,534
EARNINGS PER SHARE:
Basic	$	0.26		$	0.37		$	0.45		$	0.97		$	1.46
Diluted	$	0.25		$	0.35		$	0.43		$	0.93		$	1.38
SHARES USED IN PER-SHARE CALCULATION:
Basic		28,799			28,938			27,894			28,789			27,737
Diluted		29,879			30,346			29,283			30,195			29,406
SUPPLEMENTAL INFORMATION:
Stock-based compensation expenses included in:
Cost of revenues	$	128		$	216		$	153		$	584		$	481
Research and development		564			980			1,125			2,354			2,782
Sales and marketing		449			543			727			1,659			1,776
General and administrative		527			705			930			2,020			2,438
Total stock-based compensation expense	$	1,668		$	2,444		$	2,935		$	6,617		$	7,477
Cost of revenues includes:
Amortization of write-up of acquired inventory	$	150		$	148		$	-		$	360		$	-
Amortization of acquisition-related intangible assets	$	85		$	85		$	41		$	255		$	123
Operating expenses include:
Amortization of acquisition-related intangible assets	$	28		$	28		$	-		$	84		$	-
Patent-litigation expenses	$	1,751		$	1,210		$	1,801		$	4,218		$	4,404
REVENUE MIX BY PRODUCT FAMILY
TOPSwitch		21	%		24	%		23	%		23	%		24	%
TinySwitch		33	%		31	%		37	%		33	%		38	%
LinkSwitch		43	%		43	%		39	%		42	%		37	%
Other		3	%		2	%		1	%		2	%		1	%
REVENUE MIX BY END MARKET
Communications		26	%		28	%		30	%		29	%		30	%
Computer		12	%		13	%		11	%		12	%		12	%
Consumer		39	%		36	%		37	%		37	%		38	%
Industrial		23	%		23	%		22	%		22	%		20	%

POWER INTEGRATIONS, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP RESULTS
(in thousands, except per-share amounts)
	Three Months Ended									Nine Months Ended
	Sept. 30, 2011			June 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
RECONCILIATION OF GROSS PROFIT
GAAP gross profit	$	35,043		$	37,626		$	39,005		$	109,092		$	116,415
GAAP gross profit margin		46.7	%		46.9	%		51.7	%		47.0	%		51.3	%
Stock-based compensation included in cost of revenues		128			216			153			584			481
Amortization of write-up of acquired inventory		150			148			-			360			-
Amortization of acquisition-related intangible assets		85			85			41			255			123
Non-GAAP gross profit	$	35,406		$	38,075		$	39,199		$	110,291		$	117,019
Non-GAAP gross profit margin		47.2	%		47.5	%		52.0	%		47.5	%		51.6	%
RECONCILIATION OF OPERATING EXPENSES
GAAP operating expenses	$	24,480		$	24,440		$	23,751		$	73,666		$	67,460
Less: Stock-based compensation expense included in operating expenses
Research and development		564			980			1,125			2,354			2,782
Sales and marketing		449			543			727			1,659			1,776
General and administrative		527			705			930			2,020			2,438
Total		1,540			2,228			2,782			6,033			6,996
Amortization of acquisition-related intangible assets		28			28			-			84			-
Non-GAAP operating expenses	$	22,912		$	22,184		$	20,969		$	67,549		$	60,464
RECONCILIATION OF INCOME FROM OPERATIONS
GAAP income from operations	$	10,563		$	13,186		$	15,254		$	35,426		$	48,955
GAAP operating margin		14.1	%		16.4	%		20.2	%		15.3	%		21.6	%
Less: Total stock-based compensation		1,668			2,444			2,935			6,617			7,477
Amortization of write-up of acquired inventory		150			148			-			360			-
Amortization of acquisition-related intangible assets		113			113			41			339			123
Non-GAAP income from operations	$	12,494		$	15,891		$	18,230		$	42,742		$	56,555
Non-GAAP operating margin		16.6	%		19.8	%		24.2	%		18.4	%		24.9	%
RECONCILIATION OF PROVISION FOR INCOME TAXES
GAAP provision for income taxes	$	3,603		$	3,048		$	3,035		$	8,916		$	9,800
GAAP effective tax rate		32.4	%		22.3	%		19.4	%		24.2	%		19.5	%
Tax effect of items excluded from non-GAAP results		85			(225	)		(93	)		(544	)		(455	)
Non-GAAP provision for income taxes	$	3,518		$	3,273		$	3,128		$	9,460		$	10,255
Non-GAAP effective tax rate		27.0	%		20.0	%		16.8	%		21.4	%		17.7	%
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)
GAAP net income	$	7,512		$	10,599		$	12,634		$	27,965		$	40,534
Adjustments to GAAP net income
Stock-based compensation		1,668			2,444			2,935			6,617			7,477
Amortization of write-up of acquired inventory		150			148			-			360			-
Amortization of acquisition-related intangible assets		113			113			41			339			123
Tax effect of items excluded from non-GAAP results		85			(225	)		(93	)		(544	)		(455	)
Non-GAAP net income	$	9,528		$	13,079		$	15,517		$	34,737		$	47,679
Average shares outstanding for calculation of non-GAAP income per share (diluted)		29,879			30,346			29,283			30,195			29,406
Non-GAAP income per share (diluted)	$	0.32		$	0.43		$	0.53		$	1.15		$	1.62
GAAP income per share (diluted)	$	0.25		$	0.35		$	0.43		$	0.93		$	1.38

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
	September 30, 2011		June 30, 2011		December 31, 2010
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	148,578	$	170,494	$	155,667
Short-term investments		48,932		33,091		27,355
Accounts receivable		10,330		8,070		5,713
Inventories		51,763		54,069		62,077
Deferred tax assets		1,440		1,437		1,435
Prepaid expenses and other current assets		6,864		9,572		9,263
Total current assets		267,907		276,733		261,510
INVESTMENTS		25,022		30,043		31,760
PROPERTY AND EQUIPMENT, net		85,271		85,449		84,470
INTANGIBLE ASSETS, net		9,066		9,309		9,795
GOODWILL		14,786		14,826		14,826
DEFERRED TAX ASSETS		12,637		12,593		13,421
OTHER ASSETS		25,799		25,355		17,288
Total assets	$	440,488	$	454,308	$	433,070
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	17,318	$	14,173	$	20,291
Accrued payroll and related expenses		6,290		6,246		7,395
Income taxes payable		1,759		354		-
Deferred income on sales to distributors		10,316		11,199		12,221
Other accrued liabilities		2,613		2,367		9,548
Total current liabilities		38,296		34,339		49,455
LONG-TERM LIABILITIES
Income taxes payable		33,805		32,040		29,580
Total liabilities		72,101		66,379		79,035
STOCKHOLDERS' EQUITY:
Common stock		28		29		28
Additional paid-in capital		166,007		191,549		175,295
Accumulated translation adjustment		80		158		85
Retained earnings		202,272		196,193		178,627
Total stockholders' equity		368,387		387,929		354,035
Total liabilities and stockholders' equity	$	440,488	$	454,308	$	433,070

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Three Months Ended									Nine Months Ended
	Sept. 30, 2011			June 30, 2011			Sept. 30, 2010			Sept. 30, 2011			Sept. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,512		$	10,599		$	12,634		$	27,965			40,534
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation		3,865			3,790			3,173			11,337			8,974
Amortization of intangible assets		243			243			170			729			504
(Gain) loss on sale of property and equipment		-			(41	)		5			(41	)		(344	)
Stock-based compensation expense		1,668			2,444			2,916			6,617			7,459
Amortization of premium on held-to-maturity investments		396			420			479			1,255			1,337
Deferred income taxes		(47	)		427			(461	)		779			249
Increase (decrease) in accounts receivable allowances		(110	)		15			(7	)		(74	)		(25	)
Excess tax benefit from stock options exercised		(32	)		(299	)		(48	)		(729	)		(939	)
Tax benefit associated with employee stock plans		288			755			(89	)		1,826			1,951
Change in operating assets and liabilities:
Accounts receivable		(2,150	)		5,230			10,362			(4,542	)		13,854
Inventories		2,269			8,879			(13,336	)		10,184			(22,796	)
Prepaid expenses and other assets		(225	)		1,613			1,048			2,823			4,610
Accounts payable		3,170			(1,352	)		(4,360	)		(1,090	)		93
Taxes payable and other accrued liabilities		3,423			1,993			1,299			4,891			4,305
Deferred income on sales to distributors		(883	)		248			(77	)		(1,904	)		5,808
Net cash provided by operating activities		19,387			34,964			13,708			60,026			65,574
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(3,710	)		(5,271	)		(8,320	)		(16,229	)		(21,833	)
Proceeds from sale of property and equipment		-			2,249			-			2,249			1,415
Other assets		(463	)		(808	)		-			(1,271	)		-
Acquisition		-			(13	)		(8,598	)		(6,914	)		(8,598	)
Increase in financing lease receivables		(157	)		(2,179	)		-			(7,978	)		-
Collections of financing lease receivables		109			103			-			314			-
Notes to third parties		-			(3,000	)		(2,000	)		(3,000	)		(6,750	)
Collection of note to third parties		3,000			-			-			3,000			-
Purchases of held-to-maturity investments		(19,761	)		-			-			(31,269	)		(27,224	)
Proceeds from held-to-maturity investments		8,545			5,330			8,341			15,175			26,491
Net cash used in investing activities		(12,437	)		(3,589	)		(10,577	)		(45,923	)		(36,499	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock		3,972			6,958			2,524			18,218			17,987
Repurchase of common stock		(31,435	)		(4,384	)		-			(35,819	)		(13,960	)
Retirement of performance shares for income tax withholding		-			-			-			-			(769	)
Payments of dividends to stockholders		(1,435	)		(1,448	)		(1,395	)		(4,320	)		(4,163	)
Excess tax benefit from stock options exercised		32			299			48			729			939
Net cash provided by (used in) financing activities		(28,866	)		1,425			1,177			(21,192	)		34
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(21,916	)		32,800			4,308			(7,089	)		29,109
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		170,494			137,694			159,775			155,667			134,974
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	148,578		$	170,494		$	164,083		$	148,578		$	164,083
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Unpaid property and equipment, net	$	3,486		$	3,510		$	1,008		$	3,486		$	1,008

CONTACT:
Power Integrations, Inc.
Joe Shiffler, 408-414-8528
jshiffler@powerint.com