What changed in this filing

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Item 1. Business

2023-03-07 compared with 2022-03-09 · 89 added, 104 removed, 96 unchanged (67% of the section changed)

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(“Allied Motion” or the “Company” or “we” or “our”) is a global company that designs, manufactures and sells precision and specialty controlled motion components and systems used in a broad range of industries.

Our target markets include Vehicle, Medical, Aerospace & Defense (A&D), and Industrial.

Our target markets include Industrial, Vehicle, Medical, and Aerospace & Defense (A&D).

We are headquartered in Amherst, NY, and have global operations and sell to markets across the United States, Canada, South America, Europe and Asia-Pacific.

We are known worldwide for our expertise in electro-magnetic, mechanical and electronic motion technology.

Our products include brush and brushless DC (BLDC) motors, brushless servo and torque motors, coreless DC motors, integrated brushless motor-drives, gearmotors, gearing, modular digital servo drives, motion controllers, incremental and absolute optical encoders, active and passive filters for power quality and harmonic issues, mission critical electro-mechanical automation solutions, advanced linear and rotary motion systems for nano-precision applications, input/output (“I/O”) modules, industrial gateways, and other controlled motion-related products.

We sell component and integrated controlled motion solutions to end customers and OEMs through our own direct sales force and authorized manufacturers’ representatives and distributors.

Our products and solutions include nano precision positioning systems, servo control systems, motion controllers, digital servo amplifiers and drives, brushless servo, torque, and coreless motors, brush motors, integrated motor-drives, gear motors, gearing, incremental and absolute optical encoders, active (electronic) and passive (magnetic) filters for power quality and harmonic issues, Industrial safety rated input/output Modules, Universal Industrial Communications Gateways, light-weighting technologies, and other controlled motion-related products.

Allied Motion was established in 1962 under the laws of Colorado and operates in the United States, Canada, Mexico, Europe and Asia-Pacific.

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A copy of both Codes is also available in print to any stockholder upon written request addressed to Allied Motion Technologies Inc., 495 Commerce Drive, Suite 3, Amherst, NY 14228-2313, Attention:

IMPACT OF COVID-19

The outbreak of the novel strain of Coronavirus (“COVID-19”) and the impact of the variants has created significant impacts and disruptions to the U.S.

and global economies and are likely to do so for the foreseeable future.

We expect that COVID-19 will continue to adversely affect portions of our business, including our global supply chain and manufacturing operations.

We experienced reductions in customer demand in certain of our served markets and increases in demand in other of these markets during the periods of 2020 and 2021 due to the impact of COVID-19.

The net result was a record level of total bookings in 2021.

The operational ability of our suppliers to provide the necessary quantity of materials on a timely basis has been reduced, which has impacted the predictability of our global supply chain, and resulted in some increased costs to secure and place materials into production and forced us to delay product shipments.

Throughout 2022, we expect the impact of COVID-19 on our operations will continue to challenge certain aspects of our business, particularly our global supply chain and our ability to hire direct labor.

Certain materials and components used in our products are required and qualified to be sourced from a single or a limited number of suppliers.

Any interruption in the supply from any supplier that serves as a sole source could delay product shipments and have a material adverse effect on our business.

In response to COVID-19, we have taken and will continue to take proactive, aggressive action to protect the health and safety of our employees, customers, partners, suppliers and communities.

We continue to follow rigorous safety

measures in all of our sites, including social distancing protocols, incorporating a work from home model at certain times for those employees that do not need to be physically present to perform their work, limiting travel, implementing temperature checks at the entrances to our facilities, extensively and frequently disinfecting our workspaces and providing masks and other protective equipment to those employees who must be physically present.

These measures have been implemented on a worldwide basis and have been adjusted prudently as requirements and conditions change.

We will continue to monitor and act in accordance with government authorities requirements or recommendations and evolving best practices.

Our Company provides essential and important products, including some that our customers rely on to address COVID-19.

We manufacture and deliver critical motion control components, including electronic drives, motors and control assemblies to manufacturers of medical equipment including respirators, ventilators, infusion pumps, medical fluid pumps and other breathing assist equipment required to care for patients with respiratory issues including COVID-19.

We are a long-term, qualified supplier to leading medical device manufacturers of ventilators and respirators around the world.

Global demand and capacity to produce ventilators increased significantly during portions of 2020, and we supplied the critical motion control components for the ventilators.

The Company rapidly deployed resources to increase production capacity to meet the surge in demand that has been experienced for certain types of medical products related to combatting the COVID-19 virus.

While the demand for certain items, such as ventilators, has returned to normalized levels in 2021, we continue to provide solutions to suppliers of other types of medical equipment, including surgical tools and equipment, surgical robots, diagnostic equipment, test equipment, patient mobility and rehabilitation equipment, hospital beds and mobile equipment carts.

Our worldwide locations are considered to be essential suppliers to our customers and therefore most of our locations have remained substantially operational throughout the outbreak while implementing the enhanced safety procedures.

We have taken actions since the beginning of the pandemic to strengthen our liquidity and financial condition.

We renewed and increased our revolving credit facility to $225 million through February 2025 (refer to Note 7, Debt Obligations from our consolidated financial statements).

Through this amendment we lowered our cost of debt, and secured more favorable covenants.

This liquidity preserves our financial flexibility during the pandemic and subsequent to it.

We believe that our cash flows from operations and borrowing capacity are sufficient to support our short and long-term liquidity needs.

To conserve cash and maximize operational efficiency while supporting growth plans, we continue to align variable costs with demand, maintain and enhance key engineering capabilities, and control discretionary spending.

The Company continues to closely monitor events and conditions resulting from COVID-19.

The extent of the impact of the COVID-19 outbreak on our operational and financial performance will continue to depend on future developments, including the duration and spread of the virus and variants, the potential for additional waves, its impact on our customers, suppliers and the range of governmental reactions to the pandemic, which cannot be predicted at this time.

We will continue to proactively respond to the situation and will take further actions as warranted to alter our business operations as necessary.

Recent Events

The current conflict in Ukraine has created general economic uncertainty with regard to energy prices, interest rates and our supply chain.

The continued presence of COVID-19 has and will likely continue to create uncertainties and disruptions to the Company as well as the global economy.

This has resulted in operational and financial challenges and risks.

In response, we implemented extensive additional health and safety protocols from time to time in keeping with governmental requirements and best practices.

As a result of the continued evolving presence of variants of the virus, and related global impacts, there are likely to be ongoing disruptions to certain supply chains as well as impacts on customer demand that may present additional challenges and volatility to our business.

During 2022, inflation negatively impacted our input costs and pricing, primarily for labor and materials.

We, our customers, and our suppliers also began to experience the effect of a higher interest rate environment.

Gross domestic product growth slowed throughout 2022 largely due to the widespread impacts of inflation, increasing interest rates, and more restrictive financial conditions.

Supply chain disruptions, labor shortages, and global inflation remain persistent, along with elevated geopolitical instability.

Specifically, the current conflict in Ukraine has created geopolitical unrest resulting in economic uncertainty and

volatility with regard to energy prices, interest rates and our supply chain.

We are monitoring the developments as they unfold in order to react accordingly.

The impact of the conflict on our operational and financial performance will depend on future developments that cannot be predicted, the Company does not believe the impacts to be material at this time.

During the last half of 2021, certain regions of China experienced energy shortages which impacted our facilities.

One of our China locations was shut down for one week as a result of the restrictions on energy usage imposed by the Chinese government.

The impact was not material to our results during 2021, however, there continue to be uncertainties related to the energy shortages that may impact us in 2022 and beyond.

We have been able to proactively

mitigate the impact of the restrictions on energy usage to date by managing our scheduling at the impacted facilities.

Twinsburg Consolidation

In September 2021, the Company announced its plans to consolidate its manufacturing facility in Twinsburg, Ohio with its Watertown, New York and Reynosa, Mexico facilities in 2022.

Costs of $545 are included in business development on the consolidated statement of income and comprehensive income for the year ended December 31, 2021 related to the consolidation of the Twinsburg facility.

Total costs of approximately $1,000 are expected to be incurred in connection with this initiative and will include accelerated lease costs, severance and other payroll related costs, legal costs, accelerated depreciation, and costs to relocate inventory and machinery and equipment.

This initiative is expected to be completed during the second quarter of 2022.

On April 30, 2021, we effected a 3-for-2 stock split.

References to numbers of shares of common stock and per share data have been adjusted to reflect the stock split on a retrospective basis.

Refer to Note 1, Business and Summary of Significant Accounting Policies in the notes the consolidated financial statements contained in Item 8 of this report for further information.

During the second quarter 2021, we were the subject of a cyber security breach.

We discovered the issue soon after the intrusion and implemented our contingency and disaster recovery plans, including engaging legal, security and forensic experts in this field.

We were able to contain the issue and were successful in getting our operations back up and running without a material impact to our results.

We have implemented additional security measures that further safeguard our systems.

No ransom was paid related to this breach.

The impact of the conflict on our operational and financial performance will depend on future developments that cannot be predicted.

The Company does not believe the impact on our results to be material at this time.

The Inflation Reduction Act of 2022 (the “IRA”) was signed into law in August 2022.

The IRA is federal legislation designed to raise revenue from lowering of prescription drug prices and imposition of certain corporate tax measures, while authorizing spending on energy and climate change initiatives, subsidizing the Affordable Care Act, and enacting certain tax reforms.

Management continues to monitor any potential impact of the IRA on our results.

No immediate or direct effect from the legislation is anticipated to have a material impact on our results at this time.

The CHIPS and Science Act (“CHIPS”) was signed into law in August 2022.

CHIPS is a federal statue providing funding for research and domestic production of semiconductors.

Additional funding can be provided through CHIPS to various federal agencies as well as towards climate science research.

No immediate or direct material effect from the legislation is anticipated to have a material impact on our results at this time.

Beginning in the last half of 2021, certain regions of China experienced energy shortages which have, for brief periods of time, impacted our facilities.

The impact was not material to our results during 2021 and 2022, however, there continue to be uncertainties related to the energy shortages that may impact us in 2023 and beyond.

We have been able to proactively mitigate the impact of the restrictions on energy usage to date by managing our scheduling at the impacted facilities.

On June 17, 2022, the Company acquired 100% of the membership interests of Airex, LLC (“Airex”), a privately-owned New Hampshire headquartered developer of high precision electromagnetic products and solutions for the aerospace and defense, life sciences, semiconductor, and commercial industrial applications .

Airex combines its patented winding technology with robotic manufacturing to produce linear motors – ironless and iron core, rotary motors, voice coils, wound electromagnetic components and sub-components.

Airex expands the Company’s motor offerings as well as enhances its quality systems to support broad mission critical defense programs, as well as other high demanding industries such as life sciences and semiconductor.

On May 30, 2022, the Company acquired 100% of the direct and indirect legal and beneficial ownership of the shares of FPH Group Inc., a corporation incorporated pursuant to the laws of the Province of Ontario and the membership interests of Transtar International, LLC, a Michigan limited liability company, collectively “FPH”.

FPH is an Ontario, Canada headquartered industry leader in the development of technically advanced, reliable and cost-effective electrical drive systems which provide high torque and precision motion for the defense industry, as well as light weighting technologies for existing and future ground-based vehicles in the defense industry.

FPH provides concept engineering, prototyping, validation, and production.

FPH also develops composites, advanced materials and hybrid products and solutions that achieve significant weight reduction and higher strength.

This acquisition provides the Company with a deeper penetration within defense applications including the necessary manufacturing licenses and certifications.

ThinGap, Inc.:

On May 24, 2022, the Company acquired 100% of the outstanding stock of ThinGap, Inc.

(“ThinGap”), a privately-owned California headquartered developer and manufacturer of high performance, zero clogging slotless motors for use in aerospace, defense, and medical applications that require precise performance in a compact, yet high-torque-to-volume solutions.

ThinGap designs, engineers, and manufactures low profile, brushless DC motor kits and assemblies that utilize a proprietary wave-wound stator architecture and highly optimized rotors.

ThinGap expands the Company’s precision motion capabilities and advances its strategy to provide integrated motion solutions in the robotics, semiconductor, and instrumentation markets.

Spectrum Controls:

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(“Spectrum Controls”), a Washington headquartered innovator and manufacturer of I/O and Universal Communications Gateway products.

Spectrum Controls designs and manufactures a wide range of highly sophisticated I/O modules, marquee displays, and industrial gateways for broad industrial controls applications through partnerships with Programmable Logic Controller (“PLC”) manufacturers and distributors.

Spectrum Controls designs and manufactures a wide range of highly sophisticated I/O modules, marquee displays, and

industrial gateways for broad industrial controls applications through partnerships with Programmable Logic Controller (“PLC”) manufacturers and distributors.

This acquisition provides us with the opportunity to enhance our position as a value-added solutions supplier to the industrial automation and industrial controls market.

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ORMEC strengthens the Company’s technical expertise and adds a higher level of precision motion control systems and solutions to its offerings.

Dynamic Controls Group :

On March 7, 2020, we acquired Dynamic Controls Group (“Dynamic Controls”), a wholly owned subsidiary of Invacare Corporation, a market-leading designer and manufacturer of equipment for the medical mobility and rehabilitation markets.

Dynamic Controls provides the Company with market leading electronic control solutions and products that further strengthen our medical market position, as well as enable us to further develop higher

level solutions with embedded electronics across our other major served markets.

The acquisition of Dynamic Controls allows us to build out our ability to leverage controlled motion system solutions in a wide range of markets.

MARKETS AND APPLICATIONS

One of the Company’s growth initiatives includes product line platform development to meet the emerging needs of its selected target markets.

The platform development emphasizes a combination of technologies to create increased value solutions for customers.

The emphasis on new opportunities has allowed the Company to evolve from being an individual component provider to becoming a solutions provider emphasizing the utilization of multiple Company technologies in a system solution approach.

The Company believes this approach will allow it to provide increased value to its customers and improved margins for the Company.

The Company’s growth strategy is focused on becoming the recognized leader in designing products and innovating controlled motion solutions in its selected target markets by further developing its products and service platform to utilize multiple Allied Motion technologies to provide enhanced solutions, products, and value for its customers.

Our strategy further defines Allied Motion as being a “technology/know-how” driven company and to remain successful, the company continuously invests in its area of excellence.

This platform development emphasizes a combination of technologies to create enhanced products, solutions, and value to meet the emerging needs of the Company’s selected target markets.

The emphasis on new opportunities has driven the Company from being an individual component provider to becoming a solutions provider emphasizing the utilization of multiple Company technologies in a system solution approach.

In addition to enhanced products, solutions, and value for our customers, this approach is allowing the Company to improve margins.

We expect our recent acquisitions will further drive our success.

Our strong financial condition, along with Allied Systematic Tools (“AST”) continuous improvement initiatives in quality, delivery, and cost provide a positive outlook for the continued long-term growth and profitability of the Company.

The Company’s growth strategy is focused on becoming the recognized controlled motion solution leader in its selected target markets by further developing its products and services platform to utilize multiple Allied Motion technologies to create increased value solutions for its customers.

Our strategy further defines Allied Motion as being a “technology/know-how” driven company and to be successful, the Company continues to invest in its areas of excellence.

The Company sells its products into a subset of the following broad markets:

The Company sells its products and solutions into a subset of the following broad markets:

products and solutions are used in factory automation, specialty equipment, material handling equipment, commercial grade floor polishers and cleaners, commercial building equipment such as welders, cable pullers and assembly tools, the handling, inspection, and testing of components and final products such as PCs, high definition printers, tunable lasers and spectrum analyzers for the fiber optic industry, test and processing equipment for the semiconductor manufacturing industry, power quality products to filter distortion caused by variable frequency drives and other power electronic equipment, nano technology motion systems in silicon photonics, micro assembly, digital pathology, genome sequencing, laser processing and microelectronics, PLC manufacturers and distributors.

electronic power steering and drive-by-wire applications to electrically replace, or provide power-assist to, a variety of mechanical linkages, traction / drive systems and pumps, automated and remotely guided power steering systems, various high performance vehicle applications, actuation systems (e.g., lifts, slide-outs, covers, etc.), HVAC systems, solutions to improve energy efficiency of vehicles while idling and alternative fuel systems such as liquified petroleum gas (“LPG”), fuel cell and hybrid vehicles.

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trucks, buses, boats, utility, recreational (e.g., RVs, ATVs (all-terrain vehicles), specialty automotive, automated and remotely guided vehicles) .

surgical robots, prosthetics, electric powered surgical hand pieces, programmable pumps to meter and administer infusions associated with chemotherapy, pain control and antibiotics, nuclear imaging systems, radiology equipment, automated pharmacy dispensing equipment, kidney dialysis equipment, respiratory ventilators, heart pumps, and patient handling equipment (e.g., wheel chairs, scooters, stair lifts, patient lifts, transport tables and hospital beds).

equipment, automated pharmacy dispensing equipment, kidney dialysis equipment, respiratory ventilators, heart pumps, and patient handling equipment (e.g., wheel chairs, scooters, stair lifts, patient lifts, transport tables and hospital beds).

Aerospace & Defense :

inertial guided missiles, mid-range smart munitions systems, weapons systems on armed personnel carriers, unmanned vehicles, security and access control, camera systems, door access control, airport screening and scanning devices.

products are used in factory automation, specialty equipment, material handling equipment, commercial grade floor polishers and cleaners, commercial building equipment such as welders, cable pullers and assembly tools, the handling, inspection, and testing of components and final products such as PCs, high definition printers, tunable lasers and spectrum analyzers for the fiber optic industry, test and processing equipment for the semiconductor manufacturing industry, power quality products to filter distortion caused by variable frequency drives and other power electronic equipment, nano technology motion systems in silicon photonics, micro assembly, digital pathology, genome sequencing, laser processing and microelectronics, PLC manufacturers and distributors.

OTHER FACTORS IMPACTING OUR OPERATIONS

Sales and Marketing

We design and develop our products within our Technology Centers and can manufacture these products in various facilities located in the United States, Canada, Mexico, Europe and Asia-Pacific.

We design and develop our products within our Technology Centers and can manufacture these products and solutions in various facilities located in the United States, Canada, Mexico, Europe and Asia-Pacific.

We also operate Allied Motion Solution Centers that evaluate and focus all Allied Motion products to create integrated controlled motion solutions for our customers.

We sell our products and solutions globally to a broad spectrum of customers through our own direct sales force and authorized manufacturers’ representatives and distributors.

Our customers include end users and original

equipment manufacturers (“OEMs”).

Our customers include end users and original equipment manufacturers (“OEMs”).

Allied Motion Sales Organization:

The Company’s sales organization is focused on becoming the best sales and service force in its industry.

Through the One Team approach for providing controlled motion solutions and components that best address customers’ needs, the Company has broadened the knowledge and skills of its direct sales force, while creating sales and service support in its Solution Centers.

Through the One Team approach for providing products and controlled motion solutions that best address customers’ needs, the Company has broadened the knowledge and skills of its direct sales force, while creating sales and service support in its Solution Centers.

This enables the entire sales organization to be capable of selling all products designed, developed and produced by Allied Motion globally.

The Company’s primary channels to market include the direct sales force and external authorized Sales Representatives, Agents and Distributors that provide field coverage in Asia-Pacific, Europe, Canada, Israel and the Americas.

While the majority of the Company’s sales are directly to OEMs, it is working to expand its market reach through Distribution channels.

While most of the Company’s sales are directly to OEMs, it has expanded its market reach through Distribution channels.

Allied Motion Solution Centers :

Allied Motion has Solution Centers in China, Europe and North America that enable the design and sale of individual component products as well as integrated controlled motion systems that utilize multiple Allied Motion products and technology.

In addition to providing sales and applications support, the solution center function may include final assembly, integration and tests as required to support customers within their geographic region.

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Backlog as of December 31, 2022 was $330,078 compared with $249,927 as of December 31, 2021.

Included in backlog as of December 31, 2021 is $47,934 from the acquisitions completed in the fourth quarter of 2021.

Included in backlog as of December 31, 2022 is $21,222 from the acquisitions completed in 2022.

The time to convert the majority of backlog to sales is approximately three to nine months.

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Major Customer

Sales to one customer were 15% of total sales in 2021 and 2020.

We believe the diversification of the target markets we serve reduces our exposure to negative developments with any single customer.

Sales to one customer were 11% of total sales in 2022 and 15% of total sales in 2021.

We believe the diversification of the target markets and customers we serve reduces our exposure to negative developments with any single customer.

Competitive Environment

Our products and solutions are sold into the global market with a large and diverse group of competitors that vary by product, geography, industry and application.

We believe the controlled motion market is highly fragmented with many competitors, some of which are substantially larger and have greater resources than Allied Motion.

We believe our competitive advantages include our electro-magnetic, mechanical and electronic controlled motion expertise, the breadth of our motor technologies and our ability to integrate these technologies with our encoders, gearing, power electronics, digital control technologies and network/feedback communications capabilities, as well as our global presence.

The controlled motion market is highly fragmented with many competitors, some of which are substantially larger and have greater resources than Allied Motion.

We believe our competitive advantages include our electro-magnetic, mechanical and electronic controlled motion expertise, the breadth

of our motor technologies and our ability to integrate these technologies with our encoders, gearing, power electronics, digital control technologies and network/feedback communications capabilities, as well as our global presence.

Unlike many of our competitors, we are unique in our ability to provide custom-engineered controlled motion solutions that integrate the products we manufacture such as embedded or external electrical control solutions with our motors.

We compete on technological capabilities, quality, reliability, service responsiveness, delivery speed and price.

Our competitors include Altra Industrial Motion Corp., Ametek, Inc., Parker Hannifin Corporation and other smaller competitors.

Our competitors include Altra Industrial Motion, Ametek, Inc., Parker Hannifin Corporation and other smaller competitors.

Availability and Prices of Parts and Raw Materials

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For these critical raw materials, we maintain minimum safety stock levels and partner with suppliers through contract to help ensure the continuity of supply.

As a result of the COVID-19 pandemic and resulting economic and supply chain disruptions, we continue to face upward pricing pressure on parts and raw materials.

has also resulted in increased operational challenges from workplace disruptions and restrictions on the movement of raw materials and goods, both at our own facilities and at our customers and suppliers, leading to increases in prices and freight costs.

As we seek to secure supply during these uncertain times, we have proactively increased the levels of certain inventories to put us in the position to meet the needs of our customers.

As a result of the COVID-19 pandemic and resulting economic and supply chain disruptions, we have experienced upward pricing pressure and challenges with availability of parts and raw materials.

In addition, workplace disruptions and restrictions on the movement of raw materials and goods, both at our own facilities and at our customers and suppliers has led to increases in prices and freight costs.

As we seek to secure supply during volatile times, we have proactively increased the levels of certain inventories to put us in the position to meet the needs of our customers on a timely basis.

Patents, Trademarks, Licenses, Franchises and Concessions

We hold a number of patents and trademarks for components manufactured by our various subsidiaries, and we have several patents pending on new products recently developed, which are considered to be of significance.

We hold several patents and trademarks for components manufactured by our various subsidiaries, and we have several patents pending on new products recently developed, which we believe are significant.

Working Capital Items

We currently maintain inventory levels adequate for our short-term needs based upon present levels of production.

We currently maintain inventory levels adequate for our short-term needs based upon present levels of production while taking into account the potential for supply chain disruptions.

We consider the component parts of our different product lines to be generally available and current suppliers to be reliable and capable of satisfying anticipated needs under normal conditions.

As discussed herein, as a result of the COVID-19 pandemic and supply chain disruptions, we have experienced increased costs and have purposely increased certain inventories to deal with global supply chain issues.

Engineering and Development Activities

Our engineering and development (E&D) activities are for the development of new products, enhancement of the functionality, effectiveness and reliability of current products, to redesign products to reduce the cost of manufacturing of products or to expand the types of applications for which our products and solutions can be used.

Our engineering and development expenditures for the years ended December 31, 2021 and 2020 were $27,818 and $25,487, respectively, or 7% of sales in 2021 and 2020.

We believe E&D is critical to our success and expect to continue to invest at these levels in the future.

Our engineering and development expenditures for the years ended December 31, 2022 and 2021 were $38,561 and $27,818, respectively, or 8% and 7% of sales in 2022 and 2021, respectively.

We believe E&D is critical to our ongoing success and expect to continue to invest at similar levels in the future.

Of these expenditures, no material amounts were charged directly to customers, although we record non-recurring engineering charges to certain customers for custom engineering required to develop products that meet the customer’s specifications.

Environmental Issues

The Company takes its responsibility to be a good steward of the environment seriously and we adopt policies and procedures under the guidance of the Board of Directors that advance our performance.

No significant pollution or other types of hazardous emission result from the Company’s operations and it is not anticipated that our operations will be materially affected by Federal, State or local provisions concerning environmental controls.

Our costs of complying with environmental, health and safety requirements are not material.

We do not believe that existing or pending climate change legislation, regulation, or international treaties or accords are reasonably likely to have a material effect in the foreseeable future on our business or markets that we serve, nor on our results of operations, capital expenditures or financial position.

The board of directors provide oversight as part of their environmental, social and governance (“ESG”) initiatives and we will continue to monitor emerging developments and assess our performance in this area.

We monitor existing and pending climate legislation, regulation, and international treaties and accords to evaluate any potential impact on our future results of operations, capital expenditures or financial position.

The Board of Directors provides oversight as part of their environmental, social and governance (“ESG”) initiatives and we will continue to monitor emerging developments and assess our performance in this area.

We may face additional economic and

operational impacts from ESG regulations as well as impacts from our suppliers and customers as they adhere to the laws and regulations.

International Operations

Our operations outside the United States are conducted through wholly-owned foreign subsidiaries and are located primarily in Europe and Asia-Pacific.

Our operations outside the United States are conducted through wholly-owned foreign subsidiaries and are located in North America, Europe, and Asia-Pacific.

Our international operations are subject to the usual risks inherent in international trade, including currency fluctuations, local government contracting regulations, local governmental restrictions on foreign investment and repatriation of profits, exchange controls, regulation of the import and distribution of foreign goods, as well as changing economic and social conditions in countries in which our operations are conducted.

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Human Capital

At December 31, 2021, we employed approximately 1,950 full-time employees worldwide.

At December 31, 2022, we employed 2,254 full-time employees worldwide.

Of those, approximately 57% are located in North America, 33% are located in Europe and the remainder are located in Asia-Pacific.

As of December 31, 2022, 18% of our total workforce were employed in engineering functions, demonstrating our commitment to invest significantly in engineering resources.

Employee Health and Safety

The Company complies in all respects with the national and local laws of the jurisdictions in which we operate regarding workers safety and health.

The Company strives to continuously improve employee safety and health through consistent measurement and reporting on progress and leading indicators.

It has programs that emphasize that each employee in the organization is responsible for safety in the workplace.

The Company provides a comprehensive safety program that focuses on a zero-incident mindset by providing ongoing training opportunities and review of safety activities and initiative.

This highly visible effort encourages employee engagement and active management and leadership involvement.

Human Capital Management

The Company believes that its workforce is one of the Company’s greatest assets, and it has a proactive human capital management and talent development program.

The Human Capital and Compensation Committee recognizes human capital as a key driver of long-term value and is responsible for oversight of the Company’s human capital management and talent development programs.

The Board of Directors and Human Capital and Compensation Committee recognizes human capital as a key driver of long-term value and is responsible for oversight of the Company’s human capital management and talent development programs.

● Attraction:

The Company competes within each world-wide market for a finite number of skilled and talented workers.

The Company leverages its broad resources and reputation to deliver an outstanding career opportunity and workplace experience to its candidates and employees.

The Company leverages its broad resources, compensation strategy, and reputation to deliver an outstanding career opportunity and workplace experience to its candidates and employees.

● Engagement:

The Company strives to provide engaging and meaningful career opportunities for its employees, so they can thrive and be satisfied in its technology and innovation-based culture.

The Company strives to provide engaging, progressive, and meaningful career opportunities for its employees, so they can thrive and be satisfied in its technology and innovation-based culture.

● Development:

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The Company supports a workplace that provides an environment of trust, personal and professional development and work-life balance which is vital to its successful retention of engaged, top-notch talent.

Employee Health and Safety

The Company complies in all respects with the national and local laws of the jurisdictions in which we operate regarding workers safety and health.

The Company strives to continuously improve employee safety and health through consistent measurement and reporting on progress and leading indicators.

It has programs that emphasize that each employee in the organization is responsible for safety in the workplace.

The Company provides a comprehensive safety program that focuses on a zero-incident mindset by providing ongoing training opportunities and review of safety activities and initiative.

This highly visible effort encourages employee engagement and active management and leadership involvement.

Diversity and Inclusion

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The Company is committed to identifying a talented and innovative workforce through a culture that promotes human equity and emphasizes the benefits of a diverse and inclusive workforce and pipeline of talent.

The Human Capital and Compensation Committee is responsible for the setting the tone at the top and the oversight of the Company’s diversity and inclusion initiatives.

The Human Capital and Compensation Committee is responsible for setting the tone at the top and the oversight of the Company’s diversity and inclusion initiatives.

Ethical Business Practices

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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.

What changed 10-K

Item 1. Business