What changed in this filing

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Item 1. Financial Statements

2026-05-07 compared with 2025-11-05 · 230 added, 389 removed, 240 unchanged (72% of the section changed)

3 unchanged sentences

(In thousands)

September 30, 2025

March 31, 2026

December 31, 2025

1 unchanged sentence

Cash and cash equivalents

Short-term marketable securities

Short-term investments

Accounts receivable, net

3 unchanged sentences

Intangible assets, net

DEFERRED TAX ASSETS

Other non-current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

2 unchanged sentences

Accrued payroll and related expenses

Taxes payable

Other accrued liabilities

Total current liabilities

LONG-TERM INCOME TAXES PAYABLE

Other liabilities

TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES (Notes 11, 13 and 14)

Commitments and contingencies (Note 11)

STOCKHOLDERS’ EQUITY:

Common stock, $ 0.001 par value, 140,000 shares authorized;

and 55,312 and 56,837 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

and 55,600 and 55,339 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively

Additional paid-in capital

5 unchanged sentences

POWER INTEGRATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

Three Months Ended

Nine Months Ended

September 30,

(In thousands, except per share amounts)

COST OF REVENUES

Cost of revenue

Operating expenses:

Research and development

Sales and marketing

General and administrative

Selling, general and administrative

Other operating expenses

Restructuring and related charges

Total operating expenses

INCOME (LOSS) FROM OPERATIONS

INCOME (LOSS) BEFORE INCOME TAXES

PROVISION (BENEFIT) FOR INCOME TAXES

NET INCOME (LOSS)

EARNINGS (LOSS) PER SHARE:

Income from operations

Income before income taxes

Provision for income taxes

Earnings per share:

Shares used in per share calculation:

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POWER INTEGRATIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Net income (loss)

Other comprehensive income (loss), net of tax:

Foreign currency translation adjustments, net of $ 0 tax in each of the three and nine months ended September 30, 2025 and 2024

Unrealized gain on marketable securities, net of ($ 55 ) and ($ 221 ) taxes in the three and nine months ended September 30, 2025, respectively, and ($ 615 ) in each of the three and nine months ended September 30, 2024

Amortization of defined benefit pension items, net of $ 0 and $ 4 tax in the three and nine months ended September 30, 2025, respectively, and $ 8 and $ 23 in the three and nine months ended September 30, 2024, respectively

Total other comprehensive income

TOTAL COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustments, net of $ 0 tax in each of the three months ended March 31, 2026 and 2025

Unrealized gain (loss) on investments, net of ($ 250 ) and ($ 116 ) tax in the three months ended March 31, 2026 and 2025, respectively

Amortization of defined benefit pension items, net of tax of $ 0 in each of the three months ended March 31, 2026 and 2025

Total other comprehensive income (loss)

TOTAL COMPREHENSIVE INCOME

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three Months Ended

Nine Months Ended

September 30,

Three Months Ended March 31, 2026

Comprehensive

Stockholders’

(In thousands)

Beginning balance

Repurchase of common stock

Ending balance

Additional paid-in capital

Beginning balance

Common stock issued under employee stock plans

Repurchase of common stock

Stock-based compensation

Ending balance

Accumulated other comprehensive income (loss)

Beginning balance

Other comprehensive gain

Ending balance

Retained earnings

Beginning balance

Net income (loss)

BALANCE AT DECEMBER 31, 2025

Issuance of common stock under employee stock option and stock award plans

Issuance of common stock under employee stock purchase plan

Stock-based compensation expense related to employee stock awards

Stock-based compensation expense related to employee stock purchases

Payment of dividends to stockholders

Unrealized actuarial gain on pension benefits

Unrealized loss on investments

Foreign currency translation adjustment

BALANCE AT MARCH 31, 2026

Three Months Ended March 31, 2025

Comprehensive

Stockholders’

(In thousands)

BALANCE AT DECEMBER 31, 2024

Issuance of common stock under employee stock option and stock award plans

Repurchase of common stock

Issuance of common stock under employee stock purchase plan

Stock-based compensation expense related to employee stock awards

Stock-based compensation expense related to employee stock purchases

Payment of dividends to stockholders

Ending balance

Total stockholders’ equity

Unrealized actuarial loss on pension benefits

Unrealized gain on investments

Foreign currency translation adjustment

BALANCE AT MARCH 31, 2025

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

September 30,

Three Months Ended

(In thousands)

2 unchanged sentences

Amortization of intangibles

Loss (gain) on disposal of property and equipment

Loss on disposal of property and equipment

Stock-based compensation expense

Accretion of discount on marketable securities

Deferred income taxes

Accretion of discount on investments

Decrease in accounts receivable allowance for credit losses

3 unchanged sentences

Accounts payable

Taxes payable and accrued liabilities

Other accrued liabilities

NET CASH PROVIDED BY OPERATING ACTIVITIES

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Purchases of property and equipment

Proceeds from sale of property and equipment

Purchases of marketable securities

Proceeds from sales and maturities of marketable securities

Acquisition (Note 15)

Purchases of investments

Proceeds from sales and maturities of investments

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES

3 unchanged sentences

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

CASH AND CASH EQUIVALENTS AT END OF PERIOD

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Unpaid property and equipment

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid for income taxes, net

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4 unchanged sentences

Significant intercompany accounts and transactions have been eliminated in consolidation.

Certain prior-period amounts have been reclassified to conform to current year presentation.

These reclassifications had no effect on the reported results of operations.

While the financial information furnished is unaudited, the condensed consolidated financial statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for the fair presentation of the results of operations for the interim periods covered and the financial condition of the Company at the date of the interim balance sheet in accordance with accounting principles generally accepted in the United States of America (“U.S.

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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 (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign).

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

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

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

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

The Company 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.

2 unchanged sentences

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 guidance is effective for annual reporting periods 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.

1 unchanged sentence

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

COMPONENTS OF THE COMPANY’S CONDENSED CONSOLIDATED BALANCE SHEETS:

CONDENSED CONSOLIDATED BALANCE SHEET COMPONENTS AND OTHER INFORMATION:

Accounts Receivable

September 30,

(In thousands)

3 unchanged sentences

Allowance for credit losses

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 payment patterns, customer creditworthiness and current economic trends.

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

Allowance for Credit Losses

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Beginning balance

Provision for credit loss expense

Receivables written off

Ending balance

September 30,

(In thousands)

Raw materials

1 unchanged sentence

Finished goods

Intangible Assets

September 30, 2025

December 31, 2024

(In thousands)

In-process research and development

Developed technology

Technology licenses

Total intangible assets

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The estimated future amortization expense related to finite-lived intangible assets at September 30, 2025, is as follows:

Other non-current assets

(In thousands)

2025 (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.

Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2025 and 2024, were as follows:

Deferred tax assets

Right of use for leased properties

Prepaid expenses

Other non-current assets

Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income for the three months ended March 31, 2026 and 2025, were as follows:

Unrealized Gains

2 unchanged sentences

Foreign Currency

Marketable Securities

Pension Items

3 unchanged sentences

Three Months Ended

September 30,

(In thousands)

4 unchanged sentences

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, 2025 and 2024.

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 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 nine months ended September 30, 2025 and 2024.

(1) This component of accumulated other comprehensive income is included in the computation of net periodic pension cost for the three months ended March 31, 2026 and 2025.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

RESTRUCTURING:

The Company continuously evaluates its operations to better align the organization with market opportunities, increase operational efficiency, decrease costs and increase profitability.

During the three months ended March 31, 2026, the Company undertook a restructuring plan, reducing its workforce by approximately 7 % to better align expenses with revenue and create flexibility to invest in the products, people, and markets that are expected to drive long-term growth and profitability.

In conjunction with this restructuring plan, restructuring charges of $ 6.6 million were recognized during the first quarter of 2026, primarily composed of severance costs.

The restructuring plan was substantially completed in the first quarter of 2026.

No restructuring charges were incurred in fiscal 2025.

Restructuring liabilities are included in other accrued liabilities in the accompanying unaudited condensed consolidated balance sheets, and are summarized in the following table:

(in thousands)

Employee severance

Restructuring liability as of January 1, 2026

Cash payments

Non-cash and other

Restructuring liability as of March 31, 2026

Cash severance charges of $ 0.4 million related to the departure of an executive officer are included in the table hereto.

In addition, stock-based compensation expense of $ 1.8 million was recognized in the three months ended March 31, 2026 due to the acceleration of equity awards in accordance with the terms of the executive’s severance agreement.

The following table provides a summary of restructuring-related charges as presented in the unaudited condensed consolidated statements of income:

Three Months Ended

(in thousands)

Restructuring and related charges in cost of revenue

Restructuring and related charges in operating expenses

In conjunction with the restructuring actions, certain engineers were moved from sales and marketing projects to product development priorities.

In accordance with this, $ 3.0 million of related department costs have been classified as research and development expense in the accompanying condensed consolidated statement of income this quarter and will be accounted for accordingly going forward .

FAIR VALUE MEASUREMENTS:

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This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The Company’s cash equivalents and short-term marketable securities are classified within Level 1 or Level 2 of the fair-value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

The fair-value hierarchy of the Company’s cash equivalents and marketable securities at September 30, 2025 and December 31, 2024, was as follows:

The Company’s cash equivalents and short-term investments are classified within Level 1 or Level 2 of the fair-value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair-value hierarchy of the Company’s cash equivalents and short-term investments at March 31, 2026 and December 31, 2025, was as follows:

Fair Value Measurement at

September 30, 2025

March 31, 2026

Quoted Prices in

21 unchanged sentences

government securities

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

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

MARKETABLE SECURITIES:

Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at September 30, 2025, were as follows:

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, 2026 and the twelve months ended December 31, 2025.

Amortized cost and estimated fair market value of investments classified as available-for-sale (excluding cash equivalents) at March 31, 2026, were as follows:

Gross Unrealized

2 unchanged sentences

Investments due in 3 months or less:

Commercial paper

Corporate securities

Investments due in 4-12 months:

Commercial paper

Corporate securities

1 unchanged sentence

Corporate securities

Total marketable securities

Accrued interest receivable was $ 1.9 million at September 30, 2025 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

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

Total investments

Accrued interest receivable was $ 1.8 million at March 31, 2026, and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Gross Unrealized

2 unchanged sentences

Investments due in 3 months or less:

Commercial paper

Corporate securities

3 unchanged sentences

Corporate securities

Total marketable securities

Total investments

Accrued interest receivable was $ 2.3 million at December 31, 2025, 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, 2025:

The following table summarizes investments classified as available-for-sale (excluding cash equivalents) in a continuous unrealized loss position for which an allowance for credit losses was not recorded at March 31, 2026:

Less Than 12 Months

2 unchanged sentences

Corporate securities

Total marketable securities

In the three and nine months ended September 30, 2025 and 2024, no unrealized losses on marketable securities were recognized in the condensed consolidated statements of income (loss).

Total investments

In the three months ended March 31, 2026 and 2025, no unrealized losses on investments were recognized in the condensed consolidated statements of income.

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

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

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

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

STOCKHOLDERS’ EQUITY:

Cash Dividends

In October 2024, the Company’s board of directors declared dividends of $ 0.21 per share to be paid to stockholders of record 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.

For the three months ended March 31, 2026 and 2025, cash dividends declared and paid were as follows:

Three Months Ended

(In thousands, except per share amounts)

Dividends declared and paid

Dividends declared per common share

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

changes in interest rates.

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

STOCK-BASED COMPENSATION:

The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the three and nine months ended September 30, 2025 and 2024:

Common Stock Repurchases

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

As of December 31, 2025, the Company did no t have any amount authorized to repurchase shares of its common stock.

Employee Stock Incentive Plans

The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the three months ended March 31, 2026 and 2025:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Cost of revenues

Cost of revenue

Research and development

Sales and marketing

General and administrative

Other operating expenses

Selling, general and administrative

Other operating expenses (see note below)

Restructuring and related charges

Total stock-based compensation expense

Stock-based compensation expense in the three months ended September 30, 2025, was approximately $ 21.2 million, comprising approximately $ 13.6 million related to the modification of outstanding equity awards held by the Company’s former chief executive officer (discussed in further detail below), $ 5.8 million related to restricted stock unit (“RSU”) awards, $ 1.5 million related to performance-based (“PSU”) awards and long-term performance-based (“PRSU”) awards and $ 0.3 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the nine months ended September 30, 2025, was approximately $ 40.0 million, comprising approximately $ 16.7 million for RSUs, $ 13.6 million related to the modification of outstanding equity awards held by the Company’s former CEO, $ 8.6 million related to PSUs and PRSUs and $ 1.1 million related to the Company’s employee stock purchase plan.

Stock-based compensation expense in the three months ended September 30, 2024, was approximately $ 8.3 million, comprising approximately $ 6.6 million related to RSUs, $ 1.3 million related to PSUs and PRSUs 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.

Other Operating Expenses

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.

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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.

The majority of these awards are subject to performance criteria established at the time of grant and will only be earned to the extent that the Company’s performance satisfies such criteria 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, Compensation–Stock Compensation, the continued vesting of the outstanding equity awards represents a modification of the original awards.

As a result, in the quarter ended September 30, 2025, the Company recorded stock-based compensation in the amount of $ 13.6 million in other operating expenses on the condensed consolidated statements of income (loss) related to the accounting modification.

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

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 income 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 expected achievement of the performance targets.

The fair value of these PSUs is determined using the

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

If the performance conditions are not achieved, no compensation cost is recognized and any previously recognized compensation is reversed.

In February 2025, it was determined that approximately 66,000 shares subject to the PSUs granted in 2024 vested in aggregate;

the shares were released to the Company’s employees and executives in the first quarter of 2025.

A summary of PSUs outstanding as of September 30, 2025 and activity during the nine months ended, is presented below:

Weighted-Average

Grant Date Fair

Contractual Term

Intrinsic Value

(In thousands)

Value Per Share

(In thousands)

Outstanding at January 1, 2025

Outstanding at September 30, 2025

Outstanding and expected to vest at September 30, 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.

PRSUs are granted in an amount equal to twice the target number of shares to be issued if the maximum performance metrics are met.

The actual number of shares the recipient receives is determined at the end of a three-year performance period based on results achieved versus the Company’s performance goals, and may range from zero to 200 % of the target number.

The performance goals for PRSUs granted in fiscal 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 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.

A summary of PRSUs outstanding as of September 30, 2025 and activity during the nine months ended, is presented below:

Weighted-Average

Grant Date Fair

Contractual Term

(In thousands)

Value Per Share

(In thousands)

Outstanding at January 1, 2025

Outstanding at September 30, 2025

Outstanding and expected to vest at September 30, 2025

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of RSUs outstanding as of September 30, 2025 and activity during the nine months ended, is presented below:

Weighted-Average

Grant Date Fair

Contractual Term

(In thousands)

Value Per Share

(In thousands)

Outstanding at January 1, 2025

Outstanding at September 30, 2025

Outstanding and expected to vest at September 30, 2025

SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES:

Consequently, in the year ended December 31, 2025, the Company recognized stock-based compensation in the amount of $ 8.4 million in other operating expenses.

In the quarter ended March 31, 2026, the Company recorded a $ 1.4 million credit in other operating expenses on the condensed consolidated statements of income, reversing a portion of the previously recognized stock-based compensation expense.

The reversal reflects our revised estimate of the portion of the awards that will ultimately vest.

Subsequent changes in our estimates could result in further adjustments in future periods until the vesting of these equity awards.

Customer Concentration

The Company’s top ten customers accounted for approximately 81 % of net revenues in both the three and nine months ended September 30, 2025 and approximately 78 % for both the corresponding periods of 2024.

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

These distributors sell the Company’s products to a broad, diverse range of end users, including original equipment manufacturers (“OEMs”) and merchant power-supply manufacturers.

The Company’s top ten customers accounted for approximately 80 % of net revenue in both the three months ended March 31, 2026 and 2025.

A significant portion of revenue is 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 original equipment manufacturers (“OEMs”) and merchant power-supply contract manufacturers (“CMs”).

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

Sales to distributors were $ 82.3 million and $ 238.7 million in the three and nine months ended September 30, 2025, respectively, and $ 80.5 million and $ 220.4 million in the three and nine months ended September 30, 2024, 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 periods:

Sales to distributors and direct sales to OEMs and power-supply CMs contributed to the Company’s net revenue as follows:

Three Months Ended

Nine Months Ended

September 30,

Salcomp Group

Honestar Technologies Co., Ltd.

* 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.

(In thousands)

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Sales to distributors

Sales to OEMs and CMs

Total net revenue

During the three months ended March 31, 2026 and 2025, 15 % and 13 % of net revenue related to an OEM that fulfilled its purchases through the Company’s CM customers in each respective quarter.

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

Three Months Ended

* 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

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

As of September 30, 2025 and December 31, 2024, 91 % 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 September 30, 2025 and December 31, 2024:

September 30,

Salcomp Group

Honestar Technologies Co., Ltd.

As of March 31, 2026 and December 31, 2025, 87 % and 89 % 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, 2026 and December 31, 2025:

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

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

Geographic Net Revenues

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Net Revenue by Geography

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

Geographic net revenues 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:

Net revenue by region and country with 10% or more of the Company’s revenue during any of the periods presented, based on “bill to” customer locations were as follows:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Hong Kong/China

Total net revenues

STOCKHOLDERS’ EQUITY:

Common Stock Shares Outstanding

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

Beginning balance

Common stock issued under employee stock plans

Ending balance

Common Stock Repurchases

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, 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

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

be executed according to pre-defined price/volume guidelines.

In the three months ended September 30, 2025, the Company purchased approximately 0.9 million shares for $ 42.4 million.

In the nine months ended September 30, 2025, the Company repurchased 2.0 million shares for $ 98.1 million, exhausting the Company’s repurchase authorization.

Any future repurchase programs 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.

Cash Dividends

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 .

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.

For the three and nine months ended September 30, 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)

Dividends declared and paid

Dividends declared per common share

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

EARNINGS (LOSS) PER SHARE:

Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted-average shares of common stock outstanding during the period.

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

Total net revenue

EARNINGS PER SHARE:

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

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

Dilutive common equivalent shares included in this calculation consist of 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 (loss) per share calculation is as follows:

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)

Basic earnings per share:

Net income (loss)

Weighted-average common shares

Basic earnings (loss) per share

Basic earnings per share

Diluted earnings per share:

Net income (loss)

Weighted-average common shares

2 unchanged sentences

Diluted weighted-average common shares

Diluted earnings (loss) per share

Diluted earnings per share

(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 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 months ended September 30, 2025, shares attributable to stock-based awards were excluded from the computation of diluted earnings per share, as the Company was in a net loss position .

PROVISION (BENEFIT) FOR INCOME TAXES:

The Company has excluded the shares underlying the outstanding performance-based awards in the 2026 and 2025 calculations as the shares were not contingently issuable as of the end of the reporting period.

INCOME TAXES:

Income-tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to the Company and its subsidiaries, adjusted for certain discrete items which are fully recognized in the period they occur.

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, 2025, was ( 3.0 %) and 10.5 %, respectively, and in the corresponding periods of 2024 was 0.3 % and 1.5 %, 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 tax credits.

In the three and nine months ended September 30, 2025, the Company’s effective tax rate was negatively impacted by the recognition of a tax deficiency or “shortfall” related to share-based payments.

Additionally, i n the three and nine months ended September 30, 2024, the Company’s effective tax rate was 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.

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.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of September 30, 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.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes provisions modifying the corporate income tax code, including the immediate expensing of domestic research and development expenditures for tax purposes, 100 % bonus depreciation for qualified assets, and an increase in the statutory tax rate on foreign earnings from 10.5 % to 12.6 % (effective in the fiscal year 2026).

The Company has elected to account for Net Controlled Foreign Corporation Tested Income (“NCTI”), formerly known as Global Intangible Low-Taxed Income, under the deferred method.

The deferred tax amounts recorded are based on the evaluation of temporary differences that are expected to reverse as NCTI is incurred in future periods.

As a result, the Company has remeasured its estimated deferred tax balances related to NCTI for the changes in the tax rate and recorded an expense of $ 0.5 million during the third quarter of 2025.

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

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

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

The Company’s effective tax rate for the three months ended March 31, 2026, was 15.8 % and 11.1 % in the corresponding period of 2025.

In the three months ended March 31, 2026, the Company’s effective tax rate was affected by the recognition of a tax accounting shortfall associated with share-based payments.

Additionally, 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.

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

COMMITMENTS AND CONTINGENCIES:

Supplier Agreements

Under the terms of the Company’s wafer-supply agreements with Seiko Epson Corporation and ROHM Lapis Semiconductor Co., Ltd., the wafers purchased from these suppliers are priced in U.S.

Under the terms of the Company’s wafer-supply agreements with various foundries, the wafers purchased from these suppliers are priced in U.S.

dollars, with mutual sharing of the impact of fluctuations in the exchange rate between the Japanese yen and the U.S.

dollar on future purchases.

Each year, the Company’s management and these two suppliers review and negotiate future pricing;

Each year, the Company’s management and several suppliers review and negotiate future pricing;

the negotiated pricing is denominated in U.S.

dollars but is subject to contractual exchange-rate provisions.

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

dollars but is subject to contractual exchange-rate true-up provisions.

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

The Company generally warrants that its products will substantially conform to the published specifications for 12 months from the date of shipment.

Under the terms and conditions of sale, the Company’s liability is limited generally to either a credit equal to the purchase price or replacement of the part.

Legal Proceedings

From time to time in the ordinary course of business, the Company becomes involved in lawsuits, or customers and distributors may make claims against the Company.

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

During the year ended December 31, 2025, the Company had been defending against patent-infringement claims filed by a third party against a customer of the Company, including claims filed in 2019 and a follow-on claim filed in the first quarter of 2025.

The Company intervened on behalf of its customer and sought a declaration of non-infringement with respect to use of the Company’s products.

In the second half of 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 specified products met the specific requirements of the claimant’s asserted claims.

The Court thereafter entered judgment in favor of the Company and also dismissed the follow-on claim.

In April 2026, the Company executed a settlement in which the claimant granted the Company a full release and covenant not to assert any claims against the Company or its customers on any of the claimant’s patents based on the use or incorporation of any product.

The Company did not provide any payment to the claimant in exchange for the resolution of the dispute.

Pursuant to the settlement, all pending motions in the case have been terminated and the matter is now closed.

As of December 31, 2025, the Company had reserved approximately $ 11.3 million for an employee relations dispute including legal fees which is pending ongoing court proceedings.

While the court ruled in favor of the plaintiff in the second quarter of 2025, the Company disagrees with the jury’s verdict and court’s orders related to plaintiff attorney fees and related costs against the Company and has appealed the judgement.

The charges associated with the established reserve were recognized in other operating expenses in the accompanying condensed consolidated statements of income.

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 hereto-mentioned litigation.

The Company evaluates, at least on a quarterly

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

basis, developments in its legal matters that could affect the amount of any accrual, as well as any developments that would result in a loss contingency to become both probable and reasonably estimable.

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.

In addition, adverse determinations in patent litigation could result in 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, and incur monetary losses, any of which could have a material adverse effect on the Company’s business, financial condition and operating results.

Indemnifications

The Company sells products to its distributors under contracts, collectively referred to as Distributor Sales Agreements (“DSA”).

Each DSA contains the relevant terms of the contractual arrangement with the distributor, and generally includes certain provisions for indemnifying the distributor against losses, expenses, and liabilities from damages that may be awarded against the distributor in the event the Company’s products are found to infringe upon a patent, copyright, trademark, or other proprietary right of a third party (“Customer Indemnification”).

The DSA generally limits the scope of and remedies for the Customer Indemnification obligations in a variety of industry-standard respects, including, but not limited to, limitations based on time and geography, and a right to replace an infringing product.

The Company also, from time to time, has granted a specific indemnification right to individual customers.

The Company believes its internal development processes and other policies and practices limit its exposure related to such indemnifications.

In addition, the Company requires its employees to sign a proprietary information and inventions agreement, which assigns the rights to its employees’ development work to the Company.

While the Company has on occasion been made aware of claims against its distributors or customers that may trigger an indemnification claim, 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, 2026.

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.

SEGMENT REPORTING:

4 unchanged sentences

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 (loss).

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.

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

1 unchanged sentence

Amortization of acquisition-related intangible assets (2)

Cost of revenues (excluding 1 & 2)

Cost of revenue (excluding 1 & 2)

Research and development (excluding 1)

Sales and marketing (excluding 1)

General and administrative (excluding 1)

Selling, general and administrative (excluding 1)

Other operating expenses (excluding 1)

INCOME (LOSS) FROM OPERATIONS

PROVISION (BENEFIT) FOR INCOME TAXES

NET INCOME (LOSS)

Restructuring and related charges in operating expenses (excluding 1)

Income from operations

Provision for income taxes

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The table below presents other segment information:

Three Months Ended

Nine Months Ended

September 30,

(In thousands)

1 unchanged sentence

Interest income

LEGAL PROCEEDINGS AND CONTINGENCIES:

From time to time in the ordinary course of business, the Company becomes involved in lawsuits, or customers and distributors may make claims against the Company.

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.

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 under way, 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 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.

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.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 condensed consolidated statements of income (loss).

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

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

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

The Company disagrees with the jury’s verdicts against the Company and plans to appeal 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.

INDEMNIFICATIONS:

The Company sells products to its distributors under contracts, collectively referred to as Distributor Sales Agreements (“DSA”).

The Company also, from time to time, has granted a specific indemnification right to individual customers.

The Company believes its internal development processes and other policies and practices limit its exposure related to such indemnifications.

In addition, the Company requires its employees to sign a proprietary information and inventions agreement, which assigns the rights to its employees’ development work to the Company.

POWER INTEGRATIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

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

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

The purchase is intended to augment the Company’s development of high-power GaN switching technology.

The acquisition has been accounted for using the acquisition method of accounting in accordance with ASC 805 - Business Combinations.

Under the acquisition method of accounting, the total purchase consideration of the acquisition is allocated to the tangible assets and identifiable intangible assets acquired based on their relative fair values.

The excess of the purchase consideration over the net tangible and identifiable intangible assets is recorded as goodwill, the amount of which represents the expected benefits to the Company of future technology and the knowledgeable and experienced employees who joined the Company.

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

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.

The Company considered the number of engineers required, salaries and related benefits, allocated overhead and the development time required to recreate the technology.

The Company will record the in-process research and development as an intangible asset with an indefinite life until completion or abandonment of the associated research and development efforts and will begin amortizing the value over the estimated life of the technology upon completion of development.

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.

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

SUBSEQUENT EVENTS:

Departure of Chief Financial Officer

As disclosed in the Current Report on Form 8-K filed with the SEC on September 22, 2025, the Company’s Vice President and Chief Financial Officer and Principal Accounting Officer, Sandeep Nayyar, informed the Company on September 16, 2025 of his resignation from his positions effective October 4, 2025.

Pursuant to this announcement, Mr.

Nayyar resigned on October 4, 2025, at which time Robert Eric Verity, the Company’s Senior Director of Finance, became the Company’s interim Chief Financial Officer and Principal Accounting Officer.

Nayyar’s resignation is not the result of any disagreement with the Company related to its operations, policies, or practices.

BANK LINES OF CREDIT

In 2016, the Company entered into a credit agreement with Wells Fargo Bank, National Association (the "Prior Credit Agreement") that provided the Company with a $ 75.0 million revolving line of credit to use for general corporate purposes and a $ 20.0 million sub-limit for the issuance of standby and trade letters of credit with an interest rate based on the Secured Overnight Financing Rates (“SOFR”).

The Prior Credit Agreement had a term which originally extended to June 7, 2026;

the Prior Credit Agreement was terminated on April 10, 2026.

The Company was compliant with all covenants and had no advances outstanding under the Prior Credit Agreement as of termination of the Prior Credit Agreement.

On February 24, 2026, the Company entered into that certain Loan Agreement with PNC Bank, National Association (the "PNC Loan Agreement") to replace the Prior Credit Agreement.

The PNC Loan Agreement became effective and available for use on April 10, 2026 when the Company terminated the Prior Credit Agreement.

The PNC Loan Agreement provides the Company with a $ 100.0 million revolving line of credit with a $ 25.0 million sub-limit for the issuance of standby and trade letters of credit.

The interest rate on outstanding borrowings under the PNC Loan Agreement is based on SOFR plus 1.60 %.

The Company’s obligations under the PNC Loan Agreement are unsecured.

The PNC Loan Agreement term extends through February 24, 2031;

all advances under the revolving line of credit, together with all accrued and unpaid interest, fees and other obligations owing thereon, will become due on such date, or earlier upon the occurrence of an Event of Default (as defined in the PNC Loan Agreement).

The PNC Loan Agreement requires the Company to maintain a Minimum Liquidity of at least $ 50.0 million as of the last day of each fiscal quarter and a ratio of Funded Indebtedness to Adjusted EBITDA (each as defined in the PNC Loan Agreement) of less than 2.00 to 1.00 as of the last day of each fiscal quarter and determined on a rolling four-quarter basis.

The PNC Loan Agreement contains representations and warranties, affirmative covenants and conditions precedent to borrowing usual and customary for credit agreements of this type.

The PNC Loan Agreement contains negative covenants, including negative covenants that restrict, subject to certain exceptions, the Company’s ability to:

● use the proceeds of any credit extended under the PNC Loan Agreement except to refinance all indebtedness outstanding under the Prior Credit Agreement and for working capital or other general business purposes;

● create, incur, assume or permit to exist any indebtedness or liabilities resulting from borrowings, loans or advances;

● mortgage, pledge, grant or permit to exist a security interest in, or lien upon, all or any portion of the Company’s assets;

● guarantee or become liable for any obligations or liabilities of any other person or entity;

● purchase or hold beneficially any stock, or other securities or evidence of indebtedness of, or make or have outstanding, any loans or advances to, or otherwise extend credit to, or make any investment or acquire any interest whatsoever in, any other person, firm, corporation or other entity;

● liquidate, dissolve, merge or consolidate with or into any person, firm, corporation or other entity, or make acquisitions of all or substantially all of the property or assets of any person, firm, corporation or other entity, or sell, lease, transfer or otherwise dispose of all or a substantial part of the Company’s property, assets, operations or business.

The Company was compliant with all covenants and had no advances outstanding under the PNC Loan Agreement as of April 10, 2026.

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