What changed in this filing

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Item 1. Business

2021-03-05 compared with 2020-03-06 · 61 added, 547 removed, 216 unchanged (74% of the section changed)

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Our goal is to be a leading supplier of fluid delivery subsystems and components to OEMs engaged in manufacturing capital equipment to produce semiconductors and to leverage our technology and products to expand the share of our addressable markets.

To achieve this goal, we engage with our customers early in their design an d development processes and utilize our deep engineering resources and operating expertise , as well as our expanded product portfolio, to jointly create innovative and advanced solutions that meet the current and future needs of our customers.

These collab orations frequently involve our engineers working at our customers’ sites and serving as an extension of our customers’ product design teams.

To achieve this goal, we engage with our customers early in their design and development processes and utilize our deep engineering resources and operating expertise , as well as our expanded product portfolio, to jointly create innovative and advanced solutions that meet the current and future needs of our customers.

We employ this approach with three of the largest manufacturers of semiconductor capital equipment in the world.

W e believe this approach enables us to design products that meet the precise specifications our customers demand, allows us to often be the sole supplier of these subsystems during the initial production ramp , and positions us to be the preferred supplier f or the full five to ten-year lifespan of the process tool.

We believe this approach enables us to design products that meet the precise specifications our customers demand, allows us to often be the sole supplier of these subsystems during the initial production ramp , and positions us to be the preferred supplier for the full five to ten-year lifespan of the process tool.

The broad technical expertise of our engineering team, coupled with our early customer engagement approach, enables us to offer innovative and reliable solutions to complex fluid delivery challenges.

With two decades of experience developing complex fluid delivery subsystems and meeting the constantly changing production requirements of leading semiconductor OEMs, we have developed expertise in fluid delivery that we offer to our OEM customers.

In addition, our capital efficient model and the integration of our business systems with those of our customers provides us the flexibility to fulfill increased demand and meet changing customer requirements with relatively low levels of capital expenditures.

In addition, our capital efficient model provides us the flexibility to fulfill increased demand and meet changing customer requirements with relatively low levels of capital expenditures.

With an aim to provide superior customer service, we have a global footprint with many facilities strategically located in close proximity to our customers.

We have long standing relationships with top tier OEM customers, including Lam Research, Applied Materials, and ASML, which were our three largest customers by sales in 2020.

We generated revenue from continuing operations of $620.8 million, $823.6 million, and $655.9 million in 2019, 2018, and 2017, respectively (hereinafter, all references to “sales” or “revenue” relates to net sales from continuing operations, unless explicitly stated otherwise).

We generated net income from continuing operations of $10.7 million, $57.9 million, and $56.9 million in 2019, 2018, and 2017, respectively.

We generated non-GAAP adjusted net income from continuing operations of $28.3 million, $75.1 million, and $65.1 million in 2019, 2018, and 2017, respectively.

See Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Results for a discussion of non-GAAP adjusted net income from continuing operations, an accompanying presentation of the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States, net income from continuing operations, and a reconciliation of the differences between non-GAAP adjusted net income from continuing operations and net income from continuing operations.

We generated revenue of $914.2 million, $620.8 million, and $823.6 million in 2020, 2019, and 2018, respectively.

We generated net income of $33.3 million, $10.7 million, and $57.9 million in 2020, 2019, and 2018, respectively.

We generated non-GAAP net income of $59.0 million, $28.3 million, and $75.1 million in 2020, 2019, and 2018, respectively.

See Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations, Non-GAAP Results for a discussion of non-GAAP net income, an accompanying presentation of the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States, net income, and a reconciliation of the differences between non-GAAP net income and net income.

Our Competitive Strengths

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Our close collaboration with them has contributed to our established market position and several key supplier awards.

Operational Excellence wi th Scale to Support the Largest Customers

Over our 20 year experience in designing and building gas delivery systems, we have developed deep capabilities in operations.

Operational Excellence with Scale to Support the Largest Customers

Over our 20-year experience in designing and building fluid delivery systems, we have developed deep capabilities in operations.

We have strategically located our manufacturing facilities near our customers’ locations in order to provide fast and efficient responses to new product introductions and accommodate configuration or design changes late in the manufacturing process.

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We believe that our early collaborative approach with customers positions us to deliver innovative and dynamic solutions, offer timely deployment and meet competitive cost targets, further increasing our market share.

Through our intellectual property (“IP”) purchase of developed flow controller technology in May 2019 and our acquisitions of a Korean gas panel supplier in April 2018, a weldment company and a precision machining company in July and December 2017, respectively, and a plastic machining & fabrication company in April 2016, we significantly expanded our served market and also entered the market for chemical delivery subsystems for wet process tools where we had only limited engagement in the past.

Through our acquisition of a precision machining operation in December 2020, an intellectual property (“IP”) purchase of developed flow controller technology in 2019, and our acquisitions of a weldment company and a precision machining company in 2017, we significantly expanded our served customer base and also entered the market for chemical delivery subsystems for wet process tools where we had only limited engagement in the past.

Using this and our existing engineering capability, we developed a liquid delivery module and was qualified on a wet process equipment system at one of our largest customers who is a market leader in this space.

Grow Our Total Available Market at Existing Customers with Expanded Product Offerings

Grow Our Total Available Market and Share of the Market with Expanded Product Offerings

We continue to work with our existing core customers on additional opportunities, including chemical delivery, one of our important potential growth areas.

We believe that wet processes, including clean and electro chemical deposition (“ECD”), that require precise chemical delivery are currently an underpenetrated market opportunity for us.

We believe that wet processes, including clean and electrochemical deposition (“ECD”), that require precise chemical delivery are currently an underpenetrated market opportunity for us.

By leveraging our existing customer relationships and strong reputation in fluid mechanics, we intend to increase our chemical delivery module market share and introduce additional related products.

Through our IP purchase of developed flow controller technology in May 2019 and our acquisitions of a Korean gas panel supplier in April 2018, a weldment company and a precision machining company in July and December 2017, respectively, and a plastic machining & fabrication company in April 2016, we significantly expanded our served market and entered the market for chemical delivery subsystems.

The acquisitions allow us to manufacture and assemble the complex plastic and metal products and precision machined components for the semiconductor equipment, aerospace, and general-industrial industries, as well as provide us exposure to and growth opportunities in the Korean semiconductor capital equipment market.

Through our acquisition of a precision machining operation in December 2020, our IP purchase of developed flow controller technology in 2019, our acquisition of a Korean gas panel supplier in 2018, and our acquisitions of a weldment company and a precision machining company in 2017, we significantly expanded our served customer base with expanded product offerings.

The acquisitions allow us to manufacture and assemble the complex plastic and metal products and precision machined components for the semiconductor equipment, including our existing customer base, as well as medical device, and general-industrial industries, while providing us exposure to and growth opportunities in the Korean and Japanese semiconductor capital equipment market.

Expand Our Total Customer Base within Fluid Delivery Market

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(“IAN”) for $6.5 million to provide us exposure to and growth opportunities in the Korean semiconductor capital equipment market.

In December 2020, we acquired certain operating assets and assumed the operations of a business in Nogales, Mexico for $5.0 million to increase our precision machined component manufacturing capacity.

We intend to continue to evaluate opportunistic acquisitions to supplement our organic growth.

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In Japan, we utilize a value-added reseller to market and sell our chemical delivery system.

We are dependent upon a small number of customers, as the semiconductor equipment manufacturer market is highly concentrated with four companies accounting for over 80% of all process tool revenues.

We are dependent upon a small number of customers, as the semiconductor equipment manufacturer market is highly concentrated with five companies accounting for over 80% of all process tool revenues.

For 2020, our two largest customers were Lam Research and Applied Materials, which accounted for 52% and 35% of sales, respectively.

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We have developed a highly flexible manufacturing model with cost-effective locations situated nearby the manufacturing facilities of our largest customers.

We have facilities in the United States, Singapore, Malaysia, the United Kingdom, and Korea.

We have facilities in the United States, Singapore, Malaysia, the United Kingdom, Korea, and Mexico.

Our product cycle engagements begin by working closely with our customers to outline the solution specifications before design and prototyping even begin.

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Manufacturing

We are ISO 9001 certified or compliant at each of our manufacturing locations, and our manufactured subsystems and modules adhere to strict design tolerances and specifications.

We are ISO 9001 certified or compliant at our manufacturing locations, and our manufactured subsystems and modules adhere to strict design tolerances and specifications.

We operate Class 100 and Class 10,000 clean room facilities for customer-specified testing, assembly, and integration of high-purity gas and chemical delivery systems at our locations in Singapore, Oregon, Texas, and Korea.

We operate additional facilities in Malaysia, Oregon, and California for weldments and related components used in our gas delivery subsystems, and we operate a separate facility in California for critical components used in our chemical delivery subsystems.

We operate facilities in Minnesota and Florida for precision machining of components for sale to our customers and internal use.

We operate additional facilities in Malaysia, Oregon, Texas, and California for weldments and related components used in our gas delivery subsystems, and we operate facilities in California and Malaysia for critical components used in our chemical delivery subsystems.

We operate facilities in Minnesota and Mexico for precision machining of components for sale to our customers and internal use.

Many of our facilities are located in close proximity to our largest customers to allow us to collaborate with them on a regular basis and to enable us to deliver our products on a just-in-time basis, regardless of order size or the degree of changes in the applicable configuration or specifications.

We qualify a nd test key components that are integrated into our subsystems and test our fluid delivery subsystems during the design process and again prior to shipping.

Our quality management system allows us to access real-time corrective action reports, non-conforma nce reports, customer complaints , and controlled documentation.

We qualify and test key components that are integrated into our subsystems and test our fluid delivery subsystems during the design process and again prior to shipping.

Our quality management system allows us to access real-time corrective action reports, non-conformance reports, customer complaints , and controlled documentation.

In addition, our senior management conducts quarterly reviews of our quality control system to evaluate effectiveness.

Our customers also complete quarterly surveys which allow us to measure s atisfaction.

Our customers also complete quarterly surveys which allow us to measure satisfaction.

Supply Chain Management

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When we compete for new business, we face competition from other suppliers of gas or chemical delivery subsystems, and in some cases with the internal manufacturing groups of OEMs.

While many OEMs have outsourced the design and manufacturing of their gas and chemical delivery systems, we would face additional competition if in the future these OEMs elected to develop these systems internally.

The fluid delivery subsystem market is concentrated, and we face competition primarily from Ultra Clean Technology, with additional competition from regional suppliers.

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flexible manufacturing capabilities.

We expect our competitors to continue to improve the performance of their current products and to introduce new products or new technologies that could adversely affect sales of our c urrent and future products.

In addition, the limited number of potential customers in our industry further intensifies competition.

We anticipate that increased competitive pressures may cause intensified price-based competition and we may have to reduce t he prices of our products.

We anticipate that increased competitive pressures may cause intensified price-based competition and we may have to reduce the prices of our products.

In addition, we expect to face new competitors as we enter new markets.

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In addition, we do not believe that the loss or expiration of any single patent or group of related patents would materially affect our business.

Intellectual property that we develop on behalf of our customers is generally owned exclusively by those customers.

We develop intellectual property for our own use in our products, as well as for our customers.

Intellectual property developed on behalf of our customers is generally owned exclusively by those customers.

In addition, we have agreed to indemnify certain of our customers against claims of infringement of the intellectual property rights of others with respect to our products.

Historically, we have not paid any claims under these indemnification obligations, and we do not have any pending indemnification claims against us.

Employees and Labor Relations

Human Capital Resources

In order to be a successful company, we believe that we must be a good corporate citizen, socially responsible, and recognize that our employees are our most important asset.

We recognize and value each person’s diverse background and unique skill set and seek to foster an environment that encourages personal growth and professional development.

We continue to further increase our commitment to diversity, inclusion, and equity through specific policies, practices, employee and manager training, and demonstrated executive leadership.

Below are details demonstrating our commitment in this area.

As of December 25, 2020, we had approximately 1,600 full‑time employees and 430 contract or temporary workers, which allow flexibility as business conditions and geographic demand change.

Of our total employees, approximately 95 are engineers, 70 are engaged in sales and marketing, 1,440 are engaged in manufacturing, and 110 perform executive and administrative functions.

None of our employees are unionized, but in various countries, local law requires our participation in works councils.

We have not experienced any material work stoppages at any of our facilities.

We consider our relationship with our employees to be good.

Of our total workforce, approximately 90 are engineers, 80 are engaged in sales and marketing, 1,715 are engaged in manufacturing, and 145 perform executive and administrative functions.

Our voluntary attrition was 12%, reduced from 15% from the prior year.

Our employees are not unionized, and we have no participation in works councils.

We have not experienced any material work stoppages at any of our facilities, with the exception of temporary shutdowns at certain of our facilities in the first half of 2020 due to the COVID‑19 pandemic.

We believe our relationship with our employees to be good.

Total Rewards

As part of our total rewards philosophy, we believe in offering market-competitive compensation and benefits programs for our employees to attract and retain a talented and productive workforce.

Our programs are designed to be externally competitive, internally fair and equitable, and our pay-for-performance philosophy aims to reward each individual for their contributions while striving for equal pay for work regardless of gender, race, or ethnicity.

We offer a combination of fixed and variable pay which can vary by business and function.

For our leadership and key talent, we provide equity based long-term compensation to create retention and incentive towards the company’s strategies and objectives.

We provide benefits that are locally competitive, including retirement and savings plans with company contributions, health and welfare plans aimed to provide protection to employees, and in some instances, protection for employees’ families, and we provide a discounted employee stock purchase plan.

We invest in wellness programs to promote physical, emotional, and financial well-being.

In 2020, we expanded our employee cash spot bonus program to recognize employee contributions in improving quality and operational cost savings.

Learning and Development

We support our employees in their career development by providing a multi-dimensional approach to learning and development, including internal and external opportunities for professional development.

This includes tuition reimbursement, online training, on the job training, diversity and inclusion training, and managerial coaching.

We actively invest in leadership development, cultivating involvement, engagement, and empowerment of our future leaders in an active investment in succession planning and development.

We also believe that maintaining an effective employee review and appraisal process, with regular managerial feedback and coaching, is critical to cultivating a learning organization.

Health and Safety

We are committed to monitoring and maintaining a healthy and safe environment for our employees.

We facilitate “skip level” sessions, periodically survey employees, and use other communication forums to allow employees to express their opinions and concerns to management.

We maintain a "whistle blower" hotline available to all employees for communicating concerns, including those around health and safety.

During the COVID‑19 pandemic, we took necessary steps to ensure the health and safety of our employees and extended communities by following and often exceeding CDC and other government health organization guidelines from around the world.

We adopted remote working as a new norm for office staff and made a significant investment in our IT infrastructure to enable uninterrupted virtual communication.

For factory workers, we adopted strict guidelines to maintain safety of our workforce and business continuity.

Community Involvement

We have expanded our charitable contributions this past year to include educational scholarships specifically earmarked for under-represented minority groups attending college.

We continue to support foodbanks and other local charities in the communities in which we operate.

Environmental, Health, and Safety Regulations

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References to websites in this report are provided as a convenience and do not constitute, and should not be viewed as, incorporation by reference of the information contained on, or available through, the website.

RI SK FACTORS

There are many factors that affect our business and the results of operations, some of which are beyond our control.

The following is a description of some important factors that may cause the actual results of operations in future periods to differ materially from those currently expected or desired.

Risks Related to Our Business

Our business depends significantly on expenditures by manufacturers in the semiconductor capital equipment industry, which, in turn, is dependent upon the semiconductor device industry.

When that industry experiences cyclical downturns, demand for our products and services is likely to decrease, which would likely result in decreased sales.

We may also be forced to reduce our prices during cyclical downturns without being able to proportionally reduce costs.

Our business, financial condition and results of operations depend significantly on expenditures by manufacturers in the semiconductor capital equipment industry.

In turn, the semiconductor capital equipment industry depends upon the current and anticipated market demand for semiconductor devices.

The semiconductor device industry is subject to cyclical and volatile fluctuations in supply and demand and in the past has periodically experienced significant downturns, which often occur in connection with declines in general economic conditions, and which have resulted in significant volatility in the semiconductor capital equipment industry.

The semiconductor device industry has also experienced recurring periods of over-supply of products that have had a severe negative effect on the demand for capital equipment used to manufacture such products.

We have experienced, and anticipate that we will continue to experience, significant fluctuations in customer orders for our products and services as a result of such fluctuations and cycles.

Any downturns in the semiconductor device industry could have a material adverse effect on our business, financial condition and results of operations.

In addition, we must be able to appropriately align our cost structure with prevailing market conditions, effectively manage our supply chain and motivate and retain employees, particularly during periods of decreasing demand for our products.

We may be forced to reduce our prices during periods of decreasing demand.

While we operate under a low fixed cost model, we may not be able to proportionally reduce all of our costs if we are required to reduce our prices.

If we are not able to timely and appropriately adapt to the changes in our business environment, our business, financial condition and results of operations will be materially adversely affected.

The cyclical and volatile nature of the semiconductor device industry and the absence of long-term fixed or minimum volume contracts make any effort to project a material reduction in future sales volume difficult.

We rely on a very small number of OEM customers for a significant portion of our sales.

Any adverse change in our relationships with these customers could materially adversely affect our business, financial condition and results of operations.

The semiconductor capital equipment industry is highly concentrated and has experienced significant consolidation in recent years.

As a result, a relatively small number of OEM customers have historically accounted for a significant portion of our sales, and we expect this trend to continue for the foreseeable future.

For 2019, our top two customers accounted for approximately 51% and 33%, respectively, of sales, and we expect that our sales will continue to be concentrated among a very small number of customers.

We do not have any long-term contracts that require customers to place orders with us in fixed or minimum volumes.

Accordingly, the success of our business depends on the success of our customers and those customers and other OEMs continuing to outsource the manufacturing of critical subsystems and process solutions to us.

Because of the small number of OEMs in the markets we serve, a number of which are already our customers, it would be difficult to replace lost sales resulting from the loss of, or the reduction, cancellation or delay in purchase orders by, any one of these customers, whether due to a reduction in the amount of outsourcing they do, their giving orders to our competitors, their acquisition by an OEM who is not a customer or with whom we do less business, or otherwise.

We have in the past lost business from customers for a number of these reasons.

If we are unable to replace sales from customers who reduce the volume of products and services they purchase from us or terminate their relationship with us entirely, such events could have a material adverse impact on our business, financial condition and results of operations.

Additionally, if one or more of the largest OEMs were to decide to single- or sole-source all or a significant portion of manufacturing and assembly work to a single equipment manufacturer, such a development would heighten the risks discussed above.

Our customers exert a significant amount of negotiating leverage over us, which may require us to accept lower prices and gross margins or increased liability risk in order to retain or expand our market share with them.

By virtue of our largest customers’ size and the significant portion of our sales that is derived from them, as well as the competitive landscape, our customers are able to exert significant influence and pricing pressure in the negotiation of our commercial arrangements and the conduct of our business with them.

Our customers often require reduced prices or other pricing, quality or delivery commitments as a condition to their purchasing from us in any given period or increasing their purchase volume, which can, among other things, result in reduced gross margins in order to maintain or expand our market share.

Our customers’ negotiating leverage also can result in customer arrangements that may contain significant liability risk to us.

For example, some of our customers require that we provide them indemnification against certain liabilities in our arrangements with them, including claims of losses by their customers caused by our products.

Any increase in our customers’ negotiating leverage may expose us to increased liability risk in our arrangements with them, which, if realized, may have a material adverse effect on our business, financial condition and results of operations.

In addition, new products often carry lower gross margins than existing products for several quarters following their introduction.

If we are unable to retain and expand our business with our customers on favorable terms, or if we are unable to achieve gross margins on new products that are similar to or more favorable than the gross margins we have historically achieved, our business, financial condition and results of operations may be materially adversely affected.

The industries in which we participate are highly competitive and rapidly evolving, and if we are unable to compete effectively, our business, financial condition and results of operations could be materially adversely affected.

We face intense competition from other suppliers of gas or chemical delivery subsystems, as well as the internal manufacturing groups of OEMs.

Increased competition has in the past resulted, and could in the future result, in price reductions, reduced gross margins or loss of market share, any of which would materially adversely affect our business, financial condition and results of operations.

We are subject to significant pricing pressure as we attempt to maintain and increase market share with our existing customers.

Our competitors may offer reduced prices or introduce new products or services for the markets currently served by our products and services.

These products may have better performance, lower prices and achieve broader market acceptance than our products.

OEMs also typically own the design rights to their products.

Further, if our competitors obtain proprietary rights to these designs such that we are unable to obtain the designs necessary to manufacture products for our OEM customers, our business, financial condition and results of operations could be materially adversely affected.

Certain of our competitors may have or may develop greater financial, technical, manufacturing and marketing resources than we do.

As a result, they may be able to respond more quickly to new or emerging technologies and changes in customer requirements, devote greater resources to the development, promotion, sale and support of their products and services, and reduce prices to increase market share.

In addition to organic growth by our competitors, there may be merger and acquisition activity among our competitors and potential competitors that may provide our competitors and potential competitors with an advantage over us by enabling them to expand their product offerings and service capabilities to meet a broader range of customer needs.

The introduction of new technologies and new market entrants may also increase competitive pressures.

We are exposed to risks associated with weakness in the global economy and geopolitical instability.

Our business is dependent upon manufacturers of semiconductor capital equipment, whose businesses in turn ultimately depend largely on consumer spending on semiconductor devices.

Continuing uncertainty regarding the global economy continues to pose challenges to our business.

Economic uncertainty and related factors, including current unemployment levels, uncertainty in European debt markets, geopolitical instability in various parts of the world, fiscal uncertainty in the U.S.

economy, market volatility and the slow rate of recovery of many countries from recent recessions, exacerbate negative trends in business and consumer spending and may cause certain of our customers to push out, cancel or refrain from placing orders for products or services, which may reduce sales and materially adversely affect our business, financial condition and results of operations.

Difficulties in obtaining capital, uncertain market conditions or reduced profitability may also cause some customers to scale back operations, exit businesses, merge with other manufacturers, or file for bankruptcy protection and potentially cease operations, leading to customers’ reduced research and development funding and/or capital expenditures and, in turn, lower orders from our customers and/or additional slow moving or obsolete inventory or bad debt expense for us.

These conditions may also similarly affect our key suppliers, which could impair their ability to deliver parts and result in delays for our products or require us to either procure products from higher-cost suppliers, or if no additional suppliers exist, to reconfigure the design and manufacture of our products, and we may be unable to fulfill some customer orders.

Any of these conditions or events could have a material adverse effect on our business, financial condition and results of operations.

In 2016, the United Kingdom voted to leave the European Union (“EU”) (commonly referred to as “Brexit”).

As a result of the referendum, a complex and uncertain process of negotiation has taken place which to date has not resulted in a definitive agreement to establish the future terms of the UK’s relationship with the EU or other countries.

Notwithstanding, the UK exited the EU on January 31, 2020 under a transitional arrangement scheduled to remain in place until the end of 2020.

The transitional arrangement is intended primarily to maintain the status quo with respect to UK-EU trade and adherence to EU rules while a definitive exit agreement is negotiated.

The long-term nature of the UK’s relationship with the EU is unclear and there is considerable uncertainty when, or if, any withdrawal agreement or long-term relationship strategy, including trade deals, will be agreed to and implemented by the UK and the EU.

Brexit could adversely affect European or worldwide political, regulatory, economic or market conditions and could contribute to instability in political institutions and regulatory agencies.

Brexit could also have the ef fect of disrupting the free movement of goods, services, and people between the UK, the EU and elsewhere.

There can be no assurance that any or all of these events, or others that we cannot anticipate at this time, will not have a material adverse effect o n our business, financial condition and results of operations.

An outbreak of disease, global or localized health pandemic or epidemic or a similar public health threat, or the fear of such an event may impact economic activity, including, but not limited to demand for our products, workforce availability, and costs to manufacture our products.

In December 2019, a novel strain of coronavirus (“COVID‑19”) was reported in Wuhan, China.

The World Health Organization has declared COVID‑19 to constitute a “Public Health Emergency of International Concern.” On January 30, 2020, the U.S.

Department of State issued a Level 4 “do not travel” advisory for China.

government has also implemented enhanced screenings, quarantine requirements, and travel restrictions in connection with the COVID‑19 outbreak.

The disruption to global markets that has occurred due to the epidemic has increased uncertainty for semi-conductor demand.

In addition, many suppliers in the semi-conductor industry have had work forces disrupted due to the quarantine requirements and restricted travel.

The extent of the impact of COVID‑19 on our operational and financial performance will depend on future developments, including, but not limited to, the duration and spread of the outbreak and related travel advisories and restrictions, all of which are highly uncertain and cannot be predicted.

Preventing the effects from and responding to this market disruption if any other public health threat, related or otherwise, may further increase costs of our business and may have a material adverse effect on our business, financial condition, and results of operations.

If we do not keep pace with developments in the industries we serve and with technological innovation generally, our products and services may not be competitive.

Rapid technological innovation in the markets we serve requires us to anticipate and respond quickly to evolving customer requirements and could render our current product offerings, services and technologies obsolete.

In particular, the design and manufacturing of semiconductors is constantly evolving and becoming more complex in order to achieve greater power, performance and efficiency with smaller devices.

Capital equipment manufacturers need to keep pace with these changes by refining their existing products and developing new products.

We believe that our future success will depend upon our ability to design, engineer and manufacture products that meet the changing needs of our customers.

This requires that we successfully anticipate and respond to technological changes in design, engineering and manufacturing processes in a cost-effective and timely manner.

If we are unable to integrate new technical specifications into competitive product designs, develop the technical capabilities necessary to manufacture new products or make necessary modifications or enhancements to existing products, our business, financial condition and results of operations could be materially adversely affected.

The timely development of new or enhanced products is a complex and uncertain process which requires that we:

design innovative and performance-enhancing features that differentiate our products from those of our competitors;

identify emerging technological trends in the industries we serve, including new standards for our products;

accurately identify and design new products to meet market needs;

collaborate with OEMs to design and develop products on a timely and cost-effective basis;

ramp-up production of new products, especially new subsystems, in a timely manner and with acceptable yields;

manage our costs of product development and the costs of producing the products that we sell;

successfully manage development production cycles;

respond quickly and effectively to technological changes or product announcements by others.

If we are unsuccessful in keeping pace with technological developments for the reasons above or other reasons, our business, financial condition and results of operations could be materially adversely affected.

We mu st design, develop and introduce new products that are accepted by OEMs in order to retain our existing customers and obtain new customers.

The introduction of new products is inherently risky because it is difficult to foresee the adoption of new standards, coordinate our technical personnel and strategic relationships and win acceptance of new products by OEMs.

We attempt to mitigate this risk by collaborating with our customers during their design and development processes.

We cannot, however, assure you that we will be able to successfully introduce, market and cost-effectively manufacture new products, or that we will be able to develop new or enhanced products and processes that satisfy customer needs.

In addition, new capital equipment typically has a lifespan of five to ten years, and OEMs frequently specify which systems, subsystems, components and instruments are to be used in their equipment.

Once a specific system, subsystem, component or instrument is incorporated into a piece of capital equipment, it will often continue to be purchased for that piece of equipment on an exclusive basis for 18 to 24 months before the OEM generates enough sales volume to consider adding alternative suppliers.

Accordingly, it is important that our products are designed into the new systems introduced by the OEMs.

If any of the new products we develop are not launched or successful in the market, our business, financial condition and results of operations could be materially adversely affected.

The manufacturing of our products is highly complex, and if we are not able to manage our manufacturing and procurement process effectively, our business, financial condition and results of operations may be materially adversely affected.

The manufacturing of our products is a highly complex process that involves the integration of multiple components and requires effective management of our supply chain while meeting our customers’ design-to-delivery cycle time requirements.

Through the course of the manufacturing process, our customers may modify design and system configurations in response to changes in their own customers’ requirements.

In order to rapidly respond to these modifications and deliver our products to our customers in a timely manner, we must effectively manage our manufacturing and procurement process.

If we fail to manage this process effectively, we risk losing customers and damaging our reputation.

We may also be subject to liability under our agreements with our customers if we or our suppliers fail to re- configure manufacturing processes or components in response to these modifications.

In addition, if we acquire inventory in excess of demand or that does not meet customer specifications, we could incur excess or obsolete inventory charges.

We have from time to time experienced bottlenecks and production difficulties that have caused delivery delays and quality control problems.

These risks are even greater as we seek to expand our business into new subsystems.

In addition, certain of our suppliers have been, and may in the future be, forced out of business as a result of the economic environment.

In such cases, we may be required to procure products from higher-cost suppliers or, if no additional suppliers exist, reconfigure the design and manufacture of our products.

This could materially limit our growth, adversely impact our ability to win future business and have a material adverse effect on our business, financial condition and results of operations.

Defects in our products could damage our reputation, decrease market acceptance of our products and result in potentially costly litigation.

A number of factors, including design flaws, material and component failures, contamination in the manufacturing environment, impurities in the materials used and unknown sensitivities to process conditions, such as temperature and humidity, as well as equipment failures, may cause our products to contain undetected errors or defects.

Errors, defects or other problems with our products may:

cause delays in product introductions and shipments;

result in increased costs and diversion of development resources;

cause us to incur increased charges due to unusable inventory;

require design modifications;

result in liability for the unintended release of hazardous materials;

create claims for rework, replacement and/or damages under our contracts with customers, as well as indemnification claims from customers;

decrease market acceptance of, or customer satisfaction with, our products, which could result in decreased sales and increased product returns;

result in lower yields for semiconductor manufacturers.

If any of our products contain defects or have reliability, quality or compatibility problems, our reputation may be damaged and customers may be reluctant to buy our products.

We may also face a higher rate of product defects as we increase our production levels in periods of significant growth.

Product defects could result in warranty and indemnification liability or the loss of existing customers or impair our abilit y to attract new customers.

In addition, we may not find defects or failures in our products until after they are installed in a manufacturer’s fabrication facility.

We may have to invest significant capital and other resources to correct these problems.

O ur current or potential customers also might seek to recover from us any losses resulting from defects or failures in our products.

In addition, hazardous materials flow through and are controlled by certain of our products and an unintended release of the se materials could result in serious injury or death.

Liability claims could require us to spend significant time and money in litigation or pay significant damages.

We may incur unexpected warranty and performance guarantee claims that could materially adversely affect our business, financial condition and results of operations.

In connection with our products and services, we provide various product warranties, performance guarantees and indemnification rights.

Warranty or other performance guarantee or indemnification claims against us could cause us to incur significant expense to repair or replace defective products or indemnify the affected customer for losses.

In addition, quality issues can have various other ramifications, including delays in the recognition of sales, loss of sales, loss of future sales opportunities, increased costs associated with repairing or replacing products, and a negative impact on our reputation, all of which could materially adversely affect our business, financial condition and results of operations.

Our dependence on a limited number of suppliers may harm our production output and increase our costs, and may prevent us from delivering acceptable products on a timely basis.

Our ability to meet our customers’ demand for our products depends upon obtaining adequate supplies of quality components and other raw materials on a timely basis.

In addition, our customers often specify components from particular suppliers that we must incorporate into our products.

We also use consignment and just-in-time stocking programs, which means we carry very little inventory of components or other raw materials, and we rely on our suppliers to deliver necessary components and raw materials in a timely manner.

However, our suppliers are under no obligation to provide us with components or other raw materials.

As a result, the loss of or failure to perform by any of our key suppliers could materially adversely affect our ability to deliver products on a timely basis.

In addition, if a supplier was unable to provide the volume of components we require on a timely basis and at acceptable prices and quality, we would have to identify and qualify replacements from alternative sources of supply.

However, the process of qualifying new suppliers for complex components is also lengthy and could delay our production.

We may also experience difficulty in obtaining sufficient supplies of components and raw materials in times of significant growth in our business.

If we are unable to procure sufficient quantities of components or raw materials from suppliers, our customers may elect to delay or cancel existing orders or not place future orders, which could have a material adverse effect on our business, financial condition and results of operations.

We are subject to order and shipment uncertainties, and any significant reductions, cancellations or delays in customer orders could have a material adverse effect on our business, financial condition and results of operations.

Our sales are difficult to forecast because we generally do not have a material backlog of unfilled orders and because of the short time frame within which we are often required to manufacture and deliver products to our customers.

Most of our sales for a particular quarter depend on customer orders placed during that quarter or shortly before it commences.

Our contracts generally do not require our customers to commit to minimum purchase volumes.

While most of our customers provide periodic rolling forecasts for product orders, those forecasts do not become binding until a formal purchase order is submitted, which generally occurs only a short time prior to shipment.

As a result of the foregoing and the cyclicality and volatility of the industries we serve, it is difficult to predict future orders with precision.

Occasionally, we order component inventory and build products in advance of the receipt of actual customer orders.

Customers may cancel order forecasts, change production quantities from forecasted volumes or delay production for reasons beyond our control.

Furthermore, reductions, cancellations or delays in customer order forecasts usually occur without penalty to, or compensation from, the customer.

Reductions, cancellations or delays in forecasted orders could cause us to hold inventory longer than anticipated, which could reduce our gross profit, restrict our ability to fund our operations and result in unanticipated reductions or delays in sales.

If we do not obtain orders as we anticipate, we could have excess components for a specific product and/or finished goods inventory that we would not be able to sell to another customer, likely resulting in inventory write-offs, which could have a material adverse effect on our business, financial condition and results of operations.

Because ou r customers generally require that they qualify our engineering, documentation, manufacturing and quality control procedures, our ability to add new customers quickly is limited.

We are generally required to qualify and maintain our status as a supplier for each of our customers.

This is a time-consuming process that involves the inspection and approval by a customer of our engineering, documentation, manufacturing and quality control procedures before that customer will place orders with us.

Our ability to lessen the adverse effect of any loss of, or reduction in sales to, an existing customer through the rapid addition of one or more new customers is limited in part because of these qualification requirements.

Consequently, the risk that our business, financial condition and results of operations would be materially adversely affected by the loss of, or any reduction in orders by, any of our significant customers is increased.

Moreover, if we lost our existing status as a qualified supplier to any of our customers, such customer could cancel its orders from us or otherwise terminate its relationship with us, which could have a material adverse effect on our business, financial condition and results of operations.

We may be subject to interruptions or failures in our information technology systems .

We rely on our information technology systems to process transactions, summarize our operating results and manage our business.

Our information technology systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, cyber-attack or other security breaches, catastrophic events, such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war or terrorism, and usage errors by our employees.

If our information technology systems are damaged or cease to function properly, we may have to make a significant investment to fix or replace them, and we may suffer loss of critical data and interruptions or delays in our operations.

We may be the target of attempted cyber-attacks, computer viruses, malicious code, phishing attacks, denial of service attacks and other information security threats.

To date, cyber-attacks have not had a material impact on our financial condition, results or business;

however, we could suffer material financial or other losses in the future and we are not able to predict the severity of these attacks.

Our risk and exposure to these matters remains heightened because of, among other things, the evolving nature of these threats, the current global economic and political environment, our prominent size and scale and our role in the financial services industry, the outsourcing of some of our business operations, the ongoing shortage of qualified cyber-security professionals, and the interconnectivity and interdependence of third parties to our systems.

The occurrence of a cyber-attack, breach, unauthorized access, misuse, computer virus or other malicious code or other cyber-security event could jeopardize or result in the unauthorized disclosure, gathering, monitoring, misuse, corruption, loss or destruction of confidential and other information that belongs to us, our customers, our counterparties, third-party service providers or borrowers that is processed and stored in, and transmitted through, our computer systems and networks.

The occurrence of such an event could also result in damage to our software, computers or systems, or otherwise cause interruptions or malfunctions in our, our customers’, our counterparties’ or third parties’ operations.

This could result in significant losses, loss of customers and business opportunities, reputational damage, litigation, regulatory fines, penalties or intervention, reimbursement or other compensatory costs, or otherwise adversely affect our business, financial condition or results of operations.

The reliability and capacity of our information technology systems is critical to our operations and the implementation of our growth initiatives.

Any material disruption in our information technology systems, or delays or difficulties in implementing or integrating new systems or enhancing current systems, could have an adverse effect on our business, and results of operations.

Our business is subject to a variety of U.S.

and international laws, rules, policies, and other obligations regarding privacy, data protection, and other matters.

We are subject to federal, state, and international laws relating to the collection, use, retention, security, and transfer of customer, employee, and business partner personally identifiable information (“PII”), including the European Union’s General Data Protection Regulation (“GDPR”), which came into effect in May 2018 and the California Consumer Privacy Act (“CCPA”), which came into effect on January 1, 2020.

In many cases, these laws apply not only to third-party transactions, but also to transfers of information between one company and its subsidiaries, and among the subsidiaries and other parties with which we have commercial relations.

The introduction of new products or expansion of our activities in certain jurisdictions may subject us to additional laws and regulations.

Foreign data protection, privacy, and other laws and regulations, including GDPR, can be more restrictive than those in the United States.

federal and state and foreign laws and regulations, including GDPR which can be enforced by private parties or government entities, are constantly evolving and can be subject to significant change.

In addition, the application and interpretation of these laws and regulations, including GDPR, are often uncertain, particularly in the new and rapidly evolving industry in which we operate, and may be interpreted and applied inconsistently from country to country and inconsistently with our current policies and practices.

These existing and proposed laws and regulations can be costly to comply with and can delay or impede the development of new products, result in negative publicity, increase our operating costs, require significant management time and attention, and subject us to inquiries or investigations, claims or other remedies, including fines, which may be significant, or demands that we modify or cease existing business practices.

A failure by us, our suppliers, or other parties with whom we do business to comply with posted privacy policies or with other federal, state, or international privacy-related or data protection laws and regulations, including GDPR and CCPA, could result in proceedings against us by governmental entities or others, which could have a material adverse effect on our business, results of operations, and financial condition .

Restrictive covenants under our Credit Facilities may limit our current and future operations.

If we fail to comply with those covenants, the lenders could cause outstanding amounts, which are currently substantial, to become immediately due and payable, and we might not have sufficient funds and assets to pay such loans.

As of December 27, 2019, we had $161.9 million of indebtedness outstanding under our term loan facility and $19.2 million of indebtedness outstanding under our revolving credit facility (our “Credit Facilities”).

The outstanding amount of our Credit Facilities reflected in our consolidated financial statements included elsewhere in this report is net of $3.0 million of debt issuance costs.

We may incur additional indebtedness in the future.

Our Credit Facilities contain certain restrictive covenants and conditions, including limitations on our ability to, among other things:

incur additional indebtedness or contingent obligations;

create or incur liens, negative pledges or guarantees;

make investments;

sell or otherwise dispose of assets;

merge, consolidate or sell substantially all of our assets;

make certain payments on indebtedness;

pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments;

enter into certain agreements that restrict distributions from restricted subsidiaries;

enter into transactions with affiliates;

change the nature of our business;

amend the terms of our organizational documents.

As a result of these covenants, we may be restricted in our ability to pursue new business opportunities or strategies or to respond quickly to changes in the industries that we serve.

A violation of any of these covenants would be deemed an event of default under our Credit Facilities.

In such event, upon the election of the lenders, the loan commitments under our Credit Facilities would terminate and the principal amount of the loans and accrued interest then outstanding would be due and payable immediately.

A default may also result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies.

In the event our lenders accelerate the repayment of our borrowings, we cannot assure you that we and our subsidiaries would have sufficient funds to repay such indebtedness or be able to obtain replacement financing on a timely basis or at all.

These events could force us into bankruptcy or liquidation, which could have a material adverse effect on our business, financial condition and results of operations.

We also may need to negotiate changes to the covenants in the agreements governing our Credit Facilities in the future if there are material changes in our business, financial condition or results of operations, but we cannot assure you that we will be able to do so on terms favorable to us or at all.

The interest rates on our credit agreement might change based on changes to the method in which LIBOR or its replacement rate is determined.

In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee (“ARRC”) which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative to USD-LIBOR in derivatives and other financial contracts.

We are not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets.

Any changes adopted by FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR.

If that were to occur, our interest payments could change.

In addition, uncertainty about the extent and manner of future changes may result in interest rates and/or payments that are higher or lower than if LIBOR were to remain available in its current form.

We have agreements that are indexed to LIBOR, including our credit agreement.

We are monitoring and evaluating the related risks that arise in connection with transitioning contracts to a new alternative rate, including any resulting value transfer that may occur.

The value of loans, securities, or derivative instruments tied to LIBOR could also be impacted if LIBOR is limited or discontinued.

For some instruments, the method of transi tioning to an alternative rate may be challenging, as they may require negotiation with the respective counterparty.

If an agreement is not transitioned to an alternative rate and LIBOR is discontinued, the impact is likely to vary by agreement.

If LIBOR is discontinued or if the methods of calculating LIBOR change from their current form, interest rates on our current or future indebtedness and related interest rate swaps may be adversely affected.

While we expect LIBOR to be available in substantially its current form until the end of 2021, it is possible that LIBOR will become unavailable prior to that point.

This could result, for example, if sufficient banks decline to make submissions to the LIBOR administrator.

In that case, the risks associated with the transition to an alternative reference rate will be accelerated and magnified.

Certain of our customers require that we consult with them in connection with specified fundamental changes in our business, and address any concerns or requests such customer may have in connection with a fundamental change.

While those customers do not have contractual approval or veto rights with respect to fundamental changes, our failure to consult with such customers or to satisfactorily respond to their requests in connection with any such fundamental change could constitute a breach of contract or otherwise be detrimental to our relationships with such customers.

Certain of our key customers require that we consult with them in connection with specified fundamental changes in our business, including, among other things:

entering into any new line of business;

amending or modifying our organizational documents;

selling all or substantially all of our assets, or merging or amalgamating with a third party;

incur borrowings in excess of a specific amount;

making senior management changes;

entering into any joint venture arrangement;

effecting an initial public offering.

These customers do not have contractual approval or veto rights with respect to any fundamental changes in our business.

However, our failure to consult with such customers or to satisfactorily respond to their requests in connection with any such fundamental change could constitute a breach of contract or otherwise be detrimental to our relationships with such customers, which could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to generate sufficient cash to service all of our indebtedness, including under our Credit Facilities, and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

Our ability to make scheduled payments on or to refinance our indebtedness, including under our Credit Facilities, depends on our financial condition and results of operations, which are subject to prevailing economic and competitive conditions and other factors beyond our control.

We may be unable to maintain a level of cash flows from operating activities sufficient to permit us to fund our day-to-day operations or to pay the principal, premium, if any, and interest on our indebtedness.

If our cash flows and capital resources are insufficient to fund our debt service obligations, we could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to sell assets or operations, seek additional capital or restructure or refinance our indebtedness.

If we cannot make scheduled payments on our debt, we will be in default and, as a result, the lenders under our Credit Facilities could terminate their commitments to loan money, or foreclose against the assets securing such borrowings, and we could be forced into bankruptcy or liquidation, in each case, which would have a material adverse effect on our business, financial condition and results of operations.

Our business is largely dependent on the know-how of our employees, and we generally do not have an intellectual property position that is protected by patents.

We believe that the success of our business depends in part on our proprietary technology, information, processes and know-how and on our ability to operate without infringing on the proprietary rights of third parties.

We rely on a combination of trade secrets and contractual confidentiality provisions and, to a much lesser extent, patents, copyrights and trademarks to protect our proprietary rights.

Accordingly, our intellectual property position is more vulnerable than it would be if it were protected primarily by patents.

We cannot assure you that we have adequately protected or will be able to adequately protect our technology, that our competitors will not be able to utilize our existing technology or develop similar technology independently, that the claims allowed with respect to any patents held by us will be broad enough to protect our technology or that foreign intellectual property laws will adequately protect our intellectual property rights.

If we fail to protect our proprietary rights successfully, our competitive position could suffer.

Any future litigation to enforce patents issued to us, to protect trade secrets or know-how possessed by us or to defend ourselves or to indemnify others against claimed infringement of the rights of others could have a material adverse effect on our business, financial condition and results of operations.

Third parties have claimed and may in the future claim we are infringing their intellectual property, which could subject us to litigation or licensing expenses, and we may be prevented from selling our products if any such claims prove successful.

We may in the future receive claims that our products, processes or technologies infringe the patents or other proprietary rights of third parties.

In addition, we may be unaware of intellectual property rights of others that may be applicable to our products.

Any litigation regarding our patents or other intellectual property could be costly and time-consuming and divert our management and key personnel from our business operations, any of which could have a material adverse effect on our business, financial condition and results of operations.

The complexity of the technology involved in our products and the uncertainty of intellectual property litigation increase these risks.

Claims of intellectual property infringement may also require us to enter into costly license agreements.

However, we may not be able to obtain licenses on terms acceptable to us, or at all.

We also may be subject to significant damages or injunctions against the development, manufacture and sale of certain of our products if any such claims prove successful.

We also rely on design specifications and other intellectual property of our customers in the manufacture of products for such customers.

While our customer agreements generally provide for indemnification of us by a customer if we are subjected to litigation for third-party claims of infringement of such customer’s intellectual property, such indemnification provisions may not be sufficient to fully protect us from such claims, or our customers may breach such indemnification obligations to us, which could result in costly litigation to defend against such claims or enforce our contractual rights to such indemnification.

From time to time, we may become involved in other litigation and regulatory proceedings, which could require significant attention from our management and result in significant expense to us and disruptions in our business.

In addition to any litigation related to our intellectual property rights, we may in the future be named as a defendant from time to time in other lawsuits and regulatory actions relating to our business, such as commercial contract claims, employment claims and tax examinations, some of which may claim significant damages or cause us reputational harm.

Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot predict the ultimate outcome of any such proceeding.

An unfavorable outcome could have a material adverse effect on our business, financial condition and results of operations or limit our ability to engage in certain of our business activities.

In addition, regardless of the outcome of any litigation or regulatory proceeding, such proceedings are often expensive, time-consuming and disruptive to normal business operations and require significant attention from our management.

As a result, any such lawsuits or proceedings could materially adversely affect our business, financial condition and results of operations.

The technology labor market is very competitive, and our business will suffer if we are unable to hire and retain key personnel.

Our future success depends in part on the continued service of our key executive officers, as well as our research, engineering, sales and manufacturing personnel, most of whom are not subject to employment or non-competition agreements.

Competition for qualified personnel in the technology industry is particularly intense, and we operate in geographic locations in which labor markets are competitive.

Our management team has significant industry experience and deep customer relationships, and therefore would be difficult to replace.

In addition, our business is dependent to a significant degree on the expertise and relationships which only a limited number of engineers possess.

Many of these engineers often work at our customers’ sites and serve as an extension of our customers’ product design teams.

The loss of any of our key executive officers or key engineers and other personnel, including our engineers working at our customers’ sites, or the failure to attract additional personnel as needed, could have a material adverse effect on our business, financial condition and results of operations and could lead to higher labor costs, the use of less-qualified personnel and the loss of customers.

In addition, if any of our key executive officers or other key employees were to join a competitor or form a competing company, we could lose customers, suppliers, know-how and key personnel.

We do not maintain key-man life insurance with respect to any of our employees.

Our business will suffer if we are unable to attract, employ and retain highly skilled personnel.

Future acquisitions may present integration challenges, and if the goodwill, indefinite-lived intangible assets and other long-term assets recorded in connection with such acquisitions become impaired, we would be required to record impairment charges, which may be significant.

We have acquired strategic businesses in the past and if we find appropriate opportunities in the future, we may acquire businesses, products or technologies that we believe are strategic.

The process of integrating an acquired business, product or technology may produce unforeseen operating difficulties and expenditures, fail to result in expected synergies or other benefits and absorb significant attention of our management that would otherwise be available for the ongoing development of our business.

In addition, we may record a portion of the assets we acquire as goodwill, other indefinite-lived intangible assets or finite-lived intangible assets.

We do not amortize goodwill and indefinite-lived intangible assets, but rather review them for impairment on an annual basis or whenever events or changes in circumstances indicate that their carrying value may not be recoverable.

The recoverability of goodwill and indefinite-lived intangible assets is dependent on our ability to generate sufficient future earnings and cash flows.

Changes in estimates, circumstances or conditions, resulting from both internal and external factors, could have a significant impact on our fair valuation determination, which could then have a material adverse effect on our business, financial condition and results of operations.

Our quarterly sales and operating results fluctuate significantly from period to period, and this may cause volatility in our share price.

Our quarterly sales and operating results have fluctuated significantly in the past, and we expect them to continue to fluctuate in the future for a variety of reasons, including the following:

demand for and market acceptance of our products as a result of the cyclical nature of the industries we serve or otherwise, often resulting in reduced sales during industry downturns and increased sales during periods of industry recovery or growth;

overall economic conditions;

changes in the timing and size of orders by our customers;

strategic decisions by our customers to terminate their outsourcing relationship with us or give market share to our competitors;

consolidation by our customers;

cancellations and postponements of previously placed orders;

pricing pressure from either our competitors or our customers, resulting in the reduction of our product prices or loss of market share;

disruptions or delays in the manufacturing of our products or in the supply of components or raw materials that are incorporated into or used to manufacture our products, thereby causing us to delay the shipment of products;

decreased margins for several or more quarters following the introduction of new products, especially as we introduce new subsystems or other products or services;

changes in design-to-delivery cycle times;

inability to reduce our costs quickly in step with reductions in our prices or in response to decreased demand for our products;

changes in our mix of products sold;

write-offs of excess or obsolete inventory;

one-time expenses or charges;

announcements by our competitors of new products, services or technological innovations, which may, among other things, render our products less competitive.

As a result of the foregoing, we believe that quarter-to-quarter comparisons of our sales and results of operations may not be meaningful and that these comparisons may not be an accurate indicator of our future performance.

Changes in t he timing or terms of a small number of transactions could disproportionately affect our results of operations in any particular quarter.

Moreover, our results of operations in one or more future quarters may fail to meet our guidance or the expectations o f securities analysts or investors.

If this occurs, we would expect to experience an immediate and significant decline in the trading price of our ordinary shares.

Labor disruptions could materially adversely affect our business, financial condition and results of operations.

As of December 27, 2019, we had approximately 1,355 full time employees and 360 contract or temporary workers worldwide.

None of our employees are unionized, but in various countries, local law requires our participation in works councils.

While we have not experienced any material work stoppages at any of our facilities, any stoppage or slowdown could cause material interruptions in manufacturing, and we cannot assure you that alternate qualified capacity would be available on a timely basis, or at all.

As a result, labor disruptions at any of our facilities could materially adversely affect our business, financial condition and results of operations.

As a global company, we are subject to the risks of doing business internationally, including periodic foreign economic downturns and political instability, which may adversely affect our sales and cost of doing business in those regions of the world.

Foreign economic downturns have adversely affected our business and results of operations in the past and could adversely affect our business and results of operations in the future.

In addition, other factors relating to the operation of our business outside of the United States may have a material adverse effect on our business, financial condition and results of operations in the future, including:

the imposition of governmental controls or changes in government regulations, including tax regulations;

difficulties in enforcing our intellectual property rights;

difficulties in developing relationships with local suppliers;

difficulties in attracting new international customers;

difficulties in complying with foreign and international laws and treaties;

restrictions on the export of technology;

compliance with U.S.

and international laws involving international operations, including the Foreign Corrupt Practices Act, export control laws and export license requirements;

difficulties in achieving headcount reductions due to unionized labor and works councils;

restrictions on transfers of funds and assets between jurisdictions;

geo-political instability;

trade restrictions and changes in taxes and tariffs.

In the future, we may seek to expand our presence in certain foreign markets or enter emerging markets.

Evaluating or entering into an emerging market may require considerable management time, as well as start-up expenses for market development before any significant sales and earnings are generated.

Operations in new foreign markets may achieve low margins or may be unprofitable, and expansion in existing markets may be affected by local political, economic and market conditions.

As we continue to operate our business globally, our success will depend, in part, on our ability to anticipate and effectively manage these and the other risks noted above.

The impact of any one or more of these factors could materially adversely affect our business, financial condition and results of operations.

Changes in U.S.

trade policy, tariff and import/export regulations may have a material adverse effect on our business, financial condition and results of operations.

Our international operations and transactions also depend upon favorable trade relations between the United States and the foreign countries in which our customers and suppliers have operations.

Changes in U.S.

or international social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories or countries where we currently sell our products or conduct our business, as well as any negative sentiment toward the U.S.

as a result of such changes, could adversely affect our business.

The current U.S.

presidential administration has instituted or proposed changes in trade policies that include the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S.

and other countries where we conduct our business.

It may be time-consuming and expensive for us to alter our business operations in order to adapt to or comply with any such changes.

As a result of recent policy changes of the U.S.

presidential administration and recent U.S.

government proposals, there may be greater restrictions and economic disincentives on international trade.

The new tariffs and other changes in U.S.

trade policy could trigger retaliatory actions by affected countries, and certain foreign governments have instituted or are considering imposing trade sanctions on certain U.S.

We do a significant amount of business that would be impacted by changes to the trade policies of the U.S.

and foreign countries (including governmental action related to tariffs, international trade agreements, or economic sanctions).

Such changes have the potential to adversely impact the U.S.

economy or certain sectors thereof, our industry and the global demand for our products.

We may not succeed in developing and implementing policies and strategies to counter the foregoing factors effectively in each location where we do business and the foregoing factors may cause a reduction in our sales, profitability or cash flows, or cause an increase in our liabilities.

We are subject to fluctuations in foreign currency exchange rates which could cause operating results and reported financial results to vary significantly from period to period.

The vast majority of our sales are denominated in U.S.

Many of the costs and expenses associated with our Singapore, Malaysian and U.K.

operations are paid in Singapore Dollars, Malaysian Ringgit or British Pounds (or Euros), respectively, and we expect our exposure to these currencies to increase as we increase our operations in those countries.

As a result, our risk exposure from transactions denominated in non-U.S.

currencies is primarily related to the Singapore Dollar, Malaysian Ringgit, British Pound and Euro.

In addition, because the majority of our sales are denominated in the U.S.

Dollar, if one or more of our competitors sells to our customers in a different currency than the U.S.

Dollar, we are subject to the risk that the competitors’ products will be relatively less expensive than our products due to exchange rate effects.

We have not historically established transaction-based hedging programs.

Foreign currency exchange risks inherent in doing business in foreign countries could have a material adverse effect on our business, financial condition and results of operations.

We are subject to numerous environmental laws and regulations, which could require us to incur environmental liabilities, increase our manufacturing and related compliance costs or otherwise adversely affect our business.

We are subject to a variety of federal, state, local and foreign laws and regulations governing the protection of the environment.

These environmental laws and regulations include those relating to the use, storage, handling, discharge, emission, disposal and reporting of toxic, volatile or otherwise hazardous materials used in our manufacturing processes.

These materials may have been or could be released into the environment at properties currently or previously owned or operated by us, at other locations during the transport of materials or at properties to which we send substances for treatment or disposal.

In addition, we may not be aware of all environmental laws or regulations that could subject us to liability in the United States or internationally.

If we were to violate or become liable under environmental laws and regulations or become non-compliant with permits required at some of our facilities, we could be held financially responsible and incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, third-party property damage or personal injury claims.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

As a publicly traded company, we are required to comply with the SEC’s rules implementing Section 302 and 404 of the Sarbanes-Oxley Act, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of controls over financial reporting.

Pursuant to the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until the later of the year following our first annual report required to be filed with the SEC or the date we are no longer an emerging growth company, which may be up to five full fiscal years following our initial public offering in December 2016.

If we identify weaknesses in our internal control over financial reporting, are unable to comply with the requirements of Section 404 in a timely manner or to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by NASDAQ, the SEC or other regulatory authorities, which could require additional financial and management resources.

In the third quarter of 2019, we identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future that may cause us to fail to meet our reporting obligations or result in material misstatements of our financial statements.

If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our share price.

During the third quarter of 2019, we identified a material weakness in our controls related to the prevention and timely detection of funds transfers to unauthorized accounts.

We were the target of criminal fraud by persons impersonating one of our suppliers, which resulted in the transfer of funds to unauthorized bank accounts.

The fraud did not represent a breach of our information systems, as confirmed by an external forensic examination, but rather it was a targeted phishing scam.

Although our internal controls were not properly designed to prevent and timely detect the transfer of funds to unauthorized accounts, a secondary control was properly designed and operated effectively, which aided in a full recovery of all funds that were transferred.

Accordingly, there was no financial loss to record in our financial statements.

We determined that certain internal controls required for safeguarding our cash assets were not properly designed due to insufficient specificity regarding our policies and procedures surrounding supplier banking information changes, not identifying segregation of duties, and insufficient training on exercising professional skepticism.

We initiated a remediation plan during the third quarter of 2019 and have completed the following actions:

enhanced the approval process for adding or modifying supplier banking information;

increased the level of segregation of duties surrounding those who have the ability to modify supplier information, and;

increased communication of our internal controls and processes and emphasized security awareness and the importance of exercising professional skepticism

We consider the material weakness remediated as of December 27, 2019, as the remedial controls have operated for a sufficient period of time and we have concluded, through testing, that these controls are operating effectively.

There are limitations on the effectiveness of controls, and the failure of our control systems may materially and adversely impact us.

We do not expect that disclosure controls or internal controls over financial reporting will prevent all errors and all fraud.

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

Failure of our control systems to prevent error or fraud could have a material adverse effect on our business, financial condition and results of operations.

Compliance with SEC rules rel ating to “conflict minerals” may require us and our suppliers to incur substantial expense and may result in disclosure by us that certain minerals used in products we manufacture are not “DRC conflict free.”

Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, required the SEC to promulgate rules requiring disclosure by a public company of any “conflict minerals” (tin, tungsten, tantalum and gold) necessary to the functionality or production of a product manufactured or contracted to be manufactured by such company.

The SEC adopted final rules in 2012 which took effect at the end of January 2013.

Because we manufacture products which may contain tin, tungsten, tantalum or gold, we will be required under these rules to determine whether those minerals are necessary to the functionality or production of our products and, if so, conduct a country of origin inquiry with respect to all such minerals.

If any such minerals may have originated in the Democratic Republic of the Congo, or the DRC, or any of its adjoining countries, or the “covered countries,” then we and our suppliers must conduct diligence on the source and chain of custody of the conflict minerals to determine if they did originate in one of the covered countries and, if so, whether they financed or benefited armed groups in the covered countries.

Disclosures relating to the products which may contain conflict minerals, the country of origin of those minerals and whether they are “DRC conflict free” must be provided in a Form SD (and accompanying conflict minerals report if one is required to disclose the diligence undertaken by us in sourcing the minerals and our conclusions relating to such diligence).

If we are required to submit a conflict minerals report, that report must be audited by an independent auditor pursuant to existing government auditing standards, unless (for the first two years) we are unable to determine whether the minerals are “DRC conflict free.” Compliance with this disclosure rule may be very time consuming for management and our supply chain personnel (as well as time consuming for our suppliers) and could involve the expenditure of significant amounts of money and resources by us and them.

Disclosures by us mandated by the rules which are perceived by the market to be “negative” may cause customers to refuse to purchase our products.

We are currently unable to assess the cost of compliance with this rule, and we cannot assure you that such cost will not have a material adverse effect on our business, financial condition and results of operations.

Our business is subject to the risks of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by man-made disruptions, such as terrorism.

Our facilities could be subject to a catastrophic loss caused by natural disasters, including fires and earthquakes.

If any of our facilities were to experience a catastrophic loss, it could disrupt our operations, delay production and shipments, reduce sales and result in large expenses to repair or replace the facility.

In addition, we may experience extended power outages at our facilities.

Disruption in supply resulting from natural disasters or other causalities or catastrophic events may result in certain of our suppliers being unable to deliver sufficient quantities of components or raw materials at all or in a timely manner, disruptions in our operations or disruptions in our customers’ operations.

To the extent that natural disasters or other calamities or causalities should result in delays or cancellations of customer orders, or the delay in the manufacture or shipment of our products, our business, financial condition and results of operations would be adversely affected.

Changes in tax laws, tax rates or tax assets and liabilities could materially adversely affect our financial condition and results of operations.

As a global company, we are subject to taxation in the United States and various other countries.

Significant judgment is required to determine and estimate worldwide tax liabilities.

Our future annual and quarterly tax rates could be affected by numerous factors, including changes in applicable tax laws, the amount and composition of pre-tax income in countries with differing tax rates or valuation of our deferred tax assets and liabilities.

We have significant operations in the United States and our holding company structure includes entities organized in the Cayman Islands, Netherlands, Singapore and Scotland.

As a result, changes in applicable tax laws in these jurisdictions could have a material adverse effect on our financial condition and results of operations.

We are also subject to regular examination by the Internal Revenue Service and other tax authorities, and from time to time we initiate amendments to previously filed tax returns.

We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations and amendments to determine the adequacy of our provision for income taxes, which requires estimates and judgments.

Although we believe our tax estimates are reasonable, we cannot assure you that the tax authorities will agree with such estimates.

We may have to engage in litigation to achieve the results reflected in the estimates, which may be time- consuming and expensive.

We cannot assure you that we will be successful or that any final determination will not be materially different from the treatment reflected in our historical income tax provisions and accruals, which could materially and adversely affect our financial condition and results of operations.

Our operations might be affected by the occurrence of a natural disas ter or other catastrophic event.

We depend on our customers and facilities for the continued operation of our business.

While we maintain disaster recovery plans, they might not adequately protect us.

Despite any precautions we take for natural disasters or other catastrophic events, these events, including terrorist attack, a pandemic, epidemic or outbreak of a disease (including the COVID-19 coronavirus), hurricanes, fire, floods and ice and snow storms, could result in damage to and closure of our or our customers’ facilities or the infrastructure on which such facilities rely.

Such disruptions could significant delays in the shipments of our products, reduce our capacity to provide services, eradicate unique manufacturing capabilities, result in our customers’ inability to pay for our products or services and, ultimately, result in the loss of revenue and clients.

Although we carry business interruption insurance policies and typically have provisions in our contracts that protect us in certain events, our coverage might not be adequate to compensate us for all losses that may occur.

Any natural disaster or catastrophic event affecting us or our customers could have a significant negative impact on our operations and financial performance.

Risks Related to Ownership of Our Ordinary Shares

The price of our ordinary shares may fluctuate substantially.

You should consider an investment in our ordinary shares to be risky, and you should invest in our ordinary shares only if you can withstand a significant loss and wide fluctuations in the market value of your investment.

Some factors that may cause the market price of our ordinary shares to fluctuate, in addition to the other risks mentioned in this report, are:

our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;

changes in earnings estimates or recommendations by securities analysts, if any, who cover our ordinary shares;

speculation about our business in the press or investment community;

failures to meet external expectations or management guidance;

fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

changes in our capital structure or dividend policy, future issuances of securities, sales of large blocks of ordinary shares by our shareholders, our incurrence of additional debt or our failure to comply with the agreements governing our Credit Facilities;

our decision to enter new markets;

reputational issues;

changes in general economic and market conditions in any of the regions in which we conduct our business;

material litigation or government investigations;

changes in industry conditions or perceptions;

changes in applicable laws, rules or regulations.

In addition, if the market for stocks in our industry or industries related to our industry, or the stock market in general, experiences a loss of investor confidence, the trading price of our ordinary shares could decline for reasons unrelated to our business, financial condition and results of operations.

If any of the foregoing occurs, it could cause our share price to fall and may expose us to lawsuits that, even if unsuccessful, could be costly to defend and a distraction to management.

Future sales of our ordinary shares, or the perception in the public markets that these sales may occur, may depress our share price.

We may seek to raise additional capital from time to time in the future, which may involve the issuance of additional ordinary shares, or securities convertible into ordinary shares.

Sales of substantial amounts of our ordinary shares in the public market, or the perception that these sales could occur, could adversely affect the price of our ordinary shares and could impair our ability to raise capital through the sale of additional shares.

We are an “emerging growth company” an d have elected to comply with reduced public company reporting requirements, which could make our ordinary shares less attractive to investors.

We are an emerging growth company, as defined in the JOBS Act.

For as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various public company reporting requirements.

These exemptions include, but are not limited to, (i) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes‑Oxley Act, (ii) reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements, and (iii) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

We could be an emerging growth company for up to five years after the first sale of our ordinary shares pursuant to an effective registration statement under the Securities Act, which fifth anniversary will occur in December 2021.

However, if certain events occur prior to the end of such five‑year period, including if we become a “large accelerated filer,” our annual gross revenue exceeds $1.0 billion or we issue more than $1.0 billion of non‑convertible debt in any three‑year period, we would cease to be an emerging growth company prior to the end of such five‑year period.

We have taken advantage of certain of the reduced disclosure obligations regarding executive compensation and may elect to take advantage of other reduced disclosure obligations in our SEC filings.

As a result, the information that we provide to holders of our ordinary shares may be different than you might receive from other public reporting companies in which you hold equity interests.

We cannot predict if investors will find our ordinary shares less attractive as a result of our reliance on these exemptions.

If some investors find our ordinary shares less attractive as a result of any choice we make to reduce disclosure, there may be a less active trading market for our ordinary shares and the price for our ordinary shares may be more volatile.

Under the JOBS Act, emerging growth companies may also elect to delay adoption of new or revised accounting standards until such time as those standards apply to private companies.

We have elected not to avail ourselves of this extended transition period for complying with new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies.

We do not expect to pay any cash dividends for the foreseeable future.

We do not anticipate that we will pay any cash dividends on our ordinary shares for the foreseeable future.

Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon our financial condition, results of operations, contractual restrictions (including those under our Credit Facilities and any potential indebtedness we may incur in the future), restrictions imposed by applicable law, tax considerations and other factors our Board of Directors deems relevant.

There can be no assurance that we will pay a dividend in the future or continue to pay any dividend if we do commence paying dividends.

Accordingly, realization of a gain on an investment in our ordinary shares will depend on the appreciation of the price of our ordinary shares, which may never occur.

Investors seeking cash dividends in the foreseeable future should not purchase our ordinary shares.

Our articles of association contain anti-takeover provisions that could adversely affect the rights of our shareholders.

Our articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of control transactions, including, among other things:

provisions that authorize our Board of Directors, without action by our shareholders, to issue additional ordinary shares and preferred shares with preferential rights determined by our Board of Directors;

provisions that permit only a majority of our Board of Directors or the chairman of our Board of Directors to call shareholder meetings and therefore do not permit shareholders to call shareholder meetings;

provisions that impose advance notice requirements, minimum shareholding periods and ownership thresholds, and other requirements and limitations on the ability of shareholders to propose matters for consideration at shareholder meetings;

a staggered board whereby our directors are divided into three classes, with each class subject to re-election once every three years on a rotating basis.

These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction.

With our staggered Board of Directors, at least two annual meetings of shareholders are generally required in order to effect a change in a majority of our directors.

Our staggered Board of Directors can discourage proxy contests for the election of our directors and purchases of substantial blocks of our shares by making it more difficult for a potential acquirer to gain control of our Board of Directors in a relatively short period of time.

The issuance of preferred shares could adversely affect holders of ordinary shares.

Our Board of Directors is authorized to issue preferred shares without any action on the part of holders of our ordinary shares.

Our Board of Directors also has the power, without shareholder approval, to set the terms of any such preferred shares that may be issued, including voting rights, dividend rights, and preferences over our ordinary shares with respect to dividends or if we liquidate, dissolve or wind up our business and other terms.

If we issue preferred shares in the future that have preference over our ordinary shares with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred shares with voting rights that dilute the voting power of our ordinary shares, the rights of holders of our ordinary shares or the price of our ordinary shares could be adversely affected.

You may face difficulties in protecting your interests as a shareholder, as Cayman Islands law provides substantially less protection when compared to the laws of the United States.

Our corporate affairs are governed by our amended and restated memorandum and articles of association and by the Companies Law (2013 Revision) and common law of the Cayman Islands.

The rights of shareholders to take legal action against our directors and us, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands.

The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, which has persuasive, but not binding, authority on a court in the Cayman Islands.

The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States.

In particular, the Cayman Islands have a less exhaustive body of securities laws as compared to the United States.

In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action before the United States federal courts.

As a result of all of the above, our shareholders may have more difficulty in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

Certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands company and a portion our assets are located outside of the United States.

As a result, it may be difficult or impossible for you to bring an action against us in the United States in the event that you believe that your rights have been infringed under U.S.

federal securities laws or otherwise.

Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands may render you unable to enforce a judgment against our assets.

There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will generally recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.

There can be no assurance that we will not be a passive foreign investment company for any taxable year, which could result in adverse U.S.

federal income tax consequences to U.S.

Holders of our ordinary shares.

corporation will be a passive foreign investment company, or PFIC, for any taxable year if either (i) at least 75% of its gross income for such year is passive income or (ii) at least 50% of the value of its assets (generally based on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income.

Our PFIC status for any taxable year can be determined only after the close of that year.

Based on the value of our assets and the composition of our income and assets, we do not believe we were treated as a PFIC for U.S.

federal income purposes for our taxable year ending December 27, 2019.

However, the determination of PFIC status is based on an annual determination that cannot be made until the close of a taxable year, involves extensive factual investigation, including ascertaining the fair market value of all of our assets on a quarterly basis and the character of each item of income that we earn, and is subject to uncertainty in several respects.

Accordingly, we cannot assure you that we were not treated as a PFIC for our taxable year ending December 27, 2019 or any prior taxable year, or that we will not be treated as a PFIC for any future taxable year or that the IRS will not take a contrary position.

If we are a PFIC for any taxable year during which a U.S.

person holds ordinary shares, certain adverse U.S.

federal income tax consequences could apply to such U.S.

You are strongly urged to consult your tax advisors as to whether or not we will be a PFIC.

person is treated as owning at least 10% of our shares, such person may be subject to adverse U.S.

federal income tax consequences.

person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our shares, such person may be treated as a “United States shareholder” with respect to each “controlled foreign corporation” in our group (if any).

Because our group includes one or more U.S.

subsidiaries, certain of our non-U.S.

subsidiaries could be treated as controlled foreign corporations (regardless of whether we are or are not treated as a controlled foreign corporation).

A United States shareholder of a controlled foreign corporation may be required to annually report and include in its U.S.

taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income” and investments in United States property by controlled foreign corporations, whether or not we make any distributions.

An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S.

A failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may prevent starting of the statute of limitations with respect to such shareholder’s U.S.

federal income tax return for the year for which reporting was due.

We cannot provide any assurances that we will assist investors in determining whether we are or any of our current or future non-U.S.

subsidiaries is treated as a controlled foreign corporation or whether such investor is treated as a United States shareholder with respect to any such controlled foreign corporation.

In addition, we cannot provide assurances we will furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations.

investor should consult its tax advisors regarding the potential application of these rules to its investment in our shares.

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 1. Business