What changed in this filing

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Item 1A. Risk Factors

2022-10-25 compared with 2021-10-22 · 102 added, 120 removed, 319 unchanged (41% of the section changed)

Business and Operational Risks

Our ability to schedule production, manage capital expenditures and maximize the efficiency of our manufacturing capacity is highly dependent on the actions of our customers, who generally do not commit to long-term production schedules, and may cancel orders, change production quantities, delay production or change sourcing strategy.

Most of our customers do not commit to firm production schedules for more than one quarter.

We make significant decisions, including determining the levels of business that we will seek and accept, production schedules and locations, component procurement commitments, personnel needs and other resource requirements, based on our estimate of customer requirements.

Our inability to forecast the level of customer orders with certainty makes it difficult to schedule production and maximize utilization of our manufacturing capacity and supply chain capabilities.

Many factors outside of our control impact our customers and their ordering behavior, including global pandemics, recession in end markets, changing technology and industry standards, commercial acceptance for products and shifting market demand, product obsolescence, and loss of business.

Customers have canceled their orders, changed production quantities or designs, delayed production, changed their sourcing strategy and terminated their relationships with us.

We cannot assure you that present or future customers will not terminate their service arrangements with us or significantly change, reduce, cancel or delay the amount of services ordered.

Such changes, delays and cancellations have led to, and may lead in the future to a decline in our production and our possession of excess or obsolete inventory that we may not be able to sell to customers or third parties.

This may result in write downs of inventories, reduction in the number of products that we sell, delays in payment for inventory that we purchased, and reductions in the use of our manufacturing facilities.

As many of our costs and operating expenses are relatively fixed, a reduction in customer demand, particularly a reduction in demand for a product that represents a significant amount of revenue, can harm our gross profit margins and results of operations.

In the past, we have also been required to increase staffing and other expenses in order to meet anticipated demand.

On occasion, customers have required rapid increases in production for one or more of their products or requested that we relocate our manufacturing operations or transfer manufacturing from one facility to another, which stresses our resources and may reduce operating margins.

Our business at times experiences periods of rapid growth which can place considerable demands upon our management team and our operational, financial and management information systems.

Our ability to manage growth effectively requires us to continue to implement and improve these systems;

avoid cost overruns;

maintain customer, supplier and other favorable business relationships during transition periods;

efficiently and effectively dedicate resources to existing customers as well as new projects;

acquire or construct additional facilities;

occasionally transfer operations to different facilities;

acquire equipment in anticipation of demand;

procure materials and components;

continue to develop the management skills of our managers and supervisors;

adapt relatively quickly to new markets or technologies and continue to hire, train, motivate and manage our employees.

Our failure to effectively manage growth, as well as our failure to realize the anticipated benefits of the actions we take to try to manage our growth, could have a material adverse effect on our results of operations.

In addition, we sometimes experience difficulty forecasting the timing of our receipt of payment from customers.

The necessary process to begin manufacturing can be lengthy.

Because we may make capital expenditures during this ramping-up process and do not receive payment until after we produce and ship the customer’s products, any delays or unanticipated costs in the ramping-up process may have a significant adverse effect on our cash flows and our results of operations.

Servicing our largest customers may also require us to increase our capital expenditures.

The effect of COVID-19 on our operations and the operations of our customers, suppliers and logistics providers has had, and may in the future again have, a material and adverse impact on our financial condition and results of operations.

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COVID-19 continues to spread across the globe and is impacting worldwide economic activity, including our global manufacturing production sites.

Public and private sector policies and initiatives to reduce the transmission of COVID-19, including travel restrictions and quarantines, are impacting our operations, including affecting the ability of our employees to get to our facilities, reducing capacity utilization levels, causing certain facility or intermittent business closures, and interrupting the movement or increasing the cost of moving components and products through our supply chain.

Public and private sector policies and initiatives to reduce the transmission of COVID-19, including travel restrictions and quarantines, have and are impacting our operations, including affecting the ability of our employees to get to our facilities, reducing capacity utilization levels, causing certain facility or intermittent business closures, and interrupting the movement or increasing the cost of moving components and products through our supply chain.

If additional factory closures are required or reductions in capacity utilization levels occur, we expect to incur additional direct costs and lost revenue.

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In addition, the impact of the COVID-19 pandemic could exacerbate the other risks we face.

If we do not manage our growth effectively, our profitability could decline.

Our business at times experiences periods of rapid growth which can place considerable demands upon our management team and our operational, financial and management information systems.

Our ability to manage growth effectively requires us to continue to implement and improve these systems;

avoid cost overruns;

maintain customer, supplier and other favorable business relationships during transition periods;

efficiently and effectively dedicate resources to existing customers as well as new projects;

acquire or construct additional facilities;

occasionally transfer operations to different facilities;

acquire equipment in anticipation of demand;

continue to develop the management skills of our managers and supervisors;

adapt relatively quickly to new markets or technologies and continue to hire, train, motivate and manage our employees.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Because we depend on a limited number of customers, a reduction in sales to any one of those customers could cause a significant decline in our revenue.

We currently depend, and expect to continue to depend for the foreseeable future, upon a relatively small number of customers for a significant percentage of our net revenue and upon their growth, viability and financial stability.

See “Business – The Company.” In some instances, particular manufacturing services we provide for a customer represent a significant

portion of the overall revenue we receive from that customer.

See “Business – The Company.” In some instances, particular manufacturing services we provide for a customer represent a significant portion of the overall revenue we receive from that customer.

As a result of this concentration, a reduction in business from one or more of our largest customers could have a material adverse effect on our results of operations.

In addition, if one or more of our significant customers were to become insolvent or otherwise become unable to pay us on a timely basis, or at all, our operating results and financial condition could be adversely affected.

Consolidation among our customers exposes us to increased risks, including reduced revenue and dependence on a smaller number of customers.

Increasing consolidation in industries that utilize our services may occur as companies combine to achieve further economies of scale and other synergies, which could result in an increase in excess manufacturing capacity as companies seek to divest manufacturing operations or eliminate duplicative product lines.

Excess manufacturing capacity may increase pricing and competitive pressures for our industry as a whole and for us in particular.

Such consolidation among our customers may further reduce the number of customers that generate a significant percentage of our net revenue and expose us to increased risks relating to dependence on a small number of customers.

Our customers face numerous competitive challenges, which may materially adversely affect their business and ours.

Factors adversely affecting our customers may also adversely affect us.

These factors include:

• the impact of the COVID-19 pandemic on our customers;

• recessionary periods in our customers’ markets;

• the inability of our customers to adapt to rapidly changing technology and evolving industry standards, which may contribute to short product life cycles or shifts in our customers’ strategies;

• the inability of our customers to develop, market or gain commercial acceptance of their products, some of which are new and untested;

• the potential that our customers’ products become commoditized or obsolete;

• loss of business or a reduction in pricing power experienced by our customers;

• the emergence of new business models or more popular products and shifting patterns of demand;

• a highly-competitive consumer products industry, which is often subject to shorter product lifecycles, shifting end-user preferences and higher revenue volatility.

If our customers are unsuccessful in addressing these competitive challenges, their businesses may be materially adversely affected, reducing the demand for our services, decreasing our revenues or altering our production cycles and inventory management, each of which could adversely affect our ability to cover fixed costs and our gross profit margins and results of operations.

Most of our customers do not commit to long-term production schedules, and they may cancel their orders, change production quantities, delay production or change their sourcing strategy, which makes it difficult for us to schedule production and manage capital expenditures and to maximize the efficiency of our manufacturing capacity.

Most of our customers do not commit to firm production schedules for more than one quarter.

Our inability to forecast the level of customer orders with certainty makes it difficult to schedule production and maximize utilization of our manufacturing capacity and supply chain capabilities.

In the past, we have been required to increase staffing and other expenses in order to meet the anticipated demand.

Customers have canceled their orders, changed production quantities or designs, delayed production, changed their sourcing strategy and terminated their relationships with us.

We cannot assure you that present or future customers will not terminate their service arrangements with us or significantly change, reduce, cancel or delay the amount of services ordered.

In addition, we sometimes experience difficulty forecasting the timing of our receipt of payment from customers.

The necessary process to begin manufacturing can be lengthy.

Because we make capital expenditures during this ramping-up process and do not receive payment until after we produce and ship the customer’s products, any delays or unanticipated costs in the ramping-up process may have a significant adverse effect on our cash flows and our results of operations.

Servicing our largest customers may also require us to increase our capital expenditures.

Efficient component and material purchasing is critical to our manufacturing processes and contractual arrangements.

A shortage of components or an increase in price could interrupt our operations and reduce our profit, increase our inventory carrying costs, increase our risk of exposure to inventory obsolescence and cause us to purchase components of a lesser quality.

Strategic and efficient component and materials purchasing is an aspect of our strategy.

Inflation rates have increased and may continue to rise.

Our suppliers have raised their prices and may continue to raise prices.

When prices rise, they impact our margins and results of operations if we are not able to pass the increases through to our customers or otherwise offset them.

Most of our significant long-term customer contracts permit quarterly or other periodic prospective adjustments to pricing based on decreases and increases in component prices and other factors;

however, we could bear the risk of component price increases that occur between any such re-pricings or, if such re-pricing is not permitted, during the balance of the term of the particular customer contract.

There can be no assurance that we will continue to be able to purchase the components and materials needed to manufacture customer products at favorable prices.

Accordingly, certain component price increases could adversely affect our gross profit margins and results of operations.

Some of the products we manufacture require one or more components that are only available from a single source.

Some of these components are subject to supply shortages from time to time.

In some cases, supply shortages will substantially curtail production of all assemblies using a particular component.

A supply shortage can also increase our cost of goods sold if we have to pay higher prices for components in limited supply, or cause us to have to redesign or reconfigure products to accommodate a substitute component.

In the past there have been industry wide conditions, natural disasters and global events that have caused material and component shortages and shortages from the COVID-19 pandemic are ongoing.

In fiscal year 2022, our supply chain was impacted by component shortages, most notably in the semiconductor industry.

Our production of a customer’s product has and could again be negatively impacted by any quality, reliability or availability issues with any of our component suppliers.

The financial condition of our suppliers could affect their ability to supply us with components and their ability to satisfy any warranty obligations they may have, which could have a material adverse effect on our results of operations.

If a component shortage is threatened or anticipated, we may purchase such components early to avoid a delay or interruption in our operations.

Purchasing components early may cause us to incur additional inventory carrying costs and may cause us to experience inventory obsolescence, both of which may not be recoverable from our customers and could adversely affect our

gross profit margins and results of operations.

A component shortage will require us to look to second tier vendors or to procure components through brokers.

These components may be of lesser quality than those we have historically purchased and could cause us to incur costs to bring such components up to our quality levels or to replace defective ones.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business – Components Procurement.”

Customer relationships with emerging companies present more risks than with established companies.

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If we are unable to offer technologically advanced, cost effective, quick response manufacturing services that are differentiated from our competition and adapt those services as our customers’ requirements change, demand for our services will decline.

Introducing new business models or programs requiring implementation of new competencies, such as new process technologies and our development of new products or services for customers, could affect our operations and financial results.

The introduction of new business models or programs requiring implementation or development of new competencies, such as new process technology within our operations and our independent development of new products or services for customers, presents challenges in addition to opportunities.

Introducing new business models or programs requiring implementation of new competencies, such as new process technologies and our development of new products or services, could affect our operations and financial results.

The introduction of new business models or programs requiring implementation or development of new competencies, such as new process technology within our operations and our independent development of new products or services, presents challenges in addition to opportunities.

The success of new business models or programs depends on a number of factors including, but not limited to, a sufficient understanding of the new business or markets, timely and successful product development (by us and/or our customer), market acceptance, our ability to manage the risks associated with new business models or programs and new product production ramp-up, the effective management of purchase commitments and inventory levels in line with anticipated product demand, our development or acquisition of appropriate intellectual property, the availability of supplies in adequate quantities and at appropriate costs to meet anticipated demand, and the risk that new products may have quality or other defects in the early stages of introduction.

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As a result, we must make long-term investments, develop or obtain appropriate intellectual property and commit significant resources before knowing whether our assumptions will accurately reflect customer demand.

After the development of a new business model or program, we typically must be able to manufacture appropriate volumes quickly and at low cost.

To accomplish this, we endeavor to accurately forecast volumes, mixes of products and configurations that meet customer requirements;

After the development of a new business model, program, product or service, we typically must be able to manufacture appropriate volumes quickly and at low cost.

To accomplish this, we endeavor to accurately forecast volumes, mixes of products and configurations;

however, we do not always succeed at doing so.

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We compete against numerous domestic and foreign electronic manufacturers, manufacturing service providers, design providers and others.

The significant purchasing power and market power of these competitors, many large companies, could increase pricing and competitive pressures for us.

The significant purchasing power and market power of these competitors, many of which are large companies, could increase pricing and competitive pressures for us.

Most of our competitors have international operations and significant financial resources and some have substantially greater manufacturing, research and development (R&D) and marketing resources.

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If we are not able to do so, our business and our ability to continue to grow could be harmed.

Efficient component and material purchasing is critical to our manufacturing processes and contractual arrangements.

Strategic and efficient component and materials purchasing is an aspect of our strategy.

When prices rise, they impact our margins and results of operations if we are not able to pass the increases through to our customers or otherwise offset them.

Most of our significant long-term customer contracts permit quarterly or other periodic prospective adjustments to pricing based on decreases and increases in component prices and other factors;

however, we typically bear the risk of component price increases that occur between any such re-pricings or, if such re-pricing is not permitted, during the balance of the term of the particular customer contract.

There can be no assurance that we will continue to be able to purchase the components and materials needed to manufacture customer products at favorable prices.

Accordingly, certain component price increases could adversely affect our gross profit margins and results of operations.

Some of the products we manufacture require one or more components that are only available from a single source.

Some of these components are subject to supply shortages from time to time.

In some cases, supply shortages will substantially curtail production of all assemblies using a particular component.

In the past there have been industry wide conditions, natural disasters and global events that have caused material shortages and shortages from the COVID-19 pandemic are ongoing.

Our production of a customer’s product could be negatively impacted by any quality, reliability or availability issues with any of our component suppliers.

If a component shortage is threatened or anticipated, we may purchase such components early to avoid a delay or interruption in our operations.

A component shortage will require us to look to second tier vendors or to procure components through brokers with whom we are not familiar.

These components may be of lesser quality than those we have historically purchased and could cause us to incur costs to bring such components up to our quality levels or to replace defective ones.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business – Components Procurement.”

We derive a substantial majority of our revenues from our international operations, which are subject to a number of different risks and often require more management time and expense than our domestic operations.

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• political and economic instability and unsafe working conditions;

• geopolitical unrest, including the invasion of Ukraine, the possibility of military activity in countries near or adjacent to Ukraine, and the sanctions and other actions taken by the European Union, the United States, and other governments around the world in response;

• risk of governmental expropriation of our property;

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Relocations may require considerable management time as well as expenses related to market, personnel and facilities development before any significant revenue is generated, which may negatively affect our margin.

Furthermore, there can be no assurance that all customer manufacturing needs can be met in available locations within the desired timeframe, or at all, which may cause us to lose business, which may negatively affect our financial condition and results of operation.

Furthermore, there can be no

assurance that all customer manufacturing needs can be met in available locations within the desired timeframe, or at all, which may cause us to lose business, which may negatively affect our financial condition and results of operation.

In particular, a significant portion of our manufacturing, design, support and storage operations are conducted in our facilities in China, and revenues associated with our China operations are important to our success.

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Also, any measures that we may implement to reduce risks of our international operations may not be effective, may increase our expenses and may require significant management time and effort.

Entry into new international markets requires considerable management time as well as start-up expenses related to

market, personnel and facilities development before any significant revenue is generated.

Entry into new international markets requires considerable management time as well as start-up expenses related to market, personnel and facilities development before any significant revenue is generated.

As a result, initial operations in a new market may operate at low margins or may be unprofitable.

Although we have implemented policies and procedures designed to cause compliance with the FCPA and similar laws, there can be no assurance that all of our employees and agents, as well as those companies to which we outsource certain of our business operations, will not take actions in violation of our policies which could have a material adverse effect on our operations.

Energy price increases or shortages may negatively impact our results of operations.

Certain of the components that we use in our manufacturing activities are petroleum-based.

In addition, we, along with our suppliers and customers, rely on various energy sources (including oil) in our facilities and transportation activities.

An increase in energy prices, which have been volatile historically, or energy shortages or restrictions could cause disruption in our operations and/or increase in our raw material costs and transportation costs.

In addition, increased transportation costs of certain of our suppliers and customers could be passed along to us.

We may not be able to increase our product prices enough to offset these increased costs.

In addition, any increase in our product prices may reduce our future customer orders and profitability.

We have on occasion not achieved, and may not in the future achieve, expected profitability from our acquisitions.

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(2) the risk that the acquired businesses will fail to maintain the quality of services that we have historically provided;

(3) the need to implement financial and other systems and add management resources;

(3) the need to implement

financial and other systems and add management resources;

(4) the need to maintain customer, supplier or other favorable business relationships of acquired operations and restructure or terminate unfavorable relationships;

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If we are unable to attract and consummate some of these acquisition opportunities at favorable terms, our growth and profitability could be adversely impacted.

We have expanded the primary scope of our acquisitions strategy beyond focusing on acquisition opportunities presented by companies divesting internal manufacturing operations.

As we continue to pursue acquisitions that diversify our business into new industry sectors with new customers and services, the amount and scope of the risks associated may extend beyond

those that we have traditionally faced in making acquisitions.

These risks include greater uncertainties in the financial benefits and potential liabilities associated with this expanded base of acquisitions.

We face risks arising from the restructuring of our operations.

Over the past several years, we have undertaken initiatives to restructure our business operations with the intention of improving utilization and realizing cost savings.

In recent years, we have undertaken initiatives to restructure our business operations with the intention of improving utilization and realizing cost savings.

These initiatives have included changing the number and location of our production facilities, largely to align our capacity and infrastructure with current and anticipated customer demand.

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We rely on information systems, some of which are owned and operated by third parties, to store, process and transmit confidential information, including financial reporting, inventory management, procurement, invoicing and electronic communications, belonging to our customers, our suppliers, our employees and/or us.

We attempt to monitor and mitigate our exposure and modify our systems when warranted and we have implemented certain business continuity items including data backups at alternative sites.

Nevertheless, these systems are vulnerable to, and at times have suffered from, among other things, damage from power loss or natural disasters, computer system and network failures, loss of telecommunication services, physical and electronic loss of data, terrorist attacks, security breaches, cyberattacks and computer viruses.

We attempt to monitor and mitigate our exposure to cybersecurity issues and modify our systems when warranted and we have implemented certain business continuity items including data backups at alternative sites.

We regularly face attempts by others to access our information systems in an unauthorized manner, to introduce malicious software to such systems or both.

The increased use of mobile technologies and the internet of things can heighten these and other operational risks.

The increased use of mobile technologies and the internet of things can

heighten these and other operational risks.

If we, or the third parties who own and operate certain of our information systems, are unable to prevent such breaches, losses of data and outages, our operations could be disrupted.

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a failure to comply with current and future regulations and standards, or the terms of our contractual arrangements, could have an adverse effect on our business, customer relationships, reputation and profitability.

practices, workplace health and safety, the environment, sourcing and import/export practices, the market sectors we support, privacy and data protection, the regulations that apply to government contracts, and many other facets of our operations.

We are subject to extensive government regulation and industry standards relating to the products we design and manufacture as well as how we conduct our business, including regulations and standards relating to labor and employment practices, workplace health and safety, the environment, sourcing and import/export practices, the market sectors we support, privacy and data protection, the regulations that apply to government contracts, and many other facets of our operations.

The regulatory climate in the U.S.

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This regulation establishes requirements for manufacturers of medical devices to implement design and process manufacturing controls, quality control, labeling, handling and documentation procedures.

The FDA, through periodic inspections and post-market surveillance, continuously and rigorously monitors compliance with these QSR requirements and other applicable regulatory requirements.

The FDA, through periodic inspections and post-market surveillance, continuously and rigorously monitors compliance with these QSR requirements and other applicable

regulatory requirements.

If any FDA inspection reveals noncompliance, and we do not address the FDA’s concerns to its satisfaction, the FDA may elect to take enforcement action against us, including issuing inspection observations or a notice of violation or a warning letter, imposing fines, bringing an action against the Company and its officers, requiring a recall of the products we manufactured, issuing an import detention on products entering the U.S.

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Continued noncompliance to the EU regulations could stop the flow of products into the EU from us or from our customers.

In China, the Safe Food and Drug Administration controls and regulates the manufacture and commerce of healthcare products.

In China, the National Medical Products Administration controls and regulates the manufacture and commerce of healthcare products.

We must comply with the regulatory laws applicable to medical device manufactures or our ability to manufacture products in China could be impacted.

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Compliance or the failure to comply with current and future environmental, health and safety, product stewardship and producer responsibility laws or regulations could cause us significant expense.

storage, discharge and disposal of hazardous chemicals used during our manufacturing process, those governing worker health and safety, those requiring design changes, supply chain investigation or conformity assessments and those relating to the recycling or reuse of products we manufacture.

We are subject to a variety of federal, state, local and foreign environmental, health and safety, product stewardship and producer responsibility laws and regulations, including those arising from global pandemics or relating to the use, generation, storage, discharge and disposal of hazardous chemicals used during our manufacturing process, those governing worker health and safety, those requiring design changes, supply chain investigation or conformity assessments and those relating to the recycling or reuse of products we manufacture.

If we fail to comply with any present or future regulations or timely obtain any needed permits, we could become subject to liabilities, and we could face fines or penalties, the suspension of production, or prohibitions on sales of products we manufacture.

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In other instances, we may be responsible for clean-up costs and other liabilities, including the possibility of claims due to health risks by both employees and non-employees, as well as other third-party claims in connection with contaminated sites.

In addition, there is an increasing governmental focus around the world on global warming and environmental impact issues, which may result in new environmental, health and safety regulations that may affect us, our suppliers and our customers.

In addition, there is an increasing governmental focus around the world on global warming and environmental impact issues, which has resulted in new environmental, health and safety regulations that may affect us, our suppliers and our customers.

This could cause us to incur additional direct costs for compliance, as well as increased indirect costs resulting from our customers, suppliers or both incurring additional compliance costs that get passed on to us.

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Our operations expose us to intellectual property rights claims from third parties, some of whom may hold key intellectual property rights in areas in which we operate.

Intellectual property clearance or licensing activities, if any, may be inadequate to anticipate and avoid intellectual property claims.

Intellectual property clearance or licensing efforts or activities, if any, may be inadequate to anticipate and avoid intellectual property claims.

Our customers or suppliers, or their customers or suppliers, could also become subject to intellectual property claims.

Even though many, but not all, of our contracts require others to indemnify Jabil for intellectual property claims relating to their products, designs or technology, any such party may not, or may not have the resources to, assume responsibility for such claims.

We may be responsible for claims that our services, designs, technology and products, or components, equipment or processes we supply or use, infringe, misappropriate or otherwise violate third party intellectual property rights.

Providing turnkey design solutions, designs, technology and other services may expose us to different or greater potential liabilities than those we face providing traditional manufacturing services.

These liabilities may include an increase in exposure to claims that products we design or supply, or materials or components we use, infringe, misappropriate or otherwise violate third-party intellectual property rights.

Customers for our services in which we provide significant design or technology contributions sometimes require that we indemnify them against risk of intellectual property claims.

We may be responsible for claims that our services, designs, technologies, products, or components, equipment or

processes we supply or use, infringe, misappropriate or otherwise violate third party intellectual property rights.

Providing turnkey design solutions, designs, technologies, products and other services may expose us to different or greater potential liabilities than those we face providing traditional manufacturing services.

These liabilities may include an increase in exposure to claims that products we design or supply, or processes, materials or components we use, infringe, misappropriate or otherwise violate third-party intellectual property rights.

Customers for our products and services in which we provide significant design or technology contributions sometimes require that we indemnify them against risk of intellectual property claims.

If any intellectual property claims are brought, regardless of their merits, we could be required to expend significant resources in the defense or settlement of such claims, or in the defense or settlement of related indemnification claims.

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We cannot determine in advance the extent to which some jurisdictions may assess additional tax or interest and penalties on such additional taxes.

In addition, our effective tax rate may be increased by changes in the mix of earnings between jurisdictions, changes in the valuation of deferred tax assets and liabilities, changes in our cash management strategies, changes in local tax rates or countries adopting more aggressive interpretations of tax laws, or other legislative changes, including the proposed Made in America tax plan, if enacted.

Several countries in which we are located allow for tax incentives to attract and retain business.

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Several jurisdictions in which we operate have tax laws with detailed transfer pricing rules that require that all transactions with non-resident related parties be priced using arm’s length pricing principles, and that contemporaneous documentation must exist to support such pricing.

There is a risk that the taxing authorities may not deem our transfer pricing documentation acceptable.

In addition, the Organization for Economic Cooperation and Development continues to issue guidelines and proposals related to Base Erosion and Profit Shifting which may result in legislative changes that could reshape international tax rules in numerous countries and negatively impact our effective tax rate.

There is a risk that the taxing authorities may not deem our transfer pricing methodology or documentation acceptable.

The Organization for Economic Cooperation and Development (OECD), along with the G20, issued an inclusive framework in October 2021 on Base Erosion and Profit Shifting which may result in legislative changes that could reshape international tax rules, including the introduction of a global minimum tax.

Our effective tax rate could be adversely impacted if these provisions are adopted.

As this framework is subject to further negotiation and implementation by each member country, the timing and ultimate impacts of any such changes on our tax obligations are uncertain.

Our credit rating may be downgraded.

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and have other negative implications on our business, many of which are beyond our control.

In addition, the interest rate payable under the Credit Facility (as such terms are defined in Note 7 – “Notes Payable and Long-Term Debt” to the Consolidated Financial Statements) is subject to adjustment from time to time if our credit ratings change.

In addition, the interest rate payable under the Credit Facility (as such terms are define d in Note 7 – “Notes Payable and Long-Term Debt” to the Consolidated Financial Statements) is subject to adjustment from time to time if our credit ratings change.

Thus, any potential future negative change in our credit rating may increase the interest rate payable on the Credit Facility and certain of our other borrowings.

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The Company has a number of debt facilities.

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” and Note 7 – “Notes Payable and Long-Term Debt” to the Consolidated Financial Statements for further details.

Refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources” a nd Note 7 – “Notes Payable and Long-Term Debt” to the Consolidated Financial Statements for further details.

Should we desire to consummate significant additional acquisition opportunities, undertake significant additional expansion activities, or make substantial investments in our infrastructure or in support of customer opportunities, our capital needs would increase and could result in our need to increase borrowings under our revolving credit facilities or access public or private debt and equity markets.

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We pay interest on outstanding borrowings under our revolving credit facilities and certain other long term debt obligations at interest rates that fluctuate based upon changes in various base interest rates.

An adverse change in the base rates upon which our interest rates are determined could have a material adverse effect on our financial position, results of operations and cash flows.

An adverse change in the base rates upon which our interest rates are determined has and may continue to have a material adverse effect on our financial position, results of operations and cash flows.

If certain economic or fiscal issues occur, interest rates could rise, which would increase our interest costs and reduce our net income.

Also, increased interest rates could make any future fixed interest rate debt obligations more expensive.

In addition, the U.

K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021, though the ICE Benchmark Administration, the administrator of LIBOR, announced that it would consider ceasing the publication of the one week and two-month U.S.

dollar LIBOR settings at the end of 2021 and phase out the remaining U.S.

dollar LIBOR settings by June 30, 2023.

The transition from LIBOR to a new replacement benchmark is

uncertain at this time and the consequences of such developments cannot be entirely predicted but could result in an increase in the cost of borrowings on our variable rate debt, which could adversely impact our interest expense, results of operations and cash flows.

We are subject to risks of currency fluctuations and related hedging operations.

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Such controls could require us to hedge larger amounts of local currency than we have in the past.

Energy price increases may negatively impact our results of operations.

Certain of the components that we use in our manufacturing activities are petroleum-based.

In addition, we, along with our suppliers and customers, rely on various energy sources (including oil) in our facilities and transportation activities.

An increase in energy prices, which have been volatile historically, could cause an increase in our raw material costs and transportation costs.

In addition, increased transportation costs of certain of our suppliers and customers could be passed along to us.

We may not be able to increase our product prices enough to offset these increased costs.

In addition, any increase in our product prices may reduce our future customer orders and profitability.

An impairment in the value of our assets would reduce the value of our assets and reduce our net income in the year in which the write-off occurs.

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If the carrying amount of the reporting unit exceeds its fair value, goodwill is considered impaired.

Refer to note 6 to the consolidated financial statements for further discussion of the impairment testing of goodwill and identifiable intangible assets.

Refer t o note 6 to the consolidated financial statements f or further discussion of the impairment testing of goodwill and identifiable intangible assets.

A decline in general economic conditions or global equity valuations could impact the judgments and assumptions about the fair value of our businesses and we could be required to record impairment charges on our goodwill or other identifiable intangible assets in the future, which could impact our consolidated balance sheet, as well as our consolidated statement of operations.

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Our operations and those of our customers and suppliers have been and may again be subject to natural disasters, climate change-related events, pandemics or other business disruptions, which could seriously harm our results of operation and increase our costs and expenses.

We are susceptible to losses and interruptions caused by hurricanes (including in Florida, where our headquarters are located), earthquakes, power shortages, telecommunications failures, water or other natural resource shortages, tsunamis, floods, typhoons, drought, fire, extreme weather conditions, rising sea level, geopolitical events such as direct or indirect terrorist acts or acts of war, other natural or manmade disasters, boycotts and sanctions or widespread criminal activities.

We are susceptible to losses and interruptions caused by hurricanes (including in Florida,

where our headquarters are located), earthquakes, power shortages, telecommunications failures, water or other natural resource shortages, tsunamis, floods, typhoons, drought, fire, extreme weather conditions, rising sea level, geopolitical events such as direct or indirect terrorist acts or acts of war, other natural or manmade disasters, boycotts and sanctions or widespread criminal activities.

Such events could make it difficult or impossible to manufacture or to deliver products to our customers, receive production materials from our suppliers, or perform critical functions, which could adversely affect our business globally or in certain regions.

While we maintain similar manufacturing capacities at different locations and coordinate multi-source supplier

programs on many of our materials, which we believe better enables us to respond to these types of events, we cannot be sure that our plans will fully protect us from all such disruptions.

While we maintain similar manufacturing capacities at different locations and coordinate multi-source supplier programs on many of our materials, which we believe better enables us to respond to these types of events, we cannot be sure that our plans will fully protect us from all such disruptions.

Our insurance coverage with respect to natural disasters is limited and is subject to deductibles and coverage limits.

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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