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Our revenues for the year ended June 30, 2023 (“fiscal year 2023”) increased by $383.0 million, or 16.9%, from $2.26 billion for the year ended June 24, 2022 (“fiscal year 2022”) to $2.65 billion for fiscal year 2023.
−Removed: Our percentage of revenues from lasers, sensors and other markets decreased from 23.3% in fiscal year 2021 to 21.2% in fiscal year 2022, while our percentage of revenues from optical communications products increased from 76.7% in fiscal year 2021 to 78.8% in fiscal year 2022.
+Added: Our percentage of revenues from lasers, sensors and other markets increased from 21.2% in fiscal year 2022 to 24.1% in fiscal year 2023, while our percentage of revenues from optical communications products decreased from 78.8% in fiscal year 2022 to 75.9% in fiscal year 2023.
In many cases, we are the sole outsourced manufacturing partner used by our customers for the products that we produce for them.
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As of June 30, 2023, our facilities comprised approximately 3.7 million total square feet, including approximately 0.9 million square feet of office space used for general administration purposes and approximately 2.8 million square feet devoted to manufacturing and related activities, of which approximately 1.0 million square feet are clean room facilities.
−Removed: Of the aggregate square footage of our facilities, approximately 3.2 million square feet are located in Thailand and the remaining balance is located in the People’s Republic of China (“PRC” or “China”), the United Kingdom, the United States, Israel and the Cayman Islands.
+Added: Of the aggregate square footage of our facilities, approximately 3.2 million square feet are located in Thailand and the remaining balance is located in the People’s Republic of China (“PRC” or “China”), the United States, Israel and the Cayman Islands.
See Part I, Item 2.
Properties of this Annual Report on Form 10-K.
−Removed: Recent Developments Related to COVID-19
−Removed: The global COVID-19 pandemic has impacted us in several ways and created various challenges.
−Removed: Our PRC subsidiary, which manufactures custom optics components for us and other customers at its facility in Fuzhou, China, experienced a two-week closure in January 2020 in accordance with the Chinese government’s official efforts to mitigate the spread of COVID-19.
−Removed: Furthermore, travel restrictions in the PRC during that period resulted in fewer than 90% of our employees in the PRC being able to return to work before early March 2020.
−Removed: Our other global manufacturing facilities also have been affected by government restrictions put in place to slow the spread of COVID-19.
−Removed: While our operations in Thailand have not been suspended, we have implemented a number of safety protocols to allow such operations to continue in accordance with government regulations.
−Removed: With the exception of approximately one week beginning in late March 2020 when our facility in Santa Clara, California closed before reopening in early April 2020 as a previously classified “essential business,” our facilities in the U.S.
−Removed: have remained open while adhering to the local government restrictions.
−Removed: The health and well-being of our employees is our top priority, and we continue to take precautionary measures throughout our worldwide operations to ensure our employees and their families remain safe.
−Removed: These measures include leaves of absence for affected employees and their close contacts, stringent contact tracing, enhanced safe distancing measures, and arrangements for the vaccination of our employees in Thailand.
−Removed: Although we did not experience any significant disruptions in our operations or decrease in customer demand during the year ended June 24, 2022, any worsening of the pandemic may result in more stringent measures being implemented by local authorities, such as shutting down our manufacturing facilities, which would have a significant negative impact on our operations.
−Removed: We expect that disruptions in our supply chain and fluctuations in the availability of parts and materials will continue to have a significant impact on our ability to generate revenue, despite strong demand from our customers.
−Removed: These supply chain disruptions have been exacerbated by recent global events, such as (1) COVID-related lockdowns in China, which have caused freight and logistics issues and unforeseen delays, and (2) the armed conflict between Russia and Ukraine.
−Removed: While we have no significant direct business in Ukraine or Russia, the conflict has negatively impacted demand from some of our automotive customers that have other suppliers in the region.
−Removed: Moreover, if the facilities of our subsidiary in Fuzhou, China are locked down, we would also be negatively impacted since we and some of our customers rely on the optics components that are manufactured in such facilities.
−Removed: Furthermore, in some cases, our efforts to identify and secure alternative supply chain sources has resulted in our customers or their end customers requiring requalification and validation of components, a process that can often be lengthy and has negatively impacted the timing of our revenue.
−Removed: We expect these supply constraints to continue, and potentially worsen, for at least the next 12 months.
−Removed: Due to the unprecedented and unpredictable human and economic impact of the COVID-19 pandemic globally, including inflationary pressures and supply chain constraints as the world exits the acute phase of the pandemic, and the evolving and differing national strategies for dealing with COVID-19, it is challenging to provide a forward-looking assessment.
−Removed: However, despite uncertainty and concern about the global economy and the health of various industries, we can share some relevant perspectives as we continue to assess the impacts of COVID-19 on our business in the future:
−Removed: • A significant portion of our costs is variable and, because of this, we can adjust manufacturing costs relatively quickly to respond to the changing demand of our customers.
−Removed: However, because parts and materials account for the largest portion of our costs, any of the inflationary pressures and supply chain issues noted above will negatively affect our gross margins for the foreseeable future.
−Removed: • The ongoing safety and health of our employees is and will remain a key priority, and we will continue to follow robust safety protocols in all of our facilities.
−Removed: To this end, we arranged for the vaccination of our employees in Thailand in the first quarter of fiscal year 2022.
−Removed: • Given our $478.2 million in cash, cash equivalents and short-term investments, and our total debt of approximately $27.4 million, as of June 24, 2022, we believe we are in a solid position from a capital and financial resources perspective.
−Removed: We expect that current cash and cash equivalent balances and short-term investments, and cash flows generated from operations will be sufficient to meet our domestic and international working capital needs and other capital and liquidity requirements for at least the next 12 months.
Industry Background
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Therefore, we expect a significant percentage of our revenues will continue to come from a small number of customers.
−Removed: During each of fiscal years 2022 and 2021, we had three customers that each contributed 10% or more of our revenues.
+Added: During fiscal years 2023 and 2022, we had four and three customers, respectively, that each contributed 10% or more of our revenues.
+Added: During fiscal year 2023, Cisco Systems Inc., Lumentum Operations LLC, Nvidia Corporation, and Infinera Corporation contributed 15.6%, 15.4%, 12.5%, and 12.4% respectively, of our revenues.
During fiscal year 2022, Cisco Systems Inc., Infinera Corporation and Lumentum Operations LLC contributed 25.4%, 12.5% and 10.3%, respectively, of our revenues.
−Removed: During fiscal year 2021, Lumentum Operations LLC, Infinera Corporation and Cisco Systems Inc.
−Removed: contributed 13.6%, 11.6% and 10.7%, respectively, of our revenues.
The production of optical devices is characterized by a lengthy qualification process.
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While we continually undertake programs to strengthen our supply chain, we are experiencing, and expect to experience for the foreseeable future, strain on our supply chain, as well as periodic supplier problems.
−Removed: These supply chain disruptions have been exacerbated by recent global events, such as (1) COVID-related lockdowns in China, which have caused freight and logistics issues and unforeseen delays, and (2) the armed conflict between Russia and Ukraine.
+Added: These supply chain disruptions were exacerbated by recent global events, such as (1) COVID-related lockdowns in China, which caused freight and logistics issues and unforeseen delays during the first half of fiscal year 2023, and (2) the armed conflict between Russia and Ukraine.
While we have no significant direct business in Ukraine or Russia, the conflict has negatively impacted demand from some of our automotive customers that have other suppliers in the region.
−Removed: Moreover, if the facilities of our subsidiary in Fuzhou, China are locked down, we would also be negatively impacted since we and some of our customers rely on the optics components that are manufactured in such facilities.
Furthermore, in some cases, our efforts to identify and secure alternative supply chain sources has resulted in our customers or their end customers requiring requalification and validation of components, a process that can often be lengthy and has negatively impacted the timing of our revenue.
−Removed: We have incurred, and expect to incur for the foreseeable future, costs to address supply chain problems.
−Removed: Although we have generally managed to pass such costs on to our customers, our gross margins could decrease if the problems persist over a sustained period of time.
We have an extensive quality management system that focuses on continual process improvement and achieving high levels of customer satisfaction.
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NADCAP (National Aerospace and Defense Contractors Accreditation Program) for Quality Assurance throughout the Aerospace and Defense Industries;
−Removed: and ISO 45001 for Occupational Health and Safety Management Systems.
+Added: ISO 45001 for Occupational Health and Safety Management Systems;
+Added: and ISO 22301 for Business Continuity Management Systems.
We also maintain compliance with various additional standards imposed by the U.S.
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and Research Electro-Optic, Inc.
−Removed: Our UK competitors for printed circuit board assemblies include STI Limited, Axiom Manufacturing Services Limited and TT Electronics plc.
Intellectual Property
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We do not anticipate any material capital expenditures for environmental control facilities for the foreseeable future.
−Removed: While to date we are not aware of any material exposures, there can be no assurance that environmental matters will not arise in the future or that costs will not be incurred with respect to sites as to which no problem is currently known.
+Added: While to date we
+Added: are not aware of any material exposures, there can be no assurance that environmental matters will not arise in the future or that costs will not be incurred with respect to sites as to which no problem is currently known.
As part of the International Organization for Standardization (“ISO”) 14001 environmental management systems framework, we have established and continue to enforce at our facilities a global environmental policy that includes evaluation and control, compliance obligations, commitment, training, communication, control of documented information, operational control, emergency preparedness and response, and management review.
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Similarly, if our customers experience disruptions to their supplies or materials, or the extension of their lead times, they may reduce, cancel, or alter the timing of their purchases with us, which could have a material adverse effect on our business, financial condition and operating results.
+Added: Tax Law Changes
We are subject to income taxes in various jurisdictions.
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There have been a number of proposed changes in the tax laws that could increase our tax liability.
−Removed: Several governments are considering various tax reform proposals that, if enacted, may contain provisions that could increase our tax expense.
−Removed: Further changes in the tax laws of various jurisdictions could arise as a result of the base erosion and profit shifting project undertaken by the Organisation for Economic Co-operation and Development, which represents a coalition of member countries and has recommended changes to numerous long-standing tax principles.
−Removed: If implemented by taxing authorities, such changes could have a material adverse effect on our business, financial condition and operating results.
+Added: Several governments are considering tax reform proposals that, if enacted, could increase our tax expense.
+Added: The Organization for Economic Co-operation and Development (OECD) announced that it has reached agreement among its member countries to implement Pillar Two rules, a global minimum tax at 15% for certain multinational enterprises.
+Added: Many countries are expected to issue laws and regulations to conform to this regime.
+Added: We will continue to monitor legislative and regulatory developments to assess the impact on our business, financial condition and operating results.
Social Responsibility
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We have fourteen direct and indirect subsidiaries, all of which are wholly-owned.
−Removed: As the parent company, we enter into contracts directly with our customers while some of our subsidiaries in the PRC, the U.S.
+Added: As the parent company, we enter into contracts directly with our customers while some of our subsidiaries in the PRC and the U.S.
enter into sales contracts or purchase orders directly with their customers.
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Human Capital Resources
−Removed: Our workforce is distributed globally over eight countries.
+Added: Our workforce is distributed globally over seven countries.
As of June 30, 2023, we employed approximately 14,663 full-time employees worldwide, with approximately 14,451 employees located in the Asia-Pacific region, 210 employees located in North America, and 2 employees located in Europe or the Middle East.
−Removed: Of our total workforce, approximately 13,863 employees were involved in manufacturing operations and 372 employees were involved in business development and general and administrative functions.
+Added: Of our total workforce, approximately 14,217 employees were involved in manufacturing operations and 446 employees were involved in business development and general
+Added: and administrative functions.
None of our employees are represented by a labor union.
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We provide employee career guidance and counseling through established employee development and training opportunities.
−Removed: We have taken a wide variety of measures to protect the health and well-being of our employees, suppliers, and customers during the COVID-19 pandemic, including arranging for our employees in Thailand to receive COVID-19 vaccines beginning in the first quarter of fiscal year 2022.
Available Information
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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.