MEI Methode Electronics, Inc.

Risks

• Our business is dependent on two large automotive customers. If we were to lose either of these customers or experienced a significant decline in the volume or price of products purchased by these customers, or if either of the customers declared bankruptcy, our future results could be adversely affected.
• Because we derive a substantial portion of our revenues from customers in the automotive, commercial vehicle, appliance, computer and communications industries, we are susceptible to trends and factors affecting those industries.
• International trade disputes could result in tariffs and other protectionist measures that could adversely affect our business.
• Any changes in U.S. trade policy could trigger retaliatory actions by affected countries, resulting in "trade wars."
• Our inability to capitalize on prior or future acquisitions or any decision to strategically divest one or more current businesses may adversely affect our business.
• A significant portion of our business activities are conducted in foreign countries, exposing us to additional risks that may not exist in the United States.
• Our long-term incentive plan could require significant adjustments to compensation expense in our consolidated statements of income if management changes its determinations on the probability of meeting certain performance levels. The adjustments could be material to the financial statements.
• Impairment charges relating to our goodwill and long-lived assets could adversely affect our financial statements.
• We may be unable to keep pace with rapid technological changes, which could adversely affect our business.
• Should a catastrophic event or other significant business interruption occur at any of our facilities, we could face significant reconstruction or remediation costs, penalties, third party liability and loss of production capacity, which could adversely affect our business.
• Our ability to market our automotive and commercial vehicle products is subject to a lengthy sales cycle, which requires significant investment prior to significant sales revenues, and there is no assurance that our products will be implemented in any particular vehicle.
• Our inability, or our customers' inability, to effectively manage the timing, quality and cost of new program launches could adversely affect our financial performance.
• We are subject to continuing pressure to lower our prices.
• A significant fluctuation between the U.S. dollar and other currencies could adversely impact our results of operations and financial condition.
• We are dependent on the availability and price of materials.
• Changes in our effective tax rate may harm our results of operations.
• Our gross profit margins are subject to fluctuations due to many factors.
• Our information technology (“IT”) systems could be breached.
• Products we manufacture may contain design or manufacturing defects that could result in reduced demand for our products or services and liability claims against us.
• Our technology-based businesses and the markets in which we operate are highly competitive. If we are unable to compete effectively, our sales could decline.
• If we are unable to protect our intellectual property or we infringe, or are alleged to infringe, on another person’s intellectual property, our business, financial condition and operating results could be materially adversely affected.
• We have incurred a significant amount of indebtedness, and our level of indebtedness and restrictions under our indebtedness could adversely affect our operations and liquidity.
• Regulations related to the use of conflict-free minerals may increase our costs and expenses, and an inability to certify that our products are conflict-free may adversely affect customer relationships.