What changed in this filing

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Item 1. Financial Statements

2025-05-12 compared with 2024-11-06 · 122 added, 198 removed, 392 unchanged (45% of the section changed)

3 unchanged sentences

(In thousands)

September 30, 2024

March 31, 2025

December 31, 2024

21 unchanged sentences

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Retained earnings

5 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

14 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Other comprehensive income, net of tax:

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

Unrealized gain on marketable securities, net of $ 615 tax in each of the three and nine months ended September 30, 2024 and net of $ 0 tax in each of the three and nine months ended September 30, 2023

Amortization of defined benefit pension items, net of tax of ($ 8 ) and ($ 23 ) in the three and nine months ended September 30, 2024, respectively, and ($ 4 ) and ($ 11 ) in the three and nine months ended September 30, 2023, respectively

Total other comprehensive income

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of $ 0 tax in each of the three months ended March 31, 2025 and 2024

Unrealized gain (loss) on marketable securities, net of ($ 116 ) and $ 0 tax in the three months ended March 31, 2025 and 2024, respectively

Amortization of defined benefit pension items, net of $ 0 and $ 8 tax in the three months ended March 31, 2025 and 2024, respectively

Total other comprehensive income (loss)

TOTAL COMPREHENSIVE INCOME

3 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

10 unchanged sentences

Beginning balance

Other comprehensive income

Other comprehensive income (loss)

Ending balance

8 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

4 unchanged sentences

Stock-based compensation expense

Amortization of premium (accretion of discount) on marketable securities

Accretion of discount on marketable securities

Deferred income taxes

Decrease in accounts receivable allowance for credit losses

Increase (decrease) in accounts receivable allowance for credit losses

Change in operating assets and liabilities:

8 unchanged sentences

Proceeds from sales and maturities of marketable securities

Acquisition (Note 15)

Net cash used in investing activities

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

21 unchanged sentences

Significant Accounting Policies and Estimates

Except for the additional policy presented below, no material changes have been made to the Company’s significant accounting policies disclosed in Note 2, Significant Accounting Policies and Recent Accounting Pronouncements , of the Company’s financial statements set forth in Item 8 of the Company’s Annual Report on Form 10-K, filed on February 12, 2024, for the year ended December 31, 2023.

Business Combinations

The Company applies the provisions of ASC 805, Business Combinations (“ASC 805”), in accounting for acquisitions.

ASC 805 requires that the Company evaluates whether a transaction pertains to an acquisition of assets, or to an acquisition of a business.

A business is defined as an integrated set of assets and activities that is capable of being conducted and managed for the purpose of providing a return to investors.

Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets and liabilities assumed on a relative fair value basis;

whereas the acquisition of a business requires the Company to recognize separately from goodwill the assets acquired and the liabilities assumed at the acquisition date fair values.

Goodwill is measured as the excess of consideration transferred over the net acquisition date fair values of the assets acquired and the liabilities assumed.

While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed as well as any contingent consideration, where applicable, the estimates are inherently uncertain and subject to refinement.

As a result, during the measurement period, which may be up to one year from the business acquisition date, the Company may record certain adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill.

Upon the conclusion of a business acquisition’s measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.

All acquisition-related costs are accounted for as expenses in the period in which they are incurred.

Recent Accounting Pronouncements

No material changes have been made to the Company’s significant accounting policies disclosed in Note 2, Significant Accounting Policies and Recent Accounting Pronouncements , of the Company’s financial statements set forth in Item 8 of the Company’s Annual Report on Form 10-K, filed on February 7, 2025, for the year ended December 31, 2024.

Adoption of New Accounting Standards

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.

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

The Company adopted the annual disclosure requirements in fiscal year 2024 and the interim disclosure requirements beginning in the first quarter of fiscal year 2025.

Refer to Note 12.

Segment Reporting .

Recent Accounting Pronouncements

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

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(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).

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.

2 unchanged sentences

ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted.

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

The Company does not expect the amendment to have a material impact on its consolidated financial statements upon adoption of the annual disclosure requirements in fiscal year 2025.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures ( Subtopic 220-40) which requires additional disclosure of certain costs and expenses, including inventory purchases, employee compensation, selling expense and depreciation expense within the notes to financial statements.

The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

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

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

COMPONENTS OF THE COMPANY’S CONDENSED CONSOLIDATED BALANCE SHEETS:

Accounts Receivable

September 30,

(In thousands)

8 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

Ending balance

September 30,

(In thousands)

2 unchanged sentences

Finished goods

Intangible Assets

March 31, 2025

December 31, 2024

(In thousands)

In-process research and development

Developed technology

Technology licenses

Total intangible assets

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The estimated future amortization expense related to finite-lived intangible assets at March 31, 2025, is as follows:

(In thousands)

2025 (remaining nine months)

Total excludes $ 4.9 million of in-process research and development which will be amortized upon completion of development over the estimated useful life of the technology.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2024 and 2023, were as follows:

Changes in accumulated other comprehensive income (loss) for the three months ended March 31, 2025 and 2024, were as follows:

Unrealized Gains

8 unchanged sentences

Three Months Ended

September 30,

(In thousands)

1 unchanged sentence

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive income (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 three months ended September 30, 2024 and 2023.

Unrealized Gains

and Losses on

Defined Benefit

Foreign Currency

Marketable Securities

Pension Items

Nine Months Ended

September 30,

(In thousands)

Beginning balance

Other comprehensive income (loss) before reclassifications

Amounts reclassified from accumulated other comprehensive income (loss)

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 nine months ended September 30, 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 March 31, 2025 and 2024.

FAIR VALUE MEASUREMENTS:

7 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The fair-value hierarchy of the Company’s cash equivalents and marketable securities at March 31, 2025 and December 31, 2024, was as follows:

Fair Value Measurement at

September 30, 2024

March 31, 2025

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 nine months ended September 30, 2024 and the twelve months ended December 31, 2023.

government securities

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, 2025 and the twelve months ended December 31, 2024.

MARKETABLE SECURITIES:

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

Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at March 31, 2025, were as follows:

Gross Unrealized

3 unchanged sentences

Commercial paper

Corporate securities

Investments due in 4-12 months:

3 unchanged sentences

Total marketable securities

Accrued interest receivable was $ 2.6 million at September 30, 2024 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

Accrued interest receivable was $ 2.7 million at March 31, 2025 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

POWER INTEGRATIONS, INC.

7 unchanged sentences

Investments due in 4-12 months:

Commercial paper

Corporate securities

3 unchanged sentences

Accrued interest receivable was $ 2.8 million at December 31, 2024 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 September 30, 2024:

Less Than 12 Months

3 unchanged sentences

Total marketable securities

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

In the three months ended March 31, 2025 and 2024, 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.

1 unchanged sentence

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

GOODWILL AND INTANGIBLE ASSETS:

Changes in the carrying amount of goodwill during the nine months ended September 30, 2024 are as follows:

(in thousands)

Balance at December 31, 2023

Goodwill acquired during the period

Ending balance at September 30, 2024

The $ 3.4 million of goodwill acquired during the nine months ended September 30, 2024 resulted from the purchase of the assets of Odyssey Semiconductor Technologies (“Odyssey”) see Note 15, Acquisition , for further details.

Intangible Assets

Intangible assets consist primarily of developed technology, in-process research and development, acquired licenses and domain name and are reported net of accumulated amortization.

In July 2024, the Company acquired the

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

assets of Odyssey, a U.S.

company and developer of vertical gallium-nitride (“GaN”) transistor technology, resulting in the addition of in-process research and development of $ 4.9 million.

Amortization of the in-process research and development will commence once development is completed and products are available for sale;

the Company does not expect the amortization of its in-process research and development to begin in 2024.

September 30, 2024

December 31, 2023

(In thousands)

In-process research and development

Developed technology

Technology licenses

Total intangible assets

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

(In thousands)

2024 (remaining three months)

Total excludes $ 4.9 million of in-process research and development which will be amortized upon completion of development over the estimated useful life of the technology.

STOCK-BASED COMPENSATION:

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

The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the three months ended March 31, 2025 and 2024:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

4 unchanged sentences

Total stock-based compensation expense

Stock-based compensation expense in the three months ended September 30, 2024, was approximately $ 8.3 million, comprising approximately $ 6.6 million related to restricted stock unit (“RSU”) awards, $ 1.3 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 nine months ended September 30, 2024, was approximately $ 25.8 million, comprising approximately $ 19.0 million related to RSUs, $ 5.6 million related to PSUs and PRSUs and $ 1.2 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the three months ended March 31, 2025, was approximately $ 8.7 million, comprising approximately $ 5.8 million related to restricted stock unit (“RSU”) awards, $ 2.5 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.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock-based compensation expense in the three months ended September 30, 2023, was approximately $ 6.9 million, comprising approximately $ 6.1 million related to RSUs, $ 0.3 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 nine months ended September 30, 2023, was approximately $ 21.0 million, comprising approximately $ 17.3 million related to RSUs, $ 2.3 million related to PSUs and PRSUs and $ 1.4 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the three months ended March 31, 2024, was approximately $ 6.4 million, comprising approximately $ 6.1 million related to RSUs, an immaterial amount related to PSUs and PRSUs and $ 0.3 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 September 30, 2024 and activity during the nine months ended, is presented below:

A summary of PSUs outstanding as of March 31, 2025 and activity during the three months ended, is presented below:

Weighted-Average

7 unchanged sentences

Outstanding at January 1, 2025

Outstanding at September 30, 2024

Outstanding and expected to vest at September 30, 2024

Outstanding at March 31, 2025

Outstanding and expected to vest at March 31, 2025

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.

1 unchanged sentence

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 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”) 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.

The performance goals for PRSUs granted in fiscal 2023, 2024 and 2025 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”) or the Company’s revenue growth over as compared to defined targets (“Absolute Measure”) in each case over the respective three-year performance period.

Actual vesting of the PRSUs is 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.

In February 2024, it was determined that no shares subject to the PRSUs granted in 2021 vested and no shares were released to the Company’s executives.

In February 2025, it was determined that no shares subject to the PRSUs granted in 2022 vested, thus no shares were released to the Company’s executives.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

A summary of PRSUs outstanding as of March 31, 2025 and activity during the three months ended, is presented below:

Weighted-Average

6 unchanged sentences

Outstanding at January 1, 2025

Outstanding at September 30, 2024

Outstanding and expected to vest at September 30, 2024

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

Outstanding at March 31, 2025

Outstanding and expected to vest at March 31, 2025

A summary of RSUs outstanding as of March 31, 2025 and activity during the three months ended, is presented below:

Weighted-Average

6 unchanged sentences

Outstanding at January 1, 2025

Outstanding at September 30, 2024

Outstanding and expected to vest at September 30, 2024

Outstanding at March 31, 2025

Outstanding and expected to vest at March 31, 2025

SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES:

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 market.

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.

Customer Concentration

The Company’s top ten customers accounted for approximately 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.

The Company’s top ten customers accounted for approximately 80 % and 77 % of net revenues for the three months ended March 31, 2025 and 2024, respectively.

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 $ 80.5 million and

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

$ 220.4 million in the three and nine months ended September 30, 2024, respectively, and $ 93.2 million and $ 238.7 million in the corresponding periods of 2023.

Sales to distributors were $ 75.2 million and $ 66.4 million in the three months ended March 31, 2025 and 2024, respectively.

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

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Honestar Technologies Co., Ltd.

Salcomp Group

* 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.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Concentration of Credit Risk

1 unchanged sentence

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

As of September 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 September 30, 2024 and December 31, 2023:

September 30,

Salcomp Group

Flextronics Group

As of March 31, 2025 and December 31, 2024, 86 % and 87 % 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, 2025 and December 31, 2024:

Powertech Distribution Ltd.

Honestar Technologies Co., Ltd.

Salcomp Group

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

4 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(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

Nine Months Ended

September 30,

(In thousands)

2 unchanged sentences

Ending balance

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Common Stock Repurchases

As of December 31, 2024, the Company had $ 48.1 million remaining under its authorized stock-repurchase program.

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

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

In the three months ended March 31, 2025, the Company purchased approximately 404,000 shares of the Company’s common stock for $ 23.1 million leaving $ 25.0 million remaining on the repurchase authorization as of March 31, 2025.

In April 2025, the Company utilized the remaining $ 25.0 million, repurchasing approximately 560,000 shares of its common stock.

Subsequently, t he Company’s board of directors authorized the use of an additional $ 50.0 million for the repurchase of the Company’s common stock, with repurchases to be executed according to pre-defined price/volume guidelines.

The program has no expiration date.

1 unchanged sentence

Cash Dividends

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 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, the Company’s 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 .

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

In October 2023, the Company’s board of directors declared dividends of $ 0.20 per share to be paid to stockholders of record at the end of each quarter in 2024.

In October 2024, the Company’s board of directors raised the quarterly cash dividend with the declaration of five cash dividends of $ 0.21 per share to be paid to stockholders of record at the end of the fourth quarter in 2024 (in lieu of the previously declared dividend of $ 0.20 per share announced in October 2023) and at the end of each quarter in 2025 .

For the three months ended March 31, 2025 and 2024, cash dividends declared and paid were as follows:

Three Months Ended

Nine Months Ended

September 30,

(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:

2 unchanged sentences

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.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the earnings per share calculation is as follows:

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

10 unchanged sentences

The Company has excluded the shares underlying the outstanding performance-based awards in the 2025 and 2024 calculations as the shares were not contingently issuable as of the end of the reporting periods.

In the three and nine months ended September 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.

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 and nine months ended September 30, 2024 was 0.3 % and 1.5 %, respectively, as compared to 5.1 % in both corresponding periods of 2023.

The Company’s effective tax rate for the three months ended March 31, 2025 and 2024 was 11.1 % and 0.5 %, respectively.

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, i n the nine months ended September 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 nine months ended September 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 nine months ended September 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.

I n the three months ended March 31, 2025, the Company’s effective tax rate was unfavorably impacted by the recognition of share-based payments and foreign income subject to U.S.

tax, known as global intangible low-taxed income (“GILTI”).

In the three months ended March 31, 2024, the Company’s 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 and unfavorably impacted by foreign income subject to U.S.

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 September 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.

As of March 31, 2025, 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.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

1 unchanged sentence

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

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplier Agreements

7 unchanged sentences

The fluctuation in the exchange rate is shared equally between the Company and each of these suppliers on future purchases.

SEGMENT REPORTING:

The Company is organized and operates as one operating and reportable segment;

the design, development, manufacture and marketing of integrated circuits and related components for use primarily in high-voltage power conversion.

This determination is based on the management approach which designates internal information regularly available to the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as the source of determination of the Company’s reportable segments.

The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis for the purpose of making operating decisions and assessing financial performance.

The CODM uses net income as the measure of profit or loss to allocate resources and assess performance.

The CODM regularly reviews net income as reported on the Company’s consolidated statements of income.

Financial forecasts and budget to actual results used by the CODM to assess performance and allocate resources, as well as those used for strategic decisions related to headcount and capital expenditures are also reviewed on a consolidated basis.

The CODM considers the impact on net income of the significant segment expenses in the table below when deciding whether to reinvest profits, propose dividends or share repurchase, or pursue strategic mergers and acquisitions.

The measure of segment assets is reported on the balance sheet as total assets.

The CODM does not review segment assets at a level other than that presented in the Company’s consolidated balance sheets.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The table below presents the Company’s consolidated operating results including significant segment expenses:

Three Months Ended

(In thousands)

Stock-based compensation (1)

Amortization of acquisition-related intangible assets (2)

Cost of revenues (excluding 1 & 2)

Research and development (excluding 1)

Sales and marketing (excluding 1)

General and administrative (excluding 1)

INCOME FROM OPERATIONS

PROVISION FOR INCOME TAXES

The table below presents other segment information:

Three Months Ended

(In thousands)

Amortization of intangibles

Interest income

LEGAL PROCEEDINGS AND CONTINGENCIES:

1 unchanged sentence

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 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;

On December 18, 2019, CogniPower LLC (“CogniPower”) 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 in the coming months, and a trial scheduled in August 2025.

On January 16, 2025, CogniPower filed a follow-on complaint against the same customer asserting the same two patents in the United States District Court for the District of Delaware, but no schedule has been set for the follow-on case at this time.

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.

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.

On March 12, 2024 the Delaware Court dismissed the remaining case in view of a series of covenants not to sue that the Delaware defendants filed with the Court.

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.

10 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 September 30, 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 March 31, 2025.

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.

9 unchanged sentences

Goodwill is expected to be deductible over 15 years for tax purposes.

The following table summarizes the purchase price and estimated fair values of the assets acquired as of July 1, 2024, the completion of the Odyssey acquisition:

(In thousands)

Assets Acquired

Property and equipment, net

In-process research and development

Total purchase price

The fair value of in-process research and development was determined based on the cost approach using the Company’s estimate of the costs that would be incurred if a market participant were to create the acquired technology from scratch.

2 unchanged sentences

Consistent with the treatment of other intangible assets with indefinite lives, the Company will test the in-process research and development for impairment on an annual basis or when impairment indicators are present.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Pro forma results of operations for this acquisition have not been presented because they are not material to the Company’s 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