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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2025
or
☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ______ to ______
Commission File Number 000-23441
POWER INTEGRATIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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94-3065014 |
(State or Other Jurisdiction of Incorporation or Organization) |
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(I.R.S. Employer Identification No.) |
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5245 Hellyer Avenue |
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San Jose, |
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California |
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95138 |
(Address of Principal Executive Offices) |
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(Zip Code) |
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(408) 414-9200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
Common Stock |
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POWI |
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The Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer |
☒ |
Accelerated Filer |
☐ |
Non-accelerated Filer |
☐ |
Smaller Reporting Company |
☐ |
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Emerging Growth Company |
☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class |
Shares Outstanding at August 4, 2025 |
Common Stock, $0.001 par value |
56,095,582 |
POWER INTEGRATIONS, INC.
TABLE OF CONTENTS
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Condensed Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024 (Unaudited) |
4 |
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5 |
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6 |
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7 |
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8 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
9 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
23 |
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32 |
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37 |
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2
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes a number of forward-looking statements that involve many risks and uncertainties. Forward-looking statements are identified by the use of the words “would,” “could,” “will,” “may,” “expect,” “believe,” “should,” “anticipate,” “if,” “future,” “intend,” “plan,” “estimate,” “potential,” “target,” “seek,” or “continue” and similar words and phrases, including the negatives of these terms, or other variations of these terms, that denote future events. These statements reflect our current views with respect to future events and our potential financial performance and are subject to risks and uncertainties that could cause our actual results and financial position to differ materially and/or adversely from what is projected or implied in any forward-looking statements included in this Quarterly Report on Form 10-Q. These factors include, but are not limited to: changes in trade policies among the United States and other countries could reduce demand for end products that incorporate our integrated circuits, which could have a material adverse effect on our revenues and operating results; if demand for our products declines in our major end markets, our net revenues will decline; we do not have long-term contracts with any of our customers and if they fail to place orders for our products, or if they cancel or reschedule orders, our operating results and our business may suffer; our products are sold through distributors, which limits our direct interaction with our end customers, therefore reducing our ability to forecast sales and increasing the complexity of our business; if our products do not penetrate additional markets, our business will not grow as we expect; intense competition in the high-voltage power supply industry may lead to a decrease in our average selling price and reduced sales volume of our products; we depend on third-party suppliers to provide us with wafers for our products, and if they fail to provide us sufficient quantities of wafers, our business may suffer; if we are unable to adequately protect or enforce our intellectual property rights, we could lose market share, incur costly litigation expenses, suffer incremental price erosion or lose valuable assets, any of which could harm our operations and negatively impact our profitability; and the other risk factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, in this Quarterly Report on Form 10-Q and under the caption - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Quarterly Report on Form 10-Q. We make these forward-looking statements based upon information available on the date of this Quarterly Report on Form 10-Q, and we expressly disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information or otherwise, except as required by laws.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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(In thousands) |
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June 30, 2025 |
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December 31, 2024 |
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ASSETS |
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CURRENT ASSETS: |
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Cash and cash equivalents |
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$ |
66,935 |
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$ |
50,972 |
Short-term marketable securities |
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201,801 |
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249,023 |
Accounts receivable, net |
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27,583 |
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27,172 |
Inventories |
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168,396 |
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165,612 |
Prepaid expenses and other current assets |
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18,188 |
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21,260 |
Total current assets |
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482,903 |
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514,039 |
PROPERTY AND EQUIPMENT, net |
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147,955 |
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149,562 |
INTANGIBLE ASSETS, net |
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7,660 |
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8,075 |
GOODWILL |
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95,271 |
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95,271 |
DEFERRED TAX ASSETS |
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37,174 |
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36,485 |
OTHER ASSETS |
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26,574 |
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25,394 |
Total assets |
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$ |
797,537 |
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$ |
828,826 |
LIABILITIES AND STOCKHOLDERS’ EQUITY |
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CURRENT LIABILITIES: |
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Accounts payable |
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$ |
31,044 |
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$ |
29,789 |
Accrued payroll and related expenses |
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14,881 |
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13,987 |
Taxes payable |
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751 |
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961 |
Other accrued liabilities |
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18,323 |
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10,580 |
Total current liabilities |
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64,999 |
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55,317 |
LONG-TERM INCOME TAXES PAYABLE |
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4,063 |
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3,871 |
OTHER LIABILITIES |
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24,687 |
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19,866 |
Total liabilities |
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93,749 |
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79,054 |
COMMITMENTS AND CONTINGENCIES (Notes 11, 13 and 14) |
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STOCKHOLDERS’ EQUITY: |
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Common stock |
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21 |
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22 |
Additional paid-in capital |
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— |
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18,734 |
Accumulated other comprehensive loss |
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(1,287) |
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(3,023) |
Retained earnings |
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705,054 |
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734,039 |
Total stockholders’ equity |
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703,788 |
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749,772 |
Total liabilities and stockholders’ equity |
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$ |
797,537 |
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$ |
828,826 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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(In thousands, except per share amounts) |
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2025 |
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2024 |
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2025 |
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2024 |
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NET REVENUES |
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$ |
115,852 |
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$ |
106,198 |
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$ |
221,381 |
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$ |
197,886 |
COST OF REVENUES |
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51,898 |
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49,665 |
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99,192 |
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93,573 |
GROSS PROFIT |
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63,954 |
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56,533 |
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122,189 |
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104,313 |
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OPERATING EXPENSES: |
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Research and development |
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25,991 |
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26,047 |
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50,086 |
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49,272 |
Sales and marketing |
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18,349 |
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18,053 |
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34,724 |
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33,775 |
General and administrative |
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11,808 |
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10,475 |
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22,855 |
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18,838 |
Other operating expenses |
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9,151 |
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— |
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9,151 |
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— |
Total operating expenses |
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65,299 |
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54,575 |
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116,816 |
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101,885 |
INCOME (LOSS) FROM OPERATIONS |
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(1,345) |
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1,958 |
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5,373 |
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2,428 |
OTHER INCOME |
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2,690 |
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3,189 |
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5,857 |
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6,691 |
INCOME BEFORE INCOME TAXES |
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1,345 |
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5,147 |
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11,230 |
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9,119 |
PROVISION (BENEFIT) FOR INCOME TAXES |
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(24) |
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298 |
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1,071 |
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316 |
NET INCOME |
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$ |
1,369 |
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$ |
4,849 |
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$ |
10,159 |
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$ |
8,803 |
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EARNINGS PER SHARE: |
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Basic |
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$ |
0.02 |
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$ |
0.09 |
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$ |
0.18 |
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$ |
0.15 |
Diluted |
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$ |
0.02 |
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$ |
0.09 |
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$ |
0.18 |
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$ |
0.15 |
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SHARES USED IN PER SHARE CALCULATION: |
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Basic |
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56,274 |
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56,780 |
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56,571 |
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56,807 |
Diluted |
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56,387 |
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56,984 |
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56,787 |
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57,104 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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(In thousands) |
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2025 |
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2024 |
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2025 |
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2024 |
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Net income |
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$ |
1,369 |
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$ |
4,849 |
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$ |
10,159 |
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$ |
8,803 |
Other comprehensive income (loss), net of tax: |
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Foreign currency translation adjustments, net of $0 tax in each of the three and six months ended June 30, 2025 and 2024 |
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657 |
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(271) |
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1,047 |
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(637) |
Unrealized gain (loss) on marketable securities, net of ($49) and ($166) taxes in the three and six months ended June 30, 2025, respectively, and $0 in each of the three and six months ended June 30, 2024 |
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238 |
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(317) |
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689 |
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(1,005) |
Amortization of defined benefit pension items, net of $4 tax in each of the three and six months ended June 30, 2025, respectively, and $7 and $15 in the three and six months ended June 30, 2024, respectively |
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1 |
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(42) |
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— |
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(85) |
Total other comprehensive income (loss) |
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896 |
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(630) |
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1,736 |
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(1,727) |
TOTAL COMPREHENSIVE INCOME |
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$ |
2,265 |
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$ |
4,219 |
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$ |
11,895 |
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$ |
7,076 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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(In thousands) |
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2025 |
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2024 |
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2025 |
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2024 |
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Common stock |
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Beginning balance |
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$ |
22 |
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$ |
22 |
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$ |
22 |
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$ |
23 |
Repurchase of common stock |
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(1) |
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— |
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(1) |
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(1) |
Ending balance |
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21 |
|
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22 |
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21 |
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22 |
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|
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Additional paid-in capital |
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|
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Beginning balance |
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7,106 |
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— |
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18,734 |
|
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— |
Common stock issued under employee stock plans |
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— |
|
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— |
|
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2,787 |
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|
2,691 |
Repurchase of common stock |
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(17,183) |
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|
(11,035) |
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(40,281) |
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(20,140) |
Stock-based compensation |
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|
10,077 |
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|
11,035 |
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|
18,760 |
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|
17,449 |
Ending balance |
|
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— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
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(2,183) |
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|
(2,559) |
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(3,023) |
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(1,462) |
Other comprehensive income (loss) |
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|
896 |
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(630) |
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1,736 |
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(1,727) |
Ending balance |
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(1,287) |
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(3,189) |
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(1,287) |
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(3,189) |
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Retained earnings |
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Beginning balance |
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730,870 |
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|
740,715 |
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|
734,039 |
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|
753,680 |
Net income |
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1,369 |
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|
4,849 |
|
|
10,159 |
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|
8,803 |
Repurchase of common stock |
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(15,376) |
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(303) |
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(15,376) |
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(5,838) |
Payment of dividends to stockholders |
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(11,809) |
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(11,352) |
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(23,768) |
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|
(22,736) |
Ending balance |
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|
705,054 |
|
|
733,909 |
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|
705,054 |
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|
733,909 |
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|
|
|
|
|
|
|
|
|
|
|
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Total stockholders’ equity |
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$ |
703,788 |
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$ |
730,742 |
|
$ |
703,788 |
|
$ |
730,742 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
7
POWER INTEGRATIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Six Months Ended |
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June 30, |
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(In thousands) |
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2025 |
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2024 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
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$ |
10,159 |
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$ |
8,803 |
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
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14,246 |
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|
17,106 |
Amortization of intangibles |
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|
415 |
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|
863 |
Loss on disposal of property and equipment |
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— |
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|
8 |
Stock-based compensation expense |
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|
18,760 |
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|
17,449 |
Accretion of discount on marketable securities |
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(721) |
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|
(909) |
Deferred income taxes |
|
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(854) |
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|
(3,482) |
Increase (decrease) in accounts receivable allowance for credit losses |
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(381) |
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|
326 |
Change in operating assets and liabilities: |
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|
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Accounts receivable |
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(30) |
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(2,024) |
Inventories |
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(2,784) |
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(6,720) |
Prepaid expenses and other assets |
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6,405 |
|
|
2,072 |
Accounts payable |
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|
248 |
|
|
(117) |
Taxes payable and accrued liabilities |
|
|
9,995 |
|
|
161 |
Net cash provided by operating activities |
|
|
55,458 |
|
|
33,536 |
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|
|
|
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|
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CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchases of property and equipment |
|
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(11,652) |
|
|
(8,510) |
Purchases of marketable securities |
|
|
(47,696) |
|
|
(77,830) |
Proceeds from sales and maturities of marketable securities |
|
|
96,492 |
|
|
85,392 |
Net cash provided by (used in) investing activities |
|
|
37,144 |
|
|
(948) |
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Issuance of common stock under employee stock plans |
|
|
2,787 |
|
|
2,691 |
Repurchase of common stock |
|
|
(55,658) |
|
|
(25,979) |
Payments of dividends to stockholders |
|
|
(23,768) |
|
|
(22,736) |
Proceeds from draw on line of credit |
|
|
13,000 |
|
|
— |
Payments on line of credit |
|
|
(13,000) |
|
|
— |
Net cash used in financing activities |
|
|
(76,639) |
|
|
(46,024) |
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
|
|
15,963 |
|
|
(13,436) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD |
|
|
50,972 |
|
|
63,929 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
|
$ |
66,935 |
|
$ |
50,493 |
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: |
|
|
|
|
|
|
Unpaid property and equipment |
|
$ |
3,700 |
|
$ |
1,306 |
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
Cash paid for income taxes, net |
|
$ |
2,690 |
|
$ |
4,498 |
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
8
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The condensed consolidated financial statements include the accounts of Power Integrations, Inc., a Delaware corporation (the “Company”), and its wholly owned subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.
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. GAAP”). The results for interim periods are not necessarily indicative of the results for the entire year. The condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto for the year ended December 31, 2024, included in its Form 10-K filed on February 7, 2025, with the Securities and Exchange Commission.
2. SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING PRONOUNCEMENTS:
Significant Accounting Policies and Estimates
No material changes have been made to the Company’s significant accounting policies disclosed in Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, of the Company’s financial statements set forth in Item 8 of the Company’s Annual Report on Form 10-K, filed on February 7, 2025, for the year ended December 31, 2024.
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. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact that the updated standard will have on its financial statement disclosures.
3. COMPONENTS OF THE COMPANY’S CONDENSED CONSOLIDATED BALANCE SHEETS:
Accounts Receivable
|
|
June 30, |
|
December 31, |
||
(In thousands) |
|
2025 |
|
2024 |
||
Accounts receivable trade |
|
$ |
60,121 |
|
$ |
57,308 |
Allowance for ship and debit |
|
|
(30,077) |
|
|
(26,446) |
Allowance for stock rotation and rebate |
|
|
(2,406) |
|
|
(3,254) |
Allowance for credit losses |
|
|
(55) |
|
|
(436) |
Total |
|
$ |
27,583 |
|
$ |
27,172 |
9
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Beginning balance |
|
$ |
(55) |
|
$ |
(844) |
|
$ |
(436) |
|
$ |
(681) |
Provision for credit loss expense |
|
|
(54) |
|
|
(163) |
|
|
(104) |
|
|
(847) |
Receivables written off |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
Recoveries |
|
|
54 |
|
|
— |
|
|
485 |
|
|
521 |
Ending balance |
|
$ |
(55) |
|
$ |
(1,007) |
|
$ |
(55) |
|
$ |
(1,007) |
Inventories
|
|
June 30, |
|
December 31, |
||
(In thousands) |
|
2025 |
|
2024 |
||
Raw materials |
|
$ |
105,566 |
|
$ |
101,414 |
Work-in-process |
|
|
31,680 |
|
|
27,271 |
Finished goods |
|
|
31,150 |
|
|
36,927 |
Total |
|
$ |
168,396 |
|
$ |
165,612 |
Intangible Assets
|
|
June 30, 2025 |
|
December 31, 2024 |
||||||||||||||
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Accumulated |
|
|
|
||
(In thousands) |
|
Gross |
|
Amortization |
|
Net |
|
Gross |
|
Amortization |
|
Net |
||||||
Domain name |
|
$ |
1,261 |
|
$ |
— |
|
$ |
1,261 |
|
$ |
1,261 |
|
$ |
— |
|
$ |
1,261 |
In-process research and development |
|
|
4,930 |
|
|
— |
|
|
4,930 |
|
|
4,930 |
|
|
— |
|
|
4,930 |
Developed technology |
|
|
37,960 |
|
|
(36,787) |
|
|
1,173 |
|
|
37,960 |
|
|
(36,492) |
|
|
1,468 |
Technology licenses |
|
|
1,926 |
|
|
(1,630) |
|
|
296 |
|
|
1,926 |
|
|
(1,510) |
|
|
416 |
Total intangible assets |
|
$ |
46,077 |
|
$ |
(38,417) |
|
$ |
7,660 |
|
$ |
46,077 |
|
$ |
(38,002) |
|
$ |
8,075 |
The estimated future amortization expense related to finite-lived intangible assets at June 30, 2025, is as follows:
|
|
Estimated |
|
|
|
Amortization |
|
Fiscal Year |
|
(In thousands) |
|
2025 (remaining six months) |
|
$ |
417 |
2026 |
|
|
687 |
2027 |
|
|
365 |
Total* |
|
$ |
1,469 |
* |
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. |
10
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024, were as follows:
|
Unrealized Gains |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
and Losses on |
|
Defined Benefit |
|
Foreign Currency |
|
|
|
|||||||||||||||
|
Marketable Securities |
|
Pension Items |
|
Items |
|
Total |
||||||||||||||||
|
Three Months Ended |
|
Three Months Ended |
|
Three Months Ended |
|
Three Months Ended |
||||||||||||||||
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
||||||||||||||||
(In thousands) |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
Beginning balance |
$ |
1,144 |
|
$ |
(432) |
|
$ |
98 |
|
$ |
1,542 |
|
$ |
(3,425) |
|
$ |
(3,669) |
|
$ |
(2,183) |
|
$ |
(2,559) |
Other comprehensive income (loss) before reclassifications |
|
238 |
|
|
(317) |
|
|
— |
|
|
— |
|
|
657 |
|
|
(271) |
|
|
895 |
|
|
(588) |
Amounts reclassified from accumulated other comprehensive income (loss) |
|
— |
|
|
— |
|
|
1 |
(1) |
|
(42) |
(1) |
|
— |
|
|
— |
|
|
1 |
|
|
(42) |
Net-current period other comprehensive income (loss) |
|
238 |
|
|
(317) |
|
|
1 |
|
|
(42) |
|
|
657 |
|
|
(271) |
|
|
896 |
|
|
(630) |
Ending balance |
$ |
1,382 |
|
$ |
(749) |
|
$ |
99 |
|
$ |
1,500 |
|
$ |
(2,768) |
|
$ |
(3,940) |
|
$ |
(1,287) |
|
$ |
(3,189) |
| (1) | This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost for the three months ended June 30, 2025 and 2024. |
|
Unrealized Gains |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
and Losses on |
|
Defined Benefit |
|
Foreign Currency |
|
|
|
|||||||||||||||
|
Marketable Securities |
|
Pension Items |
|
Items |
|
Total |
||||||||||||||||
|
Six Months Ended |
|
Six Months Ended |
|
Six Months Ended |
|
Six Months Ended |
||||||||||||||||
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
||||||||||||||||
(In thousands) |
2025 |
|
2024 |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
Beginning balance |
$ |
693 |
|
$ |
256 |
|
$ |
99 |
|
$ |
1,585 |
|
$ |
(3,815) |
|
$ |
(3,303) |
|
$ |
(3,023) |
|
$ |
(1,462) |
Other comprehensive income (loss) before reclassifications |
|
689 |
|
|
(1,005) |
|
|
— |
|
|
— |
|
|
1,047 |
|
|
(637) |
|
|
1,736 |
|
|
(1,642) |
Amounts reclassified from accumulated other comprehensive loss |
|
— |
|
|
— |
|
|
— |
(1) |
|
(85) |
(1) |
|
— |
|
|
— |
|
|
— |
|
|
(85) |
Net-current period other comprehensive income (loss) |
|
689 |
|
|
(1,005) |
|
|
— |
|
|
(85) |
|
|
1,047 |
|
|
(637) |
|
|
1,736 |
|
|
(1,727) |
Ending balance |
$ |
1,382 |
|
$ |
(749) |
|
$ |
99 |
|
$ |
1,500 |
|
$ |
(2,768) |
|
$ |
(3,940) |
|
$ |
(1,287) |
|
$ |
(3,189) |
| (1) | This component of accumulated other comprehensive income (loss) is included in the computation of net periodic pension cost for the six months ended June 30, 2025 and 2024. |
4. FAIR VALUE MEASUREMENTS:
The FASB established a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices for identical assets in active markets; (Level 2) inputs other than the quoted prices in active markets that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
11
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 June 30, 2025 and December 31, 2024, was as follows:
|
|
Fair Value Measurement at |
|||||||
|
|
June 30, 2025 |
|||||||
|
|
|
|
|
Quoted Prices in |
|
|
|
|
|
|
|
|
|
Active Markets for |
|
Significant Other |
||
|
|
|
|
|
Identical Assets |
|
Observable Inputs |
||
(In thousands) |
|
Total Fair Value |
|
(Level 1) |
|
(Level 2) |
|||
Commercial paper |
|
$ |
8,206 |
|
$ |
— |
|
$ |
8,206 |
Corporate securities |
|
|
201,801 |
|
|
— |
|
|
201,801 |
Money market funds |
|
|
989 |
|
|
989 |
|
|
— |
Total |
|
$ |
210,996 |
|
$ |
989 |
|
$ |
210,007 |
|
|
Fair Value Measurement at |
|||||||
|
|
December 31, 2024 |
|||||||
|
|
|
|
|
Quoted Prices in |
|
|
|
|
|
|
|
|
|
Active Markets for |
|
Significant Other |
||
|
|
|
|
|
Identical Assets |
|
Observable Inputs |
||
(In thousands) |
|
Total Fair Value |
|
(Level 1) |
|
(Level 2) |
|||
Commercial paper |
|
$ |
2,048 |
|
$ |
— |
|
$ |
2,048 |
Corporate securities |
|
|
249,023 |
|
|
— |
|
|
249,023 |
Money market funds |
|
|
567 |
|
|
567 |
|
|
— |
U.S. government securities |
|
|
750 |
|
|
— |
|
|
750 |
Total |
|
$ |
252,388 |
|
$ |
567 |
|
$ |
251,821 |
The Company did not transfer any investments between Level 1 and Level 2 of the fair-value hierarchy in the six months ended June 30, 2025 and the twelve months ended December 31, 2024.
5. MARKETABLE SECURITIES:
Amortized cost and estimated fair market value of marketable securities classified as available-for-sale (excluding cash equivalents) at June 30, 2025, were as follows:
|
|
Amortized |
|
Gross Unrealized |
|
Estimated Fair |
||||||
(In thousands) |
|
Cost |
|
Gains |
|
Losses |
|
Market Value |
||||
Investments due in 3 months or less: |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate securities |
|
$ |
15,661 |
|
$ |
7 |
|
$ |
(10) |
|
$ |
15,658 |
Total |
|
|
15,661 |
|
|
7 |
|
|
(10) |
|
|
15,658 |
Investments due in 4-12 months: |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate securities |
|
|
25,976 |
|
|
94 |
|
|
(6) |
|
|
26,064 |
Total |
|
|
25,976 |
|
|
94 |
|
|
(6) |
|
|
26,064 |
Investments due in 12 months or greater: |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate securities |
|
|
158,421 |
|
|
1,663 |
|
|
(5) |
|
|
160,079 |
Total |
|
|
158,421 |
|
|
1,663 |
|
|
(5) |
|
|
160,079 |
Total marketable securities |
|
$ |
200,058 |
|
$ |
1,764 |
|
$ |
(21) |
|
$ |
201,801 |
Accrued interest receivable was $2.5 million at June 30, 2025 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.
12
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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:
|
|
Amortized |
|
Gross Unrealized |
|
Estimated Fair |
||||||
(In thousands) |
|
Cost |
|
Gains |
|
Losses |
|
Market Value |
||||
Investments due in 3 months or less: |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate securities |
|
$ |
10,972 |
|
$ |
4 |
|
$ |
(3) |
|
$ |
10,973 |
Total |
|
|
10,972 |
|
|
4 |
|
|
(3) |
|
|
10,973 |
Investments due in 4-12 months: |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate securities |
|
|
87,346 |
|
|
159 |
|
|
(19) |
|
|
87,486 |
Total |
|
|
87,346 |
|
|
159 |
|
|
(19) |
|
|
87,486 |
Investments due in 12 months or greater: |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate securities |
|
|
149,817 |
|
|
860 |
|
|
(113) |
|
|
150,564 |
Total |
|
|
149,817 |
|
|
860 |
|
|
(113) |
|
|
150,564 |
Total marketable securities |
|
$ |
248,135 |
|
$ |
1,023 |
|
$ |
(135) |
|
$ |
249,023 |
Accrued interest receivable was $2.8 million at December 31, 2024 and was recorded within prepaid expenses and other current assets on the condensed consolidated balance sheet.
The following table summarizes marketable securities classified as available-for-sale (excluding cash equivalents) in a continuous unrealized loss position for which an allowance for credit losses was not recorded at June 30, 2025:
|
|
Less Than 12 Months |
|
12 Months or Longer |
|
Total |
||||||||||||
|
|
Estimated |
|
Gross |
|
Estimated |
|
Gross |
|
Estimated |
|
Gross |
||||||
|
|
Fair Market |
|
Unrealized |
|
Fair Market |
|
Unrealized |
|
Fair Market |
|
Unrealized |
||||||
(In thousands) |
|
Value |
|
Losses |
|
Value |
|
Losses |
|
Value |
|
Losses |
||||||
Corporate securities |
|
$ |
9,205 |
|
$ |
(17) |
|
$ |
2,925 |
|
$ |
(4) |
|
$ |
12,130 |
|
$ |
(21) |
Total marketable securities |
|
$ |
9,205 |
|
$ |
(17) |
|
$ |
2,925 |
|
$ |
(4) |
|
$ |
12,130 |
|
$ |
(21) |
In the three and six months ended June 30, 2025 and 2024, no unrealized losses on marketable securities were recognized in income.
The Company does not intend to sell and it is unlikely that it will be required to sell the securities held prior to their anticipated recovery. The issuers are high quality (investment grade) and the decline in fair value is largely due to changes in interest rates. Additionally, the issuers continue to make timely interest payments on the marketable securities with the fair value expected to recover as they reach maturity.
6. STOCK-BASED COMPENSATION:
The following table summarizes the stock-based compensation expense recognized in accordance with ASC 718-10 for the three and six months ended June 30, 2025 and 2024:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Cost of revenues |
|
$ |
592 |
|
$ |
707 |
|
$ |
1,249 |
|
$ |
1,053 |
Research and development |
|
|
3,190 |
|
|
3,885 |
|
|
5,440 |
|
|
6,310 |
Sales and marketing |
|
|
1,922 |
|
|
2,510 |
|
|
3,508 |
|
|
4,114 |
General and administrative |
|
|
4,373 |
|
|
3,933 |
|
|
8,563 |
|
|
5,972 |
Total stock-based compensation expense |
|
$ |
10,077 |
|
$ |
11,035 |
|
$ |
18,760 |
|
$ |
17,449 |
13
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Stock-based compensation expense in the three months ended June 30, 2025, was approximately $10.1 million, comprising approximately $5.1 million related to restricted stock unit (“RSU”) awards, $4.6 million related to performance-based (“PSU”) awards and long-term performance-based (“PRSU”) awards and $0.4 million related to the Company’s employee stock purchase plan. Stock-based compensation expense in the six months ended June 30, 2025, was approximately $18.8 million, comprising approximately $10.9 million related to RSUs, $7.1 million related to PSUs and PRSUs and $0.8 million related to the Company’s employee stock purchase plan.
Stock-based compensation expense in the three months ended June 30, 2024, was approximately $11.0 million, comprising approximately $6.3 million related to RSUs, $4.3 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 six months ended June 30, 2024, was approximately $17.4 million, comprising approximately $12.4 million related to RSUs, $4.3 million related to PSUs and PRSUs and $0.7 million related to the Company’s employee stock purchase plan.
PSU Awards
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 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 June 30, 2025 and activity during the six months ended, is presented below:
|
|
|
|
|
|
Weighted-Average |
|
|
|
|
|
|
|
|
Weighted-Average |
|
Remaining |
|
Aggregate |
||
|
|
Shares |
|
Grant Date Fair |
|
Contractual Term |
|
Intrinsic Value |
||
|
|
(In thousands) |
|
Value Per Share |
|
(In years) |
|
(In thousands) |
||
Outstanding at January 1, 2025 |
|
66 |
|
$ |
69.95 |
|
|
|
|
|
Granted |
|
198 |
|
$ |
54.45 |
|
|
|
|
|
Vested |
|
(66) |
|
$ |
69.95 |
|
|
|
|
|
Forfeited |
|
(7) |
|
$ |
58.04 |
|
|
|
|
|
Outstanding at June 30, 2025 |
|
191 |
|
$ |
54.30 |
|
0.50 |
|
$ |
10,664 |
Outstanding and expected to vest at June 30, 2025 |
|
168 |
|
|
|
|
0.50 |
|
$ |
9,374 |
PRSU Awards
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.
14
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 June 30, 2025 and activity during the six months ended, is presented below:
|
|
|
|
|
|
|
Weighted-Average |
|
Aggregate |
|
|
|
|
|
Weighted-Average |
|
Remaining |
|
Intrinsic |
||
|
|
Shares |
|
Grant Date Fair |
|
Contractual Term |
|
Value |
||
|
|
(In thousands) |
|
Value Per Share |
|
(In years) |
|
(In thousands) |
||
Outstanding at January 1, 2025 |
|
317 |
|
$ |
73.85 |
|
|
|
|
|
Granted |
|
202 |
|
$ |
56.40 |
|
|
|
|
|
Vested |
|
— |
|
|
— |
|
|
|
|
|
Forfeited |
|
— |
|
|
— |
|
|
|
|
|
Outstanding at June 30, 2025 |
|
519 |
|
$ |
67.05 |
|
1.62 |
|
$ |
28,990 |
Outstanding and expected to vest at June 30, 2025 |
|
379 |
|
|
|
|
2.03 |
|
$ |
21,208 |
RSU Awards
A summary of RSUs outstanding as of June 30, 2025 and activity during the six months ended, is presented below:
|
|
|
|
|
|
|
Weighted-Average |
|
Aggregate |
|
|
|
|
|
Weighted-Average |
|
Remaining |
|
Intrinsic |
||
|
|
Shares |
|
Grant Date Fair |
|
Contractual Term |
|
Value |
||
|
|
(In thousands) |
|
Value Per Share |
|
(In years) |
|
(In thousands) |
||
Outstanding at January 1, 2025 |
|
929 |
|
$ |
70.82 |
|
|
|
|
|
Granted |
|
426 |
|
$ |
51.42 |
|
|
|
|
|
Vested |
|
(312) |
|
$ |
67.64 |
|
|
|
|
|
Forfeited |
|
(48) |
|
$ |
67.88 |
|
|
|
|
|
Outstanding at June 30, 2025 |
|
995 |
|
$ |
63.68 |
|
1.85 |
|
$ |
55,596 |
Outstanding and expected to vest at June 30, 2025 |
|
914 |
|
|
|
|
1.79 |
|
$ |
51,106 |
7. SIGNIFICANT CUSTOMERS AND GEOGRAPHIC NET REVENUES:
Customer Concentration
The Company’s top ten customers accounted for approximately 81% of net revenues for each of the three and six months ended June 30, 2025 and approximately 80% and 78%, respectively, in 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. Similarly, merchant power-supply manufacturers sell power supplies incorporating the Company’s products to a broad range of OEMs. Sales to distributors were $81.3 million and $156.5 million in the three and six months ended June 30, 2025, respectively, and $73.5 million and $139.9 million, respectively, in the corresponding periods of 2024. Direct sales to OEMs and power-supply manufacturers accounted for the remainder.
15
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following customers represented 10% or more of the Company’s net revenues for the respective periods:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
Customer |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Avnet |
|
33 |
% |
|
28 |
% |
|
32 |
% |
|
29 |
% |
Salcomp Group |
|
11 |
% |
|
* |
|
|
* |
|
|
* |
|
Honestar Technologies Co., Ltd. |
|
* |
|
|
12 |
% |
|
* |
|
|
12 |
% |
*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.
Concentration of Credit Risk
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.
As of June 30, 2025 and December 31, 2024, 89% 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 June 30, 2025 and December 31, 2024:
|
|
June 30, |
|
December 31, |
||
Customer |
|
2025 |
|
2024 |
||
Avnet |
|
38 |
% |
|
32 |
% |
Salcomp Group |
|
13 |
% |
|
13 |
% |
Honestar Technologies Co., Ltd. |
|
* |
|
|
12 |
% |
*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
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:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Americas: |
|
$ |
5,850 |
|
$ |
5,281 |
|
$ |
11,567 |
|
$ |
10,286 |
EMEA: |
|
|
|
|
|
|
|
|
|
|
|
|
Germany |
|
|
6,947 |
|
|
5,059 |
|
|
13,063 |
|
|
10,948 |
Other EMEA |
|
|
5,809 |
|
|
5,946 |
|
|
10,984 |
|
|
12,260 |
APAC: |
|
|
|
|
|
|
|
|
|
|
|
|
Hong Kong/China |
|
|
67,691 |
|
|
63,124 |
|
|
124,179 |
|
|
112,804 |
India |
|
|
4,545 |
|
|
6,400 |
|
|
9,872 |
|
|
11,780 |
Korea |
|
|
9,685 |
|
|
8,933 |
|
|
21,954 |
|
|
18,453 |
Taiwan |
|
|
6,617 |
|
|
5,294 |
|
|
13,619 |
|
|
10,052 |
Other APAC |
|
|
8,708 |
|
|
6,161 |
|
|
16,143 |
|
|
11,303 |
Total net revenues |
|
$ |
115,852 |
|
$ |
106,198 |
|
$ |
221,381 |
|
$ |
197,886 |
16
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. STOCKHOLDERS’ EQUITY:
Common Stock Shares Outstanding
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Beginning balance |
|
|
56,692 |
|
|
56,759 |
|
|
56,837 |
|
|
56,738 |
Common stock issued under employee stock plans |
|
|
171 |
|
|
183 |
|
|
430 |
|
|
411 |
Repurchased |
|
|
(705) |
|
|
(164) |
|
|
(1,109) |
|
|
(371) |
Ending balance |
|
|
56,158 |
|
|
56,778 |
|
|
56,158 |
|
|
56,778 |
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, 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 the three months ended June 30, 2025, the Company purchased approximately 0.7 million shares for $32.6 million. In the six months ended June 30, 2025, the Company repurchased 1.1 million shares for $55.7 million. As of June 30, 2025, $42.4 million remained on the Company’s repurchase authorization. The program has no expiration date. 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.
For the three and six months ended June 30, 2025 and 2024, cash dividends declared and paid were as follows:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands, except per share amounts) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Dividends declared and paid |
|
$ |
11,809 |
|
$ |
11,352 |
|
$ |
23,768 |
|
$ |
22,736 |
Dividends declared per common share |
|
$ |
0.21 |
|
$ |
0.20 |
|
$ |
0.42 |
|
$ |
0.40 |
9. 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 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.
17
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
A summary of the earnings per share calculation is as follows:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands, except per share amounts) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Basic earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,369 |
|
$ |
4,849 |
|
$ |
10,159 |
|
$ |
8,803 |
Weighted-average common shares |
|
|
56,274 |
|
|
56,780 |
|
|
56,571 |
|
|
56,807 |
Basic earnings per share |
|
$ |
0.02 |
|
$ |
0.09 |
|
$ |
0.18 |
|
$ |
0.15 |
Diluted earnings per share: (1) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
1,369 |
|
$ |
4,849 |
|
$ |
10,159 |
|
$ |
8,803 |
Weighted-average common shares |
|
|
56,274 |
|
|
56,780 |
|
|
56,571 |
|
|
56,807 |
Effect of dilutive awards: |
|
|
|
|
|
|
|
|
|
|
|
|
Employee stock plans |
|
|
113 |
|
|
204 |
|
|
216 |
|
|
297 |
Diluted weighted-average common shares |
|
|
56,387 |
|
|
56,984 |
|
|
56,787 |
|
|
57,104 |
Diluted earnings per share |
|
$ |
0.02 |
|
$ |
0.09 |
|
$ |
0.18 |
|
$ |
0.15 |
| (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. |
10. PROVISION FOR 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 six months ended June 30, 2025 was (1.8%) and 9.5%, respectively, and in the corresponding periods of 2024 was 5.8% and 3.5%, respectively. The effective tax rate in these periods were lower than the statutory federal income-tax rate of 21% due to the geographic distribution of the Company’s world-wide earnings in lower-tax jurisdictions and federal research tax credits. In the three and six months ended June 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. In the three months ended June 30, 2024, the Company’s effective tax rate was favorably impacted by the recognition of excess tax benefits related to share-based payments. In the six months ended June 30, 2024, the Company’s effective tax rate was also favorably impacted by the recognition of excess tax benefits related to share-based payments and by discrete items associated with the release of unrecognized tax benefits. 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.
As of June 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 Net Controlled Foreign Corporation Tested Income (“NCTI”), formerly known as Global Intangible Low-Taxed Income (“GILTI”), 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 will remeasure its deferred tax balances related to NCTI for the changes in the tax rate and will record an adjustment to this balance in the fiscal third quarter. The Company expects these modifications to result in an increase in its effective tax rate but is still evaluating the magnitude of the impact.
18
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Determining the consolidated provision for income-tax expense, income-tax liabilities and deferred tax assets and liabilities involves judgment. The Company calculates and provides for income taxes in each of the tax jurisdictions in which it operates, which involves estimating current tax exposures as well as making judgments regarding the recoverability of deferred tax assets in each jurisdiction. The estimates used could differ from actual results, which may have a significant impact on operating results in future periods.
11. COMMITMENTS:
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. 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; 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.
12. SEGMENT REPORTING:
The Company is organized and operates as one operating and reportable segment; the design, development, manufacture and marketing of integrated circuits and related components for use primarily in high-voltage power conversion. This determination is based on the management approach which designates internal information regularly available to the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as the source of determination of the Company’s reportable segments. The Company’s CODM, the Chief Executive Officer, reviews financial information presented on a consolidated basis for the purpose of making operating decisions and assessing financial performance.
The CODM uses net income as the measure of profit or loss to allocate resources and assess performance. The CODM regularly reviews net income as reported on the Company’s consolidated statements of income. Financial forecasts and budget to actual results used by the CODM to assess performance and allocate resources, as well as those used for strategic decisions related to headcount and capital expenditures are also reviewed on a consolidated basis. The CODM considers the impact on net income of the significant segment expenses in the table below when deciding whether to reinvest profits, propose dividends or share repurchase, or pursue strategic mergers and acquisitions.
The measure of segment assets is reported on the balance sheet as total assets. The CODM does not review segment assets at a level other than that presented in the Company’s consolidated balance sheets.
19
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The table below presents the Company’s consolidated operating results including significant segment expenses:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
NET REVENUES |
|
$ |
115,852 |
|
$ |
106,198 |
|
$ |
221,381 |
|
$ |
197,886 |
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation (1) |
|
|
10,077 |
|
|
11,035 |
|
|
18,760 |
|
|
17,449 |
Amortization of acquisition-related intangible assets (2) |
|
|
146 |
|
|
258 |
|
|
293 |
|
|
740 |
Cost of revenues (excluding 1 & 2) |
|
|
51,160 |
|
|
48,700 |
|
|
97,650 |
|
|
91,780 |
Research and development (excluding 1) |
|
|
22,801 |
|
|
22,162 |
|
|
44,646 |
|
|
42,962 |
Sales and marketing (excluding 1) |
|
|
16,427 |
|
|
15,543 |
|
|
31,216 |
|
|
29,661 |
General and administrative (excluding 1) |
|
|
7,435 |
|
|
6,542 |
|
|
14,292 |
|
|
12,866 |
Other operating expenses |
|
|
9,151 |
|
|
— |
|
|
9,151 |
|
|
— |
INCOME (LOSS) FROM OPERATIONS |
|
|
(1,345) |
|
|
1,958 |
|
|
5,373 |
|
|
2,428 |
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME |
|
|
2,690 |
|
|
3,189 |
|
|
5,857 |
|
|
6,691 |
PROVISION (BENEFIT) FOR INCOME TAXES |
|
|
(24) |
|
|
298 |
|
|
1,071 |
|
|
316 |
NET INCOME |
|
$ |
1,369 |
|
$ |
4,849 |
|
$ |
10,159 |
|
$ |
8,803 |
The table below presents other segment information:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(In thousands) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Depreciation |
|
$ |
7,002 |
|
$ |
8,391 |
|
$ |
14,246 |
|
$ |
17,106 |
Amortization of intangibles |
|
$ |
208 |
|
$ |
320 |
|
$ |
415 |
|
$ |
863 |
Interest income |
|
$ |
3,035 |
|
$ |
3,309 |
|
$ |
6,395 |
|
$ |
6,795 |
13. 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. In accordance with ASC 450-10, Contingencies, the Company makes a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.
On December 18, 2019, CogniPower LLC (“CogniPower”) filed a complaint against a customer of the Company in the United States District Court for the District of Delaware for infringement of two patents; the Company thereafter intervened and sought a declaration of non-infringement with respect to use of the Company’s products. The case was then stayed until February 26, 2024, when the Delaware Court then set a schedule for the remainder of the case, with further proceedings in the coming months and a trial scheduled in August 2025. On January 16, 2025, CogniPower filed a follow-on complaint against the same customer asserting the same two patents in the United States District Court for the District of Delaware, but no schedule has been set for the follow-on case. 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.
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.
20
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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 ending 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. The Company strongly disagrees with those portions of the jury’s verdicts against the Company and plans to file post-trial motions asking the Court for judgment notwithstanding the verdict, including reversing the award of damages, and in the alternative for a new trial. The Company plans further appeals if they are necessary after rulings on post-trial motions.
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.
14. 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 June 30, 2025. For several reasons, including the lack of prior indemnification claims and the lack of a monetary liability limit for certain infringement cases, the Company cannot determine the maximum amount of potential future payments, if any, related to such indemnifications.
15. ACQUISITION:
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. Pursuant 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.
21
POWER INTEGRATIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
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.
16. SUBSEQUENT EVENTS:
The Company has evaluated events and transactions subsequent to June 30, 2025, through the date these unaudited condensed consolidated financial statements were included on Form 10-Q and filed with the SEC. Other than the matter described below, there are no additional subsequent events identified that would require disclosure in these financial statements.
Transition of the Company’s Chief Executive Officer to Executive Chairman and related Equity Modification
As disclosed in the Current Report on Form 8-K filed with the SEC on July 17, 2025, the Company’s board of directors (the “Board”) on July 11, 2025, elected Jennifer A. Lloyd, PhD, as the Company’s President and CEO and appointed her to the Board, in each case, effective upon Dr. Lloyd’s commencement of employment with the Company on July 21, 2025. Also, on July 11, 2025, Balu Balakrishnan agreed to resign from his position as Chief Executive Officer and President of the Company as of the end of the day immediately prior to Dr. Lloyd’s commencement of employment with the Company.
Mr. Balakrishnan plans to serve as executive chairman of the Board on a transitional basis until February 2026 in order to facilitate the leadership transition, ensure continuity and support the new leadership team. Thereafter, Mr. Balakrishnan would remain a non-executive member of the Board subject to the applicable nomination process and stockholder approval. In connection with Mr. Balakrishnan’s retirement, the Company and Mr. Balakrishnan entered into a transition agreement and a consulting agreement. Each of Mr. Balakrishnan’s outstanding equity awards by their original terms are eligible to vest based on continuous service, subject to the applicable award agreements and terms and conditions of the Company’s 2016 Incentive Award Plan. 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 performance period.
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. The Company expects to record in the third quarter of 2025, net stock-based compensation expense of approximately $15 million related to the award modification, with such amount representing an acceleration of expense in respect of all of Mr. Balakrishnan’s outstanding equity awards. Subsequent changes in performance criteria measurement could result in an adjustment to expense in future periods.
22
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis has been prepared as an aid to understanding our financial condition and results of operations. It should be read in conjunction with the condensed consolidated financial statements and the notes to those statements included elsewhere in this Quarterly Report on Form 10-Q, and with the consolidated financial statements and management’s discussion and analysis of our financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 7, 2025. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, and in Part II, Item 1A - “Risk Factors” and elsewhere in this report. See also “Cautionary Note Regarding Forward-Looking Statements” at the beginning of this report.
Overview
We design, develop and market analog and mixed-signal integrated circuits (“ICs”) and other electronic components and circuitry used in high-voltage power conversion. Our products are used in power converters that convert electricity from a high-voltage source to the type of power required for a specified downstream use. In most cases, this conversion entails, among other functions, converting alternating current (“AC”) to direct current (“DC”) or vice versa, reducing or increasing the voltage, and regulating the output voltage and/or current according to the customer’s specifications.
A large percentage of our products are ICs used in AC-DC power supplies, which convert the high-voltage AC from a wall outlet to the low-voltage DC required by most electronic devices. Power supplies incorporating our products are used with all manner of electronic products including appliances, industrial controls, mobile devices such as smartphones, tablets and notebook computers, electronic utility meters, battery-powered tools, and “home-automation,” or “internet of things” applications such as networked thermostats, power strips and security devices. Variations of our power-supply ICs are used for high-voltage power conversion in electric vehicles (“EVs”). We also supply high-voltage LED drivers, which are AC-DC ICs specifically designed for lighting applications that utilize light-emitting diodes, and motor-driver ICs for brushless DC (“BLDC”) motors used in consumer appliances, HVAC systems, ceiling fans and a variety of industrial applications.
We also offer high-voltage gate drivers—either standalone ICs or circuit boards containing ICs, electrical isolation components and other circuitry—used to operate high-voltage switches such as insulated-gate bipolar transistors (“IGBTs”) and silicon-carbide (“SiC”) MOSFETs. These combinations of switches and drivers are used for power conversion in high-power applications (i.e., power levels ranging from approximately 100 kilowatts up to gigawatts) such as industrial motors, solar- and wind-power systems, electric locomotives, EVs and high-voltage DC transmission systems.
Our power-conversion products are distinguished by their “system-level” nature; that is, they incorporate into a single product numerous elements of a power-conversion system including a high-voltage transistor, drivers, advanced control circuitry and, in some cases, a communication link connecting the primary (i.e., input) and secondary (i.e., output) sides of the power converter while maintaining safety isolation to protect the end user from exposure to high voltage. Alternatively, a power converter can be designed and assembled using discrete components purchased from a variety of suppliers.
Our system-level products offer a number of important benefits compared with discrete designs, including: reduced design complexity; smaller size; lower component count, which in turn results in higher reliability and easier sourcing of components; reduced time-to-market; and more efficient use of engineering resources. Our products also reduce the energy consumption of power converters during normal use and in “standby” operation, when the end product is not in use. In addition to the environmental and economic benefits of reduced energy usage, our energy-saving technologies provide a number of benefits to our customers; these include helping them meet the increasingly stringent efficiency standards now in effect for many electronic products, and enabling the elimination of bulky, costly heatsinks used to dissipate the heat produced by wasted electricity. By reducing component count, circuit-board size and the need for heatsinks, our products also contribute to a reduction in materials usage and electronic waste.
23
While the size of our addressable market fluctuates with changes in macroeconomic and industry conditions, the market has generally exhibited a modest growth rate over time as growth in the unit volume of power converters has been offset to a large degree by reductions in the average selling price of components in this market. Therefore, the growth of our business depends largely on increasing our penetration of the markets that we serve and on further expanding our addressable market. Our growth strategy includes the following elements:
| ● | Increase the size of our addressable market. Prior to 2010 our addressable market consisted of AC-DC applications with up to about 50 watts of output, a served available market (“SAM”) opportunity of approximately $1.5 billion. Since then, we have expanded our SAM to approximately $4 billion through a variety of means. These include the introduction of products that enable us to address higher-power AC-DC applications (such as our Hiper™ product families), the introduction of LED-driver products, and our entry into the gate-driver market. In 2018 we introduced our BridgeSwitch™ motor-driver ICs for BLDC motors, and in 2024 we introduced BridgeSwitch-2, extending the addressable power range of our motor-driver products up to about one horsepower. We have recently introduced a range of products targeting the EV market; we plan to introduce additional products for EVs in the future and expect automotive applications to become a significant portion of our SAM over time. |
Also contributing to our SAM expansion has been the emergence of new applications within the power ranges that our products can address. For example, applications such as “smart” utility meters, battery-powered lawn equipment and bicycles, and USB power receptacles (often installed alongside traditional AC wall outlets) can incorporate our products. The increased use of connectivity, LED lighting and other power-consuming electronic features in consumer appliances has also enhanced our SAM.
We have also expanded our SAM through the development of technologies and architectures that increase the value (and therefore the average selling prices) of our products. For example, our InnoSwitch™ ICs integrate circuitry from the secondary, or low-voltage, side of AC-DC power supplies, whereas earlier product families integrated circuitry only on the primary, or high-voltage side. Our InnoMux™ IC families provide up to three DC outputs, eliminating the need for additional power-management circuitry in certain end products requiring multiple voltages while significantly increasing efficiency.
| ● | Increase our penetration of the markets we serve. We currently address AC-DC applications with power outputs up to approximately 500 watts, gate-driver applications ranging from 100 kilowatts up to gigawatts, and motor-drive applications up to approximately one horsepower. Through our research and development efforts, we seek to introduce more advanced products for these markets offering higher levels of integration and performance compared to earlier products. We also continue to expand our sales and application-engineering staff and our network of distributors, as well as our offerings of technical documentation and design-support tools and services to help customers use our products. These tools and services include our PI Expert™ design software, which we offer free of charge, and our transformer-sample service. In 2022 we launched PowerPros℠, a live online video support service that enables power-supply designers to talk directly with members of our applications engineering team 24 hours a day, six days a week, anywhere in the world. |
| ● | Leverage the performance benefits of our proprietary gallium-nitride (“GaN”) technology. In 2019 we began incorporating our proprietary PowiGaN™ gallium-nitride transistors in some of our products, enabling a higher level of energy efficiency than ICs with silicon transistors. Since then, we have introduced a variety of new products utilizing GaN technology and developed new generations of our GaN technology capable of supporting voltages as high as 1700 volts. While high-voltage GaN transistors have historically been more costly to produce than comparable silicon transistors, we have achieved cost reductions such that our GaN devices are approaching cost parity with silicon MOSFETs. |
We are developing additional products incorporating GaN transistors, which we believe will enable us to address higher-power applications than we address with our current range of products, and further expand our SAM as discussed above. We expect such applications to include power supplies used in data centers delivering artificial intelligence (AI) services, in communications network infrastructure equipment and in onboard-charging circuitry for EVs, among others.
24
Additionally, we are developing GaN technologies capable of supporting higher power output than today’s GaN devices, with an aim of developing products to address power-switching modules in EV drivetrains, which currently incorporate SiC and IGBT modules. In July 2024 we acquired the assets of Odyssey Semiconductor, a developer of so-called vertical GaN technology, in an effort to accelerate our development of higher-power GaN devices. We believe the development of such technologies will take several years to complete.
| ● | Capitalize on efforts to reduce carbon emissions by providing products that contribute to improved energy efficiency and increased use of renewable energy. In its 2019 World Energy Outlook, the International Energy Agency estimated that more than two-thirds of the reduction in carbon-dioxide (“CO2”) emissions needed to achieve the “Sustainable Development Scenario” of the United Nations Sustainable Development Agenda is to come from improved energy efficiency and increased use of renewable energy. Energy savings enabled by our products help our customers comply with regulations that seek to curb energy consumption in support of reducing CO2 emissions. For example: our EcoSmart™ technology drastically reduces the amount of energy consumed by electronic products when they are plugged in but not in use; our PowiGaN™ GaN transistors reduce energy consumption compared to silicon transistors; and our BridgeSwitch™ motor-driver ICs provide highly efficient power conversion for BLDC motors in appliances and industrial applications. Also, our gate-driver products are critical components in energy-efficient DC motor drives, solar- and wind-power systems, efficient high-voltage DC transmission systems (including transmission of energy from renewable energy installations to the power grid), and low-emissions transportation applications such as electric locomotives. |
We intend to continue expanding our SAM in the years ahead through all of the means described above.
Our quarterly operating results are difficult to predict and subject to significant fluctuations. We plan our production and inventory levels based on internal forecasts of projected customer demand, which are highly unpredictable and can fluctuate substantially. Customers typically may cancel or reschedule orders on short notice without significant penalty and, conversely, often place orders with very short lead times to delivery. Changes in trade policies among the United States and other countries, in particular the escalation of trade tensions and higher tariffs as well as the imposition of other barriers to international trade could reduce demand for end products that incorporate our integrated circuits which could adversely affect our business and operating results. See also our risk factor under Part II, Item 1A captioned, “Changes in trade policies among the United States and other countries, in particular the escalation and imposition of new and higher tariffs and additional export controls, could reduce demand for end products that incorporate our integrated circuits, which could have a material adverse effect on our revenues and operating results. Further, increased tariffs or the imposition of other barriers to international trade could place pressure on our prices as our customers seek to offset the impact of increased tariffs on their own products. Compliance with import and export controls could impair our ability to compete in international markets or subject us to liability if we violate these controls.” Also, external factors such as supply-chain dynamics, widespread health emergencies, and macroeconomic conditions including inflation, fluctuations in interest and exchange rates and bank failures, have caused and can continue to cause our operating results to be volatile. Furthermore, because our industry is intensely price-sensitive, our gross margin (gross profit divided by net revenues) is subject to change based on the relative pricing of solutions that compete with ours. Variations in product mix, end-market mix and customer mix can also cause our gross margin to fluctuate. Because we purchase a large percentage of our silicon wafers from foundries located in Japan, our gross margin is influenced by fluctuations in the exchange rate between the U.S. dollar and the Japanese yen. Changes in the prices of raw materials used in our products, such as copper and gold, can also affect our gross margin. Although our wafer fabrication and assembly operations are outsourced, as are most of our test operations, a portion of our production costs are fixed in nature. As a result, our unit costs and gross margin are impacted by the volume of units we produce.
Recent Results
Our net revenues were $115.9 million and $106.2 million in the three months ended June 30, 2025 and 2024, respectively, and $221.4 million and $197.9 million in the six months ended June 30, 2025 and 2024, respectively. The increase in net revenues for the three-month period was primarily due to higher sales in the industrial end-market. For the six-month period, the increase in net revenues was due to higher sales in all four end-market categories, most significantly the industrial end-market.
25
Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for approximately 81% of our net revenues for each of the three and six months ended June 30, 2025 and approximately 80% and 78%, respectively, in the corresponding periods of 2024. International sales accounted for approximately 98% and 99% of our net revenues for the three and six months ended June 30, 2025, respectively, and 99% and 98%, respectively, in the corresponding periods of 2024.
Our gross margin was 55% and 53% for the three months ended June 30, 2025 and 2024, respectively, and 55% and 53% for the six months ended June 30, 2025 and 2024, respectively. The increase in gross margin was primarily due to favorable end-market mix—reflecting a greater amount of revenues coming from higher-margin end-markets—and the favorable impact of the dollar/yen exchange rate on our wafer costs.
Total operating expenses were $65.3 million and $54.6 million for the three months ended June 30, 2025 and 2024, respectively, and $116.8 million and $101.9 million for the six months ended June 30, 2025 and 2024, respectively. The increase in operating expenses for the three- and six-month periods was primarily due to an expense related to an employee litigation matter (refer to Note 13, Legal Proceedings and Contingencies, in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q), increased employee-related expenses driven by headcount growth and higher costs associated with employee health insurance and other benefits, as well as higher expenses for professional and legal services. These increases were partially offset by decreased product-development expenses and a credit recognized in the six months ended June 30, 2025 related to the recovery of bad debt.
Critical Accounting Policies and Estimates
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“U.S. 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. On an ongoing basis, we evaluate our estimates, including those listed below. We base our estimates on historical facts and various other assumptions that we believe to be reasonable at the time the estimates are made. Actual results could differ from those estimates.
Critical accounting policies are important to the portrayal of our financial condition and results of operations and require us to make judgments and estimates about matters that are inherently uncertain. There have been no material changes to our critical accounting policies and estimates disclosed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies and Estimates” and Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, in each case in our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 7, 2025. Currently, our only critical accounting policies relate to revenue recognition and estimating write-downs for excess and obsolete inventory.
26
Results of Operations
The following table sets forth certain operating data as a percentage of net revenues for the periods indicated:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Net revenues |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
|
100.0 |
% |
Cost of revenues |
|
44.8 |
|
|
46.8 |
|
|
44.8 |
|
|
47.3 |
|
Gross profit |
|
55.2 |
|
|
53.2 |
|
|
55.2 |
|
|
52.7 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
22.4 |
|
|
24.5 |
|
|
22.6 |
|
|
24.9 |
|
Sales and marketing |
|
15.8 |
|
|
17.0 |
|
|
15.7 |
|
|
17.1 |
|
General and administrative |
|
10.2 |
|
|
9.9 |
|
|
10.3 |
|
|
9.5 |
|
Other operating expenses |
|
7.9 |
|
|
— |
|
|
4.1 |
|
|
— |
|
Total operating expenses |
|
56.3 |
|
|
51.4 |
|
|
52.7 |
|
|
51.5 |
|
Income (loss) from operations |
|
(1.1) |
|
|
1.8 |
|
|
2.5 |
|
|
1.2 |
|
Other income |
|
2.3 |
|
|
3.0 |
|
|
2.6 |
|
|
3.4 |
|
Income before income taxes |
|
1.2 |
|
|
4.8 |
|
|
5.1 |
|
|
4.6 |
|
Provision (benefit) for income taxes |
|
— |
|
|
0.3 |
|
|
0.5 |
|
|
0.2 |
|
Net income |
|
1.2 |
% |
|
4.5 |
% |
|
4.6 |
% |
|
4.4 |
% |
Comparison of the three and six months ended June 30, 2025 and 2024
Net revenues. Net revenues consist of revenues from product sales, which are calculated net of returns and allowances. Net revenues for the three and six months ended June 30, 2025 were $115.9 million and $221.4 million, respectively, and $106.2 million and $197.9 million, respectively, in the corresponding periods of 2024. The increase in net revenues for the three-month period was due primarily to higher sales in the industrial end-market. For the six-month period, the increase in net revenues was due to higher sales in all four end-market categories, most significantly the industrial end-market.
Our revenue mix by end market for the three and six months ended June 30, 2025 and 2024 was as follows:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
End Market |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Communications |
|
11 |
% |
|
11 |
% |
|
10 |
% |
|
11 |
% |
Computer |
|
12 |
% |
|
14 |
% |
|
12 |
% |
|
13 |
% |
Consumer |
|
37 |
% |
|
42 |
% |
|
41 |
% |
|
41 |
% |
Industrial |
|
40 |
% |
|
33 |
% |
|
37 |
% |
|
35 |
% |
International sales, consisting of sales outside of the United States of America based on “bill to” customer locations, were $114.0 million and $218.2 million in the three and six months ended June 30, 2025, respectively, and $104.6 million and $194.6 million, respectively, in the corresponding periods of 2024. Although power converters using our products are distributed to end markets worldwide, most are manufactured in Asia. As a result, sales to this region represented approximately 84% of our net revenues in both the three and six months ended June 30, 2025 and approximately 85% and 83%, respectively, in the corresponding period of 2024. We expect international sales, and sales to the Asia region in particular, to continue to account for a large portion of our net revenues in the future.
Sales to distributors accounted for approximately 70% and 71% of our net revenues in the three and six months ended June 30, 2025, respectively, and approximately 69% and 71%, respectively, in the corresponding periods of 2024. Direct sales to OEMs and merchant power supply manufacturers accounted for the remainder.
27
The following customers represented 10% or more of our net revenues for the respective periods:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
Customer |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Avnet |
|
33 |
% |
|
28 |
% |
|
32 |
% |
|
29 |
% |
Salcomp Group |
|
11 |
% |
|
* |
|
|
* |
|
|
* |
|
Honestar Technologies Co., Ltd. |
|
* |
|
|
12 |
% |
|
* |
|
|
12 |
% |
*Total customer revenue was less than 10% of net revenues.
No other customers accounted for 10% or more of our net revenues in these periods.
Gross profit. Gross profit is net revenues less cost of revenues. Our cost of revenues consists primarily of the purchase of wafers from our contracted foundries, the assembly, packaging and testing of our products by sub-contractors, product testing performed in our own facility, overhead associated with the management of our supply chain and the amortization of acquired intangible assets. Gross margin is gross profit divided by net revenues. The following table compares gross profit and gross margin for the three and six months ended June 30, 2025 and 2024:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
June 30, |
|
June 30, |
||||||||||||
(dollars in millions) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
Net revenues |
|
$ |
115.9 |
|
|
$ |
106.2 |
|
|
$ |
221.4 |
|
|
$ |
197.9 |
|
Gross profit |
|
$ |
64.0 |
|
|
$ |
56.5 |
|
|
$ |
122.2 |
|
|
$ |
104.3 |
|
Gross margin |
|
|
55.2 |
% |
|
|
53.2 |
% |
|
|
55.2 |
% |
|
|
52.7 |
% |
The increase in gross margin was primarily due to favorable end-market mix—reflecting a greater amount of revenues coming from higher-margin end-markets—and the favorable impact of the dollar/yen exchange rate on our wafer costs.
Research and development expenses. Research and development (“R&D”) expenses consist primarily of employee-related expenses including salaries and stock-based compensation, as well as expensed material and facility costs associated with the development of new processes and products. We also record R&D expenses for prototype wafers related to new products until the products are released to production. The following table compares R&D expenses for the three and six months ended June 30, 2025 and 2024:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(dollars in millions) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
R&D expenses |
|
$ |
26.0 |
|
$ |
26.0 |
|
$ |
50.1 |
|
$ |
49.3 |
Headcount (at period end) |
|
|
298 |
|
|
305 |
|
|
298 |
|
|
305 |
R&D expenses for the three-months ended June 30, 2025 were flat compared to the corresponding period of 2024. R&D expenses increased for the six months ended June 30, 2025 as compared to the corresponding period of 2024 primarily due to higher employee-related expenses including employee health insurance and other benefits, as well as increased equipment-related expenses, partially offset by lower stock-based compensation expense and decreased product-development expenses.
Sales and marketing expenses. Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation, and commissions to sales representatives, as well as facilities expenses, including expenses associated with our regional sales and support offices. The following table below compares S&M expenses for the three and six months ended June 30, 2025 and 2024:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(dollars in millions) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Sales and marketing expenses |
|
$ |
18.3 |
|
$ |
18.1 |
|
$ |
34.7 |
|
$ |
33.8 |
Headcount (at period end) |
|
|
334 |
|
|
328 |
|
|
334 |
|
|
328 |
28
S&M expenses increased for the three and six months ended June 30, 2025 as compared to the corresponding periods of 2024, primarily due to increased employee-related expenses and increased travel and tradeshow-related expenses. Increases were partially offset by lower stock-based compensation expense.
General and administrative expenses. General and administrative (“G&A”) expenses consist primarily of employee-related expenses, including salaries and stock-based compensation expenses for administration, finance, human resources and general management, as well as consulting, professional services, legal and auditing expenses. The following table below compares G&A expenses for the three and six months ended June 30, 2025 and 2024:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(dollars in millions) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
G&A expenses |
|
$ |
11.8 |
|
$ |
10.5 |
|
$ |
22.9 |
|
$ |
18.8 |
Headcount (at period end) |
|
|
81 |
|
|
80 |
|
|
81 |
|
|
80 |
G&A expenses increased for the three and six months ended June 30, 2025 as compared to the corresponding periods of 2024 primarily due to higher stock-based compensation expense related to performance-based awards, higher salaries and related expenses due to annual merit increases, and higher expenses for professional and legal services. These increases were partially offset by a credit recognized in the six months ended June 30, 2025 related to the recovery of bad debt. As described in Note 16, Subsequent Events, in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we expect to record in the third quarter of 2025, net stock-based compensation expense of approximately $15 million related to equity awards modification as a result of our Chief Executive Officer transition.
Other operating expenses. Other operating expenses were $9.2 million in the three and six months ended June 30, 2025. This amount consisted of a $9.2 million expense stemming from an employee litigation matter (refer to Note 13, Legal Proceedings and Contingencies, in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q).
Other income. Other income consists primarily of interest income earned on cash and cash equivalents, marketable securities and other investments, and the impact of foreign exchange gains or losses. The table below compares other income for the three and six months ended June 30, 2025 and 2024:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
June 30, |
|
June 30, |
||||||||
(dollars in millions) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||
Other income |
|
$ |
2.7 |
|
$ |
3.2 |
|
$ |
5.9 |
|
$ |
6.7 |
Other income decreased for the three and six months ended June 30, 2025 as compared to the corresponding periods of 2024 primarily due to lower interest income and losses on foreign currency exchange.
Provision (benefit) for income taxes. Provision for income taxes represents federal, state and foreign taxes. The table below compares income-tax expense for the three and six months ended June 30, 2025 and 2024:
|
|
Three Months Ended |
|
Six Months Ended |
||||||||||||
|
|
June 30, |
|
June 30, |
||||||||||||
(dollars in millions) |
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
Provision (benefit) for income taxes |
|
$ |
— |
|
|
$ |
0.3 |
|
|
$ |
1.1 |
|
|
$ |
0.3 |
|
Effective tax rate |
|
|
(1.8) |
% |
|
|
5.8 |
% |
|
|
9.5 |
% |
|
|
3.5 |
% |
Income-tax expense includes a provision for federal, state and foreign taxes based on the annual estimated effective tax rate applicable to us and our subsidiaries, adjusted for certain discrete items which are fully recognized in the period in which they occur. Accordingly, the interim effective tax rate may not be reflective of the annual estimated effective tax rate.
Our effective tax rates for the three and six months ended June 30, 2025 was (1.8%) and 9.5%, respectively, and in the corresponding periods of 2024 was 5.8% and 3.5%, respectively. The effective tax rate in these periods was lower than the statutory federal income-tax rate of 21% due to the geographic distribution of our world-wide earnings in lower-tax jurisdictions and the impact of federal research tax credits. In the three and six months ended June 30, 2025, our effective tax rate was negatively impacted by the recognition of a tax deficiency or “shortfall” related to share-based payments.
29
In the three months ended June 30, 2024, our effective tax rate was favorably impacted by the recognition of excess tax benefits related to share-based payments. In the six months ended June 30, 2024, our effective tax rate was also favorably impacted by the recognition of excess tax benefits related to share-based payments and by discrete items associated with the release of unrecognized tax benefits. These benefits were partially offset by U.S. tax on foreign income, known as global intangible low-taxed income. The primary jurisdiction from which our foreign earnings are derived is the Cayman Islands, which is a non-taxing jurisdiction. Income earned in other foreign jurisdictions was not material. We have not been granted any incentivized tax rates and do not operate under any tax holidays in any jurisdiction.
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). We have elected to account Net Controlled Foreign Corporation Tested Income (“NCTI”), formerly known as Global Intangible Low-Taxed Income (“GILTI”), 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, we will remeasure its deferred tax balances related to NCTI for the changes in the tax rate and will record an adjustment to this balance in the fiscal third quarter. We expect these modifications to result in an increase in our effective tax rate but are still evaluating the magnitude of the impact.
Liquidity and Capital Resources
As of June 30, 2025, we had $268.7 million in cash, cash equivalents and short-term marketable securities, a decrease of $31.3 million from $300.0 million as of December 31, 2024. As of June 30, 2025, we had working capital, defined as current assets less current liabilities, of $417.9 million, a decrease of approximately $40.8 million from $458.7 million as of December 31, 2024.
We have a Credit Agreement with Wells Fargo Bank, National Association (the “Credit Agreement”) that provides us with a $75.0 million revolving line of credit to use for general corporate purposes with a $20.0 million sub-limit for the issuance of standby and trade letters of credit. 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 as interest rate benchmark rates, with all other terms remaining the same. Our ability to borrow under the revolving line of credit is conditioned upon our compliance with specified covenants, including reporting and financial covenants, primarily a minimum liquidity measure and a debt to earnings ratio, with which we are currently in compliance. The Credit Agreement terminates on June 7, 2026; all advances under the revolving line of credit will become due on such date, or earlier in the event of a default. As of June 30, 2025, we had no advances outstanding under the Credit Agreement.
Cash from Operating Activities
Our operating activities generated $55.5 million of cash in the six months ended June 30, 2025. Net income for this period was $10.2 million; we also incurred non-cash stock-based compensation expense, depreciation and an increase in deferred tax assets of $18.8 million, $14.2 million and $0.9 million, respectively. Sources of cash included a $10.0 million increase in taxes payable and accrued liabilities and a $6.4 million decrease in prepaid expenses and other assets. These sources of cash were partially offset by a $2.8 million increase in inventories.
Operating activities generated $33.5 million of cash in the six months ended June 30, 2024. Net income for this period was $8.8 million; we also incurred depreciation, non-cash stock-based compensation expense, increase in deferred tax assets, accretion of discount on marketable securities, and amortization of intangibles of $17.1 million, $17.4 million, $3.5 million, $0.9 million and $0.9 million, respectively. Sources of cash primarily included a $2.1 million decrease in prepaid expenses and other assets. These sources of cash were partially offset by a $6.7 million increase in inventories due to lower demand and a $2.0 million increase in accounts receivable due to timing of customer payments.
Cash from Investing Activities
Our investing activities in the six months ended June 30, 2025, generated $37.1 million of cash, primarily consisting of $48.8 million from sales and maturities of marketable securities, net of purchases, offset by $11.7 million for purchases of property and equipment—primarily production-related machinery and equipment.
30
Our investing activities in the six months ended June 30, 2024 resulted in $0.9 million net use of cash, primarily consisting of $8.5 million used for purchases of property and equipment (primarily production-related machinery and equipment), partially offset by $7.6 million from sales and maturities of marketable securities, net of purchases.
Cash from Financing Activities
Our financing activities in the six months ended June 30, 2025 resulted in a $76.6 million net use of cash, consisting of $55.7 million for the repurchase of our common stock and $23.8 million for the payment of dividends to stockholders, partially offset by proceeds of $2.8 million from the issuance of shares through our employee stock purchase plan.
Our financing activities in the six months ended June 30, 2024 resulted in a $46.0 million net use of cash, consisting of $26.0 million for the repurchase of our common stock and $22.7 million for the payment of dividends to stockholders, partially offset by proceeds of $2.7 million from the issuance of shares through our employee stock purchase plan.
Dividends
In October 2023, our 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, our board of directors raised the cash dividend with the declaration of five cash dividends of $0.21 per share to be paid 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. Dividend payouts of $12.0 million and $11.8 million occurred on March 31, 2025 and June 30, 2025, respectively. The declaration of any future cash dividend is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that cash dividends are in the best interest of our stockholders.
Stock Repurchases
Over the years, our board of directors has authorized the use of funds to repurchase shares of our common stock. As of December 31, 2024, we had $48.1 million available under a stock-repurchase program announced in November 2024. After this authorization was exhausted in April 2025, our board of directors authorized the use of an additional $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines in compliance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. In the three months ended June 30, 2025, we purchased approximately 0.7 million of our shares for $32.6 million. In the six months ended June 30, 2025, we repurchased approximately 1.1 million of our shares for $55.7 million. As of June 30, 2025, $42.4 million remained on our repurchase authorization. The program has no expiration date. Authorization of future repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors.
Contractual Commitments
As of June 30, 2025, there were no material changes in our contractual commitments from those reported in our Annual Report on Form 10-K for the year ended December 31, 2024.
Other Information
Our cash, cash equivalents and investment balances may change in future periods due to changes in our planned cash outlays, including changes in incremental costs such as direct and integration costs related to future acquisitions. Current U.S. tax laws generally allow companies to repatriate accumulated foreign earnings without incurring additional U.S. federal taxes. Accordingly, as of June 30, 2025, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring significant U.S. federal income taxes.
If our operating results deteriorate in future periods, either as a result of a decrease in customer demand or pricing pressures from our customers or our competitors, or for other reasons, our ability to generate positive cash flow from operations may be jeopardized. In that case, we may be forced to use our cash, cash equivalents and short-term investments, use our current financing or seek additional financing from third parties to fund our operations. We believe that cash generated from operations, together with existing sources of liquidity, will satisfy our projected working capital and other cash requirements for at least the next 12 months.
31
Our uses of cash beyond the next 12 months will depend on many factors, including the general economic environment in which we operate and our ability to generate cash flow from operations, which are uncertain but include funding our operations and additional capital expenditures.
Recent Accounting Pronouncements
Information with respect to this item may be found in Note 2, Significant Accounting Policies and Recent Accounting Pronouncements, in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to our interest rate risk and foreign currency exchange risk during the first six months of 2025. For a discussion of our exposure to interest rate risk and foreign currency exchange risk, refer to our market risk disclosures set forth in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” of the 2024 Form 10-K.
ITEM 4. CONTROLS AND PROCEDURES
Limitation on Effectiveness of Controls
Any control system, no matter how well designed and operated, can provide only reasonable assurance as to the tested objectives. The design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. The inherent limitations in any control system include the realities that judgments related to decision-making can be faulty, and that reduced effectiveness in controls can occur because of simple errors or mistakes. Due to the inherent limitations in a cost-effective control system, misstatements due to error may occur and may not be detected.
Evaluation of Disclosure Controls and Procedures
Management is required to evaluate our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Disclosure controls and procedures are controls and other procedures designed to provide reasonable assurance that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to provide reasonable assurance that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on our management’s evaluation (with the participation of our principal executive officer and principal financial officer), our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective as of the end of the period covered by this report.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information with respect to this item may be found in Note 13, Legal Proceedings and Contingencies, in our Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q, which information is incorporated herein by reference.
32
ITEM 1A. RISK FACTORS
Except as discussed below, there have been no material changes to the risks described in Part I Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2024, which risk factors are incorporated herein by reference in this report from Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 7, 2025.
Risks Related to the Operation and Growth of Our Business
Changes in trade policies among the United States and other countries, in particular the escalation and imposition of new and higher tariffs and additional export controls, could reduce demand for end products that incorporate our integrated circuits, which could have a material adverse effect on our revenues and operating results. Further, increased tariffs or the imposition of other barriers to international trade could place pressure on our prices as our customers seek to offset the impact of increased tariffs on their own products. Compliance with import and export controls could impair our ability to compete in international markets or subject us to liability if we violate these controls.
Although power supplies using our products are designed and distributed worldwide, most of these power supplies are manufactured by our customers in Asia. As a result, our business is subject to risks related to tariffs and other trade protection measures put in place by the United States or other countries, as well as evolving international trade relations, including but not limited to those between the U.S., China, countries in the APAC region and the European Union.
During the year 2025, the United States government imposed additional tariffs on goods imported into the U.S. from numerous countries and announced further changes to tariffs, and in response multiple countries countered with retaliatory tariffs and other actions. Changes in trade policies and a heightened risk of further increased tariffs or other barriers to international trade could further decrease international demand. Many of our customers sell products incorporating our integrated circuits into international markets.
Existing or future tariffs proposed or imposed on our customers’ products may adversely affect our gross profit margins in the future due to the potential for increased pressure on our selling prices by customers seeking to offset the impact of tariffs on their own products. In addition, tariffs could make our customers’ products less attractive relative to products offered by their competitors that may not be subject to, or as significantly impacted by, similar tariffs. Further increases in tariffs on imported goods or the failure to resolve current international trade disputes could further decrease demand and have a material adverse effect on our business and operating results.
Resulting trade disputes, trade restrictions, tariffs and other political tensions between the U.S. and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also negatively impact customer demand for our products or services, delay purchases or renewals, limit expansion opportunities with customers, limit our access to capital, or otherwise negatively affect our business and operations. Ongoing tariff, trade restrictions and macroeconomic uncertainty also has and may continue to contribute to volatility in the price of our common stock.
In some cases, our products and power supplies using our products are subject to import and export control laws and regulations, including the Export Administration Regulations administered by the U.S. Department of Commerce and trade and economic sanctions, including those administered by the U.S. Treasury Department’s Office of Foreign Assets Control. As such, licenses and notices may be required to import, export, or re-export our products and power supplies using our products to certain countries and end users and for certain end uses. The process for obtaining necessary licenses and making required notices may be time-consuming or unsuccessful, potentially causing delays in sales or losses of sales opportunities. Trade controls are complex and dynamic regimes and monitoring and ensuring compliance can be challenging.
Furthermore, compliance with import and export controls and implementation of additional tariffs may increase compliance costs and further affect our business and operating results.
33
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
As of December 31, 2024, we had $48.1 million available under a stock-repurchase program announced in November 2024. After this authorization was exhausted in April 2025, our board of directors authorized the use of an additional $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines. The program has no expiration date. In the three months ended June 30, 2025, we repurchased approximately 0.7 million of our shares for $32.6 million. As of June 30, 2025, $42.4 million remained on our repurchase authorization. Future repurchase programs would be authorized at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors.
The following table summarizes repurchases of our common stock made under our publicly announced repurchase program during the second quarter of fiscal 2025:
|
|
|
|
|
|
|
|
Approximate |
||
|
|
|
|
|
|
|
|
|
Dollar Value that |
|
|
|
|
|
|
|
|
Total Number of |
|
May Yet be |
|
|
|
|
|
|
|
Shares Purchased |
|
Repurchased |
||
|
|
Total |
|
Average |
|
as Part of |
|
Under the |
||
|
|
Number of |
|
Price Paid |
|
Publicly Announced |
|
Plans or Program |
||
Period |
|
Shares Purchased |
|
Per Share |
|
Plans or Programs |
|
(In millions) |
||
April 1, 2025 to April 30, 2025 |
|
560,409 |
|
$ |
44.61 |
|
560,409 |
|
$ |
50.0 |
May 1, 2025 to May 31, 2025 |
|
77,268 |
|
$ |
51.13 |
|
77,268 |
|
$ |
46.0 |
June 1, 2025 to June 30, 2025 |
|
68,100 |
|
$ |
53.00 |
|
68,100 |
|
$ |
42.4 |
Total |
|
705,777 |
|
|
|
|
705,777 |
|
|
|
ITEM 5. OTHER INFORMATION
Departure of Certain Officers
On August 3, 2025, Radu Barsan, the Company’s Vice President, Technology, informed the Company of his intention to retire from employment with the Company on or about September 24, 2025.
Rule 10b5-1 Trading Plans
During the three months ended June 30, 2025, none of our directors or executive officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any “non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.
34
ITEM 6. EXHIBITS
|
|
|
|
Incorporation by Reference |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
EXHIBIT |
|
Exhibit Description |
|
Form |
|
File |
|
Exhibit/Other Reference |
|
Filing |
|
Filed |
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1 |
|
|
|
|
|
|
|
|
|
|
X |
|
3.2 |
|
|
|
|
|
|
|
|
|
|
X |
|
10.1* |
|
Power Integrations, Inc. Amended and Restated 2016 Incentive Award Plan |
|
|
|
|
|
|
|
|
|
X |
10.2* |
|
|
|
|
|
|
|
|
|
|
X |
|
10.3* |
|
|
|
|
|
|
|
|
|
|
X |
|
10.4† |
|
|
|
|
|
|
|
|
|
|
X |
|
10.5* |
|
|
|
|
|
|
|
|
|
|
X |
|
10.6* |
|
|
|
|
|
|
|
|
|
|
X |
|
10.7* |
|
|
|
|
|
|
|
|
|
|
X |
|
10.8* |
|
|
|
|
|
|
|
|
|
|
X |
|
31.1 |
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
X |
31.2 |
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
X |
32.1** |
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
X |
32.2** |
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
X |
101.INS |
|
XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
|
|
|
|
X |
35
|
|
|
|
Incorporation by Reference |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
EXHIBIT |
|
Exhibit Description |
|
Form |
|
File |
|
Exhibit/Other Reference |
|
Filing |
|
Filed |
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
|
|
|
|
X |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
101.LAB |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
101.PRE |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
|
|
|
|
X |
104 |
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
|
|
|
|
|
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All references in the table above to previously filed documents or descriptions are incorporating those documents and descriptions by reference thereto.
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Portions of this exhibit have been omitted as being immaterial and is the type of information that Power Integrations, Inc. treats as private or confidential. |
* |
Indicates a management contract or compensatory plan or arrangement. |
** |
The certifications attached as Exhibits 32.1 and 32.2 accompanying this Quarterly Report on Form 10-Q, are not deemed filed with the SEC, and are not to be incorporated by reference into any filing of Power Integrations, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
36
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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POWER INTEGRATIONS, INC. |
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Dated: |
August 6, 2025 |
By: |
/s/ SANDEEP NAYYAR |
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Sandeep Nayyar |
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Chief Financial Officer |
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(Duly Authorized Officer, Principal Financial Officer and Principal Accounting Officer) |
37
Exhibit 3.1
Amended and Restated
Certificate of Incorporation
of
Power Integrations, Inc.
Power Integrations, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the corporation is Power Integrations, Inc.
2. The original name of the corporation was Power Integrations Delaware Corporation.
3. The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was August 12, 1997.
4. This Amended and Restated Certificate of Incorporation was duly adopted in accordance with the provisions of Sections 242 and 245 of the Delaware General Corporation Law. The Board of Directors of this corporation (the “Board of Directors”) duly adopted resolutions proposing to amend and restate the Certificate of Incorporation of this corporation and authorizing the appropriate officers of this corporation to solicit the consent of the stockholders therefor.
5. This Amended and Restated Certificate of Incorporation amends and restates the Certificate of Incorporation of this corporation as herein set forth in full:
FIRST: The name of the corporation is Power Integrations, Inc. (hereinafter sometimes referred to as the "Corporation").
SECOND: The address of the registered office of the Corporation in the State of Delaware is 3500 South Dupont Highway, in the City of Dover, County of Kent, Delaware 19901. The name of the registered agent at that address is Incorporating Services, Ltd.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware.
FOURTH:
STOCK
The Corporation is authorized to issue two classes of stock to be designated, respectively, "Preferred Stock" and "Common Stock." The total number of shares of Preferred Stock the Corporation shall have authority to issue is 3,000,000, $0.001 par value per share, and the total number of shares of Common Stock the Corporation shall have authority to issue is 140,000,000, $0.001 par value per share.
The shares of Preferred Stock shall initially be undesignated as to series.
The Board of Directors is hereby authorized, within the limitations and restrictions stated herein, to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon a wholly unissued series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or any of them; and to increase or decrease the number of shares constituting any such series and the designation thereof, or any of them; and to increase or decrease the number of shares of any series subsequent to the issue of shares of that series, but, in respect of decreases, not below the number of shares of such series then outstanding. In case the number of shares of any series should be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolutions originally fixing the number of shares of such series.
FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Certificate of Incorporation or the Bylaws of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide.
C. Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.
D. Special meetings of stockholders of the Corporation may be called only (1) by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption) or (2) by the holders of not less than ten percent (10%) of all of the shares entitled to cast votes at the meeting.
SIXTH:
A. The number of directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption). All directors elected prior to or at the Corporation's 2007 Annual Meeting and in office as November 7, 2007, were elected for three year terms, expiring at the third annual meeting following their election.
2
All directors elected after the Corporation's 2007 Annual Meeting shall be elected at each annual meeting of stockholders for a term expiring at the next annual meeting of stockholders following their election. Subject to the rights of the holders of any series of Preferred Stock then outstanding, a vacancy resulting from the removal of a director by the stockholders as provided in Article SIXTH, Section C below may be filled at a special meeting of the stockholders held for that purpose. All directors shall hold office until the expiration of the term for which elected, and until their respective successors are elected, except in the case of the death, resignation, or removal of any director.
B. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation or other cause (other than removal from office by a vote of the stockholders) may be filled only by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders, and until their respective successors are elected, except in the case of the death, resignation, or removal of any director. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
C. Subject to the rights of the holders of any series of Preferred Stock then outstanding, any directors, or the entire Board of Directors, may be removed from office at any time, with or without cause, but only by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Vacancies in the Board of Directors resulting from such removal may be filled by a majority of the directors then in office, though less than a quorum, or by the stockholders as provided in Article SIXTH, Section A above. Directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders, and until their respective successors are elected, except in the case of the death, resignation, or removal of any director.
SEVENTH: The Board of Directors is expressly empowered to adopt, amend or repeal Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board). The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the stockholders shall require, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
EIGHTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involved intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit.
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If the Delaware General Corporation Law is hereafter amended to authorize the further elimination or limitation of the liability of a director, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing provisions of this Article EIGHTH by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification.
NINTH: The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided, however, that, notwithstanding any other provision of this Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of this Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal this Article NINTH, Article FIFTH, Article SIXTH, Article SEVENTH or Article EIGHTH.
In Witness Whereof, the undersigned has executed this Amended and Restated Certificate of Incorporation this 29th day of July 2025.
Power Integrations, Inc. |
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By: |
/s/ JENNIFER LLOYD |
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Jennifer Lloyd, Chief Executive Officer and President |
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4
Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
POWER INTEGRATIONS, INC.
TABLE OF CONTENTS
TABLE OF CONTENTS
(continued)
POWER INTEGRATIONS, INC.,
A DELAWARE CORPORATION
AMENDED AND RESTATED BYLAWS
ARTICLE I
STOCKHOLDERS
Section 1.1 Annual Meeting. An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place, on such date, and at such time as the Board of Directors shall each year fix.
Section 1.2 Special Meetings. Special meetings of stockholders of the Corporation may be called only (1) by the board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exists any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption) or (2) by the holders of not less than ten percent (10%) of all of the shares entitled to cast votes at the meeting.
Upon request in writing sent by registered mail to the president or chief executive officer by any stockholder or stockholders entitled to call a special meeting of stockholders pursuant to this Section 1.2, the board of directors shall determine a place and time for such meeting, which time shall be not less than one hundred twenty (120) nor more than one hundred thirty (130) days after the receipt of such request, and a record date for the determination of stockholders entitled to vote at such meeting shall be fixed by the board of directors, in advance, which shall not be more that 60 days nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. Following such receipt of a request and determination of the validity of the request, it shall be the duty of the Corporate Secretary to cause notice to be given to the stockholders entitled to vote at such meeting, in the manner set forth in Section 1.3 hereof, that a meeting will be held at the place and time so determined. Business transacted at special meetings shall be confined to the purpose or purposes stated in the notice.
Section 1.3 Notice of Meetings. Written notice of the place, date, and time of all meetings of the stockholders shall be given, not less than ten (10) nor more than sixty (60) days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the Delaware General Corporation Law or the Certificate of Incorporation of the Corporation).
When a meeting is adjourned to another place, date or time, written notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty (30) days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, date, and time of the adjourned meeting shall be given in conformity herewith. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.
Section 1.4 Quorum. At any meeting of the stockholders, the holders of majority of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law.
If a quorum shall fail to attend any meeting, the chairman of the meeting or the holders of a majority of the shares of stock entitled to vote who are present, in person or by proxy, may adjourn the meeting to another place, date, or time.
If a notice of any adjourned special meeting of stockholders is sent to all stockholders entitled to vote thereat, stating that it will be held with those present constituting a quorum, then except as otherwise required by law, those present at such adjourned meeting shall constitute a quorum, and all matters shall be determined by a majority of the votes cast at such meeting.
Section 1.5 Conduct of the Stockholders' Meeting. At every meeting of the stockholders, the Chairman, if there is such an officer, or if not, the President of the Corporation, or in his absence the Vice President designated by the President, or in the absence of such designation any Vice President, or in the absence of the President or any Vice President, a chairman chosen by the majority of the voting shares represented in person or by proxy, shall act as Chairman. The Corporate Secretary of the Corporation or a person designated by the Chairman shall act as secretary of the meeting. Unless otherwise approved by the Chairman, attendance at the stockholders' meeting is restricted to stockholders of record, persons authorized in accordance with Section 1.8 of these Bylaws to act by proxy, and officers of the Corporation.
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Section 1.6 Conduct of Business. The Chairman shall call the meeting to order, establish the agenda, and conduct the business of the meeting in accordance therewith or, at the Chairman's discretion, it may be conducted otherwise in accordance with the wishes of the stockholders in attendance. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting.
The Chairman shall also conduct the meeting in an orderly manner, rule on the precedence of and procedure on, motions and other procedural matters, and exercise discretion with respect to such procedural matters with fairness and good faith toward all those entitled to take part. The Chairman may impose reasonable limits on the amount of time taken up at the meeting on discussion in general or on remarks by any one stockholder. Should any person in attendance become unruly or obstruct the meeting proceedings, the Chairman shall have the power to have such person removed from participation. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at a meeting except in accordance with the procedures set forth in this Section 1.6 and Section 1.7, below. The Chairman of a meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this Section 1.6 and Section 1.7, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.
Section 1.7 Notice of Stockholder Business. At an annual or special meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) properly brought before the meeting by or at the direction of the Board of Directors, (c) properly brought before an annual meeting by a stockholder, or (d) properly brought before a special meeting by a stockholder, but if, and only if, the notice of a special meeting provides for business to be brought before the meeting by stockholders. For business to be properly brought before a meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Corporate Secretary of the Corporation. To be timely, a stockholder proposal to be presented at an annual meeting shall be received at the Corporation's principal executive offices not less than 120 calendar days in advance of the date that the Corporation's (or the Corporation's predecessor's) proxy statement was released to stockholders in connection with the previous year's annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting is more than 30 calendar days from the date of the first anniversary of the date of the previous year's annual meeting, or in the event of a special meeting, notice by the stockholder to be timely must be received not later than the close of business on the tenth day following the day on which such public announcement of the date of such meeting is made. A stockholder's notice to the Corporate Secretary shall set forth as to each matter the stockholder proposes to bring before the annual or special meeting (a) a brief description of the business desired to be brought before the annual or special meeting and the reasons for conducting such business at the special meeting, (b) the name and address, as they appear on the Corporation's books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder and (d) any material interest of the stockholder in such business.
For the avoidance of doubt, this Section 1.7 shall be the exclusive means for a stockholder to submit business (other than matters properly included in the Corporation's notice of meeting of stockholders and proxy statement under Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the “1934 Act”)) before a meeting of stockholders. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the 1934 Act; provided, however, that in order to include information with respect to a stockholder proposal in the Corporation's proxy statement and form of proxy for a stockholders' meeting, a stockholder must also comply with all applicable requirements of the 1934 Act and the rules and regulations thereunder.
Section 1.8 Proxies and Voting. At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting. No stockholder may authorize more than one proxy for his shares.
Each stockholder shall have one vote for every share of stock entitled to vote which is registered in his or her name on the record date for the meeting, except as otherwise provided herein or required by law.
All voting, including on the election of directors but excepting where otherwise required by law, may be by a voice vote; provided, however, that upon demand therefor by a stockholder entitled to vote or his or her proxy, a stock vote shall be taken. Every stock vote shall be taken by ballots, each of which shall state the name of the stockholder or proxy voting and such other information as may be required under the procedure established for the meeting. Every vote taken by ballots shall be counted by an inspector or inspectors appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast, and except as otherwise required by law, all other matters shall be determined by a majority of the votes cast.
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Section 1.9 Stock List. A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in his or her name, shall be open to the examination of any such stockholder, for any purpose germane to the meeting, during ordinary business hours for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the whole time thereof and shall be open to the examination of any such who is present. This list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.
ARTICLE II
BOARD OF DIRECTORS
Section 2.1 Number and Term of Office. The number of directors shall be fixed from time to time exclusively by the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption). All directors shall be elected at each annual meeting of stockholders for a term expiring at the next annual meeting of stockholders following their election. A vacancy resulting from the removal of a director by the stockholders as provided in Article II, Section 2.3 below may be filled at special meeting of the stockholders held for that purpose. All directors shall hold office until the expiration of the term for which elected and until their respective successors are elected, except in the case of the death, resignation or removal of any director.
Section 2.2 Vacancies and Newly Created Directorships. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification or other cause (other than removal from office by a vote of the stockholders) may be filled only by a majority vote of the directors then in office, though less than a quorum, and directors so chosen shall hold office for a term expiring at the next annual meeting of stockholders. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
Section 2.3 Removal. Subject to the rights of holders of any series of Preferred Stock then outstanding, any directors, or the entire Board of Directors, may be removed from office at any time, with or without cause, but only by the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Vacancies in the Board of Directors resulting from such removal may be filled by a majority of the directors then in office, though less than a quorum, or by the stockholders as provided in Article II, Section 2.1 above. Directors so chosen shall hold office until the new annual meeting of stockholders.
Section 2.4 Regular Meetings. Regular meetings of the Board of Directors shall be held at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors and publicized among all directors. A notice of each regular meeting shall not be required.
Section 2.5 Special Meetings. Special meetings of the Board of Directors may be called by one-third of the directors then in office (rounded up to the nearest whole number) or by the chief executive officer and shall be held at such place, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given each director by whom it is not waived by mailing written notice not fewer than five (5) days before the meeting or by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, or personally delivering the same not fewer than twenty-four (24) hours before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.
Section 2.6 Quorum. At any meeting of the Board of Directors, a majority of the total number of authorized directors shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.
Section 2.7 Participation in Meetings by Conference Telephone. Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other and such participation shall constitute presence in person at such meeting.
Section 2.8 Conduct of Business. At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Board may from time to time determine, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided herein or requited by law.
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Action may be taken by the Board of Directors without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or transmission or transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 2.9 Powers. The Board of Directors may, except as otherwise required by law, exercise all such powers and do all such acts and things as may be exercised or done by the Corporation, including, without limiting the generality of the foregoing, the unqualified power:
| (a) | To declare dividends from time to time in accordance with law; |
| (b) | To purchase or otherwise acquire any property, rights or privileges on such terms as it shall determine; |
| (c) | To authorize the creation, making and issuance, in such form as it may determine, of written obligations of every kind, negotiable or non-negotiable, secured or unsecured, and to do all things necessary in connection therewith; |
| (d) | To remove any officer of the Corporation with or without cause and from time to time to devolve the powers and duties of any officer upon any other person for the time being; |
| (e) | To confer upon any officer of the Corporation the power to appoint, remove and suspend subordinate officers, employees and agents; |
| (f) | To adopt from time to time such stock, option, stock purchase, bonus or other compensation plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; |
| (g) | To adopt from time to time such insurance, retirement and other benefit plans for directors, officers, employees and agents of the Corporation and its subsidiaries as it may determine; and |
| (h) | To adopt from time to time regulations, not inconsistent with these bylaws, for the management of the Corporation's business and affairs |
Section 2.10 Compensation of Directors. Directors, as such, may receive, pursuant to resolution of the Board of Directors, fixed fees and other compensation for their services as directors, including, without limitation, their services as members of committees of the Board of Directors.
Section 2.11 Nomination of Director Candidates. (a) Subject to the rights of holders of any class or series of Preferred Stock then outstanding, nominations for the election of Directors at an annual meeting may be made by (i) the Board of Directors or a duly authorized committee thereof or (ii) any stockholder entitled to vote in the election of Directors generally who complies with the procedures set forth in this Bylaw and who is a stockholder of record at the time notice is delivered to the Corporate Secretary of the Corporation. Any stockholder entitled to vote in the election of Directors generally may nominate one or more persons for election as Directors at an annual meeting only if timely notice of such stockholder's intent to make such nomination or nominations has been given in writing to the Corporate Secretary of the Corporation. To be timely, a stockholder nomination for a director to be elected at an annual meeting shall be received at the Corporation's principal executive offices not less than 120 calendar days in advance of the first anniversary of the date that the Corporation's (or the Corporation's predecessor's) proxy statement was released to stockholders in connection with the previous year's annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been advanced by more than 30 calendar days from the date contemplated at the time of the previous year's proxy statement, notice by the stockholders to be timely must be received not later than the close of business on the tenth day following the day on which public announcement of the date of such meeting is first made. Each such notice shall set forth: (i) the name and address of the stockholder who intends to make the nomination, or the beneficial owner, if any, on whose behalf the nomination is being made and of the person or persons to be nominated; (ii) a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote for the election of Directors on the date of such notice and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iii) a description of all arrangements or understandings between the stockholder or such beneficial owner and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (iv) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (v) the consent of each nominee to serve as a director of the Corporation if so elected. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder's notice as described above.
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Notwithstanding the third sentence of this Section 2.11(a), in the event that the number of Directors to be elected at an annual meeting is increased and there is no public announcement by the Corporation naming the nominees for the additional directorships at least 130 days prior to the first anniversary of the date that the Corporation's (or its predecessor's) proxy statement was released to stockholders in connection with the previous year's annual meeting, a stockholder's notice required by this Section 2.11(a) shall also be considered timely, but only with respect to nominees for the additional directorships, if it shall be delivered to the Corporate Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.
(b) Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting by (i) or at the direction of the Board of Directors or a committee thereof or (ii) any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in this Bylaw and who is a stockholder of record at the time such notice is delivered to the Corporate Secretary of the Corporation. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as are specified in the Corporation's notice of meeting, if the stockholder's notice as required by paragraph (a) of this Bylaw shall be delivered to the Corporate Secretary at the principal executive offices of the Corporation not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of the 70th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for the giving of a stockholder's notice as described above.
(c) For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”).
(d) Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
(e) Only persons nominated in accordance with the procedures set forth in this Section 2.11 shall be eligible to serve as directors. Except as otherwise provided by law, the Chairman of the meeting shall have the power and duty (i) to determine whether a nomination was made in accordance with the procedures set forth in this Section 2.11 and (ii) if any proposed nomination was not made in compliance with this Section 2.11, to declare that such nomination shall be disregarded.
(f) If the Chairman of the meeting for the election of Directors determines that a nomination of any candidate for election as a Director at such meeting was not made in accordance with the applicable provisions of this Section 2.11, such nomination shall be void; provided, however, that nothing in this Section 2.11 shall be deemed to limit any voting rights upon the occurrence of dividend arrearages provided to holders of Preferred Stock pursuant to the Preferred Stock designation for any series of Preferred Stock.
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ARTICLE III
COMMITTEES
Section 3.1 Committees of the Board of Directors. The Board of Directors, by a vote of a majority of the whole Board, may from time to time designate committees of the Board, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board and shall, for those committees and any others provided for herein, elect a director or directors to serve as the member or members, designating, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of the committee. Any committee so designated may exercise the power and authority of the Board of Directors to declare a dividend, to authorize the issuance of stock or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law if the resolution which designates the committee or a supplemental resolution of the Board of Directors shall so provide. In the absence or disqualification of any member of any committee and any alternate member in his place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member.
Section 3.2 Conduct of Business. Each committee may determine the procedural rules for meeting and conducting its business and shall act in accordance therewith, except as otherwise provided herein or required by law. Adequate provision shall be made for notice to members of all meetings; one-third of the authorized members shall constitute a quorum unless the committee shall consist of one or two members, in which event one member shall constitute a quorum; and all matters shall be determined by a majority vote of the members present. Action may be taken by any committee without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or transmission or transmissions are filed with the minutes of the proceedings of such committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
ARTICLE IV
OFFICERS
Section 4.1 Generally. The officers of the Corporation shall consist of a President, one or more Vice Presidents, a Corporate Secretary and a Treasurer. The Corporation may also have, at the discretion of the Board of Directors, a Chairman of the Board and such other officers as may from time to time be appointed by the Board of Directors. Officers shall be elected by the Board of Directors, which shall consider that subject at its first meeting after every annual meeting of stockholders. Each officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. The Chairman of the Board, if there shall be such an officer, and the President shall each be members of the Board of Directors. Any number of offices may he held by the same person.
Section 4.2 Chairman of the Board. The Chairman of the Board, if there shall be such an officer, shall, if present, preside at all meetings of the Board of Directors and exercise and perform such other powers and duties as may be from time to time assigned to him by the Board of Directors or prescribed by these bylaws.
Section 4.3 President. The President shall be the chief executive officer of the Corporation. Subject to the provisions of these bylaws and to the direction of the Board of Directors, he or she shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers which are commonly incident to the office of chief executive or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock certificates, contracts and other instruments of the Corporation which are authorized and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation.
Section 4.4 Vice President. Each Vice President shall have such powers and duties as may be delegated to him or her by the Board of Directors. One Vice President shall be designated by the Board to perform the duties and exercise the powers of the President in the event of the President's absence or disability.
Section 4.5 Treasurer. Unless otherwise designated by the Board of Directors, the Chief Financial Officer of the Corporation shall be the Treasurer. The Treasurer shall have the responsibility for maintaining the financial records of the Corporation and shall have custody of all monies and securities of the Corporation. He or she shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions and of the financial condition of the Corporation. The Treasurer shall also perform such other duties as the Board of Directors may from time to time prescribe.
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Section 4.6 Corporate Secretary. The Corporate Secretary shall issue all authorized notices for, and shall keep, or cause to be kept, minutes of all meetings of the stockholders, the Board of Directors and all committees of the Board of Directors. He or she shall have charge of the corporate books and shall perform such other duties as the Board of Directors may from time to time prescribe.
Section 4.7 Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.
Section 4.8 Removal. Any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors.
Section 4.9 Action With Respect to Securities of Other Corporations. Unless otherwise directed by the Board of Directors, the President or any officer of the Corporation authorized by the President shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation.
ARTICLE V
STOCK
Section 5.1 Certificates of Stock. The shares of the Corporation shall be represented by certificates, or shall be uncertificated. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock represented by certificate in the Corporation shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board of Directors, or the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the Corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue.
Section 5.2 Transfers of Stock.
| (a) | Transfers of record of shares of stock of the Corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and, in the case of stock represented by certificate, upon the surrender of a properly endorsed certificate or certificates for a like number of shares. |
| (b) | The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the Delaware General Corporation Law. |
Section 5.3 Record Date. The Board of Directors may fix a record date, which shall not be more than sixty (60) nor fewer than ten (10) days before the date of any meeting of stockholders, nor more than sixty (60) days prior to the time for the other action hereinafter described, as of which there shall be determined the stockholders who are entitled: to notice of or to vote at any meeting of stockholders or any adjournment thereof; to receive payment of any dividend or other distribution or allotment of any rights; or to exercise any rights with respect to any change, conversion or exchange of stock or with respect to any other lawful action.
Section 5.4 Lost, Stolen or Destroyed Certificates. In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity.
Section 5.5 Regulations. The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.
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ARTICLE VI
NOTICES
Section 6.1 Notices. Except as otherwise specifically provided herein or required by law, all notices required to be given to any stockholder, director, officer, employee or agent shall be in writing and may in every instance be effectively given by hand delivery to the recipient thereof, by depositing such notice in the mails, postage paid, or by sending such notice by prepaid telegram, mailgram, telecopy or commercial courier service, or by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile, or by electronic mail or other electronic means. Any such notice shall be addressed to such stockholder, director, officer, employee or agent at his or her last known address as the same appears on the books of the Corporation. The time when such notice shall be deemed to be given shall be the time such notice is received by such stockholder, director, officer, employee or agent, or by any person accepting such notice on behalf of such person, if hand delivered, or the time such notice is dispatched, if delivered through the mails or be telegram or mailgram.
Section 6.2 Waivers. A written waiver of any notice, signed by a stockholder, director, officer, employee or agent, whether before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such stockholder, director, officer, employee or agent. Neither the business nor the purpose of any meeting need be specified in such a waiver.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Facsimile Signatures. In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.
Section 7.2 Corporate Seal. The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Corporate Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Corporate Secretary or Assistant Treasurer.
Section 7.3 Reliance Upon Books, Reports and Records. Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation, including reports made to the Corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care.
Section 7.4 Fiscal Year. The fiscal year of the Corporation shall be as fixed by the Board of Directors.
Section 7.5 Time Periods. In applying any provision of these bylaws which require that an act be done or not done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.
ARTICLE VIII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 8.1 Right to Indemnification. Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (“proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative, is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer or employee of another corporation, or of a Partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director, officer or employee or in any other capacity while serving as a director, officer or employee, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by Delaware Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said Law permitted the Corporation to provide prior to such amendment) against all expenses, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties, amounts paid or to be paid in settlement and amounts expended in seeking indemnification granted to such person under applicable law, this bylaw or any agreement with the Corporation) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer or employee and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in Section 8.2 of this Article VIII, the Corporation shall indemnify any such person seeking indemnity in connection with an action, suit or proceeding (or part thereof) initiated by such person only if (a) such indemnification is expressly required to be made by law, (b) the action, suit or proceeding (or part thereof) was authorized by the Board of Directors of the Corporation, (c) such indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers vested in the Corporation under the Delaware General Corporation Law, or (d) the action, suit or proceeding (or part thereof) is brought to establish or enforce a right to indemnification under an indemnity agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law.
8
Such right shall be a contract right and shall include the right to be paid by the Corporation expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, unless the Delaware General Corporation Law then so prohibits, the payment of such expenses incurred by a director or officer of the Corporation in his or her capacity as a director or officer (and not in any other capacity in which service was or is tendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of such proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it should be determined ultimately that such director or officer is not entitled to be indemnified under this Section or otherwise.
Section 8.2 Right of Claimant to Bring Suit. If a claim under Section 8.1 of this Article VIII is not paid in full by the Corporation within ninety (90) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if such suit is not frivolous or brought in bad faith, the claimant shall be entitled to be paid also the expense of prosecuting such claim. The burden of proving such claim shall be on the claimant. It shall be a defense to any such action (other then an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to this Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct.
Section 8.3 Non-Exclusivity of Rights. The rights conferred on any person in Sections 8.1 and 8.2 shall not be exclusive of any other right which such persons may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, bylaws, agreement, vote of stockholders or disinterested directors or otherwise.
Section 8.4 Indemnification Contracts. The Board of Directors is authorized to enter into a contract with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing for indemnification rights equivalent to or, if the Board of Directors so determines, greater than, those provided for in this Article VIII.
Section 8.5 Insurance. The Corporation shall maintain insurance to the extent reasonably available, at its expense, to protect itself and any such director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.
Section 8.6 Effect of Amendment. Any amendment, repeal or modification of any provision of this Article VIII by the stockholders and the directors of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such amendment, repeal or modification.
ARTICLE IX
AMENDMENTS
Section 9.1 Amendment of Bylaws. The Board of Directors is expressly empowered to adopt, amend or repeal Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board). The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the stockholders shall require, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class.
9
Exhibit 10.1
Power Integrations, Inc.
2016 Incentive Award Plan
(As Approved by the Board of Directors on March 13, 2019)
(As Approved by the Stockholders on May 22, 2019)
(As Adjusted for the 1-for-1 Stock Dividend on August 19, 2020)
(As Approved by the Board of Directors on March 11, 2021)
(As Approved by the Stockholders on May 21, 2021)
(As Approved by the Board of Directors on March 13, 2025)
(As Approved by the Stockholders on May 15, 2025)
1
2
3
Awards may be granted to Employees, Directors and Consultants; provided, however, that Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405, unless (i) the stock underlying such Awards is treated as “service recipient stock” under Section 409A of the Code (for example, because the Awards are granted pursuant to a corporate transaction such as a spin off transaction) or (ii) the Company, in consultation with its legal counsel, has determined that such Awards are otherwise exempt from (or, alternatively, comply with) the distribution requirements of Section 409A of the Code.
4
5
6
7
8
9
The Board need not take the same action or actions with respect to all Awards or portions thereof or with respect to all Participants. The Board may take different actions with respect to the vested and unvested portions of an Award.
This Plan will become effective on the Effective Date.
The laws of the State of Delaware will govern all questions concerning the construction, validity and interpretation of this Plan, without regard to that state’s conflict of laws rules.
10
11
Notwithstanding the foregoing definition or any other provision of this Plan, the term Change in Control will not include a sale of assets, merger or other transaction effected exclusively for the purpose of changing the domicile of the Company.
12
13
14
15
16
17
Exhibit 10.2
Cash Compensation of Outside Directors
Cash Compensation of Non-Employee Directors is as follows:
Annual Retainer: $60,000
Additional Annual Retainer for Lead Independent Director of the Board (if an independent member of the Board): $30,000
Additional Annual Retainer for the Lead Director of Cybersecurity: $7,500
Additional Annual Retainer for Audit Committee members:
Additional Annual Retainer for Compensation Committee members:
Additional Annual Retainer for Nominating and Governance Committee members:
Fees are paid quarterly in arrears. There are no per meeting fees.
Exhibit 10.3
Directors Equity Compensation Program
Initial and annual grants will be made to outside directors primarily under the Power Integrations, Inc. 2016 Incentive Award Plan (the “2016 Plan”) as follows (the “Directors Equity Compensation Program”):
| 1. | Each Non-Employee Director shall be a participant in the Directors Equity Compensation Program; |
| 2. | On the first trading day of July in each year (the “Regular Grant Date”): |
| • | Each outside director will receive a grant of a restricted stock unit award with an aggregate value of $200,000 (the “Award”). |
| • | The number of shares subject to such Award would be calculated as the dollar value of such Award divided by the closing trading price of the Company's common stock on such grant date |
| • | Each such Award would vest in full effective immediately prior to the commencement of the Company's first annual meeting of stockholders in the year following the year of the grant date, provided that the recipient is still providing services to the Company as a director as of such time, and, provided, further, that 100% of the shares subject to such Award would be deemed fully vested upon the occurrence of a Change of Control, as such term is defined in the Company's 2016 Plan. |
| 3. | A new eligible director would receive under the 2016 Plan an Award, which shall be equal to the pro rated portion of the Company's annual Awards based on the time between the date the new director is appointed to the Board and the first trading day of Nasdaq in the month of July following such director's appointment. |
| 4. | The Directors Equity Compensation Program shall remain in effect at the discretion of the Board or the Compensation Committee. |
Exhibit 10.4
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS THE TYPE THAT POWER INTEGRATIONS INC. TREATS AS PRIVATE OR CONFIDENTIAL.
AMENDMENT NUMBER FIFTEEN TO
WAFER SUPPLY AGREEMENT
This Amendment Number Fifteen (this “Amendment”), is effective as of June 23, 2025 (the “Amendment Effective Date”), and amends the Amended and Restated Wafer Supply Agreement that is effective as of April 1, 2003 (the “Original Agreement”), as further amended by Amendment Number One that is effective as of August 11, 2004, Amendment Number Two, that is effective as of April 1, 2008, Amendment Number Three, that is effective as of June 9, 2008, Amendment Number Four, that is effective as of June 13, 2008, Amendment Number Five that is effective as of November 14, 2008, Amendment Number Six that is effective as of November 1, 2015, Amendment Number Seven that is effective as of August 8, 2016, Amendment Number Eight that is effective as of July 26, 2017, Amendment Number Nine that is effective as of February 6, 2019, Amendment Number Ten that is effective as of December 16, 2019, Amendment Number Eleven that is effective as of December 20, 2019, Amendment Number Twelve that is effective as of September 17, 2020, Amendment Number Thirteen that is effective as of February 17, 2022 and Amendment Number Fourteen that is effective as of September 16, 2024 (the “Agreement”), by and between Lapis Semiconductor Co., Ltd., a Japanese corporation having its registered head office at 2-4-8 Shinyokohama, Kouhoku-ku Yokohama 222-8575 Japan (“LAPIS”), and Power Integrations, Ltd. d.b.a. Power Integrations International, Ltd. (“PI”) a Cayman Islands corporation having its principal place of business at 4th Floor, Century Yard, Cricket Square, Elgin Avenue, P.O. Box 32322, Grand Cayman K Y 1-1209, and maintaining a place of business at 51 Newton Road, Goldhill Plaza #20-01/03, Singapore 308900, Singapore (“PI” or “Power Integrations”).
. Unless specifically designated otherwise, capitalized terms used herein shall have the same meanings given them in the Agreement.
RECITALS
WHEREAS, pursuant to the terms of the Agreement, PI grants to LAPIS licenses of certain of PI INTELLECTUAL PROPERTY for the sole purpose of PI acquiring from LAPIS the [***] of certain [***] products; and
WHEREAS, PI and LAPIS desire to amend the terms of the Agreement; and
WHEREAS, in accordance with Section 18.10 of the Agreement, the Agreement may be amended only by an instrument in writing duly executed by authorized representatives of LAPIS and PI.
Now, THEREFORE, in consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby amend the Agreement as follows:
AGREEMENT
| 1. | Section 13.1 shall be cancelled and the following shall be substituted therefor; |
This Agreement shall continue in full force and effect from the Effective Date until [***], unless earlier terminated as provided herein ("Term").
| 2. | PI and LAPIS agree that LAPIS will manufacture and supply [***] (“[***]”) for PI in accordance with the Agreement, and that PI will place new orders with LAPIS for [***], and that Exhibit F is added to the Agreement by this Amendment. |
Effective as of the Amendment Effective Date, all references in the Agreement to “the Agreement” or “this Agreement” shall mean the Agreement as amended by this Amendment. Except as expressly amended herein, the terms of the Agreement continue unchanged and shall remain in full force and effect. This Amendment may be executed in one or more counterparts, each of which shall be considered an original, but all of which counterparts together shall constitute one and the same instrument.
[Signatures appear on the next page.]
2
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized representatives, effective as of the Amendment Effective Date,
LAPIS SEMICONDUCTOR CO., LTD. |
|
POWER INTEGRATIONS, LTD. d.b.a. POWER INTEGRATIONS INTERNATIONAL, LTD. |
||
|
Signature: |
/s/ Kazumasa Wakuno |
|
Signature: |
/s/ Sunil Gupta |
Name: |
Kazumasa Wakuno |
|
Name: |
Sunil Gupta |
Title: |
President |
|
Title: |
President |
Date: |
June 23, 2025 |
|
Date: |
June 23, 2025 |
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Exhibit F
4
1.7LAPIS will provide a [***] with a maximum capacity of [***] per month.
(a)Pay PI the difference between [***] and the number of wafers delivered by LAPIS and accepted by PI, times [***]
(b)Transfer the [***] the [***], the [***] and the [***] to a location specified by PI, at PI’s expense.
1.12If the Agreement expires before the reimbursement is complete, then LAPIS shall, at PI’s election, either immediately:
(a) Transfer the [***] the [***], the [***] and the [***] to a location specified by PI, at PI’s expense, or
(b) both parties will discuss in good faith the remaining reimbursement.
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ADDENDUM A
Equipment |
Model |
Estimated Cost |
Actual Cost |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
[***] |
[***] |
[***] |
TBD |
Total Cost |
[***] |
TBD |
6
Exhibit 10.5
|
Power Integrations |
|
5245 Hellyer Avenue |
|
San Jose, CA 95138 USA |
|
+1 408 414 9200 |
|
www.power.com |
June 15, 2025
Jennifer Lloyd
Re: Employment Terms
Dear Jennifer:
Power Integrations, Inc. (the “Company”) is pleased to offer you the position of Chief Executive Officer subject to the terms described below.
You will report to the Board of Directors (the “Board”) and work closely with the Board to ensure the Company’s financial success, from our facility at 5245 Hellyer Ave., San Jose, CA. As Chief Executive Officer, you will have such duties, authority, and responsibilities as shall be determined from time to time by the Board, consistent with your position.
During the term of your employment with the Company, you will devote substantially all of your business time, attention and energy to your duties at the Company, and will not engage in any other business, profession, or occupation for compensation or otherwise which would conflict or interfere with the performance of such services either directly or indirectly without the prior written consent of the Board.
Subject to the recommendation of the Nominating and Corporate Governance Committee of the Board and approval of the Board, upon your assumption of your role as Chief Executive Officer of the Company, you will be appointed to the Board and, subject to the recommendation of the Nominating and Corporate Governance Committee and Board approval, your continued service on the Board will be subject to the annual approval of the stockholders beginning at the 2026 Annual Meeting of Stockholders. You also agree that in the event you cease to serve as the Company’s Chief Executive Officer, or you are not re-nominated by the Company’s Nominating and Governance Committee or you are not re-elected by the stockholders to serve on the Board in the future, you will then promptly tender your resignation from the Board.
Your annual base salary will be $650,000, paid at the bi-weekly rate of $25,000 every other Friday, less applicable deductions and all required withholdings. The Company and its Compensation Committee may change compensation and benefits from time to time, in its discretion.
J. Lloyd
Employment Terms
Page 2
Pursuant to the Company’s equity incentive plan (the “Plan”), subject to Compensation Committee approval of such grants and your execution of the equity grant agreements related to such awards, following your start date, the Company shall grant you the following:
| ● | An annual performance incentive award for 2025, implemented as an award of performance stock units (PSUs) in a value pro-rated from a full year value of $812,500 for the portion of the 2025 calendar year from your hire date through year end (target PSUs) (e.g., if you commenced your employment with the Company on July 1, 2025, these PSUs would be pro-rated to a value of $406,250); the number of shares to be calculated based on the closing price on the first trading day of the month following your start date as an employee. The PSUs will be subject to the terms and conditions of the Company’s 2025 PSU Plan in addition to the Plan and your grant agreement. PSU vesting is based on achievement of performance conditions for the 2025 calendar year. The actual number of PSUs that will vest can vary from 0 to 200% of the target PSUs. |
| ● | Restricted stock units (RSUs) in the value of $2,500,000; the number of shares to be calculated based on the closing price on the first trading day of the month following your start date as an employee. Your RSUs will vest over four years from the date you commence your employment with the Company, with 25% of the RSUs vesting on the first anniversary of the date you commence your employment with the Company, and with an additional 25% of the RSUs vesting on each subsequent anniversary of the commencement of your employment until the RSUs are fully vested after four years, subject in each case to your continued full-time service through the applicable vesting date. |
| ● | Long-term performance stock units (PRSUs) in the value of $2,500,000 (target PRSUs); the number of shares to be calculated based on the closing price on the first trading day of the month following your start date as an employee. The PRSUs will be subject to the terms and conditions of the Company’s 2025 PRSU Plan in addition to the Plan and your grant agreement. PRSU vesting is based on achievement of performance conditions over the three year period starting from January 1, 2025. The actual number of PRSUs that will vest can vary from 0 to 200% of the target PRSUs, depending upon performance. |
In addition, subject to Compensation Committee approval, in order to encourage your joining the Company as its Chief Executive Officer on or prior to July 21, 2025 (the “Target Start Date”), we will offer you a signing bonus contingent upon your joining the Company as Chief Executive Officer on or prior to the Target Start Date in the form of RSUs pursuant to the Plan in the value of $1,000,000, with the number of shares to be calculated based on the closing price on the first trading day of the month following your start date as an employee, that vest as follows: 50% of such RSUs shall vest upon the twelve (12) month anniversary of your commencement of employment with the Company and 50% of such RSUs shall vest upon the twenty-four (24) month anniversary of your commencement of employment with the Company, subject to your continued full-time service through the applicable vesting date.
Subject to compliance with applicable laws, the Company will sell a portion of the RSUs, PSUs and PRSUs as they vest to cover for withholding taxes.
J. Lloyd
Employment Terms
Page 3
The above summary is not a legal description of the RSU, PSU and PRSU awards. Each RSU, PSU and PRSU granted to you will be conditioned on your acceptance of the award agreement pursuant to which it is granted and subject to the terms and conditions of the Plan and such award agreement. These documents will determine the terms and conditions of the awards and will supersede the above summary.
You will be subject to stock ownership guidelines that are equal to a 5x multiple of your annual base salary. You will be expected to achieve this level of ownership over period of five years from your start date. Your execution of this offer letter represents your acknowledgement and acceptance of these guidelines.
Continued participation in RSU, PSU and PRSU programs of the Company and the number of shares awarded for future years is discretionary, subject to approval of any future award by the Compensation Committee and can vary based on performance and other factors, as determined by the Compensation Committee in its sole discretion. Eligibility for participation in this program will be evaluated each year and there is no guarantee that an employee will be eligible to participate every year.
As a full-time employee, you will be eligible for standard Company benefits. Details about these benefits are provided in the Employee Handbook and Summary Plan Descriptions, available for your review. The Company may change compensation and benefits from time to time, in its discretion.
You will be considered an “Insider” for purposes of trading Company stock and will be required to comply with Power Integrations’ Insider Trading Policy as in effect from time to time. In addition, you will be required to comply with all of the Company’s other written policies and procedures, including those set forth in the Company’s Employee Handbook and Code of Business Conduct and Ethics, as in effect from time to time. Current copies of the Insider Trading Policy, Employee Handbook and Code of Business Conduct and Ethics are enclosed.
As a condition of employment, you must sign, return, and comply with, the Employee Confidential Information and Inventions Assignment Agreement enclosed herewith.
In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. You agree that you will not bring onto Company premises or use in your work for the Company any unpublished documents or property belonging to any former employer or third party that you are not authorized to use and disclose. You represent further that you have disclosed to the Company any contract you have signed that may restrict your activities on behalf of the Company. By accepting employment with the Company, you are representing that you will be able to perform your job duties within these guidelines.
J. Lloyd
Employment Terms
Page 4
Your employment relationship is at will. You may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company. Likewise, the Company may terminate your employment at any time, with or without cause or advance notice. Your employment at-will status can only be modified in a written agreement signed by you and a duly authorized member of the Board. You will be eligible for certain severance benefits under the terms and conditions of your Executive Officer Benefits Agreement, a copy of which is enclosed for your review and execution.
This offer letter, together with your Executive Officer Benefits Agreement, and the Employee Confidential Information and Inventions Assignment Agreement, forms the complete and exclusive statement of your employment agreement with the Company. The terms in this offer letter supersede any other agreements or promises made to you by anyone, whether oral or written.
You acknowledge that the Company has encouraged you to consult with your personal legal and financial advisers with respect to the subject matter hereof, and that you have had adequate time to consult with your advisers before signing this offer letter agreement. This letter agreement cannot be changed except in a written agreement signed by you and a duly authorized member of the Board.
To ensure the rapid and economical resolution of disputes that may arise in connection with your employment with the Company, you and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this agreement, your employment with the Company, or the termination of your employment, shall be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. § 1-16, to the fullest extent permitted by law, by final, binding and confidential arbitration conducted by JAMS or its successor, under JAMS’ then applicable rules and procedures for employment disputes before a single arbitrator (available upon request and also currently available at http://www.jamsadr.com/rules-employment-arbitration/). You acknowledge that by agreeing to this arbitration procedure, both you and the Company waive the right to resolve any such dispute through a trial by jury or judge or administrative proceeding. You agree that any arbitration under this Agreement shall be conducted in the California county in which you work for the Company as of your start date as an employee. In addition, all claims, disputes, or causes of action under this section, whether by you or the Company, must be brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member in any purported class or representative proceeding, nor joined or consolidated with the claims of any other person or entity. The arbitrator may not consolidate the claims of more than one person or entity, and may not preside over any form of representative or class proceeding. To the extent that the preceding sentences regarding class claims or proceedings are found to violate applicable law or are otherwise found unenforceable, any claim(s) alleged or brought on behalf of a class shall proceed in a court of law rather than by arbitration. This paragraph shall not apply to any action or claim that cannot be subject to mandatory arbitration as a matter of law, including, without limitation, claims brought pursuant to the California Private Attorneys General Act of 2004, as amended, the California Fair Employment and Housing Act, as amended, and the California Labor Code, as amended, to the extent such claims are not permitted by applicable law(s) to be submitted to mandatory arbitration and the applicable law(s) are not preempted by the Federal Arbitration Act or otherwise invalid (collectively, the “Excluded Claims”). In the event you intend to bring multiple claims, including one of the Excluded Claims listed above, the Excluded Claims may be filed with a court, while any other claims will remain subject to mandatory arbitration.
J. Lloyd
Employment Terms
Page 5
You will have the right to be represented by legal counsel at any arbitration proceeding. Questions of whether a claim is subject to arbitration under this agreement shall be decided by the arbitrator. Likewise, procedural questions which grow out of the dispute and bear on the final disposition are also matters for the arbitrator. The arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written statement signed by the arbitrator regarding the disposition of each claim and the relief, if any, awarded as to each claim, the reasons for the award, and the arbitrator’s essential findings and conclusions on which the award is based. The arbitrator shall be authorized to award all relief that you or the Company would be entitled to seek in a court of law. The Company shall pay all JAMS arbitration fees in excess of the administrative fees that you would be required to pay if the dispute were decided in a court of law. Nothing in this letter agreement is intended to prevent either you or the Company from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any awards or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts of any competent jurisdiction.
Please (1) sign and date this offer letter in the space provided below, (2) sign and date the enclosed Executive Officer Benefits Agreement, and Employee Confidential Information and Inventions Assignment Agreement, (3) review and acknowledge receipt of the Code of Business Conduct and Ethics policy, Insider Trading Policy and Employee Handbook, and (4) complete and sign the other materials enclosed herewith, and return all such signed documents and acknowledgements to Grace Zonio at grace.zonio@power.com (408-414-9644) by July 14, 2025, if you wish to accept employment at the Company under the terms described above.
(signature page follows)
J. Lloyd
Employment Terms
Page 6
Jennifer, we look forward to your favorable reply and to a productive and enjoyable work relationship.
Sincerely, |
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AGREED and ACCEPTED: |
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/s/ Balu Balakrishnan |
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/s/ Jennifer Lloyd |
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Balu Balakrishnan, Chairman of the Board and Chief Executive Officer |
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Jennifer Lloyd |
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Date: |
15 June 2025 |
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Date: |
11 July 2025 |
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START DATE: 21 July 2025 |
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Enclosures:
| ● | Executive Officer Benefits Agreement |
| ● | Employee Confidential Information and Inventions Assignment Agreement |
| ● | Code of Business Conduct and Ethics policy, and acknowledgement of receipt |
| ● | Insider Trading Policy, and acknowledgement of receipt |
| ● | Employee Handbook, and acknowledgement of receipt |
| ● | U.S. Application for Employment |
| ● | Prospective Employee Interview Letter |
| ● | Non-Disclosure Agreement |
Exhibit 10.6
POWER INTEGRATIONS, INC.
EXECUTIVE OFFICER BENEFITS AGREEMENT
THIS EXECUTIVE OFFICER BENEFITS AGREEMENT (the “Agreement”) is made and entered into as of July 21, 2025 (the “Effective Date”), by and between POWER INTEGRATIONS, INC., a Delaware corporation, (the “Company”) and Jennifer Lloyd (“Executive”).
RECITALS
A.Executive is the Chief Executive Officer of the Company and possesses valuable knowledge of the Company, its business and operations, and the markets in which the Company competes.
B.The Company draws upon the knowledge, experience and advice of Executive in order to manage its business for the benefit of the Company’s stockholders.
C.The Board of Directors desires to supplement Executive’s other employment arrangements so as to provide additional compensation and benefits to the Executive to encourage Executive to continue to devote Executive’s attention and dedication to the Company and to create additional incentives to continued employment with the Company.
AGREEMENT
THEREFORE, in consideration of the mutual agreements, covenants and considerations contained herein, the undersigned hereby agree and acknowledge as follows:
1.Executive shall first be eligible for the benefits under this Agreement upon commencement of employment as the Chief Executive Officer of the Company.
2.This Agreement may only be modified or amended by a supplemental written agreement signed by Executive and a duly authorized member of the Board of Directors of the Company.
* * * * *
1.
IN WITNESS WHEREOF, the undersigned have executed this EXECUTIVE OFFICER BENEFITS AGREEMENT, intending to be legally bound as of the Effective Date.
COMPANY: |
POWER INTEGRATIONS, INC. |
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By: |
/s/ Balu Balakrishnan |
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Name: Balu Balakrishnan |
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Title: Chief Executive Officer and Chairman of the Board |
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EXECUTIVE: |
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/s/ Jennifer Lloyd |
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Name: Jennifer Lloyd |
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Address for Notice: Executive’s home address as reflected in the records of the Company |
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2.
EXHIBIT A
TERMS OF EXECUTIVE OFFICER BENEFITS AGREEMENT (CEO VERSION)
1.Executive shall continue to be an at-will employee of the Company employed in Executive’s current position at Executive’s then current salary rate, shall be entitled to continue to participate in and to receive benefits on the same basis as other employees under any of the Company’s employee benefit plans as in effect from time to time.
2.Qualifying Termination Upon Change of Control.
(a)Severance Benefits. In the event of the Executive’s Qualifying Termination Upon Change of Control, Executive shall be entitled to the following separation benefits in this Section 2(a), with all such benefits other than those set forth under (i) and (iii) subject to Section 12:
(i)Salary and Accrued Benefits. All salary and accrued but unused vacation earned through the date of Executive’s termination.
(ii)Annual Performance Award. A cash payment equal to the value of a Prorated Portion of Executive’s Annual Performance Award for the year in which such termination occurs, measured as of the date of termination at the applicable target (i.e., 100%) performance level as in effect as of the date of such termination, to be paid in a lump sum on the sixtieth (60th) day following such termination, in settlement of all obligations of the Company with respect to the performance share units (“PSUs”) then outstanding pursuant to such Annual Performance Award.
(iii)Expenses. Within fourteen (14) days of submission of proper expense reports by the Executive, reimbursement by the Company for all expenses reasonably and necessarily incurred by the Executive in connection with the business of the Company prior to Executive’s termination of employment.
(iv)Severance Payment.
(1)Payment of an amount equal to two (2) years of Executive’s annual base salary from the Company as in effect as of the date of such termination (or, in the event that the applicable Qualifying Termination Upon Change of Control results from a resignation by Executive for Good Reason based (in whole or in part) on a decrease in annual base salary, as in effect immediately prior to such reduction), to be paid in a lump sum on the sixtieth (60th) day following such termination; and
(2)Payment of an amount equal to 200% of the cash value of Executive’s Annual Performance Award measured as of the date of termination at the applicable target (i.e., 100%) performance level as in effect as of the date of such termination (or, in the event that the applicable Qualifying Termination Upon Change of Control results from a resignation by Executive for Good Reason based (in whole or in part) on a decrease in annual base salary or bonus opportunity, as in effect immediately prior to such reduction) to be paid in a lump sum on the sixtieth (60th) day following such termination.
1.
(v)Stock Awards. All Stock Awards other than Performance Stock Awards granted by the Company to the Executive and outstanding immediately prior to such Qualifying Termination Upon Change of Control shall have their vesting accelerated, such that 100% of the then unvested shares subject to such Stock Award will be deemed vested and exercisable as of the date of termination of employment. All Performance Stock Awards (other than Stock Awards that constitute Executive’s Annual Performance Award) granted by the Company to the Executive and outstanding immediately prior to such Qualifying Termination Upon Change of Control shall have their vesting accelerated at the applicable target (i.e., 100%) performance level, such that 100% of the then unvested shares subject to such Stock Award will be deemed vested and exercisable as of the date of termination of employment. Any shares vesting pursuant to this Section 2(a)(v) will be issued in accordance with Section 18(a). In the event of the Executive’s Qualifying Termination Upon Change of Control, the portion of any unvested Stock Award that does not vest based on this Section 2(a)(v) or pursuant to the terms of the relevant award agreement will be forfeited by Executive and will be of no further force or effect.
(b)Benefits Continuation.
(i)In the event of Executive’s Qualifying Termination Upon Change of Control, Executive shall be entitled to elect continued medical and dental insurance coverage in accordance with the applicable provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, (“COBRA”);
(ii)Subject to Section 12 and to Executive electing continuation coverage within the time period prescribed under law in connection with such termination for Executive and/or Executive’s dependents, the Company shall pay such COBRA premiums for twenty-four (24) months from the date of termination of employment; provided that, notwithstanding the above, in the event Executive becomes ineligible for COBRA or eligible for coverage under Medicare or another employer’s group health plan (other than a plan which imposes a preexisting condition exclusion unless the preexisting condition exclusion does not apply) during the period provided for herein, the Company shall cease payment of the COBRA premiums thereafter; and
(iii)Executive shall receive the benefits, if any, under the Company’s 401(k) Plan and other Company benefit plans to which he may be entitled pursuant to the terms of such plans.
3.Qualifying Termination Outside Change of Control Period.
(a)Severance Benefits. In the event of the Executive’s Qualifying Termination of Employment, Executive shall be entitled to all separation benefits provided in Section 2(a)(i), Section 2(a)(ii) and 2(a)(iii) above, with benefits under Section 2(a)(ii) subject to Section 12. In addition, Executive shall be entitled to twelve (12) months of Executive’s annual base salary as in effect as of the date of such termination and 100% of the cash value of Executive’s Annual Performance Award at the applicable target (i.e., 100%) performance level as in effect as of the date of such termination, all less applicable withholding, paid in a lump sum within sixty (60) days of such termination, subject to Section 12.
2.
(b)Performance Stock Awards. In the event of the Executive’s Qualifying Termination of Employment, subject to Section 12, a Prorated Portion of all shares subject to Performance Stock Awards granted to the Executive by the Company and outstanding immediately prior to such Qualifying Termination of Employment that remains outstanding as of such Qualifying Termination of Employment, and granted other than in connection with Executive’s Annual Performance Award shall vest at such performance level as determined by the Board of Directors or Compensation Committee on the date of such determination. In the event of the Executive’s Qualifying Termination of Employment, the portion of any unvested Performance Stock Award or other unvested Stock Award that does not vest based on this Section 3(b) or pursuant to the terms of the relevant award agreement will be forfeited by Executive and will be of no further force or effect.
(c)Benefits Continuation.
(i)In the event of Executive’s Qualifying Termination of Employment, Executive shall be entitled to elect continued medical and dental insurance coverage in accordance with the applicable provisions of COBRA;
(ii)Subject to Section 12 and to Executive electing continuation coverage within the time period prescribed under law in connection with such termination for Executive and/or Executive’s dependents, the Company shall pay such COBRA premiums for twelve (12) months from the date of Qualifying Termination of Employment; provided that, notwithstanding the above, in the event Executive becomes ineligible for COBRA or eligible for coverage under Medicare or another employer’s group health plan (other than a plan which imposes a preexisting condition exclusion unless the preexisting condition exclusion does not apply) during the period provided for herein, the Company shall cease payment of the COBRA premiums thereafter; and
(iii)Executive shall receive the benefits, if any, under the Company’s 401(k) Plan and other Company benefit plans to which he may be entitled pursuant to the terms of such plans.
4.Retirement Benefits.
(a)In order to be eligible for the Retirement Benefits described in Section 4(b) below, the Executive must meet both of the following criteria:
(i)At the time of Executive’s termination of employment with the Company (other than in circumstances in which such termination (i) constitutes a termination with Cause or (ii) does not qualify as a Separation from Service), the Executive has (1) achieved the age of 50 and served the Company for at least 15 years; or (2) achieved the age of 55 and served the Company for at least 10 years; provided, however, if such termination of employment also constitutes a Qualifying Termination of Employment or a Qualifying Termination Upon Change of Control, Executive will receive the benefits provided in Section 2 or Section 3, as applicable, in lieu of the benefits provided in this Section 4; and
3.
(ii)At any time during which the Executive is receiving Retirement Benefits, the Executive shall not (1) be employed or on contract full time by a third party (excluding a non-profit organization described in Section 501(c)(3) of the Code) or (2) materially breach the terms and conditions of the Confidentiality Agreement. If the Executive engages in either (1) or (2), then all Retirement Benefits shall terminate immediately and permanently.
(b)If both conditions in Sections 4(a)(i) and 4(a)(ii) above are satisfied, the Executive shall be entitled to receive the following “Retirement Benefits:”
(i)Performance Stock Awards. Subject to Section 12, a Prorated Portion of all shares subject to Performance Stock Awards granted to the Executive by the Company and outstanding prior to such termination of employment, including Performance Stock Awards granted in connection with Executive’s Annual Performance Award, shall vest upon such termination of employment, in each case at such performance level as determined by the Board of Directors or Compensation Committee on the date of such determination. In the event of an event resulting in vesting pursuant to this Section 4(b)(i), the portion of any unvested Performance Stock Award or other unvested Stock Award that does not vest based on this Section or pursuant to the terms of the relevant award agreement will be forfeited by Executive and will be of no further force or effect.
(ii)Benefits Continuation. Executive shall receive the benefits, if any, under the Company’s 401(k) Plan and other Company benefit plans to which Executive may be entitled pursuant to the terms of such plans, and without regard to this Section 4.
5.Termination of Employment due to Death or Permanent Disability.
(a)In the event of the Executive’s death during employment with the Company, (1) the Executive’s legal representative or any person empowered to act on Executive’s behalf under Executive’s will or under the then applicable laws of descent and distribution shall be entitled to Performance Stock Award vesting pursuant to Section 4(b)(i) subject to Section 12 (with the release signed by Executive, if capable, or, if not, by such legal representative or other such person) and (2) the Executive’s dependents, to the extent applicable, shall be entitled to benefits pursuant to Section 4(b)(ii) if any.
(b)In the event of the Executive’s Permanent Disability during employment with the Company, the Executive, and to the extent applicable, Executive’s dependents, shall be entitled to Performance Stock Award vesting provided in Section 4(b)(i) subject to Section 12 and to benefits pursuant to Section 4(b)(ii) if any.
6.Payment of Taxes. All payments made to Executive under this Agreement shall be subject to all applicable federal and state income, employment and payroll taxes, including all withholding taxes.
7.Parachute Payment. Executive is strongly encouraged to review the following provision and consult with Executive’s tax and financial advisor concerning the application of any personal tax consequences related to any payments provided for under this Agreement and the following provision.
4.
In the event that any of the payments and benefits provided for in this Agreement or otherwise payable to the Executive (a “280G Payment”) would (x) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (y) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the amount of any such 280G Payment to be paid (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be either (i) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (ii) the largest portion, up to and including the total, of the Payment, whichever amount (i.e., the amount determined by clause (i) or by clause (ii)), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in the receipt by Executive, on an after-tax basis, of the greater economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is determined pursuant to clause (i) of the preceding sentence, the reduction shall occur in the manner (the “Reduction Method”) that results in the greatest economic benefit for Executive. If more than one method of reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro Rata Reduction Method”). Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction Method would result in any portion of the Payment being subject to taxes pursuant to Section 409A that would not otherwise be subject to taxes pursuant to Section 409A, then the Reduction Method and/or the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes pursuant to Section 409A as follows: (A) as a first priority, the modification shall preserve to the greatest extent possible, the greatest economic benefit for Executive as determined on an after-tax basis; (B) as a second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third priority, Payments that are “deferred compensation” within the meaning of Section 409A shall be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of Section 409A. Unless the Company and the Executive otherwise agree in writing, any determination required under this Section 7 shall be made in writing by independent public accountants appointed by the Company and reasonably acceptable to the Executive (the “Accountants”), whose determination shall be conclusive and binding upon the Executive and the Company for all purposes. The Company shall bear all costs the Accountants may reasonably incur in connection with such determination, and the Company and the Executive shall furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make a determination under this Section 7.
8.Exclusive Remedy. The payments and benefits provided for in Section 2, Section 3, Section 4 or Section 5 shall constitute the Executive’s sole and exclusive remedy for any alleged injury or other damages arising out of the cessation of the employment relationship between the Executive and the Company. The parties hereto agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with these specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which they are entitled at law or in equity.
5.
9.Proprietary and Confidential Information. The Executive agrees to abide by the terms and conditions of the Employee Confidential Information and Inventions Assignment Agreement between the Executive and the Company, as in effect from time to time (the “Confidentiality Agreement”).
10.Interpretation. Executive and the Company agree that this Agreement shall be interpreted in accordance with and governed by the laws of the State of California, without regard to such state’s conflict of laws rules.
11.Entire Agreement; Conflict in Benefits. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter of this Agreement and supersedes all prior arrangements, if any, whether written or oral, and understandings regarding the subject matter of this Agreement. However, this Agreement is not intended to and shall not affect, limit or terminate (i) any plans, programs, or arrangements of the Company that are regularly made available to a significant number of employees of the Company, (ii) the Company’s equity incentive plans or award agreements thereunder, other than with respect to vesting under Sections 2, 3, 4 or 5, (iii) the Confidentiality Agreement and any offer letter other agreement or arrangement to which the Company and the Executive are parties that has been reduced to writing and which does not relate to the subject matter hereof, or (iv) any agreements or arrangements hereafter entered into by the parties in writing, except as otherwise expressly provided therein.
12.Release of Claims. Executive shall receive the severance benefits or the Retirement Benefits pursuant to this Agreement only if Executive executes and returns to the Company, within the applicable time period set forth therein but in no event more than sixty (60) days following the date of Executive’s Separation from Service, a release of claims (the “Release of Claims”) in favor of the Company in a form reasonably satisfactory to the Company, and permits such Release of Claims to become effective in accordance with its terms on or prior to such sixtieth day from the date of Separation from Service (the “Release Agreement Deadline”). If the Release of Claims does not become effective by the Release Agreement Deadline, the Executive will forfeit any right to severance benefits or Retirement Benefits pursuant to this Agreement. Regardless of whether the Release of Claims becomes effective prior to the Release Agreement Deadline, any severance benefits or Retirement Benefits payable prior to the Release Agreement Deadline shall be paid on the Release Agreement Deadline, with the remainder of the payments to be made as originally scheduled. Except to the minimum extent that payments must be delayed pursuant to Section 18(b) because Executive is a “specified employee” or until the effectiveness (or deemed effectiveness) of the Release of Claims, all amounts will be paid as soon as practicable in accordance with the Company’s normal payroll practices following Executive’s Separation from Service. Notwithstanding the foregoing, the Release of Claims shall not be construed to waive any right to indemnification or contribution otherwise available to Executive under law or rules of corporate governance with respect to claims by third parties for actions or omissions in Executive’s role as an officer of the Company.
13.Successors and Assigns.
(a)Successors of the Company. The Company will require any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, expressly, absolutely and unconditionally to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or assignment had taken place.
6.
Failure of the Company to obtain such agreement prior to the effectiveness of any such succession transaction shall be a breach of this Agreement effective as of the date of closing of such transaction, which breach, for avoidance of doubt, if not timely cured, may entitle the Executive to resign Executive’s employment with the Company for Good Reason. As used in this Agreement, “Company” shall mean the Company as defined above and any successor or assign to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
(b)Heirs of Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal and legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
14.Notices. For purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, as follows:
if to the Company:
Power Integrations, Inc.
5245 Hellyer Avenue
San Jose, California 95138
Attn: Chief Financial Officer and Lead People Officer or
Head of Human Resources
and if to the Executive, at the address specified in this Agreement. Notice may also be given at such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.
15.No Representations. Executive acknowledges that he/she is not relying and has not relied on any promise, representation or statement made by or on behalf of the Company which is not set forth in this Agreement.
16.Validity. If any one or more of the provisions (or any part thereof) of this Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions (or any part thereof) shall not in any way be affected or impaired thereby.
17.Consultation with Legal and Financial Advisors. Executive acknowledges that this Agreement confers significant legal rights, and may also involve the waiver of rights under other agreements; that the Company has encouraged Executive to consult with Executive’s personal legal and financial advisers; and that Executive has had adequate time to consult with Executive’s advisers before signing this Agreement.
7.
18.Application of Section 409A and Other Limitations. Executive is strongly encouraged to review the following provisions and consult with Executive’s tax and financial advisor concerning the application of any personal tax consequences related to any payments provided for under this Agreement and the following provisions.
(a)If any Stock Award vesting pursuant to Section 2(a)(v):
(i)does not constitute “deferred compensation” within the meaning of Section 409A, the shares vesting pursuant to such events will be issued in respect of Section 2(a)(v)(1) on the sixtieth (60th) day following the Qualifying Termination Upon Change of Control as further provided in Section 12 hereof.
(ii)does constitute “deferred compensation” within the meaning of Section 409A, the shares vesting pursuant to such events will be issued in respect of Section 2(a)(v), immediately prior to the Change of Control, provided such payment can be made without adverse personal tax consequences to the Executive, or else the shares vesting pursuant to Section 2(a)(v) will be converted into the same consideration received by the holders of the Company’s common stock pursuant to the Change of Control, and such consideration will be issued in accordance with the delivery schedule for such Stock Award in effect immediately prior to the Change of Control.
(b)Other Benefits. Notwithstanding anything to the contrary herein, the following provisions apply to all benefits (“Benefits”) provided herein: (A) The Benefits are intended to qualify for an exemption from application of Section 409A or comply with the requirements of Section 409A to the extent necessary to avoid adverse personal tax consequences under Section 409A, and any ambiguities herein shall be interpreted accordingly. (B) Benefits contingent on a termination of employment shall not commence until Executive has a Separation from Service. (C) Each installment of a Benefit is a separate “payment” for purposes of Treas. Reg. Section 1.409A-2(b)(2)(i). (D) Each Benefit is intended to satisfy the exemptions from application of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9) to the maximum extent available. However, if such exemptions are not available and Executive is, upon Executive’s Separation from Service, a “specified employee” for the purposes of Section 409A, then, solely to the extent necessary to avoid adverse personal tax consequences under Section 409A, the timing of the Benefit payments otherwise payable prior to such date shall be delayed until the earlier of (x) six (6) months and one day after Executive’s Separation from Service, or (y) Executive’s death, and any payments otherwise scheduled to be made after such date shall be paid as originally scheduled. (E) To the extent that any reimbursements payable to Executive pursuant to Section 2(a)(iii) are subject to the provisions of Section 409A, the following provisions will apply in addition to the provisions of any applicable expense reimbursement policy: (a) to be eligible to obtain reimbursement for such expenses Executive must submit expense reports within 45 days after the expense is incurred, (b) any such reimbursements will be paid no later than the earlier of (x) thirty (30) days after the date Executive submits receipts for the expenses or (y) December 31 of the year following the year in which the expense was incurred, (c) the amount of expenses reimbursed in one year will not affect the amount eligible for reimbursement in any subsequent year, and (d) the right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
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(c)Payment of Health Care Benefits. Notwithstanding anything to the contrary set forth herein, if the Company determines, in its sole discretion, that it cannot provide the COBRA premiums, or other medical or dental coverage premiums (together the “Health Care Benefits”) contemplated under this Agreement without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof pay Executive a taxable cash amount, which payment shall be made regardless of whether Executive or Executive’s eligible family members elect health care continuation coverage (the “Health Care Benefit Payment”). Subject to any further delay in payment required by Section 12 or Section 18(b) of this Agreement, the Health Care Benefit Payment shall be paid in monthly installments on the same schedule that such amounts would otherwise have been paid to the insurer. The Health Care Benefit Payment shall be equal to the amount that the Company would have otherwise paid to provide the Health Care Benefits for the duration of the applicable severance period (which amount shall be calculated based on the premium for the first month of coverage), subject to applicable withholding.
19.Definitions. As used in this Agreement, unless the context requires a different meaning, the following terms shall have the meanings set forth herein:
(a)“Annual Performance Award” means the Executive’s annual performance incentive award, whether consisting of cash or Stock Awards, as determined by the Board of Directors or Compensation Committee on an annual basis.
(b)“Cause” means:
(i)A material act of theft, dishonesty, fraud, intentional falsification of any employment or Company records or the commission of any criminal act or material breach of fiduciary duty, in each case, which impairs Executive’s ability to perform Executive’s duties under this Agreement;
(ii)A material violation of any material written Company policy as in effect from time to time, including material violations of any code of business conduct, ethics or insider trading policy, or any material improper disclosure of the Company’s confidential, business or proprietary information by Executive;
(iii)Any action by Executive intentionally causing or reasonably expected to cause material harm to the reputation and standing of the Company, or gross negligence or willful misconduct in the performance of Executive’s assigned duties (but not mere unsatisfactory performance); or
(iv)The Executive’s conviction (including any plea of guilty or nolo contendere) for a felony causing material harm to the reputation and standing of the Company, as determined by the Board in good faith;
provided, however, that the Executive shall be provided with thirty (30) days to cure any circumstances giving rise to “Cause” except to the extent that the Board determines, in its reasonable discretion, that the circumstances cannot be cured.
(c)“Change of Control” means:
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(i)Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary holding securities of the Company under an employee benefit plan of the Company becomes the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of (A) the outstanding shares of common stock of the Company or (B) the combined voting power of the Company’s then- outstanding securities;
(ii)The Company is party to a merger or consolidation which results in the holders of voting securities of the Company outstanding immediately prior thereto failing to continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation;
(iii)There occurs a change in the Board of Directors of the Company within a two-year period, as a result of which fewer than a majority of the Directors are Incumbent Directors. For purposes of this Agreement, an “Incumbent Director” is any director who is either:
(A)A director of the Company as of the Effective Date; or
(B)A director who is elected or nominated for election to the Board of Directors of the Company with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company).
(iv)The sale or disposition of 50% or more of the Company’s consolidated assets (or consummation of any transaction having similar effect); or
(v)The dissolution or liquidation of the Company.
(d)“Code” means the Internal Revenue Code of 1986, as amended.
(e)“Company” shall mean Power Integrations, Inc., and following a Change of Control, any successor or assign to its business and/or assets that agrees or otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.
(f)“Good Reason” means the occurrence of any of the following conditions, without Executive’s written consent, which condition(s) remain(s) in effect 20 days after written notice to the Board of Directors from Executive of such condition(s), if such notice is given within 90 days of the occurrence of such condition(s):
(i)A material decrease in Executive’s annual base salary, or the target opportunity for Executive’s Annual Performance Award, other than any general decrease that affects a majority of the Company’s then senior executives in substantially the same proportions;
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(ii)A demotion, a material reduction in Executive’s position, responsibilities or duties or a material, adverse change in Executive’s substantive functional responsibilities or duties, provided, however, that in the event of a Change of Control, Executive will be deemed demoted and Executive’s position, responsibilities or duties materially reduced or Executive’s substantive functional responsibilities or duties materially adversely changed if Executive is not responsible for at least substantially the same function that Executive had in the Company prior to the Change of Control.
(iii)The relocation of Executive’s work place for the Company to a location more than fifty (50) miles from the current location of Executive’s work place or a material adverse change in the working conditions or established working hours which persists for a period of six continuous months; or
(iv)Any material breach of this Agreement by the Company.
(g)“Performance Stock Award” means any Stock Award subject to vesting upon the achievement of any performance level regardless of the length of any performance period.
(h)“Permanent Disability” means that:
(i)The Executive has been incapacitated by bodily injury or disease so as to be prevented thereby from engaging in the performance of the Executive’s duties;
(ii)Such total incapacity shall have continued for a period of six consecutive months;
(iii)Such incapacity will, in the opinion of a qualified physician, be permanent and continuous during the remainder of the Executive’s life; and
(iv)Such incapacity results in Executive’s Separation from Service.
(i)“Prorated Portion” means a fraction the numerator of which is the number of days in an applicable performance period prior to such Executive’s termination of employment and the denominator of which is the total number of days in such performance period.
(j)“Qualifying Termination of Employment” means Executive’s Separation from Service that results from:
(i)Any termination of employment of the Executive by the Company without Cause; or
(ii)Any resignation by the Executive for Good Reason.
“Qualifying Termination of Employment” shall not include any termination of the employment of the Executive (a) by the Company for Cause; (b) as a result of Permanent Disability of the Executive; (c) as a result of the death of the Executive; (d) as a result of the voluntary termination of employment by the Executive for reasons other than Good Reason; or (e) that constitutes a Qualifying Termination Upon Change of Control.
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(k)“Qualifying Termination Upon Change of Control” means Executive’s Separation from Service that results from:
(i)Any termination of the employment of the Executive by the Company without Cause on or within three (3) months prior to or twelve (12) months after the occurrence of a Change of Control; or
(ii)Any resignation by the Executive for Good Reason on or within three (3) months prior or twelve (12) months after the occurrence of a Change of Control.
“Qualifying Termination Upon Change of Control” shall not include any termination of the employment of the Executive (a) by the Company for Cause, or (b) as a result of Permanent Disability of the Executive; (c) as a result of the death of the Executive; (d) as a result of the voluntary termination of employment by the Executive for reasons other than Good Reason.
(l) “Release of Claims” means the release of claims required by Section 12 of this Agreement.
(m)“Section 409A” means Section 409A of the Code and the regulations and other guidance thereunder and any state law of similar effect.
(n)“Separation from Service” means a “separation from service” for the purposes of Section 409A with respect to the Company.
(o)“Stock Award” shall (i) have the same meaning as the term “Award” under the Company’s 2016 Incentive Award Plan, as amended from time to time and any successor plan thereto, and (ii) mean any equity or equity-based incentive award granted by the Company to Executive, whether or not such award was granted under an equity incentive plan adopted by the Company.
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Exhibit 10.7
TRANSITION AGREEMENT AND RELEASE
This Transition Agreement and Release (“Agreement”) is made by and between Balu Balakrishnan (“Employee”) and Power Integrations, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
WHEREAS, Employee has been employed at-will by the Company as the Company’s Chief Executive Officer;
WHEREAS, Employee and the Company are parties to an Amended and Restated Chief Executive Officer Benefits Agreement made and entered into as of May 1, 2014, as amended as of June 1, 2020 and as of January 28, 2025 (the “EOBA”);
WHEREAS, Employee and the Company are parties to an Employee Agreement Regarding Confidentiality and Inventions, which Employee signed on April 19, 1989 (the “Confidentiality Agreement”);
WHEREAS, the Company previously granted Employee awards of restricted stock units (“RSUs”) on February 2, 2022, February 9, 2023, April 1, 2024 and January 28, 2025, performance stock units (“PSUs”) on January 28, 2025, and long-term performance stock units (“PRSUs”) on February 9, 2023, April 1, 2024 and January 28, 2025 (such RSUs, PSUs and PRSUs, collectively, the “Outstanding Awards”), in each case pursuant to, and subject to the terms and conditions of, the Company’s Amended and Restated 2016 Incentive Award Plan (the “Plan”) and applicable award agreements between the Company and Employee (such agreements, together with the Plan, the “Stock Agreements”);
WHEREAS, in connection with the Company’s leadership transition, Employee is resigning from his offices of Chief Executive Officer and President of the Company, effective as of the end of the day Pacific Time on July 20, 2025, or such later date immediately prior to the date on which the Company appoints a new Chief Executive Officer, and will retain his position on the Board of Directors of the Company, and will assume the role of Executive Chairman of the Board simultaneously upon his resignation, and shall serve in such Executive Chair role pursuant to the terms and conditions described herein;
WHEREAS, the Company wishes to enter into this Agreement with Employee in order to provide for an efficient and seamless transition of leadership of the Company which the Board of Directors of the Company believes is in the best interests of the Company and its shareholders;
WHEREAS, the Company wishes to enter into a consulting agreement with Employee to ensure his continued assistance, technical expertise, cooperation and guidance with respect to important ongoing litigation matters and future support, knowledge and advice with respect to pending R&D and innovation initiatives that the Board believes are important to the Company’s future success given the technical nature of the Company’s business the Employee’s long history with the Company; and
WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that Employee may have against the Company and any of the Releasees (as defined below), including, but not limited to, any and all claims arising out of or in any way related to Employee’s employment with or separation from the Company;
NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employee hereby agree as follows:
COVENANTS
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b.any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;
c.any and all claims under the law of any jurisdiction, including, but not limited to, wrongful discharge of employment; constructive discharge from employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;
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a.any and all claims relating to or arising from Employee’s employment relationship with the Company and the termination of that relationship, including any claims related to an agreement or arrangement with the Company; d.any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, the following, each as may be amended, and except as prohibited by law: Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Uniformed Services Employment and Reemployment Rights Act; the Immigration Reform and Control Act; the California Family Rights Act; the California Labor Code; and the California Workers’ Compensation Act;
e.any and all claims for violation of the federal or any state constitution;
f.any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;
g.any claim for any loss, cost, damage, or expense arising out of any dispute over the nonwithholding or other tax treatment of any of the proceeds received by Employee from the Company; and
h.any and all claims for attorneys’ fees and costs.
Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to any obligations incurred under this Agreement. This release does not release claims that cannot be released as a matter of law. This release does not extend to any right Employee may have to unemployment compensation benefits. In addition, this release does not extend to any rights of indemnification Employee may have pursuant to (i) any indemnification agreement between the Company and Employee, (ii) the Company’s certificate of incorporation and bylaws or (iii) any applicable D&O insurance policy with the Company, subject to the respective terms, conditions, and limitations of such indemnification agreement, certificate of incorporation and bylaws, or D&O insurance policy, in each case, as may be applicable. Nothing in this Agreement releases any rights or claims Employee may have under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, or the California Fair Employment and Housing Act; provided, however, Employee acknowledges that such rights and claims will be released if and when the Supplemental Release goes into effect.
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
Employee, being aware of said code section, agrees to expressly waive any rights Employee may have thereunder, as well as under any other statute or common law principles of similar effect.
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[The remainder of this page is intentionally left blank; signature page follows]
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| (a) | Employee has read this Agreement; |
| (b) | Employee has been represented in the preparation, negotiation, and execution of this Agreement by an attorney of Employee’s own choice or has elected not to retain an attorney; |
| (c) | Employee understands the terms and consequences of this Agreement and of the releases it contains; |
| (d) | Employee is fully aware of the legal and binding effect of this Agreement; and |
| (e) | Employee has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement. |
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.
BALU BALAKRISHNAN, an individual
Dated: July 11, 2025 /s/ BALU BALAKRISHNAN
Balu Balakrishnan
POWER INTEGRATIONS, INC.
Dated: July 29, 2025 By: /s/ WENDY ARIENZO
Wendy Arienzo, Director
On Behalf of the Company’s Board of Directors
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EXHIBIT A
Form of Supplemental Release
(attached)
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SUPPLEMENTAL RELEASE AGREEMENT
This Supplemental Release Agreement (“Agreement”) is made by and between Balu Balakrishnan (“Employee”) and Power Integrations, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).
WHEREAS, the Parties previously entered into a Transition Agreement and Release dated [DATE] in connection with Employee’s resignation from his position as Chief Executive Officer of the Company (the “Transition Agreement”);
WHEREAS, following Employee’s resignation from his position as Chief Executive Officer, Employee remained employed with the Company on a transitional basis as Executive Chair of the Board of Directors of the Company (the “Board”) pursuant to the terms of the Transition Agreement;
WHEREAS, Employee and the Company are parties to an Amended and Restated Chief Executive Officer Benefits Agreement made and entered into as of May 1, 2014, as amended as of June 1, 2020, as of January 28, 2025, and by the Transition Agreement (the “EOBA”);
WHEREAS, Employee and the Company are parties to an Employee Agreement Regarding Confidentiality and Inventions, which Employee signed on April 19, 1989, and which was amended by the Transition Agreement (the “Confidentiality Agreement”);
WHEREAS, Employee and the Company are parties to a Consulting Agreement dated as of [DATE] (the “Consulting Agreement”);
WHEREAS, the Company previously granted Employee awards of [restricted stock units (“RSUs”) granted on February 2, 2022, February 9, 2023, April 1, 2024 and January 28, 2025, performance stock units (“PSUs”) granted on January 28, 2025, and long-term performance stock units (“PRSUs”) granted on February 9, 2023, April 1, 2024 and January 28, 2025] (collectively, the “Outstanding Awards”), in each case pursuant to, and subject to the terms and conditions of, the Company’s Amended and Restated 2016 Incentive Award Plan (the “Plan”) and an award agreement between the Company and Employee (such agreements, together with the Plan, the “Stock Agreements”)
WHEREAS, the Transition Agreement provides that Employee is entitled to certain additional consideration, as described in Section 1 of this Agreement, in exchange for Employee’s timely execution of this Agreement within twenty-one (21) days following Employee’s separation from employment with the Company, subject to this Agreement going into effect;
WHEREAS, Employee’s employment with the Company terminated effective [DATE] (the “Separation Date”);
WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that Employee may have against the Company and any of the Releasees (as defined below);
NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employee hereby agree as follows:
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COVENANTS
[Vesting Acceleration Table to be Inserted.]
1 Note to Draft: This form will be completed and provided to Employee around the time of the Separation Date. If Employee will receive any accelerated vesting pursuant to the EOBA, the “Accelerated Vesting” language here will be included and the table will be completed to reflect that vesting. If not, the Separation Payment will be provided as consideration for Balu’s release.
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a.any and all claims relating to or arising from Employee’s service provider relationship with the Company and the termination of that relationship;
b.any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;
c.any and all claims under the law of any jurisdiction, including, but not limited to, wrongful discharge of employment; constructive discharge from employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;
d.any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, the following, each as may be amended, and except as prohibited by law: Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Uniformed Services Employment and Reemployment Rights Act; the Immigration Reform and Control Act; the California Family Rights Act; the California Labor Code; the California Workers’ Compensation Act; and the California Fair Employment and Housing Act; Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released.
e.any and all claims for violation of the federal or any state constitution;
f.any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;
g.any claim for any loss, cost, damage, or expense arising out of any dispute over the nonwithholding or other tax treatment of any of the proceeds received by Employee from the Company; and
h.any and all claims for attorneys’ fees and costs.
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This release does not extend to any obligations incurred under this Agreement. This release does not release claims that cannot be released as a matter of law. Any and all disputed wage claims that are released herein shall be subject to binding arbitration in accordance with the “Arbitration” section below, except as required by applicable law. This release does not extend to any right Employee may have to unemployment compensation benefits. In addition, this release does not extend to any rights of indemnification Employee may have pursuant to (i) any indemnification agreement between the Company and Employee, (ii) the Company’s certificate of incorporation and bylaws, (iii) any applicable D&O insurance policy with the Company, the Consulting Agreement or the Stock Agreements, subject to the respective terms, conditions, and limitations of such indemnification agreement, certificate of incorporation and bylaws, D&O insurance policy, Consulting Agreement or Stock Agreements, in each case, as may be applicable.
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
Employee, being aware of said code section, agrees to expressly waive any rights Employee may have thereunder, as well as under any other statute or common law principles of similar effect.
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2 Note to Draft: To be included if Employee will not receive any accelerated vesting pursuant to the EOBA, in connection with the Separation Date.
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| (a) | Employee has read this Agreement; |
| (b) | Employee has been represented in the preparation, negotiation, and execution of this Agreement by an attorney of Employee’s own choice or has elected not to retain an attorney; |
| (c) | Employee understands the terms and consequences of this Agreement and of the releases it contains; |
| (d) | Employee is fully aware of the legal and binding effect of this Agreement; and |
| (e) | Employee has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement. |
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.
[Signature blocks intentionally omitted; the Company will
provide Employee an execution-ready version of this Agreement
in connection with the termination of the Advisor Agreement.]
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EXHIBIT B
Consulting Agreement
(attached)
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EXHIBIT C
[INSERT NAME OF AGREEMENT]
(attached)
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Exhibit 10.8
CONSULTING AGREEMENT
This Consulting Agreement (this “Agreement”) is made and entered into as of the latest date set forth in the signature block below by and between Power Integrations, Inc. (the “Company”), and Balu Balakrishnan (“Consultant”) (each herein referred to individually as a “Party,” or collectively as the “Parties”), and shall be effective as of the beginning of the day on the first day following the Anticipated Separation Date within the meaning of the Transition Agreement and Release by and between Consultant and the Company (such agreement, the “Transition Agreement”, and such date, the “Effective Date”). If (i) the Transition Agreement does not become effective based on its terms, or (ii) if Consultant’s employment under the Transition Agreement is terminated prior to the Anticipated Separation Date for any reason, this Agreement shall be void and of no further effect.
The Company desires to retain Consultant as an independent contractor to perform consulting services for the Company, and Consultant is willing to perform such services, on the terms described below. In consideration of the mutual promises contained herein, the Parties agree as follows:
Consultant shall perform the services described in Schedule 1 (the “Services”) for the Company (or its designee), and the Company agrees to pay Consultant the compensation described in Schedule 1 for Consultant’s performance of the Services.
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Upon the termination of this Agreement, or upon Company’s earlier request, Consultant will immediately deliver to the Company, and will not keep in Consultant’s possession, recreate, or deliver to anyone else, any and all Company property, including, but not limited to, Company Confidential Information, tangible embodiments of the Inventions, all devices and equipment belonging to the Company, all electronically-stored information and passwords to access such property, those records maintained pursuant to Section 3.D and any reproductions of any of the foregoing items that Consultant may have in Consultant’s possession or control. Consultant agrees that in discharging Consultant’s obligations pursuant to this section, Consultant will conduct a reasonable and good faith search for such information, property and equipment, including searching external storage devices, personal computers and email accounts, as well as cloud accounts.
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Consultant agrees to indemnify and hold harmless the Company and its affiliates and their directors, officers and employees from and against all taxes, losses, damages, liabilities, costs and expenses, including attorneys’ fees and other legal expenses, arising directly or indirectly from or in connection with (i) any negligent, reckless or intentionally wrongful act of Consultant or Consultant’s assistants, employees, contractors or agents, (ii) a determination by a court or agency that Consultant is not an independent contractor, (iii) any breach by Consultant or Consultant’s assistants, employees, contractors or agents of any of the covenants contained in this Agreement and corresponding Company Confidential Information and Invention Assignment Agreement, (iv) any failure of Consultant to perform the Services in accordance with all applicable laws, rules and regulations, or (v) any violation or claimed violation of a third party’s rights resulting in whole, or in part, from the Company’s use of the Inventions or other deliverables of Consultant under this Agreement.
IN NO EVENT SHALL THE COMPANY BE LIABLE TO CONSULTANT OR TO ANY OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES, OR DAMAGES FOR LOST PROFITS OR LOSS OF BUSINESS, HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, WHETHER BASED IN CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHER THEORY OF LIABILITY, REGARDLESS OF WHETHER THE COMPANY WAS ADVISED OF THE POSSIBILITY OF SUCH DAMAGES AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY. IN NO EVENT SHALL THE COMPANY’S LIABILITY ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT EXCEED THE AMOUNTS PAID BY THE COMPANY TO CONSULTANT UNDER THIS AGREEMENT FOR THE SERVICES, DELIVERABLES OR INVENTION GIVING RISE TO SUCH LIABILITY.
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| (1) | If to the Company, to: |
Attention:
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(signature page follows)
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IN WITNESS WHEREOF, the Parties hereto have executed this Consulting Agreement as of the date first written above.
CONSULTANT |
POWER INTEGRATIONS, INC. |
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By: |
/s/ BALU BALAKRISHNAN |
By: |
/s/ WENDY ARIENZO |
Name: |
Balu Balakrishnan |
Name: |
Wendy Arienzo, Director, on Behalf of the Board of Directors |
Date: |
July 11, 2025 |
Date: |
June 29, 2025 |
Address for Notice: |
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SCHEDULE 1
SERVICES AND COMPENSATION
For each calendar quarter during the term of this Agreement, Consultant will provide the CEO with a written report, no later than 30 days following the close of such quarter, detailing the Consultant’s activities with respect to the Services in such quarter (each, a “Quarterly Log”).
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Jennifer Lloyd certify that:
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Sandeep Nayyar, certify that:
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Power Integrations, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jennifer Lloyd, Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), certify to the best of my knowledge that:
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Power Integrations, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sandeep Nayyar, Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (“Section 906”), certify to the best of my knowledge that:
A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.