10q10k10q10k.net

What changed in TTM TECHNOLOGIES INC's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of TTM TECHNOLOGIES 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.

+460 added−455 removedSource: 10-K (2025-02-21) vs 10-K (2023-03-03)

Top changes in TTM TECHNOLOGIES INC's 2024 10-K

460 paragraphs added · 455 removed · 341 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

125 edited+20 added−19 removed85 unchanged
Biggest changeBased on our internal market intelligence, we expect this market to grow faster than the overall defense market as well. TTM is also offering several product lines of high-volume commercial RF components. These components are utilized by TTM’s customers to achieve advance signal conditioning in transceiver applications for 5G and other communication systems.
Biggest changeThey benefit from increasing electronics content in defense programs as well as increased focus on solid-state active electronically scanned array (AESA) radar systems. Based on our internal market intelligence, we expect this market to grow faster than the overall defense market. TTM also offers a variety of high-volume commercial RF components product lines.
As electronic devices have become smaller and more portable with higher functionality, demand for advanced HDI PCB products has increased dramatically. We define advanced HDI PCBs as those having more than one layer of microvia interconnection structure. Substrate-like PCBs or SLPs Substrate-like PCBs (SLPs) represent the next evolution of high end HDI PCBs.
As electronic devices have become smaller and more portable with higher functionality, demand for advanced HDI PCB products has increased dramatically. We define advanced HDI PCBs as those having more than one layer of microvia interconnection structure. Substrate-like PCBs or SLPs SLPs represent the next evolution of high-end HDI PCBs.
The aerospace & defense industry in particular provides an opportunity for us as we combine our traditional market strength in core PCB technology with the advanced technologies and RF capabilities and engineered systems we offer for growing requirements in both traditional and AESA radar systems for defense applications. One-stop solution for customers.
The aerospace & defense industry in particular provides an opportunity for us as we combine our traditional market strength in core PCB technology with the advanced technologies, RF capabilities and engineered systems we offer for growing requirements in both traditional and AESA radar systems for defense applications. One-stop solution for customers.
The following elements underpin our culture: • Vision – Inspire innovation as a global preeminent technology solutions company. • Mission – Provide customers with market leading, differentiated solutions and an extraordinary customer experience. • The “TTM Values” that apply to all employees are: Integrity, Teamwork, Clear Communication and Performance Excellence. • Our people leaders are guided by our “Leadership Principles” which are: Communications, Collaboration, and Career Development. • “One TTM” – embodies our collective “team” approach to solving problems, working together, robust collaboration, and proactive communication throughout the organization to better serve our customers.
The following elements underpin our culture: • Vision – Inspire innovation as a global preeminent technology solutions company. • Mission – Provide customers with market leading, differentiated solutions, and an extraordinary customer experience. • The “TTM Values” that apply to all employees are: Integrity, Teamwork, Clear Communication, and Performance Excellence. • Our people leaders are guided by our “Leadership Principles” which are: Results, Communications, Collaboration, and Career Development. • “One TTM” – embodies our collective “team” approach to solving problems, working together, robust collaboration, and proactive communication throughout the organization to better serve our customers.
The material for these systems come from a variety of sources, including OEMs and Contract Manufacturers, and are often defined by the end customer. We typically use just-in-time procurement practices to maintain our raw materials inventory at low levels and work closely with our suppliers to obtain technologically advanced raw materials.
The material for these systems come from a variety of sources, including OEMs and Contract Manufacturers, and are often defined by the end customer. 11 We typically use just-in-time procurement practices to maintain our raw materials inventory at low levels and work closely with our suppliers to obtain technologically advanced raw materials.
This positions us to participate in business that is awarded at the discretion of the EMS provider. Our sales and marketing strategy focuses on building long-term relationships with our customers’ engineering and new product introduction personnel early in the product development phase, frequently through strategic account management teams.
This positions us to participate in business that is awarded at the discretion of the EMS provider. 10 Our sales and marketing strategy focuses on building long-term relationships with our customers’ engineering and new product introduction personnel early in the product development phase, frequently through strategic account management teams.
The aspect ratio is the ratio between the thickness of the PCB and the diameter of a drilled hole. As the aspect ratio increases, it becomes increasingly more difficult to consistently and reliably form, electroplate and finish all the holes on a PCB. In production, we are able to provide aspect ratios of up to 30:1. • Thin core processing.
The aspect ratio is the ratio between the thickness of the PCB and the diameter of a drilled hole. As the aspect ratio increases, it becomes increasingly difficult to consistently and reliably form, electroplate, and finish all the holes on a PCB. In production, we are able to provide aspect ratios of up to 30:1. • Thin core processing.
RF and Microwave Assemblies We design, produce, and test specialized circuits and components used in radio-frequency or microwave emission and collection applications. These products are typically used for radar, transmit/receive antennas and similar wireless applications. Markets for these products include defense, avionics, satellite, and commercial applications including telecommunications, networking and automotive.
RF and Microwave Assemblies We design, produce, and test specialized circuits and components used in radio frequency or microwave emission and collection applications. These products are typically used for radar, transmit/receive antennas and similar wireless applications. Markets for these products include defense, avionics, satellite, and commercial applications including telecommunications, networking, instrumentation, and automotive.
These systems have been fielded globally in a wide range of ground, air and sea-based applications. Communications Systems Our advanced wired and wireless communication systems provide the digital backbone for defense and civil platforms worldwide, including fixed- and rotary-wing aircraft and ground control shelters.
These systems have been fielded globally in a wide range of ground, air, and sea-based applications. Communications Systems Our advanced wired and wireless communication systems provide the digital backbone for numerous defense and civil platforms worldwide, including fixed- and rotary-wing aircraft and ground control shelters.
The process to manufacture PCBs and our other products requires adherence to city, county, state, federal, and foreign environmental laws and regulations regarding the storage, use, handling, and disposal of chemicals, solid wastes and other hazardous 13 materials, as well as compliance with wastewater and air quality standards.
The process to manufacture PCBs and our other products requires adherence to city, county, state, federal, and foreign environmental laws and regulations regarding the storage, use, handling, and disposal of chemicals, solid wastes, and other hazardous materials, as well as compliance with wastewater and air quality standards.
In 2021, the TTM Board of Directors established the TTM Chair for Community Service Award to recognize one outstanding team for their contributions to the local community during the year. We host the winning external organization along with the TTM employees and executive leaders in an annual awards ceremony.
In 2021, the TTM Board of Directors established the TTM Chair for Community Service Award to recognize one outstanding team for their contributions to the local community during that year. We host the winning external organization along with TTM employees and executive leaders in an annual awards ceremony.
We believe that this strategy will allow us to generate strong cash flows, which will provide us with the financial flexibility for continued investments for growth and return of capital to shareholders. 5 Continuously enhance the elements that make TTM an appealing employer.
We believe that this strategy will allow us to generate strong cash flows, which we expect will provide us with the financial flexibility for continued investments for growth and return of capital to shareholders. 5 Continuously enhance the elements that make TTM an appealing employer.
Combined with the engineered systems and assemblies described earlier, we collectively refer to all of these technologies as “advanced technologies,” and they generally have growth rates which are higher than conventional technologies.
Combined with the engineered systems and assemblies described earlier, we collectively refer to all of these technologies as “advanced technologies", and they generally have growth rates which are higher than conventional technologies.
As the product then matures from the prototype stage to volume production, we shift our focus to the customers’ 10 procurement departments in order to capture sales at each point in the product’s life cycle.
As the product then matures from the prototype stage to volume production, we shift our focus to the customers’ procurement departments in order to capture sales at each point in the product’s life cycle.
Furthermore, rigid-flex circuits can be found in small and lightweight end products and other space-challenged electronics packaging applications across all end markets. Some PCB manufacturers also manufacture high performance substrates that serve as the interconnect between integrated circuits (ICs) and the PCB in many advanced electronic products serving a wide variety of end markets.
Furthermore, rigid-flex circuits can be found in small and lightweight end products and other space-challenged electronics packaging applications across all end markets. Some PCB manufacturers also manufacture high-performance substrates that serve as the interconnect between integrated circuits (IC) and the PCB in many advanced electronic products serving a wide variety of end markets.
The more complicated RF subsystems may require us to purchase integrated sub-assemblies and super-components such as RF oscillators, frequency converters, power supplies and microprocessors. These components for backplane assemblies and other PCB assemblies in some cases have limited or sole sources of supply.
The more complicated RF subsystems may require us to purchase integrated subassemblies and super-components such as RF oscillators, frequency converters, power supplies, and microprocessors. These components for backplane assemblies and other PCB assemblies in some cases have limited or sole sources of supply.
The SBR codifies the maintenance of the Government Security Committee of the Board to oversee our compliance and cybersecurity efforts and to put into place best practices in our facilities in the U.S. and overseas to insure that we maintain robust security practices and policies as we serve the interests of our customers in the Aerospace and Defense market.
The SBR codifies the maintenance of the Government Security Committee of the Board to oversee our compliance and cybersecurity efforts and to put into place best practices in our facilities in the U.S. and overseas to ensure that we maintain robust security practices and policies as we serve the interests of our customers in the Aerospace and Defense market.
TTM will then meet the ramp to volume production requirements of our customers. Building upon this strategy and moving further vertically along the customer value chain, we also design and manufacture highly-engineered integrated mission systems for aerospace and defense applications.
We will then work to meet the ramp-to-volume production requirements of our customers. Building upon this strategy and moving further vertically along the customer value chain, we also design and manufacture highly-engineered integrated mission systems for aerospace and defense applications.
Supply for PCB materials can vary over time depending on supply/demand dynamics for key raw materials such as copper clad laminates. See Item 1A, Risk Factors for more details. 11 Competition For PCBs, competitors are mostly based in China and Taiwan.
Supply for PCB materials can vary over time depending on supply/demand dynamics for key raw materials such as copper clad laminates. See Item 1A, Risk Factors for more details. Competition For PCBs, our competitors are mostly based in China and Taiwan.
Our Government Security Committee of our Board of Directors, consists of at least 3 Board members that hold a National Security Clearance. The DCSA will continue to review TTM’s compliance with the terms of the SBR annually at each of TTM’s sites which operate under a U.S. DoD security clearance.
The Government Security Committee of our Board of Directors consists of at least three Board members that hold a National Security Clearance. The DCSA will continue to review TTM’s compliance with the terms of the SBR annually at each of TTM’s sites which operate under a U.S. DoD security clearance.
We believe that our facilities in China comply in all material respects with current applicable environmental laws and regulations and have resources in place to maintain compliance to them. The capital expenditure costs expected for environmental improvement initiatives are included in our annual capital expenditure projections.
We believe that our facilities in Asia comply in all material respects with current applicable environmental laws and regulations and have resources in place to maintain compliance to them. The capital expenditure costs expected for environmental improvement initiatives are included in our annual capital expenditure projections.
Department of State regulations, including the Arms Export Control Act (AECA) and ITAR located at 22 CFR Parts 120-130; • U.S. Department of Commerce regulations, including the Export Administration Regulations (EAR) located at 15 CFR Parts 730-744; • Office of Foreign Asset Control (OFAC) regulations located at 31 CFR Parts 500-599; • U.S.
Department of State regulations, including the Arms Export Control Act (AECA) and ITAR located at 22 Code of Federal Regulations (CFR) Parts 120-130; • U.S. Department of Commerce regulations, including the Export Administration Regulations (EAR) located at 15 CFR Parts 730-744; • Office of Foreign Asset Control (OFAC) regulations located at 31 CFR Parts 500-599; • U.S.
To further gauge talent attraction and the onboarding experience, we deployed a new hire survey to gather insight into our employee’s experience from the moment they first interact with TTM as a candidate to settling into their first couple of months in their new role.
To further gauge talent attraction and the onboarding experience, we utilize a new hire survey to gather insight into our employee’s experience from the moment they first interact with TTM as a candidate to settling into their first couple of months in their new role.
High density interconnect or HDI PCBs Our facilities in North America and China also produce high density interconnect (HDI) PCBs, which are PCBs with higher interconnect density per unit area requiring more sophisticated technology and manufacturing processes for their production than conventional PCB products.
High-density interconnect or HDI PCBs Our facilities in North America and Asia also produce HDI PCBs, which are PCBs with higher interconnect density per unit area requiring more sophisticated technology and manufacturing processes for their production than conventional PCB products.
For example, in some instances, our customers will require us to use a specific component from a particular supplier or require us to use a component provided by the customer itself, in which case we may have a single or limited number of suppliers for these specific components.
For example, in some instances, our customers will require use of a specific component from a particular supplier or require use of a component provided by the customer itself, in which case we may have a single or limited number of suppliers for these specific components.
Our ramp-to-volume services typically include manufacturing up to a few hundred PCBs per order with delivery times ranging from five to 15 days. Thermal management Increased component density on circuit boards often requires improved thermal dissipation to reduce operating temperatures. We produce printed circuits with heavy copper cores and both embedded and press-fit coins.
Our ramp-to-volume services typically include manufacturing up to several hundred PCBs per order with delivery times ranging from five to 15 days. Thermal management Increased component density on circuit boards often requires improved thermal dissipation to reduce operating temperatures. We produce printed circuits with heavy copper cores and both embedded and press-fit coins.
Flexible PCBs can provide for flexible electronic connectivity of an electrical device’s apparatus such as printer heads, cameras, TVs, mobile handsets, and tablets. For some of our flexible PCB customers, we also assemble components onto the flexible PCBs we manufacture.
Flexible PCBs can provide for flexible electronic connectivity of an electrical device’s apparatus such as printer heads, cameras, televisions, mobile handsets, and tablets. For some of our flexible PCB customers, we also assemble components onto the flexible PCBs we manufacture.
Accelerate our expansion into growing markets using our advanced technology as a key point of differentiation. With rising requirements for faster data transmission, shrinking features (i.e., lightweight and thin), and lower power consumption, many PCB designs have migrated to more complex HDI PCBs from conventional multi-layer PCB technologies.
Accelerate our expansion into growing markets using our advanced technology as a key point of differentiation. With rising requirements for faster data transmission, shrinking features (i.e., lightweight and thin), and lower power consumption, many PCB designs have migrated to more complex HDI PCBs from conventional multilayer PCB technologies.
We offer a wide range of engineered systems, passive RF components, advanced ceramic RF components, hi-reliability multi-chip modules, beamforming and switching networks, integrated circuit (IC) substrates and PCB and RF products, including HDI PCBs, conventional PCBs, flexible PCBs, rigid-flex PCBs, and custom assemblies. We also offer certain value-added services to support our customers’ needs.
We offer a wide range of engineered systems, passive RF components, advanced ceramic RF components, hi-reliability multi-chip modules, beamforming and switching networks, IC substrates, and PCB and RF products, including HDI and Ultra-HDI PCBs, conventional PCBs, flexible PCBs, rigid-flex PCBs, and custom assemblies. We also offer certain value-added services to support our customers’ needs.
We believe that our facilities in the United States and Canada comply in all material respects with applicable environmental laws and regulations. In China, the government has a history of changing legal requirements with minimal notice.
We believe that our facilities in the United States and Canada comply in all material respects with applicable environmental laws and regulations. In Asia, the government has a history of changing legal requirements with minimal notice.
Our design-to-specification capabilities allow us to engage at the onset in the engineering cycle at critical aerospace and defense, automotive, telecommunications, and networking customers as they begin the process of specifying system requirements. At that stage, we support our customers by designing a solution as well as providing early prototyping and test support for that solution.
Our design-to-specification capabilities allow us to engage at the onset in the engineering cycle at critical aerospace and defense customers as they begin the process of specifying system requirements. At that stage, we support our customers by designing a solution as well as providing early prototyping and test support for that solution.
Our principal PCB and substrate competitors include AT&S (Austria Technologie & Systemtechnik Aktiengesellschaft), Chin-Poon Industrial Co., Ltd., Gold Circuit Electronics Ltd., ISU Petasys Co., Ltd., Sanmina Corporation, Shennan Circuits Co., Ltd., Suzhou Dongshan Precision Manufacturing Co., Ltd., Tripod Technology Corporation, Unimicron Technology Corporation, WUS Printed Circuit Co., Ltd., and Zhen Ding Technology Holding Ltd.
Our principal PCB and substrate competitors include AT&S (Austria Technologie & Systemtechnik Aktiengesellschaft), Chin-Poon Industrial Co., Ltd., Founder PCB, Gold Circuit Electronics Ltd., ISU Petasys Co., Ltd., Sanmina Corporation, Shennan Circuits Co., Ltd., Suzhou Dongshan Precision Manufacturing Co., Ltd., Tripod Technology Corporation, Unimicron Technology Corporation, Victory Giant Technology, WUS Printed Circuit Co., Ltd., and Zhen Ding Technology Holding Ltd.
Our North America footprint includes facilities from our PCB and RF&S Components reportable segments with nineteen PCB fabrication and engineered system plants located in California, Colorado, Connecticut, New Hampshire, New York, North Carolina, Ohio, Oregon, Utah, Virginia, Wisconsin, and Ontario, Canada; and one RF component plant located in New York.
Our North America footprint includes facilities from our PCB and RF&S Components reportable segments with 16 PCB fabrication and engineered system plants located in California, Colorado, Connecticut, New Hampshire, New York, Ohio, Oregon, Utah, Virginia, Wisconsin, and Ontario, Canada; and one RF component plant located in New York.
These trends include: Increasing complexity of electronic products, which requires technologically complex PCBs that can accommodate higher speeds and component densities, including HDI, flexible, and substrate-like PCBs as well as intricately engineered RF components and subsystems as well as completely designed engineered systems.
These trends include: Increasing complexity of electronic products, which requires technologically complex PCBs that can accommodate higher speeds and component densities, including high layer count, HDI, flexible, and substrate-like PCBs as well as intricately engineered RF components and subsystems and completely designed engineered systems.
We believe that our highly specialized equipment and advanced manufacturing processes enable us to reliably produce PCBs with the following characteristics: • High layer count. Manufacturing PCBs with a large number of layers is difficult to accomplish due to the accumulation of manufacturing tolerances and registration systems required.
Our highly specialized equipment and advanced manufacturing processes enable us to reliably produce PCBs with the following characteristics: • High layer count. Manufacturing PCBs with a large number of layers is difficult to accomplish due to the accumulation of manufacturing tolerances and registration systems required.
We also offer certain value-added services to support our customers’ needs. These include design-for-manufacturability (DFM), PCB layout design, simulation and testing services, and quick turnaround (QTA) production. For our RF sub-assemblies and components, we provide specialized assembly and RF testing to offer value-added solutions to our customers.
We also offer certain value-added services to support our customers’ needs. These include design‑for‑manufacturability (DFM), PCB layout design, simulation and testing services, and quick turnaround (QTA) production. For our RF subassemblies and components, we provide specialized assembly and RF testing to offer value-added solutions to our customers.
As our commercial customers ramp to volume, we are positioned to transition them to one of our volume facilities in China. Leading aerospace and defense supplier. We have passed OEM and government certification processes, and administrative requirements associated with participation in government and commercial aerospace programs.
As our commercial customers ramp to volume, we are positioned to transition them to one of our volume facilities in China or Malaysia. Leading aerospace and defense supplier. We have passed OEM and government certification processes, and the administrative requirements associated with participation in government and commercial aerospace programs.
We engage in regular talent reviews to calibrate on performance, potential, development gaps and progress, and to evaluate the depth and strength of our integrated succession plans. Our approach to learning is a continuous one, regardless of experience level or tenure. We extend leadership development programs with individually tailored development plans anchored in dedicated coaching and separate internal mentors.
We engage in regular talent reviews to calibrate on performance, potential, development gaps and progress, and to evaluate the depth and strength of our integrated succession plans. Our approach to learning is a continuous one, regardless of experience level or tenure. We provide leadership development programs with individually tailored development plans anchored in dedicated coaching and select internal mentors.
Our competition for RF products and engineered systems include BAE Systems plc, Cobham plc, Crane Aerospace & Electronics, Elta Systems Ltd., Hendsolt AG, Mercury Systems, Inc., RN2 Technologies Co., Selex ES (subsidiary of Leonardo S.p.A.), Smiths Group plc, and Thales Group. We believe that our key competitive strengths include: Leading global technology solutions manufacturer.
Our competition for RF products and engineered systems include BAE Systems plc, Honeywell, Crane Aerospace & Electronics, Elta Systems Ltd., Hensoldt AG, Mercury Systems, Inc., RN2 Technologies Co., Selex ES (subsidiary of Leonardo S.p.A.), Smiths Group plc, and Thales Group. We believe that our key competitive strengths include: Leading global technology solutions manufacturer.
Our sales are diversified by a well-balanced portfolio of end markets which we serve and by the customers we sell to within those end markets. We believe this diversity reduces our exposure to, and reliance on, any single end market or customer.
Our sales are diversified by a well-balanced portfolio of end markets that we serve and by the customers we sell to within those end markets. This diversity reduces our exposure to, and reliance on, any single end market or customer.
We provide both equipment and supporting services required to safely and reliably control flight operations. These systems are used by the U.S. Army, U.S. Navy, U.S. Air Force, U.S. Marines, Federal Aviation Administration (FAA), NATO and numerous international defense agencies including those of Japan and South Korea.
We provide both equipment and supporting services required to safely and reliably control flight operations. These systems are used by the U.S. Army, U.S. Navy, U.S. Air Force, U.S. Marines, Federal Aviation Administration (FAA), North Atlantic Treaty Organization (NATO), and numerous international defense agencies including those of Japan and South Korea.
We are one of the largest technology solutions manufacturers in North America, one of the largest suppliers to the aerospace and defense industry and have a global sales and manufacturing presence. Historically, we have focused on manufacturing PCBs, but we have been moving further up our customers’ value chain by designing and manufacturing RF sub-assemblies and engineered systems.
We are one of the largest technology solutions manufacturers in North America, one of the largest suppliers to the aerospace and defense industry and have a global sales and manufacturing presence. Historically, we have focused on manufacturing PCBs, but we have been moving further up our customers’ value chain by also designing and manufacturing RF subassemblies and engineered systems.
By offering this wide range of engineered systems, RF components and sub-systems, PCB products, and complementary value-added services, we are able to provide our customers with a “one-stop” manufacturing solution for their hardware technology and integration requirements. We believe this differentiates us from our competition and enhances our customer relationships. Below we describe our product lines in more detail.
By offering this wide range of engineered systems, RF components and subsystems, PCB products, and complementary value-added services, we aim to provide our customers with a “one-stop” manufacturing solution for their hardware technology and integration requirements. We believe this differentiates us from our competition and enhances our customer relationships. Below we describe our product lines in more detail.
We also offer comprehensive benefit plans for eligible employees including mental health, employee assistance program (EAP), telemedicine offerings, several medical and dental plans with qualifying employer-funded health savings accounts, life insurance, specialty programs for diabetes and weight loss, wellness challenges, and an on-site health and physical therapy center at our largest U.S. facility.
We also offer comprehensive benefit plans for eligible employees including mental health, employee assistance program (EAP), telemedicine offerings, several medical and dental plans with qualifying employer-funded health savings accounts, life insurance, 15 specialty programs for diabetes and weight loss, wellness challenges, and an on-site health and physical therapy center at one of our largest U.S. facilities.
We believe that technology solution providers that can offer one-stop manufacturing capabilities — from prototype to volume production — and integration capabilities have a competitive advantage in the market. 4 Our Strategy Our vision is to inspire innovation as a global preeminent technology solutions company.
We believe that technology solution providers that can offer one-stop manufacturing capabilities — from prototype to volume production — with a globally diverse manufacturing footprint and integration capabilities have a competitive advantage in the market. 4 Our Strategy Our vision is to inspire innovation as a global preeminent technology solutions company.
This trend began with PCBs used in portable devices such as smartphones and other mobile devices but has become an increasing trend in other end markets, such as automotive, networking, medical, and aerospace and defense.
This trend began with PCBs used in portable devices such as smartphones and other mobile devices but has become an increasing trend in other end markets, such as automotive, data center computing, networking, medical, and aerospace and defense.
We aim to attract the right employees to TTM who align with our values and desire growth in their professional careers. We believe our employee engagement model, emphasis on communications and inclusion, commitment to career development and talent, and collaborative culture are the top reasons employees embrace TTM.
We aim to attract the right employees who are aligned with our values and desire growth in their professional careers. We believe our employee engagement model, emphasis on communications and inclusion, commitment to career development and talent, and collaborative culture are the top reasons employees embrace us.
Radar, Communication and Surveillance systems use highly sophisticated electronic sub-assemblies including Transmitter and Receiver CCA’s/Modules, Travelling Wave Tube Assemblies, Exciters, Wave Form Generators and Frequency Generators. Many of these systems also require the acquisition of RF antenna arrays, illuminated panel subassemblies, inertial navigation/GPS subassemblies from OEM’s or parts specifically designed for certain applications.
Radar, Communication, and Surveillance systems use highly sophisticated electronic subassemblies including Transmitter and Receiver CCA’s/Modules, Traveling Wave Tube Assemblies, Exciters, Wave Form Generators, and Frequency Generators. Many of these systems also require the acquisition of RF antenna arrays, illuminated panel subassemblies, inertial navigation/GPS subassemblies from OEMs or parts specifically designed for certain applications.
We are developing the next generation multi-mode maritime and over-land surveillance AESA radar known as MOSAIC ® . Surveillance We are a global leader in Identification Friend or Foe (IFF), Monopulse Secondary Surveillance Radars (MSSR) and Air Traffic Control (ATC) systems enabling military and civilian air traffic controllers to effectively identify aircraft and vehicles as friendly.
We are in the process of developing the next generation multi-mode maritime and overland surveillance AESA radar known as MOSAIC ® . Surveillance We are a global leader in Identification Friend or Foe (IFF), Monopulse Secondary Surveillance Radars (MSSR), and Air Traffic Control (ATC) systems enabling military and civilian air traffic controllers to effectively identify aircraft and vehicles as friendly.
The NISPOM requires that a corporation with significant foreign ownership maintaining a facility security clearance take steps to prevent foreign control or influence, referred to as “FOCI.” In February of 2023, our Board of Directors passed a Special Board Resolution (SBR), replacing the Special Security Agreement (SSA) that we entered into with the Defense Counterintelligence and Security Agency (DCSA) in 2010.
The NISPOM requires that a corporation with significant foreign ownership maintaining a facility security clearance take steps to prevent foreign ownership, control, or influence (FOCI). In February of 2023, our Board of Directors passed a Special Board Resolution (SBR), replacing the Special Security Agreement (SSA) that we entered into with the Defense Counterintelligence and Security Agency (DCSA) in 2010.
By providing a one-stop solution, we work to service our customers’ needs from the earliest stages of product design and development through volume production.
By aiming to provide a one-stop solution, we work to service our customers’ needs from the earliest stages of product design and development through volume production.
In addition, we periodically seek alternative supply sources to ensure that we are receiving competitive pricing and service. Certain raw materials, particularly semiconductors continue to be in short supply and are limiting production of some of our engineered systems while other raw materials for PCBs and subassemblies are in adequate supply now.
In addition, we periodically seek alternative supply sources with the goal of ensuring that we are receiving competitive pricing and service. Certain raw materials, particularly semiconductors continue to be in short supply and are limiting production of some of our engineered systems while other raw materials for PCBs and subassemblies are in adequate supply now.
(i3) in 2019 allowed us to broaden our technology portfolio for high mix, low volume advanced technology PCBs, and the most recent acquisition of Telephonics in 2022 significantly broadens TTM’s aerospace and defense product offering vertically into highly engineered integrated mission system solutions and horizontally into surveillance and communications markets, while strengthening our position in radar systems.
(i3) in 2019 allowed us to broaden our technology portfolio for high mix, low volume advanced technology PCBs, and the subsequent acquisition of Telephonics in 2022 significantly expanded our aerospace and defense product offering vertically into highly engineered integrated mission system solutions and horizontally into surveillance and communications markets, while strengthening our position in radar systems.
Our ability to retain valued talent while attracting candidates is paramount to our continued human capital strategy.
Our ability to retain valued talent while attracting the right candidates is paramount to our continued human capital strategy.
These products were developed to provide a low-cost high performance signal distribution component, which 6 could be placed on standard printed circuit boards with automated production equipment. The primary applications of these products are currently in equipment for cellular base stations and in WLAN, Bluetooth, and satellite television.
These products were developed to provide a lower-cost high-performance signal distribution component, which 6 could be placed on standard printed circuit boards with automated production equipment. The primary applications of these products are currently in equipment for cellular base stations and in Wireless Local Area Network (WLAN), Bluetooth, and satellite television.
We periodically survey our employees and benefit from favorable participation rates to identify and act on specific opportunities to enhance our work environment, improve communications, and strengthen the connection between supervisors and employees. In 2022, we deployed a full-scale engagement survey on 14 engagement drivers with 94% participation rate globally.
Employee Engagement & Turnover. We periodically survey our employees and benefit from favorable participation rates to identify and act on specific opportunities to enhance our work environment, improve communications, and strengthen the connection between supervisors and employees. In 2024, we deployed a full-scale engagement survey on 14 engagement drivers with 97% participation rate globally.
In China, approximately 10,700 employees are members of the All-China Federation of Trade 15 Unions and accordingly are considered to be represented by a labor union. We believe that our relations with both our union and non-union employees are satisfactory.
In China, approximately 8,500 employees are members of the All-China Federation of Trade Unions and accordingly are considered to be represented by a labor union. We believe that our relations with both our union and non-union employees are satisfactory.
Environmental Protection Agency regulations pertaining to air emissions; waste water discharges; and the use, storage, discharge, and disposal of hazardous chemicals used in the manufacturing processes; the reporting of chemical releases to the environment; and the reporting of chemicals manufactured in by-products that are beneficially recycled; • Department of Homeland Security regulations regarding the storage of certain chemicals of interest; • corresponding state laws and regulations, including site investigation and remediation; • corresponding U.S., county and city agencies; • corresponding regulations and agencies in China for our Chinese facilities; • material content directives and laws that ban or restrict certain hazardous substances in products sold in member states of the European Union, China, and other countries and jurisdictions; • SEC rules that require reporting of the use of certain metals (conflict minerals) originating in the Democratic Republic of the Congo and the 9 countries surrounding it pursuant to Section 1502 of the Dodd-Frank Act; and • reporting requirements of the California Transparency in Supply Chains Act of 2010 that requires reporting on efforts to eradicate slavery and human trafficking in retailers’ and manufacturers’ supply chains.
Environmental Protection Agency regulations pertaining to air emissions; waste water discharges; and the use, storage, discharge, and disposal of hazardous chemicals used in the manufacturing processes; the reporting of chemical releases to the environment; and the reporting of chemicals manufactured in by-products that are beneficially recycled; • Department of Homeland Security regulations regarding the storage of certain chemicals of interest; • California Climate Corporate Data Accountability Act (SB 253) and the California Climate-Related Financial Risk Act (SB 261); • corresponding state laws and regulations, including site investigation and remediation; • corresponding U.S., county and city agencies; • corresponding regulations and agencies in China for our Chinese facilities; • material content directives and laws that ban or restrict certain hazardous substances in products sold in member states of the European Union, China, and other countries and jurisdictions; 13 • Securities and Exchange Commission (SEC) rules that require reporting of the use of certain metals (conflict minerals) originating in the Democratic Republic of the Congo and the countries adjacent to it pursuant to Section 1502 of the Dodd‑Frank Act; and • reporting requirements of the California Transparency in Supply Chains Act of 2010 that requires reporting on efforts to eradicate slavery and human trafficking in retailers’ and manufacturers’ supply chains.
Each segment operates predominantly in the same industries with facilities that produce customized products for our customers and use similar means of product distribution. Additional information on our reportable segments and product information is contained in Note 17 of the Notes to Consolidated Financial Statements.
Each segment operates predominantly in the same industries with facilities that produce customized products for our customers and use similar means of product distribution. Additional information on our reportable segments and product information is contained in Part II, Item 8, Note 10, Segment Information , of the Notes to Consolidated Financial Statements.
Industry Overview TTM provides a variety of hardware technology solutions, including completely designed and engineered systems, RF microwave/microelectronic assemblies, product lines of RF components, and technologically advanced PCBs. TTM’s engineered systems are mostly sold to the aerospace and defense market, primarily tier one subcontractors but also directly to government agencies.
Industry Overview TTM provides a variety of hardware technology solutions, including completely designed and engineered systems, RF microwave/microelectronic assemblies, product lines of RF components, and technologically advanced PCBs. TTM’s engineered systems are sold primarily to the aerospace and defense market, generally tier one subcontractors but also directly to government agencies (both domestic and allied foreign governments).
These include RF design to specification capability, design for manufacturability (DFM), PCB layout design, simulation and testing services, and QTA services. By providing these value-added services to customers, we are able to provide our customers with a “one-stop” technology solution, which we believe enhances our relationships with our customers. Diversified business model.
These include RF design-to-specification capability, DFM, PCB layout design, simulation and testing services, and QTA services. By providing these value-added services to customers, we are capable of providing our customers with a “one-stop” technology solution, which we believe enhances our relationships with our customers. Diversified business model.
Radar Systems We provide a wide range of high-performing, lightweight and cost-effective maritime surveillance and weather avoidance radar systems for fixed- and rotary-wing aircraft, Unmanned Aerial Vehicles (UAVs) and shipboard platforms to the U.S. government, tier one OEMs, and numerous international defense agencies.
Radar Systems We provide a wide range of high-performing, lightweight, and cost-effective maritime surveillance and weather avoidance radar systems for fixed- and rotary-wing aircraft, Unmanned Aerial Vehicles (UAVs), and shipboard platforms to the U.S. government, tier one OEMs, and numerous international defense agencies. At this time, we are also the sole provider of the U.S.
Now that we have a well-diversified end market mix, our focus is to expand our presence in our existing end markets, particularly aerospace and defense which has long product and program lifetimes. We will also look for strategic opportunities that further strengthen our leading-edge technology capabilities.
Now that we have a more diversified end market mix, our focus is to expand our presence in existing end markets, particularly aerospace and defense which has longer product and program life cycles. We will also look for strategic opportunities that further strengthen our leading-edge technology capabilities.
This one-stop design, engineering and manufacturing solution allows us to align technology development with the diverse needs of our customers and to enable them to reduce the time required to develop new products and bring them to market.
This solution allows us to align technology development with the diverse needs of our customers and to enable them to reduce the time required to develop new products and bring them to market.
The replacement of the SSA with the SBR is a result of the significantly reduced foreign ownership of TTM. The effective date of the SBR is February 2, 2023.
The replacement of the SSA with the SBR is a result of the significantly reduced foreign ownership of TTM. DCSA accepted the SBR and the effective date of the SBR was February 2, 2023.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are available without charge on our website at https://investors.ttm.com/ , as soon as reasonably practicable after they are filed with or furnished electronically to the Securities and Exchange Commission (SEC).
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available without charge on our website at https://investors.ttm.com/ , as soon as reasonably practicable after they are filed with or furnished electronically to the SEC. Our SEC filings are also available to the public at www.sec.gov .
We serve a diversified customer base consisting of approximately 1,500 customers in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial and instrumentation, as well as networking and telecommunications. Our customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), distributors and government agencies.
We serve a diversified customer base consisting of approximately 1,400 customers in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial and instrumentation, and networking. Our customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), distributors, and government agencies (both domestic and allied foreign governments).
Quick turnaround services We refer to our rapid delivery services as “quick turnaround” or “QTA”, because we provide custom-fabricated PCBs to our customers within as little as 24 hours to ten days.
Quick turnaround services We refer to our rapid delivery services as QTA because we provide custom-fabricated PCBs to our customers within as little as 24 hours to ten days.
Custom Designed Application Specific Integrated Circuits (ASICs) Our Telephonics Large Scale Integration (TLSI) group has designed nearly 400 mixed-signal custom Application Specific Integrated Circuits (ASICs) for customers in the automotive, industrial, defense/avionics and smart energy markets.
Custom Designed Application Specific Integrated Circuits (ASICs) Our Custom Integrated Circuits (CIC) group has designed nearly 400 mixed-signal custom ASICs for customers in the automotive, industrial, defense/avionics, and smart energy markets.
Sales attributed to OEMs include sales made through EMS providers and ODMs. Although our contractual relationships are often with the EMS or ODM companies, we typically negotiate price and volume requirements directly with the OEMs. In addition, we are on the approved vendor lists of several of our EMS providers.
Although our contractual relationships are often with the EMS or ODM companies, we typically negotiate price and volume requirements directly with the OEMs. In addition, we are on the approved vendor lists of several of our EMS providers.
In addition, most of our markets have low volume requirements during the prototype stage that demand a highly flexible manufacturing environment which later transition to a higher volume requirement during product ramp. According to estimates in a November 2022 report by Prismark Partners, worldwide demand for PCBs was expected to be $83.3 billion for 2022.
In addition, most of our markets have low volume requirements during the prototype stage that demand a highly flexible manufacturing environment which later transitions to a higher volume requirement during product ramp. According to estimates in a December 2024 report by Prismark Partners, worldwide demand for PCBs was expected to be $73.6 billion for 2024.
Several core manufacturing technology areas include: • Electronic Systems Integration. Assembly and Testing of Radar, Surveillance and Communications Systems which are comprised of Low/High Power, High Reliability modules that interconnect via cables and harnesses, Circuit cards, Flexprint assemblies, backplanes, Illuminated Panels for the purpose of IFF, Intercommunications and Maritime/Overland surveillance. Material is stored using automated retrieval and storage systems.
Assembly and Testing of Radar, Surveillance and Communications Systems, which are composed of Low/High Power, High Reliability modules that interconnect via cables and harnesses, Circuit cards, Flexprint assemblies, backplanes, Illuminated Panels for the purpose of IFF, Intercommunications, and Maritime/Overland surveillance. Material is stored using automated retrieval and storage systems.
At this time, we are also the sole provider of the US Navy’s AN/APS-153 multi-mode radar on the MH-60R, and the communications suite within the MH-60R/S multi-mission helicopters. Our maritime surveillance radars offer advanced features such as Ground Moving Target Indicator (GMTI), Synthetic Aperture Radar (SAR), Inverse Synthetic Aperture Radar (ISAR), Automatic Identification System (AIS) and weather avoidance.
Navy’s AN/APS-153 multi-mode radar on the MH-60R helicopter, and the communications suite within the MH-60R/S multi-mission helicopters. Our maritime surveillance radars offer advanced features such as Ground Moving Target Indicator (GMTI), Synthetic Aperture Radar (SAR), Inverse Synthetic Aperture Radar (ISAR), Automatic Identification System (AIS), and weather avoidance.
We report our worldwide operations based on two reportable segments: (1) PCB , which consists of eighteen domestic system, sub-system, and PCB plants; six PCB fabrication plants in China; and one in Canada; and (2) RF&S Components , which consists of one domestic RF component plant and one RF component plant in China.
We report our worldwide operations based on two reportable segments: (1) PCB , which consists of 15 domestic system, subsystem, and PCB plants; four PCB fabrication plants in China; one in Malaysia; and one in Canada; and (2) RF and Specialty Components (RF&S Components) , which consists of one domestic RF component plant and one RF component plant in China.
The backplane assemblies, PCB assemblies and precision metal fabricated chassis and enclosures produced by us may be incorporated into a fully integrated and tested system delivered to our customer. These products often incorporate procured power, thermal, interconnect and mechanical components sourced from the customer directed or our selected suppliers.
The backplane assemblies, PCB assemblies, and precision metal fabricated chassis and enclosures which we produce are often incorporated into a fully integrated and tested system delivered to our customer. These products often incorporate procured power, thermal, interconnect, and mechanical components sourced from either customer directed or our selected suppliers.
In 2022, we generated approximately $2.5 billion in net sales and ended the year with approximately 17,800 employees worldwide. We currently operate a total of 27 specialized facilities in North America and China. We focus on providing time-to-market and volume production of advanced technology products and offer a one-stop design, engineering and manufacturing solution to our customers.
In 2024, we generated approximately $2.4 billion in net sales and ended the year with approximately 16,400 employees worldwide. We currently operate a total of 23 specialized facilities in North America and Asia. We focus on providing time-to-market and volume production of advanced technology products and offer a one-stop design, engineering and manufacturing solution to our customers.
ITEM 1. B USINESS General We are a leading global manufacturer of technology solutions, including engineered systems, radio frequency (RF) components and RF microwave/microelectronic assemblies, and printed circuit boards (PCB). According to a November 2022 report by Prismark Partners, we are one of the largest PCB manufacturers in the world based on 2021 revenue.
ITEM 1. B USINESS General We are a leading global manufacturer of technology solutions, including mission systems, radio frequency (RF) components, RF microwave/microelectronic assemblies, and quick-turn and technologically advanced printed circuit boards (PCB). According to a December 2024 report by Prismark Partners, we are one of the largest PCB manufacturers in the world based on 2023 revenue.
Our SEC filings are also available to the public at www.sec.gov . Copies are also available without charge by (i) telephonic request by calling our Investor Relations Department at (714) 327-3000, (ii) e-mail request to investor@ttmtech.com, or (iii) a written request to TTM Technologies, Inc., Attention: Investor Relations, 200 East Sandpointe, Suite 400, Santa Ana, CA 92707. 16
Copies are also available without charge by (1) telephonic request by calling our Investor Relations Department at (714) 327-3000; (2) e-mail request to investor@ttmtech.com; or (3) a written request to TTM Technologies, Inc., Attention: Investor Relations, 200 East Sandpointe, Suite 400, Santa Ana, CA 92707. 16
Availability of Reports Filed with the Securities and Exchange Commission We are a Delaware corporation founded in 1998, with our principal executive offices located at 200 East Sandpointe, Suite 400, Santa Ana, CA 92707. Our telephone number is (714) 327-3000. Our website address is www.ttm.com . Information included on our website is not incorporated into this report.
Availability of Reports Filed with the Securities and Exchange Commission We are a Delaware corporation founded in 1998, with our principal executive offices located at 200 East Sandpointe, Suite 400, Santa Ana, CA 92707. Our telephone number is (714) 327-3000. Our website address is www.ttm.com. We routinely post important information for investors on our website in the “Investor Relations” section.
In regards to our RF products, the vast majority are proprietary and protected or covered by approximately fifty-eight patents and thirteen currently pending patent applications directed towards products for both the wireless infrastructure and aerospace and defense markets.
In regard to our RF products, the vast majority are proprietary and protected or covered by approximately forty-five (45) patents and three (3) currently pending patent applications directed towards products for both the wireless infrastructure and aerospace and defense markets.

… 84 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

121 edited+44 added−22 removed159 unchanged
Biggest changeFurther, the conflict between Russia and Ukraine described in the previous risk factor, and the effects thereof, may adversely affect our manufacturing facilities and our customers. Rising labor costs and labor shortages, including due to pandemics and other disasters, employee strikes and other labor-related disruptions may materially adversely affect our business, financial condition, and results of operations.
Biggest changeRising labor costs and labor shortages, including due to pandemics and other disasters, employee strikes, and other labor‑related disruptions may materially adversely affect our business, financial condition, and results of operations. Our business is labor intensive, utilizing large numbers of engineering and manufacturing personnel. There is uncertainty with respect to rising labor costs and ongoing labor shortages.
A significant portion of our revenues is derived from products and services that are ultimately sold to the U.S. government by our OEM and EMS customers and is therefore affected by, among other things, the federal government budget process. We supply to defense prime companies, the U.S. government and its agencies, as well as foreign governments and agencies.
A significant portion of our revenues is derived from products and services that are ultimately sold to the U.S. federal government by our OEM and EMS customers and is therefore affected by, among other things, the federal government budget process. We supply to defense prime companies, the U.S. federal government and its agencies, as well as foreign governments and agencies.
ABL and the Asia ABL and the indenture governing the Senior Notes due 2029 restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due.
ABL, the Asia ABL, and the indenture governing the Senior Notes due 2029 restrict our ability to dispose of assets and use the proceeds from those dispositions and may also restrict our ability to raise debt or equity capital to be used to repay other indebtedness when it becomes due.
We are increasingly required to certify compliance with various material content restrictions in our products based on laws of various jurisdictions or territories such as the Restriction of Hazardous Substances (RoHS) and Registration, Evaluation, Authorization and Restriction of Chemicals, or REACH directives in the European Union and China’s RoHS legislation.
We are increasingly required to certify compliance with various material content restrictions in our products based on laws of various jurisdictions or territories such as the Restriction of Hazardous Substances (RoHS) and Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) directives in the European Union and China’s RoHS legislation.
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, which could in turn result in an event of default on such indebtedness; • require us to use a substantial portion of our cash flow from operations for debt service payments, thereby reducing the availability of cash for working capital, capital expenditures, acquisitions and other general corporate purposes; 26 • impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions and other investments or general corporate purposes, which may limit our ability to execute our business strategy; • diminish our ability to withstand a downturn in our business, the industry in which we operate or the economy generally and restrict us from exploiting business opportunities or making acquisitions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate or the general economy; • increase our vulnerability to general adverse economic and industry conditions, including increases in interest rates, that result in increased borrowing costs; • limit management’s discretion in operating our business; and • place us at a competitive disadvantage as compared to our competitors that have less debt as it could limit our ability to capitalize on future business opportunities and to react to competitive pressures or adverse changes.
For example, it could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, which could in turn result in an event of default on such indebtedness; • require us to use a substantial portion of our cash flow from operations for debt service payments, thereby reducing the availability of cash for working capital, capital expenditures, acquisitions, and other general corporate purposes; • impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, and other investments or general corporate purposes, which may limit our ability to execute our business strategy; • diminish our ability to withstand a downturn in our business, the industry in which we operate or the economy generally and restrict us from exploiting business opportunities or making acquisitions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate or the general economy; • increase our vulnerability to general adverse economic and industry conditions, including increases in interest rates, that result in increased borrowing costs; • limit management’s discretion in operating our business; and • place us at a competitive disadvantage as compared to our competitors that have less debt as it could limit our ability to capitalize on future business opportunities and to react to competitive pressures or adverse changes.
If unauthorized parties gain access to our information systems or such information is used in an unauthorized manner, misdirected, altered, lost, or stolen during transmission, any theft or misuse of such information could result in, among other things, unfavorable publicity, governmental inquiry and oversight, difficulty in marketing our services, allegations by our customers that we have not performed our contractual obligations, loss of customers, litigation by affected parties, and possible financial obligations for damages related to the theft or misuse of such information, any of which could have a material adverse effect on our business, financial condition, and results of operations.
However, if unauthorized parties gain material access to our information systems or material information is used in an unauthorized manner, misdirected, altered, lost, or stolen during transmission, any theft or misuse of such information could result in, among other things, unfavorable publicity, governmental inquiry and oversight, difficulty in marketing our services, allegations by our customers that we have not performed our contractual obligations, loss of customers, litigation by affected parties, and possible financial obligations for damages related to the theft or misuse of such information, any of which could have a material adverse effect on our business, financial condition, and results of operations.
In addition, we are subject to risks relating to significant international operations, including but not limited to: • managing international operations; • imposition of governmental controls; • unstable regulatory environments; • compliance with employment laws; • implementation of disclosure controls, internal controls, financial reporting systems, and governance standards to comply with U.S. accounting and securities laws and regulations; • limitations on imports or exports of our product offerings; • fluctuations in the value of local currencies; • inflation or changes in political and economic conditions; • public health crises, such as the COVID-19 pandemic; • labor unrest, rising wages, difficulties in staffing, and geographical labor shortages; • government or political unrest; • conflict or war between nations over territory that impacts the electronics supply chain leading to potential trade restrictions to and from the nations involved, including Russia, Ukraine and China; • longer payment cycles; • language and communication barriers, as well as time zone differences; • cultural differences; • increases in duties and taxation levied on our products; • other potentially adverse tax consequences; • imposition of restrictions on currency conversion or the transfer of funds; • travel restrictions; 19 • expropriation of private enterprises; • the potential reversal of current favorable policies encouraging foreign investment and trade; • the potential for strained trade relationships between the United States and its trading partners, including trade tariffs which could create competitive pricing risk; and • government imposed sanction laws and regulations.
In addition, we are subject to risks relating to significant international operations, including but not limited to: • managing international operations; • imposition of governmental controls; • unstable regulatory environments; • compliance with employment laws; • implementation of disclosure controls, internal controls, financial reporting systems, and governance standards to comply with U.S. accounting and securities laws and regulations; • limitations on imports or exports of our product offerings; • fluctuations in the value of local currencies; • inflation or changes in political and economic conditions; • public health crises; • labor unrest, rising wages, difficulties in staffing, and geographical labor shortages; • government or political unrest; • conflict or war between nations over territory that impacts the electronics supply chain leading to potential trade restrictions to and from the nations involved, including Russia, Ukraine, and China; • longer payment cycles; • language and communication barriers, as well as time zone differences; • cultural differences; • increases in duties and taxation levied on our products; • other potentially adverse tax consequences; • imposition of restrictions on currency conversion or the transfer of funds; • travel restrictions; • expropriation of private enterprises; • the potential reversal of current favorable policies encouraging foreign investment and trade; 19 • the potential for strained trade relationships between the United States and its trading partners, including trade tariffs which could create competitive pricing risk; and • government imposed sanction laws and regulations.
If these regulations or others are changed in a manner that reduces restrictions on products being manufactured overseas, we would likely face an increase in the number of competitors and increased price competition from overseas manufacturers, who are restricted by the current export laws from manufacturing products for U.S. defense systems.
If these regulations or others are changed in a manner that reduces restrictions on products being manufactured overseas, we would likely face an increase in the number of competitors and increased price competition from overseas manufacturers, who are restricted by current import and export laws from manufacturing products for U.S. defense systems.
The capital expenditure costs expected for environmental improvement initiatives are included in our annual capital expenditure projections. 29 Our international sales are subject to laws and regulations relating to corrupt practices, trade, and export controls and economic sanctions. Any non-compliance could have a material adverse effect on our business, financial condition, and results of operations.
The capital expenditure costs expected for environmental improvement initiatives are included in our annual capital expenditure projections. Our international sales are subject to laws and regulations relating to corrupt practices, trade and export controls, and economic sanctions. Any non-compliance could have a material adverse effect on our business, financial condition, and results of operations.
In addition, the Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives.
In addition, the Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and 31 other personnel devote a substantial amount of time to these compliance initiatives.
Although we believe that our tax estimates are reasonable, the final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions, which could materially adversely affect our business, financial condition, and results of operations. ITEM 1B. UNRESOLVE D STAFF COMMENTS None. 32
Although we believe that our tax estimates are reasonable, the final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions, which could materially adversely affect our business, financial condition, and results of operations. ITEM 1B. UNRESOLVE D STAFF COMMENTS None.
Similar laws have been adopted in other jurisdictions and may become increasingly prevalent. In addition, we must also certify as to the non-applicability of the EU’s Waste Electrical and Electronic Equipment directive for certain products that we manufacture. The REACH directive requires the identification of Substances of Very High Concern, or SVHCs periodically.
Similar laws have been adopted in other jurisdictions and may become increasingly prevalent. In addition, we must also certify as to the non‑applicability of the EU’s Waste Electrical and Electronic Equipment directive for certain products that we manufacture. The REACH directive requires the identification of Substances of Very High Concern (SVHCs) periodically.
Further, we are experiencing rising health care costs. While we strive to manage these challenges, there can be no assurance that our efforts will succeed which would result in higher costs and lower profits. The competition for talent and labor in North America and in general is currently extremely high.
Further, we are experiencing rising health care costs. While we strive to manage these challenges, there can be no assurance that our efforts will succeed which would result in higher costs and lower profits. The competition for talent and labor in North America and in general is currently high.
If sales of automobiles should decline or go into a cyclical downturn, 22 our sales could decline, and this could have a materially adverse impact on our business, financial condition, and result of operations. For safety reasons, automotive customers have strict quality standards that generally exceed the quality requirements of other customers.
If sales of automobiles should decline or go into a cyclical downturn, our sales could decline, and this could have a materially adverse impact on our business, financial condition, and result of operations. For safety reasons, automotive customers have strict quality standards that generally exceed the quality requirements of other customers.
There can be no assurance that key customers would not cancel orders, that they would continue to place orders with us in the future at the same levels as experienced by us in prior periods, that they would be able to meet their payment obligations, or that the end-products that use our products would be successful.
There can be no assurance that key customers would not cancel orders, that they would continue to place orders with us in the future at the same levels as experienced by us in prior periods, that they would be able to meet their 22 payment obligations, or that the end-products that use our products would be successful.
Foreign laws may not afford us sufficient protections for our intellectual property, and we may not be able to obtain patent protection outside of the United States. Certain nations that we operate in may not grant us certain intellectual property rights that are customarily granted in more developed legal systems.
Foreign laws may not afford us sufficient protections for our intellectual property, and we may not be able to obtain patent protection outside of the United States. Certain nations in which we operate may not grant us certain intellectual property rights that are customarily granted in more developed legal systems.
Uncertainty and adverse changes in the economy could also increase the cost and decrease the availability of potential sources of financing and increase our exposure to losses from bad debts, either of which could have a material adverse effect on our financial condition, operating results, and cash flows.
Uncertainty and adverse changes in the economy could also increase the cost and decrease the availability of potential 18 sources of financing and increase our exposure to losses from bad debts, either of which could have a material adverse effect on our financial condition, operating results, and cash flows.
We are heavily dependent on automated management systems, and any significant failure or delay in the system upgrade could cause a substantial interruption to our business and additional expense, which could result in an adverse impact on our operating results, cash flows or financial condition. 31 Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal, state and foreign income tax purposes is subject to limitations, and future transfers of shares of our common stock could cause us to experience an “ownership change” that could further limit our ability to utilize our net operating losses.
We are heavily dependent on automated management systems, and any significant failure or delay in the system upgrade could cause a substantial interruption to our business and additional expense, which could result in an adverse impact on our operating results, cash flows, or financial condition. 33 Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal, state, and foreign income tax purposes is subject to limitations, and future transfers of shares of our common stock could cause us to experience an “ownership change” that could further limit our ability to utilize our net operating losses.
Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct 27 legal entity, and under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries.
Our subsidiaries may not be able to, or may not be permitted to, make distributions to enable us to make payments in respect of our indebtedness. Each subsidiary is a distinct legal entity, and under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from our subsidiaries.
These laws and regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery 28 Act, the Superfund Amendment and Reauthorization Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Toxic Substances Control Act, and the Federal Motor Carrier Safety Improvement Act, as well as analogous state, local, and foreign laws.
These laws and regulations include the Clean Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the Superfund Amendment and Reauthorization Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Toxic Substances Control Act, and the Federal Motor Carrier Safety Improvement Act, as well as analogous state, local, and foreign laws.
If any claims, regardless of whether they have merit, are brought against our customers for such infringement, we could be required to expend significant resources 25 in defending such claims, developing non-infringing alternatives, or obtaining licenses.
If any claims, regardless of whether they have merit, are brought against our customers for such infringement, we could be required to expend significant resources in defending such claims, developing non-infringing alternatives, or obtaining licenses.
As a result, we may need to continue to seek new locations with lower costs and the employee and infrastructure base to support PCB manufacturing and we may lose business in our existing facilities as a result of such potential shifts in the global market.
As a result, we may need to continue to seek new locations with lower costs and the employee and infrastructure base to support PCB manufacturing and we may lose business in our existing facilities as a result of such potential shifts in the market.
A significant portion of our operating expenses are relatively fixed in nature, and planned expenditures are based in part on anticipated orders. Accordingly, unexpected revenue shortfalls may decrease our gross margins.
A significant portion of our operating expenses are relatively fixed in nature, and planned expenditures are based in part on anticipated orders. Accordingly, unexpected revenue shortfalls may decrease our operating margins.
Looking ahead at long-term needs, we may need to raise additional funds for a number of purposes, including the following: • to fund capital equipment purchases to increase production capacity, upgrade and expand our technological capabilities and replace aging equipment or introduce new products; • to refinance our existing indebtedness; • to fund our current or planned operations; • to fund potential acquisitions or strategic relationships; • to fund working capital requirements for future growth that we may experience; • to enhance or expand the range of services we offer; • to increase our sales and marketing activities; • to respond to competitive pressures or perceived opportunities, such as investment, acquisition, and international expansion activities; or • to fund our initiatives set forth in our ESG policies and practices.
Looking ahead at long-term needs, we may need to raise additional funds for a number of purposes, including the following: • to fund capital equipment purchases to increase production capacity, upgrade and expand our technological capabilities, and replace aging equipment or introduce new products; • to refinance our existing indebtedness; • to fund our current or planned operations; • to fund potential acquisitions or strategic relationships; • to fund working capital requirements for future growth that we may experience; • to enhance or expand the range of services we offer; • to increase our sales and marketing activities; • to respond to competitive pressures or perceived opportunities, such as investment, acquisition, and international expansion activities; or • to fund our initiatives set forth in our environmental, social, and governance (ESG) policies and practices.
No assurance can be given that the government of China will continue to pursue policies that allow for open trade with foreign countries, that such policies will be successful if pursued, or that such policies will not be significantly altered from time to time, particularly in light of the trade and travel restrictions that the United States and China have implemented in recent months.
No assurance can be given that the government of China will continue to pursue policies that allow for open trade with foreign countries, that such policies will be successful if pursued, or that such policies will not be significantly altered from time to time, particularly in light of the trade and travel restrictions that the United States and China have implemented in recent years.
The supply chain constraints and other factors discussed above may continue to impact our ability to deliver our products on a timely basis, harm our customer relationships and negatively impact our financial results. In particular, the on-going macroeconomic conditions, including the inflationary environment, have increased the cost of our raw materials and components.
The supply chain constraints and other factors discussed above may continue to impact our ability to deliver our products on a timely basis, harm our customer relationships and negatively impact our financial results. In particular, the ongoing macroeconomic conditions, including the inflationary environment, have increased the cost of our raw materials and components.
Failure to meet these ever-increasing standards may result in a loss of market share for our products and services to our competitors, which may result in a decline in our overall revenue. In addition, a significant portion of our sales are to customers within the automotive industry. The automotive industry has historically experienced multi-year cycles of growth and decline.
Failure to meet these ever-increasing standards may result in a loss of market share for our products and services to our competitors, which may result in a decline in our overall revenue. For example, a significant portion of our sales are to customers within the automotive industry, which has historically experienced multi-year cycles of growth and decline.
We may not be able to effect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The credit agreements governing the Term Loan Facility, the U.S.
We may not be able to affect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet our scheduled debt service obligations. The credit agreements governing the Term Loan Facility, the U.S.
Our tax determinations are regularly subject to audit by tax authorities, and developments in those audits could adversely affect our income tax provision.
Our tax determinations are regularly subject to audit by tax authorities, and developments in those audits could also adversely affect our income tax provision.
If our estimates of future earnings and analysis changes, we may change our decisions to have a valuation allowance against our deferred income tax assets, which will result in an increase or decrease to our income tax provision that can impact our results of operations.
If our estimates of future earnings and analysis changes, we may change our determination to have a valuation allowance against our deferred income tax assets, which will result in an increase or decrease to our income tax provision that can impact our results of operations.
Future transfers or sales of our common stock during a rolling three-year period by any of our “5-percent shareholders” could cause us to experience an ownership change under Section 382, which could further limit our use of NOL.
Future transfers or sales of our common stock during a rolling three‑year period by any of our “5-percent shareholders” could cause us to experience an ownership change under Section 382, which could further limit our use of NOLs.
Based on our forecast for future earnings and analysis, we believe we may not utilize our deferred income tax assets in future periods in the U.S. and certain subsidiaries in foreign jurisdictions and have established a valuation allowance against those deferred tax assets.
Based on our forecast for future earnings and analysis, we believe we may not utilize our deferred income tax assets in future periods in the U.S. and certain subsidiaries in foreign jurisdictions and as a result have established a valuation allowance against those deferred tax assets.
The conflict may, at times, reduce demand for our products because of reduced global or national economic activity, disruptions and extreme volatility in global financial markets, increased rates of default and bankruptcy, and reduced levels of business and consumer spending.
The conflicts may, at times, reduce demand for our products because of reduced global or national economic activity, disruptions and extreme volatility in global financial markets, increased rates of default and bankruptcy, and reduced levels of business and consumer spending.
With a high level of fixed operating costs, even small revenue shortfalls would decrease our gross margins.
With a high level of fixed operating costs, even small revenue shortfalls would decrease our operating margins.
In addition, the following risk factors and uncertainties could cause our actual results to differ materially from those projected in our forward-looking statements, whether made in this report or the other documents we file with the SEC, or our annual or quarterly reports to stockholders, future press releases, or orally, whether in presentations, responses to questions, or otherwise.
In addition, the following risk factors and uncertainties could cause our actual results to differ materially from those projected in our forward-looking statements, whether made in this Report or the other documents we file with the Securities and Exchange Commission (SEC), or our annual or quarterly reports to stockholders, future press releases, or orally, whether in presentations, responses to questions, or otherwise.
For our Radar, Communication and Surveillance systems, we use highly sophisticated electronic assemblies including Transmitter and Receiver CCA’s/Modules, Travelling Wave Tube Assemblies, Exciters, Wave Form Generators and Frequency Generators which are specifically designed for their application.
For our Radar, Communication, and Surveillance systems, we use highly sophisticated electronic assemblies including Transmitter and Receiver CCA’s/Modules, Traveling Wave Tube Assemblies, Exciters, Wave Form Generators, and Frequency Generators which are specifically designed for their application.
The termination or 23 failure to fund one or more significant defense programs or contracts by the U.S. government could have a material adverse effect on our business, financial condition, and results of operations. Future changes to the U.S. Munitions List could reduce or eliminate restrictions that currently apply to some of the products we produce.
The 20 termination or failure to fund one or more significant defense programs or contracts by the U.S. federal government could have a material adverse effect on our business, financial condition, and results of operations. Future changes to the U.S. Munitions List could reduce or eliminate restrictions that currently apply to some of the products we produce.
ITEM 1A. RISK FACTORS An investment in our common stock involves a high degree of risk. You should carefully consider the factors described below, in addition to those discussed elsewhere in this report, in analyzing an investment in our common stock.
An investment in our common stock involves a high degree of risk. You should carefully consider the factors described below, in addition to those discussed elsewhere in this Report, in analyzing an investment in our common stock.
In China, the government has a history of changing legal requirements with no or minimal notice. We believe that our facilities in China comply in all material respects with current applicable environmental laws and regulations and have resources in place to maintain compliance to them.
In Asia, the government has a history of changing legal 30 requirements with no or minimal notice. We believe that our facilities in Asia comply in all material respects with current applicable environmental laws and regulations and have resources in place to maintain compliance to them.
Based on certain parameters defined in the Term Loan Facility, including a First Lien Leverage Ratio, we may be required to make an additional principal payment on an annual basis if our First Lien Leverage Ratio is greater than 2.0.
Based on certain parameters defined in the Term Loan Facility, including a Secured Leverage Ratio, we may be required to make an additional principal payment on an annual basis if our Secured Leverage Ratio is greater than 2.0.
In particular, multiple facets of our business may be negatively impacted by the fear of exposure to or actual effects of COVID-19 and other disease outbreaks, epidemics, pandemics and similar widespread public health concerns.
In particular, multiple facets of our business may be negatively impacted by the fear of exposure to or actual effects of disease outbreaks, epidemics, pandemics, and similar widespread public health concerns.
Furthermore, our business has benefited from OEMs deciding to outsource their PCB manufacturing and backplane assembly needs to us, and our future revenue growth partially depends on new outsourcing opportunities from OEMs. Sales attributed to OEMs include both direct sales as well as sales that the OEMs place through EMS providers.
Furthermore, our business has benefited from OEMs deciding to outsource their PCB and Integrated Electronics manufacturing needs to us, and our future revenue growth partially depends on new outsourcing opportunities from OEMs. Sales attributed to OEMs include both direct sales as well as sales that the OEMs place through EMS providers.
Further, our Board has adopted a Special Board Resolution (SBR) that has been approved by the Defense Counterintelligence and Security Agency (DCSA) that provides for the Company to adopt certain corporate constructs, policies and procedures.
Further, our Board has adopted a Special Board Resolution (SBR) that has been approved by the Defense Counterintelligence and Security Agency (DCSA) that requires the Company to adopt certain corporate constructs, policies, and procedures.
For example, in 2023 in our PCB segment, we expect to continue to make capital expenditures to expand our HDI, RF technology, and other advanced manufacturing capabilities while in our RF&S Components segment, we are designing products that we hope our customers adopt and incorporate into their products.
For example, in our PCB segment, we expect to continue to make capital expenditures to expand our High Density Interconnect (HDI), RF technology, and other advanced manufacturing capabilities while in our RF&S Components segment, we are designing products that we hope our customers adopt and incorporate into their products.
As the Chinese legal system develops, the promulgation of new laws, changes to existing laws, and the preemption of local regulations by national laws may adversely affect foreign investors. Further, any litigation in China may be protracted and may result in substantial costs and diversion of resources and management’s attention.
As the legal system develop, the promulgation of new laws, changes to existing laws, and the preemption of local regulations by national laws may adversely affect foreign investors. Further, any litigation may be protracted and may result in substantial costs and diversion of resources and management’s attention.
Our operations in China and Hong Kong subject us to risks and uncertainties relating to the laws and regulations of China and Hong Kong and adverse effects of political tensions that arise from time to time with China. The government of China is adopting evolving policies regarding foreign and domestic trade.
Our operations in Asia subject us to risks and uncertainties relating to the local laws and regulations and adverse effects of political tensions that arise from time to time with China. The government of China is adopting evolving policies regarding foreign and domestic trade.
The worldwide electronics industry is intensely competitive and volatile. A majority of our revenue is generated from the electronics industry, which is characterized by intense competition, relatively short product life cycles, and significant fluctuations in product demand. The industry is subject to economic cycles and recessionary periods.
A majority of our revenue is generated from the electronics industry, which is characterized by intense competition, relatively short product life cycles, and significant fluctuations in product demand. The industry is subject to economic cycles and recessionary periods.
In addition, general labor shortages (which occurred during 2021 and that continued in 2022), a high turnover rate and our difficulty in recruiting and retaining qualified employees at any level of our organization could result in a potential for defects in our products, production disruptions or delays, or the inability to ramp production to meet increased customer orders, resulting in order cancellation or imposition of customer penalties if we are unable to deliver products in a timely manner.
In addition, general labor shortages, a high turnover rate, and our difficulty in recruiting and retaining qualified employees at any level of our organization could result in a potential for defects in our products, production disruptions or delays, or the inability to ramp production to meet increased customer orders, resulting in order cancellation or imposition of customer penalties if we are unable to deliver products in a timely manner.
As a result, there is a risk that supplies of our products may be significantly delayed by or may become unavailable as a result of the conflict between Russia and Ukraine affecting us or our suppliers.
As a result, there is a risk that supplies of our products may be significantly delayed by or may become unavailable as a result of the conflict between Russia and Ukraine and in other global regions affecting us or our suppliers.
We cannot assure investors that we will realize the anticipated strategic benefits of our international operations, including our new plant, or that our international operations will contribute positively to our operating results. In North America, we are experiencing wage inflation pressures, as a result of labor shortages, and certain pressures which are also mandated by local and state governments.
We cannot assure investors that we will realize the anticipated strategic benefits of our new locations, or that such locations will contribute positively to our operating results. In North America, we are experiencing wage inflation pressures, as a result of labor shortages, and certain pressures which are also mandated by local and state governments.
Any of the foregoing factors, or other cascading effects that are not currently foreseeable, could materially increase our costs, negatively impact our sales, or damage the Company’s financial condition, results of operations, cash flows and its liquidity position, possibly to a significant degree.
Any of the foregoing factors, or other cascading effects that are not currently foreseeable, could materially increase our costs, negatively impact our sales, or damage the Company’s financial condition, results of operations, cash flows, and its liquidity position, possibly to a significant degree. The duration of any such impacts cannot be predicted.
Our business also depends on our continuing ability to recruit, train, and retain highly qualified employees, particularly engineering and sales and marketing personnel. The competition for these employees is intense, and the loss of these employees could harm our business. 20 In addition, our industry continues to experience, a shortage of workers.
Our business also depends on our continuing ability to recruit, train, and retain highly qualified employees, particularly engineering and sales and marketing personnel. The competition for these employees is intense, and the loss of these employees could harm our business. In addition, our industry continues to experience a shortage of workers, which may prove to be systemic.
If one or more of our significant customers were to become insolvent or were otherwise unable to pay us, our business, financial condition, and results of operations would be materially adversely affected. Our business, financial condition, and results of operations could be materially adversely affected by climate change initiatives.
If one or more of our significant customers were to become insolvent or were otherwise unable to pay us, our business, financial condition, and results of operations would be materially adversely affected.
Despite progress in developing its legal system, China does not have a comprehensive and highly developed system of laws, particularly with respect to foreign investment activities and foreign trade. Enforcement of existing and future laws and contracts is uncertain, and implementation and interpretation thereof may be inconsistent.
Despite progress in developing its legal system, certain countries in Asia do not have a comprehensive and highly developed system of laws, particularly with respect to foreign investment 29 activities and foreign trade. Enforcement of existing and future laws and contracts is uncertain, and implementation and interpretation thereof may be inconsistent.
In this competitive environment, our business could be adversely impacted by increases in labor costs, which could include increases in wages and benefits necessary to attract and retain high quality employees with the right skill sets, increases triggered by regulatory actions regarding wages, scheduling, and benefits; increases in health care and workers’ compensation insurance costs; and increases in benefits and costs related to the COVID-19 pandemic and its resurgence from time to time.
In this competitive environment, our business could be adversely impacted by increases in labor costs, which could include increases in wages and benefits necessary to attract and retain high-quality employees with the right skill sets, increases triggered by regulatory actions regarding wages, scheduling, and benefits; and increases in health care and workers’ compensation insurance costs.
These impacts include but are not limited to: • failure of third parties on which we rely, including, without limitation, our suppliers, commercial banks, and other external business partners, to meet their obligations to us, caused by significant disruptions in their ability to do so or their own financial or operational difficulties; • supply chain risks such as disruptions of supply chains, excess demand on suppliers, and scrutiny or embargoing of goods produced in infected areas; • reduced workforces and labor shortages at all levels of our organization, which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, lockdowns, quarantine, or government mandates and incentives; 17 • temporary business closures due to reduced workforces or government mandates; • reduced demand for our products and services caused by, but not limited to, the effect of quarantine or other travel restrictions or financial hardship on our workforce, the businesses in the industries we service; • restrictions to our business as a result of federal or state laws, regulations, orders or other governmental or regulatory actions, if adopted; or • lawsuits from employees and others exposed to COVID-19 at our facilities, which may involve large demands or substantial defense costs that our professional and general liability insurance may not cover.
These impacts include but are not limited to: • failure of third parties on which we rely, including, without limitation, our suppliers, commercial banks, and other external business partners, to meet their obligations to us, caused by significant disruptions in their ability to do so or their own financial or operational difficulties; • supply chain risks such as disruptions of supply chains, excess demand on suppliers, and scrutiny or embargoing of goods produced in infected areas; • reduced workforces and labor shortages at all levels of our organization, which may be caused by, but not limited to, the temporary inability of the workforce to work due to illness, lockdowns, quarantine, or government mandates and incentives; • temporary business closures due to reduced workforces or government mandates; • reduced demand for our products and services caused by, but not limited to, the effect of quarantine or other travel restrictions or financial hardship on our workforce or the businesses in the industries we service; or • restrictions to our business as a result of federal or state laws, regulations, orders or other governmental or regulatory actions, if adopted.
Suppliers and equipment manufacturers may be impacted by other events outside our control including macro-economic events, financial instability, environmental occurrences, or supplier interruptions due to fire, natural catastrophes, public health crises or otherwise. Several of these factors, including the on-going COVID-19 pandemic, have contributed to supply chain constraints we continue to experience.
Suppliers and equipment manufacturers may be impacted by other events outside our control including macroeconomic events, financial instability, environmental occurrences, or supplier interruptions due to fire, natural catastrophes, public health crises or otherwise. Several of these factors have contributed to supply chain constraints we continue to experience.
The current uncertainty in the worldwide economic environment together with other unfavorable changes in economic conditions, such as higher than normal inflation and interest rate increases currently being experienced or implemented by most developed economies, as well as any recession, may negatively impact consumer confidence and spending, ultimately causing our customers to postpone purchases and may ultimately impact our profitability.
The current uncertainty in the worldwide economic environment together with other unfavorable changes in economic conditions, such as higher inflation and interest rate increases currently being experienced or implemented by most developed economies, as well as recessions that have affected major countries, may negatively impact consumer confidence and spending, ultimately causing our customers to postpone purchases and may ultimately impact our profitability.
Sales to EMS companies represented approximately 37%, 38% and 37% of our net sales for the years ended January 2, 2023, January 3, 2022 and December 28, 2020, respectively. Sales to EMS providers include sales directed by OEMs as well as orders placed with us at the EMS providers’ discretion.
Sales to EMS companies represented approximately 28%, 31%, and 37% of our net sales for the years ended December 30, 2024, January 1, 2024, and January 2, 2023, respectively. Sales to EMS providers include sales directed by OEMs as well as orders placed with us at the EMS providers’ discretion.
Moreover, if any of our OEM customers outsource the production of PCBs and creation of backplane assemblies to these EMS providers, our business, financial condition, and results of operations may be materially adversely affected.
Moreover, if any of our OEM customers outsource the production of PCBs and creation of backplane assemblies to these EMS providers, our business, financial condition, and results of operations may be materially adversely affected. The worldwide electronics industry is intensely competitive and volatile.
If any of the events described below occurs, our business, financial condition, and results of operations would likely suffer, the trading price of our common stock could fall, and you could lose all or part of the money you paid for our common stock. The risk factors described below are not the only ones we face.
If any of the events described below occurs, our business, financial condition, and results of operations would likely suffer, the trading price of our common stock could fall, and you could lose all or part of the money you paid for our common stock.
In addition, for the year ended January 2, 2023, we generated approximately 54% of our net sales from non-U.S. operations, and a significant portion of our manufacturing material was provided by international suppliers during this period.
In addition, for the year ended December 30, 2024, we generated approximately 47% of our net sales from non-U.S. operations, and a significant portion of our manufacturing material was provided by international suppliers during this period.
Despite the implementation of network security measures, our systems and those of third parties on which we rely may also be vulnerable to computer viruses, break-ins, cyber-attacks, attacks by hackers or breaches due to employee or third party (including suppliers and business partners) error, malfeasance, or other disruptions.
Despite the implementation of network security measures, our information systems, including those owned and operated by third parties, on which we rely are vulnerable to computer viruses, break-ins, cyber-attacks, attacks by hackers or breaches due to employee or third party (including suppliers and business partners) error, malfeasance, or other disruptions that are material and adverse.
Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC, from time to time, to adopt additional rules and regulations in these areas, such as “say on pay” and proxy access.
Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that have required the SEC, from time to time, to adopt additional rules and regulations in these areas.
For Hybrid Microelectronics and RF components, we use various high-performance materials such as Rad Hard & Space active components, Silicon transistors, IGBTs, FETs, Signal & Zener diodes, magnets, inductors, coils, BeO and SiN substrates, as well as ceramics and printed circuit board materials.
For Hybrid Microelectronics and radio frequency (RF) components, we use various high-performance materials such as Rad Hard & Space active components, Silicon transistors, insulated‑gate bipolar transistors (IGBTs), field-effect transistors (FETs), Signal & Zener diodes, magnets, inductors, coils, beryllium oxide (BeO), and silicon nitride (SiN) substrates, as well as ceramics and printed circuit board materials.
We are subject to the requirements of the National Industrial Security Program Operating Manual (NISPOM) for our facility security clearance, which is a prerequisite to our ability to perform on classified contracts for the U.S. government.
Regulatory Risks We are subject to the requirements of the NISPOM for our facility security clearance, which is a prerequisite to our ability to perform on classified contracts for the U.S. government.
As part of our business strategy, we expect that we will continue to implement and align our strategy by pursuing potential divestitures of assets and acquisitions of businesses, technologies, assets, or product lines that complement or expand our business, such as our acquisition of Gritel Holding Co., Inc. (Gritel) and ISC Farmingdale Corp. in June 2022.
As part of our business strategy, we expect that we will continue to implement and align our strategy by pursuing potential divestitures of assets, such as our sale of Shanghai Backplane Assembly, and acquisitions of businesses, technologies, assets, or product lines that complement or expand our business, such as our acquisition of Gritel Holding Co., Inc.
Our effective tax rates could be materially adversely affected by changes in the mix of earnings in countries and states with differing statutory tax rates, changes in the valuation of deferred income tax assets and liabilities, changes in tax laws or regulations such as those proposed by the Organization for Economic Co-operation and Development (OECD), as well as other factors.
Our effective tax rates could be materially adversely affected by changes in the mix of earnings in countries and states with differing statutory tax rates, changes in the valuation of deferred income tax assets and liabilities, changes in tax laws or regulations as well as other factors.
In light of the current challenging labor market conditions, due in part to the on-going effects from COVID-19 pandemic, our wages and benefits programs and any steps we take to increase our wages and benefits, may be insufficient to attract and retain talent at all levels of our organization.
In light of the current challenging labor market conditions, our wages and benefits programs and any steps we take to increase our wages and benefits, may be insufficient to attract and retain talent at all levels of our organization.
Closures or lay-offs could result in our recording restructuring charges such as severance, other exit costs, and asset impairments, as well as potentially causing disruptions in our ability to supply customers.
Closures or lay-offs could result in our recording of restructuring charges such as severance, other exit costs, and asset impairments, as well as potentially causing disruptions in our ability to supply customers. Our results of operations are often subject to demand fluctuations and seasonality.
Although our invoices and sales arrangements generally contain provisions designed to limit our exposure to product liability and related claims, existing or future laws or unfavorable judicial decisions could negate these limitation of liability provisions. In addition, we manufacture products for a range of automotive customers.
Although our invoices and sales arrangements generally contain provisions designed to limit our exposure to product liability and related claims, existing or future laws or unfavorable judicial decisions could negate these limitation of liability provisions.
In some cases, employers have responded by significantly increasing the wages of workers at such plants. Any increase in labor costs due to minimum wage laws or customer requirements about scheduling and overtime that we are unable to recover in our pricing to our customers could materially adversely affect our business, financial condition, and results of operations.
Any increase in labor costs due to minimum wage laws or customer requirements about scheduling and overtime that we are unable to recover in our pricing to our customers could materially adversely affect our business, financial condition, and results of operations.
Our five largest OEM customers collectively accounted for approximately 33%, 30% and 29% of our net sales for the years ended January 2, 2023, January 3, 2022 and December 28, 2020, respectively, and one customer represented 10% of our net sales for the year ended January 2, 2023.
Our five largest OEM customers collectively accounted for approximately 42%, 41%, and 33% of our net sales for the years ended December 30, 2024, January 1, 2024, and January 2, 2023, respectively, and one customer represented 11% of our net sales for the year ended December 30, 2024.
Moreover, we may be required under our contracts with automotive industry customers to indemnify them for the cost of warranties and recalls relating to our products. The prominence of EMS companies as our customers could reduce our gross margins, potential sales, and customers.
Moreover, we may be required under our contracts with automotive industry customers to indemnify them for the cost of warranties and recalls relating to our products.
Our Term Loan Facility and our Asia ABL are subject to interest at a floating rate of LIBOR plus a margin, and as a result, we have exposure to interest rate risk. Certain central banks, such as the U.S.
Our Term Loan Facility and our Asia ABL are subject to interest at a floating rate of Term Secured Overnight Financing Rate (SOFR) plus a margin, and as a result, we have exposure to interest rate risk. Certain central banks, such as the U.S. Federal Reserve, effected multiple interest rate increases in recent years.
For the year ended January 2, 2023, aerospace and defense sales accounted for approximately 35% of our total net sales. The substantial majority of aerospace and defense sales are related to both U.S. and foreign military and defense programs.
For the year ended December 30, 2024, aerospace and defense sales accounted for approximately 46% of our total net sales. The substantial majority of aerospace and defense sales are related to both U.S. and U.S. federal government approved foreign military and defense programs.
Any extended inability to continue our operations at unaffected facilities following such an event would reduce our revenue and potentially damage our reputation as a reliable supplier.
Any extended inability to continue our operations at unaffected facilities following such an event would reduce our revenue and potentially damage our reputation as a reliable supplier. The prominence of EMS companies as our customers could reduce our gross margins, potential sales, and customers.
ABL), the Asia ABL, the indenture governing the Senior Notes due 2029, and our other debt instruments, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments, or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt could intensify.
ABL), the Asia Asset-Based Lending Credit Agreement (Asia ABL), the indenture governing the Senior Notes due 2029, and our other debt instruments, we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments, or acquisitions, or for other purposes.
The increased costs may decrease our net income (or increase our net loss) and may require us to reduce costs in other areas of our business or increase the prices of our products or services.
The increased costs may decrease our net income (or increase our net loss) and may require us to reduce costs in other areas of our business or increase the prices of our products or services. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.
China has put in place a comprehensive system of intellectual property laws; however, incidents of infringement are relatively common, and enforcement of rights can, in practice, be difficult. If we are unable to manage our intellectual property rights, our business and operating results may be seriously harmed.
China has put in place a comprehensive system of intellectual property laws; however, incidents of infringement are relatively common, and enforcement of rights can, in practice, be difficult.

… 107 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

3 edited+6 added−0 removed1 unchanged
Biggest changeLocations Operating Segment Leased Square Feet Owned Square Feet Total Square Feet Anaheim, CA PCB — 96,000 96,000 Chippewa Falls, WI PCB — 281,000 281,000 Elizabeth City, NC PCB — 47,784 47,784 Farmingdale, NY PCB — 171,600 171,600 Forest Grove, OR PCB 12,774 217,950 230,724 Huntington, NY PCB 82,440 — 82,440 Littleton, CO PCB 54,590 63,210 117,800 Logan, UT PCB 12,000 118,448 130,448 North Jackson, OH PCB 8,800 85,000 93,800 Salem, NH PCB 43,700 — 43,700 San Diego, CA PCB 43,336 — 43,336 San Jose, CA PCB 42,434 — 42,434 Santa Ana, CA (1) Headquarters 14,472 — 14,472 Santa Ana, CA PCB 9,416 82,550 91,966 Santa Clara, CA PCB 21,966 45,685 67,651 Stafford, CT PCB — 126,924 126,924 Stafford Springs, CT PCB — 99,579 99,579 Sterling, VA (2) PCB 100,896 — 100,896 Syracuse, NY (3) PCB and RF&S Components 37,639 160,000 197,639 Total 484,463 1,595,730 2,080,193 Foreign Locations Operating Segment Leased Square Feet Owned Square Feet Total Square Feet Canada Toronto PCB 15,500 99,960 115,460 China Dongguan PCB — 1,069,129 1,069,129 Guangzhou PCB — 1,872,800 1,872,800 Hong Kong (1) Asia Headquarters — 24,640 24,640 Hong Kong PCB — 128,432 128,432 Huiyang PCB — 435,485 435,485 Shanghai PCB 85,745 — 85,745 Suzhou RF&S Components 68,030 — 68,030 Zhongshan PCB — 1,132,760 1,132,760 Total 169,275 4,763,206 4,932,481 (1) Location of our headquarters and not a manufacturing facility (2) In December 2021, we entered into a joint venture agreement with our landlord, O.J.B./1600 University Boulevard, LLC, Count Du Greenmonet, LLC and GFI#2/DII, LLC, to jointly own approximately 100,896 square feet of land and building.
Biggest changeLocations Operating Segment Leased Square Feet Owned Square Feet Total Square Feet Chippewa Falls, WI PCB — 280,086 280,086 Farmingdale, NY PCB — 171,600 171,600 Forest Grove, OR PCB — 212,453 212,453 Huntington, NY PCB 82,440 — 82,440 Littleton, CO PCB 54,590 63,210 117,800 Logan, UT PCB 12,000 118,448 130,448 North Jackson, OH PCB 8,800 85,000 93,800 Salem, NH PCB 43,700 — 43,700 San Diego, CA PCB 43,336 — 43,336 San Jose, CA PCB 42,434 — 42,434 Santa Ana, CA (1) Headquarters 14,472 — 14,472 Santa Ana, CA PCB 13,439 82,550 95,989 Stafford, CT PCB — 126,924 126,924 Stafford Springs, CT PCB — 115,579 115,579 Sterling, VA (2) PCB 100,896 — 100,896 Syracuse, NY (3) PCB and RF&S Components 37,639 162,587 200,226 Total 453,746 1,418,437 1,872,183 Foreign Locations Operating Segment Leased Square Feet Owned Square Feet Total Square Feet Canada Toronto PCB 15,500 99,960 115,460 Malaysia Penang PCB 827,000 — 827,000 China Dongguan PCB — 1,069,129 1,069,129 Guangzhou PCB — 1,872,800 1,872,800 Hong Kong (1) Asia Headquarters — 24,640 24,640 Huiyang PCB — 435,485 435,485 Suzhou RF&S Components 68,030 — 68,030 Zhongshan PCB — 1,132,760 1,132,760 Total 910,530 4,634,774 5,545,304 (1) Location of our headquarters and not a manufacturing facility.
ITEM 2. P ROPERTIES The following table describes our headquarters and our principal manufacturing facilities. U.S.
ITEM 2. P ROPERTIES The following table describes our headquarters and our principal manufacturing facilities as of December 30, 2024: U.S.
We believe that our properties are suitable and adequate for us to operate at present levels, and the productive capacity and extent of utilization of the facilities are appropriate for our existing manufacturing requirements.
We believe that our properties are suitable and adequate for us to operate at present levels, and the productive capacity and extent of utilization of the facilities are appropriate for our existing manufacturing requirements. On November 1, 2023, we announced our selection of Syracuse, New York as the location for a new proposed advanced technology PCB manufacturing facility.
Added
(2) In December 2021, we entered into a joint venture agreement with our landlord, O.J.B./1600 University Boulevard, LLC, Count Du Greenmonet, LLC and GFI#2/DII, LLC, to jointly own approximately 100,896 square feet of land and building.
Added
We expect that the proposed facility will bring advanced technology capability for our domestic high-volume production of ultra-high-density interconnect (HDI) PCBs in support of national security requirements.
Added
We believe the planned investment aligns with New York State’s continuing focus on the region as a premier technology hub for U.S. electronics and the recent selection of Buffalo-Rochester-Syracuse (BRS) for the Federal Tech Hub designation. The project reflects our support for cultivating a stronger microelectronics ecosystem in New York and across the U.S. Aerospace and Defense industrial base.
Added
We are continuing construction for the new building on the 24-acre property adjacent to our existing facility in Syracuse for the campus expansion and the site for the new facility, and we expect to commence initial low rate production in 2026.
Added
Phase one of the proposed project, including capital for campus-wide improvements is estimated to be $100.0 million to $130.0 million.
Added
We expect to receive support in the form of grants, awards, and tax credits from both federal and New York state sources of approximately 37 $52.0 million in the aggregate (subject to certain requirements and contingencies), which would offset the initial capital investment and lower operating expenses.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeIn the event of an adverse outcome, the ultimate potential loss could have a material adverse effect on our financial condition, results of operations, or cash flows in a particular period. 33 ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 34 PART II
Biggest changeIn the event of an adverse outcome, the ultimate potential loss could have a material adverse effect on our financial condition, results of operations, or cash flows in a particular period. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 38 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+5 added−2 removed0 unchanged
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock has been listed on the Nasdaq Global Select Market under the symbol “TTMI” since September 21, 2000. As of February 27, 2023, there were approximately 268 holders of record of our common stock.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol “TTMI”.
The performance graph above will not be deemed incorporated by reference into any filing of our company under the Securities Act of 1933, as amended, or the Exchange Act. 35 Dividends We have never declared or paid cash dividends on our common stock.
The performance graph above will not be deemed incorporated by reference into any filing of our company under the Securities Act of 1933, as amended, or the Exchange Act. 39 Dividends We have never declared or paid cash dividends on our common stock.
We currently expect to retain future earnings for capital expenditures, acquisitions, to fund working capital requirements, repay existing debt, and potentially for share repurchases and do not anticipate paying cash dividends in the foreseeable future. Additionally, our ability to pay dividends is limited pursuant to covenants contained in our various debt agreements.
We currently expect to retain future earnings for capital expenditures and acquisitions, and to fund working capital requirements, repay existing debt, and to repurchase shares and do not anticipate paying cash dividends in the foreseeable future. Additionally, our ability to pay dividends is limited pursuant to covenants contained in our various debt agreements.
The graph assumes $100 was invested in our common stock on January 1, 2018, and an investment in Nasdaq Composite Index and the Dow Jones US Electrical Components & Equipment Index. The stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future stock performance.
The graph assumes $100 was invested in our common stock on December 30, 2019, and an investment in Nasdaq Composite Index and the Dow Jones U.S. Electrical Components & Equipment Index. The stock performance shown on the graph below represents historical stock performance and is not necessarily indicative of future stock performance.
STOCK PRICE PERFORMANCE GRAPH The performance graph below compares, for the period from January 1, 2018 to January 2, 2023, the cumulative total stockholder return on our common stock against the cumulative total return of: • the Nasdaq Composite Index; and • the Dow Jones U.S. Electrical Components & Equipment Index.
STOCK PRICE PERFORMANCE GRAPH The performance graph below compares, for the period from December 30, 2019 to December 30, 2024, the cumulative total stockholder return on our common stock against the cumulative total return of the Nasdaq Composite Index and the Dow Jones U.S. Electrical Components and Equipment Index.
Removed
The closing sale price of our common stock on the Nasdaq Global Select Market on February 27, 2023 was $13.42.
Added
As of February 14, 2025, there were approximately 236 holders of record of our common stock, although there are a significantly larger number of beneficial owners of our common stock.
Removed
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among TTM Technologies, Inc., the Nasdaq Composite Index and the Dow Jones US Electrical Components & Equipment Index * $100 invested on January 1, 2018 in stock or index, including reinvestment of dividends. 1/1/2018 12/31/2018 12/30/2019 12/28/2020 1/3/2022 1/2/2023 TTM Technologies, Inc. $ 100.00 $ 62.09 $ 94.96 $ 87.75 $ 96.62 $ 96.23 Nasdaq Composite 100.00 97.16 132.81 192.47 235.15 158.65 Dow Jones US Electrical Components & Equipment 100.00 87.73 108.51 131.02 164.23 135.50 The performance graph above shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section.
Added
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Among TTM Technologies, Inc., the Nasdaq Composite Index and the Dow Jones U.S.
Added
Electrical Components & Equipment Index * $100 invested on December 30, 2019 in stock or index, including reinvestment of dividends. 12/30/2019 12/28/2020 1/3/2022 1/2/2023 1/1/2024 12/30/2024 TTM Technologies, Inc. $ 100.00 $ 92.41 $ 101.75 $ 101.34 $ 106.25 $ 165.99 Nasdaq Composite 100.00 144.92 177.06 119.45 172.77 223.87 Dow Jones U.S.
Added
Electrical Components & Equipment 100.00 120.75 151.36 124.87 159.56 213.20 The performance graph above shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section.
Added
Issuer Purchases of Equity Securities On May 3, 2023, our Board of Directors authorized a share repurchase program, under which we may repurchase up to $100.0 million of our outstanding shares of common stock through May 3, 2025. We did not repurchase any shares of our common stock during the quarter ended December 30, 2024. ITEM 6 .

Item 7. Management's Discussion & Analysis

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

75 edited+39 added−51 removed28 unchanged
Biggest changeThe following table sets forth the relationship of various items to net sales in our consolidated statements of operations: For the Year Ended January 2, 2023 January 3, 2022 December 28, 2020 Net sales 100.0 % 100.0 % 100.0 % Cost of goods sold 81.6 83.5 83.0 Gross profit 18.4 16.5 17.0 Operating expenses: Selling and marketing 3.0 2.8 3.0 General and administrative 6.4 5.5 5.8 Research and development 1.0 0.8 1.0 Amortization of definite-lived intangibles 1.5 1.6 1.8 Gain on sale of SH E-MS property (2.1 ) — — Restructuring charges 0.2 0.2 0.8 Impairment of goodwill — — 3.3 Total operating expenses 10.0 10.9 15.7 Operating income 8.4 5.6 1.3 Other (expense) income: Interest expense (1.8 ) (2.0 ) (3.5 ) Loss on extinguishment of debt — (0.7 ) — Other, net 0.7 0.2 — Total other expense, net (1.1 ) (2.5 ) (3.5 ) Income (loss) from continuing operations before income taxes 7.3 3.1 (2.2 ) Income tax (provision) benefit (3.5 ) (0.7 ) 1.4 Net income (loss) from continuing operations 3.8 % 2.4 % (0.8 ) % The Telephonics acquisition occurred on June 27, 2022.
Biggest changeThe relationship of various items to net sales in our consolidated statements of operations was as follows: For the Year Ended December 30, 2024 January 1, 2024 January 2, 2023 Net sales 100.0 % 100.0 % 100.0 % Cost of goods sold 80.5 81.5 81.6 Gross profit 19.5 18.5 18.4 Operating expenses: Selling and marketing 3.3 3.4 3.0 General and administrative 7.0 6.7 6.4 Research and development 1.3 1.2 1.0 Amortization of definite-lived intangibles 1.4 2.2 1.5 Impairment of goodwill 1.3 2.0 — Restructuring charges 0.4 1.1 0.2 Gain on sale of Shanghai E-MS (SH E-MS) property — — (2.1 ) Total operating expenses 14.7 16.6 10.0 Operating income 4.8 1.9 8.4 Other (expense) income: Interest expense (2.0 ) (2.2 ) (1.8 ) Loss on extinguishment of debt — (0.1 ) — Gain on sale of subsidiary — 0.1 — Other, net 0.6 0.3 0.7 Total other expense, net (1.4 ) (1.9 ) (1.1 ) Income before income taxes 3.4 — 7.3 Income tax provision (1.1 ) (0.9 ) (3.5 ) Net income (loss) 2.3 % (0.9 ) % 3.8 % The Telephonics acquisition occurred on June 27, 2022.
We derive revenues primarily from the sale of PCBs, engineered systems using customer-supplied engineering and design plans as well as our long-term contracts related to the design and manufacture of highly sophisticated intelligence, surveillance and communications solutions, RF and microwave/microelectronics components, assemblies, and subsystems.
We derive revenues primarily from the sale of PCBs, engineered systems using customer-supplied engineering and design plans as well as our long-term contracts related to the design and manufacture of highly sophisticated intelligence, surveillance, and communications solutions, and RF and microwave/microelectronics components, assemblies, and subsystems.
We provide our customers a limited right of return for defective PCBs including components, subsystems, and assemblies. We record an estimate for sales returns and allowances at the time of sale based on historical results and anticipated returns. Cost of goods sold consists of materials, labor, outside services, and overhead expenses incurred in the manufacture and testing of our products.
We provide our customers a limited right of return for defective PCBs including components, assemblies, and subsystems. We record an estimate for sales returns and allowances at the time of sale based on historical results and anticipated returns. Cost of goods sold consists of materials, labor, outside services, and overhead expenses incurred in the manufacture and testing of our products.
A critical accounting policy is defined as one that is both material to the presentation of our consolidated financial statements and requires us to make judgments that could have a material effect on our financial condition or results of operations. These policies require us to make assumptions about matters that are highly uncertain at the time of the estimate.
A critical accounting policy is defined as one that is both material to the presentation of our consolidated financial statements and requires us to make judgments that could have a material effect on our financial condition or results of operations. These policies 42 require us to make assumptions about matters that are highly uncertain at the time of the estimate.
Point in time recognition was determined as our customer does not simultaneously receive or consume the benefits provided by our performance and the asset being manufactured has alternative uses to us. 39 Goodwill and Intangible Assets We have significant goodwill and definite-lived intangibles.
Point in time recognition was determined as our customer does not simultaneously receive or consume the benefits provided by our performance and the asset being manufactured has alternative uses to us. Goodwill and Intangible Assets We have significant goodwill and definite-lived intangibles.
Shipping and handling fees and related freight costs and supplies associated with shipping products are also included as a component of cost of goods sold. Many factors affect our gross margin, including capacity utilization, product mix, production volume, supply chain issues, and yield.
Shipping and handling fees and related freight costs and supplies associated with shipping products are also included as a component of cost of goods sold. Many factors affect our gross margin, including capacity utilization, product mix, production volume, supply chain costs, and yield.
When tested quantitatively, we compare the fair value of the applicable reporting unit with its carrying value. We estimate the fair values of our reporting units using a combination of the discounted cash flow (DCF) and market approach.
When tested quantitatively, we compare the fair value of the applicable 43 reporting unit with its carrying value. We estimate the fair values of our reporting units using a combination of the discounted cash flow (DCF) and market approach.
Should we choose to remit cash to the United States from our foreign locations, we may incur tax obligations which would reduce the amount of cash ultimately available to the United States. However, we believe there would be no material tax consequences not previously accrued for the repatriation of this cash.
Should we choose to remit cash to the United States from our foreign locations, we may incur tax obligations which would reduce the amount of cash ultimately available to the United States. However, we believe there would be no material tax expenses not previously accrued for the repatriation of this cash.
For PCBs and engineered systems, including pursuant to long-term contracts related to the manufacture of h ighly sophisticated intelligence, surveillance and communications solutions, components, assemblies and subsystems, orders for products generally correspond to the production schedules of customers and are supported with firm purchase orders.
For PCBs and engineered systems, including pursuant to long-term contracts related to the manufacture of highly sophisticated intelligence, surveillance and communications solutions, components, assemblies, and subsystems, orders for products generally correspond to the production schedules of customers and are supported with firm purchase orders.
Gain on sale of SH E-MS Property On December 22, 2022, land, building, and relevant ancillary assets related to our former SH E-MS manufacturing facility was expropriated by the Chinese government for a compensation fee of RMB 477.6 million ($69.2 million as of January 2, 2023) and we recorded a gain on the sale of $51.8 million.
Gain on sale of SH E-MS Property On December 22, 2022, land, building, and relevant ancillary assets related to our former SH E-MS manufacturing facility was expropriated by the Chinese government for a compensation fee of Renminbi (RMB) 477.6 million ($69.2 million as of January 2, 2023) and we recorded a gain on the sale of $51.8 million during the year ended January 2, 2023.
COMPANY OVERVIEW We are a leading global manufacturer of technology solutions, including engineered systems, radio frequency (RF) components and RF microwave/microelectronic assemblies, and printed circuit boards (PCB). We focus on providing time-to-market and volume production of advanced technology products and offer a one-stop design, engineering and manufacturing solution to our customers.
COMPANY OVERVIEW We are a leading global manufacturer of technology solutions, including mission systems, radio frequency (RF) components, RF microwave/microelectronic assemblies, and quick-turn and technologically advanced printed circuit boards (PCB). We focus on providing time-to-market and volume production of advanced technology products and offer a one-stop design, engineering, and manufacturing solution to our customers.
The Company evaluates its goodwill on an annual basis in the fourth quarter or more frequently if it believes indicators of impairment exist. We assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount or perform a quantitative impairment test.
We evaluate goodwill on an annual basis in the fourth quarter or more frequently if we believe indicators of impairment exist. We assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount or perform a quantitative impairment test.
We discuss such risks, uncertainties and other factors throughout this report and specifically under Item 1A of Part I of this report, Risk Factors. In addition, the following discussion should be read in connection with the information presented in our consolidated financial statements and the related notes to our consolidated financial statements.
We discuss such risks, uncertainties, and other factors throughout this Annual Report on Form 10-K (Report) and specifically under Item 1A, Risk Factors of Part I of this Report. In addition, the following discussion should be read in connection with the information presented in our consolidated financial statements and the related notes to our consolidated financial statements.
An increase or decrease of 200 basis points in gross margin estimates would have increased or decreased our contract assets by $3.7 million and $2.7 million, respectively, and decreased or increased our contract liabilities by $4.1 million and $4.8 million, respectively.
An increase or decrease of 200 basis points in gross margin estimates would have increased or decreased our contract assets by $3.7 million and $2.3 million, respectively, and decreased or increased our contract liabilities by $7.2 million and $5.6 million, respectively.
This one-stop design, engineering and manufacturing solution allows us to align technology development with the diverse needs of our customers and to enable them to reduce the time required to develop new products and bring them to market.
This solution allows us to align technology development with the diverse needs of our customers and to enable them to reduce the time required to develop new products and bring them to market.
We serve a diversified customer base consisting of approximately 1,500 customers in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial and instrumentation, as well as networking and telecommunications. Our customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), distributors and government agencies.
We serve a diversified customer base consisting of approximately 1,400 customers in various markets throughout the world, including aerospace and defense, data center computing, automotive, medical, industrial and instrumentation, and networking. Our customers include original equipment manufacturers (OEMs), electronic manufacturing services (EMS) providers, original design manufacturers (ODMs), distributors, and government agencies (both domestic and allied foreign governments).
The increase in overall gross margin was due to the increase in gross margin for the PCB reportable segment to 18.2% for the year ended January 2, 2023, from 16.3% for the year ended January 3, 2022.
The increase in overall gross margin was due to the increase in gross margin for the PCB reportable segment to 19.3% for the year ended January 1, 2024, from 18.2% for the year ended January 2, 2023.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This financial review presents our operating results for each of our three most recent fiscal years and our financial condition as of January 2, 2023.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This financial review presents our operating results for each of our three most recent fiscal years and our financial condition as of December 30, 2024.
Our derivative liabilities of $1.6 million as of January 2, 2023 are expected to be settled within one year. We also have outstanding firm purchase orders with certain suppliers for the purchase of material and inventory. Orders for standard, or catalog, items can typically be canceled with little or no financial penalty.
As of December 30, 2024, $0.7 million of our derivative liabilities are expected to be settled within one year. We also have outstanding firm purchase orders with certain suppliers for the purchase of material and inventory. Orders for standard, or catalog, items can typically be canceled with little or no financial penalty.
If our estimates of gross margins are inaccurate, we may recognize too much or too little revenue in a period. While experience has shown that trends in gross margins are not volatile, changes in pricing or cost efficiencies could create significant fluctuations.
Based on the review of gross margins, we update our estimate to the model as necessary. If our estimates of gross margins are inaccurate, we may recognize too much or too little revenue in a period. While experience has shown that trends in gross margins are not volatile, changes in pricing or cost efficiencies could create significant fluctuations.
Recently Issued Accounting Standards For a description of recently adopted and issued accounting standards, including the respective dates of adoption and expected effects on our results of operations and financial condition, see Note 1 of the Notes to Consolidated Financial Statements.
Recently Issued Accounting Standards For a description of recently adopted and issued accounting standards, including the respective dates of adoption and expected effects on our results of operations and financial condition, see Part II, Item 8, Note 1, Nature of Operations and Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements. 49
Net sales for the RF&S Components reportable segment decreased $1.5 million, or 2.5%, to $57.1 million for the year end January 2, 2023 from $58.6 million for the year ended January 3, 2022. The decrease in RF&S Components net sales was primarily due to lower demand.
Net sales for the RF&S Components reportable segment decreased $18.6 million, or 32.5%, to $38.5 million for the year ended January 1, 2024 from $57.1 million for the year ended January 2, 2023. The decrease in RF&S Components net sales was primarily due to lower demand in our networking end market.
We anticipate that financing capital expenditures, financing acquisitions, funding working capital requirements, servicing debt, and repurchasing common stock will be the principal demands on our cash in the future.
Our principal uses of cash have been to finance capital expenditures, finance acquisitions, fund working capital requirements, repay debt obligations, and repurchase common stock. We anticipate that financing capital expenditures, financing acquisitions, funding working capital requirements, servicing debt, and repurchasing common stock will be the principal demands on our cash in the future.
Historically, we have not paid any such penalties, and as of January 2, 2023, no such penalties have been paid. Seasonality We tend to experience modest seasonal softness in the first and third quarters due to holidays and vacation periods in China and North America, respectively, which limit production leading to stronger revenue levels in the second and fourth quarters.
Seasonality We tend to experience modest seasonal softness in the first and third quarters due to holidays and vacation periods in China and North America, respectively, which limit production leading to stronger revenue levels in the second and fourth quarters.
Our effective tax rate is primarily impacted by tax rates in China and Hong Kong, the US federal income tax rate, apportioned state income tax rates, the generation of credits and deductions available to us, as well as changes in valuation allowances, certain non-deductible items, global intangible low taxed income, and the establishment of a deferred tax liability related to unremitted foreign earnings.
Our effective tax rate is primarily impacted by tax rates in China and Hong Kong, the U.S. federal income tax rate, apportioned state income tax rates, the generation of credits and deductions available to us, as well as changes in the valuation allowance, certain non-deductible items, global intangible low taxed income, and the establishment of a deferred tax liability related to unremitted foreign earnings. 47 Liquidity and Capital Resources Our principal sources of liquidity have been cash provided by operations, the issuance of debt, and borrowings under our revolving credit facilities.
Our aggregate interest on debt obligations as of January 2, 2023 amounted to $174.1 million, which are expected to be settled as follows: $46.6 million within 1 year, $59.1 million within 1-3 years, $40.0 million within 4-5 years, and $28.4 million after 5 years. For debt obligations based on variable rates, interest rates used are as of January 2, 2023.
Our aggregate interest on debt obligations as of December 30, 2024 amounted to $226.0 million, which are expected to be settled as follows: $47.6 million within 1 year, $94.9 million within 1-3 years, $74.7 million within 4-5 years, and $8.8 million after 5 years. For debt obligations based on variable rates, interest rates used are as of December 30, 2024.
Long-term Debt and Letters of Credit As of January 2, 2023, we had $929.4 million of outstanding debt, net of discount and debt issuance costs, composed of $495.2 million of Senior Notes due March 2029, $404.2 million of a Term Loan due September 2024, and $30.0 million under the Asia Asset-Based Lending Credit Agreement (Asia ABL).
Long-term Debt and Letters of Credit As of December 30, 2024, we had $918.2 million of outstanding debt, net of discount and debt issuance costs, composed of $496.6 million of Senior Notes due 2029, $339.2 million under the Term Loan Facility, $80.0 million under the Asia Asset‑Based Lending Credit Agreement (Asia ABL), and $2.3 million of other loans.
The following table shows the percentage of our net sales attributable to each of the principal end markets we serve for the periods indicated: For the Year Ended End Markets (1) January 2, 2023 January 3, 2022 December 28, 2020 Aerospace and Defense 35 % 33 % 36 % Automotive 17 18 15 Data Center Computing (2) 15 14 12 Medical/Industrial/Instrumentation 20 19 18 Networking 13 15 18 Other (3) — 1 1 Total 100 % 100 % 100 % (1) Sales to EMS companies are classified by the end markets of their OEM customers.
The percentage of our net sales attributable to each of the principal end markets we served was as follows: For the Year Ended December 30, 2024 January 1, 2024 January 2, 2023 End Markets (1) : Aerospace and Defense 46 % 45 % 35 % Automotive 13 16 17 Data Center Computing 21 14 15 Medical/Industrial/Instrumentation 14 17 20 Networking 6 8 13 Total 100 % 100 % 100 % (1) Sales to EMS companies are classified by the end markets of their OEM customers.
Selling and marketing expenses consist primarily of salaries, labor related benefits, and commissions paid to our internal sales force, independent sales representatives, and our sales support staff, as well as costs associated with marketing materials and trade shows. 38 General and administrative costs primarily include the salaries for executive, finance, accounting, information technology, and human resources personnel, as well as expenses for accounting and legal assistance, incentive compensation expense, and gains or losses on the sale or disposal of property, plant and equipment.
General and administrative costs primarily include the salaries for executive, finance, accounting, information technology, and human resources personnel, as well as expenses for accounting and legal assistance, incentive compensation expense, and gains or losses on the sale or disposal of property, plant, and equipment.
Fair value is determined through various valuation techniques, including cost-based, market and income approaches as considered necessary, which involve judgments related to future cash flows and the application of the appropriate valuation model.
Fair value is determined through various valuation techniques, including cost-based, market, and income approaches as considered necessary, which involve judgments related to future cash flows and the application of the appropriate valuation model. 44 RESULTS OF OPERATIONS We operate on a 52 or 53 week fiscal calendar with the fourth quarter ending on the Monday nearest December 31.
Net sales for the PCB reportable segment increased $251.0 million, or 11.5%, to $2,437.9 million for the year ended January 2, 2023 from $2,186.9 million for the year ended January 3, 2022.
Net sales for the PCB reportable segment decreased $243.9 million, or 10.0%, to $2,194.0 million for the year ended January 1, 2024 from $2,437.9 million for the year ended January 2, 2023.
We use historical information to estimate the gross margin associated with performance obligations that are satisfied over time. We reevaluate our estimate of gross margins on a quarterly basis. Based on the review of gross margins, we update our estimate to the model as necessary.
The increase in total contract assets in 2024 is primarily due to an increase in unbilled receivables. We use historical information to estimate the gross margin associated with performance obligations that are satisfied over time. We reevaluate our estimate of gross margins on a quarterly basis.
Selling and Marketing Expenses Selling and marketing expenses increased $12.2 million to $75.2 million for the year ended January 2, 2023 from $63.0 million for the year ended January 3, 2022.
Selling and marketing expenses increased $1.7 million to $76.9 million, or 3.4% of net sales, for the year ended January 1, 2024 from $75.2 million, or 3.0% of net sales, for the year ended January 2, 2023.
As a percentage of net sales, selling and marketing expenses were 3.0% for the year ended January 2, 2023 as compared to 2.8% for the year ended January 3, 2022.
However, selling and marketing expenses as a percentage of net sales decreased to 3.3% for the year ended December 30, 2024 as compared to 3.4% for the year ended January 1, 2024.
Subsequent to January 2, 2023, we made an optional debt principal prepayment of $50.0 million on our Term Loan Facility. Pursuant to the terms of the Term Loan Facility and Senior Notes due 2029, we are subject to certain affirmative and negative covenants, including limitations on indebtedness, corporate transactions, investments, dispositions, and share payments.
Pursuant to the terms of the Senior Notes due 2029 and Term Loan Facility, we are subject to certain affirmative and negative covenants, including limitations on indebtedness, corporate transactions, investments, dispositions, and restricted payments. Under the U.S. Asset-Based Lending Credit Agreement (U.S.
Additional information regarding our indebtedness, including information about the credit available under our debt facilities, interest rates and other key terms of our outstanding indebtedness, is included in Note 7 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Additional information regarding our indebtedness, including information about the credit available under our debt facilities, interest rates, and other key terms of our outstanding indebtedness, is included in Part II, Item 8, Note 8, Long‑term Debt and Letters of Credit , of the Notes to Consolidated Financial Statements included in this Report. 48 Supplier Finance Program Obligations We have agreements with financial institutions to facilitate payments to certain suppliers.
For information regarding net sales by country, see Note 17 of the Notes to Consolidated Financial Statements. Gross Margin Overall gross margin increased to 18.4% for the year ended January 2, 2023 from 16.5% for the year ended January 3, 2022.
For information regarding net sales by country, see Part II, Item 8, Note 10, Segment Information , of the Notes to Consolidated Financial Statements in this Report. 45 Gross Margin Overall gross margin increased to 19.5% for the year ended December 30, 2024 from 18.5% for the year ended January 1, 2024.
Gross margin for the RF&S Components reportable segment increased to 52.6% for the year ended January 3, 2022, from 45.9% for the year ended December 28, 2020, primarily due to higher sales. Capacity utilization is a key driver for us, which is measured by the actual production as a percentage of maximum capacity.
Gross margin for the RF&S Components reportable segment decreased to 54.7% for the year ended January 1, 2024, from 62.3% for the year ended January 2, 2023, primarily due to lower sales. An important factor affecting gross margins is capacity utilization, which is measured by the actual production as a percentage of maximum capacity.
In addition, as a result of Telephonics’ operations in the period commencing on June 27, 2022, $7.1 million of contract assets are expected to be collected after one year and included as a component of deposits and other non-current assets on the consolidated balance sheets as of January 2, 2023.
As of January 1, 2024, total contract assets were $303.3 million, of which $292.1 million were expected to be collected within one year and recorded as contract assets and $11.3 million were expected to be collected after one year and included as a component of deposits and other non-current assets on the consolidated balance sheets.
A summary of our long-term debt obligations as of January 2, 2023 is included in Note 7 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
A summary of our long-term debt obligations as of December 30, 2024 is included in Part II, Item 8, Note 8, Long‑term Debt and Letters of Credit , of the Notes to Consolidated Financial Statements included in this Report.
General and Administrative Expenses General and administrative expenses increased $33.3 million to $158.2 million, or 6.4% of net sales, for the year ended January 2, 2023 from $124.9 million, or 5.5% of net sales, for the year ended January 3, 2022.
General and administrative expenses decreased $8.5 million to $149.6 million for the year ended January 1, 2024 from $158.2 million for the year ended January 2, 2023, but increased as a percentage of net sales to 6.7% from 6.4% over the same two periods.
Contractual Obligations and Commitments As part of our ongoing operations, we enter into contractual arrangements that obligate us to make future cash payments. These obligations impact our liquidity and capital resource needs. Our estimated future obligations consist of long-term debt obligations, interest on debt obligations, derivative liabilities, purchase obligations, and leases as of January 2, 2023.
These obligations impact our liquidity and capital resource needs. Our estimated future obligations consist of long-term debt obligations, interest on debt obligations, derivative liabilities, purchase obligations, and leases.
As of January 2, 2023, we had outstanding offset agreements of approximately $20.2 million, some of which extend through 2028. Offset programs usually extend over several years and in some cases provide for penalties in the event we fail to perform in accordance with contract requirements.
Offset programs usually extend over several years and in some cases provide for penalties in the event we fail to perform in accordance with contract requirements. To date, we have not been obligated to pay any such penalties.
Management will continue to monitor the reporting units for changes in the business environment that could impact recoverability. The recoverability of goodwill is dependent upon the continued growth of cash flows from our business activities.
The recoverability of goodwill is dependent upon the continued growth of cash flows from our business activities.
As of January 2, 2023, we were in compliance with the covenants under the Term Loan Facility, Senior Notes due 2029 and ABL Revolving Loans.
ABL) and Asia ABL (collectively, the ABL Revolving Loans), we are also subject to various financial covenants, including leverage and fixed charge coverage ratios. As of December 30, 2024, we were in compliance with the covenants under the Senior Notes due 2029, Term Loan Facility, and ABL Revolving Loans.
While our customers include both OEMs and EMS providers, we measure customers based on OEM companies, as they are the ultimate end customers. Sales to our five largest customers accounted for 33%, 30% and 29% of our net sales in fiscal years 2022, 2021 and 2020, respectively. We sell to OEMs both directly and indirectly through EMS providers.
Sales to our five largest customers accounted for 42%, 41%, and 33% of our net sales in fiscal years 2024, 2023, and 2022, respectively, which is in line with the increase in sales in our aerospace and defense end market. We sell to OEMs both directly and indirectly through EMS providers.
Total net sales increased $143.4 million, or 6.8%, to $2,248.7 million for the year ended January 3, 2022 from $2,105.3 million for the year ended December 28, 2020.
Net Sales Total net sales increased $210.2 million, or 9.4%, to $2,442.8 million for the year ended December 30, 2024 from $2,232.5 million for the year ended January 1, 2024.
This measure is particularly important in our high-volume PCB facilities in Asia, as a significant portion of our operating costs are fixed in nature. Capacity utilization for the year ended January 2, 2023 in our Asia and North America PCB facilities was 81% and 43%, respectively, compared to 86% and 51%, respectively, for the year ended January 3, 2022.
This measure is particularly important in our high-volume PCB facilities in Asia, as a significant portion of our operating costs are fixed in nature.
As a percentage of net sales, selling and marketing expenses were 2.8% for the year ended January 3, 2022 as compared to 3.0% for the year ended December 28, 2020. The decrease in selling and marketing expenses in 2021 was primarily due to a decrease in commission expense.
The decrease in selling and marketing expenses as a percentage of net sales resulted from higher net sales for the year ended December 30, 2024 as compared to January 1, 2024.
Other expense, net decreased $18.4 million to $55.9 million for the year ended January 3, 2022 from $74.4 million for the year ended December 28, 2020.
Total Other Expense, Net Total other expense, net decreased $9.9 million to $32.1 million for the year ended December 30, 2024 from $42.0 million for the year ended January 1, 2024.
Cash flow provided by operating activities from continuing operations during the year ended January 2, 2023 was $272.9 million as compared to $176.6 million in the same period in fiscal year 2021. The increase in cash flow was primarily due to an increase in net income of $40.2 million from continuing operations and an overall decreased investment in working capital.
Cash flow provided by operating activities during the year ended December 30, 2024 was $236.9 million as compared to $187.3 million in the same period in 2023. The increase in cash flow was primarily due to the $75.0 million increase in net income.
The increase in PCB net sales was primarily due to increased demand in our Automotive, Data Center Computing, and Medical/Industrial/Instrumentation end markets, partially offset by lower demand in our Aerospace and Defense and Networking end markets.
The primary driver of this increase was demand growth for generative artificial intelligence (AI) applications in our data center computing end market and strong demand and improved operational execution in our aerospace and defense end market, partially offset by demand weakness due to customers' inventory correction in our automotive, medical, industrial, and instrumentation, and networking end markets.
Gross margin for the RF&S Components reportable segment increased to 62.3% for the year ended January 2, 2023, from 52.6% for the year ended January 3, 2022, primarily due to favorable product mix. Overall gross margin decreased to 16.5% for the year ended January 3, 2022 from 17.0% for the year ended December 28, 2020.
Gross margin for the RF&S Components reportable segment decreased to 48.9% for the year ended December 30, 2024, from 54.7% for the year ended January 1, 2024, primarily due to lower sales. Overall gross margin increased slightly to 18.5% for the year ended January 1, 2024 from 18.4% for the year ended January 2, 2023.
As of January 2, 2023, we had cash and cash equivalents of approximately $402.7 million, of which approximately $161.7 million was held by our foreign subsidiaries, primarily in China.
As of December 30, 2024, we had cash and cash equivalents of approximately $503.9 million, of which approximately $207.9 million was held by our foreign subsidiaries, primarily in China, and $195.6 million of available borrowing capacity under our revolving credit facilities.
The increase in expense was primarily due to $11.5 million of one-time costs incurred in connection with the acquisition of Telephonics on June 27, 2022 and $6.6 million of general and administrative expenses incurred by Telephonics post acquisition. In addition, there were increases in incentive compensation, labor costs, and bad debt.
The decrease in the amount of general and administrative expenses primarily resulted from $13.2 million of reduced acquisition and integration costs mainly related to the acquisition of Telephonics on June 27, 2022. In addition, there were decreases in incentive compensation and bad debt.
Net cash used in financing activities for continuing operations during the year ended January 3, 2022 was $7.2 million, primarily reflecting repayment of long-term debt of $425.8 million, repurchases of common stock of $64.7 million, capital equipment financing 43 of $7.5 million, payment of debt issuance costs of $6.0 million, and cash used to settle warrants of $3.2 million, less the proceeds from long-term debt borrowing of $500.0 million.
Net cash used in financing activities during the year ended January 1, 2024 was $47.7 million, reflecting repayment of long-term debt borrowings of $291.6 million, repurchases of common stock of $24.4 million, refund of customer deposits of $7.5 million, payment of debt issuance costs of $5.5 million and payment of original issue discount of $3.5 million, partially offset by the receipt of proceeds of $234.8 million from long-term debt borrowing and proceeds of $50.0 million from borrowings under our revolving credit facilities.
Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting unit and market conditions. Under the market approach, we use revenue and earnings multiples based on comparable industry multiples to estimate the fair value of the reporting units.
We determined the fair value of the reporting unit by using both a DCF and a market approach. Under the market approach, we used revenue and earnings multiples based on comparable industry multiples to estimate the fair value of the reporting unit.
Net cash used in investing activities for continuing operations was approximately $84.1 million for the year ended January 3, 2022, primarily reflecting $82.0 million for purchases of property, plant and equipment and other assets, $3.2 million investment in an unconsolidated joint venture, less $1.4 million for proceeds from sale of property, plant and equipment and other assets.
Net cash used in investing activities was $146.2 million for the year ended December 30, 2024, primarily reflecting the use of $185.7 million for purchases of property, plant, and equipment and other assets.
This increase primarily resulted from an increase in net sales for the PCB reportable segment of $206.0 million, or 10.4%, to $2,186.9 million for the year ended January 3, 2022 from $1,980.9 million for the year ended December 28, 2020.
Net sales for the PCB reportable segment increased $211.6 million, or 9.6%, to $2,405.6 million for the year ended December 30, 2024 from $2,194.0 million for the year ended January 1, 2024.
Net cash used in investing activities for continuing operations was approximately $395.5 million for the year ended January 2, 2023, primarily reflecting $298.3 million to fund the acquisition of Telephonics, $102.9 million for purchases of property, plant and equipment and other assets, less $6.0 million for proceeds from sale of property, plant and equipment and other assets.
Net cash used in investing activities was $92.0 million for the year ended January 1, 2024, primarily reflecting the use of $160.2 million for purchases of property, plant, and equipment and other assets, partially offset by the receipt of $61.8 million of proceeds from the sale of property associated with our Shanghai E-MS subsidiary and $6.0 million of proceeds from the sale of our Shanghai Backplane Assembly subsidiary, net of cash disposed.
During 2022, we repurchased a total of 2.7 million shares of our common stock for $35.4 million (including commissions). As of January 2, 2023, there are no remaining amounts authorized for repurchase. From its commencement, we repurchased a total of 7.5 million shares of our common stock for $100.0 million under the share repurchase program.
Share Repurchases On May 3, 2023, our Board of Directors authorized a share repurchase program (2023 Repurchase Program) allowing us to repurchase up to $100.0 million of our common stock from time to time through May 3, 2025. During 2024, we repurchased approximately 2.0 million shares of our common stock for a total cost of $34.5 million (including commissions).
These increases were partially offset by gains on the sale of assets. General and administrative expenses increased $2.4 million to $124.9 million, or 5.5% of net sales, for the year ended January 3, 2022 from $122.5 million, or 5.8% of net sales, for the year ended December 28, 2020.
Research and Development Expenses Research and development expenses increased $4.6 million to $31.8 million, or 1.3% of net sales, for the year ended December 30, 2024 from $27.3 million, or 1.2% of net sales, for the year ended January 1, 2024.
Fiscal year 2022 and 2020 were 52 weeks ended on January 2, 2023 and December 28, 2020, respectively. Fiscal year 2021 consisted of 53 weeks ended on January 3, 2022, with the additional week included in the fourth quarter.
Fiscal years 2024, 2023, and 2022 consisted of 52 weeks ended on December 30, 2024, January 1, 2024, and January 2, 2023, respectively.
A summary of our lease obligations as of January 2, 2023 is included in Note 2 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K. 44 Offset Agreements Following the acquisition of Telephonics on June 27, 2022, we have and may continue to enter into industrial cooperation agreements, sometimes referred to as offset agreements, as a condition to obtaining orders for our products and services from customers in foreign countries.
Offset Agreements We have previously entered into, and may continue to enter into industrial cooperation agreements, sometimes referred to as offset agreements, as a condition to obtaining orders for our products and services from customers in foreign countries. As of December 30, 2024, we had outstanding offset agreements of approximately $27.3 million, some of which extend through 2028.
Income Taxes Income tax expense increased $72.7 million to $88.3 million for the year ended January 2, 2023 from $15.6 million for the year ended January 3, 2022.
Income Taxes Income tax expense increased $8.6 million to $27.7 million for the year ended December 30, 2024 from $19.0 million for the year ended January 1, 2024, primarily due to an increase in pre-tax book income.
The change in income tax from fiscal year 2021 to fiscal year 2022 was primarily due to an increase in the valuation allowance set up against U.S. deferred tax assets, an increase in pre-tax book income, and a gain on the sale of certain assets of our Shanghai E-MS subsidiary.
Income tax expense decreased $69.3 million to $19.0 million for the year ended January 1, 2024 from $88.3 million for the year ended January 2, 2023, primarily due to a decrease in pre-tax book income, the absence of an expense to set up a valuation allowance against U.S. deferred tax assets in 2022, and the release of uncertain tax positions due to lapse of statute of limitations.
The increase in selling and marketing expense was primarily due to $4.8 million of selling and marketing expenses incurred by Telephonics post acquisition and increases in labor costs and commission expense company wide. Selling and marketing expenses decreased $0.9 million to $63.0 million for the year ended January 3, 2022 from $63.9 million for the year ended December 28, 2020.
The increase in selling and marketing expense was primarily due to the inclusion of a full year of Telephonics expenses, which resulted in an increase of $3.5 million and an increase in labor and travels costs, partially offset by a $3.7 million decrease in commission expense.
The decrease in other expense, net was primarily due to: • an increase in other income of $17.8 million related to the weakening of the Chinese RMB, which we utilize at our China facilities for employee-related expenses, RMB denominated purchases, and other costs of running our operations in China, • the absence of $15.2 million of loss on extinguishment of debt, • partially offset by the decrease in other income of $4.1 million related to the change in fair value of warrant liabilities.
This decrease was primarily due to the weakening RMB resulting in a $1.2 million foreign exchange gain during the year ended December 30, 2024, as compared to a $3.9 million foreign exchange loss during the year ended January 1, 2024. We utilize the RMB at our China facilities for employee-related and other costs of running our operations in China.
Other Expense Other expense, net decreased $28.4 million to $27.5 million for the year ended January 2, 2023 from $55.9 million for the year ended January 3, 2022.
In addition, there was a $3.8 million increase in interest income and $0.6 million decrease in interest expense. Total other expense, net increased $14.5 million to $42.0 million for the year ended January 1, 2024 from $27.5 million for the year ended January 2, 2023.
In the fourth quarter of 2022, we performed our annual impairment test quantitatively and concluded that goodwill was not impaired. In performing the impairment test, we determined the fair value of our reporting units by using discounted cash flow (DCF) and market analyses.
In the fourth quarter of 2024, we performed our annual goodwill impairment test qualitatively for the PCB reporting unit and concluded that it was more likely than not that there was no impairment to goodwill. In the fourth quarter of 2024, we performed our annual goodwill impairment test quantitatively for the RF&S Components reporting unit.
Net Sales Total net sales increased $246.3 million, or 11.0%, to $2,495.0 million for the year ended January 2, 2023 from $2,248.7 million for the year ended January 3, 2022.
General and Administrative Expenses General and administrative expenses increased $20.5 million to $170.1 million, or 7.0% of net sales, for the year ended December 30, 2024 from $149.6 million, or 6.7% of net sales, for the year ended January 1, 2024.
This increase was primarily due to better product mix, higher pricing and premium revenue, partially offset by higher labor costs, particularly in North America as we raised wages in the first quarter of 2022 to be more competitive.
This increase was primarily due to better product mix and improved execution in our North America region, partially offset by lower revenues and less quick-turn premium in our commercial markets.
The decrease in other expense, net was primarily due to: • a decrease in interest expense of $27.7 million due to overall lower levels of debt outstanding, • an increase in other income of $4.2 million for the year ended January 3, 2022 related to the change in fair value of warrant liabilities, • partially offset by $15.2 million of loss on extinguishment of debt.
This increase was primarily due to a decrease in other income of $16.8 million related to the strengthening of the Chinese RMB and an increase in interest expense of $2.6 million due to higher interest rates, partially offset by an increase in interest income of $5.9 million.
We will receive the proceeds as follows: 50% before March 30, 2023, 40% before June 30, 2023, and 10% before December 30, 2023. 42 Impairment of Goodwill For the year ended December 28, 2020, we recorded a goodwill impairment charge of $69.2 million. See Note 5 of the Notes to Consolidated Financial Statements for further information.
Impairment of Goodwill For the years ended December 30, 2024 and January 1, 2024, we recorded goodwill impairment charges of $32.6 million and $44.1 million, respectively. See Part II, Item 8, Note 6, Goodwill , of the Notes to Consolidated Financial Statements included in this Report for further information.
Also contributing to the increase in total net sales was an increase in net sales for the RF&S Components reportable 41 segment of $13.9 million, or 31.2%, to $58.6 million for the year ended January 3, 2022 from $44.7 million for the year ended December 28, 2020.
We also sold our Shanghai Backplane Assembly entity in the first quarter of 2023, which had the effect of reducing net sales in 2024 by $8.4 million. Net sales for the RF&S Components reportable segment decreased $1.4 million, or 3.6%, to $37.1 million for the year ended December 30, 2024 from $38.5 million for the year ended January 1, 2024.
Removed
RECENT DEVELOPMENTS On February 8, 2023, we announced that we intend to close PCB manufacturing operations in Anaheim and Santa Clara, California, and Hong Kong and to consolidate the business from these impacted sites into our remaining facilities. The plant closures are expected to improve both facility and talent utilization across our footprint resulting in improved profitability.
Added
RECENT DEVELOPMENTS In the third quarter of 2024, we commenced construction of our new advanced technology PCB manufacturing facility in Syracuse, New York. We expect that our new facility will bring advanced technology capability for our domestic high-volume production of ultra-high-density interconnect (HDI) PCBs in support of national security requirements.
Removed
We expect to record between $22.0 million and $28.0 million in separation, asset impairment and disposal costs related to this restructuring, primarily between now and the end of 2023. Approximately 80% of these costs are expected to be in the form of cash expenditures and the rest in the form of non-cash charges.
Added
We believe the planned investment aligns with New York State’s continuing focus on the region as a premier technology hub for U.S. electronics and the recent selection of Buffalo-Rochester-Syracuse (BRS) for the Federal Tech Hub designation. The project reflects our support for cultivating a stronger microelectronics ecosystem in New York and across the U.S. Aerospace and Defense industrial base.
Removed
On December 22, 2022, our land, building, and relevant ancillary assets related to our former Shanghai E-MS (SH E-MS) manufacturing facility was expropriated by the Chinese government for a compensation fee of Renminbi (RMB) 477.6 million ($69.2 million as of January 2, 2023) generating a gain on the sale of $51.8 million.

… 85 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+5 added−20 removed0 unchanged
Biggest changeSee Liquidity and Capital Resources in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 7 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K for further discussion of our financing facilities and capital structure.
Biggest changeInformation regarding our interest rate swap is as follows: For the Year Ended December 30, 2024 (In thousands, except interest rates) Average interest received rate 5.16 % Interest received amount $ 13,018 Average interest payout rate 3.49 % Interest payout amount $ (8,800 ) See Liquidity and Capital Resources in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8, Note 8, Long-term Debt and Letters of Credit , of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K (Report) for further discussion of our financing facilities and capital structure.
Foreign Currency Rate Risks In the normal course of business, we are exposed to risks associated with fluctuations in foreign currency exchange rates related to transactions that are denominated in currencies other than our functional currencies, as well as the effects of translating amounts denominated in a foreign currency to the U.S.
Foreign Currency Exchange Rate Risks In the normal course of business, we are exposed to risks associated with fluctuations in foreign currency exchange rates related to transactions that are denominated in currencies other than our functional currencies, as well as the effects of translating amounts denominated in a foreign currency to the U.S.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK In the normal course of business operations, we are exposed to risks associated with fluctuations in interest rates, foreign currency exchange rates, and commodity prices. We address these risks through controlled risk management that includes the use of derivative financial instruments to economically hedge or reduce these exposures.
ITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK In the normal course of business operations, we are exposed to risks associated with fluctuations in interest rates and foreign currency exchange rates. We address these risks through controlled risk management that includes the use of derivative financial instruments to economically hedge or reduce these exposures.
Dollar as a normal part of our financial reporting process. Most of our foreign operations have the U.S. Dollar as their functional currency, however, one of our China facilities utilize the Renminbi (RMB), which results in recognition of translation adjustments included as a component of other comprehensive income (loss).
Dollar as a normal part of our financial reporting process. Most of our foreign operations have the U.S. Dollar as their functional currency. However, one of our China facilities utilizes the Renminbi (RMB), which results in recognition of translation adjustments included as a component of other comprehensive income (loss).
Our foreign exchange exposure results primarily from employee-related and other costs of running our operations in foreign countries, foreign currency denominated purchases and translation of balance sheet accounts denominated in foreign currencies. We do not engage in hedging to manage this foreign currency risk, except for certain equipment purchases. However, we may consider the use of derivatives in the future.
Our foreign exchange exposure results primarily from employee-related and other costs of running our operations in foreign countries, foreign currency denominated purchases, and translation of balance sheet accounts denominated in foreign currencies. We do not engage in hedging to manage this foreign currency risk. However, we may consider the use of derivatives in the future.
As of January 2, 2023, approximately 53.4% of our debt was based on fixed rates. Based on our borrowings as of January 2, 2023, an assumed 100 basis point change in variable rates would cause our annual interest cost to change by $4.4 million.
As of December 30, 2024, approximately 81.1% of our debt was based on fixed rates. Based on our borrowings as of December 30, 2024, an assumed 100 basis point change in variable rates would cause our annual interest cost to change by $1.8 million.
During the term of the interest rate swap, we paid a fixed rate of 2.84% against the first interest payments of a portion of our LIBOR-based debt and received floating 1-month LIBOR during the swap period. At inception, we designated the interest rate swap as a cash flow hedge and the fair value of the interest rate swap was zero.
Under the terms of the interest rate swap, we pay a fixed rate of 3.49% against a portion of our Term SOFR-based debt and receive floating 1‑month CME Term SOFR during the swap period. At inception, we designated the interest rate swap as a cash flow hedge and the fair value of the interest rate swap was zero.
Interest Rate Risks Our business is exposed to risk resulting from fluctuations in interest rates. Our interest expense is more sensitive to fluctuations in the general level of LIBOR interest rates than to changes in rates in other markets. Increases in interest rates would increase interest expense relating to our outstanding variable rate borrowings and increase the cost of debt.
Interest Rate Risks Our business is exposed to risk resulting from fluctuations in interest rates. Our interest expense is more sensitive to fluctuations in the general level of Term Secured Overnight Financing Rate (SOFR) interest rates than to changes in rates in other markets.
We do not enter into derivative financial instruments for trading or speculative purposes. We have not experienced any losses to date on any derivative financial instruments due to counterparty credit risk.
We do not enter into derivative financial instruments for trading or speculative purposes. As of December 30, 2024, we did not have any material commodity contracts in place and believe our exposure to commodity price risk is not material. We have not experienced any losses to date on any derivative financial instruments due to counterparty credit risk.
Fluctuations in interest rates can also lead to significant fluctuations in the fair value of our debt obligations. On May 15, 2018, we entered into a four-year pay-fixed, receive floating (1-month LIBOR), interest rate swap arrangement with a notional amount of $400.0 million for the period beginning June 1, 2018 and ended on June 1, 2022.
In March 2023, we entered into a four-year pay-fixed, receive-floating (1-month Chicago Mercantile Exchange (CME) Term SOFR), interest rate swap arrangement with a notional amount of $250.0 million for the period beginning April 1, 2023 and ending on April 1, 2027.
No ineffectiveness was recognized for the year ended January 2, 2023. During the year ended January 2, 2023, the interest rate swap increased interest expense by $4.1 million. Since June 1, 2022, our $400.0 million LIBOR-based variable debt has been more sensitive to fluctuations in interest rates due to the expiration of the interest rate swap arrangement.
No ineffectiveness was recognized for the year ended December 30, 2024. During the years ended December 30, 2024 and January 1, 2024, the interest rate swap decreased interest expense by $4.2 million and $3.2 million, respectively.
Removed
To ensure the adequacy and effectiveness of our foreign exchange and commodity price hedge positions, we continually monitor our foreign exchange forward positions and commodity hedge price positions, both on a stand-alone basis and in conjunction with their underlying foreign currency and commodity price exposures, from an accounting and economic perspective.
Added
Increases in interest rates would increase interest expense relating to our outstanding variable rate borrowings and increase the cost of debt. Fluctuations in interest rates can also lead to significant fluctuations in the fair value of our debt obligations.
Removed
However, given the inherent limitations of forecasting and the anticipatory nature of the exposures intended to be hedged, we cannot be assured that such programs will offset more than a portion of the adverse financial impact resulting from unfavorable movements in either foreign exchange rates or commodity prices.
Added
As of December 30, 2024, the fair value of the interest rate swap was recorded as an asset in the amount of $3.1 million, of which $1.8 million is included as a component of prepaid expenses and other current assets and $1.3 million is included as a component of deposits and other non-current assets.
Removed
In addition, the timing of the accounting for recognition of gains and losses related to mark-to-market instruments for any given period may not coincide with the timing of gains and losses related to the underlying economic exposures and, therefore, may adversely affect our consolidated operating results and financial position.
Added
As of January 1, 2024, the fair value of the interest rate swap was recorded as a net asset of $1.8 million, of which $3.3 million is included as a component of prepaid expenses and other current assets and $1.5 million is included as a component of other long-term liabilities.
Removed
We currently do not expect to enter into a new interest rate swap arrangement.
Added
Our primary foreign exchange exposure is to the RMB and Malaysian Ringgit (MYR).
Removed
On July 27, 2017, the Financial Conduct Authority (FCA) announced the desire to phase out the use of LIBOR by the end of 2021. More recently, on March 5, 2021, the FCA announced that all LIBOR settings will either cease to be provided by any administrator or 45 no longer be representative.
Added
In general, our Chinese customers pay us in RMB, which partially mitigates this foreign currency exchange risk. 50 Debt Instruments The fiscal calendar maturities of our debt instruments for the next five years and thereafter were as follows: As of December 30, 2024 2025 2026 2027 2028 2029 Thereafter Total Fair Value Weighted Average Interest Rate (In thousands, except interest rates) US$ Variable Rate (1) $ 3,465 $ 3,465 $ 4,331 $ 83,465 $ 2,599 $ 328,309 $ 425,634 $ 426,930 6.41 % US$ Fixed Rate 330 350 404 363 500,419 445 502,311 466,636 4.01 Total $ 3,795 $ 3,815 $ 4,735 $ 83,828 $ 503,018 $ 328,754 $ 927,945 $ 893,566 (1) Interest rate swap effectively fixed $250,000 of variable rate debt.
Removed
Specifically, this occurred immediately after December 31, 2021, in the case of all Sterling, Euro (EUR), Swiss franc and Japanese yen settings, and the 1-week, and 2-month U.S. dollar settings; and immediately after June 30, 2023, in the case of the remaining U.S. dollar settings.
Removed
However, U.S. banking regulators have made it clear that U.S.-dollar LIBOR originations should end by no later than December 31, 2021, and that new LIBOR originations prior to that date must provide for an alternative reference rate in existing contracts.
Removed
On July 29, 2021, the Alternative Reference Rates Committee (ARRC) announced that it is now formally recommending CME Group’s forward-looking Secured Overnight Financing Rate term rates (SOFR Term Rates).
Removed
In accordance with recommendations from ARRC, U.S.-dollar LIBOR is expected to be replaced with the Secured Overnight Financing Rate (SOFR) and SOFR Term Rates, a new index calculated by reference to short-term repurchase agreements for U.S. Treasury securities.
Removed
Further, the International Swaps and Derivatives Association, Inc. recently announced fallback language for LIBOR-referencing derivatives contracts that also provides for SOFR as the primary replacement rate in the event of a LIBOR cessation.
Removed
The market transition from LIBOR to SOFR is expected to be complicated, including the development of term SOFR rates and credit adjustments to accommodate differences between LIBOR and SOFR.
Removed
During the transition period, LIBOR may exhibit increased volatility or become less representative, and the overnight Treasury repurchase market underlying SOFR may also experience disruptions from time to time, which may result in unexpected fluctuations in SOFR.
Removed
Our primary foreign exchange exposure is to the RMB. In general, our Chinese customers pay us in RMB, which partially mitigates this foreign currency exchange risk. Our foreign subsidiaries may at times enter into forward exchange contracts to manage foreign currency risks in relation to certain purchases of machinery denominated in foreign currencies other than our functional currencies.
Removed
As of January 2, 2023, the notional amount of the foreign exchange contracts was approximately $1.6 million (EUR 1.4 million). There were no foreign exchange contracts as of January 3, 2022. We designated certain of these foreign exchange contracts as cash flow hedges. Commodity Price Risks We are exposed to certain commodity risks associated with prices for various raw materials.
Removed
In particular, we have been experiencing volatility in prices and increasing lead times of copper clad laminates (CCLs), a key raw material for the manufacture of PCBs. This may negatively affect our profitability. CCLs are made from epoxy resin, glass cloth and copper foil, all of which are seeing limited supply and volatility in prices.
Removed
We only buy a small amount of copper directly. However, copper is a major driver of laminate cost. We are hedging copper as a proxy for hedging laminate.
Removed
As of January 2, 2023, we had commodity contracts with a notional quantity of 700 metric tonnes each for the periods: (i) beginning October 4, 2022 and ending on January 3, 2023, (ii) beginning January 1, 2023 and ending on March 31, 2023, (iii) beginning April 1, 2023 and ending on June 30, 2023, (iv) beginning July 1, 2023 and ending on September 30, 2023, and (v) beginning October 1, 2023 and ending on December 31, 2023.
Removed
As of January 2, 2023, the fair value of the commodity contracts was recorded as a liability in the amount of $1.5 million and included as a component of other current liabilities. We will continue to evaluate our commodity risks and may utilize commodity forward purchase contracts more frequently in the future.
Removed
Debt Instruments The table below presents the fiscal calendar maturities of our debt instruments through 2027 and thereafter as of January 2, 2023: As of January 2, 2023 2023 2024 2025 2026 2027 Thereafter Total Fair Value Weighted Average Interest Rate (In thousands) US$ Variable Rate $ 50,000 $ 385,879 $ — $ — $ — $ — $ 435,879 $ 435,628 6.82% US$ Fixed Rate — — — — — 500,000 500,000 430,165 4.00% Total $ 50,000 $ 385,879 $ — $ — $ — $ 500,000 $ 935,879 $ 865,793 46 Interest Rate Swap Contracts Our interest rate swap arrangement ended on June 1, 2022.
Removed
The table below presents information regarding our interest rate swap for the year ended January 2, 2023: For the Year Ended January 2, 2023 (In thousands, except interest rates) Average interest payout rate 2.84 % Interest payout amount $ (4,669 ) Average interest received rate 0.34 % Interest received amount $ 564

Other TTMI 10-K year-over-year comparisons