Quarterly Revenues Topped $60 Million, Growing 22 Percent
               Sequentially and 12 Percent Year-over-Year
              Cash Flow from Operations was $16.1 Million

SAN JOSE, Calif., Oct. 23, 2009 (GLOBE NEWSWIRE) -- Power Integrations (Nasdaq:POWI), the leader in high-voltage integrated circuits for energy-efficient power conversion, today announced financial results for the third quarter of 2009, which ended September 30, 2009.

Net revenues for the quarter were $60.0 million, up 12 percent from the third quarter of 2008 and an increase of 22 percent compared with the second quarter of 2009. Net income for the third quarter was $9.2 million, or $0.32 per diluted share, compared with net income of $7.6 million, or $0.23 per diluted share, in the year-ago quarter, and net income of $4.5 million, or $0.16 per diluted share, in the second quarter of 2009. Gross margin for the third quarter was 48.5 percent.

In addition to its GAAP results, the company provided certain non-GAAP measures that exclude stock-based compensation expenses and the related tax effects. Non-GAAP net income for the third quarter of 2009 was $10.4 million, or $0.36 per diluted share, compared with $11.0 million or $0.34 per diluted share in the year-ago quarter and $6.9 million or $0.25 per diluted share in the second quarter of 2009. Non-GAAP gross margin for the third quarter was 48.8 percent.

Cash flow from operations was $16.1 million for the third quarter. Free cash flow (defined as cash flow from operations less capital expenditures of $4.1 million) was $12.0 million. The company ended the third quarter with $176.8 million in cash and investments, an increase of $17.7 million during the quarter.

Commented Balu Balakrishnan, president and CEO of Power Integrations: "Power Integrations achieved double-digit year-over-year revenue growth and attained record sales and earnings against a backdrop of negative revenue growth for the broader analog semiconductor industry. Our revenues have recovered sharply from the downturn, increasing by nearly 50 percent over the past two quarters. While factors such as inventory replenishment and consumer subsidies in China have undoubtedly contributed to the strong recovery, we believe our outperformance compared with the broader industry over the past year primarily reflects gains in market penetration."

Balakrishnan continued: "We believe that energy-efficiency is a major driver of the success we are having in the marketplace. The importance of efficiency in the electronics industry continues to grow due to a combination of mandatory standards such as the European EcoDesign Directive, voluntary specifications such as ENERGY STAR(R) and, increasingly, proactive efforts on the part of manufacturers. Our EcoSmart(R) technology, combined with our extensive system-design expertise, enables manufacturers to design highly efficient AC-DC power supplies in a cost-effective manner."

Added Bill Roeschlein, Power Integrations' chief financial officer: "Our third-quarter results demonstrated two of the strengths of our financial model-operating-expense leverage and high cash flow. Our non-GAAP operating margin expanded by more than five percentage points compared with the prior quarter, exceeding 20 percent for the quarter. Our GAAP operating margin exceeded 18 percent, and we achieved record GAAP net income of $9.2 million. We also generated free cash flow of $12 million and added nearly $18 million in cash and investments to our balance sheet."

Additional Highlights

  *  Power Integrations repurchased 0.1 million shares during
     quarter for $2.1 million, and  has approximately $14 million
     remaining under a $25 million repurchase authorization
     announced in May 2009.  Since February 2008 the company has
     repurchased an aggregate of 5.4 million shares for $111
     million. Weighted-average shares outstanding for the third
     quarter of 2009 were 28.4 million, compared with 32.6 million
     in the third quarter of 2008.
  *  The company will pay a quarterly dividend of $0.025 per share
     on December 31, 2009 to stockholders of record as of November
     30, 2009.
  *  Power Integrations was issued 17 U.S. patents and 3 foreign
     patents during the third quarter, and now has a total of
     286 U.S. and 167 foreign patents.

Fourth-Quarter Outlook

The company expects its revenues for the fourth quarter of 2009 to increase by five to 10 percent compared with the third quarter of 2009, which would be an increase of between 49 percent and 56 percent compared with the fourth quarter of 2008. Non-GAAP gross margin is expected to be 50 percent, plus or minus half a percentage point. GAAP gross margin is expected to be between 49 percent and 50 percent. (Non-GAAP gross margin excludes stock-based compensation, which is expected to have an impact of approximately half a percentage point.) Operating expenses are expected to be between $19.5 million and $20 million including approximately $2.5 million of stock-based compensation expenses.

Conference Call Today at 6:00 a.m. Pacific Time

Power Integrations management will hold a conference call today at 6:00 a.m. Pacific time. Members of the investment community can join the call by dialing 1-877-879-6217 from within the United States or 1-913-905-3226 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 analog 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 $3.7 billion of standby energy waste and prevented millions of tons of CO2 emissions. The company's Green Room web site (www.powerint.com/greenroom) 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 is included in clean-technology stock indices sponsored by the Cleantech Group (Amex:CTIUS) and Clean Edge (Nasdaq:CELS). 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 expenses (and the related tax effects thereof) recorded under SFAS 123R, "Share-based Payment." 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 company's historical results and 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 2009 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.