What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-06 · 98 added, 86 removed, 178 unchanged (51% of the section changed)

50 unchanged sentences

in 2024 we introduced BridgeSwitch-2, which expands our addressable power range of motor-drive applications.

We have recently introduced a series of automotive-qualified versions of our products, including SCALE-iDriver, InnoSwitch™ and LinkSwitch™ ICs, targeting the EV market;

we expect to introduce additional products targeting EVs in the future, and expect automotive applications to become a significant portion of our SAM over time.

We have introduced a range of automotive-qualified products to address the EV market;

we expect to introduce more such products in the future, and expect automotive applications to become a significant portion of our SAM over time.

Also contributing to our SAM expansion has been the emergence of new applications within the power ranges that our products can address.

2 unchanged sentences

We have also expanded our SAM through the development of technologies and architectures that increase the value (and therefore the average selling prices) of our products.

For example, our

InnoSwitch™ ICs integrate circuitry from the secondary, or low-voltage, side of AC-DC power supplies, whereas earlier product families integrated circuitry only on the primary, or high-voltage side.

For example, our InnoSwitch™ ICs integrate circuitry from the secondary, or low-voltage, side of AC-DC power supplies,

whereas earlier product families integrated circuitry only on the primary, or high-voltage side.

Our InnoMux™ IC families provide up to three DC outputs, eliminating the need for additional power-management circuitry in certain end products requiring multiple voltages while significantly increasing efficiency.

15 unchanged sentences

Recent Results

Our net revenues were $106.2 million and $123.2 million in the three months ended June 30, 2024 and 2023, respectively, and $197.9 million and $229.5 million in the six months ended June 30, 2024 and 2023, respectively.

The decrease in net revenues for the three-month period was driven primarily by the communications end-market, reflecting lower sales of our products for use in smartphone chargers.

This was driven by a variety of factors including excess inventories at certain end-customers, shifts in market share among handset vendors, diversification of component suppliers among Chinese handset original equipment manufacturers (“OEMs”), including greater use of Chinese-made components, and increased decoupling of handsets and chargers.

Lower sales into the computer market also contributed to the decline, due primarily to excess inventory related to chargers for tablet computers.

These decreases were partially offset by higher sales into the consumer end-market, reflecting depletion of excess inventories related to the appliance market.

For the six-month period ended June 30, 2024, revenues for all but the consumer end-market category decreased compared to the corresponding prior-year period.

In general, we believe that demand for our products has been negatively affected in recent periods by an array of macroeconomic and geopolitical factors including reduced consumer spending and a reduction in home sales in response to inflation and higher interest rates, general economic weakness in China, weaker industrial activity and the conflicts in Ukraine and the Middle East.

Our net revenues were $115.8 million and $125.5 million in the three months ended September 30, 2024 and 2023, respectively, and $313.7 million and $355.0 million in the nine months ended September 30, 2024 and 2023, respectively.

The decrease in net revenues for the three-month period was driven primarily by lower sales of our products for use in smartphone chargers, reflecting greater use of Chinese-made components in chargers manufactured for Chinese smartphone vendors, as well as increased decoupling of handsets and chargers.

These decreases were partially offset by higher sales into the consumer and computer end-markets reflecting, respectively, the depletion of excess inventories related to the appliance market and the increased use of our products in chargers for notebook computers and other mobile devices.

For the nine-month period ended September 30, 2024, revenues for all but the consumer end-market category decreased compared to the corresponding prior-year period.

In general, we believe that demand for our products has been negatively affected in recent periods by macroeconomic and geopolitical factors including reduced consumer spending and a reduction in home sales in response to inflation and higher interest rates, general economic weakness in China, weaker industrial activity and the conflicts in Ukraine and the Middle East.

We believe these factors have exacerbated the effects of a cyclical downturn in the semiconductor industry;

such downturns are commonly experienced following periods of strong growth during which supply-chain participants tend to accumulate excess inventories.

However, inventories at distributors of our products have decreased significantly over the past several quarters, which contributed to an increase in net revenues for the three months ended June 30, 2024 compared to the prior quarter .

Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for 80% and 78% of net revenues for the three and six months ended June 30, 2024, respectively, and 82% and 79% in the corresponding periods of 2023.

International sales accounted for 99% and 98% of our net revenues for the three and six months ended June 30, 2024, respectively, and 98% in both of the corresponding periods of 2023.

Our gross margin was 53% and 51% for the three months ended June 30, 2024 and 2023, respectively, and 53% and 51% for the six months ended June 30, 2024 and 2023, respectively.

The increase in gross margin was primarily due to favorable end-market mix—reflecting a greater amount of revenues coming from higher-margin end-markets—and the favorable impact of the dollar/yen exchange rate on our wafer costs.

These factors were partially offset by the impact of reduced manufacturing volumes on our unit cost.

Total operating expenses were $54.6 million and $50.2 million for the three months ended June 30, 2024 and 2023, respectively, and $101.9 million and $98.4 million for the six months ended June 30, 2024 and 2023, respectively.

The increase in operating expenses for the three- and six-month periods was primarily due to higher stock-based compensation expense related to performance-based awards and higher salaries and related expenses driven by expansion of headcount and annual merit increases.

Partially offsetting these increases were decreased product-development expenses.

In addition, we recognized a credit to expenses in the first six months of 2023 related to the recovery of bad debt.

Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for 78% of net revenues for both the three and nine months ended September 30, 2024, and 83% and 81% in the corresponding periods of 2023.

International sales accounted for 98% of our net revenues for both the three and nine months ended September 30, 2024, and 98% in both the corresponding periods of 2023.

Our gross margin was 55% and 53% for the three months ended September 30, 2024 and 2023, respectively, and 53% and 52% for the corresponding nine-month periods.

The increase in gross margin was primarily due to favorable end-market mix, with a greater percentage of revenues coming from the higher-margin industrial and consumer end-markets, and the favorable impact of the dollar/yen exchange rate on our wafer costs.

Total operating expenses were $51.6 million and $48.2 million for the three months ended September 30, 2024 and 2023, respectively, and $153.5 million and $146.6 million for the nine months ended September 30, 2024 and 2023,

respectively.

The increase in operating expenses for the three- and nine-month periods was primarily due to higher stock-based compensation expense related to performance-based awards, and higher salaries and related expenses driven by higher headcount and annual salary increases.

P artially offsetting these increases for the nine-month period were decreased product-development expenses.

In addition, we recognized a credit in the three months ended September 30, 2024 related to the recovery of bad debt.

Critical Accounting Policies and Estimates

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of revenues

7 unchanged sentences

Provision for income taxes

Comparison of the three and six months ended June 30, 2024 and 2023

Comparison of the three and nine months ended September 30, 2024 and 2023

Net revenues.

Net revenues consist of revenues from product sales, which are calculated net of returns and allowances.

Net revenues for the three and six months ended June 30, 2024 were $106.2 million and $197.9 million, respectively, and $123.2 million and $229.5 million, i n the corresponding periods of 2023, respectively.

The decrease in net revenues for the three-month period was driven primarily by the communications end-market, reflecting lower sales of our products for use in smartphone chargers.

This was driven by a variety of factors including excess inventories at

certain end-customers, shifts in market share among handset vendors, diversification of component suppliers among Chinese handset OEMs, including greater use of Chinese-made components, and increased decoupling of handsets and chargers.

Lower sales into the computer market also contributed to the decline, due primarily to excess inventory related to chargers for tablet computers.

These decreases were partially offset by higher sales into the consumer end-market, reflecting depletion of excess inventories related to the appliance market.

For the six-month period ended June 30, 2024, revenues for all but the consumer end-market category decreased compared to the corresponding prior-year period.

Our revenue mix by end market for the three and six months ended June 30, 2024 and 2023 was as follows:

Net revenues for the three and nine months ended September 30, 2024 were $115.8 million and $313.7 million, respectively, and $125.5 million and $355.0 million, i n the corresponding periods of 2023 .

These decreases were partially offset by higher sales into the consumer and computer end-markets reflecting, respectively, the depletion of excess inventories related to the appliance market and increased use of our products in chargers for notebook computers and other mobile devices.

For the nine-month period ended September 30, 2024, revenues for all but the consumer end-market category decreased compared to the corresponding prior-year period.

Our revenue mix by end market for the three and nine months ended September 30, 2024 and 2023 was as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Communications

International sales, consisting of sales outside of the United States of America based on “bill to” customer locations, were $104.6 million and $194.6 million in the three and six months ended June 30, 2024, respectively, and $121.1 million and $224.8 million in the corresponding periods of 2023.

International sales, consisting of sales outside of the United States of America based on “bill to” customer locations, were $114.1 million and $308.7 million in the three and nine months ended September 30, 2024, respectively, and $123.3 million and $348.1 million in the corresponding periods of 2023.

Although power converters using our products are distributed to end markets worldwide, most are manufactured in Asia.

As a result, sales to this region represented 85% and 83% of our net revenues in the three and six months ended June 30, 2024, respectively, and 86% and 83% in the corresponding periods of 2023, respectively.

As a result, sales to this region represented 85% and 84% of our net revenues in the three and nine months ended September 30, 2024, respectively, and 84% in both the corresponding periods of 2023.

We expect international sales, and sales to the Asia region in particular, to continue to account for a large portion of our net revenues in the future.

Sales to distributors accounted for 69% and 71% of our net revenues in the three and six months ended June 30, 2024, respectively, and 64% and 63% in the corresponding periods of 2023.

Sales to distributors accounted for 70% of our net revenues in both the three and nine months ended September 30, 2024 and 74% and 67% in the corresponding periods of 2023.

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

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Honestar Technologies Co., Ltd.

Salcomp Group

Flextronics Group

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

4 unchanged sentences

Gross margin is gross profit divided by net revenues.

The following table compares gross profit and gross margin for the three and six months ended June 30, 2024 and 2023:

The following table compares gross profit and gross margin for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in millions)

The increase in gross margin for the three and six months ended June 30, 2024 compared to the corresponding periods of 2023 was primarily due to favorable end-market mix—reflecting a greater amount of revenues coming from higher-margin end-markets—and the favorable impact of the dollar/yen exchange rate on our wafer costs.

These factors were partially offset by the impact of reduced manufacturing volumes on our unit cost.

Research and development expenses.

1 unchanged sentence

We also record R&D expenses for prototype wafers related to new products until such products are released to production.

The table below compares R&D expenses for the three and six months ended June 30, 2024 and 2023:

The table below compares R&D expenses for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in millions)

Headcount (at period end)

R&D expenses increased for the three and six months ended June 30, 2024 as compared to the corresponding periods of 2023 primarily due to higher stock-based compensation expense related to performance-based awards and higher salaries and related expenses driven by expansion of headcount and annual merit increases .

Partially offsetting these increases were decreased product-development expenses .

R&D expenses increased for the three and nine months ended September 30, 2024 compared to the corresponding periods of 2023.

The increase for the three-month period was primarily due to higher salaries and related expenses driven by higher headcount and annual salary increases, as well as increased product-development expenses.

The increase for the nine-month period was primarily due to higher stock-based compensation expense related to performance-based awards, as well as higher salaries and related expenses driven by higher headcount and annual salary increases.

These increases were partially offset by decreased product-development expenses .

Sales and marketing expenses.

Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including stock-based compensation, commissions to sales representatives, amortization of intangible assets and facilities expenses, including expenses associated with our regional sales and support offices.

The table below compares S&M expenses for the three and six months ended June 30, 2024 and 2023:

The table below compares S&M expenses for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in millions)

1 unchanged sentence

Headcount (at period end)

S&M expenses increased for the three and six months ended June 30, 2024 as compared to the corresponding periods of 2023, primarily due to higher stock-based compensation expense related to performance-based awards and higher salaries and related expenses driven by expansion of headcount and annual merit increases .

S&M expenses increased for the three and nine months ended September 30, 2024 compared to the corresponding periods of 2023, primarily due to higher stock-based compensation expense related to performance-based awards, as well as higher salaries and related expenses driven by higher headcount and annual salary increases .

General and administrative expenses.

General and administrative (“G&A”) expenses consist primarily of employee-related expenses, including stock-based compensation expense, for administration, finance, human resources and general management, as well as consulting, professional services, legal and audit expenses.

The table below compares G&A expenses for the three and six months ended June 30, 2024 and 2023:

The table below compares G&A expenses for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in millions)

Headcount (at period end)

G&A expenses increased for the three and six months ended June 30, 2024 as compared to the corresponding periods of 2023, primarily due to higher stock-based compensation expense related to performance-based awards and higher salaries and related expenses due to annual merit increases.

In addition, we recognized a credit to expenses in the first six months of 2023 related to the recovery of bad debt.

G&A expenses increased for the three and nine months ended September 30, 2024 compared to the corresponding periods of 2023, primarily due to higher stock-based compensation expense related to performance-based awards, as well as higher salaries and related expenses due to annual salary increases.

The increase was partially offset for the three months due to a credit related to the recovery of bad debt.

Other income .

Other income consists primarily of interest income earned on cash and cash equivalents, marketable securities and other investments, and the impact of foreign exchange gains or losses.

The table below compares other income for the three and six months ended June 30, 2024 and 2023:

The table below compares other income for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in millions)

Other income increased for the three and six months ended June 30, 2024 as compared to the corresponding periods of 2023 primarily due to higher interest income driven by higher interest rates on investments.

Other income decreased for the three months ended September 30, 2024 compared to the corresponding period of 2023, as higher interest income driven by higher rates on investments was offset by the unfavorable impact of foreign exchange rates during the period.

Other income increased for the nine months ended September 30, 2024 compared to the corresponding period of 2023, primarily due to higher interest income.

Provision for income taxes .

Provision for income taxes represents federal, state and foreign taxes.

The table below compares income-tax expense for the three and six months ended June 30, 2024 and 2023:

The table below compares income-tax expense for the three and nine months ended September 30, 2024 and 2023:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

(dollars in millions)

3 unchanged sentences

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

Our effective tax rates for the three and six months ended June 30, 2024 were 5.8% and 3.5%, respectively, as compared to 3.7% and 5.1%, respectively, in the corresponding periods of 2023.

Our effective tax rates for the three and nine months ended September 30, 2024 were 0.3% and 1.5%, respectively, as compared to 5.1% in both the corresponding periods of 2023.

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

Additionally, in the three months ended June 30, 2024, our 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, our 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, our 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, our effective tax rate was also favorably impacted by discrete items associated with the release of unrecognized tax benefits.

Additionally, i n the nine months ended September 30, 2024, our 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 nine months ended September 30, 2023, our effective tax rate was favorably impacted by a discrete item associated with recognition of excess tax benefits related to share-based payments.

In the nine months ended September 30, 2023, our 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.

4 unchanged sentences

Liquidity and Capital Resources

As of June 30, 2024, we had $290.5 million in cash, cash equivalents and short-term marketable securities, a decrease of $21.1 million from $311.6 million as of December 31, 2023.

As of June 30, 2024, we had working capital, defined as current assets less current liabilities, of $449.6 million, a decrease of approximately $13.1 million from $462.7 million as of December 31, 2023.

As of September 30, 2024, we had $303.8 million in cash, cash equivalents and short-term marketable securities, a decrease of $7.8 million from $311.6 million as of December 31, 2023.

As of September 30, 2024, we had working capital, defined as current assets less current liabilities, of $457.1 million, a decrease of approximately $5.6 million from $462.7 million as of December 31, 2023.

We have a credit agreement with Wells Fargo Bank, National Association (the "Credit Agreement") that provides us 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.

3 unchanged sentences

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.

No advances were outstanding under the agreement as of June 30, 2024.

any advances under the

revolving line of credit would become due on such date, or earlier in the event of a default.

No advances were outstanding under the agreement as of September 30, 2024.

Cash from Operating Activities

Operating activities generated $33.5 million of cash in the six months ended June 30, 2024.

Operating activities generated $66.5 million of cash in the nine months ended September 30, 2024.

Net income for this period was $23.1 million;

we also incurred depreciation, non-cash stock-based compensation expense, increase in deferred tax assets, accretion of discount on marketable securities, and amortization of intangibles of $17.1 million, $17.4 million, $3.5 million, $0.9 million and $0.9 million, respectively.

Sources of cash primarily included a $2.1 million decrease in

prepaid expenses and other assets.

These sources of cash were partially offset by a $6.7 million increase in inventories due to lower demand and a $2.0 million increase in accounts receivable due to timing of customer payments.

Operating activities generated $22.8 million of cash in the six months ended June 30, 2023.

we also incurred non-cash stock-based compensation expense, depreciation, increase in deferred tax assets, accretion of discount on marketable securities, and amortization of intangibles of $25.8 million, $25.6 million, $8.7 million, $1.3 million and $1.1 million, respectively.

Sources of cash included a $5.6 million decrease in prepaid expenses and other assets and an increase of $1.9 million in accounts payable.

These sources of cash were partially offset by a $4.5 million increase in inventories and a $1.5 million increase in accounts receivable due to timing of customer payments.

Operating activities generated $49.5 million of cash in the nine months ended September 30, 2023.

Net income for this period was $41.5 million;

we also incurred depreciation, non-cash stock-based compensation expense, amortization of intangibles and amortization premiums on marketable securities of $17.7 million, $14.1 million, $1.1 million, and $0.4 million, respectively.

Sources of cash primarily included an $8.8 million increase in accounts payable (excluding payables related to property and equipment) due to timing of payments.

These sources of cash were partially offset by a $14.3 million increase in inventories, a $7.2 million increase in prepaid expenses and other assets primarily due to federal income tax prepayments, a $10.8 million increase in accounts receivable, a $5.4 million decrease in taxes payable and accrued liabilities primarily due to timing of customer rebate payments, and a $2.8 million increase in deferred income taxes.

we also incurred depreciation, non-cash stock-based compensation expense, increase in deferred tax assets and amortization of intangibles of $26.3 million, $21.0 million, $10.0 million and $1.6 million, respectively.

Sources of cash were partially offset by a $14.8 million increase in inventories reflecting a slowdown in sales driven by factors described above, a $7.2 million increase in accounts receivable, a $5.0 million decrease in taxes payable and accrued liabilities primarily due to timing of customer rebate payments, a $2.9 million decrease in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $0.8 million increase in prepaid expenses and other assets primarily due to federal income tax prepayments.

Cash from Investing Activities

Our investing activities in the six months ended June 30, 2024 resulted in a $0.9 million net use of cash, primarily consisting of $8.5 million used for purchases of property and equipment (primarily production-related machinery and equipment), partially offset by $7.6 million from sales and maturities of marketable securities, net of purchases.

Our investing activities in the six months ended June 30, 2023 resulted in $19.4 million net use of cash, primarily consisting of $12.2 million used for purchases of marketable securities net of proceeds from sales and maturities, and $7.2 million used for purchases of property and equipment, primarily production-related machinery and equipment.

Our investing activities in the nine months ended September 30, 2024 resulted in a $17.5 million net use of cash, primarily consisting of $14.2 million used for purchases of property and equipment (primarily production-related machinery and equipment) and $9.5 million for the Odyssey acquisition, partially offset by $6.2 million of proceeds from sales and maturities of marketable securities, net of purchases.

Our investing activities in the nine months ended September 30, 2023 resulted in $25.9 million net use of cash, primarily consisting of $11.1 million used for purchases of marketable securities net of proceeds from sales and maturities, and $14.7 million used for purchases of property and equipment, primarily production-related machinery and equipment.

Cash from Financing Activities

Our financing activities in the six months ended June 30, 2024 resulted in a $46.0 million net use of cash, consisting of $26.0 million for the repurchase of our common stock and $22.7 million for the payment of dividends to stockholders, partially offset by proceeds of $2.7 million from the issuance of shares through our employee stock purchase plan.

Our financing activities in the six months ended June 30, 2023 resulted in a $24.7 million net use of cash, consisting of $21.8 million for the payment of dividends to stockholders and $6.0 million for the repurchase of our common stock, partially offset by $3.1 million from the issuance of shares through our employee stock purchase plan.

Our financing activities in the nine months ended September 30, 2024 resulted in a $54.4 million net use of cash, consisting of $34.1 million for the payment of dividends to stockholders and $26.0 million for the repurchase of our common stock, partially offset by proceeds of $5.7 million from the issuance of shares through our employee stock purchase plan.

Our financing activities in the nine months ended September 30, 2023 resulted in a $34.3 million net use of cash, consisting of $32.7 million for the payment of dividends to stockholders and $7.8 million for the repurchase of our common stock, partially offset by $6.2 million from the issuance of shares through our employee stock purchase plan.

In February 2023, our 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, our 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.

Dividend payouts of $11.4 million occurred on March 28, 2024 and June 28, 2024.

In October 2023, our board of directors raised the quarterly cash dividend with the declaration of five cash dividends of $0.20 per share to be paid at the end of the fourth quarter of 2023 (in lieu of the previously declared dividend of $0.19 per share) and at the end of each quarter in 2024.

In October 2024, our board of directors raised the quarterly cash dividend again with the declaration of five cash dividends of $0.21 per share to be paid at the end of the fourth quarter of 2024 (in lieu of the previously declared dividend of $0.20 per share) and at the end of each quarter in 2025.

Dividend payouts of $11.4 million occurred on March 28, 2024, June 28, 2024 and September 30, 2024.

The declaration of any future cash dividend is at the discretion of the board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interests of our stockholders.

1 unchanged sentence

As of December 31, 2023, we had $26.0 million remaining under our stock-repurchase program .

In the six months ended June 30, 2024, we repurchased approximately 371,000 shares of our common stock for $26.0 million, leaving no amount authorized for stock repurchases as of June 30, 2024.

We exhausted this authorization in the nine months ended September 30, 2024, purchasing approximately 371,000 shares of our common stock for $26.0 million .

In October 2024, our board of directors authorized the use of $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines.

The program has no expiration date.

Authorization of future repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors.

Contractual Commitments

As of June 30, 2024 we had a contractual obligation related to income tax, which consisted primarily of unrecognized tax benefits of approximately $16.4 million and interest associated with those benefits of approximately $0.3 million.

A portion of the tax obligation is classified as long-term income taxes payable and a portion is recorded in deferred tax assets in our condensed consolidated balance sheet.

As of June 30, 2024, there were no material changes in our contractual commitments from those reported in our Annual Report on Form 10-K for the year ended December 31, 2023.

As of September 30, 2024, there were no material changes in our contractual commitments from those reported in our Annual Report on Form 10-K for the year ended December 31, 2023.

Other Information

2 unchanged sentences

federal taxes.

Accordingly, as of June 30, 2024, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring additional U.S.

Accordingly, as of September 30, 2024, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring additional U.S.

federal income taxes.

6 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis