What changed in this filing

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Item 1A. Risk Factors

2022-02-22 compared with 2021-02-16 · 110 added, 108 removed, 344 unchanged (39% of the section changed)

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Any of the following risks could materially and adversely affect our business, financial condition, results of operations, cash flows and the actual outcome of matters as to which forward-looking statements are made in this document.

Risks Relating to the COVID-19 Pandemic

The COVID-19 pandemic is expected to have a material negative impact on our business, financial condition, results of operations and cash flows.

Our business and financial results have been and are expected to continue to be negatively impacted by the COVID-19 pandemic.

Risks Relating to Our Business

The COVID-19 pandemic may have a material negative impact on our business, financial condition, results of operations and cash flows.

Our business and financial results have been and may continue to be negatively impacted by the COVID-19 pandemic and its repercussions.

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

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

• The COVID-19 pandemic has caused a global economic slowdown that may last for a potentially extended duration, and it is possible that it could cause a global recession.

In 2021 and 2020, the COVID-19 pandemic significantly impacted economic activity and markets around the world and our business, and it may negatively impact our business in numerous ways, including but not limited to those outlined below:

• Deteriorating economic and political conditions caused by the COVID-19 pandemic, such as increased unemployment, decreases in capital spending, declines in consumer confidence, or economic slowdowns or recessions, could cause a decrease in demand for our products.

• Due to the impacts of the COVID-19 pandemic, we have experienced and expect to continue to experience reductions in customer demand for certain of our products and in several of our end-markets, including commercial filtration, commercial flow, industrial filtration and food and beverage.

• The COVID-19 pandemic is adversely affecting, and is expected to continue to adversely affect, certain elements of our business (including certain elements of our operations, supply chains and distribution systems), including as a result of impacts associated with required, preventive and precautionary measures that we, other businesses, our communities and governments are taking.

These impacts include requiring employees to work from home or not go into their offices or facilities, limiting the number of employees attending meetings, reducing the number of people in our sites at any one time, reducing employee travel and adopting other employee safety measures.

• Due to the impacts of the COVID-19 pandemic, we have experienced and may continue to experience reductions in customer demand for certain products and in certain end-markets.

• Our workforce may be unable or unwilling to work on-site or travel as a result of the continuing pandemic and related vaccine requirements, event cancellations, facility closures, shelter-in-place, travel and other restrictions and changes in industry practice, or if they, their co-workers or their family members become ill or otherwise require care arrangements.

Regulations for vaccines and COVID-19 testing have been announced and additional regulations may be announced in the jurisdictions in which our businesses operate.

Implementation of new regulations for vaccines may result in attrition of professional and skilled labor and impact our ability to attract and retain talent necessary for our business operations.

These measures also may impact our ability to meet production demands or requests and may delay our new product introductions depending on employee attendance or ability to continue to work.

In addition, we have experienced disruptions at some of our facilities with higher absenteeism due to the COVID-19 pandemic.

• If the COVID-19 pandemic continues and economic conditions worsen, we expect to experience additional adverse impacts on our operational and commercial activities, customer orders and our collections of accounts receivable, which may be material, and it remains uncertain the impact on future operational and commercial activities, customer orders, and collections even if economic conditions begin to improve.

• Government or regulatory responses to the COVID-19 pandemic have and are likely to continue to negatively impact our business.

During the first and second quarters of 2020, mandatory lockdowns or other restrictions on operations in

some countries temporarily disrupted our ability to manufacture or distribute our products in some of these markets.

• If the COVID-19 pandemic continues and economic conditions worsen, we may experience additional adverse impacts on our operational and commercial activities, customer orders and our collections of accounts receivable, which could be material, and it remains uncertain the impact on future operational and commercial activities, customer orders, and collections even if economic conditions improve.

• Government or regulatory responses to the COVID-19 pandemic have and may continue to negatively impact our business.

During 2021 and 2020, mandatory lockdowns or other restrictions on operations in some countries temporarily disrupted our ability to manufacture or distribute our products in some of these markets.

A reoccurrence of these disruptions could materially adversely impact our operations and results.

In addition, the current resurgence of the COVID-19 pandemic and government restrictions related thereto in the fourth quarter of 2020 and first quarter of 2021 may negatively impact demand in certain of our commercial and industrial businesses.

In addition to existing travel restrictions, jurisdictions may continue to close borders, impose prolonged quarantines and further restrict travel and business activity, and other related supply chain delays may develop, which could significantly impact our ability to support our operations and customers, meet demand, develop new products, ship our backlog and also impact the ability of our employees to get to their workplaces to produce products and services, or significantly hamper our products from moving through the supply chain.

In addition to existing travel restrictions, jurisdictions may continue to close borders, impose increased vaccine or testing requirements, prolong quarantines and further restrict travel and business activity, and other related supply chain delays may develop, which could significantly impact our ability to support our operations and customers, meet demand, develop new products, ship our backlog and also impact the ability of our employees to get to their workplaces to produce products and services, or significantly hamper our products from moving through the supply chain.

• The impacts of the COVID-19 pandemic may limit our ability to reduce our overall operating costs.

We have experienced increased costs relating to our efforts to mitigate the impact of the COVID-19 pandemic through, among other things, enhanced sanitization procedures and social-distancing measures we have enacted and will likely continue to enact at our locations around the world in an effort to protect our employees’ health and well-being.

• The COVID-19 pandemic has disrupted and is expected to continue to disrupt our operations, global supply chain and routes to market or those of our suppliers or their suppliers.

These disruptions or our failure to effectively respond to them have increased and may continue to increase product, distribution or labor costs or cause delays in delivering our backlog or may cause an inability to deliver products to our customers or meet customer demand.

• While we have experienced high demand in our pool business as consumers sheltered-in-place and have spent more time at home as a result of the COVID-19 pandemic that contributed to growth in our sales during 2020, such growth may not be sustainable and may not be repeated in future periods.

Furthermore, even if growth in demand continues, we may not be able to meet that demand due to production and capacity challenges.

We have experienced increased costs relating to our efforts to mitigate the impact of the COVID-19 pandemic through, among other things, our continued measures taken to protect our employees’ health and well-being.

• The increase in demand as the COVID-19 pandemic has stabilized or waned has disrupted and is expected to continue to disrupt our operations, global supply chain and routes to market and/or those of our suppliers and/or their suppliers.

These disruptions or our failure to effectively respond to them have increased and may continue to increase product, logistics or labor costs, limit availability of raw materials or cause delays in delivering our backlog or may cause an inability to deliver products to our customers or meet customer demand.

• While we have experienced high demand in our pool business as consumers have spent more time at home as a result of the COVID-19 pandemic that contributed to growth in our sales during 2021 and 2020, such growth may not be sustainable and may not be repeated in future periods.

Furthermore, even if growth in demand continues, we may not be able to meet that demand due to supply, production, capacity, and/or labor challenges.

• Disruptions or uncertainties related to the COVID-19 pandemic for a sustained period of time could result in delays or modifications to some of our strategic plans and initiatives and hinder our ability to achieve our growth targets.

• The COVID-19 pandemic has increased volatility and pricing in and disrupted the capital markets and commercial paper markets, and volatility is likely to continue.

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

• Actions we have taken or may take, or decisions we have made or may make, as a consequence of the COVID-19 pandemic, may result in legal investigations or claims, regulatory actions, or litigation against us.

We might not be able to predict or respond to all impacts of the COVID-19 pandemic on a timely basis to prevent near- or long-term adverse impacts to our results.

Due to the speed with which the COVID-19 situation continues to develop, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration and ultimate impact and uncertainty regarding the availability and distribution of vaccines to address the COVID-19 virus;

We may not be able to predict or respond to all impacts of the COVID-19 pandemic on a timely basis to prevent near- or long-term adverse impacts to our results.

Due to the speed with which the COVID-19 situation continues to develop, the global breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration and severity and ultimate impact, actions taken by parties other than us to respond to the pandemic and the impact of virus variants and the effectiveness of vaccines to address the COVID-19 virus and variants;

therefore, any negative impact on our business, financial condition (including without limitation our liquidity), results of operations and cash flows cannot be reasonably estimated at this time, but the COVID-19 pandemic could lead to extended disruption of economic activity and the impact on our business, financial condition, results of operations and cash flows could be material.

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

The foregoing and other impacts of the COVID-19 pandemic could have the effect of heightening many of the other risks described below and any of these impacts could materially adversely affect our business, financial condition, results of operations and cash flows.

Risks Relating to Our Business

General global economic and business conditions affect demand for our products.

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We have experienced, and expect to continue to experience, fluctuations in revenues and results of operations due to economic and business cycles.

Important factors for our businesses and the businesses of our customers include the overall strength of the global economy and various regional economies and our customers’ confidence in these economies, industrial and governmental capital spending, the strength of residential and commercial real estate markets, residential housing markets, the commercial business climate, unemployment rates, availability of consumer and commercial financing, interest rates, and energy and commodity prices.

In particular, during 2021, we had higher than anticipated demand in our pool business and certain of our residential and commercial businesses.

Such demand may not be sustainable and may not be repeated in future periods.

The businesses of many of our industrial customers are to varying degrees cyclical and have experienced periodic downturns.

for our products and services, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

While we attempt to minimize our exposure to economic or market fluctuations by serving a balanced mix of end markets and geographic regions, any of the above factors, individually or in the aggregate, or a significant or sustained downturn in a specific end market or geographic region could reduce demand for our products and services, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We compete in attractive markets with a high level of competition, which may result in pressure on our profit margins and limit our ability to maintain or increase the market share of our products.

The markets for our products and services are geographically diverse and highly competitive.

We compete against large and well-established national and global companies, as well as regional and local companies and lower cost manufacturers.

Competition may also result from new entrants into the markets we serve, offering products and/or services that compete with us.

We compete based on technical expertise, intellectual property, reputation for quality and reliability, timeliness of delivery, previous installation history, contractual terms, service offerings, customer experience and service, and price.

We compete against large and well-established national and global companies, regional and local companies, diversified and pure-play companies, and lower cost manufacturers.

Competition may also result from new entrants into the markets we serve offering products and/or services that compete with ours.

Some of our competitors attempt to compete based primarily on price, localized expertise and local relationships, especially with respect to products and applications that do not require a great deal of engineering or technical expertise.

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Customer purchasing behavior may also shift by product mix in the market or result in a shift to new distribution channels, including e-commerce, which is a rapidly developing area.

If we are unable to continue to differentiate our products, services and solutions or adapt to changes in customer purchasing behavior or shifts in distribution channels, or if we are forced to cut prices or to incur additional costs to remain competitive, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Volatility in currency exchange rates could have a material adverse effect on our financial condition, results of operations and cash flows.

Sales outside of the U.S.

for the year ended December 31, 2020 accounted for 33% of our net sales.

Our financial statements reflect translation of items denominated in non-U.S.

currencies to U.S.

Therefore, if the U.S.

dollar strengthens in relation to the principal non-U.S.

currencies from which we derive revenue as compared to a prior period, our U.S.

dollar reported revenue and income will effectively be decreased to the extent of the change in currency valuations, and vice-versa.

Fluctuations in foreign currency exchange rates, most notably the strengthening of the U.S.

dollar against the euro, could have a material adverse effect on our reported revenue in future periods.

In addition, currency variations could have a material adverse effect on margins on sales of our products in countries outside of the U.S.

and margins on sales of products that include components obtained from suppliers located outside of the U.S.

If we are unable to continue to differentiate our products, services and solutions or adapt to changes in customer purchasing behavior or shifts in distribution channels, or if we are forced to change prices or to incur additional costs to remain competitive, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our future growth is dependent upon our ability to transform and adapt our products, services, solutions, and organization to meet the demands of local markets in both developed and emerging economies and by developing or acquiring new technologies that achieve market acceptance with acceptable margins.

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• dilution of interests of holders of our shares through the issuance of equity securities or equity-linked securities.

It may be difficult for us to integrate acquired businesses efficiently into our business operations.

Any acquisitions or investments may not be successful or realize the intended benefits and may ultimately result in impairment charges or have a material adverse effect on our business, financial condition, results of operations and cash flows.

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During 2021, 2020 and 2019, we initiated and continued execution of certain business initiatives aimed at reducing our fixed cost structure and realigning our business.

As a result, we have incurred substantial expense, including restructuring charges.

We may not be able to achieve the operating efficiencies to reduce costs or realize benefits that were anticipated in connection with these initiatives.

During 2021, we also launched and committed resources to a program designed to accelerate growth and drive margin expansion through transformation of our business model to drive operational excellence, reduce complexity and streamline our processes.

As a result, we have incurred and expect to continue to incur in the future substantial expense, including transformation costs that include professional services, project management and related design and execution charges, as well as costs related to both labor and non-labor restructuring and IT investments, and restructuring charges.

We may not be able to achieve accelerated growth and margin expansion or operating efficiencies to reduce costs or realize benefits that we anticipated in connection with these initiatives.

If we are unable to execute these initiatives as planned, we may not realize all or any of the anticipated benefits, which could have a material adverse effect on our business, financial condition, results of operations and cash flows .

We may experience cost and other inflation.

During 2021, we experienced inflationary cost increases of raw materials, such as metals, resins and electronics (including drives and motors), as well as increases in logistics and labor costs, and we expect inflationary cost increases to continue in 2022.

We strive for productivity improvements and implement increases in selling prices to help mitigate cost increases in raw materials (especially metals, resins and electronics), logistics, energy and other costs including wages, pension, health care and insurance.

We continue to implement operational initiatives in order to mitigate the impacts of this inflation and continuously reduce our costs.

However, these actions may not be successful in managing our costs or increasing our productivity and we anticipate inflation to continue with respect to materials (especially resins, copper, steel, stainless steel and electronics) as well as labor and logistics.

Continued cost inflation or failure of our initiatives to increase prices, generate cost savings or improve productivity could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Interruption of our supply chain could affect our ability to produce or deliver our products and could negatively impact our business and profitability.

During 2021, we experienced supply chain challenges, including increased lead times for raw materials due to availability constraints and high demand.

While we have elevated our engagement with our suppliers and used secondary suppliers and new methods of procurement where available to mitigate the supply chain pressures, we expect supply chain challenges to continue in 2022.

Any material interruption in our supply chain, such as material interruption of the supply of raw materials and components due to the casualty loss of any of our manufacturing plants, interruptions in service by our third-party logistic service providers or common carriers that ship goods within our distribution channels, unexpected delays in shipping or processing through customs of goods, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions, or other unexpected or uncontrollable events that cause a material interruption in our supply chain such as pandemics, social or labor unrest, natural disasters or political disputes and military conflicts, could negatively affect our ability to produce or deliver our products and have a negative material impact on our business and our profitability.

Additionally, our raw materials and components are sourced from a wide variety of domestic and international business partners.

We rely on these suppliers to provide high quality products and to comply with applicable laws.

Our ability to find qualified suppliers who meet our standards and supply products in a timely and efficient manner may be a challenge, especially with respect to raw materials and components sourced from outside the U.S.

and from countries or regions with diminished infrastructure, developing or failing economies or which are experiencing political instability or social unrest.

For certain products, we may rely on one or very few suppliers.

A supplier's failure to meet our standards, provide products in a timely and efficient manner, or comply with applicable laws is beyond our control.

In addition, our competitors may be less reliant on third party suppliers than we are, which may give such competitors more control over their supply chain and lead times for manufacturing products.

These issues could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are exposed to political, regulatory, economic, trade, and other risks that arise from operating a multinational business.

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• relatively more severe economic conditions in some international markets than in the U.S.;

• the imposition of tariffs, duties, exchange controls or other trade restrictions;

• the imposition of sanctions, tariffs, duties, exchange controls, currency restrictions or other trade restrictions;

• changes in tax treaties, laws or rulings that could have a material adverse impact on our effective tax rate;

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• the difficulty of communicating and monitoring evolving standards and directives across our product lines, services, and global facilities;

• the difficulty of ensuring that products and services meet ever-changing regional regulations and requirements;

• the difficulty of ensuring that our products, services and supply chains meet ever-changing regional regulations and requirements;

• trade protection measures and import or export licensing requirements and restrictions;

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• the threat of nationalization and expropriation;

• changes due to nationalist consumer sentiment;

• the difficulty in staffing and managing widespread operations in non-U.S.

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• changes in and required compliance with a variety of non-U.S.

laws and regulations.

In 2016, the United Kingdom held a referendum in which voters approved an exit from the European Union (“Brexit”).

The United Kingdom subsequently withdrew from the European Union effective on January 31, 2020, subject to a transition period that ended on December 31, 2020.

Since January 1, 2021, the European Union - United Kingdom Trade and Cooperative Agreement has provisionally been in effect.

Given the lack of comparable precedent, the implications of Brexit, or how such implications might affect our company, continue to remain unclear at this time.

Brexit could, among other impacts, disrupt trade and the movement of goods, services and people between the United Kingdom and the European Union or other countries as well as create legal and global economic uncertainty.

laws and regulations, some of which may be incompatible.

Our success depends in part on our ability to anticipate and effectively manage these and other risks.

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As a result of changes to U.S.

or foreign government administrative policy, there may be changes to existing trade agreements, like the U.S.-Mexico-Canada Agreement (“USMCA”);

or foreign government administrative policy, there may be changes to existing trade agreements;

greater restrictions on free trade generally;

significant increases in tariffs on goods imported into the U.S., particularly tariffs on products manufactured in Mexico, China, or other countries where we purchase from, have operations or manufacture or sell products;

prohibitions or restrictions on doing business with certain companies, including those with certain relationships with China;

significant increases in tariffs on goods including those imported into the U.S., particularly tariffs on products manufactured in Mexico, China, or other countries where we purchase, have operations or manufacture or sell products;

prohibitions or restrictions on doing business with certain entities, including those with certain relationships with China;

and adverse responses by foreign governments to U.S.

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It remains unclear what the U.S.

administration or foreign governments, including China, will or will not do with respect to tariffs, USMCA or other international trade agreements and policies.

other governmental action related to tariffs or international trade agreements, including USMCA;

administration or foreign governments, including China, will or will not do with respect to tariffs or international trade agreements and policies.

other governmental action related to tariffs or international trade agreements;

changes in U.S.

social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently purchase, manufacture and sell products;

and any resulting negative sentiments towards the U.S.

as a result of such changes, could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may experience cost and other inflation.

In the past, we have experienced material cost and other inflation in a number of our businesses.

We strive for productivity improvements and implement increases in selling prices to help mitigate cost increases in raw materials (especially metals and resins), energy and other costs including wages, pension, health care and insurance.

We continue to implement operational initiatives in order to mitigate the impacts of this inflation and continuously reduce our costs.

Continued cost inflation or failure of our initiatives to generate cost savings or improve productivity could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Intellectual property challenges may hinder our ability to develop, engineer and market our products.

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Furthermore, our business strategy also includes expanding our smart products and Internet of Things offerings and there are many other companies that hold patents in this space.

Over the past few years, we have noticed an increasing tendency for participants in our markets to use challenges to intellectual property as a means to compete.

Over the past few years, we have noticed an increasing tendency for participants in our markets, including competitors, to use challenges to intellectual property as a means to compete.

Patent and trademark challenges increase our costs to develop, engineer and market our products.

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Declines in fair market value could result in future goodwill and intangible asset impairment charges.

A loss of, or material cancellation, reduction, or delay in purchases by, one or more of our largest customers could harm our business.

A loss of, or material cancellation, reduction, or delay in purchases by or delivery of products to, one or more of our largest customers could harm our business.

Our net sales to our largest customer represented approximately 20% of our consolidated net sales in 2021.

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Our success is dependent on retaining these customers, which requires us to successfully manage relationships and anticipate the needs of our customers in the channels in which we sell our products.

Our customers also may be impacted by economic conditions in the industries of those customers, which could result in reduced demand for our products.

Our customers also may be impacted by economic conditions in the industries of those customers, which could result in reduced demand for or a delay in purchases of our products.

In addition, our customers may cancel orders for purchases of our products or may not order products at rates consistent with past order levels.

In addition, we may not be able to timely deliver products to our largest customers due to supply chain interruptions or otherwise.

We cannot provide assurance that we will be able to retain our largest customers.

In addition, some of our customers may shift their purchases to our competitors in the future.

The loss of one or more of our largest customers, any material cancellation, reduction, or delay in purchases by these customers, or our inability to successfully develop relationships with additional customers could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The loss of one or more of our largest customers, any material cancellation, reduction, or delay in purchases by or delivery of products to these customers, or our inability to successfully develop relationships with additional customers could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Catastrophic and other events beyond our control may disrupt operations at our manufacturing facilities and those of our suppliers, which could cause us to be unable to meet customer demands or increase our costs, or reduce customer spending.

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We experience seasonal demand with end-customers and end-users within each of our business segments.

Demand for pool equipment in the pool business;

water treatment solutions in our water treatment and industrial filtration businesses;

and residential water supply, infrastructure and agricultural products in the businesses within the Industrial & Flow Technologies segment follows warm weather trends and is at seasonal highs from April to August.

While we attempt to mitigate the magnitude of the sales spike in the pool business and in the businesses within the Industrial & Flow Technologies segment by employing some advance sale “early buy” programs (generally including extended payment terms and/or additional discounts), we cannot provide any assurance that such programs will be successful.

Demand for pool equipment in the pool business within the Consumer Solutions segment and residential water supply, infrastructure and agricultural products in the businesses within the Industrial & Flow Technologies segment follows warm weather trends and is at seasonal highs from April to August.

While historically we have attempted to mitigate the magnitude of the sales spike in the pool business and in the businesses within the Industrial & Flow Technologies segment by employing some advance sale “early buy” programs (generally including extended payment terms and/or additional discounts), we cannot provide any assurance that should we use such programs in the future they will be successful.

In addition, seasonal effects in the pool business and in the businesses within the Industrial & Flow Technologies segment may vary from year to year and be impacted by weather patterns, particularly by temperature, heavy flooding and droughts.

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• employees in transit using company vehicles to visit customer locations and employees being present in customer homes, which may increase our scope of liability;

• the potential for increased scope of liability relating to our consumer products, services and solutions and related business model;

• the potential for increased scope of liability relating to our consumer products, services and solutions and related business model, including increased exposure to consumer lawsuits and enforcement actions by governmental authorities;

• increased costs of liability insurance to cover risks associated with performing installation and other services;

• the cyber-security and data protection risks related to the collection and storage of consumer data;

• the engagement of third parties to assist with sales, installation or servicing of our products and solutions, and the potential responsibility for the actions they take;

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These expanded risks increase the complexity of our business and place significant responsibility on our management, employees, operations, systems, technical expertise, financial resources, and internal controls and compliance functions.

Interruption of our supply chain could affect our ability to produce or deliver our products and could negatively impact our business and profitability.

Any material interruption in our supply chain, such as material interruption of the supply of raw materials and components due to the casualty loss of any of our manufacturing plants, interruptions in service by our third-party logistic service providers or common carriers that ship goods within our distribution channels, unexpected delays in shipping or processing through customs of goods, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions, or other unexpected or uncontrollable events that cause a material interruption in our supply chain such as pandemics, social or labor unrest, natural disasters or political disputes and military conflicts, could have a negative material impact on our business and our profitability.

Additionally, our raw materials and components are sourced from a wide variety of domestic and international business partners.

We rely on these suppliers to provide high quality products and to comply with applicable laws.

and from countries or regions with diminished infrastructure, developing or failing economies or which are experiencing political instability or social unrest.

For certain products, we may rely on one or very few suppliers.

A supplier's failure to meet our standards, provide products in a timely and efficient manner, or comply with applicable laws is beyond our control.

These issues could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Volatility in currency exchange rates could have a material adverse effect on our financial condition, results of operations and cash flows.

Sales outside of the U.S.

for the year ended December 31, 2021 accounted for 32% of our net sales.

Our financial statements reflect translation of items denominated in non-U.S.

currencies to U.S.

Therefore, if the U.S.

dollar strengthens in relation to the principal non-U.S.

currencies from which we derive revenue as compared to a prior period, our U.S.

dollar reported revenue and income will effectively be decreased to the extent of the change in currency valuations, and vice-versa.

Fluctuations in foreign currency exchange rates, most notably the strengthening of the U.S.

dollar against the euro, could have a material adverse effect on our reported revenue in future periods.

In addition, currency variations could have a material adverse effect on margins on sales of our products in countries outside of the U.S.

and margins on sales of products that include components obtained from suppliers located outside of the U.S.

Risks Relating to Our Debt and Financial Markets

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Additionally, our credit agreements generally include an increase in interest rates if the ratings for our debt are downgraded.

In addition, borrowings under our revolving credit facility and term loans bear interest at a rate equal to an adjusted base rate or the London Interbank Offered Rate (“LIBOR”), plus, in each case, an applicable margin.

Financial Conduct Authority, which regulates LIBOR, has announced it intends to phase out

LIBOR by the end of 2021.

The credit agreement governing our revolving credit facility and term loans provides procedures for determining a replacement or alternative base rate in the event that LIBOR is discontinued;

however, any calculation of interest based upon such replacement or alternative base rate may result in higher interest rates.

To the extent that our interest rates increase, our interest expense will increase, which could adversely affect our financial condition, results of operations and cash flows.

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Although we expect to have sufficient liquidity to meet our foreseeable needs, our access to and the cost of capital could be negatively impacted by disruptions in the credit markets, which have occurred in the past and made financing terms for borrowers unattractive or unavailable.

For example, during 2020, the commercial paper market began to experience high levels of volatility due to uncertainty related to the COVID-19 pandemic that impacted both market access to and pricing of commercial paper and we withdrew our credit ratings to access the commercial paper market.

These factors may make it more difficult or expensive for us to access credit markets if the need arises.

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Our failure to satisfy international trade compliance regulations, and changes in U.S.

government sanctions, could have a material adverse effect on us.

government and other applicable sanctions, could have a material adverse effect on us.

Our global operations require importing and exporting goods and technology across international borders on a regular basis.

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Compliance with environmental requirements also could require significant operating or capital expenditures or result in significant operational restrictions.

We cannot assure you that we have been or will be at all times in compliance with environmental and health and safety laws.

We cannot provide assurance that we have been or will be at all times in compliance with environmental and health and safety laws.

If we violate these laws, we could be fined, criminally charged or otherwise sanctioned by regulators.

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Our eventual environmental remediation costs and liabilities could exceed the amount of our current reserves.

Our subsidiaries are party to asbestos-related product litigation that could adversely affect our financial condition, results of operations and cash flows.

Our subsidiaries are party to asbestos-related litigation that could adversely affect our financial condition, results of operations and cash flows.

Our subsidiaries, along with numerous other companies, are named as defendants in a substantial number of lawsuits based on alleged exposure to asbestos-containing materials, substantially all of which relate to our discontinued operations.

These cases typically involve product liability claims based primarily on allegations of manufacture, sale or distribution of industrial products that either contained asbestos or were attached to or used with asbestos-containing components manufactured by third parties.

In addition, some cases brought against us involve the presence of asbestos at facilities that we own or used to own.

Each case typically names a large number of product manufacturers, service providers and premises owners.

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Unfavorable rulings, judgments or settlement terms could have a material adverse impact on our business and financial condition, results of operations and cash flows.

In addition, most of the asbestos claims against us are covered by liability insurance policies from many years ago.

In addition, while most of the asbestos claims against us are covered by liability insurance policies from many years ago, not all claims are insured.

As our insurers resolve claims relating to past policy periods, the aggregate coverage provided by those policies erodes.

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Both our products and the operation of our manufacturing facilities are subject to certain statutory and regulatory requirements.

These laws and regulations impose on us increasingly complex, stringent and costly compliance activities, including but not limited to environmental, health, and safety protection standards and permitting, labeling and other requirements regarding (among other things) pump efficiency, air quality and emissions, and wastewater discharges;

These laws and regulations impose on us increasingly complex, stringent and costly compliance activities, including but not limited to environmental, health, and safety protection standards and permitting, labeling and other requirements regarding (among other things) product efficiency and performance, material makeup, air quality and emissions, and wastewater discharges;

the use, handling, and disposal of hazardous or toxic materials;

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It is uncertain whether, when and in what form a federal mandatory carbon dioxide emissions reduction program, or other state programs, may be adopted.

Similarly, certain countries have adopted the Kyoto Protocol and/or the Paris Accord, and these and other existing international initiatives and regulations or those under consideration could affect our international operations.

Similarly, certain countries have adopted the Kyoto Protocol and in February 2021 the U.S.

rejoined the Paris Accord, and these and other existing or potential international initiatives and regulations could affect our international operations.

To the extent our customers, particularly our energy and industrial customers, are subject to any of these or other similar proposed or newly enacted laws and regulations, we are exposed to risks that the additional costs by customers to comply with such laws and regulations could impact their ability or desire to continue to operate at similar levels in certain jurisdictions as historically seen or as currently anticipated, which could negatively impact their demand for our products and services.

1 unchanged sentence

These actions could also increase costs associated with our operations, including costs for raw materials and transportation.

We may also be subject to consumer lawsuits or enforcement actions by governmental authorities if our ESG claims relating to product marketing are inaccurate.

It is uncertain what laws will be enacted and therefore we cannot predict the potential impact of such laws on our future financial condition, results of operations and cash flows.

In addition, as part of our strategy regarding environmental, climate change and sustainability matters, we may set targets aimed at reducing our impact on the environment and climate change or targets relating to other sustainability matters.

In addition, as part of our strategy regarding environmental, climate change and sustainability matters, we have set and may set additional targets aimed at reducing our impact on the environment and climate change and/or targets relating to other sustainability matters.

It is possible that we may not be able to achieve such targets or our desired impact, which may cause us to suffer from reputational damage or our business or financial condition could be adversely affected.

It is also possible that failure to achieve such targets or actions we take to achieve our strategy or targets would result in increased costs to our operations.

In addition, investors and stakeholders are increasingly focused on ESG matters, and as stakeholder ESG expectations and standards are evolving, this may cause us to suffer from reputational damage and our business or financial condition could be adversely affected.

It is also possible that actions we take to achieve our strategy or targets could result in increased costs to our operations.

In addition, investors and stakeholders are increasingly focused on ESG matters, and as stakeholder ESG expectations and standards are evolving, our failure to sufficiently respond to these evolving standards and expectations may cause us to suffer from reputational damage and our business or financial condition could be adversely affected.

Increased information technology security threats and computer crime pose a risk to our systems, networks, products and services, and we are exposed to potential regulatory, financial and reputational risks relating to the protection of our data.

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Establishing systems and processes to address these threats may increase our costs.

We have experienced data breaches, and, although we have determined such data breaches to be immaterial and such data breaches have not had a material adverse effect on our financial condition, results of operations or cash flows, there can be no assurance of similar results in the future.

We have experienced cybersecurity incidents, and, although we have determined such cybersecurity incidents to be immaterial and such incidents have not had a material adverse effect on our financial condition, results of operations or cash flows, there can be no assurance of similar results in the future.

Should future attacks succeed in the theft of assets, exporting sensitive data or financial information or controlling sensitive systems or networks, it could expose us and our employees, customers, dealers and suppliers to the theft of assets, misuse of information or systems, compromising of confidential information, manipulation and destruction of data, defective products, production downtimes and operations disruptions.

The occurrence of any of these events could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows.

In addition, such breaches in security could result in litigation, regulatory action and potential liability and the costs and operational consequences of implementing further data protection measures.

In addition, such cybersecurity incidents could result in litigation, regulatory action and potential liability and the costs and operational consequences of implementing further data protection measures.

Changes in data privacy laws and our ability to comply with them could have a material adverse effect on us.

1 unchanged sentence

A variety of state, national, foreign and international laws and regulations apply to the collection, use, retention, protection, security, disclosure, transfer and other processing of personal and other data.

Many foreign data privacy regulations, including the General Data Protection Regulation (the “GDPR”) in the European Union, are more stringent than federal regulations in the United States.

Many foreign data privacy regulations, including the General Data Protection

Regulation (the “GDPR”) in the European Union, are more stringent than federal regulations in the United States.

Within the United States, many states are considering adopting, or have already adopted privacy regulations, including, for example, the California Consumer Privacy Act.

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We are currently, and may in the future, become subject to litigation and other claims.

These legal proceedings are typically claims that relate to our products or services or to the conduct of our business and include, without limitation, claims relating to commercial or contractual disputes with suppliers, customers or parties to acquisitions and divestitures;

These legal proceedings are typically claims that relate to our products or services or to the conduct of our business and include, without limitation, claims relating to commercial regulatory or contractual disputes with suppliers, authorities, customers or parties to acquisitions and divestitures;

intellectual property matters;

environmental, safety and health matters;

environmental, asbestos, safety and health matters;

product liability;

8 unchanged sentences

In addition, some of our businesses, customers, and dealers are subject to various laws and regulations regarding consumer protection and advertising and sales practices, and we have been named, and may be named in the future, as a defendant in litigation, some of which are or may be class action complaints, arising from alleged violation of these laws and regulations.

In addition, our indemnification obligations relating to the purchase or sale of businesses could result in litigation or claims of unknown amounts.

Successful claims or litigation against us for significant amounts could have a material adverse effect on our reputation, business, financial condition, results of operations and cash flows.

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The MLI has now entered into force for a number of countries, including Ireland and the U.K.

Under the Double Tax Convention between Ireland and the U.K., as amended by the MLI, the residence tie-breaker provides that a company will remain dual resident unless there is a determination otherwise by the tax authorities of the two contracting states.

Under the Double Tax Convention between Ireland and the

U.K., as amended by the MLI, the residence tie-breaker provides that a company will remain dual resident unless there is a determination otherwise by the tax authorities of the two contracting states.

We have obtained a determination from the Competent Authorities of the Irish Revenue Commissioners and the U.K.

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Accordingly, holders of our securities may have more difficulty protecting their interests than would holders of securities of a corporation incorporated in a jurisdiction of the U.S.

Irish law differs from the laws in effect in the United States, which may negatively impact our ability to issue ordinary shares.

Under Irish law, we must have authority from our shareholders to issue any ordinary shares, including shares that are part of our authorized but unissued share capital.

In addition, unless otherwise authorized by its shareholders, when an Irish company issues shares for cash to new shareholders, it is required first to offer those shares on the same or more favorable terms to existing shareholders on a pro-rata basis.

If we are unable to obtain these authorizations from our shareholders, or are otherwise limited by the terms of our authorizations, our ability to issue ordinary shares under our equity compensation plans and, if applicable, to facilitate funding acquisitions or otherwise raise capital could be adversely affected.

Transfers of our ordinary shares may be subject to Irish stamp duty.

Transfers of our ordinary shares effected by means of the transfer of book entry interests in the Depository Trust Company (“DTC”) will not be subject to Irish stamp duty.

However, if you hold your ordinary shares directly rather than beneficially through DTC, any transfer of your ordinary shares could be subject to Irish stamp duty (currently at the rate of 1 percent of the higher of the price paid or the market value of the shares acquired).

However, if you hold your ordinary shares directly rather than beneficially through DTC, any transfer of your ordinary shares could be subject to Irish stamp duty (currently at the rate of 1% of the higher of the price paid or the market value of the shares acquired).

Payment of Irish stamp duty is generally a legal obligation of the transferee.

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The person who receives the gift or inheritance has primary liability for CAT.

Gifts and inheritances passing between spouses are exempt from CAT.

Gifts and inheritances passing between

spouses are exempt from CAT.

Children have a tax-free threshold of €335,000 per lifetime in respect of taxable gifts or inheritances received from their parents for periods on or after October 9, 2019.

22 unchanged sentences

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