What changed in this filing

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Item 1. Financial Statements

2024-05-03 compared with 2023-11-08 · 532 added, 686 removed, 459 unchanged (73% of the section changed)

3 unchanged sentences

(In thousands, except par value)

September 30,

Current assets:

Cash and cash equivalents

$ 421,178  

$ 288,607  

$ 488,273 $ 527,843

Short-term investments

621,123  

449,266  

798,116 580,633

Accounts receivable, net

185,820  

182,714  

397,288  

447,290  

194,428 179,858

395,990 383,702

Other current assets

109,967  

42,742  

99,685 147,463

Total current assets

1,735,376  

1,410,619  

1,976,492 1,819,499

Property and equipment, net

358,226  

357,157  

375,573 368,952

Acquisition-related intangible assets, net

Deferred tax assets, net

23,676  

35,252  

32,784 28,054

Other long-term assets

204,240  

249,286  

$ 2,328,089  

$ 2,058,885  

LIABILITIES AND STOCKHOLDERS’

157,023 211,277

$ 2,578,701 $ 2,434,353

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$ 64,707  

$ 61,461  

$ 103,471 $ 62,958

Accrued compensation and related benefits

64,634  

88,260  

70,541 56,286

Other accrued liabilities

120,677  

113,679  

137,868 115,791

Total current liabilities

250,018  

263,400  

311,880 235,035

Income tax liabilities

55,806  

53,509  

66,337 60,724

Other long-term liabilities

77,401  

73,374  

86,927 88,655

Total liabilities

383,225  

390,283  

465,144 384,414

Commitments and contingencies

Stockholders’

Stockholders’ equity:

Common stock and additional paid-in capital:

3 unchanged sentences

48,667 and 48,028 , respectively

1,092,569  

975,276  

1,176,382 1,129,937

Retained earnings

899,398  

716,403  

977,724 947,064

Accumulated other comprehensive loss

( 47,103 )  

Total stockholders’

1,944,864  

1,668,602  

Total liabilities and stockholders’

$ 2,328,089  

$ 2,058,885  

( 40,549 ) ( 27,062 )

Total stockholders’ equity

2,113,557 2,049,939

Total liabilities and stockholders’ equity

$ 2,578,701 $ 2,434,353

See accompanying notes to unaudited condensed consolidated financial statements.

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(In thousands, except per-share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

$ 457,885 $ 451,065

Cost of revenue

205,444 192,285

252,441 258,780

Operating expenses:

Research and development

75,990 63,709

Selling, general and administrative

80,964 70,795

Total operating expenses

156,954 134,504

Operating income

Other income (expense), net

95,487 124,276

Other income, net

Income before income taxes

105,027 129,573

Income tax expense

12,486 19,771

$ 92,541 $ 109,802

Net income per share:

$ 1.90 $ 2.32

$ 1.89 $ 2.26

Weighted-average shares outstanding:

48,635 47,234

48,928 48,655

See accompanying notes to unaudited condensed consolidated financial statements.

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(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

$ 121,163  

$ 124,337  

$ 330,469  

$ 318,582  

Other comprehensive loss, net of tax:

Three Months Ended March 31,

$ 92,541 $ 109,802

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments

( 4,838 )  

( 26,081 )  

( 28,099 )  

( 13,822 ) 2,919

Change in unrealized gains and losses on available-for-sale securities, net of tax of $( 248 ) and $ 311 , respectively

( 1,157 )  

Other comprehensive loss, net of tax:

( 3,706 )  

( 27,238 )  

( 24,026 )  

Other comprehensive income (loss), net of tax:

( 13,487 ) 5,132

Comprehensive income

$ 117,457  

$ 97,099  

$ 306,443  

$ 260,778  

$ 79,054 $ 114,934

See accompanying notes to unaudited condensed consolidated financial statements.

MONOLITHIC POWER SYSTEMS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

(In thousands, except per-share amounts)

2 unchanged sentences

Comprehensive

Stockholders’

Three Months Ended September 30, 2023

Balance as of July 1, 2023

47,611  

$ 1,055,130  

$ 827,356  

$ ( 43,397 )  

$ 1,839,089  

121,163  

Other comprehensive loss

( 3,706 )  

Dividends and dividend equivalents declared ($ 1.00 per share)

( 49,121 )  

Common stock issued under the employee equity incentive plan

Common stock issued under the employee stock purchase plan

Stock-based compensation expense

33,604  

Balance as of September 30, 2023

47,911  

$ 1,092,569  

$ 899,398  

$ ( 47,103 )  

$ 1,944,864  

Common Stock and

Additional Paid-in Capital

Comprehensive

Stockholders’

Three Months Ended September 30, 2022

Balance as of July 1, 2022

46,787  

$ 891,888  

$ 545,920  

$ ( 14,686 )  

$ 1,423,122  

124,337  

Other comprehensive loss

( 27,238 )  

Dividends and dividend equivalents declared ($ 0.75 per share)

( 36,617 )  

Common stock issued under the employee equity incentive plan

Common stock issued under the employee stock purchase plan

Stock-based compensation expense

43,000  

Balance as of September 30, 2022

46,941  

$ 938,993  

$ 633,640  

$ ( 41,924 )  

$ 1,530,709  

Common Stock and

Additional Paid-in Capital

Comprehensive

Stockholders’

Nine Months Ended September 30, 2023

Stockholders’

Three Months Ended March 31, 2024

Balance as of January 1, 2024

47,107  

$ 975,276  

$ 716,403  

$ ( 23,077 )  

$ 1,668,602  

330,469  

48,028 $ 1,129,937 $ 947,064 $ ( 27,062 ) $ 2,049,939

- - 92,541 - 92,541

Other comprehensive loss

( 24,026 )  

- - - ( 13,487 ) ( 13,487 )

Dividends and dividend equivalents declared ($ 1.25 per share)

( 147,474 )  

- - ( 61,881 ) - ( 61,881 )

Common stock issued under the employee equity incentive plan

Common stock issued under the employee stock purchase plan

11 4,606 - - 4,606

Repurchases of common stock

( 6 ) ( 4,076 ) - - ( 4,076 )

Stock-based compensation expense

108,607  

Balance as of September 30, 2023

47,911  

$ 1,092,569  

$ 899,398  

$ ( 47,103 )  

$ 1,944,864  

- 45,915 - - 45,915

Balance as of March 31, 2024

48,667 $ 1,176,382 $ 977,724 $ ( 40,549 ) $ 2,113,557

Common Stock and

1 unchanged sentence

Comprehensive

Stockholders’

Nine Months Ended September 30, 2022

Income (Loss)

Stockholders’

Three Months Ended March 31, 2023

Balance as of January 1, 2023

46,256  

$ 803,226  

$ 424,879  

$ 15,880  

$ 1,243,985  

318,582  

Other comprehensive loss

( 57,804 )  

47,107 $ 975,276 $ 716,403 $ ( 23,077 ) $ 1,668,602

- - 109,802 - 109,802

Other comprehensive income

- - - 5,132 5,132

Dividends and dividend equivalents declared ($ 1.00 per share)

( 109,821 )  

- - ( 49,130 ) - ( 49,130 )

Common stock issued under the employee equity incentive plan

295 1,110 - - 1,110

Common stock issued under the employee stock purchase plan

9 3,737 - - 3,737

Stock-based compensation expense

125,545  

Balance as of September 30, 2022

46,941  

$ 938,993  

$ 633,640  

$ ( 41,924 )  

$ 1,530,709  

- 37,008 - - 37,008

Balance as of March 31, 2023

47,411 $ 1,017,131 $ 777,075 $ ( 17,945 ) $ 1,776,261

See accompanying notes to unaudited condensed consolidated financial statements.

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(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

$ 92,541 $ 109,802

Adjustments to reconcile net income to net cash provided by operating activities:

1 unchanged sentence

Amortization of premium (discount) on available-for-sale securities

(Gain) loss on deferred compensation plan investments

Gain on sales of equity investment

( 4,123 ) 260

Gain on deferred compensation plan investments

( 4,019 ) ( 2,534 )

Deferred taxes, net

Stock-based compensation expense

45,926 37,009

Changes in operating assets and liabilities:

Accounts receivable

( 14,578 ) ( 1,558 )

( 11,596 ) 16,063

Accounts payable

35,934 ( 880 )

Accrued compensation and related benefits

14,698 13,422

Income tax liabilities

1 unchanged sentence

Net cash provided by operating activities

248,051 218,807

Cash flows from investing activities:

Purchases of property and equipment

( 15,991 ) ( 8,854 )

Purchases of investments

( 365,856 ) ( 129,321 )

Maturities and sales of investments

149,766 152,698

Cash paid for acquisition, net of cash acquired

Contributions to deferred compensation plan, net

( 650 ) ( 2,209 )

Net cash provided by (used in) investing activities

( 266,015 ) 12,314

Cash flows from financing activities:

Property and equipment purchased on extended payment terms

( 978 ) ( 374 )

Proceeds from common stock issued under the employee equity incentive plan

Proceeds from common stock issued under the employee stock purchase plan

Repurchases of common stock

Dividends and dividend equivalents paid

( 49,553 ) ( 36,725 )

Net cash used in financing activities

( 50,001 ) ( 32,252 )

Effect of change in exchange rates

Net increase in cash, cash equivalents and restricted cash

( 4,818 ) 1,497

Net increase (decrease) in cash, cash equivalents and restricted cash

( 72,783 ) 200,366

Cash, cash equivalents and restricted cash, beginning of period

561,181 288,729

Cash, cash equivalents and restricted cash, end of period

$ 488,398 $ 489,095

Supplemental disclosures for cash flow information:

Cash paid for income taxes, net

Cash paid (refunded) for income taxes, net

$ 725 $ ( 1,300 )

Non-cash investing and financing activities:

Liability accrued for property and equipment purchases

$ 5,995 $ 2,482

Liability accrued for dividends and dividend equivalents

$ 61,892 $ 49,219

See accompanying notes to unaudited condensed consolidated financial statements.

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The accompanying unaudited condensed consolidated financial statements have been prepared by Monolithic Power Systems, Inc.

(the “Company”

or “MPS”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Certain information and disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted in accordance with these accounting principles, rules and regulations.

The information in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Annual Report on Form 10 -K for the year ended December 31, 2022 , filed with the SEC on February 24, 2023.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods presented.

The financial statements contained in this Quarterly Report on Form 10 -Q are not necessarily indicative of the results that may be expected for the year ending December 31, 

2023 or for any other future periods.

(the “Company” or “MPS”) in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”).

Certain information and disclosures normally included in financial statements prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) have been condensed or omitted in accordance with these accounting principles, rules and regulations.

The financial statements contained in this Quarterly Report on Form 10 -Q are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or for any other future periods.

Summary of Significant Accounting Policies

There have been no changes to the Company’s significant accounting policies during the three months ended March 31, 2024.

In addition to those described in the Company’s audited consolidated financial statements included in the Annual Report on Form 10 -K for the year ended December 31, 2023, the Company is subject to the following significant accounting policy due to the recent acquisition.

Goodwill and Acquisition-Related Intangible Assets

Goodwill represents the excess of fair value of purchase consideration over fair value of net tangible and identifiable intangible assets acquired as of the date of an acquisition.

In-process research and development (“IPR&D”) assets represent the fair value of incomplete research and development (“R&D”) projects that had not reached technological feasibility as of the date of acquisition.

IPR&D assets are initially capitalized at fair value as intangible assets with indefinite lives.

When IPR&D projects are completed, they are reclassified as amortizable intangible assets and are amortized over their estimated useful lives.

Alternatively, if IPR&D projects are abandoned, they are impaired and expensed as R&D costs.

Acquisition-related intangible assets with finite lives consist of developed technologies, which are amortized on a straight-line basis over their estimated remaining useful lives.

The amortization expense is recorded in cost of revenue in the Condensed Consolidated Statements of Operations.

Use of Estimates

1 unchanged sentence

Significant estimates and assumptions used in these condensed consolidated financial statements primarily include those related to revenue recognition, inventory valuation, valuation of share-based awards, contingencies and income tax valuation allowances.

Actual results could differ from these estimates and assumptions, and any such differences may be material to the Company’s condensed consolidated financial statements.

New Accounting Pronouncements Not Yet Adopted as of March 31, 2024

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures , which aims to improve disclosures regarding a public entity’s reportable segments, primarily through more comprehensive disclosures around significant segment expenses.

The standard is effective for annual periods beginning January 1, 2024 and for interim periods beginning January 1, 2025, and should be applied retroactively to all prior periods presented.

The Company is evaluating the potential effect that the updated standard will have on its financial statement disclosures.

In December 2023, the FASB issued ASU 2023 - 09, Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures , which aims to improve an entity’s income tax disclosures around its effective rate reconciliation, income taxes paid, disaggregation of income before income taxes and income tax expense.

The guidance will be effective for annual periods beginning January 1, 2025.

The standard should be applied prospectively but retrospective application is permitted.

The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

REVENUE RECOGNITION

Revenue from Product Sales

The Company generates revenue primarily from product sales, which include assembled and tested integrated circuits (“ICs”), as well as dies in wafer form.

These product sales accounted for 99 % of the Company’s total revenue for both the three and nine months ended September 30, 2023 , and 98 % of the Company’s total revenue for both the three and nine months ended September 30, 2022 .

The remaining revenue primarily includes royalty revenue from licensing arrangements and revenue from wafer testing services performed for third parties, which have not been significant for the periods presented.

See Note 7 for the disaggregation of the Company’s revenue by geographic region and by product family.

The Company sells its products primarily through third -party distributors, value-added resellers, original equipment manufacturers (“OEMs”), original design manufacturers (“ODMs”) and electronic manufacturing service (“EMS”) providers.

For the three months ended September 30, 2023 and 2022 , 77 % and 

83 % of the Company’s product sales were made through distribution arrangements, respectively.

For the nine months ended September 30, 2023 and 2022 , 79 % and 83 % of the Company’s product sales were made through distribution arrangements, respectively.

The Company generates revenue primarily from product sales, which include assembled and tested integrated circuits (“ICs”), power modules as well as dies in wafer form.

These product sales accounted for 99 % of the Company’s total revenue for both the three months ended March 31, 2024 and 2023 .

The remaining revenue primarily includes royalty revenue from licensing arrangements and revenue from wafer testing services performed for third parties.

See Note 8 for the disaggregation of the Company’s revenue by geographic region and by product family.

For the three months ended March 31, 2024 and 2023 , 85 % and 81 % of the Company’s product sales were made through distribution arrangements, respectively.

These distribution arrangements contain enforceable rights and obligations specific to those distributors and not the end customers.

Purchase orders, which are generally governed by sales agreements or the Company’s standard terms of sale, set the final terms for unit price, quantity, shipping and payment agreed between the Company and the customer.

The Company considers purchase orders to be the contracts with customers.

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(a) the Company has transferred physical possession of the products, (b) the Company has a present right to payment, (c) the customer has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products.

In accordance with the shipping terms specified in the contracts, these criteria are generally met when the products are shipped from the Company’s facilities (such as the “Ex Works”

shipping term) or delivered to the customers’

locations (such as the “Delivered Duty Paid”

shipping term).

Under certain consignment agreements, revenue is not recognized when the products are shipped and delivered to be held at customers’

designated locations because the Company continues to control the products and retain ownership, and the customers do not have an unconditional obligation to pay.

The Company recognizes revenue when the customers consume the products from the consigned inventory locations, at which time control transfers to the customers and the Company invoices them for payment.

In accordance with the shipping terms specified in the contracts, these criteria are generally met when the products are shipped from the Company’s facilities (such as the “Ex Works” shipping term) or delivered to the customers’ locations (such as the “Delivered Duty Paid” shipping term).

Under certain consignment agreements, the Company recognizes revenue when the customers consume the products from the consigned inventory locations, at which time control transfers to the customers and the Company issues invoices.

Variable Consideration

The Company accounts for price adjustments and stock rotation rights as variable consideration that reduces the transaction price and recognizes that reduction in the same period the associated revenue is recognized.

Four U.S.-based distributors have price adjustment rights when they sell the Company’s products to their end customers at a price that is lower than the distribution price invoiced by the Company.

When the Company receives claims from the distributors that products have been sold to the end customers at the lower prices, the Company issues the distributors credit memos for the price adjustments.

Certain U.S.-based distributors have price adjustment rights when they sell the Company’s products to their end customers at a price that is lower than the distribution price invoiced by the Company.

When the Company receives claims from the distributors that products have been sold to the end customers at the lower price, the Company issues the distributors credit memos for the price adjustments.

The Company estimates the price adjustments using the expected value method based on an analysis of historical claims, at both the distributor and product level, as well as an assessment of any known trends of product sales mix.

2 unchanged sentences

The Company records a credit against accounts receivable for the estimated price adjustments, with a corresponding reduction to revenue.

Certain distributors have limited stock rotation rights that permit the return of a small percentage of the previous six months’

purchases in accordance with the contract terms.

Certain distributors have limited stock rotation rights that permit the return of a small percentage of the previous six months’ purchases in accordance with the contract terms.

The Company estimates the stock rotation returns using the expected value method based on an analysis of historical returns, and the current level of inventory in the distribution channel.

4 unchanged sentences

The Company records a receivable when it has an unconditional right to receive consideration after the performance obligations are satisfied.

September 30, 2023 and December 31, 2022 , accounts receivable totaled $ 185.8  million and $ 182.7  million, respectively.

The Company’s accounts receivable are short-term, with standard payment terms generally ranging from 30 to 90 days.

The Company’s accounts receivables are short-term, with standard payment terms generally ranging from 30 to 90 days.

The Company does not require its customers to provide collateral to support accounts receivable.

The Company assesses the collectability by reviewing accounts receivable on a customer-by-customer basis.

To manage credit risk, management performs ongoing credit evaluations of the customers’

financial condition, monitors payment performance, and assesses current economic conditions, as well as reasonable and supportable forecasts of future economic conditions, that may affect collectability of the outstanding receivables.

For certain high-risk customers, the Company requires standby letters of credit or advance payments prior to shipments of goods.

The Company assesses collectability by reviewing accounts receivable on a customer-by-customer basis.

To manage credit risk, management performs ongoing credit evaluations of the customers’ financial condition, monitors payment performance, and assesses current economic conditions, as well as reasonable and supportable forecasts of future economic conditions, that may affect collectability of the outstanding receivables.

For certain customers, the Company requires standby letters of credit or advance payments prior to shipments of goods.

The Company did not recognize any write-offs of accounts receivable or record any allowance for credit losses for the periods presented.

Contract Liabilities:

For certain customers located in Asia, the Company requires cash payments two weeks before the products are scheduled to be shipped to the customers.

For customers without credit terms, the Company requires cash payments two weeks before the products are scheduled to be shipped to the customers.

The Company records these payments received in advance of performance as customer prepayments within current accrued liabilities.

As of September 30, 2023 and December 31, 2022 , customer prepayments totaled $ 1.5  million and $ 3.6 million, respectively.

The decrease in the customer prepayment balance for the 

nine months ended September 30, 2023 resulted from a decrease in unfulfilled customer orders for which the Company had received payments.

For the nine months ended September 30, 2023 , the Company recognized substantially all of the revenue that was included in the customer prepayment balance as of December 31, 2022 .

As of March 31, 2024 and December 31, 2023 , customer prepayments totaled $ 2.7 million and $ 2.8 million, respectively.

For the three months ended March 31, 2024 , the Company recognized all revenue that was included in the customer prepayment balance as of December 31, 2023 .

Practical Expedients

The Company has elected the practical expedient to expense sales commissions as incurred because the amortization period would have been one year or less.

The Company’s standard payment terms generally require customers to pay 30 to 90 days after the Company satisfies the performance obligations.

For those customers who are required to pay in advance, the Company satisfies the performance obligations generally within a quarter.

For these reasons, the Company has elected not to determine whether contracts with customers contain significant financing components.

The Company’s unsatisfied performance obligations primarily include products held in consignment arrangements and customer purchase orders for products that the Company has not yet shipped.

Because the Company expects to fulfill these performance obligations within one year, the Company has elected not to disclose the amount of these remaining performance obligations.

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2014 Equity Incentive Plan

In April 2013, the Board of Directors adopted the 2014 Equity Incentive Plan (the “2014 Plan”), which the Company’s stockholders approved in June 2013.

In April 2013, the Board of Directors adopted the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), which the Company’s stockholders approved in June 2013.

In October 2014, the Board of Directors approved certain amendments to the 2014 Plan.

The amended 2014 Plan became effective on November 13, 2014, and provided for the issuance of up to 5.5 million shares.

In April 2020, the Board of Directors further amended and restated the amended 2014 Plan (the “Amended and Restated 2014 Plan”), which the Company’s stockholders approved in June 2020.

The Amended and Restated 2014 Plan became effective on June 11, 2020, and provides for the issuance of up to 10.5 million shares.

The Amended and Restated 2014 Plan will expire on June 11, 2030.

As of September 30, 2023 , 4.2  million shares remained available for future issuance under the Amended and Restated 2014 Plan.

The Amended and Restated 2014 Plan will cease being available for new awards on June 11, 2030.

As of March 31, 2024 , 3.9 million shares remained available for future issuance under the Amended and Restated 2014 Plan.

Stock-Based Compensation Expense

The Company recognized stock-based compensation expenses as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Cost of revenue

$ 1,020  

$ 1,186  

$ 3,317  

$ 3,691  

Research and development (“R&D”)

26,406  

26,875  

Selling, general and administrative (“SG&A”)

24,103  

32,524  

78,880  

95,157  

$ 1,398 $ 1,147

Research and development

Selling, general and administrative (“SG&A”)

34,081 27,248

Total stock-based compensation expense

$ 33,602  

$ 42,997  

$ 108,603  

$ 125,723  

$ 45,926 $ 37,009

Tax benefit related to stock-based compensation (1)

$ 1,753  

$ 1,879  

Amount reflects the tax benefit related to stock-based compensation recorded for equity awards that are expected to generate tax deductions when they vest in future periods.

Equity awards granted to the Company’s executive officers are subject to the tax deduction limitations set by Section 162 (m) of the Internal Revenue Code.

Restricted Stock Units ( “

RSUs ”

The Company’s RSUs include time-based RSUs, RSUs with performance conditions (“PSUs”), RSUs with market conditions (“MSUs”), and RSUs with both market and performance conditions (“MPSUs”).

Vesting of awards with performance conditions or market conditions is subject to the achievement of pre-determined performance/market goals and the approval of such achievement by the Compensation Committee of the Board of Directors (the “Compensation Committee”).

All awards include service conditions which require continued employment with the Company.

Equity awards granted to the Company’s executive officers are subject to the tax deduction limitations set by Section 162 (m) of the Internal Revenue Code.

Restricted Stock Units ( “ RSUs ” )

Vesting of awards with performance conditions or market conditions is subject to the achievement of pre-determined performance or market goals and the approval of such achievement by the Compensation Committee of the Board of Directors (the “Compensation Committee”).

All awards include service conditions which require continued employment with or services to the Company.

A summary of RSU activity is presented in the table below (in thousands, except per-share amounts):

2 unchanged sentences

Outstanding at January 1, 2024

$ 327.13  

$ 275.70  

$ 126.57  

$ 176.50  

$ 479.76  

$ 449.34  

$ 330.95  

$ 445.50  

( 42 )  

$ 288.51  

( 504 )  

$ 257.41  

( 240 )  

$ 23.57  

( 786 )  

$ 187.56  

$ 376.82  

$ 312.12  

( 14 )  

$ 104.16  

( 23 )  

$ 192.23  

Outstanding at September 30, 2023

$ 406.52  

$ 380.12  

$ 146.51  

$ 209.67  

Amount reflects the number of awards that may ultimately be earned based on management’s probability assessment of the achievement of performance conditions at each reporting period.

The intrinsic value related to vested RSUs was $ 148.9 million and $ 62.3 million for the three months ended September 30, 2023 and 2022 , respectively.

The intrinsic value related to vested RSUs was $ 388.6 million and $ 277.9 million for the nine months ended September 30, 2023 and 2022 , respectively.

As of September 30, 2023 , the total intrinsic value of all outstanding RSUs was $ 987.4 million, based on the closing stock price of $ 462.00 .

As of September 30, 2023 , unamortized compensation expense related to all outstanding RSUs was $ 236.5 million with a weighted-average remaining recognition period of approximately two  years.

Cash proceeds from vested PSUs with a purchase price requirement totaled $ 1.1 million and $ 4.3 million for the nine months ended September 30, 2023 and 2022 , respectively.

102 $ 411.11 482 $ 397.77 1,502 $ 152.89 2,086 $ 222.04

21 $ 632.98 240 (1)

$ 609.22 - $ - 261 $ 610.67

( 14 ) $ 372.30 ( 57 ) $ 287.31 ( 563 ) $ 68.48 ( 634 ) $ 94.76

( 2 ) $ 467.30 - $ - - $ - ( 2 ) $ 423.45

Outstanding at March 31, 2024

107 $ 458.67 665 $ 489.68 939 $ 203.38 1,711 $ 330.53

Amount reflects the number of awards that may ultimately be earned based on management’s probability assessment of the achievement of performance conditions at each reporting period.

The intrinsic value related to vested RSUs was $ 403.0 million and $ 141.6 million for the three months ended March 31, 2024 and 2023 , respectively.

As of March 31, 2024 , the total intrinsic value of all outstanding RSUs was $ 1.1 billion, based on the closing stock price of $ 677.42 .

As of March 31, 2024 , unamortized compensation expense related to all outstanding RSUs was $ 339.5 million with a weighted-average remaining recognition period of approximately two years.

Time-Based RSUs:

For the nine months ended September 30, 2023 , the Compensation Committee granted 45,000 RSUs with service conditions to non-executive employees and non-employee directors.

For the three months ended March 31, 2024 , the Compensation Committee granted 21,000 RSUs with service conditions to non-executive employees and non-employee directors.

The RSUs generally vest over four years for employees and one year for directors, subject to continued service with the Company.

In February 2023, the Compensation Committee granted 69,000 PSUs to the executive officers, which represent a target number of shares that can be earned based on the degree of achievement of two sets of performance goals ( “2023 Executive PSUs”).

For the first goal, the executive officers can earn up to 300 % of the target number of the 2023 Executive PSUs based on the achievement of the Company’s average three -year ( 2023 through 2025 ) revenue growth rate in excess of the analog industry’s average three -year revenue growth rate as published by the Semiconductor Industry Association (the “SIA”).

For the second goal, the executive officers can earn up to an additional 200 % of the target number of the 2023 Executive PSUs if the Company secures additional manufacturing capacity outside of Mainland China during a three -year performance period.

For both goals, a percentage of the 2023 Executive PSUs will fully vest on December 31, 2025, depending on the degree to which the pre-determined goals are met during the performance periods.

Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2023 Executive PSUs is $ 156.2 million.

In February 2023, the Compensation Committee granted 13,000 PSUs to certain non-executive employees, which represent a target number of shares that can be earned based on the degree of achievement of the Company’s 2024 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s average two -year ( 2023 and 2024 ) revenue growth rate compared against the analog industry’s average two -year revenue growth rate as published by the SIA ( “2023 Non-Executive PSUs”).

In February 2024, the Compensation Committee granted 50,000 PSUs to the executive officers, which represent a target number of shares that can be earned based on the degree of achievement of three sets of performance goals ( “2024 Executive PSUs”).

For the first goal, the executive officers can earn up to 300 % of the target number of the 2024 Executive PSUs based on the achievement of the Company’s average three -year ( 2024 through 2026 ) revenue growth rate in excess of the analog industry’s average three -year revenue growth rate as published by the Semiconductor Industry Association (the “SIA”).

For the second goal, the executive officers can earn an additional 100 % of the target number of the 2024 Executive PSUs if the Company achieves a reduction in 2026 of 25% global combined Scope 1 and Scope 2 greenhouse gas emissions against the 2022 baseline.

For the third goal, the executive officers can earn 50 % of the target number of the 2024 Executive PSUs if more than one - third of the Company’s total 2026 revenue in the automotive market is generated from Electronic Vehicle (“EV”) automakers.

In addition, for the third goal, the executive officers can earn 50 % of the target number of the 2024 Executive PSUs if total 2026 revenue from products enabling EV powertrains and EV 48V systems grows to 200% of the 2023 baseline.

For the first goal, a percentage of the 2024 Executive PSUs will fully vest on December 31, 2026, depending on the degree to which the pre-determined goal is met during the performance period.

The 2024 Executive PSUs related to the second and the third goal will fully vest on December 31, 2026 if the pre-determined goals are met during the performance period.

Assuming the achievement of the highest level of the performance goals, the total stock-based compensation cost for the 2024 Executive PSUs will be $ 154.3 million.

In February 2024, the Compensation Committee granted 11,000 PSUs to certain non-executive employees, which represent a target number of shares that can be earned based on the degree of achievement of the Company’s 2025 revenue goals for certain regions or product line divisions, or based on the degree of achievement of the Company’s average two -year ( 2024 and 2025 ) revenue growth rate compared against the analog industry’s average two -year revenue growth rate as published by the SIA ( “2024 Non-Executive PSUs”).

The maximum number of shares that an employee can earn is either 200 % or 300 % of the target number of the 2024 Non-Executive PSUs, depending on the job classification of the employee.

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The remaining 2024 Non-Executive PSUs will vest over the following two years on a quarterly basis.

Assuming the achievement of the highest level of performance goals, the total stock-based compensation cost for the 2023 Non-Executive PSUs is $ 13.9 million.

Assuming the achievement of the highest level of performance goals, the total stock-based compensation cost for the 2024 Non-Executive PSUs will be $ 17.7 million.

The 2024 Executive PSUs and the 2024 Non-Executive PSUs contain a purchase price feature, which requires the employees to pay the Company $ 30 per share upon vesting of the shares.

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The Company determined the grant date fair value of the 2024 Executive PSUs and the 2024 Non-Executive PSUs using a Monte Carlo simulation model with the following assumptions:

stock price of $ 467.62 , simulation term of four years, expected volatility of 51.0 %, risk-free interest rate of 3.9 %, and expected dividend yield of 0.9 %.

stock price of $ 632.98 , simulation term of three years, expected volatility of 49.4 %, risk-free interest rate of 4.1 %, and expected dividend yield of 0.8 %.

There is no illiquidity discount because the awards do not contain any post-vesting sales restrictions.

2004 Employee Stock Purchase Plan (as amended and restated, the “

2004 ESPP ”

On August 16, 2023, the 2004 ESPP was amended and restated to, among other changes, provide for the issuance of up to 4.4 million shares of the Company’s common stock.

The 2004 ESPP will expire on 

August 16, 2038.

For the 

three  months ended 

September 30, 2023 

9,000 and 7,000  shares were issued under the 2004 ESPP, respectively.

For the nine months ended September 30, 2023 and 2022, 18,000 and 14,000 shares were issued under the 2004 ESPP, respectively.

As of September 30, 2023, 4.4  million shares were available for future issuance under the 2004 ESPP.

The intrinsic value of the shares issued was $ 0.7  million and $ 0.9  million for the 

three  months ended 

September 30, 2023 

2022,  respectively.

The intrinsic value of the shares issued was $ 1.4  million and $ 1.6  million for the 

nine  months ended 

September 30, 2023 

2022,  respectively.

As of September 30, 2023, the unamortized expense was $ 1.2  million, which will be recognized through the first quarter of 2024.

2004 Employee Stock Purchase Plan (as amended and restated, the “ 2004 ESPP ” )

On August 16, 2023, the 2004 ESPP was amended and restated to, among other changes, provide for the issuance of up to 4.4 million shares of the Company’s common stock.

The 2004 ESPP will expire on August 16, 2038.

For the three months ended March 31, 2024 and 2023 , 11,000 and 9,000 shares were issued under the 2004 ESPP, respectively.

As of March 31, 2024 , 4.4 million shares were available for future issuance under the 2004 ESPP.

The intrinsic value of the shares issued was $ 3.5 million and $ 0.7 million for the three months ended March 31, 2024 and 2023 , respectively.

As of March 31, 2024 , the unamortized expense was $ 1.1 million, which will be recognized through the third quarter of 2024.

The Black-Scholes model was used to value the employee stock purchase rights with the following weighted-average assumptions:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Expected term (in years)

Expected volatility

50.8 %  

63.2 %  

53.3 %  

42.4 % 55.8 %

Risk-free interest rate

Dividend yield

Cash proceeds from the shares issued under the 

2004 ESPP were $ 7.6 million and $ 5.9 million for the nine months ended September 30, 2023 and 2022, respectively.

Cash proceeds from the shares issued under the 2004 ESPP were $ 4.6 million and $ 3.7 million for the three months ended March 31, 2024 and 2023 , respectively.

On January 3, 2024 ( the “Acquisition Date”), the Company acquired 100 % of the outstanding capital stock of Axign B.V.

(“Axign”), a Dutch company that designs and develops class-D audio ICs, targeting applications ranging from portable consumer speakers to automotive and professional-grade multi-speaker systems.

Commencing on the Acquisition Date, Axign became a wholly-owned subsidiary of the Company and its results of operations have been included in the Company’s consolidated financial statements.

Purchase Consideration

The preliminary purchase consideration was approximately $ 33.7 million in cash and includes an estimated working capital adjustment and other adjustments.

Cash paid at the Acquisition Date included $ 3.8 million that is being held in an escrow account for a one -year period until Axign’s satisfaction of certain representations and warranties.

In connection with the acquisition, the Company incurred $ 0.4 million in transaction costs that were expensed as incurred and included in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.

Preliminary Purchase Price Allocation

The preliminary purchase price allocation for Axign is as follows (in thousands):

Estimated Net Asset

Other tangible assets acquired, net of liabilities assumed

Intangible assets:

Developed technology

Total identifiable net assets acquired

Total net assets acquired

The intangible asset acquired with a finite life includes the core developed technology with an estimated remaining useful life of eight years.

The acquired intangible asset with an indefinite life includes an incomplete R&D project that had not reached technological feasibility as of the Acquisition Date.

The fair values of the developed technology and the IPR&D were determined using the income approach.

The goodwill arising from the acquisition was primarily attributed to the assembled workforce and synergies that are anticipated to enable the Company to develop solutions with lower power consumption in the consumer and automotive markets using Axign’s digital feedback technology.

The goodwill is not expected to be deductible for tax purposes.

The Company is still in the process of determining the final fair values of the assets acquired and liabilities assumed.

As a result, the purchase price allocation for Axign is not complete as of March 31, 2024.

The Company expects to finalize the allocation by the quarter ending June 30, 2024.

Final determination of the fair values could result in an adjustment to the preliminary purchase price allocation with a corresponding adjustment to goodwill.

BALANCE SHEET COMPONENTS

Inventories consist of the following (in thousands):

September 30,

Raw materials

$ 108,425 $ 118,917

Work in process

141,703 112,750

Finished goods

145,862 152,035

$ 395,990 $ 383,702

Other Current Assets

Other current assets consist of the following (in thousands):

September 30,

Prepaid wafer purchase

RSU tax withholding proceeds receivable

Prepaid wafer expenses

Prepaid expenses

Accrued interest receivable

Prepaid wafer purchase of $ 50.0 million relates to a deposit made to a supplier under a long-term wafer supply agreement.

21,588 28,964

RSU tax withholding proceeds receivable

Other receivables

Restricted cash

18,082 15,154

$ 99,685 $ 147,463

As of March 31, 2024 and December 31, 2023, the Company held $ 60 million in prepaid wafer expenses and $ 50 million in other receivables, respectively, related to deposits made to a supplier under a long-term wafer supply agreement.

See Note 9 for further details.

The restricted cash included in other current assets as of December 31, 2023 was related to preliminary purchase consideration held in a trust account in connection with the Company’s acquisition of Axign and was paid in January 2024.

See Note 4 for further details.

Other Long-Term Assets

Other long-term assets consist of the following (in thousands):

September 30,

Prepaid wafer purchase

Deferred compensation plan assets

Prepaid wafer purchase relates to a deposit made to a supplier under a long-term wafer supply agreement.

$ 83,050 $ 78,381

Prepaid wafer purchases

60,000 120,000

13,973 12,896

$ 157,023 $ 211,277

Prepaid wafer purchases relate to a deposit made to a supplier under a long-term wafer supply agreement.

See Note 9 for further details.

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Other accrued liabilities consist of the following (in thousands):

September 30,

Dividends and dividend equivalents

$ 69,291 $ 57,697

Stock rotation and sales returns

30,208 18,843

12,873 16,906

Income tax payable

As of September 30, 2023 , stock rotation and sales returns included a $ 25.0  million stock rotation reserve, compared with a $ 14.3  million reserve as of December 31, 2022 .

17,464 14,282

$ 137,868 $ 115,791

As of March 31, 2024 , stock rotation and sales returns included a $ 24.7 million stock rotation reserve, compared with a $ 16.7 million reserve as of December 31, 2023 .

The change in the reserve is affected by the timing of customer returns and the level of inventory in the distribution channel.

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Other long-term liabilities consist of the following (in thousands):

September 30,

Deferred compensation plan liabilities

$ 78,085 $ 80,903

Operating lease liabilities

Dividend equivalents

The Company has operating leases primarily for administrative, sales and marketing offices, manufacturing operations and research and development facilities, employee housing units and certain equipment.

$ 86,927 $ 88,655

The Company has operating leases primarily for administrative, sales and marketing offices, manufacturing operations and R&D facilities, employee housing units and certain equipment.

These leases have remaining lease terms from less than one year to seven years.

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The Company does not have finance lease arrangements.

The following table summarizes the balances of operating lease right-of-use (“ROU”) assets and liabilities (in thousands):

September 30,

The following table summarizes the balances of operating lease right-of-use (“ROU”) assets and liabilities (in thousands):

Financial Statement Line Item

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Other long-term assets

$ 8,910 $ 8,355

Operating lease liabilities

Other accrued liabilities

$ 2,635 $ 2,303

Other long-term liabilities

$ 5,920 $ 5,565

The following tables summarize certain information related to the leases (in thousands, except percentages and years):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating lease costs

Total lease costs

Three Months Ended September 30,

Nine Months Ended September 30,

$ 1,447 $ 1,254

Three Months Ended March 31,

Cash paid for amounts included in the measurement of lease liabilities:

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ROU assets obtained in exchange for new operating lease liabilities

September 30,

$ 1,462 $ 4,545

Weighted-average remaining lease term (in years)

Weighted-average discount rate

As of September 30, 2023 , the maturities of the lease liabilities were as follows (in thousands):

2023 (remaining three months)

As of March 31, 2024 , the maturities of the lease liabilities were as follows (in thousands):

2024 (remaining nine months)

Total remaining lease payments

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Total lease liabilities

As of September 30, 2023 , the Company had no operating leases that had not yet commenced.

As of March 31, 2024 , operating leases that have not yet commenced are not material.

The Company owns certain office buildings and leases a portion of these properties to third parties under arrangements that are classified as operating leases.

These leases have remaining lease terms ranging from less than one year to three years.

Some of these leases include options to renew the lease term for up to five years.

For the three months ended September 30, 2023 and 2022 , income related to lease payments was $ 0.4  million and $ 0.6 million, respectively.

For the nine months ended September 30, 2023 and 2022 , income related to lease payments was $ 1.2 million and $ 1.7  million, respectively.

As of September 30, 2023 , future income related to lease payments was as follows (in thousands):

2023 (remaining three months)

These leases have remaining lease terms ranging from less than one year to two years.

One of these leases includes a tenant option to renew the lease term for up to five years.

For the three months ended March 31, 2024 and 2023 , income related to lease payments was $ 0.2 million and $ 0.5 million, respectively.

As of March 31, 2024 , future income related to lease payments was as follows (in thousands):

2024 (remaining nine months)

NET INCOME PER SHARE

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Prior to the end of the contingency period, the number of contingently issuable shares included in the diluted net income per share is based on the number of shares, if any, that would be issuable under the terms of the arrangement at the end of the reporting period.

The Company’s RSUs contain forfeitable rights to receive cash dividend equivalents, which are accumulated and paid to the employees when the underlying RSUs vest.

Dividend equivalents accumulated on the underlying RSUs are forfeited if the employees do not fulfill the requisite service requirement and, as a result, the awards do not vest.

1 unchanged sentence

The following table sets forth the computation of basic and diluted net income per share (in thousands, except per-share amounts):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

$ 92,541 $ 109,802

Weighted-average outstanding shares — basic

48,635 47,234

Effect of dilutive securities

Weighted-average outstanding shares — diluted

48,928 48,655

Net income per share:

$ 1.90 $ 2.32

$ 1.89 $ 2.26

Anti-dilutive common stock equivalents were not material in any of the periods presented.

Stock Repurchase Program

In October 2023, the Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $ 640.0 million in the aggregate of its common stock through October 29, 2026.

Shares are retired upon repurchase.

The Company repurchased 6,100 shares of its common stock for an aggregate purchase price of $ 4.1 million during the three months ended March 31, 2024 .

Stock repurchased under the program may be made through open market repurchases, privately negotiated transactions or other structures in accordance with applicable state and federal securities laws, at times and in amounts as management deems appropriate.

The timing and the number of any repurchased common stock will be determined by the Company’s management based on its evaluation of market conditions, legal requirements, share price, and other factors.

The repurchase program does not obligate the Company to purchase any particular number of shares, and may be suspended, modified, or discontinued at any time without prior notice.

Inflation Reduction Act of 2022 requires a 1% excise tax based on the value of certain stock repurchases in excess of stock issued for employee compensation made after December 31, 2022.

This provision did not have an impact on the Company’s condensed consolidated financial statements for the three months ended March 31, 2024 .

SEGMENT, SIGNIFICANT CUSTOMERS AND GEOGRAPHIC INFORMATION

The Company operates in one reportable segment that includes the design, development, marketing and sale of high-performance, semiconductor-based power electronic solutions for the storage and computing, enterprise data, automotive, industrial, communications and consumer markets.

The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

The Company derives a majority of its revenue from sales to customers located outside North America, with geographic revenue based on the customers’

ship-to locations.

The Company sells its products primarily through third -party distributors and value-added resellers, and directly to OEMs, ODMs and EMS providers.

The following table summarizes those customers with sales equal to 10% or more of the Company’s total revenue:

Three Months Ended September 30,

Nine Months Ended September 30,

The Company operates in one reportable segment that includes the design, development, marketing and sale of high-performance, semiconductor-based power electronics solutions for the enterprise data, storage and computing, automotive, communications, consumer and industrial markets.

The Company derives a majority of its revenue from sales to customers located outside North America, with geographic revenue based on the customers’ ship-to locations.

The Company sells its products primarily to third -party distributors and value-added resellers, and directly to OEMs, ODMs and EMS providers.

The following table summarizes those customers with sales equal to 10% or more of the Company’s total revenue:

Three Months Ended March 31,

Distributor A

Distributor B

Distributor C

The Company’s agreements with these third -party customers were made in the ordinary course of business and may be terminated with or without cause by these customers with advance notice.

Although the Company may experience a short-term disruption in the distribution of its products and a short-term decline in revenue if its agreement with any of the distributors were terminated, the Company believes that such termination would not have a material adverse effect on its financial statements because it would be able to engage alternative distributors, resellers and other distribution channels to deliver its products to end customers within a short period following any termination of the agreement with a distributor.

The following table summarizes those customers with accounts receivable equal to 10% or more of the Company’s total accounts receivable:

September 30,

The Company’s agreements with these third -party customers were made in the ordinary course of business and may be terminated with or without cause by these customers with advance notice.

Although the Company may experience a short-term disruption in the distribution of its products and a short-term decline in revenue if its agreement with any of the distributors were terminated, the Company believes that such termination would not have a material adverse effect on its financial statements because it would be able to engage alternative distributors, resellers and other distribution channels to deliver its products to end customers within a short period following any termination of the agreement with a distributor.

The following table summarizes those customers with accounts receivable equal to 10% or more of the Company’s total accounts receivable:

Distributor A

Distributor B

Distributor C

* Represents less than 10%

The following is a summary of revenue by geographic region (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Country or Region

$ 263,040 $ 225,052

100,450 48,833

35,537 45,680

17,742 43,103

United States

14,820 31,017

Southeast Asia

13,239 26,432

12,948 30,815

$ 457,885 $ 451,065

The following is a summary of revenue by product family (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Product Family

Direct Current (“DC”) to DC

$ 415,975 $ 425,181

Lighting Control

41,910 25,884

$ 457,885 $ 451,065

The following is a summary of long-lived assets by geographic region (in thousands):

September 30,

$ 188,698 $ 184,685

United States

121,775 119,430

38,084 39,419

27,016 25,418

$ 375,573 $ 368,952

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

As they are considered assurance-type warranties, the Company does not account for them as separate performance obligations.

Warranty reserve requirements are mainly based on a specific assessment when a customer asserts a claim for warranty or a product defect.

Warranty reserve requirements are generally based on a specific assessment of the products sold with warranties when a customer asserts a claim for warranty or for a product defect.

The changes in warranty reserves are as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Balance at beginning of period

$ 16,906 $ 24,082

Warranties issued

Repairs, replacement and refund

( 4,015 ) ( 672 )

Changes in liability for pre-existing warranties

( 118 ) ( 4,046 )

Balance at end of period

$ 12,873 $ 19,726

Changes in liability for pre-existing warranties result from changes in estimates for warranties issued in prior periods.

Purchase Commitments

The Company has outstanding purchase obligations with its suppliers and other parties that require the future purchases of goods or services.

The purchase obligations primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, construction of manufacturing and research and development facilities, purchases of production and other equipment, and license arrangements.

The Company has outstanding purchase obligations with its suppliers and other parties that require the purchases of goods or services.

The purchase obligations primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, construction of manufacturing and R&D facilities, purchases of production and other equipment, and license arrangements.

In May 2022, the Company entered into a long-term supply agreement in order to secure manufacturing production capacity for silicon wafers over a four -year period.

As of September 30, 2023 , the Company had made prepayments under this agreement of $ 170.0 million, of which $ 50.0 million was classified as short-term.

Total estimated future unconditional purchase commitments to all suppliers and other parties as of September 30, 2023 were as follows (in thousands):

2023 (remaining three months)

The Company is a party to actions and proceedings in the ordinary course of business, including challenges to the enforceability or validity of its intellectual property, claims that the Company’s products infringe on the intellectual property rights of others, and employment matters.

As of March 31, 2024 , the Company had remaining prepayments under this agreement of $ 120.0 million, of which $ 60.0 million was classified as short-term.

Total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $120.0 million prepayment, as of March 31, 2024 were as follows (in thousands):

2024 (remaining nine months)

The Company may also be subject to litigation initiated by its stockholders.

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The Company defends itself vigorously against any such claims.

As of September 30, 2023 , there were no material pending legal proceedings to which the Company was a party.

As of March 31, 2024 , there were no material pending legal proceedings to which the Company was a party.

CASH, CASH EQUIVALENTS, INVESTMENTS AND RESTRICTED CASH

The following is a summary of the Company’s cash, cash equivalents and debt investments (in thousands):

September 30,

$ 377,324  

$ 273,145  

The following is a summary of the Company’s cash, cash equivalents and debt investments (in thousands):

$ 363,038 $ 392,329

Money market funds

43,854  

15,462  

125,235 135,514

Certificates of deposit

123,368  

130,467  

166,157 127,123

Corporate debt securities

130,614  

292,586  

Commercial paper

17,928  

60,380 95,101

treasuries and government agency bonds

362,165  

571,579 358,409

Auction-rate securities backed by student-loan notes

$ 1,042,901  

$ 739,584  

September 30,

$ 1,286,907 $ 1,109,043

Cash and cash equivalents

$ 421,178  

$ 288,607  

$ 488,273 $ 527,843

Short-term investments

621,123  

449,266  

798,116 580,633

Investment within other long-term assets

$ 1,042,901  

$ 739,584  

The following table summarizes the contractual maturities of the short-term and long-term available-for-sale investments as of September 30, 2023 (in thousands):

$ 1,286,907 $ 1,109,043

The following table summarizes the contractual maturities of the short-term and long-term available-for-sale investments as of March 31, 2024 (in thousands):

Amortized Cost

Due in less than 1 year

$ 405,120  

$ 403,201  

$ 738,665 $ 737,861

Due in 1 - 5 years

219,510  

217,922  

60,667 60,255

Due in greater than 5 years

$ 625,230  

$ 621,723  

$ 799,857 $ 798,634

Gross realized gains and losses recognized on the sales of available-for-sale investments were not material for the periods presented.

The following tables summarize the unrealized gain and loss positions related to the available-for-sale investments (in thousands):

September 30, 2023

March 31, 2024

Amortized Cost

2 unchanged sentences

Money market funds

$ 125,235 $ - $ - $ 125,235

Certificates of deposit

166,157 - - 166,157

Corporate debt securities

Commercial paper

61,353 1 ( 974 ) 60,380

treasuries and government agency bonds

571,822 7 ( 250 ) 571,579

Auction-rate securities backed by student-loan notes

525 - ( 7 ) 518

$ 925,092 $ 8 $ ( 1,231 ) $ 923,869

December 31, 2023

3 unchanged sentences

Money market funds

$ 15,462  

$ 135,514 $ - $ - $ 135,514

Certificates of deposit

130,467  

127,123 - - 127,123

Corporate debt securities

300,529  

( 7,961 )  

292,586  

Commercial paper

17,928  

96,636 4 ( 1,539 ) 95,101

treasuries and government agency bonds

( 202 )  

358,177 327 ( 95 ) 358,409

Auction-rate securities backed by student-loan notes

( 59 )  

$ 474,643  

$ ( 8,222 )  

$ 466,439  

574 - ( 7 ) 567

$ 718,024 $ 331 $ ( 1,641 ) $ 716,714

The following tables present information about the available-for-sale investments that had been in a continuous unrealized loss position for less than 12 months and for greater than 12 months (in thousands):

September 30, 2023

March 31, 2024

Less than 12 Months

4 unchanged sentences

Corporate debt securities

$ 29,476  

$ ( 79 )  

$ 97,133  

$ ( 2,752 )  

$ 126,609  

$ 5,436 $ ( 9 ) $ 51,943 $ ( 965 ) $ 57,379 $ ( 974 )

treasuries and government agency bonds

237,004  

( 693 )  

238,501  

509,959 ( 250 ) - - 509,959 ( 250 )

Auction-rate securities backed by student-loan notes

$ 266,480  

$ ( 772 )  

$ 99,230  

$ ( 2,755 )  

$ 365,710  

- - 518 ( 7 ) 518 ( 7 )

$ 515,395 $ ( 259 ) $ 52,461 $ ( 972 ) $ 567,856 $ ( 1,231 )

December 31, 2023

5 unchanged sentences

Corporate debt securities

$ 72,943  

$ ( 973 )  

$ 202,074  

$ ( 6,988 )  

$ 275,017  

$ 20,792 $ ( 19 ) $ 70,806 $ ( 1,520 ) $ 91,598 $ ( 1,539 )

treasuries and government agency bonds

( 200 )  

97,599 ( 95 ) - - 97,599 ( 95 )

Auction-rate securities backed by student-loan notes

( 59 )  

$ 73,930  

$ ( 975 )  

$ 211,083  

$ ( 7,247 )  

$ 285,013  

- - 567 ( 7 ) 567 ( 7 )

$ 118,391 $ ( 114 ) $ 71,373 $ ( 1,527 ) $ 189,764 $ ( 1,641 )

An impairment exists when the fair value of an investment is less than its amortized cost basis.

As of September 30, 2023 and December 31, 2022 , the Company did not consider the impairment of its investments to be a result of credit losses.

As of March 31, 2024 and December 31, 2023 , the Company did not consider the impairment of its investments to be a result of credit losses.

The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss.

The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.

When evaluating a debt security for impairment, management reviews factors such as the Company’s intent to sell, or whether it will more likely than not be required to sell, the security before recovery of its amortized cost basis, the extent to which the fair value of the security is less than its cost, the financial condition of the issuer and the credit quality of the investment.

Non-Marketable Equity Investment

In November 2020 , the Company made an equity investment in a privately held Swiss company (the “Investee”) that was accounted for under the measurement alternative.

In April 2022, the Company made an additional investment in the form of a convertible loan.

One member of the Company’s Board of Directors is an executive officer of a company that has a commercial relationship with the Investee.

In addition, the Company’s Chief Executive Officer had a personal investment in the Investee and was on the Investee’s board of directors.

In May 2023, the Company sold all its investments in the Investee for $ 7.4  million and recorded a gain of $ 1.4  million, which was included as a component of other income (expense), net, in the Condensed Consolidated Statements of Operations.

The Company’s investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.

Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported on the Condensed Consolidated Balance Sheets to the amounts reported on the Condensed Consolidated Statements of Cash Flows (in thousands):

September 30,

Cash and cash equivalents

$ 421,178  

$ 288,607  

$ 488,273 $ 527,843

Restricted cash included in other current assets

Restricted cash included in other long-term assets

Total cash, cash equivalents and restricted cash reported on the Condensed Consolidated Statements of Cash Flows

$ 421,300  

$ 288,729  

As of September 30, 2023 and December 31, 2022 , restricted cash included a security deposit that is set aside in a bank account and cannot be withdrawn by the Company under the terms of a lease agreement.

$ 488,398 $ 561,181

See Note 4 for additional information.

As of March 31, 2024 and December 31, 2023 , restricted cash included in other long-term assets was related to a security deposit that is set aside in a bank account and cannot be withdrawn by the Company under the terms of a lease agreement.

The restriction will end upon the expiration of the lease.

FAIR VALUE MEASUREMENTS

The following tables summarize the fair value of the Company’s financial assets measured on a recurring basis (in thousands):

September 30, 2023

Fair Value Hierarchy

The Company has estimated the fair value of its financial assets by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

● Level 1 —includes instruments with quoted prices in active markets for identical assets.

● Level 2 —includes instruments for which the valuations are based upon quoted market prices in active markets involving similar assets or inputs other than quoted prices that are observable for the assets.

The market inputs used to value these instruments generally consist of market yields, recently executed transactions, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency.

Pricing sources may include industry standard data providers, security master files from large financial institutions, and other third -party sources used to determine a daily market value.

● Level 3 —includes instruments for which the valuations are based on inputs that are unobservable and significant to the overall fair value measurement.

Financial Assets Measured at Fair Value on a Recurring Basis

The following tables summarize the fair value of the Company’s financial assets measured on a recurring basis (in thousands):

March 31, 2024

Money market funds

$ 125,235 $ 125,235 $ - $ -

Certificates of deposit

166,157 - 166,157 -

Corporate debt securities

Commercial paper

60,380 - 60,380 -

treasuries and government agency bonds

571,579 - 571,579 -

Auction-rate securities backed by student-loan notes

Mutual funds and money market funds under deferred compensation plan

57,373 57,373 - -

$ 981,242 $ 182,608 $ 798,116 $ 518

December 31, 2023

Money market funds

$ 135,514 $ 135,514 $ - $ -

Certificates of deposit

127,123 - 127,123 -

Corporate debt securities

Commercial paper

95,101 - 95,101 -

treasuries and government agency bonds

358,409 - 358,409 -

Auction-rate securities backed by student-loan notes

Mutual funds and money market funds under deferred compensation plan

Level 1 —includes instruments with quoted prices in active markets for identical assets.

Level 2 —includes instruments for which the valuations are based upon quoted market prices in active markets involving similar assets or inputs other than quoted prices that are observable for the assets.

Pricing sources may include industry standard data providers, security master files from large financial institutions, and other third -party sources used to determine a daily market value.

Level 3 —includes instruments for which the valuations are based on inputs that are unobservable and significant to the overall fair value measurement.

54,836 54,836 - -

$ 771,550 $ 190,350 $ 580,633 $ 567

Redemptions and changes in the fair value of the auction-rate securities classified as Level 3 assets were not material for the periods presented.

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The following table summarizes the deferred compensation plan balances on the Condensed Consolidated Balance Sheets (in thousands):

September 30,

Deferred compensation plan asset components:

Cash surrender value of corporate-owned life insurance policies

$ 25,677 $ 23,545

Fair value of mutual funds and money market funds

57,373 54,836

$ 83,050 $ 78,381

Deferred compensation plan assets reported in:

Other long-term assets

$ 83,050 $ 78,381

Deferred compensation plan liabilities reported in:

Accrued compensation and related benefits (short-term)

$ 7,534 $ 384

Other long-term liabilities

OTHER INCOME (EXPENSE), NET

The components of other income (expense), net, are as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

78,085 80,903

$ 85,619 $ 81,287

OTHER INCOME, NET

The components of other income, net, are as follows (in thousands):

Three Months Ended March 31,

Interest income

$ 6,914 $ 4,808

Amortization of discount (premium) on available-for-sale securities

Gain (loss) on deferred compensation plan investments

4,123 ( 260 )

Gain on deferred compensation plan investments

Charitable contributions

Gain on sales of equity investments

The income tax provision or benefit for interim periods is generally determined using an estimate of the Company’s annual effective tax rate and adjusted for discrete items, if any, in the relevant period.

Each quarter the estimate of the annual effective tax rate is updated, and if the Company’s estimated tax rate changes, a cumulative adjustment is made.

The income tax expense for the three months ended September 30, 2023 was $ 16.7 million, or 12.1 % of pre-tax income.

The income tax expense for the nine months ended September 30, 2023 was $ 55.8 million, or 14.5 % of pre-tax income.

The effective tax rates were lower than the federal statutory rate of 21 % primarily due to foreign income from the Company’s subsidiaries in Bermuda and China being taxed at lower statutory tax rates, and excess tax benefits from stock-based compensation.

The decrease in the effective tax rates relative to the federal statutory rate was partially offset by the inclusion of the global intangible low-taxed income (“GILTI”) tax and the addition of a valuation allowance against China deferred tax assets arising from the indefinite extension of the R&D super deduction policy in China.

The income tax expense for the three months ended 

September 30, 2022 was $ 27.5 million, or 

18.1 % of pre-tax income.

The income tax expense for the 

nine months ended September 30, 2022 was $ 65.6 million, or 

17.1 % of pre-tax income.

The effective tax rates were lower than the federal statutory rate of 21 % primarily due to foreign income from the Company’s subsidiaries in Bermuda and China being taxed at lower statutory tax rates, and excess tax benefits from stock-based compensation.

The decrease in the effective tax rates relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax.

On August 9, 2022, the U.S.

government enacted the U.S.

CHIPS and Science Act of 2022 (the “CHIPS Act”) to provide certain financial and tax incentives to the semiconductor industry, primarily for manufacturing activities within the United States.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was enacted and signed into law.

The IRA, among other things, introduced a new 15% corporate minimum tax, based on adjusted financial statement income of certain large corporations, and imposes a 1% surcharge on stock repurchases.

This excise tax was effective January 1, 2023.

The Company does not believe the CHIPS Act or the IRA had a material impact on the Company’s income tax provisions, results of operations or financial condition for the three and nine months ended September 30, 2023 .

( 5,850 ) ( 2,000 )

$ 9,540 $ 5,297

Each quarter the estimate of the annual effective tax rate is updated, and if the Company’s estimated tax rate changes, a cumulative adjustment is made.

The income tax expense for the three months ended March 31, 2024 was $ 12.5 million, or 11.9 % of pre-tax income.

The effective tax rate was lower than the federal statutory rate of 21 % primarily due to foreign income from the Company’s subsidiaries in Bermuda and China being taxed at lower statutory tax rates, and excess tax benefits from stock-based compensation.

The decrease in the effective tax rate relative to the federal statutory rate was partially offset by the inclusion of the global intangible low-taxed income (“GILTI”) tax .

The income tax expense for the three months ended March 31, 2023 was $ 19.8 million, or 15.3 % of pre-tax income.

The decrease in the effective tax rate relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax.

On December 27, 2023, the Bermuda Corporate Income Tax Act of 2023 (the “Bermuda CIT Act”) was enacted and signed into law.

It includes a 15% CIT applicable to Bermuda businesses that are multinational enterprises (“MNE”) with annual revenue of €750M or more beginning in 2025.

The Bermuda CIT Act also includes an Economic Transition Adjustment ( “ ETA ” ) that requires MNEs to revalue their assets and liabilities, excluding goodwill, at their fair value as of September 30, 2023.

There is an election to opt out of the ETA.

As the Bermuda CIT Act is not effective until January 1, 2025, the Company is evaluating whether or not to adopt this ETA.

Based on the information available, the Company has not recorded any changes to income tax expense related to the Bermuda CIT Act as of March 31, 2024 .

ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table summarizes the changes in accumulated other comprehensive loss (in thousands):

Unrealized Gains

Foreign Currency

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Balance as of January 1, 2024

Other comprehensive income before reclassifications

Net current period other comprehensive income

$ ( 2,184 ) $ ( 24,878 ) $ ( 27,062 )

Other comprehensive income (loss) before reclassifications

87 ( 13,822 ) ( 13,735 )

Net current period other comprehensive income (loss)

335 ( 13,822 ) ( 13,487 )

Balance as of March 31, 2024

Other comprehensive loss before reclassifications

Net current period other comprehensive loss

Balance as of June 30, 2023

Other comprehensive loss before reclassifications

Net current period other comprehensive loss

Balance as of September 30, 2023

$ ( 1,849 ) $ ( 38,700 ) $ ( 40,549 )

DIVIDENDS AND DIVIDEND EQUIVALENTS

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The Company has a dividend program approved by the Board of Directors, pursuant to which the Company intends to pay quarterly cash dividends on its common stock.

Based on the Company’s historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month.

The Board of Directors declared the following cash dividends (in thousands, except per-share amounts):

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Dividend declared per share

As of September 30, 2023 and December 31, 2022 , accrued dividends totaled $ 47.8  million and $ 35.3 million, respectively.

The declaration of any future cash dividends is at the discretion of the Board of Directors and will depend on, among other things, the Company’s financial condition, results of operations, capital requirements, business conditions, and other factors that the Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of the Company’s stockholders.

$ 1.25 $ 1.00

$ 60,834 $ 47,330

As of March 31, 2024 and December 31, 2023 , accrued dividends totaled $ 60.8 million and $ 47.9 million, respectively.

The Company anticipates that cash used for future dividend payments will come from its domestic cash, cash generated from ongoing U.S.

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Cash Dividend Equivalent Rights

The Company’s RSUs contain rights to receive cash dividend equivalents, which entitle employees who hold RSUs to the same dividend value per share as holders of common stock.

The dividend equivalents are accumulated and paid to the employees when the underlying RSUs vest.

Dividend equivalents accumulated on the underlying RSUs are forfeited if the employees do not fulfill the requisite service requirement and, as a result, the awards do not vest.

As of September 30, 2023 and December 31, 2022 , accrued dividend equivalents totaled $ 13.4  million and $ 13.8  million, respectively.

SUBSEQUENT EVENT

Stock Repurchase Program

In October 2023, 

the Board of Directors approved a new stock repurchase program authorizing the Company to repurchase up to $ 640.0 million in the aggregate of its common stock through October 29, 2026. 

The repurchases will be funded from available working capital and cash repatriation from its Bermuda subsidiary.

Management ’

s Discussion and Analysis of Financial Condition and Results of Operations

As of March 31, 2024 and December 31, 2023 , accrued dividend equivalents totaled $ 11.4 million and $ 11.9 million, respectively.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that have been made pursuant to and in reliance on the provisions of the Private Securities Litigation Reform Act of 1995.

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our plan to increase our revenue through the introduction of new products within our existing product families as well as in new product categories and families;

our belief that we may incur significant legal expenses that vary with the level of activity in each of our current or future legal proceedings;

our mission statement to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future;

the effects of macroeconomic factors, including the global economic downturn, the Russia-Ukraine conflict and the Middle East conflict on the semiconductor industry and our business;

the effect that liquidity of our investments has on our capital resources;

the continuing application of our products in the storage and computing, enterprise data, automotive, industrial, communications and consumer markets;

the continuing application of our products in the enterprise data, storage and computing, automotive, communications, consumer and industrial markets;

estimates of our future liquidity requirements;

the cyclical nature of the semiconductor industry;

the effects of macroeconomic factors, including the 2023 banking crisis, the global economic downturn, the Russia-Ukraine conflict and the Israel-Gaza conflict on the semiconductor industry and our business;

protection of our proprietary technology;

our belief that we may incur significant legal expenses that vary with the level of activity in each of our current or future legal proceedings;

expectations regarding protection of our proprietary technology;

business outlook for the remainder of 2024 and beyond;

the factors that we believe will impact our business, operations and financial condition, as well as our ability to achieve revenue growth;

the percentage of our total revenue from various end markets;

the expected percentage of our total revenue from various end markets;

our ability to identify, acquire and integrate companies, businesses and products, and achieve the anticipated benefits from such acquisitions and integrations;

the impact of various tax laws and regulations on our income tax provision, financial position and cash flows;

the expected impact of various tax laws and regulations on our income tax provision, financial position and cash flows;

our plan to repatriate cash from our subsidiary in Bermuda;

our intention and ability to execute our stock repurchase program and pay cash dividends and dividend equivalents;

our intention and ability to continue our stock repurchase program and pay cash dividends and dividend equivalents;

the factors that differentiate us from our competitors;

In some cases, words such as “would,”

“could,”

“may,”

“should,”

“predict,”

“potential,”

“targets,”

“continue,”

“anticipate,”

“expect,”

“intend,”

“plan,”

“believe,”

“seek,”

“estimate,”

“project,”

“forecast,”

“will,”

the negative of these terms or other variations of such terms and similar expressions relating to the future identify forward-looking statements.

All forward-looking statements are based on our current outlook, expectations, estimates, projections, beliefs and plans or objectives about our business, our industry and the global economy, including our expectations regarding the potential impacts of macroeconomic factors, such as the ongoing banking crisis, the global economic downturn, the Russia-Ukraine conflict and the Israel-Gaza conflict on the semiconductor industry and our business.

our ability to adequately remediate our material weakness.

In some cases, words such as “would,” “could,” “may,” “should,” “predict,” “potential,” “targets,” “continue,” “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “estimate,” “project,” “forecast,” “will,” the negative of these terms or other variations of such terms and similar expressions relating to the future identify forward-looking statements.

All forward-looking statements are based on our current outlook, expectations, estimates, projections, beliefs and plans or objectives about our business, our industry and the global economy, including our expectations regarding the potential impacts of macroeconomic factors, such as the global economic downturn, the Russia-Ukraine conflict and the Middle East conflict on the semiconductor industry and our business.

These statements are not guarantees of future performance and are subject to significant risks and uncertainties.

Actual events or results could differ materially and adversely from those expressed in any such forward-looking statements.

Except as required by law, we disclaim any duty, and undertake no obligation, to update any forward-looking statements, whether as a result of new information relating to existing conditions, future events or otherwise or to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Risks and uncertainties that could cause actual results to differ materially include those set forth throughout this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K including, in particular, in the sections entitled “Risk Factors.” Except as required by law, we disclaim any duty, and undertake no obligation, to update any forward-looking statements, whether as a result of new information relating to existing conditions, future events or otherwise or to release publicly the results of any future revisions we may make to forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this Quarterly Report on Form 10-Q and entail significant risks.

Readers should carefully review future reports and documents that we file from time to time with the SEC, such as our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K.

We are a fabless company with a global footprint that provides high-performance, semiconductor-based power electronic solutions.

Incorporated in 1997, our three core strengths include deep system-level knowledge, strong semiconductor expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging.

These combined advantages enable us to deliver reliable, compact, and monolithic solutions found in storage and computing, enterprise data, automotive, industrial, communications and consumer applications.

Our mission is to reduce energy and material consumption to improve all aspects of quality of life.

We believe that we differentiate ourselves by offering solutions that are more highly integrated, smaller in size, more energy-efficient, more accurate with respect to performance specifications and, consequently, more cost-effective than many competing solutions.

We plan to continue to introduce new products within our existing product families, as well as in new innovative product categories.

We are a fabless global company that provides high-performance, semiconductor-based power electronics solutions.

MPS’s mission is to reduce energy and material consumption to improve all aspects of quality of life and create a sustainable future.

Founded in 1997 by our CEO Michael Hsing, MPS has three core strengths:

deep system-level knowledge, strong semiconductor design expertise, and innovative proprietary technologies in the areas of semiconductor processes, system integration, and packaging.

These combined advantages are designed to enable MPS to deliver reliable, compact, and monolithic solutions that are highly energy-efficient, cost-effective, and environmentally responsible while providing a consistent return on investment to our stockholders.

We operate in the cyclical semiconductor industry.

While we are not immune from industry downturns, we have targeted product and market areas that we believe have the ability to offer above average industry performance over the long term.

We are subject to industry downturns, but we have targeted product and market areas that we believe have the ability to offer above average industry performance over the long term.

Historically, our revenue has generally been higher in the second half of the year than in the first half although various factors, such as market conditions and the timing of key product introductions, could impact this trend.

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Typical supply chain lead times for orders are generally 16 to 26 weeks.

These factors, combined with the fact that our customers can cancel or reschedule orders without significant penalty to the customer, make the forecasting of our orders and revenue difficult.

These factors, combined with the fact that our customers can cancel or reschedule orders without significant penalty to the customer, make the forecasting of our orders, revenue and expenses difficult.

We derive most of our revenue from sales through distribution arrangements and direct sales to customers in Asia, where our products are incorporated into end-user products.

Our revenue from direct and indirect sales to customers in Asia was 89% and 86% of our total revenue for the three months ended September 30, 2023 and 2022, respectively, and 86% and 88% of our total revenue for the nine months ended September 30, 2023 and 2022, respectively.

We derive a majority of our revenue from the sales of our DC to DC converter products which serve the storage and computing, enterprise data, automotive, industrial, communications and consumer markets.

Our revenue from direct and indirect sales to customers in Asia was 93% and 84% of our total revenue for the three months ended March 31, 2024 and 2023, respectively.

We derive a majority of our revenue from the sales of our DC to DC converter products which serve the enterprise data, storage and computing, automotive, communications, consumer and industrial markets.

We believe our ability to achieve revenue growth will depend, in part, on our ability to develop new products, enter new market segments, gain market share, manage litigation risk, diversify our customer base and continue to secure manufacturing capacity.

Macroeconomic Conditions and Regulations

The semiconductor industry has been facing, and continues to face, a number of macro-economic challenges including reduced consumer spending, fluctuations in demand for semiconductors, rising inflation, increased interest rates, and fluctuations in currency rates.

Macroeconomic Conditions and Regulations

The semiconductor industry continues to face a number of macro-economic challenges including reduced consumer spending, fluctuations in demand for semiconductors, rising inflation, increased interest rates, and fluctuations in currency rates.

We remain cautious in light of continued challenging macroeconomic conditions and will continue to monitor the potential impact on our operations.

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We will continue to monitor any changes to export control laws, trade regulations and other trade requirements and are committed to complying with all applicable trade laws, regulations and other requirements.

Cybersecurity Risk Management

We are committed to protecting our information technology (“IT”) assets, including computers, systems, corporate networks and sensitive data, from unauthorized access or attack.

We have established an internal global IT policy handbook as well as IT security management control procedures designed to:

Create information security awareness and define responsibilities among our employees and business partners;

• 

Implement controls to identify IT risks and monitor the use of our systems and information resources;

• 

Establish key policies and processes to adequately and timely respond to security threats;

• 

Maintain disaster recovery and business continuity plans;

• 

Ensure compliance with applicable laws and regulations regarding the management of information security.

We require all new employees to attend an IT security training orientation.

In addition, on a regular basis, our IT team updates training materials related to our policies and procedures and shares news and articles related to cybersecurity awareness, both of which are stored on our intranet and available to all employees.

For example, we continue to provide guidelines and training to employees related to the proper usage of generative artificial intelligence (“AI”) applications for work purposes. 

Our IT Steering Committee, which consists of our senior management and IT team, meets on a regular basis to review initiatives and projects to improve IT security, as well as resources and budgets for our cybersecurity compliance and education efforts.

In 2021, we completed the ISO 27001 certification, a globally recognized information security standard.

We also currently maintain an insurance policy that provides certain coverage for losses we incur due to data breaches and other cybersecurity incidents.

The Audit Committee of our Board of Directors, which consists of three independent members, is responsible for the oversight of our cybersecurity risk program.

At least quarterly, the Audit Committee reviews reports and updates from our Chief Financial Officer and IT senior management about major risk exposures, their potential impact on our business operations, and management’s strategies to assess, monitor and mitigate those risks.

The Audit Committee also provides updates of their oversight and findings to the Board of Directors.

We believe we have adequate resources and sufficient policies, procedures and oversight in place to identify and manage our IT security risks to our business operations.

To date, we do not believe we have experienced any material information security breaches and have not incurred significant operating expenses related to information security breaches.

Critical Accounting Policies and Estimates

In preparing our condensed consolidated financial statements in accordance with GAAP, we are required to make estimates, assumptions and judgments that affect the amounts reported in our financial statements and the accompanying disclosures.

Estimates and judgments used in the preparation of our condensed consolidated financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, including demand for our products, economic conditions and other current and future events, such as macroeconomic factors, including the impact of the banking crisis earlier this year and the global economic downturn.

Estimates and judgments used in the preparation of our condensed consolidated financial statements are, by their nature, uncertain and unpredictable, and depend upon, among other things, many factors outside of our control, including demand for our products, economic conditions and other current and future events, such as macroeconomic factors, including the impact of the global economic downturn, Russia-Ukraine conflict and the Middle East conflict.

Actual results could differ from these estimates and assumptions, and any such differences may be material to our condensed consolidated financial statements.

As of the date of issuance of these condensed consolidated financial statements, we are not aware of any specific event or circumstance that would require our management to update the significant estimates and assumptions used in the preparation of the condensed consolidated financial statements included in this Report, as compared to those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022.

As new events continue to evolve and additional information becomes available, any changes to these estimates and assumptions will be recognized in the condensed consolidated financial statements as soon as they become known.

Results of Operations

The table below sets forth the data on the Condensed Consolidated Statements of Operations as a percentage of revenue:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

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Operating income

Other income (expense), net

Other income, net

Income before income taxes

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The following table summarizes our revenue by end market:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

Storage and Computing

Enterprise Data

Storage and Computing

Communications

Revenue for the three months ended September 30, 2023 was $474.9 million, a decrease of $20.5 million, or 4.1%, from $495.4 million for the three months ended September 30, 2022.

The decrease in revenue was primarily due to lower shipment volume, which was partially offset by higher average selling prices resulting primarily from product mix.

For the three months ended September 30, 2023, revenue from the storage and computing market increased $16.6 million, or 14.7%, from the same period in 2022.

This increase was primarily due to higher sales in commercial notebooks, partially offset by lower sales of storage applications.

Revenue from the enterprise data market increased $23.7 million, or 31.4%, from the same period in 2022.

This increase was primarily due to higher demand for generative AI applications, partially offset by lower sales of cloud-based CPU server applications.

Revenue from the automotive market increased $8.1 million, or 9.3%, from the same period in 2022.

This increase was primarily due to higher sales of our highly integrated solutions for advanced driver assistance systems.

Revenue from the industrial market decreased $16.6 million, or 28.2%, from the same period in 2022.

This decrease was mainly driven by lower sales of power sources, security and industrial equipment applications.

Revenue from the communications market decreased $25.5 million, or 35.3%, from the same period in 2022.

This decrease was primarily driven by lower demand for infrastructure related products.

Revenue from the consumer market decreased $26.8 million, or 30.1%, from the same period in 2022.

This decrease was broad-based and primarily driven by lower sales of products for home appliances.

Revenue for the nine months ended September 30, 2023 was $1,367.1 million, an increase of $33.0 million, or 2.5%, from $1,334.1 million for the nine months ended September 30, 2022.

The increase in revenue was primarily due to increases in the average selling prices resulting primarily from product mix, which was partially offset by lower shipment volume.

For the nine months ended September 30, 2023, revenue from the storage and computing market increased $42.1 million, or 12.7%, from the same period in 2022.

This increase was primarily due to higher sales in commercial notebooks and graphic card applications.

Revenue from the enterprise data market increased $11.1 million, or 6.1%, from the same period in 2022.

This increase was primarily due to higher demand for generative AI applications, partially offset by lower sales of our cloud-based CPU server applications.

Revenue from the automotive market increased $102.3 million, or 50.5%, from the same period in 2022.

This increase was broad-based and included higher sales of our highly integrated solutions for advanced driver assistance systems, body electronics and digital cockpits.

Revenue from the industrial market decreased $23.8 million, or 14.6%, from the same period in 2022.

This decrease was mainly driven by lower sales of power sources, security and industrial equipment applications, partially offset by higher sales in industrial meter applications.

Revenue from the communications market decreased $23.2 million, or 12.4%, from the same period in 2022.

This decrease primarily reflected lower revenue related to infrastructure related products.

Revenue from the consumer market decreased $75.6 million, or 28.4%, from the same period in 2022.

This decrease was broad-based and primarily driven by lower sales of products for home appliances, gaming, mobile devices and smart TVs.

Revenue for the three months ended March 31, 2024 was $457.9 million, an increase of $6.8 million, or 1.5%, from $451.1 million for the three months ended March 31, 2023.

The increase in revenue was primarily due to higher average selling prices resulting primarily from product mix, which was partially offset by lower shipment volume.

For the three months ended March 31, 2024, revenue from the enterprise data market increased $102.6 million, or 217.5%, from the same period in 2023.

This increase was primarily due to higher sales of our power management solutions for AI applications.

Revenue from the storage and computing market decreased $13.7 million, or 11.4%, from the same period in 2023.

This decrease was primarily due to lower sales of storage applications, partially offset by higher sales of commercial notebooks.

Revenue from the automotive market decreased $18.3 million, or 17.3%, from the same period in 2023.

This decrease was primarily due to lower sales of our highly integrated applications supporting infotainment, USB connector and body electronics.

Revenue from the communications market decreased $21.3 million, or 31.3%, from the same period in 2023.

This decrease was primarily driven by lower demand for infrastructure related products.

Revenue from the consumer market decreased $25.3 million, or 39.9%, from the same period in 2023.

This decrease was broad-based and primarily driven by lower sales of products for home appliances and gaming.

Revenue from the industrial market decreased $17.2 million, or 36.3%, from the same period in 2023.

This decrease was mainly driven by lower sales of security and industrial meters applications.

Cost of Revenue and Gross Margin

Cost of revenue primarily consists of costs incurred to manufacture, assemble and test our products, as well as warranty costs, inventory-related and other overhead costs, and stock-based compensation expenses.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

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As a percentage of revenue

Cost of revenue was $211.3 million, or 44.5% of revenue, for the three months ended September 30, 2023, and $204.5 million, or 41.3% of revenue, for the three months ended September 30, 2022.

The $6.8 million increase in cost of revenue was primarily driven by product mix partially offset by lower shipment volume and lower inventory write-downs.

Gross margin was 55.5% for the three months ended September 30, 2023, compared with 58.7% for the three months ended September 30, 2022.

The decrease in gross margin was mainly driven by product mix, partially offset by lower inventory write-downs as a percentage of revenue.

Cost of revenue was $597.1 million, or 43.7% of revenue, for the nine months ended September 30, 2023, and $553.4 million, or 41.5% of revenue, for the nine months ended September 30, 2022.

The $43.7 million increase in cost of revenue was primarily driven by product mix and higher manufacturing overhead costs, partially offset by lower shipment volume and lower inventory write-downs and warranty expenses.

Gross margin was 56.3% for the nine months ended September 30, 2023, compared with 58.5% for the nine months ended September 30, 2022.

The decrease in gross margin was mainly driven by product mix and higher manufacturing overhead costs, partially offset by lower inventory write-downs and warranty expenses as a percentage of revenue.

Research and Development 

Cost of revenue was $205.4 million, or 44.9% of revenue, for the three months ended March 31, 2024, and $192.3 million, or 42.6% of revenue, for the three months ended March 31, 2023.

The $13.2 million increase in cost of revenue was primarily driven by product mix, higher inventory write-downs and higher warranty expenses, partially offset by lower shipment volume.

Gross margin was 55.1% for the three months ended March 31, 2024, compared with 57.4% for the three months ended March 31, 2023.

The decrease in gross margin was mainly driven by an increase in inventory write-downs and warranty expenses as a percentage of revenue.

Research and Development

R&D expenses primarily consist of cash compensation and benefits, stock-based compensation and deferred compensation for design and product engineers, expenses related to new product development and supplies, and facility costs.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

As a percentage of revenue

R&D expenses were $64.8 million, or 13.6% of revenue, for the three months ended September 30, 2023, and $67.3 million, or 13.6% of revenue, for the three months ended September 30, 2022.

The $2.5 million decrease in R&D expenses was primarily due to a $6.5 million decrease in cash compensation expenses.

This decrease was partially offset by a $4.0 million increase in new product development expenses.

R&D expenses were $192.2 million, or 14.1% of revenue, for the nine months ended September 30, 2023, and $178.5 million, or 13.4% of revenue, for the nine months ended September 30, 2022.

The $13.7 million increase in R&D expenses was primarily due to a $17.8 million increase in new product development expenses, and a $4.7 million increase in expenses related to the changes in the value of deferred compensation plan liabilities, partially offset by a $9.5 million decrease in cash compensation expenses.

Selling, General and Administrative 

R&D expenses were $76.0 million, or 16.6% of revenue, for the three months ended March 31, 2024, and $63.7 million, or 14.1% of revenue, for the three months ended March 31, 2023.

The $12.3 million increase in R&D expenses was primarily due to a $5.8 million increase in cash compensation expenses, a $3.5 million increase in stock-based compensation expenses and related employer payroll taxes, and a $1.1 million increase in third party service fees.

Selling, General and Administrative

SG&A expenses primarily include cash compensation and benefits, stock-based compensation and deferred compensation for sales, marketing and administrative personnel, sales commissions, travel expenses, facilities costs, third party service fees and litigation expenses.

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands, except percentages)

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As a percentage of revenue

SG&A expenses were $63.2 million, or 13.3% of revenue, for the three months ended September 30, 2023, and $71.8 million, or 14.4% of revenue, for the three months ended September 30, 2022. The $8.6 million decrease in SG&A expenses was driven by an $8.4 million decrease in stock-based compensation expenses, and a $3.3 million decrease in net litigation expenses, partially offset by a $1.5 million increase in travel and professional service expenses and a $1.4 million increase in cash compensation expenses.

SG&A expenses were $205.6 million, or 15.0% of revenue, for the nine months ended September 30, 2023, and $212.4 million, or 15.9% of revenue, for the nine months ended September 30, 2022.

The $6.8 million decrease in SG&A expenses was driven by a $16.3 million decrease in stock-based compensation expenses, and a $4.4 million decrease in cash compensation expenses, partially offset by an $8.0 million increase in expense related to changes in the value of the deferred compensation plan liabilities, and a $7.0 million increase consisting mostly of travel related expenses, professional services and software licensing fees.

Other Income (Expense), Net

Other income, net, was $2.3 million for the three months ended September 30, 2023, compared with $5 thousand for the three months ended September 30, 2022.

The increase in other income was primarily due to an increase of $5.2 million in net interest income, partially offset by an increase of $2.2 million in charitable contributions.

Other income, net, was $14.1 million for the nine months ended September 30, 2023, compared with other expense, net, of $5.7 million for the nine months ended September 30, 2022.

The increase in other income was primarily due to an increase of $12.0 million in income related to changes in the value of the deferred compensation plan investments and an increase of $11.7 million in net interest income, partially offset by an increase of $5.0 million in charitable contributions.

SG&A expenses were $81.0 million, or 17.7% of revenue, for the three months ended March 31, 2024, and $70.8 million, or 15.7% of revenue, for the three months ended March 31, 2023.

The $10.2 million increase in SG&A expenses was driven by a $10.5 million increase in stock-based compensation expenses and related employer payroll taxes.

Other Income, Net

Other income, net, was $9.5 million for the three months ended March 31, 2024, compared with $5.3 million for the three months ended March 31, 2023.

The increase in other income was primarily due to an increase of $6.5 million in net interest income and $1.5 million in income related to changes in the value of deferred compensation plan investments, partially offset by an increase in charitable contributions.

Income Tax Expense

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Each quarter the estimate of the annual effective tax rate is updated, and if our estimated tax rate changes, a cumulative adjustment is made.

The income tax expense for the three months ended September 30, 2023 was $16.7 million, or 12.1% of pre-tax income.

The income tax expense for the nine months ended September 30, 2023 was $55.8 million, or 14.5% of pre-tax income.

The effective tax rates were lower than the federal statutory rate of 21% primarily due to foreign income from our subsidiaries in Bermuda and China being taxed at lower statutory tax rates, and excess tax benefits from stock-based compensation.

The decrease in the effective tax rates relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax and the addition of a valuation allowance against China deferred tax assets arising from the indefinite extension of the R&D super deduction policy in China.

The income tax expense for the three months ended September 30, 2022 was $27.5 million, or 18.1% of pre-tax income.

The income tax expense for the nine months ended September 30, 2022 was $65.6 million, or 17.1% of pre-tax income.

The decrease in the effective tax rates relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax.

In August 2022, the CHIPS Act and the IRA were enacted and signed into law, neither of which had a material impact on our income tax provisions, results of operations or financial condition for the three and nine months ended September 30, 2023.

The income tax expense for the three months ended March 31, 2024 was $12.5 million, or 11.9% of pre-tax income.

The effective tax rate was lower than the federal statutory rate of 21% primarily due to foreign income from our subsidiaries in Bermuda and China being taxed at lower statutory tax rates, and excess tax benefits from stock-based compensation.

The decrease in the effective tax rate relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax .

The income tax expense for the three months ended March 31, 2023 was $19.8 million, or 15.3% of pre-tax income.

The decrease in the effective tax rate relative to the federal statutory rate was partially offset by the inclusion of the GILTI tax.

The Organization for Economic Co-operation and Development enacted model rules for a new global minimum tax framework, also known as Pillar Two, and certain governments globally have enacted, or are in the process of enacting, legislation considering these model rules.

These rules did not have a material impact on our taxes for the three months ended March 31, 2024.

In December 2023, the Bermuda CIT Act was enacted and signed into law.

See Note 14 for further details.

Liquidity and Capital Resources

September 30,

(In thousands, except percentages)

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Working capital

As of September 30, 2023, we had cash and cash equivalents of $421.2 million and short-term investments of $621.1 million, compared with cash and cash equivalents of $288.6 million and short-term investments of $449.3 million as of December 31, 2022.

As of September 30, 2023, $365.8 million of cash and cash equivalents and $544.4 million of short-term investments were held by our international subsidiaries.

We have repatriated and may continue to repatriate cash from our Bermuda subsidiary with minimal tax impact to fund our expenditures in future periods.

As of March 31, 2024, we had cash and cash equivalents of $488.3 million and short-term investments of $798.1 million, compared with cash and cash equivalents of $527.8 million and short-term investments of $580.6 million as of December 31, 2023.

As of March 31, 2024, $310.3 million of cash and cash equivalents and $769.4 million of short-term investments were held by our international subsidiaries.

We have repatriated and may continue to repatriate cash from our Bermuda subsidiary to fund our expenditures in future periods.

We anticipate that earnings from other foreign subsidiaries will continue to be indefinitely reinvested.

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The following table summarizes our cash flow activities:

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

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Effect of change in exchange rates

Net increase in cash, cash equivalents and restricted cash

For the nine months ended September 30, 2023, the $290.4 million increase in cash provided by operating activities compared to the prior period was primarily due to decreased prepaid wafer expenses, decreased inventory purchases, increased accounts receivable collections and other changes in working capital.

For the nine months ended September 30, 2023, the $250.4 million increase in cash used in investing activities compared to the prior period was primarily due to an increase of $474.3 million in purchases of investments, partially offset by an increase of $223.2 million in sales of investments.

For the nine months ended September 30, 2023, the $36.4 million increase in cash used in financing activities compared to the prior period was primarily due to an increase of $33.7 million in dividend and dividend equivalent payments.

In the future, in order to strengthen our financial position, respond to adverse developments, changes in our circumstance or unforeseen events or conditions, or fund our growth, we may need to raise additional funds by any one or a combination of the following:

issuing equity securities, issuing debt or convertible debt securities, incurring indebtedness secured by our assets, or selling certain product lines and/or portions of our business.

There can be no guarantee that we will be able to raise additional funds on terms acceptable to us, or at all.

From time to time, we have engaged in discussions with third parties concerning capital investments and potential acquisitions of product lines, technologies, businesses and companies, and we continue to consider potential investments and acquisition candidates.

Any such transactions could involve the issuance of a significant number of new equity securities, assumptions of debt, and/or payment of cash consideration.

We may also be required to raise additional funds to complete any such investments or acquisitions, through either the issuance of equity and/or debt securities or incurring indebtedness secured by our assets.

If we raise additional funds or acquire businesses or technologies through the issuance of equity securities or convertible debt securities, our existing stockholders may experience significant dilution.

Net increase (decrease) in cash, cash equivalents and restricted cash

For the three months ended March 31, 2024, the $29.2 million increase in cash provided by operating activities compared to the same period in 2023 was primarily due to the collection of $50.0 million of other receivables related to a long-term wafer supply agreement, partially offset by increased inventory purchases.

This increase was also affected by changes in other working capital.

For the three months ended March 31, 2024, the $278.3 million increase in cash used in investing activities compared to the same period in 2023 was primarily due to an increase of $236.5 million in purchases of investments and $33.3 million paid for the acquisition of Axign.

For the three months ended March 31, 2024, the $17.7 million increase in cash used in financing activities compared to the same period in 2023 was primarily due to an increase of $12.8 million in dividend and dividend equivalent payments.

Cash Requirements

Although consequences of economic uncertainty and macroeconomic conditions and other factors could adversely affect our liquidity and capital resources in the future, and our cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $1,042.3 million as of September 30, 2023, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months and beyond.

Although consequences of economic uncertainty and macroeconomic conditions and other factors could adversely affect our liquidity and capital resources in the future, and our cash requirements may fluctuate based on the timing and extent of many factors such as those discussed above, we believe that our balances of cash, cash equivalents and short-term investments of $1,286.4 million as of March 31, 2024, along with cash generated by ongoing operations, will be sufficient to satisfy our liquidity requirements for the next 12 months and beyond.

Our material cash requirements include the following contractual and other obligations:

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Purchase obligations represent commitments to our suppliers and other parties requiring the purchases of goods or services.

Our purchase obligations primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, construction of manufacturing and research and development facilities, purchases of production and other equipment, and license arrangements.

Our purchase obligations primarily consist of wafer and other inventory purchases, assembly and other manufacturing services, construction of manufacturing and R&D facilities, purchases of production and other equipment, and license arrangements.

In May 2022, we entered into a long-term supply agreement in order to secure manufacturing production capacity for silicon wafers over a four-year period.

As of September 30, 2023, the Company had made prepayments under this agreement of $170.0 million, of which $50.0 million was classified as short-term.

As of September 30, 2023, total estimated future unconditional purchase commitments to all suppliers and other parties were $656.5 million, of which $343.2 million was classified as short-term.

As of March 31, 2024, we had remaining prepayments under this agreement of $120.0 million, of which $60.0 million was classified as short-term.

As of March 31, 2024, total estimated future unconditional purchase commitments to all suppliers and other parties, net of the $120.0 million prepayment, were $630.2 million, of which $341.3 million was classified as short-term.

Transition Tax Liability

The transition tax liability represents the one-time, mandatory deemed repatriation tax imposed on previously deferred foreign earnings under the U.S.

Tax Cuts and Jobs Act enacted in December 2017 (the “2017 Tax Act”).

As permitted by the 2017 Tax Act, we have elected to pay the tax liability in installments on an interest-free basis through 2025.

As of September 30, 2023, the remaining liability totaled $11.1 million, of which $4.9 million was classified as short-term.

As of March 31, 2024, the remaining liability totaled $11.1 million, of which $4.9 million was classified as short-term.

Operating Leases

Operating lease obligations represent the undiscounted remaining lease payments primarily for our leased facilities and equipment.

As of September 30, 2023, these obligations totaled $8.0 million, of which $2.2 million was classified as short-term.

As of March 31, 2024, these obligations totaled $8.6 million, of which $2.6 million was classified as short-term.

Capital Return to Stockholders

In October 2023, our Board of Directors approved a new stock repurchase program authorizing us to repurchase up to $640.0 million in the aggregate of our common stock through October 29, 2026.

Shares are retired upon repurchase.

We repurchased 6,100 shares of our common stock for an aggregate purchase price of $4.1 million during the three months ended March 31, 2024.

As of March 31, 2024, $632.2 million remained available for future repurchases under the program.

We currently have a dividend program approved by our Board of Directors, pursuant to which we intend to pay quarterly cash dividends on our common stock.

Based on our historical practice, stockholders of record as of the last business day of the quarter are entitled to receive the quarterly cash dividends when and if declared by the Board of Directors, which are payable to the stockholders in the following month.

As of September 30, 2023, accrued dividends totaled $47.8 million.

As of March 31, 2024, accrued dividends totaled $60.8 million.

The declaration of any future cash dividends is at the discretion of our Board of Directors and will depend on, among other things, our financial condition, results of operations, capital requirements, business conditions and other factors that our Board of Directors may deem relevant, as well as a determination that cash dividends are in the best interests of our stockholders.

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Other long-term obligations primarily include payments for deferred compensation plan liabilities and accrued dividend equivalents.

As of September 30, 2023, these obligations totaled $71.6 million.

Stock Repurchase Program

In October 2023, our Board of Directors approved a new stock repurchase program authorizing us to repurchase up to $640.0 million in the aggregate of our common stock through October 29, 2026. The repurchases will be funded from available working capital and cash repatriation from our Bermuda subsidiary.

As of March 31, 2024, these obligations totaled $81.0 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements