8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securites Exchange Act of 1934

Date of Report (Date of earliest event reported): October 28, 2021

Power Integrations, Inc.

(Exact name of Registrant as specified in its charter)

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

5245 Hellyer Avenue, San Jose, California	95138
(Address of Principal Executive Offices)	(Zip Code)

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

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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value	POWI	The Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On October 28, 2021 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 October 28, 2021

Exhibit 104         Cover Page Interactive Data File (formatted as Inline XBRL)

 SIGNATURES

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

Power Integrations, Inc.
By:	/s/ Sandeep Nayyar
	Name:  Sandeep Nayyar
	Title:    Chief Financial Officer

Dated:  October 28, 2021

EX-99.1

Exhibit 99.1

Power Integrations Reports Third-Quarter Financial Results

Revenues increased 46 percent year-over-year to $176.8 million; GAAP earnings were $0.69 per diluted share; non-GAAP earnings were $0.84 per diluted share

Quarterly dividend rises to $0.15 per share; $50M added to repurchase authorization

SAN JOSE, Calif.--(BUSINESS WIRE)--October 28, 2021--Power Integrations (Nasdaq: POWI) today announced financial results for the quarter ended September 30, 2021. Net revenues for the third quarter of 2021 were $176.8 million, down two percent compared to the prior quarter and up 46 percent from the third quarter of 2020. Net income for the third quarter was $42.0 million or $0.69 per diluted share compared to $0.68 per diluted share in the prior quarter and $0.24 per diluted share in the third quarter of 2020. Cash flow from operations for the third quarter was $58.7 million.

In addition to its GAAP results, the company provided certain non-GAAP measures that exclude stock-based compensation, amortization of acquisition-related intangible assets and the tax effects of these items. Non-GAAP net income for the third quarter of 2021 was $51.8 million or $0.84 per diluted share compared with $0.83 per diluted share in the prior quarter and $0.40 per diluted share in the third quarter of 2020. A reconciliation of GAAP to non-GAAP financial results is included with the tables accompanying this press release.

Commented Balu Balakrishnan, president and CEO of Power Integrations: “We delivered another quarter of strong growth in revenues, earnings and cash flows. For the first nine months of 2021 our revenues were up 57 percent, and we are on track to outgrow the analog semiconductor industry by a wide margin this year thanks to broad market-share gains, strong uptake of our highly integrated GaN products, and secular trends such as energy efficiency, electrification, smart homes and appliances, and advanced chargers for mobile devices.”

Additional Highlights

• The company paid a cash dividend of $0.13 per share on September 30, 2021. The company’s board of directors has declared a dividend of $0.15 per share to be paid on December 31, 2021 to stockholders of record as of November 30, 2021.
• Power Integrations repurchased approximately 120,000 shares of its common stock during the quarter for $9.8 million. The company had approximately $55 million remaining on its repurchase authorization at quarter-end; the company’s board of directors has subsequently allocated an additional $50 million for share repurchases bringing the total allocation to approximately $105 million.

Financial Outlook

The company issued the following forecast for the fourth quarter of 2021:

• Revenues are expected to be $170 million plus or minus $5 million.
• Gross margins are expected to be similar to the third-quarter levels.
• GAAP operating expenses are expected to be approximately $49.5 million; non-GAAP operating expenses are expected to be approximately $40 million. Non-GAAP expenses are expected to exclude approximately $9.3 million of stock-based compensation and $0.2 million of amortization of acquisition-related intangible assets.

Conference Call Today at 1:30 p.m. Pacific Time

Power Integrations management will hold a conference call today at 1:30 p.m. Pacific time. Members of the investment community can register for the call by visiting the following link: https://conferencingportals.com/event/iobnvsok. A live webcast of the call will also be available on the investor section of the company's website, http://investors.power.com.

About Power Integrations

Power Integrations, Inc. is a leading innovator in semiconductor technologies for high-voltage power conversion. The company’s products are key building blocks in the clean-power ecosystem, enabling the generation of renewable energy as well as the efficient transmission and consumption of power in applications ranging from milliwatts to megawatts. For more information please visit www.power.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 ASC 718-10, amortization of acquisition-related intangible assets, and the tax effects of these items. The company uses these measures in its financial and operational decision-making and, with respect to one measure, in setting performance targets for compensation purposes. The company believes that these non-GAAP measures offer important analytical tools to help investors understand its operating results, and to facilitate comparability with the results of companies that provide similar measures. Non-GAAP measures have 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 measures differently, limiting their usefulness as comparative measures. Reconciliations of non-GAAP measures to GAAP measures are attached to this press release.

Note Regarding Forward-Looking Statements

The above statements regarding the company’s forecast for its fourth-quarter financial performance are forward-looking statements reflecting management's current expectations and beliefs. These forward-looking statements are based on current information that is, by its nature, subject to rapid and even abrupt change. Due to risks and uncertainties associated with the company's business, actual results could differ materially from those projected or implied by these statements. These risks and uncertainties include, but are not limited to: the impact of the COVID-19 pandemic on demand for the company’s products, its ability to supply products and its ability to conduct other aspects of its business such as competing for new design wins; changes in global macroeconomic conditions, including changing tariffs and uncertainty regarding trade negotiations, which 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 effects of competition, which may cause the company’s revenues to decrease or cause the company to decrease its selling prices for its products; unforeseen costs and expenses; and unfavorable fluctuations in component costs or operating expenses resulting from changes in commodity prices and/or exchange rates. 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 that may cause actual results to differ are more fully explained under the caption “Risk Factors” in the company's most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on February 5, 2021. 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 law.

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									Nine Months Ended
	September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
NET REVENUES	$	176,776		$	180,110		$	121,129		$	530,623		$	337,625
COST OF REVENUES		85,037			88,797			61,560			263,160			168,040
GROSS PROFIT		91,739			91,313			59,569			267,463			169,585
OPERATING EXPENSES:
Research and development		21,137			21,741			20,868			62,905			59,790
Sales and marketing		15,443			15,097			13,442			44,447			39,465
General and administrative		9,386			9,306			10,302			28,767			26,867
Amortization of acquisition-related intangible assets		181			193			216			590			703
Total operating expenses		46,147			46,337			44,828			136,709			126,825
INCOME FROM OPERATIONS		45,592			44,976			14,741			130,754			42,760
OTHER INCOME		206			173			877			976			4,134
INCOME BEFORE INCOME TAXES		45,798			45,149			15,618			131,730			46,894
PROVISION FOR INCOME TAXES		3,764			3,268			798			8,017			2,996
NET INCOME	$	42,034		$	41,881		$	14,820		$	123,713		$	43,898
EARNINGS PER SHARE:
Basic	$	0.70		$	0.69		$	0.25		$	2.05		$	0.74
Diluted	$	0.69		$	0.68		$	0.24		$	2.01		$	0.72
SHARES USED IN PER-SHARE CALCULATION:
Basic		60,319			60,544			59,823			60,350			59,582
Diluted		61,363			61,466			60,852			61,466			60,668
SUPPLEMENTAL INFORMATION:	Three Months Ended									Nine Months Ended
	September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Stock-based compensation expenses included in:
Cost of revenues	$	664		$	640		$	602		$	1,935		$	1,250
Research and development		3,055			3,159			2,976			8,605			7,436
Sales and marketing		2,201			1,725			1,900			5,540			4,550
General and administrative		3,725			3,676			3,880			11,245			8,813
Total stock-based compensation expense	$	9,645		$	9,200		$	9,358		$	27,325		$	22,049
Cost of revenues includes:
Amortization of acquisition-related intangible assets	$	552		$	619		$	799		$	1,925		$	2,397
	Three Months Ended									Nine Months Ended
REVENUE MIX BY END MARKET	September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
Communications		25	%		35	%		32	%		33	%		28	%
Computer		11	%		8	%		9	%		9	%		6	%
Consumer		34	%		31	%		31	%		31	%		34	%
Industrial		30	%		26	%		28	%		27	%		32	%

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, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
RECONCILIATION OF GROSS PROFIT
GAAP gross profit		$	91,739		$	91,313		$	59,569		$	267,463		$	169,585
	GAAP gross margin		51.9	%		50.7	%		49.2	%		50.4	%		50.2	%
Stock-based compensation included in cost of revenues			664			640			602			1,935			1,250
Amortization of acquisition-related intangible assets			552			619			799			1,925			2,397
Non-GAAP gross profit		$	92,955		$	92,572		$	60,970		$	271,323		$	173,232
	Non-GAAP gross margin		52.6	%		51.4	%		50.3	%		51.1	%		51.3	%
		Three Months Ended									Nine Months Ended
RECONCILIATION OF OPERATING EXPENSES		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
GAAP operating expenses		$	46,147		$	46,337		$	44,828		$	136,709		$	126,825
Less:	Stock-based compensation expense included in operating expenses
	Research and development		3,055			3,159			2,976			8,605			7,436
	Sales and marketing		2,201			1,725			1,900			5,540			4,550
	General and administrative		3,725			3,676			3,880			11,245			8,813
	Total		8,981			8,560			8,756			25,390			20,799
	Amortization of acquisition-related intangible assets		181			193			216			590			703
Non-GAAP operating expenses		$	36,985		$	37,584		$	35,856		$	110,729		$	105,323
		Three Months Ended									Nine Months Ended
RECONCILIATION OF INCOME FROM OPERATIONS		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
GAAP income from operations		$	45,592		$	44,976		$	14,741		$	130,754		$	42,760
	GAAP operating margin		25.8	%		25.0	%		12.2	%		24.6	%		12.7	%
Add:	Total stock-based compensation		9,645			9,200			9,358			27,325			22,049
	Amortization of acquisition-related intangible assets		733			812			1,015			2,515			3,100
Non-GAAP income from operations		$	55,970		$	54,988		$	25,114		$	160,594		$	67,909
	Non-GAAP operating margin		31.7	%		30.5	%		20.7	%		30.3	%		20.1	%
		Three Months Ended									Nine Months Ended
RECONCILIATION OF PROVISION FOR INCOME TAXES		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
GAAP provision for income taxes		$	3,764		$	3,268		$	798		$	8,017		$	2,996
	GAAP effective tax rate		8.2	%		7.2	%		5.1	%		6.1	%		6.4	%
Tax effect of adjustments to GAAP results			(565	)		(1,101	)		(971	)		(4,244	)		(1,994	)
Non-GAAP provision for income taxes		$	4,329		$	4,369		$	1,769		$	12,261		$	4,990
	Non-GAAP effective tax rate		7.7	%		7.9	%		6.8	%		7.6	%		6.9	%
		Three Months Ended									Nine Months Ended
RECONCILIATION OF NET INCOME PER SHARE (DILUTED)		September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
GAAP net income		$	42,034		$	41,881		$	14,820		$	123,713		$	43,898
Adjustments to GAAP net income
	Stock-based compensation		9,645			9,200			9,358			27,325			22,049
	Amortization of acquisition-related intangible assets		733			812			1,015			2,515			3,100
	Tax effect of items excluded from non-GAAP results		(565	)		(1,101	)		(971	)		(4,244	)		(1,994	)
Non-GAAP net income		$	51,847		$	50,792		$	24,222		$	149,309		$	67,053
Average shares outstanding for calculation of non-GAAP net income per share (diluted)			61,363			61,466			60,852			61,466			60,668
Non-GAAP net income per share (diluted)		$	0.84		$	0.83		$	0.40		$	2.43		$	1.11
GAAP net income per share (diluted)		$	0.69		$	0.68		$	0.24		$	2.01		$	0.72

POWER INTEGRATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
		September 30, 2021			June 30, 2021			December 31, 2020
ASSETS
	CURRENT ASSETS:
	Cash and cash equivalents	$	262,435		$	297,481		$	258,874
	Short-term marketable securities		286,506			217,777			190,318
	Accounts receivable, net		38,872			41,352			35,910
	Inventories		91,814			89,643			102,878
	Prepaid expenses and other current assets		23,720			21,292			13,252
	Total current assets		703,347			667,545			601,232
	PROPERTY AND EQUIPMENT, net		168,498			167,079			166,188
	INTANGIBLE ASSETS, net		9,807			10,601			12,506
	GOODWILL		91,849			91,849			91,849
	DEFERRED TAX ASSETS		3,266			2,072			3,339
	OTHER ASSETS		28,223			28,703			28,225
	Total assets	$	1,004,990		$	967,849		$	903,339
LIABILITIES AND STOCKHOLDERS’ EQUITY
	CURRENT LIABILITIES:
	Accounts payable	$	40,390		$	41,898		$	34,712
	Accrued payroll and related expenses		14,064			16,652			14,806
	Taxes payable		970			989			902
	Other accrued liabilities		10,638			8,727			12,106
	Total current liabilities		66,062			68,266			62,526
	LONG-TERM LIABILITIES:
	Income taxes payable		14,644			14,340			15,588
	Other liabilities		15,928			14,899			14,814
	Total liabilities		96,634			97,505			92,928
STOCKHOLDERS' EQUITY:
	Common stock		28			28			28
	Additional paid-in capital		189,790			185,878			190,920
	Accumulated other comprehensive loss		(3,249	)		(3,155	)		(2,163	)
	Retained earnings		721,787			687,593			621,626
	Total stockholders' equity		908,356			870,344			810,411
	Total liabilities and stockholders' equity	$	1,004,990		$	967,849		$	903,339

POWER INTEGRATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
	Three Months Ended									Nine Months Ended
	September 30, 2021			June 30, 2021			September 30, 2020			September 30, 2021			September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	42,034		$	41,881		$	14,820		$	123,713		$	43,898
Adjustments to reconcile net income to cash provided by operating activities
Depreciation		8,126			7,821			6,002			23,400			17,071
Amortization of intangible assets		794			873			1,076			2,699			3,283
Loss on disposal of property and equipment		2,162			21			19			2,200			311
Stock-based compensation expense		9,645			9,200			9,358			27,325			22,049
Amortization of premium on marketable securities		475			124			204			775			525
Deferred income taxes		(1,194	)		(263	)		(1,179	)		(12	)		100
Increase (decrease) in accounts receivable allowance for credit losses		(74	)		93			309			17			155
Change in operating assets and liabilities:
Accounts receivable		2,554			812			(16,884	)		(2,979	)		(5,328	)
Inventories		(2,171	)		866			(842	)		11,064			(14,425	)
Prepaid expenses and other assets		(472	)		(1,248	)		2,041			(4,973	)		6,133
Accounts payable		(1,420	)		4,772			504			6,633			6,365
Taxes payable and other accrued liabilities		(1,724	)		1,896			801			(6,157	)		(864	)
Net cash provided by operating activities		58,735			66,848			16,229			183,705			79,273
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(11,011	)		(8,243	)		(14,116	)		(30,305	)		(35,738	)
Proceeds from sale of property and equipment		-			10			-			35			331
Purchases of marketable securities		(193,150	)		(166,782	)		(46,239	)		(381,903	)		(66,066	)
Proceeds from sales and maturities of marketable securities		123,953			96,617			28,033			284,036			86,995
Net cash used in investing activities		(80,208	)		(78,398	)		(32,322	)		(128,137	)		(14,478	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock		4,058			-			3,364			7,710			9,662
Repurchase of common stock		(9,791	)		(26,374	)		-			(36,165	)		(2,636	)
Payments of dividends to stockholders		(7,840	)		(7,867	)		(6,582	)		(23,552	)		(18,497	)
Net cash used in financing activities		(13,573	)		(34,241	)		(3,218	)		(52,007	)		(11,471	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(35,046	)		(45,791	)		(19,311	)		3,561			53,324
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		297,481			343,272			251,325			258,874			178,690
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	262,435		$	297,481		$	232,014		$	262,435		$	232,014

Contacts

Joe Shiffler
Power Integrations, Inc.
(408) 414-8528
joe@power.com

XML

Document and Entity Information	Oct. 28, 2021
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 28, 2021
Entity Registrant Name	Power Integrations, Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	000-23441
Entity Tax Identification Number	94-3065014
Entity Address, Address Line One	5245 Hellyer Avenue
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95138
City Area Code	408
Local Phone Number	414-9200
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000833640
Title of 12(b) Security	Common Stock, $0.001 Par Value
Trading Symbol	POWI
Security Exchange Name	NASDAQ