4 unchanged sentences
Risks Related to Our Business
−Removed: The Company’s business has been and is expected to continue to be negatively impacted by the ongoing coronavirus (COVID-19) pandemic.
+Added: Our financial and operating performance may be adversely affected by epidemics and other health related issues.
As a result of the COVID-19 pandemic, the Company has experienced and could continue to experience disruptions to its business, its operations, the delivery of its products and customer demand for its products, including the following:
−Removed: The Company has operations in Shanghai and Dongguan, China that were adversely affected by the COVID-19 pandemic in the first six months of 2020.
−Removed: The virus led to a chain of events that interfered with our ability, and the ability of certain suppliers of ours, to conduct business.
−Removed: We source approximately 10% of our products and components from China.
−Removed: As a result of government mandated shutdowns at our facilities, and those of certain suppliers in China, many of the products that we ordered were delayed by approximately four to six weeks, which resulted in delays in our product shipments to our customers through May 2020.
−Removed: These delays had an adverse impact on our business, operations, fulfillment of production requirements and operating results.
−Removed: There may be similar delays in the future as a result of resurgences of the COVID-19 pandemic, which may have an adverse impact on our business, operations, fulfillment of production requirements and operating results.
−Removed: By mid-March 2020, the COVID-19 pandemic spread across the United States, which precipitated the closure by government authorities of non-essential businesses.
−Removed: The majority of the Company’s businesses were deemed essential and accordingly remained open, but at reduced levels.
−Removed: This reduction in operations exacerbated delays in delivery of customer orders in the second and third quarters of 2020.
−Removed: Any resurgence of COVID-19 could result in reduced operations and could impair the Company’s ability to meet production requirements in a timely manner or at all.
−Removed: These effects have had and could to continue to have an adverse impact on the Company’s business, financial condition and operating results.
−Removed: Many of the Company’s customers in both automotive/transportation and non-automotive/transportation markets experienced varying degrees of shutdowns beginning in the last week of March 2020, and, on a case-by-case basis, began to reopen at various dates beginning in May 2020.
−Removed: These temporary shutdowns have had an adverse impact on demand for our products.
−Removed: A sustained decrease in demand would negatively impact our business, financial condition and operating results.
−Removed: In addition, the COVID-19 pandemic has had and may continue to have an adverse impact on the operations, financial results and finances of many of our customers, which has impacted and could continue to impact customer payment cycles and payments due from customers.
The broader economic impact of the COVID-19 pandemic, including resurgences, may continue to result in unfavorable operating earnings and cash flow generation in the months to follow.
−Removed: Current global economic conditions are highly volatile due to the COVID-19 pandemic, resulting in economic slowdowns that have caused and are likely to continue to cause contractions in some or all of the markets we serve, which has led to and may continue to lead to decreased demand for the Company’s products, which in turn has, and may continue to negatively impact the Company’s financial condition and operating results.
+Added: Current global economic conditions are highly volatile due to the COVID-19 pandemic, resulting in economic slowdowns that have caused and are likely to continue to cause contractions in some or all the markets we serve, which has led to and may continue to lead to decreased demand for the Company’s products, which in turn has, and may continue to negatively impact the Company’s financial condition and operating results.
Other macroeconomic factors also remain dynamic, and any causes of market size contraction, including economic uncertainty related to the United Kingdom’s exit from the European Union, and overall economic slowdowns, could reduce the Company’s sales or erode operating margin, in either case reducing earnings.
15 unchanged sentences
To the extent asset returns and interest rates, which are used to discount future plan benefits, change from prior measurement periods, the plan’s funded ratio has the potential to change significantly.
−Removed: The COVID-19 pandemic continues to evolve rapidly, and additional material impacts and disruptions are likely to occur.
−Removed: The factors described above, which may worsen, and other factors that the Company cannot predict, can be expected to have a material adverse impact on the business, operations, financial results and capital resources of the Company.
−Removed: The ultimate impact of the COVID-19 pandemic on the Company is highly uncertain and subject to change and will depend on future developments, which cannot be accurately predicted, including, but limited to:
−Removed: (i) the duration of the pandemic, including:
−Removed: (a) the extent of resurgences particularly in those regions that were previously impacted, but are now reopening, (b) new outbreaks in the regions previously unaffected and (c) how quickly and to what extent normal economic activity can resume;
−Removed: (ii) additional or modified government actions;
−Removed: (iii) the timing of vaccine distribution and the development and distribution of effective treatments for COVID-19;
−Removed: (iv) new information that may emerge concerning the severity and impact of the COVID-19 pandemic and (v) the actions taken to contain the COVID-19 pandemic or address its impact in the short and long term, among others.
−Removed: We do not yet know and cannot predict the full extent of impacts on the business, operations, financial results and capital resources of the Company.
−Removed: Our financial and operating performance may be adversely affected by epidemics and other health related issues.
−Removed: Our business and financial and operating performance have been and are expected to continue to be materially adversely affected by the COVID-19 pandemic, and could be materially and adversely affected by the outbreak of other epidemics and other health related issues.
−Removed: As a result of the ongoing novel coronavirus, the Company’s operations in China, Hong Kong and Taiwan experienced a slowdown or temporary suspension in production.
−Removed: Our business could be materially and adversely affected in the event of another slowdown or suspension for a long period of time.
−Removed: During such epidemic outbreak, China, Hong Kong or Taiwan may adopt certain hygiene measures similar to those adopted in response to COVID-19, including quarantining visitors from places where any of the contagious diseases are rampant.
−Removed: Those restrictive measures may adversely affect and slow down economic development during that period.
−Removed: Any prolonged restrictive measures in order to control the contagious disease or other adverse public health developments in China, Hong Kong or Taiwan may have a material adverse effect on our business, financial condition and results of operations.
Indebtedness may affect our business and may restrict our operating flexibility.
21 unchanged sentences
On July 27, 2017, the Financial Conduct Authority (the “FCA”) (the authority that regulates LIBOR) announced that it would phase out LIBOR by the end of 2021.
−Removed: The ICE Benchmark Administration (the “IBA”) recently announced market consultation regarding the extension of US dollar LIBOR tenors through June 30, 2023 which the FCA supports.
−Removed: The Alternative Reference Rates Committee (the “ARRC”), a financial industry group convened by the Federal Reserve Board has recommended the use of the Secured Overnight Financing Rate (“SOFR”) to replace LIBOR.
+Added: In December 2020, the ICE Benchmark Administration (the “IBA”) announced a market consultation regarding the extension of US dollar LIBOR tenors through June 30, 2023, which the FCA supports.
+Added: On March 5, 2021, the IBA released its feedback statement reporting the results of the market consultation.
+Added: Pursuant to its feedback statement, the IBA intends to cease publication of all settings of non-US dollar LIBOR and only the one-week and two-month U.S.
+Added: dollar LIBOR settings on December 31, 2021, with the publication of the remaining U.S.
+Added: dollar LIBOR settings being discontinued after June 30, 2023.
+Added: The Alternative Reference Rates Committee (ARRC), a financial industry group convened by the Federal Reserve Board, has recommended the use of SOFR to replace LIBOR.
The difference between LIBOR and SOFR is that LIBOR is a forward-looking rate which means the interest rate is set at the beginning of the period with payment due at the end.
−Removed: SOFR is a backward-looking overnight rate which have implications for how interest and other payments are based.
−Removed: Changes in the method of calculating the replacement of LIBOR with an alternative rate or benchmark are still in flux and once an alternative rate or benchmark is adopted, may adversely affect interest rates and result in higher borrowing costs.
−Removed: This could materially and adversely affect the Company’s results of operations, cash flows and liquidity.
−Removed: We cannot predict the effect of the potential changes to LIBOR or the establishment and use of alternative rates or benchmarks at this time.
−Removed: We are working with our senior lender and may need to renegotiate our credit facilities as LIBOR phases out in June 2023.
+Added: SOFR is a backward-looking overnight rate which has implications for how interest and other payments are based.
+Added: Changes in the method of calculating the replacement of LIBOR with a fallback rate (effectively SOFR plus a spread adjustment) will become effective in June 2023 unless adopted earlier.
+Added: The effect of this change is still unknown and could adversely affect the Company’s results of operations, cash flow, and liquidity.
Risks Related to Competition and Global Operations
19 unchanged sentences
As a result of Brexit, there may be further periods of volatility in the currencies in which the Company conducts business.
−Removed: Increases in the price or reduced availability of raw materials could increase the cost of raw materials, decrease profit margins or impair the Company’s ability to meet production requirements on time or at all.
+Added: Supply chain disruptions, delays in production, and forecast inaccuracies could affect our ability to meet customer demand, lead to higher costs, result in excess inventory, and could have an adverse effect on our results of operations and financial condition.
Raw materials needed to manufacture products are obtained from numerous suppliers.
Under normal market conditions, these raw materials are readily available on the open market from a variety of producers.
−Removed: However, from time to time, the prices and availability of these raw materials fluctuate, which could impair the Company’s ability to procure the required raw materials for its operations or increase the cost of manufacturing its products.
+Added: However, from time to time, the prices and availability of these raw materials fluctuate due to the impact of inflation, as well as changes in existing and expected rates of inflation, which could impair the Company’s ability to procure the required raw materials for its operations or increase the cost of manufacturing its products.
If the price of raw materials increases, the Company may be unable to pass these increases on to its customers and could experience reductions to its profit margins.
−Removed: Also, any decrease in the availability of raw materials could impair the Company’s ability to meet production requirements in a timely manner or at all.
+Added: Additionally, any decrease in the availability of raw materials could impair the Company’s ability to meet production requirements in a timely manner or at all.
The Company faces active global competition and if it does not compete effectively, its business may suffer.
−Removed: The Company encounters competition in all of its business segments, and imports from Asia and Latin America with favorable currency exchange rates and low-cost labor have resulted in pricing pressure.
−Removed: The Company competes with other companies that offer similar products or that produce different products appropriate for the same uses.
+Added: The Company encounters competition in all its business operations, and imports from Asia and Latin America with favorable currency exchange rates and low-cost labor have resulted in pricing pressure.
+Added: The Company competes with other companies that offer comparable products or that produce different products appropriate for the same uses.
To remain profitable and defend market share, the Company must continue to offer high quality custom engineered products on a timely basis, deploy internal engineering resources, maintain cost-effective manufacturing capabilities through its wholly owned Asian subsidiaries, expand its product lines through product development and acquisitions, and maintain sufficient inventory for fast turnaround of customer orders.
−Removed: The Company may not be able to compete effectively on all of these fronts and with all of its competitors, and the failure to do so could have a material adverse effect on its sales and profit margins.
+Added: The Company may not be able to compete effectively on all these fronts and with all its competitors, and the failure to do so could have a material adverse effect on its sales and profit margins.
In addition, the Company may have to reduce prices on its products and services, or make other concessions, to stay competitive and retain market share.
6 unchanged sentences
However, the 25% tariffs on $250 billion of Chinese imports will remain in effect subject to further reductions depending on the progress of future negotiations.
−Removed: If China does not follow through its agreed upon commitments and tariffs are reinstated on $550 billion of Chinese products at the 25% rate, it could result in a loss of business and possible reduced margins for the Company, if the tariffs cannot be fully offset by higher selling prices.
+Added: If China does not follow through on its agreed upon commitments and tariffs are reinstated on $550 billion of Chinese products at the 25% rate, it could result in a loss of business and possible reduced margins for the Company if the tariffs cannot be fully offset by higher selling prices.
Changes in competition in the markets that the Company services could impact revenues and earnings.
53 unchanged sentences
Security breaches also could cause the Company to lose current and potential customers, which could have an adverse effect on our business.
−Removed: Moreover, the Company might be required to expend significant financial and other resources to further protect against security breaches or to rectify problems caused by any security breach.
+Added: Moreover, the Company may be required to expend significant financial and other resources to further protect against security breaches or to rectify problems caused by any security breach.
Litigation, Compliance and Regulatory Risks
22 unchanged sentences
Any litigation to which the Company may be subject could have a material adverse effect on its business, financial condition, or results of operations.
−Removed: See Item 3 – Legal Proceedings in this Form 10-K for a discussion of current litigation.
+Added: See Item 3 – Legal Proceedings of this Form 10-K for a discussion of current litigation.
The Company could be subject to additional tax liabilities.
3 unchanged sentences
In the ordinary course of business, transactions arise where the ultimate tax determination is uncertain.
−Removed: Although the Company believes that our tax estimates are reasonable, the final outcome of tax audits and any related litigation could be materially different from that which is reflected in historical income tax provisions and accruals.
+Added: Although the Company believes that our tax estimates are reasonable, the outcome of tax audits and any related litigation could be materially different from that which is reflected in historical income tax provisions and accruals.
Based on the status of a given tax audit or related litigation, a material effect on the Company’s income tax provision or net income may result during the period or periods from the initial recognition of a particular matter in the Company’s reported financial results to the final closure of that tax audit or settlement of related litigation when the ultimate tax and related cash flow is known with certainty.
General Risk Factors
−Removed: The Company’s goodwill or indefinite-lived intangible assets may become impaired, which could require a significant charge to earnings to be recognized.
+Added: The Company’s goodwill or indefinite-lived intangible assets may become impaired, which could require a significant charge to earnings be recognized.
Under accounting principles generally accepted in the United States, goodwill and indefinite-lived intangible assets are not amortized but are reviewed for impairment at least annually.
Future operating results used in the assumptions, such as sales or profit forecasts, may not materialize, and the Company has been and could in the future be required to record a significant charge to earnings in the financial statements during the period in which any impairment is determined, resulting in an unfavorable impact on our results of operations.
−Removed: For example, approximately $1 million of goodwill was impaired and written off the books in December 2020 in connection with the closing of operations of Eberhard Hardware Manufacturing Ltd.
−Removed: in Ontario, Canada.
−Removed: Numerous assumptions are used in the evaluation of impairment, and there is no guarantee that the Company’s independent registered public accounting firm would reach the same conclusion as the Company or an independent valuation firm, which could result in a disagreement between management and the Company’s independent registered public accounting firm.
+Added: Approximately $1.0 million of goodwill was impaired and written off in December 2020 in connection with closing the operations of Eberhard Hardware Manufacturing Ltd.
+Added: In Ontario, Canada (“Eberhard Hardware”).
The Company may need additional capital in the future, which may not be available on acceptable terms, if at all.
12 unchanged sentences
In addition, when the Company experiences periods with little or no profits, a decrease in compensation based on profits may make it difficult to attract and retain highly qualified personnel.
−Removed: In order to attract and retain executives and other key employees, the Company must provide a competitive compensation package.
+Added: To attract and retain executives and other key employees, the Company must provide a competitive compensation package.
If the Company’s profits decrease, or if the Company’s total compensation package is not viewed as competitive, the Company’s ability to attract, retain and motivate executives and key employees could be weakened.
10 unchanged sentences
The Company’s operating results may fluctuate, which makes the results of operations difficult to predict and could cause the results to fall short of expectations.
−Removed: The Company’s operating results may fluctuate as a result of a number of factors, many of which are outside of our control.
+Added: The Company’s operating results may fluctuate because of several factors, many of which are outside of our control.
As a result, comparing the Company’s operating results on a period-to-period basis may not be meaningful, and past results should not be relied upon as an indication of future performance.
8 unchanged sentences
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.