What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-02-24 compared with 2022-03-01 · 93 added, 94 removed, 318 unchanged (37% of the section changed)

4 unchanged sentences

Business, Economic, Industry and Operational Risks

Termination or interruption of our supply relationships and increases in labor costs and the prices of our component parts, finished products, third-party services and raw materials, particularly petroleum-based products, is negatively impacting our business and could have a further adverse effect on our business, operations or financial condition .

We rely on raw materials, component parts, finished products and third-party services in connection with our business.

For example, substantially all of our products are sterilized by only a few different entities.

If any of these sterilizers goes out of business or fails to comply with quality or regulatory requirements, we may be unable to find a suitable supplier to replace them.

This could significantly delay or stop production and cause sales of such products to materially decline.

Additionally, many of our products have components that are manufactured using resins, plastics and other petroleum-based materials which are available from a limited number of suppliers.

We are experiencing a growing trend among suppliers of polymer resins to refuse to supply resin to the medical device manufacturers or to require such manufacturers to assume additional risks due to the potential for product liability claims.

Additionally, there is no assurance that crude oil supplies will be uninterrupted or that petroleum-based manufacturing materials will be available for purchase in the future.

The military conflict between Russia and Ukraine may increase the likelihood of supply interruptions and further hinder our ability to find the materials we need to make our products.

Supply disruptions are making it harder for us to find favorable pricing and reliable sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials and services we need to continue to manufacture certain products.

The availability and price of these materials, parts, products and services are affected by a variety of factors beyond our control, including the willingness of suppliers to sell into the medical device industry, changes in supply and demand, general economic conditions, labor costs, fuel-related transportation costs, liability concerns, climate change (including new and existing laws and regulations to address climate change), competition, import duties, tariffs, currency exchange rates and political uncertainty around the world.

During 2022, we experienced significantly elevated commodity and supply chain costs, including the costs of labor, raw materials, energy, fuel, packaging materials and other inputs necessary for the production and distribution of our products, and we expect elevated levels of inflation to continue in 2023.

Our suppliers often pass some of their cost increases on to us, and if such increased costs are sustained or increase further, our suppliers may pass further cost increases on to us.

In addition to the effect on resin prices, transportation costs have generally increased and may further increase if crude oil prices increase.

Our transportation and service providers are typically able to pass any significant increases in oil prices on to us.

Our ability to recover such increased costs may depend upon our ability to raise prices on our products.

Due to the highly competitive nature of the healthcare industry and the cost-containment efforts of our customers and third-party payers, we may be unable to pass along cost increases through higher prices.

If we are unable to fully recover these costs through price increases or offset these increases through cost reductions, or we experience terminations or interruption of our relationships with our suppliers, we could experience lower margins and profitability, and our results of operations, financial condition and cash flows could be materially harmed.

Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results.

1 unchanged sentence

economic and geopolitical conditions.

Russia’s invasion and military attacks on Ukraine have triggered significant sanctions from U.S.

and European leaders.

These events are currently escalating and creating increasingly volatile global economic conditions.

Resulting changes in U.S.

trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a “trade war.” A trade war could result in increased costs for raw materials we use in our manufacturing and could result in Russia and other foreign governments imposing tariffs on products that we export outside the U.S.

The global macroeconomic environment continues to be challenging due to the effects of the COVID-19 pandemic and government responses, increases in inflation globally, instability in the global credit markets, the impact of uncertainty regarding global central bank monetary policy, the instability in the geopolitical environment in many parts of the world (including as a result of the on-going Russia and Ukraine war and China-Taiwan relations), the current economic challenges in China, and other disruptions.

Periods of intense diplomatic or armed conflict, such as the ongoing conflict in

Ukraine, may result in (i) new and rapidly evolving sanctions and trade restrictions, which may impair trade with sanctioned individuals and countries, and (ii) negative impacts to regional trade ecosystems among our customers, partners, and us.

Non-compliance with sanctions as well as general ecosystem disruptions could result in reputational harm, operational delays, monetary fines, loss of revenues, increased costs, loss of export privileges, or criminal sanctions.

Furthermore, U.S.

trade policy could trigger retaliatory actions by other countries, including China, resulting in a “trade war.” A trade war could result in increased costs for raw materials we use in our manufacturing and could result in foreign governments imposing tariffs on products that we export outside the U.S.

or otherwise limiting our ability to sell our products abroad.

1 unchanged sentence

Furthermore, if the conflict between Russia and Ukraine continues for a long period of time, or if other countries, including the U.S., become further involved in the conflict, we could face significant adverse effects to our business and financial condition.

The United Kingdom’s (“UK”) departure from the European Union (“EU”) (commonly known as “Brexit”) has created uncertainties affecting business operations in the UK, the EU and a number of other countries, including with respect to compliance with the regulatory regimes regarding the labeling and registration of the products we sell in these markets.

While we have taken proactive steps to mitigate possible disruption to our operations, we still could face increased costs, volatility in exchange rates, market instability and other risks, depending on the effects of existing and future agreements between the UK and EU regarding Brexit and the future EU/UK trading relationship.

The occurrence of regional epidemics or a global pandemic, such as COVID-19, may adversely affect our operations, financial condition, and results of operations.

The COVID-19 pandemic and governmental responses have had widespread, rapidly evolving, and unpredictable impacts on global society, economies, financial markets, and business practices.

The extent to which global pandemics impact our business going forward will depend on factors such as the duration and scope of the pandemic;

governmental, business, and individuals’ actions in response to the pandemic;

and the impact on economic activity, including the possibility of recession or financial market instability.

The above factors, including a number of other economic and geopolitical factors both in the U.S.

2 unchanged sentences

and abroad including currency fluctuations, inflationary pressures and significant income tax changes;

● global increases in inflation ;

● a global or regional economic slowdown in any of our market segments;

9 unchanged sentences

● the impact of each of the foregoing on outsourcing and procurement arrangements.

We rely on raw materials, component parts, finished products and third-party services in connection with our business.

For example, substantially all of our products are sterilized by only a few different entities.

If any of these sterilizers goes

out of business or fails to comply with quality or regulatory requirements, we may be unable to find a suitable supplier to replace them.

This could significantly delay or stop production and cause sales of such products to materially decline.

Additionally, many of our products have components that are manufactured using resins, plastics and other petroleum-based materials which are available from a limited number of suppliers.

Additionally, there is no assurance that crude oil supplies will be uninterrupted or that petroleum-based manufacturing materials will be available for purchase in the future.

The military conflict between Russia and Ukraine may increase the likelihood of supply interruptions and further hinder our ability to find the materials we need to make our products.

Our suppliers often pass some of their cost increases on to us, and if such increased costs are sustained or increase further, our suppliers may pass further cost increases on to us.

In addition to the effect on resin prices, transportation costs have generally increased and may further increase if crude oil prices increase.

Our transportation and service providers are typically able to pass any significant increases in oil prices on to us.

Our costs may also be impacted by laws to increase minimum wages, including the potential increase to the federal minimum wage in the United States that has been recently proposed by the current administration.

Our ability to recover such increased costs may depend upon our ability to raise prices on our products.

Any damage or interruption to our facilities, infrastructure, manufacturing processes or information technology systems, or those of our suppliers, could result in lost revenues and our business could be seriously harmed.

Any damage or interruption to our operations, facilities, infrastructure, manufacturing processes or information technology systems, or those of our suppliers, including as a result of our facility consolidation initiatives, could result in lost revenues and our business could be seriously harmed.

Damage or interruption to our facilities or systems relating to manufacturing, distribution, research and development, or information technology because of fire, extreme weather conditions, natural disaster, power loss, communications failure, geopolitical disruption, labor strikes, riots, cyber-attack, health epidemics and pandemics, unauthorized entry or other events could significantly disrupt our operations, the operations of suppliers and critical infrastructure.

These events may also delay or prevent product manufacturing and shipment during the time required to repair, rebuild or replace the damaged facilities or systems.

We have recently closed certain facilities and moved operations and resources to other facilities.

As a result, this concentration of resources may further exacerbate the adverse effects of these events or make it more difficult for us to respond to the effects of these events.

Climate change may increase both the frequency and severity of natural disasters and, consequently, risks to our operations and growth.

We have recently closed or reduced the operations of certain facilities and moved operations and resources to other facilities, and we are in the process of other facility consolidation initiatives.

The resulting concentration of resources and the potential disruption and logistical challenges resulting from those initiatives may further exacerbate the adverse effects of these events or make it more difficult for us to respond to the effects of these events.

Those initiatives may also divert the attention of our management team or other personnel, result in unanticipated expense and disrupt our operations.

Climate change may increase both the frequency and severity of natural disasters and,

consequently, risks to our operations and growth.

Although we maintain property damage and business interruption i nsurance coverage on our facilities , our insurance might not cover all losses under such circumstances, and we may not be able to renew or obtain such insurance in the future on acceptable terms with adequate coverage or at reasonable costs.

2 unchanged sentences

Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which has created more requests for pricing concessions and is expected to continue in the future.

Additionally, many of our customers belong to group purchasing organizations or integrated delivery networks that use their market power to consolidate purchasing decisions for these hospitals and healthcare service

These customers are often able to obtain lower prices and more favorable terms because of the potential sales volume they represent, which has lead to lower revenues and required us to take on additional liability.

7 unchanged sentences

A reduction in the demand for a significant number of our products, or a few key products, could have a material adverse effect on our business, operations or financial condition.

COVID-19 Pandemic Risks

The COVID-19 pandemic has negatively impacted our business and operations around the world and may continue to materially and adversely impact our business, operations and financial results .

The COVID-19 pandemic has created significant disruption and uncertainty in the global economy, has negatively impacted our business, results of operations and financial condition, and we anticipate that it will continue to negatively impact our business, results of operations and financial condition for the foreseeable future.

Numerous national, international, state and local jurisdictions have imposed, and may further impose, a variety of government orders and restrictions for their residents to control the spread of COVID-19.

COVID-19 Risks

The COVID-19 pandemic and related ongoing implications have negatively impacted our business and operations around the world and may continue to materially and adversely impact our business, operations and financial results .

The COVID-19 pandemic and the resulting containment measures created significant disruption and uncertainty in the global economy and negatively impacted our business, results of operations and financial condition during 2020, 2021 and 2022.

Although the impact of COVID-19 and the resulting containment measures decreased during 2022, they have the potential to continue to negatively impact our business, results of operations and financial condition in the future.

Numerous national, international, state and local jurisdictions imposed a variety of government orders and restrictions for their residents to control the spread of COVID-19.

In 2020, such orders and restrictions caused significant alterations of our operations, work stoppages, slowdowns and delays, travel restrictions and event cancellations, among other effects, thereby significantly and negatively impacting our financial condition.

In 2021, these conditions continued at varying levels throughout the year.

Other disruptions that we experienced, which persist in various regions throughout the world, include (i) restrictions on our personnel and personnel of business partners to travel and access customers for training and case support; (ii) supply chain delays and disruptions, logistical challenges and increased freight, transportation and other expenses;

In 2021 and 2022, these conditions continued at varying levels.

Other disruptions that we experienced include (i) restrictions on our personnel and personnel of business partners to travel and access customers for training and case support; (ii) supply chain delays and disruptions, logistical challenges and increased freight, transportation and other expenses;

(iii) delays in regulatory approvals by governmental and regulatory bodies;

(iv) reductions in spending by our customers;

(v) diversion of or limitations on employee resources that would otherwise be focused on the operations of our business, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; (vi) fluctuations in the availability of employees and potential employees; (vii) additional government requirements or other incremental mitigation efforts that may further impact our or our suppliers' capacity to manufacture our products;

may further impact our or our suppliers' capacity to manufacture our products;

(viii) disruption of our research and development activities;

and (ix) delays in ongoing studies and pre-clinical trials.

Although some of these disruptions diminished in 2021, they may again return or further intensify their effect on our operations, whether as a direct result of the COVID-19 pandemic or other factors exacerbated by the effects of the COVID-19 pandemic.

Although some of these disruptions diminished in 2021 and the impact lessened further during 2022, they may again return or further intensify their effect on our operations, whether as a direct result of COVID-19 or other factors exacerbated by the effects of COVID-19.

In addition, elective procedures that use our products significantly decreased in number during much of 2020 as health care organizations around the world prioritized the treatment of patients with COVID-19 and reduced spending in other areas.

1 unchanged sentence

In 2021, these procedures resumed in many locations, and overall, we saw significant improvement in our business during 2021.

however, it is

unclear when or if a resurgence of COVID-19, or increased spread of its variants, may again cause a rise in severe infections and force authorities and customers to impose restrictions that will negatively impact our operations.

We saw further improvement in the availability of elective procedures during 2022.

It is possible, however, that a resurgence of COVID-19, or increased spread of its variants, could again cause a rise in severe infections and force authorities and customers to impose restrictions that would negatively impact our operations.

All of these factors have also caused or contributed to disruptions and delays in our logistics and supply chain, and we may continue to experience these disruptions and delays.

The full extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on future developments that are uncertain and cannot be predicted, including new information that may emerge concerning the severity and spread of the virus and its variants.

To the extent the COVID-19 pandemic continues to adversely affect our business, operations and financial results, it may also have the effect of heightening other risks described herein, such as those relating to general economic conditions, demand for our products, relationships with suppliers and sales efforts.

The full extent to which COVID-19 and resulting containment measures impact our business, operations and financial results will depend on future developments that are uncertain and cannot be predicted, including new information that may emerge concerning the severity and spread of the virus and its variants.

To the extent COVID-19 (including existing variants and any new variants) and resulting containment measures continue to adversely affect our business, operations and financial results, they may also have the effect of heightening other risks described herein, such as those relating to general economic conditions, demand for our products, relationships with suppliers and sales efforts.

Strategic, Business Development and Employee Attraction and Retention Risks

8 unchanged sentences

Substantial costs are incurred when identifying, evaluating, negotiating and closing acquisitions, and failure to integrate acquired businesses may adversely impact our business and financial results.

Over the past several years, we have completed a series of significant acquisitions and, in the future we may consider other potential acquisitions and strategic transactions, certain of which may also be significant.

We have incurred, and will likely continue to incur, significant expenses in connection with negotiating and consummating various acquisition and other strategic transactions.

We have completed a series of significant acquisitions and, continue to evaluate other potential acquisitions and strategic transactions, certain of which may also be significant.

We have incurred, and will likely continue to incur, significant expenses in connection with evaluating, negotiating and consummating various acquisition and other strategic transactions.

As we grow through acquisitions, we face the additional challenges of integrating the operations, culture, information management systems and other characteristics of the acquired entity with our own, including sales models related to capital equipment.

Our efforts to integrate acquisitions may be hampered by delays, the loss of certain employees, suppliers or customers, proceedings resulting from employment terminations, culture clashes, unbudgeted costs, and other issues, which may occur at levels that are more severe or prolonged than anticipated.

Our efforts to integrate acquisitions may be hampered by delays, the loss of certain employees, suppliers or

customers, proceedings resulting from employment terminations, culture clashes, unbudgeted costs, and other issues, which may occur at levels that are more severe or prolonged than anticipated.

Additionally, past and future acquisitions may increase the risks of competition we face by, among other things, extending our operations into industry segments and product lines where we have few existing customers or qualified sales personnel and limited expertise.

2 unchanged sentences

In addition, we may not realize competitive advantages, synergies or other benefits anticipated in connection with any such acquisition or other transaction.

If we do not adequately identify and value targets for, or manage issues related to,

acquisitions and strategic transactions, such transactions may not produce the anticipated benefits and have an adverse effect on our business, operations or financial condition.

If we do not adequately identify and value targets for, or manage issues related to, acquisitions and strategic transactions, such transactions may not produce the anticipated benefits and have an adverse effect on our business, operations or financial condition.

We have incurred expenses in connection with the disposition of businesses and assets which we acquired but determined that they did not produce the benefits contemplated at the time of acquisition.

We may incur similar expenses in the future.

We will be required to expend significant resources for research, development, testing and regulatory approval or clearance of our products under development, and these products may not be developed successfully or approved for commercial use .

10 unchanged sentences

To ensure adequate supply, we must forecast our inventory needs and place orders with our suppliers based on estimates of future demand for particular products.

Our ability to accurately forecast demand for our products could be negatively affected by many factors, including our failure to accurately manage our expansion strategy and customer acceptance of new products, product introductions by our competitors, an increase or decrease in customer demand for our products or for products of our competitors, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions, effects of the COVID-19 pandemic or consumer confidence in future economic conditions.

Our ability to accurately forecast demand for our products could be negatively affected by many factors, including our failure to accurately manage our expansion strategy and customer acceptance of new products, product introductions by our competitors, an increase or decrease in customer demand for our products or for products of our competitors, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions, effects of COVID-19 or decreased consumer confidence in future economic conditions.

Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, which would impact our gross margin.

12 unchanged sentences

In addition, although our contract terms require our distributors to comply with all applicable laws regarding the sale of our products, including anti-competition, anti-corruption, anti-money laundering and sanctions laws, we may not be able to ensure proper compliance.

If our distributors

fail to effectively market and sell our products in full compliance with applicable laws, our results of operations and business could be impacted.

If our distributors fail to effectively market and sell our products in full compliance with applicable laws, our results of operations and business could be impacted.

We are dependent upon key personnel .

18 unchanged sentences

In particular, w e are currently conducting a large, multinational pivotal human clinical trial of the Wrapsody Endoprosthesis.

A successful outcome of this trial is required to obtain approval from the FDA and some international regulatory agencies.

A successful outcome of this trial is required to obtain approval from the FDA and some international

regulatory agencies.

However, there is no assurance that we will be able to obtain the necessary regulatory clearances or approvals for the Wrapsody Endoprosthesis or any other products on a timely basis or at all.

3 unchanged sentences

We cannot provide assurance that we will successfully maintain the clearances or approvals we have received or may receive in the future.

The loss of previously received clearances or

approvals, or the failure to comply with existing or future regulatory requirements, could also have a material adverse effect on our business.

The loss of previously received clearances or approvals, or the failure to comply with existing or future regulatory requirements, could also have a material adverse effect on our business.

Our products are generally subject to regulatory requirements in foreign countries in which we sell them.

22 unchanged sentences

We anticipate that government authorities will continue to scrutinize our industry closely, and that additional regulation by government authorities may increase compliance costs, exposure to litigation and other adverse effects on our operations.

If we fail to comply with applicable regulatory requirements, including the terms of the CIA, we may be subjected to a wide variety of sanctions and enforcement actions, including warning letters that require corrective action, injunctions, product seizures or recalls, suspension of product manufacturing, revocation of approvals, import or export prohibitions, exclusion from participation in government healthcare programs, civil fines and/or criminal penalties, which in turn may have a negative impact our business, results of operations, financial condition and ability to obtain financing on reasonable terms.

If we fail to comply with applicable regulatory requirements, including the terms of the CIA, we may be subjected to a wide variety of sanctions and enforcement actions, including warning letters that require corrective action, injunctions, product seizures or recalls, suspension of product manufacturing, revocation of approvals, import or export prohibitions, exclusion from participation in government healthcare programs, civil fines and/or criminal penalties, which in turn may have a negative impact on our business, results of operations, financial condition and ability to obtain financing on reasonable terms.

We are subject to laws targeting fraud and abuse in the healthcare industry, the violation of which could adversely affect our business or financial results .

21 unchanged sentences

The ability of our customers to obtain adequate reimbursement for the health care procedures that use our products, such that the cost of our products is covered, is critical to our business.

Limits on reimbursement imposed by such third-party payers may adversely affect our customers, such as hospitals, physicians and other healthcare providers, to purchase our products, which could adversely affect our business and results of operations.

Limits on reimbursement imposed by such third-party payers may adversely affect our

customers, such as hospitals, physicians and other healthcare providers, to purchase our products, which could adversely affect our business and results of operations.

Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs.

3 unchanged sentences

Therefore, coverage and reimbursement for procedures using our products can differ significantly from payer to payer and, in some cases, jurisdiction to jurisdiction.

payers continually review new and existing technologies for possible coverage and can, without notice, deny, change or reverse coverage decisions or alter prior authorization requirements for new or existing products and procedures.

In addition, payers continually review new and existing technologies for possible coverage and can, without notice, deny, change or reverse coverage decisions or alter prior authorization requirements for new or existing products and procedures.

We cannot provide assurance that we will be successful in any efforts we may potentially undertake to reverse such non-coverage or unfavorable coverage decisions.

7 unchanged sentences

and many other countries in which we conduct our operations have adopted laws and regulations protecting certain data, including medical and personal data (including HIPAA, the HITECH Act and the rules issued thereunder), and requiring data holders and controllers to implement administrative, logical and technical controls and procedures in order to protect the privacy of such data.

Individual states have also begun to enact data privacy laws.

For example, California’s Consumer Protection Act went into effect on January 1, 2020, giving consumers the right to demand certain information and actions from companies who collect personal information.

Individual states have also begun to enact data privacy laws giving consumers the right to demand certain information and actions from companies who collect personal information.

Internationally, some countries have also passed laws and regulations that require individually identifiable data on their citizens to be maintained on local servers and that may restrict transfer or processing of that data.

In addition, regulatory authorities around the world are considering a number of additional proposals concerning data protection.

In addition, regulatory authorities around the world are considering additional proposals concerning data protection.

These laws and regulations have been, and may continue to be, inconsistent with each other, requiring different approaches in different jurisdictions.

1 unchanged sentence

Further, we have incurred, and will likely continue to incur, significant expense in connection with our efforts to comply with those applicable laws and regulations.

It is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent with our data practices, possibly resulting in fines or orders requiring that we change our data practices, which could have an adverse effect on our business and results of operations.

Complying with these various laws could cause us to incur substantial costs or require us to change our business practices in a manner adverse to our business.

Legal developments in foreign countries have created compliance uncertainty regarding certain transfers of personal data from certain countries to the U.S.

It is possible that these laws and regulations may be interpreted and applied in a manner that is inconsistent with our data practices, resulting in fines or orders requiring that we change our data practices, which could in turn (i) cause us to incur substantial costs or (ii) have an adverse effect on our business.

Legal developments in foreign countries have created uncertainty regarding certain transfers of personal data from certain countries to the U.S.

or other foreign countries.

For example, the GDPR, applies to the processing of personal data related to the activities of an establishment in the EU or to the processing of personal data of data subjects who are in the EU where this is related to products and services that we offer to EU users.

The GDPR created a range of new compliance obligations, which could cause us to change our business practices, and significantly increases financial penalties for noncompliance (including possible fines of up to 4% of the total worldwide global annual turnover for the preceding financial year or €20 million (whichever is higher) for the most serious infringements).

In addition, as discussed under Item 1.

“Business – Regulation - Privacy and Security,” the PIPL, similar to the GDPR, applies to personal information processing activities outside of China if companies provide products or services to individuals in China or analyze and evaluate the behavior of individuals in China.

If we fail to comply with the requirements of the PIPL, we could incur severe penalties, including a fine of up to RMB 50 million or 5% of our annual turnover in the preceding year and revocation of our license to do business in China.

If we incur any of these penalties in the EU or China for violations of the GDPR or PIPL, our business and operations in those areas could be adversely affected and have a material adverse effect on our financial results.

For example, GDPR applies to the processing of personal data related to:

(i) the activities of an establishment in the EU or (ii) the processing of personal data of data subjects who are in the EU where this is related to products and services that we offer to EU users.

GDPR includes compliance obligations, which could cause us to change our business practices, and significantly increases financial penalties for noncompliance.

In addition, the PIPL, similar to GDPR, applies to personal information processing activities outside of China if companies provide products or services to individuals in China or analyze and evaluate the behavior of individuals in China.

If we fail to comply with the requirements of the PIPL, we could incur severe penalties.

If we incur any of these penalties in the EU or China for violations of GDPR or the PIPL, our business and operations in those areas could be adversely affected and have a material adverse effect on our financial results.

Our failure to comply with applicable environmental, health and safety laws and regulations could affect our business, operations or financial condition.

51 unchanged sentences

We are routinely a party to or otherwise involved in legal proceedings, claims or other legal matters, arising in the course of our business.

In particular, our company, our Chief Executive Officer and our Chief Financial Officer have been named in a complaint filed in the U.S.

District Court for the Central District of California, which alleges violations of certain federal securities laws, and our company and certain of our officers and directors have been named in a related shareholder derivative proceeding filed in the U.S.

District Court of the State of Utah.

Legal proceedings can be complex and take

many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control.

Legal proceedings can be complex and take many months, or even years, to reach resolution, with the final outcome depending on a number of variables, some of which are not within our control.

Litigation is subject to significant uncertainty and may be expensive, time-consuming, and disruptive to our operations.

Although it is our intention to vigorously defend ourselves in such legal proceedings, their ultimate resolution and potential financial and other impacts on us are uncertain.

Although it is our intention to vigorously defend ourselves in such legal proceedings, their ultimate resolution and potential financial and

other impacts on us are uncertain.

If a legal proceeding is resolved against us, it could result in significant compensatory damages or injunctive relief that could materially adversely affect our financial condition, results of operations and cash flows.

25 unchanged sentences

Any such claim, with or without merit, could result in costly litigation, distract management from day-to-day operations and harm our brand or reputation, which in turn could harm our business or results of operations.

If we are not successful in defending such claims, we could be required to (i) stop selling our products, (ii) redesign our products, (iii) discontinue the use of related trademarks, technologies or

designs, (iv) pay damages or indemnification obligations, or (v) enter into royalty or licensing arrangements.

Royalty or licensing arrangements that we may seek in such circumstances may not be available to us on commercially reasonable terms or at all and we may not be able to redesign applicable products in a way to avoid infringing the intellectual property rights of others.

If we are not successful in defending such claims, we could be required to (i) stop selling our products, (ii) redesign our products, (iii) discontinue the use of related trademarks, technologies or designs, (iv) pay damages or indemnification obligations, or (v) enter into royalty or licensing arrangements.

rights of others.

We have made and expect to continue making significant expenditures to investigate, defend and settle claims related to the use of technology and intellectual property rights as part of our strategy to manage this risk.

19 unchanged sentences

Bank, National Association, BMO Harris Bank, N.A., and MUFG Union Bank, Ltd.

are parties to the

Third Amended Credit Agreement as lenders.

are parties to the Third Amended Credit Agreement as lenders.

The Third Amended Credit Agreement amends and restates in its entirety our previously outstanding Second Amended and Restated Credit Agreement and all amendments thereto (the “Second Amended Credit Agreement”).

The Third Amended Credit Agreement contains a number of significant covenants that could adversely affect our ability to operate our business, our liquidity or our results of operations.

The Third Amended Credit Agreement contains a number of significant covenants that

could adversely affect our ability to operate our business, our liquidity or our results of operations.

These covenants restrict, among other things, our incurrence of indebtedness, creation of liens or pledges on our assets, mergers or similar combinations or liquidations, asset dispositions, repurchases or redemptions of equity interests or debt, issuances of equity, payment of dividends and certain distributions and entry into related party transactions.

12 unchanged sentences

The market price of our common stock has been and may continue to be volatile.

The market price of our common stock has recently been, and may in the future be, volatile for various reasons, including those discussed in these risk factors.

The market price of our common stock has at times, been, and may in the future be, volatile for various reasons, including those discussed in these risk factors.

Other events that could cause volatility in our stock include, without limitation, variances in our financial results;

6 unchanged sentences

During 2022, 2021 and 2020, the exchange rate between all applicable foreign currencies and the U.S.

Dollar resulted in an increase in net sales of $10.3 million, a decrease in net sales of $1.3 million and a decrease in net sales of $13.5 million, respectively.

Dollar resulted in a decrease in net sales of $23.8 million, an increase in net sales of $10.3 million, and a decrease in net sales of $1.3 million, respectively.

For the year ended December 31, 2022, $394.1 million, or 34.2%, of our net sales were denominated in foreign currencies, with our CNY- and Euro-denominated sales representing our largest currency risks to net sales.

4 unchanged sentences

Dollar, our financial results may be negatively impacted.

Fluctuations in our effective tax rate may adversely affect our business, financial condition or results of operation.

We are subject to changes in tax laws, fluctuations in tax rates, the adoption of new tax legislation or exposure to additional tax liabilities, which may adversely affect our effective tax rate, business, financial condition, or results of operations.

We are subject to taxation in numerous countries, states and other jurisdictions.

3 unchanged sentences

Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations, which could have an adverse effect on our business, financial condition or results of operation.

Uncertainty relating to the LIBOR calculation method and potential phasing out of LIBOR after 2021 may adversely affect the interest rates under our Third Amended Credit Agreement .

Certain of the interest rates applicable to our Third Amended Credit Agreement, and applicable to hedging instruments we have purchased to offset interest rate risk under our Third Amended Credit Agreement, are LIBOR-based.

On July 27, 2017, the U.K.

Financial Conduct Authority (the “FCA”) announced that it will no longer persuade or compel banks to submit rates for the calculation of LIBOR rates after 2021.

Actions by the FCA, other regulators or law enforcement agencies may result in changes to the method by which LIBOR is calculated.

At this time, it is not possible to predict the effect of any such changes or any other reforms to LIBOR that may be enacted in the UK or elsewhere.

Uncertainty as to the nature of such potential changes may adversely affect the trading market for LIBOR-based securities, including the floating rates applicable to our Third Amended Credit Agreement and related hedges.

It is possible that the changes in how LIBOR is calculated, changes in the trading market for LIBOR-based securities or actions of the FCA and other government entities may cause unexpected increases in LIBOR rates or a breakdown in the LIBOR systems.

If these issues arise, we could experience increased interest rates or uncertainty with respect to the calculation of interest on our Third Amended Credit Agreement and other instruments, which could harm our operations.

Unresolved Staff Comments.

In many countries, including the United States, we are subject to transfer pricing and other tax regulations designed to ensure that appropriate levels of income are reported as earned by our U.S.

or local entities and are taxed accordingly.

Although we believe we are in substantial compliance with applicable regulations and restrictions, we are subject to the risk that governmental authorities could assert that we owe additional taxes.

In the event that audits, assessments, or other determinations by governmental authorities are concluded adversely to us, they could have an adverse effect on our business, financial condition or results of operation.

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