What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-22 compared with 2021-02-22 · 82 added, 88 removed, 353 unchanged (33% of the section changed)

72 unchanged sentences

Marking of plastic and non-metal material Ultraviolet pulsed lasers

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

Medical devices Stent, pacemaker and device manufacturing CW lasers, NS and Femtosecond ("FS") pulsed lasers

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

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Solar cell processing Green pulsed lasers

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

shipbuilding Percussion drilling of parts QCW lasers

Non-destructive inspection Genesis systems

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

Percussion drilling of parts QCW lasers

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

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

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

Other Markets

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Aerospace and defense Directed energy Single-Mode CW lasers, amplifiers and diodes

Entertainment Laser cinema projection RGB luminaire laser system

Scientific Sensing, spectroscopy and research Mid-infrared and other lasers

Medical procedures General surgery, urology and soft tissue Thulium lasers

Scientific Sensing, spectroscopy and research Mid-infrared, FS and other lasers

Medical procedures General surgery, urology and soft tissue Thulium and FS lasers

Skin, wrinkle/hair removal, dental Erbium and diode 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 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 such 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.

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These lasers may be CW, QCW or pulsed.

Our pulsed line includes NS, PS and femtosecond lasers.

Our pulsed line includes NS, PS and FS lasers.

We offer lasers with different gain mediums and wavelengths.

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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.

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

In 2020, we introduced our new LightWELD product line, a handheld laser welding system to provide fabricators a laser-based solution for welding.

We offer 2D compact flat sheet cutter systems and multi-axis systems for fine welding, cutting and drilling.

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We also sell optical transceiver and transponder modules for communications applications.

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.

These optical subsystems provide the interface for interconnecting electronic equipment including Ethernet switches, IP routers and DWDM/SONET/SDH optical transport systems 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.

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Advanced applications 69,257 4.8 % 63,859 5.3 % 40,779 3.1 %

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

Medical procedures 42,936 2.9 % 31,243 2.6 % 14,480 1.1 %

Communications 23,263 1.6 % 23,144 1.9 % 30,111 2.3 %

Total $ 1,460,860 100.0 % $ 1,200,724 100.0 % $ 1,314,581 100.0 %

9 unchanged sentences

We sell low, mid and high power ytterbium fiber lasers for laser cutting.

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.

Our high power pulsed lasers are used in thin foil cutting applications in electric vehicle battery production.

High electrical efficiency, low maintenance and operating cost, excellent 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, 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.

Adjustable mode beam (AMB) lasers allow beam tunability for precise high-quality welding required in electric vehicle battery manufacturing.

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.

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.

We also offer a real-time weld monitoring system to determine weld quality in an integrated solution.

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

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In contrast to conventional acid etching and ink-based technologies, lasers can mark a wide variety of metal and non-metal materials, such as ceramic, glass and plastic surfaces, at high speeds and without contact by changing the surface structure of the material or by engraving.

Laser marking systems can be easily integrated into a customer's production process and do not subject the item being marked to mechanical stress.

Laser marking systems can be easily integrated into a

customer's production process and do not subject the item being marked to mechanical stress.

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

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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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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.

Communications

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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 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.

We also produce optical transceiver and transponder modules based upon proprietary tunable lasers, silicon photonics 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, 100G and 200G coherent transmission rates, with higher speed modules under development.

These products are deployed in data center networks, service provider optical networks, and communications networks of oil and gas utilities.

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, 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.

Our ultrafast, CW and QCW ytterbium, erbium, thulium fiber lasers, diode laser and hybrid lasers with average 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 consumable 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.

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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 incurred research and development costs of approximately $139.6 million, $126.9 million and $130.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.

We expect to continue our commitment to research and development and to introduce new products, systems and complementary products.

We expect to continue our commitment to research and

development and to introduce new products, systems and complementary products.

See Item 7, "Management's Discussion and Analysis of Financial Condition of Results of Operations."

Intellectual Property

We rely on the technical expertise, creativity, and knowledge of our personnel, and therefore, we utilize trade secret, patent, trademark, copyright and contractual protections to maintain our competitive position and protect our proprietary rights in our products and technology.

We rely on the technical expertise, creativity, and knowledge of our personnel, and we utilize trade secret, patent, trademark, copyright and contractual protections to maintain our competitive position and protect our proprietary rights in our products and technology.

While our intellectual property rights are important to our success, we believe that our business as a whole is not materially dependent on any particular patent, trademark, copyright or other intellectual property right.

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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 processes.

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

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

We also process, package and extensively test all of our diodes.

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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 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.

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 because the OEMs typically have 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:

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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.

To a lesser extent, we market through agreements with independent sales representatives and distributors, although we do use such channels more widely for our new LightWELD product.

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

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We have thousands of customers worldwide.

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.

No other customer accounted for 10% or more of our net sales in 2020, 2019 or 2018.

We rely on a few customers for a significant portion of our sales.

In the aggregate, our top five customers accounted for 19%, 24% and 21% of our consolidated net sales in 2021, 2020 and 2019, respectively.

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., Trumpf GmbH + Co.

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.

Some of our customers have developed products for their own use which are competitive to our products.

Such vertical integration could reduce the market opportunity for our products.

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, 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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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 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.

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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.

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

Throughout 2020 and 2021, 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.

Throughout the pandemic, 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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Name Age Position with the Company

Gapontsev, Ph.D.

81 Chief Executive Officer and Chairman of the Board

Scherbakov, Ph.D.

73 Chief Operating Officer, Managing Director of IPG Laser GmbH, Senior Vice President, Europe, and Director

Mammen 51 Chief Financial Officer and Senior Vice President

74 Chief Executive Officer

Lopresti 58 General Counsel, Secretary and Senior Vice President

Mammen 52 Chief Financial Officer and Senior Vice President

Ness 49 Senior Vice President, Sales and Strategic Business Development

Alexander Ovtchinnikov, Ph.D.

60 Senior Vice President, Components

Ness 48 Senior Vice President, World Wide Sales and Marketing

Igor Samartsev 56 Chief Technology Officer

Felix Stukalin 59 Senior Vice President, North America Operations

Gapontsev, Ph.D .

has been the Chief Executive Officer and Chairman of the Board of IPG since our inception.

Prior to founding the company in 1990, Dr.

Gapontsev served as senior scientist in laser material physics and head of the laboratory at the Soviet Academy of Science's Institute of Radio Engineering and Electronics in Moscow.

In 2006 he was awarded the Ernst & Young ® Entrepreneur of the Year Award for Industrial Products and Services in New England and in 2009, he was awarded the Arthur L.

Schawlow Award by the Laser Institute of America.

In 2011 he received the Russian Federation National Award in Science and Technology, and he was selected as a Fellow of the Optical Society of America.

Gapontsev holds a Ph.D.

in Laser Materials from the Moscow Institute of Physics and Technology.

61 Senior Vice President, Chief Technology Officer

Igor Samartsev, Ph.D.

58 Senior Vice President, Chief Scientist

Felix Stukalin 60 Senior Vice President, Chief Operating Officer

Scherbakov, Ph.D.

has served as Chief Operating Officer since February 2017, Managing Director of IPG Laser GmbH, our German subsidiary, since August 2000 and Senior Vice President, Europe, since 2013.

has served as our Chief Executive Officer since May 2021.

Prior to that, he was Chief Operating Officer since February 2017, Managing Director of IPG Laser GmbH, our German subsidiary, since August 2000 and Senior Vice President, Europe, since 2013.

He served as the Technical Director of IPG Laser from 1995 to August 2000.

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degree in Laser Physics from its General Physics Institute.

Igor Samartsev has served as our Chief Technology Officer since 2011.

Prior to that, he was the Deputy General Manager of our Russian subsidiary, NTO IRE-Polus since 2005 and after having served in technical leadership roles at NTO IRE-Polus.

Samartsev holds an M.S.

in Physics from the Moscow Institute of Physics and Technology.

Mammen has served as our Chief Financial Officer since July 2000 and as Vice President since November 2000.

He was promoted to Senior Vice President in February 2013.

Between May 1999 and July 2000, Mr.

Mammen served as the Group Finance Director and General Manager of the United Kingdom operations for IPFD.

Mammen was Finance Director and General Manager of United Partners Plc, a commodities trading firm, from 1995 to 1999 and, prior to that, he worked in the finance department of E.I.

du Pont de Nemours and Company.

Mammen holds an Upper Second B.Sc.

Honours degree in International Trade and Development from the London School of Economics and Political Science.

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

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

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from the New York University School of Law.

Alexander Ovtchinnikov, Ph.D., has served as our Vice President, Components, since September 2005 and as Director of Material Sciences from October 2001 to September 2005.

Mammen has served as our Chief Financial Officer since July 2000 and as Vice President since November 2000.

He was promoted to Senior Vice President in February 2013.

Prior to joining us, Dr.

Ovtchinnikov was Material Science Manager of Lasertel, Inc., a maker of high-power semiconductor lasers, from 1999 to 2001.

For 15 years prior to joining Lasertel, Inc., he worked on the development and commercialization of high power diode pump technology at the Ioffe Institute, Tampere University of Technology, Coherent, Inc.

and Spectra-Physics Corporation.

He holds an M.S.

in Electrical Engineering from the Electrotechnical University of St.

Petersburg, Russia, and a Ph.D.

from Ioffe Institute of the Russian Academy of Sciences.

Ness has served as our Senior Vice President, World Wide Sales and Marketing, since February 2013.

Between May 1999 and July 2000, Mr.

Mammen served as the Group Finance Director and General Manager of the United Kingdom operations for IPFD.

Mammen was Finance Director and General Manager of United Partners Plc, a commodities trading firm, from 1995 to 1999 and, prior to that, he worked in the finance department of E.I.

du Pont de Nemours and Company.

Mammen holds an Upper Second B.Sc.

Honours degree in International Trade and Development from the London School of Economics and Political Science.

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

Ness has served as our Senior Vice President, Sales and Strategic Business Development since February 18, 2022.

Prior to that, he was Senior Vice President, World Wide Sales and Marketing, from February 2013 to 2022.

From January 2011 until February 2013, he served as our Vice President-Asian Operations.

6 unchanged sentences

from The Open University.

Felix Stukalin has served as our Senior Vice President, North America Operations, since February 2013.

Alexander Ovtchinnikov, Ph.D., has served as our Senior Vice President, Chief Technology Officer since February 2022.

Prior to that, he was Vice President, Components, from September 2005 to February 2022 and Director of Material Sciences from October 2001 to September 2005.

He was promoted to Senior Vice President in February 2013.

Prior to joining us, Dr.

Ovtchinnikov was Material Science Manager of Lasertel, Inc., a maker of high-power semiconductor lasers, from 1999 to 2001.

and Spectra-Physics Corporation.

He holds an M.S.

in Electrical Engineering from the Electrotechnical University of St.

Petersburg, Russia, and a Ph.D.

from Ioffe Institute of the Russian Academy of Sciences.

Igor Samartsev, Ph.D.

has served as our Senior Vice President, Chief Scientist since February 2022.

Prior to that, he was Chief Technology Officer from 2011 to 2022 and Deputy General Manager of our Russian subsidiary, NTO IRE-Polus from 2005 to 2011 after having served in technical leadership roles at NTO IRE-Polus.

Samartsev holds a Ph.D.

in Physics from the Imperial College London.

Felix Stukalin has served as our Senior Vice President, Chief Operating Officer since February 2022.

Prior to that, he was Senior Vice President, North America Operations, from February 2013 to February 2022.

From March 2009 until February 2013, he served as our Vice President, Devices.

Prior to joining us, he was Vice President, Business Development of GSI Group Inc.

from April 2002 to September 2008, and from March 2000 to April 2002 he was Vice President of Components and President of the Wave Precision divisions of GSI Lumonics, Mr.

from April 2002 to September 2008, and from March 2000 to April 2002 he was Vice President of Components and President of the Wave Precision divisions of GSI Lumonics.

Stukalin holds a B.S.

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Our net sales can fluctuate from quarter to quarter with general economic trends, specific industry cycles, holidays in foreign countries such as Lunar New Year in the first quarter of our fiscal year and the timing of capital expenditures by our customers.

Historically, our net sales have been higher in the second half of the year than in the first half of the year, although that trend did not occur in 2018 and 2019 due to a decrease in capital equipment spending in Europe and China caused by slower macro-economic growth and uncertainty caused by the trade war between the United States and China.

Historically, our net sales have generally been higher in the second half of the year than in the first half of the year, although that trend did not occur in 2019 due to a decrease in capital equipment spending in Europe and China caused by slower macro-economic growth and uncertainty caused by the trade war between the United States and China.

Government Regulation

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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."

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 could negatively affect our business and may change due to diplomatic and political considerations outside of our control"

Environmental Regulation

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business