What changed in this filing

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Item 9A. Controls and Procedures

2023-02-17 compared with 2022-03-16 · 54 added, 106 removed, 165 unchanged (49% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures, which are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934 ("Act") is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Act is accumulated and communicated to management, including our Principal Executive Officer (Stephen D.

We have established disclosure controls and procedures, which are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized, and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

These disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer (Stephen D.

Kelley, President and Chief Executive Officer) and Principal Financial Officer (Paul Oldham, Chief Financial Officer), as appropriate, to allow timely decisions regarding required disclosures.

As of the end of the period covered by this report, we conducted an evaluation, with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to the Exchange Act Rule 13a 15(b).

Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2021.

The conclusions of the Chief Executive Officer and Chief Financial Officer from this evaluation were communicated to the Audit Committee.

Based upon this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2022.

The conclusions of the Chief Executive Officer and Chief Financial Officer from this evaluation were communicated to the Audit and Finance Committee.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

We intend to continue to review and document our disclosure controls and procedures, including our internal controls over financial reporting, and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

2 unchanged sentences

Our internal control over financial reporting is designed to provide reasonable assurance concerning the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.

In June 2021, we acquired TEGAM, Inc.

In April 2022, we acquired SL Power.

Refer to Note 2.

Acquisitions in Part II, Item 8 "Financial Statements and Supplementary Data"

for additional information.

TEGAM's objectives regarding internal controls over financial reporting are consistent, in all material respects, with Advanced Energy’s objectives.

We are in the process of completing a more comprehensive review of TEGAM's internal control over financial reporting and will be implementing changes to better align their reporting and controls with the rest of Advanced Energy.

As a result of the timing of the acquisition, anticipated changes, and general guidance issued by the SEC regarding exclusion of certain acquired businesses, we excluded TEGAM from Advanced Energy's December 31, 2021 assessment of internal controls over financial reporting.

TEGAM accounted for approximately 1% of our total assets at December 31, 2021, and 1% of our total net sales for the year ended December 31, 2021.

Acquisitions in Part II, Item 8 “Financial Statements and Supplementary Data” for additional information.

SL Power’s objectives regarding internal controls over financial reporting are consistent, in all material respects, with Advanced Energy’s objectives.

We are in the process of completing a more comprehensive review of SL Power’s internal control over financial reporting and will be implementing changes to better align their reporting and controls with the rest of Advanced Energy.

As a result of the timing of the acquisition, anticipated changes, and general guidance issued by the SEC regarding exclusion of certain acquired businesses, we excluded SL Power from Advanced Energy’s December 31, 2022 assessment of internal controls over financial reporting.

SL Power accounted for approximately 2% of our total assets at December 31, 2022, and 3% of our total net sales for the year ended December 31, 2022.

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2022, using the criteria described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

8 unchanged sentences

The occurrence of a misstatement, error, or fraud, if any, would not necessarily require a conclusion that our controls and procedures are not effective.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Advanced Energy Industries, Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Advanced Energy Industries, Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Advanced Energy Industries, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

As indicated in the accompanying Management’s Annual Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of TEGAM, Inc., which is included in the 2021 consolidated financial statements of the Company and constituted 1% and 2% of total and net assets, respectively, as of December 31, 2021 and 0.6% and 0.5% of revenues and net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of TEGAM, Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated March 16, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Denver, Colorado

March 16, 2022

OTHER INFORMATION

2 unchanged sentences

Not applicable.

In accordance with General Instruction G(3) of Form 10-K, certain information required by this Part III is incorporated by reference to the definitive proxy statement relating to our 2022 annual meeting of stockholders (the "2022 Proxy Statement"), as set forth below.

In accordance with General Instruction G (3) of Form 10-K, certain information required by this Part III is incorporated by reference to the definitive proxy statement relating to our 2023 annual meeting of stockholders (the “2023 Proxy Statement”), as set forth below.

The 2023 Proxy Statement will be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year.

DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information set forth in the 2022 Proxy Statement under the headings "Management"

and "Proposal No.

1 - Election of Directors"

is incorporated herein by reference.

The information set forth in the 2023 Proxy Statement under the headings “Management” and “Proposal No.

1 - Election of Directors” is incorporated herein by reference.

We adopted a Code of Ethical Conduct that applies to all employees, including our Chief Executive Officer, Chief Financial Officer, and others performing similar functions.

We posted a copy of the Code of Ethical Conduct on our website at www.advancedenergy.com, and such Code of Ethical Conduct is available, in print, without charge, to any stockholder who requests it from the Company’s Secretary.

We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, the Code of Ethical Conduct by posting such

information on our website at www.advancedenergy.com.

We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding amendments to, or waivers from, the Code of Ethical Conduct by posting such information on our website at www.advancedenergy.com.

We are not including the information contained on our website as part of, or incorporating it by reference into, this report.

EXECUTIVE COMPENSATION

The information set forth in the 2022 Proxy Statement under the headings "Executive Compensation"

is incorporated herein by reference.

The information set forth in the 2023 Proxy Statement under the headings “Executive Compensation” is incorporated herein by reference.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information set forth in the 2022 Proxy Statement under the headings “Security Ownership of Certain Beneficial Owners and Management"

and "Equity Compensation Plan Information"

is incorporated herein by reference.

The information set forth in the 2023 Proxy Statement under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” is incorporated herein by reference.

Securities Authorized for Issuance under Equity Compensation Plans

16 unchanged sentences

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR

Not applicable.

The information set forth in the 2023 Proxy Statement under the heading “Certain Relationships and Related Transactions” is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information set forth in the 2022 Proxy Statement under the caption "Proposal No.

2 - Ratification of the Appointment of Ernst & Young LLP as Advanced Energy’s Independent Registered Public Accounting Firm for 2022"

is incorporated herein by reference.

The information set forth in the 2023 Proxy Statement under the caption “Proposal No.

2 - Ratification of the Appointment of Ernst & Young LLP as Advanced Energy’s Independent Registered Public Accounting Firm for 2023” is incorporated herein by reference.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

8 unchanged sentences

September 10, 2019

Stock Purchase Agreement, dated April 1, 2022,

by and among SL Power Electronics Corporation,

SL Delaware Holdings, Inc., Steel Partners

Holdings L.P., AEI US Subsidiary, LLC and

Advanced Energy Industries, Inc.

April 4, 2022

Amended and Restated Certificate of Incorporation of Advanced Energy Industries, Inc.

7 unchanged sentences

February 24, 2004

Form of Indemnification Agreement

September 21, 1995

Form of Director Indemnification Agreement

December 14, 2009

Form of Notice of Grant for Restricted Stock Unit *

Form of Restricted Stock Unit Agreement *

Form of Notice of Grant of Stock Option *

Form of Incentive Stock Option Agreement *

Form of Non-Qualified Stock Option Agreement *

Incorporated by Reference

Form of LTI Notice of Grant *

Form of LTI Performance Stock Option Agreement pursuant to the 2008 Omnibus Incentive Plan *

Form of LTI Performance Stock Unit Agreement pursuant to the 2008 Omnibus Incentive Plan *

Form of 2020 Short-Term Incentive Plan *

March 2, 2020

2017 Long-Term Incentive (LTI) Plan *

March 14, 2017

2017 Short-Term Incentive (STI) Plan *

March 14, 2017

Form of Director and Officer Indemnification Agreement

Filed herewith

Form of Notice of Grant Stock Option under 2008 Omnibus Incentive Plan *

Form of Non-Qualified Stock Option Agreement under 2008 Omnibus Incentive Plan *

2017 Omnibus Incentive Plan*

4 unchanged sentences

September 21, 1995

Transition and Retirement Agreement dated February 8, 2021 *

February 10, 2021

Offer Letter dated February 8, 2021 *

February 10, 2021

Incorporated by Reference

Global Supply Agreement by and between Advanced Energy Industries, Inc.

9 unchanged sentences

dated January 28, 2011 +

Fixed Dollar Accelerated Share Repurchase Transaction, dated November 6, 2015, between Advanced Energy Industries, Inc.

and Morgan Stanley & Co.

November 6, 2015

Offer Letter to Paul Oldham, dated March 26, 2018 *

2 unchanged sentences

August 6, 2018

Incorporated by Reference

Credit Agreement, dated September 10, 2019, by and among Advanced Energy Industries, Inc., Bank of America N.A.

3 unchanged sentences

ISDA 2002 Master Agreement, by and between Advanced Energy Industries, Inc.

and HSBC Bank USA, National Association, dated as of April 2, 2020 (the "HSBC ISDA Master Agreement")

and HSBC Bank USA, National Association, dated as of April 2, 2020 (the “HSBC ISDA Master Agreement”)

April 10, 2020

ISDA 2002 Master Agreement, by and between Advanced Energy Industries, Inc.

and Citibank, N.A., dated as of April 7, 2020 (the "Citibank ISDA Master Agreement")

and Citibank, N.A., dated as of April 7, 2020 (the “Citibank ISDA Master Agreement”)

April 10, 2020

9 unchanged sentences

April 10, 2020

Incorporated by Reference

Amendment No.

6 unchanged sentences

February 4, 2021

Transition and Separation Agreement of Mr.

Dana Huth, dated July 7, 2021 *

November 9, 2021

Advanced Energy Industries, Inc.

Deferred Compensation Plan *

Amended and Restated Deferred Compensation Plan *

November 1, 2022

Incorporated by Reference

Form of Restricted Stock Unit Agreement under 2017 Omnibus Incentive Plan *

Filed herewith

Form of LTI Performance Stock Unit Agreement under 2017 Omnibus Incentive Plan *

Filed herewith

Subsidiaries of Advanced Energy Industries, Inc .

18 unchanged sentences

Filed herewith

Incorporated by Reference

Inline XBRL Taxonomy Extension Definition Linkbase Document

14 unchanged sentences

Chief Executive Officer

March 16, 2022

February 17, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934, this annual report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

1 unchanged sentence

Chief Executive Officer and Director

March 16, 2022

February 17, 2023

(Principal Executive Officer)

1 unchanged sentence

Chief Financial Officer and Executive Vice President

March 16, 2022

February 17, 2023

(Principal Financial and Accounting Officer)

Chairman of the Board

March 16, 2022

February 17, 2023

/s/ Frederick A.

March 16, 2022

/s/ Anne DelSanto

March 16, 2022

Anne DelSanto

March 16, 2022

February 17, 2023

/s/ Ronald C.

March 16, 2022

February 17, 2023

/s/ Edward C.

March 16, 2022

/s/ Lanesha Minnix

March 16, 2022

Lanesha Minnix

March 16, 2022

/s/ Thomas M.

March 16, 2022

February 17, 2023

/s/ Lanesha T.

February 17, 2023

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

What changed 10-K

Item 9A. Controls and Procedures