What changed in this filing

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Item 1. Business

2022-03-25 compared with 2021-03-26 · 49 added, 103 removed, 473 unchanged (24% of the section changed)

Unless the context indicates otherwise, the terms the “Company,” “Duluth,” “Duluth Trading,” “Duluth Holdings,” “Duluth Trading Co.,” “we,” “our” or “us” are used to refer to Duluth Holdings Inc.

The following discussion contains references to fiscal years 2020 and 2019, which refer to our fiscal years ended January 31, 2021 and February 2, 2020, respectively.

The following discussion contains references to fiscal years 2021 and 2020, which refer to our fiscal years ended January 30, 2022 and January 31, 2021, respectively.

Fiscal years 2021 and 2020 were 52-week periods.

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Since then, we have expanded our retail presence, and as of January 30, 2022, we operated 62 retail stores and three outlet stores.

In fiscal 2020, we opened a total of 4 retail stores adding approximately 60,000 gross square feet to our stores.

Duluth Trading was founded in 1989 when two brothers in the home construction industry were tired of dragging tools from job to job using discarded five-gallon drywall compound buckets.

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Our Growth Strategies

Our goal is to expand the reach of the Duluth Trading brand, using strategies that will further drive growth and profitability:

 Evolving into a Portfolio of Distinct Brands within the Duluth Trading Co.

At the center of Duluth Trading Co’s success has been the consistent ability to develop and grow our brands and sub-brands.

We’ve used our unique combination of forward-thinking product development, memorable storytelling and direct relationship with the customer to evolve and grow the Duluth Trading Men’s sub-brand.

We used the same formula on the Duluth Trading Women’s sub-brand and, more recently, the Alaskan Hardgear sub-brand.

This continued success gives us the confidence to enter the next phase of our evolution:

Duluth Trading Co.

as a direct to consumer brand platform.

We plan to leverage our infrastructure investments and direct marketing expertise to launch and grow closely guarded digitally native brands that cater to an ever-growing definition of a “can-do” customer.

Men and Women across all walks of life can rely on Duluth Trading Co.

portfolio of brands for quality, innovative products to support hands-on work, active hobbies and modern, self-reliant lifestyle.

40Grit and Best Made are our latest platform sub-brands.

40Grit is a workwear basics line tailored to our younger, more budget conscious consumer.

Best Made is a premium offering with design-focused hardgoods and apparel.

Over time, we will plan to add more sub-brands as we see whitespace or as acquisition opportunities emerge.

 Growing Sales in Existing Store and Non-Store Markets.

Based on our experience to date, we believe the combination of our high brand awareness and agile digital advertising tools allow us to grow our business in both store markets and non-store markets, while also navigating through the unprecedented disruptions to store traffic that the COVID-19 pandemic brought on.

Our significant shift between physical and digital channel sales in 2020, yet realizing growth in sales overall for the year, highlight the flexibility and resiliency of our direct order fulfillment model.

Once we begin to return to normal retail operations, one of our top priorities will be to drive awareness of and traffic to our stores with total market growth being our primary goal.

We believe our retail stores provide ancillary marketing benefits by complementing our digital presence to enable brand discovery, experience and superior service.

We believe that our customers’ desire to shop in stores, combined with the compelling unit economics of our existing retail stores, provide us with the opportunity to continue to grow our store market sales, but to be selective on new store formats and locations based on changing shopping behavior.

We plan to scale our distribution model to meet customer’s expectations across brands in a cost-effective manner.

We will also plan to develop strategic partnerships to extend the reach of our brands into new channels or to provide unique product offerings.

 Strengthening the Core Men’s Duluth Brand .

We believe there is opportunity to fortify and grow our men’s business by selectively broadening our assortment in certain product categories that cement Duluth as the most innovative workwear destination.

Our Duluth Trading Men’s sub-brand will remain focused on our long-standing key to success by introducing products that solve a problem and serve a purpose.

Our Duluth Trading Men’s collection of workwear apparel and accessories includes our most well-known base layer and underwear category, where we will continue to develop innovative products in our Center for Underwear Advancement initiative.

 Growing Our Women’s Duluth Brand .

We believe that we have a significant opportunity to continue to grow our Duluth Trading Women’s sub-brand through customer acquisition, and we plan to leverage all of our marketing tools to do so.

We expect that our Duluth Trading Women’s sub-brand will continue to represent an increasing portion of our net sales, and accordingly, we are allocating a higher percentage of our total advertising budget to the women’s sub-brand.

With our Duluth Women’s Brand relaunch in 2020, our focus shifted to hands-on capable women through our WAYFORGER™ customer features and Maker’s Collection of workwear.

Also, our expansion of base layer basics featuring a broadened assortment of sizes and unique fabrications establish Duluth as the Destination for Comfort.

We believe that as we continue to capture share in an increasingly fragmented women’s apparel market, our business will continue to grow and be driven by solution-based products that fits the Modern, Self-Reliant American Lifestyle and will appeal to a wider range of female customers.

The Company has completed a comprehensive review of current operations, logistics networks, marketing and technology capabilities, and unique brands and products.

The Company formulated the “Big Dam Blueprint”, which management believes will unlock the Company’s full potential for long-term, sustainable grow growth.

 Begin with a digital-first mindset that integrates technology into all areas of the business, fundamentally changing how we operate and deliver value to customers.

 Intensify efforts to optimize Duluth Trading’s owned retail channels by increasing focus and investments in our direct channel as our primary growth vehicle.

We are conducting strategic research that will inform decisions on future stores regarding new locations and market share potential, size and layout.

 Evolve the Company’s multi-brand platform as a new pathway to grow the business.

Create unique brand positions, across men’s and women’s, for Duluth, Alaskan Hardgear, Buck Naked, and Best Made to address customer needs for various occasions including work, outdoor recreation, casual lifestyle, and first layer.

Invest in the evolution of the Duluth Trading platform to enable the integration of new brands, expand our offerings and broaden our customer base.

 Carefully test and learn to unlock long-term growth potential.

Explore new opportunities to engage current and potential customers through products, services and touchpoints that they expect and value.

 Increase and, in some areas, accelerate investments to future proof the business.

Areas under analysis include greater automation across the logistics network;

technology that will improve operations, generate positive impact and sustainable returns;

support growth through multiple brands and seamlessly integrate new brands into the portfolio, and attract the talent, skillsets and expertise needed to scale the business.

Our omnichannel business strategy allows our sales channels to work in synergy to seamlessly deliver a consistent brand experience to the customer, including consistent marketing, pricing and product presentation.

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Our products feature proprietary designs and distinct names, such as our Longtail T® shirts, Buck Naked TM underwear, Fire Hose® work pants and No-Yank TM Tank.

Our stable product assortment appeals to our customers for their everyday and on-the-job use.

Our product assortment appeals to our customers for their everyday and on-the-job use.

The majority of our products represent enduring styles that go beyond short-lived fashion trends.

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We are focused on developing apparel and gear that builds upon the Duluth Trading brand’s product heritage of “there’s gotta be a better way,” resulting in distinctive products with enhanced features.

We primarily use an innovative feedback-based design process through which we actively seek the input of our customers, including a group of more than 100 products testers with expertise in the trades industry.

These trades panel members have become an integral part of our product development process, as they test and evaluate select products in intense conditions, providing real-time feedback on performance and functionality.

Members of our product development team also regularly read online customer product reviews, attend tradeshows and collaborate with our vendors, which facilitates new product innovation.

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In fiscal 2021, 53% of our purchases came from our largest supplier, an agent partner in Hong Kong who manages multiple factories across Asia, including Cambodia, China, Indonesia and Vietnam.

Approximately 10% of our purchases in fiscal 2020 came from our second largest supplier, which is based in Thailand.

We believe sourcing inventory through these agents allows us to leverage the agents’ purchasing power with multiple factories, as well as transportation and logistics capabilities, allowing our internal team to focus on our core competencies of product development, storytelling and serving customers, rather than factory and mill management or logistics.

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Distribution Centers

We operate distribution centers located in Belleville, Wisconsin and Dubuque, Iowa.

We plan to open a new distribution center before the peak holiday shopping season in Salt Lake City, Utah to further expand our shipping capacity and store replenishment capabilities.

We operate distribution centers located in Belleville, Wisconsin, Dubuque, Iowa and Salt Lake City, Utah.

The approximate square footage of each facility is included in Item 2 of Part I of this report.

We also contracted with two third-party logistics (“3PLs”) centers in Sparks, Nevada and Carlisle, Pennsylvania.

Our contracts with the 3PLs ended in the second quarter of fiscal 2020.

Orders are generally assigned to the distribution center closest to the customer’s ship-to location.

Returns Center

We currently lease a warehouse space located in Verona, Wisconsin.

The approximate square footage is included in Item 2 of Part I of this report.

Our returns center handles the majority of direct-to-consumer sales returns.

Information Technology

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The “Duluth Trading Co” trade name and trademark is used both in the United States and internationally and is material to our business.

Trademarks that are important in identifying and distinguishing our products and services are Alaskan Hardgear ® , Armachillo ® , Ballroom ® , Cab Commander ® , Crouch Gusset ® , Dry on the Fly ® , Duluth Trading Co ® , Duluthflex ® , Fire Hose ® , Longtail T ® , No Polo Shirt ® , No Yank ® and Wild Boar Mocs ® .

Trademarks that are important in identifying

and distinguishing our products and services are Alaskan Hardgear ® , Armachillo ® , Ballroom ® , Cab Commander ® , Crouch Gusset ® , Dry on the Fly ® , Duluth Trading Co ® , Duluthflex ® , Fire Hose ® , Longtail T ® , No Polo Shirt ® , No Yank ® and Wild Boar Mocs ® .

Our rights to some of these trademarks may be limited to select markets.

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All retail stores were temporarily closed beginning March 20, 2020 and began re-opening the first week of May through the third week of June.

All of our retail stores are open, but prolonged COVID-19 safety concerns have kept store traffic at subdued levels.

All of our retail stores are open, but prolonged COVID-19 safety concerns has continued to impact store traffic.

The ultimate impact of COVID-19 on our operational and financial performance still depends on future developments outside of our control, including the duration and spread of the pandemic and related actions taken by federal, state and local government officials, international governments to prevent disease spread, and the availability, safety and efficiency of a vaccine.

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In that event, the trading price of our Class B common stock could decline, and you could lose part or all of your investment.

Risks Related to the COVID-19 Global Pandemic

The Coronavirus pandemic may continue to adversely affect our business operations, store traffic, employee availability, financial condition, liquidity, and cash flow for an extended period of time.

The outbreak of the Coronavirus (“COVID-19”) continues to affect our business operations and it is impossible to predict the effect and ultimate impact of the COVID-19 pandemic as the situation is rapidly evolving.

As the pandemic continues, consumer fear about becoming ill with the virus and recommendations and/or mandates from federal, state and local authorities to avoid large gatherings of people or self-quarantine may continue to increase, which may continue to adversely affect traffic to our stores, result in further reduced store hours or result in store closures.

Ongoing significant reductions in customer visits to, and spending at, our stores caused by COVID-19 would result in further loss of retail store sales and profits and other material adverse effects.

The extent of the impact of COVID-19 on our business, financial results, liquidity and cash flows will depend largely on future developments, including the effectiveness and rollout timing of the vaccine, new information that may emerge concerning the severity and action taken to contain or prevent further spread within the U.S.

and the related impact on consumer confidence and spending, all of which are highly uncertain and cannot be predicted.

These and other potential impacts of COVID-19, could therefore materially and adversely affect our business, financial condition and results of operations.

Strategic Risks

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These risks could have a material adverse effect on our brand as well as our results of operations and financial condition.

Our business depends on our ability to maintain strong brands and sub-brands.

Our business depends on our ability to maintain strong brands.

We may not be able to maintain and enhance the Duluth Trading brands if we receive unfavorable complaints, negative publicity or otherwise fail to live up to consumers’ expectations, which could materially adversely affect our business, results of operations and growth prospects.

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Customer complaints or negative reactions to, or unfavorable publicity about, our product quality or product features, our storytelling or irreverent advertising, the shopping experience on our website or in our retail stores, product delivery times, customer data privacy and security practices or customer support, especially on blogs, social media, other third-party websites and our website, could rapidly and severely diminish consumer use of our website and catalogs, visits to our retail stores and consumer confidence in us and result in harm to our brand.

Furthermore, these factors could cause our customers to no longer feel a personal connection with the Duluth Trading brand, which could result in the loss of customers and materially adversely affect our business, results of operations and growth prospects.

Furthermore, these factors could cause our customers to no longer

feel a personal connection with the Duluth Trading brand, which could result in the loss of customers and materially adversely affect our business, results of operations and growth prospects.

We may face risks and new challenges associated with our geographic expansion.

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As e-commerce and social networking continue to rapidly evolve, we must continue to establish relationships with these channels and may be unable to develop or maintain these relationships on acceptable terms.

Additionally, digital advertising costs may continue to rise and as our usage of these channels expands, such costs may impact our ability to acquire new customers in a cost-effective manner.

Additionally, digital advertising costs may continue to rise and as our usage of these channels expands, such costs may impact

our ability to acquire new customers in a cost-effective manner.

If the level of usage of these channels by our customer base does not grow as expected, we may suffer a decline in customer growth or net sales.

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Operational Risks

The Coronavirus pandemic may continue to adversely affect our business operations, store traffic, employee availability, financial condition, liquidity, and cash flow for an extended period of time.

The outbreak of the Coronavirus (“COVID-19”) continues to affect our business operations and it is impossible to predict the effect and ultimate impact of the COVID-19 pandemic.

As the pandemic continues, consumer fear about becoming ill with the virus and recommendations and/or mandates from federal, state and local authorities to avoid large gatherings of people or self-quarantine may increase, which may adversely affect traffic to our stores, result in further reduced store hours or result in store closures.

Reductions in customer visits to, and spending at, our stores caused by COVID-19 would result in further loss of retail store sales and profits and other material adverse effects.

The extent of the impact of COVID-19 on our business, financial results, liquidity and cash flows will depend largely on future developments, including the efficacy of the vaccine related to current and future variants of the virus, new information that may emerge concerning the severity and action taken to contain or prevent further spread within the U.S.

and the related impact on consumer confidence and spending, all of which are highly uncertain and cannot be predicted.

These and other potential impacts of COVID-19, could therefore materially and adversely affect our business, financial condition and results of operations.

We rely on sources for merchandise located in foreign markets, and our business may therefore be adversely affected by legal, regulatory, economic and political risks associated with international trade and those markets.

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 the imposition of anti-dumping or countervailing duty proceedings resulting in the potential assessment of special anti-dumping or countervailing duties;

 political instability and acts of terrorism;

 political instability, war and acts of terrorism;

 the occurrence of a natural disaster, unusual weather conditions, or prolonged public health crises, epidemics or pandemics in foreign countries from which we source our products.

The occurrence of one or more of these events could result in disruptions to our operations, which in turn could increase our cost of goods sold, decrease our gross profit, or impact our ability to deliver to our customers.

For example, the recent outbreak of COVID-19 has led to work and travel restrictions as well as temporary closure of production and logistics constraints due to workforce availability.

If the COVID-19 outbreak continues and persists for an extended period of time, there may be significant and material disruptions to our supply chain and operations, and delays in the manufacture and shipment of our products, which may then have a material adverse effect on our business and results of operations.

New initiatives may be proposed in the United States that may have an impact on the trading status of certain countries and may include retaliatory duties or other trade sanctions that, if enacted, would increase the cost of products purchased from suppliers in such countries with which we do business.

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A majority of the products that we purchase must be shipped to our distribution centers in Wisconsin and Iowa.

While our reliance on a limited number of distribution centers provides certain efficiencies, it also makes us more vulnerable to natural disasters, weather-related disruptions, accidents, system failures, public health pandemics, such as the ongoing COVID-19 outbreak or other unforeseen causes that could delay or impair our ability to fulfill customer orders and/or ship merchandise to our stores, which could adversely affect sales.

While our reliance on a limited number of distribution centers provides certain efficiencies, it also makes us more vulnerable to natural disasters, weather-related disruptions, accidents, system failures, public health pandemics, such as the ongoing COVID-19 pandemic or other unforeseen causes that could delay or impair our ability to fulfill customer orders and/or ship merchandise to our stores, which could adversely affect sales.

Our ability to mitigate the adverse impacts of these events depends in part upon the effectiveness of our disaster preparedness and response planning, as well as our business continuity planning.

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Given the size of our direct-to-consumer net sales relative to our total net sales, shipping and handling revenue has had a significant impact on our gross profit and gross profit margin.

Historically, this revenue has partially offset our shipping and

handling expense included in selling, general and administrative expenses.

Historically, this revenue has partially offset our shipping and handling expense included in selling, general and administrative expenses.

Online and omnichannel retailers are increasing their focus on delivery services, with customers increasingly seeking faster, guaranteed delivery times and low-price or free shipping.

Higher direct-to-consumer net sales has and may continue to also result in additional peak surcharges assessed by our delivery partners.

Higher direct-to-consumer net sales has resulted and may continue to result in additional peak surcharges assessed by our delivery partners.

To remain competitive, we have been required to offer discounted, free or other more competitive shipping options to our customers, which has resulted in declines in our shipping and handling revenue and increased shipping and handling expense.

We expect further declines in shipping and handling revenues as compared to prior years.

Further declines in shipping and handling revenues may have a material adverse effect on our gross profit and gross profit margin, as well as our Adjusted EBITDA to the extent there are not commensurate declines, or if there are increases, in our shipping and handling expense.

Further declines in shipping and handling revenues may have a material adverse effect on our gross profit and gross profit margin, as

well as our Adjusted EBITDA to the extent there are not commensurate declines, or if there are increases, in our shipping and handling expense.

We rely on third-party service providers, such as UPS and the United States Postal Service (“USPS”), to deliver products purchased through our direct-to-consumer channel to our customers and our business could be negatively impacted by disruptions in the operations of these third-party service providers.

Relying on third-party service providers puts us at risk from disruptions in their operations, such as employee strikes, inclement weather and their inability to meet our shipping demands.

For example, due to COVID-19, during the fourth quarter UPS increased surcharges and provided shipping thresholds, which were mitigated by engaging additional shipping partners during our peak selling season.

Our efforts to mitigate the impact of future thresholds may not be successful or may result in similar surcharges.

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We rely upon third-party land-based and air freight carriers for merchandise shipments from our distribution centers to customers and our retail stores.

Accordingly, we are subject to the risks, including labor disputes, union organizing activity, inclement weather and increased transportation costs, associated with such carriers’ ability to provide delivery services to meet

outbound shipping needs.

In addition, if the cost of fuel rises, the cost to deliver merchandise from distribution centers to customers and our retail stores may rise and, although some of these costs are paid by our customers, such costs could have an adverse impact on our profitability.

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If these suppliers are unable or unwilling to provide the products or services that we require or materially increase their costs, our ability to offer and deliver our products on a timely and profitable basis could be impaired, which could have a material adverse effect on our business, financial condition and results of operations.

We do not have written agreements with our top suppliers, and we cannot assure that any or all of our relationships will not be terminated or that such relationships will continue as presently in effect.

We cannot assure that any or all of our relationships will not be terminated or that such relationships will continue as presently in effect.

Furthermore, if any of our significant suppliers were to become subject to bankruptcy, receivership or similar proceedings, customs actions, or other legal actions, we may be unable to arrange for alternate or replacement relationships on terms as favorable as our current terms, which could adversely affect our sales and operating results.

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Our competitors may enter into arrangements with suppliers that could impair our ability to obtain our products from those suppliers, including by requiring suppliers to enter into exclusive arrangements, which could limit our access to such arrangements or products.

If we cannot successfully implement future retail store expansion, our growth and profitability could be adversely impacted.

Our ability to open new retail stores in a timely manner and operate them profitably depends on a number of factors, many of which are beyond our control, including:

 our ability to manage the financial and operational aspects of our retail store growth strategy, including making appropriate investments in our software systems, information technology and operational infrastructure;

 our ability to identify suitable locations, including our ability to gather and assess demographic and marketing data to accurately determine consumer demand for our products in the locations we select;

 our ability to negotiate favorable lease agreements;

 our ability to properly assess the profitability and payback period of potential new retail store locations;

 the availability of financing on favorable terms;

 our ability to secure required governmental permits and approvals;

 our ability to abide by environmental standards;

 our ability to hire and train skilled store operating personnel, especially management personnel;

 the availability of construction materials and labor and the absence of significant construction delays or cost overruns;

 our ability to provide a satisfactory mix of merchandise that is responsive to the needs of our customers living in the areas where new retail stores are built;

 our ability to establish a supplier and distribution network able to supply new retail stores with inventory in a timely manner;

 our competitors building or leasing stores near our retail stores or in locations we have identified as targets for a new retail store;

 consumer demand for our products, which drives traffic to our retail stores;

 general economic and business conditions affecting consumer confidence and spending and the overall strength of our business.

We rely on third parties to provide us with services in connection with certain aspects of our business, and any failure by these third parties to perform their obligations could have an adverse effect on our business and results of operations.

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We and our employees and customers could suffer significant harm if any personal, financial, or credit card information was accessed or disclosed by an unauthorized third party, or our information technology systems or those of our third party providers were compromised or subject to data loss, exfiltration, corruption, or disruption.

Any security incident or data breach could severely damage our reputation and our relationships with customers, business partners and employees, cause us to incur significant costs and expenses to investigate, remediate and notify affected individuals, and expose us to an increased risk of litigation, regulatory enforcement, fines and penalties, and other losses and liabilities.

In addition, the media and public scrutiny of information security and privacy has become more intense and the regulatory environment has become more complex and uncertain due to recent high-profile privacy and security incidents and legislative efforts across the globe.

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Competition for these types of personnel is intense, and we may not be successful in attracting, integrating and retaining the personnel required to grow and operate our business profitably.

An inability to attract and retain qualified employees to meet our staffing needs in our corporate office, stores, distribution center or call center could result in higher payroll costs and adversely affect our operating results.

An inability to attract and retain qualified employees to meet our staffing needs in our corporate office, stores, fulfillment centers or call center could result in higher payroll costs and adversely affect our operating results.

Our performance is dependent on attracting and retaining a large number of qualified employees.

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Our business is subject to seasonal influences, with increased net sales and net income realized during the fourth quarter of our fiscal year, which includes the holiday season.

See Part I, Item 1 Business, under the heading “ Seasonality ,” for our net sales and net income realized during the fourth quarter of our fiscal year for each of the past three fiscal years.

See Part I, Item 1 Business, under the heading “ Seasonality ,” for our net sales and net income realized during the fourth quarter of our fiscal year for each of the past two fiscal years.

We must maintain sufficient inventory levels to operate our business successfully, but we must also avoid accumulating excess inventory, which increases working capital needs and potentially lowers gross margins.

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If we do not stock or restock popular products in amounts sufficient to meet customer demand, it could significantly affect our revenue and our future growth.

If we overstock products, we may be required to take significant inventory markdowns or write-offs and incur commitment costs, which could reduce profitability.

If we overstock products, we may be required to take significant inventory markdowns or write-offs and incur

commitment costs, which could reduce profitability.

We may experience an increase in our net shipping cost due to complimentary upgrades, split-shipments and additional long-zone shipments necessary to ensure timely delivery for the holiday season.

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To manage our growth effectively, we must continue to implement our operational plans and strategies, improve and expand our infrastructure of people, information systems and facilities and expand, train and manage our employee base.

support continued growth, we must effectively integrate, develop and motivate a large number of employees.

To support continued growth, we must effectively integrate, develop and motivate a large number of employees.

Failure to improve and expand our infrastructure of employees may have a material adverse effect on our business, financial condition and operating results.

Additionally, the growth of our business places significant demands on our management and other employees.

The growth of our business may require significant additional resources to meet these daily demands, which may not scale in a cost-effective manner or may negatively affect the quality of our website, retail stores, call center and other aspects of the customer experience.

The growth of our business may require significant additional resources to meet these daily demands, which may not scale in a cost-effective manner or may negatively affect the quality of our website, retail stores, fulfillment centers, call center and other aspects of the customer experience.

We are also required to manage relationships with a growing number of suppliers, customers and other third parties.

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If our business does not generate sufficient cash flow from operations to fund these activities and sufficient funds are not otherwise available from our existing revolving credit facility or future credit facilities, we may need additional equity or debt financing.

If such financing is not available to us on satisfactory terms, our ability to operate and expand our business or to respond to competitive pressures would be limited and we could be required to delay, curtail or eliminate planned store openings.

Moreover, if we raise additional capital by issuing equity securities or securities convertible into equity securities, your ownership may be diluted.

Any debt financing we may incur may impose on us covenants that restrict our operations and will require interest payments that would create additional cash demands and financial risk for us.

We maintain debt that could adversely affect our operating flexibility and put us at a competitive disadvantage.

The borrowings under our revolving credit facility typically peak during our third or fourth fiscal quarter.

Our level of debt and the limitations imposed on us by our credit agreement could have important consequences for investors, including the following:

 we may not be able to obtain additional debt financing for future working capital, capital expenditures, to support our growth plans, or other corporate purposes or may have to pay more for such financing;

 borrowings under our revolving credit facility are at a variable interest rate, making us more vulnerable to increases in interest rates;

 we could be less able to take advantage of significant business opportunities and to react to changes in market or industry conditions.

We may be unable to accurately forecast our operating results and growth rate, and our growth rate may decline over time.

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The market price of our Class B common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

 actual or anticipated fluctuations in our results of operations, particularly in our segment growth rates and margins;

 actual or anticipated fluctuations in our results of operations, particularly in our growth rates and margins;

 the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

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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 1. Business