What changed in this filing

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Item 1A. Risk Factors

2021-05-05 compared with 2020-11-05 · 106 added, 166 removed, 419 unchanged (39% of the section changed)

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Widespread infection in the United States and abroad has the potential for catastrophic impact.

National, state and local authorities have recommended social distancing and have imposed or are considering quarantine and isolation measures on large portions of the population, including mandatory business closures.

These measures, while intended to protect human life, are expected to have serious adverse impacts on domestic and foreign economies of uncertain severity and duration.

The effectiveness of economic stabilization efforts, including proposed government payments to affected citizens and industries, is uncertain.

National, state and local authorities have recommended social distancing and at times have imposed quarantine and isolation measures on large portions of the population, including mandatory business closures.

These measures, while intended to protect human life, had, and in the future may have, serious adverse impacts on domestic and foreign economies of uncertain severity and duration.

The effectiveness of economic stabilization e fforts, including proposed government payments to affected citizens and industries, is uncertain.

In particular, our business may be negatively impacted by the fear of exposure to or actual effects of COVID-19 and other disease outbreaks, epidemics, pandemics and similar widespread public health concerns.

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possibly to a significant degree.

The duration of any such impacts cannot be predicted because of the sweeping and uncertain nature of the circumstances involving the COVID-19 pandemic.

Uncertainty and adverse changes in the economy and financial markets, including the worldwide electronics industry, could have an adverse impact on our business and operating results.

Uncertainty or adverse changes in the economy could lead to a significant decline in demand for the end products manufactured by our customers, which, in turn, could result in a decline in the demand for our products and pressure to reduce our prices.

Any decrease in demand for our products could have an adverse impact on our financial condition, operating results and cash flows.

Uncertainty and adverse changes in the economy could also increase the cost and decrease the availability of potential sources of financing and increase our exposure to losses from bad debts, either of which could have a material adverse effect on our financial condition, operating results and cash flows.

A majority of our revenue is generated from the electronics industry, which is characterized by intense competition, relatively short product life cycles, and significant fluctuations in product demand.

The industry is subject to economic cycles and recessionary periods.

Due to the uncertainty in the end markets served by most of our customers, we have a low level of visibility with respect to future financial results.

Consequently, our past operating results, earnings, and cash flows may not be indicative of our future operating results, earnings, and cash flows.

The duration of any such impacts cannot be predicted because of the sweeping , on-going and uncertain nature of the circumstances involving the COVID-19 pandemic .

We serve customers and have manufacturing facilities outside the United States and are subject to the risks characteristic of international operations, including recently imposed tariffs.

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We continue to consider additional opportunities to make foreign investments and construct new foreign facilities.

For the quarter ended September 28, 2020, we generated approximately 52% of our net sales from non-U.S.

For the quarter ended March 29, 2021, we generated approximately 53% of our net sales from non-U.S.

operations, and a significant portion of our manufacturing material was provided by international suppliers during this period.

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government imposed sanction laws and regulations.

We rely on suppliers and equipment manufacturers for the timely delivery of raw materials, components, equipment and spare parts used in manufacturing our PCBs.

If a raw material supplier or equipment manufacturer goes bankrupt, liquidates, consolidates out of existence or fails to satisfy our product quality standards, or if the prices or availability of raw materials change, it could harm our ability to purchase new manufacturing equipment, service the equipment we have, or timely produce our products, thereby affecting our customer relationships.

To manufacture PCBs, we use raw materials such as laminated layers of fiberglass, copper foil, chemical solutions, gold, copper and other commodity products, which we order from our suppliers.

For RF components, we use various high-performance

materials such as ceramics and printed circuit board materials.

In the case of backplane assemblies, components include connectors, sheet metal, capacitors, resistors and diodes, many of which are custom made and controlled by our customers’ approved vendors .

Consolidations and restructuring in our supplier base and equipment fabricators related to our raw materials purchases or the manufacturing equipment we use to fabricate our products may result in adverse changes in pricing of materials due to reduction in competition among our raw material suppliers or an elimination or shortage of equipment and spare parts from our manufacturing equipment supply base.

Suppliers and equipment manufacturers may be impacted by other events outside our control including macro-economic events, financial instability, environmental occurrences, or supplier interruptions due to fire, natural catastrophes, public health crises (including, but not limited to, the COVID-19 pandemic) or otherwise.

Suppliers and equipment manufacturers may extend lead times, limit supplies, or increase prices due to capacity constraints or other factors, which could harm our ability to deliver our products on a timely basis and negatively impact our financial results.

In addition, in extreme circumstances, the suppliers we purchase from could cease production due to a fire, natural disaster, consolidation or liquidation of their businesses.

As such, this may impact our ability to deliver our products on a timely basis, harm our customer relationships and negatively impact our financial results.

If raw material and component prices increase or if there is inflationary pressure on the cost of the metals that we use to produce our product, especially if the prices of copper, gold, palladium and other precious metals we use to manufacture our products increase, it may reduce our gross margins.

Should the supply of materials used in the above manufacturing processes become limited, our ability to obtain the quantities necessary to meet our customers’ demand may be impacted which could cause us to encounter reduced revenue levels or price increases which would impact our profit margins.

If either of these situations occurs, our financial condition and results of operations could be negatively impacted.

We are subject to risks of currency fluctuations.

A portion of our cash, other current assets and current liabilities is held in currencies other than the U.S.

Changes in exchange rates among other currencies and the U.S.

dollar will affect the value of these assets or liabilities as re-measured to U.S.

dollars on our balance sheet.

To the extent that we ultimately decide to repatriate some portion of these funds to the United States, the actual value transferred could be impacted by movements in exchange rates.

Any such type of movement could negatively impact the amount of cash available to fund operations or to repay debt.

Additionally, we have revenues and costs denominated in currencies other than the U.S.

dollar (primarily the Renminbi (RMB)).

Fluctuations in the exchange rates between the U.S.

dollar and the RMB could result in increases or decreases in our costs or revenues which could negatively impact our business, financial condition, and results of operations.

Significant inflation or disproportionate changes in foreign exchange rates could occur as a result of general economic conditions, acts of war or terrorism, changes in governmental monetary or tax policy, or changes in local interest rates Further, China’s government imposes controls over the convertibility of RMB into foreign currencies, which subjects us to further currency exchange risk.

Rising labor costs, including due to employee strikes and other labor-related disruptions may materially adversely affect our business, financial condition, and results of operations.

Our business is labor intensive, utilizing large numbers of engineering and manufacturing personnel.

There is uncertainty with respect to rising labor costs.

Furthermore, labor disputes and strikes based partly on wages have in the past slowed or stopped production by certain manufacturers in China.

In some cases, employers have responded by significantly increasing the wages of workers at such plants.

Any increase in labor costs due to minimum wage laws or customer requirements about scheduling and overtime that we are unable to recover in our pricing to our customers could materially adversely affect our business, financial condition, and results of operations.

In addition, the high turnover rate and our difficulty in recruiting and retaining qualified employees and the other labor trends we are noting in China could result in a potential for defects in our products, production disruptions or delays, or the inability to ramp production to meet increased customer orders, resulting in order cancellation or imposition of customer penalties if we are unable to deliver products in a timely manner.

To respond to competitive pressures and customer requirements, we may further expand internationally in lower-cost locations.

If we pursue such expansions, we may be required to make additional capital expenditures.

In addition, the cost structure in certain countries that are now considered to be favorable may increase as economies develop or as such countries join multinational economic communities or organizations, causing local wages to rise.

As a result, we may need to continue to seek new locations with lower costs and the employee and infrastructure base to support PCB manufacturing.

We cannot assure investors that we will realize the anticipated strategic benefits of our international operations or that our international operations will contribute positively to our operating results.

In North America, we are experiencing wage inflation pressures, some of which are mandated by local and state governments.

Further, we are experiencing rising health care costs.

While we strive to manage these challenges, there can be no assurance that our efforts will succeed which would result in higher costs and lower profits.

Strikes or labor disputes with our unionized employees, primarily in China, may adversely affect our ability to conduct our business.

If we are unable to reach agreement with any of our unionized work groups on future negotiations regarding the terms of their collective bargaining agreements, we may be subject to work interruptions or stoppages.

Any of these events could be disruptive

to our operations and could result in negative publicity, loss of contracts, and a decrease in revenues.

We may also become subject to additional collective bargaining agreements in the future if more employees or segments of our workforce become unionized, including any of our employees in the United States .

We have pursued and intend to continue to pursue potential divestitures of assets and acquisitions of other businesses and may encounter risks associated with these activities, which could harm our business and operating results.

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As part of our business strategy, we expect that we will continue to align our strategy by pursuing potential divestitures of assets and acquisitions of businesses, technologies, assets, or product lines that complement or expand our business.

Risks related to such activity may include:

Risks related to such activities may include:

the potential inability to successfully integrate acquired operations and businesses or to realize anticipated synergies, economies of scale, or other expected value;

diversion of management’s attention from normal daily operations of our existing business to focus on integration of the newly acquired business;

unforeseen expenses associated with the integration of the newly acquired business;

unforeseen expenses associated with the integration of the newly acquired business or assets;

difficulties in managing production and coordinating operations at new sites;

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incur substantial transaction-related costs, whether or not a proposed acquisition is consummated.

Acquisitions of high technology companies are inherently risky, and no assurance can be given that our recent or future acquisitions will be successful.

Acquisitions of high technology companies and assets are inherently risky, and no assurance can be given that our recent or future acquisitions will be successful.

Failure to manage and successfully integrate acquisitions we make could have a material adverse effect on our business, financial condition, and results of operations.

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As we continue to experience growth in the scope and complexity of our operations, we may be required to continue to implement additional operating and financial controls and hire and train additional personnel.

There can be no assurance that we will be able to do so in the future, and failure to do so could jeopardize our expansion plans and seriously harm our operations.

There can be no assurance that we will

be able to do so in the future, and failure to do so could jeopardize our expansion plans and seriously harm our operations.

In addition, growth in our capacity could result in reduced capacity utilization and a corresponding decrease in gross margins .

Uncertainty and adverse changes in the economy and financial markets, including the worldwide electronics industry, could have an adverse impact on our business and operating results.

Any decrease in demand for our products could have an adverse impact on our financial condition, operating results and cash flows.

The industry is subject to economic cycles and recessionary periods.

Due to the uncertainty in the end markets served by most of our customers, we have a low level of visibility with respect to future financial results.

Consequently, our past operating results, earnings, and cash flows may not be indicative of our future operating results, earnings, and cash flows.

If we are unable to maintain satisfactory capacity utilization rates, our business, financial condition, and results of operations would be materially adversely affected.

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If our goodwill or other intangible assets become impaired in the future, we would be required to record a non-cash charge to earnings, which may be material and would also reduce our stockholders’ equity.

As of September 28, 2020, our consolidated condensed balance sheet included $929.6 million of goodwill and definite-lived intangible assets.

During the quarter ended September 28, 2020, the Company recorded an impairment charge for goodwill of $69.2 million related to its RF and Specialty Components (RF&S Components) reportable segment.

As of March 29, 2021, our consolidated condensed balance sheet included $907.7 million of goodwill and definite-lived intangible assets.

We periodically evaluate whether events and circumstances have occurred, such that the potential for reduced expectations for future cash flows coupled with further decline in the market price of our stock and market capitalization may indicate that the remaining balance of goodwill and definite-lived intangible assets may not be recoverable.

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In addition, our future quarterly operating results may fluctuate and may not meet the expectations of securities analysts or investors.

We participate in the competitive, cyclical telecommunications automotive industries, which are subject to strict quality control standards.

We participate in the competitive, cyclical automotive industry, which is subject to strict quality control standards.

Failure to meet quality standards may adversely affect our business, financial condition and results of operations.

A significant portion of our sales are to customers within the telecommunications and automotive industry.

The telecommunications industry is characterized by intense competition, relatively short product life cycles, and significant fluctuations in product demand, which is heavily dependent on the end markets it serves and therefore can be affected by the demand patterns of those markets.

If the volatility in the telecommunications industry continues, it may have a material adverse effect on our business, financial condition and result of operations.

A significant portion of our sales are to customers within the automotive industry.

The automotive industry has historically experienced multi-year cycles of growth and decline.

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Moreover, we may be required under our contracts with automotive industry customers to indemnify them for the cost of warranties and recalls relating to our products.

The prominence of EMS companies as our customers could reduce our gross margins, potential sales, and OEM customers.

Sales to EMS companies represented approximately 41% and 34% of our net sales for the quarters ended September 28, 2020 and September 30, 2019, respectively.

The prominence of EMS companies as our customers could reduce our gross margins, potential sales, and customers.

Sales to EMS companies represented approximately 35% of our net sales for both the quarters ended March 29, 2021 and March 30, 2020.

Sales to EMS providers include sales directed by OEMs as well as orders placed with us at the EMS providers’ discretion.

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A small number of customers are responsible for a significant portion of our sales.

Our five largest OEM customers accounted for approximately 32% and 28% of our net sales for the quarters ended September 28, 2020 and September 30, 2019, respectively.

Our five largest OEM customers collectively accounted for approximately 32% and 28% of our net sales for the quarters ended March 29, 2021 and March 30, 2020, respectively.

Furthermore, our business has benefited from OEMs deciding to outsource their PCB manufacturing and backplane assembly needs to us, and our future revenue growth partially depends on new outsourcing opportunities from OEMs.

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government and its agencies, as well as foreign governments and agencies.

The contracts between our direct customers and the government end user are subject to political and budgetary constraints and processes,

changes in short-range and long-range strategic plans, the timing of contract awards, the congressional budget authorization and appropriation processes, the government’s ability to terminate contracts for convenience or for default, as well as other risks, such as contractor suspension or debarment in the event of certain violations of legal and regulatory requirements.

For the quarter ended September 28, 2020, aerospace and defense sales accounted for approximately 36% of our total net sales.

The contracts between our direct customers and the government end user are subject to political and budgetary constraints and processes, changes in short-range and long-range strategic plans, the timing of contract awards, the congressional budget authorization and appropriation processes, the government’s ability to terminate contracts for convenience or for default, as well as other risks, such as contractor suspension or debarment in the event of certain violations of legal and regulatory requirements.

For the quarter ended March 29, 2021, aerospace and defense sales accounted for approximately 35% of our total net sales.

The substantial majority of aerospace and defense sales are related to both U.S.

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The domestic and international threat of terrorist activity, emerging nuclear states, and conventional military threats have led to an increase in demand for defense products and services and homeland security solutions in the recent past.

Although a two-year budget agreement has recently been approved by the U.S.

government and the budget agreement includes sustained spending on defense programs, the termination or failure to fund one or more significant contracts by the U.S.

Although a two-year budget agreement was approved by the U.S.

government in 2019 that budget agreement included sustained spending on defense programs, the termination or failure to fund one or more significant contracts by the U.S.

government could have a material adverse effect on our business, financial condition, and results of operations.

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Additionally, our OEM customers often direct a significant portion of their purchases through a relatively limited number of EMS companies.

Sales to EMS companies represented approximately 41% and 34% of our net sales for the quarters ended September 28, 2020 and September 30, 2019, respectively.

Sales to EMS companies represented approximately 35% of our net sales for both the quarters ended March 29, 2021 and March 30, 2020.

Our contractual relationship is often with the EMS companies, who are obligated to pay us for our products.

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If one or more of our significant customers were to become insolvent or were otherwise unable to pay us, our business, financial condition, and results of operations would be materially adversely affected.

We rely on suppliers and equipment manufacturers for the timely delivery of raw materials, components, equipment and spare parts used in manufacturing our PCBs.

To manufacture PCBs, we use raw materials such as laminated layers of fiberglass, copper foil, chemical solutions, gold, copper and other commodity products, which we order from our suppliers.

For RF components, we use various high performance materials such as ceramics and printed circuit board materials.

In the case of backplane assemblies, components include connectors, sheet metal, capacitors, resistors and diodes, many of which are custom made and controlled by our customers’ approved vendors.

Suppliers and equipment manufacturers may be impacted by other events outside our control including macro-economic, financial instability, environmental occurrences, or supplier interruptions due to fire, natural catastrophes, public health crises (including, but not limited to, the COVID-19 pandemic) or otherwise.

In addition, in extreme circumstances, the suppliers we purchase from could cease production due to a fire, natural disaster, consolidation or liquidation of their businesses.

As such, this may impact our ability to deliver our products on a timely basis and harm our customer relationships and negatively impact our financial results.

If raw material and component prices increase or if there is inflationary pressure on the cost of the metals that we use to produce our product, especially copper, it may reduce our gross margins.

Should the supply of materials used in our above manufacturing processes become limited, our ability to obtain the quantities necessary to meet our customers’ demand may be

impacted which could cause us to encounter reduced revenue levels or price increases which would impact our profit margins.

If either of these situations occurs, our financial condition and results of operations could be negatively impacted .

Our business, financial condition, and results of operations could be materially adversely affected by climate change initiatives.

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We expect competition to continue, which could result in price reductions, reduced gross margins, and loss of market share.

Our principal PCB and substrate competitors include AT&S (Austria Technologie & Systemtechnik Aktiengesellschaft), BoardTek Electronics Corporation, Chin-Poon Industrial Co., Ltd., ISU Petasys Co., Ltd., Suzhou Dongshan Precision Manufacturing Co., Ltd., Sanmina Corporation, Tripod Technology Corporation, Unimicron Technology Corporation, Shennan Circuits Co., Ltd., and WUS Printed Circuit Co., Ltd.

Our principal E-M Solutions competitors include Amphenol Corporation, Flex Ltd., Jabil Inc., and Sanmina Corporation.

Our competition for RF products include Cobham plc, Crane Aerospace & Electronics, TRM Microwave, Mercury Systems, Inc., AVX Corporation, Molex, and Smiths Group plc.

In addition, we increasingly compete on an international basis, and new and emerging technologies may result in new competitors entering our markets.

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When prices decline, we may also be required to write down the value of our inventory.

The effects of such pricing pressures on our business may be exacerbated by inflationary pressures that affect our costs of supply.

When we are unable to extract comparable concessions from our suppliers on prices they charge us, this in turn reduces gross profit if we are unable to raise prices.

Further, uncertainty or adverse changes in the economy could also lead to a significant decline in demand for our products and pressure to reduce our prices.

Recently, many businesses have taken a more conservative stance in ordering inventory.

Any decrease in demand for our products, coupled with pressure from the market and our customers to decrease our prices, would materially adversely affect our business, financial condition, and results of operations.

Consolidation among our customers could materially adversely affect our business, financial condition, and results of operations.

Some of our large customers have consolidated in the past, and further consolidation of customers may occur.

Depending on which organization becomes the controller of the supply chain function following the consolidation, we may not be retained as a preferred or approved supplier.

In addition, product duplication could result in the termination of a product line that we currently support.

While there is potential for increasing our position with the combined customer, there does exist the potential for decreased revenue if we are not retained as a continuing supplier.

We also face the risk of increased pricing pressure from the combined customer because of its increased market share.

If we are unable to adapt our design and production processes in response to rapid technological change and process development, we may not be able to compete effectively.

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We expect that the investment necessary to maintain our technological position will increase as customers make demands for products and services requiring more advanced technology on a quicker turnaround basis.

For example, in 2020 in our printed circuit board segment we expect to continue to make significant capital expenditures to expand our HDI, RF technology, and other advanced manufacturing capabilities while in our RF&S Components segment we are designing products that we hope our customers adopt and incorporate into their products.

For example, in 2021 in our PCB segment, we expect to continue to make significant capital expenditures to expand our HDI, RF technology, and other advanced manufacturing capabilities while in our RF&S Components segment, we are designing products that we hope our customers adopt and incorporate into their products.

We may not be able to obtain access to additional sources of funds in order to respond to technological changes as quickly as our competitors.

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If any of our products are or are alleged to be defective, we may be required to participate in a recall of such products.

As suppliers become more integral to the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contributions when faced with product liability claims or recalls.

As suppliers become more integral to

the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contributions when faced with product liability claims or recalls.

In addition, vehicle manufacturers, which have traditionally borne the costs associated with warranty programs offered on their vehicles, are increasingly requiring suppliers to guarantee or warrant their products and may seek to hold us responsible for some or all of the costs related to the repair and replacement of parts supplied by us to the vehicle manufacturer .

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Our business also depends on our continuing ability to recruit, train, and retain highly qualified employees, particularly engineering and sales and marketing personnel.

The competition for these employees is intense, and the loss of these employees could harm our

The competition for these employees is intense, and the loss of these employees could harm our business.

Further, our ability to successfully integrate acquired companies depends in part on our ability to retain key management and existing employees at the time of the acquisition.

Rising labor costs, including due to employee strikes and other labor-related disruptions may materially adversely affect our business, financial condition, and results of operations.

Our business is labor intensive, utilizing large numbers of engineering and manufacturing personnel.

There is uncertainty with respect to rising labor costs, particularly within China, where we have most of our manufacturing facilities.

Furthermore, labor disputes and strikes based partly on wages have in the past slowed or stopped production by certain manufacturers in China.

In some cases, employers have responded by significantly increasing the wages of workers at such plants.

To respond to competitive pressures and customer requirements, we may further expand internationally in lower-cost locations.

If we pursue such expansions, we may be required to make additional capital expenditures.

As a result, we may need to continue to seek new locations with lower costs and the employee and infrastructure base to support PCB manufacturing.

In North America, we are experiencing wage inflation pressures, some of which are mandated by local and state governments.

Further, we are experiencing rising health care costs.

While we strive to manage these challenges, there can be no assurance that our efforts will succeed which would result in higher costs and lower profits.

Strikes or labor disputes with our unionized employees, primarily in China, may adversely affect our ability to conduct our business.

Any of these events could be disruptive to our operations and could result in negative publicity, loss of contracts, and a decrease in revenues.

Infringement of our intellectual property rights could negatively affect us, and we may be exposed to intellectual property infringement claims from third parties that could be costly to defend, could divert management’s attention and resources, and if successful, could result in liability.

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Irrespective of the validity or the successful assertion of such claims, we could incur costs in either defending or settling any intellectual property disputes alleging infringement.

If any claims, whether or not they have merit, are brought against our customers for such infringement, we could be required to expend significant resources in defending such claims.

In the event we are subject to any infringement claims, we may be required to spend a significant amount of money to develop non-infringing alternatives or obtain licenses.

If any claims, whether or not they have merit, are brought against our customers for such infringement, we could be required to expend significant resources in defending such claims, developing non-infringing alternatives or obtaining licenses.

We may not be successful in developing such alternatives or in obtaining such licenses on reasonable terms, or at all, and may be required to modify or cease marketing our products or services, which could disrupt the production processes, damage our reputation, and materially and adversely affect our business, financial condition, and results of operations.

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Uncertainties with respect to the Chinese legal system may adversely affect the operations of our Chinese subsidiaries.

China has put in place a comprehensive system of intellectual property laws however, incidents of infringement are common, and enforcement of rights can, in practice, be difficult.

China has put in place a comprehensive system of intellectual property laws;

however, incidents of infringement are common, and enforcement of rights can, in practice, be difficult.

If we are unable to manage our intellectual property rights, our business and operating results may be seriously harmed.

Damage to our manufacturing facilities due to fire, natural disaster, or other events could materially adversely affect our business, financial condition, and results of operations.

Damage to our manufacturing facilities due to fire, natural disaster, or other events could materially adversely affect our business, financial condition, and results of operation s .

The destruction or closure of any of our facilities for a significant period of time as a result of fire, explosion, blizzard, act of war or terrorism, flood, tornado, earthquake, lightning, other natural disasters, required maintenance, or other events could harm us financially, increasing our costs of doing business and limiting our ability to deliver our manufacturing services on a timely basis.

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We have substantial debt and, as a result, we have significant debt service obligations.

We maintain $250.0 million of Convertible Senior Notes due 2020 at an interest rate of 1.75%, $405.9 million Term Loan Facility due 2024 (Term Loan Facility) at a floating rate of LIBOR plus 2.5%, $375.0 million of Senior Notes due 2025 (Senior Notes) at an interest rate of 5.63%, $40.0 million outstanding under a $150.0 million U.S.

Asset-Based Lending Credit Agreement (U.S.

ABL), and $30.0 million outstanding under a $150.0 million Asia Asset-Based Lending Credit Agreement (Asia ABL).

We maintain $405.9 million outstanding in a Term Loan Facility due 2024 (Term Loan Facility) at a floating rate of LIBOR plus 2.5%, $500.0 million of Senior Notes due 2029 (Senior Notes due 2029) at an interest rate of 4.0%, and $30.0 million outstanding under a $150.0 million Asia Asset-Based Lending Credit Agreement (Asia ABL).

We and a number of our direct and indirect subsidiaries also have various credit facilities and letters of credit.

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Subject to the limits contained in the credit agreements governing the Term Loan Facility, the U.S.

ABL, the Asia ABL, the indenture governing the Senior Notes, and our other debt instruments, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes.

ABL, the Asia ABL, the indenture governing the Senior Notes due 2029, and our other debt instruments, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes.

If we do so, the risks related to our high level of debt could intensify.

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place us at a competitive disadvantage as compared to our competitors that have less debt as it could limit our ability to capitalize on future business opportunities and to react to competitive pressures or adverse changes.

In addition, the indenture governing the Senior Notes and the credit agreements governing the Term Loan Facility, the U.S.

In addition, the indenture governing the Senior Notes due 2029 and the credit agreements governing the Term Loan Facility, the U.S.

ABL and the Asia ABL contain restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interest.

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Furthermore, we and our subsidiaries may decide to incur significant additional indebtedness in the future.

Although the indenture governing the Senior Notes and the credit agreements governing the Term Loan Facility, the U.S.

ABL and the Asia ABL will contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial.

Although the indenture governing the Senior Notes due 2029 and the credit agreements governing the Term Loan Facility, the U.S.

Asia ABL will contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial.

These restrictions also will not prevent us from incurring obligations that do not constitute indebtedness .

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under the Term Loan Facility, the U.S.

ABL and the Asia ABL are at variable rates of interest and expose us to interest rate risk.

If interest rates were to increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease.

On May 15, 2018, we entered into an interest rate swap arrangement with a notional amount of $400.0 million, which expires on June 1, 2022, in order to reduce interest rate volatility exposure.

This arrangement effectively converts $400.0 million of our variable rate debt to fixed rate.

Under the terms of the interest rate swap, we would pay a fixed rate of 2.84% and would receive floating 1-month LIBOR during the swap period.

For illustrative purposes and assuming all loans under the Term Loan Facility, the U.S.

ABL and the Asia ABL were fully drawn, each quarter point change in interest rates would result in a $0.8 million change in annual interest expense on our indebtedness under the Term Loan Facility, the U.S.

ABL and the Asia ABL, after giving effect to our interest rate swap.

Servicing our debt requires a significant amount of cash and we may not be able to generate sufficient cash to service all of our debt and may be forced to take other actions to satisfy our obligations under our debt, which may not be successful.

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The credit agreements governing the Term Loan Facility, the U.S.

ABL and the Asia ABL, the indenture governing the Senior Notes will restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due.

ABL and the Asia ABL and the indenture governing the Senior Notes due 2029 will restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due.

We may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due.

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Accordingly, repayment of our indebtedness may be dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise.

Unless they are guarantors of the Senior Notes or our other indebtedness, our subsidiaries do not have any obligation to pay amounts due on our indebtedness or to make funds available for that purpose.

Our subsidiaries may not be able to,

or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness.

Unless they are guarantors of the Senior Notes due 2029 or our other indebtedness, our subsidiaries do not have any obligation to pay amounts due on our indebtedness or to make funds available for that purpose.

Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness.

Each subsidiary is a distinct legal entity, and under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries.

While the indenture governing the Senior Notes and the credit agreements governing the Term Loan Facility, the U.S.

While the indenture governing the Senior Notes due 2029 and the credit agreements governing the Term Loan Facility, the U.S.

ABL and the Asia ABL will limit the ability of our subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to us, these limitations are subject to qualifications and exceptions.

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Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations and our ability to satisfy our obligations under our indebtedness.

If we cannot make scheduled payments on our debt, we will be in default and holders of the Senior Notes could declare all outstanding principal and interest to be due and payable, the lenders under the Term Loan Facility, the U.S.

If we cannot make scheduled payments on our debt, we will be in default and holders of the Senior Notes due 2029 could declare all outstanding principal and interest to be due and payable, the lenders under the Term Loan Facility, the U.S.

ABL and the Asia ABL could terminate their commitments to loan money, the lenders could foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.

Possible replacement of the LIBOR benchmark interest rate may have an impact on our financial condition or results of operations.

On July 27, 2017, the Financial Conduct Authority (FCA), a regulator of financial services firms in the United Kingdom, announced that it intends to stop persuading or compelling banks to submit LIBOR rates after 2021.

The FCA and the submitting LIBOR banks have indicated they will support the LIBOR indices through 2021 to allow for an orderly transition to an alternative reference rate.

In the United States, efforts to identify a set of alternative U.S.

dollar reference interest rates include proposals by the Alternative Reference Rates Committee of the Federal Reserve Board.

Other financial services regulators and industry groups are evaluating the possible phase-out of LIBOR and the development of alternate reference rate indices or reference rates.

Some of our liabilities are indexed to LIBOR.

We are evaluating the potential impact of the possible replacement of the LIBOR benchmark interest rate, but are not able to predict whether LIBOR will cease to be available after 2021, whether the alternative rates the Federal Reserve Board proposes to publish will become market benchmarks in place of LIBOR, or what the impact of such a transition will have on our financial condition or results of operations.

Regulatory Risks

We are subject to the requirements of the NISPOM for our facility security clearance, which is a prerequisite to our ability to perform on classified contracts for the U.S.

We are subject to the requirements of the National Industrial Security Program Operating Manual (NISPOM) for our facility security clearance, which is a prerequisite to our ability to perform on classified contracts for the U.S.

A facility security clearance is required in order to be awarded and perform on classified contracts for the Department of Defense and certain other agencies of the U.S.

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Further, due to the fact that a portion of our voting equity is owned by a non-U.S.

entity, we are required to be governed by and operate in accordance with the terms and requirements of the Special Security Agreement (SSA).

entity, we are required to be governed by and operate in accordance with the terms and requirements of a Special Security Agreement (SSA).

The terms of the SSA have been previously disclosed in our SEC filings.

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In addition, though changes in government policies and rules are timely published or communicated, there is usually no indication of the duration of any grace period before which full implementation and compliance will be required.

As a result, it is possible that we might operate our business in violation of new rules and policies before

full compliance can be achieved.

As a result, it is possible that we might operate our business in violation of new rules and policies before full compliance can be achieved.

These uncertainties could limit the legal protections available to us and adversely impact our results of operations.

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Environmental laws have generally become more stringent and we expect this trend to continue over time, especially in developing countries, imposing greater compliance costs and increasing risks and penalties associated with violation.

We operate in environmentally sensitive locations, and we are subject to potentially conflicting and changing regulatory agendas of political, business, and environmental groups.

We operate in

environmentally sensitive locations, and we are subject to potentially conflicting and changing regulatory agendas of political, business, and environmental groups.

Changes or restrictions on discharge limits, emissions levels, material storage, handling, or disposal might require a high level of unplanned capital investment or relocation to another global location where prohibitive regulations do not exist.

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Imposition of economic sanction laws and regulations on a company or country could impact our revenue levels.

Violations of these laws or regulations could result in significant additional sanctions including criminal or civil fines or penalties, more onerous compliance requirements, more extensive debarments from export privileges, or loss of authorizations needed to conduct aspects of our international business.

Violations of these laws or regulations could result in significant additional sanctions including criminal or civil fines or

penalties, more onerous compliance requirements, more extensive debarments from export privileges, or loss of authorizations needed to conduct aspects of our international business .

In certain countries, we may engage third-party agents or intermediaries, such as customs agents, to act on our behalf, and if these third-party agents or intermediaries violate applicable laws, their actions may result in criminal or civil fines or penalties or other sanctions being assessed against us.

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to refinance our existing indebtedness;

to fund our operations beyond 2020;

to fund our current or planned operations;

to fund working capital requirements for future growth that we may experience;

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If we or our vendors are unable to prevent such outages and breaches, our operations could be disrupted.

If unauthorized parties gain access to our information systems or such information is used in an unauthorized manner, misdirected, altered, lost, or stolen during transmission, any theft or misuse of such information could result in, among other things, unfavorable publicity, governmental inquiry and oversight, difficulty in marketing our services, allegations by our customers that we have not performed our contractual obligations, loss of customers, litigation by affected parties, and possible financial obligations for damages related to the theft or misuse of such information, any of which could have a material adverse effect on our business, financial condition, and results of operations.

damages related to the theft or misuse of such information, any of which could have a material adverse effect on our business, financial condition, and results of operation s.

Issues arising during the upgrade of our enterprise resource planning system could affect our operating results and ability to manage our business effectively.

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Such disruptions could include, among other things, temporary loss of data, inability to process certain orders, failure of systems to communicate with each other and the inability to track or reconcile key data.

We are heavily dependent on

automated management systems, and any significant failure or delay in the system upgrade could cause a substantial interruption to our business and additional expense, which could result in an adverse impact on our operating results, cash flows or financial condition .

We are subject to risks of currency fluctuations.

A portion of our cash, other current assets and current liabilities is held in currencies other than the U.S.

Changes in exchange rates among other currencies and the U.S.

dollar will affect the value of these assets or liabilities as re-measured to U.S.

dollars on our balance sheet.

To the extent that we ultimately decide to repatriate some portion of these funds to the United States, the actual value transferred could be impacted by movements in exchange rates.

Any such type of movement could negatively impact the amount of cash available to fund operations or to repay debt.

Additionally, we have revenues and costs denominated in currencies other than the U.S.

dollar (primarily the Renminbi (RMB)).

Fluctuations in the exchange rates between the U.S.

dollar and the RMB could result in increases or decreases in our costs or revenues which could negatively impact our business, financial condition, and results of operations.

We are heavily dependent on automated management systems, and any significant failure or delay in the system upgrade could cause a substantial interruption to our business and additional expense, which could result in an adverse impact on our operating results, cash flows or financial condition.

Our ability to use net operating loss carryforwards to offset future taxable income for U.S.

federal, state and foreign income tax purposes is subject to limitations, and future transfers of shares of our common stock could cause us to experience an “ownership change” that could further limit our ability to utilize our net operating losses.

federal income tax law, a corporation’s ability to utilize its net operating losses (NOL’s) to offset future taxable income may be significantly limited if it experiences an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended (the Code).

In general, an ownership change will occur if there is a cumulative change in a corporation’s ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period.

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As a result of our acquisition of Viasystems, the NOLs acquired were subject to this limitation.

Future transfers or sales of our common stock during a rolling three-year period by any of our “5-percent shareholders” could cause us to experience an ownership change under Section 382, which could further limit our use of NOLs.

If our net earnings do not remain at or above recent levels, or we are not able to predict with a reasonable degree of probability that they will continue, we may have to record a valuation allowance against our net deferred income tax assets.

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If our estimates of future earnings decline, we may have to increase our valuation allowance against our net deferred income tax assets, resulting in a higher income tax provision, which would reduce our results of operations.

On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) providing economic relief to disruptions caused by the Coronavirus pandemic.

The CARES Act includes a number of provisions, including the delay in certain employer payroll tax payments, employee retention payroll tax credits, increase of Internal Revenue Code (IRC) Section 163(j) limitation of Adjusted Tax Income (ATI) from 30% to 50% (applicable to 2019 and 2020 tax years), changes to net operating loss rules, alternative minimum tax relief, modification of charitable contribution limits and others.

Unanticipated changes in our tax rates or in our assessment of the realizability of our deferred income tax assets or exposure to additional income tax liabilities could affect our business, financial condition, and results of operations.

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Although we believe that our tax estimates are reasonable, the final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions, which could materially adversely affect our business, financial condition, and results of operations.

Registrant’s Certificate of Incorporation, as amended May 12, 2016 (1)

Registrant’s Fourth Amended and Restated Bylaws, as amended March 2, 2016 (2)

CEO Certification Pursuant to Section 302 of the Sarbanes — Oxley Act of 2002

CFO Certification Pursuant to Section 302 of the Sarbanes — Oxley Act of 2002

CEO Certification Pursuant to Section 906 of the Sarbanes — Oxley Act of 2002

CFO Certification Pursuant to Section 906 of the Sarbanes — Oxley Act of 2002

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Documents

Inline XBRL Taxonomy Extension Definition Linkbase Documents

Inline XBRL Taxonomy Extension Label Linkbase Documents

Inline XBRL Taxonomy Extension Presentation Linkbase Documents

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on June 6, 2011 and to the Registrant’s Form 8-K as filed with the Commission on May 18, 2016.

Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed with the Commission on March 8, 2016.

Filed herewith

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

TTM Technologies, Inc.

/s/ Thomas T.

November 5, 2020

President and Chief Executive Officer

November 5, 2020

Executive Vice President and Chief Financial Officer

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-Q

Item 1A. Risk Factors