What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-02-05 compared with 2020-02-07 · 227 added, 181 removed, 160 unchanged (72% of the section changed)

3 unchanged sentences

While we believe we have identified and discussed below the key risk factors affecting our business, these risk factors do not identify all the risks we face, and there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be significant that may have a material adverse effect on our business, performance or financial condition in the future.

We operate in a highly competitive industry and we face risks related to the execution of our strategy and our timely response to pricing and other competitive pressures.

Strategic and Operational Risks

Global or regional health pandemics or epidemics, including COVID-19, could negatively impact our business operations, financial performance and results of operations.

Our business and financial results could be negatively impacted by the outbreak of COVID-19 or other pandemics or epidemics.

The severity, magnitude and duration of the current COVID-19 pandemic is uncertain, rapidly changing and hard to predict.

In 2020, COVID-19 significantly impacted economic activity and markets around the world, and it could negatively impact our business in numerous ways, including but not limited to those outlined below:

• The COVID-19 outbreak has resulted and could continue to result in lower revenues in some of our emerging market countries that have a higher concentration of traditional trade outlets (such as small family-run stores), as well as in our travel retail (such as international duty-free stores) and foodservice businesses.

We are unable to predict how long these trends will continue or whether they will worsen.

• In addition, sales of some of our products for in-home consumption in some markets and channels, such as the United States and some European markets and modern trade, increased in 2020.

We are unable to predict how long this sustained demand will last or how significant it will be.

• The COVID-19 outbreak has disrupted and could materially disrupt our global supply chain, operations and routes to market or those of our suppliers, their suppliers, or our co-manufacturers or distributors.

The outbreak has also necessitated increased expenditures to secure the safety and effectiveness of our personnel and operations.

Disruptions or our failure to effectively respond to them could increase product or distribution costs or cause delays in delivering or an inability to deliver products to our customers.

For example, we experienced temporary disruptions in operations in some of our emerging markets such as India and Nigeria in the first half of 2020.

• Disruptions or uncertainties related to the COVID-19 outbreak for a sustained period of time could result in delays or modifications to our strategic plans and initiatives and hinder our ability to achieve our objective to reduce our operating cost structure in both our supply chain and overhead costs through our Simplify to Grow Program.

• Illness, travel restrictions, absenteeism or other workforce disruptions have affected and could materially negatively affect our supply chain, manufacturing, distribution or other business processes.

• Government or regulatory responses to pandemics could negatively impact our business.

Mandatory lockdowns or other restrictions on operations in some countries temporarily disrupted our ability to distribute our products in some markets.

Continuation or expansion of these disruptions could materially adversely impact our operations and results.

• Commodity costs have become more volatile due to the COVID-19 outbreak.

We expect continued commodity cost volatility, and our commodity hedging activities cannot fully offset this volatility.

• Initially during the COVID-19 outbreak, the U.S.

dollar appreciated materially against other currencies in the countries in which we operate, resulting in currency translation losses.

dollar were to appreciate

again against some or all of those same currencies, the resulting currency translation losses, along with currency transaction losses, could adversely affect our reported results of operations and financial condition.

• The COVID-19 outbreak initially increased volatility and pricing in the capital markets and commercial paper markets, and volatility may increase again as COVID-19 evolves.

We might not be able to continue to access preferred sources of liquidity when we would like or on terms we find acceptable, and our borrowing costs could increase.

An economic or credit crisis could occur and impair credit availability and our ability to raise capital when needed.

A disruption in the financial markets may have a negative effect on our derivative counterparties and could impair our banking or other business partners, on whom we rely for access to capital and as counterparties for a number of our derivative contracts.

These and other impacts of the COVID-19 or other global or regional health pandemics or epidemics could have the effect of heightening many of the other risks described in the risk factors below, including but not limited to those relating to our reputation, brands, consumer preferences, supply chain, product sales, results of operations or financial condition.

We might not be able to predict or respond to all impacts on a timely basis to prevent near- or long-term adverse impacts to our results.

The ultimate impact of these disruptions also depends on events beyond our knowledge or control, including the duration and severity of the COVID-19 and other outbreaks and actions taken by parties other than us to respond to them.

Any of these disruptions could have a negative impact on our business operations, financial performance and results of operations, which impact could be material.

Additionally, COVID-19 may also materially adversely affect our operating results and financial position in a manner that is not currently known to us or that we do not currently consider to present significant risks to our operations.

We operate in a highly competitive industry and we face risks related to the execution of our strategy and our timely response to channel shifts and pricing and other competitive pressures.

The food and snacking industry is highly competitive.

1 unchanged sentence

Failure to effectively respond to challenges from our competitors could adversely affect our business.

Competitor and customer pressures require that we timely and effectively respond to new distribution channels and technological developments and may require that we reduce our prices.

These pressures also affect our ability to increase prices in response to commodity and other cost increases.

Competitor and customer pressures require that we timely and effectively respond to changes in distribution channels and technological developments that may require changes in our prices.

These pressures could affect our ability to increase prices in response to commodity and other cost increases.

Failure to effectively and timely assess new or developing trends, technological advancements or changes in distribution methods and set proper pricing or effective trade incentives will negatively impact our operating results, achievement of our strategic and financial goals and our ability to capitalize on new revenue or value-producing opportunities.

The rapid evolution of new distribution channels, in particular in e-commerce, may disrupt our current operations or strategies more quickly than we planned for, create consumer price deflation, alter the buying behavior of consumers or disrupt our retail customer relationships.

The rapid growth of some channels, in particular in e-commerce which has expanded significantly following the outbreak of COVID-19, may impact our current operations or strategies more quickly than we planned for, create consumer price deflation, alter the buying behavior of consumers or disrupt our retail customer relationships.

We may need to increase or reallocate spending on existing and new distribution channels and technologies, marketing, advertising and new product innovation to protect or increase revenues, market share and brand significance.

These expenditures may not be successful, including those related to our e-commerce and other technology-focused efforts, and might not result in trade and consumer acceptance of our efforts, which could materially and adversely affect our product sales, financial condition and results of operations.

These new distribution channels as well as growing opportunities to utilize external manufacturers allow smaller competitors to more effectively gain market share.

These new distribution channels as well as growing opportunities to utilize external manufacturers lower barriers to entry and allow smaller competitors to more effectively gain market share.

Additionally, if we reduce prices but cannot increase sales volumes, or our labor or other costs increase but we cannot increase prices to offset those changes, our financial condition and results of operations will suffer.

During 2019, we operated under our new strategy, which focuses on accelerating consumer-centric and volume-driven growth, operational excellence driven by cost discipline and continuous operational improvement including in areas like sales execution, and building a winning growth culture with a “local first” commercial approach.

Failure to achieve these objectives or effectively operate under our strategy in a way that minimizes disruptions to our business could materially and adversely affect our financial condition and results of operations.

During 2020, we continued to operate under our strategy, which focuses on accelerating consumer-centric and volume-driven growth, operational excellence driven by cost discipline and continuous operational improvement including in areas like sales execution, and building a winning growth culture with a “local first” commercial approach.

Promoting and protecting our reputation and brand image and health is essential to our business success.

2 unchanged sentences

Failure to effectively address the continuing global focus on consumer-centric well-being, including changing consumer acceptance of certain ingredients, nutritional expectations of our products, and the sustainability of our ingredients, our supply chain and our packaging could adversely affect our brands.

Increased attention from the media, governments, shareholders and other stakeholders in these areas as well as on the role of food marketing could adversely affect our brand image.

Increased negative attention from the media, governments, shareholders and other stakeholders in these areas as well as on the role of food marketing and other environmental, social or governance practices could adversely affect our brand image.

Undue caution or inaction on our part in addressing these challenges and trends could weaken our competitive position.

Such pressures could also lead to stricter regulations, industry self-regulation that is unevenly adopted among companies, and increased focus on food and snacking marketing practices.

Increased legal or regulatory restrictions on our labeling, advertising and consumer promotions, or our response to those restrictions, could limit our efforts to maintain, extend and expand our brands.

across our supply chain, or antitrust, anti-bribery and anti-corruption compliance could damage our reputation and brand health.

Increasing legal or regulatory restrictions on our labeling, advertising and consumer promotions, such as age-based restrictions on sales of products with certain nutritional profiles enacted in some states in Mexico and other restrictions being considered in the United Kingdom, or our response to those restrictions, could limit our efforts to maintain, extend and expand our brands.

Moreover, adverse publicity, regulatory developments or legal action against us, our employees or our licensees related to product quality and safety, where and how we manufacture our products, environmental risks, human and workplace rights across our supply chain, or antitrust, anti-bribery and anti-corruption compliance could damage our reputation and brand health.

Such actions could undermine our customers’ and shareholders’ confidence and reduce demand for our products, even if the regulatory or legal action is unfounded or these matters are immaterial to our operations.

8 unchanged sentences

When consumers confuse these counterfeit products for our products or have a bad experience with the counterfeit brand, they might refrain from purchasing our brands in the future, which could harm our brand image and sales.

Failure to successfully maintain and enhance our reputation and brand health could materially and adversely affect our company and product brands as well as our product sales, financial condition and results of operations.

We must correctly predict, identify and interpret changes in consumer preferences and demand and offer new and improved products that meet those changes.

3 unchanged sentences

Our success relies upon managing this complexity to promote and bring our products to consumers effectively.

Moreover, weak economic conditions, recession, equity market volatility or other factors, such as severe or unusual weather events, can affect consumer preferences and demand.

Failure to offer products that appeal to consumers or to correctly judge consumer demand for our products will impact our ability to meet our growth targets, and our sales and market share could decrease and our profitability could suffer.

Moreover, weak economic conditions, recession, equity market volatility or other factors, such as global or local pandemics and severe or unusual weather events, affect consumer preferences and demand, such as the increased demand for biscuits and decreased demand for gum since the start of the COVID-19 pandemic.

Failure to offer products that appeal to consumers or to correctly judge consumer

demand for our products will impact our ability to meet our growth targets, and our sales and market share could decrease and our profitability could suffer.

We must distinguish between short-term fads and trends and long-term changes in consumer preferences.

When we do not accurately predict which shifts in consumer preferences or category trends will be long-term or fail to introduce new and improved products to satisfy changing preferences, our sales can be adversely affected.

In addition, because of our varied and geographically diverse consumer base, we must be responsive to local consumer needs, including with respect to when and how consumers snack and their desire for premium or value offerings, provide an array of products that satisfy the broad spectrum of consumer preferences and use data-driven marketing and advertising to reach consumers at the right time with the right message.

In addition, because of our varied and geographically diverse consumer base, we must be responsive to local consumer needs, including with respect to when and how consumers snack and their desire for premium or value offerings, provide an array of products that satisfy the broad spectrum of consumer preferences and use marketing and advertising to reach consumers at the right time with the right message.

Failure to expand our product offerings successfully across product categories, rapidly develop products in faster growing and more profitable categories or reach consumers in efficient and effective ways leveraging data and analytics could cause demand for our products to decrease and our profitability to suffer.

Prolonged negative perceptions concerning the health, environmental and social implications of certain food products, ingredients, packaging materials, sourcing or production methods could influence consumer preferences and acceptance of some of our products and marketing programs.

Negative perceptions concerning the health, environmental and social implications of certain food products, ingredients, packaging materials, sourcing or production methods could influence consumer preferences and acceptance of some of our products and marketing programs.

For example, consumers have increasingly focused on well-being, including reducing sodium and added sugar consumption, as well as the source and authenticity of the foods they consume.

Continuing to expand our well-being offerings and refining the ingredient and nutrition profiles of existing products is important to our growth, as is maintaining focus on ethical sourcing and supply chain management opportunities to address evolving consumer preferences.

In addition, consumer preferences differ by region, and we must monitor and adjust our use of ingredients to respond to these regional preferences.

We might be unsuccessful in our efforts to effectively respond to changing consumer preferences and

social expectations.

Continued negative perceptions and failure to satisfy consumer preferences could materially and adversely affect our reputation, brands, product sales, financial condition and results of operations.

In addition, consumer preferences differ by region, and we must monitor and adjust our use of ingredients and other activities to respond to these regional preferences.

We might be unsuccessful in our efforts to effectively respond to changing consumer preferences and social expectations.

Continued negative perceptions or failure to satisfy consumer preferences could materially and adversely affect our reputation, brands, product sales, financial condition, results of operations and cash flows.

We are subject to risks from operating globally.

8 unchanged sentences

• compliance with antitrust and competition laws, trade laws, data privacy laws, anti-bribery laws, human rights laws and a variety of other local, national and multinational regulations and laws in multiple regimes;

currency devaluations or fluctuations in currency values, including in developing markets such as Argentina, Brazil, China, Mexico, Russia, Ukraine, Turkey, Egypt, Nigeria, South Africa and Pakistan as well as in developed markets such as the United Kingdom and other countries within the European Union.

• currency devaluations or fluctuations in currency values, including in developing markets such as Argentina, Brazil, China, India, Mexico, Russia, Ukraine, Turkey, Egypt, Nigeria, South Africa and Pakistan as well as in developed markets such as the United Kingdom and countries within the European Union.

This includes events like applying highly inflationary accounting as we did for our Argentinean subsidiaries beginning in July 2018;

1 unchanged sentence

• increased sovereign risk, such as default by or deterioration in the economies and credit ratings of governments, particularly in our Latin America and AMEA regions;

changes in local regulations and laws, the uncertainty of enforcement of remedies in non-U.S.

• changes or inconsistencies in local regulations and laws, the uncertainty of enforcement of remedies in non-U.S.

jurisdictions, and foreign ownership restrictions and the potential for nationalization or expropriation of property or other resources;

3 unchanged sentences

• design, implementation and use of effective control environment processes across our diverse operations and employee base.

In addition, political and economic changes or volatility, geopolitical regional conflicts, terrorist activity, political unrest, civil strife, acts of war, government shutdowns, travel or immigration restrictions, public health risks or pandemics, public corruption, expropriation and other economic or political uncertainties, including inaccuracies in our assumptions about these factors, could interrupt and negatively affect our business operations or customer demand.

In addition, political and economic changes or volatility, geopolitical regional conflicts, terrorist activity, political unrest, civil strife, acts of war, government shutdowns, travel or immigration restrictions, tariffs and other trade restrictions, public health risks or pandemics including COVID-19, public corruption, expropriation and other economic or political uncertainties, including inaccuracies in our assumptions about these factors, could interrupt and negatively affect our business operations or customer demand.

High unemployment or the slowdown in economic growth in some markets could constrain consumer spending.

Declining consumer purchasing power could result in loss of market share and adversely impact our profitability.

Continued instability in the banking and governmental sectors of certain countries or the dynamics and uncertainties associated with the United Kingdom’s planned exit from the European Union (“Brexit”) could have a negative effect on our business.

(See below and Management’s Discussion and Analysis of Financial Condition and Results of Operations - Financial Outlook for more information on Brexit.)

All of these factors could result in increased costs or decreased revenues and could materially and adversely affect our product sales, financial condition, results of operations, and our relationships with customers, suppliers and employees in the short or long term.

We face risks related to tax matters, including changes in tax laws and rates, disagreements with taxing authorities and imposition of new taxes.

In December 2017, the United States enacted tax reform legislation (“U.S.

tax reform”).

The legislation implements many new U.S.

domestic and international tax provisions.

While additional guidance has been issued by the Internal Revenue Service (“IRS”) and the U.S.

Treasury Department during 2018 and 2019, there are still some areas that need to be clarified.

Also, a number of U.S.

states have not updated their laws to take into account the new federal legislation.

As a result, there may be further impact of the new laws on our future results of operations and financial condition.

Changes in U.S.

tax law, including further interpretations of the 2017 U.S.

tax reform, could have a material adverse effect on us.

In addition, tax legislation enacted by foreign jurisdictions could significantly affect our ongoing operations.

For example, during the third quarter of 2019, Swiss Federal and Zurich Cantonal events took place that resulted in enacted tax law changes under U.S.

GAAP (“Swiss tax reform”).

The new legislation is intended to replace certain preferential tax regimes with a new set of internationally accepted measures.

We will continue to monitor Swiss tax reform for any additional interpretative guidance that could result in changes to the amounts we have recorded.

Further, foreign tax authorities could impose rate changes along with additional corporate tax provisions that would disallow or tax perceived base erosion or profit shifting payments or subject us to new types of taxes such as digital taxes.

Aspects of U.S.

tax reform may lead foreign jurisdictions to respond by enacting additional tax legislation that is unfavorable to us.

Adverse changes in the underlying profitability or financial outlook of our operations in several jurisdictions could lead to changes in the realizability of our deferred tax assets and result in a charge to our income tax provision.

Additionally, changes in tax laws in the U.S.

or in other countries where we have significant operations could materially affect deferred tax assets and liabilities and our income tax provision.

We are also subject to tax audits by governmental authorities.

Although we believe our tax estimates are reasonable, if a taxing authority disagrees with the positions we have taken, we could face additional tax liabilities, including interest and penalties.

Unexpected results from one or more such tax audits could significantly adversely affect our income tax provision and our results of operations.

Continued instability in the banking and governmental sectors of certain countries or the dynamics and uncertainties associated with the transition period following the United Kingdom’s exit from the European Union (“Brexit”) could have a negative effect on our business.

(See below and Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Outlook – Brexit for more information.)

All of these factors could result in increased costs or decreased revenues and could materially and adversely affect our product sales, financial condition, results of operations, cash flows, and our relationships with customers, suppliers and employees in the short or long term.

Our operations in certain emerging markets expose us to political, economic and regulatory risks.

7 unchanged sentences

Our success in emerging markets is critical to achieving our growth strategy.

Failure to successfully increase our business in emerging markets and manage associated political, economic and regulatory risks could adversely affect our product sales, financial condition and results of operations.

Our use of information technology and third-party service providers exposes us to cybersecurity breaches and other business disruptions.

7 unchanged sentences

Global shared service centers managed by third parties provide an increasing amount of services important to conducting our business, including a number of accounting, internal control, human resources and computing functions.

Continuity of business applications and services has been, and may in the future be, disrupted by events such as infection by viruses or malware, including the June 2017 malware incident that affected a significant portion of our global sales, distribution and financial networks (the “malware incident”) (see Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments and Significant Items Affecting Comparability – Malware Incident and – Financial Outlook – Cybersecurity Risks );

other cybersecurity attacks;

7 unchanged sentences

and other catastrophic occurrences.

Our use of new and emerging technologies such as cloud-based services and mobile applications continues to

evolve, presenting new and additional risks in managing access to our data, relying on third-parties to manage and safeguard data, ensuring access to our systems and availability of third-party systems.

Cybersecurity breaches of our or third-party systems, whether from circumvention of security systems, denial-of-service attacks or other cyberattacks such as hacking, phishing attacks, computer viruses, ransomware or malware, employee or insider error, malfeasance, social engineering, physical breaches or other actions may cause confidential information belonging to us or our employees, customers, consumers, partners, suppliers, or governmental or regulatory authorities to be misused or breached.

Our use of new and emerging technologies such as cloud-based services and mobile applications continues to evolve, presenting new and additional risks in managing access to our data, relying on third-parties to manage and safeguard data, ensuring access to our systems and availability of third-party systems.

confidential information belonging to us or our employees, customers, consumers, partners, suppliers, or governmental or regulatory authorities to be misused or breached.

These risks could be magnified given the increased number of employees, contractors and others working outside of offices during the COVID-19 pandemic.

When risks such as these materialize, the need for us to coordinate with various third-party service providers and for third-party service providers to coordinate amongst themselves might increase challenges and costs to resolve related issues.

7 unchanged sentences

Privacy and data protection laws may be interpreted and applied differently from jurisdiction to jurisdiction and may create inconsistent or conflicting requirements.

The European Union’s General Data Protection Regulation (“GDPR”), which has greatly increased the jurisdictional reach of European Union law and became effective in May 2018, adds a broad array of requirements for handling personal data including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance of up to 4% of global annual revenue for the preceding financial year.

The California Consumer Privacy Act (“CCPA”), which became effective on January 1, 2020, imposes new responsibilities on us for the handling, disclosure and deletion of personal information for consumers who reside in California.

The European Union’s General Data Protection Regulation (“GDPR”), which has greatly increased the jurisdictional reach of E.U.

law and became effective in May 2018, added a broad array of requirements for handling personal data including the public disclosure of significant data breaches, and imposes substantial penalties for non-compliance of up to 4% of global annual revenue for the preceding financial year in addition to potential restrictions on data transfer and processing.

The California Consumer Privacy Act (“CCPA”), which became effective in January 2020, imposed new responsibilities on us for the handling, disclosure and deletion of personal information for consumers who reside in California.

The CCPA permits California to assess potentially significant fines for violating CCPA and creates a right for individuals to bring class action suits seeking damages for violations.

In addition, the California Privacy Rights Act ballot initiative passed in November 2020 will create a new agency dedicated to data privacy that will be required to implement more stringent privacy regulations by January 1, 2023.

Our efforts to comply with GDPR, CCPA and other privacy and data protection laws may impose significant costs and challenges that are likely to increase over time, and we could incur substantial penalties or be subject to litigation related to violation of existing or future data privacy laws and regulations.

2 unchanged sentences

We utilize an integrated supply chain – a complex network of suppliers and material needs, owned and leased manufacturing locations, co-manufacturing locations, distribution networks, shared service delivery centers and information systems that support our ability to provide our products to our customers consistently.

Factors that are hard to predict or beyond our control, like weather (including any potential effects of climate change), natural disasters, water availability, supply and commodity shortages, terrorism, political unrest, cybersecurity breaches, generalized labor unrest, government shutdowns or health pandemics could damage or disrupt our operations or those of our suppliers, their suppliers, or our co-manufacturers or distributors.

Failure to effectively plan for and respond to disruptions in our operations, for example, by not finding alternative suppliers or replacing capacity at key or sole manufacturing or distribution locations or by not quickly repairing damage to our information, production or supply systems, can cause delays in delivering or the inability to deliver products to our customers as we experienced in connection with the malware incident (see Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments and Significant Items Affecting Comparability – Malware Incident and – Financial Outlook – Cybersecurity Risks ), and the quality and safety of our products might be negatively affected.

The occurrence of a

material or extended disruption may cause us to lose our customers’ or business partners’ confidence or suffer damage to our reputation, and long-term consumer demand for our products could decline.

Factors that are hard to predict or beyond our control, like weather (including any potential effects of climate change), natural disasters, water availability, supply and commodity shortages, terrorism, political unrest, cybersecurity breaches, generalized labor unrest, government shutdowns or health pandemics such as COVID-19 could damage or disrupt our operations or those of our suppliers, their suppliers, or our co-manufacturers or distributors.

Failure to effectively prepare for and respond to disruptions in our operations, for example, by not finding alternative suppliers or replacing capacity at key or sole manufacturing or distribution locations or by not quickly repairing damage to our information, production or supply systems, can cause delays in delivering or the inability to deliver products to our customers as we experienced in connection with the malware incident, and the quality and safety of our products might be negatively affected.

The occurrence of a material or extended disruption may cause us to lose our customers’ or business partners’ confidence or suffer damage to our reputation, and long-term consumer demand for our products could decline.

Some risks are difficult or impossible to insure through the insurance programs we use to transfer many of these risks, and the timing of insurance recoveries may not match the timing of our financial loss.

In addition, we are subject to risk related to our own execution.

1 unchanged sentence

Further, our ability to supply multiple markets with a streamlined manufacturing footprint may be negatively impacted by portfolio complexity, significant changes in trade policies, changes in volume produced and changes to regulatory restrictions or labor-related or other constraints on our ability to adjust production capacity in the markets in which we operate.

These events could materially and adversely affect our product sales, financial condition and results of operations.

We are subject to currency exchange rate fluctuations.

At December 31, 2019 , we sold our products in over 150 countries and had operations in approximately 80 countries.

Consequently, a significant portion of our business is exposed to currency exchange rate fluctuations.

Our financial results and capital ratios are sensitive to movements in currency exchange rates because a large portion of our assets, liabilities, revenue and expenses must be translated into U.S.

dollars for reporting purposes or converted into U.S.

dollars to service obligations such as our U.S.

dollar-denominated indebtedness and to pay dividends to our shareholders.

In addition, movements in currency exchange rates affect transaction costs because we source product ingredients from various countries.

Our efforts to mitigate our exposure to exchange rate fluctuations, primarily on cross-currency transactions, may not be successful.

We hedge a number of risks including exposures to foreign exchange rate movements and volatility of interest rates that could impact our future borrowing costs.

Hedging of these risks could potentially subject us to counter-party credit risk.

In addition, local economies, monetary policies and currency hedging availability affect our ability to hedge against currency-related economic losses.

We might not be able to successfully mitigate our exposure to currency risks due to factors such as continued global and local market volatility, actions by foreign governments, political uncertainty, inflation and limited hedging opportunities.

Accordingly, changes in the currency exchange rates that we use to translate our results into U.S.

dollars for financial reporting purposes or for transactions involving multiple currencies could materially and adversely affect future demand for our products, our financial condition and results of operations, and our relationships with customers, suppliers and employees in the short or long-term.

These events could materially and adversely affect our product sales, financial condition, results of operations and cash flows.

Commodity and other input prices are volatile and may increase or decrease significantly or availability of commodities may become constrained.

2 unchanged sentences

Costs of raw materials, other supplies and services and energy are volatile and fluctuate due to conditions that are difficult to predict.

These conditions include global competition for resources, currency fluctuations, geopolitical conditions or conflicts, tariffs or other trade barriers, government intervention to introduce living income premiums or similar requirements such as those announced in 2019 in two cocoa-growing countries, severe weather, the potential longer-term consequences of climate change on agricultural productivity, crop disease or pests, water risk, health pandemics, forest fires, consumer or industrial demand, and changes in governmental trade policy and regulations, alternative energy and agricultural programs.

These conditions include global competition for resources, currency fluctuations, geopolitical conditions or conflicts, tariffs or other trade barriers, government intervention to introduce living income premiums or similar requirements such as those announced in 2019 in two of the main cocoa-growing countries, severe weather, the potential longer-term consequences of climate change on agricultural productivity, crop disease or pests, water risk, health pandemics including COVID-19, forest fires, consumer or industrial demand, and changes in governmental environmental or trade policy and regulations, alternative energy and agricultural programs.

Increased government intervention and consumer or activist responses caused by increased focus on climate change, deforestation, water, plastic waste, animal welfare and human rights concerns and other risks associated with the global food system could adversely affect our or our suppliers’ reputation and business and our ability to procure the materials we need to operate our business.

3 unchanged sentences

Moreover, increases in the price of our products, including increases to cover higher input, packaging and transportation costs, may result in lower sales volumes, while decreases in input costs could require us to lower our prices and thereby affect our revenues, profits or margins.

Likewise, constraints in the supply or availability of key commodities, including necessary services such as transportation, may limit our ability to grow our net revenues and earnings.

If our mitigation activities are not effective, if we are unable to price to cover increased costs or must reduce our

prices, or if we are limited by supply or distribution constraints, our financial condition and results of operations can be materially adversely affected.

We face risks related to complying with changes in and inconsistencies among laws and regulations in many countries in which we operate.

Our activities around the world are highly regulated and subject to government oversight.

Various laws and regulations govern food production, packaging and waste management, storage, distribution, sales, advertising, labeling and marketing, as well as intellectual property, competition, antitrust, trade, labor, tax and environmental matters, privacy, data protection, and health and safety practices.

Government authorities regularly change laws and regulations as well as their interpretations of existing laws and regulations.

Our failure to comply with existing laws and regulations, or to make changes necessary to comply with new or revised laws and regulations or evolving interpretations and application of existing laws and regulations, could materially and adversely affect our product sales, financial condition and results of operations.

For instance, our financial condition and results of operations could be negatively affected by the regulatory and economic impact of changes in taxation and trade relations among the United States and other countries, including a new United States-Mexico-Canada Agreement when ratified, developments in U.S.

trade relations with China or changes with or in the European Union such as Brexit.

We continue to monitor Brexit and its potential impacts on our results of operations and financial condition.

In 2019, we generated 8.6% of our net revenues in the United Kingdom, and our supply chain in this market relies on imports of raw and packaging materials as well as finished goods.

Volatility in foreign currencies and other markets is expected to continue as the United Kingdom executes its exit from the European Union.

If the U.K.'s membership in the European Union terminates without trade and other cross-border operating agreements, there could be increased costs from re-imposition of tariffs on trade between the United Kingdom and other countries, including those in the European Union, shipping delays because of the need for customs inspections and procedures and shortages of certain goods.

The United Kingdom will also need to negotiate its own tax and trade treaties with countries all over the world, which could take years to complete.

If the ultimate terms of the U.K.’s separation from the European Union negatively impact the U.K.

economy or result in disruptions to sales or our supply chain, the imposition of tariffs or currency devaluation in the United Kingdom, the impact to our consolidated revenue, earnings and cash flow could be material.

(See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Outlook – Brexit for more information.)

We may be unable to hire or retain and develop key personnel or a highly skilled and diverse global workforce or manage changes in our workforce.

We must hire, retain and develop effective leaders and a highly skilled and diverse global workforce.

We compete to hire new personnel with a variety of capabilities in the many countries in which we manufacture and market our products and then to develop and retain their skills and competencies.

Unplanned or increased turnover of employees with key capabilities, failure to attract and develop personnel with key emerging capabilities such as e-commerce and digital marketing skills, or failure to develop adequate succession plans for leadership positions or to hire and retain a workforce with the skills and in the locations we need to operate and grow our business could deplete our institutional knowledge base and erode our competitiveness.

Changes in our operating model and business processes, including building a winning growth culture, implementing our “local first” commercial approach, utilizing our global shared services capability and reconfiguring our supply chain, could lead to operational challenges and changes in the skills we require to achieve our business goals.

Failure to achieve a more diverse workforce and leadership team, compensate our employees competitively and fairly or maintain a safe and inclusive environment could affect our reputation and also result in lower performance and an inability to retain valuable employees.

We might be unable to manage appropriately changes in, or that affect, our workforce or satisfy the legal requirements associated with how we manage and compensate our employees.

This includes our management of employees represented by labor unions or workers’ councils, who represent approximately 63% of our 68,000 employees outside the United States and approximately 27% of our 12,000 U.S.

Strikes, work stoppages or other forms of labor unrest by our employees or those of our suppliers or distributors, or situations like the renegotiation of collective bargaining agreements that expired in February 2016 and that cover eight U.S.

facilities, could cause disruptions to our supply chain, manufacturing or distribution processes.

Changes in immigration laws and policies, including in connection with Brexit, could also make it more difficult for us to recruit or relocate skilled employees.

These risks could materially and adversely affect our reputation, ability to meet the needs of our customers, product sales, financial condition and results of operations.

Our retail customers are consolidating, and we must leverage our value proposition in order to compete against retailer and other economy brands.

Retail customers, such as supermarkets, discounters, e-commerce merchants, warehouse clubs and food distributors in the European Union, the United States and other major markets, continue to consolidate, form buying alliances or be acquired by new entrants in the food retail market, resulting in fewer, larger customers.

Large retail customers and customer alliances can delist our products or reduce the shelf space allotted to our products and demand lower pricing, increased promotional programs or longer payment terms.

Retail customers might also adopt these tactics in their dealings with us in response to the significant growth in online retailing for consumer products, which is outpacing the growth of traditional retail channels.

The emergence of alternative online retail channels, such as direct to consumer and e-business to business, may adversely affect our relationships with our large retail and wholesale customers.

In addition, larger retail customers have the scale to develop supply chains that permit them to operate with reduced inventories or to develop and market their own retailer and other economy brands that compete with some of our products.

Our products must provide higher quality or value to our consumers than the less expensive alternatives, particularly during periods of economic uncertainty.

Consumers may not buy our products when they perceive little difference between the quality or value of our products and those of retailer or other economy brands.

When consumers prefer or otherwise choose to purchase the retailer or other economy brands, we can lose market share or sales volumes, or we may need to shift our product mix to lower margin offerings.

Retail consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance will have a corresponding material adverse effect on us.

For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease or cancel purchases of our products, or delay or fail to pay us for previous purchases.

Failure to effectively respond to retail consolidation, increasing retail power and competition from retailer and other economy brands could materially and adversely affect our reputation, brands, product sales, financial condition and results of operations.

We are subject to changes in our relationships with significant customers, suppliers and distributors.

During 2019 , our five largest customers accounted for 17.0% of our net revenues.

There can be no assurance that our customers will continue to purchase our products in the same mix or quantities or on the same terms as in the past, particularly as increasingly powerful retailers continue to demand lower pricing and develop their own brands.

The loss of or disruptions related to significant customers could result in a material reduction in sales or change in the mix of products we sell to a significant customer.

This could materially and adversely affect our product sales, financial condition and results of operations.

Disputes with significant suppliers or distributors, including disputes related to pricing or performance, could adversely affect our ability to supply or deliver products to our customers or operate our business and could materially and adversely affect our product sales, financial condition and results of operations.

In addition, the financial condition of our significant customers, suppliers and distributors are affected by events that are largely beyond our control.

Deterioration in the financial condition of significant customers, suppliers or distributors could materially and adversely affect our product sales, financial condition and results of operations.

We may decide or be required to recall products or be subjected to product liability claims.

We could decide, or laws or regulations could require us, to recall products due to suspected or confirmed deliberate or unintentional product contamination, including contamination of ingredients we use in our products that third parties supply, spoilage or other adulteration, product mislabeling or product tampering.

In addition, if another company recalls or experiences negative publicity related to a product in a category in which we compete, consumers might reduce their overall consumption of products in this category.

Any of these events could materially and adversely affect our reputation, brands, product sales, financial condition and results of operations.

We may also suffer losses when our products or operations or those of our suppliers violate applicable laws or regulations, or when our or our suppliers’ products cause injury, illness or death.

In addition, our marketing could

face claims of false or deceptive advertising or other criticism.

A significant product liability or other legal judgment against us, a related regulatory enforcement action, a widespread product recall or attempts to manipulate us based on threats related to the safety of our products could materially and adversely affect our reputation and profitability.

Moreover, even if a product liability, consumer fraud or other claim is unsuccessful, has no merit or is not pursued, the negative publicity surrounding assertions against our products or processes could materially and adversely affect our reputation, brands, product sales, product inventory, financial condition and results of operations.

We face risks related to legal or tax claims or other regulatory enforcement actions.

We are a large snack food company operating in highly regulated environments and constantly evolving legal, tax and regulatory frameworks around the world.

Consequently, we are subject to greater risk of litigation, legal or tax claims or other regulatory enforcement actions.

We have implemented policies and procedures designed to promote compliance with existing laws and regulations;

however, there can be no assurance that we maintain effective control environment processes, including in connection with our global shared services capability.

Actions by our employees, contractors or agents in violation of our policies and procedures could lead to violations, unintentional or otherwise, of laws and regulations.

When litigation, legal or tax claims or regulatory enforcement actions arise out of our failure or alleged failure to comply with applicable laws, regulations or controls, we could be subject to civil and criminal penalties that could materially and adversely affect our reputation, product sales, financial condition and results of operations.

Climate change might adversely impact our supply chain or our operations.

Scientific evidence collected by the Intergovernmental Panel on Climate Change demonstrates that carbon dioxide and other greenhouse gases in the atmosphere have caused and will in the future cause changes in weather patterns around the globe.

These changes are expected to increase the frequency of extreme weather events and natural disasters and affect water availability and quality.

These impacts increase risks for the global food production and distribution system.

Decreased agricultural productivity caused by climate change might limit the availability of the commodities we purchase and use.

These include cocoa, which is a critical raw material for our chocolate and biscuit portfolios that is particularly sensitive to changes in climate, as well as other raw materials such as wheat, vegetable oils, sugar, nuts and dairy.

Localized weather events such as floods, severe storms or water shortages that are partially caused or exacerbated by climate change might disrupt our business operations or those of our suppliers, their suppliers, or our co-manufacturers or distributors.

Concern about climate change might result in new legal and regulatory requirements to reduce or mitigate the effects of climate change.

These changes could increase our operating costs for things like energy through taxes or regulations.

Concern about climate change might cause consumer preferences to switch away from products or ingredients considered to have high climate change impact.

Furthermore, we might fail to effectively address increased attention from the media, shareholders, activists and other stakeholders on climate change and related environmental sustainability matters, including deforestation, land use, water use and packaging, including plastic.

Finally, the fact that consumers are exposed to rising temperatures could affect demand for our products, such as decreased demand we have experienced for chocolate during periods when temperatures are warmer.

Taken together these risks could materially and adversely affect our ability to meet the needs of our customers, reputation, product sales, financial condition and results of operations.

Likewise, constraints in the supply or availability of key commodities and necessary services such as transportation may limit our ability to grow our net revenues and earnings.

If our mitigation activities are not effective, if we are unable to price to cover increased costs or must reduce our prices, or if we are limited by supply or distribution constraints, our financial condition, results of operations and cash flows can be materially adversely affected.

We may not successfully identify, complete or manage strategic transactions.

13 unchanged sentences

With respect to acquisitions and joint ventures in particular, we are also exposed to potential risks based on our ability to conform standards, controls, policies and procedures, and business cultures;

consolidate and streamline operations and infrastructures;

consolidate and streamline

operations and infrastructures;

identify and eliminate, as appropriate, redundant and underperforming operations and assets;

2 unchanged sentences

Joint ventures and similar strategic alliances pose additional risks, as we share ownership in both public and private companies and in some cases management responsibilities with one or more other parties whose objectives for the alliance may diverge from ours over time, who may not have the same priorities, strategies or resources as we do, or whose interpretation of applicable policies may differ from our own.

Strategic alliances we have entered into include our investments in Jacobs Douwe Egberts and Keurig Dr Pepper Inc.

Strategic alliances we have entered into include our investments in JDE Peet's N.V.

and Keurig Dr Pepper Inc.

Transactions or ventures into which we enter might not meet our financial and non-financial control and compliance expectations or yield the anticipated benefits.

4 unchanged sentences

Gains or losses on the sales of, or lost operating income from, those businesses may also affect our profitability.

Any of these risks could materially and adversely affect our business, product sales, financial condition and results of operations.

Any of these risks could materially and adversely affect our business, product sales, financial condition, results of operations and cash flows.

Macroeconomic and Industry Risks

Climate change might adversely impact our supply chain or our operations.

These changes are expected to increase the frequency of extreme weather events and natural disasters and affect water availability and quality.

These impacts increase risks for the global food production and distribution system.

Decreased agricultural productivity caused by climate change might limit the availability of the commodities we purchase and use.

Localized weather events such as floods, severe storms or water shortages that are partially caused or exacerbated by climate change are physical risks that might disrupt our business operations or those of our suppliers, their suppliers, or our co-manufacturers or distributors.

Concern about climate change might result in new legal and regulatory requirements to reduce or mitigate the effects of climate change.

These changes could increase our operating costs for things like energy or packaging through taxes or regulations, including payments under extended producer responsibility policies.

Concern about climate change might cause consumer preferences to switch away from products or ingredients considered to have high climate change impact.

Taken together these risks could materially and adversely affect our ability to meet the needs of our customers, reputation, product sales, financial condition, results of operations and cash flows.

Our retail customers are consolidating, and we must leverage our value proposition in order to compete against retailer and other economy brands.

Large retail customers and customer alliances can delist our products or reduce the shelf space allotted to our products and

demand lower pricing, increased promotional programs or longer payment terms.

The emergence of alternative online retail channels, such as direct to consumer and e-business to business, may adversely affect our relationships with our large retail and wholesale customers.

Our products must provide higher quality or value to our consumers than the less expensive alternatives, particularly during periods of economic uncertainty.

Consumers may not buy our products when they perceive little difference between the quality or value of our products and those of retailer or other economy brands.

Retail consolidation also increases the risk that adverse changes in our customers’ business operations or financial performance will have a corresponding material adverse effect on us.

For example, if our customers cannot access sufficient funds or financing, then they may delay, decrease or cancel purchases of our products, or delay or fail to pay us for previous purchases.

We are subject to changes in our relationships with significant customers, suppliers and distributors.

During 2020, our five largest customers accounted for 17.5% of our net revenues.

The loss of or disruptions related to significant customers could result in a material reduction in sales or change in the mix of products we sell to a significant customer.

This could materially and adversely affect our product sales, financial condition, results of operations and cash flows.

In addition, the financial condition of our significant customers, suppliers and distributors are affected by events that are largely beyond our control such as the COVID-19 pandemic.

Deterioration in the financial condition of significant customers, suppliers or distributors could materially and adversely affect our product sales, financial condition, results of operations and cash flows.

We may be unable to hire or retain and develop key personnel or a highly skilled and diverse global workforce or effectively manage changes in our workforce and respond to shifts in labor availability.

We must hire, retain and develop effective leaders and a highly skilled and diverse global workforce.

We compete to hire new personnel with a variety of capabilities in the many countries in which we manufacture and market our products and then to develop and retain their skills and competencies.

We could face unforeseen challenges in the availability of labor, such as we have experienced since the outbreak of COVID-19.

We must address changes in, and that affect, our workforce and satisfy the legal requirements associated with how we manage and compensate our employees.

This includes our management of employees represented by labor unions or workers’ councils, who represent approximately 63% of our 67,000 employees outside the United States and approximately 26% of our 12,000 U.S.

Strikes, work stoppages or other forms of labor unrest by our employees or those of our suppliers or distributors, or situations like the renegotiation of collective bargaining agreements, could cause disruptions to our supply chain, manufacturing or distribution processes.

Changes in immigration laws and policies, including in connection with Brexit, or restrictions such as those imposed in connection with the COVID-19 pandemic could also make it more difficult for us to recruit or relocate skilled employees.

These risks could materially and adversely affect our reputation, ability to meet the needs of our customers, product sales, financial condition, results of operations and cash flows.

Legal and Regulatory Risks

We face risks related to complying with changes in and inconsistencies among laws and regulations in many countries in which we operate.

Our activities around the world are highly regulated and subject to government oversight.

Government authorities regularly change laws and regulations as well as their interpretations of existing laws and regulations.

For instance, our financial condition, results of operations and cash flows could be negatively affected by the regulatory and economic impact of changes in the corporate tax policies of the United States and other countries;

trade relations among the United States and other countries, including China, Mexico and the European Union;

and changes within the European Union such as Brexit.

In connection with Brexit, on December 24, 2020, the European Union and the United Kingdom reached an agreement on a new trade arrangement that became effective on January 1, 2021.

Main trade provisions include the continuation of no tariffs or quotas on trade between the U.K.

so long as we meet prescribed trade terms.

We will also need to meet product and labeling standards for both the U.K.

may also set its own trade policies with countries such as the United States, Australia and New Zealand that currently do not have free trade agreements with the E.U.

Cross-border trade between the U.K.

will be subject to new customs regulations, documentation and reviews.

We anticipate increased shipping costs and near-term delays because of the need for ongoing customs inspections and related procedures.

Our supply chain in this market relies on imports of raw and packaging materials as well as finished goods.

Volatility in foreign currencies and other markets may also arise as the U.K.

work though the new trade arrangements.

Once the new rules are formalized, there could be other near- or long-term negative impacts.

Any disagreements on trade terms or supply chain or distribution delays or other disruptions could negatively affect our U.K.

(See Management’s Discussion and Analysis of Financial Condition and Results of Operations – Financial Outlook – Brexit for more information.)

We may decide or be required to recall products or be subjected to product liability claims.

These risks could be heightened in light of increased pressure on our suppliers from the COVID-19 pandemic.

On-site quality audits of third parties such as suppliers, external manufacturers and trademark licensees have been limited by travel restrictions and heightened safety protocols in light of COVID-19, and remote audits do not fully offset risks from the inability to conduct on-site audits.

Any of these events could materially and adversely affect our reputation, brands, product sales, financial condition, results of operations and cash flows.

We may also suffer losses when our products or operations or those of our suppliers violate applicable laws or regulations, or when our or our suppliers’ products cause injury, illness or death.

In addition, our marketing could face claims of false or deceptive advertising or other criticism.

A significant product liability claim or other legal judgment against us, a related regulatory enforcement action, a widespread product recall or attempts to manipulate us based on threats related to the safety of our products could materially and adversely affect our reputation and profitability.

We face risks related to legal or tax claims or other regulatory enforcement actions.

We are a large snack food company operating in highly regulated environments and constantly evolving legal, tax and regulatory frameworks around the world.

Consequently, we are subject to greater risk of litigation, legal or tax claims or other regulatory enforcement actions.

We have implemented policies and procedures designed to promote compliance with existing laws and regulations;

however, there can be no assurance that we maintain effective control environment processes, including in connection with our global shared services capability.

Actions by our employees, contractors or agents in violation of our policies and procedures could lead to violations, unintentional or otherwise, of laws and regulations.

Even if a claim is unsuccessful, without merit or not pursued to completion, the cost of responding to such a claim, including expenses and management time, could adversely affect us.

Furthermore, as a result of the COVID-19 pandemic, there may be investigations, legal claims or litigation against us relating to our actions or decisions in response to the pandemic.

We could fail to maintain effective internal control over financial reporting.

4 unchanged sentences

As a result, our reputation, results of operations and stock price could be materially adversely affected.

We face risks related to adequately protecting our valuable intellectual property rights.

We consider our intellectual property rights, particularly and most notably our trademarks, but also our patents, copyrights, registered designs, proprietary trade secrets, recipes, technology, know-how and licensing agreements, to be a significant and valuable part of our business.

We attempt to protect our intellectual property rights by taking advantage of a combination of patent, trademark, copyright and trade secret laws in various countries, as well as licensing agreements, third-party nondisclosure and assignment agreements and policing of third-party misuses and infringement of our intellectual property.

Our failure to obtain or adequately protect our intellectual property rights, or any change in law or other changes that serve to lessen or remove the current legal protections of our intellectual property, may diminish our competitiveness and could materially harm our business and financial condition.

We may be unaware of potential third-party claims of intellectual property infringement relating to our technology, brands or products.

Any litigation regarding patents or other intellectual property could be costly and time-consuming and could divert management’s and other key personnel’s attention from our business operations.

Third-party claims of intellectual property infringement might require us to pay monetary damages or enter into costly license agreements.

We also may be subject to injunctions against development and sale of certain of our products, which could include removal of existing products from sale.

Any of these occurrences could materially and adversely affect our reputation, brand health, ability to introduce new products or improve the quality of existing products, product sales, financial condition, results of operations and cash flows.

Financial Risks

We face risks related to tax matters, including changes in tax laws and rates, disagreements with taxing authorities and imposition of new taxes.

In December 2017, the United States enacted tax reform legislation (“U.S.

tax reform”).

The legislation implements many new U.S.

domestic and international tax provisions.

The Internal Revenue Service (“IRS”), the U.S.

Treasury Department and numerous state governments issued additional guidance during 2018, 2019 and 2020.

We have factored the original 2017 legislation as well as the additional guidance into our 2017 through 2020 financial results of operations as applicable.

As of January 2021, there is a new president of the United States, and his campaign included proposed changes to U.S.

tax legislation.

Adoption of new U.S.

tax rules could have a material adverse effect on us.

In addition, tax legislation enacted by foreign jurisdictions could significantly affect our ongoing operations.

For example, during the third quarter of 2019, Swiss Federal and Zurich Cantonal events took place that resulted in enacted tax law changes under U.S.

GAAP (“Swiss tax reform”).

The new legislation is intended to replace certain preferential tax regimes with a new set of internationally accepted measures.

We will continue to monitor Swiss tax reform for any additional interpretative guidance that could result in changes to the amounts we have recorded.

Aspects of U.S.

tax reform may lead foreign jurisdictions to respond by enacting additional tax legislation that is unfavorable to us.

Additionally, changes in tax laws in the U.S.

or in other countries where we have significant operations could materially affect deferred tax assets and liabilities and our income tax provision.

We are also subject to tax audits by governmental authorities.

Although we believe our tax estimates are reasonable, if a taxing authority disagrees with the positions we have taken, we could face additional tax liabilities, including interest and penalties.

Unexpected results from one or more such tax audits could significantly adversely affect our income tax provision, results of operations and cash flows.

We are subject to currency exchange rate fluctuations.

At December 31, 2020, we sold our products in over 150 countries and had operations in approximately 80 countries.

Consequently, a significant portion of our business is exposed to currency exchange rate fluctuations.

Our financial results and capital ratios are sensitive to movements in currency exchange rates because a large portion of our assets, liabilities, revenue and expenses must be translated into U.S.

dollars for reporting purposes or converted into U.S.

dollars to service obligations such as our U.S.

dollar-denominated indebtedness and to pay dividends to our shareholders.

In addition, movements in currency exchange rates affect transaction costs because we source product ingredients from various countries.

Our efforts to mitigate our exposure to exchange rate fluctuations, primarily on cross-currency transactions, may not be successful.

We hedge a number of risks including exposures to foreign exchange rate movements and volatility of interest rates that could impact our future borrowing costs.

Hedging of these risks could potentially subject us to counter-party credit risk.

In addition, local economies, monetary policies and currency hedging availability affect our ability to hedge against currency-related economic losses.

Accordingly, changes in the currency exchange rates that we use to translate our results into U.S.

dollars for financial reporting purposes or for transactions involving multiple currencies could materially and adversely affect future demand for our products, our financial condition, results of operations and cash flows, and our relationships with customers, suppliers and employees in the short or long-term.

Weak financial performance, downgrades in our credit ratings, illiquid global capital markets and volatile global economic conditions could limit our access to the global capital markets, reduce our liquidity and increase our borrowing costs.

We access the long-term and short-term global capital markets to obtain financing.

Our financial performance, our short-and long-term debt credit ratings, interest rates, the stability of financial institutions with which we partner, the liquidity of the overall global capital markets and the state of the global economy, including the food industry, could affect our access to, and the availability or cost of, financing on acceptable terms and conditions and our ability to pay dividends in the future.

Our financial performance, our short-and long-term debt credit ratings, interest rates, the stability of financial institutions with which we partner, the

liquidity of the overall global capital markets and the state of the global economy, including the food industry, could affect our access to, and the availability or cost of, financing on acceptable terms and conditions and our ability to pay dividends in the future.

There can be no assurance that we will have access to the global capital markets on terms we find acceptable.

14 unchanged sentences

As a participating employer under multiemployer pension plans, we may owe more than the contributions we are required to make under the applicable collective bargaining agreements.

For example, if we partially or completely withdraw from a multiemployer pension plan, we may be required to pay a partial or complete withdrawal liability.

This withdrawal liability will generally increase if there is also a mass withdrawal of other participating employers or if the plan terminates.

In 2018, we executed a complete withdrawal from the Bakery and Confectionery Union and Industry International Pension Fund (the "Fund") and recorded a $429 million estimated withdrawal liability.

On July 11, 2019, we received an undiscounted withdrawal liability assessment from the Fund totaling $526 million requiring pro-rata monthly payments over 20 years and we recorded a $35 million final adjustment to reduce our withdrawal liability as of June 30, 2019.

We began making monthly payments during the third quarter of 2019.

As of December 31, 2019 , the remaining discounted withdrawal liability was $391 million , with $14 million recorded in other current liabilities and $377 million recorded in long-term other liabilities.

For example, if we partially or completely withdraw from a multiemployer pension plan, we may be required to pay a partial or complete withdrawal liability, such as the withdrawal liability we are paying in connection with our complete withdrawal from the Bakery and Confectionery Union and Industry International Pension Fund in 2018.

This kind of withdrawal liability will generally increase if there is also a mass withdrawal of other participating employers or if the plan terminates.

See Note 11, Benefit Plans , to the consolidated financial statements for more information on our multiemployer pension plans.

A significant increase in our pension benefit obligations or funding requirements could curtail our ability to invest in the business and adversely affect our financial condition and results of operations.

We face risks related to adequately protecting our valuable intellectual property rights.

We consider our intellectual property rights, particularly and most notably our trademarks, but also our patents, trade secrets, copyrights and licensing agreements, to be a significant and valuable part of our business.

We may be unaware of potential third-party claims of intellectual property infringement relating to our technology, brands or products.

Any litigation regarding patents or other intellectual property could be costly and time-consuming and could divert management’s and other key personnel’s attention from our business operations.

Third-party claims of intellectual property infringement might require us to pay monetary damages or enter into costly license agreements.

We also may be subject to injunctions against development and sale of certain of our products, which could include removal of existing products from sale.

Unresolved Staff Comments.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors