What changed in this filing

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Item 1A. Risk Factors

2021-11-02 compared with 2021-08-04 · 47 added, 37 removed, 489 unchanged (15% of the section changed)

15 unchanged sentences

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.

The effectiveness of economic stabilization e fforts, including on-going and further potential government payments and benefits to affected citizens and industries, is uncertain.

Even as efforts to contain the pandemic, including vaccinations, have made progress and some restrictions have been relaxed, new variants of the virus are causing additional outbreaks.

The Delta variant of COVID-19 has caused a surge in COVID-19 cases globally.

The impact of the Delta variant, or other variants that may emerge, cannot be predicted at this time, and could depend on numerous factors, including the availability of vaccines in different parts of the world, vaccination rates among the population, the effectiveness of COVID-19 vaccines against the Delta variant and other variants, and the response by governmental bodies to reinstate restrictive measures.

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.

1 unchanged sentence

failure of third parties on which we rely, including, without limitation, our suppliers, commercial banks, and other external business partners, to meet their obligations to us, caused by significant disruptions in their ability to do so or their own financial or operational difficulties;

supply chain risks such as scrutiny or embargoing of goods produced in infected areas;

reduced workforces, which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, quarantine, or government mandates;

supply chain risks such as disruptions of supply chains, excess demand on suppliers, and scrutiny or embargoing of goods produced in infected areas;

reduced workforces and labor shortages, which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, quarantine, or government mandates and incentives;

temporary business closures due to reduced workforces or government mandates;

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lawsuits from employees and others exposed to COVID-19 at our facilities, which may involve large demands or substantial defense costs that our professional and general liability insurance may not cover.

Any of the foregoing factors, or other cascading effects that are not currently foreseeable, could materially increase our costs, negatively impact our sales or damage the Company’s financial condition, results of operations, cash flows and its liquidity position,

possibly to a significant degree.

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.

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

For the quarter ended June 28, 2021, we generated approximately 56% of our net sales from non-U.S.

For the quarter ended September 27, 2021, we generated approximately 58% 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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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.

If a raw material supplier or equipment manufacturer goes bankrupt, liquidates, consolidates out of existence, experiences excess demands or other disruptions to their supply chain or operations, or otherwise 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.

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.

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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.

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.

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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.

The competition for talent is currently extremely high.

In this competitive environment, our business could be adversely impacted by increases in labor costs, including wages and benefits, including those increases triggered by regulatory actions regarding wages, scheduling and benefits;

increased health care and workers’ compensation insurance costs;

increased wages and costs of other benefits necessary to attract and retain high quality employees with the right skill sets and increased wages, and benefits and costs related to the COVID-19 pandemic and its resurgence.

In addition, our wages and benefits programs, combined with the challenging conditions due to the COVID-19 pandemic, may be insufficient to attract and retain talent.

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.

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.

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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.

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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 June 28, 2021, our consolidated condensed balance sheet included $897.3 million of goodwill and definite-lived intangible assets.

As of September 27, 2021, our consolidated condensed balance sheet included $887.6 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.

If factors indicate that assets are impaired, we would be required to reduce the carrying value of our goodwill and definite-lived intangible assets, which could harm our results during the periods in which such a reduction is recognized.

If factors indicate that

assets are impaired, we would be required to reduce the carrying value of our goodwill and definite-lived intangible assets, which could harm our results during the periods in which such a reduction is recognized .

Our results of operations are often subject to demand fluctuations and seasonality.

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

Sales to EMS companies represented approximately 36% and 38% of our net sales for the quarters ended June 28, 2021 and June 29, 2020, respectively.

Sales to EMS companies represented approximately 39% and 41% of our net sales for the quarters ended September 27, 2021 and September 28, 2020, respectively.

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 collectively accounted for approximately 29% and 27% of our net sales for the quarters ended June 28, 2021 and June 29, 2020, respectively.

Our five largest OEM customers collectively accounted for approximately 28% and 32% of our net sales for the quarters ended September 27, 2021 and September 28, 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.

Sales attributed to OEMs include both direct sales as well as sales that the OEMs place through EMS providers.

Our customer concentration could fluctuate, depending on future customer requirements, which will depend in large part on market conditions in the electronics industry segments in which our customers participate.

concentration could fluctuate, depending on future customer requirements, which will depend in large part on market conditions in the electronics industry segments in which our customers participate.

The loss of one or more significant customers or a decline in sales to our significant customers would materially adversely affect our business, financial condition, and results of operations.

12 unchanged sentences

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 June 28, 2021, aerospace and defense sales accounted for approximately 33% of our total net sales.

For the quarter ended September 27, 2021, aerospace and defense sales accounted for approximately 31% of our total net sales.

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

1 unchanged sentence

While we do not sell any significant volume of products directly to the U.S.

government, we are a supplier to OEMs that sell to the U.S.

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

government or to foreign governments and agencies, we are a supplier to OEMs that sell to these entities.

Consequently, our sales are affected by changes in the defense budgets of the U.S.

13 unchanged sentences

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 36% and 38% of our net sales for the quarters ended June 28, 2021 and June 29, 2020, respectively.

Sales to EMS companies represented approximately 39% and 41% of our net sales for the quarters ended September 27, 2021 and September 28, 2020, respectively.

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

3 unchanged sentences

Our manufacturing processes require that we purchase significant quantities of energy from third parties, which results in the generation of greenhouse gases, either directly on-site or indirectly at electric utilities.

Both domestic and international legislation to address climate change by reducing greenhouse gas emissions could create increases in energy costs and price volatility.

Both domestic and international legislation to

address climate change by reducing greenhouse gas emissions could create increases in energy costs and price volatility.

Considerable international attention is now focused on development of an international policy framework to guide international action to address climate change.

38 unchanged sentences

In addition, we manufacture products for a range of automotive customers.

If any of our products

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

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.

31 unchanged sentences

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

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

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.

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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.

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 .

Regulatory Risks

Because of power shortages in China, we may have to temporarily close our China operations, which would adversely impact our ability to manufacture our products, meet customer orders, and result in reduced revenues.

China is currently facing a growing power supply shortage.

Instability in electrical supply can cause sporadic outages among residential and commercial consumers.

As a result, the Chinese government is implementing power restrictions to ease the energy shortage.

If we are required to make temporary closures of our facilities in China at any time, we may be unable to manufacture our products, and would then be unable to meet customer orders except from inventory on hand.

As a result, we could lose sales, adversely impacting our revenues, and our relationships with our customers could suffer, impacting our ability to generate future sales.

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.

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We cannot be certain that we will be able to maintain our security clearance.

If for some reason our security clearance is invalidated or

terminated, we may not be able to continue to perform on classified contracts and would not be able to enter into new classified contracts, which could materially adversely affect our business, financial condition, and results of operations .

If for some reason our security clearance is invalidated or terminated, we may not be able to continue to perform on classified contracts and would not be able to enter into new classified contracts, which could materially adversely affect our business, financial condition, and results of operations.

Our operations in China and Hong Kong subject us to risks and uncertainties relating to the laws and regulations of China and Hong Kong.

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There can be no assurance that we will be able to obtain such minerals in sufficient quantities or at competitive prices.

Also, since our supply chain is complex, we may, at a minimum, face reputational challenges with our customers, stockholders, and other stakeholders if we are unable to sufficiently verify the origins of the minerals used in our products.

Also, since our supply chain is complex, we may, at a minimum, face reputational challenges with our customers, stockholders, and other stakeholders if we are unable to sufficiently verify the

origins of the minerals used in our products.

We may also encounter customers who require that all of the components of our products be certified as conflict free.

46 unchanged sentences

Department of Commerce.

We must comply with all applicable economic sanctions laws and regulations of the United

States and other countries.

We must comply with all applicable economic sanctions laws and regulations of the United States and other countries.

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

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

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 operation s.

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.

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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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.

federal income tax law, a corporation’s ability to utilize its net operating losses (NOLs) 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.

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.

2 unchanged sentences

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 NOL.

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 NOL .

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.

9 unchanged sentences

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

What changed 10-Q

Item 1A. Risk Factors