What changed in this filing

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Item 1A. Risk Factors

2021-03-09 compared with 2020-03-16 · 93 added, 178 removed, 277 unchanged (49% of the section changed)

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In such case, the trading price of our common stock could decline and you may lose all or part of your investment.

Risks Related to COVID-19 Pandemic and Global Economy

Our financial condition and results of operations will be materially adversely affected by the coronavirus pandemic

The global spread of COVID-19 that has been declared a pandemic by the World Health Organization and the preventative measures taken to contain or mitigate the outbreak have caused, and are continuing to cause, significant volatility and uncertainty and economic disruptions.

The outbreak has resulted in governments around the world implementing increasingly stringent measures to contain or mitigate the spread of the virus, including quarantines, “shelter in place” and “stay at home” orders, travel restrictions, business curtailments and other measures.

While we continue to operate, consistent with applicable government guidelines, in certain of our facilities we are experiencing, and may continue to experience, production slowdowns and/or shutdowns at our manufacturing facilities in North America, Europe and Asia Pacific as a result of government orders, our inability to obtain component parts from suppliers and/or decreased customer demand.

In addition, many of our suppliers and customers are also experiencing, and may continue to experience, production slowdowns and/or shutdowns, which may further impact our business, sales and results of operation.

The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable and depend upon the severity and duration of the outbreak and the effectiveness of actions taken globally to contain or mitigate its effects.

Any resulting financial impact cannot be estimated reasonably at this time, but may materially adversely affect our business, supply chain, sales, results of operations, financial condition and cash flows.

Even after the COVID-19 pandemic has subsided, we may experience materially adverse impacts to our business due to any resulting economic recession or depression that may continue to impact customer demand and the financial instability or operating viability of our suppliers and customers.

Volatility in and disruption to the global economic environment and changes in the regulatory and business environments in which we operate may have a material adverse effect on our business, results of operations and financial condition.

The commercial vehicle industry as a whole has been more adversely affected by volatile economic conditions than many other industries, as the purchase or replacement of commercial vehicles, which are durable items, may be deferred for many reasons.

Future changes in the regulatory and business environments in which we operate, including increased trade protectionism and tariffs, may adversely affect our ability to sell our products or source materials needed to manufacture our products.

Furthermore, financial instability or bankruptcy at any of our suppliers or customers could disrupt our ability to manufacture our products and impair our ability to collect receivables, any or all of which may have a material adverse effect on our business, results of operations and financial condition.

In addition, some of our customers and suppliers may experience serious cash flow problems and, thus, may find it difficult to obtain financing, if financing is available at all.

Any inability of customers to pay us for our products and services, or any demands by suppliers for different payment terms, or inability of our suppliers to supply us may materially and adversely affect our results of operations and financial condition.

Furthermore, our suppliers may not be successful in generating sufficient sales, restarting or ramping up production or securing alternate financing arrangements, and therefore may no longer be able to supply goods and services to us.

In that event, we would need to find alternate sources for these goods and services, and there is no assurance we would be able to find such alternate sources on favorable terms, if at all.

Any such disruption in our supply chain could adversely affect our ability to manufacture and deliver our products on a timely basis, and thereby affect our results of operations

Risks Related to Our Material Weaknesses and Restatements

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Likewise, our independent registered public accounting firm is required to provide an attestation report on the effectiveness of our internal control over financial reporting.

In connection with the preparation of our financial statements for 2019, we have identified material weaknesses in our internal controls over financial reporting relating to management's risk assessment and review process of manual journal entries and balance sheet account reconciliations.

Further, we identified and corrected certain errors as described in Note 2 and 19 to the accompanying financial statements, included in Part II, Item 8 of this Form 10-K.

We deemed these corrections to be material to the consolidated financial statements as of and for the fiscal year ended December 31, 2018, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and our unaudited consolidated financial statements as of and for the quarterly periods ended March 31, 2019 and 2018, June 30, 2019 and 2018, and September 30, 2019 and 2018, included in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2019, June 30, 2019 and September 30, 2019.

In connection with the preparation of our financial statements for 2019, we identified material weaknesses in our internal controls over financial reporting relating to management's risk assessment and review process of manual journal entries and balance sheet account reconciliations.

Further, we identified and corrected certain errors.

We deemed these corrections to be material.

As a result, management concluded that our internal controls over financial reporting as of December 31, 2019 were not effective.

As described in Part II, Item 9A of this Form 10-K, management is taking steps to remediate the material weaknesses in our internal controls.

There can be no assurance that any measures we take will remediate the material weaknesses identified, nor can there be any assurance as to how quickly we will be able to remediate these material weaknesses.

In future periods, if our senior management is unable to remediate the material weaknesses such that they cannot conclude that we have effective internal control over financial reporting, or to certify the effectiveness of such controls, or if our independent registered public accounting firm cannot render an unqualified opinion on management’s assessment and the effectiveness of our internal control over financial reporting, or if additional material weaknesses in our internal control over financial reporting are identified, we may be required to again restate our financial statements and could be subject to regulatory scrutiny and sanction, a loss of public and investor confidence, and to litigation from investors, which could have a material adverse effect on our financial position and results of operations.

Furthermore, actions to remediate any material weaknesses, including the ones noted above and in Item 9A of this Annual report on Form 10-K, could require remedial measures, including additional personnel, which could be costly and time-consuming.

We may encounter problems or delays in completing the implementation of any remedial actions and receiving a favorable attestation report from our independent registered public accounting firm.

If we do not maintain adequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance on a timely basis, which could adversely affect our results of operations and financial condition and cause a decline in our common stock price.

Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by regulatory authorities, which would likely require additional financial and management resources.

Future Restatements could have a material effect on our business

As part of an internal investigation, the Company discovered material errors in our consolidated financial statements as of and for the fiscal year ended December 31, 2018, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and our unaudited consolidated financial statements as of and for the quarterly periods ended March 31, 2019 and 2018, June 30, 2019 and 2018, and September 30, 2019 and 2018, included in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2019, June 30, 2019 and September 30, 2019.

As noted above, material weaknesses were also discovered in the Company’s internal controls over financial reporting.

Having one or more weakness in our internal controls over financial reporting can heighten the chance of failing to discover future errors in the financial statements.

While the Company believes it has identified and corrected all material errors in our financial statements for the restated periods, there can be no assurance that more material errors will not be identified in the future, both in or outside the restated periods.

Restatements can lead to reputational harm, litigation, regulatory investigations and sanctions, stock price fluctuation, and significant accounting and legal expenses to address.

They also could require significant time and resources from management.

As described in Part II, Item 9A of this Form 10-K, management has taken steps to remediate the material weaknesses in our internal controls.

In future periods, if our senior management is unable to conclude that we have effective internal control over financial reporting, or to certify the effectiveness of such controls, or if our independent registered public accounting firm cannot render an unqualified opinion on management’s assessment and the effectiveness of our internal control over financial reporting, or if additional material weaknesses in our internal control over financial reporting are identified, we may be required to again restate our financial statements and could be subject to regulatory scrutiny and sanction, a loss of public and investor confidence, significant accounting and legal expenses and to litigation from investors, which could have a material adverse effect on our financial position and results of operations.

Risks Related to Our Business and Industry

Our results of operations could be materially and adversely affected by downturns in the U.S.

and global economy which are naturally accompanied by related declines in freight tonnage hauled and in infrastructure development and other construction projects.

and global economy which are naturally accompanied by related declines in new truck orders by fleets, freight tonnage hauled and in infrastructure development and other construction projects.

Our results of operations are directly impacted by changes in the U.S.

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Sales of commercial vehicles have historically been cyclical, with demand affected by such economic factors as industrial production, construction levels, demand for consumer durable goods, interest rates and fuel costs.

Historically, general weakness in the global economy, but especially the North American economy, and corresponding decline in the need for commercial vehicles has contributed to a downturn in commercial vehicle production.

Demand for commercial vehicles depends to some extent on economic and other conditions in a given market and the introduction of new vehicles and technologies.

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If unit production of commercial vehicles declines in the future, it may materially and adversely affect our business and results of operations.

Conversely, upswings in the global economy may result in a sharp acceleration in commercial vehicle production.

A sharp acceleration in commercial vehicle production may adversely affect our ability to convert the incremental revenue into operating income efficiently.

Natural disasters could adversely affect us.

Natural disasters may also disrupt the commercial vehicle market and materially and adversely affect global production levels in our industry.

The impact from disasters resulting in wide-spread destruction may not be immediately apparent.

It is particularly difficult to assess the impact of catastrophic losses on our suppliers and end customers, who themselves may not fully understand the impact of such events on their businesses.

Accordingly, there is no assurance our results of operations will not be materially affected as a result of the impact of future natural disasters.

We may be unable to successfully implement our business strategy and, as a result, our businesses and financial position and results of operations could be materially and adversely affected.

Our ability to achieve our business and financial objectives is subject to a variety of factors, many of which are beyond our control.

For example, we may not be successful in implementing our strategy if unforeseen factors emerge diminishing the current levels or any future expected growth in the commercial vehicle markets we supply, or we experience increased pressure on our margins.

In addition, we may not succeed in integrating strategic acquisitions, and our pursuit of additional strategic acquisitions may lead to resource constraints, which could have a negative impact on our ability to meet customers’ demands, thereby adversely affecting our relationships with those customers.

Similarly, strategic divestitures involve special risks and could have an adverse effect on our results of operations and financial condition.

As a result of such business or competitive factors, we may decide to alter or discontinue aspects of our business strategy and may adopt alternative or additional strategies.

For example, we may not be successful in implementing our strategy if unforeseen factors emerge diminishing the current levels or any future expected growth in the commercial vehicle, warehouse automation or electric vehicle markets we supply or expect to penetrate, or we experience increased pressure on our margins.

Any failure to successfully implement our business strategy could materially and adversely affect our business, results of operations and growth potential.

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If the expected synergies from acquisitions do not materialize or we fail to successfully integrate such new businesses into our existing businesses, our results of operations could also be materially and adversely affected.

Circumstances associated with our acquisition and divestiture strategy could adversely affect our results of operations and financial condition.

From time to time, we pursue acquisition targets to expand or complement our business.

Acquisitions involve risks, including the risk that we may overpay for a business or are unable to obtain in a timely manner, or at all, the synergies and other expected benefits from acquiring a business.

Integrating acquired businesses also involves a number of special risks, including the following:

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• potential adverse short-term effects on results of operations through increased costs or otherwise.

If we are unable to successfully complete and integrate strategic acquisitions in a timely manner, our results of operations and financial condition could be adversely affected.

With respect to divestitures, from time to time we evaluate the performance and strategic fit of our businesses and may decide to sell a business or product line based on such an evaluation.

Circumstances associated with our acquisition and divestiture strategy could adversely affect our results of operations and financial condition.

From time to time we evaluate the performance and strategic fit of our businesses and may decide to sell a business or product line based on such an evaluation.

Any divestitures may result in significant write-offs, including those related to goodwill and other tangible and intangible assets, which could have an adverse effect on our results of operations and financial condition.

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Our customer base is concentrated and the loss of business from a major customer or the discontinuation of particular commercial vehicle platforms could reduce our revenues.

Sales to A.B.

Volvo, Daimler and PACCAR accounted for approximately 22%, 17% and 11%, respectively, of our revenue in 2019, and our ten largest customers accounted for approximately 76% of our revenue in 2019.

Even though we may be selected as the supplier of a product by an OEM for a particular vehicle, our OEM customers issue blanket purchase orders, which generally provide for the supply of that customer’s annual requirements for that vehicle, rather than for a specific number of our products.

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Once we enter into such agreements, fulfillment of the supply requirements is our obligation for the entire production life of the platform, with terms generally ranging from five to seven years, and we have limited provisions to terminate such contracts.

We may become committed to supply products to our customers at selling prices that are not sufficient to cover the direct cost to produce such products.

We may become committed to supplying products to our customers at selling prices that are not sufficient to cover the direct cost to produce such products.

We cannot predict our customers’ demands for our products.

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In other cases, we share the design costs with the customer and thereby have some risk that not all the costs will be covered if the project does not go forward or if it is not as profitable as expected.

In addition, changes in OEMs’ purchasing policies or payment practices could have an adverse effect on our business.

Furthermore, due to the cost focus of our major customers, we have been, and expect to continue to be, requested to reduce prices as part of our initial business quotations and over the life of vehicle platforms we have been awarded.

We cannot be certain that we will be able to generate cost savings and operational improvements in the future that are sufficient to offset price reductions requested by existing customers and necessary to win additional business.

Demand for our products could also be materially reduced if our customers vertically integrate their operations in a significant manner, which would have a material and adverse impact on our business and results of operations.

We are subject to certain risks associated with our foreign operations.

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• foreign currency exchange rate fluctuations affecting our ability to match revenue received with costs;

tax rates in certain foreign countries, which may exceed those in the U.S., withholding requirements or the imposition of tariffs, exchange controls or other restrictions, including restrictions on repatriation, on foreign earnings;

• tax rates in certain foreign countries, which may exceed those in the U.S., withholding requirements or the imposition of tariffs, exchange controls or other restrictions, including restrictions on repatriation, of foreign earnings;

• intellectual property protection difficulties;

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If we fail to comply with applicable laws and regulations, we could suffer civil and criminal penalties that could materially and adversely affect our results of operations and financial condition.

As we expand our business on a global basis, we are increasingly exposed to these risks.

Our success will be dependent, in part, on our ability to anticipate and effectively manage these and other risks associated with foreign operations.

These and other factors may have a material adverse effect on our international operations, business, financial condition and results of operations.

The U.K.’s exit from the European Union (EU) could materially and adversely impact our results of operations, financial condition and cash flows.

On January 31, 2020, the U.K.

formally exited from the EU (“Brexit”) and a transition period is in place until December 31, 2020 during which the U.K.

will maintain access to the EU single market and to the global trade deals negotiated by the EU on behalf of its members and remain subject to EU law.

Brexit has had an adverse impact on the U.K.’s economy.

formally exited from the EU (“Brexit”) and Brexit has had an adverse impact on the U.K.’s economy.

Uncertainty regarding the future relationship between the U.K.

and the EU likely will continue to have an adverse impact on the U.K.’s economy until the U.K.

and the EU reach a definitive resolution on the outstanding trade and legal matters.

Although it is unknown what the terms of the U.K.’s future relationship with the EU will be, it is possible that there will be higher tariffs or greater restrictions on imports and exports between the U.K.

and the EU and increased regulatory complexities following the transition period.

and the EU likely will continue to have an adverse impact on the U.K.

These factors could potentially disrupt our supply chain, including delays of imports and exports, limited access to human capital within some of the target markets and jurisdictions in which we operate and adverse changes to tax benefits or liabilities in these and other jurisdictions.

In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations, including with respect to emissions and similar certifications, as the U.K.

determines which EU laws to replace or replicate.

In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations.

Brexit also could lead to long-term volatility in the currency markets, long-term adverse effects on the value of the British pound and significant volatility in currency exchange rates.

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We are subject to certain risks associated with our Mexican operations

In December 2018, the newly elected Mexican government announced new minimum wage requirements per the Mexican labor laws.

Under the new requirements, Mexico will have two minimum wages:

one rate applicable to municipalities located on the border with the United States, which were included in a newly created Northern Border Free Trade Zone, and a different rate applicable to the rest of Mexico.

Along with the new requirements, the Mexican National Minimum Wage Commission announced the following new minimum wages, which have been in effect since January 1, 2019:

176.72 per day for municipalities in the Northern Border Free Trade Zone, a 100% increase from the minimum wage of Pesos.

88.36 per day in effect prior to January 1, 2019, and Pesos.

102.68 per day for the rest of Mexico, a 16.2% increase from the prior minimum wage.

We have facilities in the Northern Border Free Trade Zone that are affected by the 100% increase in minimum wage and we have complied with the new requirements.

The Mexican National Minimum Wage Commission continues to increase the minimum wage requirements in the municipalities located on the border with the United States (the Northern Border Free Trade Zone) where some of our facilities are located.

We are uncertain if the increase in the affected employee’s minimum wage will flow through the entire compensation structure of our employees in our facilities in Mexico creating additional costs and any labor shortages resulting from our failure to adjust the entire compensation structure over and above the incremental minimum wage.

Additionally, we are uncertain if we will be successful in passing through the related incremental cost to our customers and there can be no assurance our results of operations will not continue to be materially affected as a result of the impact of such incremental cost.

Significant changes to international trade regulations could adversely affect our results of operations.

Our business benefits from current free trade agreements and other duty preference programs, including the North American Free Trade Agreement (“NAFTA”).

government has negotiated the US-Mexico-Canada Agreement (the "USMCA") as a replacement for NAFTA.

The USMA has been ratified by the Untied States and Mexico, but will not become binding unless and until Canada ratifies the agreement.

government has indicated that it may propose significant changes to other international trade agreements, import and export regulations, and tariffs and customs duties, which have increased uncertainty regarding the future of existing international trade regulations.

The imposition of tariffs on the products we manufacture and sell could have a material and adverse impact on our business, financial condition and results of operations.

Additionally, if the U.S.

President or Congress takes action to withdraw from or materially modify NAFTA or USMCA, our business, financial condition and results of operations could be adversely affected.

In addition, the Trump administration has called for substantial changes to U.S.

foreign trade policy, including the imposition of greater restrictions on international trade and significant increases in tariffs on goods imported into the United States, and has increased tariffs on certain goods imported into the United States from a number of foreign markets, following which retaliatory tariffs have been imposed on exports of certain U.S.

goods to those markets.

These tariffs and any further escalation of protectionist trade measures could adversely affect the markets in which we sell our products and, in turn, our business, financial condition, operating results, and cash flows.

Decreased availability or increased costs of materials could increase our costs of producing our products.

Decreased availability or increased costs of materials could affect both our ability to produce products as well as the cost of producing our products.

We purchase raw materials, fabricated components, assemblies and services from a variety of suppliers.

Steel, aluminum, petroleum-based products, copper, resin, foam, fabrics, wire and wire components account for the most significant portion of our raw material costs.

Although we currently maintain alternative sources for most raw materials, from time to time, however, the prices and availability of these materials fluctuate due to global market demands and other considerations, which could impair the Company's ability to procure necessary materials, or increase the cost of such materials.

Steel, aluminum, petroleum-based products, copper, resin, foam, fabrics, wire and wire components, semiconductor chips, electronics and electrical components account for the most significant portion of our raw material costs.

Although we currently maintain alternative sources for most raw materials, from time to time, however, the prices and availability of these materials fluctuate

due to global market demands and other considerations, which could impair the Company's ability to procure necessary materials, or increase the cost of such materials.

We may be assessed surcharges on certain purchases of steel, copper and other raw materials.

Inflationary and other increases in costs of these materials have occurred in the past and may recur from time to time.

In addition, freight costs associated with shipping and receiving product are impacted by fluctuations in freight tonnage, freight hauler capacity and the cost of oil and gas.

If we are unable to purchase certain raw materials required for our operations, our operations would be disrupted, and our results of operations would be adversely affected.

There is currently a well-publicized global shortage of semiconductor chips that could impact the Company and our customers.

Inflationary and other increases in costs or shortages of the various materials that are needed for us to produce our products have occurred in the past and may recur from time to time.

In addition, freight costs associated with shipping and receiving product are impacted by fluctuations in freight tonnage, freight hauler capacity or availability and the cost of oil and gas.

If we are unable to purchase or obtain timely delivery of certain raw materials required for our operations, our operations would be disrupted, and our results of operations would be adversely affected.

In addition, if we are unable to pass on the increased costs of raw materials to our customers, this could adversely affect our results of operations and financial condition.

The recent imposition of tariffs on steel and aluminum have impacted the prices of certain of our materials.

Uncertainty exists regarding whether these tariffs will remain in place or be removed or reduced.

If these tariffs are continued or expanded, they could result in material increases in our costs.

We have invested substantial resources in markets where we expect growth and we may be unable to timely alter our strategies should such expectations not be realized.

Our future growth is dependent in part on our making the right investments at the right time to support product development and manufacturing capacity in areas where we can support our customer base.

Our future growth is dependent in part on us making the right investments at the right time to support product development and manufacturing capacity in areas where we can support our customer base.

We have identified the Asia-Pacific region as key markets likely to experience substantial growth in our market share, and accordingly have made and expect to continue to make substantial investments, both directly and through participation in various partnerships and joint ventures, in numerous manufacturing operations, technical centers and other infrastructure to support anticipated growth in the region.

If we are unable to maintain, deepen existing and develop additional customer relationships in these regions, we may not only fail to realize expected rates of return on our existing investments, we may also incur losses on such investments and be unable to timely redeploy the invested capital to take advantage of other markets, potentially resulting in lost market share to our competitors.

Additionally, we are investing in people, technology, new product development, expansion into new markets including in warehouse automation and electric vehicle markets.

If we are unable to maintain, deepen existing and develop additional customer relationships in these markets, we may not only fail to realize expected rates of return on our existing investments, we may also incur losses on such investments and be unable to timely redeploy the invested capital to take advantage of other markets, potentially resulting in lost market share to our competitors.

We cannot guarantee that we will be successful in leveraging our capabilities into new markets and thus, in meeting the needs of these new customers and competing favorably in these new markets.

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Increased competition may lead to price reductions resulting in reduced gross margins and loss of market share.

Current and future competitors may make strategic acquisitions or establish cooperative relationships among themselves or with others, foresee the course of market development more accurately than we do, develop products that are superior to our products, produce similar products at lower cost than we can, or adapt more quickly to new technologies, industry or customer requirements.

By doing so, they may enhance their ability to meet the needs of our customers or potential future customers more competitively.

These developments could limit our ability to obtain revenues from new customers or maintain existing revenues from our customer base.

We may not be able to compete successfully against current and future competitors and our failure to do so may have a material adverse effect on our business, operating results and financial condition.

We may be unable to successfully introduce new products and, as a result, our business, and financial condition and results of operations could be materially and adversely affected.

Product innovations have been and will continue to be a part of our business strategy.

We believe it is important we continue to meet our customers’ demands for product innovation, improvement and enhancement, including the continued development of new-generation products, and design improvements and innovations that improve the quality and efficiency of our products.

However, such development will require us to continue to invest in research and development and sales and marketing.

We are also subject to the risks generally associated with product development, including lack of market acceptance, delays in product development and failure of products to operate properly.

Such investments are subject to the risks generally associated with product development, including difficulty in gaining market acceptance, delays in product development and failure of products to operate properly.

Additionally, we have exposure to excess costs as we are engaged in multiple development programs for new electric vehicles, each with unique designs and timelines.

These electric vehicle programs require the use of a higher level of technical expertise with increased costs and the incremental cost is variable depending on the pace and success rate of the innovation process, the prototyping and mule build process, the production tooling process and then production ramp-up.

In addition, our competitors may develop new products before us or may produce similar products that compete with our new products.

We may, as a result of these factors, be unable to meaningfully focus on product innovation as a strategy and may therefore be unable to meet our customers’ demands for product innovation, which could have a material adverse effect on our business, operating results and financial condition.

Our products may be rendered less attractive by changes in competitive technologies, including the introduction of autonomous vehicles.

Changes in competitive technologies, including the introduction of autonomous vehicles, may render certain of our products less attractive.

Our ability to anticipate changes in technology and to successfully develop and introduce new and enhanced products on a timely basis will be a significant factor in our ability to remain competitive.

There can be no assurance that we will be able to achieve the technological advances that may be necessary for us to remain competitive.

We are also subject to the risks generally associated with new product introductions and applications, including lack of market acceptance, delays in product development and failure of products to operate properly, all of which could adversely affect our business, results of operations and growth potential.

We rely on third parties for raw materials, parts, and components.

We may source a variety of systems, components, raw materials and parts, including but not limited to top covers, fabricated steel, semiconductor chips, chemicals, seat-foam, air bag, air bag inflators, and seat belts from third parties.

From time to time these third-party items may not meet the quality standards that we desire, which could harm our reputation, cause delays and cause us to incur significant costs.

Furthermore, we may be unable to source third-party items in sufficient quantities or at acceptable prices.

The realization of any of these risks could have a material adverse effect on our business, operating results and financial condition.

Part of our strategy involves the development of new products for sales into new market segments, and if we fail to timely develop new products or we incorrectly gauge the potential market for new products, our financial results will be adversely affected.

We plan to utilize our research and development capabilities to develop new products that could become new sources of sales revenue for us in the future and help us to diversify the markets in which we compete.

For example, we may develop parts and components for use in lighter duty vehicles, electric vehicles, middle-mile and last-mile vehicles.

We intend to leverage our research and development efforts to expand our product offering beyond our current products and current markets into other similar products and components for different applications and markets.

If we fail to timely develop new products or if we miscalculate market demand for new products that we develop, we may not be able to grow our sales revenue at desired growth rates and may incur expenses relating to the development of new products that are not offset by sufficient sales revenue generated by these new products.

We could experience disruption in our supply or delivery chain, which could cause one or more of our customers to halt or delay production.

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This just-in-time method makes the logistics supply chain in our industry very complex and very vulnerable to disruptions.

The potential loss of one of our suppliers or our own production sites could be caused by a myriad of potential problems, such as closures of one of our own or one of our suppliers’ plants or critical manufacturing lines due to bankruptcy, strikes, mechanical breakdowns, equipment failure, electrical outages, fires, explosions, political upheaval, as well as logistical complications due to weather, volcanic eruptions, earthquakes, flooding or other natural disasters, Acts of God, epidemics, mechanical failures, delayed customs processing and more.

The potential loss of one of our suppliers or our own production sites could be caused by a myriad of potential problems.

Additionally, as we expand in growth markets, the risk for such disruptions is heightened.

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Similarly, a potential quality issue could force us to halt deliveries.

Even where products are ready to be shipped or have been shipped, delays

may arise before they reach our customer.

Even where products are ready to be shipped or have been shipped, delays may arise before they reach our customer.

Our customers may halt or delay their production for the same reason if one of their other suppliers fails to deliver necessary components.

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Where a customer halts production because of another supplier failing to deliver on time, we may not be fully compensated, if at all, and therefore our business and financial results could be materially and adversely affected.

We face risks related to health epidemics that could impact our sales and operating results.

Our business could be adversely affected by the effects of a widespread outbreak of contagious disease, including the recent outbreak of respiratory illness in several countries.

Any outbreak of contagious diseases, and other adverse public health developments could adversely affect our operations and the operations and production capabilities of our suppliers, including as a result of quarantine or closure.

The extent to which the recent respiratory illness outbreak in the various countries may affect our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the outbreak and the actions to contain the outbreak or treat its effects, among others.

In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect demand for our products and significantly impact our operating results.

Security breaches and other disruptions could compromise our information systems and expose us to liability, which could cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, financial information, our proprietary business information and that of our customers, suppliers and business partners, and personally identifiable information of our customers and employees, in our data centers and on our networks.

The secure processing, maintenance and transmission of this information is critical to our operations and business strategy.

Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfunction, malfeasance or other disruptions.

Like most companies, our systems are under attack on a routine basis.

At times there are breaches of our security measures.

While past breaches have not been material, there is no guarantee that future breaches could not have a material impact.

Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disrupt our operations and the services we provide to customers, damage our reputation, and cause a loss of confidence in our products and services, which could adversely affect our business and our results of operations.

If we are unable to recruit or retain senior management and other skilled personnel, our business, operating results and financial condition could be materially and adversely affected.

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We seek to develop and retain an effective management team through the proper positioning of existing key employees and the addition of new management personnel where necessary.

Retaining personnel with the right skills at competitive wages can be difficult in certain markets in which we are doing business, particularly those locations that are seeing much inbound investment and have highly mobile workforces.

Retaining personnel with the right skills at competitive wages can be difficult in certain markets in which we are doing business, particularly those

locations that are seeing much inbound investment and have highly mobile workforces.

Additionally, attracting sufficiently well-educated and talented management, especially middle-management employees, in certain markets can be challenging.

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We may be adversely impacted by labor strikes, work stoppages and other matters.

As of December 31, 2019 , approximately 49% of the employees in our North American operations were unionized, with the majority of union-represented personnel based in Mexico.

We have experienced limited unionization efforts at certain of our other North American facilities from time to time.

In addition, approximately 71% of our employees of our European, Asian and Australian

operations were represented by a shop steward committee, which may limit our flexibility in our relationship with these employees.

As of December 31, 2020, a majority of employees based in Mexico are unionized.

In addition, approximately 63% of our employees of our European, Asian and Australian operations were represented by a shop steward committee, which may limit our flexibility in our relationship with these employees.

We may encounter future unionization efforts or other types of conflicts with labor unions or our employees.

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In the event that one or more of our customers or their suppliers experience a material work stoppage, such work stoppage could have a material adverse effect on our business.

Additionally, the rapid recovery of certain COVID-19-impacted markets and locales is causing spot shortages of labor.

The Company has exposure to cost premiums as we use temporary labor during demand ramp-ups which carries with it a temporary premium cost.

The Company is currently at high levels of temporary labor which could have a material adverse effect on our business.

Our earnings may be adversely affected by changes to the carrying values of our tangible and intangible assets as a result of recording any impairment charges deemed necessary.

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If the carrying amount of goodwill exceeds its implied fair value, the reporting unit would recognize an impairment loss for that excess amount.

Factors that may be considered in assessing whether goodwill or other long-lived assets may not be recoverable include a decline in our stock price or market capitalization, reduced estimates of future cash flows, the general economic environment, changes or downturns in our industry as a whole, termination of any of our customer contracts, restructuring efforts and general workforce reductions.

There can be no assurance that we will not incur such charges in the future as changes in economic or operating conditions impacting the estimates and assumptions could result in additional impairment.

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As part of our business strategy, we continuously seek ways to lower costs, improve manufacturing efficiencies and increase productivity in our existing operations and intend to apply this strategy to those operations acquired through acquisitions.

In addition, we incur restructuring charges periodically to close facilities, such as lease termination charges, severance charges and impairment charges of leasehold improvements and/or machinery and equipment, as we continue to evaluate our manufacturing footprint to improve our cost structure and remove excess, underperforming assets, or assets that no longer fit our goals.

In addition, we incur restructuring charges periodically to close facilities, such as lease termination charges, severance charges and

impairment charges of leasehold improvements and/or machinery and equipment, as we continue to evaluate our manufacturing footprint to improve our cost structure and remove excess, underperforming assets, or assets that no longer fit our goals.

If we decide to close or consolidate facilities, we may face execution risks which could adversely affect our ability to serve our customers.

Further, we may be unsuccessful in achieving these objectives which could adversely affect our operating results and financial condition.

Additionally, aspects of the data upon which the company’s business strategy is based may be incomplete or unreliable, which could lead to errors in the strategy, which in turn could adversely affect the company’s performance.

Also, not all business strategy

can be based on data, and to the extent that it is based on assumptions and judgments that are untested, then it could be unsound and thereby lead to performance below expectations.

Tax legislation initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition.

We are a multinational corporation with operations in the United States and international jurisdictions.

As such, we are subject to the tax laws and regulations of the U.S.

federal, state and local governments and various international jurisdictions.

From time to time, various legislative initiatives may be proposed that could adversely affect our tax positions.

There can be no assurance that our effective tax rate or tax payments will not be adversely affected by these initiatives.

In addition, U.S.

federal, state and local, as well as international, tax laws and regulations are extremely complex and subject to varying interpretations.

There can be no assurance that our tax position will not be challenged by relevant tax authorities or that we would be successful in any such challenge.

The geographic profile of our taxable income could adversely impact our tax provision and therefore our results of operations.

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This could materially impact our results of operations.

Litigation against us could be costly and time consuming to defend, as a result, our businesses and financial position could be materially and adversely affected.

We are regularly subject to legal proceedings and claims that arise in the ordinary course of business, such as workers’ compensation claims, Occupational Safety and Health Administration investigations, employment disputes, unfair labor practice charges, examination by the IRS, customer and supplier disputes, contractual disputes, intellectual property disputes, environmental claims and product liability claims arising out of the conduct of our business.

While we maintain insurance, we cannot assure you that it will be sufficient to cover such proceedings and claims, that any costs and liability arising therefrom will not exceed our insurance coverage limits or that such insurance will continue to be available on commercially reasonable terms, if at all.

Litigation may result in substantial costs and may divert management’s attention and resources from the operation of our business, which could have a material adverse effect on our business, results of operations or financial condition.

We have only limited protection for our proprietary rights in our intellectual property, which makes it difficult to prevent third parties from infringing upon our rights and our operations could be limited by the rights of others.

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Such licenses may not be made available to us on acceptable terms, if at all, or we may not prevail in contesting the validity of third party rights.

In addition to patent and trademark protection, we also protect trade secrets, “know-how” and other confidential information against unauthorized use or disclosure by persons who have access to them, such as our employees and others, through contractual arrangements.

These arrangements may not provide meaningful protection for our trade secrets, know-how or other confidential information in the event of any unauthorized use, misappropriation or disclosure.

If we are unable to maintain the proprietary

nature of our technologies, trade secrets, know-how, or other confidential information, our revenues could be materially and adversely affected.

As we diversify and globalize our geographic footprint, we may encounter laws and practices in emerging markets that are not as stringent or enforceable as those present in developed markets, and thus incur a higher risk of intellectual property infringement, which could materially and adversely affect our results of operations.

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Product liability claims could result in significant losses as a result of expenses incurred in defending claims or the award of damages.

In addition, we may be required to participate in recalls involving systems or components sold by us if any prove to be defective, or we may voluntarily initiate a recall or make payments related to such claims as a result of various industry or business practices or the need to maintain good customer relationships.

In addition, we may be required to participate in recalls involving systems or components sold by us if any prove to be defective, or we may or our customers may voluntarily initiate a recall and we have to make payments related to such recalls as

a result of various industry or business practices, contractual obligations or the need to maintain good customer relationships.

Such a recall would result in a diversion of management resources.

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Any product liability claim brought against us could have a material adverse effect on our results of operations.

We warrant the workmanship and materials of many of our products under limited warranties and have entered into warranty agreements with certain OEMs that warranty certain of our products in the hands of these OEMs’ customers, in some cases for many years.

We warrant the workmanship and materials of many of our products under limited warranties and have entered into warranty agreements with certain customers that warranty certain of our products in the hands of these customers of our customers, in some cases for many years.

From time to time, we receive product warranty claims from our customers, pursuant to which we may be required to bear costs of repair or replacement of certain of our products.

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The environmental laws to which we are subject have become more stringent over time, and we could incur material costs or expenses in the future to comply with environmental laws.

If we violate or fail to comply with these laws and regulations or do

not have the requisite permits, we could be fined or otherwise sanctioned by regulators.

If we violate or fail to comply with these laws and regulations or do not have the requisite permits, we could be fined or otherwise sanctioned by regulators.

In some instances, such a fine or sanction could have a material adverse effect on our financial condition and results of operations.

We may be adversely affected by the impact of government regulations on our OEM customers.

Although the products we manufacture and supply to commercial vehicle OEMs are not subject to significant government regulation, our business is indirectly impacted by the extensive governmental regulation applicable to commercial vehicle OEMs.

These regulations primarily relate to emissions and noise standards imposed by the Environmental Protection Agency ("EPA"), state regulatory agencies in North America, such as the California Air Resources Board ("CARB"), and other regulatory agencies around the world.

Commercial vehicle OEMs are also subject to the National Traffic and Motor Vehicle Safety Act and Federal Motor Vehicle Safety Standards promulgated by NHTSA in the U.S.

Changes in emission standards and other proposed governmental regulations could impact the demand for commercial vehicles and, as a result, indirectly impact our operations.

For example, new emission standards for truck engines used in Class 5 to 8 trucks imposed by the EPA and CARB became effective in 2010.

In 2011, the EPA and NHTSA adopted a program to reduce greenhouse gas emissions and improve the fuel efficiency of medium-and heavy-duty vehicles.

To the extent that current or future governmental regulation has a negative impact on the demand for commercial vehicles, our business, financial condition or results of operations could be adversely affected.

Risks Related to Our Indebtedness

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In addition, the agreements governing the senior secured revolving and term loan credit facilities contain covenants that, among other things, restrict our ability to:

• incur liens;

• incur or assume additional debt or guarantees or issue preferred stock;

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It is expected that a transition away from the widespread use of LIBOR to alternative rates will occur over the course of the next few years.

Financial Conduct Authority (FCA), which regulates LIBOR, has announced that it has commitments from panel banks to continue to contribute to LIBOR through the end of 2021, but that it will not use its powers to compel contributions beyond such date.

Accordingly, there is considerable uncertainty regarding the publication of such rates beyond 2021.

The Federal Reserve Bank of New York and various other authorities have commenced the publication of reforms and actions relating to alternatives to U.S.

dollar LIBOR.

The full impact of such reforms and actions, together with any transition away from LIBOR, including the potential or actual discontinuance of LIBOR publication, remains unclear.

At this time, it is not possible to predict the effect any discontinuance, modification or other reforms to LIBOR or any other reference rate, or the establishment of alternative reference rates will have on us.

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These fluctuations could have an adverse effect on the market price of our common stock.

Our operating results may fluctuate as a result of these and other events and factors:

the size, timing, volume and execution of significant orders and shipments;

changes in the terms of our sales contracts;

the timing of new product announcements by us and our competitors;

changes in our pricing policies or those of our competitors;

changes in supply and pricing of raw materials and components;

market acceptance of new and enhanced products;

announcement of technological innovations or new products by us or our competitors;

the length of our sales cycles;

conditions in the commercial vehicle industry;

changes in our operating expenses;

personnel changes;

health epidemics;

new business acquisitions;

uncertainty in geographic regions;

cyber attacks;

currency and interest rate fluctuations;

uncertainty with respect to the NAFTA, USMCA and other international trade agreements;

union actions;

seasonal factors.

We base our operating expense budgets in large part on expected revenue trends.

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In such events, the trading price of our common stock may be adversely affected.

In the past, companies that have experienced volatility in the market price of their stock have been the subject of securities class action litigation.

If we become involved in securities class action litigation in the future, it could result in substantial costs and diversion of management attention and resources, thus harming our business.

Our common stock has historically had a low trading volume with limited analyst coverage and, as a result, any sale of a significant number of shares may depress the trading price of our stock;

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These provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock.

In addition, on June 23, 2020, our board of directors unanimously adopted a limited duration stockholder rights plan and declared a dividend of one right for each outstanding share of our common stock as of July 5, 2020, the record date for such dividend.

Under the rights plan, the rights will become exercisable only if a person or persons acquires beneficial ownership of 10% or more of our outstanding common stock, or 15% in the case of certain passive investors.

In the event that the rights become exercisable, each holder of rights (other than the person or group triggering the rights plan) will be entitled to purchase, at the right’s exercise price, a number of shares of our common stock having a market value of twice the right’s exercise price.

Such exercise of the rights will cause the person or group triggering the rights plan to suffer dilution of their ownership stake in our company.

The rights plan will expire on June 24, 2021 unless earlier terminated or amended by our board of directors.

These charter provisions, as well as the potential impact of Section 203 and the rights plan, could limit the price that certain investors might be willing to pay in the future for shares of our common stock, discourage potential acquisition proposals and delay, deter or prevent a change in control.

General Risk Factors

Security breaches and other disruptions could compromise our information systems and expose us to liability, which could cause our business and reputation to suffer.

The secure processing, maintenance and transmission of this information is critical to our operations and business strategy.

Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfunction, malfeasance or other disruptions.

Like most companies, our systems are under attack on a routine basis.

At times there are breaches of our security measures.

While past breaches have not been material, there is no guarantee that future breaches could not have a material impact.

We face risks related to health epidemics that could impact our sales and operating results.

Our business could be adversely affected by the effects of a widespread outbreak of contagious disease.

Unresolved Staff Comments

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 1A. Risk Factors