Coherent Corp.

New or substantially reworded (8)

• Our reliance on contract manufacturers, and any failure to qualify or requalify our own or our subcontractors’ manufacturing lines for volume production, could adversely affect our ability to meet customer demand and harm our business, results of operations, and financial condition.

• We provide components to contract manufacturers to produce finished or intermediary goods, and for some products a particular internal or external manufacturing site may be the sole qualified source. Read more

  Our reliance on contract manufacturers exposes us to risks including reduced control over delivery schedules and planning, limited visibility into or availability of manufacturing capability and capacity, reliance on third-party quality assurance procedures, cybersecurity incidents or data security breaches affecting contract manufacturers, and the risk that disruptions at those manufacturers could require us to identify and qualify alternatives, which may be expensive and time-consuming and could result in supply interruptions and harm to customer relationships.

• In addition, customers may require qualification or requalification of manufacturing lines before they will accept volume shipments, including when we establish new lines, relocate production, introduce new products, or transition work to new contract manufacturers or internal sites. Any failure or delay in obtaining such qualification or requalification could delay revenue, increase costs, harm our reputation, and adversely affect customer relationships and operating results.

• We may not be able to achieve expected returns from strategic investments, including capacity expansions.

• We have made and are planning to make significant investments to satisfy increased customer demand, including expansion of our production capacity in the United States and in other regions where we operate. Read more

  These projects are highly dependent on available sources of materials, and specialized equipment, as well as labor, skilled sub-contractors and other service providers. Increasing demand, supply constraints, inflation, tariffs, trade restrictions, and other market conditions could result in shortages and higher costs. Additionally, difficulties in obtaining labor, skilled sub-contractors and other service providers or other resources could result in delays in completion of our construction projects and cost increases, including costs to operate these facilities. Our ability to increase production is also subject to regulatory approvals, environmental and operational permits,…

• From time to time, we could experience impacts from certain of the above items and, because these risks are a characteristic of our business, we expect to experience them in the future. Read more

  Depending on the nature and extent of the impact from these risks, we may be unable to produce sufficient capacity in the expected timeframe which could result in delays in the completion of our projects and increased costs, including costs to operate these facilities.

• If we overestimate demand, if customers delay, reduce, or cancel anticipated orders, or if expected end markets develop more slowly than anticipated, we may be unable to optimize our manufacturing footprint and could incur excess or obsolete inventory, underutilized facilities, under-absorbed overhead, liabilities under supplier arrangements, noncancellable purchase obligations, or charges associated with unused allocated manufacturing capacity, any of which could increase our costs and reduce our margins. In addition, certain customers may require qualification of existing, new, relocated, or subcontractor manufacturing lines before they will purchase more than limited evaluation units or permit volume shipments. If we introduce new production lines, relocate manufacturing, or transition production to new internal or external sites, we may experience delays or failures in obtaining…

• We have a broad portfolio of products to address our customers’ needs, which span multiple market segments and are subject to rapid technological changes. Read more

  We invest our capital in areas that we believe best align with our business strategy and optimize future returns. Investments in capital expenditures may not generate expected returns or cash flows. Significant judgment is required to determine which capital investments will result in optimal returns, and we could invest in projects that are ultimately

No longer in the text (4)

• We also make products of which we are one of the world’s largest suppliers. Read more

  We use high-quality, optical-grade ZnSe in the production of many of our IR optical products. We are a leading producer of ZnSe for our internal use and for external sale. The production of ZnSe is a complex process requiring a highly controlled environment. A number of factors, including defective or contaminated materials, could adversely affect our ability to achieve acceptable manufacturing yields of high-quality ZnSe. Lack of adequate availability of high-quality ZnSe could have a material adverse effect upon our business. There can be no assurance that we will not experience manufacturing yield inefficiencies that could have a material adverse effect on our business, results of operations, or financial condition.

• Our business is subject to various governmental regulations. Compliance with these regulations may cause us to incur significant expense and failure to maintain compliance with applicable regulations could adversely affect our business.

• In addition, if any of certain fundamental changes were to occur, we or the surviving entity would be required to make an offer to repurchase, at the option and election of the holders thereof, for cash each share of Series B Preferred Stock then outstanding. These features of the Series B Preferred Stock could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management.

• Our common stock ranks junior to our Series B Preferred Stock with respect to the payment of dividends and amounts payable in the event of our liquidation, dissolution, or winding-up of our affairs. Read more

  This means that, unless accumulated dividends have been paid on all the Series B Preferred Stock then outstanding through the most recently completed dividend period, no dividends may be declared or paid on our common stock and we will not be permitted to repurchase any of our common stock, subject to limited exceptions. Likewise, in the event of our voluntary or involuntary liquidation, dissolution, or winding-up of our affairs, no distribution of our assets may be made to holders of our common stock until we have paid to holders of the Series B Preferred Stock then outstanding the applicable liquidation preferences.