What changed in this filing

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Item 1A. Risk Factors

2020-08-25 compared with 2019-08-29 · 95 added, 61 removed, 223 unchanged (41% of the section changed)

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These risk factors should be read in conjunction with the other information in this Annual Report on Form 10-K and in the other documents that we file from time to time with the SEC.

The COVID-19 pandemic creates near-term and longer-term challenges and uncertainty, and our business and operating results may be adversely affected if we do not manage our business effectively in response.

The COVID-19 pandemic and the measures being taken by governments, businesses and consumers to limit the spread of COVID-19 have led to operational challenges in our business and may result in broader and longer-term challenges and uncertainty that we will need to successfully manage, including but not limited to:

• Manufacturing and Supply Chain Challenges — We have faced disruptions and may have additional disruptions in manufacturing our products and making them available to customers and consumers as a result of the COVID-19 pandemic.

The implementation of extra employee and consumer health and safety precautions has led to temporary disruptions at certain of our manufacturing facilities, and could lead to more prolonged disruptions or closures in the future.

Additionally, shelter-in-place and social distancing behaviors, which are being mandated or encouraged by governments and practiced by businesses and individuals, create challenges for our workforce and our business.

All of these health and safety precautions and individual shelter-in-place and social distancing behaviors also impact third parties on which we rely to make our products available to consumers, including our suppliers, contract manufacturers, distributors, logistics providers and other business partners, as well as the retailers that ultimately sell our products to consumers.

• Uncertain Future Consumer Demand Environment — While we experienced a net increase in the overall demand for our products during the early phases of the COVID-19 pandemic, deteriorating economic conditions arising from the COVID-19 pandemic could adversely affect future demand for our products.

Factors such as increased unemployment, decreases in disposable income and declines in consumer confidence could cause a decrease in demand for our overall product set, particularly higher priced products.

Additionally, demand for certain of our product offerings, such as sun care products and the food service component of our business in the United Kingdom, has been adversely impacted by the COVID-19 pandemic and may continue to be adversely impacted due to changed consumer behavior and priorities.

• Increased Costs — We have incurred, and expect to continue to incur, additional costs to address the challenges created by the COVID-19 pandemic.

These include additional costs associated with overtime pay, appropriately compensating employees for working under challenging conditions, hiring temporary contractors, temporary factory closures, implementing increased safety measures, and procuring ingredients and managing our supply chain during a global pandemic.

Our operating results may be adversely affected if we experience significant unexpected costs in the future.

• Changed Business Environment and Priorities — The COVID-19 pandemic has resulted in dramatic changes to the environment in which we operate, which may continue into the foreseeable future.

Additionally.

with much of our focus centered on managing our business through the COVID-19 pandemic, we have made the decision to delay some important initiatives.

These changes to the overall business environment may include:

◦ Productivity challenges as many of our employees work from home and all of our employees face risks and uncertainty while working during a global public health crisis;

◦ The way customers communicate with us, establish their priorities and make product reset decisions;

◦ Shifts in consumer shopping trends with an increased importance of e-commerce channels;

◦ Cancellation of important internal and external conferences including our internal global sales conference and industry and customer trade shows;

◦ Delays and uncertainty in obtaining product certifications and undergoing quality audits;

◦ Decisions to delay capital expenditures, planned innovation and productivity initiatives.

• Financial Impact on Third Parties and Equity Investments — Deteriorating economic conditions could jeopardize the viability of some third parties and our business relationships with them and could cause us to incur losses or increased costs in our dealings with those third parties.

Additionally, we have equity investments in businesses and joint ventures that have been impacted by the COVID-19 pandemic, and the value of those equity investments could become impaired or lost if those businesses are unable to stabilize their operations.

In addition to the potential effects of the COVID-19 pandemic described above, the impacts of the COVID-19 pandemic could exacerbate conditions in our other risk factors noted below.

If we are unable to successfully manage our business through the challenges and uncertainty created by the COVID-19 pandemic, some of which is not within our control, our business and operating results could be materially adversely affected.

Our markets are highly competitive.

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We may not be able to successfully compete for sales to distributors or retailers that purchase from larger competitors that have greater financial, managerial, sales and technical resources.

Conventional food companies, including but not limited to Campbell Soup Company, Mondelez International, Inc., General Mills, Inc., Danone S.

Smucker Company, Kellogg Company, The Kraft Heinz Company, Nestle S.A., PepsiCo, Inc., The Hershey Company, Conagra Brands, Inc., and Unilever, and conventional personal care products companies, including but not limited to The Procter & Gamble Company, Johnson & Johnson and Colgate-Palmolive Company, may be able to use their resources and scale to respond to competitive pressures and changes in consumer preferences by introducing new products or reformulating their existing products, reducing prices or increasing promotional activities.

Conventional food companies, including but not limited to Campbell Soup Company, Conagra Brands, Inc., Danone S.

A., General Mills, Inc., The Hershey Company, The J.M.

Smucker Company, Kellogg Company, Mondelez International, Inc., Nestle S.A., PepsiCo, Inc.

and Unilever, and conventional personal care products companies, including but not limited to Colgate-Palmolive Company, Johnson & Johnson and The Procter & Gamble Company, may be able to use their resources and scale to respond to competitive pressures and changes in consumer preferences by introducing new products or reformulating their existing products, reducing prices or increasing promotional activities.

We also compete with other organic and natural packaged food brands and companies, which may be more innovative and able to bring new products to market faster and may be better able to quickly exploit and serve niche markets.

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Our business is primarily focused on sales of organic, natural and “better-for-you” products which, if consumer demand for such categories were to decrease, could harm our business.

While we continue to diversify our product offerings, developing new products entails risks, and demand for our products may not continue at current levels or increase in the future.

During an economic downturn, factors such as increased unemployment, decreases in disposable income and declines in consumer confidence could cause a decrease in demand for our overall product set, particularly higher priced better-for-you products.

While we continue to diversify our product offerings,

developing new products entails risks, and demand for our products may not continue at current levels or increase in the future.

The success of our innovation and product improvement effort is affected by our ability to anticipate changes in consumers’ preferences, the level of funding that can be made available, the technical capability of our research and development staff in developing, formulating and testing product prototypes, including complying with governmental regulations, and the success of our management in introducing the resulting improvements in a timely manner.

In addition, we may see a substantial shift in consumption towards the e-commerce channel.

Typically, products sold via the e-commerce channel have lower margins than those sold in traditional brick and mortar retailers and present unique challenges in order fulfillment.

In addition, we have seen a shift in consumption towards the e-commerce channel during the COVID-19 pandemic and may see a more substantial shift in the future.

Typically, products we sell via the e-commerce channel have lower margins than those sold in traditional brick and mortar retailers and present unique challenges in order fulfillment.

If we are unsuccessful in implementing product improvements or introducing new products that satisfy the demands of consumers, our business could be harmed.

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A significant shift in consumer demand away from our products could reduce the sales of our brands or our market share, both of which could harm our business.

A significant portion of our business has exposure to continued political uncertainty in the United Kingdom and the negotiation of its exit from the European Union, commonly referred to as “Brexit.”

In each of fiscal years 2019 and 2018, approximately 38% of our consolidated net sales were generated in the United Kingdom, which continues to experience political, economic and market uncertainty as it negotiates the terms of Brexit.

Disruptions in the worldwide economy and the financial markets may adversely impact our business and results of operations.

Adverse and uncertain economic and market conditions, particularly in the locations in which we operate, may impact customer and consumer demand for our products and our ability to manage normal commercial relationships with our customers, suppliers and creditors.

Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns, which may adversely affect our results of operations.

Consumers may also reduce the number of organic and natural products that they purchase where there are conventional alternatives, given that organic and natural products generally have higher retail prices than do their conventional counterparts.

In addition, consumers may choose to purchase private label products rather than branded products, which generally have lower retail prices than do their branded counterparts.

Distributors and retailers may also become more conservative in response to these conditions and seek to reduce their inventories.

Prolonged unfavorable economic conditions may have an adverse effect on any of these factors and, therefore, could adversely impact our sales and profitability.

A significant portion of our business has exposure to continued uncertainty in the United Kingdom and the negotiation of a possible trade agreement following its exit from the European Union, commonly referred to as “Brexit.”

In each of fiscal years 2020 and 2019, approximately 32% and 33%, respectively, of our consolidated net sales were generated in the United Kingdom, which continues to experience economic and market uncertainty as it negotiates the terms of a possible trade agreement with the European Union following Brexit.

Brexit has caused and may continue to cause disruptions to and create uncertainty surrounding our business, including affecting our relationships with our existing and future customers, suppliers and employees, which could have an adverse effect on our business, financial results and operations.

The effects of Brexit will depend on any agreements the United Kingdom makes to retain access to European Union markets either during a transitional period or more permanently.

The measures could potentially disrupt the markets we serve and the tax jurisdictions in which we operate, adversely change tax benefits or liabilities in these or other jurisdictions and

may cause us to lose customers, suppliers and employees.

The effects of Brexit will depend on any agreements the United Kingdom makes to retain access to European Union markets following the transitional period which ends on December 31, 2020.

The measures could potentially disrupt the markets we serve and the tax jurisdictions in which we operate, adversely change tax benefits or liabilities in these or other jurisdictions and may cause us to lose customers, suppliers and employees.

In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which European Union laws to replace or replicate.

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Our growth and continued success depend upon, among other things, our ability to maintain and increase sales volumes with existing customers, our ability to attract new customers, the financial condition of our customers and our ability to provide products that appeal to customers at the right price.

Customers, such as supermarkets and food distributors in North America and the European Union, continue to consolidate.

Customers, such as supermarkets and food distributors in North America, the United Kingdom and the European Union, continue to consolidate.

This consolidation has produced larger, more sophisticated organizations with increased negotiating and buying power that are able to resist price increases or demand increased promotional programs, as well as operate with lower inventories, decrease the number of brands that they carry and increase their emphasis on private label products, which could negatively impact our business.

The consolidation of retail customers also increases the risk that a significant adverse impact on their business could have a corresponding material adverse impact on our business.

Two of our customers each accounted for more than 10% of our consolidated net sales in each of the last three fiscal years, respectively.

United Natural Foods, Inc., a distributor of products to natural foods supermarkets, independent natural retailers and other supermarkets and retailers, accounted for approximately 10% , 11% and 11% of our consolidated net sales for the fiscal years ended June 30, 2019 , 2018 , and 2017 , respectively, which were primarily related to the United States segment.

Two of our customers each accounted for more than 10% of our consolidated net sales in certain of the last three fiscal years, respectively.

United Natural Foods, Inc., a distributor of products to natural foods supermarkets, independent natural retailers and other supermarkets and retailers, accounted for approximately 9% , 10% and 12% of our consolidated net sales for the fiscal years ended June 30, 2020, 2019, and 2018, respectively, which were primarily related to the United States operating segment.

Likewise, WalMart Inc.

and its affiliates, Sam’s Club and ASDA, together accounted for approximately 11% , 11% , and 12% of our consolidated net sales for the fiscal years ended June 30, 2019 , 2018 and 2017 , respectively, which were primarily related to the United States and United Kingdom segments.

and its affiliates, Sam’s Club and ASDA, together accounted for approximately 12% , 11%, and 11% of our consolidated net sales for the fiscal years ended June 30, 2020, 2019 and 2018, respectively, which were primarily related to the United States and United Kingdom operating segments.

The loss of any large customer, the reduction of purchasing levels or the cancellation of any business from a large customer for an extended length of time could negatively impact our sales and profitability.

We rely on independent distributors for a substantial portion of our sales.

In our United States segment, we rely upon sales made by or through a group of non-affiliated distributors to customers.

In our United States operating segment, we rely upon sales made by or through non-affiliated distributors to customers.

Distributors purchase directly for their own account for resale.

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Our inability to enter into satisfactory distribution agreements may inhibit our ability to implement our business plan or to establish markets necessary to successfully expand the distribution of our products.

Disruptions in the worldwide economy and the financial markets may adversely impact our business and results of operations.

Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns, which may adversely affect our results of operations.

In addition, consumers may choose to purchase private label products rather than branded products, which generally have lower retail prices than do their branded counterparts.

Distributors and retailers may also become more conservative in response to these conditions and seek to reduce their inventories.

Prolonged unfavorable economic conditions may have an adverse effect on any of these factors and, therefore, could adversely impact our sales and profitability.

We are subject to risks associated with our international sales and operations, including foreign currency, compliance and trade risks.

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As a result, changes in the value of the United States Dollar during a period may unpredictably and adversely impact our consolidated operating results, our asset and liability balances and our cash flows in our consolidated financial statements, even if their value has not changed in their original currency.

During fiscal 2019 , 54% of our consolidated net sales were generated outside the United States, while such sales outside the United States were 53% of net sales in fiscal 2018 and 50% in fiscal 2017 .

During fiscal 2020, 51% of our consolidated net sales were generated outside the United States, while such sales outside the United States were 50% of net sales in both fiscal 2019 and fiscal 2018.

Sales from outside our U.S.

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food and beverages;

pandemics, such as the flu, which may adversely affect our workforce as well as our local suppliers and customers;

• pandemics, such as COVID-19 or the flu, which may adversely affect our workforce as well as our local suppliers and customers;

• earthquakes, tsunamis, floods or other major disasters that may limit the supply of products that we purchase abroad;

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We must continuously monitor our inventory and product mix against forecasted demand or risk having inadequate supplies to meet consumer demand as well as having too much inventory on hand that may reach its expiration date and become unsaleable.

The COVID-19 pandemic, in particular, has created operating challenges in manufacturing our products and making them available to customers and consumers.

If we are unable to manage our supply chain efficiently and ensure that our products are available to meet consumer demand, our operating costs could increase, and our profit margins could decrease.

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Many aspects of our business have been, and may continue to be, directly affected by volatile commodity costs, including fuel.

Agricultural commodities and ingredients, including almonds, corn, dairy, fruit and vegetables, oils, rice, soybeans and wheat, are the principal inputs used in our products.

Agricultural commodities and ingredients, including almonds, corn, dairy, fruit and vegetables, oils, rice, grains and soybeans, are the principal inputs used in our food products.

These items are subject to price volatility which can be caused by commodity market fluctuations, crop yields, seasonal cycles, weather conditions (including the potential effects of climate change), temperature extremes and natural disasters (including floods, droughts, water scarcity, frosts, earthquakes and hurricanes), pest and disease problems, changes in currency exchange rates, imbalances between supply and demand, and government programs and policies among other factors.

Volatile fuel costs translate into unpredictable costs for the products and services we receive from our third-party providers including, but not limited to, distribution costs for our products and packaging costs.

While we seek to offset the volatility of such costs with a combination of cost savings initiatives, operating efficiencies and price increases to our customers,

we may be unable to manage cost volatility.

While we seek to offset the volatility of such costs with a combination of cost savings initiatives, operating efficiencies and price increases to our customers, we may be unable to manage cost volatility.

If we are unable to fully offset the volatility of such costs, our financial results could be adversely affected.

Our ability to achieve our business plans is partially dependent on our ability to implement and achieve targeted savings and efficiencies from cost reduction initiatives.

We put in place planned productivity initiatives that are designed to control or reduce costs or that increase operating efficiencies in order to improve our profitability and offset many of the input cost increases that are outside of our control.

In addition, these initiatives are designed to fund opportunities for investment in innovation and marketing.

Our success depends on our ability to execute these initiatives and realize cost savings and efficiencies from our operations.

If we are unable to identify and fully implement our productivity plans and achieve our anticipated efficiencies, our profitability may be adversely impacted.

Our profit margins also depend on our ability to manage our inventory efficiently.

As part of our effort to manage our inventory more efficiently, we carry out SKU rationalization programs, which may result in the discontinuation of lower-margin or low-turnover SKUs.

For example, as part of the Project Terra review, and the more recent productivity initiative in fiscal year 2019, the Company has carried out product rationalization initiatives aimed at eliminating low margin and slow moving SKUs or brands entirely.

However, a number of factors, such as changes in customers’ inventory levels, access to shelf space and changes in consumer preferences, may lengthen the number of days we carry certain inventories, which may impede our effort to manage our inventory efficiently and thereby increase our costs.

Our debt may restrict our future operations, and any default under our debt agreements could have significant consequences.

We have substantial debt and have the ability to incur additional debt.

As of June 30, 2019, we had approximately $626.8 million of debt outstanding under our credit agreement, consisting of approximately $420.6 million in borrowings under a revolving credit facility and approximately $206.3 million outstanding under a term loan.

As of June 30, 2019, there was approximately $569.7 million available for additional borrowings under the revolving credit facility.

Our payments of interest and principal due under our debt could make it more difficult for us to satisfy our financial obligations and could increase our vulnerability to general adverse economic and industry conditions.

In fiscal 2019, we implemented a strategy that includes as one of its key pillars identifying areas of cost savings and operating efficiencies to expand profit margins and cash flow.

As part of this overall strategy and the key pillar of realizing savings and efficiencies, we have implemented SKU rationalizations that included the elimination of approximately 350 low velocity and low profitability SKUs during the fourth quarter of fiscal 2019.

As another aspect of this strategy, during fiscal 2020, we began the integration of our United States and Canada operations in alignment with the North America reportable segment structure.

We will carry out additional productivity initiatives under this strategy in fiscal 2021.

Our success depends on our ability to execute on our productivity initiatives and realize cost savings and efficiencies in our operations.

If we are unable to fully implement our productivity plans and realize our anticipated savings and efficiencies, our profitability may be adversely impacted.

Any default under our debt agreements could have significant consequences.

Our credit agreement contains covenants imposing certain restrictions on our business.

These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise.

The credit agreement contains restrictive covenants including, with specified exceptions, limitations on our ability to engage in certain business activities, incur debt and liens, make capital expenditures, pay dividends or make other distributions, enter into affiliate transactions, consolidate, merge or acquire or dispose of assets, and make certain investments, acquisitions and loans.

transactions, consolidate, merge or acquire or dispose of assets, and make certain investments, acquisitions and loans.

The credit agreement also requires us to satisfy certain financial covenants, such as maintaining a minimum consolidated interest coverage ratio and a maximum consolidated leverage ratio.

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Any default by us under the credit agreement could have a material adverse effect on our financial condition and our business.

We may be adversely impacted by the potential discontinuation of the London Interbank Offered Rate, or LIBOR.

We have loans under our credit facility and interest rate swap agreements that are indexed to LIBOR.

The financial authority that regulates LIBOR has announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

It is unclear if LIBOR will cease to exist or precisely how any alternative reference rates would be calculated and published.

While we have sought to reduce future interest rate volatility by entering into floating rate to fixed rate swap agreements with respect to a substantial portion of our outstanding indebtedness as of June 30, 2020, any transition from LIBOR may nonetheless cause us to incur increased costs and additional risk.

If LIBOR is discontinued or if the method of calculating LIBOR changes from its current form, interest rates on our current or future indebtedness may be adversely affected.

If LIBOR is discontinued, interest rates will generally be based on an alternative variable rate specified in the documentation governing our indebtedness or swaps or as otherwise agreed upon.

The alternative variable rate could be higher and more volatile than LIBOR prior to its discontinuance.

Certain risks arise in transitioning contracts to an alternative variable rate.

The method of transitioning to an alternative rate may be challenging and may require substantial negotiation with the counterparty to each contract.

If a contract is not transitioned to an alternative variable rate and LIBOR is discontinued, the impact is likely to vary by contract.

Ineffective internal controls could impact the Company’s business and financial results.

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Consequently, we are subject to a heightened risk of legal claims, government investigations and other regulatory enforcement actions.

We are subject

to extensive regulations in the United States, United Kingdom, Canada, Europe, Asia, including India, and any other countries where we manufacture, distribute and/or sell our products.

We are subject to extensive regulations in the United States, United Kingdom, Canada, Europe, Asia, including India, and any other countries where we manufacture, distribute and/or sell our products.

Our products are subject to numerous food safety and other laws and regulations relating to the registration and approval, sourcing, manufacturing, storing, labeling, marketing, advertising and distribution of these products.

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Additionally, in the future, insurance coverage may not be available to us at commercially acceptable premiums, or at all.

In addition, both current and former officers and members of our Board of Directors, as individual defendants, are the subject of lawsuits related to the Company.

Under Delaware law, our bylaws and certain indemnification agreements, we may have an obligation to indemnify both current and former officers and directors in relation to these matters, and our insurance coverage may not be adequate to cover all of the costs associated with these claims.

In addition, former officers and members of our Board of Directors, as individual defendants, are the subject of lawsuits related to the Company.

Under Delaware law, our bylaws and certain indemnification agreements, we may have an obligation to indemnify former officers and directors in relation to these matters, and our insurance coverage may not be adequate to cover all of the costs associated with these claims.

If the Company incurs significant uninsured indemnity obligations, our indemnity obligations could result in significant legal expenses or damages and cause our business, financial condition, results of operations and cash flow to suffer.

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Under certain circumstances, we may be required to recall or withdraw products, suspend production of our products or cease operations, which may lead to a material adverse effect on our business.

In addition, customers may cancel orders for such products as a result of

In addition, customers may cancel orders for such products as a result of such events.

Even if a situation does not necessitate a recall or market withdrawal, product liability claims might be asserted against us.

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An impairment in the carrying value of goodwill or other acquired intangible assets could materially and adversely affect our consolidated results of operations and net worth.

As of June 30, 2019 , we had goodwill of $1.01 billion and trademarks and other intangibles assets of $465.2 million , which in the aggregate represented 57% of our total consolidated assets.

As of June 30, 2020, we had goodwill of $862.0 million and trademarks and other intangibles assets of $346.5 million , which in the aggregate represented 55% of our total consolidated assets.

The net carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the acquisition date (or subsequent impairment date, if applicable).

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The incurrence of impairment charges could negatively affect our results of operations and adversely impact our net worth and our consolidated earnings in the period of such charge.

We may not be able to successfully consummate divestitures as part of our strategy to become a smaller business.

We may not be able to successfully consummate divestitures as part of our strategy to streamline our business.

As discussed under Item 1, “Business,” as part of the Company’s overall strategy, the Company may seek to dispose of businesses and brands that are less profitable or are otherwise less of a strategic fit within our core portfolio.

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If we are not successful in divesting such businesses, our business could be harmed.

Our acquisition history could expose us to risk, including our ability to continue to integrate the brands that we have acquired.

We have historically grown our business in part through the acquisition of brands, both in the United States and internationally.

The success of our more recent acquisitions will be dependent upon our ability to effectively integrate those brands, including our ability to realize potentially available marketing opportunities and cost savings, some of which may involve operational changes.

Despite our due diligence investigation of each business that we have acquired, there may be liabilities of the acquired companies that we failed to or were unable to discover during the diligence process and for which we, as a successor owner, may be responsible.

Our future results of operations may be adversely affected by the availability of organic ingredients.

Our ability to ensure a continuing supply of organic ingredients at competitive prices depends on many factors beyond our control, such as the number and size of farms that grow organic crops, climate conditions, increased demand for organic ingredients by our competitors, changes in national and world economic conditions, currency fluctuations and forecasting adequate need of seasonal ingredients.

The organic ingredients that we use in the production of our products (including, among others, fruits, vegetables, nuts and grains) are vulnerable to adverse weather conditions and natural disasters, such as floods, droughts, water scarcity, temperature extremes,

frosts, earthquakes and pestilences.

Natural disasters and adverse weather conditions (including the potential effects of climate change) can lower crop yields and reduce crop size and crop quality, which in turn could reduce our supplies of organic ingredients or increase the prices of organic ingredients.

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Liabilities or claims with respect to environmental matters could have a significant negative impact on our business.

As with other companies engaged in similar businesses, the nature of our operations expose us to the risk of liabilities and claims with respect to environmental matters, including those relating to the disposal and release of hazardous substances.

As with other companies engaged in similar businesses, the nature of our operations exposes us to the risk of liabilities and claims with respect to environmental matters, including those relating to the disposal and release of hazardous substances.

Furthermore, our operations are governed by laws and regulations relating to workplace safety and worker health, which, among other things, regulate employee exposure to hazardous chemicals in the workplace.

Any material costs incurred in connection with such liabilities or claims could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity.

Any environmental or health and safety legislation or regulations enacted in the future, or any changes in how existing or future laws or regulations will be enforced, administered or interpreted, may lead to an increase in compliance costs or expose us to additional risk of liabilities and claims, which could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity.

Any environmental or health and safety legislation or regulations enacted in the future, or any

changes in how existing or future laws or regulations will be enforced, administered or interpreted, may lead to an increase in compliance costs or expose us to additional risk of liabilities and claims, which could have a material adverse effect on our business, consolidated financial condition, results of operations or liquidity.

If the reputation of one or more of our leading brands erodes significantly, it could have a material impact on our results of operations.

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Such uses give rise to cybersecurity risks, including security breach, espionage, system disruption, theft and inadvertent release of information.

We have become more reliant on mobile devices, remote communication and other technologies during the COVID-19 pandemic, enhancing our cybersecurity risk.

Our business involves the storage and transmission of numerous classes of sensitive and/or confidential information and intellectual property, including customers’ and suppliers' information, private information about employees, and financial and strategic information about the Company and its business partners.

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The failure of our information technology systems to perform as we anticipate could disrupt our business and could result in transaction errors, processing inefficiencies and the loss of sales and customers, causing our business and results of operations to suffer.

In addition, our information technology systems may be vulnerable to damage or interruption from

circumstances beyond our control, including fire, natural disasters, system failures and viruses.

In addition, our information technology systems may be vulnerable to damage or interruption from circumstances beyond our control, including fire, natural disasters, system failures and viruses.

Any such damage or interruption could have a material adverse effect on our business.

Compliance with data privacy laws may be costly, and non-compliance with such laws may result in significant liability.

Many jurisdictions in which the Company operates have laws and regulations relating to data privacy and protection of personal information, including the European Union GDPR, which became effective May 25, 2018.

GDPR requires companies to satisfy requirements regarding the handling of personal data.

personal data.

Failure to comply with GDPR requirements could result in litigation, adverse publicity and penalties of up to 4% of worldwide revenue.

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Our business could also be negatively impacted if our suppliers or customers experience disruptions resulting from tighter capital and credit markets or a slowdown in the general economy.

Our acquisition history could expose us to risk, including our ability to continue to integrate the brands that we have acquired.

We have historically grown our business in part through the acquisition of brands, both in the United States and internationally.

The success of our acquisitions will be dependent upon our ability to effectively integrate those brands, including our ability to realize potentially available marketing opportunities and cost savings, some of which may involve operational changes.

Climate change may negatively affect our business and operations.

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In the event of issuance, the preferred stock could be used as a method of discouraging, delaying or preventing a change in control.

and restated certificate of incorporation authorizes the issuance of up to 5 million shares of “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by our Board of Directors.

Our amended and restated certificate of incorporation authorizes the issuance of up to 5 million shares of “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by our Board of Directors.

Although we have no present intention to issue any shares of our preferred stock, we may do so in the future under appropriate circumstances.

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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