POWER INTEGRATIONS INC 10-K

Item 8. Financial Statements and Supplementary Data. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors of Power Integrations, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Power Integrations, Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and schedules listed in the Index at Item 8 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with the accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 12, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Inventories – Provision for Excess and Obsolete Inventory – Refer to Notes 2 and 3 to the financial statements Critical Audit Matter Description The Company's inventories are recorded at standard cost, which approximates actual cost on a first-in, first-out basis, not in excess of net realizable value. The Company routinely evaluates quantities and values of inventories and records a provision for excess and obsolete inventories to reduce its recorded inventory balance to its estimated net realizable value. Management’s assumptions regarding the inventory quantities considered to be excess and obsolete are determined by analyzing historical usage, demand forecasts, current economic trends, and historical write-offs. We identified the determination of excess and obsolete inventory within work-in-process and finished goods inventory as a critical audit matter due to the significant assumptions made by management when determining the excess and obsolete inventory quantities and the resulting provision. This required a high degree of auditor judgement and an increased extent 35 Table of Contents of effort when performing audit procedures to evaluate the reasonableness of management’s excess and obsolete provision for work-in-process and finished goods inventory. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s assumptions used in determining the excess and obsolete provision for work-in-process and finished goods inventory included the following, among others: ● We tested the effectiveness of the control over the determination of the provision for excess and obsolete inventories, including work-in-process and finished goods inventory. ● We selected a sample of products from work-in-process and finished goods inventory as of December 31, 2022, and evaluated management's ability to accurately estimate forecasted demand by comparing the respective products usage for the year ended December 31, 2023, to estimates made in the prior year. ● We selected a sample of products from work-in-process and finished goods inventory and evaluated the reasonableness of management's provision for work-in-process and finished goods inventory by considering recent usage, historical usage, contracts and communications with customers, expected product lifecycles, macroeconomic conditions, and inquiries with sales personnel. ● We considered the existence of contradictory evidence based on reading of internal communications to management and the board of directors, Company press releases, and analyst reports, as well as our observations and inquiries as to changes within the business. ​ /s/ DELOITTE & TOUCHE LLP San Jose, California February 12, 2024 We have served as the Company’s auditor since 2005. ​ ​ ​ 36 Table of Contents POWER INTEGRATIONS, INC. CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, (in thousands) 2023 ​ 2022 ASSETS ​ ​ CURRENT ASSETS: ​ ​ Cash and cash equivalents ​ $ 63,929 ​ $ 105,372 Short-term marketable securities ​ 247,640 ​ 248,441 Accounts receivable, net ​ 14,674 ​ 20,836 Inventories ​ 163,164 ​ 135,420 Prepaid expenses and other current assets ​ 22,193 ​ 15,004 Total current assets ​ 511,600 ​ 525,073 PROPERTY AND EQUIPMENT, net ​ 164,213 ​ 176,681 INTANGIBLE ASSETS, net ​ 4,424 ​ 6,597 GOODWILL ​ 91,849 ​ 91,849 DEFERRED TAX ASSETS ​ 28,325 ​ 19,034 OTHER ASSETS ​ 19,457 ​ 20,862 Total assets ​ $ 819,868 ​ $ 840,096 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ ​ ​ Accounts payable ​ $ 26,390 ​ $ 30,088 Accrued payroll and related expenses ​ 13,551 ​ 14,778 Taxes payable ​ 1,016 ​ 938 Other accrued liabilities ​ 7,910 ​ 12,572 Total current liabilities ​ 48,867 ​ 58,376 LONG-TERM INCOME TAXES PAYABLE ​ 6,244 ​ 15,757 OTHER LIABILITIES ​ 12,516 ​ 10,747 Total liabilities ​ 67,627 ​ 84,880 COMMITMENTS AND CONTINGENCIES (Notes 11, 12 and 13) ​ ​ ​ ​ STOCKHOLDERS’ EQUITY: ​ ​ ​ ​ Common stock, $ 0.001 par value ​ ​ ​ ​ Authorized - 140,000 shares ​ ​ ​ ​ Outstanding - 56,738 and 56,961 shares in 2023 and 2022, respectively ​ 23 ​ 24 Additional paid-in capital ​ — ​ — Accumulated other comprehensive loss ​ ( 1,462 ) ​ ( 7,344 ) Retained earnings ​ 753,680 ​ 762,536 Total stockholders’ equity ​ 752,241 ​ 755,216 Total liabilities and stockholders’ equity ​ $ 819,868 ​ $ 840,096 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 37 Table of Contents POWER INTEGRATIONS, INC. CONSOLIDATED STATEMENTS OF INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands, except per share amounts) ​ 2023 2022 2021 NET REVENUES ​ $ 444,538 ​ $ 651,138 ​ $ 703,277 COST OF REVENUES ​ 215,582 ​ 284,231 ​ 342,638 GROSS PROFIT ​ 228,956 ​ 366,907 ​ 360,639 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES: ​ ​ ​ Research and development ​ 96,067 ​ 93,894 ​ 84,933 Sales and marketing ​ 64,598 ​ 62,574 ​ 60,808 General and administrative ​ 33,232 ​ 28,897 ​ 39,840 Other operating expenses, net ​ ​ — ​ ​ 1,130 ​ ​ — Total operating expenses ​ 193,897 ​ 186,495 ​ 185,581 INCOME FROM OPERATIONS ​ 35,059 ​ 180,412 ​ 175,058 OTHER INCOME ​ 10,848 ​ 3,014 ​ 1,077 INCOME BEFORE INCOME TAXES ​ 45,907 ​ 183,426 ​ 176,135 PROVISION (BENEFIT) FOR INCOME TAXES ​ ( 9,828 ) ​ 12,575 ​ ​ 11,722 NET INCOME ​ $ 55,735 ​ $ 170,851 ​ $ 164,413 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EARNINGS PER SHARE: ​ ​ ​ ​ ​ Basic ​ $ 0.97 ​ $ 2.96 ​ $ 2.73 Diluted ​ $ 0.97 ​ $ 2.93 ​ $ 2.67 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SHARES USED IN PER SHARE CALCULATION: ​ ​ ​ ​ Basic ​ 57,195 ​ 57,801 ​ 60,327 Diluted ​ 57,622 ​ 58,371 ​ 61,467 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 38 Table of Contents POWER INTEGRATIONS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) 2023 2022 2021 Net income ​ $ 55,735 ​ $ 170,851 ​ $ 164,413 Other comprehensive income (loss), net of tax: ​ ​ ​ ​ ​ ​ Foreign currency translation adjustments, net of $ 0 tax in 2023, 2022 and 2021 ​ ( 420 ) ​ ( 985 ) ​ ( 486 ) Unrealized gain (loss) on marketable securities, net of $ 0 tax in 2023, 2022 and 2021 ​ 5,579 ​ ( 4,158 ) ​ ( 2,055 ) Unrealized actuarial gain on pension benefits, net of tax of ($ 130 ), ($ 271 ) and ($ 334 ) in 2023, 2022 and 2021, respectively ​ 723 ​ 1,536 ​ 967 Total other comprehensive income (loss) ​ 5,882 ​ ( 3,607 ) ​ ( 1,574 ) TOTAL COMPREHENSIVE INCOME ​ $ 61,617 ​ $ 167,244 ​ $ 162,839 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 39 Table of Contents POWER INTEGRATIONS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ Other ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-In ​ Comprehensive ​ Retained ​ Stockholders’ (In thousands) Shares Amount Capital Loss Earnings Equity BALANCE AT JANUARY 1, 2021 59,910 ​ $ 28 ​ $ 190,920 ​ $ ( 2,163 ) ​ $ 621,626 ​ $ 810,411 Issuance of common stock under employee stock option and stock award plans 780 ​ — ​ 1,644 ​ — ​ — ​ 1,644 Repurchase of common stock ( 878 ) ​ ( 1 ) ​ ( 73,937 ) ​ — ​ — ​ ( 73,938 ) Issuance of common stock under employee stock purchase plan 101 ​ 1 ​ 6,065 ​ — ​ — ​ 6,066 Stock-based compensation expense related to employee stock awards — ​ — ​ 35,647 ​ — ​ — ​ 35,647 Stock-based compensation expense related to employee stock purchases — ​ — ​ 1,962 ​ — ​ — ​ 1,962 Payment of dividends to stockholders — ​ — ​ — ​ — ​ ( 32,599 ) ​ ( 32,599 ) Unrealized actuarial gain on pension benefits — ​ — ​ — ​ 967 ​ — ​ 967 Unrealized loss on marketable securities — ​ — ​ — ​ ( 2,055 ) ​ — ​ ( 2,055 ) Foreign currency translation adjustment — ​ — ​ — ​ ( 486 ) ​ — ​ ( 486 ) Net income — ​ — ​ — ​ — ​ 164,413 ​ 164,413 BALANCE AT DECEMBER 31, 2021 59,913 ​ 28 ​ 162,301 ​ ( 3,737 ) ​ 753,440 ​ 912,032 Issuance of common stock under employee stock option and stock award plans 731 ​ — ​ 257 ​ — ​ — ​ 257 Repurchase of common stock ( 3,770 ) ​ ( 4 ) ​ ( 190,827 ) ​ — ​ ( 120,263 ) ​ ( 311,094 ) Issuance of common stock under employee stock purchase plan 87 ​ — ​ 5,905 ​ — ​ — ​ 5,905 Stock-based compensation expense related to employee stock awards — ​ — ​ 20,494 ​ — ​ — ​ 20,494 Stock-based compensation expense related to employee stock purchases — ​ — ​ 1,870 ​ — ​ — ​ 1,870 Payment of dividends to stockholders — ​ — ​ — ​ — ​ ( 41,492 ) ​ ( 41,492 ) Unrealized actuarial gain on pension benefits — ​ — ​ — ​ 1,536 ​ — ​ 1,536 Unrealized loss on marketable securities — ​ — ​ — ​ ( 4,158 ) ​ — ​ ( 4,158 ) Foreign currency translation adjustment — ​ — ​ — ​ ( 985 ) ​ — ​ ( 985 ) Net income — ​ — ​ — ​ — ​ 170,851 ​ 170,851 BALANCE AT DECEMBER 31, 2022 56,961 ​ 24 ​ — ​ ( 7,344 ) ​ 762,536 ​ 755,216 Issuance of common stock under employee stock option and stock award plans 476 ​ — ​ — ​ — ​ — ​ — Repurchase of common stock ( 784 ) ​ ( 1 ) ​ ( 34,765 ) ​ — ​ ( 20,583 ) ​ ( 55,349 ) Issuance of common stock under employee stock purchase plan 85 ​ — ​ 6,237 ​ — ​ — ​ 6,237 Stock-based compensation expense related to employee stock awards — ​ — ​ 26,624 ​ — ​ — ​ 26,624 Stock-based compensation expense related to employee stock purchases — ​ — ​ 1,904 ​ — ​ — ​ 1,904 Payment of dividends to stockholders — ​ — ​ — ​ — ​ ( 44,008 ) ​ ( 44,008 ) Unrealized actuarial gain on pension benefits — ​ — ​ — ​ 723 ​ — ​ 723 Unrealized gain on marketable securities — ​ — ​ — ​ 5,579 ​ — ​ 5,579 Foreign currency translation adjustment — ​ — ​ — ​ ( 420 ) ​ — ​ ( 420 ) Net income — ​ — ​ — ​ — ​ 55,735 ​ 55,735 BALANCE AT DECEMBER 31, 2023 56,738 ​ $ 23 ​ $ — ​ $ ( 1,462 ) ​ $ 753,680 ​ $ 752,241 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 40 Table of Contents POWER INTEGRATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ Net income ​ $ 55,735 ​ $ 170,851 ​ $ 164,413 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ Depreciation ​ 35,203 ​ 34,930 ​ 31,454 Amortization of intangibles ​ 2,173 ​ 2,415 ​ 3,494 Loss on disposal of property and equipment ​ 100 ​ 1,371 ​ 3,105 Stock-based compensation expense ​ 28,528 ​ 22,364 ​ 37,609 Amortization of premium (accretion of discount) on marketable securities ​ ( 351 ) ​ 3,292 ​ 1,590 Deferred income taxes ​ ( 9,247 ) ​ ( 2,566 ) ​ ( 13,240 ) Increase (decrease) in accounts receivable allowance for credit losses ​ ( 454 ) ​ 690 ​ 18 Change in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ 6,616 ​ 19,867 ​ ( 5,501 ) Inventories ​ ( 27,744 ) ​ ( 36,154 ) ​ 3,612 Prepaid expenses and other assets ​ ( 1,183 ) ​ 7,343 ​ 4,326 Accounts payable ​ ( 5,435 ) ​ ( 3,836 ) ​ 4,067 Taxes payable and accrued liabilities ​ ( 18,182 ) ​ ( 5,224 ) ​ ( 4,079 ) Net cash provided by operating activities ​ 65,759 ​ 215,343 ​ 230,868 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ ​ Purchases of property and equipment ​ ( 20,884 ) ​ ( 39,211 ) ​ ( 47,272 ) Proceeds from sale of property and equipment ​ ​ — ​ ​ 1,202 ​ ​ 35 Purchases of marketable securities ​ ( 191,211 ) ​ ( 55,820 ) ​ ( 554,018 ) Proceeds from sales and maturities of marketable securities ​ 197,942 ​ 172,165 ​ 368,457 Net cash provided by (used in) investing activities ​ ( 14,153 ) ​ 78,336 ​ ( 232,798 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ ​ Issuance of common stock under employee stock plans ​ 6,237 ​ 6,162 ​ 7,710 Repurchase of common stock ​ ( 55,278 ) ​ ( 311,094 ) ​ ( 73,938 ) Payments of dividends to stockholders ​ ( 44,008 ) ​ ( 41,492 ) ​ ( 32,599 ) Net cash used in financing activities ​ ( 93,049 ) ​ ( 346,424 ) ​ ( 98,827 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET DECREASE IN CASH AND CASH EQUIVALENTS ​ ( 41,443 ) ​ ( 52,745 ) ​ ( 100,757 ) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ​ 105,372 ​ 158,117 ​ 258,874 CASH AND CASH EQUIVALENTS AT END OF PERIOD ​ $ 63,929 ​ $ 105,372 ​ $ 158,117 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: ​ ​ ​ Unpaid property and equipment ​ $ 2,747 ​ $ 1,082 ​ $ 10,879 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: ​ ​ ​ Cash paid for income taxes, net ​ $ 13,769 ​ $ 17,880 ​ $ 25,644 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 41 Table of Contents POWER INTEGRATIONS, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. THE COMPANY: Power Integrations, Inc. (“Power Integrations” or the “Company”), incorporated in California on March 25, 1988, and reincorporated in Delaware in December 1997, designs, develops, manufactures and markets analog and mixed-signal integrated circuits (“ICs”) and other electronic components and circuitry used in high-voltage power conversion. The Company’s products are used in power converters that convert electricity from a high-voltage source to the type of power required for a specified downstream use. In most cases, this conversion entails, among other functions, converting alternating current (“AC”) to direct current (“DC”) or vice versa, reducing or increasing the voltage, and regulating the output voltage and/or current according to the customer’s specifications. ​ A large percentage of the Company’s products are ICs used in AC-DC power supplies, which convert the high-voltage AC from a wall outlet to the low-voltage DC required by most electronic devices. Power supplies incorporating the Company’s products are used with all manner of electronic products including mobile phones, computing and networking equipment, appliances, electronic utility meters, battery-powered tools, industrial controls, and “home-automation,” or “internet of things” applications such as networked thermostats, power strips and other building-automation and security devices. The Company also supplies high-voltage LED drivers, which are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-drivers ICs for brushless DC (“BLDC”) motors used in consumer appliances, HVAC systems, ceiling fans and a variety of industrial applications. The Company also offers high-voltage gate drivers—either standalone ICs or circuit boards containing ICs, electrical isolation components and other circuitry—used to operate high-voltage switches such as insulated-gate bipolar transistors (“IGBTs”) and silicon-carbide (“SiC”) MOSFETs. These combinations of switches and drivers are used for power conversion in high-power applications (i.e., power levels ranging from approximately 100 kilowatts up to gigawatts) such as industrial motors, solar- and wind-power systems, electric vehicles and high-voltage DC transmission systems. ​ 2. SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS: Significant Accounting Policies and Estimates Segment Reporting The Company is organized and operates as one reportable segment, the design, development, manufacture and marketing of integrated circuits and related components for use primarily in the high-voltage power conversion markets. The Company’s chief operating decision maker, the Chief Executive Officer, reviews financial information presented on a consolidated basis for purposes of making operating decisions and assessing financial performance. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries after elimination of all intercompany transactions and balances. Estimates The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, the Company evaluates its estimates, including those related to revenue recognition, allowances for receivables, inventories, litigation and income taxes. These estimates are based on historical facts and various other factors, which the Company believes to be reasonable at the time the estimates are made. However, as the effects of future events cannot be determined with precision, actual results could differ significantly from management’s estimates. Revenue Recognition The Company applies the provisions of Accounting Standards Codification (“ASC”) 606-10, Revenue from Contracts with Customers , and all related appropriate guidance. The Company recognizes revenue under the core principle to depict the transfer of control to the Company’s customers in an amount reflecting the consideration the Company expects to be entitled. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, 42 Table of Contents (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. Product revenues consist of sales to original equipment manufacturers, or OEMs, merchant power supply manufacturers and distributors. The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. In situations where sales are to a distributor, the Company has concluded that its contracts are with the distributor as the Company holds a contract bearing enforceable rights and obligations only with the distributor. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. In determining the transaction price the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on their relative standalone selling price. The product price as specified on the purchase order is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied), which typically occurs at shipment. Further, in determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Frequently, the Company receives orders for products to be delivered over multiple dates that may extend across several reporting periods. The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred. As scheduled delivery dates are within one year, under the optional exemption provided by ASC 606-10-50-14 revenues allocated to future shipments of partially completed contracts are not disclosed. The Company has also elected the practical expedient under ASC 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year. Sales to international customers that are shipped from the Company’s facility outside of the United States are pursuant to EX Works, or EXW, shipping terms, meaning that control of the product transfers to the customer upon shipment from the Company’s foreign warehouse. Sales to international customers that are shipped from the Company’s facility in California are pursuant to Delivered at Frontier, or DAF, shipping terms. As such, control of the product passes to the customer when the shipment reaches the destination country and revenue is recognized upon the arrival of the product in that country. Shipments to customers in the Americas are pursuant to Free on Board, or FOB, point of origin shipping terms meaning that control is passed to the customer upon shipment. Sales to most distributors are made under terms allowing certain price adjustments and limited rights of return (known as “stock rotation”) of the Company’s products held in their inventory or upon sale to their end customers. Revenue from sales to distributors is recognized upon the transfer of control to the distributor. Frequently, distributors need to sell at a price lower than the standard distribution price in order to win business. At the time the distributor invoices its customer or soon thereafter, the distributor submits a “ship-and-debit” price adjustment claim to the Company to adjust the distributor’s cost from the standard price to the pre-approved lower price. After the Company verifies that the claim was pre-approved, a credit memo is issued to the distributor for the ship-and-debit claim. In determining the transaction price, the Company considers ship-and-debit price adjustments to be variable consideration. Such price adjustments are estimated using the expected value method based on an analysis of actual ship-and-debit claims, at the distributor and product level, over a period of time considered adequate to account for current pricing and business trends. Historically, actual price adjustments for ship-and-debit claims have not materially differed from those estimated and included when determining the transaction price. Stock rotation rights grant the distributor the ability to return certain specified amounts of inventory. Stock rotation adjustments are an additional form of variable consideration and are also estimated using the expected value method based on historical return rates. Historically, distributor stock rotation adjustments have not been material. Sales to certain distributors are made under terms that do not include rights of return or price concessions after the product is shipped to the distributor. Accordingly, upon application of steps one through five above, product revenue is recognized upon shipment and transfer of control. The Company generally provides an assurance warranty that its products will substantially conform to the published specifications for twelve months from the date of shipment. The Company’s liability is limited to either a credit equal to the purchase price or replacement of the defective part. Returns under warranty have historically been immaterial. As such, the Company does not record a specific warranty reserve or consider activities related to such warranty, if any, to be a separate performance obligation. 43 Table of Contents Inventories Inventories (which consist of costs associated with the purchases of wafers from domestic and offshore foundries and of packaged components from offshore assembly manufacturers, as well as internal labor and overhead associated with the testing of both wafers and packaged components). Inventory is recorded at standard cost, which approximates actual cost computed on a first-in, first-out basis, not in excess of net realizable value. The Company routinely evaluates quantities and values of inventories and records a provision for excess and obsolete inventories to reduce its recorded inventory balance to its estimated net realizable value. In order to determine the provision management considers historical usage, forecasted demand, current economic trends and historical write-offs. Income Taxes Income-tax expense is an estimate of current income taxes payable or refundable in the current fiscal year based on reported income before income taxes. Deferred income taxes reflect the effect of temporary differences and carry-forwards that are recognized for financial reporting and income tax purposes. The Company accounts for income taxes under the provisions of ASC 740, Income Taxe s. Under the provisions of ASC 740, deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, utilizing the tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company limits the deferred tax assets recognized related to certain officers’ compensation to amounts that it estimates will be deductible in future periods based upon Internal Revenue Code Section 162(m). The Company also recognizes valuation allowances to reduce any deferred tax assets to the amount that it estimates will more likely than not be realized based on available evidence and management’s judgment. 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, it 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 the Company’s results of operations and financial position. The Company recognizes interest and penalties related to income tax matters as income tax expense. The U.S. tax rules require U.S. tax on foreign earnings, known as global intangible low taxed income. Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). We selected the deferred method of accounting and recorded the associated basis differences anticipated to influence prospective income inclusion calculations. Goodwill and Intangible Assets Goodwill and the Company’s domain name are evaluated in accordance with ASC 350-10, Goodwill and Other Intangible Assets, and an impairment analysis is conducted on an annual basis, or sooner if indicators exist for a potential impairment. In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets , long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Cash and Cash Equivalents The Company considers cash invested in highly liquid financial instruments with maturities of three months or less at the date of purchase to be cash equivalents. 44 Table of Contents Marketable Securities The Company generally holds securities until maturity; however, they may be sold under certain circumstances including, but not limited to, when necessary for the funding of acquisitions and other strategic investments. As a result, the Company classifies its investment portfolio as available-for-sale. The Company classifies all investments with a maturity date greater than three months at the date of purchase as short-term marketable securities in its consolidated balance sheet. As of December 31, 2023 and 2022, the Company’s marketable securities consisted primarily of commercial paper, corporate bonds, government securities and/or other high-quality commercial securities. Employee Benefits Plan The Company sponsors a 401(k) tax-deferred savings plan for all employees in the United States who meet certain eligibility requirements. Participants may contribute up to the amount allowable as a deduction for federal income tax purposes. The Company is not required to contribute; however, the Company contributes a certain percentage of employee annual salaries on a discretionary basis, not to exceed an established threshold. The Company provided for a contribution of approximately $ 2.1 million, $ 2.0 million and $ 1.9 million in 2023, 2022 and 2021, respectively. Retirement Benefit Obligations (Pension) The Company recognizes the over-funded or under-funded status of a defined benefit pension or post-retirement plan as an asset or liability in the accompanying consolidated balance sheets. Actuarial gains and losses are recorded in accumulated other comprehensive loss, a component of stockholders’ equity, and are amortized as a component of net periodic cost over the remaining estimated service period of participants. Foreign Currency Risk and Foreign Currency Translation As of December 31, 2023, the Company’s primary transactional currency was U.S. dollars; in addition, the Company holds cash in Swiss francs and euros to fund the operations of the Company’s Swiss subsidiary. The foreign exchange rate fluctuation between the U.S. dollar versus the Swiss franc and euro is recorded in other income in the consolidated statements of income. 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 recognized a loss of $ 0.4 million in 2023, an immaterial foreign exchange loss in 2022 and a loss of $ 0.6 million in 2021. The functional currencies of the Company’s other subsidiaries are the local currencies. Accordingly, all assets and liabilities are translated into U.S. dollars at the current exchange rates as of the applicable balance sheet date. Revenues and expenses are translated at the average exchange rate prevailing during the period. Cumulative gains and losses from the translation of the foreign subsidiaries’ financial statements have been included accumulated other comprehensive loss in stockholders’ equity. Warranty The Company generally warrants that its products will substantially conform to the published specifications for 12 months from the date of shipment. The Company’s liability is limited to either a credit equal to the purchase price or replacement of the defective part. Returns under warranty have historically been immaterial, and as a result, the Company does not record a specific warranty reserve. Advertising Advertising costs are expensed as incurred and amounted to $ 1.3 million, $ 1.4 million and $ 1.3 million in 2023, 2022 and 2021, respectively. Research and Development Research and development costs are expensed as incurred. Indemnifications The Company sells products to its distributors under contracts, collectively referred to as Distributor Sales Agreements (“DSA”). Each DSA contains the relevant terms of the contractual arrangement with the distributor, and 45 Table of Contents generally includes certain provisions for indemnifying the distributor against losses, expenses, and liabilities from damages that may be awarded against the distributor in the event the Company’s products are found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party (Customer Indemnification). The DSA generally limits the scope of and remedies for the Customer Indemnification obligations in a variety of industry-standard respects, including, but not limited to, limitations based on time and geography, and a right to replace an infringing product. The Company also, from time to time, has granted a specific indemnification right to individual customers. The Company believes its internal development processes and other policies and practices limit its exposure related to such indemnifications. In addition, the Company requires its employees to sign a proprietary information and inventions agreement, which assigns the rights to its employees’ development work to the Company. To date, the Company has not had to reimburse any of its distributors or customers for any losses related to these indemnifications and no material claims were outstanding as of December 31, 2023. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases, the Company cannot determine the maximum amount of potential future payments, if any, related to such indemnifications. Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which is intended to improve reportable segment disclosure requirements and expand public entities’ segment disclosures in the annual and interim financial statements. The amendment will require disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and within each reported measure of segment profit or loss, an amount and description of its composition for other segment items and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements of ASU 2023-07 are required for entities with a single reportable segment. The Company is required to adopt the amendments in fiscal year 2024 for annual and retrospective reporting periods and in the first quarter of fiscal year 2025 for all interim and retrospective reporting periods; with early adoption permitted. The Company is currently evaluating the effect of adopting these amendments on its consolidated financial statements. The Company does not expect the amendment to have a material impact on its consolidated financial statements upon adoption. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its consolidated financial statements. ​ 3. COMPONENTS OF THE COMPANY’S CONSOLIDATED BALANCE SHEETS: Accounts Receivable ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, (In thousands) ​ 2023 ​ 2022 Accounts receivable trade ​ $ 53,147 ​ $ 78,914 Allowance for ship-and-debit ​ ( 36,017 ) ​ ( 53,184 ) Allowance for stock rotation and rebate ​ ( 1,775 ) ​ ( 3,759 ) Allowance for credit losses ​ ​ ( 681 ) ​ ​ ( 1,135 ) Total ​ $ 14,674 ​ $ 20,836 ​ The Company maintains an allowance for estimated credit losses resulting from the inability of customers to make required payments. This allowance is established using estimates formulated by the Company’s management based upon factors such as the composition of the accounts receivable aging, historical losses, changes in payments patterns, 46 Table of Contents customer creditworthiness, and current economic trends. Receivables determined to be uncollectible are written off and deducted from the allowance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Allowance for Credit Losses ​ ​ Year Ended ​ ​ December 31, (In thousands) ​ 2023 2022 Beginning balance ​ $ ( 1,135 ) ​ $ ( 445 ) Provision for credit loss expense ​ ( 619 ) ​ ( 1,859 ) Receivables written off ​ — ​ 49 Recoveries collected ​ 1,073 ​ 1,120 Ending balance ​ $ ( 681 ) ​ $ ( 1,135 ) ​ Inventories ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, (In thousands) ​ 2023 ​ 2022 Raw materials ​ $ 96,467 ​ $ 75,355 Work-in-process ​ 24,727 ​ 15,440 Finished goods ​ 41,970 ​ 44,625 Total ​ $ 163,164 ​ $ 135,420 ​ Property and Equipment ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, (In thousands) ​ 2023 ​ 2022 Land ​ $ 22,178 ​ $ 22,166 Construction-in-progress ​ 17,022 ​ 19,195 Building and improvements ​ 92,049 ​ 89,704 Machinery and equipment ​ 267,941 ​ 253,308 Computer software and hardware and office furniture and fixtures ​ 67,450 ​ 62,574 Total ​ 466,640 ​ 446,947 Less: Accumulated depreciation ​ ( 302,427 ) ​ ( 270,266 ) Property and equipment, net ​ $ 164,213 ​ $ 176,681 ​ Depreciation expense for property and equipment for fiscal years ended December 31, 2023, 2022 and 2021, was approximately $ 35.2 million, $ 34.9 million and $ 31.5 million, respectively, and was determined using the straight-line method over the following useful lives: ​ ​ ​ ​ ​ ​ Building and improvements ​ ​ 4 - 40 years Machinery and equipment ​ 2 - 8 years Computer software and hardware and office furniture and fixtures ​ 4 - 7 years ​ Total property and equipment (excluding accumulated depreciation) located in the United States at December 31, 2023, 2022 and 2021, was approximately $ 203.6 million, $ 190.3 million and $ 174.6 million, respectively. In 2023, 2022 and 2021, approximately 11 %, 12 % and 14 %, respectively, of total property and equipment (excluding accumulated depreciation) was held in Thailand by one of the Company’s subcontractors. In 2023, 2022 and 2021, approximately 15 % 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. 47 Table of Contents Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss for the three years ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized Gains ​ ​ ​ ​ ​ ​ ​ ​ and Losses on ​ ​ ​ ​ Foreign ​ ​ ​ ​ ​ Available-for-Sale ​ Defined Benefit ​ Currency ​ ​ ​ (In thousands) ​ Securities ​ Pension Items ​ Items ​ Total Balance at January 1, 2021 ​ $ 890 ​ $ ( 1,641 ) ​ $ ( 1,412 ) ​ $ ( 2,163 ) Other comprehensive income (loss) before reclassifications ​ ( 2,055 ) ​ 800 ​ ( 486 ) ​ ( 1,741 ) Amounts reclassified from accumulated other comprehensive loss ​ — ​ 167 (1) — ​ 167 Other comprehensive loss ​ ( 2,055 ) ​ 967 ​ ( 486 ) ​ ( 1,574 ) Balance at December 31, 2021 ​ ( 1,165 ) ​ ( 674 ) ​ ( 1,898 ) ​ ( 3,737 ) Other comprehensive income (loss) before reclassifications ​ ( 4,158 ) ​ 1,459 ​ ( 985 ) ​ ( 3,684 ) Amounts reclassified from accumulated other comprehensive loss ​ — ​ 77 (1) — ​ 77 Other comprehensive loss ​ ( 4,158 ) ​ 1,536 ​ ( 985 ) ​ ( 3,607 ) Balance at December 31, 2022 ​ ( 5,323 ) ​ 862 ​ ( 2,883 ) ​ ( 7,344 ) Other comprehensive income (loss) before reclassifications ​ 5,579 ​ 811 ​ ( 420 ) ​ 5,970 Amounts reclassified from accumulated other comprehensive loss ​ — ​ ( 88 ) (1) — ​ ( 88 ) Other comprehensive income ​ 5,579 ​ 723 ​ ( 420 ) ​ 5,882 Balance at December 31, 2023 ​ $ 256 ​ $ 1,585 ​ $ ( 3,303 ) ​ $ ( 1,462 ) (1) This component of accumulated other comprehensive loss is included in the computation of net periodic pension cost for the years ended December 31, 2023, 2022 and 2021. ​ 4. FAIR VALUE MEASUREMENTS: ASC 820-10, Fair Value Measurements , clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices for identical assets in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company’s cash equivalents and investment instruments are classified within Level 1 or Level 2 of the fair-value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The type of instrument valued based on quoted market prices in active markets primarily includes money market securities. This type of instrument is generally classified within Level 1 of the fair-value hierarchy. The types of instruments valued based on other observable inputs (Level 2 of the fair-value hierarchy) include investment-grade corporate bonds and commercial paper. Such types of investments are valued by using a multi-dimensional relational model, the inputs are primarily benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research publications. The Company does not hold any instruments that would be classified within Level 3 of the fair-value hierarchy. 48 Table of Contents The fair value hierarchy of the Company’s cash equivalents and marketable securities at December 31, 2023 and 2022, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement at ​ ​ December 31, 2023 ​ ​ ​ Quoted Prices in ​ ​ ​ ​ ​ ​ ​ Active Markets for ​ Significant Other ​ ​ ​ ​ ​ Identical Assets ​ Observable Inputs (In thousands) ​ Total Fair Value ​ (Level 1) ​ (Level 2) Commercial paper ​ $ 20,275 ​ $ — ​ $ 20,275 Corporate securities ​ ​ 246,922 ​ ​ — ​ ​ 246,922 Money market funds ​ 491 ​ 491 ​ — Total ​ $ 267,688 ​ $ 491 ​ $ 267,197 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurement at ​ ​ December 31, 2022 ​ ​ ​ Quoted Prices in ​ ​ ​ ​ ​ ​ ​ Active Markets for ​ Significant Other ​ ​ ​ ​ ​ Identical Assets ​ Observable Inputs (In thousands) ​ Total Fair Value ​ (Level 1) ​ (Level 2) Commercial paper ​ $ 58,683 ​ $ — ​ $ 58,683 Corporate securities ​ ​ 248,441 ​ ​ — ​ ​ 248,441 Money market funds ​ 363 ​ 363 ​ — Total ​ $ 307,487 ​ $ 363 ​ $ 307,124 ​ The Company did not transfer any investments between level 1 and level 2 of the fair value hierarchy in the years ended December 31, 2023 and 2022. 5. MARKETABLE SECURITIES: Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at December 31, 2023, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized ​ Gross Unrealized ​ Estimated Fair (In thousands) Cost Gains Losses Market Value Investments due in 3 months or less: ​ ​ ​ ​ Corporate securities ​ $ 10,688 ​ $ — ​ $ ( 42 ) ​ $ 10,646 Total ​ 10,688 ​ — ​ ( 42 ) ​ 10,646 Investments due in 4-12 months: ​ ​ ​ ​ Commercial paper ​ 718 ​ — ​ — ​ 718 Corporate securities ​ ​ 48,680 ​ 15 ​ ( 347 ) ​ 48,348 Total ​ 49,398 ​ 15 ​ ( 347 ) ​ 49,066 Investments due in 12 months or greater: ​ ​ ​ ​ Corporate securities ​ 187,298 ​ 952 ​ ( 322 ) ​ 187,928 Total ​ ​ 187,298 ​ 952 ​ ​ ( 322 ) ​ 187,928 Total marketable securities ​ $ 247,384 ​ $ 967 ​ $ ( 711 ) ​ $ 247,640 ​ Accrued interest receivable was $ 2.3 million at December 31, 2023 and was recorded within prepaid expenses and other current assets on the consolidated balance sheet. 49 Table of Contents Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at December 31, 2022, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized ​ Gross Unrealized ​ Estimated Fair (In thousands) Cost Gains Losses Market Value Investments due in 3 months or less: ​ ​ ​ ​ Corporate securities ​ $ 21,803 ​ $ — ​ $ ( 135 ) ​ $ 21,668 Total ​ 21,803 ​ — ​ ( 135 ) ​ 21,668 Investments due in 4-12 months: ​ ​ ​ ​ Corporate securities ​ 173,833 ​ — ​ ( 4,019 ) ​ 169,814 Total ​ 173,833 ​ — ​ ( 4,019 ) ​ 169,814 Investments due in 12 months or greater: ​ ​ ​ ​ Corporate securities ​ 58,128 ​ 71 ​ ( 1,240 ) ​ 56,959 Total ​ 58,128 ​ 71 ​ ( 1,240 ) ​ 56,959 Total marketable securities ​ $ 253,764 ​ $ 71 ​ $ ( 5,394 ) ​ $ 248,441 ​ 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. ​ As of December 31, 2023 and 2022 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, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ 12 Months or Longer ​ Total ​ Estimated Gross Estimated Gross Estimated Gross ​ ​ Fair Market ​ Unrealized ​ Fair Market ​ Unrealized ​ Fair Market ​ Unrealized (In thousands) ​ Value ​ Losses ​ Value ​ Losses ​ Value ​ Losses December 31, 2023 ​ ​ ​ ​ ​ ​ Corporate securities ​ $ 102,729 ​ $ ( 371 ) ​ $ 25,401 ​ $ ( 340 ) ​ $ 128,130 ​ $ ( 711 ) Total marketable securities ​ $ 102,729 ​ $ ( 371 ) ​ $ 25,401 ​ $ ( 340 ) ​ $ 128,130 ​ $ ( 711 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less Than 12 Months ​ 12 Months or Longer ​ Total ​ Estimated Gross Estimated Gross Estimated Gross ​ ​ Fair Market ​ Unrealized ​ Fair Market ​ Unrealized ​ Fair Market ​ Unrealized (In thousands) ​ Value ​ Losses ​ Value ​ Losses ​ Value ​ Losses December 31, 2022 ​ ​ ​ ​ ​ ​ Corporate securities ​ $ 45,047 ​ $ ( 662 ) ​ $ 191,443 ​ $ ( 4,732 ) ​ $ 236,490 ​ $ ( 5,394 ) Total marketable securities ​ $ 45,047 ​ $ ( 662 ) ​ $ 191,443 ​ $ ( 4,732 ) ​ $ 236,490 ​ $ ( 5,394 ) ​ The weighted average interest rate of investments at December 31, 2023 and 2022, was approximately 4.87 % and 2.08 %, respectively. In the years ended December 31, 2023 and 2022, no unrealized losses on marketable securities were recognized in income. ​ 6. GOODWILL AND INTANGIBLE ASSETS: The carrying amount of goodwill as of December 31, 2023 and 2022 was $ 91.8 million; there were no changes to goodwill in either of the respective fiscal years. Intangible assets consist primarily of developed technology, acquired licenses, and domain name and are reported net of accumulated amortization. The Company amortizes the cost of all intangible assets over the estimated useful life of the developed technology and technology licenses, which range from two to twelve years , with the exception of $ 1.3 million paid to acquire an internet domain name. The Company acquired the rights to the internet domain name www.power.com , the Company’s 50 Table of Contents primary domain name; the cost to acquire the domain name has been recorded as an intangible asset and will not be amortized as it has an indefinite useful life. Amortization of acquired intangible assets was approximately $ 2.2 million, $ 2.4 million and $ 3.5 million in the years ended December 31, 2023, 2022 and 2021, respectively. The Company does not believe there is any significant residual value associated with the following intangible assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ December 31, 2022 ​ ​ ​ Accumulated ​ ​ ​ ​ Accumulated ​ ​ (In thousands) ​ Gross ​ Amortization ​ Net ​ Gross ​ Amortization ​ Net Domain name ​ $ 1,261 ​ $ — ​ $ 1,261 ​ $ 1,261 ​ $ — ​ $ 1,261 Developed technology ​ 37,960 ​ ( 35,459 ) ​ 2,501 ​ 37,960 ​ ( 33,531 ) ​ 4,429 Technology licenses ​ 1,926 ​ ( 1,264 ) ​ 662 ​ 1,926 ​ ( 1,019 ) ​ 907 Total intangible assets ​ $ 41,147 ​ $ ( 36,723 ) ​ $ 4,424 ​ $ 41,147 ​ $ ( 34,550 ) ​ $ 6,597 The estimated future amortization expense related to definite-lived intangible assets at December 31, 2023, is as follows: ​ ​ ​ ​ ​ Estimated ​ ​ Amortization Fiscal Year ​ (In thousands) 2024 ​ $ 1,279 2025 ​ 832 2026 ​ 687 2027 ​ 365 Total ​ $ 3,163 ​ ​ 7. STOCK PLANS AND SHARE BASED COMPENSATION: Stock Plans As of December 31, 2023, the Company had three stock-based compensation plans (the “Plans”) which are described below. 2007 Equity Incentive Plan 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. The 2007 Plan expired in September 2017 with no further grants to be made under this plan; however previous grants under this plan shall remain outstanding until they are exercised, vest, forfeited or expire. 2016 Incentive Award Plan The 2016 Incentive Award Plan (“2016 Plan”) was adopted by the board of directors on March 17, 2016 and approved by the stockholders on May 13, 2016. The 2016 Plan provides for the grant of RSU awards, PSU awards and PRSU awards. No other forms of equity-based awards, including stock options and stock appreciation rights, may be granted under the 2016 Plan. As of December 31, 2023, 3.4 million awards have been issued, net of forfeitures or cancellations, and approximately 3.6 million shares of common stock remain available for future grant under the 2016 Plan. 1997 Employee Stock Purchase Plan Under the 1997 Employee Stock Purchase Plan (Purchase Plan), eligible employees may apply accumulated payroll deductions, which may not exceed 15 % of an employee’s compensation, to the purchase of shares of the Company’s common stock at periodic intervals. The purchase price of stock under the Purchase Plan is equal to 85 % of the lower of (i) the fair market value of the Company’s common stock on the first day of each offering period, or (ii) the fair market value of the Company’s common stock on the purchase date (as defined in the Purchase Plan). Each offering period consists of one purchase period of approximately six months duration. An aggregate of 7.5 million shares of common stock were reserved for issuance to employees under the Purchase Plan. As of December 31, 2023, of the shares 51 Table of Contents reserved for issuance, 6.9 million shares had been purchased and 0.6 million shares were reserved for future issuance under the Purchase Plan. Shares Reserved As of December 31, 2023, the Company had approximately 4.4 million shares of common stock reserved for future grant under all stock plans. Stock-Based Compensation The Company applies the provisions of ASC 718-10, Stock Compensation . Under the provisions of ASC 718-10, the Company recognizes the fair value of stock-based compensation in its financial statements over the requisite service period of the individual grants, which generally equals a four-year vesting period. The Company uses estimates of volatility, expected term, risk-free interest rate, dividend yield and forfeitures in determining the fair value of these awards and the amount of compensation expense to recognize. The Company uses the straight-line method to amortize all stock awards granted over the requisite service period of the award. The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the years ended December 31, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) 2023 2022 2021 Cost of revenues ​ $ 1,692 ​ $ 1,132 ​ $ 2,359 Research and development ​ 10,939 ​ 10,428 ​ 12,127 Sales and marketing ​ 6,888 ​ 6,035 ​ 7,630 General and administrative ​ 9,009 ​ 4,769 ​ 15,493 Total stock-based compensation expense ​ $ 28,528 ​ $ 22,364 ​ $ 37,609 ​ The following table summarizes total compensation expense related to unvested awards not yet recognized, net of expected forfeitures, and the weighted average period over which it is expected to be recognized as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ Unrecognized Compensation Weighted Average ​ ​ Expense for Unvested ​ Remaining Recognition ​ ​ Awards ​ Period ​ ​ (In thousands) ​ (In years) Long-term performance-based awards ​ $ — — Restricted stock units ​ 46,856 2.66 Purchase plan ​ 155 0.08 Total unrecognized compensation expense ​ $ 47,011 ​ Stock-based compensation expense in the year ended December 31, 2023, was approximately $ 28.5 million, comprising approximately $ 23.4 million related to restricted stock units, $ 3.2 million related to performance-based awards and long-term performance-based awards and $ 1.9 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 related to performance-based awards and long-term performance-based awards. 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. 52 Table of Contents 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, 2023, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 ​ 2022 ​ 2021 Risk-free interest rates ​ 5.15 % ​ ​ 1.71 % ​ ​ 0.07 % Expected volatility rates ​ 37 % ​ ​ 41 % ​ ​ 41 % Expected dividend yield ​ 0.90 % ​ ​ 0.89 % ​ ​ 0.57 % Expected term of purchase rights (in years) ​ 0.49 ​ ​ 0.50 ​ ​ 0.50 Weighted-average estimated fair value of purchase rights ​ $ 23.75 ​ ​ $ 21.63 ​ ​ $ 23.92 ​ ​ No options were granted or remain outstanding as of December 31, 2023. There were no options exercised during the year ended December 31, 2023 while total intrinsic value of options exercised during the years ended December 31, 2022 and December 31, 2021 were $ 0.8 million and $ 4.9 million, respectively. PSU Awards 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. The number of shares that are released at the end of the performance year can range from zero to 200 % of the target number depending on the Company’s performance. The performance metrics of this program are annual targets consisting of a combination of net revenue, non-GAAP operating earnings and strategic goals. As the net revenue, non-GAAP operating income and strategic goals are considered performance conditions, expense associated with these awards, net of estimated forfeitures, is recognized over the service period based on an assessment of the achievement of the performance targets. The fair value of these PSUs 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. If the performance conditions are not achieved, no compensation cost is recognized and any previously recognized compensation is reversed. A summary of PSU awards outstanding as of December 31, 2023, and activity during the three years then ended, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ Weighted-Average ​ Remaining ​ Aggregate ​ ​ Shares ​ Grant Date Fair ​ Contractual Term ​ Intrinsic Value ​ (In thousands) Value Per Share (In years) (In thousands) Outstanding at January 1, 2021 150 ​ $ 46.27 ​ Granted 105 ​ $ 84.48 ​ Vested ( 150 ) ​ $ 46.27 ​ Forfeited or canceled ( 1 ) ​ $ 85.01 ​ Outstanding at December 31, 2021 104 ​ $ 84.47 ​ Granted 119 ​ $ 79.91 ​ Vested ( 104 ) ​ $ 84.48 ​ Forfeited or canceled ( 85 ) ​ $ 79.89 ​ Outstanding at December 31, 2022 34 ​ $ 79.94 ​ Granted 131 ​ $ 82.96 ​ Vested ( 34 ) ​ $ 79.94 ​ Forfeited or canceled ( 93 ) ​ $ 82.96 ​ Outstanding at December 31, 2023 38 ​ $ 82.95 — ​ $ 3,131 Outstanding and expected to vest at December 31, 2023 38 ​ ​ ​ — ​ $ 3,131 ​ In February 2023, it was determined that approximately 34,000 shares subject to the PSUs granted in 2022 vested in aggregate; the shares were released to the Company’s employees and executives in the first quarter of 2023. The grant-date fair value of PSU awards released, which were fully vested, in the years ended December 31, 2023, 2022 and 2021, was approximately $ 2.7 million, $ 8.8 million and $ 6.9 million, respectively. 53 Table of Contents PRSU Awards (Long-term Performance Based) The Company’s PRSU program provides for the issuance of PRSUs which will vest based on the Company’s performance measured against the PRSU program’s established performance targets. PRSUs are granted in an amount equal to twice the target number of shares to be issued if the maximum performance metrics are met. 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. The performance goals for PRSUs granted in fiscal 2021, 2022 and 2023 were based on the Company’s compound annual growth rate (“CAGR”) of revenue as measured against the revenue CAGR of the analog semiconductor industry (“Relative Measure”), in each case over the respective three-year performance period. In addition, the PRSUs granted in 2023 (“2023 PRSUs”) also include a performance goal related to the Company’s revenue growth over the respective three-year performance period as compared to defined targets (“Absolute Measure”) with the actual vesting of the 2023 PRSUs calculated based on higher achievement under the Relative Measure or the Absolute Measure. Expense associated with these awards, net of estimated forfeitures, is recorded throughout the year based on an assessment of the expected achievement of the performance targets. If the performance conditions are not achieved, no compensation cost is recognized and any previously recognized compensation is reversed. Expense associated with these awards, net of estimated forfeitures, is recorded throughout the year based on an assessment of the expected achievement of the performance targets. If the performance conditions are not achieved, no compensation cost is recognized and any previously recognized compensation is reversed. A summary of PRSU awards outstanding as of December 31, 2023, and activity during the three years then ended, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average ​ Aggregate ​ ​ ​ ​ Weighted-Average ​ Remaining ​ Intrinsic ​ ​ Shares ​ Grant Date Fair ​ Contractual Term ​ Value ​ (In thousands) Value Per Share (In years) (In thousands) Outstanding at January 1, 2021 301 ​ $ 41.90 ​ Granted 103 ​ $ 82.92 ​ Vested ( 6 ) ​ $ 29.94 ​ Forfeited or canceled ( 15 ) ​ $ 40.05 ​ Outstanding at December 31, 2021 383 ​ $ 53.14 ​ ​ Granted 110 ​ $ 78.96 ​ Vested ( 135 ) ​ $ 34.09 ​ Forfeited or canceled ( 122 ) ​ $ 49.68 ​ Outstanding at December 31, 2022 236 ​ $ 77.82 ​ Granted 146 ​ $ 80.92 ​ Vested ( 23 ) ​ $ 49.68 ​ Forfeited or canceled ( 103 ) ​ $ 82.92 ​ Outstanding at December 31, 2023 256 ​ $ 80.08 1.57 ​ $ 20,987 Outstanding and expected to vest at December 31, 2023 — ​ ​ ​ ​ — ​ $ — ​ In February 2023 it was determined that approximately 23,000 shares subject to the PRSUs granted in 2020 vested in aggregate; the shares were released to the Company’s executives in the first quarter of 2023. The grant-date fair value of PRSU awards released, which were fully vested, in the years ended December 31, 2023, 2022 and 2021 was approximately $ 1.1 million, $ 4.6 million and $ 0.2 million , respectively. RSU Awards RSUs granted to employees typically vest ratably over a four-year period and are converted into shares of the Company’s common stock upon vesting on a one-for-one basis subject to the employee’s continued service to the Company over that period. The fair value of RSUs 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. Compensation expense is recognized on a straight-line basis over the requisite service period of each grant adjusted for estimated forfeitures. 54 Table of Contents A summary of RSU awards outstanding as of December 31, 2023, and activity during the three years then ended, is presented below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-Average ​ Aggregate ​ ​ ​ ​ Weighted-Average ​ Remaining ​ Intrinsic ​ ​ Shares ​ Grant Date Fair ​ Contractual Term ​ Value ​ (In thousands) Value Per Share (In years) (In thousands) Outstanding at January 1, 2021 1,518 ​ $ 35.51 ​ Granted 271 ​ $ 83.79 ​ Vested ( 546 ) ​ $ 35.03 ​ Forfeited ( 99 ) ​ $ 39.85 ​ Outstanding at December 31, 2021 1,144 ​ $ 46.81 ​ Granted 519 ​ $ 76.01 ​ Vested ( 481 ) ​ $ 44.70 ​ Forfeited ( 86 ) ​ $ 60.02 ​ Outstanding at December 31, 2022 1,096 ​ $ 60.52 ​ Granted 335 ​ $ 80.97 ​ Vested ( 418 ) ​ $ 53.08 ​ Forfeited ( 32 ) ​ $ 73.29 ​ Outstanding at December 31, 2023 981 ​ $ 70.27 1.48 ​ $ 80,585 Outstanding and expected to vest at December 31, 2023 918 ​ ​ ​ 1.39 ​ $ 75,384 ​ The grant-date fair value of RSUs vested in the years ended December 31, 2023, 2022 and 2021, was approximately $ 22.2 million, $ 21.5 million and $ 19.1 million, respectively. ​ 8. SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES: Customer Concentration The Company’s top ten customers accounted for approximately 80 %, 76 % and 78 % of revenues in 2023, 2022 and 2021, respectively. A significant portion of these revenues are attributable to sales of the Company’s products to distributors of electronic components. These distributors sell the Company’s products to a broad, diverse range of end users, including OEMs and merchant power supply manufacturers. Sales to distributors in 2023, 2022 and 2021 were $ 307.4 million, $ 457.7 million and $ 525.7 million, respectively. Direct sales to OEMs and power-supply manufacturers accounted for the remainder. The following customers represented 10% or more of the Company’s net revenues for the respective years : ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, Customer 2023 ​ 2022 ​ 2021 Avnet ​ 27 % ​ 31 % ​ 30 % Honestar Technologies Co., Ltd. ​ 18 % ​ 11 % ​ 16 % Salcomp Group 10 % ​ * ​ ​ * ​ * 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. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consisted principally of cash investments and trade receivables. The Company does not have any off-balance-sheet credit exposure related to its customers. As of December 31, 2023 and 2022, 86 % and 87 % of accounts receivable were concentrated with the Company’s top ten customers, respectively. 55 Table of Contents The following customers represented 10% or more of accounts receivable: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, Customer 2023 ​ 2022 Avnet ​ 39 % ​ 42 % Honestar Technologies Co., Ltd. ​ 20 % ​ * ​ Salcomp Group 10 % ​ 13 % Flextronics Group * ​ ​ 11 % * 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. Geographic Net Revenues The Company markets its products globally through its sales personnel and a worldwide network of independent sales representatives and distributors. Geographic net revenues based on “bill to” customer locations were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) 2023 2022 2021 United States of America ​ $ 8,676 ​ $ 25,500 ​ $ 17,238 Hong Kong/China ​ 265,936 ​ 356,865 ​ 446,980 India ​ ​ 34,558 ​ ​ 33,159 ​ ​ 25,961 Taiwan ​ 15,774 ​ 19,789 ​ 25,991 Korea ​ 24,956 ​ 52,074 ​ 59,501 Western Europe (excluding Germany) ​ 27,819 ​ 32,429 ​ 35,835 Japan ​ 16,177 ​ 34,924 ​ 25,101 Germany ​ 23,041 ​ 52,876 ​ 32,664 Other ​ 27,601 ​ 43,522 ​ 34,006 Total net revenues ​ $ 444,538 ​ $ 651,138 ​ $ 703,277 ​ ​ ​ 9. COMMON STOCK REPURCHASES AND CASH DIVIDENDS: Common Stock Repurchases 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 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. 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 2023, 2022 and 2021 the Company purchased approximately 0.8 million shares, 3.8 million shares and 0.9 million shares, respectively, for approximately $ 55.3 million, $ 311.1 million and $ 73.9 million, respectively. As of December 31, 2023, the Company had $ 26.0 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 The following table presents the quarterly dividends declared per share of the Company’s common stock for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 2021 First Quarter ​ $ 0.19 ​ $ 0.18 ​ $ 0.13 Second Quarter ​ $ 0.19 ​ $ 0.18 ​ $ 0.13 Third Quarter ​ $ 0.19 ​ $ 0.18 ​ $ 0.13 Fourth Quarter ​ $ 0.20 ​ $ 0.18 ​ $ 0.15 ​ 56 Table of Contents The Company paid approximately $ 44.0 million, $ 41.5 million and $ 32.6 million in cash dividends during 2023, 2022 and 2021, respectively. 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. In October 2023, the Company’s board of directors raised the cash dividend with the declaration of four cash dividends of $ 0.20 per share to be paid to stockholders of record at the end of the fourth quarter in 2023 (in lieu of the $ 0.19 per share announced in February 2023) and at the end of each quarter in 2024 . 10. EARNINGS PER SHARE: Basic earnings per share are calculated by dividing net income by the weighted-average shares of common stock outstanding during the period. Diluted earnings per share are calculated by dividing net income by the weighted-average shares of common stock and dilutive common equivalent shares outstanding during the period. Dilutive common equivalent shares included in this calculation consist of dilutive shares issuable upon the assumed exercise of outstanding common stock options, the assumed vesting of outstanding restricted stock units, the assumed issuance of awards under the stock purchase plan and contingently issuable performance-based awards, as computed using the treasury stock method. A summary of the earnings per share calculation is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands, except per share amounts) 2023 2022 2021 Basic earnings per share: ​ ​ ​ Net income ​ $ 55,735 ​ $ 170,851 ​ $ 164,413 Weighted-average common shares ​ 57,195 ​ 57,801 ​ 60,327 Basic earnings per share ​ $ 0.97 ​ $ 2.96 ​ $ 2.73 Diluted earnings per share: (1) ​ ​ ​ Net income ​ $ 55,735 ​ $ 170,851 ​ $ 164,413 Weighted-average common shares ​ 57,195 ​ 57,801 ​ 60,327 Effect of dilutive awards: ​ ​ ​ Employee stock plans ​ 427 ​ 570 ​ 1,140 Diluted weighted-average common shares ​ 57,622 ​ 58,371 ​ 61,467 Diluted earnings per share ​ $ 0.97 ​ $ 2.93 ​ $ 2.67 (1) The Company includes the shares underlying performance-based awards in the calculation of diluted earnings per share if the performance conditions have been satisfied as of the end of the reporting period and excludes such shares when the necessary conditions have not been met. The Company has included in the 2023, 2022 and 2021 calculations those shares that were contingently issuable upon the satisfaction of the performance conditions as of the end of the respective periods. In the years ended December 31, 2023, 2022 and 2021, no outstanding stock awards were determined to be anti-dilutive and therefore were excluded from the computation of diluted earnings per share. ​ 11. PROVISION (BENEFIT) FOR INCOME TAXES: Income Taxes The Company accounts for income taxes under the provisions of ASC 740, Income Taxes . Under the provisions of ASC 740, deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, utilizing the tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. 57 Table of Contents U.S. and foreign components of income before income taxes were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) 2023 2022 2021 U.S. operations ​ $ 2,995 ​ $ 17,250 ​ $ 241 Foreign operations ​ 42,912 ​ 166,176 ​ 175,894 Total income before income taxes ​ $ 45,907 ​ $ 183,426 ​ $ 176,135 ​ The components of the provision (benefit) for income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) 2023 2022 2021 Current provision (benefit): ​ ​ ​ Federal ​ $ ( 1,193 ) ​ $ 19,740 ​ $ 23,648 State ​ 3 ​ 2 ​ 2 Foreign ​ 1,331 ​ 1,079 ​ 1,608 ​ ​ 141 ​ 20,821 ​ 25,258 Deferred provision (benefit): ​ ​ ​ Federal ​ ( 9,178 ) ​ ( 7,962 ) ​ ( 11,449 ) State ​ — ​ — ​ — Foreign ​ ( 791 ) ​ ( 284 ) ​ ( 2,087 ) ​ ​ ( 9,969 ) ​ ( 8,246 ) ​ ( 13,536 ) Total ​ $ ( 9,828 ) ​ $ 12,575 ​ $ 11,722 ​ The provision (benefit) for income taxes differs from the amount that would result by applying the applicable federal income tax rate to income before income taxes, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 ​ 2022 ​ 2021 Provision (benefit) computed at Federal statutory rate 21.0 % ​ 21.0 % ​ 21.0 % Business tax credits ( 12.2 ) ​ ( 3.7 ) ​ ( 3.6 ) Stock-based compensation ( 0.1 ) ​ ( 1.6 ) ​ ( 0.6 ) Foreign income taxed at different rate ( 17.6 ) ​ ( 18.5 ) ​ ( 23.8 ) GILTI inclusion 4.1 ​ 8.5 ​ 13.1 Uncertain tax positions ( 18.6 ) ​ ( 0.1 ) ​ ( 0.6 ) Valuation allowance 4.3 ​ 1.3 ​ 1.3 Other ( 2.3 ) ​ — ​ ( 0.1 ) Total ( 21.4 ) % ​ 6.9 % ​ 6.7 % ​ The Company’s effective tax rate is impacted by the geographic distribution of the Company’s world-wide earnings in lower-tax jurisdictions, federal research tax credits and the recognition of excess tax benefits related to share-based payments. In 2023, the rate was further favorably impacted by release of $ 7.6 million of reserves related to federal uncertain tax positions as the statute of limitations for review of these positions expired. These benefits were partially offset by foreign income subject to U.S. tax, known as global intangible low-taxed income. The Company’s primary jurisdiction where foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction. Income earned in other foreign jurisdictions was not material. The Company has not been granted any incentivized tax rates and does not operate under any tax holidays in any jurisdiction. 58 Table of Contents The components of the net deferred income tax assets (liabilities) were as follows: ​ ​ ​ ​ ​ ​ ​ ​ December 31, (In thousands) ​ 2023 ​ 2022 Deferred tax assets: ​ ​ Capitalized R&D costs ​ $ 30,886 ​ $ 20,666 Other reserves and accruals ​ ​ 861 ​ ​ 2,516 Tax credit carry-forwards ​ 28,223 ​ 26,154 Stock compensation ​ 1,543 ​ 1,559 Capital losses ​ 141 ​ 150 Net operating loss ​ 2,269 ​ 2,217 Other ​ 465 ​ 439 Valuation allowance ​ ( 31,031 ) ​ ( 29,036 ) ​ ​ 33,357 ​ 24,665 Deferred tax liabilities: ​ ​ Depreciation ​ ( 5,040 ) ​ ( 5,596 ) ​ ​ ( 5,040 ) ​ ( 5,596 ) Net deferred tax assets ​ $ 28,317 ​ $ 19,069 ​ In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income. 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, 2023, 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, 2023, the Company had utilized all of its federal research and development tax credit carryforwards. As of December 31, 2023, the Company had California research and development tax credit carryforwards of approximately $ 40.7 million (there is no expiration of research and development tax credit carryforwards for the state of California) and California net operating losses of $ 44.2 million which will begin to expire in 2032 . As of December 31, 2023, the Company had Canadian scientific research and experimental development tax credit carryforwards of approximately $ 3.8 million and New Jersey research and experimental development tax credit carryforwards of approximately $ 0.8 million, which will start to expire in 2030 and 2029 , respectively. The Tax Act signed into law on December 22, 2017, generally allows companies to repatriate accumulated foreign earnings without incurring additional U.S. federal taxes beginning after December 31, 2017. Local foreign and U.S. states taxes may still be incurred upon repatriation. The Company has not provided for U.S. taxes on its undistributed earnings of foreign subsidiaries. The determination of the future tax consequences of the remittance of these earnings is not practicable. 59 Table of Contents Unrecognized Tax Benefits The Company applies the provisions of ASC 740-10, relating to accounting for uncertain income taxes. Reconciliation of the beginning and ending amount of unrecognized tax benefits: ​ ​ ​ ​ ​ Unrecognized (In thousands) ​ Tax Benefits Unrecognized tax benefits balance at January 1, 2021 ​ $ 21,051 Gross increase for tax positions of current year ​ 2,068 Gross decrease for tax positions of prior years ​ ​ — Statute of limitation release for tax positions of prior years ​ ( 1,756 ) Unrecognized tax benefits balance at December 31, 2021 ​ 21,363 Gross increase for tax positions of current year ​ 2,188 Gross decrease for tax positions of prior years ​ ​ — Statute of limitation release for tax positions of prior years ​ ( 165 ) Unrecognized tax benefits balance at December 31, 2022 ​ 23,386 Gross increase for tax positions of current year ​ 605 Gross decrease for tax positions of prior years ​ ​ — Statute of limitation release for tax positions of prior years ​ ( 7,602 ) Unrecognized tax benefits balance at December 31, 2023 ​ $ 16,389 ​ The Company’s total unrecognized tax benefits as of December 31, 2023, 2022 and 2021, were $ 16.4 million, $ 23.4 million and $ 21.4 million, respectively. An income tax benefit of $ 4.5 million, net of valuation allowance adjustments, would be recorded if fiscal year 2023 unrecognized tax benefits are recognized. The Company cannot reasonably estimate the amount of the unrecognized tax benefit that could be adjusted in the next twelve months. The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had accrued interest and penalties of $ 0.3 million and $ 1.2 million as of December 31, 2023 and 2022, respectively, which have been recorded in long-term income taxes payable in the accompanying consolidated balance sheets. As of December 31, 2023, the Company has concluded all U.S. federal income tax matters for the years through 2019. However, due to tax attributes, the IRS may calculate tax adjustments for the 2017 transition tax calculation for positions taken prior to 2017 since it has an extended statute of limitations period totaling six years. The California Franchise Tax Board has started an audit for the Company’s tax years 2018 and 2019, it is currently ongoing. ​ 12. LEASES AND COMMITMENTS: Facilities and Leases The Company owns its main executive, administrative, manufacturing and technical offices in San Jose, California. The Company also owns a research and development facility in New Jersey, a design center in Germany and a multipurpose office building in Switzerland. The Company’s leases consist of operating leases for administrative office spaces, research-and-development facilities and sales offices in various countries around the world. The Company determines whether an arrangement is a lease at inception. Some lease agreements contain lease and non-lease components, which are accounted for as a single lease component. Total lease expense was $ 3.6 million for the year ended December 31, 2023, and $ 3.3 million in both the years ended December 31, 2022 and 2021; short-term and variable lease expenses were not material during these periods. Balance sheet information related to leases was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, (In thousands) ​ Balance Sheet Classification ​ 2023 ​ 2022 Right-of-use assets ​ ​ ​ ​ ​ ​ Operating lease assets ​ Other assets ​ $ 10,398 ​ $ 9,153 ​ ​ ​ ​ ​ ​ ​ ​ ​ Lease liabilities ​ ​ ​ Current operating lease liabilities ​ Other accrued liabilities ​ $ 2,626 ​ $ 2,895 Non-current operating lease liabilities ​ Other liabilities ​ 7,354 ​ 5,831 Total ​ ​ ​ $ 9,980 ​ $ 8,726 ​ 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 six years , 60 Table of Contents 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. As the Company’s leases do not provide an implicit rate, the present value of future lease payments is determined using the Company’s incremental borrowing rate based on information available at commencement date. ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, Lease term and discount rate ​ 2023 ​ 2022 Weighted average remaining lease term ​ 3.8 years ​ 4.0 years Weighted average discount rate 6.1 % ​ 4.6 % ​ Supplemental cash flows information related to leases was as follow: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (In thousands) ​ 2023 ​ 2022 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ Operating cash flows from operating leases ​ $ 3,579 ​ $ 3,245 Right-of-use assets obtained in exchange for new operating lease obligations ​ $ 4,889 ​ $ 1,795 ​ Future minimum lease payments under all non-cancelable lease agreements as of December 31, 2023, are as follows: ​ ​ ​ ​ ​ ​ December 31, (In thousands) ​ 2023 2024 ​ $ 3,168 2025 ​ 3,103 2026 ​ 2,514 2027 ​ 1,359 2028 ​ ​ 852 Thereafter ​ 243 Total future minimum lease payments ​ 11,239 Less imputed interest ​ ( 1,259 ) Total ​ $ 9,980 ​ Purchase Obligations At December 31, 2023, the Company had no non-cancelable purchase obligations that were due beyond one year. ​ 13. LEGAL PROCEEDINGS AND CONTINGENCIES: From time to time in the ordinary course of business, the Company becomes involved in lawsuits, or customers and distributors may make claims against the Company. 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 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, and the parties thereafter agreed to dismiss the Company’s separate lawsuit against CogniPower. The remaining case is currently stayed, but the Company recently filed a motion to amend its claims against CogniPower to include three additional patents that are in the same family as the two CogniPower patents that are already in the lawsuit, after CogniPower accused the Company’s customers of infringing those three related patents in a lawsuit in the Eastern District of Texas. A ruling on the Company’s motion is expected in the coming months, and the Company believes it has strong claims and defenses with respect to all of CogniPower’s asserted patents 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 alleged that the Company was infringing one patent pertaining to charging a battery-operated device. The Company believes it has strong claims and defenses, and intends to 61 Table of Contents vigorously defend itself against Waverly’s claims, with appeals to follow if necessary. Because the Company believed that Waverly’s Texas complaint was improperly filed in the wrong court, the Company 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 charged the Company with infringing. The Texas court thereafter dismissed Waverly’s Texas complaint. The Company’s Delaware lawsuit is in its earliest stages, but on April 6, 2023, the Delaware defendants filed a motion to dismiss based on a series of covenants not to sue that the Delaware defendants filed with the Court, with further proceedings on the Delaware defendants’ motion expected in the coming months. 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 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. 14. RETIREMENT PLANS: The Company sponsors a defined benefit pension plan (Pension Plan) for its Swiss subsidiary in accordance with the legal requirements of Switzerland. The plan assets, which provide benefits in the event of an employee’s retirement, death or disability, are held in legally autonomous trustee-administered funds that are subject to Swiss law. Benefits are based on the employee’s age, years of service and salary, and the plan is financed by contributions by both the employee and the Company. The net periodic benefit cost of the Pension Plan was not material to the Company’s financial statements during the years ended December 31, 2023, 2022 and 2021. At December 31, 2023, the projected benefit obligation was $ 11.4 million, the plan assets were $ 7.9 million and the net pension liability was $ 3.5 million. As of December 31, 2022, the projected benefit obligation was $ 12.1 million, the plan assets were $ 8.2 million, and the net pension liability was $ 3.9 million. The Company has recorded the unfunded amount as a liability in its consolidated balance sheet at December 31, 2023 and 2022, under the other liabilities caption. The Company expects to make contributions to the Pension Plan of approximately $ 0.4 million during 2024. The accumulated unrealized actuarial activity on pension benefits, net of tax, at December 31, 2023, 2022 and 2021 was $ 1.6 million gain, $ 0.9 million gain and $ 0.7 million loss, respectively. These amounts were reflected in Note 3 under the caption accumulated other comprehensive loss. In accordance with the Compensation-Retirement Benefits Topic of ASC 715-20, Defined Benefits Plan , the Company recognizes the over-funded or under-funded status of its defined post-retirement plan as an asset or liability in its statement of financial position. The Company measured the plan assets and benefit obligations as of the date of the fiscal year-end. ​ 62 Table of Contents 15. BANK LINE OF CREDIT: On July 27, 2016, the Company entered into a credit agreement with Wells Fargo Bank, National Association (the "Credit Agreement") that provides the Company with a $ 75.0 million revolving line of credit to use for general corporate purposes with a $ 20.0 million sub-limit for the issuance of standby and trade letters of credit. The Credit Agreement was amended on April 30, 2018, to extend the termination date from July 26, 2019, to April 30, 2022, with all other terms remaining the same. The Credit Agreement was amended on June 7, 2021, to provide an alternate borrowing rate as a replacement for LIBOR and extend the termination date from April 30, 2022, to June 7, 2026, with all other terms remaining the same. The Credit Agreement was amended with an effective date of June 28, 2023 to include the Secured Overnight Financing Rates (“SOFR”) as interest rate benchmark rates, with all other terms remaining the same. The Company’s ability to borrow under the revolving line of credit is conditioned upon the Company’s compliance with specified covenants, including reporting and financial covenants, primarily a minimum cash requirement and a debt to earnings ratio. The Credit Agreement terminates on June 7, 2026; all advances under the revolving line of credit will become due on such date, or earlier in the event of a default. The Company was compliant with all covenants and had no advances outstanding under the Credit Agreement as of December 31, 2023. Schedule II Valuation and Qualifying Accounts The Company maintains an allowance for the distributors’ ship-and-debit credits relating to the sell-through of the Company’s products. This reserve is established using the Company’s historical ship-and-debit amounts and levels of inventory in the distributor channels. The following is a summary of the activity in the allowance for ship-and-debit credits: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance at ​ ​ ​ ​ ​ ​ ​ ​ Beginning ​ ​ ​ ​ ​ ​ ​ Balance at End (In thousands) of Period Additions Deductions (1) of Period Allowance for ship-and-debit credits: ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, 2021 ​ $ 26,435 ​ $ 311,443 ​ $ ( 296,279 ) ​ $ 41,599 Year ended December 31, 2022 ​ $ 41,599 ​ $ 241,817 ​ $ ( 230,232 ) ​ $ 53,184 Year ended December 31, 2023 ​ $ 53,184 ​ $ 202,159 ​ $ ( 219,326 ) ​ $ 36,017 (1) Deductions relate to ship-and-debit credits issued which adjust the sales price from the standard distribution price to the pre-approved lower price. Refer to Note 2, Significant Accounting Policies and Recent Accounting Pronouncements , for the Company’s revenue recognition policy, including the Company’s accounting for ship-and-debit claims. ​ 63 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. Not applicable.