What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-02-06 compared with 2025-02-07 · 191 added, 129 removed, 805 unchanged (28% of the section changed)

27 unchanged sentences

We identified the determination of excess and obsolete inventories within work-in-process and finished goods inventories as a critical audit matter due to the significant assumptions made by management when determining the excess and obsolete inventory quantities and the resulting provision.

This required a high degree of auditor judgement and an increased extent

of effort when performing audit procedures to evaluate the reasonableness of management’s excess and obsolete provision for work-in-process and finished goods inventories.

This required a high degree of auditor judgement and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s excess and obsolete provision for work-in-process and finished goods inventories.

How the Critical Audit Matter Was Addressed in the Audit

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Authorized - 140,000 shares

Outstanding - 56,837 and 56,738 shares in 2024 and 2023, respectively

Shares issued and outstanding - 55,339 and 56,837 shares in 2025 and 2024, respectively

Additional paid-in capital

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(In thousands, except per share amounts)

COST OF REVENUES

COST OF REVENUE

OPERATING EXPENSES:

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General and administrative

Other operating expenses, net

Other operating expenses

Total operating expenses

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Foreign currency translation adjustments, net of $ 0 tax in 2025, 2024 and 2023

Unrealized gain (loss) on marketable securities, net of ($ 195 ), $ 0 and $ 0 tax in 2024, 2023 and 2022, respectively

Unrealized gain on marketable securities, net of ($ 7 ), ($ 195 ) and $ 0 tax in 2025, 2024 and 2023, respectively

Unrealized actuarial gain (loss) on pension benefits, net of tax of $ 21 , $ 266 and ($ 130 ) in 2025, 2024 and 2023, respectively

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Unrealized actuarial gain on pension benefits

Unrealized loss on marketable securities

Unrealized gain on marketable securities

Foreign currency translation adjustment

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Payment of dividends to stockholders

Unrealized actuarial gain on pension benefits

Unrealized actuarial loss on pension benefits

Unrealized gain on marketable securities

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Amortization of intangibles

Loss on disposal of property and equipment

Loss (gain) on disposal of property and equipment

Stock-based compensation expense

Amortization of premium (accretion of discount) on marketable securities

Accretion of discount on marketable securities

Deferred income taxes

Increase (decrease) in accounts receivable allowance for credit losses

Decrease in accounts receivable allowance for credit losses

Change in operating assets and liabilities:

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Payments of dividends to stockholders

Proceeds from draw on line of credit

Payments on line of credit

Net cash used in financing activities

NET DECREASE IN CASH AND CASH EQUIVALENTS

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

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The preparation of financial statements in conformity with U.S.

Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

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(4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

Product revenues consist of sales to original equipment manufacturers, or OEMs, merchant power supply manufacturers and distributors.

Product revenue consists of sales to original equipment manufacturers, or OEMs, merchant power supply manufacturers and distributors.

The Company considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer.

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Frequently, the Company receives orders for products to be delivered over multiple dates that may extend across several reporting periods.

The Company invoices for each delivery upon shipment and recognizes revenues for each distinct product delivered, assuming transfer of control has occurred.

As scheduled delivery dates are within one year, under the optional exemption provided by ASC 606-10-50-14 revenues allocated to future shipments of partially completed contracts are not disclosed.

The Company invoices for each delivery upon shipment and recognizes revenue for each distinct product delivered, assuming transfer of control has occurred.

As scheduled delivery dates are within one year, under the optional exemption provided by ASC 606-10-50-14 revenue allocated to future shipments of partially completed contracts are not disclosed.

The Company has also elected the practical expedient under ASC 340-40-25-4 to expense commissions when incurred as the amortization period of the commission asset the Company would have otherwise recognized is less than one year.

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In order to determine the provision management considers historical usage, forecasted demand, current economic trends and historical write-offs.

Stock-based compensation

The Company applies the provisions of ASC 718-10, Share-Based Payment to recognize the fair value of stock-based compensation in the financial statements over the requisite service period of the individual grants.

The Company uses estimates of volatility, expected term, risk-free interest rate, dividend yield and forfeitures in determining the fair value of these awards and the amount of compensation expense to recognize.

Changes in the estimated forfeiture rate could result in changes to current compensation charges for historical grants.

For awards with performance conditions, the Company recognizes compensation expense when it becomes probable that the performance target will be achieved.

A probability assessment is performed on a quarterly basis and requires significant assumptions and estimates made by management related to the projected achievement of the performance targets, which generally consist of non-GAAP operating earnings, strategic goals and revenue.

Changes in the probability assessment of achieving the performance targets are accounted for in the period of change by recording a cumulative catch-up adjustment as if the new estimate had been applied since the service inception date.

If the actual performance targets achieved differ significantly from those projected by management, additional compensation expense may be recorded for the performance-based awards due to the cumulative catch-up adjustment, which could have an adverse impact on our results of operations.

Income-tax expense is an estimate of current income taxes payable or refundable in the current fiscal year based on reported income before income taxes.

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tax rules require U.S.

tax on foreign earnings, known as global intangible low taxed income (“GILTI”).

tax on foreign earnings, known as net Controlled Foreign Corporations tested income (formerly known as global intangible low taxed income, or GILTI).

GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S.

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however, the Company contributes a certain percentage of employee annual salaries on a discretionary basis, not to exceed an established threshold.

The Company provided for a contribution of approximately $ 2.1 million, $ 2.1 million and $ 2.0 million in 2024, 2023 and 2022, respectively.

The Company provided for a contribution of approximately $ 2.1 million in each of 2025, 2024 and 2023.

Retirement Benefit Obligations (Pension)

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

The Company recognized a loss of $ 0.3 million in 2024, a loss of $ 0.4 million in 2023 and an immaterial foreign exchange loss in 2022.

The Company recognized foreign exchange losses of $ 0.3 million, $ 0.3 million, and $ 0.4 million in 2025, 2024 and 2023, respectively.

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

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dollars at the current exchange rates as of the applicable balance sheet date.

Revenues and expenses are translated at the average exchange rate prevailing during the period.

Revenue and expenses are translated at the average exchange rate prevailing during the period.

Cumulative gains and losses from the translation of the foreign subsidiaries’ financial statements have been included accumulated other comprehensive loss in stockholders’ equity.

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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 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 adopted the new standard in fiscal year 2024 for annual and retrospective reporting periods with all interim disclosures to begin in the first quarter of fiscal year 2025.

Refer to Note 13.

Segment Reporting .

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) :

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ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.

The guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

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

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

The guidance is effective for annual

periods beginning after December 15, 2024.

The Company adopted the new standard on a prospective basis in fiscal year 2025 for annual reporting periods.

Refer to Note 11.

Provision ( Benefit) for Income Taxes .

Recently Issued Accounting Pronouncements

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.

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

In September 2025, the FASB issued ASU 2025-06, Intangibles–Goodwill and Other–Internal-Use Software (Subtopic 350-40) which amends certain aspects of the accounting for and disclosure of software costs.

The guidance is effective for annual reporting beginning after December 15, 2027, 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.

COMPONENTS OF THE COMPANY’S CONSOLIDATED BALANCE SHEETS:

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The Company maintains an allowance for estimated credit losses resulting from the inability of customers to make required payments.

This allowance is established using estimates formulated by the Company’s management based upon factors such as the composition of the accounts receivable aging, historical losses, changes in payments patterns, customer creditworthiness, and current economic trends.

This allowance is established using estimates formulated by the Company’s management based upon factors such as the composition of the accounts receivable aging, historical losses, changes in payment patterns, customer creditworthiness, and current economic trends.

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

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Receivables written off

Recoveries collected

Ending balance

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Finished goods

Inventories consist of costs associated with the purchases of wafers from domestic and offshore foundries and of packaged components from offshore assembly manufacturers, as well as internal labor and overhead associated with the testing of both wafers and packaged components.

Inventories are recorded at standard cost, which approximates actual cost computed on a first-in, first-out basis, not in excess of net realizable value.

The Company routinely evaluates quantities and values of inventories and records a

provision for excess and obsolete inventories to reduce its recorded inventory balance to its estimated net realizable value.

Historically these write-downs have not been material.

The bulk of our inventory is held in wafers, which combined with the fungibility of our products across customers and applications results in a lower risk of obsolescence.

Property and Equipment

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Total property and equipment (excluding accumulated depreciation) located in the United States at December 31, 2025, 2024 and 2023, was approximately $ 216.3 million, $ 209.7 million and $ 203.6 million, respectively.

In 2024, 2023 and 2022, approximately 10 %, 11 % and 12 %, respectively, of total property and equipment (excluding accumulated depreciation) was held in Thailand by one of the Company’s subcontractors.

In 2024, 2023 and 2022, approximately 15 % of total property and equipment (excluding accumulated depreciation was held by one of the Company’s subcontractors in Malaysia.

In 2025, 2024 and 2023, approximately 16 %, 15 % and 15 % of total property and equipment (excluding accumulated depreciation) was held by one of the Company’s subcontractors in Malaysia.

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

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss, net of taxes, for the three years ended December 31, 2024:

In 2024 and 2023, approximately 10 % and 11 %, respectively, of total property and equipment (excluding accumulated depreciation) was held in Thailand by one of the Company’s subcontractors.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of taxes, for the three years ended December 31, 2025:

Unrealized Gains

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Amounts reclassified from accumulated other comprehensive loss

Other comprehensive loss

Other comprehensive income (loss)

Balance at December 31, 2023

1 unchanged sentence

Amounts reclassified from accumulated other comprehensive loss

Other comprehensive income

Other comprehensive income (loss)

Balance at December 31, 2024

1 unchanged sentence

Amounts reclassified from accumulated other comprehensive loss

Other comprehensive loss

Other comprehensive income (loss)

Balance at December 31, 2025

(1) This component of accumulated other comprehensive loss is included in the computation of net periodic pension cost for the years ended December 31, 2024, 2023 and 2022.

(1) This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost for the years ended December 31, 2025, 2024 and 2023.

FAIR VALUE MEASUREMENTS:

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The types of instruments valued based on other observable inputs (Level 2 of the fair-value hierarchy) include investment-grade corporate bonds and commercial paper.

Such types of investments are valued by using a multi-dimensional relational model, the inputs are primarily benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data including market research

publications.

The Company does not hold any instruments that would be classified within Level 3 of the fair-value hierarchy.

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Money market funds

government securities

The Company did not transfer any investments between Level 1 and Level 2 of the fair value hierarchy in the years ended December 31, 2025 and 2024.

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Investments due in 3 months or less:

Commercial paper

Corporate securities

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Investments due in 4-12 months:

Commercial paper

Corporate securities

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As of December 31, 2025, the Company had three stock-based compensation plans (the “Plans”) which are described below.

2007 Equity Incentive Plan

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

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

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

however previous grants under this plan shall remain outstanding until they are exercised, vest, forfeited or expire.

2025 Inducement Award Plan

The 2025 Inducement Award Plan (“Inducement Plan”) was adopted by the board of directors on November 14, 2025.

The Inducement Plan provides for the grant of RSU awards, PSU awards and performance cash awards.

No other forms of equity-based awards, including stock options and stock appreciation rights, may be granted.

The plan is intended to be used in connection with the recruiting and inducement of senior management and employees.

Each award under the Inducement Plan is intended to qualify as an employment inducement grant under the Inducement Listing Rule or to otherwise qualify under the exception relating to plans or arrangements relating to an acquisition or merger under NASDAQ Listing Rule 5635(c)(3) and the official guidance thereunder.

Pursuant to Rule 5635(c)(4) of the NASDAQ Listing Rules, the Company did not seek stockholder’s approval.

As of December 31, 2025, 0.1 million awards have been issued, net of forfeitures or cancellations, and approximately 0.3 million shares of common stock remain available for future grant under the Inducement Plan.

On January 27, 2026, the Talent and Compensation Committee of the board of directors approved the Amended and Restated 2025 Inducement Award Plan, reserving an additional 0.5 million shares of the Company’s common stock, or 0.9 million shares of the Company’s common stock in the aggregate, for issuance pursuant to equity awards granted under the Inducement Plan.

2016 Incentive Award Plan

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(In thousands)

Cost of revenues

Cost of revenue

Research and development

1 unchanged sentence

General and administrative

Other operating expenses

Total stock-based compensation expense

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Total unrecognized compensation expense

Stock-based compensation expense in the year ended December 31, 2024, was approximately $ 35.1 million, comprising approximately $ 25.7 million related to restricted stock units, $ 7.7 million related to performance-based awards and long-term performance-based awards and $ 1.7 million related to the Company’s Purchase Plan.

Stock-based compensation expense in the year ended December 31, 2023, was approximately $ 28.5 million, comprising approximately $ 23.4 million related to restricted stock units, $ 3.2 million related to performance-based awards and long-term performance-based awards and $ 1.9 million related to the Company’s Purchase Plan.

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

Stock-based compensation expense in the year ended December 31, 2025, was approximately $ 39.7 million, comprising approximately $ 22.8 million related to restricted stock units, $ 8.4 million related to the modification of outstanding equity awards held by the Company’s former chief executive officer, $ 6.9 million related to performance-based awards and long-term performance-based awards and $ 1.6 million related to the Company’s employee stock purchase plan.

In connection with his retirement in July 2025, the Company’s former chief executive officer, Balu Balakrishnan, entered into a transition agreement and a consulting agreement with the Company.

Pursuant to these agreements, Mr.

Balakrishnan’s outstanding equity awards continue to vest subject to his continuous service and the applicable award agreements.

The vast majority of these awards are subject to performance criteria established at the time of grant and will only be earned if such criteria are met at the conclusion of the applicable performance periods.

As the services to be performed by Mr.

Balakrishnan under the transition agreement and the consulting agreement do not qualify as “substantive services” under ASC 718-10 , the continued vesting of the outstanding equity awards represents a modification of the original awards.

As a result, in the year ended December 31, 2025, the Company recognized stock-based compensation in the amount of $ 8.4 million in other operating expenses on the consolidated statements of income related to the accounting modification in July 2025 and subsequent changes in performance criteria measurement.

Further subsequent changes in performance criteria measurement could result in an adjustment to expense in future periods.

Employee Stock Purchase Plan

The fair value of employees’ stock purchase rights under the Purchase Plan was estimated using the Black-Scholes model with the following weighted-average assumptions used during the three years ended December 31, 2025, 2024 and 2023:

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Weighted-average estimated fair value of purchase rights

No options were granted or remain outstanding as of December 31, 2024.

There were no options exercised during the years ended December 31, 2024 and December 31, 2023, while total intrinsic value of options exercised during the year ended December 31, 2022 was $ 0.8 million.

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

The number of shares that are released at the end of the performance year can range from zero to 200 % of the target number depending on the Company’s performance.

The performance metrics of this program are annual targets consisting of a combination of net revenue, non-GAAP operating earnings and strategic goals.

As the net revenue, non-GAAP operating income and strategic goals are considered performance conditions, expense associated with these awards, net of estimated forfeitures, is recognized over the service period based on an assessment of the achievement of the performance targets.

The performance metrics of this program are annual targets consisting of a combination of net revenue, non-GAAP operating income and strategic goals.

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

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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.

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Outstanding and expected to vest at December 31, 2025

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.

The grant-date fair value of PRSU awards released, which were fully vested, in the years ended December 31, 2023 and 2022, was approximately $ 1.1 million and $ 4.6 million , respectively.

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.

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.

The grant-date fair value of PRSU awards released, which were fully vested, in the year ended December 31, 2023, was approximately $ 1.1 million.

RSUs granted to employees typically vest ratably over a four-year period and are converted into shares of the Company’s common stock upon vesting on a one-for-one basis subject to the employee’s continued service to the Company over that period.

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The grant-date fair value of RSUs vested in the years ended December 31, 2025, 2024 and 2023, was approximately $ 21.9 million, $ 23.9 million and $ 22.2 million, respectively.

SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES:

SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUE:

Customer Concentration

The Company’s top ten customers accounted for approximately 79 %, 80 % and 76 % of revenues in 2024, 2023 and 2022, respectively.

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

The Company’s top ten customers accounted for approximately 81 %, 79 % and 80 % of revenue in 2025, 2024 and 2023, respectively.

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

These distributors sell the Company’s products to a broad, diverse range of end users, including OEMs and merchant power supply manufacturers.

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

Sales to distributors in 2025, 2024 and 2023 were $ 304.6 million, $ 292.9 million and $ 307.4 million, respectively.

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

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

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

Year Ended December 31,

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.

Honestar Technologies Co., Ltd.

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

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

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consisted principally of cash investments and trade receivables.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash investments and trade receivables.

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

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

Honestar Technologies Co., Ltd.

Salcomp Group

Honestar Technologies Co., Ltd.

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

Geographic Net Revenues

Geographic Net Revenue

The Company markets its products globally through its sales personnel and a worldwide network of independent sales representatives and distributors.

Geographic net revenues based on “bill to” customer locations by region and country with 5% or more of the Company’s revenue during any of the periods presented were as follows:

Geographic net revenue by region and country with 5% or more of the Company’s revenue during any of the periods presented, based on “bill to” customer locations were as follows:

Year Ended December 31,

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Hong Kong/China

Total net revenues

Total net revenue

COMMON STOCK REPURCHASES AND CASH DIVIDENDS:

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

In 2022, the Company’s board of directors authorized the use of $ 325.0 million for the repurchase of the Company’s common stock.

This amount was in addition to $ 67.3 million remaining and available at the beginning of 2022 for repurchases to be executed according to pre-defined price/volume guidelines.

As of December 31, 2023, the Company had $ 26.0 million available for future stock repurchases which was used for repurchases during 2024.

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

As of December 31, 2024, the Company had $ 48.1 million available under a stock-repurchase program announced in November 2024.

After this authorization was exhausted in April 2025, the Company’s board of directors authorized the use of an additional $ 50.0 million for the repurchase of the Company’s common stock, with repurchases to be executed according to pre-defined price/volume guidelines.

In 2025, 2024 and 2023, the Company purchased approximately 2.0 million shares, 0.4 million shares and 0.8 million shares, respectively, for approximately $ 98.1 million, $ 27.9 million and $ 55.3 million, respectively.

As of December 31, 2024, the Company had $ 48.1 million available for future stock repurchases.

There is no expiration date on the plan or amount currently authorized.

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

Common Stock Dividend

As of December 31, 2025, the Company had exhausted their repurchase authorization.

Any future repurchase program would be authorized 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.

Common Stock Dividends

The following table presents the quarterly dividends declared per share of the Company’s common stock for the periods indicated:

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The Company paid approximately $ 47.2 million, $ 46.0 million and $ 44.0 million in cash dividends during 2025, 2024 and 2023, respectively.

In October 2021, the Company’s board of directors declared dividends of $ 0.15 per share to be paid to be paid to stockholders of record at the end of each quarter in 2022.

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

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

1 unchanged sentence

In October 2024, the Company’s board of directors raised the 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 $ 0.20 per share announced in October 2023) and at the end of each quarter in 2025 .

In October 2025, the Company’s board of directors raised the quarterly cash dividend with the declaration of four cash dividends of $ 0.215 per share to be paid at the end of each quarter in 2026.

EARNINGS PER SHARE:

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Diluted earnings per share are calculated by dividing net income by the weighted-average shares of common stock and dilutive common equivalent shares outstanding during the period.

Dilutive common equivalent shares included in this calculation consist of dilutive shares issuable upon the assumed exercise of outstanding common stock options, the assumed vesting of outstanding restricted stock units, the assumed issuance of awards under the stock purchase plan and contingently issuable performance-based awards, as computed using the treasury stock method.

Dilutive common equivalent shares included in this calculation consist of the assumed vesting of outstanding restricted stock units, the assumed issuance of awards under the stock purchase plan and contingently issuable performance-based awards, as computed using the treasury stock method.

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

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(1) The Company includes the shares underlying performance-based awards in the calculation of diluted earnings per share if the performance conditions have been satisfied as of the end of the reporting period and excludes such shares when the necessary conditions have not been met.

The Company has included in the 2024, 2023 and 2022 calculations those shares that were contingently issuable upon the satisfaction of the performance conditions as of the end of the respective periods.

The Company has excluded the shares underlying the outstanding performance-based awards in the 2025, 2024 and 2023 calculations as the shares were not contingently issuable as of the end of the respective periods.

In the years ended December 31, 2025, 2024 and 2023, no outstanding stock awards were determined to be anti-dilutive and excluded from the computation of diluted earnings per share.

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Total income before income taxes

The components of the provision (benefit) for income taxes are as follows:

The Company’s effective tax rate is impacted by the geographic distribution of the Company’s world-wide earnings in lower-tax jurisdictions, federal research tax credits and the recognition of excess tax benefits related to share-based payments.

The rate was further reduced by the release of federal uncertain tax position caused by an expiration in the statute of limitations on these positions.

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

tax, known as Net Controlled Foreign Corporation Tested Income ("NCTI").

The Company’s primary jurisdiction where foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction.

Income earned in other foreign jurisdictions was not material.

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

The Company has adopted Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” on a prospective basis for the year ended December 31, 2025.

Significant Accounting Policies - Adoption of New Accounting Standards for additional details on the adoption of ASU 2023-09.

The provision (benefit) for income taxes differs from the amount that would result by applying the applicable federal income tax rate to income before income taxes, as follows:

Year Ended December 31,

(In thousands)

Federal Statutory Tax Rate

State and Local Income Taxes, Net of Federal Income Tax Effect (a)

Foreign tax effects

Statutory tax rate difference between Cayman and United States

Other foreign jurisdictions

Enacted changes in tax laws or rates

Effect of Cross-Border Tax Laws

Global intangible low-taxed income

Research and development tax credits

Energy-related tax credits

Nontaxable and Nondeductible Items

Share-based payment awards

Change in Unrecognized Tax Benefits

(a) State taxes in California made up the majority ( greater than 50% ) of the tax effect in this category.

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the components of the benefits for income taxes were as follows:

Year Ended December 31,

(In thousands)

Current provision (benefit):

Deferred provision (benefit):

The provision (benefit) for income taxes differs from the amount that would result by applying the applicable federal income tax rate to income before income taxes, as follows:

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:

Year Ended December 31,

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Valuation allowance

The rate was further reduced by the release of federal uncertain tax positions caused by an expiration in the statute of limitations on these positions.

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

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

The Company’s primary jurisdiction where foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction.

Income earned in other foreign jurisdictions was not material.

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

The components of the net deferred income tax assets (liabilities) were as follows:

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As of December 31, 2025, the Company continues to maintain a valuation allowance primarily as a result of its California, New Jersey and Canada deferred tax assets as the Company believes that it is not more likely than not that the deferred tax assets will be realized.

As of December 31, 2024, the Company had utilized all of its federal research and development tax credit carryforwards.

As of December 31, 2024, the Company had California research and development tax credit carryforwards of approximately $ 42.0 million (there is no expiration of research and development tax credit carry-forwards for the state of California) and California net operating losses of $ 44.2 million which will begin to expire in 2032 .

December 31, 2024, the Company had Canadian scientific research and experimental development tax credit carry-forwards of approximately $ 3.8 million and New Jersey research and experimental development tax credit carry-forwards of approximately $ 1.0 million, which will start to expire in 2030 and 2026 , respectively.

tax laws generally allow companies to repatriate accumulated foreign earnings without incurring additional U.S.

federal taxes although local foreign and U.S.

As of December 31, 2025, the Company had utilized all its federal research and development tax credit carry-forwards.

As of December 31, 2025, the Company had California research and development tax credit carry-forwards of approximately $ 46.0 million (there is no expiration of research and development tax credit carry-forwards for the state of California) and California net operating losses of $ 36.9 million, which will begin to expire in 2032 .

As of December 31, 2025, the Company had Canadian scientific research and experimental development tax credit carry-forwards of approximately $ 3.9 million and New Jersey research and experimental development tax credit carry-forwards of approximately $ 1.0 million, which will start to expire in 2033 and 2026 , respectively.

Tax law signed into law on December 22, 2017, generally allows companies to repatriate accumulated foreign earnings without incurring additional U.S.

federal taxes beginning after December 31, 2017.

Local foreign and U.S.

states taxes may still be incurred upon repatriation.

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The determination of the future tax consequences of the remittance of these earnings is not practicable.

The foregoing items could have a material effect on our business, cash flow, results of operations or financial conditions.

Unrecognized Tax Benefits

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An income tax benefit of $ 3.3 million, net of valuation allowance adjustments, would be recorded if fiscal year 2025 unrecognized tax benefits are recognized.

The Company cannot reasonably estimate the amount of the unrecognized tax benefit that could be adjusted in the next twelve months.

The Company’s continuing practice is to recognize interest and penalties related to income tax matters in income tax expense.

The Company had accrued interest and penalties of $ 0.3 million in both December 31, 2024 and 2023, which have been recorded in long-term income taxes payable in the accompanying consolidated balance sheets.

As of December 31, 2024, the Company’s tax returns continue to remain subject to examination by U.S.

The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

The Company had accrued interest and penalties of $ 0.5 million and $ 0.3 million as of December 31, 2025 and 2024, respectively, which have been recorded in long-term income taxes payable in the accompanying consolidated balance sheets.

As of December 31, 2025, the Company’s tax returns continue to remain effectively subject to examination by U.S.

federal authorities for the years after 2021.

The California Franchise Tax Board is conducting an audit for the tax years 2018 and 2019, it is still currently ongoing.

The Company has closed its audit with the California Franchise Tax Board for the tax years 2018 and 2019 without material change.

The California Franchise Tax Board has started an audit for the tax years 2020 through 2022, which is currently ongoing.

The amount of cash taxes paid by the Company is as follows:

Year Ended December 31,

(In thousands)

Other foreign*

Income Taxes, net of amounts refunded

* The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.

LEASES AND COMMITMENTS:

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Some lease agreements contain lease and non-lease components, which are accounted for as a single lease component.

Total lease expense was $ 3.9 million, $ 3.6 million and $ 3.3 million for the years ended December 31, 2024, 2023 and 2022;

Total lease expense was $ 4.4 million, $ 3.9 million and $ 3.6 million

for the years ended December 31, 2025, 2024 and 2023;

short-term and variable lease expenses were not material during these periods.

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

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.

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Amortization of acquisition-related intangible assets (2)

Cost of revenues (excluding 1 & 2)

Cost of revenue (excluding 1 & 2)

Research and development (excluding 1)

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General and administrative (excluding 1)

Other operating expenses, net

Other operating expenses (excluding 1)

INCOME FROM OPERATIONS

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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.

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 (“Waverly”) 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 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 Delaware case in view of a series of covenants not to sue that Waverly et al.

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.

These litigations, whether or not determined in the Company’s favor or settled, will be costly and will divert the efforts and attention of the Company’s management

and technical personnel from normal business operations, potentially causing a material adverse effect on the business, financial condition and operating results.

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

Following a trial in August 2025, the Company successfully obtained verdicts of noninfringement and invalidity of all asserted claims, and as part of the noninfringement verdict, the jury found that no products incorporating the Company’s InnoSwitch products met the specific requirements of CogniPower’s asserted claims.

The Court thereafter entered judgment in favor of the Company;

briefing on post-trial motions is complete, with rulings expected in the coming months.

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 that case was dismissed following the August 2025 verdict in the Company’s favor in CogniPower’s earlier case.

The Company believes the jury verdicts and judgement in its favor are correct and intends to continue to vigorously defend itself against CogniPower’s claims against the Company’s technology, including on appeal if necessary.

Currently, the Company is not able to estimate a loss or a range of loss for the ongoing litigations disclosed above.

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.

On May 11, 2022, a former employee of the Company filed a first amended complaint in the Superior Court of California, County of Santa Clara alleging several violations of the Fair Employment and Housing Act.

The complaint named the Company and one of its vice presidents and alleged, among other things, that the former employee was discriminated against and harassed based on age and disability, was retaliated against, and was wrongfully terminated in violation of public policy.

Two of the plaintiff’s claims were dismissed with prejudice in response to the Company’s demurrer motions.

Prior to trial, the plaintiff dismissed with prejudice the claims against the Company’s vice president and the claim of wrongful termination in violation of public policy.

In June 2025, the remaining claims in the matter were tried before a jury.

The jury reached a verdict and ruled in favor of the Company on the claims of age and disability discrimination and harassment based on age.

The jury ruled in favor of the plaintiff and against the Company on the claims of harassment based on disability and retaliation and awarded compensatory damages of $ 3.2 million and punitive damages of $ 6.0 million.

In the quarter ended June 30, 2025, the Company recognized a charge in the amount of $ 9.2 million in other operating expenses on the consolidated statements of income.

In the quarter ended September 30, 2025, the Company recognized in other operating expenses on the consolidated statements of income an additional $ 0.7 million related to plaintiff attorney fees and related costs.

The plaintiff had filed claims for attorney fees and other costs totaling $ 5.9 million;

the Company was thus potentially exposed to an additional $ 5.2 million in expenses related to this matter.

On December 9, 2025, the court issued orders on the parties’ motions on attorneys’ fees and costs, awarding claims for attorney fees and other costs totaling $ 2.1 million.

As a result, in the quarter ended December 31, 2025, the Company recognized in other operating expenses on the consolidated statements of income an additional $ 1.4 million to reflect the court determination of plaintiff attorney fees and related costs.

The Company disagrees with the jury’s verdicts and court’s orders against the Company and has appealed the judgement.

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

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

Odyssey Semiconductor Technologies

On March 12, 2024, the Company agreed to acquire the assets of Odyssey, a U.S.

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

company and a developer of vertical GaN transistor technology.

The transaction closed on July 1, 2024, at which time all key Odyssey employees joined the Company.

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The Company expects to make contributions to the Pension Plan of approximately $ 0.6 million during 2026.

The accumulated unrealized actuarial balance on pension

benefits, net of tax, at December 31, 2024, 2023 and 2022 was $ 1.5 million loss, $ 1.6 million gain and $ 0.9 million gain, respectively.

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

The accumulated unrealized actuarial balance on pension benefits, net of tax, at December 31, 2025, 2024 and 2023 was $ 0.1 million loss, $ 1.5 million loss and $ 1.6 million gain, respectively.

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

In accordance with the Compensation-Retirement Benefits Topic of ASC 715-20, Defined Benefits Plan , the Company recognizes the over-funded or under-funded status of its defined post-retirement plan as an asset or liability in its statement of financial position.

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The Credit Agreement was amended on June 7, 2021, to provide an alternate borrowing rate as a replacement for LIBOR and extend the termination date from April 30, 2022, to June 7, 2026, with all other terms remaining the same.

The Credit Agreement was amended with an effective date of June 28, 2023 to include the Secured Overnight Financing Rates (“SOFR”) as interest rate benchmark rates, with all other terms remaining the same.

The Credit Agreement was amended with an effective date of June 28, 2023 to include the Secured Overnight Financing Rates as interest rate benchmark rates, with all other terms remaining the same.

The Company’s ability to borrow under the revolving line of credit is conditioned upon the Company’s compliance with specified covenants, including reporting and financial covenants, primarily a minimum cash requirement and a debt to earnings ratio.

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The Company was compliant with all covenants and had no advances outstanding under the Credit Agreement as of December 31, 2025.

SUBSEQUENT EVENTS:

On January 31, 2026, the Company approved a reduction in force that resulted in the termination of approximately 7 % of the Company’s global workforce on February 2, 2026 in order to decrease the Company’s costs and create a more efficient organization to support its business.

In connection with the reduction in force, the Company estimates it will incur approximately between $ 3.5 million and $ 4.0 million of costs, substantially all of which are related to employee severance and benefit costs, which the Company expects to recognize in the first quarter of 2026.

Valuation and Qualifying Accounts

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data