UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

____________________________________________________________________________

FORM 10-Q

____________________________________________________________________________

(Mark One)

☒Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



x	~~Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~
	~~For the quarterly period ended March 31, 2019~~

For the quarterly period ended March 31, 2020

☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934



o	~~Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~
	For the transition period from ______ to ______

Commission File Number 000-23441

____________________________________________________________________________

POWER INTEGRATIONS, INC.

(Exact name of registrant as specified in its charter)

____________________________________________________________________________



~~DELAWARE~~Delaware		94-3065014
(State or ~~other jurisdiction~~Other Jurisdiction of Incorporation or ~~organization)~~ Organization)		(I.R.S. Employer Identification No.)

~~5245 Hellyer Avenue, San Jose, California, 95138~~

~~(Address of principal executive offices) (Zip code)~~



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

~~(408)~~ (408) 414-9200

(Registrant’s telephone number, including area code)

~~____________________________________________________________________________~~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	POWI	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~YES~~ x NO oYes ☒ No ☐

Indicate by check mark whether the registrant submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ~~YES~~ x NO oYes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:



~~Large accelerated filer~~ x		~~Accelerated filer~~ o
Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated ~~filer~~ oFiler	☐	Smaller ~~reporting company~~ o Reporting Company	☐
		Emerging ~~growth company~~ o 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. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~YES~~ o NO xYes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class	Shares Outstanding at ~~April 18, 2019~~May 4, 2020
Common Stock, $0.001 par value	~~29,270,669~~29,840,080

POWER INTEGRATIONS, INC.

TABLE OF CONTENTS



		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements ~~(Unaudited)~~

	Condensed Consolidated Balance Sheets as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (Unaudited)	4

	Condensed Consolidated Statements of Income for the three months ended March 31, 2020 and 2019 ~~and 2018~~(Unaudited)	5

	Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 ~~and 2018~~(Unaudited)	6

	Condensed Consolidated ~~Statement~~Statements of Stockholders’ Equity for the three months ended March 31, 2020 and 2019 ~~and 2018~~(Unaudited)	7

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 ~~and 2018~~(Unaudited)	8

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2320

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2927

Item 4.	Controls and Procedures	3028

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6.	Exhibits	30

~~Item 1A.~~	~~Risk Factors~~	30

~~Item 2.~~	~~Unregistered Sale of Equity Securities and Use of Proceeds~~	30

~~Item 6.~~	~~Exhibits~~	31

SIGNATURES		3231

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes a number of forward-looking statements that involve many risks and uncertainties. Forward-looking statements are identified by the use of the words “would,” “could,” “will,” “may,” “expect,” “believe,” “should,” “anticipate,” “if,” “future,” “intend,” “plan,” “estimate,” “potential,” “target,” “seek,” or “continue” and similar words and phrases, including the negatives of these terms, or other variations of these terms, that denote future events. These statements reflect our current views with respect to future events and our potential financial performance and are subject to risks and uncertainties that could cause our actual results and financial position to differ materially ~~and~~and/ or adversely from what is projected or implied in any forward-looking statements included in this Form 10-Q. These factors include, but are not limited ~~to,~~to: the novel coronavirus pandemic (COVID-19), which could significantly disrupt our operations, including our manufacturing, research and development, and sales and marketing activities, which could have a material adverse impact on our business and has or could exacerbate the risks described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018, and in Item 2 of Part I — “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q, including, but not limited to: our quarterly operating results are volatile and difficult to predict, and if we fail to meet the expectations of public market analysts or investors, the market price of our common stock may decrease significantly;discussed below; if demand for our products declines in our major end markets, our net revenues will decrease; our products are sold through distributors, which limits our direct interaction with our end customers, therefore reducing our ability to forecast sales and increasing the complexity of our business; we depend on third-party suppliers to provide us with wafers for our products, and if they fail to provide us sufficient quantities of wafers, our business may suffer; intense competition may lead to a decrease in our average selling price and reduced sales volume of our products; if our products do not penetrate additional markets, our business will not grow as we expect; we do not have long-term contracts with any of our customers and if they fail to place, or if they cancel or reschedule orders for our products, our operating results and our business may suffer; if we are unable to adequately protect or enforce our intellectual property rights, we could lose market share, incur costly litigation expenses, suffer incremental price erosion or lose valuable assets, any of which could harm our operations and negatively impact our ~~profitability.~~profitability; and the other risk factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, and in Part II, Item 1A -“Risk Factors” and Part I, Item 2 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. We make these forward-looking statements based upon information available on the date of this Form 10-Q, and we expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information or otherwise, except as required by laws.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS ~~(Unaudited)~~

POWER INTEGRATIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In thousands)	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	125,795		$	134,137		$	190,459		$	178,690
Short-term marketable securities	92,901			94,451			232,183			232,398
Accounts receivable, net of allowances for doubtful accounts of $526 and $706 in 2019 and 2018, respectively	20,545			11,072
Accounts receivable, net							20,597			24,274
Inventories	85,080			80,857			96,633			90,380
Prepaid expenses and other current assets	16,798			11,915			20,570			15,597
Total current assets	341,119			332,432			560,442			541,339
PROPERTY AND EQUIPMENT, net	113,713			114,117			123,430			116,619
INTANGIBLE ASSETS, net	20,073			21,152			15,748			16,865
GOODWILL	91,849			91,849			91,849			91,849
DEFERRED TAX ASSETS	5,733			6,906			1,739			2,836
OTHER ASSETS	28,018			22,241			34,231			34,388
Total assets	$	600,505		$	588,697		$	827,439		$	803,896
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	33,432		$	31,552		$	37,156		$	27,433
Accrued payroll and related expenses	11,512			12,131			10,921			13,408
Taxes payable	706			933			567			584
Other accrued liabilities	5,271			3,750			5,826			9,051
Total current liabilities	50,921			48,366			54,470			50,476
LONG-TERM INCOME TAXES PAYABLE	8,789			8,652			14,840			14,617
DEFERRED TAX LIABILITIES	204			216			162			164
OTHER LIABILITIES	9,290			4,391			14,137			14,093
Total liabilities	69,204			61,625			83,609			79,350
COMMITMENTS AND CONTINGENCIES (Notes 11, 12, 13 and 14)
COMMITMENTS AND CONTINGENCIES (Notes 11, 12 and 13)
STOCKHOLDERS’ EQUITY:
Common stock	28			28			28			28
Additional paid-in capital	127,769			126,164			162,343			152,117
Accumulated other comprehensive loss	(1,361		)	(1,689		)	(4,314		)	(3,130		)
Retained earnings	404,865			402,569			585,773			575,531
Total stockholders’ equity	531,301			527,072			743,830			724,546
Total liabilities and stockholders’ equity	$	600,505		$	588,697		$	827,439		$	803,896

On October 20, 2004, the Company filed a complaint against Fairchild Semiconductor International, Inc. and Fairchild Semiconductor Corporation (referred to collectively as “Fairchild”) in the United States District Court for the District of Delaware. In its complaint, the Company alleged that Fairchild has and is infringing four of Power Integrations’ patents pertaining to pulse width modulation (PWM) integrated circuit devices. Fairchild denied infringement and asked for a declaration from the court that it does not infringe any Power Integrations patent and that the patents are invalid. The Court issued a claim construction order on March 31, 2006 which was favorable to the Company. The Court set a first trial on the issues of infringement, willfulness and damages for October 2, 2006. At the close of the first trial, on October 10, 2006, the jury returned a verdict in favor of the Company finding all asserted claims of all four patents-in-suit to be willfully infringed by Fairchild and awarding $34.0 million in damages. Fairchild raised defenses contending that the asserted patents are invalid or unenforceable, and the Court held a second trial on these issues beginning on September 17, 2007. On September 21, 2007, the jury returned a verdict in the Company’s favor, affirming the validity of the asserted claims of all four patents-in-suit. Fairchild submitted further materials on the issue of enforceability along with various other post-trial motions, and the Company filed post-trial motions seeking a permanent injunction and increased damages and attorneys’ fees, among other things. On September 24, 2008, the Court denied Fairchild’s motion regarding enforceability and ruled that all four patents are enforceable. On December 12, 2008, the Court ruled on the remaining post-trial motions, including granting a permanent injunction, reducing the damages award to $6.1 million, granting Fairchild a new trial on the issue of willful infringement in view of an intervening change in the law, and denying the Company’s motion for increased damages and attorneys’ fees with leave to renew the motion after the resolution of the issue of willful infringement. On December 22, 2008, at Fairchild’s request, the Court temporarily stayed the permanent injunction for 90 days. On January 12, 2009, Fairchild filed a notice of appeal challenging the Court’s refusal to enter a more permanent stay of the injunction, and Fairchild filed additional motions requesting that both the Federal Circuit and the District Court extend the stay of injunction. The District Court temporarily extended the stay pending the Federal Circuit ruling on Fairchild’s pending motion, but the Federal Circuit dismissed Fairchild’s appeal and denied its motion on May 5, 2009, and the District Court issued an order on May 13, 2009 confirming the reinstatement of the permanent injunction as originally entered in December 2008. On June 22, 2009, the Court held a brief bench re-trial on the issue of willful infringement. On July 22, 2010, the Court found that Fairchild willfully infringed all four of the asserted patents, and the Court also invited briefing on enhanced damages and attorneys’ fees. Fairchild also filed a motion requesting that the Court amend its findings regarding willfulness. On January 18, 2011, the Court denied Fairchild’s request to amend the findings regarding Fairchild’s willful infringement and doubled the damages award against Fairchild but declined to award attorneys’ fees. On February 3, 2011, the Court

On May 23, 2008, the Company filed a complaint against Fairchild Semiconductor International, Inc., Fairchild Semiconductor Corporation, and Fairchild’s wholly owned subsidiary System General Corporation (referred to collectively as “Fairchild”), in the United States District Court for the District of Delaware. In its complaint, the Company alleged that Fairchild has infringed and is infringing three patents pertaining to power supply controller integrated circuit devices. Fairchild answered the Company’s complaint on November 7, 2008, denying infringement and asking for a declaration from the Court that it does not infringe any Power Integrations patent and that the patents are invalid and unenforceable. Fairchild’s answer also included counterclaims accusing the Company of infringing three patents pertaining to primary side power conversion integrated circuit devices. Fairchild had earlier brought these same claims in a separate suit against the Company, also in Delaware, which Fairchild dismissed in favor of adding its claims to the Company’s already pending suit against Fairchild. The Company has answered Fairchild’s counterclaims, denying infringement and asking for a declaration from the Court that it does not infringe any Fairchild patent and that the Fairchild patents are invalid. Fairchild also filed a motion to stay the case, but the Court denied that motion on December 19, 2008. On March 5, 2009, Fairchild filed a motion for summary judgment to preclude any recovery for post-verdict sales of parts found to infringe in the parties’ other ongoing litigation, described above, and the Company filed its opposition and a cross-motion to preclude Fairchild from re-litigating the issues of infringement and damages for those same products. On June 26, 2009, the Court held a hearing on the parties’ motions, and on July 9, 2009 the Court issued an order denying the parties’ motions but staying proceedings with respect to the products that were found to infringe and which are subject to the injunction in the other Delaware case between the parties pending the entry of final judgment in that case; those products are expected to be addressed in the context of the parties’ remand proceedings following the appeal in their earlier litigation in Delaware, and the remainder of the case is proceeding. On December 18, 2009, the Court issued an order construing certain terms in the asserted claims of the Company’s and Fairchild’s patents in suit. Following the Court’s ruling on claim construction, Fairchild withdrew its claim related to one of its patents and significantly reduced the number of claims asserted for the remaining two patents. The parties thereafter filed and argued a number of motions for summary judgment, and the Court denied the majority of the parties’ motions but granted the Company’s motion to preclude Fairchild from re-arguing validity positions that were rejected in the prior case between the parties. Because the assigned Judge retired at the end of July 2010, the case was re-assigned to a different Judge, and the Court vacated the trial schedule and had the parties provide their input on the appropriate course of action. The Court thereafter set a trial schedule with the jury trial on infringement and validity to begin in July 2011. On April 18, 2011, the Court rescheduled the trial to begin in January 2012, and on June 2, 2011, the Court moved the trial date to April 2012 to permit the parties to address another patent the Company accused Fairchild of infringing. Following a trial in April 2012, the jury returned a verdict finding that Fairchild infringes two of the Company’s patents, that Fairchild has induced others to infringe the Company’s patents, and also upheld the validity of the infringed patents. Of the two remaining counterclaim patents Fairchild asserted in the case, one was found not to be infringed, but the jury found the second patent to be infringed by a limited number of the Company’s products, although the jury further found the Company did not induce infringement by any customers, including customers outside the United States. On March 29, 2013, the District Court denied most of the parties’ post-trial motions on liability but granted the Company’s motion for judgment as a matter of law finding that Fairchild infringed another of the Company’s patents. On April 25, 2013, the Court denied both parties’ motions regarding the unenforceability of each other’s patents. The Company challenged adverse findings on appeal; nevertheless, the Company estimated that even if the verdict on Fairchild’s patent had ultimately been upheld, the sales potentially impacted would have amounted to less than 0.5% of the Company’s revenues. The Company requested an injunction preventing further infringement of its own patents by Fairchild, and Fairchild requested an injunction as well. Following a hearing on the issue in June 2014, the Court denied Fairchild’s request for an injunction against the Company and granted the Company’s request for an injunction against Fairchild. On January 13, 2015, the District Court entered final judgment on the liability and validity issues discussed above, and both parties filed appeals with the Federal Circuit. After briefing was completed, oral argument on the appeal took place in early July 2016, and on December 12, 2016, the Federal Circuit issued its opinion in the appeal, overturning the lone infringement verdict against the Company, finding one of the Company’s patents invalid, and overturning the District Court’s jury instruction on inducement. In view of the Federal Circuit’s rejection of the District Court’s jury instruction on inducement, the Court also vacated the inducement findings and associated injunction against Fairchild and remanded the case for a retrial on inducement, but the underlying validity and infringement findings

On June 28, 2004, the Company filed a complaint for patent infringement in the U.S. District Court, Northern District of California, against System General Corporation (SG), a Taiwanese company, and its U.S. subsidiary. The Company’s complaint alleged that certain integrated circuits produced by SG infringed and continue to infringe certain of its patents. On June 10, 2005, in response to the initiation of an International Trade Commission (ITC) investigation on the patents asserted in the District Court lawsuit, the District Court stayed all proceedings. Subsequent to the completion of the ITC proceedings, the District Court temporarily lifted the stay and scheduled a case management conference. On December 6, 2006, SG filed a notice of appeal of the ITC decision. In response, and by agreement of the parties, the District Court vacated the scheduled case management conference and renewed the stay of proceedings pending the outcome of the Federal Circuit appeal of the ITC determination. On November 19, 2007, the Federal Circuit affirmed the ITC’s findings in all respects, and SG did not file a petition for review. The parties subsequently filed a motion to dismiss the District Court case without prejudice. On November 4, 2009, the Company re-filed its complaint for patent infringement against SG and its parent corporations, Fairchild Semiconductor International, Inc. and Fairchild Semiconductor Corporation, to address their continued infringement of patents at issue in the original suit that recently emerged from SG requested reexamination proceedings before the U.S. Patent and Trademark Office (USPTO). The Company seeks, among other things, an order enjoining SG and Fairchild from infringing the Company’s patents and an award of damages resulting from the alleged infringement. Fairchild has denied infringement and asked for a declaration from the Court that it does not infringe any Power Integrations patent, that the patents are invalid, and that one of the two of the Company’s patents now at issue in the case is unenforceable. On May 5, 2010, SG and Fairchild filed an amended answer including counterclaims accusing the Company of infringing two patents, and later Fairchild withdrew its claim for infringement of one of the patents it originally asserted against the Company but added another patent to the case over the Company’s objections. Both parties filed summary judgment motions and challenges to each other’s experts’ testimony, and the Court granted the Company’s motion for summary judgment of non-infringement with respect to one of Fairchild’s two patents. Following a trial on the remaining claims in February 2014, the jury returned a verdict in the Company’s favor, affirming the validity of the asserted claims of the Company’s patents-in-suit, finding that SG and Fairchild infringed the Company’s asserted patents and induced infringement by others, and awarding $105.0 million in damages. The Jury also rejected Fairchild’s remaining counterclaims for infringement against the Company. Fairchild challenged these rulings in post-trial motions, but the judge confirmed the jury’s determinations on infringement and damages, although the Court declined to find Fairchild’s infringement willful. Fairchild also pressed its unenforceability claim with respect to one of the two patents it was found to infringe in post-trial briefing, but the Court rejected Fairchild’s unenforceability claim. Fairchild also requested reconsideration of the damages determinations, and the Court granted a new trial with respect to damages but none of the other issues addressed in the previous trial, with the retrial scheduled for December 2015. Thereafter, the parties completed pretrial proceedings challenging each other’s experts, and the Court granted portions of each party’s motions limiting the scope of expert testimony for purposes of the damages retrial, but neither party was successful in their efforts to prevent the other side’s experts from testifying at trial. Following a retrial on the issue of damages in December 2015, the jury returned a verdict in the Company’s favor, finding that the Company’s patented technology created the basis for customer demand for the infringing Fairchild products and awarding $139.8 million in damages. Although the jury awarded damages, at this stage of the proceedings the Company cannot state the amount, if any, it might ultimately recover from Fairchild, and no benefits have been recorded in the Company’s consolidated financial statements as a result of the damages verdict. Fairchild filed post-trial motions challenging the verdict, but the Court rejected Fairchild’s motions challenging the damages verdict in August 2016. The Company also filed motions requesting enhanced damages and attorney fees and reinstatement of the willfulness finding against Fairchild in view of an intervening change of law; on January 13, 2017, the District Court reinstated the finding that Fairchild’s infringement was willful but declined to enhance damages or award fees. In January 2017, Fairchild filed a further challenge to the verdict, but the Court rejected Fairchild’s motion and entered a final judgment of $146.5 million after factoring in pre-judgment interest. Fairchild’s appeal on the merits challenged the infringement findings and damages award. In July 2018, on appeal, the Federal Circuit affirmed the findings that Fairchild infringed both of the Company’s asserted patents but vacated the damages award and remanded the case for further proceedings. The Company filed a petition for review by the Supreme Court seeking to overturn the Federal Circuit’s ruling, but the Supreme Court denied further reviews. On remand, the Company intends to pursue its claim for damages, although the patent claims at issue in litigation currently stand rejected in IPR proceedings, subject to appeal as discussed below.

~~Increase our penetration of the markets we serve.~~ We currently address AC-DC applications with power outputs up to approximately 500 watts, gate-driver applications of approximately ten kilowatts and higher, and motor-drive applications up to approximately 300 watts. Through our research and development efforts, we seek to introduce more advanced products for these markets offering higher levels of integration and performance compared to earlier products. We also continue to expand our sales and application-engineering staff and our network of distributors, as well as our offerings of technical documentation and design-support tools and services to help customers use our products. These tools and services include our PI Expert™ design software, which we offer free of charge, and our transformer-sample service.

•

Increase our penetration of the markets we serve. We currently address AC-DC applications with power outputs up to approximately 500 watts, gate-driver applications of approximately ten kilowatts and higher, and motor-drive applications up to approximately 400 watts. Through our research and development efforts, we seek to introduce more advanced products for these markets offering higher levels of integration and performance compared to earlier products. We also continue to expand our sales and application-engineering staff and our network of distributors, as well as our offerings of technical documentation and design-support tools and services to help customers use our products. These tools and services include our PI Expert™ design software, which we offer free of charge, and our transformer-sample service.

Our market-penetration strategy also includes capitalizing on the importance of energy efficiency and renewable energy in the power conversion market. For example, our EcoSmart™ technology drastically reduces the amount of energy consumed by electronic products when they are not in use, helping our customers comply with regulations that seek to curb this so-called “standby” energy consumption. Also, our gate-driver products are critical components in energy-efficient DC motor drives, high-voltage DC transmission systems, ~~renewable-energy installations~~solar and wind energy systems and electric transportation applications.

~~Increase the size of our addressable market.~~ Prior to 2010 our addressable market consisted of AC-DC applications with up to about 50 watts of output, a served available market (“SAM”) opportunity of approximately $1.5 billion. Since that time we have expanded our SAM to approximately $4 billion through a variety of means. These include the introduction of products that enable us to address higher-power AC-DC applications (such as our Hiper™ product families, which address applications up to about 500 watts) and our entry into the gate-driver market through the acquisition of CT-Concept Technologie AG in 2012. In 2016 we introduced the SCALE-iDriverTM family of gate-driver ICs, broadening the range of gate-driver applications we can address. In 2018 we introduced our BridgeSwitch™ motor-driver ICs, as described above.

•

Increase the size of our addressable market. Prior to 2010 our addressable market consisted of AC-DC applications with up to about 50 watts of output, a served available market (SAM) opportunity of approximately $1.5 billion. Since that time we have expanded our SAM to more than $4 billion through a variety of means. These include the introduction of products that enable us to address higher-power AC-DC applications (such as our Hiper™ product families), the introduction of LED-driver products, and our entry into the gate-driver market through the acquisition of CT-Concept Technologie AG in 2012. In 2016 we introduced the SCALE-iDriver^TM family of gate-driver ICs, broadening the range of gate-driver applications we can address, and in 2018 we introduced our BridgeSwitch™ motor-driver ICs, addressing BLDC motors, as described above.

Also contributing to our SAM expansion has been the emergence of new applications within the power ranges that our products can address. For example, applications such as ~~LED lighting,~~ “smart” utility meters, battery-powered lawn equipment and bicycles, and USB power ~~ports (installed~~receptacles (often installed alongside traditional AC wall outlets) can incorporate our ~~products; the~~products. The increased use of electronic intelligence and ~~controls~~connectivity in consumer appliances has also enhanced our SAM. Finally, we have enhanced our SAM ~~by increasing~~through the ~~level~~development of ~~integration~~new technologies that increase the value (and therefore the average selling prices) of our ~~products, which in turn increases their value.~~products. For example, our InnoSwitch™ ICs integrate circuitry from the secondary, or low-voltage, side of AC-DC power supplies, whereas earlier product families integrated circuitry only on the primary, or high-voltage side. In 2019 we introduced new members of our InnoSwitch™ family incorporating gallium-nitride (GaN) transistors, which enable a higher level of energy efficiency than ICs with traditional silicon transistors.

We intend to continue expanding our SAM in the years ahead through all of the means described above.

Our quarterly operating results are difficult to predict and subject to significant fluctuations. We plan our production and inventory levels based on internal forecasts of projected customer demand, which are highly unpredictable and can fluctuate substantially. Customers typically may cancel or reschedule orders on short notice without significant penalty and, conversely, often place orders with very short lead times to delivery. Also, external factors such as global economic conditions and supply-chain dynamics can cause our operating results to be volatile. In particular, the severe economic disruption caused by the global novel coronavirus pandemic (COVID-19) may affect the demand for our products and make our results more difficult to forecast. Furthermore, because our industry is intensely price-sensitive, our gross margin (gross profit divided by net revenues) is subject to change based on the relative pricing of solutions that compete with ours. Variations in product mix, end-market mix and customer mix can also cause our gross margin to fluctuate. Because we purchase a large percentage of our silicon wafers from foundries located in Japan, our gross margin is influenced by fluctuations in the exchange rate between the U.S. dollar and the Japanese yen. Changes in the prices of raw materials used in our products, such as copper and gold, can also affect our gross margin. Although our wafer-fabrication and assembly operations are outsourced, as are most of our test operations, a portion of our production costs are fixed in nature. As a result, our unit costs and gross margin are impacted by the volume of units we produce.

Recent Results

Our net revenues were ~~$89.2~~$109.7 million and ~~$103.1~~$89.2 million in the three months ended March 31, 2020 and 2019, ~~and 2018,~~ respectively. ~~Net~~The increase in revenues ~~decreased compared with the same period~~was primarily due to growth in the ~~prior year~~consumer end market, particularly increased sales into comfort-appliances such as air conditioners, as well as the communications end market, reflecting ~~a broad-based decline in demand across all end markets.~~increased adoption of higher-power chargers for mobile phones.

Our top ten customers, including distributors that resell to original equipment manufacturers, or OEMs, and merchant power supply manufacturers, accounted for ~~52%~~55% and ~~58%~~52% of our net revenues in the three months ended March 31, 2020 and 2019, ~~and 2018,~~ respectively. ~~Our top customer, a distributor~~In the three months ended March 31, 2020, two customers, both distributors of our products, each accounted for approximately 11% of our net revenues. In the three months ended March 31, 2019, one customer accounted for approximately 13% of our net revenues. International sales accounted for 98% and ~~16%~~97% of our net revenues in the three months ended March 31, ~~2019~~2020 and ~~2018, respectively. International sales accounted for 97% and 96% of our net revenues in the three-month periods ended March 31,~~ 2019, ~~and 2018,~~ respectively.

Our gross margin ~~was 51% and 52% in~~for the three months ended March 31, 2020 and 2019 was 51.5%, and ~~2018,~~51.0%, respectively. The ~~decrease~~increase in gross margin was due ~~primarily~~ to ~~increased wafer substrate costs.~~a favorable change in end-market mix with a greater amount of revenues coming from higher-margin end markets.

Total operating expenses were ~~$39.4~~$41.4 million and ~~$39.6~~$39.4 million in the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The ~~slight decrease~~increase was due primarily to ~~lower~~higher salary and related expenses driven by the expansion of our workforce, as well as higher stock-based compensation expense related to performance-based ~~awards,~~awards. These expenses were partially offset by ~~higher salary and related expenses due to~~lower patent-litigation expense reflecting the ~~expansion~~recent conclusion of ~~our workforce, increased promotional activity associated with new-product launches and increased legal expenses related to~~ our litigation with ON ~~Semiconductor.~~Semiconductor, as well as lower travel expenses due to restrictions associated with the COVID-19 pandemic.

COVID-19 Pandemic

The COVID-19 pandemic has disrupted everyday life and markets worldwide, and governments around the world have imposed restrictions aimed at controlling the spread of the virus, including shelter-in-place orders, travel restrictions, business

shutdowns and border closures. Since March 16, 2020 our San Jose headquarters location has been subject to a shelter-in-place order, under which most of our employees have been required to work from home; other locations around the world have also been subject to such restrictions. We have implemented a variety of measures to protect the health and safety of those employees whose responsibilities require them to go to our office locations, including the provision of masks and sanitizers, and regular deep cleaning of our facilities. While it is uncertain when we will be able to return to normal working conditions, we believe that we are able to conduct our day-to-day operations effectively in spite of the restrictions.

While we do not believe our recent results have been impacted materially by the pandemic, we believe our results in future periods are likely to be affected as the economic downturn stemming from the pandemic reduces demand for end products that incorporate our products. Also, the pandemic may impact our ability to supply products to our customers if our suppliers are unable to obtain necessary raw materials or other inputs, if our manufacturing partners are unable to staff their manufacturing facilities, or if key logistical elements of our supply chain such as warehousing or shipping services are disrupted. We have taken steps to reduce the effects of such supply disruptions, including higher-than-normal levels of inventory of wafers and finished goods, safety stocks of certain key inputs, and multiple sources for most of our products. The supply of wafers from our foundry partners has not been interrupted; however, government-mandated closures in China, Malaysia, Sri Lanka and Philippines have caused temporary shutdowns at our assembly and test sub-contractors in those countries. All of the affected sub-contractors have either fully or partially resumed operations. While these disruptions have resulted in delayed shipments to some customers, we believe our mitigation efforts have been effective at preventing a material impact to our results.

In anticipation of reduced demand for our products in future periods, we have adjusted our near-term operating-expense and capital-spending plans, such as slowing the pace of hiring, and will continue to make adjustments as business conditions change. However, we believe our business is fundamentally sound with strong, long-term growth prospects and ample cash resources. We have not reduced headcount and intend to continue investing in research and development and other functions necessary to support our future growth. We also intend to continue our cash dividend and stock repurchase programs; however, if the economy deteriorates more than we expect or our business outlook changes, our board of directors may choose to suspend or alter these programs at its discretion. For additional discussion regarding COVID-19 business risks refer to Part II, Item 1A “Risk Factors” in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates, including those listed below. We base our estimates on historical facts and various other assumptions that we believe to be reasonable at the time the estimates are made. Actual results could differ from those estimates.

Our critical accounting policies are as follows:

•revenue recognition;

•stock-based compensation;

•estimating write-downs for excess and obsolete inventory;

•income taxes;

•business combinations; and

•goodwill and intangible assets.

Our critical accounting policies are important to the portrayal of our financial condition and results of operations, and require us to make judgments and estimates about matters that are inherently uncertain. There have been no material changes to our critical accounting policies and estimates disclosed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” and Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, in each case in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, filed with the SEC on February ~~13, 2019.~~7, 2020.

Results of Operations

The following table sets forth certain operating data as a percentage of net revenues for the periods indicated.


	Three Months Ended March 31,				Three Months Ended March 31,
	2019		2018		2020		2019
Net revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenues	49.0		48.1		48.5		49.0
Gross profit	51.0		51.9		51.5		51.0
Operating expenses:
Research and development	20.1		17.0		17.4		20.1
Sales and marketing	14.6		12.7		12.3		14.6
General and administrative	9.4		8.7		8.0		9.4
Total operating expenses	44.1		38.4		37.7		44.1
Income from operations	6.9		13.5		13.8		6.9
Other income	1.3		0.8		1.6		1.3
Income before income taxes	8.2		14.3		15.4		8.2
Provision for income taxes	—		0.6		0.9		—
Net income	8.2	%	13.7	%	14.5	%	8.2	%

Comparison of the Three Months Ended March 31, ~~2019~~2020 and ~~2018~~2019

Net revenues. Net revenues consist of revenues from product sales, which are calculated net of returns and allowances. Net revenues for the three months ended March 31, 2020 and 2019 were $109.7 million and ~~2018 were~~ $89.2 million, ~~and $103.1 million,~~ respectively. ~~Net~~The increase in revenues ~~decreased compared with the same period~~was due to growth in the ~~prior year~~consumer end market, particularly the comfort-appliances such as air conditioners, as well as the communications end market, reflecting ~~a broad-based decline in demand across all end markets.~~increased adoption of faster higher-power chargers for mobile phones.

Our revenue mix by end market for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 was as follows:


	Three Months Ended March 31,				Three Months Ended March 31,
End Market	2019		2018		2020		2019
Communications	18	%	19	%	22	%	18	%
Computer	5	%	5	%	4	%	5	%
Consumer	39	%	40	%	41	%	39	%
Industrial	38	%	36	%	33	%	38	%


	Three Months Ended				Three Months Ended
	March 31,				March 31,
(In thousands, except per share amounts)	2019		2018		2020		2019
NET REVENUES	$	89,188	$	103,081	$	109,664	$	89,188
COST OF REVENUES	43,714		49,537		53,184		43,714
GROSS PROFIT	45,474		53,544		56,480		45,474

OPERATING EXPENSES:
Research and development	17,946		17,481		19,152		17,946
Sales and marketing	13,017		13,088		13,473		13,017
General and administrative	8,390		9,014		8,761		8,390
Total operating expenses	39,353		39,583		41,386		39,353
INCOME FROM OPERATIONS	6,121		13,961		15,094		6,121
OTHER INCOME	1,152		836		1,777		1,152
INCOME BEFORE INCOME TAXES	7,273		14,797		16,871		7,273
PROVISION FOR INCOME TAXES	40		597		985		40
NET INCOME	$	7,233	$	14,200	$	15,886	$	7,233

EARNINGS PER SHARE:
Basic	$	0.25	$	0.48	$	0.54	$	0.25
Diluted	$	0.25	$	0.46	$	0.53	$	0.25

SHARES USED IN PER SHARE CALCULATION:
Basic	28,951		29,799		29,602		28,951
Diluted	29,446		30,552		30,134		29,446


	Three Months Ended						Three Months Ended
	March 31,						March 31,
(In thousands)	2019			2018			2020			2019
NET INCOME	$	7,233		$	14,200		$	15,886		$	7,233
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments, net of $0 tax in each of the three months ended March 31, 2019 and 2018	(22		)	(37		)
Unrealized gain (loss) on marketable securities, net of $0 tax in each of the three months ended March 31, 2019 and 2018	334			(238		)
Amortization of defined benefit pension items, net of tax of $5 and $9 in the three months ended March 31, 2019 and 2018, respectively	16			32
Foreign currency translation adjustments, net of $0 tax in each of the three months ended March 31, 2020 and 2019							(283		)	(22		)
Unrealized gain (loss) on marketable securities, net of $0 tax in each of the three months ended March 31, 2020 and 2019							(952		)	334
Amortization of defined benefit pension items, net of tax of $31 and $5 in the three months ended March 31, 2020, and 2019, respectively							51			16
Total other comprehensive income (loss)	328			(243		)	(1,184		)	328
TOTAL COMPREHENSIVE INCOME	$	7,561		$	13,957		$	14,702		$	7,561


	Three Months Ended						Three Months Ended
	March 31,						March 31,
(In thousands)	2019			2018			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,233		$	14,200		$	15,886		$	7,233
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	4,610			4,931			5,488			4,610
Amortization of intangibles	1,255			1,348			1,117			1,255
Loss on disposal of property and equipment	96			38			30			96
Stock-based compensation expense	4,407			5,625			6,710			4,407
Amortization of premium (accretion of discount) on marketable securities	(110		)	262			154			(110		)
Deferred income taxes	1,161			(140		)	1,095			1,161
Increase (decrease) in accounts receivable allowances	(180		)	5
Decrease in accounts receivable allowance for credit losses							(154		)	(180		)
Change in operating assets and liabilities:
Accounts receivable	(9,293		)	(934		)	3,831			(9,293		)
Inventories	(4,223		)	(6,121		)	(6,253		)	(4,223		)
Prepaid expenses and other assets	(4,229		)	(3,141		)	(3,992		)	(4,229		)
Accounts payable	1,220			233			8,828			1,220
Taxes payable and accrued liabilities	(871		)	(577		)	(6,349		)	(871		)
Net cash provided by operating activities	1,076			15,729			26,391			1,076
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(3,459		)	(6,491		)	(11,603		)	(3,459		)
Acquisition of technology licenses	(214		)	(500		)	—			(214		)
Purchases of marketable securities	(4,793		)	—			(16,838		)	(4,793		)
Proceeds from sales and maturities of marketable securities	6,787			52,366			15,947			6,787
Net cash provided by (used in) investing activities	(1,679		)	45,375
Net cash used in investing activities							(12,494		)	(1,679		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock under employee stock plans	4,500			4,657			5,529			4,500
Repurchase of common stock	(7,302		)	(33,314		)	(2,013		)	(7,302		)
Payments of dividends to stockholders	(4,937		)	(4,775		)	(5,644		)	(4,937		)
Proceeds from draw on line of credit	—			8,000
Payments on line of credit	—			(8,000		)
Net cash used in financing activities	(7,739		)	(33,432		)	(2,128		)	(7,739		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(8,342		)	27,672			11,769			(8,342		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	134,137			93,655			178,690			134,137
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	125,795		$	121,327		$	190,459		$	125,795
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Unpaid property and equipment	$	2,533		$	1,961		$	5,250		$	2,533
Unpaid technology licenses	$	100		$	500		$	—		$	100

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes, net	$	378		$	273		$	305		$	378



(In thousands)	March 31, 2020			December 31, 2019
Accounts receivable trade	$	64,232		$	61,036
Allowance for ship and debit	(40,332		)	(33,475		)
Allowance for stock rotation and rebate	(2,694		)	(2,524		)
Allowance for credit losses	(609		)	(763		)
Total	$	20,597		$	24,274



(In thousands)	March 31, 2019			December 31, 2018
Accounts receivable trade	$	63,340		$	54,055
Allowances for ship and debit	(39,168		)	(40,118		)
Allowances for stock rotation and rebate	(3,101		)	(2,159		)
Allowances for doubtful accounts	(526		)	(706		)
Total	$	20,545		$	11,072



Fiscal Year	Estimated Amortization (In thousands)
2020 (remaining nine months)	$	3,242
2021	3,494
2022	2,415
2023	2,173
2024	1,279
Thereafter	1,884
Total	$	14,487



Fiscal Year	Estimated Amortization (In thousands)
2019 (remaining nine months)	$	3,644
2020	3,675
2021	2,809
2022	1,731
2023	1,489
Thereafter	774
Total ⁽¹⁾	$	14,122


~~(1)~~	~~The total above excludes $4.7 million of in-process research and development that will be amortized, upon completion of development, over the estimated useful life of the technology.~~


	Unrealized Gains and Losses on Marketable Securities						Defined Benefit Pension Items										Foreign Currency Items						Total						Unrealized Gains and Losses on Marketable Securities						Defined Benefit Pension Items								Foreign Currency Items						Total
	Three Months Ended						Three Months Ended										Three Months Ended						Three Months Ended						Three Months Ended						Three Months Ended								Three Months Ended						Three Months Ended
	March 31,						March 31,										March 31,						March 31,						March 31,						March 31,								March 31,						March 31,
(In thousands)	2019			2018			2019					2018					2019			2018			2019			2018			2020			2019			2020				2019				2020			2019			2020			2019
Beginning balance	$	(266	)	$	(427	)	$	(712	)			$	(1,237	)			$	(711	)	$	(475	)	$	(1,689	)	$	(2,139	)	$	583		$	(266	)	$	(2,484	)		$	(712	)		$	(1,229	)	$	(711	)	$	(3,130	)	$	(1,689	)
Other comprehensive income (loss) before reclassifications	334			(238		)	—					—					(22		)	(37		)	312			(275		)	(952		)	334			—				—				(283		)	(22		)	(1,235		)	312
Amounts reclassified from accumulated other comprehensive loss	—			—			16			(1	)	32			(1	)	—			—			16			32			—			—			51			(1)	16			(1)	—			—			51			16
Net-current period other comprehensive income (loss)	334			(238		)	16					32					(22		)	(37		)	328			(243		)	(952		)	334			51				16				(283		)	(22		)	(1,184		)	328
Ending balance	$	68		$	(665	)	$	(696	)			$	(1,205	)			$	(733	)	$	(512	)	$	(1,361	)	$	(2,382	)	$	(369	)	$	68		$	(2,433	)		$	(696	)		$	(1,512	)	$	(733	)	$	(4,314	)	$	(1,361	)


(1)	This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost for the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019.


	Fair Value Measurement at						Fair Value Measurement at
	March 31, 2019						March 31, 2020
(In thousands)	Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Total Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)
Corporate securities	$	92,901	$	—	$	92,901	$	217,314	$	—	$	217,314
Commercial paper	99,196		—		99,196		161,858		—		161,858
Money market funds	189		189		—		1,707		1,707		—
Total	$	192,286	$	189	$	192,097	$	380,879	$	1,707	$	379,172


	Amortized Cost		Gross Unrealized					Estimated Fair Market Value		Amortized Cost		Gross Unrealized					Estimated Fair Market Value
(In thousands)			Gains		Losses							Gains		Losses
Investments due in 3 months or less:
Commercial paper										$	14,869	$	—	$	—		$	14,869
Corporate securities	$	12,635	$	—	$	(9	)	$	12,626	28,104		1		(21		)	28,084
Total	12,635		—		(9		)	12,626		42,973		1		(21		)	42,953
Investments due in 4-12 months:
Corporate securities	60,573		53		(60		)	60,566		63,204		61		(159		)	63,106
Total	60,573		53		(60		)	60,566		63,204		61		(159		)	63,106
Investments due in 12 months or greater:
Corporate securities	19,625		84		—			19,709		126,375		145		(396		)	126,124
Total	19,625		84		—			19,709		126,375		145		(396		)	126,124
Total marketable securities	$	92,833	$	137	$	(69	)	$	92,901	$	232,552	$	207	$	(576	)	$	232,183



	Less Than 12 Months					12 Months or Longer				Total
(In thousands)	Estimated Fair Market Value		Gross Unrealized Losses			Estimated Fair Market Value		Gross Unrealized Losses		Estimated Fair Market Value		Gross Unrealized Losses
March 31, 2020
Corporate securities	$	138,527	$	(576	)	$	—	$	—	$	138,527	$	(576	)
Total marketable securities	$	138,527	$	(576	)	$	—	$	—	$	138,527	$	(576	)

December 31, 2019
Corporate securities	$	13,069	$	(6	)	$	—	$	—	$	13,069	$	(6	)
Total marketable securities	$	13,069	$	(6	)	$	—	$	—	$	13,069	$	(6	)


	Shares (In thousands)		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (In years)	Aggregate Intrinsic Value (In thousands)		Shares (In thousands)		Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (In years)	Aggregate Intrinsic Value (In thousands)
Outstanding at January 1, 2019	335		$	32.41
Outstanding at January 1, 2020								167		$	38.88
Granted	—		—					—		—
Exercised	(85	)	$	20.92				(67	)	$	38.07
Forfeited or expired	—		—					—		—
Outstanding at March 31, 2019	250		$	36.33	1.73	$	8,404
Vested and exercisable at March 31, 2019	250				1.73	$	8,404
Outstanding at March 31, 2020								100		$	39.42	1.50	$	4,893
Vested and exercisable at March 31, 2020								100				1.50	$	4,893



	Shares (In thousands)		Weighted- Average Grant Date Fair Value Per Share		Weighted-Average Remaining Contractual Term (In years)	Aggregate Intrinsic Value (In thousands)
Outstanding at January 1, 2020	61		$	70.11
Granted	42		$	100.23
Vested	(61	)	$	70.11
Forfeited	—		—
Outstanding at March 31, 2020	42		$	100.23	0.75	$	3,728
Outstanding and expected to vest at March 31, 2020	42				0.75	$	3,728



	March 31, 2020							December 31, 2019
(In thousands)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Domain name	$	1,261	$	—		$	1,261	$	1,261	$	—		$	1,261
Developed technology	37,960		(26,730		)	11,230		37,960		(25,933		)	12,027
Customer relationships	16,700		(15,025		)	1,675		20,030		(18,098		)	1,932
Technology licenses	1,926		(344		)	1,582		1,926		(281		)	1,645
Total	$	57,847	$	(42,099	)	$	15,748	$	61,177	$	(44,312	)	$	16,865



	March 31, 2019							December 31, 2018
(In thousands)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Domain name	$	1,261	$	—		$	1,261	$	1,261	$	—		$	1,261
In-process research and development	4,690		—			4,690		4,690		—			4,690
Developed technology	33,270		(23,258		)	10,012		33,270		(22,464		)	10,806
Customer relationships	20,030		(16,947		)	3,083		20,030		(16,520		)	3,510
Technology licenses	1,176		(149		)	1,027		1,000		(115		)	885
Total	$	60,427	$	(40,354	)	$	20,073	$	60,251	$	(39,099	)	$	21,152



	Three Months Ended
Customer	March 31, 2020		March 31, 2019
Avnet	11	%	13	%
Powertech Distribution Ltd.	11	%	*



(In thousands)	Balance Sheet Classification	March 31, 2019
Right-of-use assets
Operating lease assets	Other assets	$	6,792
Lease liabilities
Current operating lease liabilities	Other accrued liabilities	$	1,657
Non-current operating lease liabilities	Other liabilities	4,917
Total		$	6,574



~~Lease term and discount rate~~	~~March 31,~~ ~~2019~~
~~Weighted average remaining lease term~~	~~5.0 years~~
~~Weighted average discount rate~~	~~4.0~~	%


	Three Months Ended March 31,						Three Months Ended March 31,
(dollars in millions)	2019			2018			2020			2019
Net revenues	$	89.2		$	103.1		$	109.7		$	89.2
Gross profit	$	45.5		$	53.5		$	56.5		$	45.5
Gross margin	51.0		%	51.9		%	51.5		%	51.0		%



Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Repurchased Under the Plans or Programs (in millions)
January 1, 2019, to January 31, 2019	121,110	$	60.29	121,110	$	43.9
February 1, 2019, to February 28, 2019	—	—		—	$	43.9
March 1, 2019, to March 31, 2019	—	—		—	$	43.9
Total	121,110			121,110


*†	Portions of this exhibit have been omitted as being immaterial and would be competitively harmful if ~~publicly~~ disclosed.



		POWER INTEGRATIONS, INC.

Dated:	~~April 25, 2019~~May 7, 2020	By:	/s/ SANDEEP NAYYAR
			Sandeep Nayyar Chief Financial Officer (Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer)