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What changed in Ultra Clean Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Ultra Clean Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+254 added−239 removedSource: 10-K (2025-02-25) vs 10-K (2024-03-06)

Top changes in Ultra Clean Holdings, Inc.'s 2024 10-K

254 paragraphs added · 239 removed · 209 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

55 edited+13 added−11 removed63 unchanged
Biggest changeWe believe our customers will continue to outsource critical subsystems and that we are well positioned to capture a significant portion of these outsourcing opportunities. We believe that our continued focus on efficient manufacturing, reduced design-to-delivery cycle times, and high quality and reliability will also allow us to gain market share.
Biggest changeWe believe that our continued focus on efficient manufacturing, reduced design-to-delivery cycle times, and high quality and reliability will allow us to gain market share. Similarly, we believe there is room to gain market share with our cleaning and coating 4 Table of Contents services, both with chip and equipment makers, as customers typically outsource these solutions.
Our Products segment primarily designs, engineers and manufactures production tools, components, parts, and modules and subsystems for the semiconductor and display capital equipment markets. Products include chemical delivery modules, frame assemblies, gas delivery systems, fluid delivery systems, precision robotics and process modules as well as other high-level assemblies.
Our Products segment primarily designs, engineers and manufactures production tools, components and parts, and modules and subsystems for the semiconductor and display capital equipment markets. Products include chemical delivery modules, frame assemblies, gas delivery systems, fluid delivery systems, precision robotics, process modules as well as other high-level assemblies.
The primary competitive factors in our industry are quality, meeting customer timeline requirements, price, technology, design-to-delivery cycle time, customer qualification approvals, and the development of product recipes for cleaning and analytics and 8 historical customer relationships. We anticipate that increased competitive pressures will cause intensified price-based competition and we may have to reduce the prices of our products.
The primary competitive factors in our industry are quality, meeting customer timeline requirements, price, technology, design-to-delivery cycle time, customer qualification approvals, the development of product recipes for cleaning and analytics and historical customer relationships. We anticipate that increased competitive pressures will cause intensified price-based competition and we may have to reduce the prices of our products.
Cho served as Senior Legal Counsel for Samsung SDI, a storage battery manufacturing company, from June 2013 to September 2014 and as Legal Counsel for LG Electronics, an electronics company, from April 2012 to May 2013. Mr. Cho holds a B.A. in English from the University of Michigan and a J.D. from the University of Minnesota Law School. 12
Cho served as Senior Legal Counsel for Samsung SDI, a storage battery manufacturing company, from June 2013 to September 2014 and as Legal Counsel for LG Electronics, an electronics company, from April 2012 to May 2013. Mr. Cho holds a B.A. in English from the University of Michigan and a J.D. from the University of Minnesota Law School.
UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and part and component manufacturing, as well as tool chamber parts cleaning and coating, and micro-contamination analytical services. We report results for two operating segments: Products and Services.
UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and part and component manufacturing, as well as tool chamber parts cleaning and coating, and micro-contamination analytical services. We report results for two segments: Products and Services.
By deepening our integration capabilities, we aim to streamline processes, reduce dependencies, and fortify our position as a leading solutions and service provider in the semiconductor ecosystem. 5 Products We design, develop, prototype, manufacture and test subsystems, primarily for the semiconductor equipment market.
By deepening our integration capabilities, we aim to streamline processes, reduce dependencies, and fortify our position as a leading solutions and service provider in the semiconductor ecosystem. Products We design, develop, prototype, manufacture and test subsystems, primarily for the semiconductor equipment market.
Bentinck served as Vice President 11 and General Manager of the Logic & Memories Technology Group for AIXTRON Inc., a manufacturer of systems and equipment to the semiconductor industry, from April 2014 to November 2017. From August 2006 to March 2014, Mr.
Bentinck served as Vice President and General Manager of the Logic & Memories Technology Group for AIXTRON Inc., a manufacturer of systems and equipment to the semiconductor industry, from April 2014 to November 2017. From August 2006 to March 2014, Mr.
Because our engineers work closely with our customers’ engineers and understand the fabrication, assembly and testing of their products, we often can improve their design for manufacturability, implement automation, thereby reducing their cost and improving their, quality and consistency. • Testing capabilities . We utilize our technical expertise to test and characterize key gas delivery products.
Because our engineers work closely with our customers’ engineers and understand the fabrication, assembly and testing of their products, we often can improve their design for manufacturability and implement automation, thereby reducing their cost and improving their quality and consistency. • Testing capabilities . We utilize our technical expertise to test and characterize key fluid delivery products.
Cho 46 General Counsel and Corporate Secretary James P. Scholhamer joined the Company as Chief Executive Officer and a member of our Board of Directors in January 2015. Prior to joining Ultra Clean, Mr.
Cho 47 General Counsel and Corporate Secretary James P. Scholhamer joined the Company as Chief Executive Officer and a member of our Board of Directors in January 2015. Prior to joining Ultra Clean, Mr.
Our two largest revenue customers in fiscal years 2023, 2022 and 2021 were Applied Materials, Inc. and Lam Research Corporation, each of which accounted for more than 10% of our total revenues in those three years.
Our two largest revenue customers in fiscal years 2024, 2023 and 2022 were Applied Materials, Inc. and Lam Research Corporation, each of which accounted for more than 10% of our total revenues in those three years.
Bentinck served in various roles of increasing responsibility at Novellus Systems, Inc., a provider of advanced process equipment for the global semiconductor industry, from 1991 through August 2006. Mr. Bentinck holds a B.S. in Chemical Engineering, and a M.S. in Engineering – Material Science, from California State Polytechnic University, Pomona. Brian E.
Bentinck served in various roles of increasing responsibility at Novellus Systems, Inc., a provider of advanced process equipment for the 10 Table of Contents global semiconductor industry, from 1991 through August 2006. Mr. Bentinck holds a B.S. in Chemical Engineering, and a M.S. in Engineering – Material Science, from California State Polytechnic University, Pomona. Brian E.
Before joining UCT, Mr. Cook served as Executive Vice President and Chief Marketing Officer of Cypress Semiconductor from March 2017 to April 2020 when the company was acquired for $10 billion by Infineon Technologies AG. Mr. Cook served as Founder, CEO and Adviser at Cauz Colony from June 2015 to December 2018.
Before joining UCT, Mr. Cook served as Executive Vice President and Chief Marketing Officer of Cypress Semiconductor from March 2017 to April 2020 when the company was acquired by Infineon Technologies AG. Mr. Cook served as Founder, CEO and Adviser at Cauz Colony from June 2015 to December 2018.
For our services, cleaning and coating offerings, our main competitors in the US are Pentagon Technologies and Cleanpart, and in South Korea, KoMiCo. For analytical services our primary competitors are Balazs (an Air Liquide company) and Cerium Labs. Some of these competitors have substantially greater financial, technical, manufacturing and marketing resources than UCT.
For our services, cleaning and coating offerings, our main competitors in the U.S. are Pentagon Technologies and Cleanpart, and in South Korea, KoMiCo. For analytical services our primary competitors are Balazs (an Air Liquide company) and Cerium Labs. Some of these competitors have substantially greater financial, technical, manufacturing and marketing resources than UCT.
Our Services segment provides ultra-high purity parts cleaning, process tool part recoating, surface encapsulation and high sensitivity micro contamination analysis primarily for the semiconductor device makers and wafer fabrication equipment (“WFE”) markets. We ship a majority of our products and provide most of our services to U.S. registered customers with locations both in and outside the U.S.
Our Services segment provides ultra-high purity parts cleaning, process tool part recoating, surface encapsulation and high sensitivity micro contamination analysis primarily for the semiconductor device makers and wafer fabrication equipment (“WFE”) markets. We ship a majority of our products and provide most of our services to U.S. registered customers with both domestic and international locations.
McKibben served at ON Semiconductor Corporation, a $6 billion global manufacturer driving innovation in energy efficient electronics, as Chief Information Officer from December 2020 to August 2021, as Vice President, Enterprise Applications from August 2017 to December 2020 and as Senior Director, Enterprise Applications from July 2007 to August 2017.
McKibben served at ON Semiconductor Corporation, global manufacturer driving innovation in energy efficient electronics, as Chief Information Officer from December 2020 to August 2021, as Vice President, Enterprise Applications from August 2017 to December 2020 and as Senior Director, Enterprise Applications from July 2007 to August 2017.
While several customers specify the full system bill of materials, many leverage our design expertise to help them select the appropriate components for their particular system. • Fluid delivery system: A typical OEM liquid delivery system consists of one or more chemical delivery units, comprised of small diameter high purity PFA tubing, filters, flow controllers, regulators, component heaters, and an integrated electronic and/or pneumatic control system.
While several customers specify the full system bill of materials, many leverage our design expertise to help them select the appropriate components for their particular system. 5 Table of Contents • Fluid delivery systems: A typical OEM liquid delivery system consists of one or more chemical delivery units, comprised of small diameter high purity perflouroalkoxy (PFA) tubing, filters, flow controllers, regulators, component heaters, and an integrated electronic and/or pneumatic control system.
Item 1. B usiness Overview Ultra Clean Holdings, Inc., (“UCT”, the “Company” or “We”) is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services primarily for the semiconductor industry.
Item 1. Business Overview Ultra Clean Holdings, Inc., (“UCT”, the “Company” or “We”) is a leading developer and supplier of critical subsystems, components, parts, and ultra-high purity cleaning and analytical services primarily for the semiconductor industry.
Scholhamer served as Corporate Vice President and General Manager of Applied Materials, Inc., leading the Equipment Products Group and Display Services Group of its Global Service Division from February 2011 to January 2015. Mr.
Scholhamer served as Corporate Vice President and General Manager of Applied 9 Table of Contents Materials, Inc., leading the Equipment Products Group and Display Services Group of its Global Service Division from February 2011 to January 2015. Mr.
Palfrey has served as our Senior Vice President of Global Human Resources since May 2021. Prior to joining UCT, Ms. Palfrey served as Senior Vice President, Global Human Resources for Shape Technologies Group, a global leader in the manufacturing process solutions industry with operations in 33 countries worldwide, from December 2015 to April 2020.
Palfrey has served as our Senior Vice President of Global Human Resources since May 2021. Prior to joining UCT, Ms. Palfrey served as Senior Vice President, Global Human Resources for Shape Technologies Group, a global leader in the manufacturing process solutions industry, from December 2015 to April 2020.
Customers that have elected to outsource their gas delivery systems and other critical subsystems including cleaning and analytics, could elect in the future to develop and manufacture these subsystems internally, leading to further competition.
Customers that have elected to outsource their gas delivery systems and other critical subsystems including 7 Table of Contents cleaning and analytics, could elect in the future to develop and manufacture these subsystems internally, leading to further competition.
This website address is intended to be an inactive textual reference only; none of the information contained on our website is part of this report or is incorporated by reference herein. 10 Executive Officers Set forth below is information concerning our executive officers as of March 6, 2024. Name Age Position James P.
This website address is intended to be an inactive textual reference only; none of the information contained on our website is part of this report or is incorporated by reference herein. Executive Officers Set forth below is information concerning our executive officers as of February 21, 2025. Name Age Position James P.
Positively involving employees and giving back to communities is central to UCT’s culture. Supported by the Company, UCT employees contribute directly to the community with their time and resources. In 2023, UCT organized and conducted 31 events designed to give back and support its communities.
Positively involving our employees and giving back to communities is central to our culture. Supported by the Company, our employees contribute directly to the community with their time and resources. In 2024, we organized and conducted 31 events designed to give back and support its communities.
Cho held the position of General Counsel and Corporate Secretary for the North American operations of the world’s second largest memory chip supplier, SK Hynix, Inc., and held the position of Senior Counsel at its corporate headquarters from September 2014 to March 2016. Prior to SK Hynix Inc., Mr.
Cho held the position of General Counsel and Corporate Secretary for the North American operations of SK Hynix, Inc., and held the position of Senior Counsel at its corporate headquarters from September 2014 to March 2016. Prior to SK Hynix Inc., Mr.
UCT offers competitive rewards, compensation and benefits, including an Employee Stock Purchase Plan, healthcare and retirement benefits, parental and family leave, adoption credits, holiday and paid time off, and tuition assistance. UCT uses its annual operating plan and industry growth projections to determine the appropriate level of staffing requirements.
We offer competitive rewards, compensation and benefits, including an Employee Stock Purchase Plan, healthcare and retirement benefits, parental and family leave, adoption credits, holiday and paid time off, and tuition assistance. We use our annual operating plan and industry growth projections to determine the appropriate level of staffing requirements.
Social Responsibility UCT believes that social responsibility is defined as “positively impacting society by ensuring the people we work with are safe and treated with dignity and respect, and by being a good neighbor in the communities in which we operate”. UCT applies its core values to employee engagement inside and outside the Company.
Social Responsibility We believe that social responsibility is defined as “positively impacting society by ensuring the people we work with are safe and treated with dignity and respect, and by being a good neighbor in the communities in which we operate”. We apply our core values to our engagement inside and outside the Company.
Scholhamer 57 Chief Executive Officer and Director Sheri Savage 53 Chief Financial Officer Jeff McKibben 61 Chief Information Officer Chris Cook 55 President, Products Business William C. Bentinck 62 President, Services Business Brian E. Harding 43 Senior Vice President, Chief Accounting Officer Jamie J. Palfrey 56 Senior Vice President, Global Human Resources Paul Y.
Scholhamer 58 Chief Executive Officer and Director Sheri Savage 54 Chief Financial Officer Harjinder Bajwa 58 Chief Operating Officer Jeff McKibben 62 Chief Information Officer Chris Cook 56 President, Products Business William C. Bentinck 63 President, Services Business Brian E. Harding 43 Senior Vice President, Chief Accounting Officer Jamie J. Palfrey 57 Senior Vice President, Global Human Resources Paul Y.
As a group, our respective year’s top two customers accounted for 57.4%, 62.7% and 64.0% of the Company’s revenues for fiscal years 2023, 2022 and 2021, respectively. Approximately 93.2% of our total revenues for the fiscal year 2023 came from multiple segments of the semiconductor industry, which include IDM, Foundry, OEM, and sub-tier suppliers.
As a group, our respective year’s top two customers accounted for 54.5%, 57.4% and 62.7% of the Company’s revenues for fiscal years 2024, 2023 and 2022, respectively. Approximately 94.9% of our total revenues for the fiscal year 2024 came from multiple segments of the semiconductor industry, which include IDM, Foundry, OEM, and sub-tier suppliers.
Staffing levels are aligned and adjusted on occasion throughout the year to ensure UCT meets its customer obligations, in line with any changes in demand, to ensure business continuity.
Staffing levels are aligned and adjusted on occasion throughout the year to ensure we meet our customer obligations, in line with any changes in demand, to ensure business continuity.
We offer our customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and component manufacturing, tool chamber parts cleaning and coating and micro contamination analytical services. We offer our customers: • A vertically integrated solution for complex and highly configurable systems .
We offer our customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and component manufacturing, tool chamber parts cleaning and coating and micro contamination analytical services. Our leadership in the market is enabled by the following customer-centric solutions: • A vertically integrated solution for complex and highly configurable systems .
We design and manufacture heaters, sensors, and controllers for precise temperature control. These products are complementary to our gas delivery systems products. 4 • Parts cleaning and coating and analytical verification : Through our Services business, we offer integrated device manufacturers (“IDM”) validated, ultra-high purity process tool chamber parts cleaning and coating services.
These products are complementary to our gas delivery systems products. • Parts cleaning and coating and analytical verification : Through our Services business, we offer integrated device manufacturers (“IDM”) and OEMs validated, ultra-high purity process tool chamber parts cleaning and coating services.
We also believe that semiconductor original equipment manufacturers (“OEM”) are increasingly relying on partners like UCT to fulfill their expanding capacity requirements. Additionally, we believe that we will continue to benefit as device manufacturers rely on precision cleaning and coating to manufacture ever more complex devices.
We also believe that semiconductor original equipment manufacturers (“OEM”) are increasingly relying on partners like UCT to fulfill their expanding capacity requirements. Additionally, our Services business is benefiting as device manufacturers rely on precision cleaning and coating to produce ever more advanced devices.
UCT’s technical capability is extremely critical and differentiated to ensure high wafer yields and throughput as geometries shrink and density increases. Our Services business development activities are performed primarily in Hillsboro, Oregon; Phoenix, Arizona; Israel and South Korea.
Our Services business works closely with customers to identify and anticipate changes that will be required in next-generation equipment. UCT’s technical capability is extremely critical and differentiated to ensure high wafer yields and throughput as geometries shrink and density increases. Our Services business development activities are performed primarily in Hillsboro, Oregon; Phoenix, Arizona; Israel and South Korea.
Savage also served as Manager, Business Process Risk Accounting, at Arthur Anderson LLP, the former accounting firm, from May 1996 to October 1999. Ms. Savage holds a B.S. in Managerial Economics from the University of California, Davis. Jeff McKibben has served as our Chief Information Officer since August 2021. Prior to joining UCT, Mr.
Savage also served as Manager, Business Process Risk Accounting, at Arthur Anderson LLP, the former accounting firm, from May 1996 to October 1999. Ms. Savage holds a B.S. in Managerial Economics from the University of California, Davis. Harjinder Bajwa joined UCT as Chief Operating Officer in June 2024. Mr.
We utilize our weldment and frame fabrication capabilities together with highly specialized engineering, global supply chain management, and assembly capabilities to produce high performance products that are customized to meet the needs of equipment suppliers and chipmakers. We enable our customers to minimize their overall number of suppliers, simplify their supply chain and reduce their inventories. • Parts and components.
We utilize our weldment and frame fabrication capabilities together with highly specialized engineering, global supply chain management, and 3 Table of Contents assembly capabilities to produce high performance products that are customized to meet the needs of equipment suppliers and chipmakers.
Included in these services are tool part process optimization solutions that can lower the total cost of ownership for our customers. • Micro-contamination analysis : UCT also offers micro-contamination analysis of tool parts, wafers and depositions, chemicals, cleanroom materials, deionized water and airborne molecular contamination and provides analytical verification of process tool chamber part cleaning effectiveness. 6 Customers We sell our products and services primarily to customers in the semiconductor capital equipment and semiconductor integrated device manufacturing industries, and we also sell to the display, consumer, medical, energy, industrial, and research equipment industries.
Included in these services are tool part process optimization solutions that can lower the total cost of ownership for our customers. • Micro-contamination analysis : UCT also offers micro-contamination analysis of tool parts, wafers and depositions, chemicals, cleanroom materials, deionized water and airborne molecular contamination and provides analytical verification of process tool chamber part cleaning effectiveness.
We believe that the skills, experience and industry knowledge of our key employees significantly benefit our operations and performance. The Company strives to provide fair and equal opportunity for career development and advancement to all its employees.
We believe that our success depends on our ability to attract, develop and retain key personnel. We believe that the skills, experience and industry knowledge of our key employees significantly benefit our operations and performance. We strive to provide fair and equal opportunity for career development and advancement to all our employees.
We employ a core engineering strategy with flexible partnering to augment our staff during the demand cycles within the semiconductor industry. • Continue to selectively pursue strategic acquisitions .
In addition, we believe our overseas facilities position us to respond effectively to future business demands. We employ a core engineering strategy with flexible partnering to augment our staff during the demand cycles within the semiconductor industry. • Continue to selectively pursue strategic acquisitions .
See Note 13 to the Notes to Consolidated Financial Statements for further information about our geographic revenues. Our Suite of Offerings We are a leading developer and supplier of critical subsystems, parts, components and ultra-high purity cleaning and analytical services primarily for the semiconductor industry.
Our Suite of Offerings We are a leading developer and supplier of critical subsystems, parts, components and ultra-high purity cleaning and analytical services primarily for the semiconductor industry.
We design and manufacture weldments and frames with exacting standards to meet or exceed our customers’ needs. UCT has over 30 years of experience in the fabrication of complex gas delivery systems which enables us to provide cost competitiveness in our vertical integration model. • Custom thermal control .
UCT has over 30 years of experience in the fabrication of complex gas delivery systems which enables us to provide cost competitiveness in our vertical integration model. • Custom thermal control . We design and manufacture heaters, sensors, and controllers for precise temperature control.
Over the long-term, we believe the semiconductor market we serve will continue to grow due to multi-year industry demand from a broad range of drivers, such as new CPU architectures that enable higher performance servers necessary for cloud, artificial intelligence (“AI”) and machine learning applications.
Over the long-term, we believe the semiconductor market we serve will continue to grow due to multi-year industry demand from a broad range of drivers, such as new device architecture (e.g. gate all around) and memory devices (e.g. high bandwidth memory) necessary for cloud, artificial intelligence (“AI”) and machine learning (“ML”) applications.
Our Customer Business Management organization includes technical sales support for order placement, spare parts quotes, production status updates as well as service and maintenance contracts and analysis business. We have technical relationship representatives located at most of our facilities.
They are responsible for initiating and developing long-term, multi-level relationships and work closely with the customers on new business opportunities. Our Customer Business Management organization includes technical sales support for order placement, spare parts, quotes and production status updates as well as service and maintenance contracts and analysis business. We have technical relationship representatives located at most of our facilities.
We participate in the Responsible Business Alliance’s Responsible Minerals Assurance Process for Tantalum. Our cleaning processes for tantalum-deposited parts recovers the tantalum, enabling it to re-enter the commodity market and reduce the demand for mined material, the majority of which originates from the Conflict Region in Africa.
Our cleaning processes for tantalum-deposited parts recovers the tantalum, enabling it to re-enter the commodity market and reduce the demand for mined material, the majority of which originates from the Conflict Region in Africa. Although cleaning is a chemical-intensive business we utilize chemical-free processing whenever possible to remove significant volumes of deposited material.
Many of our manufacturing facilities use similar processes and procedures enabling us to easily shift production between sites to support expanded demand and ensure business continuity. • Drive profitable growth with our flexible cost structure .
Our manufacturing facilities use similar processes and procedures enabling us to easily shift production between sites to support expanded demand and ensure business continuity. • Drive profitable growth with our flexible cost structure . We implement cost containment and capacity enhancement initiatives throughout the semiconductor demand cycles and benefit from the global presence and efficiencies of our supply chain.
In addition, we have developed an overall infrastructure to provide our customers with service and support 24 hours a day, seven days a week.
In addition, we have developed an overall infrastructure to provide our customers with service and support 24 hours a day, seven days a week. Our dedicated global field service engineers provide customer support through the performance of on-site installation, servicing and repair.
Customer relationship managers also work with customers to identify and meet their cost and design-to-delivery cycle time objectives. IDM Customer relationship managers work with process tool owners and Fab maintenance managers relating to the development and validation of cleaning recipes, addressing new tools cleaning and analytical requirements, and optimizing cleaning processes and analytical testing requirements to support node transitions.
IDM Customer relationship managers work with process tool owners and Fab maintenance managers relating to the development and validation of cleaning recipes, addressing new tools cleaning and analytical requirements, and optimizing cleaning processes and analytical testing requirements to support node transitions. We have dedicated New Business Development managers for both our product and service businesses.
Although some risk of costs and liabilities related to these matters is inherent in our business, we believe that our business is compliant with applicable U.S. and international regulations and laws. However, new, modified or more stringent requirements or enforcement policies could be adopted by governmental agencies, which could affect our business operations.
Our past or future operations may result in injury or claims of injury by employees or the public which may result in material costs and liabilities. Although some risk of costs and liabilities related to these matters is inherent in our business, we believe that our business is compliant with applicable U.S. and international regulations and laws.
Our dedicated global field service engineers provide customer support through the performance of on-site installation, servicing and repair. 7 Technology Development We engage in ongoing technology development efforts to remain a leader for gas delivery systems and to further develop our expertise in other critical subsystems.
Technology Development We engage in ongoing technology development efforts to remain a leader for gas delivery systems and to further develop our expertise in other critical subsystems.
Several of UCT’s facilities are also in low-cost regions, strategically close to our customers, adding to our competitive advantage. • Provide production flexibility to respond rapidly to demand changes.
These facilities house subsystem assembly, weldment and thermal control heater operations and are near the manufacturing facilities of existing and potential customers and their end users. Several of UCT’s facilities are also in low-cost regions, adding to our competitive advantage. • Provide production flexibility to respond rapidly to demand changes.
Our local presence in close proximity to the facilities of most of our OEM customers enables us to remain closely integrated with their design, development and implementation teams. This level of integration enables us to respond quickly and efficiently to customer changes and requests. • Precision fabrication .
We can perform diagnostic tests, design verifications and failure analyses for our customers and suppliers. • Increased integration with OEMs through local presence . Our local presence in close proximity to the facilities of most of our OEM customers enables us to remain closely integrated with their design, development and implementation teams.
Our technology development activities for next-generation gas delivery and other critical subsystems are performed in Hayward, CA and Israel. We are actively developing new technology and processes to maintain our leadership in the cleaning, coating and analytical markets. Our Services business works closely with customers to identify and anticipate changes that will be required in next-generation equipment.
Our technology development activities for next-generation gas delivery and other critical subsystems is supported by our global engineering group, with teams primarily located in the United States, Singapore, Taiwan, the United Kingdom, and Israel. We are actively developing new technology and processes to maintain our leadership in the cleaning, coating and analytical markets.
To minimize packaging waste we have implemented re-use programs with our customers and suppliers for these type of materials. Our past or future operations may result in injury or claims of injury by employees or the public which may result in material costs and liabilities.
These requirements may necessitate the design and fabrication of product-specific crates or the use of plastic cleanroom boxes. To minimize packaging waste we have implemented re-use programs with our customers and suppliers for these type of materials.
Employees and Human Capital As of December 29, 2023, we had 6,657 employees, of which 527 were temporary. Of our total employees, there were 124 in engineering, 21 in technology development, 386 in sales and support, 4,252 in direct manufacturing, 1,221 in indirect manufacturing and 653 in administrative and executive functions.
Of our total employees, there were 130 in engineering, 26 in technology development, 402 in sales and support, 4,877 in direct manufacturing, 1,329 in indirect manufacturing and 741 in administrative and executive functions.
The semiconductor industry has stringent packaging requirements which include the need to maintain the cleanliness of a part/system while providing structural support of heavy modules. These requirements may necessitate the design and fabrication of product-specific crates or the use of plastic cleanroom boxes.
Reduction in the volume of film being chemically removed reduces the amount of chemicals used to meet the target cleanliness specifications. The semiconductor industry has stringent packaging requirements which include the need to maintain the cleanliness of a part/system while providing structural support of heavy modules.
We have made significant investments in advanced analytical and automated test equipment, enabling us to test and qualify key gas delivery sub-systems and components. We can perform diagnostic tests, design verifications and failure analyses for our customers and suppliers. • Increased integration with OEMs through local presence .
We have made significant investments in advanced analytical and automated test equipment, enabling us to test and qualify key fluid delivery sub-systems and components across the entire range of extreme pressures and flows required to support leading-edge technologies.
These figures include 2,993 employees in Asia Pacific and 1,535 employees in EMEA. None of our employees are represented by a labor union and we have not experienced any work stoppages. 9 UCT believes that its employees are its most important assets.
These figures include 3,571 employees in Asia Pacific and 1,584 employees in EMEA. 8 Table of Contents Except where required by local regulations, our employees are not represented by labor unions, nor are they covered by collective bargaining agreements. We have not experienced a significant work stoppage. We believe that our employees are the foundation of our success.
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On October 25, 2023, we acquired 100% of the shares of HIS Innovations Group (“HIS”), a privately held company based in Hillsboro, Oregon. HIS is a leading supplier to the semiconductor sub-fab segment including the design, manufacturing, and integration of components, process solutions, and fully integrated sub-systems.
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Our international revenues represented 73.0%, 69.6% and 68.9% of total revenues for fiscal years ended 2024, 2023 and 2022, respectively. See Note 13 to the Notes to Consolidated Financial Statements for further information about our geographic revenues.
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The purchase price was comprised of initial cash consideration of $46.5 million, subject to customary post-closing adjustments, and up to $70.0 million of additional cash consideration that may be payable subject to the performance of the acquired business during the remainder of fiscal years 2023, 2024, and 2025.
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We enable our customers to minimize their overall number of suppliers, simplify their supply chain and reduce their inventories. • Parts and components.
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The acquisition strengthens our leadership in developing and supplying critical products to the semiconductor industry, and extends our reach into the sub-fab area. In 2022, the Board of Directors approved a share repurchase program authorizing the Company to purchase up to an aggregate of $150.0 million of the Company’s common stock over a three-year period.
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This level of integration enables us to respond quickly and efficiently to customer changes and requests. • Precision fabrication . We design and manufacture weldments and frames with exacting standards to meet or exceed our customers’ needs.
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In fiscal years 2023 and 2022, approximately 1.1 million and 0.3 million shares were repurchased under this program with an aggregate cost of $29.4 million and $12.1 million and an average price of $29.16 and $35.31 per share, respectively. 3 Our international revenues represented 69.6%, 68.9% and 65.1% of total revenues for fiscal years ended 2023, 2022 and 2021, respectively.
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We believe our customers will continue to outsource critical subsystems and that we are well positioned to capture a significant portion of these outsourcing opportunities. We have broadened our portfolio into the sub-fab with the design and manufacturing of components, process solutions and fully integrated sub-systems.
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Similarly, we believe there is room to gain market share with our cleaning and coating services, both with IDMs and OEMs, as customers typically outsource these solutions.
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Customers We sell our products and services primarily to customers in the semiconductor capital equipment and semiconductor integrated device manufacturing industries, and we also sell to the display, consumer, medical, energy, industrial, and research equipment industries.
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These facilities house subsystem assembly, weldment and thermal control heater operations and are near the manufacturing facilities of existing and potential customers and their end users. In Singapore, we have a procurement office and substantial manufacturing capabilities. Many of our manufacturing facilities use similar processes and procedures, enabling us to respond rapidly to demand changes from our customers.
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Customer relationship managers also work with customers to identify and meet their cost and design-to-delivery cycle time 6 Table of Contents objectives.
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We implement cost containment and capacity enhancement initiatives throughout the semiconductor demand cycles and benefit from the global presence and efficiencies of our supply chain. In addition, we believe our overseas facilities position us to respond effectively to future business demands.
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In 2022, UCT became a Founding Member of the Semiconductor Climate Consortium (SCC), the first global alliance of semiconductor ecosystem companies focused on reducing greenhouse gas emissions across the value chain.
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We have dedicated New Business Development managers for both our product and service businesses. They are responsible for initiating and developing long-term, multi-level relationships and work closely with the customers on new business opportunities.
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The SCC’s members are committed to driving climate progress within the semiconductor industry and support the Paris Agreement and related accords aimed at accelerating and intensifying the actions and investments required for a sustainable low-carbon future. We participate in the Responsible Business Alliance’s Responsible Minerals Assurance Process for Tantalum.
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Although cleaning is a chemical-intensive business we utilize chemical-free processing whenever possible to remove significant volumes of deposited material. Reduction in the volume of film being chemically removed reduces the amount of chemicals used to meet the target cleanliness specifications.
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However, new, modified or more stringent requirements or enforcement policies could be adopted by governmental agencies, which could affect our business operations. Employees and Human Capital As of December 27, 2024, we had 7,505 employees, of which 732 were temporary.
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The Company has a long history of embracing diversity, multiculturalism and belonging and is reinforcing a culture of inclusion by committing to even greater transparency, clearer targets and comprehensive training to improve diversity and inclusion within the company to ensure every employee is treated with dignity and respect.
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We are committed to fostering a workplace where every individual feels valued, respected, and empowered to contribute effectively to our business objectives. By reinforcing a culture of mutual respect and trust, we create an environment where all employees can thrive. We provide ongoing education and practical training to ensure our workplace reflects the highest standards of professionalism, respect, and collaboration.
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The goal is to foster an atmosphere of acceptance, inclusion, trust and of mutual respect for all. To reach that goal, UCT provides mandatory practical and continuous education to all employees on behavioral expectations. We believe that UCT’s success depends on our ability to attract, develop and retain key personnel.
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Bajwa has 30 years of global operations expertise, including strategy development and execution, operations improvement and quality control, lean manufacturing and cost management. Most recently, Harjinder was the Chief Operating Officer for Reconext, a leading provider of aftermarket lifecycle services for electronics. Prior, he held various roles with Flex, Ltd. for 27 years.
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From 2011 to 2021, he was the Senior Vice President, Global Operations of the High Reliability Solutions business unit, where he oversaw global operations in Americas, Asia and Europe, and was part of significant growth in the business unit's revenue and operating profits. Mr.
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Bajwa holds a B.S. in Mechanical Engineering from Panjab University and an M.S. in Engineering from San Jose State University. He has also completed executive development programs at the Massachusetts Institute of Technology and Stanford University. Jeff McKibben has served as our Chief Information Officer since August 2021. Prior to joining UCT, Mr.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

75 edited+16 added−4 removed118 unchanged
Biggest changeEffective management of raw materials, work-in-process and finished goods is imperative to keep inventory costs down and maintain or improve gross margins, all the while meeting changing customer requirements. 19 Historically, the industries we serve (in particular the semiconductor capital equipment industry) have been highly cyclical, which makes accurately forecasting customers’ product needs difficult.
Biggest changeInventory is one of the largest assets on our balance sheet, representing 19.8% of our total assets as of December 27, 2024. Effective management of raw materials, work-in-process and finished goods is imperative to keep inventory costs down and maintain or improve gross margins, all the while meeting changing customer requirements.
We generally do not have long-term purchase orders or contracts that contain minimum purchase commitments from our customers. Instead, we typically plan around non-binding volume forecasts we receive from our customers, and we sometimes order and build component inventory in advance of the receipt of actual customer orders.
We generally do not have long-term purchase orders or contracts that contain minimum purchase commitments. Instead, we typically plan around non-binding volume forecasts we receive from our customers, and we sometimes order and build component inventory in advance of the receipt of actual customer orders.
Among the factors that could affect our stock price are: • quarterly variations in our operating results; • our ability to successfully introduce new products and services and manage new product transitions; 25 • changes in revenue or earnings estimates or publication of research reports by analysts; • speculation in the press or investment community; • strategic actions by us, our customers or our competitors, such as acquisitions or restructurings; • announcements relating to any of our key customers, significant suppliers or the semiconductor manufacturing and capital equipment industry generally; • the effects of war and terrorist attacks; • domestic and international economic or political factors unrelated to our performance; and, • the results of our operations not meeting our guidance or analysts’ expectations.
Among the factors that could affect our stock price are: • quarterly variations in our operating results; • our ability to successfully introduce new products and services and manage new product transitions; • changes in revenue or earnings estimates or publication of research reports by analysts; • speculation in the press or investment community; • strategic actions by us, our customers or our competitors, such as acquisitions or restructurings; • announcements relating to any of our key customers, significant suppliers or the semiconductor manufacturing and capital equipment industry generally; • the effects of war and terrorist attacks; • domestic and international economic or political factors unrelated to our performance; and, • the results of our operations not meeting our guidance or analysts’ expectations.
This risk is further exacerbated by the fact that our insurance policies do not cover the losses caused by earthquakes or other natural disasters or power loss. Our Fluid Solutions business operations are concentrated in Israel, where many key employees, offices and some of its production facilities are located.
This risk is further exacerbated by the fact that our insurance policies do not fully cover the losses caused by earthquakes or other natural disasters or power loss. Our Fluid Solutions business operations are concentrated in Israel, where many key employees, offices and some of its production facilities are located.
Similarly, while the cleaning and analytical processes we utilize are proprietary to us, OEMs are looking to increase their maintenance services and could create proprietary cleaning processes with competitors, limiting our ability to compete for future business. 16 Our competitors may have greater financial, technical, manufacturing and marketing resources than we do.
Similarly, while the cleaning and analytical processes we utilize are proprietary to us, OEMs are looking to increase their maintenance services and could create proprietary cleaning processes with competitors, limiting our ability to compete for future business. Our competitors may have greater financial, technical, manufacturing and marketing resources than we do.
We have facilities in areas with above average seismic activity, such as our facilities in Hayward, California, and our Taiwan facilities in Hsinchu and Tainan. We also have experienced fires 21 and extended power outages at our facilities, such as the fire that occurred at a Korean plant operated by our joint venture, Cinos Korea, in 2018.
We have facilities in areas with above average seismic activity, such as our facilities in Hayward, California, and our Taiwan facilities in Hsinchu and Tainan. We also have experienced fires and extended power outages at our facilities, such as the fire that occurred at a Korean plant operated by our joint venture, Cinos Korea, in 2018.
The areas where we face risks include: • management of a larger, more complex and capital intensive combined business, including integrating supply and distribution channels, computer and accounting systems, and other aspects of operations; • exposure to new operational risks, rules, regulations, worker expectations, customs and practices; • inability to complete proposed transactions due to the failure to obtain regulatory or other approvals, litigation or other disputes, and any ensuing obligation to pay a termination fee; • reduction of gross margins and pricing leverage due to the acquired company having the same customer base; • failure to realize expected returns from acquired businesses; • reduction in cash balances or increase in debt obligations to finance the acquisition, which may reduce the availability of cash flow for general corporate or other purposes; • integration of the capabilities of the acquired businesses without reducing the quality of existing products; • incorporation of different financial and reporting controls, processes, systems and technologies into our existing business environment; • unforeseen liabilities, expenses, or other losses associated with the acquisitions for which we do not have recourse under their respective agreements; • the risk of litigation or claims associated with a proposed or completed transaction; • inadequacy or ineffectiveness of an acquired company’s internal financial controls, disclosure controls and procedures, or environmental, health and safety, anti-corruption, human resource or other policies or practices; 14 • performance shortfalls as a result of the diversion of management’s attention from the Company’s operations; • cultural challenges associated with integrating employees from the acquired business into our organization, and incentivization and retention of employees from the businesses we acquire; and • difficulties associated with the retention and transition of new customers and partners into our existing business.
The areas where we face risks include: • management of a larger, more complex and capital intensive combined business, including integrating supply and distribution channels, computer and accounting systems, and other aspects of operations; 12 Table of Contents • exposure to new operational risks, rules, regulations, worker expectations, customs and practices; • inability to complete proposed transactions due to the failure to obtain regulatory or other approvals, litigation or other disputes, and any ensuing obligation to pay a termination fee; • reduction of gross margins and pricing leverage due to the acquired company having the same customer base; • failure to realize expected returns from acquired businesses; • reduction in cash balances or increase in debt obligations to finance the acquisition, which may reduce the availability of cash flow for general corporate or other purposes; • integration of the capabilities of the acquired businesses without reducing the quality of existing products; • incorporation of different financial and reporting controls, processes, systems and technologies into our existing business environment; • unforeseen liabilities, expenses, or other losses associated with the acquisitions for which we do not have recourse under their respective agreements; • the risk of litigation or claims associated with a proposed or completed transaction; • inadequacy or ineffectiveness of an acquired company’s internal financial controls, disclosure controls and procedures, or environmental, health and safety, anti-corruption, human resource or other policies or practices; • performance shortfalls as a result of the diversion of management’s attention from the Company’s operations; • cultural challenges associated with integrating employees from the acquired business into our organization, and incentivization and retention of employees from the businesses we acquire; and • difficulties associated with the retention and transition of new customers and partners into our existing business.
Further, developing new customer relationships, as well as maintaining and increasing our market share with existing customers, requires a 17 substantial investment of our sales, engineering and management resources without any assurance from prospective customers that they will place orders.
Further, developing new customer relationships, as well as maintaining and increasing our market share with existing customers, requires a substantial investment of our sales, engineering and management resources without any assurance from prospective customers that they will place orders.
Any damage to or failure of our systems could result in interruptions in our ability to manufacture or 20 deliver products or services, or adversely impact our ability to accurately and timely report our financial results. Interruptions could reduce our sales and profits, and our systems could be perceived as unreliable.
Any damage to or failure of our systems could result in interruptions in our ability to manufacture or deliver products or services, or adversely impact our ability to accurately and timely report our financial results. Interruptions could reduce our sales and profits, and our systems could be perceived as unreliable.
Our quarterly revenue and operating results, including our gross margin, have fluctuated significantly in the past, and we expect them to continue to fluctuate in the future for a variety of reasons, which may include: • the cyclical nature of the industries we serve that frequently oscillates between downturns and growths; • changes in the timing and size, or cancellation or postponement, of orders by our customers; • strategic decisions by our customers to terminate their outsourcing relationship with us or give market share to our competitors, which may result from decreased demand for our customers’ products by end customers; • strategic consolidation by our customers; • pricing pressure from either our competitors or our customers; • disruptions or delays in the manufacturing of our products or in the supply of components or raw materials; • introduction of new products or services; • delays in production ramp-up, low yields or other problems experienced at our manufacturing facilities; • changes in design-to-delivery cycle times; • inability to reduce our costs quickly, commensurate with reductions in our prices or in response to decreased demand; 24 • changes in our product and/or service mix; • write-offs of excess or obsolete inventory; • one-time expenses or charges associated with failed acquisition negotiations or completed acquisitions; • inability to control our operating costs consistent with target levels; • announcements by our competitors of new products, services or technological innovations; and • geographic mix of customer orders or worldwide earnings.
Our quarterly revenue and operating results, including our gross margin, have fluctuated significantly in the past, and we expect them to continue to fluctuate in the future for a variety of reasons, which may include: • the cyclical nature of the industries we serve that frequently oscillates between downturn and growth; • changes in the timing and size, or cancellation or postponement, of orders by our customers; • strategic decisions by our customers to terminate their outsourcing relationship with us or give market share to our competitors, which may result from decreased demand for our customers’ products by end customers; • strategic consolidation by our customers; • pricing pressure from either our competitors or our customers; • disruptions or delays in the manufacturing of our products or in the supply of components or raw materials; • introduction of new products or services; • delays in production ramp-up, low yields or other problems experienced at our manufacturing facilities; • changes in design-to-delivery cycle times; • inability to reduce our costs quickly, commensurate with reductions in our prices or in response to decreased demand; • changes in our product and/or service mix; • write-offs of excess or obsolete inventory; • one-time expenses or charges associated with failed acquisition negotiations or completed acquisitions; • inability to control our operating costs consistent with target levels; • announcements by our competitors of new products, services or technological innovations; and • geographic mix of customer orders or worldwide earnings.
Customers may cancel order forecasts, change production quantities from forecasted volumes, or delay production for reasons beyond our control, and for which we usually are not entitled to compensation.
Customers may cancel order forecasts, change production quantities from forecasted volumes, or delay production for reasons beyond our control, for which we usually are not entitled to compensation.
Problems with our products may: • cause delays in product introductions and shipments for us or our customers; • result in increased costs and diversion of development resources (for design modifications and others); • cause us to incur increased charges due to unusable inventory; • result in liability for the unintended release of hazardous materials through the defective products, which can cause serious injury or death; • create indemnification and warranty claims for rework, replacement or other damages, which can be significant if our products have already been installed in a fabrication facility; • decrease market acceptance of, or customer satisfaction with, our products; and • result in lower yields for semiconductor manufacturers.
Problems with our products may: • cause delays in product introductions and shipments for us or our customers; • result in increased costs and diversion of development resources (for design modifications and others); • cause us to incur increased charges due to unusable inventory; 18 Table of Contents • result in liability for the unintended release of hazardous materials through the defective products, which can cause serious injury or death; • create indemnification and warranty claims for rework, replacement or other damages, which can be significant if our products have already been installed in a fabrication facility; • decrease market acceptance of, or customer satisfaction with, our products; and • result in lower yields for semiconductor manufacturers.
Some of the suppliers designated by our customers are also our competitors, which presents a special challenge for us to procure the components in sufficient quantity to meet the customer demands. If we, or our suppliers, are unable to procure sufficient quantities of supplies, components or raw materials, our customers could delay or cancel orders or service contracts.
Some of the suppliers designated by our customers are also our competitors, which presents a special challenge for us to procure the components in sufficient quantity to meet the customer demand. If we, or our suppliers, are unable to procure sufficient quantities of supplies, components or raw materials, our customers could delay or cancel orders or service contracts.
Item 1A. Ri sk Factors The following risk factors could materially and adversely affect the Company’s business, financial condition or results of operations and cause reputational harm and should be carefully considered in evaluating the Company and its business, in addition to other information presented elsewhere in this report.
Item 1A. Risk Factors The following risk factors could materially and adversely affect the Company’s business, financial condition or results of operations and cause reputational harm and should be carefully considered in evaluating the Company and its business, in addition to other information presented elsewhere in this report.
While many of our customers are contractually obligated to indemnify us for the costs to defend third party claims arising out of our use of the information provided by the customers, the indemnified amount may not be enough to make us whole, or if our customers refuse to honor its obligations, we could end up in costly litigations both to defend against such third-party claims and to enforce our contractual indemnification rights. 22 We may become involved in litigations and regulatory proceedings, which could require significant attention from our management and result in significant expense to us and disruptions to our business.
While many of our customers are contractually obligated to indemnify us for the costs to defend third party claims arising out of our use of the information provided by the customers, the indemnified amount may not be enough to make us whole, or if our customers refuse to honor its obligations, we could end up in costly litigations both to defend against such third-party claims and to enforce our contractual indemnification rights. 20 Table of Contents We may become involved in litigations and regulatory proceedings, which could require significant attention from our management and result in significant expense to us and disruptions to our business.
Our IDM business is similarly concentrated in a small number of customers, and we compete with in-house capabilities, the OEMs who perform cleaning as part of their service contracts, and other providers of cleaning, coating and analytical services.
Our IDM business is similarly concentrated in a small number of customers, and we compete with their in-house capabilities, those OEMs who perform cleaning as part of their service contracts, and other providers of cleaning, coating and analytical services.
International trade disputes could result in increases in tariffs and other trade restrictions and protectionist measures that could adversely impact our operations and reduce the competitiveness of our products relative to local and global competitors. We could be adversely affected by risks associated with joint ventures, including those in the Asian markets.
International trade disputes could result, and have resulted in the past, in increases in tariffs and other trade restrictions and protectionist measures that could adversely impact our operations and reduce the competitiveness of our products relative to local and global competitors. We could be adversely affected by risks associated with joint ventures, including those in the Asian markets.
Uncertainty regarding the global economy may exacerbate negative trends in business and consumer spending, which may cause our customers to scale back operations, reduce capital expenditures, exit businesses, move capacity to other manufacturers, in-source capacity or file for bankruptcy protection and potentially cease operations.
Uncertainty regarding the global economy may exacerbate negative trends in business and consumer spending, which may cause, and have caused in the past, our customers to scale back operations, reduce capital expenditures, exit businesses, move capacity to other manufacturers, in-source capacity or file for bankruptcy protection and potentially cease operations.
We are continuing the implementation of a company-wide ERP system. This process has been and continues to be complex and time-consuming and we expect to incur additional capital outlays and expenses. This ERP system will replace many of our existing operating and financial systems, which has been and is a major undertaking from a financial management and personnel perspective.
We are continuing the implementation of a company-wide ERP system. This process has been and continues to be complex and time-consuming and we expect to incur additional capital outlays and expenses. This ERP system will replace or interface with our existing operating and financial systems, which has been and is a major undertaking from a financial management and personnel perspective.
This expansion of export license requirements in China has adversely impacted some of our customers with business presence in China, which in turn had an adverse impact on our business. These new regulations may create uncertainty for our operations in China, as the full scope and extent of the new license requirements remain unknown, and may change over time.
This expansion of export license requirements in China has adversely impacted some of our customers with business presence in China, which in turn had an adverse impact on our business. These new regulations created uncertainty for our operations in China, as the full scope and extent of the new license requirements remain uncertain, and may change over time.
Our most recent disclosure was filed on Form SD on May 19, 2023, noting that we could not yet determine whether the conflict minerals we source were, directly or indirectly, used to finance or benefit armed groups in the Democratic Republic of Congo and its adjoining countries.
Our most recent disclosure was filed on Form SD on May 30, 2024, noting that we could not yet determine whether the conflict minerals we source were, directly or indirectly, used to finance or benefit armed groups in the Democratic Republic of Congo and its adjoining countries.
In order to respond to these modifications and deliver our products in a timely manner, we must effectively manage our manufacturing and procurement processes, the failure of which can lead to a loss of business and reputational damage.
In order to respond to these modifications and deliver our products in a timely manner, we must effectively manage our manufacturing and procurement processes, the failure of which can lead to a loss 16 Table of Contents of business and reputational damage.
If we are unable to remediate the material weaknesses, our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the Securities and Exchange Commission, could be adversely affected and could reduce the market’s confidence in our financial statements and harm our stock price.
If we are unable to remediate the material weaknesses, our ability to record, process and report financial information accurately, and to prepare financial statements within the time periods specified by the rules and forms of the SEC, could be adversely affected and could reduce the market’s confidence in our financial statements and harm our stock price.
Also, uncertainty and disruption to our organization as a result of executive management transition could divert the executive management’s attention away from key areas of our business and have a material adverse effect on our business.
Also, uncertainty and disruption to our organization as a 19 Table of Contents result of executive management transition could divert the executive management’s attention away from key areas of our business and have a material adverse effect on our business.
If a supplier, who may not be under any long-term supply obligations, fails to provide the necessary volume of components or raw materials on a timely basis at acceptable prices and quality, we would be forced to identify and qualify alternative sources.
If a supplier, who may not be under any long-term supply obligations, fails to provide the necessary volume of components or raw materials in a timely manner at acceptable prices and quality, we would be forced to identify and qualify alternative sources.
A disruption in our IT systems or a failure of our internal controls could result in delays in receiving inventory and supplies, delays in filling customer orders, incorrect inventory counts, over or under stocking, and loss of inventory. Our customers require our products to undergo a lengthy and expensive qualification process.
A disruption in our IT systems or a failure of our internal controls could result, and have resulted in the past, in delays in receiving inventory and supplies, delays in filling customer orders, incorrect inventory counts, over or under stocking, and loss of inventory. Our customers require our products to undergo a lengthy and expensive qualification process.
Our business is subject to the risks of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by man-made disruptions, such as terrorism.
Our business is subject to the risks of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by man-made disruptions, such as armed conflicts or terrorism.
The process of qualifying new suppliers for complex components and raw materials is lengthy and could delay our production or delivery of services. Fluid Solutions, for example, may be susceptible to experiencing sharp price fluctuations in raw materials, which can significantly affect its cost of revenue and could erode profitability and competitiveness.
The process of qualifying new suppliers for complex components and raw materials is lengthy and could delay our production or delivery of services. Fluid Solutions, for example, is susceptible to experiencing sharp price fluctuations in raw materials, which can significantly affect, and has affected in the past, its cost of revenue and could erode profitability and competitiveness.
Based on our evaluation under the COSO framework as further described under “Item 9A – Controls and Procedures," our management concluded that we did not maintain effective internal control over financial reporting as of December 29, 2023 due to material weaknesses.
Based on our evaluation under the COSO framework as further described under “Item 9A – Controls and Procedures,” our management concluded that we did not maintain effective internal control over financial reporting as of December 27, 2024 due to material weaknesses.
Obtaining these export licenses may be difficult for us and/or our customers, and any delays (or denial) in the approval process could disrupt our supply chains and negatively impact production schedules.
Obtaining these export licenses is likely difficult for us and/or our customers, and any delays (or denial) in the approval process could disrupt our supply chains and negatively impact production schedules.
As long as our indebtedness remains outstanding, the restrictive covenants and mandatory prepayment provisions could impair our ability to expand or pursue our business strategies or obtain additional funding.
As long as our indebtedness remains outstanding, the restrictive 21 Table of Contents covenants and mandatory prepayment provisions could impair our ability to expand or pursue our business strategies or obtain additional funding.
Recently, one of our key suppliers was the target of a ransomware attack, which likely will have a negative impact on our ability to procure the necessary volume of components to meet our projected production level. We may also experience difficulty in obtaining sufficient quantities of components and raw materials in times of growth in our business.
For example, one of our key suppliers was the target of a ransomware attack, which had a negative impact on our ability to procure the necessary volume of components to meet our projected production level. We may also experience difficulty in obtaining sufficient quantities of components and raw materials in times of growth in our business.
If we were required to impair all or part of our goodwill and/or our acquired intangible assets, our net income and net worth could be materially adversely affected. We had $265.2 million of goodwill recorded on our Consolidated Balance Sheet as of December 29, 2023.
If we were required to impair all or part of our goodwill and/or our acquired intangible assets, our net income and net worth could be materially adversely affected. We had $265.3 million of goodwill recorded on our Consolidated Balance Sheet as of December 27, 2024.
Until the remediation plan is implemented, tested, and deemed effective we cannot assure you that our actions will adequately remediate the material weaknesses or that additional material weaknesses in our internal controls will not be identified in the future.
Until the remediation plan is implemented, tested, and deemed effective, we cannot be certain that our actions will adequately remediate the material weaknesses or that no additional material weaknesses in our internal controls will be identified in the future.
We made capital expenditures of approximately $75.8 million and $100.1 million for fiscal years 2023 and 2022, respectively, which are primarily related to investments in our manufacturing facilities in the United States, Ireland and Malaysia and to our ERP system implementation.
We made capital expenditures of approximately $63.5 million and $75.8 million for fiscal years 2024 and 2023, respectively, which are primarily related to investments in our manufacturing facilities in the United States, Ireland and Malaysia and to our ERP system implementation.
For the foreseeable future, therefore, any return on our shareholders’ investment will depend exclusively on the capital appreciation of our common stock. 26
For the foreseeable future, therefore, any return on our shareholders’ investment will depend exclusively on the capital appreciation of our common stock. 24 Table of Contents
Our customers may then be forced to push out, cancel or refrain from placing orders for our products or services. These conditions may also similarly affect key suppliers, impairing their ability to timely deliver components or raw materials.
Our customers may then be forced, and have been forced in the past, to push out, cancel or refrain from placing orders for our products or services. These conditions may also similarly affect, and have affected in the past, key suppliers, impairing their ability to timely deliver components or raw materials.
The extent of the impact of the ongoing trade tension between the United States and China on our sales and operations is difficult to predict. In October 2022, the U.S. Department of Commerce imposed additional license requirements on certain semiconductor goods and technologies sold in China.
We and our customers have significant operations in China. The extent of the impact of the ongoing trade tension between the United States and China on our sales and operations is difficult to predict. In December 2024, the U.S. Department of Commerce imposed additional license requirements on certain semiconductor goods and technologies sold to certain entities in China.
We are subject to examinations of our income tax returns by domestic and foreign tax authorities. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations.
We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our provision for income taxes and have reserved for potential adjustments that may result from these examinations.
Failure to maintain existing or implement new or improved controls, or difficulties encountered in their implementation, could harm our results of operations or cause us to fail to meet our reporting obligations. The Company has begun the process of evaluating the material weaknesses and developing its full remediation plan.
Failure to maintain existing or implement new or improved controls, or difficulties encountered in their implementation, could harm our results of operations or cause us to fail to meet our reporting obligations. We have begun the process of evaluating the material weaknesses and have taken steps toward executing a full remediation plan.
We are exposed to political, economic, legal and other risks associated with operating in Asia and EMEA, including: • foreign currency exchange fluctuations; • political, civil, public health and economic instability; • restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments, import/export restrictions and quotas, and customs duties and tariffs; • uncertainty regarding social, political and trade policies in the United States and abroad; • timing and availability of export licenses; • disruptions due to China’s developing domestic infrastructure, including transportation and energy; • difficulties in developing relationships with local suppliers, attracting new international customers, conducting due diligence with respect to business partners in certain international markets, collecting accounts receivables, and staffing and managing distant international subsidiaries and branch operations; • the burden of complying with foreign and international laws and treaties; • legal systems potentially subject to undue influence or corruption; and • potentially adverse tax consequences, including restrictions on the repatriation of earnings to the United States. 15 Negative or uncertain global conditions could prevent us from accurately forecasting demand for our products and services.
We are exposed to political, economic, legal and other risks associated with operating in Asia and EMEA, including: • foreign currency exchange fluctuations; 13 Table of Contents • political, civil, public health and economic instability, such as the one resulting from the conflict between Israel and Hamas-led groups that started in 2023; • restrictive governmental actions, such as restrictions on the transfer or repatriation of funds and foreign investments, import/export restrictions and quotas, and customs duties and tariffs; • uncertainty regarding social, political and trade policies in the United States and abroad; • timing and availability of export licenses; • disruptions due to developing domestic infrastructure in countries like China, including transportation and energy; • difficulties in developing relationships with local suppliers, attracting new international customers, conducting due diligence with respect to business partners in certain international markets, collecting accounts receivables, and staffing and managing distant international subsidiaries and branch operations; • the burden of complying with foreign and international laws and treaties; • legal systems potentially subject to undue influence or corruption; and • potentially adverse tax consequences, including restrictions on the repatriation of earnings to the United States.
Our top two customers accounted for 57.4%, 62.7% and 64.0% of our revenues for fiscal years 2023, 2022 and 2021, respectively.
Our top two customers accounted for 54.5%, 57.4% and 62.7% of our revenues for fiscal years 2024, 2023 and 2022, respectively.
We expect that management will regularly evaluate potential strategic transactions with its advisors and our Board of Directors in the ordinary course of business.
Our management regularly evaluates potential strategic transactions with its advisors and our Board of Directors in the ordinary course of business.
Finally, even once implemented in a business unit we may not realize the anticipated efficiencies and we may incur additional expenses and efforts post-implementation. 18 We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls which, if not remediated, could adversely affect the accuracy, reliability, and timeliness of our financial reports, our reputation, business operations, and stock price.
We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls which, if not remediated, could adversely affect the accuracy, reliability, and timeliness of our financial reports, our reputation, business operations, and stock price.
We must achieve design wins to retain our existing customers and to obtain new customers. New capital equipment typically has a lifespan of several years, and OEMs frequently specify which systems, subsystems, components and instruments are to be incorporated in their equipment. Once incorporated, the OEM will likely maintain that same composition of products for at least several months.
We must achieve design wins to retain our existing customers and to obtain new customers. New capital equipment typically has a lifespan of several years, and OEMs frequently specify which systems, subsystems, components and instruments are to be incorporated in their equipment.
Our ability to remain profitable and mitigate the impact on our business in periods of decreasing demand depends, in part, upon our ability to: (i) maintain the prices, quality and delivery cycles of our products and services while managing costs by optimizing our inventory levels, (ii) reduce or cancel orders from our suppliers, all without compromising our relationships with such suppliers; and (iii) continue to motivate our employees while reducing our fixed and variable costs through various initiatives, which may include reducing our workforce.
Our ability to remain profitable and mitigate the impact on our business in periods of decreasing demand depends, in part, upon our ability to: (i) maintain the prices, quality and delivery cycles of our products and services while managing costs by optimizing our inventory levels, (ii) reduce or cancel orders from our suppliers, all without compromising our relationships with such suppliers; and (iii) continue to motivate our employees while reducing our fixed and variable costs through various initiatives, which may include reducing our workforce. 11 Table of Contents The limited visibility we have on the future needs of our customers, combined with the cyclical and volatile nature of the industries we serve, makes future revenues, results of operations and net cash flows difficult to estimate.
Even if our stock repurchase program is fully implemented, it may not enhance long-term stockholder value. Also, the amount, timing, and execution of our stock repurchase programs may fluctuate based on our priorities for the use of cash for other purposes and because of changes in cash flows, tax laws, and the market price of our common stock.
Also, the amount, timing, and execution of our stock repurchase programs may fluctuate based on our priorities for the use of cash for other purposes and because of changes in cash flows, tax laws, and the market price of our common stock.
The political, economic and security situation in Israel has a direct impact on our operations there, and a state of war in Israel may harm our ability to supply our products to customers.
The political, economic and security situation in Israel has a direct impact on our operations there, and a state of war in Israel, such as the Gaza war between Israel and Hamas-led groups that started in 2023, may harm, and have harmed, our ability to supply our products to customers.
These new products may have better performance, lower prices and achieve broader market acceptance than our products. Further, since our customers generally own the designs and other intellectual property to the products we manufacture on their behalf, we cannot prevent them from licensing such designs and other intellectual property to our competitors for the manufacture of such products.
Further, since our customers generally own the designs and other intellectual property to the products we manufacture on their behalf, we cannot prevent them from licensing such designs and other intellectual property to our competitors for the manufacture of such products.
We believe that OEMs and IDMs often consider long-term relationships in selecting and placing orders, which could mean we may have difficulty achieving design wins from OEMs and IDMs that are not our current customers. Operational Risks Our dependence on our suppliers may prevent us from delivering an acceptable product on a timely basis.
We believe that OEMs and IDMs often consider long-term relationships in selecting and placing orders, which could mean we may have difficulty achieving design wins from OEMs and IDMs that are not our current customers.
The carrying amount of our fixed assets in Asia Pacific and EMEA were $132.6 million and $80.1 million, respectively as of December 29, 2023, and $129.1 million and $76.2 million, respectively as of December 30, 2022.
The carrying amount of our fixed assets in Asia Pacific and EMEA were $121.0 million and $84.5 million, respectively as of December 27, 2024, and $132.6 million and $80.1 million, respectively as of December 29, 2023.
As a result of the foregoing, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful and that these comparisons may not be an accurate indicator of our future performance. Changes in the timing or terms of a small number of transactions could disproportionately affect our operating results in any particular quarter.
As a result of the foregoing, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful and that these comparisons may not be an accurate indicator of our future performance.
As of December 29, 2023, we have gross debt of $485.3 million. Such debt is composed of a $479.3 million term loan outstanding under our credit agreement with Barclays Bank and $6.0 million under credit facilities at Fluid Solutions less unamortized debt costs of $6.5 million.
As of December 27, 2024, we have gross debt of $499.7 million. Such debt is composed of a $493.8 million term loan outstanding under our credit agreement with Barclays Bank and $5.9 million under credit facilities at Fluid Solutions less unamortized debt costs of $7.2 million.
For many of the components and raw materials we use in our products and services, we rely on both single-source and sole-source suppliers, many of whom have been specifically designated by our customers.
Operational Risks Our dependence on our suppliers may prevent us from delivering an acceptable product on a timely basis. For many of the components and raw materials we use in our products and services, we rely on both single-source and sole-source suppliers, many of whom have been specifically designated by our customers.
We may then be forced to procure components or raw materials from higher-cost suppliers or reconfigure the design and manufacture of our products or services, which may eventually lead to our failure to fill customer orders. Recent inflationary trends have had, and could continue to have, a negative impact on many aspects of our cost structure.
We will then be forced to procure components or raw materials from higher-cost suppliers or reconfigure the design and manufacture of our products or services, which may eventually lead, and have led in the past, to our failure to fill customer orders.
Consolidation among our customers, or a decision by any one or more of our customers to outsource all or most manufacturing, assembly, cleaning, coating and analytical services work to a single equipment manufacturer, may further concentrate our business in a limited number of customers and expose us to increased risks relating to dependence on an even smaller number of customers. 13 Our customers also exert a significant amount of negotiating leverage over us, which may force us to accept lower operating margins, increased liability risks or changes in our operations in order to retain their business.
Consolidation among our customers, or a decision by any one or more of our customers to outsource all or most of manufacturing, assembly, cleaning, coating and analytical services work to a single OEM, may further concentrate our business in a limited number of customers and expose us to increased risks relating to dependence on an even smaller number of customers.
If we do not keep pace with developments in the industries we serve and with technological innovation generally, our products may not be competitive. Rapid technological innovation in the markets we serve requires us to anticipate and respond quickly to evolving customer requirements and could render our current product or service offerings and technology obsolete. Technological innovations are inherently complex.
Rapid technological innovation in the markets we serve (for example, the recent proliferation of artificial intelligence) requires us to anticipate and respond quickly to evolving customer requirements and could render our current product or service offerings and technology obsolete. Technological innovations are inherently complex.
If we underestimate customer demand or if such demand exceeds our manufacturing capacity or available raw materials, we may lose sales opportunities and market share and potentially damage our relationships with customers.
We also often face long lead times from our suppliers, which may be longer than the lead times provided to us by our customers. If we underestimate customer demand or if such demand exceeds our manufacturing capacity or available raw materials, we may lose sales opportunities and market share and potentially damage our relationships with customers.
In addition, from time to time in the future, our joint venture partners may have economic or business interests that are different from ours. If each joint venture business does not progress according to our plans and anticipated timing, our investment in the joint ventures may not be successful.
In addition, from time to time in the future, our joint venture partners may have economic or business interests that are different from ours.
Any environmental contamination at any of our production facilities could result in substantial liabilities. Our facilities use substances regulated under various foreign, federal, state and local environmental laws and regulations.
Our facilities use substances regulated under various foreign, federal, state and local environmental laws and regulations.
If we are unable to meet our debt obligations as they come due, we could be forced to restructure or refinance such obligations, seek additional equity financing, incur additional debt or sell assets, which we may not be able to do on satisfactory terms, if at all. 23 Our credit agreement contains certain covenants that restrict our ability to take certain actions, including incurring additional debt, providing guarantees, creating liens, making certain investments, engaging in transactions with affiliates and engaging in certain mergers and acquisitions.
If we are unable to meet our debt obligations as they come due, we could be forced to restructure or refinance such obligations, seek additional equity financing, incur additional debt or sell assets, which we may not be able to do on satisfactory terms, if at all.
We have established and, as circumstances may require, intend to expand our operations globally, which exposes us to risks associated with operating in foreign countries. We generated approximately 69.6% and 68.9% of our revenues in international markets for fiscal years 2023 and 2022, respectively. Depending on market conditions, we intend to further expand our operations in Asia Pacific and EMEA.
We generated approximately 73.0% and 69.6% of our revenues in international markets for fiscal years 2024 and 2023, respectively. Depending on market conditions, we intend to further expand our operations in Asia Pacific and EMEA.
Although we seek to maintain sufficient inventory of materials to guard against interruptions in supply and meet our customers’ needs, we may experience shortages of certain key materials, particularly in times of high industry demand. We also often face long lead times from our suppliers, which may be longer than the lead times provided to us by our customers.
The industries we serve have been highly cyclical, which makes accurately forecasting customers’ needs difficult. Although we seek to maintain sufficient inventory of materials to guard against interruptions in supply and meet our customers’ needs, we may experience shortages of certain key materials, particularly in times of high industry demand.
Without notice, these government authorities may continue or alter these policies to our detriment, including imposition of confiscatory taxation policies, new restrictions on currency conversion, and limitations on sources of supply.
Over the past several years, some foreign government authorities, including those in China and South Korea, have pursued economic reform policies by promoting local businesses and local economic activity. Without notice, these government authorities may continue or alter these policies to our detriment, including imposition of confiscatory taxation policies, new restrictions on currency conversion, and limitations on sources of supply.
We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value. We have a stock repurchase program under which we are authorized to repurchase our common stock. Our repurchase program may be suspended or terminated at any time.
If this occurs, we would expect to experience an immediate and significant decline in the trading price of our common stock. We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value. We have a stock repurchase program under which we are authorized to repurchase our common stock.
The stock markets in general, and the markets for technology stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. Changes in tax rates or tax assets and liabilities could affect results of operations.
The stock markets in general, and the markets for technology stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.
In addition, because many of our costs are fixed in the short term, we could experience deterioration in our gross profit and operating margins when our sales volume declines. We hold our customers’ parts on our premises and any significant damage or loss to these parts could cause our operating results to suffer.
In addition, because many of our costs are fixed in the short term, we 17 Table of Contents could experience, and have experienced in the past, deterioration in our gross profit and operating margins when our sales volume declines.
IDMs typically establish cleaning, coating, and analytical services as they develop and qualify new chip designs for production. Once a cleaned or coated part has been qualified, the refurbishment processes used to clean or coat the qualified part will likely continue to be used.
Once a cleaned or coated part has been qualified, the refurbishment processes used to clean or coat the qualified part will likely continue to be used.
As a global company, we are subject to taxation in the United States and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities.
These broad market fluctuations may adversely affect the trading price of our common stock. 23 Table of Contents Changes in tax rates or tax assets and liabilities could affect results of operations. As a global company, we are subject to taxation in the United States and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities.
The industries in which we participate are highly competitive and rapidly evolving. We face intense competition from subsystem and component manufacturers in the industries we serve. Increased competition has and could result, in price reductions, reduced gross margins or loss of market share. Competitors may introduce new products in the markets currently being served by our products.
Increased competition could result, and has resulted in the past, in price reductions, reduced gross margins or loss of market share. Competitors may introduce new products in the markets currently being served by our products. These new products may have better performance, lower prices and achieve broader market acceptance than our products.
Similar events may occur again to our material detriment. Legal and Regulatory Risks Growing uncertainties with U.S. trade policies and export regulations with regard to China have adversely impacted and could continue to adversely impact us. We and our customers have significant operations in China.
In addition, our suppliers experiencing natural disasters may not be able to provide sufficient components or raw materials in a timely manner, which can cause disruptions in our operations. Legal and Regulatory Risks Growing uncertainties with U.S. trade policies and export regulations with regard to China have adversely impacted and could continue to adversely impact us.
These laws are complex and require us to obtain export licenses, a failure of which could expose us to fines, penalties and export ban. The U.S. Department of Commerce continually updates and often expands the list of entities, to whom U.S. companies cannot sell certain products without a license from the Department of Commerce.
Our operations in Asia Pacific and EMEA are subject to U.S. regulations governing equipment export. These laws are complex and require us to obtain export licenses, a failure of which could expose us to fines, penalties and export ban. The U.S.
In addition, a shift in the mix of orders from our customers away from low-cost markets to higher cost markets could adversely affect our operating margins. Our operations in Asia Pacific and EMEA are subject to U.S. regulations governing equipment export.
Negative or uncertain global conditions could prevent us (and have prevented us in the past) from accurately forecasting demand for our products and services. In addition, a shift in the mix of orders from our customers away from low-cost markets to higher cost markets could adversely affect our operating margins.
While it is uncertain whether the U.S. will enact legislation to adopt Pillar Two, certain countries in which we operate have adopted legislation and other countries are in the process of introducing legislation to implement Pillar Two. It is possible that such measures, if adopted, may adversely affect our provision for income taxes.
While it is uncertain whether the U.S. will enact legislation to adopt Pillar Two, certain countries in which we operate have adopted certain provisions of Pillar Two including Czechia and Korea though the impact to our fiscal year 2025 effective tax rate and cash flow is not expected to be material.
Moreover, our operating results in one or more future quarters may fail to meet our guidance or the expectations of securities analysts or investors. If this occurs, we would expect to experience an immediate and significant decline in the trading price of our common stock.
Changes in the timing or terms of a small number of transactions could disproportionately affect our operating results in any particular 22 Table of Contents quarter. Moreover, our operating results in one or more future quarters may fail to meet our guidance or the expectations of securities analysts or investors.
Removed
The limited visibility we have on the future needs of our customers, combined with the cyclical and volatile nature of the industries we serve, makes future revenues, results of operations and net cash flows difficult to estimate.
Added
Our customers also exert a significant amount of negotiating leverage over us, which may force us to accept lower operating margins, increased liability risks or changes in our operations in order to retain their business.
Removed
These rules and regulatory changes could have material adverse impact on the result of our operations. Over the past several years, some foreign government authorities, including those in China and South Korea, have pursued economic reform policies by promoting local businesses and local economic activity.
Added
Recent inflationary trends have had, and could continue to have, a negative impact on many aspects of our cost structure. We have established and, as circumstances may require, intend to expand our operations globally, which exposes us to risks associated with operating in foreign countries.
Removed
Inventory is one of the largest assets on our balance sheet, representing 20.1% of our total assets as of December 29, 2023.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeIn the normal course of our monitoring process, upon identifying certain vulnerabilities within our business and information systems during a recent security assessment, our information security team, in close collaboration with a third-party expert, promptly began to remediate these vulnerabilities to prevent any potential compromise of our systems or data.
Biggest changeIn the normal course of our monitoring process, our information security team also regularly conducts penetration testing of our business and information systems in close collaboration with a third-party expert, and promptly remediates identified vulnerabilities to prevent any potential compromise of our systems or data.
In the event of an incident, we are prepared to follow the steps outlined in these playbooks, from initial detection to mitigation, as well as notification to all appropriate functions, including the senior management and the Board.
In the event of an incident, we are prepared to follow the steps outlined in these playbooks, from initial detection to mitigation, as well as notification to all appropriate functions, including senior management and the Board.
In addition, the Board and the Compensation Committee review and approve the key performance indicators applicable to all management personnel responsible for effectively managing cybersecurity risk management programs at UCT, and engage in regular review of the Company’s performance against those indicators. 27 We continue to face cybersecurity risks related to our business.
In addition, the Board and the Compensation Committee review and approve the key performance indicators applicable to all management personnel responsible for effectively managing cybersecurity risk management programs at UCT, and engage in regular review of the Company’s performance against those indicators. We continue to face cybersecurity risks related to our business.
We have deployed various protocols as part of a larger preventive framework against cyber threats, including advanced security technologies and services, firewalls outfitted with cutting-edge capabilities, layers of encryption protocols, Identity and Access Management (“IAM”) controls, and muti-factor authentication.
We have deployed various protocols as part of a larger preventive framework against cyber threats, including advanced security technologies and services, firewalls outfitted with cutting-edge capabilities, layers of encryption protocols, Identity and Access Management (“IAM”) controls, security monitoring tools, and multi-factor authentication.
While these risks have yet to materially affect us, we cannot guarantee that our ongoing and increasingly robust approach towards cybersecurity will be able to prevent cybersecurity incidents that could have a material adverse effect on us.
While these risks have yet to materially affect us, we cannot guarantee that our ongoing and increasingly robust approach towards cybersecurity will be able to prevent 25 Table of Contents cybersecurity incidents that could have a material adverse effect on us.
Led by our Chief Information Security Officer (“CISO”), and under the oversight of our Board of Directors, we have implemented processes to assess, identify, manage and report cybersecurity risks, which, together with our broader business continuity plans, aim to not only address immediate response to cybersecurity incidents but also ensure swift restoration of critical systems and the maintenance of core business functions in the face of digital threats.
Led by our Chief Information Security Officer (“CISO”), who has over 20 years of experience in information security and technology leadership, and under the oversight of our Board of Directors, we have implemented processes to assess, identify, manage and report cybersecurity risks, which, together with our broader business continuity plans, aim to not only address immediate response to cybersecurity incidents but also ensure swift restoration of critical systems and the maintenance of core business functions in the face of digital threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. P roperties UCT’s headquarters is located in Hayward, California. This facility provides administrative, sales and support, engineering and technology development and manufacturing operations. This lease expires in 2027. The Company has manufacturing and engineering facilities in California, Texas, Arizona, Israel, Oregon, China, Malaysia, Singapore, United Kingdom, Philippines and Czech Republic.
Biggest changeItem 2. Properties UCT’s headquarters is located in Hayward, California. This facility provides administrative, sales and support, engineering and technology development and manufacturing operations. This lease expires in 2027. The Company has manufacturing and engineering facilities in California, Texas, Arizona, Israel, Oregon, China, Malaysia, Singapore, the United Kingdom, Philippines and Czechia.
The Company has parts cleaning, analytics and engineering facilities in Colorado, Arizona, California, Oregon, Maine, Texas, Ireland, Israel, Taiwan, South Korea, Singapore and China. These facilities have leases that expire on various dates through 2038 and are subject to periodic changes. We also own buildings and land that are located in South Korea, China and the United Kingdom.
The Company has parts cleaning, analytics and engineering facilities in Colorado, Arizona, California, Oregon, Maine, Texas, Ireland, Israel, Taiwan, South Korea, Singapore and China. These facilities have leases that expire on various dates through 2084 and are subject to periodic changes. We also own buildings and land that are located in South Korea, China and the United Kingdom.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−0 removed1 unchanged
Biggest changeAlthough the outcome of the various legal proceedings and claims cannot be predicted with certainty, we have not had a history of outcomes to date that have been material to our statement of operations and do not believe that any of these proceedings or other claims will have a material adverse effect on our consolidated financial condition or results of operations.
Biggest changeAlthough the outcome of the various legal proceedings and claims cannot be predicted with certainty, we have not had a history of outcomes to date that have been material to our consolidated statement of operations and do not believe that any of these proceedings or other claims will have a material adverse effect on our consolidated financial condition or results of operations.
Added
On June 7, 2024, UCT received a subpoena from the SEC related to the material weaknesses identified in our 2022 and 2023 Forms 10-K and the change of our independent auditors. We are fully cooperating with the SEC investigation. We cannot predict the duration, scope, or outcome of this matter at this time.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased Average Price Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (In millions) December 31, 2022 — January 27, 2023 389,299 $ 33.12 389,299 $ 125.0 January 28, 2023 — February 24, 2023 — — — $ 125.0 February 25, 2023 — March 31, 2023 43,387 $ 29.67 43,387 $ 123.7 April 1, 2023 — April 28, 2023 159,180 $ 28.67 159,180 $ 119.1 April 29, 2023 — May 26, 2023 177,683 $ 27.84 177,683 $ 114.2 May 27, 2023 — June 30, 2023 — — — $ 114.2 July 1, 2023 — July 28, 2023 — — — $ 114.2 July 29, 2023 — August 25, 2023 — — — $ 114.2 August 26, 2023 — September 29, 2023 — — — $ 114.2 September 30, 2023 — October 27, 2023 176,606 $ 23.90 176,606 $ 110.0 October 28, 2023 — November 24, 2023 62,762 $ 24.04 62,762 $ 108.5 November 25, 2023 — December 29, 2023 — — — $ 108.5 Stock Price Performance Graph The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
Biggest changeStock Price Performance Graph The following stock performance graph and related information shall not be deemed “soliciting material” or “filed” with the Securities and Exchange Commission, nor shall such information be incorporated by reference into any future filings under the Securities Act of 1933 or the Exchange Act, each as amended, except to the extent that we specifically incorporate it by reference into such filing.
The following stock performance graph compares the cumulative total stockholder returns during the period from December 28, 2018 to December 29, 2023, of our common stock to the NASDAQ Composite Index and the RDG Semiconductor Composite Index. The comparison assumes $100 was invested on December 28, 2018, in our common stock and in each of the foregoing indices.
The following stock performance graph compares the cumulative total stockholder returns during the period from December 27, 2019 to December 27, 2024, of our common stock to the NASDAQ Composite Index and the RDG Semiconductor Composite Index. The comparison assumes $100 was invested on December 27, 2019, in our common stock and in each of the foregoing indices.
Item 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters, and Issuer Purchases of Equity Securities Stock Exchange Listing Our common stock has been traded on the NASDAQ Global Market under the symbol “UCTT” since March 25, 2004. As of February 20, 2024, there were six holders of record of UCTT common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Stock Exchange Listing Our common stock has been traded on the NASDAQ Global Market under the symbol “UCTT” since March 25, 2004. As of February 21, 2025, there were five holders of record of UCTT common stock.
The stock performance shown on the following graph represents historical stock performance and is not necessarily indicative of future stock price performance. 29 The following table sets forth for the periods indicated the high and low sales prices per share of our common stock as reported by the NASDAQ Global Market: High Low Fiscal year 2022 First quarter $ 60.49 $ 37.72 Second quarter $ 41.41 $ 26.61 Third quarter $ 36.23 $ 25.19 Fourth quarter $ 39.10 $ 23.32 Fiscal year 2023 First quarter $ 38.84 $ 29.01 Second quarter $ 39.15 $ 26.59 Third quarter $ 40.80 $ 28.04 Fourth quarter $ 35.54 $ 22.15
The stock performance shown on the following graph represents historical stock performance and is not necessarily indicative of future stock price performance. 27 Table of Contents The following table sets forth for the periods indicated the high and low sales prices per share of our common stock as reported by the NASDAQ Global Market: High Low Fiscal year 2023 First quarter $ 38.84 $ 29.01 Second quarter $ 39.15 $ 26.59 Third quarter $ 40.80 $ 28.04 Fourth quarter $ 35.54 $ 22.15 Fiscal year 2024 First quarter $ 49.25 $ 31.01 Second quarter $ 50.51 $ 38.16 Third quarter $ 56.47 $ 32.33 Fourth quarter $ 41.84 $ 32.08
This program may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of common stock.
This program may be suspended or discontinued at any time and does not obligate the Company to acquire any amount of common stock. No shares were repurchased under this program in fiscal 2024.
Removed
In fiscal 2023, pursuant to a trading plan designed to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, approximately 1.1 million shares were repurchased under this program with an aggregate cost of $29.4 million and an average price of $29.16 per share.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

60 edited+15 added−14 removed43 unchanged
Biggest changeGeneral and Administrative Year Ended December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 Change 2021 General and administrative $ 162.0 (12.1 ) % $ 184.3 7.4 % $ 171.6 General and administrative as a percentage of total revenues 9.3 % 7.8 % 8.2 % General and administrative expenses decreased $22.3 million in fiscal year 2023 over fiscal year 2022, primarily driven by decreases in stock-based compensation expense of $7.1 million, in other employee related costs of $4.5 million, in amortization of intangible assets acquired through business combinations of $6.1 million, in spending for certain third party professional services of $3.7 million and in depreciation expense of $3.5 million partially offset by increases in acquisition and restructuring related costs of $6.0 million.
Biggest changeGeneral and Administrative Year Ended (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 General and administrative $ 179.5 10.8% $ 162.0 (12.1)% $ 184.3 General and administrative as a percentage of total revenues 8.6 % 9.3 % 7.8 % General and administrative expenses increased $17.5 million in fiscal year 2024 over fiscal year 2023, primarily driven by increases in spending for certain third party professional services of $5.8 million, stock-based compensation expense of $4.4 million, amortization of intangible assets acquired through business combinations of $3.6 million, in addition to a combination of other factors, none of which were individually significant. 34 Table of Contents Interest and Other Income (Expense), net Year Ended (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 Interest income $ 4.8 17.1% $ 4.1 355.6% $ 0.9 Interest expense $ (46.5) (4.7)% $ (48.8) 44.0% $ (33.9) Other income (expense), net $ 17.7 n/m $ (1.8) (300.0)% $ 0.9 n/m - not meaningful Interest income increased $0.7 million in fiscal year 2024 over fiscal year 2023 due to higher interest income earned on cash and cash equivalent balances attributed to higher interest rates in the current period.
It is possible that changes in such circumstances, or in the variables associated with the judgments, assumptions and estimates used in assessing fair value, would require us to record a non-cash impairment charge. 33 Results of Operations Fiscal Year Our fiscal year is the 52 or 53 week period ending on the Friday nearest December 31.
It is possible that changes in such circumstances, or in the variables associated with the judgments, assumptions and estimates used in assessing fair value, would require us to record a non-cash impairment charge. Results of Operations Fiscal Year Our fiscal year is the 52 or 53 week period ending on the Friday nearest December 31.
UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and part and component manufacturing, as well as tool chamber parts cleaning and coating, and micro-contamination analytical services. We report results for two operating segments: Products and Services.
UCT offers its customers an integrated outsourced solution for major subassemblies, improved design-to-delivery cycle times, design for manufacturability, prototyping and part and component manufacturing, as well as tool chamber parts cleaning and coating, and micro-contamination analytical services. We report results for two segments: Products and Services.
Under the Credit Facilities, the Company may elect that the Term Loan bear interest at a rate per annum equal to either (a) “ABR” (as defined in the Credit Agreement), plus the applicable margin or (b) the “Eurodollar Rate” (as defined in the Credit Agreement), based on SOFR, plus the applicable margin.
Under the Credit Agreement, the Company may elect that the Term Loan bear interest at a rate per annum equal to either (a) “ABR” (as defined in the Credit Agreement), plus the applicable margin or (b) the “Eurodollar Rate” (as defined in the Credit Agreement), based on SOFR, plus the applicable margin.
We also believe that semiconductor original equipment manufacturers (“OEM”) are increasingly relying on partners like UCT to fulfill their expanding capacity requirements. Additionally, our Services business is benefiting as device manufacturers rely on precision cleaning and coating to achieve ever more complex devices.
We also believe that semiconductor original equipment manufacturers (“OEM”) are increasingly relying on partners like UCT to fulfill their expanding capacity requirements. Additionally, our Services business is benefiting as device manufacturers rely on precision cleaning and coating to achieve ever more advanced devices.
If changes occur in the assumptions underlying our tax planning strategies or in the scheduling of the reversal of our deferred tax liabilities, the valuation allowance may need to be adjusted in the future. The Company remitted earnings from one of its subsidiaries in Singapore in 2023.
If changes occur in the assumptions underlying our tax planning strategies or in the scheduling of the reversal of our deferred tax liabilities, the valuation allowance may need to be adjusted in the future. The Company remitted earnings from one of its subsidiaries in Singapore in 2024.
If we raise additional funds through the issuance of equity or convertible debt securities, our stockholders’ equity interest will be diluted and these securities might have rights, preferences and privileges senior to those of our current stockholders. We may also require the consent of our new lenders to raise additional funds through equity or debt financings.
If we raise additional funds through the issuance of equity or convertible debt securities, our stockholders’ equity interest will be diluted and these securities might have rights, preferences and privileges senior to 36 Table of Contents those of our current stockholders. We may also require the consent of our new lenders to raise additional funds through equity or debt financings.
The fair value of our long-term debt was based on Level 2 inputs, and fair value was determined using quoted prices for similar liabilities in inactive markets. The carrying value of our long-term debt approximates fair value.
The fair value of the Company’s long-term debt was based on Level 2 inputs, and fair value was determined using quoted prices for similar liabilities in inactive markets. The Company’s carrying value approximates fair value for the Company’s long term-debt.
Our Services segment provides ultra-high purity parts cleaning, process tool part recoating, surface encapsulation and high sensitivity micro contamination analysis primarily for the semiconductor device makers and wafer fabrication equipment (“WFE”) markets. We ship a majority of our products and provide most of our services to U.S. registered customers with locations both in and outside the U.S.
Our Services segment provides ultra-high purity parts cleaning, process tool part recoating, surface encapsulation and high sensitivity micro contamination analysis primarily for the semiconductor device makers and wafer fabrication equipment (“WFE”) markets. We ship a majority of our products and provide most of our services to U.S. registered customers with both domestic and international locations.
The applicable margin for the Term Loan is equal to a rate per annum to either (i) at any time that the Company’s corporate family rating is Ba3 (with a stable outlook) or higher from Moody’s and BB- (with a stable outlook) or higher from S&P, (x) 3.50% for such Eurodollar term loans and (y) 2.50% for such ABR term loans or (ii) at all other times, (x) 3.75% for such Eurodollar term loans and (y) 2.75% for such ABR term loans.
The applicable margin for the Term Loan is equal to a rate per annum to either (i) at any time that the Company’s corporate family rating is Ba3 (with a stable outlook) or higher from Moody’s and BB (with a stable outlook) or higher from S&P, (x) 3.00% for such Eurodollar term loans and (y) 2.00% for such ABR term loans or (ii) at all other times, (x) 3.25% for such Eurodollar term loans and (y) 2.25% for such ABR term loans.
Recently Issued and Adopted Accounting Pronouncement For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on UCT’s Consolidated Financial Statements, see Note 1, “Organization and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements.
Recently Issued and Adopted Accounting Pronouncement For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on UCT’s Consolidated Financial Statements, see Note 1, “Organization and Significant Accounting Policies,” of the Notes to Consolidated Financial Statements. 38 Table of Contents
Interest on the Term Loan is payable on (1) in the case of such ABR term loans, the last day of each calendar quarter and (2) in the case of such Eurodollar term loans, the last day of each relevant interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period.
Interest on the Term Loan is payable on (1) in the case of such ABR term loans, the last day of each calendar quarter 37 Table of Contents and (2) in the case of such Eurodollar term loans, the last day of each relevant interest period and, in the case of any interest period longer than three months, on each successive date three months after the first day of such interest period.
Our potential liability arising out of intellectual property infringement claims by any third party is generally uncapped. As of December 29, 2023, we have not incurred significant costs to defend lawsuits or settle claims related to these indemnification arrangements. As a result, we believe the estimated fair value of these arrangements is minimal.
Our potential liability arising out of intellectual property infringement claims by any third party is generally uncapped. As of December 27, 2024 , we have not incurred significant costs to defend lawsuits or settle claims related to these indemnification arrangements. As a result, we believe the estimated fair value of these arrangements is minimal.
In assessing our future taxable income, we have considered all sources of future taxable income available to realize our deferred tax assets, including the taxable income from future reversal of existing temporary differences, carry forwards, and tax-planning strategies.
In assessing our future taxable income, we have considered all sources of future taxable income available to realize our deferred tax assets, including the taxable income from future reversal of existing temporary differences, carryforwards, and tax-planning strategies.
We consider certain accounting policies related to revenue recognition, inventory valuation, accounting for income taxes, business combinations, valuation of goodwill, intangible assets and long-lived assets to be critical policies due to the estimates and judgments involved in each. 31 Revenue Recognition Our revenues for fiscal years 2023, 2022 and 2021, were highly concentrated with a small number of OEM customers in the semiconductor capital equipment industry.
We consider certain accounting policies related to revenue recognition, inventory valuation, accounting for income taxes, business combinations, valuation of goodwill, intangible assets and long-lived assets to be critical policies due to the estimates and judgments involved in each. 29 Table of Contents Revenue Recognition Our revenues for fiscal years 2024, 2023 and 2022, were highly concentrated with a small number of OEM customers in the semiconductor capital equipment industry.
A discussion regarding our financial condition and results of operations for fiscal 2022, compared to fiscal 2021, can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 30, 2022, filed with the SEC on February 28, 2023, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at www.uct.com/investors.
A discussion regarding our financial condition and results of operations for fiscal 2023, compared to fiscal 2022, can be found under Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 29, 2023, filed with the SEC on February 27, 2024, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at www.uct.com/investors.
GAAP suggest that we review our recent cumulative income/loss as well as determine our ability to generate sufficient future taxable 32 income to realize our net deferred tax assets.
GAAP suggests that we review our recent cumulative income/loss as well as determine our ability to generate sufficient future taxable income to realize our net deferred tax assets.
Research and Development Year Ended December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 Change 2021 Research and development $ 28.3 (0.7 ) % $ 28.5 16.3 % $ 24.5 Research and development as a percentage of total revenues 1.6 % 1.2 % 1.2 % 35 Research and development expenses consist primarily of activities related to new component testing and evaluation, test equipment and fixture development, product design, the advancement of cleaning and coating and analytical processes, and other product-development activities.
Research and Development Year Ended (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 Research and development $ 28.3 —% $ 28.3 (0.7)% $ 28.5 Research and development as a percentage of total revenues 1.3 % 1.6 % 1.2 % Research and development expenses consist primarily of activities related to new component testing and evaluation, test equipment and fixture development, product design, the advancement of cleaning and coating and analytical processes, and other product-development activities.
In both segments, costs of revenue as a percent of revenue increased as certain fixed costs remain regardless of volume.
In both segments, costs of revenue as a percent of revenue decreased as certain fixed costs remain regardless of volume.
No assurance can be given that additional financing will be available or that, if available, such financing can be obtained on terms favorable to our stockholders and us. As of December 29, 2023, we had undistributed earnings of approximately $491.0 million from our foreign subsidiaries that are indefinitely invested outside of the U.S.
No assurance can be given that additional financing will be available or that, if available, such financing can be obtained on terms favorable to our stockholders and us. As of December 27, 2024, we had undistributed earnings of approximately $555.0 million from our foreign subsidiaries that are indefinitely invested outside of the U.S.
As of December 29, 2023, the total U.S. and foreign valuation allowances for deferred tax assets were $49.8 million and $8.1 million, respectively. Our ability to realize deferred tax assets depends on our ability to generate sufficient future taxable income.
The total U.S. and foreign valuation allowances for deferred tax assets were $79.1 million and $17.2 million, respectively as of December 27, 2024, and $49.8 million and $8.1 million, respectively as of December 29, 2023. Our ability to realize deferred tax assets depends on our ability to generate sufficient future taxable income.
Sales and Marketing Year Ended December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 Change 2021 Sales and marketing $ 51.8 (4.8 ) % $ 54.4 12.9 % $ 48.2 Sales and marketing as a percentage of total revenues 3.0 % 2.3 % 2.3 % Sales and marketing expenses consist primarily of salaries and commissions paid to our sales employees, salaries paid to our engineers who partner with sales and service employees to help determine the components and configuration requirements for new products and other costs related to the sales of our products.
Sales and Marketing Year Ended (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 Sales and marketing $ 57.3 10.6% $ 51.8 (4.8)% $ 54.4 Sales and marketing as a percentage of total revenues 2.7 % 3.0 % 2.3 % Sales and marketing expenses consist primarily of salaries and commissions paid to our sales employees, salaries paid to our engineers who partner with sales and service employees to help determine the components and configuration requirements for new products and other costs related to the sales of our products.
The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.
We recognize liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any.
Fiscal years 2023 and 2022, each contained 52 weeks . Fiscal year 2021, contained 53 weeks. A discussion regarding our financial condition and results of operations for fiscal 2023, compared to fiscal 2022, is presented below. The results of operations for 2023, and the discussion below reflect two months of activity resulting from the acquisition of HIS.
Fiscal 2024, 2023 and 2022 each contained 52 weeks . 31 Table of Contents A discussion regarding our financial condition and results of operations for fiscal 2024, compared to fiscal 2023, is presented below. The results of operations for 2023, and the discussion below reflect two months of activity resulting from the acquisition of HIS.
Research and development expenses were generally consistent in fiscal year 2023 compared to fiscal year 2022.
Research and development expenses were consistent in fiscal year 2024 compared to fiscal year 2023.
The Company has no plans to remit other foreign earnings other than possibly from a subsidiary in Singapore. We may change our intent to reinvest certain of our undistributed foreign earnings indefinitely, which could require us to accrue or pay taxes on some or all of these undistributed earnings.
With the possible exception of this Singapore subsidiary, the Company has no plans to remit other foreign earnings. We may change our intent to reinvest certain of our undistributed foreign earnings indefinitely, which could require us to accrue or pay taxes on some or all of these undistributed earnings.
Gross Margin Year Ended Gross Profit by Segment December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 Change 2021 Products $ 211.1 (41.8 ) % $ 362.4 11.4 % $ 325.2 Services 66.2 (35.5 ) % 102.6 (2.1 ) % 104.8 Gross profit $ 277.3 (40.4 ) % $ 465.0 8.1 % $ 430.0 Gross Margin by Segment Products 14.1 % 17.5 % 18.0 % Services 28.4 % 34.2 % 33.5 % Total Company 16.0 % 19.6 % 20.5 % Gross profit and gross margins fluctuate with revenue levels, product mix, material costs, and labor costs.
Gross Margin Year Ended Gross Profit by Segment (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 Products $ 284.0 34.5% $ 211.1 (41.8)% $ 362.4 Services 72.3 9.2% 66.2 (35.5)% 102.6 Gross profit $ 356.3 28.5% $ 277.3 (40.4)% $ 465.0 Gross Margin by Segment Products 15.3 % 14.1 % 17.5 % Services 29.6 % 28.4 % 34.2 % Total Company 17.0 % 16.0 % 19.6 % Gross profit and gross margins fluctuate with revenue levels, product mix, material costs, and labor costs.
As of December 29, 2023, we have cash of approximately $228.0 million in our foreign subsidiaries. Borrowing Arrangements December 29, December 30, 2023 2022 (Dollars in millions) Amount Weighted- Average Interest Rate Amount Weighted- Average Interest Rate U.S.
As of December 27, 2024, we have cash of approximately $273.1 million in our foreign subsidiaries. Borrowing Arrangements December 27, 2024 December 29, 2023 (Dollars in millions) Amount Weighted- Average Interest Rate Amount Weighted- Average Interest Rate U.S.
During fiscal year 2023, net cash used for investing activities primarily consisted of $75.8 million related to purchases of property, plant and equipment and $46.1 million related to an acquisition.
During fiscal year 2023 , net cash used for investing activities primarily consisted of $75.8 million related to purchases of property, plant and equipment and $46.1 million related to an acquisition. • Cash provided by financing activities was $9.8 million in fiscal year 2024 compared to cash used of $69.9 million in fiscal year 2023 .
For fiscal year 2023, our effective tax rate differs from 21.0% primarily due to the valuation allowance in the U.S. and earnings in our foreign subsidiaries subject to local statutory tax rates.
For fiscal year 2024, our effective tax rate was higher than the federal statutory rate of 21.0% primarily due to the valuation allowance in the U.S. and earnings in our foreign subsidiaries subject to local statutory tax rates.
In fiscal year 2023, we factored $7.5 million under this arrangement. We anticipate that our existing cash and cash equivalents balance and operating cash flow will be sufficient to service our indebtedness and meet our working capital requirements and technology development projects for at least the next twelve months.
We anticipate that our existing cash and cash equivalents balance and operating cash flow will be sufficient to service our indebtedness and meet our working capital requirements and technology development projects for at least the next twelve months.
The Company was in compliance with all financial covenants during the year ended December 29, 2023. The Company has a credit agreement with a local bank in the Czech Republic that provides for a revolving credit facility in the aggregate of up to 7.0 million euros (approximately $7.8 million).
The Company was in compliance with all financial covenants as of the fiscal year ended December 27, 2024. The Company has a credit agreement with a local bank in the Czechia that provides for a revolving credit facility in the aggregate of up to 7.0 million euros (approximately $7.3 million).
For the year ended December 29, 2023, the Company concluded that a full valuation allowance against its U.S. federal and state net deferred tax assets continues to be necessary. The Company also concluded that some of its foreign deferred tax assets acquired as part of the QGT and Ham-Let acquisitions required a valuation allowance.
For the year ended December 27, 2024, the Company concluded that a full valuation allowance against its U.S. federal and state net deferred tax assets continues to be necessary. The Company also concluded that some of its foreign deferred tax assets require a valuation allowance.
Cost of Services revenues consists of direct labor, manufacturing overhead and materials (such as chemicals, gases and consumables). Cost of services revenues decreased $30.3 million in fiscal 2023 compared to the prior year driven by lower volumes of service orders, resulting in decrease in labor costs (the largest component of Cost of Services) and lower material costs.
Cost of Services revenues consists of direct labor, manufacturing overhead and materials (such as chemicals, gases and consumables). Cost of services revenues increased $4.9 million in fiscal 2024 compared to the prior year driven by higher volumes of service orders, resulting in increase in material costs and overhead costs.
The $88.7 million increase in net cash from operating activities was driven by a $264.6 million favorable change in net working capital offset in part by a decrease of $72.6 million in net income and by a decrease of $103.3 million from non-cash items. • The major contributors to the net change in operating assets and liabilities, net of effects of acquisition, in fiscal year 2023 were as follows: o Accounts receivable decreased $78.5 million primarily due to timing of shipments and collections, inventories and prepaid expenses decreased $80.8 million and $12.5 million, respectively. o Accounts payable decreased $61.5 million, income taxes payable decreased $5.2 million, accrued compensation and related benefits decreased $5.6 million and other liabilities decreased $7.9 million, primarily due to the timing of payments. • Cash used in investing activities was $119.7 million in fiscal year 2023 compared to $96.2 million in fiscal year 2022.
The $70.9 million decrease in net cash from operating activities was driven by a $127.0 million on unfavorable change in net working capital and by a decrease of $0.6 million from non-cash items offset in part by $56.7 million increase in net income. • The major contributors to the net change in operating assets and liabilities, net of effects of acquisition, in fiscal year 2024 were as follows: ◦ Accounts receivable increased $60.3 million primarily due to timing of shipments and collections, inventories and prepaid expenses increased $6.5 million and $3.2 million, respectively due to increased production levels. ◦ Accounts payable increased $26.4 million, income taxes payable increased $1.0 million, accrued compensation and related benefits increased $2.4 million and other liabilities increased $1.3 million, primarily due to the timing of payments. • Cash used in investing activities was $63.5 million in fiscal year 2024 compared to $119.7 million in fiscal year 2023 .
Operating profit and operating margin of Services decreased in fiscal year 2023 compared to fiscal year 2022, due to lower gross profit resulting from reduced customer demand.
Operating profit and operating margin of Services increased in fiscal year 2024 compared to fiscal year 2023 primarily due to the higher gross profit resulting from increased customer demand.
At December 29, 2023, the Company had an outstanding amount under the Term Loan of $479.3 million, gross of unamortized debt issuance costs of $6.5 million. As of December 29, 2023, the interest rate on the outstanding Term Loan was 9.2%.
At December 27, 2024, the Company had an outstanding amount under the Term Loan of $493.8 million, gross of unamortized debt issuance costs of $7.2 million. As of December 27, 2024, the interest rate on the outstanding Term Loan was 7.8%.
Over the long-term, we believe the semiconductor market we serve will continue to grow due to multi-year industry demand from a broad range of drivers, such as new CPU architectures that enable higher performance servers necessary for cloud, artificial intelligence (“AI”) and Machine Learning applications.
Over the long-term, we believe the semiconductor market we serve will continue to grow due to multi-year industry demand from a broad range of drivers, such as new process architecture (e.g. gate all around) and memory devices (e.g. high bandwidth memory) necessary for cloud, artificial intelligence (“AI”) and machine learning (“ML”) applications.
The Credit Agreement requires the Company to maintain certain financial covenants including a consolidated fixed charge coverage ratio (as defined in the Credit Agreement) as of the last day of any fiscal quarter of at least 1.25 to 1.00, and a consolidated leverage ratio (as defined in the Credit Agreement) as of the last day of any fiscal quarter of no greater than 3.75 to 1.00.
The Credit Agreement requires the Company to maintain certain financial covenants including a consolidated fixed charge coverage ratio and a consolidated leverage ratio (as defined in the Credit Agreement) as of the last day of any fiscal quarter. The Company currently has no revolving loans outstanding under the Credit Agreement.
As of December 29, 2023, the Company’s total bank debt was $478.8 million, net of unamortized debt issuance costs of $6.5 million. As of December 29, 2023, the Company had $146.1 million, $12.5 million and $7.8 million available to draw from our credit facilities in the U.S., Israel and Czech Republic, respectively.
As of December 27, 2024, the Company’s total bank debt was $492.5 million, net of unamortized debt issuance costs of $7.2 million. As of December 27, 2024, the Company had $146.5 million, $0.1 million and $7.3 million available to draw from its credit facilities in the U.S., Israel and Czechia, respectively.
Cash Flows Year Ended December 29, December 30, December 31, (In millions) 2023 2022 2021 Operating activities $ 135.9 $ 47.2 $ 211.6 Investing activities (119.7 ) (96.2 ) (404.8 ) Financing activities (69.9 ) (56.0 ) 460.8 Effects of exchange rate changes on cash and cash equivalents 1.9 (2.7 ) (1.4 ) Net increase (decrease) in cash and cash equivalents $ (51.8 ) $ (107.7 ) $ 266.2 37 Our primary cash inflows and outflows were as follows: • We generated net cash from operating activities of $135.9 million in fiscal year 2023, compared to $47.2 million in fiscal year 2022.
Liquidity and Capital Resources Cash and cash equivalents The following table summarizes our cash and cash equivalents: Year Ended (In millions) December 27, 2024 December 29, 2023 Increase Total cash and cash equivalents $ 313.9 $ 307.0 $ 6.9 The increase in cash and cash equivalents in fiscal year 2024, compared to fiscal year 2023, was primarily due to cash provided by operating and financing activities of $65.0 million and $9.8 million, respectively offset by cash used in investing activities of $63.5 million. 35 Table of Contents Cash Flows Year Ended (In millions) December 27, 2024 December 29, 2023 December 30, 2022 Operating activities $ 65.0 $ 135.9 $ 47.2 Investing activities (63.5) (119.7) (96.2) Financing activities 9.8 (69.9) (56.0) Effects of exchange rate changes on cash and cash equivalents (4.4) 1.9 (2.7) Net increase (decrease) in cash and cash equivalents $ 6.9 $ (51.8) $ (107.7) Our primary cash inflows and outflows were as follows: • We generated net cash from operating activities of $65.0 million in fiscal year 2024 , compared to $135.9 million in fiscal year 2023 .
Cost of Revenues Year Ended Cost of revenues by Segment December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 Change 2021 Products $ 1,290.5 (24.6 ) % $ 1,712.3 15.8 % $ 1,478.7 Services 166.7 (15.4 ) % 197.0 2.1 % 192.9 Total Cost of revenues $ 1,457.2 (23.7 ) % $ 1,909.3 14.2 % $ 1,671.6 Products cost as a percentage of total Products revenues 85.9 % 82.5 % 82.0 % Services cost as a percentage of total Services revenues 71.6 % 65.8 % 64.8 % 34 Total cost of revenues decreased $452.1 million in fiscal year 2023 over fiscal year 2022, due to lower demand for both Products and Services driven by reduced spending within the semiconductor industry globally.
International revenues increased compared to the prior year primarily as a result of market improvement driving higher customer demand. 32 Table of Contents Cost of Revenues Year Ended Cost of revenues by Segment (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 Products $ 1,569.7 21.6% $ 1,290.5 (24.6)% $ 1,712.3 Services 171.6 2.9% 166.7 (15.4)% 197.0 Total Cost of revenues $ 1,741.3 19.5% $ 1,457.2 (23.7)% $ 1,909.3 Products cost as a percentage of total Products revenues 84.7 % 85.9 % 82.5 % Services cost as a percentage of total Services revenues 70.4 % 71.6 % 65.8 % Total cost of revenues increased $284.1 million in fiscal year 2024 over fiscal year 2023, due to higher demand for both Products and Services driven by higher customer spending within the semiconductor industry globally.
Cost of Products revenues consists of purchased materials, direct labor and manufacturing overhead. Cost of products revenues decreased $421.8 million for fiscal 2023 compared to fiscal 2022, due to lower volume of sales driving decreased material costs, lower direct labor spending, unfavorable absorption of overhead costs and lower freight costs.
Cost of Products revenues consists of purchased materials, direct labor and manufacturing overhead. Cost of products revenues increased $279.2 million for fiscal 2024 compared to fiscal 2023. The increase was due to higher sales volume driving increased material costs of $241.0 million, higher direct labor spending of $24.4 million, and unfavorable absorption of overhead costs of $13.8 million.
Discussion of Results of Operations Revenues Year Ended Revenues by Segment December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 Change 2021 Products $ 1,501.6 (27.6 ) % $ 2,074.7 15.0 % $ 1,803.9 Services 232.9 (22.3 ) % 299.6 0.6 % 297.7 Total revenues $ 1,734.5 (26.9 ) % $ 2,374.3 13.0 % $ 2,101.6 Products as a percentage of total revenues 86.6 % 87.4 % 85.8 % Services as a percentage of total revenues 13.4 % 12.6 % 14.2 % Total Products and Services revenues decreased $639.8 million in fiscal year 2023 over fiscal year 2022, primarily due to weaker demand in the semiconductor industry driven largely by macroeconomic and geopolitical factors.
Discussion of Results of Operations Revenues Year Ended Revenues by Segment (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 Products $ 1,853.7 23.4% $ 1,501.6 (27.6)% $ 2,074.7 Services 243.9 4.7% 232.9 (22.3)% 299.6 Total revenues $ 2,097.6 20.9% $ 1,734.5 (26.9)% $ 2,374.3 Products as a percentage of total revenues 88.4 % 86.6 % 87.4 % Services as a percentage of total revenues 11.6 % 13.4 % 12.6 % Products revenues increased $352.1 million in fiscal year 2024 over fiscal year 2023, primarily due to an increase in customer demand, along with an overall market improvement in the semiconductor industry and in part due to the acquisition of HIS in October 2023.
As of December 29, 2023, we maintained full valuation allowances on our U.S. federal and state and certain of our foreign deferred tax assets in the amount of $57.9 million as we believe it is more likely than not that these deferred tax assets will not be realized.
As of December 27, 2024, we maintained a full valuation allowance on our U.S. federal and state and on certain of our foreign deferred tax assets in the amount of $96.3 million as we believe it is more likely than not that these deferred tax assets will not be realized. 30 Table of Contents In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws.
As of December 29, 2023, the Company had no outstanding amount under this revolving credit facility. Fluid Solutions has credit facilities with various financial institutions in Israel that provides borrowings of up to $18.5 million. As of December 30, 2022, Fluid Solutions had $6.0 million of outstanding debt with interest rate ranges from 7.6% to 8.4%.
As of December 27, 2024, no debt was outstanding under this revolving credit facility. Fluid Solutions has a credit facility with a financial institution in Israel that provides borrowing up to $6.0 million. As of December 27, 2024, Fluid Solutions had a $5.9 million outstanding balance under this facility with interest rate of 6.7%.
Capital Expenditures Capital expenditures were $75.8 million for the year ended December 29, 2023 and were primarily attributable to the capital invested in our manufacturing facilities worldwide as well as costs associated with the ongoing design and implementation of our new enterprise resource planning system. 40 Contractual Obligations The Company had commitments to various third parties to purchase inventories and property, plant and equipment totaling approximately $352.4 million on December 29, 2023.
Capital Expenditures Capital expenditures were $63.5 million for the year ended December 27, 2024 and were primarily attributable to the capital invested in our manufacturing facilities worldwide as well as costs associated with the ongoing design and implementation of our new enterprise resource planning system.
The revolving credit facility has an available commitment of $150.0 million and a maturity date of February 27, 2025. The Company pays a quarterly commitment fee in arrears equal to 0.25% of the average daily available commitment outstanding.
The Company pays a quarterly commitment fee in arrears equal to 0.25% of the average daily available commitment outstanding. Outstanding letters of credit reduce the availability of the revolving credit facility and, as of December 27, 2024, the Company had $146.5 million, net of $3.5 million of outstanding letters of credit, available under this revolving credit facility.
During fiscal year 2022, net cash used for investing activities primarily consisted of $100.1 million for purchases of property, plant and equipment. • Cash used in financing activities was $69.9 million in fiscal year 2023 compared to $56.0 million in fiscal year 2022.
During fiscal year 2024 , net cash used for investing activities primarily consisted of $63.5 million related to purchases of property, plant and equipment.
The Term Loan has a maturity date of August 27, 2025, with monthly interest payments in arrears, quarterly principal payments of 0.625% of the outstanding principal balance as of March 31, 2021, with the remaining principal paid upon maturity.
The Company pays monthly interest payments in arrears and quarterly principal payments of 0.625% of the outstanding principal balance as of October 8, 2024, with the remaining principal paid upon maturity. The revolving credit facility has an available commitment of $150.0 million and a maturity date of August 27, 2027.
Operating Margin Year Ended Operating Profit by Segment December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 Change 2021 Products $ 29.9 (66.9 ) % $ 90.4 (41.4 ) % $ 154.3 Services 5.3 (82.3 ) % 30.0 (4.4 ) % 31.4 Operating profit $ 35.2 (70.8 ) % $ 120.4 (35.2 ) % $ 185.7 Operating Margin by Segment Products 2.0 % 4.4 % 8.6 % Services 2.3 % 10.0 % 10.5 % Total Company 2.0 % 5.1 % 8.8 % Operating profit and operating margin of Products decreased in fiscal year 2023 compared to fiscal year 2022, primarily due to decreases in business volumes and customer demands offset partially by the absence of net loss on divestitures.
Services gross profit increased in fiscal year 2024 compared to fiscal year 2023 due to higher revenue levels. 33 Table of Contents Operating Margin Year Ended Operating Profit by Segment (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 Products $ 79.4 165.6% $ 29.9 (66.9)% $ 90.4 Services 11.8 122.6% 5.3 (82.3)% 30.0 Operating profit $ 91.2 159.1% $ 35.2 (70.8)% $ 120.4 Operating Margin by Segment Products 4.3 % 2.0 % 4.4 % Services 4.8 % 2.3 % 10.0 % Total Company 4.3 % 2.0 % 5.1 % Operating profit and operating margin of Products increased in fiscal year 2024 compared to fiscal year 2023 primarily due to increases in business volumes and customer demand partially offset by increases in share-based compensation expense, in outside service spending, and in the amortization of intangible assets in conjunction with the acquisition of HIS.
We believe we have sufficient capital to fund our working capital needs, satisfy our debt obligations, maintain our existing capital equipment, purchase new capital equipment and make strategic acquisitions from time to time. As of December 29, 2023, we had cash and cash equivalents of $307.0 million compared to $358.8 million as of December 30, 2022.
During fiscal year 2023 , net cash provided by financing activities primarily consisted of debt repayment of $38.6 million and $29.4 million of shares repurchased. We believe we have sufficient capital to fund our working capital needs, satisfy our debt obligations, maintain our existing capital equipment, purchase new capital equipment and make strategic acquisitions from time to time.
Year Ended Revenues by Geography December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 (1) Change 2021 United States $ 526.8 (28.6 ) % $ 738.0 0.5 % $ 734.4 International 1,207.7 (26.2 ) % 1,636.3 19.7 % 1,367.2 Total revenues $ 1,734.5 (26.9 ) % $ 2,374.3 13.0 % $ 2,101.6 Unites States as a percentage of total revenues 30.4 % 31.1 % 34.9 % International as a percentage of total revenues 69.6 % 68.9 % 65.1 % (1) Subsequent to the original issuance of the Company’s 2022 Consolidated Financial Statements, management identified an immaterial disclosure error related to revenues shipped locally and internationally.
Year Ended Revenues by Geography (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 United States $ 566.5 7.5% $ 526.8 (28.6)% $ 738.0 International 1,531.1 26.8% 1,207.7 (26.2)% 1,636.3 Total revenues $ 2,097.6 20.9% $ 1,734.5 (26.9)% $ 2,374.3 United States as a percentage of total revenues 27.0 % 30.4 % 31.1 % International as a percentage of total revenues 73.0 % 69.6 % 68.9 % Revenues by geographic area are categorized based on the customer’s location to which the products were shipped or services were performed.
Other income (expense), net, decreased $2.7 million in fiscal year 2023 over fiscal year 2022, due to the loss from the change of the fair value of contingent earn-out of $2.0 million. 36 Provision for Income Taxes Year Ended December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 Change 2021 Provision for income taxes $ 10.9 (71.2 ) % $ 37.9 35.8 % $ 27.9 Effective tax rate (96.5 ) % 42.9 % 18.1 % The change in tax rates in fiscal year 2023 reflects, primarily, the changes in the geographic distribution of our worldwide earnings and the changes in our net deferred tax asset realization assessment as a result of taxable temporary differences assumed in connection with the HIS acquisition.
Provision for Income Taxes Year Ended (Dollars in millions) December 27, 2024 Percent Change December 29, 2023 Percent Change December 30, 2022 Provision for income taxes $ 32.7 200.0% $ 10.9 (71.2)% $ 37.9 Effective tax rate 48.7 % -96.5 % 42.9 % The change in tax rates in fiscal year 2024 reflects, primarily, the changes in the geographic distribution of our worldwide earnings.
Outstanding letters of credit reduce the availability of the revolving credit facility and, as of December 29, 2023, the Company had $146.1 million, net of $3.9 million of outstanding letters of credit, available under this revolving credit facility. The letter of credit facility has an available commitment of $50.0 million and a maturity date of August 27, 2025.
The letter of credit facility has an available commitment of $50.0 million and a maturity date of August 27, 2027.
Products and Services gross profit and gross margin decreased in fiscal year 2023 over fiscal year 2022, primarily due to lower revenue levels and lower factory utilization.
Products gross profit and gross margin increased in fiscal year 2024 compared to fiscal year 2023 due to higher revenue levels, product shift and volume shift from higher to lower cost regions.
Our cash and cash equivalents, cash generated from operations and borrowings under our term loan described below, were our principal sources of liquidity as of December 29, 2023. 38 We have an existing factoring arrangement with a financial institution in which a portion of its accounts receivable are sold on a nonrecourse basis.
We have an existing factoring arrangement with a financial institution in which a portion of its accounts receivable are sold on a nonrecourse basis. As of December 27, 2024, there were outstanding customer invoices amounting to $6.7 million that we factored under this arrangement.
As of December 29, 2023, the Company had $3.9 million of outstanding letters of credit and $46.1 million of available commitments remaining under the letter of credit facility. 39 On June 29, 2023, the Company entered into a Fourth Amendment (the “Fourth Amendment”) to the Credit Agreement to replace the LIBOR-based reference interest rate option with a reference interest option based upon Term SOFR under the Credit Agreement.
As of December 27, 2024, the Company had $3.5 million of outstanding letters of credit and $46.5 million of available commitments remaining under the letter of credit facility.
Interest expense increased $14.9 million in fiscal year 2023 over fiscal year 2022 due to a higher interest rates.
Interest expense decreased $2.3 million in fiscal year 2024 over fiscal year 2023 due to lower interest rates and due to lower amortization of debt issuance costs due to debt modification.
Term Loan $ 479.3 8.8 % $ 515.0 5.5 % Fluid Solutions Debt Facilities 6.0 9.4 % 9.0 4.2 % Debt issuance costs (6.5 ) (10.2 ) $ 478.8 $ 513.8 On March 31, 2021, the Company entered into a Second Amendment (the “Second Amendment”) to the Credit Agreement to, among other things, (i) refinance and reprice $272.8 million of existing Term Loan borrowings that will remain outstanding and (ii) obtain a $355.0 million senior secured incremental term loan B facility ((i) and (ii) collectively the “Term Loan”) with Barclays Bank, which increased the amount of term loan indebtedness outstanding under the Company’s Credit Facilities.
Term Loan $ 493.8 8.7 % $ 479.3 8.8 % Fluid Solutions Debt Facilities 5.9 7.4 % 6.0 9.4 % Debt issuance costs (7.2) (6.5) $ 492.5 $ 478.8 On April 4, 2024, the Company entered into a Sixth Amendment (the “Sixth Amendment”) to the Credit Agreement dated as of August 27, 2018 (as amended as of October 1, 2018, March 31, 2021, August 19, 2022, June 29, 2023 and July 27, 2023 (the “Existing Credit Agreement”), and the Existing Credit Agreement as further amended by the Sixth Amendment, the “Credit Agreement”).
Removed
In addition, the calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. We recognize liabilities for uncertain tax positions based on a two-step process.
Added
Services revenues increased $11.0 million in fiscal year 2024 over fiscal year 2023, primarily due to increase in demand across its customer base.
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See Note 13 to the Notes to Consolidated Financial Statements for more information on the impact of this correction. Revenues by geographic area are categorized based on the customer’s location to which the products were shipped or services were performed.
Added
The increase in U.S. revenues in fiscal year 2024 compared to fiscal year 2023 was primarily due to the acquisition of HIS in October 2023, whose customers are primarily U.S. based.
Removed
Both U.S. and foreign revenues decreased in fiscal 2023 over fiscal 2022, primarily as a result of the global slowdown in semiconductor industry resulting in less demand for our products and services.
Added
Sales and marketing expenses increased $5.5 million in fiscal year 2024 over fiscal year 2023, due to an increase in headcount.
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Sales and marketing expenses decreased $2.6 million in fiscal year 2023 over fiscal year 2022, due to the decreases in compensation costs and related employee benefits and in spending for certain third party professional services.
Added
Other income (expense), net, decreased $19.5 million in fiscal year 2024 over fiscal year 2023, due to the gain from the change of the fair value of contingent earn-out of $31.0 million offset partially by the $4.0 million of debt financing costs and by $7.0 million unfavorable foreign exchange transactions and remeasurements.
Removed
These restructuring costs primarily reflect employee severance costs and facilities consolidation costs to improve efficiencies in our operational activities and to reduce redundancies. Net Loss on Divestitures In 2022, the Company sold four of its non-semiconductor operating subsidiaries of Fluid Solutions.
Added
During fiscal year 2024 , net cash provided by financing activities primarily due to the $23.5 million net cash proceeds from the amended credit agreement, a decrease of $28.4 million in principal payments on bank borrowings, and a $29.4 million decrease in share repurchases offset partially by the additional $2.5 million payment of debt issuance costs.
Removed
As a result of these divestitures, the Company recorded a net loss of $77.4 million for the twelve months ended December 30, 2022.
Added
As of December 27, 2024, we had cash and cash equivalents of $313.9 million compared to $307.0 million as of December 29, 2023. Our cash and cash equivalents, cash generated from operations and borrowings under our term loan described below, were our principal sources of liquidity as of December 27, 2024.
Removed
Interest and Other Income (Expense), net Year Ended December 29, Percent December 30, Percent December 31, (Dollars in millions) 2023 Change 2022 Change 2021 Interest income $ 4.1 355.6 % $ 0.9 125.0 % $ 0.4 Interest expense $ (48.8 ) 44.0 % $ (33.9 ) 40.1 % $ (24.2 ) Other income (expense), net $ (1.8 ) (300.0 ) % $ 0.9 (111.8 ) % $ (7.6 ) Interest income increased $3.2 million in fiscal year 2023 over fiscal year 2022 due to higher interest income earned on cash and cash equivalent balances attributed to higher interest rates in the current period.
Added
Pursuant to the Sixth Amendment, the Existing Credit Agreement was amended to, among other things, (i) extend the final maturity date of the term loan and revolving credit facilities under the Credit Agreement by 30 months; (ii) reduce the interest rate applicable to the term loan facility under the Credit Agreement by 0.25% per annum; and (iii) increase the outstanding amount under the Term Loan of $475.4 million to $500 million.
Removed
Liquidity and Capital Resources Cash and cash Equivalents The following table summarizes our cash and cash equivalents: Year Ended December 29, December 30, (In millions) 2023 2022 Decrease Total cash and cash equivalents $ 307.0 $ 358.8 $ (51.8 ) The decrease in cash and cash equivalents in fiscal year 2023, compared to fiscal year 2022, was primarily due to cash used in investing activities of $119.7 million and $69.9 million cash used in financing activities offset by the cash provided by operating activities of $135.9 million.
Added
The Sixth Amendment resulted in the receipts of an additional $67.7 million of debt, net of $1.1 million related lender fees from new or existing syndicate lenders which was offset by syndicate lenders who reduced their positions by $44.2 million.
Removed
During fiscal year 2023, net cash provided by financing activities primarily consisted of debt repayment of $38.6 million and $29.4 million of shares repurchased. During fiscal year 2022, net cash provided by financing activities primarily consisted of debt repayment of $39.7 million and $12.1 million of shares repurchased.
Added
The Company capitalized additional $2.5 million of costs related to this amendment and continued to defer previously capitalized costs of $5.2 million.
Removed
On August 19, 2022, we entered into a Third Amendment (the “Third Amendment”) to the credit agreement dated as of August 27, 2018 and amended as of October 1, 2018 and March 31, 2021 (as amended by the Third Amendment, the "Credit Agreement") to, among other things, increase the revolving credit facility portion of the Credit Facilities to $150.0 million with several banks and Barclays Bank as administrative agent.
Added
The Company expensed third party transaction costs and the previously capitalized costs of extinguished debt of $3.6 million which was included in the other income (expense), net in the Consolidated Statements of Operations for the year ended December 27, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe believe the net accounts receivable balances from our two largest customers (26.8% as of December 29, 2023) do not represent a significant credit risk, based on cash flow forecasts, balance sheet analysis, and past collection experience. For more information about the customers that represent our accounts receivable balance, see Note 1, Organization and Significant Accounting Policies.
Biggest changeWe believe the three largest customer net accounts receivable balances (41.9% as of December 27, 2024) do not represent a significant credit risk, based on cash flow forecasts, balance sheet analysis, and past collection experience. For more information about the customers that represent our accounts receivable balance and our consideration related to credit losses, see Note 13, Revenue Recognition.
However, we do not expect foreign currency exchange rate fluctuations to have a material effect on our results of operations. 41 We use derivative instruments, such as foreign currency exchange contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates.
However, we do not expect foreign currency exchange rate fluctuations to have a material effect on our results of operations. We use derivative instruments, such as foreign currency exchange contracts, to hedge certain exposures to fluctuations in foreign currency exchange rates.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk We are exposed to financial market risks, including credit risk, foreign currency exchange rate risk and interest rate risk. Credit Risk A substantial majority of our trade receivables are derived from sales to OEMs.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to financial market risks, including credit risk, foreign currency exchange rate risk and interest rate risk. Credit Risk A substantial majority of our trade receivables are derived from sales to OEMs.
Our Credit Facility is comprised of a Term B loan and a revolving credit agreement with interest rates as described under Note 7 of Notes to the Consolidated Financial Statements. At the end of fiscal 2023, the Term B loan had a balance of $479.3 million.
Our Credit Facility is comprised of a Term B loan and a revolving credit agreement with interest rates as described under Note 7 of Notes to the Consolidated Financial Statements. At the end of fiscal 2024, the Term B loan had a balance of $493.8 million.
A hypothetical 100 basis points increase in our borrowing rates at the end of fiscal 2023, would result in approximately $4.4 million annual increase in interest expense on this existing principal balance. 42
A hypothetical 100 basis points increase in our borrowing rates at the end of fiscal 2024, would result in approximately $4.9 million annual increase in interest expense on this existing principal balance. 39 Table of Contents

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