What changed in this filing

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Item 1A. Risk Factors

2023-02-09 compared with 2022-02-08 · 100 added, 84 removed, 122 unchanged (60% of the section changed)

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Additional risks and uncertainties not presently known to us, or that we currently believe to be immaterial, also may adversely impact our business, results of operations and financial position.

Coronavirus Disease Risks

The ongoing COVID-19 pandemic has and may continue to impact our operations, which may impact our results and our financial condition.

The spread of COVID-19 created a global health crisis that resulted in widespread disruption to economic activity, both in the U.S.

and globally.

We operate facilities in the United States and around the world which have been and may continue to be adversely affected by this pandemic, including the closure or reduced capacity of certain of our facilities;

delays or disruptions in our ability to source raw materials, components and products;

constraints in shipping, transportation and logistics;

and decreased employee availability.

Due to the uncertain duration of the COVID-19 pandemic, we are unable to fully estimate the extent of the impact it may have on the markets in which we operate or our business.

The extent of such impact will depend on a number of factors, including the duration of the COVID-19 pandemic, its effect on our customers, suppliers and employees, its effect on domestic and international economies and markets, including consumer discretionary spending, and the response of governmental authorities.

A prolonged disruption of our operations or slowdown in domestic and international economic activity could materially and adversely affect our results of operations and financial condition.

To the extent COVID-19 continues to impact our business and our operations, it may also have the effect of heightening certain of the other risks described in this Annual Report on Form 10-K, such as those relating to our international operations and global strategies and our dependence on third-party suppliers.

Strategic Risks

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• existing home sales;

• inflationary pressures;

• unemployment and underemployment levels;

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• trends in lifestyle and housing design;

• natural disasters, terrorist acts, pandemics or other catastrophic events.

The fundamentals driving our business are impacted by economic cycles.

Adverse changes or uncertainty involving the factors listed above, an economic contraction or inflationary pressures could result in a decline in residential repair and remodeling activity or in demand for new home construction, which could adversely affect our results of operations and financial position.

• natural disasters, terrorist acts, pandemics, wars or conflicts or other catastrophic events.

We have been, and may in the future be, negatively impacted by adverse changes or uncertainty involving one or more of the factors listed above.

In addition, the fundamentals driving our business are impacted by economic cycles.

An economic contraction or recession have in the past resulted in and could in the future result in a decline in residential repair and remodeling activity or in demand for new home construction, adversely affecting our results of operations and financial position.

We may not achieve all of the anticipated benefits of our strategic initiatives.

We continue to pursue our strategic initiatives of investing in our brands, developing innovative products, and focusing on operational excellence through the Masco Operating System, our methodology to drive growth and productivity.

These initiatives are designed to grow revenue, improve profitability and increase shareholder value over the mid- to long-term.

Our business performance and results could be adversely affected if we are unable to successfully execute these initiatives or if we are unable to execute these initiatives in a timely and efficient manner.

We could also be adversely affected if we have not appropriately prioritized and balanced our initiatives or if we are unable to effectively manage change throughout our organization.

We continue to pursue our strategy of driving the full potential of our core businesses, leveraging opportunities across our enterprise, and actively managing our portfolio.

Our strategy is designed to grow revenue, improve profitability and increase shareholder value over the mid- to long-term.

We execute our strategy by investing in our brands, developing innovative products, making capital investments, and focusing on continuous productivity improvement and operational excellence, among other initiatives.

Our business performance and results could be adversely affected if we are unable to timely and effectively execute our strategy.

We could also be adversely affected if we have not appropriately prioritized and balanced our strategic initiatives or if we are unable to effectively manage change throughout our organization.

We may not be able to successfully execute our acquisition strategy or integrate businesses that we acquire.

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• difficulties in retaining critical employees of the acquired businesses.

International acquisitions that we have made, and international acquisitions that we may make in the future may continue to increase our exposure to foreign currency risks and risks associated with interpretation and enforcement of foreign regulations.

International acquisitions that we have made, and international acquisitions that we may make in the future, may continue to increase our exposure to foreign currency risks, risks associated with interpretation and enforcement of foreign regulations and the policies of foreign governments.

Our failure to address these risks could cause us to incur additional costs and fail to realize the anticipated benefits of our acquisitions and could adversely affect our results of operations and financial position.

Business and Operational Risks

Variability in the cost and availability of our raw materials, component parts and finished goods could affect our results of operations and financial position.

We purchase substantial amounts of raw materials, component parts and finished goods from outside sources, including international sources, and we manufacture certain of our products outside of the United States.

Increases in the cost of the materials we purchase, including as a result of availability, tariffs and inflation, have in the past and may in the future increase the prices for our products.

Further, our production could be affected if we or our suppliers are unable to procure our requirements for various commodities, including, among others, brass, resins, titanium dioxide and zinc, or if a shortage of these commodities results in significantly increased costs.

Rising energy costs could also increase our production and transportation costs.

We are dependent on suppliers and service providers.

We are dependent on third parties for our raw materials, many of our components and finished products and for certain services.

Our ability to offer a wide variety of products and provide high levels of service to our customers depend on our ability to obtain an adequate and timely supply of these goods and services.

Failure of our suppliers to timely provide us goods and services on commercially reasonable terms or to comply with applicable legal and regulatory requirements or our supplier business practices policy could have a material adverse effect on our results of operations and financial position or could damage our reputation.

The operations of the third parties on whom we depend could be impacted by:

changing laws, regulations and policies, including those related to climate change;

cybersecurity breaches;

labor availability;

raw material shortages;

energy availability;

supply disruptions;

and adverse weather conditions, pandemics, and other force majeure events.

Any of these factors could disrupt our third parties’ operations and result in shortages of supply, assertion of force majeure and increases in the prices charged to us for the raw materials, components and finished products they produce or services they provide.

Sourcing these raw materials, components, finished products and services from alternate suppliers, including suppliers from new geographic regions, or re-engineering our products as a result of supplier disruptions, is time-consuming and costly and could result in inefficiencies or delays in our business operations or could negatively impact the quality of our products.

In addition, the loss of critical suppliers, or a substantial decrease in the availability of supply, has disrupted and could continue to disrupt our business and may have a material adverse effect on our results of operations and financial position.

Many of the suppliers we rely upon are located in foreign countries, primarily China.

The differences in business practices, shipping and delivery requirements and costs, changes in economic conditions and trade policies and laws and regulations, together with the limited number of suppliers available to us, have increased the complexity of our supply chain logistics and the potential for interruptions in our production scheduling.

We have experienced and may continue to experience constraints on and disruptions to transporting our raw materials, components and finished products from our international and domestic suppliers and have had to pay higher transportation costs.

If we are unable to effectively manage our supply chain or if we continue to experience such issues, our results of operations and financial position could be adversely affected.

Variability in the cost and availability of our raw materials, component parts and finished products could affect our results of operations and financial position.

We purchase substantial amounts of raw materials, component parts and finished products from outside sources, including international sources, and we manufacture certain of our products outside of the United States.

Increases in the cost of the materials we purchase, including as a result of diminished availability, increased tariffs and inflation or unfavorable fluctuations in foreign currency exchange rates have increased and may in the future increase the prices for our products and negatively impact our results of operations and financial position.

Further, our production has been and may in the future be affected if we or our suppliers are unable to procure our requirements for various commodities, including, among others, brass, resins, titanium dioxide and zinc, or if a shortage of these commodities results in significantly increased costs.

Energy prices have also increased and, this coupled with potential energy supply shortages, could continue to increase our production and transportation costs.

In addition, water is a significant component of our architectural coatings products and may be subject to shortages and restrictions on supply in certain regions, due to climate-related and other influences.

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Our existing arrangements with customers, competitive considerations and customer resistance to price increases may delay or make us unable to adjust selling prices.

If we are not able to sufficiently increase the prices of our products or achieve cost savings to offset increased material and production costs, our results of operations and financial position could be adversely affected.

If we are not able to sufficiently increase the prices of our products or achieve cost savings to offset increased material, production, transportation and labor costs, our results of operations and financial position could be adversely affected.

Increased selling prices for our products have and may in the future lead to sales declines and loss of market share, particularly if those prices are not competitive.

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This strategy increases the possibility that we may make commitments for these commodities at prices that subsequently exceed their market prices, which has occurred and could occur in the future and may adversely affect our results of operations and financial position.

We are dependent on third-party suppliers and service providers.

We are dependent on third parties for many of our products and components and for certain services.

Our ability to offer a wide variety of products and provide high levels of service to our customers depend on our ability to obtain an adequate and timely supply of products and components.

Failure of our suppliers to timely provide us quality products or services on commercially reasonable terms or to comply with applicable legal and regulatory requirements or our supplier business practices policies, could have a material adverse effect on our results of operations and financial position or could damage our reputation.

The operations of the third parties we depend on could be impacted by changing laws, regulations and policies, including those related to climate change, labor availability and by adverse weather conditions, pandemics, and other force majeure events, any of which could result in disruptions to their operations and result in shortages of supply, assertion of force majeure contract provisions and increases in the prices they charge for the raw materials, components and products they produce.

Sourcing these products and components from alternate suppliers, including suppliers from new geographic regions, or re-engineering our products as a result of supplier disruptions, is time-consuming and costly and could result in inefficiencies or delays in our business operations or could negatively impact the quality of our products.

In addition, the loss of critical suppliers, or a substantial decrease in the availability of products or components from our suppliers, has and could continue to disrupt our business and may adversely affect our results of operations and financial position.

Many of the suppliers we rely upon are located in foreign countries, primarily China.

The differences in business practices, shipping and delivery requirements, changes in economic conditions and trade policies and laws and regulations, together with the limited number of suppliers, have increased the complexity of our supply chain logistics and the potential for interruptions in our production scheduling.

We have experienced and may continue to experience constraints on and disruptions to transporting our raw materials, components and products from our international suppliers and have had to pay higher transportation costs.

If we are unable to effectively manage our supply chain or if we continue to experience such transportation constraints, disruptions and higher costs for timely delivery of our products or components, our results of operations and financial position could be adversely affected.

There are risks associated with our international operations and global strategies.

In 2022, 20 percent of our sales from continuing operations were made outside of North America (principally in Europe) and transacted in currencies other than the U.S.

In addition to our European operations, we manufacture products in Asia and source products and components from third parties globally.

In addition to our European operations, we manufacture products in other locations, including Asia and Mexico and source products and components from third parties globally.

Risks associated with our international operations include:

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• social and political unrest;

• natural disasters, terrorist attacks, pandemics or other catastrophic events.

We are also affected by domestic and international laws and regulations applicable to companies doing business abroad or importing and exporting goods and materials.

These include tax laws, laws regulating competition, anti-bribery/anti-corruption and other business practices, and trade regulations, including duties and tariffs.

• natural disasters, terrorist attacks, pandemics, wars or conflicts or other catastrophic events.

We are also affected by domestic and international laws and regulations applicable to companies doing business outside of the U.S.

or importing and exporting goods and materials.

These include anti-bribery/anti-corruption laws, laws regulating competition, sanctions, tax laws, and other business practices, and trade regulations, including duties and tariffs.

Compliance with these laws is costly, and future changes to these laws may require significant management attention and disrupt our operations.

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Our results of operations and financial position are also impacted by changes in currency exchange rates.

Unfavorable currency exchange rates, particularly the euro, the Chinese Yuan renminbi, the Canadian dollar and the British pound sterling, have in the past adversely affected us, and could adversely affect us in the future.

Unfavorable currency exchange rates, particularly the euro, the Chinese renminbi, the Canadian dollar, the British pound sterling and the Mexican peso, have in the past adversely affected us, and could adversely affect us in the future.

Fluctuations in currency exchange rates may present challenges in comparing operating performance from period to period.

Additionally, as a result of the United Kingdom's exit from the European Union, we could experience volatility in the currency exchange rates or a change in the demand for our products and services, particularly in our U.K.

and European markets, or there could be disruption of our operations and our customers’ and suppliers’ businesses.

The long-term performance of our businesses relies on our ability to attract, develop and retain talented and diverse personnel.

The long-term performance of our businesses relies on our ability to attract, develop and retain a talented and diverse workforce.

To be successful, we must invest significant resources to attract, develop and retain highly qualified, talented and diverse employees at all levels, who have the experience, knowledge and expertise to implement our strategic and business initiatives.

We compete for employees with a broad range of employers in many different industries, including large multinational firms, and we may fail in recruiting, developing, motivating and retaining them, particularly when there are low unemployment levels.

We have been and continue to be affected by a shortage of qualified personnel in certain geographic areas.

Our growth, competitive position, results of operations and financial position could be adversely affected by our failure to attract, develop and retain key employees and diverse talent, to build strong leadership teams, to successfully implement our talent strategies or to develop effective succession planning to assure smooth transitions of those employees and the knowledge and expertise they possess.

We compete for employees with a broad range of employers in many different industries, including large multinational firms.

We may face challenges in recruiting, developing, motivating and retaining employees, particularly when the labor market is experiencing low unemployment levels, increasing compensation and increasing competition.

We have been and continue to be affected by a shortage of qualified personnel primarily for our hourly workforce.

Additionally if we are unable to attract, develop and retain key employees, build strong and diverse leadership teams, successfully implement our talent strategies or develop effective succession planning, our results of operations and financial position could be adversely affected.

Extreme weather events and changes in climate could adversely impact our results of operations and financial position.

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These types of events can be disruptive to our operations and may impact consumer spending.

In addition, we have certain suppliers located in areas that have experienced extreme weather events which have impacted and may continue to impact the availability and cost of some of our raw materials, components and products from time to time.

In addition, we have certain suppliers located in areas that have experienced extreme weather events which have impacted and may in the future impact the availability and cost of some of our raw materials, components and finished products.

If the frequency or severity of extreme weather increases, we may experience interruptions to our operations, further impact on our supply chain, increased operating costs or loss or damage to our property or inventory, which could adversely affect our results of operations and financial position.

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Competitive Risks

We could lose market share if we do not maintain our strong brands, develop innovative products or respond to changing purchasing practices and consumer preferences or if our reputation is damaged.

We could lose market share if we do not maintain our strong brands, develop innovative products or respond to changing purchasing practices and consumer preferences.

Our competitive advantage is due, in part, to our ability to maintain our strong brands and to develop and introduce innovative new and improved products.

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If we are unable to successfully provide this support to our customers or if our customers are unable to successfully execute their strategies, our brands may lose market share.

If we do not timely and effectively identify and respond to changing consumer preferences, including, among others, a continued shift in consumer purchasing practices toward e-commerce and increased consumer demand for products with potential desired attributes, such as connected products and sustainable products, our relationships with our customers and with consumers could be harmed, our ability to retain our customers and consumers may be negatively impacted, the demand for our brands and products could be reduced and our results of operations and financial position could be adversely affected.

Our public image and reputation are important to maintaining our strong brands and could be adversely affected by various factors, including product quality and service, claims and comments in social media or the press, or a negative perception regarding our company practices, positions or public statements, including regarding disputes or legal action against us, even if unfounded.

Damage to our public image or reputation could adversely affect our results of operations and financial position.

A number of consumer preferences are changing, including a continued shift in consumer purchasing practices toward e-commerce and increased consumer demand for products with potential desired attributes, such as connected products and sustainable products.

If we do not timely and effectively identify and respond to these changes our relationships with our customers and with consumers could be harmed, our ability to retain our customers and consumers may be negatively impacted, the demand for our brands and products could be reduced and our results of operations and financial position could be adversely affected.

Damage to our public reputation could adversely affect our results of operations and financial position.

Our public image and reputation are important to maintaining our strong brands.

Our results of operations and financial position could be adversely affected by negative claims and comments in social media or the press, a negative perception regarding our products or company practices, positions or public statements, even if unfounded, or a data breach.

Furthermore, there is increased scrutiny by stakeholders on environmental, social and governance (“ESG”) practices by companies, and we may not be able to meet such stakeholders’ expectations.

Expectations regarding ESG practices are diverse and rapidly changing, and we may not be able to align our ESG practices with such evolving expectations within the timeframes expected by stakeholders or without incurring significant costs.

In addition, we may not be able to achieve our aspirational goals related to our ESG initiatives, which are and may continue to be impacted by many complexities and variables, such as a tightening labor market, challenging economic environment, changes to our operations, changes to our portfolio of businesses via acquisitions or divestitures, and adjustments to our job levels and managerial headcount.

A failure or perceived failure by us in this regard may damage our reputation and adversely affect our results of operations and financial position.

We face significant competition and operate in an evolving competitive landscape.

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We believe that brand reputation is an important factor affecting product selection and that we compete on the basis of product features, innovation, quality, customer service, warranty and price.

We sell many of our products through home center retailers, online retailers, distributors and independent dealers and rely on these customers to market and promote our products to consumers.

Our success with our customers is dependent on our ability to provide quality products and timely delivery.

In addition, home center retailers, which have historically concentrated their sales efforts on retail consumers and remodelers, are increasingly selling directly to professional contractors and installers.

This shift may adversely affect our margins on our products that contractors and installers would otherwise buy through our dealers and wholesalers, and as home center retailers develop customer experience programs to attract and retain contractors and installers, they may rely on us to support their efforts, which may affect our growth and operating results.

We sell our products through home center retailers, online retailers, distributors and independent dealers and rely on these customers to market and promote our products to consumers.

Our success with our customers is dependent on, among other things, our ability to provide quality products with desired features at the right price, timely delivery and a high level of customer service.

Home center retailers, which have historically concentrated their sales efforts on retail consumers and remodelers, are increasingly selling directly to professional contractors and installers, which may adversely affect our margins on our products that contractors and installers would otherwise buy through our dealers and wholesalers.

In addition, as home center retailers develop customer experience programs to attract and retain contractors and installers, they are relying on us to support their efforts.

Such support has been and could continue to be time-consuming and costly and these efforts may not be successful, which may affect our growth and operating results.

Certain of our customers are selling products sourced from low-cost foreign manufacturers under their own private label brands, which directly compete with our brands.

As a result of this trend, we have and we may in the future experience lower demand for our products or a shift in the mix of some products we sell toward more value-priced or opening price point products, which may affect our operating results.

As a result of this trend, we have experienced and may in the future experience lower demand for our products or a shift in the mix of some products we sell toward more value-priced or opening price point products, which may affect our operating results.

In addition, we face competitive pricing pressure in the marketplace, including sales promotion programs, that could affect our market share or result in price reductions, which could adversely impact our results of operations and financial position.

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These customers can significantly affect the prices we receive for our products and the terms and conditions on which we do business with them.

Additionally, these customers have in the past and may in the future reduce the number of vendors from which they purchase and could make significant changes in their volume of purchases from us.

Although other retailers, dealers, distributors and homebuilders represent other channels of distribution for our products and services, we might not be able to quickly replace, if at all, the loss of a substantial portion of our sales to The Home Depot or the loss of all of our sales to either Ferguson or Lowe’s, and any such loss would have a material adverse effect on our business, results of operations and financial position.

Additionally, these customers have reduced in the past and may in the future reduce the number of vendors from which they purchase and could make significant changes in their volume of purchases from us.

Although other retailers, dealers, distributors and homebuilders represent other channels of distribution for our products and services, we might not be able to quickly replace, or replace at all, the loss of a substantial portion of our sales to The Home Depot or the loss of all of our sales to either Ferguson or Lowe’s.

Any such loss would have a material adverse effect on our business, results of operations and financial position.

In addition, our Behr business grants Behr brand exclusivity in the retail sales channel in North America to The Home Depot, and from time to time, certain of our other businesses grant product and/or brand exclusivity to our customers.

The granting of exclusivity affects our ability to sell those products and brands to other customers and can increase the complexity of our product offerings and can increase our costs.

The granting of exclusivity affects our ability to sell those products and brands to other customers and can increase the complexity of our product offerings and our costs.

Technology and Intellectual Property Risks

We rely on information systems and technology, and a breakdown of these systems or interruptions resulting from our implementation of new systems could adversely affect our results of operations and financial position.

We rely on many information systems and technology to process, transmit, store and manage information to support our business activities.

We may be adversely affected if our information systems breakdown, fail, or are no longer supported.

In addition to the consequences that may occur from interruptions in our current systems, we continue to invest in new technology systems throughout our company, including implementations of and upgrades to Enterprise Resource Planning (“ERP”) systems at our business units.

ERP implementations and upgrades are complex and require significant management oversight, and we have experienced, and may continue to experience, unanticipated expenses and interruptions to our operations during these implementations.

Our results of operations and financial position, as well as the effectiveness of our internal controls over financial reporting, could be adversely affected if we do not appropriately select, implement, maintain and upgrade our technology systems in a timely manner or if we experience significant unanticipated expenses or disruptions in connection with the implementation and upgrade of ERP systems.

We have been and may continue to be subject to cybersecurity attacks, which could adversely affect our results of operations and financial position.

Global cybersecurity vulnerabilities, threats and more frequent, sophisticated and targeted attacks pose a risk to our information technology systems.

We have implemented security policies, processes and layers of defense designed to help identify and protect against intentional and unintentional misappropriation or corruption of our systems and information and disruption of our operations.

Despite these efforts, our systems have been and may in the future be damaged, disrupted, or shut down due to cybersecurity attacks by unauthorized access, malware, ransomware, undetected intrusion, hardware failures, or other events, and in these circumstances our disaster recovery plans may be ineffective or inadequate.

These breaches or intrusions have led and could in the future lead to business interruption, production or operational downtime, product shipment delays, exposure or loss of proprietary confidential or financial information or the personal information of our employees or customers, data corruption, an inability to report our financial results in a timely manner, damage to the reputation of our brands, damage to our relationships with our customers and suppliers, exposure to litigation, and increased costs associated with the remediation and mitigation of such attacks.

In addition, we could be adversely affected if any of our significant customers, third-party suppliers or service providers experiences any similar events that disrupt their business operations or damage their reputation.

Global cybersecurity vulnerabilities, threats and more frequent, sophisticated and targeted attacks pose a risk to our information technology systems and to critical third-party information technology platforms we utilize.

We have implemented security policies, processes and layers of defense designed to help identify and protect against misappropriation or corruption of our systems and information and disruption of our operations.

Despite these efforts, systems we utilize have been and may in the future be damaged, disrupted, ransomed or shut down due to cybersecurity attacks by unauthorized access, malware, ransomware, undetected intrusion, hardware failures, or other events, and in these circumstances our disaster recovery plans may be ineffective or inadequate.

These attacks have led and could in the future lead to business interruption, production or operational downtime, product shipment delays, exposure or loss of proprietary confidential or financial information or the personal information of our employees, suppliers, customers or consumers, data corruption, an inability to report our financial results in a timely manner, damage to the reputation of our brands, damage to our relationships with our employees, suppliers, customers and consumers, exposure to litigation, and increased costs associated with the remediation and mitigation of such attacks.

In addition, we could be adversely affected if any of our significant customers, suppliers or service providers experiences any similar events that disrupt their business operations or damage their reputation.

Such events could adversely affect our results of operations and financial position.

We rely on information systems and technology, and a breakdown or interruption of these systems could adversely affect our results of operations and financial position.

We rely on many on-site and cloud-based information systems and technology to process, transmit, store and manage information to support our business activities.

We may be adversely affected if these information systems breakdown, fail, or are no longer supported by third-party service providers, including cloud platform providers.

In addition to the consequences that may occur from interruptions in the current systems we utilize, we continue to invest in new technology systems throughout our company, including implementations of and upgrades to critical systems at our business units.

System implementations and upgrades are complex and require significant management oversight, and we have experienced, and may continue to experience, unanticipated expenses and interruptions to our operations during these implementations and upgrades.

Our results of operations and financial position, as well as the effectiveness of our internal controls over financial reporting, could be adversely affected if we do not appropriately select, implement, maintain or upgrade our critical systems in a timely manner or if we experience significant unanticipated expenses or disruptions in connection with the implementation, upgrade or update of such systems.

We may not be able to adequately protect or prevent the unauthorized use of our intellectual property.

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In addition, the global nature of our business increases the risk that we may be unable to obtain or maintain our intellectual property rights on reasonable terms.

Furthermore, others may assert intellectual property infringement claims against us.

Furthermore, others have asserted and may in the future assert intellectual property infringement claims against us.

Current and former employees, contractors, customers or suppliers have or may have had access to proprietary or confidential information regarding our business operations that could harm us if used by them, or disclosed to others, including our competitors.

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The types of matters may include, among others:

competition, product liability, employment, warranty, advertising, contract, personal injury, environmental, intellectual property, product compliance and insurance coverage.

advertising, competition, contract, data privacy, employment, environmental, insurance coverage, intellectual property, personal injury, product compliance, product liability, securities and warranty.

The outcome and effect of these matters are inherently unpredictable, and defending and resolving them can be costly and can divert management’s attention.

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We are also subject to product safety regulations, product recalls and direct claims for product liability that can result in significant costs and, regardless of the ultimate outcome, create adverse publicity and damage the reputation of our brands and business.

Also, we rely on third-party suppliers to provide products or components for products that we sell.

Due to the difficulty of controlling the quality of products and components we source from these suppliers, we are exposed to risks relating to the quality of such products and to limitations on our recourse against such suppliers.

Also, we rely on suppliers to provide finished products and components for products that we sell.

Due to the difficulty of controlling the quality of finished products and components we source from these suppliers, we are exposed to risks relating to the quality of such finished products and components and to limitations on our recourse against such suppliers.

We maintain insurance against some, but not all, of the risks of loss resulting from claims and litigation.

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We are subject to a wide variety of federal, state, local and foreign laws and regulations pertaining to:

• securities matters;

• anti-bribery/anti-corruption;

• climate change and protection of the environment;

• competition practices;

• data privacy;

• employment and labor matters;

• wage and hour matters;

• environment, health and safety matters;

• the protection of employees and consumers;

• product safety and performance;

• competition practices;

• protection of employees and consumers;

• securities matters;

• trade, including duties and tariffs;

• data privacy and the collection and storage of information;

• climate change and protection of the environment.

• wage and hour matters.

In addition to complying with current requirements and known future requirements, we will be subject to new or more stringent requirements in the future.

As we sell new types of products or existing products in new geographic areas or channels or for new applications, we are subject to the requirements applicable to those sales.

As we sell new types of products or existing products in new geographies or channels or for new applications, we are subject to the requirements applicable to those sales.

Additionally, some of our products must be certified by industry organizations.

Compliance with new or changed laws, regulations and other requirements, including as a part of government or industry response to climate change, may require us to alter our product designs, our manufacturing processes, our packaging or our sourcing.

These compliance activities are costly and require significant management attention and resources.

If we do not effectively and timely comply with such regulations and other requirements, our results of operations and financial position could be adversely affected.

Coronavirus Disease Risks

The ongoing COVID-19 pandemic has and may continue to impact our operations, which may impact our results and our financial condition.

We operate facilities in the U.S.

and around the world which have been and may in the future be adversely affected by the COVID-19 pandemic, including the closure or reduced capacity of certain of our facilities;

delays or disruptions in our ability to source and increases in the cost of raw materials, components and finished products;

constraints in shipping, transportation and logistics;

and decreased employee availability.

Future disruption of our operations or slowdown in domestic and international economic activity due to the COVID-19 pandemic could materially and adversely affect our results of operations and financial condition.

To the extent COVID-19 impacts our business and our operations, it may also have the effect of heightening certain of the other risks described in this Report, such as those relating to our international operations and global strategies and our dependence on suppliers.

Unresolved Staff Comments.

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