POWER INTEGRATIONS INC
For the period ended Sep 30, 2024. Filed Nov 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 6, 2024
POWI$40.26+3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0000833640-24-000147
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0000833640-24-000171
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 73 previous paragraphs and 66 current paragraphs.
30 unchanged; 34 reworded; 1 added; 6 removed; 3 previous and 1 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
Total operating expenses were $51.6 million and $48.2 million for the three months ended September 30, 2024 and 2023, respectively, and $153.5 million and $146.6 million for the nine months ended September 30, 2024 and 2023,
Removed paragraphs (6)
Previous report
As of June 30, 2024 we had a contractual obligation related to income tax, which consisted primarily of unrecognized tax benefits of approximately $16.4 million and interest associated with those benefits of approximately $0.3 million. A portion of the tax obligation is classified as long-term income taxes payable and a portion is recorded in deferred tax assets in our condensed consolidated balance sheet.
Previous report
Other Information
Previous report
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, 2024, our worldwide cash and marketable securities are available to fund capital allocation needs, including capital and internal investments, acquisitions, stock repurchases and/or dividends without incurring additional U.S. federal income taxes.
Previous report
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. 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.
Previous report
Recent Accounting Pronouncements
Previous report
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.
Reworded paragraphs (34)
Previous wording
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
Current wording
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,
Previous wording
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. In 2019 we began incorporating our proprietary GaN 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, as well as new generations of our GaN technology capable of supporting higher voltages (as high as 1250 volts). We are currently developing new products incorporating these technologies, which we believe will enable us to address higher-power applications than we address with our current range of products and therefore further expand our SAM.
Current wording
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. In 2019 we began incorporating our proprietary GaN 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, as well as new generations of our GaN technology capable of supporting higher voltages (as high as 1700 volts). We are currently developing new products incorporating these technologies, which we believe will enable us to address higher-power applications than we address with our current range of products and therefore further expand our SAM.
Previous wording
Our net revenues were $106.2 million and $123.2 million in the three months ended June 30, 2024 and 2023, respectively, and $197.9 million and $229.5 million in the six months ended June 30, 2024 and 2023, respectively. The decrease in net revenues for the three-month period was driven primarily by the communications end-market, reflecting lower sales of our products for use in smartphone chargers. This was driven by a variety of factors including excess inventories at certain end-customers, shifts in market share among handset vendors, diversification of component suppliers among Chinese handset original equipment manufacturers (“OEMs”), including greater use of Chinese-made components, and increased decoupling of handsets and chargers. Lower sales into the computer market also contributed to the decline, due primarily to excess inventory related to chargers for tablet computers. These decreases were partially offset by higher sales into the consumer end-market, reflecting depletion of excess inventories related to the appliance market. For the six-month period ended June 30, 2024, revenues for all but the consumer end-market category decreased compared to the corresponding prior-year period.
Current wording
Our net revenues were $115.8 million and $125.5 million in the three months ended September 30, 2024 and 2023, respectively, and $313.7 million and $355.0 million in the nine months ended September 30, 2024 and 2023, respectively. The decrease in net revenues for the three-month period was driven primarily by lower sales of our products for use in smartphone chargers, reflecting greater use of Chinese-made components in chargers manufactured for Chinese smartphone vendors, as well as increased decoupling of handsets and chargers. These decreases were partially offset by higher sales into the consumer and computer end-markets reflecting, respectively, the depletion of excess inventories related to the appliance market and the increased use of our products in chargers for notebook computers and other mobile devices. For the nine-month period ended September 30, 2024, revenues for all but the consumer end-market category decreased compared to the corresponding prior-year period.
Previous wording
In general, we believe that demand for our products has been negatively affected in recent periods by an array of macroeconomic and geopolitical factors including reduced consumer spending and a reduction in home sales in response to inflation and higher interest rates, general economic weakness in China, weaker industrial activity and the conflicts in Ukraine and the Middle East. We believe these factors have exacerbated the effects of a cyclical downturn in the semiconductor industry; such downturns are commonly experienced following periods of strong growth during which supply-chain participants tend to accumulate excess inventories. However, inventories at distributors of our products have decreased significantly over the past several quarters, which contributed to an increase in net revenues for the three months ended June 30, 2024 compared to the prior quarter.
Current wording
In general, we believe that demand for our products has been negatively affected in recent periods by macroeconomic and geopolitical factors including reduced consumer spending and a reduction in home sales in response to inflation and higher interest rates, general economic weakness in China, weaker industrial activity and the conflicts in Ukraine and the Middle East. We believe these factors have exacerbated the effects of a cyclical downturn in the semiconductor industry; such downturns are commonly experienced following periods of strong growth during which supply-chain participants tend to accumulate excess inventories.
Previous wording
Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for 80% and 78% of net revenues for the three and six months ended June 30, 2024, respectively, and 82% and 79% in the corresponding periods of 2023. International sales accounted for 99% and 98% of our net revenues for the three and six months ended June 30, 2024, respectively, and 98% in both of the corresponding periods of 2023.
Current wording
Our top ten customers, including distributors that resell to OEMs and merchant power supply manufacturers, accounted for 78% of net revenues for both the three and nine months ended September 30, 2024, and 83% and 81% in the corresponding periods of 2023. International sales accounted for 98% of our net revenues for both the three and nine months ended September 30, 2024, and 98% in both the corresponding periods of 2023.
Previous wording
Our gross margin was 53% and 51% for the three months ended June 30, 2024 and 2023, respectively, and 53% and 51% for the six months ended June 30, 2024 and 2023, respectively. The increase in gross margin was primarily due to favorable end-market mix—reflecting a greater amount of revenues coming from higher-margin end-markets—and thefavorable impact of the dollar/yen exchange rate on our wafer costs. These factors were partially offset by the impact of reduced manufacturing volumes on our unit cost.
Current wording
Our gross margin was 55% and 53% for the three months ended September 30, 2024 and 2023, respectively, and 53% and 52% for the corresponding nine-month periods. The increase in gross margin was primarily due to favorable end-market mix, with a greater percentage of revenues coming from the higher-margin industrial and consumer end-markets, and thefavorable impact of the dollar/yen exchange rate on our wafer costs.
Previous wording
Total operating expenses were $54.6 million and $50.2 million for the three months ended June 30, 2024 and 2023, respectively, and $101.9 million and $98.4 million for the six months ended June 30, 2024 and 2023, respectively. The increase in operating expenses for the three- and six-month periods was primarily due to higher stock-based compensation expense related to performance-based awards and higher salaries and related expenses driven byexpansion of headcount and annual merit increases. Partially offsetting these increases were decreased product-development expenses. In addition, we recognized a credit to expenses in the first six months of 2023 related to the recovery of bad debt.
Current wording
respectively. The increase in operating expenses for the three- and nine-month periods was primarily due to higher stock-based compensation expense related to performance-based awards, and higher salaries and related expenses driven byhigher headcount and annual salary increases. Partially offsetting these increases for the nine-month period were decreased product-development expenses. In addition, we recognized a credit in the three months ended September 30, 2024 related to the recovery of bad debt.
Previous wording
Comparison of the three and six months ended June 30, 2024 and 2023
Current wording
Comparison of the three and nine months ended September 30, 2024 and 2023
Previous wording
*Net revenues.*Net revenues consist of revenues from product sales, which are calculated net of returns and allowances. Net revenues for the three and six months ended June 30, 2024 were $106.2 million and $197.9 million, respectively, and $123.2 million and $229.5 million, in the corresponding periods of 2023, respectively. The decrease in net revenues for the three-month period was driven primarily by the communications end-market, reflecting lower sales of our products for use in smartphone chargers. This was driven by a variety of factors including excess inventories at
Current wording
*Net revenues.*Net revenues consist of revenues from product sales, which are calculated net of returns and allowances. Net revenues for the three and nine months ended September 30, 2024 were $115.8 million and $313.7 million, respectively, and $125.5 million and $355.0 million, in the corresponding periods of 2023. The decrease in net revenues for the three-month period was driven primarily by lower sales of our products for use in smartphone chargers, reflecting greater use of Chinese-made components in chargers manufactured for Chinese smartphone vendors, as well as increased decoupling of handsets and chargers. These decreases were partially offset by higher sales into the consumer and computer end-markets reflecting, respectively, the depletion of excess inventories related to the appliance market and increased use of our products in chargers for notebook computers and other mobile devices. For the nine-month period ended September 30, 2024, revenues for all but the consumer end-market category decreased compared to the corresponding prior-year period.
Previous wording
Our revenue mix by end market for the three and six months ended June 30, 2024 and 2023 was as follows:
Current wording
Our revenue mix by end market for the three and nine months ended September 30, 2024 and 2023 was as follows:
Previous wording
International sales, consisting of sales outside of the United States of America based on “bill to” customer locations, were $104.6 million and $194.6 million in the three and six months ended June 30, 2024, respectively, and $121.1 million and $224.8 million in the corresponding periods of 2023. Although power converters using our products are distributed to end markets worldwide, most are manufactured in Asia. As a result, sales to this region represented 85% and 83% of our net revenues in the three and six months ended June 30, 2024, respectively, and 86% and 83% in the corresponding periods of 2023, respectively. 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.
Current wording
International sales, consisting of sales outside of the United States of America based on “bill to” customer locations, were $114.1 million and $308.7 million in the three and nine months ended September 30, 2024, respectively, and $123.3 million and $348.1 million in the corresponding periods of 2023. Although power converters using our products are distributed to end markets worldwide, most are manufactured in Asia. As a result, sales to this region represented 85% and 84% of our net revenues in the three and nine months ended September 30, 2024, respectively, and 84% in both the corresponding periods of 2023. We expect international sales, and sales to the Asia region in particular, to continue to account for a large portion of our net revenues in the future.
Previous wording
Sales to distributors accounted for 69% and 71% of our net revenues in the three and six months ended June 30, 2024, respectively, and 64% and 63% in the corresponding periods of 2023. Direct sales to OEMs and power-supply manufacturers accounted for the remainder.
Current wording
Sales to distributors accounted for 70% of our net revenues in both the three and nine months ended September 30, 2024 and 74% and 67% in the corresponding periods of 2023. Direct sales to OEMs and power-supply manufacturers accounted for the remainder.
Previous wording
*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. Gross margin is gross profit divided by net revenues. The following table compares gross profit and gross margin for the three and six months ended June 30, 2024 and 2023:
Current wording
*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. Gross margin is gross profit divided by net revenues. The following table compares gross profit and gross margin for the three and nine months ended September 30, 2024 and 2023:
Previous wording
The increase in gross margin for the three and six months ended June 30, 2024 compared to the corresponding periods of 2023 was primarily due to favorable end-market mix—reflecting a greater amount of revenues coming from higher-margin end-markets—and thefavorable impact of the dollar/yen exchange rate on our wafer costs. These factors were partially offset by the impact of reduced manufacturing volumes on our unit cost.
Current wording
The increase in gross margin was primarily due to favorable end-market mix, with a greater percentage of revenues coming from the higher-margin industrial and consumer end-markets, and thefavorable impact of the dollar/yen exchange rate on our wafer costs.
Previous wording
*Research and development expenses.*Research and development (“R&D”) expenses consist primarily of employee-related expenses, including stock-based compensation, and expensed material and facility costs associated with the development of new technologies and products. We also record R&D expenses for prototype wafers related to new products until such products are released to production. The table below compares R&D expenses for the three and six months ended June 30, 2024 and 2023:
Current wording
*Research and development expenses.*Research and development (“R&D”) expenses consist primarily of employee-related expenses, including stock-based compensation, and expensed material and facility costs associated with the development of new technologies and products. We also record R&D expenses for prototype wafers related to new products until such products are released to production. The table below compares R&D expenses for the three and nine months ended September 30, 2024 and 2023:
Previous wording
R&D expenses increased for the three and six months ended June 30, 2024 as compared to the corresponding periods of 2023 primarily due to higher stock-based compensation expense related to performance-based awards and higher salaries and related expenses driven byexpansion of headcount and annual merit increases. Partially offsetting these increases were decreased product-development expenses.
Current wording
R&D expenses increased for the three and nine months ended September 30, 2024 compared to the corresponding periods of 2023. The increase for the three-month period wasprimarily due to higher salaries and related expenses driven byhigher headcount and annual salary increases, as well as increased product-development expenses. The increase for the nine-month period was primarily due to higher stock-based compensation expense related to performance-based awards, as well as higher salaries and related expenses driven byhigher headcount and annual salary increases. These increases were partially offset by decreased product-development expenses.
Previous wording
*Sales and marketing expenses.*Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including stock-based compensation, commissions to sales representatives, amortization of intangible assets and facilities expenses, including expenses associated with our regional sales and support offices. The table below compares S&M expenses for the three and six months ended June 30, 2024 and 2023:
Current wording
*Sales and marketing expenses.*Sales and marketing (“S&M”) expenses consist primarily of employee-related expenses, including stock-based compensation, commissions to sales representatives, amortization of intangible assets and facilities expenses, including expenses associated with our regional sales and support offices. The table below compares S&M expenses for the three and nine months ended September 30, 2024 and 2023:
Previous wording
S&M expenses increased for the three and six months ended June 30, 2024 as compared to the corresponding periods of 2023, primarily due to higher stock-based compensation expense related to performance-based awards and higher salaries and related expenses driven byexpansion of headcount and annual merit increases.
Current wording
S&M expenses increased for the three and nine months ended September 30, 2024 compared to the corresponding periods of 2023, primarily due to higher stock-based compensation expense related to performance-based awards, as well as higher salaries and related expenses driven byhigher headcount and annual salary increases.
Previous wording
*General and administrative expenses.*General and administrative (“G&A”) expenses consist primarily of employee-related expenses, including stock-based compensation expense, for administration, finance, human resources and general management, as well as consulting, professional services, legal and audit expenses. The table below compares G&A expenses for the three and six months ended June 30, 2024 and 2023:
Current wording
*General and administrative expenses.*General and administrative (“G&A”) expenses consist primarily of employee-related expenses, including stock-based compensation expense, for administration, finance, human resources and general management, as well as consulting, professional services, legal and audit expenses. The table below compares G&A expenses for the three and nine months ended September 30, 2024 and 2023:
Previous wording
G&A expenses increased for the three and six months ended June 30, 2024 as compared to the corresponding periods of 2023, primarily due to higher stock-based compensation expense related to performance-based awards and higher salaries and related expenses due to annual merit increases. In addition, we recognized a credit to expenses in the first six months of 2023 related to the recovery of bad debt.
Current wording
G&A expenses increased for the three and nine months ended September 30, 2024 compared to the corresponding periods of 2023, primarily due to higher stock-based compensation expense related to performance-based awards, as well as higher salaries and related expenses due to annual salary increases. The increase was partially offset for the three months due to a credit related to the recovery of bad debt.
Previous wording
Other income. Other income consists primarily of interest income earned on cash and cash equivalents, marketable securities and other investments, and the impact of foreign exchange gains or losses. The table below compares other income for the three and six months ended June 30, 2024 and 2023:
Current wording
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 nine months ended September 30, 2024 and 2023:
Previous wording
Other income increased for the three and six months ended June 30, 2024 as compared to the corresponding periods of 2023 primarily due to higher interest income driven by higher interest rates on investments.
Current wording
Other income decreased for the three months ended September 30, 2024 compared to the corresponding period of 2023, as higher interest income driven by higher rates on investments was offset by the unfavorable impact of foreign exchange rates during the period. Other income increased for the nine months ended September 30, 2024 compared to the corresponding period of 2023, primarily due to higher interest income.
Previous wording
Provision for income taxes. Provision for income taxes represents federal, state and foreign taxes. The table below compares income-tax expense for the three and six months ended June 30, 2024 and 2023:
Current wording
Provision for income taxes. Provision for income taxes represents federal, state and foreign taxes. The table below compares income-tax expense for the three and nine months ended September 30, 2024 and 2023:
Previous wording
Our effective tax rates for the three and six months ended June 30, 2024 were 5.8% and 3.5%, respectively, as compared to 3.7% and 5.1%, respectively, in the corresponding periods of 2023. The effective tax rate in these periods was lower than the statutory federal income-tax rate of 21% due to the geographic distribution of our world-wide earnings in lower-tax jurisdictions and the impact of federal research tax credits. Additionally, in the three months ended June 30, 2024, our effective tax rate was favorably impacted by the recognition of excess tax benefits related to share-based payments. In the six months ended June 30, 2024, our effective tax rate was also favorably impacted by the recognition of excess tax benefits related to share-based payments andby discrete items associated with the release of unrecognized tax benefits. In the three and six months ended June 30, 2023, our effective tax rate was favorably impacted by a discrete item associated with recognition of excess tax benefits related to share-based payments. In the six months ended June 30, 2023, our effective tax rate was also favorably impacted by discrete items associated with the release of unrecognized tax benefits. 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.
Current wording
Our effective tax rates for the three and nine months ended September 30, 2024 were 0.3% and 1.5%, respectively, as compared to 5.1% in both the corresponding periods of 2023. The effective tax rate in these periods was lower than the statutory federal income-tax rate of 21% due to the geographic distribution of our world-wide earnings in lower-tax jurisdictions and the impact of federal research tax credits. Additionally, in the nine months ended September 30, 2024, our effective tax rate was also favorably impacted by the recognition of excess tax benefits related to share-based payments andby discrete items associated with the release of unrecognized tax benefits. In the three and nine months ended September 30, 2023, our effective tax rate was favorably impacted by a discrete item associated with recognition of excess tax benefits related to share-based payments. In the nine months ended September 30, 2023, our effective tax rate was also favorably impacted by discrete items associated with the release of unrecognized tax benefits. These benefits were partially offset by U.S. 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.
Previous wording
As of June 30, 2024, we had $290.5 million in cash, cash equivalents and short-term marketable securities, a decrease of $21.1 million from $311.6 million as of December 31, 2023. As of June 30, 2024, we had working capital, defined as current assets less current liabilities, of $449.6 million, a decrease of approximately $13.1 million from $462.7 million as of December 31, 2023.
Current wording
As of September 30, 2024, we had $303.8 million in cash, cash equivalents and short-term marketable securities, a decrease of $7.8 million from $311.6 million as of December 31, 2023. As of September 30, 2024, we had working capital, defined as current assets less current liabilities, of $457.1 million, a decrease of approximately $5.6 million from $462.7 million as of December 31, 2023.
Previous wording
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 (“SOFR”) 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. No advances were outstanding under the agreement as of June 30, 2024.
Current wording
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 (“SOFR”) 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; any advances under the
Previous wording
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
Current wording
Operating activities generated $66.5 million of cash in the nine months ended September 30, 2024. Net income for this period was $23.1 million; we also incurred non-cash stock-based compensation expense, depreciation, increase in deferred tax assets, accretion of discount on marketable securities, and amortization of intangibles of $25.8 million, $25.6 million, $8.7 million, $1.3 million and $1.1 million, respectively. Sources of cash included a $5.6 million decrease in prepaid expenses and other assets and an increase of $1.9 million in accounts payable. These sources of cash were partially offset by a $4.5 million increase in inventories and a $1.5 million increase in accounts receivable due to timing of customer payments.
Previous wording
Operating activities generated $22.8 million of cash in the six months ended June 30, 2023. Net income for this period was $21.7 million; we also incurred depreciation, non-cash stock-based compensation expense, amortization of intangibles and amortization premiums on marketable securities of $17.7 million, $14.1 million, $1.1 million, and $0.4 million, respectively. Sources of cash primarily included an $8.8 million increase in accounts payable (excluding payables related to property and equipment) due to timing of payments. These sources of cash were partially offset by a $14.3 million increase in inventories, a $7.2 million increase in prepaid expenses and other assets primarily due to federal income tax prepayments, a $10.8 million increase in accounts receivable, a $5.4 million decrease in taxes payable and accrued liabilities primarily due to timing of customer rebate payments, and a $2.8 million increase in deferred income taxes.
Current wording
Operating activities generated $49.5 million of cash in the nine months ended September 30, 2023. Net income for this period was $41.5 million; we also incurred depreciation, non-cash stock-based compensation expense, increase in deferred tax assets and amortization of intangibles of $26.3 million, $21.0 million, $10.0 million and $1.6 million, respectively. Sources of cash were partially offset by a $14.8 million increase in inventories reflecting a slowdown in sales driven by factors described above, a $7.2 million increase in accounts receivable, a $5.0 million decrease in taxes payable and accrued liabilities primarily due to timing of customer rebate payments, a $2.9 million decrease in accounts payable (excluding payables related to property and equipment) due to timing of payments and a $0.8 million increase in prepaid expenses and other assets primarily due to federal income tax prepayments.
Previous wording
Our investing activities in the six months ended June 30, 2024 resulted in a $0.9 million net use of cash, primarily consisting of $8.5 million used for purchases of property and equipment (primarily production-related machinery and equipment), partially offset by $7.6 million from sales and maturities of marketable securities, net of purchases.
Current wording
Our investing activities in the nine months ended September 30, 2024 resulted in a $17.5 million net use of cash, primarily consisting of $14.2 million used for purchases of property and equipment (primarily production-related machinery and equipment) and $9.5 million for the Odyssey acquisition, partially offset by $6.2 million of proceeds from sales and maturities of marketable securities, net of purchases.
Previous wording
Our investing activities inthe six months ended June 30, 2023 resulted in$19.4 million net use of cash, primarily consisting of $12.2 million used for purchases of marketable securities net of proceeds from sales and maturities, and $7.2 million used for purchases of property and equipment, primarily production-related machinery and equipment.
Current wording
Our investing activities in the nine months ended September 30, 2023 resulted in$25.9 million net use of cash, primarily consisting of $11.1 million used for purchases of marketable securities net of proceeds from sales and maturities, and $14.7 million used for purchases of property and equipment, primarily production-related machinery and equipment.
Previous wording
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.
Current wording
Our financing activities in the nine months ended September 30, 2024 resulted in a $54.4 million net use of cash, consisting of $34.1 million for the payment of dividends to stockholders and $26.0 million for the repurchase of our common stock, partially offset by proceeds of $5.7 million from the issuance of shares through our employee stock purchase plan.
Previous wording
Our financing activities in the six months ended June 30, 2023 resulted in a $24.7 million net use of cash, consisting of $21.8 million for the payment of dividends to stockholders and $6.0 million for the repurchase of our common stock, partially offset by $3.1 million from the issuance of shares through our employee stock purchase plan.
Current wording
Our financing activities in the nine months ended September 30, 2023 resulted in a $34.3 million net use of cash, consisting of $32.7 million for the payment of dividends to stockholders and $7.8 million for the repurchase of our common stock, partially offset by $6.2 million from the issuance of shares through our employee stock purchase plan.
Previous wording
In February 2023, our board of directors declared dividends of $0.19 per share to be paid to stockholders of record at the end of each quarter in 2023. In October 2023, our board of directors raised the quarterly cash dividend with the declaration of five cash dividends of $0.20 per share to be paid to stockholders of record at the end of the fourth quarter in 2023 (in lieu of the $0.19 per share announced in February 2023) and at the end of each quarter in 2024.
Current wording
In February 2023, our board of directors declared dividends of $0.19 per share to be paid to stockholders of record at the end of each quarter in 2023. In October 2023, our board of directors raised the quarterly cash dividend with the declaration of five cash dividends of $0.20 per share to be paid at the end of the fourth quarter of 2023 (in lieu of the previously declared dividend of $0.19 per share) and at the end of each quarter in 2024. In October 2024, our board of directors raised the quarterly cash dividend again with the declaration of five cash dividends of $0.21 per share to be paid at the end of the fourth quarter of 2024 (in lieu of the previously declared dividend of $0.20 per share) and at the end of each quarter in 2025.
Previous wording
As of December 31, 2023, we had $26.0 million remaining under our stock-repurchase program. In the six months ended June 30, 2024, we repurchased approximately 371,000 shares of our common stock for $26.0 million, leaving no amount authorized for stock repurchases as of June 30, 2024. 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.
Current wording
As of December 31, 2023, we had $26.0 million remaining under our stock-repurchase program. We exhausted this authorization in the nine months ended September 30, 2024, purchasing approximately 371,000 shares of our common stock for $26.0 million. In October 2024, our board of directors authorized the use of $50.0 million for the repurchase of our common stock, with repurchases to be executed according to pre-defined price/volume guidelines. The program has no expiration date. Authorization of future repurchase programs is at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
revolving line of credit would become due on such date, or earlier in the event of a default. No advances were outstanding under the agreement as of September 30, 2024.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous report — wording carried elsewhere
certain end-customers, shifts in market share among handset vendors, diversification of component suppliers among Chinese handset OEMs, including greater use of Chinese-made components, and increased decoupling of handsets and chargers. Lower sales into the computer market also contributed to the decline, due primarily to excess inventory related to chargers for tablet computers. These decreases were partially offset by higher sales into the consumer end-market, reflecting depletion of excess inventories related to the appliance market. For the six-month period ended June 30, 2024, revenues for all but the consumer end-market category decreased compared to the corresponding prior-year period.
Previous report — wording carried elsewhere
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.