UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended May 2, 20201, 2021

OR

Commission File Number 0-2816001-33731

METHODE ELECTRONICS, INC.

(Exact name of Registrant as specified in its charter)

Registrant’s telephone number (including area code):  (708) 867-6777

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒  No ☐

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐  No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, an emerging growth company, or a smaller reporting company.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.   ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes   ☐    No   ☒

The aggregate market value of common stock, $0.50 par value, held by non-affiliates of the Registrant on October 26, 2019,31, 2020, based upon the closing price on that date as reported by the New York Stock Exchange, was $0.9$0.8 billion.

Registrant had 37,164,33138,302,350 shares of common stock, $0.50 par value, outstanding as of June 16, 2020.17, 2021.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for the 20202021 annual shareholders' meeting to be held on September 16, 202015, 2021 are incorporated by reference into Part III of this Form 10-K.

METHODE ELECTRONICS, INC.

FORM 10-K

TABLE OF CONTENTS

Table of Contents

PART I

As used herein, “we,” “us,” “our,” the “Company” or “Methode” means Methode Electronics, Inc. and its subsidiaries.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (“this Annual Report”) includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect, when made, our current views with respect to current events and financial performance. Such forward-looking statements are subject to many risks, uncertainties and factors relating to our operations and business environment, which may cause our actual results to be materially different from any future results, express or implied, by such forward-looking statements. All statements that address future operating, financial or business performance or our strategies or expectations are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “projects,” “potential,” “outlook” or “continue,” and other comparable terminology. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following:

Additional details and factors are discussed under the caption “Risk Factors” in this Annual Report. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. Any forward-looking statements made by us speak only as of the date on which they are made. We are under no obligation to, and expressly disclaims any obligation to, update or alter our forward-looking statements, whether as a result of new information, subsequent events or otherwise.

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Item 1. Business

Description of Business

Methode Electronics, Inc. was incorporated in 1946 as an Illinois corporation and reincorporated in Delaware in 1966. As used herein, “we,” “us,” “our,” the “Company” or “Methode” means Methode Electronics, Inc. and its subsidiaries.

We are a leading global developersupplier of custom engineered and application specific products and solutions with manufacturing,

designsales, engineering and testing facilitiesmanufacturing locations in Belgium, Canada, China, Egypt, Germany, India, Italy, Lebanon, Malta, Mexico, the

Netherlands, Singapore, Switzerland, the United KingdomNorth America, Europe, Middle East and the United States. Our primary manufacturing facilities are

located in Dongguan and Shanghai, China; Cairo, Egypt; Mriehel, Malta; and Fresnillo and Monterrey, Mexico.Asia. We design,

manufacture engineer and market devices employing electrical, radio remote control, electronic, produce mechatronic products for Original Equipment Manufacturers (“OEMs”) utilizing our broad range of technologies for user interface, light-emitting diode ("LED"(“LED”) based lighting wirelesssystem, power distribution and sensing technologies. sensor applications.

Our componentssolutions are found in the primary end-marketsend markets of the aerospace, appliance,transportation (including automotive, commercial vehicle, e-bike, aerospace, bus and rail), cloud computing infrastructure, construction equipment, consumer appliance and industrial equipment, communications (including information processingmedical devices. Our business is managed on a segment basis, with those segments being Automotive, Industrial, Interface and storage, networking equipmentMedical.

Fiscal Year

We maintain our financial records on the basis of a 52 or 53-week fiscal year ending on the Saturday closest to April 30. Fiscal 2021 ended on May 1, 2021 and wireless and terrestrial voice/data systems), medical, rail and other transportation industries.fiscal 2019 ended on April 27, 2019, which represented 52 weeks of results for each year. Fiscal 2020 ended on May 2, 2020, which represented 53 weeks of results.

Impact of the COVID-19 Pandemic

The COVID-19 global pandemic has negatively affected the global economy, disrupted global supply chains, and created extremesignificant volatility and disruptions to capital and credit markets in the global financial markets. We began to see the impacts of the COVID-19 pandemic at the beginning of our fourth quarter of fiscal 2020 at our China manufacturing facilities, which were initially closed for a few weeks after the Chinese New Year. Our manufacturing facilities in China resumed operations later in the fourth quarter of fiscal 2020, but at lower capacity utilization. However, the major impact to our business from the COVID-19 pandemic began in mid-March 2020, as our operations in North America and Europe were adversely impacted by many of our customers suspending their manufacturing operations due to the COVID-19 pandemic. As a result, net salesIn the first quarter of fiscal 2021, our operations in North America and Europe gradually resumed operations, however production levels at our major North American and European manufacturing facilities were still significantly reduced, to well belowresulting in lower capacity utilization, thus impacting our results of operations during the fourthfirst quarter of fiscal 2020.2021. In the second quarter of fiscal 2021, production levels in North America and Europe returned to pre-COVID levels as a result of increased demand from customers and continued for the remainder of fiscal 2021. However, towards the end of our third quarter of fiscal 2021, many automotive companies announced a slowdown in their production schedules due to a worldwide semiconductor supply shortage. The semiconductor supply shortage is impacting our supply chain and our ability to meet demand at some of our customers as well. We expect this semiconductor shortage will impact our operating results and financial condition in fiscal 2022.

In response to the COVID-19 pandemic and business disruption, in March 2020, we implemented certain measures to manage costs, preserve liquidity and enhance employee safety. These measures included the following:

The extentIn fiscal 2021, we continued to focus on effectively managing the unprecedented challenges and uncertainties of the impact of the COVID-19 pandemic on a global basis. As our business, financial resultsoperations resumed, management prioritized the health and liquidity will depend largely on future developments, including the duration of the spread of the COVID-19 outbreak within the U.S. and globally, the impact on capital and financial markets and the related impact on our customers, especially in the automotive and commercial vehicle markets. These future developments are outsidesafety of our control, are highly uncertainemployees and cannot be predicted. Iftheir families. We adopted numerous safety procedures at our 34 global facilities, including hygiene and disinfection protocols, testing and contact tracing, social distancing and wearing personal protective equipment (“PPE”). We implemented the impact is prolonged, then it can further increasesharing of best practices throughout our global facilities, resulting in effective and standardized safety guidelines and procedures, updated on a regular basis, promoting the difficultyhealth and safety of planning for operations and may require us to take further actions as it relates to costs and liquidity. These and other potential impacts of the COVID-19 pandemic will adversely impact our results for the first quarter of fiscal 2021, as well as the full fiscal year, and that impact could be material.employees.

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Fiscal YearManagement evaluated and redesigned our staffing requirements and structures to reflect the ongoing impact of the pandemic on our business and operations. Among other actions, management successfully implemented several important business consolidations and successfully managed pandemic-related labor issues at our facilities in Mexico. We implemented processes to continuously monitor and strengthen our supply chain to proactively mitigate potential disruptions due to the pandemic. Management also instituted elevated procedures and practices to successfully manage liquidity, cash, accounts receivable, accounts payable, capital expenditures and indebtedness during the pandemic.

In addition, we initiated certain restructuring actions in fiscal 2021 to rationalize our operations, lower our costs and improve financial performance and long-term cash flow generation. These actions included plant consolidations and workforce reductions in the Automotive, Industrial and Interface segments. In fiscal 2021, we recognized $8.2 million of restructuring costs. We maintain our financial records on the basis of a 52 or 53-week fiscal year ending on the Saturday closest to April 30. Fiscal 2020 ended on May 2, 2020may take additional restructuring actions in future periods based upon market conditions and represented 53 weeks of results. Fiscal 2019 ended on April 27, 2019 and fiscal 2018 ended on April 28, 2018 and both represented 52 weeks of results.industry trends.

Operating Segments 

Our business is managed, and our financial results are reported, based on the following four segments: Automotive, Industrial, Interface and Medical. See Note 15, "Segment“Segment Information and Geographic Area Information,"Information” to our consolidated financial statements in this Annual Report for further information.

The Automotive segment supplies electronic and electro-mechanical devices and related products to automobile original equipment manufacturers ("OEMs"),OEMs, either directly or through their tiered suppliers. Our products include integrated center consoles, hidden switches, ergonomic switches, transmission lead-frames, LED-based lighting, and sensors which incorporate magneto-elastic sensing and other technologies that monitor the operation or status of a component or system.

The Industrial segment manufactures external lighting solutions, industrial safety radio remote controls, braided flexible cables, current-carrying laminated busbars and devices, custom power-product assemblies, such as our PowerRail® solution, high-current low-voltage flexible power cabling systems and powder-coated busbars that are used in various markets and applications, including aerospace, cloud computing, commercial vehicles, computers, industrial, military, power conversion military, telecommunications and transportation.

The Interface segment provides a variety of copper based transceivers and fiber-optic interfacerelated accessories for the cloud computing hardware equipment and telecommunications broadband equipment markets, user interface solutions for the appliance, commercial food service, construction, consumer, material handling,and point-of-sale equipment markets, and telecommunicationsfluid-level sensors for the marine/recreational vehicle and sump pump markets. Solutions include copper transceivers and solid-state field-effect consumer touch panels.

The Medical segment is made up of our medical device business, Dabir Surfaces, Inc. (“Dabir Surfaces”), our surface support technology aimed at pressure injury prevention. Dabir Surfaces has developed the technology for use by patients who are immobilized or otherwise at risk for pressure injuries, including patients undergoing long-duration surgical procedures.

The following table reflects the percentage of net sales by segment for the last three fiscal years.

Sales and Marketing

The majority of our sales activities are directed by sales managers who are supported by field application engineers and other technical personnel who work with customers to design our products into their systems. Our field application engineers also help us identify emerging markets and new products. Our products are primarily sold through our in-house sales staff. We also utilize independent manufacturers’ representatives with offices throughout the world. Information about our sales and operations in different geographic regions is summarized in Note 15, "Segment“Segment Information and Geographic Area Information,"Information” to our consolidated financial statements in this Annual Report. Sales are made primarily to OEMs, either directly or through their tiered suppliers, as well as to selling partners and distributors.

The following table reflects the percentage of net sales by segment for the last three fiscal years.3

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Sources and Availability of Materials

The principal materials that we purchase include application-specific integrated circuits, coil and bar stock, ferrous and copper alloy sheets, glass, LED displays, plastic molding resins, capacitors and resistors, precious metals, and silicon die castings. All of these items are available from several suppliers and we generally rely on more than one supplier for each item.

Intellectual Property

We generally rely on patents, trade secrets, trademarks, licenses, and non-disclosure agreements to protect our intellectual property and proprietary products. We have been granted a number of patents in the U.S., Europe and Asia and have additional domestic and international patent applications pending related to our products and manufacturing processes.products. Our existing patents expire on various dates from 2021 to 2040.between 2022 and 2041. We seek patents in order to protect our interest in certainunique and critical products and technologies, including our TouchSensor field-effect touch technology, magneto-elastic torquetorque/force sensing, current sensing, displacement sensing, medical devices and high-power distributionradio-type products. We do not believe any single patent is material to our business, nor would the expiration or invalidity of any patent have a material adverse effect on our business or our ability to compete.

Seasonality

A significant portion of our business is dependent upon automotive and commercial vehicle industries. Consequently, our Automotive and Industrial segments may experience seasonal fluctuations based on the sales and the production schedules of our customers. The automotive and commercial vehicle markets are cyclical and depend on general economic conditions, interest rates, fuel prices and consumer spending patterns.

Major Customers 

During fiscal 2020,2021, shipments to General Motors Corporation (“GM”) and Ford Motor Company (“Ford”), or their tiered suppliers, represented 26.8%27.5% and 10.7%8.8%, respectively, of consolidated net sales. In general, these sales were for component parts used in particular vehicle models of the OEMs. Typically, our GM and Ford supply arrangements for each component part include a blanket purchase order and production releases. In general, a blanket purchase order is issued for each GM or Ford part as identified by the customer part number. Each such GM or Ford blanket purchase order accounted for less than 10.0% of our fiscal 2020 consolidated net sales. Each blanket purchase order includes standard terms and conditions, including price. In certain circumstances, we supply GM or Ford the requirements for a particular customer vehicle model for the life of the model, which can vary from three to seven years. Both GM and Ford order parts using production releases approved under the relevant blanket purchase order. The production releases are submitted by the various GM or Ford plants and include information regarding part quantities and delivery specifications.

Backlog

We manufacture products based on a combination of specific order requirements and forecasts of our customers’ demand. For many of our OEM customers, especially in the automotive and commercial vehicle markets, we have long-term supply agreementsarrangements where there is an expectation that we will supply products in future periods, however these agreementsarrangements do not necessarily constitute firm orders and these OEM customers are not required to purchase any minimum amount of products from us. Firm orders are generally limited to authorized customer purchase orders which are typically based on customer release schedules. We fulfill these purchase orders as promptly as possible. The dollar amount of such purchase order releases on hand and not processed at any point in time is not believed to be significant based upon the time frame involved. Accordingly, backlog at any given time might not be a meaningful indicator of future revenue.

Competition

The markets in which we operate are highly competitive and characterized by rapid changes due to technological improvements and developments. We compete with a large number of other manufacturers in each of our product areas and many of these competitors have greater resources and sales. Price, service and product performance are significant elements of competition in the sale of our products.

Research and Development 

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We maintain a research and development program involving a number of professional employees who devote a majority of their time to the enhancement of existing products and to the development of new products and processes. Research and development costs primarily relate to product engineering and design and development expenses and are classified as a component of costs of products sold on our consolidated statements of income. Expenditures for such activities amounted to $37.1 million for fiscal 2021, $34.9 million for fiscal 2020 and $41.2 million for fiscal 20192019.

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Government Regulations

Our worldwide business activities are subject to various laws, rules, and $37.9 million for fiscal 2018.

Environmental Matters

regulations of the United States as well as of foreign governments. Compliance with foreign, federal, statethese laws, rules, and local provisions regulating the discharge of materials into the environmentregulations has not materially affectedhad a material effect upon our capital expenditures, earningsresults of operations, or our competitive position. Currently,position, and we do not currently anticipate material capital expenditures for environmental control facilities. Nevertheless, compliance with existing or future governmental regulations, including, but not limited to, those pertaining to international operations, environmental, export controls, business acquisitions, consumer and data protection, employee health and safety, and taxes, could have anya material environmental-related lawsuits or material administrative proceedings pending against us. Further information asimpact on our business in subsequent periods. Refer to environmental matters affecting us is presented in Note 12, "Commitments and Contingencies," to our consolidated financial statements“Item 1A. Risk Factors” in this Annual Report.Report for a discussion of these potential impacts.

EmployeesHuman Capital

AtAs of May 2, 2020 and April 27, 2019,1, 2021, we had 6,044 and 6,187employed approximately 7,200 employees respectively. We also, fromworldwide, substantially all of whom were employed full time with approximately 94% of these employees located outside the U.S. Our U.S. employees are not subject to time, employ part-time employees and hire independent contractors. Approximately 37% of our workforce are represented byany collective bargaining agreements. Theseagreements although certain international employees are primarily located atcovered by national or local labor agreements.

Our corporate culture is committed to doing business with integrity, teamwork, and performance excellence. Our management team and all our Maltaemployees are expected to exhibit the principles of fairness, honesty, and Mexico facilities. integrity in the actions we undertake. Our employees must adhere to our Code of Conduct that addresses topics such as anti-corruption, discrimination, harassment, privacy, appropriate use of company assets and protecting confidential information. Our employees participate in annual training on preventing, identifying, reporting, and stopping any type of unlawful discrimination or unethical actions.

Talent Acquisition, Development and Succession Planning

Our talent strategy is focused on attracting the best talent, recognizing, and rewarding their performance while continually developing, engaging, and retaining them. We focus significant attention on attracting and retaining talented and experienced individuals to manage and support our operations. When we hire new employees, we focus not just on the skills required for current positions, but the ever-changing complex skills and competencies that will be required as we move forward.

We have never experienced a work stoppageglobal talent review and succession planning process designed to align our talent plans with the current and future strategies of the business. This includes the identification of key positions, assessment of internal talent and potential successors and plans for talent development. Our teams meet with leaders and team members across the company to develop action plans and goals focused on both personal and professional development.

Diversity and Inclusion

As highlighted in our Diversity & Inclusion Statement, we believe that diversity and inclusion are business imperatives that will enable us to build and empower our future workforce. We strive to maintain a diverse and inclusive workforce that reflects our global customer base and the communities that we serve. We embrace the diversity of our employees, including their unique backgrounds, experiences, thoughts, and talents. Employees are valued and appreciated for their distinct contributions to the growth and sustainability of our business. We also strive for diversity in leadership, which has the power to drive innovation and to encompass a wide variety of perspectives in company decision-making. We believe that diversity and inclusion will make us a more desirable workplace and will lead to improved business performance.

Health and Safety

The success of our business is fundamentally connected to the well-being of our employees. We maintain a work environment with a safety culture grounded on the premise of eliminating workplace incidents, risks, and hazards. We have created and implemented processes to help eliminate safety events and reduce their frequency and severity. The safety of our employees is a top priority and vital to our success. Our employees are regularly trained on safety-related topics and we monitor and measure our effectiveness at all our locations.

It is always a top priority, but in fiscal 2021 employee relationshealth and safety were of paramount importance due to the COVID-19 global pandemic. Where feasible, employees worked from home during fiscal 2021. For jobs that could not be done remotely, extensive safety measures were implemented, including equipping employees with PPE, temperature and health screenings, distanced workstations, plexiglass barriers, enhanced cleaning, and disinfection protocols, contact tracing when needed, published Safe Workplace Guidelines, employee training, and instituting other measures aimed at minimizing the transmission of COVID-19 while sustaining production and related services. Our safety measures are good.aligned with the recommendations of U.S. and global health organizations and have continued into fiscal 2022.

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Benefits and Compensation

As part of our efforts to attract and motivate our employees, we offer competitive compensation and benefits that may vary by region and employee-type. We provide compensation packages that include base salary/wages, and short and long-term incentives. We also provide employee benefits such as life, disability, and health (medical, dental, and vision) insurance, a 401(k) plan with a company match, paid time off, tuition reimbursement, military leave, and holiday pay. We believe those benefits are competitive within our industry.

The Human Resources function at Methode is an active and visible partner to the business at all levels. Our Chief Human Resources Officer reports directly to the Chief Executive Officer and interacts frequently with our Board of Directors. In fiscal 2022, our human capital focus will be on employee health and safety, employee and leadership development, and communications.

Available Information

Through our internet website at www.methode.com, we make available, free of charge, copies of our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to those reports, and other filings with the Securities and Exchange Commission ("SEC"(“SEC”), as soon as reasonably practicable after they are filed or furnished to the SEC. Our filings are also available on the SEC’s website at www.sec.gov. Also posted on our website are our Corporate Governance Guidelines, Code of Business Conduct, Anti-Corruption Policy, Insider Trading Policy, Diversity & Inclusion Statement and the charters of the Audit Committee, Compensation Committee, Medical Products Committee, Nominating and Governance Committee and Technology Committee. Copies of these documents are also available free of charge by sending a request to Methode Electronics, Inc., 8750 West Bryn Mawr Avenue, Suite 1000, Chicago, Illinois 60631, Attention: Investor Relations Department. 

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TableThe references in this Annual Report to our website address or any third party’s website address, including but not limited to the SEC’s website, do not constitute incorporation by reference of Contentsthe information contained in those websites and should not be considered part of this document unless otherwise expressly stated.

Item 1A. Risk Factors

Certain statements in this report are forward-looking statements thatOur business, financial condition and results of operations are subject to certainvarious risks, and uncertainties. We undertake no dutyincluding, but not limited to, update any such forward-looking statements to conform tothose set forth below, which could cause actual results to vary materially from recent results or changes in our expectations. Our business is dependent upon two large automotive customers and specific makes and models of automobiles. Our results will be subject to many of the same risks that apply to the automotive, appliance, commercial vehicle, computer and communications industries, such as general economic conditions, interest rate fluctuations, consumer spending patterns and technological changes. Other factors which may result in materially different results forfrom anticipated future periods include the following risk factors. Additional risks and uncertainties not presently known or that our management currently believe to be insignificant may also adversely affect our financial condition or results of operations.results. These risk factors should be considered in connectiontogether with evaluating the forward-looking statements containedinformation included elsewhere in this report because these factors could cause our actual resultsAnnual Report.

Operational and condition to differ materially from those projected in forward-looking statements. The forward-looking statements in this report are subject to the safe harbor protection provided under the securities laws and are made as of the date of this report.Industry Risks

The effects of a pandemic or widespread outbreak of an illness, such as the COVID-19 pandemic has had and could continue to have a material adverse impact onadversely affected our business, financial condition and results of operations and financial condition.

operations. The recent outbreakextent of COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread across the globe and is impacting worldwide economic activity. A pandemic, including COVID-19, or other public widespread outbreak of an illness, poses the risk that we, our employees, our suppliers, our customers and others may be restricted or prevented from conducting business activities for indefinite or intermittent periods of time, including as a result of employee health and safety concerns, shutdowns, shelter in place orders, travel restrictions and other actions and restrictions that may be requested or mandated by governmental authorities.

While we have implemented measures to mitigate the impacteffects of the COVID-19 pandemic we expecton our fiscal 2021business depends on future events that continue to be highly uncertain and beyond our control.

The COVID-19 pandemic and the ongoing measures to reduce its spread have negatively impacted the global economy, disrupted consumer and customer demand and global supply chains, and created significant volatility and disruption of financial markets. The continued volatility of the global economy adversely affected our results of operations for fiscal 2021, and we are currently unable to be adversely affected byquantify the COVID-19 pandemic.full and long-term impact of the pandemic on our business, financial condition and results of operations. The extent of the impact on our business will depend on a number of evolving factors, all of which remain uncertain, including the duration and spread of the pandemic, as well as the possibility of the pandemic re-occurring, actions taken by governmental authorities to restrict certain business operations and social activity and impose travel restrictions, the impact of the pandemic on economic activity and whether recessionary conditions will persist,shifting consumer demand, the ability of our supply chain to deliver in a timely and cost-effective manner, the ability of our employees and manufacturing facilities to operate efficiently and effectively, the continued viability and financial stability of our customers and suppliers and future access to capital, allcapital.

We have implemented numerous actions in order to effectively manage the unprecedented challenges and uncertainties of which remain uncertain. Asthe COVID-19 pandemic on a result,global basis, such as implementing new workplace hygiene and disinfection protocols, redesigning production processes, leveraging our global purchasing power to secure PPE for our entire workforce, adopting processes to continuously monitor and strengthen our supply chain and consolidating operations. We may be required to take additional actions in response to evolving conditions, such as renewed travel restrictions, quarantine and stay-at-home orders, as well as uncertainty regarding the magnitudewidespread availability and durationadoption of vaccines. A prolonged extension of the disruptions resulting directly or indirectly from the COVID-19 pandemic could have a material adverse impact on our business, financial condition and results of operations

The COVID-19 pandemic and the ongoing measures to reduce its spread may also impact many of our other risk factors discussed in this Annual Report on Form 10-K, including customer demand, supply chain disruptions, availability of financing sources and risks of international operations. The ultimate significance of the COVID-19 pandemic on our business will depend on events that are beyond our control and that we cannot predict. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, financial condition cannot be determined at this time.and results of operations.

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We are susceptible to trends and factors affecting the automotive and commercial vehicle industries.

We derive a substantial portion of our revenues from customers in the automotive and commercial vehicle appliance, computer and communications industries and are susceptible to trends and factors affecting those industries, including the COVID-19 pandemic.

Our components are found in the primary end-markets of the automotive, commercial vehicle, communications (including information processing and storage, networking equipment, wireless and terrestrial voice/data systems), aerospace, rail and other transportation industries, appliances, consumer and industrial equipment markets, and medical device markets.industries. Factors negatively affecting these industries also negatively affect our business, financial condition and results of operations. Automotive sales and production are highly cyclical and, in addition to general economic conditions, also depend on other factors, such as consumer confidence and consumer preferences. Any adverse occurrence, including industry slowdown,slowdowns, recession, rising interest rates, political instability, costly or constraining regulations, armed hostilities, terrorism, excessive inflation, prolonged disruptions in one or more of our customers’ production schedules or labor disturbances or work stoppages, that results in a significant decline in the volume of sales volumes in these industries, or in an overall downturn in the business and operations of our customers in these industries, could materially adversely affect our business, financial condition and results of operations.

The COVID-19 pandemic has significantly disrupted, and may continue to significantly disrupt, the global automotive and commercial vehicle industries and customer sales, production volumes and purchases of vehicles by consumers. In addition, the spread of COVID-19 has created a significant disruption in the manufacturing operations, delivery systems and overall supply chains of automobile and commercial vehicle manufacturers and suppliers. Further, the COVID-19 pandemic resulted in a temporary shutdown of substantially all of the major OEMs in our markets at various times in fiscal 2021, which impacted our sales volumes. Although automotive and commercial vehicle production has resumed, customer sales and production volumes may significantly decrease or may be very volatile due to supply chain issues or other global economic impacts and uncertainties which could materially adversely affect our business, financial condition and results of operations.

The inability of our supply chain, or the supply chain of our customers, to deliver key components, such as semiconductors, could materially adversely affect our business, financial condition and results of operations.

Our Automotive segment hasproducts contain a significant number of components that we source globally. If our supply chain fails to deliver products to us, or to our customers, in sufficient quality and quantity on a timely basis, we will be challenged to meet our production schedules or could incur significant additional expenses for expedited freight and other related costs. Similarly, many of our customers are dependent on an ever-greater number of global suppliers to manufacture their products. These global supply chains have been, and may continue to be, adversely impacted by events outside of our control, including macroeconomic events, trade restrictions, economic recessions, political crises, labor relations issues, liquidity constraints, or natural occurrences, such as the ongoing disruptions caused to the global automotive industry byfrom the COVID-19 pandemic. Global vehicle production has decreased,Any significant disruptions to such supply chains could materially adversely affect our business, financial condition and some vehicle manufacturers have completely shut down manufacturing operations in some countries and regions,results of operations.

Many of the industries we supply, including the United Statesautomotive and Europe. As a result, wecommercial vehicle industries, are reliant on semiconductors. Globally, there is an ongoing significant shortage of semiconductors. The semiconductor supply chain is complex, with capacity constraints occurring throughout. There is significant competition within the automotive and commercial vehicle supply chains and with other industries to satisfy current and near-term requirements for semiconductors. We have

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experienced, and are likely towill continue to experience, delays inwork closely with our suppliers and customers to minimize any potential adverse impacts of the semiconductor supply shortage and monitor the availability of semiconductor microchips and other component parts and raw materials, customer production schedules and distribution of our products andany other supply chain inefficiencies that may arise. However, if we are not able to mitigate the loss of sales. If the global economic effects caused by the COVID-19 pandemic continuesemiconductor shortage impact, any direct or increase, overall customer demandindirect supply chain disruptions may continue to decrease which could have a furthermaterial adverse effectimpact on our business, financial condition and results of operations and financial condition.operations.

Our business is dependent on sales to GM and Ford. If we were to loseThe loss or insolvency of either of theseour major 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,would adversely affect our future results could be adversely affected.results.

During fiscal 2020,2021, sales to GM and Ford, or their tiered suppliers, represented 26.8%27.5% and 10.7%8.8%, respectively, of our consolidated net sales. The sales to GM primarily consisted of integrated center consoles produced for use in light trucks and SUV's, and a shift in consumer preference for smaller or more fuel-efficient vehicles could adversely affect our results of operations.SUV’s. The sales to Ford consist of ambient lighting, overhead consoles and other integrated modules, including control panels.panels, for a variety of models. The arrangements with these customers generally provide for supplying the customers’ requirements for particular models, rather than for manufacturing a specific quantity of products. Such supply arrangements cover a period from one year to the life of the model, which is generally three to seven years. Therefore, theThe loss of a GM or Ford supply arrangement for a particular model or product or a significant decrease in demandproduction volumes for one or more of these modelsproducts could have a material adverse impact on our business, financial condition and results of operations and financial condition.operations. We also compete to supply products for successor models and are subject to the risk that GM or Ford will not select us to produce products on any such successor model, which could have a material adverse impact on our business, financial condition and results of operationsoperations.

We are dependent on the availability and financial condition.price of raw materials.

In addition, our salesWe require substantial amounts of materials, including application-specific integrated circuits, coil and bar stock, ferrous and copper alloy sheets, extrusions, glass, LED displays, plastic molding materials, precious metals, silicon die castings and wire. The availability and prices of materials may be subject to GMcurtailment or change due to, among other things, new laws or regulations, suppliers’ allocations to other purchasers, supply chain disruptions, changes in exchange rates and Ford, can be impacted by work stoppages, such the United Auto Workers (“UAW”) labor strike at GMworldwide price levels. Any change in the fallavailability of, 2019. This labor strike at GM adversely impacted our results of operations in fiscal 2020.

International trade disputeslead times for, or price for, these materials could result in tariffs and other protectionist measures that couldmaterially adversely affect our business.business, financial condition and results of operations.

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Our inability to attract or retain key employees and a highly skilled workforce may have an adverse effect on our business, financial condition and results of operations.

Our success depends upon the costcontinued contributions of our productsexecutive officers and other key employees, many of whom have many years of experience with us and would be extremely difficult to replace. We must also attract and retain experienced and highly skilled engineering, sales and marketing and managerial personnel. Competition for qualified personnel is intense in our industries, and we may not be successful in hiring and retaining these people. If we lost the components and raw materials that go into making them. These increased costs could adversely impact the gross profit margin that we earn on salesservices of our products. Tariffsexecutive officers or our other highly qualified and experienced employees or cannot attract and retain other qualified personnel, our business could also make oursuffer due to less effective management or less successful products more expensive for customers, which could make our products less competitive and reduce consumer demand. Countries may also adopt other protectionist measures that could limit ourdue to a reduced ability to offerdesign, manufacture and market our products and services. Political uncertainty surrounding international trade disputes and protectionist measures could also have a negative effect on consumer confidence and spending, which could adversely affect our business.

Any changes in U.S. trade policy could trigger retaliatory actions by affected countries, resulting in "trade wars."

Any changes in U.S. trade policy could trigger retaliatory actions by affected countries, resulting in "trade wars," which could increase costs for goods imported into the United States. This increase in costs may reduce customer demand for these products if the parties having to pay those tariffs increase their prices, or if trading partners limit their trade with the United States. If these consequences are realized, the volume of economic activity in the U.S., including demand for our products, may be materially reduced. Such a reduction may materially and adversely affect our sales and our business.products.

Our inability, or our customers'customers’ inability, to effectively manage the timing, quality and cost of new program launches could adversely affect our financial performance.

In connection with the awarding of new business, we obligate ourselves to deliver new products and services that are subject to our customers' timing, performance and quality demands. Additionally, we must effectively coordinate the activities of numerous suppliers and our and our customers’ personnel in order for the program launches of certain of our products to be successful. Given the complexity of new program launches, we may experience difficulties managing product quality, timeliness and associated costs. In addition, new program launches require a significant ramp up of costs; however, our sales related to these new programs generally are dependent upon the timing and success of our customers' introduction of new products. Our inability, or our customers' inability, to effectively manage the timing, quality and costs of these new program launches could adversely affect our financial condition and results of operations.

The global nature of our operations subjects us to political, economic and cash flows.

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We are subject to continuing pressure to lowersocial risks that could adversely affect our prices.

Over the past several years we have experienced, and we expect to continue to experience, pressure to lower our prices. We, from time to time, provide price concessions in connection with the awarding of new business. In order to maintain our profitability, we must strive to increase volumes and reduce our costs. Continuing pressures to reduce our prices could have a material adverse effect on ourbusiness, financial condition and results of operations and cash flows.operations.

FailureSales to attract and retain qualified personnel could affect our results.

Our success, both generally and in connection with mergers and acquisitions, depends on our ability to attract, retain, and motivate a highly-skilled and diverse management team and workforce. Failure to ensure that we have the depth and breadth of personnel with the necessary skill set and experience could impede our ability to deliver growth objectives and execute our strategy. Competition for qualified employees among companies that rely heavily upon engineering and technology is at times intense, and the loss of qualified employees could hinder our ability to conduct research activities successfully and develop marketable products.

Our Dabir Surfaces medical device products are emerging technologies. Our ability to successfully market and sell these products will depend on acceptance by the medical community.

We continue to develop our Dabir Surfaces medical device products, which are included in several ongoing clinical research and product evaluation studies. We will not be successful in marketing and selling these products to the medical community if we are unable to demonstrate the clinical efficacy, cost effectiveness and distinctive benefits of the products or if our customers prefer competitive products.

A significant fluctuation between the U.S. dollar and other currencies could adversely impact our results of operations and financial condition.

We have currency exposures related to transactions denominated in currencies other than the local currencies of the countries in which we operate. Gains and losses resulting from the remeasurement of assets and liabilities in a currency other than the functional currency of our foreign subsidiaries are reported in current period income. In the future, unfavorable changes in exchange rate relationships between the functional currencies of our subsidiaries and their non-functional currency denominated assets and liabilities could have an adverse impact on our results of operations and financial condition. While we seek to manage our foreign exchange risk through operational means by matching revenue with same-currency costs, this may not always be effective. We currently do not use third-party derivative financial instruments to mitigate the risk of transactional currency fluctuations. As a result, significant fluctuations in relative currency values, in particular against the valueoutside of the U.S. dollar, could have an adverse effect on our results of operations and financial condition.

We are also subject to currency translation risk as we are required to translate the financial statements of our foreign subsidiaries to U.S. dollars. We report the effect of translation for our foreign subsidiaries withrepresented a functional currency other than the U.S. dollar as a separate component of stockholders' equity. Unfavorable changes in the exchange rate relationship between the U.S. dollar and the functional currencies of our foreign subsidiaries could have an adverse impact on our results of operations and financial condition.

A significantsubstantial portion of our business activities are conducted in foreign countries, exposing us to additional risks that may not exist in the United States.

International operations represent a significant portion offiscal 2021 net sales. We expect our business. Sales outside the U.S. represent a material amount of our consolidated net sales and we expect net sales outside the U.S.in international markets to continue to represent a significant portion of our consolidated net sales. OutsideIn addition, we have significant personnel, property, equipment and operations in a number of countries outside of the U.S., we operate manufacturing facilities inincluding Belgium, Canada, China, Egypt, India, Malta, Mexico, the Netherlands and the United Kingdom.

As of May 1, 2021, approximately 94% of our employees were located outside of the U.S. Our international operations subject us to extensive domestic and foreign regulations and expose us to a variety of domestic and foreign political, economic, social and other risks, including:

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Many of the laws and regulations listed above are complex and often difficult to interpret and violations could result in significant criminal penalties or sanctions. Any of these factors may have an adverse effect on our international operations which could have a material adverse effect on our business, financial condition and results of operations or cash flows.operations.

Our business is subject to costs associated with environmental, health and safety regulations.

Our operations are subject to various federal, state, local and foreign laws and regulations governing, among other things, emissions to air, discharge to watersbusinesses and the generation, handling, storage, transportation, treatmentmarkets in which we operate are highly competitive. If we are unable to compete effectively, our sales and disposalprofitability could decline.

The markets in which we operate are highly competitive. We compete with a large number of wasteother manufacturers in each of our product areas and other materials. We believe that our current and former operations and facilities have been, and are being, operated in compliance, in all material respects, with such laws and regulations, many of which provide for substantial finesthese competitors have greater resources and criminal sanctions for violations. The operationsales. Price, service and product performance are significant elements of competition in the sale of our manufacturing facilities entails risksproducts. Competition may intensify further if more companies enter the markets in these areas, however, and there can be no assurance thatwhich we will not incur material costs or liabilities. In addition, potentially significant expenditures could be required in orderoperate. Our failure to comply with evolving environmental, health and safety laws, regulations or other pertinent requirements that may be adopted or imposed in the future by governmental authorities.

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.

Weather conditions, natural disasters or other catastrophic events could cause significant disruptions in operations, including, specifically, disruptions at our manufacturing facilities or those of our major suppliers or customers. In turn, the quality, cost and volumes of the products we produce and sell could be unexpectedly, negatively affected, which would impact our results of operations and financial condition.

War, terrorism, geopolitical uncertainties, public health issues (such as the COVID-19 pandemic), and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thuscompete effectively could have a strong negativematerial adverse effect on us, our suppliers, logistics providers, manufacturing partnersbusiness, financial condition and customers. Our business operations could be subject to interruption by power shortages, terrorist attacks and other hostile acts, labor disputes, and other events beyond our control. Such events could decrease demand for our products or make it difficult or impossible for us to produce and deliver products to our customers, or to receive components from our suppliers, thereby creating delays and inefficiencies in our supply chain. Should major public health issues, including pandemics, arise, we could be negatively affected by shutdowns, shelter in place orders, more stringent travel restrictions, additional limitations in freight services,results of operations.

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governmental actions limiting the movement ofOur ability to market our automotive and commercial vehicle products between regions,is subject to a lengthy sales cycle, which requires significant investment prior to reporting significant sales revenues, and disruptions in the operations of our manufacturing partners and component suppliers. The majority of our research and development activities, our corporate headquarters, information technology systems, and other critical business operations, including certain component suppliers and manufacturing partners, are in locations that could be affected by natural disasters. In the event of a natural disaster, losses could be incurred and significant recovery time could be required to resume operations and our financial condition and operating results could be materially adversely affected. While we may purchase insurance policies to cover the direct economic impact experienced following a natural disaster occurring at one of our own facilities, there can beis no assurance that such insurance policiesour products will coverbe implemented in any particular vehicle.

The sales cycles for our automotive and commercial vehicle products are lengthy because the full extentmanufacturers must develop high degrees of assurance that the products they buy will meet their needs, interface correctly with the other parts of a vehicle and with the manufacturer’s production and assembly process, and have minimal warranty, safety and service problems. While we currently have active development programs with various OEMs for a variety of our financial loss norproducts, no assurance can be given that our products will they cover losses whichbe implemented in any particular vehicles. If our products are not economic in nature such as, for example,selected after a lengthy development process, our reputation as a reliable supplier.

Impairment charges relating to our goodwill and long-lived assets could adversely affect our financial statements.

A significant portion of our long-term assets consists of goodwill and long-lived assets recorded as a result of past acquisitions. We do not amortize goodwill and indefinite-lived intangible assets, but rather review them for impairment on an annual basis or more frequently whenever events or changes in circumstances indicate that their carrying value may not be recoverable. If such circumstances or conditions exist, further steps are required in order to determine whether the carrying value of each of the individual assets exceeds its fair market value. If our analysis indicates that an individual asset’s carrying value does exceed its fair market value, the next step is to record a loss equal to the excess of the individual asset’s carrying value over its fair value.

In evaluating the potential for impairment of goodwill, we make assumptions regarding future operating performance, business, trends, and market and economic conditions. Such analyses further require us to make certain assumptions about sales, operating margins, growth rates, and discount rates. Uncertainties are inherent in evaluating and applying these factors to the assessment of goodwill. We could be required to evaluate the recoverability of goodwill prior to the annual assessment if we experience business disruptions, unexpected significant declines in operating results, a divestiture of a significant component of our business, or declines in market capitalization.

We also continually evaluate whether events or circumstances have occurred that indicate our long-lived assets may be impaired. We use an estimate of the related undiscounted cash flow over the remaining life of the asset in measuring whether the asset is recoverable.

In the event that we determine that our goodwill or long-lived assets are impaired, we may be required to record a significant charge to earnings that could adversely affect our financial condition and results of operations could be adversely affected.

Future price reductions and increased quality standards may reduce our profitability and have a material adverse effect on our business, financial condition and results of operations.The impact

Our supply arrangements with our customers typically require us to provide our products at predetermined prices. In some cases, these prices decline over the course of the COVID-19 pandemicarrangement and may require us to meet certain productivity and cost reduction targets. In addition, our customers may require us to share productivity savings in excess of our cost reduction targets. The costs that we incur in fulfilling these orders may vary substantially from our initial estimates. Unanticipated cost increases or the inability to meet certain cost reduction targets may occur as a result of several factors, including increases in the costs of labor, components or materials. In some cases, we are permitted to pass on to our customers the cost increases associated with specific materials. However, cost overruns that we cannot pass on to our customers could adversely impactaffect our business, financial condition and results of operations.

Certain of our customers have exerted and continue to exert considerable pressure on us to reduce prices and costs, improve quality and provide additional design and engineering capabilities. We may be unable to generate sufficient production cost savings in the future projections,to offset required price reductions. Future price reductions, increased quality standards and additional engineering capabilities may reduce our profitability and have a material adverse effect on our business, financial condition and results of operations.

Our customers may cancel their orders, change production quantities or locations or delay production.

We generally receive volume estimates, but not firm volume commitments from our customers, and may experience reduced or extended lead times in customer orders. Customers may cancel orders, change production quantities and delay production for a number of reasons. Cancellations, reductions or delays by a significant customer or by a number of customers may harm our results of operations by reducing the volumes of products we manufacture and sell, as well as by causing a delay in the recovery of our expenditures for inventory in preparation for customer orders, or by reducing our asset utilization, resulting in lower profitability.

In addition, we make key decisions based on our estimates of customer requirements, including determining the levels of orders that we will seek and accept, production schedules, component procurement commitments, personnel needs and other resource requirements. Changes in demand for our customers’ products may reduce our ability to estimate future customer requirements accurately. This may make it difficult to schedule production and maximize utilization of our manufacturing capacity. Anticipated orders may not materialize and delivery schedules may be deferred as a result of changes in demand for our products or our customers’ products. We often increase staffing and capacity and incur other expenses to meet the anticipated demand of our customers. On occasion, customers may require rapid increases in production, which may increase the requirement to record an impairment.stress our resources. Any significant decrease or delay in customer orders could have a material adverse effect on our business, financial condition and results of operations.

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.business, financial condition and results of operations.

We have completed acquisitions and divestitures in the past and we mayintend to continue to seek acquisitions to grow our businesses orand may divest operations to focus on our core businesses. We may fail to derive significant benefits from such transactions. Also, if we fail to achieve sufficient financial performance from an acquisition, certain long-lived assets, such as property, plant and equipment and intangible assets, could become impaired and result in the recognition of an impairment loss.

The success of our acquisitions depends on our ability to:

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Integration of acquisitions may take longer than we expect and may never be achieved to the extent originally anticipated. Acquisitions may also increase our debt levels. This could result in lower than expected business growth or higher than anticipated costs. In addition, acquisitions or strategic divestitures may:

Our abilityprofitability will suffer if we are unable to marketsuccessfully integrate an acquisition, if the acquisition does not further our automotive and commercial vehicle products is subjectbusiness strategy as we expected or if we do not achieve sufficient revenue to a lengthy sales cycle, which requires significant investment prior to significant sales revenues, and there is no assurance thatoffset the increased expenses associated with any acquisition. We may overpay for, or otherwise not realize the expected return on, our products will be implemented in any particular vehicle.

The sales cycles for our automotive and commercial vehicle products are lengthy because the manufacturers must develop high degrees of assurance that the products they buy will meet customer needs, interface as easily as possible with the other parts of a vehicle and with the manufacturer’s production and assembly process, and have minimal warranty, safety and service problems. As a result, from the time that a manufacturer develops a strong interest in our products, it normally will take several years before our products are available to consumers in that manufacturer’s vehicles.

In the automotive components industry, products typically proceed through five stages of research and development. Initial research on the product concept comes first, to assess its technical feasibility and economic costs and benefits. This stage often includes development of an internal prototype for the component supplier’s own evaluation. If the product appears feasible, the component supplier manufactures a functioning prototype to demonstrate and test the product’s features. These prototypes are then marketed and sold to automotive companies for testing and evaluation. If an automobile manufacturer shows interest in the product, it typically works with the component supplier to refine the product, then purchases second and subsequent generation engineering prototypes for further evaluation. Finally, the automobile manufacturer either decides to purchase the component for a production vehicle or terminates the program.

The time required to progress through these five stages to commercialization varies widely. Generally, the more a component must be integrated with other vehicle systems, the longer the process takes. Further, products that are installed by the factory usually require extra time for evaluation because other vehicle systems are affected, and a decision to introduce the product into the vehicle is not easily reversed. Because our automotive products affect other vehicle systems and are a factory-installed item, the process usually takes several years from conception to commercialization.

While we currently have active development programs with various OEMs for a variety of our products, no assurance can be given that our products will be implemented in any particular vehicles. During this development process, we derive minimal funding from prototype sales but generally obtain no significant revenue until mass production begins,investments, which could have a material adverse effect on our liquidity. If our products are not selected after a lengthy development process, our results of operations and financial condition could be adversely affected.

Other automotive and commercial vehicle products that we develop are also likely to have a lengthy sales cycle. Because such technology is new and evolving, and because customers will likely require that any new product we develop pass certain feasibility and economic viability tests before committing to purchase, it is expected that any new products we develop will take some years before they are sold to customers, if at all.

We are dependent on the availability and price of materials.

We require substantial amounts of materials, including application-specific integrated circuits, coil and bar stock, ferrous and copper alloy sheets, glass, LED displays, plastic molding materials, precious metals, and silicon die castings. The availability and prices of materials may be subject to curtailment or change due to, among other things, new laws or regulations, suppliers’ allocations to other purchasers, interruptions in production by suppliers, changes in exchange rates and worldwide

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price levels. Any change in the availability of, or price for, these materials could materially adversely affect our operating results and potentially cause impairments to assets that we record as a part of operationsan acquisition including intangible assets and financial condition.goodwill.

DisruptionA catastrophic event or other significant business interruption at any of our supply chain could have an adverse effect on our business, financial condition and results of operations.

Our ability, and that of our suppliers, business partners and contract manufacturers, to make, move and sell products is critical to our success. Damage or disruption to our or their manufacturing or distribution capabilities due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics, strikes, repairs or enhancements at our facilities or other reasons, could impair our ability to manufacture or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, could adversely affect our business, financial condition and results of operations, as well as require additional resourcesoperations.

Weather conditions, natural disasters or other catastrophic events could cause significant disruptions at our manufacturing facilities or those of our major suppliers or customers. In such event, losses could be incurred and significant recovery time could be required to restore our supply chain.

Our judgments regarding the accounting for tax positions and the resolution of tax disputes may impact our results ofresume operations and financial condition.

Significant judgment is required to determine our effective tax rate and evaluate our tax positions. We provide for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement criteria prescribed by applicable accounting standards. Fluctuations in federal, state and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may impact our effective tax rate and results of operations. Additionally, we are subject to audits in the various taxing jurisdictions in which we conduct business. Based on the status of these audits and the protocol of finalizing audits by the relevant tax authorities, it is not possible to estimate the impact of changes, if any, to previously recorded uncertain tax positions. Any negative or unexpected outcomes of these examinations and audits could have a material adverse impact on our results of operations and financial condition.

Changes in our effective tax rate may adversely impact our results of operations.

A number of factors may increase our effective tax rate, which could reduce our net income, including:

We may be unable to keep pace with rapid technological changes, which could adversely affect our business.

The technologies relating to some of our products have undergone, and are continuing to undergo, rapid and significant changes. Specifically, end-markets for electronic components and assemblies are characterized by technological change, frequent new product introductions and enhancements, changes in customer requirements and emerging industry standards. These changes could render our existing products unmarketable before we can recover any or all of our research, development and other expenses. Furthermore, the life cycles of our products vary, may change and are difficult to estimate. If we are unable, for technological or other reasons, to develop and market new products or product enhancements in a timely and cost-effective manner, our business, financial condition and operating results of operations could be materially adversely affected.

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TableWar, terrorism, geopolitical uncertainties, public health issues (such as the COVID-19 pandemic), and other business interruptions have caused and could cause damage or disruption to international commerce and the global economy, and thus could have a strong negative effect on us, our suppliers, logistics providers, and customers. Our business operations could be subject to interruption by power shortages, terrorist attacks and other hostile acts, labor disputes, and other events beyond our control. Such events could decrease demand for our products or make it difficult or impossible for us to produce and deliver products to our customers, or to receive components from our suppliers. Should major public health issues, including pandemics, arise, we could be negatively affected by shutdowns, shelter in place orders, more stringent travel restrictions, additional limitations in freight services, governmental actions limiting the movement of Contents

products between regions, and disruptions in the operations of our manufacturing partners and component suppliers. Any such business interruptions could materially affect our business, financial condition and results of operation.

Technology and Intellectual Property Risks

Our operations could be negatively impacted by IT service interruptions, data corruption or misuse, cyber-based attacks, or network security breaches.

We face certain security threats relating to the confidentiality and integrity of our information technology (“IT”) systems. Despite implementation of security measures, our IT systems may be vulnerable to damage from computer viruses, cyber-attacks and other unauthorized access, and these security breaches could result in a disruption to our operations. A material network breach of our IT systems could involve the theft of our and our customers' intellectual property or trade secrets which may be used by competitors to develop competing products. To the extent that any security breach results in a loss or damage to data, or inappropriate disclosure of confidential or proprietary information, it could cause significant damage to our reputation, affect our customer relations, lead to claims against us, increase our costs to protect against future damage and could result in a material adverse effect on our business, financial condition and financial position.

results of operations.

Any such disruption or security breach, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the U.S. and elsewhere where we conduct business, could result in enforcement actions by U.S. states, the U.S. Federal government or foreign governments, liability or sanctions under data privacy laws that protect personally identifiable information, regulatory penalties, other legal proceedings such as but not limited to private litigation, the incurrence of significant remediation costs, disruptions to our development programs, business operations and collaborations, diversion of management efforts and damage to our reputation, which could harm our business and operations. Because of the rapidly changing nature of technology and the increasing sophistication of cybersecurity threats, our measures to prevent, respond to and minimize such risks may be unsuccessful. While we have secured cyber insurance to potentially cover certain risks associated with cyber incidents, there can be no assurance the insuranceit will be sufficient to cover any such liability.

TheIn particular, the General Data Privacy Regulation (“GDPR”) of the European Union creates a range of compliance obligations applicable to the collection, use, retention, security, processing and transfer of personal data in the European Union. The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of the personal data. The GDPR also imposes strict rules on the transfer of personal data out of the European Union to countries such as the U.S., enhances enforcement authority and imposes large penalties for noncompliance.

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.10

Despite our quality control and quality assurance efforts, defects may occur in the products we manufacture due to a variety of factors, including design or manufacturing errors, component failure or counterfeit parts. Product defects may result in delayed shipments and reduced demand for our products. We may be subject to increased costs due to warranty claims on defective products. Product defects may result in product liability claims against us where defects cause, or are alleged to cause, property damage, bodily injury or death. We may be required to participate in a recall involving products that are, or are alleged to be, defective. We carry insurance for certain legal matters involving product liability, however, we do not have coverage for all costs related to product defects or recalls and the costs of such claims, including costs of defense and settlement, may exceed our available coverage.

Reorganization activities may lead to additional costs and material adverse effects.

In the past, we have taken actions to restructure and optimize our production and manufacturing capabilities and efficiencies through relocations, consolidations, plant closings or asset sales. In the future, we may take additional restructuring actions including the consolidating, closing or selling of additional facilities. These actions could result in impairment charges and various charges for such items as idle capacity, disposition costs and severance costs, in addition to normal or attendant risks and uncertainties. We may be unsuccessful in any of our current or future efforts to restructure or consolidate our

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business. Plans to minimize or eliminate any loss of revenues during restructuring or consolidationWe may not be achieved. These activities may have a material adverse effect on our business, financial condition and results of operations.

Our technology-based businesses and the markets in which we operate are highly competitive. If we are unable to compete effectively, our saleskeep pace with rapid technological changes, which could decline.

The markets in which we operate are highly competitive and characterized by rapid changes due to technological improvements and developments. We compete with a large number of other manufacturers in each of our product areas and many of these competitors have greater resources and sales. Price, service and product performance are significant elements of competition in the sale of our products. Competition may intensify further if more companies enter the markets in which we operate. Our failure to compete effectively could materially adversely affect our business, financial condition and results of operations.

The technologies relating to some of our products have undergone, and are continuing to undergo, rapid and significant changes. Specifically, end-markets for electronic components and assemblies are characterized by technological change, frequent new product introductions and enhancements, changes in customer requirements and emerging industry standards. These changes could render our existing products unmarketable before we can recover any or all of our research, development and other expenses. Furthermore, the life cycles of our products vary, may change and are sometimes difficult to estimate. If we are unable, for technological or other reasons, to develop and market new products or product enhancements in a timely and cost-effective manner, our business, financial condition and results of operations could be materially adversely affected.

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 conditioncompetitive position and operating results couldof operations may be materially adversely affected.

impacted.

We have numerous U.S. and foreign patents, trade secrets and license agreements covering certain of our products and manufacturing processes. Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our technology. Although we have been awarded, have filed applications for, or have been licensed under numerous patents in the U.S. and other countries, there can be no assurance concerning the degree of protection afforded by these patents or the likelihood that pending patents will be issued. The loss of certain patents and trade secrets could adversely affect our sales, margins or profitability.

We have and may become involved in litigation in the future to protect our intellectual property or because others may allege that we infringe on their intellectual property. These claims and any resulting lawsuit could subject us to liability for damages and invalidate our intellectual property rights. If an infringement claim is successfully asserted by a holder of intellectual property rights, we may be required to cease marketing or selling certain products, pay a penalty for past infringement and spend significant time and money to develop a non-infringing product or process or to obtain licenses for the technology, process or information from the holder. We may not be successful in the development of a non-infringing alternative, or licenses may not be available on commercially acceptable terms, if at all, in which case we may lose sales and profits. In addition, any litigation could be lengthy and costly and could materially adversely affect us even if we are successful in the litigation.

Legal, Regulatory and Compliance Risks

We cannot guaranteeare subject to government regulations, including environmental, health, and safety laws and regulations, that expose us to potential financial liability.

Our operations are regulated by a number of federal, state, local and international government regulations, including those pertaining to environmental, health, and safety (“EHS”) that govern, among other things, air and water emissions, worker protection, and the recently acquired Grakon businesses willhandling, storage and disposal of hazardous materials. If we violate EHS laws and regulations, we could be successfulliable for substantial fines, penalties, and costs of mandated remedial actions. Our environmental permits could also be revoked or that we can implementmodified, which could require us to cease or limit production at one or more of our facilities, thereby materially adversely affecting our business, financial condition and profit fromresults of operations. EHS laws and regulations have generally become more stringent over time and could continue to do so in response to climate change concerns, imposing greater compliance costs and increasing risks and penalties associated with any new applicationsviolation, which also could materially adversely affect our business, financial condition and results of the acquired technology.

operations.

We acquired Grakon Parent, Inc. (“Grakon”)operate our business on September 12, 2018. As a result,global basis and changes to trade policy, including tariffs and customs regulations, could have a material and adverse effect on our business.

We manufacture and sell our products globally and rely on a global supply chain to deliver the required raw materials, components, and parts, as well as the final products to our customers. Existing free trade laws and regulations, such as the United States-Mexico-Canada Agreement, provide certain duties and tariffs for qualifying imports and exports, subject to compliance with the applicable classification and other requirements. Changes in laws or policies governing the terms of foreign trade, and in particular increased trade restrictions, tariffs or taxes on imports from countries where we now manufacture LED-based lightingproducts, such as China, Egypt and Mexico, could have a material adverse effect on our business, financial condition and operating results. For instance, beginning in North America2018, the U.S. and Asia, which are expectedChinese governments have imposed a series of significant incremental retaliatory tariffs to aid in our expansion incertain imported products. Most notably with respect to the automotive and commercial vehicle sectors. The markets forindustries, the productsU.S. imposed tariffs on imports of certain steel, aluminum and automotive components, and China imposed retaliatory tariffs on imports of U.S. vehicles and certain automotive components. Depending upon their duration and implementation, as well as our ability to mitigate their impact, these companies produce are competitivetariffs and rapidly changing. If we do not keep pace with technological innovationsother regulatory actions could materially affect our business, including in the industry, our products may not be competitive,form of an increase in cost of goods sold, decreased margins, increased pricing for customers, and our revenue and operating results may suffer. Furthermore, while we intend to expand these businesses by integrating the acquired technologies into additional automotive and other applications, we can make no guarantee that such ventures will be successful or profitable.reduced sales.

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Performance-based stock awards under our long-term incentive plan have required significant adjustments to compensation expense in our consolidated statements of income. Any future performance-based stock awards issued under our long-term incentive plan could require similar adjustments. The adjustments could be material our financial statements.

In general, performance-based stock-based compensation expense under our long-term incentive plans is ‎recognized over the vesting ‎period based on the projected probability of achievement of the ‎threshold, target or maximum performance level. In each ‎period, the stock-based compensation ‎expense may be adjusted, as necessary, in response to changes in

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Climate change and climate change regulations could adversely impact our ‎forecast with ‎respectbusiness and results of operation.

Increased public awareness and concern regarding environmental risks, including global climate change, may result in more international, regional and/or federal requirements or industry standards to reduce or mitigate global warming and other environmental risks. These regulations or standards could mandate more restrictive requirements, such as stricter limits on greenhouse gas emissions and production of single use plastics. In addition, the performance level.risks of climate change may impact manufacturing, product demand, the availability and cost of materials and natural resources, and sources and supply of energy, and could increase insurance and other operating costs. If required, we will record additional compensation ‎expense,environmental laws or a reversalregulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements upon us, our operations or products, or our operations are disrupted due to physical impacts of compensation expense, relating to prior periods. The stock-based ‎compensation expense adjustmentsclimate change, our business, financial condition and results of operations could be ‎materialmaterially adversely affected.

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.

Despite our quality control and quality assurance efforts, defects may occur in the products we manufacture due to a variety of factors, including design or manufacturing errors, component failure or counterfeit parts. Product defects may result in delayed shipments and reduced demand for our products. We may be subject to increased costs due to warranty claims on defective products. Product defects may result in product liability claims against us where defects cause, or are alleged to cause, property damage, bodily injury or death. We may be required to participate in a recall involving products that are, or are alleged to be, defective. We carry insurance for certain legal matters involving product liability, however, we do not have coverage for all costs related to product defects or recalls and the costs of such claims, including costs of defense and settlement, may exceed our available coverage. Any such product defects or product liability claims could materially adversely affect our business, financial statements.‎condition and results of operations.

Financial Risks

We have significant goodwill and other intangible assets, and future impairment of these assets could have a material adverse impact on our financial condition and results of operations.

A significant portion of our long-term assets consists of goodwill and long-lived assets recorded as a result of past acquisitions. We do not amortize goodwill and indefinite long-lived intangible assets, but rather review them for impairment on an annual basis or more frequently whenever events or changes in circumstances indicate that their carrying value may not be recoverable. In the event that we determine that our goodwill or long-lived assets are impaired, we may be required to record a significant charge to earnings that could adversely affect our financial condition and results of operations.

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. The COVID-19 pandemic could also adversely impact our liquidity.

Our primary sources of liquidity are cash generated from operations and availability under our revolving credit facility. Our senior unsecured credit agreement consists of a $200.0 million revolving credit facility and a $250.0 million term loan. On March 23, 2020, we drew down $100.0 million under the revolving credit facility as a precautionary measure in order to increase our cash position and preserve financial flexibility in light of the current uncertainty resulting from the COVID-19 pandemic. As of May 2, 2020, $339.71, 2021, $228.6 million in principal was outstanding under these financing arrangements and we had $91.4$190.1 million of availability remaining under the revolving credit facility. The term loan matures in September 2023 and requires quarterly principal payments of $3.1 million over the five-year term, with the remaining balance due upon maturity. The senior unsecured credit agreement provides for variable rates of interest based on the type of borrowing and our debt to EBITDA financial ratio and contains customary representations and warranties, financial covenants, restrictive covenants and events of default.

Further, the impacts of the COVID-19 pandemic have caused significant uncertainty and volatility in the credit markets. Our senior unsecured credit agreement provides an option to increase the size of our revolving credit facility and term loan by an additional $200.0 million, subject to customary conditions and approval of the lenders providing the new commitments. There can be no assurance that lenders will approve additional commitments under current circumstances.As a result of the impacts of the COVID-19 pandemic, we may be required to raise additional capital and our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, and our prospects.

Our senior unsecured credit agreement imposes various restrictions and covenants regarding the operation of our business, including covenants that require us to obtain the lenders’ consent before we can, among other things and subject to certain exceptions: (i) incur additional indebtedness or additional liens on our property; (ii) consummate certain acquisitions, dispositions, mergers or consolidations; (iii) make any material change in the nature of our business; (iv) enter into certain transactions with our affiliates; or (v) repurchase or redeem any outstanding shares of our common stock or pay cash dividends to our stockholders when a default exists or certain financial covenants are not maintained.

The amount of our outstanding indebtedness could have an adverse effect on our operations and liquidity, including by, among other things: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions, because we may not have sufficient cash flows to make our scheduled debt payments; (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, product development, capital expenditures and other business activities; (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions; and (iv) limiting our ability to borrow additional monies in the future to fund the activities and expenditures described above and for other general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations.

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A significant fluctuation between the U.S. dollar and other currencies could adversely impact our business, results of operations and financial condition.

We transact business in various foreign countries. We present our consolidated financial statements in U.S. dollars, but a portion of our revenues and expenditures are transacted in other currencies. As a result, we are exposed to fluctuations in foreign currencies. Additionally, we have currency fluctuation exposure arising from funds held in local currencies in foreign countries. Volatility in the exchange rates between the foreign currencies and the U.S. dollar could have an adverse effect on our business, financial condition and results of operations.

Changes in our effective tax rate may adversely impact our results of operations.

A number of factors may increase our effective tax rate, which could reduce our net income, including:

Our judgments regarding the accounting for tax positions and the resolution of tax disputes may impact our results of operations and financial condition.

Significant judgment is required to determine our effective tax rate and evaluate our tax positions. We provide for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement criteria prescribed by applicable accounting standards. Fluctuations in federal, state and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may impact our effective tax rate and results of operations. Additionally, we are subject to audits in the various taxing jurisdictions in which we conduct business. Based on the status of these audits and the protocol of finalizing audits by the relevant tax authorities, it is not possible to estimate the impact of changes, if any, to previously recorded uncertain tax positions. Any negative or unexpected outcomes of these examinations and audits could have a material adverse impact on our results of operations and financial condition.

Performance-based awards under our long-term incentive plan may require significant adjustments to compensation expense which could have a material adverse impact on our results of operations.

Compensation expense for the performance-based restricted stock awards (“RSAs”) and performance units (“Performance Units”) recently awarded under our five-year long-term incentive program will be ‎recognized over the vesting ‎period based on the projected probability of achieving the relevant performance goals for fiscal 2025. As of May 1, 2021, we have not recorded any compensation expense for the RSAs or the Performance Units based on the probability assessment required under the accounting rules and regulations. Each quarter, we will assess the probability of vesting for the RSAs and the Performance Units and will adjust the compensation expense as necessary. At such time, we may be required to record compensation ‎expense relating to prior periods, and such ‎compensation expense adjustment could be ‎material to our results of operation.‎

Reorganization activities may lead to additional costs and material adverse effects.

In the past, we have taken actions to restructure and optimize our production and manufacturing capabilities and efficiencies through relocations, consolidations, facility closings or asset sales. In the future, we may take additional restructuring actions including the consolidating, closing or selling of additional facilities. These actions could result in impairment charges and various charges for such items as idle capacity, disposition costs and severance costs, in addition to normal or attendant risks and uncertainties. We may be unsuccessful in any of our current or future efforts to restructure or consolidate our business. Plans to minimize or eliminate any loss of revenues during restructuring or consolidation may not be achieved. These activities may have a material adverse effect on our business, financial condition and results of operations.

The replacement or modification of LIBOR as a reference rate could increase our interest expense in the future.

The London Inter-Bank Offered Rate (“LIBOR”) is expected to be phased out by the end of 2021. LIBOR is currently used as the reference rate on our senior unsecured credit agreement, which matures in September 2023. Currently, no replacement rate has been identified. The transition from or modification of LIBOR could result in higher interest expense than has historically been recognized.

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Item 1B. Unresolved Staff Comments

NoneNone.

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Item 2. Properties

Our corporate headquarters is located in Chicago, Illinois. As of May 2, 2020,1, 2021, we leased or owned 4234 operating facilities. We believe our space is in good condition and adequate to meet our current and reasonably anticipated future needs. The following table provides details regarding our significant properties as of May 2, 2020:1, 2021:

Item 3. Legal Proceedings

From time to time, we have and may become involved in various litigation matters, including administrative proceedings, regulatory proceedings, environmental matters, and commercial disputes. The impact and outcome of litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that could harm our business. We are not currently aware of any legal proceedings or claims to which we are a party or to which our property is subject that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.

Item 4. Mine Safety Disclosures

Not Applicableapplicable.

Supplementary Item: Information about our Executive Officers

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All executive officers are elected by the Board of Directors and serve a term of one year or until their successors are duly elected and qualified.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is traded on the New York Stock Exchange under the symbol "MEI."“MEI”. As of June 16, 2020,17, 2021, we had 382 holders of record of our common stock. This does not include persons whose stock is in nominee or “street name” accounts held by banks, brokers and other nominees.

Dividends

While we currently expect that quarterly cash dividends will continue to be paid in the future, such payments are at the discretion of our Board of Directors and will depend upon many factors, including our results of operations and liquidity position.

Issuer Purchases of Equity Securities

On March 31, 2021, the Board of Directors authorized the purchase of up to $100.0 million of our common stock, expiring on March 31, 2023. Purchases under this program may be made on the open market, in private transactions or pursuant to purchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934. In fiscal 2021, we purchased and retired $7.5 million of common stock.

The following table provides information about our purchases of equity securities that are registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) during the quarter ended May 1, 2021:

Securities Authorized for Issuance Under Equity Compensation Plans

See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” of this Annual Report for certain information relating to our equity compensation plans.

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Stock Performance

The following graph shows the cumulative total stockholder return on our common stock over the period spanning May 2, 2015April 30, 2016 to May 2, 2020,1, 2021, as compared with that of the NYSE Composite Index (“NYSE Index”), our Fiscal 2020 Peer Group and a selected peer group of comparable, publicly traded companies that we have selected for purposes of this comparison.our Fiscal 2021 Peer Group. We have assumed that dividends have been reinvested and that $100 was invested on May 2, 2015.April 30, 2016. The stock price performance included in this graph is historical and not necessarily indicative of future stock price performance.

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The Fiscal 2021 Peer Group consists of the following fifteen public companies:

* The Compensation Committee of the Board of Directors reviews the peer group consistsannually and from time to time changes the composition of Belden Inc., CTSthe peer group where changes are appropriate. In fiscal 2021, the Compensation Committee added Delphi Technologies PLC and Visteon Corporation and removed Dorman Products, Inc., Franklin Electric Company, and Standard Motor Products, Inc., Gentherm Incorporated, Benchmark Electronics, based on our revenue, market capitalization and industry criteria for the peer group. Delphi Technologies PLC, Kemet Corporation LCI Industries, Littelfuse, Inc.,and MTS Systems Corporation OSI Systems, Inc., Rogers Corporation, Standard Motor Products, Inc., Stoneridge, Inc.were all acquired in fiscal 2021 and TTM Technologies, Inc.were excluded from the five-year cumulative total returns.

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Item 6. Selected Financial Data

The following selected financial data were derived from our audited consolidated financial statements and should be read in conjunction with Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included in this Annual Report. Fiscal 2020 represented 53 weeks, while fiscal 2019, fiscal 2018, fiscal 2017 and fiscal 2016 represented 52 weeks.Not applicable.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. You should read the following discussion and analysis in conjunction with Item 6, “Selected Financial Data” and our consolidated financial statements and related notes included in this Annual Report. This discussion and analysis of our financial condition and results of operations also contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements because of a variety of factors, including those set forth under Item 1A. “Risk Factors” of this Annual Report. We undertake no duty to update any such forward-looking statements to conform to actual results or changes in our expectations.

Overview

We are a leading global developersupplier of custom engineered and application specific products and solutions with sales, engineering and manufacturing designlocations in North America, Europe, Middle East and testing facilities in Belgium, Canada, China, Egypt, Germany, India, Italy, Lebanon, Malta, Mexico, the Netherlands, Singapore, Switzerland, the United Kingdom and the United States. Our primary manufacturing facilities are located in Dongguan and Shanghai, China; Cairo, Egypt; Mriehel, Malta; and Fresnillo and Monterrey, Mexico.Asia. We design, manufactureengineer and market devices employing electrical, radio remote control, electronic,produce mechatronic products for OEMs utilizing our broad range of technologies for user interface, LED lighting wirelesssystem, power distribution and sensing technologies.sensor applications.

Our solutions are found in the end markets of transportation (including automotive, commercial vehicle, e-bike, aerospace, bus and rail), cloud computing infrastructure, construction equipment, consumer appliance and medical devices. Our business is managed and our financial results are reported, based on the following four segments:a segment basis, with those segments being Automotive, Industrial, Interface and Medical. For more information regarding the business and products of these segments, see “Item 1. Business” of this Annual Report.

Our components are found in the primary end-markets of the aerospace, appliance, automotive, commercial vehicle, construction, consumer and industrial equipment, communications (including information processing and storage, networking equipment and wireless and terrestrial voice/data systems), medical, rail and other transportation industries.

Impact of the COVID-19

Pandemic

The COVID-19 global pandemic hasand the ongoing measures to reduce its spread have negatively affectedimpacted the global economy, disrupted consumer and customer demand and global supply chains, and created extreme volatilityresulted in manufacturing efficiencies and disruptionsincreased freight costs due to capital and credit markets inglobal capacity constraints. We expect that the global financial markets. We began to see the impacts of COVID-19 at the beginning of our fourth quarter of fiscal 2020 at our China manufacturing facilities, which were initially closed for a few weeks after the Chinese New Year. Our manufacturing facilities in China resumed operations later in the fourth quarter of fiscal 2020, but at lower capacity utilization. However, the major impact to our business fromhealth crisis caused by the COVID-19 pandemic began in mid-March 2020, aswill continue to negatively impact our operations in North Americabusiness and Europe were adversely impacted by many of our customers suspending their manufacturing operations due to the COVID-19 pandemic. As a result, net sales and production levels at our major North American and European manufacturing facilities were significantly reduced to well below capacity, thus impacting our results of operations duringfor the fourth quarter of fiscal 2020.

In response to the COVID-19 pandemic and business disruption, we implemented certain measures to manage costs, preserve liquidity and enhance employee safety. These measures included the following:

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foreseeable future. The extent of the impact will depend on a number of evolving and uncertain factors, including the duration and spread of COVID-19 (and its variants), the rate of vaccinations, actions taken by governmental authorities to further restrict business operations and social activity and impose travel restrictions, shifting consumer demand, the ability of our supply chain to deliver in a timely and cost-effective manner, the ability of our employees and manufacturing facilities to operate efficiently and effectively, the continued viability and financial stability of our customers and suppliers and future access to capital.

Restructuring actions

As a result of the COVID-19 pandemic, onwe initiated certain restructuring actions in fiscal 2021 to rationalize our business, financial results and liquidity will depend largely on future developments, including the duration of the spread of the COVID-19 outbreak within the U.S. and globally, the impact on capital and financial markets and the related impact onoperations, lower our customers, especially in the automotive and commercial vehicle markets. These future developments are outside of our control, are highly uncertain and cannot be predicted. If the impact is prolonged, then it can further increase the difficulty of planning for operations and may require us to take further actions as it relates to costs and liquidity.improve financial performance and long-term cash flow generation. These actions included plant consolidations and other potential impacts of the COVID-19 pandemic will adversely impact our results for the first quarter of fiscal 2021, as well as the full fiscal year, and that impact could be material.

Grakon Transaction

On September 12, 2018, we acquired 100% of the stock of Grakon for $422.1 million in cash, net of cash acquired. The business, headquartered in Seattle, Washington, is a manufacturer of custom designed exterior lighting solutions and highly styled engineered components, with locations in Canada, China, the Netherlands and the United Kingdom. Grakon’s manufacturing capabilities and products help diversify our product offerings and expand the Industrial segment, which is a key component of our strategic direction. Grakon’s results have been includedworkforce reductions in the Automotive, Industrial and Industrial segments from the effective dateInterface segments. In fiscal 2021, we recognized $8.2 million of the acquisition. Grakon’s results are included for the entire periodrestructuring costs. We may take additional restructuring actions in fiscal 2020future periods based upon market conditions and only for seven and a half-months in fiscal 2019.industry trends.

Results of Operations

We maintain our financial records on the basis of a 52- or 53-week fiscal year ending on the Saturday closest to April 30. For fiscal 2021 and fiscal 2019, our accounting period included 52 weeks and ended on May 1, 2021 and April 27, 2019, respectively. For fiscal 2020, our accounting period included 53 weeks and ended on May 2, 2020. For fiscal 2019 and fiscal 2018, our accounting period included 52 weeks and ended on April 27, 2019 and April 28, 2018, respectively. The following discussions of comparative results among periods should be reviewed in this context.

A detailed comparison of our results of operations between fiscal 20192020 and fiscal 20182019 can be found in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our fiscal 20192020 Annual Report on Form 10-K filed with the SEC on June 20, 2019.30, 2020.

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ResultsThe table below compares our results of Operations for the Fiscal Year Ended May 2, 2020 compared to the Fiscal Year Ended April 27, 2019.operations between fiscal 2021 and fiscal 2020:

Consolidated Results

Below is a table summarizing results for the fiscal years ended:

Net Salessales. Consolidated netNet sales increased by $23.6$64.1 million, or 2.4%6.3%, to $1,088.0 million in fiscal 2021, compared to $1,023.9 million in fiscal 2020, compared to $1,000.3 million in fiscal 2019.2020. The acquisition of Grakon increased net sales by $76.2 million, while the impact of foreign currency translation, decreased net sales by $13.9 million. The weakerprimarily the euro and Chinese renminbi, impacted foreign currency translation.increased net sales by $26.7 million. Excluding the acquisition of Grakon and foreign currency translation, net sales decreasedincreased by $38.7$37.4 million, primarily due to higher sales in the adverse impacts from the UAW labor strike at GMAutomotive and the negative impact of the COVID-19 pandemic on net sales during our fourth fiscal quarter.Industrial segments.

Cost of Products Soldproducts sold. Consolidated costCost of products sold increased by $6.5$72.9 million, or 0.9%9.8%, to $813.9 million (74.8% of sales) in fiscal 2021, compared to $741.0 million (72.4% of sales) in fiscal 2020, compared to $734.5 million (73.4%2020. The impact of sales) in fiscal 2019. The acquisition of Grakonforeign currency translation increased cost of products sold by $46.4 million, while the impact of foreign currency translation decreased cost of products sold by $8.7$18.9 million. Excluding the acquisition of Grakon and foreign currency translation, cost of products sold decreasedincreased by $31.2$54.0 million, primarily due to higher material and operating costs and restructuring costs, partially offset by lower labor costs. Supply chain shortages and disruptions led to higher material and logistic costs. Material costs were also impacted by product sales volumes. Consolidated costmix. In fiscal 2021, we recognized $4.8 million of products soldrestructuring costs, compared to $0.6 million in fiscal 2019 included $5.6 million2020. Labor costs were lower as a result of purchase accounting adjustments relatedactions taken in response to Grakon inventory and $2.8 million of costs related to initiatives to reduce overall costs and improve operational profitability.the COVID-19 pandemic.

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Gross Profit. profit. Gross profit increaseddecreased by $17.1$8.8 million, or 6.4%3.1%, to $274.1 million (25.2% of sales) in fiscal 2021, compared to $282.9 million (27.6% of sales) in fiscal 2020, compared to $265.8 million (26.6% of sales) in fiscal 2019.2020. The acquisition of Grakon increased gross profit by $29.8 million, while the impact of foreign currency translation decreasedincreased gross profit by $5.2$7.8 million. Excluding the acquisition of Grakon and foreign currency translation, gross profit decreased by $7.5 million,$16.6 million. The decrease in gross profit margin was primarily due to lowerhigher material costs, product sales in the Automotive segment as a result of the UAW labor strike at GMmix and lower sales of radio remote control products in the Industrial segment,restructuring costs, partially offset by the benefits of initiatives to reduce overall costs and improve operational profitability taken in fiscal 2019. Gross profit was also negatively impacted in our fourth fiscal quarter by the negative impact of the COVID-19 pandemic on net sales.lower labor costs.

Selling and Administrative Expensesadministrative expenses. Selling and administrative expenses decreasedincreased by $26.1$10.1 million, or 18.3%8.6%, to $126.9 million (11.7% of sales) in fiscal 2021, compared to $116.8 million (11.4% of sales) in fiscal 2020, compared to $142.9 million (14.3% of sales) in fiscal 2019.2020. The impact of foreign currency translation decreased selling and administrative expenses by $1.3 million, which was partially offset by the acquisition of Grakon which increased selling and administrative expenses by $1.1$1.7 million. Excluding foreign currency translation, and the acquisition of Grakon, selling and administrative expenses decreasedincreased by $25.9$8.4 million. The decreaseincrease was primarily due to higher stock-based and cash incentive compensation expenses and restructuring costs, partially offset by lower stock-basedsalary expense and travel expense. Cash incentive compensation expense professional fees and salaries.increased by $7.1 million due to the increase in the amounts earned under our annual performance-based bonus program compared to fiscal 2020. Stock-based compensation expense decreasedincreased by $13.7$6.5 million as fiscal 2020 included a $5.2 million reversal of stock-based compensation expense related to prior years, while fiscal 2019 included a $7.4 million accrual adjustment expense related to prior years. expense.For further information, see Note 13, "Shareholders“Shareholders Equity,” to the consolidated financial statements included in this Annual Report. Professional fees were higherIn fiscal 2021, we recognized $3.4 million of restructuring costs, compared to $1.2 million in fiscal 2019 primarily due to transaction costs associated with the acquisition of Grakon. Salaries were2020. Salary expense was lower in fiscal 2020 due to lower incentive compensation expense and actions taken with respect to salaries2021 as a result of the actions we took in response to the COVID-19 pandemic. In addition,As noted above, we implemented temporary salary reductions and four-day work weeks (which ended in the second quarter of fiscal 2020, we realized benefits from initiatives taken in fiscal 2019 to reduce overall costs2021) and improve operational profitability. In fiscal 2019, we incurred $4.0 million of expenses related to initiatives to reduce overall costs and improve operational profitability versus $1.2 million of expenses incurred in fiscal 2020.eliminated most business travel.

Amortization of Intangiblesintangibles. Amortization of intangibles increased by $2.9$0.3 million, or 18.0%1.6%, to $19.3 million in fiscal 2021, compared to $19.0 million in fiscal 2020, compared to $16.1 million in fiscal 2019. The increase was due to amortization expense related to the Grakon acquisition, partially offset by lower amortization expense in the Interface segment.2020.

Interest Expense, Net.expense, net. Interest expense, net was $5.2 million in fiscal 2021, compared to $10.1 million in fiscal 2020, compared to $8.3 million in fiscal 2019.2020. The increasedecrease was due to higher averagea lower effective interest rate on outstanding borrowings, in fiscal 2020 compared to fiscal 2019, partially offset by lowerhigher average interest rates.borrowings. Average borrowings were higher due to the precautionary $100.0 million draw-down under our revolving credit facility in March 2020, which was fully repaid in the third quarter of fiscal 2021.

Other Income, Net.income, net. Other income, net increased by $6.6$0.5 million to $12.2 million in fiscal 2021, compared to $11.7 million in fiscal 2020. In fiscal 2021, we received $11.1 million of government assistance at certain of our international locations with respect to the COVID-19 pandemic. In fiscal 2020, compared to $5.1we received $11.6 million in fiscal 2019. The increase was primarily due to higher income fromof international government grantsassistance, of $11.6 million in fiscal 2020 compared to $5.8 million in fiscal 2019. Approximatelywhich approximately $1.7 million of the international government grants relatesrelated to assistance provided with respect to the COVID-19 pandemic. The remaining $9.9 million of international government grants in fiscal 2020 relaterelated to maintaining certain employment levels. In fiscal 2020, we sold assets related to a previously closed business and recognized a gain on sale of $0.5 million. In addition, net foreign exchange losses were $0.3 million in fiscal 2021, compared to $3.1 million in fiscal 2020, compared to $1.4 million in fiscal 2019.2020.

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Income Tax Expense.tax expense. Income tax expense increaseddecreased by $13.3$12.7 million, or 110.8%50.2%, to $12.6 million in fiscal 2021, compared to $25.3 million in fiscal 2020, compared to $12.0 million in fiscal 2019.2020. Our effective tax rate increaseddecreased to 9.3% in fiscal 2021, compared to 17.0% in fiscal 2020, compared to 11.6% in fiscal 2019.2020. The increase was primarily related to the higher pre-tax income from the Grakon acquisition in fiscal 2020 and an increase in tax reserves. Thelower effective tax rate in fiscal 20192021 was lower primarily due to discrete tax benefits recorded of $10.4 million. These discrete tax benefits included tax credits earned and research deductions claimed in foreign jurisdictions. The discrete tax benefits were partially offset by discrete tax expense of $1.6 million, resulting in a net discrete tax benefit related toof $8.8 million. Excluding the finalizationnet discrete tax benefits, the effective tax rate would have been 15.9%. In fiscal 2020, income tax expense included discrete tax expenses of $1.5 million. Excluding the transitiondiscrete tax from U.S. Tax Reform and investmentexpense, the effective tax credits generated from a non-U.S. location.rate would have been 15.5%.

Net Income.income. Net income increaseddecreased by $31.8$1.1 million, or 34.7%0.9%, to $122.3 million in fiscal 2021, compared to $123.4 million in fiscal 2020, compared to $91.62020. The impact of foreign currency translation increased net income by $5.4 million. Excluding foreign currency translation, net income decreased by $6.5 million in fiscal 2019. Net income increased as a result of the reasons described above.

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Operating Segments

Automotive Segment Results

Below is a table summarizing results for the fiscal years ended:

Net Salessales. Automotive segment net sales decreasedincreased by $22.6$43.6 million, or 3.1%6.1%, to $755.7 million in fiscal 2021, compared to $712.1 million in fiscal 2020, from $734.7 million in fiscal 2019. Net2020. The impact of foreign currency translation increased net sales were negatively impacted in our fourth fiscal quarter as a result of the COVID-19 pandemic.by $20.7 million. Excluding foreign currency translation, net sales increased by $22.9 million. Net sales decreased in North America by $25.2$29.2 million, or 5.5%6.7%, to $406.4 million in fiscal 2021, compared to $435.6 million in fiscal 2020, compared to $460.8 million in fiscal 2019.2020. The decrease was primarily due to the adverse impactlower electric vehicle product sales which shifted from the COVID-19 pandemicNorth America to Asia and the adverse impact fromlower lighting product sales volumes. Net sales in fiscal 2020 were negatively impacted by $28.7 million due to the UAW labor strike at GM, partially offset by higher sales from the Grakon acquisition.GM. Net sales in Europe increased by $6.4$10.2 million, or 3.3%5.0%, to $212.3 million in fiscal 2021, compared to $202.1 million in fiscal 2020, compared2020. The stronger euro, relative to $195.7 million in fiscal 2019. The weaker euro decreasedthe U.S. dollar, increased net sales in Europe by $7.6$14.0 million. Excluding the impact of foreign currency translation, net sales in Europe increaseddecreased by $14.0$3.8 million primarily due to higherlower sales volumes, primarily in the first quarter of sensor and switch products, partially offset by the adverse impactfiscal 2021, as a result of the COVID-19 pandemic. Net sales in Asia decreasedincreased by $3.8$62.6 million, or 4.9%84.1%, to $137.0 million in fiscal 2021, compared to $74.4 million in fiscal 2020, compared to $78.2 million in fiscal 2019.2020. The weakerstronger Chinese renminbi, decreasedrelative to the U.S. dollar, increased net sales in Asia by $2.6$6.7 million. Excluding foreign currency translation, net sales in Asia decreasedincreased by $1.2$55.9 million primarily due to lower sales of our sensor and transmission lead-frame assembly products and the adverse impact of the COVID-19 pandemic, partially offset by the launch of touchscreenhigher electric vehicle product sales to an Asian automobile OEM.volumes which were transferred from North America, and higher lead frame and touchscreen sales volumes.

Gross Profit.profit. Automotive segment gross profit decreased by $10.1$14.8 million, or 5.4%8.3%, to $163.4 million in fiscal 2021, compared to $178.2 million in fiscal 2020, compared to $188.3 million in fiscal 2019.2020. The impact of foreign currency translation increased gross profit by $5.2 million. Excluding foreign currency translation, gross profit decreased by $20.0 million. Gross profit margin decreased slightly to 21.6% in fiscal 2021, from 25.0% in fiscal 2020, from 25.6%2020. The decrease in gross profit margin was primarily due to higher material costs and restructuring actions taken in fiscal 2019.2021. In fiscal 2021, we recognized $4.9 million of restructuring costs, compared to $0.6 million in fiscal 2020.

Income from operations. Automotive segment income from operations decreased by $16.8 million, or 13.5%, to $107.6 million in fiscal 2021, compared to $124.4 million in fiscal 2020. The impact of foreign currency translation increased automotive segment income from operations by $3.6 million. Excluding foreign currency translation, automotive segment income from operations decreased by $20.4 million, primarily due to lower gross profit.

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Industrial