There are inherent risks and uncertainties associated with our business that could adversely affect our results of operations, cash flows and financial condition.
−Removed: Set forth below are descriptions of those risks and uncertainties that we currently believe to be material, but the risks and uncertainties described below are not the only risks and uncertainties that could affect our results of operations, cash flows and financial condition.
−Removed: If any of these risks materialize, our results of operations, cash flows and financial condition could be materially adversely affected, and the trading price of our common stock could materially decline.
−Removed: Summary Risk Factors
−Removed: Risks Related to Our Business
−Removed: ◦ Risks Related to Our Industry
−Removed: ▪ Downward changes in the general economy, the housing market, unfavorable interest rates or other business conditions could adversely affect our results of operations, cash flows and financial condition.
−Removed: ▪ The cabinet industry is highly competitive with relatively low barriers to entry and market share losses could occur.
−Removed: ▪ We face competition from competitors in countries with lower labor and compliance costs.
−Removed: ▪ We could lose market share if we do not successfully develop new products or processes or improve existing products or processes.
−Removed: ▪ Our businesses rely on the performance of dealers, retailers and other marketing arrangements and could be adversely affected by poor performance or other disruptions impacting our distribution channels and customers.
−Removed: ▪ The loss of any of our significant customers or a reduction in the quantity of products they purchase could affect our financial health.
−Removed: ▪ Certain of our customers may expand through consolidation and growth, which may increase their buying power.
−Removed: ▪ Failure to maintain the performance, reliability and quality of our products, or to timely deliver our products, could have an adverse effect on our results of operations, cash flows and financial condition.
−Removed: ◦ Risks Related to Our Operations
−Removed: ▪ Risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility could adversely affect our results of operations, cash flows and financial condition.
−Removed: ▪ Risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, could adversely affect our results of operations, cash flows and financial condition.
−Removed: ▪ Our failure to attract and retain qualified personnel and other labor constraints, including increases in labor costs, potential labor disputes and work stoppages, could adversely affect our results of operations.
−Removed: ▪ COVID-19 has impacted our business and may cause further disruptions to our business and results of operations.
−Removed: ▪ We may experience delays or outages in or breaches of our information technology systems and computer networks.
−Removed: ▪ We manufacture, source and sell products internationally and are exposed to risks associated with doing business globally, including risks associated with uncertain trade environments.
−Removed: ▪ Disruption of operations could adversely affect our results of operations, cash flows and financial condition.
−Removed: ▪ Our inability to obtain raw materials and finished goods in a timely and cost-effective manner from suppliers could adversely affect our ability to manufacture and market our products.
−Removed: ▪ We are dependent on third-party suppliers and service providers.
−Removed: ▪ Risks associated with strategic acquisitions and joint ventures could adversely affect our results of operations, cash flows and financial condition.
−Removed: ▪ Impairment charges could have a material adverse effect on our financial results.
−Removed: ▪ Our pension costs and funding requirements could increase as a result of volatility in the financial markets and changes in interest rates and actuarial assumptions.
−Removed: ▪ We have debt obligations, and may in the future incur, additional debt obligations that could adversely affect our business and profitability and our ability to meet our other obligations.
−Removed: ◦ Risks Related to Litigation and Regulations
−Removed: ▪ Changes in government and industry regulatory standards could adversely affect our results of operations, cash flows, and financial condition.
−Removed: ▪ Potential liabilities and costs from claims and litigation could adversely affect our results of operations, cash flows, and financial condition.
−Removed: ▪ Our failure to comply with laws, government regulations and other requirements could adversely affect our results of operations, cash flows and financial condition.
−Removed: ▪ We may be subject to compliance costs and liabilities under environmental, health, and safety laws and regulations.
−Removed: ▪ Climate change and related governmental initiatives could adversely affect our business and results of operations.
−Removed: ▪ ESG matters may adversely impact our business and reputation.
−Removed: ▪ Changes in tax laws or regulations may have negatively affect our results of operations and financial condition.
−Removed: ▪ Our inability to secure and protect our intellectual property could negatively impact revenues and brand reputation.
−Removed: Risks Related to the Separation and Distribution
−Removed: ◦ Our short independent operating history and our historical and pro forma consolidated financial statements are not necessarily representative of the results we would have achieved as an independent, publicly-traded company.
−Removed: ◦ Following the Separation and Distribution, our financial profile has changed, and we are a smaller, less diversified company than Fortune Brands prior to the Separation and Distribution.
−Removed: ◦ We may be unable to achieve some or all of the benefits that we expect to achieve as an independent company.
−Removed: ◦ Separating from Fortune Brands into an independent, publicly-traded company is subject to various risks and uncertainties, and involves significant time and expense, which could disrupt or adversely affect our business.
−Removed: ◦ The terms we received in our agreements with Fortune Brands could be less beneficial than the terms we may have otherwise received from unaffiliated third parties.
−Removed: ◦ Fortune Brands may fail to perform under various transaction agreements that were executed as part of the Separation, which could cause us to incur expenses or losses we would not otherwise incur.
−Removed: ◦ If we are required to pay Fortune Brands under the indemnities related to the Separation, our financial results could be negatively impacted.
−Removed: ◦ We may fail to have necessary systems and services in place when certain of the transaction agreements expire.
−Removed: ◦ Our accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which we will be subject following the Distribution.
−Removed: ◦ If the Distribution and related transactions were to fail to qualify as tax-free for U.S.
−Removed: federal income tax purposes, then we, Fortune Brands and our stockholders could be subject to significant tax liability or indemnity obligations.
−Removed: ◦ There can be no assurance that we will have access to the capital markets on terms acceptable to us.
−Removed: ◦ We might not be able to engage in desirable strategic transactions and equity issuances following the Distribution because of certain restrictions relating to requirements for tax-free distributions.
−Removed: ◦ A court could deem the Distribution to be a fraudulent conveyance and void the transaction or impose substantial liabilities upon us.
−Removed: Risks Related to Our Common Stock
−Removed: ◦ A trading market that will provide you with adequate liquidity may not develop for our common stock.
−Removed: Now that our common stock has begun trading, the market price of our shares may fluctuate significantly.
−Removed: ◦ Stockholder percentage ownership in us may be diluted in the future.
−Removed: ◦ We rely on dividends, distributions, and transfers of funds from our subsidiaries, and we could be harmed if such distributions were not made in the future, because we are a holding company with no operations of our own.
−Removed: ◦ Provisions in our certificate of incorporation and our bylaws and provisions of Delaware law may prevent or delay an acquisition of us, even if that change may be considered beneficial by some of our stockholders.
−Removed: ◦ Our charter contains an exclusive forum provision that may discourage lawsuits.
−Removed: ◦ We currently do not expect to pay any cash dividends in the short term.
−Removed: General Risk Factors
−Removed: ◦ The obligations associated with being a public company require significant attention from management.
−Removed: ◦ If securities analysts do not publish research or reports about our business or if they downgrade our stock, our stock price and trading volume could decline.
−Removed: Risks Related to Our Business
+Added: Set forth below are descriptions of those risks and uncertainties that we currently believe to be material, but the risks and uncertainties described below are not the only risks and uncertainties that could affect our results of operations, cash flows and financial condition, (“results of operations”).
+Added: If any of these risks materialize, our results of operations could be materially adversely affected, and the trading price of our common stock could materially decline.
Risks Related to Our Industry
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and Canadian home improvement, R&R and new home construction activity levels, all of which are impacted by risks associated with fluctuations in the housing market.
−Removed: Downward changes in the general economy, the housing market, unfavorable interest rates or other business conditions could adversely affect our results of operations, cash flows and financial condition.
+Added: Unfavorable changes in the general economy, the housing market, interest rates, inflation or other business conditions could adversely affect our results of operations.
Our business primarily relies on home improvement, R&R, and new home construction activity levels, principally in the U.S.
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or making it more difficult to secure loans for renovations.
+Added: Economic conditions, including as a result of inflation and increased interest rates, may adversely impact our business by causing softer end-market demand for our products, decreased customer orders, delays in decisions to purchase our products and price-consciousness and “trade-downs” to lower priced products by consumers.
The cabinet industry is highly competitive with relatively low barriers to entry and market share losses could occur.
−Removed: Competition is further intensified during economic downturns.
+Added: Competition has further intensified as a result of current economic conditions.
We compete with numerous large national and regional companies for, among other things, customers, raw materials, skilled management and labor resources.
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and Canadian cabinet markets and new competitors may enter these markets at any time.
−Removed: Since our competitors offer products that are similar to ours, we face significant price competition from our competitors, which tends to intensify during economic downturns.
+Added: Since our competitors offer products that are similar to ours, we face significant price competition from our competitors, which tends to intensify during economic downturns, such as during the recent inflationary environment.
This price competition impacts our ability to implement price increases or, in some cases, such as during an economic downturn, maintain prices, which could lower our profit margins.
−Removed: Although we believe that competition in our businesses is based largely on product quality, consumer and trade brand reputation, customer service and product features, as well as fashion trends, innovation and ease of installation, price is a significant factor for consumers as well as our trade customers.
+Added: Although we believe that competition in our business is based largely on product quality, consumer and trade brand reputation, customer service and product features, as well as fashion trends, innovation and ease of installation, price is a significant factor for consumers as well as our trade customers.
Additionally, some of our competitors may resort to price competition to sustain or grow market share and manufacturing capacity utilization.
−Removed: Due to the highly competitive nature of the cabinets industry and the low barriers to entry in our markets, we are continually subject to the risk of losing market share, which may adversely affect our profitability and revenue levels, as well as our results of operations, cash flows and financial condition.
+Added: Due to the highly competitive nature of the cabinets industry and the low barriers to entry in our markets, we are continually subject to the risk of losing market share, which may adversely affect our profitability and revenue levels, as well as our results of operations.
We also use e-commerce to sell our products.
−Removed: E-commerce brings an increased number of competitors and greater pricing transparency for consumers, which could affect our results of operations and financial position.
+Added: E-commerce brings an increased number of competitors and greater pricing transparency for consumers, which could affect our results of operations.
In addition, our relationships with our customers, including our retailers, may be affected if we increase the amount of business we transact in the e-commerce channel.
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(2) sourcing raw materials on a timely basis or for a cost-effective price due to ongoing global supply chain issues and elevated inflation;
−Removed: and (3) attracting and retaining qualified personnel at all levels, including our senior management team and other key employees.
−Removed: Our failure to compete in any of these areas could adversely impact our results of operations, cash flows and financial condition.
+Added: and (3) attracting and retaining qualified personnel at all levels, including our senior management team and other key associates.
We face competition with respect to some of our products from competitors who operate in countries with lower labor and compliance costs.
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Accordingly, these competitors may be able to produce their products at lower costs compared to the costs we incur to produce similar products.
−Removed: These competitors may also benefit from certain local government subsidies or other incentives which are not available to us.
+Added: These competitors may also benefit from certain local government subsidies or other incentives that are not available to us.
Such competitors may be able to offer lower prices for their products as compared to the prices we offer, which could harm our competitive position and result in the loss of our market share.
−Removed: Any of the foregoing could adversely impact our results of operations, cash flows and financial condition.
We could lose market share if we do not successfully develop new products or processes or improve existing products or processes.
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In addition, it is possible that competitors may improve their products or processes more rapidly or effectively, which could adversely affect our sales.
−Removed: If the products we introduce do not gain widespread acceptance or if our competitors improve their products more rapidly or effectively than we do, we could lose market share or be required to reduce our prices, which could adversely impact our results of operations, cash flows and financial condition.
−Removed: Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories, which could adversely impact our results of operations, cash flows and financial condition.
+Added: If the products we introduce do not gain widespread acceptance or if our competitors improve their products more rapidly or effectively than we do, we could lose market share or be required to reduce our prices, which could adversely impact our results of operations.
+Added: Furthermore, market demand may decline as a result of consumer preferences trending away from our categories or trending down within our brands or product categories.
Our businesses rely on the performance of dealers, retailers and other marketing arrangements and could be adversely affected by poor performance or other disruptions impacting our distribution channels and customers.
We rely on a distribution network comprised of consolidating customers.
−Removed: Any disruption to the existing distribution channels could adversely affect our results of operations, cash flows and financial condition.
+Added: Any disruption to the existing distribution channels could adversely affect our results of operations.
The consolidation of dealers or retailers or the financial instability or default of a dealer or one of its major customers could potentially cause such a disruption.
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In addition, one or more retailers may stop carrying certain of our products, reduce the volume of purchases of our products and/or replace certain of our products with the products of our competitors.
−Removed: The loss or termination of, or significant reduction in sales to, one or more of our major dealers or retailers, the failure of one or more of our dealers or retailers to effectively promote our products, or changes in the financial or business condition of these dealers or retailers could adversely affect our ability to bring products to market and our results of operations, cash flows and financial condition.
+Added: The loss or termination of, or significant reduction in sales to, one or more of our major dealers or retailers, the failure of one or more of our dealers or retailers to effectively promote our products, or changes in the financial or business condition of these dealers or retailers could adversely affect our ability to bring products to market.
The loss of any of our significant customers or a reduction in the quantity of products they purchase could affect our financial health.
−Removed: Our ten largest customers generated approximately 52 percent and 50 percent of our net sales for our 2022 and 2021 fiscal years, respectively.
−Removed: Lowe’s and The Home Depot comprised approximately 37 percent and 36 percent of our net sales for our 2022 and 2021 fiscal years.
+Added: Our ten largest customers generated approximately 55 percent, 52 percent and 50 percent of our net sales for our 2023, 2022 and 2021 fiscal years, respectively.
+Added: Lowe’s and The Home Depot comprised approximately 37 percent, 37 percent and 36 percent of our net sales for our 2023, 2022 and 2021 fiscal years.
We cannot guarantee that we will maintain or improve our relationships with these customers or that we will supply these customers at historical levels.
Moreover, in the event of any economic downturn, some of our customers may exit or severely curtail activity in certain of our markets.
−Removed: The loss of one or more of our significant customers or deterioration in our relations with any of them could significantly affect our results of operations, cash flows and financial condition.
+Added: The loss of one or more of our significant customers or deterioration in our relations with any of them could significantly affect our results of operations.
Furthermore, our customers are not required to purchase any minimum amount of products from us.
The contracts into which we have entered with most of our customers typically provide that we supply particular products for a certain period of time when and if ordered by the customer.
−Removed: Should our customers purchase our products in significantly lower quantities than they have in the past, such decreased purchases could adversely impact our results of operations, cash flows and financial condition.
+Added: Should our customers purchase our products in significantly lower quantities than they have in the past, such decreased purchases could adversely impact our results of operations.
Certain of our customers may expand through consolidation and internal growth, which may increase their buying power.
−Removed: The increased size of our customers could have an adverse effect on our results of operations, cash flows and financial condition.
+Added: The increased size of our customers could have an adverse effect on our results of operations.
Certain of our significant customers are large companies with strong buying power, and our customers may expand through consolidation or internal growth.
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Accordingly, the increased size of our customers may further limit our ability to maintain or raise prices in the future.
−Removed: This could have an adverse effect on our results of operations, cash flows and financial condition.
−Removed: Failure to maintain the performance, reliability and quality of our products, or to timely deliver our products, could have an adverse effect on our results of operations, cash flows and financial condition.
+Added: Failure to maintain the performance, reliability and quality of our products, or to timely deliver our products, could have an adverse effect on our results of operations.
If our products have performance, reliability or quality problems, our reputation and brand equity, which we believe is a substantial competitive advantage, could be adversely affected.
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Furthermore, we manufacture a significant portion of our products based on the specific requirements of our customers, and delays in providing our customers the products and services they specify on a timely basis could result in reduced or canceled orders and delays in the collection of accounts receivable.
−Removed: Additionally, claims from our customers, with or without merit, could result in costly and time-consuming litigation that could require significant time and attention of management and involve significant monetary damages that could have an adverse effect on our results of operations, cash flows and financial condition.
+Added: Additionally, claims from our customers, with or without merit, could result in costly and time-consuming litigation that could require significant time and attention of management and involve significant monetary damages.
Risks Related to Our Operations
−Removed: Risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility could adversely affect our results of operations, cash flows and financial condition.
+Added: Risks associated with our ability to improve organizational productivity and global supply chain efficiency and flexibility could adversely affect our results of operations.
If we are unable to obtain sufficient components or raw materials on a timely basis or for a cost-effective price or if we experience other manufacturing, supply or distribution difficulties, our business and results of operations may be adversely affected.
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Import tariffs or other adverse trade actions could potentially lead to increases in prices of raw materials or components which are critical to our business.
−Removed: Failure to achieve the desired level of quality, capacity or cost reductions could impair our results of operations, cash flows and financial condition.
−Removed: Risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, could adversely affect our results of operations, cash flows and financial condition.
+Added: Failure to achieve the desired level of quality, capacity or cost reductions could impair our results of operations.
+Added: Risks associated with global commodity and energy availability and price volatility, as well as the possibility of sustained inflation, could adversely affect our results of operations.
Because our component products have few distinguishing properties from producer to producer, competition for these products is based primarily on price, which is determined by supply relative to demand.
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Decreased availability and increased or volatile prices for these commodities, as well as energy used in making, distributing and transporting our products, could increase the costs of our products.
−Removed: While in the past we have been able to mitigate the impact of these cost increases through productivity improvements and passing on increasing costs to our customers over time, there is no assurance that we will be able to offset such cost increases in the future, and the risk of potentially sustained high levels of inflation could adversely impact our results of operations, cash flows and financial condition.
−Removed: During 2021 and 2022, we experienced and will likely continue to experience price increases in nearly all raw materials due to inflation and continued global supply chain issues.
−Removed: While we may use derivative contracts to limit our short-term exposure to commodity price volatility, the commodity exposures under these contracts could still be material to our results of operations, cash flows and financial condition.
−Removed: In addition, in periods of declining commodity prices, these derivative contracts may have the short-term effect of increasing our expenditures for these raw materials.
−Removed: Our failure to attract and retain qualified personnel and other labor constraints, including increases in labor costs, potential labor disputes and work stoppages, could adversely affect our results of operations, cash flows and financial condition.
−Removed: Our success depends in part on the efforts and abilities of qualified personnel at all levels, including our senior management team and other key employees.
+Added: While in the past we have been able to mitigate the impact of these cost increases through productivity improvements and passing on increasing costs to our customers over time, there is no assurance that we will be able to offset such cost increases in the future, and the risk of potentially sustained high levels of inflation could adversely impact our results of operations.
+Added: During 2021 and 2022, we experienced price increases in nearly all raw materials due to inflation and continued global supply chain issues.
+Added: In 2023, we experienced cost deflation in certain raw materials and transportation costs.
+Added: Failure to attract and retain qualified personnel and other labor constraints, including increases in labor costs, potential labor disputes and work stoppages, could adversely affect our results of operations.
+Added: Our success depends in part on the efforts and abilities of qualified personnel at all levels, including our senior management team and other key associates.
Their motivation, skills, experience, contacts and industry knowledge significantly benefit our operations and administration.
Low unemployment rates in the U.S., rising wages, competition for qualified talent and attracting and retaining personnel in remote locations could result in the failure to attract, motivate and retain personnel.
−Removed: This has resulted in higher employee costs, increased attrition and significant shifts in the labor market and employee expectations and we may continue to face challenges in finding and retaining qualified personnel, particularly at the production level, which could have an adverse effect on our results of operations, cash flows and financial condition.
+Added: This has resulted in higher associate costs, increased attrition and significant shifts in the labor market and associate expectations and we may continue to face challenges in finding and retaining qualified personnel, particularly at the production level, which could have an adverse effect on our results of operations.
As of December 31, 2023, approximately 37 percent of our associates worked under collective bargaining agreements.
These collective bargaining agreements are subject to periodic negotiation and renewal.
−Removed: If we are unable to enter into new, satisfactory labor agreements with our unionized employees upon expiration of their agreements, we could experience a significant disruption of our operations, which could cause us to be unable to deliver products to customers on a timely basis.
+Added: If we are unable to enter into new, satisfactory labor agreements with our unionized associates upon expiration of their agreements, we could experience a significant disruption of our operations, which could cause us to be unable to deliver products to customers on a timely basis.
Such disruptions could result in a loss of business and an increase in our operating expenses, which could reduce our net sales and profit margins.
In addition, our non-unionized labor force may become subject to labor union organizing efforts, which could cause us to incur additional labor costs and increase the related risks that we now face.
−Removed: COVID-19 has impacted our business and may cause further disruptions to our business, results of operations and financial condition.
−Removed: The COVID-19 pandemic has had an impact on many aspects of our business and operations and may continue to impact us in the future, including impacting our ability to efficiently operate our facilities, the ability of our suppliers to supply and manufacture key inputs, availability and cost of transportation and logistics, customer behaviors, our employees, the dealers and retailers who sell our products, and the market generally.
−Removed: Our business could be negatively impacted over the longer term if the disruptions related to COVID-19 decrease consumer confidence and housing investments, or precipitate a prolonged economic downturn and/or an extended rise in unemployment or tempering of wage growth, any of which could lower demand for our products.
−Removed: The COVID-19 pandemic may also exacerbate certain of the other risks described in this “Risk Factors” section.
−Removed: The COVID-19 pandemic has also resulted in and is expected to continue to result in operational challenges in the manufacturing of our products and the operation of the related domestic and international supply chains supporting our ability to manufacture our products and distribute them through our channels.
−Removed: Restrictions on or disruptions of transportation or increased border controls or closures, or other impacts on domestic and global supply chains or distribution channels, could increase our raw materials and commodity costs, increase demand for raw materials and commodities from competing purchasers, limit our ability to manufacture and distribute products to meet customer demand or otherwise have a material adverse effect on our results of operations, cash flows and financial condition.
+Added: COVID-19 impacted our business in the past and future global pandemics would likely cause disruptions to our business and results of operations.
+Added: The COVID-19 pandemic had, and future global pandemics would likely have, an adverse impact on many aspects of our business and operations, including impacting our ability to efficiently operate our facilities, manufacture and distribute our products, the ability of our suppliers to supply and manufacture key inputs, availability and cost of transportation and logistics, the operation of domestic and international supply chains, raw materials and commodity costs and competition, customer behaviors, our associates, the dealers and retailers who sell our products, and the market generally.
+Added: Our business could be negatively impacted over the longer term if the disruptions related to global pandemics decrease consumer confidence and housing investments, or precipitate a prolonged economic downturn and/or an extended rise in unemployment or tempering of wage growth, any of which could lower demand for our products.
+Added: Global pandemics may also exacerbate certain of the other risks described in this “Risk Factors” section.
We may experience delays or outages in our information technology systems and computer networks.
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Such breaches could subject us to significant financial, legal and operational consequences.
−Removed: We, like most companies, may be subject to information technology system failures and network disruptions caused by delays or disruptions due to system updates, natural disasters, malicious attacks, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or similar events or disruptions.
−Removed: We rely upon information technology systems and infrastructure, including support provided by third parties, to support our business, our products and our customers.
+Added: We, or third-party systems that we rely upon, may be subject to information technology system failures and network disruptions caused by delays or disruptions due to system updates, natural disasters, malicious attacks and threats, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins, or similar events or disruptions.
+Added: We rely on information technology systems and infrastructure, including support provided by third parties.
+Added: In particular, we rely on such systems for manufacturing, customer orders, shipping, regulatory compliance and various other matters, as well as information technology systems and infrastructure to aid us in the collection, use, storage and transfer and other processing of data including confidential, business, financial, and personal information such as customer buying preferences and marketing profiles.
Our businesses may implement digital systems or technologies, enterprise resource planning systems or add applications to replace outdated systems and to operate more efficiently.
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Any expected benefits of implementing projects might not be realized or the costs of implementation might outweigh the benefits realized.
−Removed: We routinely rely on systems for manufacturing, customer orders, shipping, regulatory compliance and various other matters, as well as information technology systems and infrastructure to aid us in the collection, use, storage and transfer and other processing of data including confidential, business, financial, and personal information.
−Removed: Security threats, including cyber and other attacks, are becoming increasingly sophisticated, frequent and adaptive.
−Removed: In addition, a greater
−Removed: number of our employees are working remotely in response to the COVID-19 pandemic, which (among other things) could expose us to greater risks related to cybersecurity and our information technology systems.
+Added: We may be subject to security threats, including cyber and other attacks, which are becoming increasingly sophisticated, frequent and adaptive.
+Added: In addition, many of our associates are working remotely, which, among other things, increases the importance of and exposes us to greater risks related to cybersecurity and our information technology systems.
Third-party systems that we rely upon could also become vulnerable to the same risks and may contain defects in design or manufacture or other problems that could result in system disruption or compromise the information security of our own systems.
−Removed: We believe we devote appropriate resources to network security, data encryption, and other security measures to protect our systems and data, but these security measures cannot provide absolute security.
−Removed: Breaches and breakdowns affecting our information technology systems or protected data could have an adverse effect on our business, results of operations, cash flows and financial condition.
+Added: From time to time, we have had to address non-material security incidents.
+Added: There can be no assurance that we will not experience security incidents in the future.
+Added: Security measures and resources we devote to network security, data encryption, and other security measures to protect our systems and data cannot provide absolute security.
+Added: Breaches and breakdowns affecting our information technology systems or protected data could lead to negative publicity, legal claims, extortion, ransom, theft, modification or destruction of proprietary information or key information, damage to or inaccessibility of critical systems, manufacture of defective products, production downtimes, operational disruptions, data breach claims, privacy violations and other significant costs.
+Added: Data privacy considerations could impact our business.
+Added: In our business, we, ourselves and through our third parties, collect and process personal, confidential, and sensitive data about our business, which includes sensitive information about our customers, associates, suppliers, distributors and others, including users of our online product engagement applications.
+Added: Some of this data is stored, accessible or transferred.
+Added: The interpretation and application of information security and privacy laws, rules and regulations applicable to our business (collectively, the “Data Protection Laws”) are uncertain and evolving.
+Added: It is possible that the Data Protection Laws may be interpreted and applied in a manner that is inconsistent with our data practices.
+Added: Complying with these various laws is difficult and could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.
+Added: Further, there can be no assurance that our internal controls and procedures designed to manage compliance with the Data Protection Laws and protect our data will prevent a breach or that our procedures will enable us to be fully compliant with all Data Protection Laws.
+Added: Cybersecurity attacks or breaches due to security vulnerabilities, associate error, supplier or third-party error, malfeasance or other disruptions may still occur and create data privacy risks, which may lead to negative publicity, legal claims, extortion, ransom, theft, remediation costs and other significant costs.
We manufacture, source and sell products internationally and are exposed to risks associated with doing business globally, including risks associated with uncertain trade environments.
−Removed: We manufacture, source or sell our products in a number of locations throughout the world, predominantly in the U.S., Mexico, Canada and Asia.
−Removed: Accordingly, we are subject to risks associated with potential disruption caused by changes in political, economic and social environments, including civil and political unrest, illnesses declared as a public health emergency (including viral pandemics such as COVID-19), terrorism, expropriation, local labor conditions, changes in laws, regulations and policies of foreign governments and trade disputes with the U.S., and U.S.
+Added: We manufacture, source or sell our products in a number of locations throughout the world, predominantly in the U.S., Mexico, Canada and Southeast Asia.
+Added: Accordingly, we are subject to risks associated with potential disruption caused by changes in political, economic and social environments, including civil and political unrest, illnesses declared as a public health emergency (including global pandemics such as the COVID-19 pandemic), terrorism, expropriation, local labor conditions, changes in laws, regulations and policies of foreign governments and trade disputes with the U.S., and U.S.
laws affecting activities of U.S.
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Our success will depend, in part, on our ability to effectively manage our businesses through the impact of these potential changes.
−Removed: In addition, we source certain raw materials, components and finished goods from Asia where we have experienced higher manufacturing costs and longer lead times due to higher tariffs, currency fluctuations, higher wage rates, labor shortages and higher raw material costs.
−Removed: Disruption of operations could adversely affect our results of operations, cash flows and financial condition.
+Added: In addition, we source certain raw materials, components and finished goods from Southeast Asia where we have experienced higher manufacturing costs and longer lead times due to higher tariffs, currency fluctuations, higher wage rates, labor shortages and higher raw material costs.
+Added: Disruption of operations could adversely affect our profitability and competitive position.
We manufacture a significant portion of the products we sell.
−Removed: Any prolonged disruption in our manufacturing operations, whether due to technical or labor difficulties, continued labor shortages, transportation-related shortages, supply chain constraints, COVID-19, weather conditions (including due to the impacts of climate change, particularly for those facilities near any shorelines or in any other area traditionally impacted by extreme weather), lack of raw material or component availability, startup inefficiencies for new operations, destruction of or damage to any facility (as a result of natural disasters, fires and explosions, use and storage of hazardous materials or other events) or other reasons, could negatively impact our profitability and competitive position and adversely affect our results of operations, cash flows and financial condition.
−Removed: Our inability to obtain raw materials and finished goods in a timely and cost-effective manner from suppliers could adversely affect our ability to manufacture and market our products.
+Added: Any prolonged disruption in our manufacturing operations, whether due to technical or labor difficulties, continued labor shortages, transportation-related shortages, supply chain constraints, global pandemics such as COVID-19, weather conditions (including due to the impacts of climate change, particularly for those facilities near any shorelines or in any other area traditionally impacted by extreme weather), lack of raw material or component availability, startup inefficiencies for new operations, destruction of or damage to any facility (as a result of natural disasters, fires and explosions, use and storage of hazardous materials or other events) or other reasons, could negatively impact our profitability and competitive position.
+Added: Inability to obtain raw materials and finished goods in a timely and cost-effective manner from suppliers could adversely affect our ability to manufacture and market our products.
We purchase raw materials to be used in manufacturing our products and also rely on third-party manufacturers to produce certain of the finished goods we sell.
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Financial, operating or other difficulties encountered by our suppliers or sourcing partners or changes in our relationships with them could result in manufacturing or sourcing interruptions, delays and inefficiencies, and prevent us from manufacturing or obtaining the finished goods necessary to meet customer demand.
−Removed: If we are unable to meet customer demand, there could be an adverse effect on our results of operations, cash flows and financial condition.
We are dependent on third-party suppliers and service providers.
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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.
−Removed: 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, could have an adverse
−Removed: effect on our results of operations, cash flows and financial condition or could damage our reputation.
+Added: 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, could have an adverse effect on our results of operations 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, cybersecurity attacks 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.
−Removed: In addition, the loss of critical suppliers, or a substantial decrease in the availability of products or components from our suppliers, could disrupt our business and may adversely affect our results of operations, cash flows and financial condition.
+Added: In addition, the loss of critical suppliers, or a substantial decrease in the availability of products or components from our suppliers, could disrupt our business and may adversely affect our results of operations.
Many of the suppliers we rely upon are located in foreign countries.
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We may experience constraints on and disruptions to transporting our raw materials, components and products from our international suppliers and may have to pay higher transportation costs.
−Removed: If we are unable to effectively manage our supply chain or if we experience transportation constraints, disruptions and higher costs for timely delivery of our products or components, our results of operations, cash flows and financial condition could be adversely affected.
−Removed: Risks associated with strategic acquisitions and joint ventures could adversely affect our results of operations, cash flows and financial condition.
+Added: If we are unable to effectively manage our supply chain or if we experience transportation constraints, disruptions and higher costs for timely delivery of our products or components, our results of operations could be adversely affected.
+Added: Risks associated with strategic acquisitions and joint ventures could adversely affect our results of operations.
We will consider acquisitions and joint ventures as a means of enhancing stockholder value.
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the inability to achieve the expected financial results and benefits of transactions;
−Removed: the loss of key employees from acquired companies;
+Added: the loss of key associates from acquired companies;
implementing and maintaining consistent standards, controls, policies and information systems;
−Removed: and diversion of management’s attention from other business and strategic matters.
−Removed: Future acquisitions could cause us to incur additional debt or issue additional shares, resulting in dilution in earnings per share and return on capital.
+Added: incurrence of acquisition and integration costs and diversion of management’s attention from other business and strategic matters.
+Added: Future acquisitions could cause us to incur additional debt or issue additional shares, resulting in increased financial leverage, increased borrowing costs, dilution in earnings per share or decreased return on capital.
Impairment charges could have a material adverse effect on our financial results.
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In 2022, we recognized impairment charges of $46.4 million, consisting of $38.8 million related to an indefinite-lived tradename, and $7.6 million related to another indefinite-lived tradename.
−Removed: No impairments were recorded during our 2021 fiscal year.
+Added: No intangible asset impairments were recorded during 2023.
Future events may occur that would adversely affect the fair value of our goodwill or other acquired intangible assets and require impairment charges.
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Accordingly, we may be required to perform impairment tests based on changes in the economic environment and other factors, and these tests could result in impairment charges in the future.
−Removed: Our pension costs and funding requirements could increase as a result of volatility in the financial markets and changes in interest rates and actuarial assumptions.
−Removed: Increases in the costs of pension benefits may continue and negatively affect our business as a result of:
+Added: Our pension costs and funding requirements could increase as a result of volatility in the financial markets and changes in interest rates and actuarial assumptions, or the decision to transfer administration of the pension plan to a third-party.
+Added: Increases in the costs of pension benefits and accelerated expenses may continue and negatively affect our business as a result of:
the effect of potential declines in the stock and bond markets on the performance of our pension plan assets;
potential reductions in the discount rate used to determine the present value of our benefit obligations;
+Added: the decision by the Company to transfer administration of the pension plan to a third-party;
and changes to our investment strategy that may impact our expected return on pension plan asset assumptions.
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Funding requirements for our U.S.
−Removed: pension plan may become
−Removed: more significant.
+Added: pension plan may become more significant.
However, the ultimate amounts to be contributed are dependent upon, among other things, interest rates, underlying asset returns and the impact of legislative or regulatory changes related to pension funding obligations.
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This debt could potentially have important consequences to us and our debt and equity investors, including:
−Removed: • requiring a substantial portion of our cash flow from operations to make interest payments, which could reduce our profitability;
+Added: ▪ requiring a substantial portion of our cash flow from operations to make interest and principal payments, which could reduce our profitability;
▪ making it more difficult to satisfy debt service and other obligations;
▪ if we have a credit rating, increasing the risk of a future credit ratings downgrade of our debt, which could increase future debt costs and limit the future availability of debt financing;
−Removed: • increasing our vulnerability to adverse economic and industry conditions;
+Added: ▪ increasing our vulnerability to adverse economic and industry conditions, such as adverse interest rates;
▪ reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business;
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Our cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt.
+Added: Additionally, our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including, but not limited to:
+Added: (1) our financial performance;
+Added: (2) our credit ratings or absence of a credit rating;
+Added: (3) the liquidity of the overall capital markets;
+Added: and (4) the state of the economy, including the housing market.
+Added: There can be no assurance that we will have access to the capital markets on terms acceptable to us.
Risks Related to Litigation and Regulations
−Removed: Changes in government and industry regulatory standards could adversely affect our results of operations, cash flows and financial condition.
−Removed: Government regulations and policies pertaining to trade agreements, health and safety (including protection of employees as well as consumers), taxes and environment (including those specific to climate change and the reduction of air and energy emissions) may continue to emerge in the U.S., as well as internationally.
−Removed: There are many government and industry regulatory standards focused on wood, including the Toxic Substance Control Act and the Lacey Act.
+Added: Changes in government and industry regulatory standards could adversely affect our results of operations.
+Added: Government regulations and policies pertaining to trade agreements, health and safety (including protection of associates as well as consumers), taxes and environment (including those specific to climate change and the reduction of air and energy emissions) may continue to emerge in the U.S., as well as internationally.
+Added: There are many government and industry regulatory standards focused on wood, including the Toxic Substances Control Act and the Lacey Act.
In particular, there may be additional tariffs or taxes related to our imported raw materials, components and finished goods.
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Compliance with changes in taxes, tariffs and other regulations may require us to further alter our manufacturing and installation processes and our sourcing.
−Removed: Such actions may result in customers transitioning to available competitive products, loss of market share, negative publicity, reputational damage, loss of customer confidence or other negative consequences (including a decline in stock price) and could increase our capital expenditures and adversely impact our results of operations, cash flows and financial condition.
−Removed: Potential liabilities and costs from claims and litigation could adversely affect our results of operations, cash flows and financial condition.
−Removed: We are, from time to time, involved in various claims, litigation matters and regulatory proceedings that arise in the ordinary course of our business and that could have an adverse effect on us.
−Removed: These matters may include contract disputes, intellectual property disputes, product recalls, personal injury claims, construction defects and home warranty claims, warranty disputes, environmental claims or proceedings, other tort claims, employment and tax matters and other proceedings and litigation, including class actions.
−Removed: It is not possible to predict the outcome of pending or future litigation, and, as with any litigation, it is possible that some of the actions could be decided unfavorably and could have an adverse effect on our results of operations, cash flows and financial condition.
+Added: Such actions may result in customers transitioning to available competitive products, loss of market share, negative publicity, reputational damage, loss of customer confidence or other negative consequences (including a decline in stock price) and could increase our capital expenditures and adversely impact our results of operations.
+Added: Potential liabilities and costs from claims and litigation could adversely affect our results of operations.
+Added: We are, from time to time, involved in various claims, litigation matters, audits and regulatory proceedings that arise in the ordinary course of our business and that could have an adverse effect on us.
+Added: These matters may include contract disputes, intellectual property disputes, product recalls, personal injury claims, construction defects and home warranty claims, warranty disputes, environmental claims or proceedings, other tort claims, employment, trade and tax matters and other proceedings and litigation, including class actions.
+Added: It is not possible to predict the outcome of pending or future claims, litigation, audits and regulatory proceedings and, as with any litigation, it is possible that some of the actions could be decided unfavorably and could have an adverse effect on our results of operations.
We are subject to product safety regulations, recalls and direct claims for product liability that can result in significant liability and, regardless of the ultimate outcome, can be costly to defend.
−Removed: As a result of the difficulty of controlling the
−Removed: quality of products or components sourced from other manufacturers, we are exposed to risks relating to the quality of such products and to limitations on our recourse against such suppliers.
−Removed: Our failure to comply with laws, government regulations and other requirements could adversely affect our results of operations, cash flows and financial condition.
+Added: As a result of the difficulty of controlling the quality of products or components sourced from other manufacturers, we are exposed to risks relating to the quality of such products and to limitations on our recourse against such suppliers.
+Added: Failure to comply with laws, government regulations and other requirements could adversely affect our results of operations.
We are subject to a wide variety of federal, state, local and foreign laws and regulations pertaining to:
▪ securities matters;
+Added: ▪ taxation (including import and export related taxes);
▪ anti-bribery/anti-corruption;
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▪ environment, health and safety matters;
−Removed: • the protection of employees and consumers;
+Added: ▪ the protection of associates and consumers;
+Added: • unclaimed property (i.e., aged outstanding checks to vendors & associates, aged unused credits issued to customers, etc.)
▪ product safety and performance;
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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.
−Removed: These compliance activities are costly and require significant management attention and resources.
−Removed: If we do not effectively and timely comply with such regulations and other requirements, our results of operations, cash flows and financial condition could be adversely affected.
+Added: Existing and new compliance activities are or may be costly and require significant management attention and resources.
+Added: If we do not effectively and timely comply with such regulations and other requirements, our results of operations could be adversely affected.
We may be subject to significant compliance costs, as well as liabilities under environmental, health, and safety laws and regulations.
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Concerns over the long-term effects of climate change have led to, and we expect will continue to lead to, governmental efforts around the world to mitigate those effects, including potential changes to wood sourcing practices.
−Removed: We will need to
−Removed: respond to any new laws and regulations as well as to consumer, investor and business preferences resulting from climate change concerns, which may increase our operational complexity and result in costs to us in order to comply with any new laws, regulations or preferences.
+Added: We will need to respond to any new laws and regulations as well as to consumer, investor and business preferences resulting from climate change concerns, which may increase our operational complexity and result in costs to us in order to comply with any new laws, regulations or preferences.
Further, the effects of climate change may negatively impact international, regional and local economic activity, which may lower demand for our products or disrupt our manufacturing or distribution operations.
Additionally, sustained changes to the climate may impact the growing patterns or locations of some of the species of wood we use, resulting in increased costs or shortages.
−Removed: Overall, climate change, its effects and the resulting, unknown impact on government regulation, consumer, investor and business preferences could have a long-term adverse effect on our business and results of operations.
−Removed: ESG matters may adversely impact our business and reputation.
+Added: Overall, climate change, its effects and the resulting, unknown impact on government regulation, consumer, investor and business preferences could have a long-term adverse effect on our business.
+Added: ESG matters may adversely impact our business and reputation and we may be required to make material expenditures to respond to customer needs and investor expectations regarding ESG matters.
In addition to the importance of their financial performance, companies are increasingly being judged by their performance on a variety of Environmental, Social and Governance (“ESG”) matters.
−Removed: In light of the increased focus on ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet stakeholder expectations as to our proper role.
−Removed: Any failure or perceived failure by us in this regard could adversely impact our business and reputation.
−Removed: Changes in tax laws or regulations may have a negative impact on our results of operations, cash flows and financial condition.
−Removed: The Company is subject to income taxes in the U.S.
+Added: In light of the increased focus on ESG matters, there can be no certainty that we will manage such issues successfully, or that we will successfully meet stakeholder expectations.
+Added: Any failure or perceived failure by us in this regard could adversely impact our business and reputation, including reducing our profitability and stock price.
+Added: The current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations with respect to ESG matters, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.
+Added: In addition, customers have, and are likely to continue to, require us and our products to comply with their internal ESG-related standards, such as wood-sourcing policies.
+Added: Complying with such standards may impose significant
+Added: additional costs on us, and we may no longer be able to do business with customers with whose standards we are unable to comply with.
+Added: Changes in tax laws or regulations may have a negative impact on our results of operations.
+Added: We are subject to income taxes in the U.S.
and various foreign jurisdictions.
−Removed: The determination of the Company’s income tax positions involves consideration of uncertainties, changing fiscal policies, tax laws, court rulings, regulations, and related legislation.
−Removed: New income, sales, use, or other tax laws, treaties, statutes, rules, regulations, or court rulings could be enacted at any time, which could adversely affect our business operations and financial performance.
+Added: The determination of our income tax positions involves consideration of uncertainties, changing fiscal policies, tax laws, court rulings, regulations, and related legislation.
+Added: New income, sales, use, or other tax laws, treaties, statutes, rules, regulations, interpretations, or court rulings could be enacted at any time, which could adversely affect our business operations and financial performance.
Additionally, existing tax laws, treaties, statutes, rules, regulations, or court rulings could be interpreted, changed, modified, or applied adversely to us.
−Removed: Tax Cuts and Jobs Act (“Tax Act”), enacted on December 22, 2017, made broad and complex changes to the U.S.
−Removed: tax code that are subject to continuous guidance and interpretation.
−Removed: The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on March 27, 2020, and includes several measures intended to assist companies during the COVID-19 pandemic, including temporary changes to income and non-income-based laws.
−Removed: The Organization for Economic Cooperation and Development (“OECD”) initiatives, including the Global Anti-Base Erosion proposal envisaging global minimum taxation known as Pillar Two, represent significant changes that could have a material effect upon our effective tax rate, future earnings, and cash flows.
−Removed: The United Nations (“UN”) initiatives could affect global tax policy and related tax conventions.
−Removed: The European Union maintains a focus on the taxation of multinational companies, including an agreement to adopt the OECD’s Pillar Two reform of international taxation for its member states.
−Removed: With continuous changes in the U.S.
−Removed: Government and legislatures in various states corresponding with the respective election cycles, there is an increased likelihood of additional tax legislation being passed in the near future, which could also have an adverse impact on our effective tax rate, future earnings, and cash flows.
−Removed: We regularly undergo tax audits in various jurisdictions in which our products are sold.
−Removed: Although we believe that our tax estimates are reasonable and that we prepare our tax filings in accordance with all applicable tax laws, the final determination with respect to any tax audits, and related litigation, could be materially different from our estimates or from our historical results in the periods for which that determination is made.
−Removed: In addition, future period results of operations, cash flows and financial condition may be adversely impacted by litigation costs, settlements, interest, and/or penalty assessments.
+Added: In 2023, certain jurisdictions in which we operate enacted, or announced their intention to enact, legislation consistent with one or more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules (Pillar Two).
+Added: The model rules include minimum domestic top up taxes, income inclusion rules, and undertaxed profit rules all aimed to ensure that multinationals pay a minimum effective corporate tax rate of 15 percent in each jurisdiction in which they operate, with some rules becoming effective in 2024.
+Added: The Pillar Two legislation does not impact our 2023 annual effective tax rate, nor do we expect it to materially impact our annual effective rate in 2024.
+Added: However, further changes to our entity structure or changes in jurisdictions in which we operate could adversely impact our results of operations.
+Added: Tax audits may result in findings that have a negative impact on our results of operations.
+Added: We regularly undergo tax audits in various jurisdictions in which our products are sold or manufactured, including audits of indirect taxes, value-added tax, import and export related taxes, customs and duties in certain jurisdictions.
+Added: There can be no assurance that tax authorities agree with our determinations on tax positions, and tax authorities have disagreed and may disagree with certain tax positions we have taken or may challenge our compliance with related rules and regulations.
+Added: We may decide to challenge any assessments, if made, and may exercise our right to appeal, which could result in expensive and time-consuming litigation that may ultimately be unsuccessful.
+Added: Any final determination by tax authorities, including related litigation, penalties and interest, with respect to any tax, import and export tax, customs and duty audits, could be materially different from our estimates or from our historical results in the periods for which that determination is made.
+Added: Such determinations and additional costs relating to reviews of our practices as a result of such audits may adversely impact future period results of operations.
Our inability to secure and protect our intellectual property rights could negatively impact revenues and brand reputation.
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In addition, existing patent, trade secret and trademark laws offer only limited protection, and the laws of some countries in which our products are or may be developed, manufactured or sold may not fully protect our intellectual property from infringement by others.
−Removed: There can be no assurance that our efforts to assess possible third party intellectual property rights will ensure our ability to
−Removed: manufacture, distribute, market or sell our products in any given country or territory.
+Added: There can be no assurance that our efforts to assess possible third party intellectual property rights will ensure our ability to manufacture, distribute, market or sell our products in any given country or territory.
Furthermore, others may assert claims of intellectual property infringement, misappropriation or violation against us or our customers that may require us to incur significant expense to defend such claims or indemnify our customers.
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We have a very short operating history as an independent, publicly-traded company, and our historical consolidated financial statements are not necessarily representative of the results we would have achieved as an independent, publicly-traded company and may not be reliable indicators of our future results.
−Removed: Our historical consolidated financial statements included in this Annual Report on Form 10-K do not necessarily reflect the results of operations, cash flows and financial condition that we would have achieved as an independent, publicly-traded company during the periods presented or those that we will achieve in the future, including as a result of the following factors:
−Removed: • Historically, our working capital requirements and capital for our general corporate purposes, including acquisitions and capital expenditures, have been financed by Fortune Brands.
−Removed: Additionally, Fortune Brands has historically managed and retained cash we have generated.
−Removed: Following completion of the Separation as of December 14, 2022, Fortune Brands no longer provides us with funds to finance our working capital or other cash requirements.
+Added: Our historical consolidated financial statements included in this Annual Report on Form 10-K do not necessarily reflect the results of operations that we would have achieved as an independent, publicly-traded company during the periods presented or those that we will achieve in the future, including as a result of the following factors:
+Added: ▪ Historically, prior to Separation, our working capital requirements and capital for our general corporate purposes, including acquisitions and capital expenditures, were financed by Fortune Brands.
+Added: Additionally, Fortune Brands historically managed and retained cash we generated prior to Separation.
+Added: Following completion of the Separation
+Added: as of December 14, 2022, Fortune Brands no longer provides us with funds to finance our working capital or other cash requirements.
Without the opportunity to obtain financing from Fortune Brands, we have obtained and may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements, and such arrangements may not be available to us or available on terms that are as favorable as those we could have obtained when we were part of Fortune Brands.
• Prior to the Separation, our business was operated by Fortune Brands as part of its broader corporate organization, rather than as an independent company.
−Removed: Fortune Brands has historically performed various corporate functions for us, including, but not limited to, tax administration, treasury activities, accounting, legal, ethics and compliance program administration, investor and public relations, certain governance functions, including the board of directors and related committees, internal audit and external reporting.
+Added: Fortune Brands historically performed various corporate functions for us, including, but not limited to, tax administration, treasury activities, accounting, legal, ethics and compliance program administration, investor and public relations, certain governance functions, including the board of directors and related committees, internal audit and external reporting.
Our historical consolidated financial statements reflect allocations of corporate expenses from Fortune Brands for these and similar functions.
These allocations may be more or less than the comparable expenses we would have incurred had we operated as an independent, publicly-traded company.
−Removed: • Prior to the Separation that occurred on December 14, 2022, we took advantage of Fortune Brands’ overall size and scope to obtain more advantageous procurement terms.
−Removed: After the Separation, as a standalone company, we may be unable to obtain similar arrangements to the same extent as Fortune Brands did, or on terms as favorable as those Fortune obtained.
+Added: • Prior to the Separation, we took advantage of Fortune Brands’ overall size and scope to obtain more advantageous procurement terms.
+Added: After the Separation, we may be unable to obtain similar arrangements to the same extent as Fortune Brands did, or on terms as favorable as those Fortune Brands obtained.
• Other significant changes may occur in our cost structure, management, financing and business operations as a result of our operation as a company separate from Fortune Brands.
−Removed: Following the Separation and Distribution, our financial profile has changed, and we are a smaller, less diversified company than Fortune Brands prior to the Separation and Distribution.
−Removed: The Separation and Distribution resulted in us and Fortune Brands being smaller, less diversified companies with more limited businesses concentrated in their respective industries.
−Removed: As a result, we may be more vulnerable to changing market conditions, which could have a material adverse effect on our results of operations, cash flows and financial condition.
−Removed: In addition, the diversification of our revenues, costs and cash flows will diminish as a standalone company, such that our results of operations, cash flows, working capital and financing requirements may be subject to increased volatility and our ability to fund capital expenditures and investments, pay dividends and service debt may be diminished.
−Removed: Following the Separation and Distribution, we may also lose capital allocation efficiency and flexibility, as we will no longer be able to use cash flow from Fortune Brands to fund our business.
−Removed: We may be unable to achieve some or all of the benefits that we expect to achieve as an independent, publicly- traded company.
−Removed: By separating from Fortune Brands there is a risk that we may be more susceptible to market fluctuations and other adverse events than we would have otherwise been while we were still a part of Fortune Brands.
−Removed: As part of Fortune Brands, we
−Removed: were able to enjoy certain benefits from Fortune Brands’ operating diversity, borrowing leverage and available capital for investments, which benefits are no longer available to us after we have separated from Fortune Brands.
−Removed: As an independent, publicly-traded company, we believe that our businesses now benefit from, among other things, sharpened focus on the financial and operational resources of our specific business, allowing our management to design and implement corporate strategies and policies that are based primarily on the characteristics and strategic decisions of our businesses.
−Removed: We anticipate this will allow us to respond more effectively to industry dynamics and to allow us to create effective incentives for our management and employees that are more closely tied to our business performance.
−Removed: However, we may not be able to achieve some or all of the expected benefits.
−Removed: Separating from Fortune Brands into an independent, publicly-traded company is subject to various risks and uncertainties, and involves significant time and expense, which could disrupt or adversely affect our business.
−Removed: In December 2022, we and Fortune Brands separated into two independent, publicly-traded companies.
−Removed: The ultimate Separation costs may be significantly higher than what we currently anticipate and may not yield a discernible benefit if the Separation is not well executed, or if the expected benefits of the Separation are not realized.
−Removed: Executing the Separation required significant amounts of management’s time and effort.
−Removed: Other challenges associated with effectively executing the Separation included:
−Removed: attracting, retaining and motivating employees during the pendency of the Separation and following its completion;
−Removed: addressing disruptions to our supply chain, manufacturing, sales and distribution and other operations resulting from separating Fortune Brands into two independent companies;
−Removed: and separating Fortune Brands’ information systems.
−Removed: The terms we received in our agreements with Fortune Brands could be less beneficial than the terms we may have otherwise received from unaffiliated third parties.
−Removed: The agreements we entered into with Fortune Brands in connection with the Separation, including the Separation and Distribution Agreement, a tax allocation agreement (the “Tax Allocation Agreement”), a Transition Services Agreement and an employee matters agreement (the “Employee Matters Agreement”), were prepared in the context of the Separation while we were still a wholly-owned subsidiary of Fortune Brands.
+Added: Following the Separation, our financial profile has changed, and we are a smaller, less diversified company than Fortune Brands prior to the Separation.
+Added: The Separation resulted in our business becoming smaller and less diversified.
+Added: As a result, we are more vulnerable to changing market conditions,.
+Added: In addition, the diversification of our revenues, costs and cash flows are diminished as a standalone company, such that our results of operations, cash flows, working capital and financing requirements may be subject to increased volatility and our ability to fund capital expenditures and investments and service debt may be diminished.
+Added: We may experience decreased capital allocation efficiency and flexibility because we can no longer use cash flow from Fortune Brands to fund our business.
+Added: The terms we received in our agreements with Fortune Brands could be less beneficial than the terms we may have otherwise received from unaffiliated third parties, and Fortune Brands may fail to perform under such agreements.
+Added: The agreements we entered into with Fortune Brands in connection with the Separation, including the Separation and Distribution Agreement, a tax allocation agreement (the “Tax Allocation Agreement”), Transition Services Agreement and an associate matters agreement (the “Employee Matters Agreement,”) that are still in effect, were prepared in the context of the Separation while we were still a wholly-owned subsidiary of Fortune Brands.
Accordingly, during the period in which the terms of those agreements were prepared, we did not have an independent Board of Directors or a management team that was independent of Fortune Brands.
As a result, the terms of those agreements may not reflect terms that would have resulted from negotiations between unaffiliated third parties.
+Added: The Separation and Distribution Agreement, the Tax Allocation Agreement and the Employee Matters Agreement determined the allocation of assets and liabilities between the companies following the Separation for those respective areas and includes any necessary indemnifications related to liabilities and obligations.
+Added: The Employee Matters Agreement also provides for the establishment or amendment of certain associate benefit arrangements and the conversion or adjustment of equity incentive awards.
+Added: The Transition Services Agreement provides for the performance of certain services by each company for the benefit of the other generally for a term of up to 24 months after the Separation.
+Added: We will rely on Fortune Brands to satisfy its performance and payment obligations under these agreements.
+Added: If Fortune Brands is unable or unwilling to satisfy its obligations under these agreements, including its indemnification obligations, we could incur operational difficulties or losses.
Fortune Brands may fail to perform under various transaction agreements that were executed as part of the Separation, which could cause us to incur expenses or losses we would not otherwise incur.
In connection with the Separation and prior to the Distribution, we and Fortune Brands entered into the Separation and Distribution Agreement and also entered into various other agreements, including a Tax Allocation Agreement, a Transition Services Agreement and an Employee Matters Agreement.
−Removed: The Separation and Distribution Agreement, the Tax Allocation Agreement and the Employee Matters Agreement determined the allocation of assets and liabilities between the companies following the Separation for those respective areas and includes any necessary indemnifications related to liabilities and obligations.
+Added: The Separation and Distribution Agreement, the Tax Allocation Agreement and the Employee Matters Agreement determined the allocation of assets and liabilities between the
+Added: companies following the Separation for those respective areas and includes any necessary indemnifications related to liabilities and obligations.
The Employee Matters Agreement also provides for the establishment or amendment of certain employee benefit arrangements and the conversion or adjustment of equity incentive awards.
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In connection with the Separation, each of Fortune Brands and MasterBrand are indemnifying each other for certain liabilities.
−Removed: If we are required to pay under these indemnities to Fortune Brands, our results of operations, cash flows and financial condition could be negatively impacted.
+Added: If we are required to pay under these indemnities to Fortune Brands, our results of operations could be negatively impacted.
The Fortune Brands indemnities may not be sufficient to hold MasterBrand harmless from the full amount of liabilities for which Fortune Brands will be allocated responsibility, and Fortune Brands may not be able to satisfy its indemnification obligations in the future.
−Removed: Pursuant to the Separation and Distribution Agreement and certain other agreements between Fortune Brands and us, each party agrees to indemnify the other for certain liabilities, in each case for uncapped amounts.
+Added: Pursuant to the Separation and certain other agreements between Fortune Brands and us, each party agrees to indemnify the other for certain liabilities, in each case for uncapped amounts.
Indemnities that we may be required to provide Fortune Brands are not subject to any cap, may be significant and could negatively impact our business.
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Any amounts we are required to pay pursuant to these indemnification obligations and other liabilities could require us to divert cash that would otherwise have been used in furtherance of our operating business.
−Removed: Further, the indemnities from Fortune
−Removed: Brands for our benefit may not be sufficient to protect us against the full amount of such liabilities, and Fortune Brands may not be able to fully satisfy its indemnification obligations, and we could incur operational difficulties or losses.
+Added: Further, the indemnities from Fortune Brands for our benefit may not be sufficient to protect us against the full amount of such liabilities, and Fortune Brands may not be able to fully satisfy its indemnification obligations, and we could incur operational difficulties or losses.
Moreover, even if we ultimately succeed in recovering from Fortune Brands any amounts for which we are held liable, we may be temporarily required to bear these losses ourselves.
−Removed: Each of these risks could negatively affect our results of operations, cash flows and financial condition.
−Removed: We may fail to have necessary systems and services in place when certain of the transaction agreements expire.
−Removed: If we do not have in place our own systems and services, or if we do not have agreements with other providers of these services once certain Separation transaction agreements expire, we may not be able to operate our business effectively, and our profitability may decline.
−Removed: We are in the process of creating our own, or engaging third parties to provide, systems and services to replace the remaining systems and services that Fortune Brands currently provides to us.
−Removed: We may incur temporary interruptions in business operations if we cannot transition effectively from Fortune Brands’ existing operating systems, databases and programming languages that support these functions to our own systems.
−Removed: Our failure to implement the new systems and transition our data successfully and cost-effectively could disrupt our business operations and have a material adverse effect on our profitability.
−Removed: In addition, our costs for the operation of these systems may be higher than the amounts reflected in our historical financial statements.
−Removed: Our accounting and other management systems and resources may not be adequately prepared to meet the financial reporting and other requirements to which we will be subject following the Distribution.
−Removed: If we are unable to achieve and maintain effective internal controls, our results of operations, cash flows and financial condition could be materially adversely affected.
−Removed: Our financial results previously were included within the consolidated results of Fortune Brands, and we believe that our reporting and control systems were appropriate for those of subsidiaries of a public company.
−Removed: However, we were not directly subject to the reporting and other requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
−Removed: As a result of the Separation and Distribution, we are now directly subject to reporting and other obligations under the Exchange Act.
−Removed: Beginning with our annual report on Form 10-K for our 53-week fiscal year ending December 31, 2023, we will be required to comply with Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), which will require annual management assessments of the effectiveness of our internal control over financial reporting and a report by our independent registered public accounting firm.
−Removed: These reporting and other obligations will place significant demands on our management and administrative and operational resources, including accounting resources.
−Removed: To comply with these requirements, we may need to upgrade our systems, including information technology, and implement additional financial and management controls, reporting systems and procedures.
−Removed: We expect to incur additional annual expenses related to these steps, and those expenses may be significant.
−Removed: If we are unable to upgrade our financial and management controls, reporting systems, information technology systems and procedures in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies under the Exchange Act could be impaired.
−Removed: Any failure to achieve and maintain effective internal controls could have a material adverse effect on our business, financial condition, results of operations and cash flows.
+Added: Each of these risks could negatively affect our results of operations.
If the Distribution, together with certain related transactions, were to fail to qualify as tax-free for U.S.
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and (3) taxable gain from the exchange of Fortune Brand common stock to the extent the amount received exceeded the sum of such stockholder’s share of Fortune Brand’s earnings and profits and such stockholder’s basis in its Fortune Brand common stock.
−Removed: There can be no assurance that we will have access to the capital markets on terms acceptable to us.
−Removed: From time to time we may need to access the long-term and short-term capital markets to obtain financing.
−Removed: Although we believe that the sources of capital in place at the time of the Distribution will permit us to finance our operations for the foreseeable future on acceptable terms and conditions, our access to, and the availability of, financing on acceptable terms and conditions in the future will be impacted by many factors, including, but not limited to:
−Removed: (1) our financial performance;
−Removed: (2) our credit ratings or absence of a credit rating;
−Removed: (3) the liquidity of the overall capital markets;
−Removed: and (4) the state of the economy, including the housing market.
−Removed: There can be no assurance, particularly as a new company with no credit rating, that we will have access to the capital markets on terms acceptable to us.
We might not be able to engage in desirable strategic transactions and equity issuances following the Distribution because of certain restrictions relating to requirements for tax-free distributions.
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Moreover, the Tax Allocation Agreement also provides that we are responsible for any taxes imposed on Fortune Brands or any of its affiliates as a result of the failure of the Distribution to qualify for favorable treatment under the Code if such failure is attributable to certain actions taken after the Distribution by or in respect of us, any of our affiliates or our stockholders.
−Removed: Any such indemnification obligation could adversely affect our results of operations, cash flows and financial condition.
+Added: Any such indemnification obligation could adversely affect our results of operations.
A court could deem the Distribution to be a fraudulent conveyance and void the transaction or impose substantial liabilities upon us.
A court could deem the Distribution or certain internal restructuring transactions undertaken by Fortune Brands in connection with the Separation to be a fraudulent conveyance or transfer.
−Removed: Fraudulent conveyances or transfers are defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors
−Removed: or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay its debts as they become due.
−Removed: A court could void the transactions or impose substantial liabilities upon us, which could adversely affect our results of operations, cash flows and financial condition.
+Added: Fraudulent conveyances or transfers are defined to include transfers made or obligations incurred with the actual intent to hinder, delay or defraud current or future creditors or transfers made or obligations incurred for less than reasonably equivalent value when the debtor was insolvent, or that rendered the debtor insolvent, inadequately capitalized or unable to pay its debts as they become due.
+Added: A court could void the transactions or impose substantial liabilities upon us, which could adversely affect our results of operations.
Among other things, the court could require our stockholders to return to Fortune Brands, for the benefit of its creditors, some or all of the shares of our common stock issued in the Distribution, or require us to fund liabilities of other companies involved in the restructuring transaction.
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Risks Related to Our Common Stock
−Removed: There was no historical, existing market for our common stock, and a trading market that will provide you with adequate liquidity may not develop for our common stock.
−Removed: Now that our common stock has begun trading, the market price of our shares may fluctuate significantly.
−Removed: Until the Distribution on December 14, 2022, there was no public market for our common stock.
−Removed: There can be no assurance that an active trading market for our common stock will develop after the Distribution or be sustained in the future.
−Removed: The lack of an active trading market may make it more difficult for you to sell our shares and could lead to our share price being depressed or more volatile.
−Removed: We cannot predict the prices at which our common stock may trade in the future.
−Removed: Similarly, we cannot predict the long-term effect of the Separation on the trading prices of our common stock.
−Removed: Our common stock has been listed and is being traded on the NYSE under the trading symbol “MBC”.
−Removed: The combined trading prices of the shares of our common stock and Fortune Brands common stock after the Distribution, as adjusted for any changes in the combined capitalization of these companies, may not be equal to or greater than the trading prices of Fortune Brands’ common stock prior to the Distribution.
−Removed: Until the market has fully evaluated the business of Fortune Brands without our business, and fully evaluated us, the price at which Fortune Brands’ or our common stock trades may fluctuate significantly.
−Removed: Many factors could cause the market price of our common stock to rise and fall, including the following:
+Added: The market price of our shares of common stock may fluctuate significantly.
+Added: Our common stock has been listed and is being traded on the NYSE under the trading symbol “MBC.” Many factors could cause the market price of our common stock to rise and fall, including the following:
▪ a shift in our investor base;
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Additionally, if any of the foregoing occurs, it could cause our stock price to fall and may expose us to lawsuits that, even if successfully defended, could be costly to defend and a distraction to management.
−Removed: Stockholder percentage ownership in us may be diluted in the future.
−Removed: In the future, your percentage ownership in us may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including any equity awards that we will grant to our directors, officers and employees.
−Removed: Our employees have stock-based awards that correspond to shares of our common stock after the Distribution as a result of conversion of their Fortune Brands stock-based awards.
−Removed: The Compensation Committee of our Board of Directors granted additional stock-based awards to our employees after the Distribution.
−Removed: Those awards have a dilutive effect on the number of our shares outstanding, and therefore on our earnings per share, which could adversely affect the market price of our common stock.
−Removed: From time to time, we will issue additional stock-based awards to our employees under our stock-based compensation plans.
We rely on dividends, distributions, and transfers of funds from our subsidiaries, and we could be harmed if such distributions were not made in the future, because we are a holding company with no operations of our own.
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In addition, following the Separation, we are subject to Section 203 of the Delaware General Corporation Law (the “DGCL”), which may have an anti-takeover effect with respect to transactions not approved in advance by our Board of Directors, including discouraging takeover attempts that might result in a premium over the market price for shares of our common stock.
−Removed: We believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with our Board of Directors and by providing our Board of Directors with more time to assess any acquisition proposal.
−Removed: However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our Board of Directors determines is not in our best interests or the best interests of our stockholders.
+Added: These provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our Board of Directors determines is not in our best interests or the best interests of our stockholders.
Our charter contains an exclusive forum provision that may discourage lawsuits against us and our directors and officers.
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Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty of liability created by the Exchange Act or the rules and regulations thereunder, and as a result, the exclusive forum provision does not apply to actions arising under the Exchange Act or the rules and regulations thereunder.
−Removed: While the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court are “facially valid” under Delaware law,
−Removed: there is uncertainty as to whether other courts will enforce our federal forum provision described above.
+Added: While the Delaware Supreme Court ruled in March 2020 that federal forum selection provisions purporting to require claims under the Securities Act be brought in federal court are “facially valid” under Delaware law, there is uncertainty as to whether other courts will enforce our federal forum provision described above.
Our stockholders will not be deemed to have waived compliance with the federal securities laws and the rules and regulations thereunder.
This exclusive forum provision may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors and officers.
−Removed: Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could negatively affect our results of operations, cash flows and financial condition.
−Removed: We currently do not expect to pay any cash dividends in the short term.
−Removed: We presently intend to retain future earnings, if any, to finance our business or reduce debt.
−Removed: As a result, we do not currently expect to pay any cash dividends;
−Removed: although we may do so in the future.
−Removed: All decisions regarding payment of future dividends will be made by our Board of Directors from time to time in accordance with applicable law and will depend on our financial condition, earnings, capital requirements, legal requirements, debt covenant requirements, regulatory constraints, industry practice and any other factors that our Board of Directors believes are relevant.
−Removed: There can be no assurance that we will have sufficient surplus under Delaware law to be able to pay any dividends.
−Removed: This may result from extraordinary cash expenses, actual expenses exceeding contemplated costs, funding of capital expenditures or increases in reserves.
−Removed: If we do not pay dividends, the price of our common stock that you receive in the Distribution must appreciate for you to receive a gain on your investment.
−Removed: This appreciation may not occur.
−Removed: Further, you may have to sell some or all of your shares of our common stock in order to generate cash flow from your investment.
−Removed: General Risk Factors
−Removed: The obligations associated with being a public company require significant resources and attention from our senior management team.
−Removed: As a public company with listed equity securities, we need to comply with laws, regulations and requirements, including the requirements of the Exchange Act, certain corporate governance provisions of the Sarbanes-Oxley Act, related regulations of the SEC and requirements of the NYSE, with which we were not required to comply with as a subsidiary of a publicly traded company.
−Removed: The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition.
−Removed: The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls over financial reporting.
−Removed: Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.
−Removed: We may in the future discover areas of our internal controls that need improvement.
−Removed: We cannot be certain that we will be successful in implementing or maintaining an effective system of internal control over our financial reporting and financial processes.
−Removed: Furthermore, as we grow our business, our internal controls will become more complex, and we will require significantly more resources to ensure our internal controls remain effective.
−Removed: Additionally, the existence of any material weakness or significant deficiency would require us to devote significant time and us to incur significant expense to remediate any such material weaknesses or significant deficiencies and we may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner.
−Removed: The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause stockholders to lose confidence in our financial results, which could materially and adversely affect us.
−Removed: As a public company with listed equity securities, we will also be required to maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file with, or submit to, the SEC is recorded, processed, summarized and reported, within the time periods specified by the SEC.
−Removed: They include controls and procedures designed to ensure that information required to be disclosed in reports filed with, or submitted to, the SEC is accumulated and communicated to management, including our principal executive and principal financial officers, to allow timely decisions regarding required disclosure.
−Removed: Designing and implementing effective disclosure controls and procedures is a continuous effort that requires significant resources and devotion of time.
−Removed: We may discover deficiencies in our disclosure controls and procedures that may be difficult or time consuming to remediate in a timely manner.
−Removed: These reporting and other obligations place significant demands on us and our senior management team, and our administrative, operational and accounting resources and may cause us to incur significant expenses.
−Removed: We may need to
−Removed: upgrade our systems or create new systems, implement additional financial and other controls, reporting systems and procedures, and expand or outsource our internal audit function.
−Removed: If we are unable to accomplish these objectives in a timely and effective fashion, our ability to comply with the financial reporting requirements and other rules that apply to public companies could be impaired.
−Removed: If securities analysts do not publish research or reports about our business or if they downgrade our stock, our stock price and trading volume could decline.
−Removed: The trading market for shares of our common stock may rely in part on the research and reports that industry or financial analysts publish about us or our business or industry.
−Removed: We do not control these analysts.
−Removed: Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business or industry, the price of our stock could decline.
−Removed: If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.
−Removed: Unresolved Staff Comments
+Added: Alternatively, if a court were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could negatively affect our results of operations.
+Added: We cannot guarantee that our stock repurchase program will be fully consummated or will enhance long-term stockholder value, and stock repurchases could increase the volatility of our stock prices and could diminish our cash reserves.
+Added: Our Board of Directors has adopted a stock repurchase program, and we may make repurchases under such program.
+Added: The actual manner, timing, amount and value of repurchases under our repurchase program or any future repurchase programs will be determined by management at its discretion and will depend on a number of factors, including the market price of our common stock, trading volume, other capital management objectives and opportunities, applicable legal requirements, applicable tax effects and general market and economic conditions.
+Added: Any stock repurchases could affect our share trading price, increase volatility and reduce our cash reserves, which may result in a decrease in the trading price of our common stock.
+Added: In addition, if we are unable to make repurchases in accordance with our repurchase program, then we would not be able to reduce the effects of dilution experienced when we issue stock under our equity incentive programs, and we would not receive other benefits contemplated by the repurchase program.
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.