Item 2.05 Costs Associated with Exit or Disposal Activities.
On January 11, 2021, the Company initiated a plan to expand its Chihuahua,
Mexico campus and consolidate its current operations from its Fresnillo, Mexico
facility. The Company expects to complete the first phase of the Chihuahua,
Mexico expansion early in the first quarter of 2021, and the subsequent phases
of the expansion throughout 2021. As part of this plan, the Company will incur
restructuring and other charges from consolidating operations from its
Fresnillo, Mexico facility of approximately $5.5 million, which includes
approximately $1.5 million of non-cash accelerated asset write-downs, and $4.0
million of other cash-based expenses, including employee-related costs.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21F of the Exchange Act. Forward looking statements are indicated by words or
phrases such as "guidance," "believes," "expects," "intends," forecasts," "can,"
"could," "may," "anticipates," "estimates," "plans," "projects," "seeks,"
"should," "targets," "will," "would," "outlook," "continuing," "ongoing," and
similar words or phrases and the negative of such words and phrases and the
negative of such words and phrases, and include statements regarding the
anticipated timing and expenses related to consolidation of the Company's Mexico
operations. Forward-looking statements are based on the Company's current plans
and expectations and involve risks and uncertainties which are, in many
instances, beyond the Company's control, and which could cause actual results to
differ materially from those included in or contemplated or implied by the
forward-looking statements. Actual results could differ materially from those
contained in any forward-looking statement as a result of various factors,
including, without limitation, SMTC's timing and execution of its plans to
consolidate its Mexican operations and expansion of its Chihuahua campus,
including the anticipated operational synergies, restructuring and other
charges, required cash, and the effects of the consolidation on the Company's
profitability and shareholder returns. For these statements, SMTC claims the
protection of the safe harbor for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995. Risks and uncertainties that
may cause future results to differ from forward looking statements include the
effect of the expanded outbreak of the COVID-19 pandemic on the economy
generally and on SMTC, its operations, fluctuations in demand for customers'
products and changes in customers' product sources, disruptions to the supply
chain, availability of labor resources, delivery logistics, component shortages,
availability of credit or lending facilities, challenges of managing quickly
expanding operations, competition in the electronics manufacturing services
industry, changes in regulations and guidance from federal, state and local
governments and public health officials, ability to achieve operational
synergies and effectively manage restructuring charges and other costs
associated with consolidation of the Company's Mexico operations.
The foregoing review of important factors that could cause actual results to
differ from expectations should not be construed as exhaustive and should be
read in conjunction with the information contained in the Company's SEC filings,
including, but not limited to, the risk factors included in the Company's
filings with the SEC, including the Company's Annual Report on Form 10-K for the
fiscal year ended December 29, 2019, filed with the SEC on March 13, 2020, as
updated by the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 29, 2020, June 28, 2020 and September 27, 2020, filed with the SEC on May
7, 2020, August 6, 2020 and November 5, 2020, respectively. No assurance can be
given that these are all of the factors that could cause actual results to vary
materially from the forward-looking statements.
Except as required by applicable law, the Company does not intend, and assumes
no obligation, to update any forward-looking statements. The Company's
stockholders are advised, however, to consult any future disclosures the Company
makes on related subjects as may be detailed in the Company's other filings made
from time to time with the SEC.
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