What changed in this filing

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Item 1. Business

2021-02-22 compared with 2020-02-24 · 130 added, 85 removed, 311 unchanged (41% of the section changed)

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We market our products internationally, primarily through our direct sales force.

Our major manufacturing facilities are located in the United States, Germany and Russia.

Our major manufacturing facilities are located in the United States, Germany, Russia and Belarus.

We have sales service offices and applications laboratories worldwide.

We are vertically integrated such that we design and manufacture most of the key components used in our finished products, from semiconductor diodes to optical fiber preforms, finished fiber lasers and amplifiers.

We also manufacture complementary products used with our lasers including optical delivery cables, fiber couplers, beam switches, optical processing heads, in-line sensors and chillers.

In addition, we offer laser-based and non-laser based systems for certain markets and applications.

We are vertically integrated.

We design and manufacture most of the key components used in our finished products, from semiconductor diodes to optical fiber preforms, finished fiber lasers and amplifiers.

We manufacture complementary products used with our lasers including optical delivery cables, fiber couplers, beam switches, optical processing heads, in-line sensors and chillers.

We offer laser-based and non-laser based systems for certain markets and applications.

Our vertically integrated operations allow us to reduce manufacturing costs, control quality, rapidly develop and integrate advanced products and protect our proprietary technology.

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In a laser, an energy source excites or pumps a gain medium, which converts the energy from the source into an emission consisting of particles of light, called photons, at particular wavelengths.

Lasers provide flexible, non-contact and high-speed ways to process and treat various materials and are a key enabler of automated production, miniaturization and increasing product complexity.

Lasers are utilized in materials processing applications requiring very high power densities, such as cutting, welding, marking and engraving, additive manufacturing, ablation, printing, drilling and cladding.

Historically, machine tools such as grinding machines, mechanical saws, milling machines, lathes and presses have been used to cut, form or otherwise process metal in the production of finished goods such as automobiles, consumer appliances, electronics and heavy machinery.

Lasers provide flexible, non-contact and high-speed ways to process and treat various materials and enable automated production, miniaturization and increasing product complexity.

Lasers are utilized in materials processing applications requiring very high power densities, such as cutting, welding, marking, engraving, additive manufacturing, ablation and cleaning, printing, drilling and cladding.

Historically, machine tools such as grinding machines, mechanical saws, milling machines, lathes, presses, water jet cutters, plasma cutters and welding machines have been used to cut, combine, form or otherwise process metal in the production of finished goods such as automobiles, consumer appliances, electronics and heavy machinery.

Laser-based systems are increasingly gaining share within the materials processing market because of the greater precision, processing speeds and flexibility enabled by this technology.

Beyond materials processing, lasers are well-suited for imaging and inspection applications and the ability to confine laser light to narrow wavelengths makes them particularly effective in medical and sensing applications.

Fiber lasers use semiconductor diodes as the energy source to pump a gain medium consisting of specialty optical fibers, which are infused with rare earth ions.

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In addition, fiber lasers free the end users from fine mechanical adjustments and the high maintenance costs that are typical for other laser technologies.

Although low power fiber lasers were introduced four decades ago, their increased adoption in the last fifteen years has been driven primarily by our improvements in their output power levels and cost, as well as their superior performance, lower cost of ownership and greater reliability compared with other laser technologies.

We have successfully increased output power levels, efficiency and reliability by developing improved optical components such as diodes and active fibers that have increased their power capacities and improved their performance.

Fiber lasers now offer output powers that exceed those of

other laser technologies in many categories.

In addition, our semiconductor diodes have become more affordable and reliable due, in part, to substantial advancements in diode technology, packaging design and increased production volumes.

Also, many optical components have been developed to be more efficient with greater capabilities.

As a result, the average cost per watt of output power has decreased dramatically over the last fifteen years.

Because of these improvements, our fiber lasers effectively compete with other laser technologies and non-laser solutions in many applications that did not use lasers historically.

As a pioneer in the development and commercialization of fiber lasers, we have contributed to many advancements in fiber laser technology, components and solutions.

Although low power fiber lasers were introduced four decades ago, their increased adoption in the last twenty years has been driven primarily by our improvements in their output power levels and cost, as well as their superior performance, lower cost of ownership and greater reliability compared with other laser and non-laser technologies.

We successfully increased output power levels, efficiency and reliability by improving optical components such as diodes and active fibers that increased their power capacities and improved their performance.

Fiber lasers now offer output powers that exceed those of other laser technologies in many categories.

Our substantial advancements in diode technology, packaging design and other optical

components together with increased production volumes over the last two decades reduced the cost and increased the reliability of our products.

As a result, the average cost per watt of output power has decreased dramatically and our fiber lasers effectively compete in many applications that used other laser technologies and non-laser solutions historically.

We believe that fiber lasers provide a combination of benefits that include:

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Manufacturing Scale.

We have invested extensively in our production capabilities allowing us to deliver large volumes of fiber lasers in short delivery cycles which provide us with a competitive advantage.

We have invested extensively in our production capabilities allowing us to efficiently manufacture and deliver large volumes of fiber lasers in short delivery cycles which provide us with a competitive advantage.

Breadth and Depth of Expertise.

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Broad Product Portfolio and Ability to Meet Customer Requirements.

Our broad range of standard and custom fiber lasers operating at various wavelengths and pulse durations and our vertically integrated manufacturing, broad technology expertise allow us to design, prototype and commence high-volume production of our products rapidly.

Our broad range of standard and custom fiber lasers operating at various wavelengths and pulse durations allow us to meet varied customer requirements.

Further, our vertically integrated manufacturing and broad technology expertise allow us to design, prototype and commence high-volume production of our products rapidly.

Diverse Customer Base, End Markets and Applications.

Our diverse customer base, end markets and applications provide us with many growth opportunities.

In 2019, we shipped products to over 5,100 customers worldwide.

In 2020, we shipped products to thousands of customers worldwide.

Our principal end markets and representative applications within those markets include:

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Medical devices Stent, pacemaker and device manufacturing CW lasers and NS pulsed lasers

Energy Hardening and welding of pipes CW lasers (4-50 kW)

Energy and Renewable Energy Hardening and welding of pipes CW lasers (4-50 kW)

Cladding of turbine blades and drill bits CW lasers (1-20 kW) and IPG systems

Solar cell processing Green pulsed lasers

Aerospace, rail and Welding titanium, welding/cutting thick plates CW lasers (1-50 kW) and IPG systems

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Micro electronics Wafer inspection and annealing CW lasers and NS pulsed lasers

Solar cell processing Green pulsed lasers

Processing of glass, ceramics, sapphire, silicon Picosecond ("PS") pulsed lasers

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Because of our flexible and modular product architecture, we offer products in different configurations according to the desired application, including modules, rack-mounted units and tabletop units.

Our engineers and other technical experts work directly with the customer in our application and development centers to develop and configure the optimal solution for each customer's manufacturing requirements.

Our engineers and other technical experts work directly with the customer in our application and development centers to develop and configure the optimal solution for each customer's requirements.

We also manufacture certain complementary products that are used with our lasers, such as optical delivery cables, fiber couplers, beam switches, optical processing heads and chillers.

Our products are used in a broad range of applications.

The major application is materials processing, comprising 94% of our sales in both 2019 and 2018 and 95% of our sales in 2017.

Our products also address other applications, including advanced applications (3% of sales in 2019, 2018, and 2017), communications (2% of sales in 2019, 2018, and 2017) and medical (1% of sales in 2019, 2018, and 2017).

For 2019 fiscal year, high power continuous wave ("CW") lasers accounted for 56% of revenue and were 62%, of revenue in both 2018 and 2017.

Pulsed lasers accounted for 11% of revenue in each of the three years.

For the 2019, 2018 and 2017 fiscal years, laser and non-laser systems accounted for 11%, 4%, and 3%, respectively, of revenues.

Our laser products include medium (1 to 999 watts) and high (1,000 watts and above) output power lasers from 0.3 to 4.5 microns in wavelength.

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Our pulsed line includes NS, PS and femtosecond lasers.

We offer several different types of lasers, which are defined by the type of gain medium they use.

These are ytterbium, erbium and thulium, as well as Raman and hybrid fiber-solid state lasers using our crystal technology.

We offer lasers with different gain mediums and wavelengths.

The gain mediums are ytterbium, erbium and thulium, as well as Raman and hybrid fiber-solid state lasers using our crystal technology.

We produce hybrid fiber-solid state lasers at green and ultraviolet wavelengths for a range of micro processing applications and in the mid-IR spectrum for sensing, imaging and spectroscopy applications.

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We also make single-mode and low-mode output ytterbium fiber lasers with power levels of up to 20,000 watts and single-mode, erbium and thulium fiber lasers with power levels of up to 1,000 watts.

We sell our own family of high power optical fiber delivery cables, fiber couplers, beam switches, chillers, scanners and other accessories for our fiber lasers.

We are expanding our line of cutting and welding optical processing heads for use with our fiber lasers, including in-line coherent monitoring for welding.

For 2020 fiscal year, high power continuous wave ("CW") lasers accounted for 54% of revenue and were 56% and 62% of revenue, in 2019 and 2018, respectively.

Pulsed lasers accounted for 13%, 11%, and 11% of revenue in 2020, 2019 and 2018, respectively.

We manufacture and sell accessories that include high power optical fiber delivery cables, fiber couplers, beam switches, chillers and scanners for our fiber lasers.

We are expanding our line of cutting and welding optical processing heads for use with our fiber lasers and sell devices for in-line coherent monitoring for welding.

Besides selling laser sources, we also offer integrated laser systems for particular geographic markets or custom-developed for a customer's manufacturing requirements.

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The platforms include robotic and multi-axis workstations for welding, cutting and cladding, flatbed cutting systems, and diode markers.

For the 2020, 2019 and 2018 fiscal years, laser and non-laser systems accounted for 8%, 11%, and 4%, respectively, of revenues.

Other Products

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These optical subsystems provide the interface for interconnecting electronic equipment including Ethernet switches, IP routers and SONET/SDH optical transport modules within telecommunications, cable multi-system operator ("MSO") and data center networking applications.

We broadly classify our principal end markets as material processing, advanced applications, communications and medical procedures.

The following table shows the allocation of our net sales (in thousands) among our principal markets:

Year Ended December 31,

2020 2019 2018

% of Total % of Total % of Total

Materials processing $ 1,082,478 90.2 % $ 1,229,211 93.5 % $ 1,374,448 94.1 %

Advanced applications 63,859 5.3 % 40,779 3.1 % 43,469 3.0 %

Communications 23,144 1.9 % 30,111 2.3 % 34,397 2.4 %

Medical procedures 31,243 2.6 % 14,480 1.1 % 7,560 0.5 %

Total $ 1,200,724 100.0 % $ 1,314,581 100.0 % $ 1,459,874 100.0 %

These estimates are based upon customer information and when customer information has not been provided, upon our best information and belief.

Materials Processing

The most significant materials processing applications for fiber lasers are cutting, welding and brazing, marking and engraving, additive manufacturing such as 3D printing and ablation.

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High electrical efficiency, low maintenance and operating cost, high beam quality, wide operating power range, power stability and small spot size are some of the qualities offered by IPG fiber lasers for many cutting applications, which enable customers to cut a variety of materials faster.

Laser welding offers several important advantages compared to conventional welding technology as it is non-contact, easy to automate, provides high process speed and results in narrow-seamed, high-quality welds that generally require little or no post-processing machining.

Laser welding offers several important advantages compared to conventional welding technology as it is non-contact, precise, easy to automate, provides high process speed and results in narrow-seamed, high-quality welds that generally require little or no post-processing machining.

The high beam quality of our fiber lasers coupled with high CW power offer deep penetration welding as well as shallow conduction mode welding.

Lasers allow for precise welding required in battery manufacturing or the small components used in consumer electronics.

In addition, fiber lasers enable remote welding "on the fly," a flexible method of three-dimensional welding in which the laser beam is positioned by a robot-guided scanner.

Such remote welding stations equipped with fiber lasers are used for welding door panels and seat backs, the multiple welding of spot and lap welds over the entire auto body frame, tailor blank welding and welding "body-in-white," which is welding pieces of metal with different thicknesses for automotive applications.

Remote welding stations equipped with fiber lasers are used for welding door panels, seat backs, spot and lap welds over the entire auto body frame ("body-in-white") and tailor welded blanks for automotive applications.

Our products are used also for laser brazing of visible joints in automobiles such as tailgates, roof joints and columns.

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Marking and Engraving.

With the increasing need for source traceability, component identification and product tracking as a means of reducing product liability and preventing falsification, as well as the demand for modern robotic production systems, manufacturers increasingly demand marking systems capable of applying serialized alphanumeric, graphic or bar code identifications directly onto their manufactured components.

With the increasing need for source traceability, component identification and product tracking as a means of reducing product liability and preventing falsification, as well as the demand for modern robotic production systems, manufacturers increasingly demand laser marking systems capable of applying serialized alphanumeric, graphic or bar code identifications directly onto their manufactured components.

Laser engraving is similar to marking but forms deeper grooves in the material.

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In addition, we make high powered lasers for ablation and cleaning applications.

Micro-materials processing.

In the semiconductor industry, lasers typically are used as the light source in microlithography and for annealing, dicing, drilling, lift-off and marking of wafers.

In the electronics industry, lasers typically are used to cut, join, mark, scribe or otherwise process a variety of materials that include ceramics, metals, plastics, silicon, and sapphire among others.

In the electronics industry, lasers typically are used to cut, join, mark, scribe or otherwise process a variety of materials that include ceramics, metals, plastics, silicon, and

sapphire among others.

Consumer electronic devices such as mobile phones, computers and handheld computers contain many parts that are laser-cut, marked or welded.

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In photovoltaic manufacturing, our lasers etch and perform edge isolation processes.

The aerospace industry requires precise manufacturing of

engine parts so that cooling is effective and aerospace manufacturers use lasers to conduct percussion drilling.

The aerospace industry requires precise manufacturing of engine parts so that cooling is effective and aerospace manufacturers use lasers to conduct percussion drilling.

Processing of plastics and semi-conductors require short pulse and high energy lasers, in the green, UV and mid-IR wavelengths.

Advanced Applications

Our fiber lasers and amplifiers are utilized by commercial firms and by academic and government institutions worldwide for manufacturing of commercial systems, directed energy applications and for research in advanced technologies and products.

These markets may use specialty products developed by us or commercial versions of our products.

Representative applications include design, test and characterization of components and systems, remote sensing and LIDAR, and materials testing.

Our fiber lasers and amplifiers are utilized by commercial firms and by academic and government institutions worldwide for advanced and scientific applications.

These markets may sell specialty products developed by us or our commercial products.

Representative applications include directed energy, spectroscopy, optical trapping, remote sensing, LIDAR and materials characterization.

Our visible lasers can be used in cinema projection, amusement parks, planetariums and light shows.

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We provide a broad range of high power products for these applications including erbium doped fiber amplifiers and Raman lasers.

We also produce optical transceiver and transponder modules based upon proprietary mixed signal ASIC designs, intended to simplify optical networks and reduce customer capital costs.

These configurable modules are designed to operate at 100G coherent transmission rates, with higher speed modules under development.

We also produce optical transceiver and transponder modules based upon proprietary tunable lasers, photonic integrated circuits and mixed signal coherent DSP-ASIC designs, intended to simplify optical networks and reduce customer capital costs.

These configurable modules are designed to operate at 10G and 100G coherent transmission rates, with higher speed modules under development.

These products are deployed in data center operations and optical network systems.

Medical Procedures

We sell our commercial fiber and diode laser modules, subassemblies and complete systems to OEMs that incorporate our products into their medical products.

Our ultrafast, CW and QCW ytterbium, erbium and thulium fiber lasers from 1 to 200 watts and diode laser systems can be used in various medical and biomedical applications.

Aesthetic applications addressed by lasers include skin rejuvenation, hair removal, and treatment of pigmented and vascular lesions.

We have also developed and are now selling a medical laser system and consumables for surgical applications, including benign prostatic hyperplasia and lithotripsy, as an OEM and IPG-branded product.

Our ultrafast, CW and QCW ytterbium, erbium, thulium fiber lasers and hybrid lasers with power from 1 to 200 watts and diode laser systems can be used in various medical and biomedical applications.

We have also developed and are now selling medical laser systems and fibers for surgical applications, including benign prostatic hyperplasia and lithotripsy, as an OEM and, in certain territories, as an IPG-branded product.

Aesthetic applications addressed by IPG lasers include skin rejuvenation, hair removal, and treatment of pigmented and vascular lesions.

Our products are based on our proprietary technology platform that we have developed and refined since our formation.

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We use multiple multi-mode, or broad area, single-emitter diodes rather than diode bars or stacks as a pump source.

We believe that multi-mode single-emitter diodes are efficient and reliable pumping source presently available, surpassing diode bars and stacks in efficiency, brightness and reliability.

We believe that multi-mode single-emitter diodes are the most efficient and reliable pumping source presently available, surpassing diode bars and stacks in efficiency, brightness and reliability.

Single-emitter diodes have substantially reduced cooling requirements and typically have long lifetimes at high operating currents, compared to typical lifetimes of diode bars.

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In addition, we have developed numerous proprietary wafer processes and testing and qualification procedures in order to create a high energy output in a reliable and high power diode.

Our diode is packaged to dissipate heat produced by the diode and withstands vibration, shock, high temperature, humidity and other environmental conditions, enabling world-class reliability and efficiency of the products.

Our diode is packaged to dissipate heat produced by the

diode and withstands vibration, shock, high temperature, humidity and other environmental conditions, enabling world-class reliability and efficiency of the products.

Specialty Components and Combining Techniques

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We also developed special methods and expertise in splicing fibers together with low optical energy loss and on-line loss testing.

We believe that our internal

development and manufacturing of key optical components allows us to lower our manufacturing costs and improve product performance.

We believe that our internal development and manufacturing of key optical components allows us to lower our manufacturing costs and improve product performance and reliability.

Side Pumping of Fibers and Fiber Block Technologies

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We employ high-stress techniques in testing components and final products that help increase reliability and accelerate product development.

For example, we test all of our diodes with high current and temperatures to accelerate aging.

For example, we test all of our diodes with high current and temperatures to identify and eliminate potentially unreliable diodes.

We also have built a large database of diode test results that allows us to predict the estimated lifetime of our diodes.

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Research and Development

We focus our research and development efforts on designing and introducing new and improved standard and customized products and complementary products, and the mass production of components for our products.

We perform research and development to develop new products or components, improve existing products or components, develop new applications for our products and improve our manufacturing processes.

We research, develop and manufacture most of the key components of our lasers.

In addition to our cladding-pumped specialty fiber platform, we have core competencies in high power multi-mode and single-mode semiconductor laser diodes, diode packaging, specialty active and passive optical fibers, high-performance optical components, crystal growth and processing, fiber gain blocks and fiber modules, thin film optical coatings, as well as splicing and combining techniques and high-stress test methods.

The strategy of developing our proprietary components has allowed us to leverage our optical experience and large volume requirements to lower the cost of our products.

Our research and development efforts are also directed at expanding our product line by increasing power levels, improving beam quality and electrical efficiency, decreasing the size of our products and lowering the cost per watt.

We also are engaged in research projects to expand the spectral range of products that we offer.

We are also investing our research and development funds on laser systems, products for medical applications, and telecommunications products and components.

Our research and development supports expanding and improving our product line by increasing power levels, improving beam quality and electrical efficiency, decreasing the size of our products and lowering the cost per watt.

We are engaged in research projects to expand the spectral range of products that we offer.

We are investing our research and development funds on laser systems, products for medical applications, and telecommunications products and components.

We have assembled a team of scientists and engineers with specialized experience and knowledge in fiber lasers and amplifiers, materials science, optics, critical components, testing and manufacturing process design, and laser application development.

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Vertical integration is one of our core business strategies through which we control our proprietary processes and technologies as well as the supply of key components and assemblies.

Our vertically integrated manufacturing operations include optical preform making, specialty fiber drawing, semiconductor wafer growth, diode processing and packaging, specialty optical component manufacturing, fiber block and fiber module assembly for different power units, circuit boards, software and electronics development and production including power supplies, crystal growth, cleaning and polishing, chiller production, fabrication of metal parts, housings, cabinets and casings, and final assembly of finished product.

In addition, we make some of the testing, tool manufacturing and automated production systems that we use in our own manufacturing processes.

Over the last several years, we added additional production capabilities, including multi-wafer growth reactors, diode test stations, fiber preform and fiber drawing equipment and low, mid and high power laser production and testing, in order to increase our capacity as well as reduce the risks associated with our production process.

Our vertically integrated manufacturing operations include the manufacturing or assembly of optical preforms, specialty fiber, semiconductor wafers, laser diodes and packaged laser diodes, specialty optical components, fiber blocks, fiber laser modules, power supplies, circuit boards, electronics and control systems and software, crystals, chillers, housings and cabinets and final assembly of finished product.

In addition, we make some of the automated production systems, tools and fixtures and testing systems that we use in our own manufacturing processes.

We operate our own semiconductor foundry for the production of the multi-mode single-emitter diodes.

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We have developed proprietary testing methodologies that allow us to develop higher power components and products in short periods of time, enable us to introduce products to the market more quickly, capitalize on new opportunities and provide superior service to our customers.

In our materials process systems business, we manufacture standard configuration systems and also systems customized for specific customer requirements.

In our materials processing systems business, we manufacture standard configuration systems and also systems customized for specific customer requirements.

We purchase common and specialized mechanical, electrical and optical parts and raw materials from vendors.

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Our direct sales force sells to end users, OEMs and systems integrators.

Once our fiber laser products are designed into an OEMs' system, the OEM's sales force markets its systems, allowing us to take advantage of numerous OEMs' sales forces, each typically having several sales persons in locations other than where our sales offices are located.

Once our fiber laser products are designed into an OEM system, the OEM's sales force markets its systems, allowing us to leverage our sales capability through the OEM sales channels and because the OEM's typically having several sales persons in locations other than where our sales offices are located.

We have sales offices in the countries in which we have major manufacturing:

United States, Germany and Russia.

We also have sales and service offices and application development centers in the Americas, Europe and Asia.

We have sales and service offices and application development centers in the Americas, Europe and Asia.

To a lesser extent, we market through agreements with independent sales representatives and distributors.

We typically provide one to five-year parts and service warranties on lasers and amplifiers.

Most of the Company's sales offices provide support to customers in their respective geographic areas.

We sell our products globally to OEMs, system integrators and end users in a wide range of diverse markets who have the in-house engineering capability to integrate our products into their own systems.

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We have thousands of customers worldwide.

We estimate that in 2019, approximately 49%, 17% and 8% of our net sales were generated from sales for cutting, welding and brazing, and marking and engraving applications, respectively.

In 2018, approximately 57%, 16% and 9% and in 2017, approximately 54%, 20% and 9% of our net sales were generated from sales for cutting, welding and brazing, and marking and engraving applications, respectively.

These estimates are based upon customer information and when customer information has not been provided, upon our best information and belief.

The following table shows the allocation of our net sales (in thousands) among our principal markets:

Year Ended December 31,

2019 2018 2017

% of Total % of Total % of Total

Materials processing $ 1,229,211 93.5 % $ 1,374,448 94.1 % $ 1,332,607 94.6 %

Other applications 85,370 6.5 85,426 5.9 76,282 5.4

Total $ 1,314,581 100.0 % $ 1,459,874 100.0 % $ 1,408,889 100.0 %

One of our customers, Han's Laser, headquartered in China, accounted for 8%, 9% and 12% of our net sales in 2020, 2019 and 2018, respectively.

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Our markets are highly competitive and characterized by rapidly changing technology, continuously evolving customer requirements and reduced average selling prices over time.

In the materials processing market, we compete with makers of fiber lasers and other lasers, such as Coherent, Inc., Laserline GmbH, Lumentum Holdings Inc., Maxphotonics Co., Ltd., nLight, Inc., Raycus Fiber Laser Technologies Co.

Ltd., and Trumpf GmbH + Co.

KG, as well as other smaller competitors.

KG and Wuhan Raycus Fiber Laser Technologies Co.

Ltd., as well as other smaller competitors.

Our current or potential customers may develop and produce products for their own use which are competitive to our products.

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Many of our fiber laser competitors are increasing the output powers of their fiber lasers to compete with our products.

We also compete with end users that produce their own laser technology as well as with manufacturers of non-laser methods and tools, such as traditional non-laser welding and cutting dies in the materials processing market.

We also compete with end users that produce their own laser technology as well as with manufacturers of non-laser methods and tools, such as traditional non-laser welding, cutting dies, mechanical cutters and plasma cutters in the materials

processing market.

Some of our competitors are larger than we are and have substantially greater financial, managerial and technical resources, more extensive distribution and service networks, greater sales and marketing capacity, and larger installed customer bases than we do.

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However, our backlog at any given date is not necessarily indicative of actual sales for any future period.

Employees and Human Capital Management

Our employees are our most valuable assets.

They contribute to IPG’s success and, in particular, the skilled and experienced employees within our manufacturing, sales, service, research and development and quality assurance departments are instrumental in driving operational execution and strong financial performance, advancing innovation and maintaining a strong quality and compliance program.

As of December 31, 2020, we had approximately 6,060 full-time employees, including 660 in research and development, 4,550 in manufacturing and service operations, 350 in sales and marketing, and 500 in general and administrative functions.

Of our total full-time employees at our principal facilities, approximately 2,120 were in the United States, 1,220 were in Germany, 1,770 were in Russia and 230 were in China.

We have never experienced a work stoppage, and none of our employees are subject to a collective bargaining agreement.

We believe that our current relations with our employees are good.

As a global company, our employees are distributed throughout our more than thirty locations in twenty-four countries.

Of our total full-time employees at our principal facilities, approximately 2,150 were in the United States, 1,200 were in Germany, 1,740 were in Russia, 210 were in Belarus and 230 were in China.

We have never experienced a work stoppage, and none of our employees at our principal manufacturing facilities are subject to a collective bargaining agreement.

The success and growth of IPG’s business is dependent in large part on our ability to attract, retain and develop a diverse population of talented and high-performing employees at all levels of our organization.

For our research, engineering and production management positions, we require employees with university and graduate-level degrees in physics, optics, electrical, mechanical and software engineering.

Globally, the demand for employees with such levels of education is high and competitive.

To succeed in these conditions, IPG implements key recruitment and retention strategies, objectives and effectiveness measures as part of the overall management of our business.

These core strategies are advanced through the following programs, policies and initiatives:

Competitive Pay and Benefits .

IPG’s compensation programs are designed to align the compensation of our employees, who operate in a highly competitive and technologically challenging environment, with IPG’s business performance and to provide the proper incentives to attract, retain and motivate employees to achieve superior performance.

The structure of our compensation programs balances incentive earnings for both short-term and long-term performance.

Specifically:

• We provide employee wages that are competitive and consistent with employee’s positions, skill levels, experience, knowledge and geographic location.

• All employees participate in our annual cash bonus program, allowing them to share in the profitability and business performance of IPG.

We also generally provide equity grants and an employee stock purchase plan to salaried employees consistent with geographic compensation practices and subject to regulatory compliance.

These programs each further align our employees’ financial interests with the performance of the business and the interests of our stockholders.

• We generally provide annual increases and incentive compensation based on merit.

• We purchase compensation data from a compensation and benefits consulting firm to allow us to ensure we provide competitive compensation in each of the geographic locations in which we operate.

• We align our executives’ annual and long-term equity compensation with our stockholders’ interests by linking realizable pay with stock performance and operating metrics.

• We provide comprehensive benefit options designed to retain our employees and support their families in living healthier and more secure lives.

Employee recruitment, retention and development .

IPG works diligently to attract the best talent from a broad array of sources to meet the current and future demands of our business.

We have established relationships with trade schools, world-

class universities, professional associations and industry groups to proactively attract talented and capable new hires.

We also utilize social media, local job fairs and educational organizations to find diverse, motivated and responsible employees.

IPG has made strides to increase diversity in management positions, building internal resources for potential future leadership openings.

IPG has a strong employee value proposition that leverages our technology leadership, unique culture, collaborative working environment, shared sense of purpose, and desire to do the right thing to attract talent to our company.

In 2020, we hired approximately 719 new employees.

We monitor employee turnover rates as our success depends upon retaining and investing in our highly trained manufacturing and technical staff.

IPG strives to decrease voluntary turnover rates and thereby increase employee tenure by ensuring a combination of competitive compensation, individual developmental opportunities and personal career enrichment and growth.

Our retention at the technical, professional and levels is high.

In 2020, amidst global uncertainty and turmoil resulting from the COVID-19 pandemic, we introduced a number of special initiatives to minimize the impact upon our employees to safeguard the health and safety of them and their communities.

These initiatives included compensation programs designed to provide a source of income to employees who needed to be absent from work as a result of the pandemic and enhanced “appreciation pay” to recognize the significant contributions of hourly employees who continued to work on-site.

Throughout the crisis, we believe our employees took immense pride in the shared purpose of making products that supported the world’s critical supply chains within a wide range of essential businesses and services including medical devices, transportation, communications, packaging and agriculture.

Executive Officers of the Registrant

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Ness 48 Senior Vice President, World Wide Sales and Marketing

Igor Samartsev 56 Chief Technology Officer and Director

Igor Samartsev 56 Chief Technology Officer

Felix Stukalin 59 Senior Vice President, North America Operations

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From 1983 to 1995, Dr.

Scherbakov was a senior scientist in fiber optics and head of the optical communications laboratory at the General Physics Institute, Russian Academy of Science in

Scherbakov was a senior scientist in fiber optics and head of the optical communications laboratory at the General Physics Institute, Russian Academy of Science in Moscow.

Scherbakov graduated from the Moscow Physics and Technology Institute with an M.S.

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He is a Chartered Accountant and a member of the Institute of Chartered Accountants of Scotland.

Lopresti has served as our General Counsel and Secretary and one of our Vice Presidents since February 2001.

Lopresti has served as our General Counsel, Secretary and Vice President since February 2001.

He was promoted to Senior Vice President in February 2013.

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He was a partner at the law firm of Hertzog, Calamari & Gleason from 1998 to 1999 and an associate there from 1991 to 1998.

He is on the board of Coastway Bancorp, Inc., the holding company of Coastway Community Bank.

He served on the board of Coastway Bancorp, Inc.

from 2016 to 2018, prior to its acquisition by HarborOne Bancorp, Inc.

Lopresti holds a B.A.

34 unchanged sentences

Safety rules are formulated with "Deutsche Industrie Norm" (i.e., German Industrial Standards) or International Organization for Standardization ("ISO") standards, which are internationally harmonized.

CDRH regulations generally require a self-certification procedure pursuant to

which a manufacturer must submit a filing to the CDRH with respect to each product incorporating a laser device, make periodic reports of sales and purchases and comply with product labeling standards, product safety and design features and informational requirements.

CDRH regulations generally require a self-certification procedure pursuant to which a manufacturer must submit a filing to the CDRH with respect to each product incorporating a laser device, make periodic reports of sales and purchases and comply with product labeling standards, product safety and design features and informational requirements.

Our business activities are subject to various export controls and trade and economic sanctions laws and regulations, including, without limitation, the U.S.

Commerce Department’s Export Administration Regulations, the U.S.

Treasury Department’s Office of Foreign Assets Control’s trade and economic sanctions programs, the U.S.

Department of State’s Nonproliferation Sanctions and International Traffic in Arms Regulations, as well as those of the European Community and Germany, which we collectively refer to as Trade Controls.

We further discuss the impact of such Trade Controls under "Risk Factors" in Item 1A " — We must comply with and could be impacted by various export controls and trade and economic sanctions laws and regulations that are fluid and may change due to diplomatic and political considerations outside of our control."

Environmental Regulation

5 unchanged sentences

In addition to these regulations and directives, we may face costs and liabilities in connection with product take-back legislation.

For further discussion of risks relating to the regulations to which we are subject, see Item 1A.

Risk Factors.

Availability of Reports

4 unchanged sentences

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