What changed in this filing

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Item 1A. Risk Factors

2021-02-10 compared with 2020-02-12 · 95 added, 51 removed, 203 unchanged (42% of the section changed)

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The risks and uncertainties described below are not the only ones facing the Company.

Additional risks and uncertainties not presently known to the Company or that it currently deems immaterial may also impair the Company’s business, operations, liquidity and financial condition.

Additional risks and uncertainties not presently known to the Company or that we currently consider immaterial may also impair the Company’s business, operations, liquidity and financial condition.

In addition to the risk factor included below related to adverse public health developments and, in particular, the ongoing COVID-19 pandemic and its effects on public health and the global economy, the Company also notes that the effects of the pandemic have and may continue to impact many of the other risk factors described below.

If actions taken by management to limit, monitor or control enterprise risk exposures are not successful, the Company’s business and consolidated financial statements could be materially adversely affected.

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● instability in political or economic conditions, including but not limited to inflation, recession or slowing growth, changes in tariff and trade barriers and import and export licensing requirements, our ability to hire and maintain qualified staff in these regions, foreign currency exchange restrictions and devaluations, restrictive governmental controls on the movement and repatriation of earnings and capital, and actual or anticipated military or political conflicts, particularly in emerging markets;

● intergovernmental conflicts or actions, including but not limited to armed conflict, trade wars and acts of terrorism or war;

● interruptions to the Company’s business with its largest customers, distributors and suppliers resulting from but not limited to, strikes, financial instabilities, computer malfunctions or cybersecurity incidents, inventory excesses, natural disasters or other disasters such as fires, floods, earthquakes, hurricanes or explosions.

International trade disputes may result in increased tariffs, trade barriers and other protectionist measures that could increase our manufacturing costs, make our products less competitive, reduce consumer demand or impede or slow the

movement of our goods across borders.

● intergovernmental conflicts or actions, including but not limited to armed conflict, trade wars, cyber attacks and acts of terrorism or war;

● interruptions to the Company’s business with its largest customers, distributors and suppliers resulting from but not limited to, strikes, financial instabilities, computer malfunctions or cybersecurity incidents, inventory excesses, natural disasters such as fires, floods, earthquakes, hurricanes or tornadoes or adverse public health developments, including the ongoing COVID-19 pandemic discussed further below.

International trade or other disputes may result in increased tariffs, trade barriers, retaliatory governmental regulations or actions and other protectionist measures that could increase our manufacturing costs, make our products less competitive, reduce consumer demand or impede or slow the movement of our goods across borders.

Increasing protectionism and economic nationalism may lead to further changes in trade policy, domestic sourcing initiatives, or other formal and informal measures that could make it more difficult to sell our products in some markets.

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economic and geopolitical conditions.

In recent years, there has been discussion and dialogue regarding potential significant changes to U.S.

In recent years, there have been significant changes to U.S.

trade policies, legislation, treaties and tariffs, in particular trade policies and tariffs affecting China.

Some of these trade policies have been or are in the process of being renegotiated, including the U.S.’s trading relationship with China.

Some of these trade policies, including the U.S.’s trading relationship with China, have been renegotiated during this timeframe and are subject to further changes in the future.

Changes to current policies by the U.S.

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trade relations with China and other countries.

The imposition of additional tariffs or other trade barriers could increase our costs in certain markets, and may cause our customers to find alternative sourcing.

In addition, other countries may change their own policies on business and foreign investment in companies in their respective countries.

The imposition of additional tariffs or other trade barriers could increase our costs in certain markets, and may cause our

customers to find alternative sourcing.

In addition, other countries have changed and may continue to change their own policies on trade as well as business and foreign investment in their respective countries.

Additionally, it is possible that U.S.

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Market volatility and currency exchange rate fluctuations could have a material adverse effect on our business, financial condition, results of operations or cash flows.

As a result of these dynamics, we cannot predict the impact to our business of any future changes to the U.S.’s trading relationships.

As a result of these dynamics, we cannot predict the impact to our business of any future changes to the U.S.’s trading relationships or of new laws or regulations by the U.S.

or other countries.

In addition to changes in U.S.

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● postponement of spending, in response to tighter credit, financial market volatility and other factors;

● effects of significant changes in economic, monetary and fiscal policies in the United States and abroad including significant income tax changes, currency fluctuations and inflationary pressures;

● rapid material escalation of the cost of regulatory compliance and litigation;

● changes in government policies and regulations affecting the Company or its significant customers or suppliers;

● effects of significant changes in economic, monetary and/or fiscal policies in the United States and abroad including significant income tax changes, currency fluctuations and inflationary pressures;

● employment regulations and local labor conditions, including increases in employment costs, particularly in low-cost regions in which the Company currently operates;

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● the impact of each of the foregoing on outsourcing and procurement arrangements;

● continuing uncertainty regarding social, political, immigration and tax and trade policies in the United States and abroad, including as a result of the United Kingdom’s vote to withdraw from the European Union, otherwise known as “Brexit”.

We have significant international sales and operations and face risks related to health epidemics such as the coronavirus.

Any outbreaks of contagious diseases and other adverse public health developments in countries where we operate could have a material and adverse effect on our business, financial condition and results of operations.

For example, the recent outbreak of a novel strain of coronavirus first identified in Wuhan, Hubei Province, China, has resulted in significant governmental measures being implemented to control the spread of the virus, including restrictions on manufacturing and the movement of employees in many regions of the country.

This has affected our manufacturing facilities in China as well as the facilities of our suppliers, customers and our customers’ contract manufacturers.

The extent to which the coronavirus will impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted.

In addition, the coronavirus may result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn

that could affect demand for our end customers’ products.

As a result, at the time of this filing, it is impossible to predict the overall impact of the coronavirus on our business and financial results.

● social unrest due to escalating racial tensions in the United States and certain other countries where we operate;

● continuing uncertainty regarding the United Kingdom’s recent withdrawal from the European Union, otherwise known as “Brexit”.

We face significant risks related to adverse public health developments, including epidemics and pandemics such as the COVID-19 pandemic.

For example, the COVID-19 pandemic has affected our manufacturing facilities throughout the world, as well as the facilities of our suppliers, customers and our customers’ contract manufacturers.

The COVID-19 pandemic has caused widespread disruptions to our Company throughout most of 2020, particularly during the first half of the year.

During the first quarter of 2020, these disruptions were primarily limited to our operations in China, which were closed for three weeks during January and February due to government mandates.

As the virus spread to the rest of the world beginning in March and continuing throughout the remainder of 2020, most of our other operations outside of China were also impacted.

As of December 31, 2020, we continue to experience some disruptions, and at a minimum, we expect those disruptions to continue through the first half of 2021 and they could, potentially, extend for the full year and beyond.

These disruptions have included and may continue to include, depending on the specific location, government regulations that limit our ability to operate certain of our facilities at full capacity and to adjust certain costs, travel restrictions, “work-from-home” orders, supplier constraints, supply-chain interruptions, logistics challenges and limitations, and reduced demand from certain customers.

The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments such as the length and severity of the crisis, future government regulations and actions in response to the crisis, the timing, availability and effectiveness of vaccines, some of which have recently been approved and distributed for use, and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable.

In addition, the COVID-19 pandemic could impact the health of our management team and other employees.

It is impossible to predict the overall future impact of the COVID-19 pandemic on our business, financial condition, liquidity and financial results, and there can be no assurance that the COVID-19 pandemic will not have a material and adverse effect on our financial results in the future during any quarter or period in which we are affected.

In addition, the COVID-19 pandemic increases the likelihood and potential severity of other risks (including some discussed separately within this Item 1A.

Risk Factors ), including but not limited to, the following:

● A protracted economic slowdown could negatively affect the financial condition of our customers, which may result in an increase in bankruptcies or insolvencies, a delay in payments and decreased sales.

● A scarcity of resources or other hardships caused by the COVID-19 pandemic may result in increased nationalism, protectionism and political tensions which may cause governments and/or other entities to take actions that may have a significant negative impact on the ability of the Company, its suppliers and its customers to conduct business.

● We have transitioned a significant subset of our employee population to a remote work environment in an effort to mitigate the spread of COVID-19.

This change may exacerbate certain risks to our business, including an increased demand for information technology resources, an increased risk of phishing and other cybersecurity attacks, and an increased risk of unauthorized dissemination of sensitive personal information or proprietary or confidential information.

● If the vaccines that have recently been approved and distributed for use prove ineffective, we could experience another disruption in the global capital markets, which could increase the cost of, and adversely impact access to, capital (including the commercial paper markets) and increase economic uncertainty.

● If the financial performance of our businesses were to decline significantly as a result of the COVID-19 pandemic, we could incur a material non-cash charge to our income statement for the impairment of goodwill and other intangible assets.

● If there is a general market downturn and continued high degree of volatility in the financial markets, we may experience a material re-valuation of, for example, our pension assets and obligations.

Our international operations require us to comply with anti-corruption laws and regulations of the U.S.

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The Company conducts business in many foreign currencies through its worldwide operations, and as a result is subject to foreign exchange exposure due to changes in exchange rates of the various currencies including possible currency devaluations.

Changes in exchange rates can positively or negatively affect the Company’s sales, operating margins and equity.

Changes in exchange rates can positively or negatively affect the Company’s sales, operating

margins and equity.

The Company manages currency exposure risk in a number of ways, including producing its products in the same country or region in which the products are sold (thereby generating revenues and incurring expenses in the same currency), cost reduction and pricing actions, working capital management and hedging contracts.

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In limited instances we depend on a single source of supply or participate in commodity markets that may be served by a limited number of suppliers.

Delays in obtaining supplies may result from a number of factors affecting our suppliers, and any delay could impair our ability to deliver products to our customers and, accordingly, could have an adverse effect on our business, results of operations and financial condition.

Delays in obtaining supplies may result from a number of factors affecting our suppliers, and any delay could impair our ability to deliver products to our customers.

For example, the COVID-19 pandemic initially disrupted the supply of raw materials, primarily in the first half of 2020;

reoccurrences of such unforeseen events may result in the Company experiencing difficulties in obtaining a consistent supply of materials at stable pricing levels.

Accordingly, such delays and associated risks could have an adverse effect on our business, results of operations and financial condition.

Risks related to our end markets

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or foreign government defense expenditures could have an adverse effect on the Company’s business, financial condition and results of operations.

and foreign government expenditures are also subject to political and budgetary fluctuations and constraints, which may result in significant unexpected changes in levels of demand for our products.

and foreign government expenditures are also subject to

political and budgetary fluctuations and constraints, which may result in significant unexpected changes in levels of demand for our products.

The Company is dependent on the acceptance of new product introductions for continued revenue growth.

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The Company has at times experienced difficulties and unanticipated expenses in connection with purchasing and integrating newly acquired businesses.

The Company has completed a number of acquisitions in recent years, including nine in 2019.

The Company has completed a number of acquisitions in recent years, including nine in 2019 and two in 2020.

The Company anticipates that it will continue to pursue acquisition opportunities as part of its growth strategy.

From time to time, the Company experiences difficulty and unanticipated expenses associated with purchasing and integrating acquisitions, and acquisitions do not always perform as expected.

The Company has also experience d challenges at times following the acquisition of a new company or business, including but not limited to:

The Company has also experienced challenges at times following the acquisition of a new company or business, including but not limited to:

managing the operations, manufacturing facilities and technology;

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Although we expect to realize strategic, operational and financial benefits as a result of past or future acquisitions and investments, we cannot predict or guarantee whether and to what extent anticipated cost savings, benefits and growth prospects will be achieved.

On December 9, 2020, the Company announced that we had entered into a definitive agreement to acquire MTS Systems Corporation (“MTS”) for $58.50 per share in cash, or approximately $1.7 billion, net of cash acquired and including the assumption of outstanding debt and liabilities.

On January 19, 2021, the Company announced that we had entered into an agreement to sell the MTS Test & Simulation (“T&S”) business to Illinois Tool Works Inc.

The agreement to acquire MTS is expected to close by the middle of 2021, but is subject to certain regulatory approvals, approval from MTS’s shareholders and other customary closing conditions.

The sale of the MTS T&S business to ITW is expected to close following the anticipated closing of our acquisition of MTS, but is also subject to certain regulatory approvals and other customary closing conditions.

The acquisition of MTS and the sale of the MTS T&S business to ITW are subject to a number of risks that include, but are not limited to:

(i) the risk that the proposed merger between Amphenol and MTS, and/or the proposed subsequent sale of the MTS T&S business to ITW, may not be completed in a timely manner or at all, (ii) unanticipated difficulties or expenditures relating to the proposed transactions, the response of business partners and competitors to the announcement of the proposed transactions, potential disruptions to current plans and operations and/or potential difficulties in employee retention as a result of the announcement and pendency of the proposed transactions and (iii) the failure of the transactions, if completed, to deliver the financial benefits to Amphenol currently anticipated by the Amphenol management team.

The Company may in the future incur goodwill and other intangible asset impairment charges.

At December 31, 2019, the total assets of the Company were $10,815.5 million, which included $4,867.1 million of goodwill (the excess of fair value of consideration paid over the fair value of net identifiable assets of businesses acquired) and $442.0 million of other intangible assets, net.

At December 31, 2020, the total assets of the Company were $12.3 billion, which included $5.0 billion of goodwill (the excess of fair value of consideration paid over the fair value of net identifiable assets of businesses acquired) and $397.5 million of other intangible assets, net.

The Company performs annual evaluations (or more frequently, if necessary) for the potential impairment of the carrying value of goodwill and other intangible assets.

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Upon the occurrence of an event of default under any of the Company’s credit facilities, the lenders could terminate all commitments to extend further credit and elect to declare amounts outstanding thereunder to be immediately due and payable which could result in the acceleration of certain of the Company’s other indebtedness and the Company not having sufficient assets to repay the Revolving Credit Facility and such other indebtedness.

As of December 31, 2019, the Company had outstanding borrowings under the Revolving Credit Facility, U.S.

Commercial Paper Program and Euro commercial paper program of nil, $160.0 million and $235.5 million, respectively.

As of December 31, 2020, the Company had no outstanding borrowings under the Revolving Credit Facility, U.S.

Commercial Paper Program and Euro commercial paper program.

The Company relies on the capital markets, and its inability to access those markets on favorable terms could adversely affect the Company’s results.

The Company has used the capital markets to invest in its business and make strategic acquisitions.

If general economic and capital market conditions deteriorate significantly, it could impact the Company’s ability to access the

capital markets.

If general economic and capital market conditions deteriorate significantly, it could impact the Company’s ability to access the capital markets.

While the Company has not recently encountered any financing difficulties, the capital and credit markets have experienced significant volatility in the past.

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The Company monitors its mix of fixed-rate and variable-rate debt, as well as its mix of short-term and long-term debt.

As of December 31, 2019, approximately $400 million, or 11%, of the Company’s outstanding borrowings were subject to floating interest rates and were primarily comprised of commercial paper borrowings.

As of December 31, 2020, less than 1% of the Company’s outstanding borrowings were subject to floating interest rates and were primarily comprised of foreign borrowings.

A 10% change in the London Interbank Offered Rate (“LIBOR”) or floating interest rates at December 31, 2020 would not have a material effect on the Company’s interest expense.

The Company does not expect changes in interest rates to have a material effect on income or cash flows in 2021, although there can be no assurance that interest rates will not change significantly.

In 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced its intent to phase out LIBOR by the end of 2021.

In 2017, the United Kingdom's Financial Conduct Authority, which regulates LIBOR, announced its intent to phase out the use of LIBOR by the end of 2021.

On December 4, 2020, the ICE Benchmark Administration published a consultation on its intention to extend the publication of certain U.S.

dollar LIBOR (“USD LIBOR”) rates until June 30, 2023.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, identified the Secured Overnight Financing Rate (the “SOFR”) as its preferred benchmark alternative to USD LIBOR.

The SOFR represents a measure of the cost of borrowing cash overnight, collateralized by U.S.

Treasury securities, and is calculated based on directly observable U.S.

Treasury-backed repurchase transactions.

If LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, interest rates on, and the market price for, our current or future indebtedness may be adversely affected.

Refer to Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion and details on this development.

As of December 31, 2019, approximately 89% of the Company’s outstanding borrowings were based on fixed rates and primarily related to the following unsecured Senior Notes:

Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 1 of the Notes to Consolidated Financial Statements for further discussion and details on this development.

As of December 31, 2020, nearly all of the Company’s outstanding borrowings were based on fixed rates and primarily related to the following unsecured Senior Notes:

(in millions)

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February 2030

May 2026 (Euro Notes)

October 2028 (Euro Notes)

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government, as noted herein in Item 3.

Legal Proceedings .

Legal Proceedings and Note 14 of the Notes to Consolidated Financial Statements.

The laws and regulations to which we are subject include, but are not limited to, Export Administration Regulations, the Federal Acquisition Regulation, the False Claims Act, International Traffic in Arms Regulations and regulations from the Bureau of Alcohol, Tobacco and Firearms and the FCPA.

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and foreign sanctions and embargoes.

These laws and regulations are complex, may change frequently and with limited notice, have generally become more stringent over time and have intensified under the current U.S.

administration, especially in light of recent trade tensions with China.

These laws and regulations are complex, may change frequently and with limited notice, have generally become more stringent over time and have intensified under recent U.S.

administrations, especially in light of recent trade tensions with China.

For example, in 2019, the U.S.

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Obtaining the necessary export license for a particular sale may be time-consuming and may result in the delay or loss of sales opportunities.

Cybersecurity incidents on our information technology systems could disrupt business operations, resulting in adverse impacts to our reputation and operating results and potentially leading to litigation and/or governmental investigations.

Cybersecurity incidents on our information technology systems could disrupt business operations or cause the release of highly sensitive confidential information, resulting in adverse impacts to our reputation and operating results and potentially leading to litigation and/or governmental investigations.

Cybersecurity threats continue to expand and evolve globally, making it difficult to detect and prevent such threats from impacting the Company.

The Company has been a target of various cybersecurity attacks, including but not limited to ransomware attacks, but the impact of such attacks has not been material.

While the Company has been a target of various cybersecurity attacks, including but not limited to ransomware attacks, the impact of such attacks has not been material.

Cybersecurity threats to the Company could lead to unauthorized access to the Company’s information technology systems, products, customers, suppliers and third party service providers.

Cybersecurity incidents could potentially result in the disruption of our business operations and the misappropriation, destruction or corruption of critical data and confidential or proprietary technological information.

Cybersecurity incidents could also result from unauthorized parties gaining access to our systems or information through fraud or other means of deceiving our employees, suppliers or third party service providers.

Despite the Company’s implementation of preventative security measures to prevent, detect, address and mitigate these threats, our infrastructure may still be susceptible to disruptions from cybersecurity incidents, ransomware attacks, security breaches, computer viruses, outages, systems failures or other catastrophic events, any of which could include reputational damage, loss of our intellectual property, litigation with third parties and/or governmental investigations, among other things, which could have a material adverse effect on our business, financial condition and results of operations.

Cybersecurity incidents could potentially result in the disruption of our business operations and/or the misappropriation, destruction or corruption of critical data and confidential or proprietary information.

Cybersecurity events could also result in the Company being unable to access critical data in a timely manner, or at all.

Cybersecurity incidents could also result from unauthorized parties gaining access to our systems or information through fraudulent or other means of deceiving our employees, suppliers or third party service providers.

In addition, the ongoing COVID-19 pandemic may increase our susceptibility to cybersecurity incidents and risks, especially as certain of our employees have transitioned and continue to work from home.

Despite the Company’s implementation of preventative security measures to prevent, detect, address and mitigate these threats, our infrastructure may still be susceptible to disruptions from cybersecurity incidents, ransomware attacks, security breaches, computer viruses, outages, systems failures, natural disasters, adverse public health developments, or other catastrophic events, any of which could include reputational damage, loss of our intellectual property, release of highly sensitive confidential information, the inability to access critical data, litigation with third parties and/or governmental investigations, among other things, which could have a material adverse effect on our business, financial condition and results of operations.

We and our business partners maintain significant amounts of data electronically in locations around the world.

This data relates to all aspects of our business, including financial information and current and future products under development, and also contains certain customer, supplier, partner and employee data.

We maintain systems and processes designed to protect this data, but notwithstanding such protective measures, there is a risk of intrusion, cyber attacks or tampering that could compromise the integrity and privacy of this data or make the data inaccessible to us.

In addition, in certain cases, in order to conduct business, we outsource to third-party business partners.

We obtain assurances from those parties that they have systems and processes in place to protect our data, and where applicable, that they will take steps to assure the protection of our data;

nonetheless, those partners may also be subject to data intrusion or a cyber attack.

Any compromise of the data could substantially disrupt our operations, harm our customers, employees and other business partners, damage our reputation, violate applicable laws and regulations, and subject us to potentially significant costs and liabilities.

The regulatory environment surrounding information security and privacy is increasingly demanding, with frequent imposition of new and changing requirements.

For example, the European Union's General Data Protection Regulation (“GDPR”), which became effective in May 2018, and the state of California’s California Consumer Privacy Act (“CCPA”), which became effective January 1, 2020, impose significant new requirements and additional obligations for companies on how they collect, process and transfer personal data by enhancing consumer privacy rights and imposing significant fines for non-compliance.

The potential for fines and other related costs in the event of a breach of or non-compliance with the GDPR, CCPA or other existing or proposed information security or privacy laws and requirements may have an adverse effect on our financial results.

The potential for fines and other related costs in the event of a breach of or non-

compliance with the GDPR, CCPA or other existing or proposed information security or privacy laws and requirements may have an adverse effect on our financial results.

Changes in fiscal and tax policies, audits and examinations by taxing authorities could impact the Company’s results.

The Company is subject to taxes in the U.S.

The Company is subject to tax in the U.S.

and numerous foreign jurisdictions.

The Company is also subject to tax examinations by various tax authorities and in addition, new examinations could be initiated by tax authorities.

The Company is currently under tax examination in several jurisdictions, and in addition, new examinations could be initiated by additional tax authorities.

As the Company has operations in jurisdictions throughout the world, the risk of tax examinations will continue to occur.

The Company’s financial condition, results of operations or cash flows may be materially impacted by the results of these tax examinations.

Any future changes in tax laws, regulations, accounting standards for income taxes and/or other tax guidance, including related interpretations, could materially impact the Company’s current, non-current and deferred tax assets and liabilities, and consequently, our financial condition, results of operations or cash flows.

Any future changes in tax laws, regulations, accounting standards for income taxes and/or other tax guidance, including related interpretations, could materially impact the Company’s current and non-current tax liabilities, along with deferred tax assets and liabilities, and consequently, our financial condition, results of operations or cash flows.

The Company relies on patent and trade secret laws, copyright, trademark, confidentiality procedures, controls and contractual commitments to protect our intellectual property rights.

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The Company is currently engaged in, or subject to, various customer claims, litigation and other regulatory and legal matters and may be subject to additional claims, litigation and other regulatory or legal proceedings in the future.

Such matters expose the Company to risks that could be material, including but not limited to, risks related to employment disputes, tax controversies, government investigations, intellectual property infringement, compliance with environmental laws, unfair sales practices, product safety and liability, and product warranty and other contract-related claims.

These matters may subject the Company to lawsuits, product recalls, government investigations and criminal liability, including claims for compensatory, punitive or consequential damages, and could result in disruptions to our business and significant legal expense s.

These matters could also damage our reputation, harm our relationships with customers or negatively affect product demand.

While the Company does maintain certain insurance coverages that may mitigate losses associated with some of these types of claims and proceedings, the policies may not respond in all cases and the amount of insurance coverage may not be adequate to cover the total claims and liabilities .

While the Company does maintain certain insurance coverages that may mitigate losses associated with some of these types of claims and proceedings, the policies may not respond in all cases and, where insurance exists, the amount of insurance coverage may not be adequate to cover the total claims and liabilities .

Any current or future substantial liabilities or regulatory actions could have a material adverse effect on our business, financial condition, cash flows and reputation.

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While the Company believes that its operations are currently in substantial compliance with applicable environmental laws and regulations, the Company and its operations may be subject to liabilities, regardless of fault, for investigative and/or remediation efforts on such matters that may arise at any of the Company’s former or current properties, either owned or leased.

Such liabilities could result from the use of hazardous materials in production, the disposal of products, damages associated with the use of any of our products or other related matters.

For example, as disclosed in Note 14 of the Notes to Consolidated Financial Statements, the Company has been named as one of several defendants in four separate lawsuits filed in the State of Indiana relating to a manufacturing site in Franklin, Indiana where the Company has been conducting an environmental clean-up effort under the direction of the United States Environmental Protection Agency.

All costs incurred by the Company relating to these lawsuits as well as all costs associated with the clean-up effort at the manufacturing site are reimbursed by the former owner pursuant to an indemnification agreement entered into in

connection with the acquisition of the manufacturing site as part of a larger acquisition that led to the establishment of the Company’s business in 1987.

Environmental liabilities can result from the use of hazardous materials in production, the disposal of products, damages associated with the use of any of our products or other related matters.

We cannot be certain as to the potential impact of any changes to environmental conditions or environmental policies that may arise at any of our jurisdictions.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors