What changed in this filing

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Item 1. Financial Statements

2024-08-06 compared with 2024-05-07 · 116 added, 77 removed, 402 unchanged (32% of the section changed)

3 unchanged sentences

(In thousands)

March 31, 2024

June 30, 2024

December 31, 2023

29 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except per share amounts)

14 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of $ 0 tax in each of the three months ended March 31, 2024 and 2023

Unrealized gain (loss) on marketable securities, net of $ 0 tax in each of the three months ended March 31, 2024 and 2023

Amortization of defined benefit pension items, net of tax of ($ 8 ) and ($ 4 ) in the three months ended March 31, 2024 and 2023, respectively

Foreign currency translation adjustments, net of $ 0 tax in each of the three and six months ended June 30, 2024 and 2023

Unrealized gain (loss) on marketable securities, net of $ 0 tax in each of the three and six months ended June 30, 2024 and 2023

Amortization of defined benefit pension items, net of tax of ($ 7 ) and ($ 15 ) in the three and six months ended June 30, 2024, respectively, and ($ 4 ) and ($ 7 ) in the three and six months ended June 30, 2023, respectively

Total other comprehensive income (loss)

4 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

21 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended

Six Months Ended

(In thousands)

56 unchanged sentences

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.

The Company does not expect the amendment to have a material impact on its consolidated financial statements upon adoption.

POWER INTEGRATIONS, INC.

12 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

9 unchanged sentences

Intangible Assets

March 31, 2024

June 30, 2024

December 31, 2023

5 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The estimated future amortization expense related to finite-lived intangible assets at March 31, 2024, is as follows:

The estimated future amortization expense related to finite-lived intangible assets at June 30, 2024, is as follows:

(In thousands)

2024 (remaining nine months)

2024 (remaining six months)

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss for the three months ended March 31, 2024 and 2023, were as follows:

Changes in accumulated other comprehensive loss for the three and six months ended June 30, 2024 and 2023, were as follows:

Unrealized Gains

14 unchanged sentences

Ending balance

(1) This component of accumulated other comprehensive loss is included in the computation of net periodic pension cost for the three months ended March 31, 2024 and 2023.

(1) This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost for the three months ended June 30, 2024 and 2023.

Unrealized Gains

and Losses on

Defined Benefit

Foreign Currency

Marketable Securities

Pension Items

Six Months Ended

(In thousands)

Beginning balance

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive loss

Net-current period other comprehensive income (loss)

Ending balance

(1) This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost for the six months ended June 30, 2024 and 2023.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

FAIR VALUE MEASUREMENTS:

5 unchanged sentences

The Company’s cash equivalents and short-term marketable securities 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.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair-value hierarchy of the Company’s cash equivalents and marketable securities at March 31, 2024 and December 31, 2023, was as follows:

The fair-value hierarchy of the Company’s cash equivalents and marketable securities at June 30, 2024 and December 31, 2023, was as follows:

Fair Value Measurement at

March 31, 2024

June 30, 2024

Quoted Prices in

8 unchanged sentences

Money market funds

government securities

Fair Value Measurement at

10 unchanged sentences

Money market funds

The Company did not transfer any investments between Level 1 and Level 2 of the fair-value hierarchy in the three months ended March 31, 2024 and the twelve months ended December 31, 2023.

The Company did not transfer any investments between Level 1 and Level 2 of the fair-value hierarchy in the six months ended June 30, 2024 and the twelve months ended December 31, 2023.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARKETABLE SECURITIES:

Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at March 31, 2024, were as follows:

Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at June 30, 2024, were as follows:

Gross Unrealized

9 unchanged sentences

Total marketable securities

Accrued interest receivable was $ 2.5 million at March 31, 2024 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accrued interest receivable was $ 2.7 million at June 30, 2024 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

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:

11 unchanged sentences

Accrued interest receivable was $ 2.3 million at December 31, 2023 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

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 March 31, 2024:

Less Than 12 Months

3 unchanged sentences

Total marketable securities

In the three months ended March 31, 2024 and 2023, no unrealized losses on marketable securities were recognized in income.

The Company does not intend to sell and it is unlikely that it will be required to sell securities prior to their anticipated recovery.

The issuers are high quality (investment grade) and the decline in fair value is largely due to changes in interest rates.

In the three and six months ended June 30, 2024 and 2023, no unrealized losses on marketable securities were recognized in income.

The Company does not intend to sell and it is unlikely that it will be required to sell the securities prior to their anticipated recovery.

The issuers are high quality (investment grade) and the decline in fair value is largely due to changes

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

in interest rates.

Additionally, the issuers continue to make timely interest payments on the marketable securities with the fair value expected to recover as they reach maturity.

STOCK-BASED COMPENSATION:

The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the three months ended March 31, 2024 and 2023:

The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the three and six months ended June 30, 2024 and 2023:

Three Months Ended

Six Months Ended

(In thousands)

4 unchanged sentences

Total stock-based compensation expense

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-based compensation expense in the three months ended March 31, 2024, was approximately $ 6.4 million, comprising approximately $ 6.1 million related to restricted stock unit (“RSU”) awards, an immaterial amount related to performance-based (“PSU”) awards and long-term performance-based (“PRSU”) awards and $ 0.3 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the three months ended March 31, 2023, was approximately $ 7.4 million, comprising approximately $ 5.9 million related to RSUs, $ 1.0 million related to PSUs and PRSUs and $ 0.5 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the three months ended June 30, 2024, was approximately $ 11.0 million, comprising approximately $ 6.3 million related to restricted stock unit (“RSU”) awards, $ 4.3 million related to performance-based (“PSU”) awards and long-term performance-based (“PRSU”) awards and $ 0.4 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the six months ended June 30, 2024, was approximately $ 17.4 million, comprising approximately $ 12.4 million related to RSUs, $ 4.3 million related to PSUs and PRSUs and $ 0.7 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the three months ended June 30, 2023, was approximately $ 6.8 million, comprising approximately $ 5.3 million related to RSUs, $ 1.0 million related to PSUs and PRSUs and $ 0.5 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the six months ended June 30, 2023, was approximately $ 14.1 million, comprising approximately $ 11.2 million related to RSUs, $ 1.9 million related to PSUs and PRSUs and $ 1.0 million related to the Company’s employee stock purchase plan.

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.

6 unchanged sentences

the shares were released to the Company’s employees and executives in the first quarter of 2024.

A summary of PSUs outstanding as of March 31, 2024 and activity during the three months ended, is presented below:

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of PSUs outstanding as of June 30, 2024 and activity during the six months ended, is presented below:

Weighted-Average

7 unchanged sentences

Outstanding at January 1, 2024

Outstanding at March 31, 2024

Outstanding and expected to vest at March 31, 2024

Outstanding at June 30, 2024

Outstanding and expected to vest at June 30, 2024

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.

2 unchanged sentences

The performance goals for PRSUs granted in fiscal 2022, 2023 and 2024 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.

In addition, the PRSUs granted in 2023 (“2023 PRSUs”) and 2024 (“2024 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 and 2024 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.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In February 2024, it was determined that no shares subject to the PRSUs granted in 2021 vested;

thus no shares were released to the Company’s executives in the first quarter of 2024.

A summary of PRSUs outstanding as of March 31, 2024 and activity during the three months ended, is presented below:

A summary of PRSUs outstanding as of June 30, 2024 and activity during the six months ended, is presented below:

Weighted-Average

6 unchanged sentences

Outstanding at January 1, 2024

Outstanding at March 31, 2024

Outstanding and expected to vest at March 31, 2024

A summary of RSUs outstanding as of March 31, 2024 and activity during the three months ended, is presented below:

Outstanding at June 30, 2024

Outstanding and expected to vest at June 30, 2024

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of RSUs outstanding as of June 30, 2024 and activity during the six months ended, is presented below:

Weighted-Average

6 unchanged sentences

Outstanding at January 1, 2024

Outstanding at March 31, 2024

Outstanding and expected to vest at March 31, 2024

Outstanding at June 30, 2024

Outstanding and expected to vest at June 30, 2024

SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES:

3 unchanged sentences

Customer Concentration

The Company’s top ten customers accounted for approximately 77 % and 78 % of net revenues for the three months ended March 31, 2024 and 2023, respectively.

The Company’s top ten customers accounted for approximately 80 % and 78 % of net revenues for the three and six months ended June 30, 2024, respectively, and 82 % and 79 %, respectively, in the corresponding periods of 2023.

A significant portion of these revenues are attributable to sales of the Company’s products to distributors of electronic components.

1 unchanged sentence

Similarly, merchant power-supply manufacturers sell power supplies incorporating the Company’s products to a broad range of OEMs.

Sales to distributors were $ 66.4 million and $ 66.8 million in the three months ended March 31, 2024 and 2023, respectively.

Sales to distributors were $ 73.5 million and $ 139.9 million in the three and six months ended June 30, 2024, respectively, and $ 78.8 million and $ 145.5 million, respectively, in the corresponding periods of 2023.

Direct sales to OEMs and power-supply manufacturers accounted for the remainder.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following customers represented 10% or more of the Company’s net revenues for the respective periods:

Three Months Ended

Six Months Ended

Honestar Technologies Co., Ltd.

Salcomp Group

Flextronics Group

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

3 unchanged sentences

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

As of March 31, 2024 and December 31, 2023, 88 % and 86 % of accounts receivable were concentrated with the Company’s top ten customers.

The following customers represented 10% or more of accounts receivable at March 31, 2024 and December 31, 2023:

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 30, 2024 and December 31, 2023, 84 % and 86 % of accounts receivable were concentrated with the Company’s top ten customers.

The following customers represented 10% or more of accounts receivable at June 30, 2024 and December 31, 2023:

Powertech Distribution Ltd.

Flextronics Group

Honestar Technologies Co., Ltd.

6 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands)

1 unchanged sentence

Total net revenues

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

STOCKHOLDERS’ EQUITY:

1 unchanged sentence

Three Months Ended

Six Months Ended

(In thousands)

4 unchanged sentences

As of December 31, 2023, the Company had $ 26.0 million remaining under its authorized stock-repurchase program.

In the three months ended March 31, 2024 , the Company purchased approximately 207,000 shares for $ 14.6 million, leaving $ 11.3 million remaining on the repurchase authorization as of March 31, 2024.

In the three and six months ended June 30, 2024 , the Company purchased approximately 164,000 shares for $ 11.3 million and approximately 371,000 shares for $ 26.0 million, leaving no amount authorized for stock repurchases as of June 30, 2024.

Authorization of future 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, business conditions and other factors.

the program has no expiration date.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Cash Dividends

1 unchanged sentence

In October 2023, the Company’s board of directors raised the quarterly cash dividend with the declaration of five 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 .

For the three months ended March 31, 2024 and 2023, cash dividends declared and paid were as follows:

For the three and six months ended June 30, 2024 and 2023, cash dividends declared and paid were as follows:

Three Months Ended

Six Months Ended

(In thousands, except per share amounts)

1 unchanged sentence

Dividends declared per common share

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

EARNINGS PER SHARE:

4 unchanged sentences

Three Months Ended

Six Months Ended

(In thousands, except per share amounts)

10 unchanged sentences

The Company has excluded the shares underlying the outstanding performance-based awards in the 2024 and 2023 calculations as the shares were not contingently issuable as of the end of the reporting periods.

In the three months ended March 31, 2024 and 2023, no outstanding stock awards were determined to be anti-dilutive and therefore excluded from the computation of diluted earnings per share.

In the three and six months ended June 30, 2024 and 2023, no outstanding stock awards were determined to be anti-dilutive and therefore excluded from the computation of diluted earnings per share.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

PROVISION FOR INCOME TAXES:

1 unchanged sentence

Accordingly, the interim effective tax rate may not be reflective of the annual estimated effective tax rate.

The Company’s effective tax rate for the three months ended March 31, 2024 and 2023 was 0.5 % and 8.0 %, respectively.

The Company’s effective tax rate for the three and six months ended June 30, 2024 was 5.8 % and 3.5 %, respectively, as compared to 3.7 % and 5.1 %, respectively, in the corresponding periods of 2023.

The effective tax rate in these periods were lower than the statutory federal income-tax rate of 21 % due to the geographic distribution of the Company’s world-wide earnings in lower-tax jurisdictions and federal research tax credits.

Additionally, in the three months ended March 31, 2024 and 2023, our effective tax rate was favorably impacted by the recognition of excess tax benefits related to share-based payments and the release of unrecognized tax benefits.

These benefits were partially offset by foreign income subject to U.S.

tax, known as global intangible low-taxed income.

Additionally, in the three months ended June 30, 2024, the Company’s effective tax rate was favorably impacted by the recognition of excess tax benefits related to share-based payments.

In the six months ended June 30, 2024, the Company’s effective tax rate was also favorably impacted by the recognition of excess tax benefits related to share-based payments and by discrete items associated with the release of unrecognized tax benefits.

In the three and six months ended June 30, 2023, the Company’s effective tax rate was favorably impacted by a discrete item associated with recognition of excess tax benefits related to share-based payments.

In the six months ended June 30, 2023, the Company’s effective tax rate was also favorably impacted by discrete items associated with the release of unrecognized tax benefits.

These benefits were partially offset by U.S.

tax on foreign income, 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.

1 unchanged sentence

The Company has not been granted any incentivized tax rates and does not operate under any tax holidays in any jurisdiction.

As of March 31, 2024, the Company maintained a valuation allowance on its California deferred tax assets, New Jersey deferred tax assets and a valuation allowance with respect to its deferred tax assets relating to tax credits in Canada.

As of June 30, 2024, the Company maintained a valuation allowance on its California deferred tax assets, New Jersey deferred tax assets and a valuation allowance with respect to its deferred tax assets relating to tax credits in Canada.

Determining the consolidated provision for income-tax expense, income-tax liabilities and deferred tax assets and liabilities involves judgment.

The Company calculates and provides for income taxes in each of the tax jurisdictions in

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

which it operates, which involves estimating current tax exposures as well as making judgments regarding the recoverability of deferred tax assets in each jurisdiction.

The Company calculates and provides for income taxes in each of the tax jurisdictions in which it operates, which involves estimating current tax exposures as well as making judgments regarding the recoverability of deferred tax assets in each jurisdiction.

The estimates used could differ from actual results, which may have a significant impact on operating results in future periods.

11 unchanged sentences

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

On 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, and CogniPower’s claims for infringement went forward separately in CogniPower’s lawsuit against the Company’s customers in the District of Delaware.

The Company filed a motion to intervene in that lawsuit and received a ruling allowing the Company to intervene on February 1, 2021, and the parties thereafter agreed to dismiss the Company’s separate lawsuit against CogniPower.

The remaining case remained stayed until February 26, 2024, when the Court lifted the stay.

The Delaware Court then set a schedule for the remainder of the case, with further proceedings in the coming months, and a trial scheduled in August 2025.

On December 18, 2019, CogniPower LLC filed a complaint against a customer of the Company in the United States District Court for the District of Delaware for infringement of two patents;

the Company thereafter intervened and sought a declaration of non-infringement with respect to use of the Company’s products.

The case was then stayed until February 26, 2024, when the Delaware Court then set a schedule for the remainder of the case, with further proceedings

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

in the coming months, and a trial scheduled in August 2025.

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.

1 unchanged sentence

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 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.

3 unchanged sentences

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.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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.

INDEMNIFICATIONS:

5 unchanged sentences

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 March 31, 2024.

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 June 30, 2024.

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.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Odyssey Semiconductor Technologies

On March 12, 2024, the Company entered into an agreement with Odyssey Semiconductor Technologies ("Odyssey"), a U.S.

company and a developer of vertical gallium-nitride (“GaN”) transistor technology.

The transaction closed on July 1, 2024;

at that time all key Odyssey employees joined Power Integrations’ technology organization.

P ursuant to the asset purchase agreement, Odyssey sold, transferred and assigned substantially all of its assets to the Company for $ 9.52 million in cash consideration.

It is expected that intangible assets and goodwill arising from the acquisition will be recorded on the Company’s consolidated balance sheets.

However, as the initial accounting for the acquisition had not yet been completed at the time of the issuance of these unaudited condensed consolidated financial statements, further details have not yet been disclosed.

The Company does not expect the acquisition to have a material impact on its consolidated financial statements.

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

What changed 10-Q

Item 1. Financial Statements