Coherent (COHR) risk factors, FY2025 10-K

Risks Related to Our Business, Operations and Industry

1. 01Our competitive position depends on our ability to develop new products and processes and may require significant investment
2. 02A significant portion of our business is subject to cyclical market factors and we may fail to accurately estimate the size and growth rate of our markets and our customers’ demands
3. 03Products that fail to meet specifications, are defective, or are otherwise incompatible with end uses could impose significant costs on us
4. 04We may encounter increased competition, and we may fail to accurately estimate our competitors’ or our customers’ willingness and capability to backward integrate into our competencies and thereby displace us
5. 05Global economic downturns may adversely affect our business, results of operations, and financial condition
6. 06We depend on highly complex manufacturing processes that require strategic materials, components, and products from limited sources of supply
7. 07Significant political, trade, regulatory developments, and other circumstances beyond our control, including as a result of recently announced tariffs, could have a material adverse effect on our financial condition or results of operations
8. 08Our business is subject to various governmental regulations. Compliance with these regulations may cause us to incur significant expense and failure to maintain compliance with applicable regulations could adversely affect our business
9. 09Increases in commodity prices and diminished availability of rare earth minerals and noble gases may adversely affect our results of operations and financial condition
10. 10We depend on secure information technology for our business and are exposed to risks related to cybersecurity threats and other cyber incidents affecting our operations, facilities, systems and networks, and those of our customers, suppliers and service providers, and other third parties
11. 11third-party technology as we do, which means that outages, errors and other incidents impacting third parties and third party technology can impact both us, as well as our customers, vendors and service providers, which can have a compounding effect
12. 12We may be adversely impacted by any of the multiple uncertainties and outcomes associated with the use and evolution of Artificial Intelligence (“AI”)
13. 13Natural disasters or other global or regional catastrophic events could disrupt our operations, give rise to substantial environmental hazards, and adversely affect our results
14. 14We may be unable to successfully implement our acquisitions strategy, integrate acquired companies and personnel with existing operations, or capitalize on any decision to strategically divest one or more current businesses
15. 15Our success requires us to attract, retain, and develop key personnel and maintain good relations with our employees
16. 16Actions that we are taking to restructure our business in alignment with our strategic priorities may not be as effective as anticipated
17. 17If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings

Risks Related to Intellectual Property and Litigation

1. 18There are limitations on the protection of our intellectual property, and we may from time to time be involved in costly intellectual property litigation or indemnification
2. 19Legal, regulatory and administrative investigations, inquiries, proceedings, and claims could have a material adverse effect on our business, results of operations, or financial condition

Risks Related to Laws and Regulations

1. 20Government actions and regulations, such as export restrictions, tariffs, and trade protection measures, may limit our ability to sell our products to certain customers or markets, or could otherwise restrict our ability to conduct operations
2. 21We are subject to complex and rapidly changing import and export regulations of the countries in which we operate and/or sell which could limit our sales and decrease our profitability, and we may be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations
3. 22We are subject to a variety of complex and evolving laws, regulations, or industry standards, including with respect to environmental, health, safety, and product considerations, which may have a material adverse effect on our business, results of operations, or financial condition
4. 23Our operations are subject to environmental, health and safety risks and requirements which could adversely affect our business, results of operations and reputation
5. 24Tax-related matters could have a material adverse effect on our business, results of operations, or financial condition

Risks Related to Capitalization and Financial Markets

1. 25Foreign currency risk may negatively affect our revenues, cost of sales, and operating margins, and could result in foreign exchange losses
2. 26We have a substantial amount of debt, which could adversely affect our business, financial condition, or results of operations and prevent us from fulfilling our debt-related obligations
3. 27The agreements that govern our senior credit facilities and our 5.000% senior notes due 2029 contain various covenants that impose restrictions on our business, which may affect our ability to operate our businesses
4. 28The trading price of our common stock has been, and may continue to be, volatile
5. 29Provisions in our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws and the Pennsylvania Associations Code (the “Code”) may delay or prevent our acquisition by a third party, which could also reduce the market price of our capital stock
6. 30All of these provisions may limit the price that investors may be willing to pay for shares of our capital stock
7. 31Our ability to declare and pay dividends on our capital stock may be limited, including by the terms of our existing Credit Agreement
8. 32The terms of the Credit Agreement contain a restriction on our ability to pay cash dividends on our capital stock. Credit facilities, indentures, or other financing agreements that we enter into in the future also may contain provisions that restrict or prohibit our ability to pay cash dividends on our capital stock
9. 33Our common stock is subordinate to our existing and future indebtedness, the Series B Preferred Stock, and any other preferred stock we may issue in the future. Our Series B Preferred Stock ranks junior to all of our and our subsidiaries’ consolidated liabilities
10. 34Our Board of Directors can issue, without approval of the holders of our common stock, preferred stock with voting and conversion rights that could adversely affect the voting power of the holders of our common stock, the rights of holders of shares of our capital stock, or the market price of our capital stock
11. 35The redemption rights of the holders of Series B Preferred Stock may result in the use of our cash in such a way that could adversely affect our business, financial condition or results of operations
12. 36Holders of our Series B Preferred Stock can exercise significant control over us, which could limit the ability of holders of our other capital stock to influence the outcome of key transactions, including a change of control