What changed in this filing

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Item 1A. Risk Factors

2026-02-19 compared with 2025-03-13 · 83 added, 48 removed, 239 unchanged (35% of the section changed)

6 unchanged sentences

The Company operates in markets that are highly competitive.

The Company competes on the basis of price, product performance and quality, service, and or brand name across the industries and markets it serves.

The Company competes on the basis of price, product performance and quality, service, innovation, and or brand name across the industries and markets it serves.

Competitive pressures could affect the prices the Company is able to charge its customers or demand for its products.

As the Company keeps up with the pace of its rapidly evolving end markets, it has prioritized strategic market opportunities including data centers and data center infrastructure, aerospace and defense, battery energy storage and grid and utility infrastructure.

The rapidly evolving nature of these end markets creates uncertainty concerning how our operations may develop, which reduces our ability to accurately forecast our success.

Our failure to become competitive in and to integrate end markets into our focused strategy may divert our resources and adversely affect our financial condition.

The Company may not always be able to compete on price, particularly when compared to manufacturers with lower cost structures.

Some of the Company’s competitors have substantially greater sales, financial and manufacturing resources and may have greater access to capital than the Company.

As other companies enter its markets or develop new products, competition may further intensify.

As competitors enter the Company's markets or develop new products, competition may further intensify.

The Company’s failure to compete effectively could materially adversely affect its business, financial condition, and results of operations.

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The success of these transactions also depends on the Company’s ability to integrate the assets, operations, and personnel associated with these acquisitions.

The Company may encounter difficulties in integrating acquisitions with the Company’s operations and may not realize the degree or timing of the benefits that are anticipated from an acquisition.

The Company may also be unable to retain key personnel from the acquisitions, and disruption from an acquisition may adversely affect the Company’s relationship with its customers, suppliers or employees.

Further, the Company may encounter difficulties in integrating acquisitions with the Company’s operations and may not realize the degree or timing of the benefits that are anticipated from an acquisition.

The Company may also discover liabilities or deficiencies associated with the companies or assets it acquires that were not identified in advance, which may result in significant unanticipated costs.

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A disruption could occur within the Company’s manufacturing, distribution or supply chain network.

This could include damage or destruction due to various causes including natural disasters or political instability which would cause one or more of these networks to become non-operational.

This could adversely affect the Company’s ability to manufacture or deliver its products in a timely manner, impair its ability to meet customer demand for products and result in lost sales or damage to its reputation.

This could include damage or destruction due to various causes including natural disasters or political instability which may cause one or more of these networks to become non-operational.

This could adversely affect the Company’s ability to manufacture or deliver its products in a timely manner, impair

its ability to meet customer demand for products and result in lost sales or damage to its reputation.

Such a disruption could have a material adverse effect on the Company’s business, financial condition and results of operations.

1 unchanged sentence

The end markets for the Company’s products are characterized by technological change, frequent new product introductions and enhancements, changes in customer requirements and emerging industry standards.

The introduction of products embodying new technologies and the emergence of new industry standards could render its existing products obsolete and

unmarketable before it can recover any or all of its research, development, and commercialization expenses on capital investments.

Furthermore, the life cycles of its products may change and are difficult to estimate.

The introduction of products embodying new technologies and the emergence of new industry standards could render the Company's existing products obsolete and unmarketable before it can recover any or all of its research, development, and commercialization expenses on capital investments.

Furthermore, the life cycles of its products may change as result of developments in technology or otherwise and accordingly are difficult to estimate.

The Company’s future success will depend upon its ability to manufacture and deliver products in a manner that is responsive to its customers’ needs.

The Company works with customers at the design stage to create products and solutions to meet their needs, but if the customer abandons or changes its plans, or if its new products and designs are not accepted by the market, the Company may not realize a return on its investment in developing the new products.

The Company will need to develop and introduce new products and product enhancements on a timely basis that keep pace with technological developments and emerging industry standards and address increasingly sophisticated requirements of its customers.

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Further, our reliance on international supply chain systems exposes us to potential interruptions and delays cause by transportation labor shortages, including dock worker stoppages and freight carrier disruptions.

In addition, the Company may experience a shortage of supplies for various reasons, such as financial distress, work stoppages, natural disasters, or production difficulties that may affect one of its suppliers.

In addition, the Company may experience a shortage of supplies for various reasons, such as financial distress, work stoppages, port disruptions, natural disasters, or production difficulties that may affect one of its suppliers.

A significant work stoppage, or an interruption or shortage of supplies for any reason, if protracted, could substantially adversely affect the Company’s business, financial condition and results of operations.

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Failure to ensure that the Company has the depth and breadth of personnel with the necessary skill set and experience could impede its ability to deliver growth objectives and execute the Company’s strategy.

Competition for qualified employees among companies that rely heavily upon engineering and technology is at times intense, and the loss of qualified employees could hinder the Company’s ability to conduct research activities successfully and develop marketable products.

We have had, and could have additional, changes in senior management, which could be disruptive to the Company’s operations and may have an adverse effect on our business, financial condition and results of operations.

Competition for qualified employees among companies that rely heavily upon engineering and technology is at times intense, the labor market in the United States and abroad is competitive, and the loss of qualified employees could hinder the Company’s ability to conduct research activities successfully and develop marketable products.

Due to the competitive labor market, competition for qualified personnel could require us to pay high wages or incur higher costs for retaining and incentivizing our personnel.

The Company may not be successful in protecting its intellectual property.

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It is also possible that end users of customers’ products may make claims against the Company, resulting in additional defense costs and potential damages.

damages and/or that a successful claim against the Company may exceed the Company’s applicable insurance policy limits or be excluded from coverage.

Although, the Company generally attempts to limit its liability through standard contract terms and conditions and maintains insurance in connection with product defects and warranty claims, it is possible that the Company may not be able to enforce contractual limitations on damages and/or that a successful claim against the Company may exceed the Company’s applicable insurance policy limits or be excluded from coverage.

2) Regulatory Risks:

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Any future climate change regulations could also adversely impact our ability to compete with companies not subject to such regulations.

In addition, the European Union ("EU") enacted the Corporate Sustainability Reporting Directive ("CSRD") and Corporate Sustainability Due Diligence ("CS3D") in 2023 and 2024, respectively.

In addition, the European Union ("EU") enacted the Corporate Sustainability Reporting Directive ("CSRD") and Corporate Sustainability Due Diligence ("CS3D") in 2023 and 2024, respectively, and published proposed revisions to both the CSRD and CS3D through omnibus legislation in 2025.

We are further assessing our compliance and reporting strategies under CSRD and CS3D, but our obligations under these and other EU climate directives may incur substantial effort in the future.

Shifts in environmental regulation have created increased legal, regulatory and operational uncertainty for the Company.

Changes in U.S.

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Further, the global trade policies and tensions could create additional complexities.

Our international presence subjects us to risks associated with international trade conflicts between the United States and its trade partners, including, without limitation, China, Mexico and Canada, particularly with regard to tariffs and import/export controls.

various European countries, particularly with regard to tariffs and import/export controls.

These factors in turn could require us to materially increase prices to our customers which may reduce demand, or, if we do not or are unable to increase prices, could result in lower margins on products sold.

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trading partners adopting responsive trade policies making it more difficult or costly for us to export our products to those countries.

Additionally, continued geopolitical issues may result in customers outside the U.S.

It may also be time and resource-consuming for us to adapt our business strategies to adverse, changing trade policies.

Compliance with rapidly changing tariffs and trade restrictions may require significant time and resources, and in turn increase our cost of doing business, and could result in reputational harm, fines, penalties or plant shutdowns if we are found to not be in compliance Additionally, continued geopolitical issues may result in customers outside the U.S.

seeking to source products from local suppliers, which could result in lower sales or lost customers.

Increased restrictions on international trade may have a material adverse effect on our business, financial condition, and results of operations.

Export controls and impediments could impact our competitive position compared to local competitors and other companies not subject to the same restrictions.

As such, we could lose market position and our business, operating results, and financial condition would be adversely impacted.

Recently, the U.S.

government has imposed extensive tariffs on goods imported from several countries, including, without limitation, China, Mexico and Canada, as well as certain broad, product-specific tariffs on foreign goods and products.

Tariffs may increase the cost of materials in our supply chain, result in reciprocal levies on components and finished products exported to or imported from affected countries, and have an adverse impact on our cost of goods sold in the U.S.

Tariffs have resulted in China and other countries imposing reciprocal tariffs on U.S.

goods and ceasing sales of certain products to the U.S.

and could result in more U.S.

trading partners adopting responsive trade policies, including making it more difficult or costly for us to export our products to those countries.

Sales to customers outside of the U.S., and to China in particular, comprise a significant portion of our net sales, and reciprocal tariffs may impact our business in China.

Further, tariffs and trade policies may continue to change quickly and without warning, and we may not be able to accurately anticipate and mitigate the impacts.

Any retaliatory actions by affected countries and foreign governments could result in tariffs, trade protection measures or other restrictions imposed on our current and future products.

Our customers’ costs of doing business may increase or their sales may be negatively affected.

As such, customer demand for our products may decline, which could adversely impact our ability to generate revenue and result in inventory impairment changes.

Tariffs on hardware required for data centers, for example, could raise costs for our customers, potentially causing them to delay data center infrastructure investments.

To the extent that the U.S., China or other countries seek to promote products that are produced domestically or reduce their dependence on products from another country, they may implement regulations or policies that may negatively affect our business.

The Company is exposed to political, economic, and other risks that arise from operating a multinational business.

6 unchanged sentences

and other countries, including China, with respect to geopolitics, trade policies, treaties, government regulations, and tariffs.

The result of the recent U.S.

elections may compound this uncertainty.

The current political climate has intensified concerns about trade tensions between the U.S.

and China in connection with each country’s recent or proposed tariffs on the other country’s products.

Accordingly, our operations and transactions with customers in China could be adversely affected by changes to market conditions, changes to the regulatory environment, increased trade barriers, tariffs, or restrictions, or interpretation of Chinese law.

Further deterioration of economic conditions or outlook, such as lower economic growth, recession or fears of recession in other countries may adversely affect the demand for or profitability of our products and services.

22 unchanged sentences

Any of these factors could have a material adverse effect on the Company’s consolidated results of operations, financial position and cash flows.

In addition, the effects on the global economy of the Russia-Ukraine and Israel-Hamas wars, particularly if they escalate, are uncertain.

In addition, the effects on the global economy of geopolitical tensions, such as the Russia-Ukraine and Israel-Hamas wars as well as developments in Venezuela, particularly if they escalate, remain uncertain.

Environmental liabilities could adversely impact the Company’s financial position.

25 unchanged sentences

Therefore, it is subject to changes in tax laws in each of these jurisdictions, including changes discussed in the paragraphs below.

Further, the results of the recent U.S.

elections could create additional complexities in the U.S.'s and other countries' tax policies.

The outcome of these and other legislative developments, including changes to interpretations of recently enacted legislation, could have a material adverse effect on the Company’s future effective tax rate and cash flows.

On July 4, 2025, the United States enacted into law the legislation formally titled "An Act to provide for reconciliation pursuant to title II of H.

14,” and commonly referred to as the One Big Beautiful Bill Act ("OBBB").

The OBBB contains multiple business tax provisions, including the permanent extension of several expiring provisions of the 2017 Tax Cuts and Jobs Act (the "Tax Act") and multiple modifications to the international tax framework.

The legislation has multiple effective dates with certain provisions effective in 2025 and others to be implemented in future years, and the Company determined the impact for the year ended December 27, 2025 was not significant.

The Company will continue to monitor future administrative guidance and regulations that clarify the legislative text of the OBBB and the bill’s potential effect on the Company’s income taxes.

The Organization for Economic Cooperation and Development ("OECD") has been working with a group of more than 100 countries to significantly change the tax treatment of multinational businesses, subjecting them to tax in additional jurisdictions, modifying the methods by which they allocate profits among jurisdictions, and subjecting them to a minimum level of tax of 15%, on a country-by-country-basis.

As part of this effort, in December of 2021, the OECD published model rules to assist with implementation of the minimum tax regime.

In December of 2022, the European Union reached an agreement pursuant to which all European Union countries agreed to enact laws based upon the OECD-led minimum tax proposals.

During 2024, these rules became effective for most European jurisdictions.

Similar legislation was adopted, or is expected to be adopted, in other countries with widespread implementation of the global minimum tax anticipated by the end of 2025.

The Company’s income tax rate in certain non-U.S.

jurisdictions is lower than 15%.

Once these minimum tax rules are effective, they could have a significant adverse effect on the Company’s future effective tax rate and cash flows.

As part of this effort, in December of 2021, the OECD published model rules to assist with implementation of the minimum tax regime, or its Pillar Two framework ("Pillar 2").

Through the end of 2025, a number of the countries involved have enacted portions, or all, of Pillar 2 into their local laws.

For 2025, Pillar 2 did not have a material impact for the Company.

On January 5, 2026, the OECD published updated Pillar 2 administrative guidance, introducing the “Side-by-Side” Safe Harbor.

This guidance provides significant relief for U.S.-parented multinational groups, including an exemption from the Pillar 2 Income Inclusion Rule ("IIR") and Undertaxed Profits Rule ("UTPR") starting in 2026, provided the U.S.

parent remains subject to a qualifying U.S.

minimum tax regime.

As a result, the Company does not anticipate additional top-up taxes under this Safe Harbor rule.

However, we remain subject to Qualified Domestic Minimum Top-up Taxes ("QDMTTs") imposed by certain countries, and we anticipate increased global tax compliance burden.

If our eligibility for the Safe Harbor is restricted or revoked, or if local jurisdictions implement QDMTTs or other rules, we could face increased tax liabilities and higher administrative costs.

These developments could adversely affect our effective tax rate and cash flows.

We continue to monitor evolving international tax requirements and assess their potential impact on our business.

The Company has two subsidiaries in China which benefit from lower tax rates due to “tax holidays” which apply for three-year periods.

The tax holiday for one of the subsidiaries expired at the end of 2023 but was later extended for an additional three years, retroactively to include all of 2024, as well as 2025 and 2026;

and for the other subsidiary, the tax holiday will expire at the end of 2025.

and for the other subsidiary, the tax holiday expired at the end of 2025.

The Company intends to seek an extension for the expired tax holiday.

Future year tax benefits will depend upon the Company’s ability to obtain extensions, after the three-year periods expire.

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Nevertheless, changes in currency exchange rates, commodity prices and interest rates cannot always be predicted.

The Company uses various metals in the manufacturing of its products, including copper, zinc, tin, gold, silver, and ruthenium.

Worldwide demand, availability, and pricing of these raw materials have been volatile.

In recent years, the prices of many of these raw materials have continue to fluctuate, and in many cases increased, and fluctuations may persist in the future.

Also in the fourth quarter 2025 and through the date of filing, precious metal commodity pricing has significantly increased.

If we must pay more for certain materials, it could reduce our profit margin or otherwise have a material adverse effect on our business and financial results.

In addition, because of intense price competition and the Company’s high level of fixed costs, it may not be able to address such changes even if they are foreseeable.

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The Company’s most significant net long exposure is to the euro.

Company’s most significant net short exposures are to the Chinese renminbi, Mexican peso, and Philippine peso.

The Company’s most significant net short exposures are to the Chinese renminbi, Mexican peso, and Philippine peso.

Changes in foreign exchange rates could have an adverse effect on the Company's results of operations, financial position and cash flows.

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Such an occurrence could have a material adverse effect on the Company’s consolidated results of operations, financial position and cash flows.

As a result of the 2024 annual goodwill impairment test, the Company recorded non-cash charges of $36.1 million and $8.6 million to reflect the impairment of goodwill for the Industrial controls and sensors reporting unit within the Industrial segment and the Automotive sensors reporting unit within the Transportation segment, respectively.

There were no impairment charges recorded during the fiscal years of 2023 and 2022.

As a result of the 2025 annual goodwill impairment test, the Company recorded a non-cash charge of $301.2 million to reflect the impairment of goodwill for the Semiconductor reporting unit within the Electronics segment.

As a result of the 2024 annual goodwill impairment test, the Company recorded non-cash charges of $36.1 million and $8.6 million to reflect the impairment

of goodwill for the Industrial Controls and Sensors reporting unit within the Industrial segment and the Automotive Sensors reporting unit within the Transportation segment, respectively.

There was no impairment charge recorded during the fiscal year of 2023.

In addition, during the fourth quarter of 2024, the Company recorded non-cash impairment charges of $47.8 million for the impairment of intangible assets, including $47.6 million related to the impairment of certain acquired customer relationships, developed technology, and tradename intangible assets in the Industrial Controls and Sensors reporting unit within the Industrial segment.

We have identified a material weaknesses in our internal control over financial reporting, and ineffective internal controls could impact the accuracy and timely reporting of our business and financial results.

Ineffective internal controls could impact the accuracy and timely reporting of our business and financial results.

Our disclosure controls or our internal control over financial reporting may not prevent or detect all errors, including simple errors or mistakes, and all incidents of non-compliance, which may result in misstatements.

A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met with respect to the preparation and accurate presentation of financial statements.

If we fail to maintain the adequacy of our internal controls, including any failure to timely and appropriately implement new, required or improved controls, such failure

may result in the loss of investor confidence in our financial reports, and we may incur significant expenses to remediate any resulting internal control deficiencies.

If we fail to maintain the adequacy of our internal controls, including any failure to timely and appropriately implement new, required or improved controls, such failure may result in the loss of investor confidence in our financial reports, and we may incur significant expenses to remediate any resulting internal control deficiencies.

Such failure may, ultimately, have an adverse effect on the trading price of our common stock.

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

The Company’s management has identified the material weaknesses described below.

In making this assessment, management has concluded that we did not design and maintain an effective control environment commensurate with our financial reporting requirements.

Specifically, at certain of our non-U.S.

manufacturing locations, we lacked sufficiently skilled operational and accounting personnel to ensure that internal control responsibilities were performed and aligned with internal control objectives.

The material weakness in the control environment contributed to an additional material weakness related to the design and operating effectiveness of control activities over the existence of inventory at these locations.

The Company did not maintain effective controls related to inventory cycle counts to validate existence of inventory, and consequently, the completeness and accuracy of the data used in evaluating the appropriateness of the valuation of inventory and related reserves.

These material weaknesses resulted in corrections through cumulative out-of-period adjustments as described in notes to the consolidated financial statements as of and for the year ended December 28, 2024.

The Company evaluated the impact of the error and out-of-period adjustment and concluded it was not material to any previously issued financial statements and the adjustment was not material to the year ended December 28, 2024.

Further, we have incurred additional costs and risks, including costs for accounting and legal fees in connection with the ongoing process of remediating the material weaknesses.

We could also be subject to regulatory, stockholder or other actions in connection with the material weaknesses, and such actions would divert management’s time and attention.

For a description of the material weaknesses identified by management and the remediation efforts being implemented to address the material weaknesses, see “Part II, Item 9A - Controls and Procedures.” If the enhanced controls implemented to address the material weaknesses and to strengthen our overall internal control do not operate effectively, if we are unsuccessful in implementing or following these enhanced processes, or if we are otherwise unable to remediate this material weaknesses, such failures may result in delayed or inaccurate reporting of our financial results.

In 2025, the Company remediated the material weaknesses identified by management, see “Part II, Item 9A - Controls and Procedures.” If the enhanced controls implemented to address the material weaknesses and to strengthen our overall internal control do not operate effectively, or if we are unsuccessful in following these enhanced processes in the future, such failures may result in delayed or inaccurate reporting of our financial results.

Management has excluded Basler's internal controls over financial reporting from its assessment of the effectiveness of internal controls over financial reporting as of December 27, 2025.

The integration of Basler’s operations into the Company’s business may pose additional challenges to internal controls, and we may be unsuccessful or delayed in adopting our enhanced processes to Basler’s operations.

The bankruptcy or insolvency of a major customer could adversely affect the Company.

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Between December 28, 2024 and December 27, 2025, the closing sale price of the Company’s common stock ranged between a low of $142.3 and a high of $275.0.

The volatility of the stock price may be related to any number of factors, such as volatility in the financial markets, general macroeconomic conditions, industry conditions, market expectations concerning the Company’s results of operations, or the volatility of its revenues as discussed above under “The Company’s revenues may vary significantly from period to period.” The historic

market price of the Company’s common stock may not be indicative of future market prices.

The volatility of the stock price may be related to any number of factors, such as volatility in the financial markets, general macroeconomic

conditions, industry conditions, market expectations concerning the Company’s results of operations, or the volatility of its revenues as discussed above under “The Company’s revenues may vary significantly from period to period.” The historic market price of the Company’s common stock may not be indicative of future market prices.

The Company may not be able to sustain or increase the value of its common stock.

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Information technology security threats, including security breaches, computer malware, and other cyber-attacks are increasing in both frequency and sophistication and could create financial liability, subject the Company to legal or regulatory sanctions or damage the Company’s reputation with customers, dealers, suppliers, and other stakeholders.

In addition, the widespread adoption and rapid evolution of artificial intelligence technologies may increase our cybersecurity risk, including the use of generative artificial intelligence to augment existing or to create new malware.

In addition, the widespread availability, adoption and rapid evolution of artificial intelligence technologies may increase our cybersecurity risk, including the use of generative artificial intelligence to augment existing or to create new malware, and additional vulnerabilities may be introduced from the use of artificial intelligence by our customers or third parties.

The Company continuously seeks to maintain a robust program of information security and controls, but the impact of a material information technology event could have a material adverse effect on the Company’s competitive position, reputation, results of operations, financial position and cash flows.

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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 1A. Risk Factors