3 unchanged sentences
Our actual results may differ materially from those anticipated in these forward-looking statements.
−Removed: Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in the section entitled Item 1A – Risk Factors.
−Removed: For a comparison of our financial condition, results of operations, and cash flows for 2021 to 2020, refer to Part II, Item 7 in our 2021 Annual Report on Form 10‑K, which was filed with the Securities and Exchange Commission on February 28, 2022.
+Added: Factors that could cause or contribute to these differences include those discussed below and elsewhere in this report, particularly in the section entitled Item 1A.
+Added: – Risk Factors.
+Added: For a comparison of our financial condition, results of operations, and cash flows for 2022 to 2021, refer to Part II, Item 7.
+Added: in our 2022 Annual Report on Form 10‑K, which was filed with the SEC on February 24, 2023.
We are a leader in the design, engineering, and manufacturing of critical fluid delivery subsystems and components for semiconductor capital equipment.
13 unchanged sentences
Amounts are presented in accordance with GAAP unless explicitly identified as being a non-GAAP metric.
−Removed: For a description of our non-GAAP metrics and reconciliations to the most comparable GAAP metrics, please refer to Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Results within this Annual Report.
+Added: For a description of our non-GAAP metrics and reconciliations to the most comparable GAAP metrics, please refer to Item 7.
+Added: – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Non-GAAP Financial Results within this Annual Report.
+Added: 2023 December 30,
(dollars in thousands, except per share amounts)
+Added: Net sales $ 811,120 $ 1,280,069
+Added: Gross margin 12.7 % 16.6 %
Gross margin, non-GAAP 13.4 % 17.0 %
1 unchanged sentence
Operating margin, non-GAAP 2.9 % 9.8 %
+Added: Net income (loss) $ (42,985) $ 72,804
Net income, non-GAAP $ 12,257 $ 104,863
+Added: Diluted EPS $ (1.47) $ 2.51
Diluted EPS, non-GAAP $ 0.42 $ 3.62
18 unchanged sentences
Our customers are a significant component of this consolidation, resulting in our sales being concentrated in a few customers.
−Removed: In 2022, our top two customers were Lam Research and Applied Material, accounting for a combined 79% of sales.
−Removed: 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.
−Removed: Although we do not have any long-term contracts that require customers to place orders with us, Lam Research and Applied Materials have been our customers for over a decade.
+Added: In 2023, our top three customers were Applied Materials, Lam Research, and ASML, accounting for a combined 82% of sales.
+Added: Our customers often require reduced prices or other pricing, quality, or delivery commitments as a condition to their purchasing from us or increasing their purchase volume, which can, among other things, result in reduced gross margins in order to maintain or expand our market share.
+Added: Although we do not have any long-term contracts that require customers to place orders with us, Applied Materials, Lam Research, and ASML have been our customers for over a decade.
In November 2021, we acquired IMG, a California-based leader in precision machining and specialty joining and plating, for approximately $270.0 million.
3 unchanged sentences
Macroeconomic Conditions
−Removed: We participated in the continuation of unprecedented demand for semiconductor capital equipment in 2022, driven by increased secular demand for semiconductors, as well as the ever-increasing levels of complexity in the manufacturing thereof.
−Removed: Macroeconomic factors have, however, created, and may continue to create, volatility and uncertainty in our industry, including persistent levels of high inflation, higher interest rates, foreign currency rate fluctuations, and supply chain challenges.
−Removed: Additionally, increased controls around exporting goods and services to China may impact the overall size of the semiconductor capital equipment industry going forward, and the conflict in Ukraine has given rise to potential global security issues that may adversely affect international business and economic conditions as well as economic sanctions imposed by the international community that have impacted the global economy.
−Removed: Regarding the COVID‑19 pandemic, although our factories and operations are currently not directly affected by any restrictions, measures, or shutdowns, increases in positive case rates may change the extent to which our business becomes adversely impacted by such restrictions, measures, or shutdowns on a go-forward basis.
−Removed: While these challenging macroeconomic conditions may impact business and customers in the near-term, we believe secular demand for semiconductors, both in quantity and performance, and constant technological innovation will drive long-term, sustainable growth in the semiconductor capital equipment industry.
+Added: The semiconductor industry is cyclical in nature, and matching customer demand can be challenging based on a variety of factors, including market trends, supply chain shortages and related lead times, customer buying patterns, availability of skilled labor, and macroeconomic and other factors.
+Added: During much of 2022, many of these factors impacted our ability to fulfill high customer demand;
+Added: however, the industry entered a cyclical downturn in the fourth quarter of 2022, leading to reductions in spending on semiconductor capital equipment, the primary industry in which we operate, resulting in weakened customer demand in 2023.
+Added: In particular, industry overcapacity and a number of macroeconomic factors may have contributed to this reduced spending environment, including persistent levels of high inflation, higher interest rates, supply chain disruptions, and other macroeconomic uncertainties.
+Added: Additionally, increased export controls for semiconductor-related goods and services shipped to China and delayed business investment in electronic memory capacity had varying levels of unfavorable consequences to our business.
+Added: To help mitigate these impacts and to better align our resources and cost structure with current and expected future levels of business, we initiated labor and other cost reduction initiatives starting in the fourth quarter of 2022 and continuing through 2023.
+Added: As a result of these programs, we incurred severance charges of $1.1 million and $2.3 million in 2022 and 2023, respectively.
+Added: While challenging macroeconomic conditions have impacted and will continue to impact our business and customers in the near term, we believe demand for semiconductors, semiconductor capital equipment, and our products will return to growth, fueled by the long-term growing need for more semiconductor productive capacity and enhanced process technologies.
Components of Our Results of Operations
−Removed: The following discussion sets forth certain components of our statements of operations as well as significant factors that impact those items.
−Removed: We generate sales primarily from the design, manufacture, and sale of subsystems and components primarily for semiconductor capital equipment.
+Added: The following discussion sets forth certain components of our statements of operations as well as significant factors impacting those items.
+Added: We generate sales primarily from the design, manufacture, and sale of subsystems and components for semiconductor capital equipment.
Sales are recognized when control of promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
−Removed: Our shipping terms are generally “shipping point.” Accordingly, control transfers, and sales are recognized, at the point-in-time of shipment.
+Added: Sales are recognized at a point-in-time, upon "delivery," as such term is defined within the contract, which is generally at the time of shipment, as that is when control of the promised good has transferred.
Cost of Sales and Gross Profit
Cost of sales consists primarily of purchased materials, direct labor, indirect labor, factory overhead cost, and depreciation expense for our manufacturing facilities and equipment.
−Removed: Our business has a highly variable cost structure with low fixed overhead as a percentage of cost of sales.
−Removed: In addition, our existing global manufacturing plant capacity is scalable, and we are able to adjust to increased customer demand for our products without significant additional capital investment.
+Added: Our business has a variable cost structure, with fixed costs comprising a smaller percentage of cost of sales compared to variable costs.
+Added: Our existing global manufacturing plant capacity is scalable, and we are able to adjust to increased customer demand for our products without significant additional capital investment.
We operate our business in this manner to avoid having excessive fixed costs during a cyclical downturn, while retaining flexibility to expand our production volumes during periods of growth.
−Removed: However, this approach results in a smaller increase in gross margin as a percentage of sales in times of increased demand.
−Removed: Since the gross margin on each of our products differs, our overall gross margin as a percentage of our sales changes based on the mix of products we sell in any period.
+Added: However, during a cyclical downturn, fixed costs become a larger percentage of cost of sales, which could result in a decrease to gross margin.
+Added: Additionally, since the gross margin on each of our products can differ, our overall gross margin as a percentage of our sales can change based on the mix of products we sell in any period.
Operating Expenses
2 unchanged sentences
Operating expenses also include overhead costs for facilities, IT, and depreciation.
−Removed: In addition, our operating expenses include amortization expense of acquired intangible assets and certain non-recurring costs, including facility shutdown costs and executive transition-related costs.
+Added: In addition, our operating expenses include amortization expense of acquired intangible assets.
Research and development – Research and development expense consists primarily of activities related to product design and other development activities, new component testing and evaluation, and test equipment and fixture development.
1 unchanged sentence
Selling, general, and administrative – Selling expense consists primarily of salaries and commissions paid to our sales and sales support employees and other costs related to the sales of our products.
−Removed: General and administrative expense consists primarily of salaries and overhead associated with our administrative staff, professional fees, and depreciation and other allocated facility related costs.
+Added: General and administrative expense consists primarily of salaries, professional fees, and overhead associated with our administrative staff.
We expect selling expenses to increase in absolute dollars as we continue to invest in expanding our markets and as we expand our international operations.
−Removed: We expect general and administrative expenses to also increase in absolute dollars due to an increase in employee-related costs, regulatory compliance, and accounting expenses.
+Added: We expect general and administrative expenses to also increase in absolute dollars as our business grows, due to an increase in employee-related costs, regulatory compliance, and accounting-related expenses.
Amortization of intangibles – Amortization of intangible assets is related to our finite-lived intangible assets and is computed using the straight-line method over the estimated economic life of the asset.
−Removed: Interest Expense
−Removed: Interest expense consists of interest on our outstanding debt under our credit facilities, including amortization of debt issuance costs, and any other indebtedness we may incur in the future.
+Added: Interest Expense, Net
+Added: Interest expense, net of interest income on our cash deposits, consists of interest on our outstanding debt under our credit facilities, including amortization of debt issuance costs, and any other indebtedness we may incur in the future.
Borrowings under our credit facilities are generally subject to variable interest rates, which fluctuate depending on macroeconomic factors and can result in increased interest expense in periods of rising interest rates.
5 unchanged sentences
Income Tax Expense
−Removed: Income tax expense consists primarily of taxes on our taxable income related to our domestic and foreign operations, offset by the benefit of our tax holiday in Singapore, which was extended through 2026.
+Added: Income tax expense consists primarily of taxes on our taxable income related to our domestic and foreign operations, offset by the benefit of our tax holiday in Singapore, which is expected to continue through 2026.
In 2023, the tax benefit resulting from our Singapore tax holiday, compared to the Singapore statutory tax rate, was approximately $5.0 million.
+Added: During 2023, we recorded a valuation allowance against our U.S.
+Added: state and federal deferred tax assets;
+Added: therefore, we are unable to record income tax benefits related to our losses under GAAP losses.
Income tax is also impacted by certain withholding taxes, stock option and restricted share unit (“RSU”) activity, and credit generation.
Critical Accounting Estimates
−Removed: Our consolidated financial statements have been prepared in accordance with U.S.
−Removed: generally accepted accounting principles.
+Added: Our consolidated financial statements have been prepared in accordance with GAAP.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales, expenses, and related disclosures.
18 unchanged sentences
The period-to-period comparison of results is not necessarily indicative of results for future periods.
+Added: 2023 December 30,
(in thousands)
+Added: Net sales $ 811,120 $ 1,280,069
Cost of sales 707,724 1,068,205
+Added: Gross profit 103,396 211,864
Operating expenses:
3 unchanged sentences
Total operating expenses 114,291 126,041
−Removed: Operating income
+Added: Operating income (loss) (10,895) 85,823
Interest expense, net 19,379 11,056
Other expense (income), net 804 (563)
−Removed: Income before income taxes
+Added: Income (loss) before income taxes (31,078) 75,330
Income tax expense 11,907 2,526
+Added: Net income (loss) $ (42,985) $ 72,804
The following table sets forth our results of operations as a percentage of our total sales for the periods presented.
+Added: December 29, 2023 December 30, 2022
+Added: Net sales 100.0 100.0
Cost of sales 87.3 83.4
+Added: Gross profit 12.7 16.6
Operating expenses:
3 unchanged sentences
Total operating expenses 14.1 9.8
−Removed: Operating income
+Added: Operating income (loss) (1.3) 6.7
Interest expense, net 2.4 0.9
Other expense (income), net 0.1 0.0
−Removed: Income before income taxes
+Added: Income (loss) before income taxes (3.8) 5.9
Income tax expense 1.5 0.2
+Added: Net income (loss) (5.3) 5.7
Comparison of 2023 and 2022
+Added: Year Ended Change
+Added: 2023 December 30,
+Added: 2022 Amount %
(dollars in thousands)
−Removed: The increase in net sales from 2021 to 2022 was primarily due to strong demand from our customers as a result of continued growth in the global wafer fabrication equipment market throughout much of 2022, as well as incremental sales from our acquisition of IMG in November 2021.
+Added: Net sales $ 811,120 $ 1,280,069 $ (468,949) (36.6) %
+Added: The decrease in net sales from 2022 to 2023 was primarily due to reduced customer demand stemming from reduced spending within the semiconductor capital equipment industry.
+Added: Further detail is provided above under the section entitled "Key Factors Affecting Our Business".
Net sales to U.S.
−Removed: customers increased by $38.0 million in 2022 to $572.1 million.
+Added: customers decreased by $290.8 million in 2023 to $281.3 million.
On a relative basis, net sales to U.S.
customers as a percent of total net sales decreased from 44.7% in 2022 to 34.7% in 2023.
−Removed: Net sales to international customers increased by $155.1 million in 2022 to $707.9 million.
+Added: Net sales to international customers decreased by $178.1 million in 2023 to $529.8 million.
On a relative basis, net sales to international customers as a percent of total net sales increased from 55.3% in 2022 to 65.3% in 2023.
Cost of Sales and Gross Profit
+Added: Year Ended Change
+Added: 2023 December 30,
+Added: 2022 Amount %
(dollars in thousands)
Cost of sales $ 707,724 $ 1,068,205 $ (360,481) (33.7 %)
−Removed: The increase in the gross amounts of cost of sales and gross profit from 2021 to 2022 was primarily due to the factors mentioned in the commentary above under the above heading, Net Sales .
−Removed: The 40 basis point increase in gross margin from 2021 to 2022 was primarily due to increased factory utilization and operating leverage, as well as accretive margins from our acquisition of IMG in November 2021, partially offset by increased materials, logistics, and labor costs observed throughout 2022.
−Removed: These cost increases were primarily due to investments in our capacity to service customer demand, inflationary macroeconomic conditions that put pressure on the cost of labor, materials and factory costs, and the impacts of certain supply chain challenges on logistics costs and factory efficiency.
+Added: Gross profit $ 103,396 $ 211,864 $ (108,468) (51.2 %)
+Added: Gross margin 12.7 % 16.6 % -390 bps
+Added: The decrease in the gross amounts of cost of sales and gross profit from 2022 to 2023 was primarily due to the factors mentioned in the commentary above under the above heading, " Net Sales" .
+Added: The 390 basis point decrease in gross margin from 2022 to 2023 was primarily due to reduced factory utilization as a result of lower volume due to reduced customer demand, as well as a lower revenue mix from sales of components, due to excess inventory levels at our customers.
+Added: Additionally, increased excess and obsolete inventory expense unfavorably impacted gross margin by approximately 60 basis points.
Research and Development
+Added: Year Ended Change
+Added: 2023 December 30,
+Added: 2022 Amount %
(dollars in thousands)
Research and development $ 20,223 $ 19,564 $ 659 3.4 %
−Removed: The increase in research and development expenses from 2021 to 2022 was primarily due to increased employee-related expense of $2.6 million, inclusive of increased share-based compensation expense of $0.3 million, as we expand our engineering team to design and engineer next generation, high performance solutions for our customers, as well as increased program costs, including consulting, travel, materials, and fixtures costs, related to the development of our new products .
+Added: The increase in research and development expenses from 2022 to 2023 was primarily due to increased materials and professional fees of $1.0 million for program costs related to the development of our new products, partially offset by lower employee related expenses, inclusive of share-based compensation expense, of $0.5 million.
Selling, General, and Administrative
+Added: Year Ended Change
+Added: 2023 December 30,
+Added: 2022 Amount %
(dollars in thousands)
Selling, general, and administrative $ 79,334 $ 88,572 $ (9,238) (10.4) %
−Removed: The increase in selling, general, and administrative expense from 2021 to 2022 was primarily due to (1) incremental costs from our acquisition of IMG in November 2021 of $11.6 million, primarily consisting of employee-related expenses;
−Removed: (2) increased employee-related expenses (excluding IMG) of $5.5 million, which includes $1.4 million in increased share-based compensation expense;
−Removed: (3) loss accruals recorded in the first and third quarters of 2022 relating to expected settlements of employment-related legal matters totaling $4.1 million;
−Removed: (4) increased consulting and professional fees of $2.1 million;
−Removed: (5) increased depreciation expense and amortization of capitalized cloud-computing implementation costs of $1.1 million;
−Removed: (6) increased IT, software, and related services costs of $0.7 million;
−Removed: (7) increased travel costs of $0.6 million;
−Removed: and (8) increased occupancy-related costs of $0.5 million;
−Removed: partially offset by (9) reduced transaction costs associated with our acquisition of IMG of $4.1 million.
+Added: The decrease in selling, general, and administrative expense from 2022 to 2023 was primarily due to reduced employee-related expenses, inclusive of share-based compensation expense, of $6.0 million, loss accruals recorded in 2022 relating to an expected settlement of employment-related legal matters totaling $4.1 million, and reduced occupancy-related costs of $0.8 million, partially offset by increased information technology systems and related consulting and software costs of $1.7 million.
Amortization of Intangible Assets
+Added: Year Ended Change
+Added: 2023 December 30,
+Added: 2022 Amount %
(dollars in thousands)
Amortization of intangibles assets $ 14,734 $ 17,905 $ (3,171) (17.7) %
−Removed: The increase in amortization expense from 2021 to 2022 was primarily due to incremental amortization expense from intangible assets acquired in connection with our acquisition of IMG, partially offset by reduced amortization expense from certain intangible assets becoming fully amortized in the fourth quarter of 2021 and the first quarter of 2022 .
+Added: The decrease in amortization expense from 2022 to 2023 was primarily due to certain intangible assets becoming fully amortized in 2023.
Interest Expense, Net
+Added: Year Ended Change
+Added: 2023 December 30,
+Added: 2022 Amount %
(dollars in thousands)
1 unchanged sentence
Weighted average borrowings outstanding $ 292,661 $ 303,036 $ (10,375) (3.4 %)
−Removed: Weighted average borrowing rate
−Removed: The increase in interest expense, net from 2021 to 2022 was due to a $116.0 million increase in our average amount borrowed during the year and a 63 basis point increase in our weighted average borrowing rate.
−Removed: Our average amount borrowed was primarily the result of drawing $130.0 million on our revolving credit facility in November 2021 to partially fund our acquisition of IMG.
−Removed: The year-over-year increase in our weighted average borrowing rate was primarily due to higher overall prevailing short-term borrowing rates in the second half of 2022 compared to 2021, partially offset by a lower overall applicable margin following the amendment and restatement of our credit agreement in October 2021.
+Added: Weighted average borrowing rate 6.80 % 3.37 % + 343 bps
+Added: The increase in interest expense, net from 2022 to 2023 was due to increases in our weighted average borrowing rate, partially offset by decreases in our average amount borrowed.
+Added: The increase in our weighted average borrowing rate was primarily due to an increase in risk-free, short-term borrowing rates as a result of tightening monetary policy, which impacts the Bloomberg Short Term Bank Yield ("BSBY"), the variable component of our borrowing rate under our credit facilities.
+Added: The decreases in our average amount borrowed was primarily due to quarterly term loan payments and payments on our revolving credit facilities in the second, third, and fourth quarters of 2023.
Other Expense (Income), Net
+Added: Year Ended Change
+Added: 2023 December 30,
+Added: 2022 Amount %
(dollars in thousands)
−Removed: Other expense (income), net
−Removed: The change in other expense (income), net from 2021 to 2022 was primarily due to currency exchange rate fluctuations during the year, reflecting an overall strengthening U.S.
−Removed: dollar against local currency payables of our foreign operations .
+Added: Other expense (income), net $ 804 $ (563) $ 1,367 n/m
+Added: The change in other expense (income), net from 2022 to 2023 was primarily due to currency exchange rate fluctuations during the year related to our local currency payables of our foreign operations.
Income Tax Expense
+Added: Year Ended Change
+Added: 2023 December 30,
+Added: 2022 Amount %
(dollars in thousands)
Income tax expense $ 11,907 $ 2,526 $ 9,381 371.4 %
−Removed: Income before income taxes
−Removed: Effective income tax rate
−Removed: The decrease in income tax expense from 2021 to 2022 was primarily due to decreased taxable income in the U.S., partially offset by reduced benefits from share-based compensation activity.
−Removed: The reduction in benefits from share-based compensation activity was primarily due to RSU awards vesting in 2022 at lower fair values relative to their grant-date fair values compared to 2021, in which RSU awards vested at higher fair values relative to their grant-date fair values .
+Added: Income before income taxes $ (31,078) $ 75,330 $ (106,408) n/m
+Added: Effective income tax rate (38.3) % 3.4 % -4,170 bps
+Added: The increase in income tax expense from 2022 to 2023 was primarily due to recording a valuation allowance against our U.S.
+Added: federal and state deferred tax assets, resulting in an $11.1 million charge to income tax expense during the second quarter of 2023.
+Added: Because we recorded a valuation allowance against our U.S.
+Added: state and federal deferred income taxes, we currently do not record tax benefits on our GAAP U.S.
+Added: taxable losses.
Non-GAAP Financial Results
−Removed: Management uses these non-GAAP metrics to evaluate our operating and financial results.
+Added: Management uses certain non-GAAP metrics to evaluate our operating and financial results.
We believe the presentation of non-GAAP results is useful to investors for analyzing business trends and comparing performance to prior periods, along with enhancing investors’ ability to view our results from management’s perspective.
Non-GAAP gross profit, operating income, and net income are defined as:
−Removed: gross profit, operating income, or net income, respectively, excluding (1) amortization of intangible assets, share-based compensation expense, and discrete or infrequent charges and gains that are outside of normal business operations, including acquisition-related costs, contract and legal settlement gains and losses, facility shutdown costs, and severance costs associated with reduction-in-force programs, to the extent they are present in gross profit, operating income, and net income;
−Removed: and (2) the tax impacts associated with these non-GAAP adjustments, as well as non-recurring discrete tax items.
−Removed: Non-GAAP diluted EPS is defined as non-GAAP net income divided by weighted average diluted ordinary shares outstanding during the period.
+Added: gross profit, operating income (loss), or net income (loss), respectively, excluding (1) amortization of intangible assets, share-based compensation expense, and discrete or infrequent charges and gains that are outside of normal business operations, including acquisition-related costs, contract and legal settlement gains and losses, facility shutdown costs, and severance costs associated with reduction-in-force programs, to the extent they are present in gross profit, operating income (loss), and net income (loss), respectively;
+Added: and (2) the tax impacts associated with these non-GAAP adjustments, as well as non-recurring discrete tax items, including deferred tax asset valuation allowance changes.
+Added: All non-GAAP adjustments are presented on a gross basis;
+Added: the related income tax effects, including current and deferred income tax expense, are included in the adjustment line under the heading "Tax adjustments related to non-GAAP adjustments." Non-GAAP diluted earnings per shares ("EPS") is defined as non-GAAP net income divided by weighted average diluted ordinary shares outstanding during the period.
Non-GAAP gross margin and non-GAAP operating margin are defined as non-GAAP gross profit and non-GAAP operating income, respectively, divided by net sales.
4 unchanged sentences
The following table presents our unaudited non‑GAAP gross profit and non-GAAP gross margin and a reconciliation from gross profit, the most comparable GAAP measure, for the periods indicated:
+Added: 2023 December 30,
(dollars in thousands)
2 unchanged sentences
Share-based compensation 3,130 2,056
−Removed: Facility shutdown costs (1)
Fair value adjustment to inventory from acquisitions (1) — 2,492
+Added: Other (2) 2,191 933
Non-GAAP gross profit $ 108,717 $ 217,345
1 unchanged sentence
Non-GAAP gross margin 13.4 % 17.0 %
−Removed: During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we completed in 2021.
−Removed: Included in this amount are costs and charges directly related to the facility closure.
−Removed: As part of the purchase price allocations of our acquisitions of IMG in November 2021 and a precision machining operation in Mexico in December 2020, we recorded acquired-inventories at fair value, resulting in a fair value step-up.
−Removed: These amounts represent the release of the step-up to cost of sales as acquired-inventories were sold.
−Removed: Included in this amount for 2022 are severance costs associated with our global reduction-in-force program that began near the end of 2022.
−Removed: The following table presents our unaudited non ‑GAAP operating income and non-GAAP operating margin and a reconciliation from operating income, the most comparable GAAP measure, for the periods indicated:
+Added: (1) As part of the purchase price allocation of our acquisition of IMG in November 2021, we recorded acquired-inventories at fair value, resulting in a fair value step-up.
+Added: This amount represents the release of the step-up to cost of sales as acquired-inventories were sold.
+Added: (2) Included in this amount are severance costs associated with our global reduction-in-force programs.
+Added: The following table presents our unaudited non‑GAAP operating income and non-GAAP operating margin and a reconciliation from operating income (loss), the most comparable GAAP measure, for the periods indicated:
+Added: 2023 December 30,
(dollars in thousands)
−Removed: GAAP operating income
+Added: GAAP operating income (loss) $ (10,895) $ 85,823
Non-GAAP adjustments:
1 unchanged sentence
Share-based compensation 17,338 13,924
−Removed: Facility shutdown costs (1)
Settlement loss (1) — 4,146
1 unchanged sentence
Acquisition costs (3) — 296
+Added: Other (4) 2,298 1,144
Non-GAAP operating income $ 23,475 $ 125,730
1 unchanged sentence
Non-GAAP operating margin 2.9 % 9.8 %
−Removed: During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we completed in 2021.
−Removed: Included in this amount are costs and charges directly related to the facility closure.
−Removed: During the first and third quarters of 2022, we recorded loss accruals of $3.1 million and $1.0 million, respectively, relating to expected settlements of employment-related legal matters.
−Removed: We expect the settlements to be finalized and paid within 12 months.
−Removed: As part of the purchase price allocations of our acquisitions of IMG in November 2021 and a precision machining operation in Mexico in December 2020, we recorded acquired-inventories at fair value, resulting in a fair value step-up.
−Removed: These amounts represent the release of the step-up to cost of sales as acquired-inventories were sold.
−Removed: Included in this amount are transaction-related costs incurred in connection with our acquisition of IMG in November 2021.
−Removed: Included in this amount for 2022 are severance costs associated with our global reduction-in-force program that began near the end of 2022.
−Removed: Included in this amount for 2021 are primarily non-capitalized costs incurred in connection with our implementation of a new ERP system and our implementation of a Sarbanes-Oxley compliance program.
−Removed: The following table presents our unaudited non‑GAAP net income and non-GAAP diluted EPS and a reconciliation from net income, the most comparable GAAP measure, for the periods indicated:
+Added: (1) During the first and third quarters of 2022, we recorded non-recurring loss accruals of $3.1 million and $1.0 million, respectively, relating to expected settlements of employment-related legal matters.
+Added: (2) As part of the purchase price allocations of our acquisition of IMG, we recorded acquired-inventories at fair value, resulting in a fair value step-up.
+Added: This amount represents the release of the step-up to cost of sales as acquired-inventories were sold.
+Added: (3) Included in this amount are transaction-related costs incurred in connection with our acquisition of IMG.
+Added: (4) Included in this amount are severance costs associated with our global reduction-in-force programs.
+Added: The following table presents our unaudited non‑GAAP net income and non-GAAP diluted EPS and a reconciliation from net income (loss), the most comparable GAAP measure, for the periods indicated.
+Added: All non-GAAP adjustments are presented on a gross basis;
+Added: the related income tax effects, including current and deferred income tax expense, are included in the adjustment line under the heading "Tax adjustments related to non-GAAP adjustments."
+Added: 2023 December 30,
(dollars in thousands, except per share amounts)
−Removed: GAAP net income
+Added: GAAP net income (loss) $ (42,985) $ 72,804
Non-GAAP adjustments:
1 unchanged sentence
Share-based compensation 17,338 13,924
−Removed: Facility shutdown costs (1)
Settlement loss (1) — 4,146
1 unchanged sentence
Acquisition costs (3) — 296
−Removed: Loss on extinguishment of debt (6)
+Added: Other (4) 2,298 1,144
Tax adjustments related to non-GAAP adjustments (5) 9,778 (7,848)
+Added: Tax expense from valuation allowance (6) 11,094 —
Non-GAAP net income $ 12,257 $ 104,863
1 unchanged sentence
Non-GAAP diluted EPS $ 0.42 $ 3.62
−Removed: Shares used to compute diluted EPS
−Removed: During the second quarter of 2020, we announced the closure of our manufacturing facility in Union City, California, which we completed in 2021.
−Removed: Included in this amount are costs and charges directly related to the facility closure.
−Removed: During the first and third quarters of 2022, we recorded loss accruals of $3.1 million and $1.0 million, respectively, relating to expected settlements of employment-related legal matters.
−Removed: We expect the settlements to be finalized and paid within 12 months.
−Removed: As part of the purchase price allocations of our acquisitions of IMG in November 2021 and a precision machining operation in Mexico in December 2020, we recorded acquired-inventories at fair value, resulting in a fair value step-up.
−Removed: These amounts represent the release of the step-up to cost of sales as acquired-inventories were sold.
−Removed: Included in this amount are transaction-related costs incurred in connection with our acquisition of IMG in November 2021.
−Removed: Included in this amount for 2022 are severance costs associated with our global reduction-in-force program that began near the end of 2022.
−Removed: Included in this amount for 2021 are primarily non-capitalized costs incurred in connection with our implementation of a new ERP system and our implementation of a Sarbanes-Oxley compliance program.
−Removed: In October 2021, we entered into an amended and restated credit agreement.
−Removed: Pursuant to ASC 470, a portion of the refinance was treated as an extinguishment, resulting in a $0.7 million write-off of existing capitalized deferred issuance costs .
−Removed: GAAP income tax expense for impact of our non-GAAP adjustments.
+Added: Shares used to compute diluted non-GAAP EPS 29,514,553 28,963,031
+Added: (1) During the first and third quarters of 2022, we recorded non-recurring loss accruals of $3.1 million and $1.0 million, respectively, relating to expected settlements of employment-related legal matters.
+Added: (2) As part of the purchase price allocation of our acquisition of IMG, we recorded acquired-inventories at fair value, resulting in a fair value step-up.
+Added: This amount represents the release of the step-up to cost of sales as acquired-inventories were sold.
+Added: (3) Included in this amount are transaction-related costs incurred in connection with our acquisition of IMG.
+Added: (4) Included in this amount are severance costs associated with our global reduction-in-force programs.
+Added: (5) Adjusts U.S.
+Added: GAAP income tax expense for the impact of our non-GAAP adjustments, which are presented on a gross basis, including the impacts of excluding share-based compensation and amortization of intangible assets.
+Added: The adjustment reflects income tax benefits generated from U.S.
+Added: taxable losses, on a non-GAAP basis, as we do not have a valuation allowance against our U.S.
+Added: federal and state deferred tax assets on a non-GAAP basis.
+Added: Refer to footnote 6 below.
+Added: (6) During the second quarter of 2023, we recorded a valuation allowance of $11.1 million against our U.S.
+Added: federal and state deferred tax assets.
+Added: The valuation allowance was recorded based on an assessment of available positive and negative evidence, including an estimate of being in a three-year cumulative loss position in the U.S.
+Added: by the end of 2023, projections of future taxable income, and other quantitative and qualitative information.
+Added: On a non-GAAP basis, we added back the expense associated with our recognition of a valuation allowance against our U.S.
+Added: federal and state deferred tax assets, because recording a valuation allowance would not have been appropriate, as we were, and expect to remain, in a three-year cumulative U.S.
+Added: income position on a non-GAAP basis.
Liquidity and Capital Resources
11 unchanged sentences
Summary of Cash Flows
−Removed: We ended 2022 with cash and cash equivalents of $86.5 million, an increase of $11.0 million from 2021, which was primarily due to cash provided by operating activities of $31.5 million and net proceeds from our credit facilities of $7.5 million, partially offset by capital expenditures of $29.4 million.
+Added: We ended 2023 with cash and cash equivalents of $80.0 million, a decrease of $6.5 million from 2022, which was primarily due to net payments on credit facilities of $52.5 million and capital expenditures of $15.5 million, partially offset by cash provided by operating activities of $57.6 million.
The following table sets forth a summary of operating, investing, and financing activities for the periods presented:
+Added: 2023 December 30,
+Added: 2022 December 31,
(in thousands)
1 unchanged sentence
Cash used in investing activities (15,496) (28,933) (289,585)
−Removed: Cash provided by financing activities
+Added: Cash provided by (used in) financing activities (48,651) 8,455 96,909
Net increase (decrease) in cash $ (6,515) $ 10,975 $ (177,404)
−Removed: Our cash provided by operating activities of $31.5 million during the year ended December 30, 2022 consisted of net income of $72.8 million and net non-cash charges of $46.3 million, which consisted primarily of depreciation and amortization of $35.1 million and share-based compensation expense of $13.9 million, partially offset by an increase in our net operating assets and liabilities of $87.6 million.
−Removed: The increase in our net operating assets and liabilities was primarily due to a decrease in accounts payable of $50.2 million and an increase in inventories of $47.5 million, partially offset by a decrease in accounts receivable of $6.7 million.
−Removed: Cash used in investing activities during 2022 primarily consisted of capital expenditures of $29.4 million.
−Removed: Cash provided by financing activities during 2022 consisted of net proceeds from our credit facilities of $7.5 million and net proceeds from share-based compensation activity of $1.0 million.
+Added: Our cash provided by operating activities of $57.6 million during 2023 consisted of net loss of $43.0 million, offset by net non-cash charges of $61.7 million, which consisted primarily of depreciation and amortization of $34.6 million, share-based compensation expense of $17.3 million, and deferred income taxes of $9.3 million, and a decrease in our net operating assets and liabilities of $38.9 million.
+Added: Deferred taxes consists primarily of $11.1 million charge related to a valuation allowance recorded against our U.S.
+Added: and state deferred tax assets in the second quarter of 2023.
+Added: The decrease in our net operating assets and liabilities of $38.9 million was primarily due to a decrease in accounts receivable and inventories of $69.6 million and $37.8 million, respectively, partially offset by a decrease in accounts payable and accrued and other liabilities of $51.0 million and $27.7 million, respectively.
+Added: Cash provided by operating activities was $31.5 million during 2022.
+Added: The increase in cash provided by operating activities from 2022 to 2023 was primarily due to favorable changes in the balances of accounts receivable and inventories during 2023 compared to 2022, partially offset by less aggregate net income (loss) and net non-cash charges and unfavorable changes in the balance of accrued and other liabilities during 2023 compared to 2022.
+Added: Cash used in investing activities during 2023 and 2022 consisted of capital expenditures.
+Added: The reduction in capital expenditures from 2023 to 2022 was due to reduced factory capacity expansion projects.
+Added: Cash used in financing activities during 2023 consisted of net payments from our credit facilities of $52.5 million, partially offset by net proceeds from share-based compensation activity of $3.8 million.
+Added: Cash provided by financing activities during 2022 consisted of net proceeds from our credit facilities of $7.5 million and net proceeds from share-based compensation activity of $1.0 million.The change in net payments on, and net proceeds from, our facilities relates to fluctuations in cash required for working capital purposes relative to the geographic distribution of available cash during the periods then ended.
+Added: The increase in net proceeds from share-based compensation activity from 2022 to 2023 was due to increased stock option exercises.
Recent Accounting Pronouncements
1 unchanged sentence
Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update (“ASU”).
−Removed: Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our Consolidated Financial Statements upon adoption.
To understand the impact of recently issued guidance, whether adopted or to be adopted, please review the information provided in Note 1 – Organization and Summary of Significant Accounting Policies of our consolidated financial statements in Part IV, Item 15 of this report.
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.