5 unchanged sentences
COVID-19 could further materially adversely affect our business, workforce, supply chain, results of operations, financial condition and/or cash flows.
−Removed: The continuing spread in 2020 of COVID-19 and related foreign and domestic government actions restricting travel, commerce and gathering has adversely affected our manufacturing locations.
+Added: The ongoing COVID-19 pandemic has adversely impacted our ability (a) to manufacture, test, service and ship our products, (b) to get required materials and sub-assemblies to build and service our products and (c) to staff labor and management for manufacturing, research and development, supply chain, service, and administrative operations.
+Added: Further, we may continue to experience adverse impact with our global supply chain partners, critical subassembly suppliers, parts distributors, and transportation service providers, which may result in increased costs, material shortages, and the inability to fully meet our customers’ demand.
+Added: For example, in 2021, the combination of increased demand for semiconductor and other select components and the ongoing impact of COVID-19 has affected global electronics markets and impacted our ability to ship to our full demand levels.
+Added: In addition, we have experienced higher input costs as we have incurred material premiums, expedite fees, price increases, and higher logistic costs.
+Added: We expect these conditions will continue to adversely impact our ability to ship products to customers.
+Added: Beyond 2021, it is not known how long or significant these global supply strain constraints will be, but it may continue to impact our results.
+Added: Further foreign and domestic government actions restricting travel, commerce, and gathering could adversely affect our manufacturing locations.
COVID-19 has also resulted in economic recessions and high unemployment in many countries, which could negatively impact future customer purchases of our products.
−Removed: If COVID-19 continues to spread and restrictions remain in place or are reinstituted, we may continue to see adverse impact on our ability (a) to manufacture, test, service and ship our products, (b) to get required materials and sub-assemblies to build and service our products and (c) to staff labor and management for manufacturing, research and development, supply chain, service, and administrative operations.
−Removed: Further, we may experience adverse impact with our global supply chain partners and transportation service providers which may result in increased costs and material shortages.
−Removed: In addition, much of our workforce is now working remotely.
+Added: In addition, a portion of our workforce continues to work remotely.
While we have been successful in transitioning to this remote environment, the long-term impact on productivity and innovation is not yet clear.
−Removed: As a result, COVID-19 could adversely impact our near-term and long-term revenues, earnings and cash flow and could require further expenditures.
−Removed: This situation continues to evolve, and other impacts may arise that we are not aware of currently.
+Added: As a result, COVID-19 and its variants could continue to adversely impact our near-term and long-term revenues, earnings and cash flow and could require further expenditures.
+Added: The COVID-19 situation continues to evolve and to the extent that it adversely affects our business, financial condition, operating results, and cash flows, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.
+Added: Other impacts may arise that we are not aware of currently.
We have an active rapid response team to mitigate risks we are aware of currently and as they arise.
+Added: Our orders of raw materials, parts, components, and subassemblies are based on demand forecasts and may be constrained by supply shortages caused by COVID-19 or other factors.
+Added: We place orders with many of our suppliers based on our customers’ quarterly forecasts and our annual forecasts.
+Added: These forecasts are based on our customers’ and our expectations as to demand for our products.
+Added: As the quarter and the year progress, such demand can change rapidly or we may realize that our customers’ expectations were overly optimistic or pessimistic, especially when industry or general economic conditions change.
+Added: Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties.
+Added: Delays in delivery schedules and/or customer changes to backlog orders during any particular period could cause a decrease in sales and have a material adverse effect on our business and results of operations.
+Added: Orders with our suppliers cannot always be amended in response.
+Added: In addition, to assure availability of certain components or to obtain priority pricing, we have entered into contracts with some of our suppliers that require us to purchase a specified number of components and subassemblies each quarter, even if we are not able to use such components or subassemblies.
+Added: Moreover, we have obligations to some of our customers to hold a minimum amount of finished goods in inventory, to fulfill just in time orders, regardless of whether the customers expect to place such orders.
+Added: We currently have firm purchase commitments and agreements with various suppliers to ensure the availability of components.
+Added: If demand for our products exceeds our customers’ and our forecasts, we may not be able to timely obtain enough raw materials, parts, components, or subassemblies, on favorable terms or at all, to fulfill the excess demand.
+Added: This may lead to customers cancelling orders prior to shipment causing a decrease in sales, which may have a material adverse effect on our business and results of operations.
+Added: In addition, given the proprietary nature of our products, many of these parts are sole sourced or not easily interchangeable.
+Added: For example, in 2021 there was a global shortage of certain electronics and semiconductor parts given the emerging higher global demand for technology goods and the impact of COVID-19 and other disruptions on the global supply chain.
+Added: This has resulted in higher levels of inventory while we procure critical parts to complete full kits.
+Added: If we are not able to obtain parts in a reasonable timeframe and at a reasonable cost our business may be adversely impacted.
+Added: Further, if demand for our products does not continue at current levels, we might not be able to use all the components that we are required to purchase under these commitments and agreements, and our reserves for excess and obsolete inventory may increase, which could have a material adverse effect on our results of operations.
Our results of operations could be affected by natural disasters and other events in the locations in which we or our customers or suppliers operate.
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Industry related risks
+Added: Our operations in the People’s Republic of China and the Asia Pacific region are subject to significant political and economic uncertainties over which we have little or no control and we may be unable to alter our business practice in time to avoid reductions in revenues.
+Added: A significant portion of our operations outside the United States are located in the People’s Republic of China ("PRC"), which exposes us to risks, such as exchange controls and currency restrictions, changes in local economic conditions, changes in customs regulations and tariffs, changes in tax policies, changes in PRC laws and regulations, possible expropriation or other PRC government actions, and unsettled political conditions including potential changes in U.S.
+Added: policy regarding overseas manufacturing.
+Added: At various times during recent years, the U.S.
+Added: and PRC have had significant disagreements over geopolitical, trade and economic issues.
+Added: Controversies may arise in the future between these two countries.
+Added: Any escalating political controversies between the U.S.
+Added: and PRC, whether or not directly related to our business, could have a material adverse effect on our operations, business, results of operations, and financial condition.
+Added: See "We are exposed to risks associated with worldwide financial markets and the global economy"
+Added: risk factor below.
+Added: Additionally, there is inherent risk, based on the complex relationships among PRC, Hong Kong, Taiwan, and the United States, that political, diplomatic, and national security influences might lead to trade, technology, or capital disputes, and/or disruptions, in particular those affecting the semiconductor industry.
+Added: This would adversely affect our business with PRC, Hong Kong, and/or Taiwan and perhaps the entire Asia Pacific region or global economy.
+Added: Actions by the Chinese government extending its territorial claims, such as the passage of the national security law in Hong Kong and the potential establishment of an Air Defense Identification Zone over the South China Sea,
+Added: raises the fear of conflict that could result in international reprisal.
+Added: Actions by the U.S.
+Added: government on trade policy against the PRC and companies like Huawei Technologies Co., Ltd.
+Added: have also escalated tensions.
+Added: Lastly, the recent U.S.
+Added: and PRC consulate closures and the continuing Hong Kong political unrest is creating more uncertainty.
+Added: Should the PRC take any actions against Taiwan, we could see additional risks to diplomatic and trade relations that could inhibit our access to materials, parts, and customers and impair our ability to effectively operate in the region.
+Added: Given our expanded presence in the PRC and Hong Kong, our business results, operations, and financial condition could be adversely affected by these developments and other changes to political, diplomatic, and social conditions.
+Added: Moreover, PRC’s policies towards, and treatment of, U.S.
+Added: companies operating in PRC and Hong Kong could change quickly resulting in an adverse impact to us.
The industries in which we compete are subject to volatile and unpredictable cycles.
10 unchanged sentences
Although the Semiconductor Equipment market improved during the fourth quarter of 2019 and throughout 2021, it is unclear how long this recovery will last.
−Removed: In addition, the market may be characterized in the future with more "mini-ramps"
−Removed: rather than sustained growth periods as experienced during 2015-2017 given market dynamics, inventory levels, and geopolitical changes.
−Removed: In addition, our Data Center Computing and Telecom
−Removed: and Networking markets are characterized by large program investments, which can cause variations in quarterly or annual revenues.
−Removed: For example, during 2020 our growth in data center computing and telecom networking has been driven by share gains at specific customer accounts.
−Removed: Towards the end of 2020, we began to experience a period of digestion by our major customers resulting in lower demand.
−Removed: We expect this digestion to continue into the first half of 2021 and overall business levels may not continue to be realized at these levels each quarter.
+Added: In addition, our Data Center Computing and Telecom and Networking markets are characterized by large program investments, which can cause variations in quarterly or annual revenues.
+Added: For example, during 2020 our growth in Data Center Computing and Telecom and Networking was driven by share gains at specific customer accounts.
+Added: Towards the end of 2020, we began to experience a period of digestion by our major customers that continued into early 2021, resulting in lower demand.
+Added: We expect overall demand levels may continue to fluctuate each quarter through these business cycles.
+Added: In 2021, demand was strong across our markets, however industry wide supply constraints for certain integrated circuit and other parts limited our ability to ship to our demand levels and resulted in increased cost as we procured material through open market and other purchases.
+Added: It is unclear how long it will take before the supply chain environment improves, further impacting our financial results.
We must achieve design wins to retain our existing customers and to obtain new customers, although design wins achieved do not necessarily result in substantial sales.
−Removed: Driven by continuing technology migration and changing customers demand, the markets we serve are constantly changing in terms of advancement in applications, core technology and competitive pressures.
+Added: Driven by continuing technology migration and changing customer demand, the markets we serve are constantly changing in terms of advancement in applications, core technology and competitive pressures.
New products we design for capital equipment manufacturers typically have a lifespan of five to ten years.
1 unchanged sentence
Given such up-front investments we make to develop, evaluate, and qualify products in the design win process, our success and future growth depend on our products being designed into our customers' new generations of equipment as they develop new technologies and applications.
−Removed: We must work with these manufacturers early in their design cycles to modify, enhance and upgrade our products or design new products that meet the requirements of their new systems.
+Added: We must work with these manufacturers early in their design cycles to modify, enhance and upgrade our products or
+Added: design new products that meet the requirements of their new systems.
The design win process is highly competitive, and we may win or lose new design wins for our existing customers or new customers' next generations of equipment.
If existing or new customers do not choose us during the design win process, our market share will be reduced, the potential revenues related to the lifespan of our customers’ products, which can be five to ten years, will not be realized, and our business, financial condition and results of operations would be materially and adversely impacted.
−Removed: Business model, acquisitions, and capital structure related risks
+Added: Business model and capital structure related risks
Despite the continued evolution of our manufacturing footprint our product lines are manufactured at only a few sites and our sites are not generally interchangeable.
4 unchanged sentences
Our telecom, networking, data center computing, and medical products are manufactured in Zhongshan, PRC, Rosario, Philippines and Santa Rosa, Philippines.
−Removed: Most facilities are under operating lease and interruptions in operations could be caused by early termination of existing leases by landlords or failure by landlords to renew existing leases upon expiration, including the possibility that suitable operating locations may not be available in proximity to existing facilities which could result in labor or supply chain risks.
+Added: Most facilities are under operating leases and interruptions in operations could be caused by early termination of existing leases by landlords or failure by landlords to renew existing leases upon expiration, including the possibility that suitable operating locations may not be available in proximity to existing facilities, which could result in labor or supply chain risks.
Each facility manufactures different products, and therefore, is not interchangeable.
Natural, uncontrollable occurrences or other operational issues at any of our manufacturing facilities could significantly reduce or disrupt our productivity at such site and could prevent us from meeting our customers’ requirements in a timely manner, or at all.
−Removed: Additionally, we have a plan to relocate our Shenzhen, PRC manufacturing facility by December 2021.
−Removed: As a result, we are investing in a dual manufacturing facility in Penang, Malaysia capable of manufacturing our semiconductor and other products.
+Added: Additionally, we have a plan to complete the relocation of our Shenzhen, PRC manufacturing facility in 2022.
+Added: As a result, we have invested in a dual manufacturing facility in Penang, Malaysia capable of manufacturing our semiconductor and other products.
We believe this investment will help to mitigate our exposure to regional risks, improve our business continuity profile and lower costs over time.
We opened this facility in 2020;
−Removed: however, it may take additional time to realize the facility’s full production capacity given the impact of COVID-19.
+Added: however, it may take additional time to realize the facility’s full production capacity given the impact of COVID-19 and supply chain constraints.
+Added: As this facility increases its volume capabilities, we may experience production inefficiencies, challenges related to material flow and workmanship, or other issues customary to ramping a new factory.
+Added: If we are not able to fully and timely integrate our facility, our revenues may be negatively impacted until we are able to increase capacity or productivity.
+Added: We transitioned a significant amount of our supply base to Asian suppliers.
+Added: We transitioned the purchasing of a substantial portion of components for our products to Asian suppliers to lower our materials costs and shipping expenses.
+Added: These components might require us to incur higher than anticipated testing or repair costs, which would have an adverse effect on our operating results.
+Added: Customers who have strict and extensive qualification requirements might not accept our products if these lower-cost components do not meet their requirements.
+Added: A delay or refusal by our customers to accept such products, as well as an inability of our suppliers to meet our purchasing requirements, might require us to purchase higher-priced components from our existing suppliers or might cause us to lose sales to these customers, either of which could lead to decreased revenue and gross margins and have an adverse effect on our results of operations.
+Added: We generally have no long-term contracts with our customers requiring them to purchase any specified quantities from us.
+Added: Our sales are primarily made on a purchase order basis, and we generally have no long-term purchase commitments from our customers, which is typical in the industries we serve.
+Added: As a result, we are limited in our ability to predict the level of future sales or commitments from our current customers, which may diminish our ability to allocate labor, materials, and equipment in the manufacturing process effectively.
+Added: In addition, we may purchase inventory in anticipation of sales that do not materialize, resulting in excess and obsolete inventory write-offs.
+Added: If we are unable to adjust our business strategy successfully for some of our product lines to reflect the increasing price sensitivity on the part of our customers, our business and financial condition could be harmed.
+Added: Our business strategy for many of our product lines has been focused on product performance and technology innovation to provide enhanced efficiencies and productivity.
+Added: Our customers continually exert pressure on us to reduce our prices and extend payment terms and we may be required to enter into long term reduced pricing agreements, extended payment terms, exclusivity arrangements, or other unfavorable contract terms with our largest customers to remain competitive.
+Added: In addition, we compete in markets in which customers may include dual or multi-sourcing of power.
+Added: We believe some of our Asian competitors benefit from local governmental funding incentives and purchasing preferences from end-user customers in their respective countries.
+Added: If competition against any of our product lines should come to focus solely on price rather than on product performance and technology innovation, we will need to adjust our business strategy, product offerings and product costs accordingly, and if we are unable to do so, our business, financial condition, and results of operations could be materially and adversely affected.
+Added: Further, in 2021 we increased prices and implemented surcharges across many of our products to reflect our higher supply chain costs.
+Added: Although these price changes have been accepted by our customers, the higher prices could make our products less competitive in the market over time and could have an adverse effect on our results of operations.
+Added: A significant portion of our sales and accounts receivable are concentrated among a few customers.
+Added: The following table summarizes the percentage of total sales derived from our ten largest customers:
+Added: Years Ended December 31,
+Added: Ten largest customers
+Added: The following table summarizes sales to and percentage of total sales from our two largest customers (in thousands):
+Added: Years Ended December 31,
+Added: Applied Materials, Inc.
+Added: Lam Research Corporation
+Added: The following table summarizes the accounts receivable balances (in thousands) and percentages of the total accounts receivable from customers who individually accounted for 10% or more of accounts receivable:
+Added: Applied Materials, Inc.
+Added: Nidec Motor Corporation
+Added: * Customer’s balance was less than 10% of total
+Added: A significant decline in sales from these or other large customers, or our inability to collect on these sales, could materially and adversely impact our business, results of operations and financial condition.
+Added: The loss of personnel could significantly harm our results of operations and competitive position.
+Added: Our success depends to a significant degree upon the continuing contributions of our management, technical, marketing, and sales employees.
+Added: We may not be successful in retaining our employees or attracting or retaining additional skilled personnel as required.
+Added: Failure to retain or attract personnel could significantly harm our results of operations and competitive position.
+Added: Our success in hiring and retaining employees depends on a variety of factors, including the attractiveness of our compensation and benefit programs, global economic or political and industry conditions, our organizational structure, our reputation, culture and working environment, competition for talent and the availability of qualified employees, the availability of career development opportunities, and our ability to offer a
+Added: challenging and rewarding work environment.
+Added: We must develop our personnel to provide succession plans capable of maintaining continuity during the inevitable unpredictability of personnel retention.
+Added: While we have plans for key management succession and long-term compensation plans designed to retain our senior employees, if our succession plans do not operate effectively, our business could be adversely affected.
+Added: The market price of our common stock has fluctuated and may continue to fluctuate for reasons over which we have no control.
+Added: The stock market has from time to time experienced, and is likely to continue to experience, extreme price and volume fluctuations.
+Added: Prices of securities of technology companies have been especially volatile and have often fluctuated for reasons that are unrelated to their operating performance.
+Added: In the past, companies that have experienced volatility in the market price of their stock have been the subject of securities class action litigation.
+Added: If we were the subject of securities class action litigation, it could result in substantial costs and a diversion of management’s attention and resources.
+Added: Our operating results are subject to fluctuations, and if we fail to meet the expectations of securities analysts or investors, our share price may decrease significantly.
+Added: Our annual and quarterly results may vary significantly depending on various factors, many of which are beyond our control.
+Added: Because our operating expenses are based on anticipated revenue levels, our sales cycle for development work is relatively long, and a high percentage of our expenses are fixed for the short term, a small variation in the timing of recognition of revenue can cause significant variations in operating results from period to period.
+Added: If our earnings do not meet the expectations of securities analysts or investors, the price of our stock could decline.
+Added: Acquisition related risks
Our long-term success and results of operations depend on our ability to successfully integrate Artesyn’s business and operations and realize the anticipated benefits from the acquisition.
10 unchanged sentences
If we are unable to successfully or timely integrate the operations of Artesyn’s business into our business over the long-term, we may be unable to realize the long-term revenue growth, synergies, cost-savings, and other anticipated benefits resulting from the acquisition and our business could be adversely affected.
−Removed: Additionally, we have and may continue to incur transaction-related costs, including legal, regulatory, and other costs associated with implementing integration plans, including facilities and systems consolidation costs and employment-related costs.
+Added: Additionally, we have and may
+Added: continue to incur transaction-related costs, including legal, regulatory, and other costs associated with implementing integration plans, including facilities and systems consolidation costs and employment-related costs.
Artesyn’s business and operations may not achieve the anticipated revenues and operating results.
10 unchanged sentences
● transfer and sell assets;
−Removed: ● effect a consolidation or merger or sell, transfer, lease, or otherwise dispose of all or substantially all of our assets;
+Added: ● effect a consolidation or merger or sell, transfer, lease, or otherwise dispose of all or substantially all our assets;
● create liens on our assets to secure debt.
2 unchanged sentences
If there were an event of default under certain provisions of our debt arrangements that was not cured or waived, the holders of the defaulted debt may be able to cause all amounts outstanding with respect to the debt instrument, plus any required settlement costs, to be due and payable immediately.
−Removed: Our assets and cash flow may not be sufficient to fully repay
−Removed: borrowings under our outstanding debt instruments if accelerated upon an event of default.
+Added: Our assets and cash flow may not be sufficient to fully repay borrowings under our outstanding debt instruments if accelerated upon an event of default.
If we are unable to repay, refinance, or restructure our indebtedness as required, or amend the covenants contained in these agreements, the lenders can exercise all rights and remedies available under our Credit Agreement or applicable laws or equity.
−Removed: Our orders of raw materials, parts, components, and subassemblies are based on demand forecasts.
−Removed: We place orders with many of our suppliers based on our customers’ quarterly forecasts and our annual forecasts.
−Removed: These forecasts are based on our customers’ and our expectations as to demand for our products.
−Removed: As the quarter and the year progress, such demand can change rapidly or we may realize that our customers’ expectations were overly optimistic or pessimistic, especially when industry or general economic conditions change.
−Removed: Orders with our suppliers cannot always be amended in response.
−Removed: In addition, to assure availability of certain components or to obtain priority pricing, we have entered into contracts with some of our suppliers that require us to purchase a specified number of components and subassemblies each quarter, even if we are not able to use such components or subassemblies.
−Removed: Moreover, we have obligations to some of our customers to hold a minimum amount of finished goods in inventory, to fulfill just in time orders, regardless of whether the customers expect to place such orders.
−Removed: We currently have firm purchase commitments and agreements with various suppliers to ensure the availability of components.
−Removed: If demand for our products does not continue at current levels, we might not be able to use all the components that we are required to purchase under these commitments and agreements, and our reserves for excess and obsolete inventory may increase, which could have a material adverse effect on our results of operations.
−Removed: If demand for our products exceeds our customers’ and our forecasts, we may not be able to timely obtain enough raw materials, parts, components, or subassemblies, on favorable terms or at all, to fulfill the excess demand.
−Removed: For example, entering 2021 there is global shortage of certain electronics and semiconductor parts given higher global demand and the impact of COVID-19 on the global supply chain.
−Removed: If we are not able to obtain parts in a reasonable timeframe our business may be adversely impacted.
Activities necessary to integrate acquisitions may result in costs more than current expectations or be less successful than anticipated.
4 unchanged sentences
If actual integration costs are higher than amounts originally anticipated, if we are unable to integrate the assets and personnel acquired in an acquisition as anticipated, or if we are unable to fully benefit from anticipated synergies, our business, financial condition, results of operations, and cash flows could be materially adversely affected.
−Removed: We transitioned a significant amount of our supply base to Asian suppliers.
−Removed: We transitioned the purchasing of a substantial portion of components for our products to Asian suppliers to lower our materials costs and shipping expenses.
−Removed: These components might require us to incur higher than anticipated testing or repair costs, which would have an adverse effect on our operating results.
−Removed: Customers who have strict and extensive qualification requirements might not accept our products if these lower-cost components do not meet their requirements.
−Removed: A delay or refusal by our customers to accept such products, as well as an inability of our suppliers to meet our purchasing requirements, might require us to purchase higher-priced components from our existing suppliers or might cause us to lose sales to these customers, either of which could lead to decreased revenue and gross margins and have an adverse effect on our results of operations.
−Removed: We generally have no long-term contracts with our customers requiring them to purchase any specified quantities from us.
−Removed: Our sales are primarily made on a purchase order basis, and we generally have no long-term purchase commitments from our customers, which is typical in the industries we serve.
−Removed: As a result, we are limited in our ability to predict the level of future sales or commitments from our current customers, which may diminish our ability to allocate
−Removed: labor, materials, and equipment in the manufacturing process effectively.
−Removed: In addition, we may purchase inventory in anticipation of sales that do not materialize, resulting in excess and obsolete inventory write-offs.
−Removed: If we are unable to adjust our business strategy successfully for some of our product lines to reflect the increasing price sensitivity on the part of our customers, our business and financial condition could be harmed.
−Removed: Our business strategy for many of our product lines has been focused on product performance and technology innovation to provide enhanced efficiencies and productivity.
−Removed: Our customers continually exert pressure on us to reduce our prices and extend payment terms and we may be required to enter into long term reduced pricing agreements with our largest customers to remain competitive.
−Removed: In addition, we compete in markets in which customers may include dual or multi-sourcing of power.
−Removed: We believe some of our Asian competitors benefit from local governmental funding incentives and purchasing preferences from end-user customers in their respective countries.
−Removed: If competition against any of our product lines should come to focus solely on price rather than on product performance and technology innovation, we will need to adjust our business strategy, product offerings and product costs accordingly, and if we are unable to do so, our business, financial condition, and results of operations could be materially and adversely affected.
−Removed: A significant portion of our sales and accounts receivable are concentrated among a few customers.
−Removed: The following table summarizes the percentage of total sales derived from our ten largest customers:
−Removed: Years Ended December 31,
−Removed: Ten largest customers
−Removed: The following table summarizes sales to and percentage of total sales from Applied Materials, Inc.
−Removed: and Lam Research Corp., our two largest customers (in thousands):
−Removed: Years Ended December 31,
−Removed: Applied Materials, Inc.
−Removed: We have an accounts receivable balance from Applied Materials, Inc.
−Removed: of $33.4 million and $36.8 million as of December 31, 2020 and 2019, respectively.
−Removed: A significant decline in sales from this or other large customers, or the Company’s inability to collect on these sales, could materially and adversely impact our business, results of operations and financial condition.
−Removed: The loss of any of our key personnel could significantly harm our results of operations and competitive position.
−Removed: Our success depends to a significant degree upon the continuing contributions of our key management, technical, marketing, and sales employees.
−Removed: We may not be successful in retaining our key employees or attracting or retaining additional skilled personnel as required.
−Removed: Failure to retain or attract key personnel could significantly harm our results of operations and competitive position.
−Removed: Our success in hiring and retaining employees depends on a variety of factors, including the attractiveness of our compensation and benefit programs, global economic or political and industry conditions, our organizational structure, our reputation, culture and working environment, competition for talent and the availability of qualified employees, the availability of career development opportunities, and our ability to offer a challenging and rewarding work environment.
−Removed: We must develop our personnel to provide succession plans capable of maintaining continuity during the inevitable unpredictability of personnel retention.
−Removed: While we have plans for key management succession and long-term compensation plans designed to retain our senior employees, if our succession plans do not operate effectively, our business could be adversely affected.
−Removed: The market price of our common stock has fluctuated and may continue to fluctuate for reasons over which we have no control.
−Removed: The stock market has from time to time experienced, and is likely to continue to experience, extreme price and volume fluctuations.
−Removed: Prices of securities of technology companies have been especially volatile and have often fluctuated for reasons that are unrelated to their operating performance.
−Removed: In the past, companies that have experienced volatility in the market price of their stock have been the subject of securities class action litigation.
−Removed: If we were the subject of securities class action litigation, it could result in substantial costs and a diversion of management’s attention and resources.
−Removed: Our operating results are subject to fluctuations, and if we fail to meet the expectations of securities analysts or investors, our share price may decrease significantly.
−Removed: Our annual and quarterly results may vary significantly depending on various factors, many of which are beyond our control.
−Removed: Because our operating expenses are based on anticipated revenue levels, our sales cycle for development work is relatively long, and a high percentage of our expenses are fixed for the short term, a small variation in the timing of recognition of revenue can cause significant variations in operating results from period to period.
−Removed: If our earnings do not meet the expectations of securities analysts or investors, the price of our stock could decline.
Commercial and financial related risks
+Added: If our network security measures are breached and unauthorized access is obtained to a customer’s data or our data or our information technology systems, we may incur significant legal and financial exposure and liabilities.
+Added: As part of our day-to-day business, we store our data and certain data about our customers in our global information technology system.
+Added: Unauthorized access to our data, including any regarding our customers, could expose us to a risk of loss of this information, loss of business, litigation, and possible liability.
+Added: These security measures may be breached by intentional misconduct by computer hackers, because of third-party action, employee error, malfeasance or otherwise.
+Added: Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords, or other information in order to gain access to our customers’ data or our data, including our intellectual property and other confidential business information, or our information technology systems.
+Added: Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
+Added: Any security breach could result in a loss of confidence by our customers, damage our reputation, disrupt our business, lead to legal liability, and negatively impact our future sales.
We are highly dependent on our intellectual property.
3 unchanged sentences
In addition, the laws of some foreign countries might not afford our intellectual property the same protections as do the laws of the United States.
−Removed: Our intellectual property is not protected by patents in several countries in which we do business, and we have limited patent protection in other countries, including the PRC Generally, our efforts to obtain international patents have been concentrated in the European Union and certain industrialized countries in Asia, including Korea, Japan, and Taiwan.
+Added: Our intellectual property is not protected by patents in several countries in which we do business, and we have limited patent protection in other countries, including the PRC.
+Added: Generally, our efforts to obtain international patents have been concentrated in the European Union and certain industrialized countries in Asia, including Korea, Japan, and Taiwan.
If we are unable to protect our intellectual property successfully, our business, financial condition, and results of operations could be materially and adversely affected.
2 unchanged sentences
Consequently, manufacturing our products in the PRC may subject us to an increased risk that unauthorized parties may attempt to copy our products or otherwise obtain or use our intellectual property.
−Removed: Our operations in the People’s Republic of China (PRC) and the Asia Pacific region are subject to significant political and economic uncertainties over which we have little or no control and we may be unable to alter our business practice in time to avoid reductions in revenues.
−Removed: A significant portion of our operations outside the United States are located in the PRC, which exposes us to risks, such as exchange controls and currency restrictions, changes in local economic conditions, changes in customs regulations and tariffs, changes in tax policies, changes in PRC laws and regulations, possible expropriation or other PRC government actions, and unsettled political conditions including potential changes in U.S.
−Removed: policy regarding overseas manufacturing.
−Removed: At various times during recent years, the U.S.
−Removed: and PRC have had significant disagreements over geopolitical, trade and economic issues.
−Removed: Controversies may arise in the future between these two countries.
−Removed: Any escalating political controversies between the U.S.
−Removed: and PRC, whether or not directly related to our business, could have a material adverse effect on our operations, business, results of operations, and financial condition.
−Removed: See "We are exposed to risks associated with worldwide financial markets and the global economy"
−Removed: risk factor below.
−Removed: Additionally, there is inherent risk, based on the complex relationships among PRC, Hong Kong, Taiwan, and the United States, that political, diplomatic, and national security influences might lead to trade, technology, or capital disputes,
−Removed: and/or disruptions, in particular those affecting the semiconductor industry.
−Removed: This would adversely affect our business with PRC, Hong Kong, and/or Taiwan and perhaps the entire Asia Pacific region or global economy.
−Removed: Actions by the Chinese government extending its territorial claims, such as the recent passage of the national security law in Hong Kong and the planned establishment of an Air Defense Identification Zone over the South China Sea, raises the fear of conflict that could result in international reprisal.
−Removed: Actions by the U.S.
−Removed: government on trade policy against the PRC and companies like Huawei Technologies Co., Ltd.
−Removed: have also escalated tensions.
−Removed: Lastly, the recent U.S.
−Removed: and PRC consulate closures and the continuing Hong Kong political unrest is creating more uncertainty.
−Removed: Should the PRC take any actions against Taiwan, we could see additional risks to diplomatic and trade relations in the region.
−Removed: Given our expanded presence in the PRC and Hong Kong, the company’s business results, operations and financial condition could be adversely affected by these developments and other changes to political, diplomatic, and social conditions.
−Removed: Moreover, PRC’s policies towards, and treatment of, U.S.
−Removed: companies operating in PRC and Hong Kong could change quickly resulting in an adverse impact on the Company.
We are subject to risks inherent in international operations.
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The value of our cash, cash equivalents, and marketable securities can be negatively affected by liquidity, credit deterioration, financial results, economic risk, political risk, sovereign risk, or other factors.
−Removed: Sales to our customers outside the United States were approximately 68.7% and 59.2% of our total sales for the year ended December 31, 2020 and 2019, respectively.
+Added: The table below summarizes our sales by geographic area (in thousands).
+Added: Sales to customers outside the United States represent a significant portion of our total revenue.
+Added: Years Ended December 31,
+Added: United States
+Added: North America (excluding U.S.)
Our acquisitions have increased our presence in international locations.
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● our ability to develop and maintain relationships with suppliers and other local businesses;
+Added: ● Our ability to procure parts from suppliers affected by geographic, geopolitical, pandemic, or other factors related to their local environment.
● compliance with product safety requirements and standards that are different from those of the United States;
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● our ability to obtain business licenses that may be needed in international locations to support expanded operations;
−Removed: ● timely collecting accounts receivable from foreign customers including significant balances in accounts receivable from foreign customers as of December 31, 2020;
−Removed: ● changes in tariffs, taxes, and foreign currency exchange rates;
+Added: ● timely collecting accounts receivable from foreign customers including significant balances in accounts receivable from foreign customers;
+Added: ● changes in tariffs, income tax, value added tax, and foreign currency exchange rates.
Our profitability and ability to implement our business strategies, maintain market share and compete successfully in international markets will be compromised if we are unable to manage these and other international risks successfully.
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This includes performing service to fulfill obligations under existing service maintenance contracts.
−Removed: There is no certainty that these can be performed profitably and could be adversely affected by higher than anticipated product failure rates, loss of critical service technician skills, an inability to obtain service parts, customer demands and disputes and cost of repair parts, among other factors.
+Added: There is no certainty that these can be performed profitably, and they could be adversely affected by higher than anticipated product failure rates, loss of critical service technician skills, an inability to obtain service parts, customer demands and disputes and cost of repair parts, among other factors.
Disposed and Discontinued Operations in Part II, Item 8 "Financial Statements and Supplementary Data."
−Removed: contained herein.
Our products may suffer from defects or errors leading to damage or warranty claims.
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Disposed and Discontinued Operations in Part II, Item 8 "Financial Statements and Supplementary Data."
−Removed: contained herein.
Unfavorable currency exchange rate fluctuations may lead to lower operating margins, or may cause us to raise prices, which could result in reduced sales.
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In addition, we have large, long-term liabilities such as local lease and pension liabilities in Europe and Asia creating more significant exposure to fluctuations in the value of the Euro, Philippine Peso, and Chinese Yuan.
−Removed: The company does not attempt to hedge these exposures given the long-term nature of the underlying liabilities and the non-cash nature of the foreign exchange gain or loss.
+Added: We do not attempt to hedge these exposures given the long-term nature of the underlying liabilities and the non-cash nature of the foreign exchange gain or loss.
The PRC government is continually pressured by its trading partners to allow its currency to float in a manner like other major currencies.
−Removed: Any change in the value of the Chinese yuan could significantly increase the labor and other costs incurred in the operation of our Shenzhen and Zhongshan facilities and the cost of raw materials, parts, components, and subassemblies that we source in the PRC, which could materially and adversely affect our results of operations.
+Added: Any change in the value of the Chinese yuan could significantly increase the labor and other costs incurred in the operation of our Shenzhen and Zhongshan facilities and the cost of raw materials, parts,
+Added: components, and subassemblies that we source in the PRC, which could materially and adversely affect our results of operations.
The United Kingdom’s exit from the European Union and related actions could adversely affect us.
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and was in a transitionary period through December 31, 2020.
−Removed: As of January 1, 2021, EU Trade Agreements no longer apply to the UK.
+Added: As of January 1, 2021, EU Trade Agreements no longer applied to the UK.
The UK has taken steps to reproduce the effects of trading agreements that previously applied through the provisional application of new trade agreements not yet ratified and has introduced the UK Global Tariff.
−Removed: These changes result in increased regulatory complexities on imports and exports between the UK and EU countries and may adversely affect our sales, operations, and financial results.
−Removed: Our operations in the UK may be adversely affected by significant fluctuations in the UK exchange rates and increased administrative costs and tariffs on the importation of parts for manufacturing and repair services.
−Removed: Moreover, the imposition of any import restrictions and duties levied on our UK products as imported for EU customers may make our products more expensive for such customers and less competitive from a pricing perspective.
+Added: These changes resulted in increased regulatory complexities on imports and exports to and from the UK which may adversely affect our sales, operations, and financial results.
+Added: Our operations in the UK may also be adversely affected by significant fluctuations in the UK exchange rates and increased administrative costs and tariffs on the importation of parts for manufacturing and repair services.
+Added: Moreover, the imposition of import restrictions and duties levied on our UK products may make our products more expensive for such customers and less competitive from a pricing perspective.
Difficulties with our enterprise resource planning ("ERP") system and other parts of our global information technology system could harm our business and results of operation.
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In addition, a significant failure of our global information technology system could adversely affect our ability to complete an evaluation of our internal controls and attestation activities pursuant to Section 404 of the Sarbanes-Oxley Act of 2002.
−Removed: If our network security measures are breached and unauthorized access is obtained to a customer’s data or our data or our information technology systems, we may incur significant legal and financial exposure and liabilities.
−Removed: As part of our day-to-day business, we store our data and certain data about our customers in our global information technology system.
−Removed: Unauthorized access to our data, including any regarding our customers, could expose us to a risk of loss of this information, loss of business, litigation, and possible liability.
−Removed: These security measures may be breached by intentional misconduct by computer hackers, because of third-party action, employee error, malfeasance or otherwise.
−Removed: Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as usernames, passwords, or other information in order to gain access to our customers’ data or our data, including our intellectual property and other confidential business information, or our information technology systems.
−Removed: Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not
−Removed: recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures.
−Removed: Any security breach could result in a loss of confidence by our customers, damage our reputation, disrupt our business, lead to legal liability, and negatively impact our future sales.
We have been, and in the future may again be, involved in litigation.
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Litigation may be necessary to enforce our commercial or property rights, to defend ourselves against claimed violations of such rights of others, or to protect our interests in regulatory, tax, customs, commercial, and other disputes, or similar matters.
−Removed: We have been experiencing increased litigation related to our legacy inverter product line.
+Added: We have experienced increased litigation related to our legacy inverter product line.
Litigation often requires a substantial amount of our management’s time and attention, as well as financial and other resources, including:
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Our intangible assets may become impaired.
−Removed: As of December 31, 2020, we have $210.0 million of goodwill and $168.9 million in intangible assets.
−Removed: We periodically review the estimated useful lives of our identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value, or for intangible assets, a revised useful life.
+Added: The following table summarizes our goodwill and intangible assets (in thousands):
+Added: Intangible assets, net
+Added: We periodically review the carrying value of our goodwill and the estimated useful lives of our intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value, or for intangible assets, a revised useful life.
The events and circumstances include significant changes in the business climate, legal factors, operating performance indicators, and competition.
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Additionally, the U.S.
−Removed: Department of Defense continues to issue lists of companies it has determined to be owned or controlled by China’s People’s Liberation Army on which sanctions could be levied by executive order, and the
−Removed: Department of Commerce has published their "first tranche"
−Removed: of designated military end users from China and Russia for whom export licenses are now required.
−Removed: Furthermore, the government has determined that the Special Administrative Region of Hong Kong is no longer sufficiently autonomous to justify being treated as separate from China and has eliminated certain license exceptions for the export of controlled goods to Hong Kong and has removed Hong Kong as a separate shipping destination under the Export Administration Regulations ("EAR").
+Added: Department of Defense continues to issue lists of companies it has determined to be owned or controlled by China’s People’s Liberation Army on which sanctions could be levied by executive order, and the Department of Commerce continues to expand the list of designated military end users from PRC and Russia for whom export licenses are now required.
+Added: Furthermore, the government has determined that the Special Administrative Region of Hong Kong is no longer sufficiently autonomous to justify being treated as separate from PRC and has eliminated certain license exceptions for the export of controlled goods to Hong Kong and has removed Hong Kong as a separate shipping destination under the Export Administration Regulations ("EAR").
In response to U.S.
−Removed: Government actions, China passed the Export Control Law of the People’s Republic of China, effective December 1, 2020.
−Removed: The Export Control Law provides the Chinese government with the framework to ban exports of strategic materials and advanced technologies to specific foreign entities on its Control List and also provides a counterweight to the U.S.
+Added: Government actions, PRC passed numerous regulations, including the Export Control Law of the People’s Republic of China, effective December 1, 2020, the Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures promulgated on January 9, 2021, and the Anti-Foreign Sanctions Law of the People’s Republic of China, released on July 24, 2021.
+Added: These laws provide the PRC government with the framework to ban exports of strategic materials and advanced technologies to specific foreign entities on its Control List, block application of foreign laws, impose its own sanctions on entities and countries and provides a counterweight to the U.S.
government’s restrictions through provisions for retaliatory action and extraterritorial jurisdiction.
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As indicated above, these measures could also result in increased costs for goods imported into the U.S.
−Removed: This in turn could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on goods and services sold.
+Added: This in turn could require us to increase prices to our customers which may reduce demand, or, if we are unable to increase prices, result in lowering our margin on goods and
+Added: services sold.
To the extent that trade tariffs and other restrictions imposed by the U.S.
increase the price of semiconductor equipment and related parts imported into the U.S., the cost of our materials may be adversely affected and the demand from customers for products and services may be diminished, which could adversely affect our revenues and profitability.
−Removed: The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S.
+Added: The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs, trade agreements, or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S.
economy, which in turn could adversely impact our business, financial condition, and results of operations.
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Tax laws, regulations, and administrative practices in various jurisdictions by their nature are complex and may be subject to significant change due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.
−Removed: There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain.
−Removed: Our effective tax rates could be adversely affected by earnings being lower than anticipated in jurisdictions where we have lower statutory rates and earnings higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies and changes to our existing businesses, acquisitions (including integrations) and investments, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative
−Removed: practices, principles, and interpretations, including fundamental changes to the tax laws applicable to corporate multinationals.
+Added: As both domestic and foreign governments contemplate or make changes in tax law to raise more revenues, our results could be negatively affected.
+Added: Further, there are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain.
+Added: Our effective tax rates could be adversely affected by earnings being lower than anticipated in jurisdictions where we have lower statutory rates and earnings higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, changes in foreign currency exchange rates, entry into new businesses and geographies and changes to our existing businesses, acquisitions (including integrations) and investments, changes in our deferred tax assets and liabilities and their valuation, and changes in the relevant tax, accounting, and other laws, regulations, administrative practices, principles, and interpretations, including fundamental changes to the tax laws applicable to corporate multinationals.
The U.S., many countries in the European Union, and several other countries are actively considering changes in this regard.
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or by changes in tax laws and regulations, treaties, or interpretations thereof, including changes to the taxation of earnings of our foreign subsidiaries, the deductibility of expenses attributable to foreign income, and the foreign tax credit rules.
−Removed: Significant judgment is required to determine the recognition and measurement attribute prescribed in the accounting guidance for uncertainty in income taxes.
+Added: Significant judgment is required to determine the
+Added: recognition and measurement attribute prescribed in the accounting guidance for uncertainty in income taxes.
The Organization for Economic Co-operation and Development ("OECD"), an international association comprised of 36 countries, including the United States, has made changes to numerous long-standing tax principles.
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Our failure to meet these commitments could adversely impact our provision for income taxes.
−Removed: In addition, we are subject of regular examination of our income tax returns by tax authorities.
+Added: In addition, we are the subject of regular examination of our income tax returns by tax authorities.
We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes.
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In the past, we have invested significant resources to redesign our products to comply with these directives.
−Removed: In addition, with our acquisition of Versatile Power, Inc., we expanded our presence in the medical market to include more highly regulated applications and added its medical-certified manufacturing center to our operating footprint.
+Added: In addition, with our December 31, 2020 acquisition of Versatile Power, Inc., we expanded our presence in the medical market to include more highly regulated applications and added its medical-certified manufacturing center to our operating footprint.
We may encounter increased costs to maintain compliance with the quality systems and other regulations and requirements that apply to the acquired business.
Compliance with future regulations, directives, and standards could require us to modify or redesign some products, make capital expenditures, or incur substantial costs.
−Removed: Also, we may incur significant costs in complying with the
−Removed: numerous imports, exports, and customs regulations as we seek to sell our products internationally.
+Added: Also, we may incur significant costs in complying with the numerous imports, exports, and customs regulations as we seek to sell our products internationally.
If we do not comply with current or future regulations, directives, and standards:
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The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") requires various federal agencies to adopt a broad range of implementing rules and regulations, and to prepare numerous studies and reports for Congress.
−Removed: On August 22, 2012, under the Dodd-Frank Act, the SEC adopted requirements for companies that use certain minerals and metals, known as conflict minerals, in their products, whether or not these products are manufactured by third parties.
+Added: On August 22, 2012, under the Dodd-Frank Act, the SEC adopted requirements for companies that
+Added: use certain minerals and metals, known as conflict minerals, in their products, whether or not these products are manufactured by third parties.
These requirements require companies to perform due diligence, disclose and report whether such minerals originate from the Democratic Republic of Congo and adjoining countries.
We must perform sufficient due diligence to determine whether such minerals are used in the manufacture of our products.
−Removed: Regarding our acquisition of Artesyn, we will need to complete due diligence on the minerals used in the manufacture of those products and include our due diligence results in our next conflict minerals report.
In addition, we incur costs to comply with the disclosure requirements, including costs related to determining the source of any of the relevant minerals and metals used in our products.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.