Climate Change Data

Environmental Metrics

Environmental Achievements

• Environmental management system has been ISO 14001 certified since May 2003.
• Completed construction of a new wastewater treatment facility in December 2015, showing compliance with standards in January 2016.

Governance Achievements

• Established an audit committee, compensation committee, and banking committee.

Climate Goals & Targets

Environmental Challenges

• Loss of key customers impacting revenues.
• Currency fluctuations affecting operating results.
• Economic downturns and financial market disruptions.
• Losses from Germany-based subsidiary Kubatronik.
• Compliance with environmental laws and regulations (including legal proceedings related to wastewater and emissions).
• Intense competition in the PCB market.
• Dependence on a select number of suppliers for raw materials.
• Difficulties expanding into the U.S. defense market.
• Challenges with international operations and sales.
• Costly compliance with new business permit conditions.
• History of operating losses.
• Fluctuating quarterly operating results.
• Potential non-compliance with financial covenants.
• Complex manufacturing processes leading to shipment delays and potential product liability claims.
• Price increases for raw materials affecting operating margins.
• Obstacles in transitioning to a new ERP system.
• Need for additional capital.
• Potential breaches of network or IT security, natural disasters, or terrorist attacks.
• Potential unionization of employees.
• New requirements related to conflict-free minerals.
• Increased regulation associated with climate change.
• Dependence on key personnel.
• Maintaining effective internal control over financial reporting.
• Technological change affecting market acceptance of products.
• Competition with lower-cost PCB manufacturers in Asia.
• Protecting intellectual property.
• Potential infringement claims.
• Meeting industry standards.
• Indemnification obligations.
• Political, economic, and military instability in Israel.
• Difficulty in service and enforcement of legal process.
• Limitations on enforceability of non-compete agreements in Israel.
• Provisions of Israeli law potentially delaying or preventing acquisitions.
• Differences between shareholder rights under Israeli and U.S. law.
• Following home country corporate governance practices instead of certain NASDAQ requirements.

Mitigation Strategies

• Savings in manufacturing costs.
• Cutting expenses.
• Investment in new wastewater treatment facility.
• Focus on high-end PCB market, mainly flex-rigid PCBs.
• ITAR registration from the U.S. Department of State.
• AS 9100B and AS 9100C certifications.
• Nadcap accreditation.
• Programs to upgrade processes, implement high-quality standards, and provide employee training.
• Implementation of procedures to investigate the origin of conflict minerals.
• Maintaining insurance coverage for some events.
• Use of firewall and anti-virus systems.
• Investment in new equipment and expansion of facilities.
• Securing credit facilities and long-term loans from banks.
• Raising capital through private placement.
• Negotiating lower price increases from suppliers.
• Maintaining moderate price increases for products.
• Implementation of a new ERP system (planned completion in 2016).

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: U.S. GAAP

Certifications: ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, AS 9100C, UL 94V-0

Third-party Assurance: Kost Forer Gabbay & Kasierer (a member of Ernst & Young Global)

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• History of operating losses and may not be able to achieve and sustain long-term profitable operations.
• Lack of sufficient working capital.
• Dependence on a select number of key customers.
• Adverse impact of currency fluctuations.
• Unfavorable national and global economic conditions.
• Compliance with environmental laws and regulations.
• Rapid changes in the Israeli and international electronics industries and recessionary pressure.
• Intense competition in the PCB market.
• Dependence on a select number of suppliers for timely delivery of key raw materials.
• Efforts to expand into the U.S. defense market may not succeed.
• Difficulties with international operations and sales.
• Costly compliance with a new business permit.
• Significant fluctuations in quarterly operating results.
• Non-compliance with financial covenants in loan agreements.
• Complex manufacturing processes leading to delays and product liability claims.
• Price increases for principal raw materials.
• Obstacles in the transition to a new ERP system.
• Breaches of network or information technology security, natural disasters or terrorist attacks.
• Potential for unionization of the workforce.
• Compliance with "conflict minerals" rules.
• Increased regulation associated with climate change and greenhouse gas emissions.
• Dependence on key personnel.
• Maintaining effective internal control over financial reporting.
• Technological change affecting market acceptance of products.
• Competition with lower-cost PCB manufacturers in Asia.
• Ineffective intellectual property protection.
• Claims of product infringement.
• Meeting industry standards.
• Indemnification obligations.
• Political, economic, and military instability in Israel.

Mitigation Strategies

• Cost-cutting measures.
• New wastewater treatment facility.
• Settlement with Meitav.
• Amended application for emissions permit.
• Investments in new equipment and expansion of facilities.
• Implementation of a new ERP system.
• Maintenance of insurance coverage.
• Efforts to retain and attract key personnel.
• Ongoing efforts to comply with Section 404 of the Sarbanes-Oxley Act.
• Investments in new technologies and equipment.
• Focus on high-end PCB market.
• ITAR registration from the U.S. Department of State.
• AS 9100B quality management standard certification.
• Nadcap accreditation.

Supply Chain Management

Responsible Procurement

• Conflict Minerals Policy

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: U.S. GAAP

Certifications: ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007, AS 9100C, UL 94V-0

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Increased scrutiny and changing expectations from investors, lenders, customers and other market participants with respect to our Environmental, Social and Governance policies may impose additional costs on us or expose us to additional risks.
• Increased regulation associated with climate change and greenhouse gas emissions could impose significant additional costs on operations.
• Environmental violations and related penalties.
• Shortage of key raw materials.

Mitigation Strategies

• Environmental management system has been ISO 14001 certified since May 2003.
• Various actions to reduce the use of water in our manufacturing facilities, and invested in improving our effluent wastewater treatment system.
• Developing alternative sourcing strategies for raw materials.

Supply Chain Management

Climate-Related Risks & Opportunities