What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-07 compared with 2022-02-07 · 68 added, 100 removed, 750 unchanged (18% of the section changed)

67 unchanged sentences

General and administrative

Litigation settlement

Other operating expenses, net

Total operating expenses

5 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

The Earnings Per Share and Shares Used in Per Share Calculation information presented above reflects the effect of the August 2020 stock split.

Refer to Note 10, Earnings Per Share , in this Form 10-K for details .

POWER INTEGRATIONS, INC.

5 unchanged sentences

Unrealized gain (loss) on marketable securities, net of $ 0 tax in 2022, 2021 and 2020

Unrealized actuarial gain (loss) on pension benefits, net of tax of ($ 334 ), ($ 308 ) and $ 497 in 2021, 2020 and 2019, respectively

Unrealized actuarial gain on pension benefits, net of tax of ($ 271 ), ($ 334 ) and ($ 308 ) in 2022, 2021 and 2020, respectively

Total other comprehensive income (loss)

10 unchanged sentences

Issuance of common stock under employee stock purchase plan

Stock-based compensation expense related to employee stock options and awards

Stock-based compensation expense related to employee stock awards

Stock-based compensation expense related to employee stock purchases

Payment of dividends to stockholders

Unrealized actuarial loss on pension benefits

Unrealized actuarial gain on pension benefits

Unrealized gain on marketable securities

8 unchanged sentences

Unrealized actuarial gain on pension benefits

Unrealized gain on marketable securities

Unrealized loss on marketable securities

Foreign currency translation adjustment

11 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

The Shares presented above reflects the effect of the August 2020 stock split.

Refer to Note 10, Earnings Per Share , in this Form 10-K for details .

POWER INTEGRATIONS, INC.

19 unchanged sentences

Proceeds from sale of property and equipment

Acquisition of technology licenses

Purchases of marketable securities

Proceeds from sales and maturities of marketable securities

Net cash used in investing activities

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

117 unchanged sentences

Gains and losses arising from the remeasurement of non-functional currency balances are recorded in other income in the accompanying consolidated statements of income.

The Company realized a foreign exchange transaction loss of $ 0.6 million, $ 0.5 million and $ 0.3 million in 2021, 2020 and 2019 respectively.

The Company recognized an immaterial foreign exchange loss in 2022 while recognizing losses of $ 0.6 million and $ 0.5 million in 2021 and 2020, respectively.

The functional currencies of the Company’s other subsidiaries are the local currencies.

20 unchanged sentences

Recent Accounting Pronouncements

The Company has considered all recent accounting pronouncements issued, but not yet effective, and does not expect any to have a material effect on the Company’s condensed consolidated financial statements.

The Company has considered all recent accounting pronouncements issued, but not yet effective, and does not expect any to have a material effect on the Company’s consolidated financial statements.

COMPONENTS OF THE COMPANY’S CONSOLIDATED BALANCE SHEETS:

8 unchanged sentences

Receivables determined to be uncollectible are written off and deducted from the allowance.

Allowance for Credit Losses

(In thousands)

22 unchanged sentences

In 2022, 2021 and 2020, approximately 12 %, 14 % and 14 %, respectively, of total property and equipment (excluding accumulated depreciation) was held in Thailand by one of the Company’s subcontractors.

Also in 2021 and 2020, approximately 15 % and 14 % of total property and equipment (excluding accumulated depreciation) was held by one of the Company’s subcontractors in Malaysia.

Also in both 2022 and 2021, approximately 15 % and in 2020, 14 % of total property and equipment (excluding accumulated depreciation) was held by one of the Company’s subcontractors in Malaysia.

No other country held 10% or more of total property and equipment in the periods presented.

10 unchanged sentences

Amounts reclassified from accumulated other comprehensive loss

Other comprehensive loss

Other comprehensive income

Balance at December 31, 2020

1 unchanged sentence

Amounts reclassified from accumulated other comprehensive loss

Other comprehensive income

Other comprehensive loss

Balance at December 31, 2021

43 unchanged sentences

Money market funds

The Company did no t transfer any investments between level 1 and level 2 of the fair value hierarchy in the years ended December 31, 2021, and 2020.

The Company did not transfer any investments between level 1 and level 2 of the fair value hierarchy in the years ended December 31, 2022 and 2021.

MARKETABLE SECURITIES:

4 unchanged sentences

Investments due in 3 months or less:

Commercial paper

Corporate securities

4 unchanged sentences

Total marketable securities

Accrued interest receivable was $ 1.5 million at December 31, 2021 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

Accrued interest receivable was $ 1.2 million at December 31, 2022 and was recorded within prepaid expenses and other current assets on the consolidated balance sheet.

Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at December 31, 2021, were as follows:

7 unchanged sentences

Corporate securities

Investments due in 12 months or greater:

Corporate securities

Total marketable securities

The Company did not have any investments due in twelve months or greater as of December 31, 2020.

Accrued interest receivable was $ 0.8 million at December 31, 2020 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

As of December 31, 2021, the Company had no marketable securities classified as available-for-sale (excluding cash equivalents) in a continuous unrealized loss position for which an allowance for credit losses was recorded.

The following table summarizes marketable securities classified as available-for-sale (excluding cash equivalents) in a continuous unrealized loss position for which an allowance for credit losses was not recorded at December 31, 2021:

Accrued interest receivable was $ 1.5 million at December 31, 2021 and was recorded within prepaid expenses and other current assets on the consolidated balance sheet.

As of December 31, 2022 and 2021 the Company had no marketable securities classified as available-for-sale (excluding cash equivalents) in a continuous unrealized loss position for which an allowance for credit losses was recorded.

Less Than 12 Months

1 unchanged sentence

(In thousands)

December 31, 2022

Corporate securities

Total marketable securities

As of December 31, 2020, the Company had no marketable securities classified as available-for-sale (excluding cash equivalents) in a continuous unrealized loss position for which an allowance for credit losses was recorded.

Less Than 12 Months

12 Months or Longer

(In thousands)

December 31, 2021

Corporate securities

Total marketable securities

The weighted average interest rate of investments at December 31, 2022 and 2021, was approximately 2.08 % and 0.45 %, respectively.

In the year ended December 31, 2021 and 2020, no unrealized losses on marketable securities were recognized in income.

In the years ended December 31, 2022 and 2021, no unrealized losses on marketable securities were recognized in income.

GOODWILL AND INTANGIBLE ASSETS:

17 unchanged sentences

STOCK PLANS AND SHARE BASED COMPENSATION:

The share and per share information for all periods presented in this Form 10-K has been adjusted for the effect of the August 2020 stock split.

Refer to Note 10, Earnings Per Share , in this Form 10-K for details.

As of December 31, 2022, the Company had three stock-based compensation plans (the “Plans”) which are described below.

1 unchanged sentence

The 2007 Equity Incentive Plan (2007 Plan) was adopted by the board of directors on September 10, 2007, and approved by the stockholders on November 7, 2007, as an amendment and restatement of the 1997 Stock Option Plan (1997 Plan).

The 2007 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock

awards, restricted stock unit (RSU) awards, stock appreciation rights, performance-based (PSU) awards, long-term performance based (PRSU) awards and other stock awards to employees, directors and consultants.

Pursuant to the 2007 Plan, the exercise price for incentive stock options and non-statutory stock options is generally at least 100 % of the fair market value of the underlying shares on the date of grant.

Options generally vest over 48 months measured from the date of grant.

Options generally expire no later than ten years after the date of grant, subject to earlier termination upon an optionee’s cessation of employment or service.

The 2007 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit (RSU) awards, stock appreciation rights, performance-based (PSU) awards, long-term performance based (PRSU) awards and other stock awards to employees, directors and consultants.

The 2007 Plan expired in September 2017 with no further grants to be made under this plan;

36 unchanged sentences

Total unrecognized compensation expense

Stock-based compensation expense in the year ended December 31, 2021, was approximately $ 37.6 million, comprising approximately $ 19.9 million related to restricted stock units, $ 15.7 million related to performance-based awards and $ 2.0 million related to the Company’s Purchase Plan.

Stock-based compensation expense in the year ended December 31, 2022, was approximately $ 22.4 million, comprising approximately $ 23.2 million related to restricted stock units, $ 1.9 million related to the Company’s Purchase Plan and a $ 2.7 million credit to expense related to performance-based awards and long-term performance-based awards.

Stock-based compensation expense in the year ended December 31, 2020, was approximately $ 30.9 million, comprising approximately $ 18.7 million related to restricted stock units, $ 10.2 million related to performance-based awards and $ 2.0 million related to the Company’s Purchase Plan.

The Company did not grant stock options in the years ended December 31, 2021, 2020 and 2019, and therefore no fair-value assumptions are reported.

The fair value of employees’ stock purchase rights under the Purchase Plan was estimated using the Black-Scholes model with the following weighted-average assumptions used during the three years ended December 31, 2022, 2021 and 2020:

5 unchanged sentences

Weighted-average estimated fair value of purchase rights

A summary of stock options outstanding as of December 31, 2021, and activity during three years then ended, is presented below:

Contractual Term

Intrinsic Value

(In thousands)

Outstanding at January 1, 2019

Forfeited or expired

Outstanding at December 31, 2019

Forfeited or expired

Outstanding at December 31, 2020

Forfeited or expired

Outstanding at December 31, 2021

Vested and Exercisable at December 31, 2021

The total intrinsic value of options exercised during the year ended December 31, 2021, 2020 and 2019, was $ 4.9 million, $ 9.1 million and $ 8.3 million, respectively.

The following table summarizes the stock options outstanding at December 31, 2021:

Options Outstanding

Options Exercisable

Weighted Average

(Shares in thousands)

Contractual Term

Range of Exercise Prices

$ 21.44 - $ 21.44

No options were granted or remain outstanding as of December 31, 2022.

The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020, was $ 0.8 million, $ 4.9 million and $ 9.1 million, respectively.

Under the performance-based awards program, the Company grants awards in the performance year in an amount equal to twice the target number of shares to be issued if the maximum performance metrics are met.

5 unchanged sentences

A summary of PSU awards outstanding as of December 31, 2022, and activity during the three years then ended, is presented below:

Weighted-Average

Grant Date Fair

12 unchanged sentences

Outstanding and expected to vest at December 31, 2022

In January 2021, it was determined that approximately 150,000 shares subject to the PSUs granted in 2020 vested in aggregate;

In February 2022, it was determined that approximately 104,000 shares subject to the PSUs granted in 2021 vested in aggregate;

the shares were released to the Company’s employees and executives in the first quarter of 2022.

3 unchanged sentences

The PRSUs were granted in an amount equal to twice the target number of shares to be issued if the maximum performance metrics are met.

The fair value of these PRSUs is determined using the fair value of the Company’s common stock on the date of the grant, reduced by the discounted present value of dividends expected to be declared before the awards vest .

The actual number of shares the recipient receives is determined at the end of a three-year performance period based on results achieved versus the Company’s performance goals, and may range from zero to 200 % of the target number.

19 unchanged sentences

Outstanding and expected to vest at December 31, 2022

In January 2021 it was determined that approximately 6,000 shares subject to the PRSUs granted in 2018 vested in aggregate;

In February 2022, it was determined that approximately 135,000 shares subject to the PRSUs granted in 2019 vested in aggregate;

the shares were released to the Company’s executives in the first quarter of 2022.

27 unchanged sentences

Honestar Technologies Co., Ltd.

*Total customer revenue was less than 10% of net revenues.

No other customers accounted for 10% or more of the Company’s net revenues in the periods presented.

2 unchanged sentences

The Company does not have any off-balance-sheet credit exposure related to its customers.

As of December 31, 2021 and 2020, 86 % and 90 % of accounts receivable were concentrated with the Company’s top ten customers, respectively.

As of years ended December 31, 2022 and 2021, 87 % and 86 % of accounts receivable were concentrated with the Company’s top ten customers, respectively.

The following customers represented 10% or more of accounts receivable:

Powertech Distribution Ltd.

*Total customer accounts receivable was less than 10% of net accounts receivables.

Salcomp Group

Flextronics Group

*Total customer accounts receivable was less than 10% of accounts receivable.

No other customers accounted for 10% or more of the Company’s accounts receivable in the periods presented.

10 unchanged sentences

Common Stock Repurchases

Over the years the Company’s board of directors has authorized the use of funds to repurchase shares of the Company’s common stock.

In October 2018, the Company’s board of director’s authorized the use of $ 80.0 million for the repurchase of the Company’s common stock, and in each of April 2021 and October 2021 , the Company’s board of directors authorized the use of an additional $ 50.0 million for the repurchase of the Company’s common stock, with repurchases to be executed according to pre-defined price/volume guidelines.

In 2021, 2020 and 2019 the Company purchased approximately 878,000 , 63,000 and 242,000 shares, respectively, for approximately $ 73.9 million, $ 2.6 million and $ 7.3 million, respectively.

As of December 31, 2021, the Company had $ 67.3 million available for future stock repurchases, all of which was utilized in January 2022.

In January 2022, the Company’s board of directors authorized the use of an additional $ 100.0 million for the repurchase of the Company’s common stock, with repurchases to be executed according to pre-defined price/volume guidelines.

Authorization of future stock repurchase programs is at the discretion of the board of directors and will depend on the Company’s financial condition, results of operations, capital requirements and business conditions as well as other factors.

From time to time the Company’s board of directors has authorized the use of funds to repurchase shares of the Company’s common stock.

In January, February, April and October 2022, the Company’s board of directors authorized the use of an additional $ 100.0 million, $ 50.0 million, $ 75.0 million and $ 100.0 million, respectively, for the repurchase of the Company’s common stock, with repurchases to be executed according to pre-defined price/volume guidelines.

In 2022, 2021 and 2020, the Company purchased approximately 3.8 million shares, 0.9 million shares and 63 thousand shares, respectively, for approximately $ 311.1 million, $ 73.9 million and $ 2.6 million, respectively.

As of December 31, 2022, the Company had $ 81.3 million available for future stock repurchases.

Authorization of future stock repurchase programs is at the discretion of the Company’s board of directors and will depend on the Company’s financial condition, results of operations, capital requirements and business conditions as well as other factors.

Common Stock Dividend

6 unchanged sentences

The Company paid a total of approximately $ 41.5 million, $ 32.6 million and $ 25.1 million in cash dividends during 2022, 2021 and 2020, respectively.

In January 2019, the Company’s board of directors declared four quarterly cash dividends of $ 0.085 per share to be paid to stockholders of record at the end of each quarter in 2019.

In October 2019, the Company’s board of directors raised the cash dividends per share with the declaration of five cash dividends, consisting of (a) a dividend of $ 0.01 per share to be paid to stockholders of record at the end of the fourth quarter in 2019, that was in addition to the dividend of $ 0.085 per share to be paid to stockholders of record at the end of the fourth quarter in 2019 previously declared by the board in January 2019, and (b) a dividend of $ 0.095 per share to be paid to stockholders of record at the end of each quarter in 2020.

In October 2019, the Company’s board of directors declared a dividend of $ 0.095 per share to be paid to stockholders of record at the end of each quarter in 2020.

In April 2020, the Company’s board of directors raised the cash dividends with the declaration of three cash dividends of $ 0.105 per share (in lieu of the $ 0.095 per share previously announced in October 2019) to be paid to stockholders of record at the end of each of the second, third and fourth quarter in 2020.

In July 2020, the Company’s board of directors raised the cash dividends further with the declaration of two cash dividends of $ 0.11 per share (in lieu of the $ 0.105 per share announced in April 2020) to be paid to stockholders of record at the end of each of the third and fourth quarter in 2020.

In January 2021, the Company’s board of directors raised the quarterly cash dividend by $ 0.02 per share with the declaration of four cash dividends of $ 0.13 per share to be paid to stockholders of record at the end of each quarter in 2021.

In January 2021, the Company’s board of directors declared dividends of $ 0.13 per share to be paid to stockholders of record at the end of each quarter in 2021.

In October 2021, the Company’s board of directors raised the quarterly cash dividend with the declaration of five cash dividends of $ 0.15 per share (the first in lieu of the $ 0.13 per share announced in January 2021) to be paid to stockholders of record at the end of the fourth quarter in 2021 and at the end of each quarter in 2022 .

In January 2022, the Company’s board of directors raised the quarterly cash dividend by an additional $ 0.03 per share with the declaration of four cash dividends of $ 0.18 per share (in lieu of the $ 0.15 per share announced in October 2021) to be paid to stockholders of record at the end of each quarter in 2022.

In February 2023, the Company’s board of directors declared dividends of $ 0.19 per share to be paid to stockholders of record at the end of each quarter in 2023.

EARNINGS PER SHARE:

17 unchanged sentences

In the years ended December 31, 2022, 2021 and 2020, no outstanding stock awards were determined to be anti-dilutive and therefore were excluded from the computation of diluted earnings per share.

In July 2020, the Company’s board of directors approved a two -for-one stock split in the form of a stock dividend, payable on August 18, 2020, to stockholders of record as of the close of business on August 14, 2020.

The Company’s stockholders received one additional share of common stock for each share of common stock held on August 14, 2020 .

The share and per share information for all periods presented in this Form 10-K has been adjusted for the effect of the stock split.

PROVISION FOR INCOME TAXES:

28 unchanged sentences

Deferred tax assets:

Capitalized R&D costs

Other reserves and accruals

9 unchanged sentences

Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income.

that the Company determines, based on available evidence and management judgment, that all or part of the net deferred tax assets will not be realized in the future, the Company would record a valuation allowance in the period the determination is made.

In the event that the Company determines, based on available evidence and management judgment, that all or part of the net deferred tax assets will not be realized in the future, the Company would record a valuation allowance in the period the determination is made.

In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws.

Resolution of these uncertainties in a manner inconsistent with the Company’s expectations could have a material impact on its results of operations and financial position.

As of December 31, 2021, the Company continues to maintain a valuation allowance primarily as a result of capital losses for federal purposes, and on its California, New Jersey and Canada deferred tax assets as the Company believes that it is not more likely than not that the deferred tax assets will be fully realized.

As of December 31, 2022, the Company continues to maintain a valuation allowance primarily as a result of its California, New Jersey and Canada deferred tax assets as the Company believes that it is not more likely than not that the deferred tax assets will be fully realized.

As of December 31, 2022, the Company had utilized all of its federal research and development tax credit carryforwards.

30 unchanged sentences

However, due to tax attributes, the IRS may calculate tax adjustments for subsequent years for positions taken prior to 2012.

As of December 31, 2021, the Company’s 2018 and 2019 tax years are under audit by the California Franchise Tax Board.

The California Franchise Tax Board has started an audit for the Company’s tax years 2018 and 2019, it is currently ongoing.

LEASES AND COMMITMENTS:

17 unchanged sentences

Initial lease terms are determined at commencement and may include options to extend or terminate the lease when it is reasonably certain the Company will exercise the option.

Remaining lease terms range from one to eight years , some of which include options to extend for up to six years , and some of which include options to terminate within one year .

Remaining lease terms range from one to seven years ,

some of which include options to extend for up to five years , and some of which include options to terminate within one year .

Leases with an initial term of twelve months or less are not recorded on the balance sheet.

18 unchanged sentences

In accordance with ASC 450-10, Contingencies , the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

On April 1, 2016, Opticurrent, LLC filed a complaint against the Company in the United States District Court for the Eastern District of Texas alleging that the Company infringed one patent pertaining to transistor switch devices and seeking damages for the alleged infringement.

The Company filed a motion to transfer the case to the Northern District of California, which the Court granted, and the case was assigned to a new judge in San Francisco following the transfer.

On December 21, 2018, the Court granted the Company’s challenge to Opticurrent’s damages expert but denied the Company’s motion for summary judgment.

Following a trial in February 2019, a jury issued a finding of direct infringement by the Company but found that the Company did not induce infringement, and awarded Opticurrent damages of $ 6.7 million.

The Company challenged those findings in post-trial proceedings, and the Court granted one of the Company’s post-trial motions, reducing the damages award to $ 1.2 million.

The Court of Appeals affirmed the original findings and the reduced damages award, but the Company believes Opticurrent made key disclaimers during reexamination proceedings after the original trial, giving rise to a motion to set aside the original judgment in view of a disclaimer, an issue that is currently on appeal to the Federal Circuit.

Briefing and oral argument on the Company’s appeal are completed, with a ruling expected in the coming months.

The District Court has issued an order staying execution on the original judgment pending the Company’s appeal, and the Federal Circuit rejected Opticurrent’s challenge to the order staying execution pending appeal.

As such, the Company continues to believe it has strong defenses, and intends to continue to vigorously defend itself against Opticurrent’s claims.

On June 19, 2019, Opticurrent, LLC filed a follow-on lawsuit in the United States District Court for the Northern District of California accusing more of the Company’s products of infringement and seeking damages for the alleged infringement of the same claim of the same patent asserted in the parties’ prior litigation, as described above.

Limited discovery has taken place, but proceedings are currently stayed for all but written discovery;

no schedule has yet been set for expert discovery, dispositive motions, or trial.

The Company believes it has strong defenses, independent of the issue on appeal in the first case, and intends to vigorously defend itself against Opticurrent’s claims, with appeals to follow if necessary.

On May 10, 2021, Opticurrent, LLC filed another follow-on lawsuit in the United States District Court for the Eastern District of Texas accusing one of the Company’s customers of infringement based on the use of the Company’s products and seeking damages for the alleged infringement of the same claim of the same patent asserted in the parties’ prior litigation, as described above.

The case is at the pleadings stage, but the Company believes it has strong defenses, independent of the issue on appeal in the parties’ first case, and intends to vigorously defend against Opticurrent’s claims against the Company’s technology, with appeals to follow if necessary.

On May 16, 2022, the Company entered into a binding settlement agreement (the “Settlement Agreement”) with Opticurrent, LLC, pursuant to which the parties agreed to end all outstanding legal disputes.

Neither party granted any licenses to the other.

Pursuant to the Settlement Agreement, the Company and Opticurrent have dismissed, withdrawn, and/or terminated all legal proceedings between the parties and the Company agreed to and subsequently paid Opticurrent $ 2.9 million.

On January 6, 2020, the Company filed a complaint against CogniPower LLC in the United States District Court for the District of Delaware for infringement of two of the Company’s patents and seeking a declaration of non-infringement with respect to patents that CogniPower had charged the Company’s customers with infringing , based on customer use of the Company’s products.

In response, CogniPower filed a motion to dismiss the Company’s declaratory judgment claims on the basis that CogniPower had not threatened the Company directly with suit.

That motion was granted, so CogniPower’s claims for infringement initially went forward separately in their lawsuit against the Company’s customers in the District of Delaware, but the Company filed a motion to intervene in that lawsuit and received a ruling allowing the Company to intervene in CogniPower’s customer lawsuit on February 1, 2021.

The Company believes it has strong claims and defenses, and intends to vigorously defend itself against CogniPower’s claims against the Company’s technology, with appeals to follow if necessary.

Moreover, given the United States Patent and Trademark Office’s institution of inter partes review proceedings against every independent claim CogniPower asserted in the litigation, the parties have agreed to stay the associated District Court litigation pending resolution of the IPRs.

The remaining case is currently stayed, but the

Company believes it has strong claims and defenses, and intends to vigorously defend itself against CogniPower’s claims against the Company’s technology, with appeals to follow if necessary.

On October 31, 2022, Waverly Licensing LLC filed a complaint against the Company in the United States District Court for the Western District of Texas.

In its complaint, Waverly alleges that the Company is infringing one patent pertaining to charging a battery-operated device.

Because the Company believes that Waverly’s complaint was improperly filed in the wrong court, the Company has filed a motion to dismiss, and on November 30, 2022, the Company filed a complaint against Waverly Licensing LLC and related entities IP Edge LLC, Mavexar LLC, and Array IP LLC in the United States District Court for the District of Delaware seeking a declaration of non-infringement with respect to a patent that Waverly has charged the Company with infringing.

The Company expects a resolution of its motion to dismiss Waverly’s Texas complaint in the coming months.

These lawsuits are in their earliest stages, but the Company believes it has strong claims and defenses, and intends to vigorously defend itself against Waverly’s claims against the Company’s technology, with appeals to follow if necessary.

The Company is unable to predict the outcome of legal proceedings with certainty, and there can be no assurance that the Company will prevail in the above-mentioned unsettled litigations.

These litigations, whether or not determined

in the Company’s favor or settled, will be costly and will divert the efforts and attention of the Company’s management and technical personnel from normal business operations, potentially causing a material adverse effect on the business, financial condition and operating results.

Currently, the Company is not able to estimate a loss or a range of loss for the ongoing litigation disclosed above, however adverse determinations in litigation could result in monetary losses, the loss of proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from third parties or prevent the Company from licensing the technology, any of which could have a material adverse effect on the Company’s business, financial condition and operating results.

These litigations, whether or not determined in the Company’s favor or settled, will be costly and will divert the efforts and attention of the Company’s management and technical personnel from normal business operations, potentially causing a material adverse effect on the business, financial condition and operating results.

Currently, the Company is not able to estimate a loss or a range of loss for the ongoing litigations disclosed above, however adverse determinations in litigation could result in monetary losses, the loss of proprietary rights, subject the Company to significant liabilities, require the Company to seek licenses from third parties or prevent the Company from licensing the technology, any of which could have a material adverse effect on the Company’s business, financial condition and operating results.

RETIREMENT PLANS:

7 unchanged sentences

The Company expects to make contributions to the Pension Plan of approximately $ 0.4 million during 2023.

The unrealized actuarial loss on pension benefits, net of tax, at December 31, 2021, 2020 and 2019 was $ 0.7 million, $ 1.6 million and $ 2.5 million, respectively.

The accumulated unrealized actuarial activity on pension benefits, net of tax, at December 31, 2022, 2021 and 2020 was $ 0.9 million gain, $ 0.7 million loss and $ 1.6 million loss, respectively.

These amounts were reflected in Note 3 under the caption accumulated other comprehensive loss.

25 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data