Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) under the Exchange Act. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, our chief executive officer and our chief financial officer concluded the disclosure controls and procedures were not effective as of December 27, 2024, the end of the period covered by this Annual Report on Form 10-K, due to material weaknesses in internal control over financial reporting described below.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.
Management of the Company has assessed the effectiveness of the Company’s internal control over financial reporting as of December 27, 2024 using the criteria described in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Because of the material weaknesses described below, management concluded that the Company did not maintain effective internal control over financial reporting as of December 27, 2024.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The Company did not design and maintain effective controls relating to the: (i) sufficiency of processes related to identifying and analyzing risks to the achievement of objectives across the Company, (ii) sufficiency of competent personnel to analyze risks of material misstatement and develop internal control activities to support the achievement of the Company’s internal control objectives; and (iii) monitoring of control activities in accordance with established policies in a timely manner.
These material weaknesses contributed to the following additional material weaknesses:
(a) The Company did not design and maintain effective information technology (“IT”) general controls for certain information systems that are relevant to the preparation of its consolidated financial statements. Specifically, for certain of the Fluid Solutions operating subsidiaries in the Products segment which have not been migrated to the Company’s primary ERP system, the Company did not design and maintain (i) program change management controls to ensure that IT program and data changes are identified, tested, authorized and implemented appropriately, and (ii) user access controls to ensure appropriate segregation of duties and to adequately restrict user and privileged access to appropriate company personnel.
(b) The Company did not design and maintain effective controls for certain other international operating subsidiaries in the Products segment. Specifically, the Company did not design and maintain effective segregation of duties controls across various business processes, including journal entries.
The material weaknesses described above did not result in any material misstatements to annual or interim consolidated financial statements. However, these material weaknesses could result in misstatements of our consolidated financial statements that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
The effectiveness of the Company’s internal control over financial reporting as of December 27, 2024 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears under Item 8.
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Remediation Plan and Progress
Management has been executing and remains committed to implementing measures designed to ensure that control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed, implemented, and operating effectively.
In response to all unremediated material weaknesses, management has taken the following actions:
• engaged an external advisor to assist with evaluating and documenting the design and operating effectiveness of internal controls and to assist with the remediation of deficiencies, as necessary,
• hired additional IT, accounting, and finance personnel to support our remediation efforts, including a Vice President of Internal Audit, as well as third-party resources with relevant expertise to augment our internal resources,
• formalized roles and responsibilities within the organization to establish ownership of workstreams to identify and analyze risks of material misstatement, develop internal control activities to support the achievement of the Company’s internal control objectives, and monitor the effective performance of those control objectives,
• performed an entity-wide risk assessment of information technology systems and business processes by operating subsidiary, and
• assessed the specific training needs for newly hired and existing personnel and developed and delivered training programs designed to support our internal controls.
In response to the material weakness “(a)” management has taken the following actions:
• in process of designing and implementing change management and user access review controls for relevant information technology systems at certain Fluid Solutions operating subsidiaries not yet migrated to our primary ERP system. Management also continues to design and implement other user access controls to ensure appropriate segregation of duties that adequately restrict user access to our financial applications and data to appropriate company personnel.
In response to the material weakness “(b)” management has taken the following actions:
• in process of designing and implementing controls over segregation of duties assessments to identify key conflicts, establishing policies and procedures to maintain effective segregation of duties, and identifying and implementing mitigating controls for any key conflicts identified for certain other international operating subsidiaries in the Products segment which have not been migrated to the Company’s primary ERP system.
As we continue to evaluate and work to improve our internal control over financial reporting, we may decide to take additional measures to address the material weaknesses or modify the remediation plans described above. We believe that these actions will remediate the material weaknesses, however the material weaknesses will not be considered remediated until we conclude all measures necessary to remediate the material weaknesses have been designed, implemented, and the applicable controls have operated for a sufficient period of time, and management has concluded, through testing, that these controls are designed and operating effectively. While management believes that the aforementioned plans will remediate the material weaknesses, there is no assurance on the exact timing of the completion of the remediation.
Remediation of Previously Reported Material Weaknesses
We previously disclosed material weaknesses in our internal control over financial reporting related to the following:
• the design of controls to determine the valuation of inventories, including the write down of inventory to its estimated market value less costs to sell and the validation and approval of inventory costing,
• the design of controls to validate the accuracy of certain data used within the operation of controls which affects substantially all financial statement account balances and disclosures, and
• the design of controls related to the review of cash flow forecasts used in the valuation of certain assets and liabilities acquired in a business combination. Specifically, the control activities related to the review of the inputs and assumptions utilized to develop the cash flow forecasts used in the valuation of acquired intangible assets and contingent earn-out liabilities were not designed at an appropriate level of precision.
During the quarter ended September 27, 2024, we completed the following activities as part of remediating these material weaknesses:
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• designed and implemented controls over valuation of inventories, including review and assessment of the methodology for the valuation of inventories, including the write down of inventory to its estimated market value less costs to sell,
• designed and implemented controls over validation and approval of inventory costing,
• established ongoing education and training of control owners on how to assess the accuracy and completeness of relevant data used within the operation of controls, including the adequate levels of evidence and documentation required to support such procedures,
• designed and implemented an additional control activity in each IT dependent manual control to validate the accuracy of data used within the operation of controls,
• designed and implemented controls over the review of cash flow forecasts utilized in the valuation of contingent earn-out liabilities including review of the inputs and assumptions utilized to develop the cash flow forecasts at an appropriate level of precision, and
• designed controls that stand ready to operate in a future business combination to review the inputs and assumptions utilized to develop the cash flow forecasts in the valuation of intangible assets at an appropriate level of precision.
During the quarter ended December 27, 2024, we completed our testing of both the design and operating effectiveness of these controls and have determined that controls operated for a sufficient period of time for management to conclude that these material weaknesses have been remediated as of December 27, 2024.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the fiscal fourth quarter ended December 27, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
None.
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PART III
Pursuant to Paragraph G (3) of the General Instructions to Form 10-K, portions of the information required by Part III of Form 10-K are incorporated by reference from our definitive Proxy Statement to be filed with the SEC in connection with our December 27, 2024 Annual Meeting of Stockholders.
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item concerning directors and corporate governance is incorporated by reference to the section entitled, “Election of Directors” in our Proxy Statement for the December 27, 2024 Annual Meeting of Stockholders.
For information with respect to Executive Officers, see Part I, Item 1 of this Annual Report on Form 10-K, under “Executive Officers.”
The information required by this item with respect to Section 16(a) beneficial reporting compliance is incorporated by reference to the section entitled, “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement for the December 27, 2024 Annual Meeting of Stockholders.
We have adopted a Code of Business Conduct and Ethics that is designed to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder. This code of ethics is available on our website at www.uct.com . To the extent required by law, any amendments to, or waivers from, any provision of the code of ethics will be promptly disclosed to the public. To the extent permitted by such legal requirements, we intend to make such public disclosure by posting the relative material on our website in accordance with SEC rules.
Insider Trading Policies and Procedures
We have adopted insider trading policies and procedures governing the purchase, sale and other dispositions of our securities by directors, officers and employees that are designed to promote compliance with insider trading laws, rules and regulations, and applicable NASDAQ listing standards, as well as procedures designed to further the foregoing purposes. A copy of our insider trading policy is filed with this Annual Report on Form 10-K as Exhibit 19.1.
Item 11. Executive Compensation
The information required by this item regarding the security ownership of certain beneficial owners is incorporated by reference to the sections entitled “Executive Officer Compensation” and “Election of Directors” in our Proxy Statement for the December 27, 2024 Annual Meeting of Stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference to the sections entitled “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement for the December 27, 2024 Annual Meeting of Stockholders.
The table below summarizes our equity plan information as of December 27, 2024:
(Shares in millions)
Plan Category (a)
Number of Securities
to be Issued Upon
Exercise/Vest of
Outstanding Options,
Awards
Warrants and Rights (b)
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights (c) (1)
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding
Securities Reflected
in Column (a)
Equity compensation plans approved by security holders 1.4 $ — 1.4
(1) Consists of the 2003 Stock Incentive Plan, as amended, and, for purposes of column (c), the Employee Stock Purchase Plan. Since restricted stock units do not have an exercise price, they are excluded from the calculations in column (b) of the table above.
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Item 13. Certain Relationships and Related Transactions
The information required by this item is incorporated by reference to the section entitled “Certain Relationships and Related Party Transactions” in our Proxy Statement for the December 27, 2024 Annual Meeting of Stockholders.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference to the section entitled “Ratification of the Appointment of Our Independent Registered Public Accounting Firm” in our Proxy Statement for the December 27, 2024 Annual Meeting of Stockholders.
Auditor Firm Id: 238
Auditor Name: PricewaterhouseCoopers LLP
Auditor Location: San Jose, California
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Part IV
Item 15. Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this Form 10-K:
1. Financial Statements:
Form 10-K
Page No.
Report s of Independent Registered Public Accounting Fir ms
41
Consolidated Balance Sheets
44
Consolidated Statements of Operations
45
Consolidated Statements of Comprehensive Income (Loss)
46
Consolidated Statements of Cash Flows
47
Consolidated Statements of Stockholders’ Equity
49
Notes to Consolidated Financial Statements
50
2. Financial statement schedules not listed have been omitted because they are not applicable or required, or the information required to be set forth therein is included in the Consolidated Financial Statements or Notes thereto.
3. Exhibits
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Exhibit Index
Exhibit
Number Description Form File No. Filing Date Exhibit Filed
Herewith
2.1 Agreement and Plan of Merger, dated as of July 24, 2018, among Quantum Global Technologies, LLC, Ultra Clean Holdings, Inc., Falcon Merger Subsidiary, LLC and G-Squared Partners, LLC (as the representative of the unitholders of the Company)
8-K 000-50646 July 25, 2018 2.1
2.2 Agreement and Plan of Merger by and among Ultra Clean Holdings, Inc., Sir Daibus Ltd., Bealish Ltd. and Ham-Let (Israel – Canada) Ltd.
8-K 000-50646 December 17, 2020 2.1
2.3 HIS Merger Agreement
X
3.1 Amended and Restated Certificate of Incorporation of Ultra Clean Holdings, Inc.
S-1/A 333-11904 March 2, 2004 3.1
3.2 Amended and Restated Bylaws of Ultra Clean Holdings, Inc.
10-Q 000-50646 May 2, 2016 3.1
4.1 Specimen Stock Certificate
S-1/A 333-11904 March 8, 2004 4.1
4.2 Description of Securities Registered Under Section 12 of the Exchange Act
10-K 000-50646 March 6, 2024 4.2
10.1† Ultra Clean Holdings, Inc. Amended and Restated Stock Incentive Plan (amended and restated as of May 17, 2023)
10-K 000-50646 March 6, 2024 10.1
10.2† Form of Stock Option Agreement
S-1/A 333-11904 March 8, 2004 10.6
10.3† Form of Award Agreement
S-1/A 333-11904 March 8, 2004 10.13
10.4† Form of Restricted Stock Unit Award Agreement
10-K 000-50646 March 12, 2008 10.18
10.5† Employee Stock Purchase Plan (amended and restated as of May 17, 2023)
10-K 000-50646 March 6, 2024 10.5
10.6† Form of Indemnification Agreement between Ultra Clean Holdings, Inc. and each of its directors and executive officers
S-1/A 333-11904 March 2, 2004 10.10
10.7† Severance Policy for Executive Officers (amended as of October 26, 2018)
8-K 000-50646 November 1, 2018 10.1
10.8† Offer Letter between Ultra Clean Holdings, Inc. and James P. Scholhamer dated January 3, 2015
8-K 000-50646 January 5, 2015 99.1
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Exhibit
Number Description Form File No. Filing Date Exhibit Filed
Herewith
10.9† Change in Control Severance Agreement dated as of January 19, 2015 by and between Ultra Clean Holdings, Inc. and James P. Scholhamer
10-K 000-50646 March 11, 2015 10.18
10.10† Promotion Letter between Ultra Clean Holdings, Inc. and Sheri Savage (previously Sheri Brumm) dated February 18, 2016
10-K 000-50646 March 9, 2016 10.18
10.11† Offer Letter between Ultra Clean Holdings, Inc. and Sheri Savage (previously Sheri Brumm) dated July 7, 2016
8-K 000-50646 July 12, 2016 99.1
10.12† Change in Control Severance Agreement between Ultra Clean Holdings, Inc. and Sheri Savage (previously Sheri Brumm) dated July 7, 2016
8-K 000-50646 July 12, 2016 99.2
10.13† Amendment to Offer Letter and Change in Control Severance Agreement dated as of July 25, 2017 by and between Ultra Clean Holdings, Inc. and James P. Scholhamer
10-Q 000-50646 August 9, 2017 10.2
10.14 Credit Agreement, dated as of August 27, 2018, among Ultra Clean Holdings, Inc., Barclays Bank PLC, as administrative agent, and the lenders party thereto
8-K 000-50646 August 31, 2018 10.1
10.15 Guarantee and Collateral Agreement in favor of Barclays Bank PLC and the other Lenders party thereto, dated as of August 27, 2018, made by Ultra Clean Holdings, Inc. and the other Grantors referred to therein and from time to time party thereto
8-K 000-50646 August 31, 2018 10.2
10.16 Amendment Agreement, dated as of October 1, 2018, among Ultra Clean Holdings, Inc., any Subsidiary Borrowers, Barclays Bank PLC, as administrative agent, and the lenders party thereto
8-K 000-50646 October 4, 2018 10.1
10.17 Second Amendment, dated as of March 31, 2021, by and among Ultra Clean Holdings, Inc., the subsidiaries of Ultra Clean Holdings, Inc. party thereto, Barclays Bank PLC, as administrative agent and the lenders party thereto
8-K 000-50646 April 5, 2021 10.1
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Exhibit
Number Description Form File No. Filing Date Exhibit Filed
Herewith
10.18 Third Amendment, dated as of August 19, 2022, by and among Ultra Clean Holdings, Inc., the subsidiaries of Ultra Clean Holdings, Inc. party thereto, Barclays Bank PLC, as administrative agent and the lenders party thereto
8-K 000-50646 August 20, 2022 10.1
10.19 Fourth Amendment, dated as of June 29, 2023, by and among Ultra Clean Holdings, Inc., the subsidiaries of Ultra Clean Holdings, Inc. party thereto, Barclays Bank PLC, as administrative agent and the lenders party thereto
8-K 000-50646 July 6, 2023 10.1
10.20 Fifth Amendment, dated as of July 27, 2023, by and among Ultra Clean Holdings, Inc., the subsidiaries of Ultra Clean Holdings, Inc. party thereto, Barclays Bank PLC, as administrative agent and the lenders party thereto
8-K 000-50646 August 1, 2023 10.1
10.21 Sixth Amendment, dated as of April 4, 2024, by and among Ultra Clean Holdings, Inc., Barclays Bank PLC, as administrative agent and the lenders party thereto
8-K 000-50646 April 9, 2024 10.1
10.22 Seventh Amendment, dated as of October 8, 2024, by and among Ultra Clean Holdings, Inc., the subsidiaries of Ultra Clean Holdings, Inc. party thereto, Barclays Bank PLC, as administrative agent and the lenders party thereto
8-K 000-50646 October 10, 2024 10.1
10.23† Form of Change in Control Severance Agreement for Executive Officers
8-K 000-50646 November 1, 2018 10.2
19.1 Ultra Clean Holdings, Inc. Insider Trading Policy
X
21.1 Subsidiaries of Ultra Clean Holdings, Inc.
X
23.1 Consent of Pricewaterhouse Coopers LLP, Independent Registered Public Accounting Firm
X
23.2 Consent of Moss Adams LLP, Independent Registered Public Accounting Firm
X
24.1 Power of Attorney (included on signature page) X
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Exhibit
Number Description Form File No. Filing Date Exhibit Filed
Herewith
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
97.1 Compensation Recoupment Policy
10-K 000-50646 March 6, 2024 97.1
101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
† Denotes management contract or compensatory plan.
Item 16. Form 10-K Summary
None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Ultra Clean Holdings, Inc.
By: /S/ JAMES P. SCHOLHAMER
James P. Scholhamer
Chief Executive Officer
Date: February 25, 2025
KNOW ALL PERSONS BY THESE PRESENTS , that each person whose signature appears below constitutes and appoints James P. Scholhamer and Sheri Savage, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution, for him or her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission hereby ratifying and confirming that each of said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/S/ CLARENCE L. GRANGER Chairman February 25, 2025
Clarence L. Granger
/S/ JAMES P. SCHOLHAMER Chief Executive Officer and Director
(Principal Executive Officer) February 25, 2025
James P. Scholhamer
/S/ SHERI SAVAGE Chief Financial Officer
(Principal Financial Officer) February 25, 2025
Sheri Savage
/S/ BRIAN E. HARDING Chief Accounting Officer
(Principal Accounting Officer) February 25, 2025
Brian E. Harding
/S/ THOMAS T. EDMAN Director February 25, 2025
Thomas T. Edman
/S/ DAVID T. IBNALE Director February 25, 2025
David T. IbnAle
/S/ EMILY M. LIGGETT Director February 25, 2025
Emily M. Liggett
/S/ ERNEST E. MADDOCK Director February 25, 2025
Ernest E. Maddock
/S/ BARBARA V. SCHERER Director February 25, 2025
Barbara V. Scherer
/S/ JACQUELINE A. SETO Director February 25, 2025
Jacqueline A. Seto
/S/ JOANNE SOLOMON Director February 25, 2025
Joanne Solomon
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