What changed in this filing

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Item 1A. Risk Factors

2021-02-24 compared with 2020-02-19 · 194 added, 220 removed, 125 unchanged (77% of the section changed)

1 unchanged sentence

If any of the following risks develop into actual events, the Company’s business, financial condition or results of operations could be materially and adversely affected, and you may lose all or part of your investment.

Risks Relating to Quad’s Business, Operations and Industry

The coronavirus (COVID-19) pandemic has had, and will continue to have, a negative impact on the Company’s business, financial condition, cash flows, results of operations and supply chain.

The COVID-19 pandemic has resulted in national, state and local government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, border closings, restrictions on public gatherings, quarantining of people who may have been exposed to the virus, shelter-in-place restrictions, and limitations or shutdowns of business operations.

These measures have impacted and may further impact the Company’s workforce and operations, the operations of its clients, and those of its suppliers.

Quad has significant operations in the United States and printing operations or investments in printing operations in England, France, Germany, Poland, Argentina, Colombia, Mexico, Peru, Brazil and India , and each of these countries has been affected by the pandemic and taken measures to try to contain it, resulting in disruptions at some of the Company’s printing facilities and support operations.

There is still uncertainty regarding the full impact and duration of such measures and potential future measures, and restrictions on the Company’s access to its facilities or on its support operations or workforce, or similar limitations for Quad’s suppliers.

The COVID-19 pandemic has significantly increased economic and demand uncertainty and has caused an economic slowdown that may continue.

The pandemic has also weakened demand for the Company’s products and services, which has resulted in a decline in sales, and it remains uncertain what impact this weakened demand will have on future sales once conditions further improve.

The pandemic could also continue to disrupt the Company’s supply chain.

The COVID-19 pandemic has led to disruption and volatility in the global capital markets, which may adversely affect Quad’s and its client’s and suppliers’ liquidity, cost of capital and ability to access the capital markets.

As a result, the pandemic could adversely affect the Company’s liquidity as well as the ability of the Company’s clients to perform, including in making timely payments to Quad, which could further adversely impact the Company’s business, financial condition, cash flows and results of operations.

The COVID-19 pandemic has had, and will continue to have, a negative impact on the Company’s business, financial condition, cash flows, results of operations and supply chain, although the full extent is still uncertain.

As the pandemic continues to evolve, the extent of the impact on the Company’s business, financial condition, cash flows, results of operations and supply chain will depend on future developments, including, but not limited to, the duration of the pandemic (including any continuing relapses), the actions to contain the virus and/or treat its impact, restrictions on travel, the duration, timing and severity of the impact on client spending and consumer demand, and how quickly and to what extent normal economic and operating conditions can resume, all of which are highly uncertain and cannot be predicted.

In addition to the COVID-19 pandemic, future natural disasters, epidemics, other public health crises, conflicts, wars, terrorist attacks, fires or other catastrophic events affecting the Company’s plants, distribution centers or other facilities, could also materially disrupt the Company’s operations and result in an adverse impact on its financial condition, results of operations and cash flows, which could force the Company to reassess its strategic alternatives involving certain of its operations.

Decreasing demand for printing services caused by factors outside of the Company’s control, including the substitution of printed products with digital content, the COVID-19 pandemic and recent recessions, as well as significant downward pricing pressure, may continue to adversely affect the Company.

The Company and the overall printing industry continues to experience a reduction in demand for printed materials and overcapacity due to various factors including the sustained and increasing shift of digital substitution by marketers and advertisers (to both replace and augment campaigns that were historically focused on print), as well as the COVID-19 pandemic and recent recessions (which have severely impacted print volumes and further accelerated the impact of media disruption).

The impacts of overcapacity, as well as intense competition, have led to the Company experiencing significant downward pricing pressures for printing services in recent years and such pricing may continue to decline from current levels.

Any future increases in the supply of printing services or decreases in demand could cause prices to continue to decline, and prolonged periods of low prices, weak demand and/or excess supply could have a material adverse effect on the Company’s business growth, results of operations and liquidity.

The media landscape is experiencing rapid change due to the impact of digital media and content on printed products.

Improvements in the accessibility and quality of digital media through the online distribution and hosting of media content, mobile technologies, e-reader technologies, digital retailing and the digital distribution of documents and data has resulted and may continue to result in increased consumer substitution.

Continued consumer acceptance of such digital media, as an alternative to print materials, is uncertain and difficult to predict and may decrease the demand for the Company’s printed products, result in reduced pricing for its printing services and additional excess capacity in the printing industry, and adversely affect the results of the Company’s operations.

The Company operates in a highly competitive environment.

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Any failure on the part of the Company to compete effectively in the markets it serves could have a material adverse effect on its results of operations, financial condition or cash flows and could require changes to the way it conducts its business or require it to reassess strategic alternatives involving its operations.

The Company operates primarily in the commercial print portion of the printing industry, which is highly fragmented and competitive.

The Company operates primarily in the commercial print portion of the printing industry, which is highly fragmented and competitive in both the United States and internationally.

The Company competes for business not only with large and mid-sized printers, but also with smaller regional printers and the growing forms of digital alternatives to print.

In certain circumstances, due primarily to factors such as freight rates and client preference for local services, printers with better access to certain regions of a given country may be preferred by clients in such regions.

The printing industry continues to experience a reduction in demand for printed materials and overcapacity due to various factors including the great recession of 2008 and 2009, which severely impacted print volumes and accelerated the impact of media disruption.

Specifically, there is a sustained and increasing shift of digital substitution by marketers and advertisers, to both replace and augment campaigns that were historically focused on print.

The impacts of overcapacity and intense competition have led to continued downward pricing pressures.

Printing industry revenues may continue to decrease in the future.

Some of the industries that the Company services have been subject to consolidation efforts, leading to a smaller number of potential clients.

Furthermore, if the smaller clients of the Company are consolidated with larger companies using other printing companies, the Company could lose its clients to competing printing companies.

Significant downward pricing pressure and decreasing demand for printing services caused by factors outside of the Company’s control may adversely affect the Company.

The Company has experienced significant downward pricing pressures for printing services in the past, and pricing for printing services has declined significantly in recent years.

Such pricing may continue to decline from current levels.

In addition, demand for printing services has decreased in recent years and may continue to decrease.

Any increases in the supply of printing services or decreases in demand could cause prices to continue to decline, and prolonged periods of low prices, weak demand and/or excess supply could have a material adverse effect on the Company’s business growth, results of operations and liquidity.

The impact of digital media and similar technological changes, including the substitution of printed products with digital content, may continue to adversely affect the results of the Company’s operations.

The media landscape is experiencing rapid change due to the impact of digital media and content on printed products.

Improvements in the accessibility and quality of digital media through the online distribution and hosting of

media content, mobile technologies, e-reader technologies, digital retailing and the digital distribution of documents and data has resulted and may continue to result in increased consumer substitution.

As competition increases among retail-based customers, they may enter into business combinations or alliances and establish companies in other market segments to expand their businesses.

In addition, new and enhanced technologies, including search, web and infrastructure computing services, digital content, and electronic devices, affect the customers’ reliance on the use of printed materials.

The internet facilitates competitive entry and comparison shopping, and the reliance on digital retailing may reduce the Company’s sales and profits.

The Company may be adversely affected by increases in its operating costs, including the cost and availability of raw materials, labor-related costs, fuel and other energy costs and freight rates.

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In periods of high demand, certain paper grades have been in short supply, including grades used in the Company’s business.

In addition, during periods of tight supply, many paper producers allocate shipments of paper based upon historical purchase levels of customers.

Additionally, the declining number of paper suppliers in the United States and Canada has resulted in a contraction in the overall paper manufacturing industry.

In addition, during periods of tight supply, many paper producers allocate shipments of paper based upon historical purchase levels of clients.

Additionally, the declining number of paper suppliers has resulted in a contraction in the overall paper manufacturing industry.

This contraction of suppliers may cause overall supply issues, may cause certain paper grades to be in short supply or unavailable, and may cause paper prices to substantially increase.

Although historically the Company generally has not experienced significant difficulty in obtaining adequate quantities of paper, continued decline in suppliers, changes as noted above in United States import or trade regulations, or other unforeseen developments in the overall paper markets could result in a decrease in the supply of paper and could adversely affect the Company’s revenues or profits.

Although historically the Company generally has not experienced significant difficulty in obtaining adequate quantities of paper, continued decline in suppliers, changes in United States import or trade regulations, or other unforeseen developments in the overall paper markets (such as the COVID-19 pandemic) could result in a decrease in the supply of paper and could adversely affect the Company’s revenues or profits.

In addition, the Company may not be able to resell waste paper and other by-products or the prices received for their sale may decline substantially.

The Company is dependent upon the vendors within the Company’s supply chain to maintain a steady supply of inventory, parts and materials.

Many of the Company’s products are dependent upon a limited number of vendors, and significant disruptions could adversely affect operations.

Under recent market conditions, it is possible that one or more of the Company’s vendors will be unable to fulfill their operating obligations due to financial hardships, liquidity issues or other reasons.

Many of the Company’s products are dependent upon a limited number of vendors, and significant disruptions could adversely affect operations (including as a result of the COVID-19 pandemic).

Under current market conditions, and in light of the COVID-19 pandemic, it is possible that one or more of the Company’s vendors will be unable to fulfill their operating obligations due to financial hardships, liquidity issues or other reasons.

The Company generally cannot pass on to clients the impact of higher electric and natural gas energy prices on its manufacturing costs, and increases in energy prices result in higher manufacturing costs for certain of its operations.

If the Company is unable to pass along increases in energy costs, future increases would adversely affect its margins and profits.

Even if the Company could pass along increases in energy costs, the price of the Company’s products and services would increase as a result.

Client demand could be adversely affected, and would thereby negatively impact the Company’s financial performance.

Labor represents a significant component of the cost structure of the Company.

Increases in wages, salaries and benefits, such as medical, dental, pension and other post-retirement benefits, may impact the Company’s financial performance.

Increases in wages, salaries and the cost of medical, dental, pension and other post-retirement benefits, including increases from the COVID-19 pandemic, may impact the Company’s financial performance.

Changes in interest rates, investment returns or the regulatory environment may impact the amounts the Company will be required to contribute to the pension plans that it sponsors and may affect the solvency of these pension plans.

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As the Company expands its integrated marketing platform, the overall complexity of the Company’s business increases at an accelerated rate and the Company becomes subject to different market dynamics.

The new markets into which the Company is expanding, or may expand, may have different characteristics from the markets in which the Company historically competed.

The new markets into

which the Company is expanding, or may expand, may have different characteristics from the markets in which the Company historically competed.

These different characteristics may include, among other things, demand volume requirements, demand seasonality, product generation development rates, client concentrations and performance and compatibility requirements.

The Company’s failure to make the necessary adaptations to its business model to address these different characteristics, complexities and new market dynamics could adversely affect the Company’s operating results.

Changes in postal rates, postal regulations and postal services may adversely impact clients’ demand for print products and services.

Postal costs are a significant component of the cost structures of many of the Company’s clients and potential clients.

Postal rate changes and USPS regulations that result in higher overall costs can influence the volume that these clients will be willing to print and ultimately send through the USPS.

Integrated distribution with the postal service is an important component of the Company’s business.

Any material change in the current service levels provided by the postal service could impact the demand that clients have for print services.

The USPS continues to experience financial problems.

Without increased revenues or action by Congress to reform the USPS’ cost structure, these losses will continue into the future.

As a result of these financial difficulties, the USPS has come under increased pressure to adjust its postal rates and service levels.

Additional price increases may result in clients reducing mail volumes and exploring the use of alternative methods for delivering a larger portion of their products, such as continued diversion to the internet and other alternative media channels in order to ensure that they stay within their expected postage budgets.

There are also continued risks of delivery delays due to ongoing COVID-19 impacts on daily operational staffing at the USPS.

The USPS offers “work-share” discounts that provide incentives to co-mail and place product as far down the mail-stream as possible.

Discounts are earned as a result of less handling of the mail, and therefore, lower costs for the USPS.

As a result, the Company has made substantial investments in co-mailing technology and equipment to ensure clients benefit from these discounts.

As the USPS reacts to its financial difficulties, it often revises design standards for mail entering its system.

These design standards often increase costs for clients and, in turn, decrease the value of the cost reductions that the Company’s co-mailing services provide.

If the incentives to co-mail are decreased by USPS regulations, the overall cost to mail printed products will increase and may result in print volumes declining.

Federal statute requires the Postal Regulatory Commission (“PRC”) to conduct reviews of the overall rate-making structure for the USPS to ensure funding stability.

As a result of those reviews, the PRC has authorized a new five year rate-making structure that would provide the USPS with additional pricing flexibility over the current Consumer Price Index cap, which may result in a substantially altered rate structure for mailers.

The newly revised rate authority that is effective as a result of new rules issued by the PRC includes a higher overall rate cap on the USPS’ ability to increase rates from year to year.

This may lead to price spikes for mailers and may also reduce the incentive for the USPS to continue to take out costs and instead continue to rely on postage to cover the costs of an outdated postal service that does not reflect the industry’s ability or willingness to pay.

The uncertainty as to the actual rate increases due to competing lawsuits from both industry and the USPS, as well as how much of the authority the USPS will use, also creates potential volume declines as rate predictability with respect to cost and timing is no longer known for mailers.

The result may be reduced demand for printed products as clients may move more aggressively into other delivery methods, such as the many digital and mobile options now available to consumers.

The Company may suffer a data-breach of sensitive information.

If the Company’s efforts to protect the security of such information are unsuccessful, any such failure may result in costly government enforcement actions and/or private litigation, and the Company’s business and reputation could suffer.

The Company and its clients are subject to various United States and foreign cyber-security laws, which require the Company to maintain adequate protections for electronically held information.

The Company may not be able to anticipate techniques used to gain access to the Company’s systems or facilities, the systems of the Company’s clients or vendors, or implement adequate prevention measures.

Moreover, unauthorized parties may attempt to access the Company’s systems or facilities, or the systems of the Company’s clients or vendors, through fraud or deception.

In the event and to the extent that a data breach occurs, such breach could have an adverse effect on the Company’s business

and results of operations.

Complying with these various laws could cause the Company to incur substantial costs or require changes to the Company’s business practices in a manner adverse to the Company’s business.

Negative publicity could have an adverse impact on the Company’s business.

Unfavorable publicity, whether accurate or not, related to the Company or the Company’s executive management team, employees, board of directors, operations, business or prospects, or to the Quadracci family shareholders of the Company, could negatively affect the Company’s reputation, stock price, ability to attract new clients from growth vertical industries, ability to attract and retain high-quality talent, or the performance of the Company’s business.

In addition, there has been a substantial increase in the use of social media platforms, including blogs, social media websites, and other forms of internet-based and mobile communications, which allow individuals access to a broad audience of consumers and other interested persons.

Many social media platforms immediately publish the content their subscribers’ and participants’ post, often without filters or checks on accuracy of the content posted.

Information or commentary posted on such platforms at any time may be adverse to the Company’s interests or may be inaccurate, each of which may harm the Company’s reputation, business or prospects.

The harm may be immediate without affording the Company an opportunity for redress or correction.

The Company’s business depends substantially on client contract renewals and/or client retention.

Any contract non-renewals, renewals on different terms and conditions or decline in the Company’s client retention or expansion could materially adversely affect the Company’s results of operations, financial condition and cash flows.

The Company has historically derived a significant portion of its revenue from long-term contracts with significant clients.

If the Company loses significant clients (including as a result of reduced demand for a client’s products or services stemming from the COVID-19 pandemic), is unable to renew such contracts on similar terms and conditions, or at all, or is not awarded new long-term contracts with important clients in the future, its results of operations, financial condition and cash flows may be adversely affected.

The Company is exposed to risks of loss in the event of nonperformance by its clients.

Some of the Company’s clients are highly leveraged or otherwise subject to their own operating and regulatory risks.

Even if the Company’s credit review and analysis mechanisms work properly, the Company may experience financial losses and loss of future business if its clients become bankrupt, insolvent or otherwise are unable to pay the Company for its work performed, including as a result of the COVID-19 pandemic.

Any increase in the nonpayment or nonperformance by clients could adversely affect the Company’s results of operations and financial condition.

Certain industries in which the Company’s clients operate are experiencing consolidation.

When client consolidation occurs, it is possible that the volume of work performed by the Company for a client after the consolidation will be less than it was before the consolidation or that the client’s work will be completely moved to competitors.

In addition, new and enhanced technologies, including search, web and infrastructure computing services, digital content, and electronic devices, may affect clients.

The internet facilitates competitive entry and comparison shopping, and the reliance on digital retailing may reduce clients’ volume.

Any such reduction or loss of work could adversely affect the Company’s results of operations and financial condition.

If the Company fails to identify, manage, complete and integrate acquisitions, investment opportunities or other significant transactions, as well as identify and execute strategic divestitures, it may adversely affect the Company’s future results and ability to implement its business strategy.

The Company may pursue acquisitions of, investment opportunities in, or other significant transactions with, companies that are complementary to the Company’s business, as well as divestitures of businesses, product lines or other assets.

In order to pursue this strategy successfully, the Company must identify attractive acquisition or investment opportunities, successfully complete the transaction, some of which may be large and complex, and manage post-closing

issues such as integration of the acquired company or employees.

The Company may not be able to identify or complete appealing acquisition or investment opportunities given the intense competition for these transactions.

Even if the Company identifies and completes suitable corporate transactions, the Company may not be able to successfully address inherent risks in a timely manner, or at all.

Company identifies and completes suitable corporate transactions, the Company may not be able to successfully address inherent risks in a timely manner, or at all.

These inherent risks include, among other things:

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If the Company fails to successfully integrate an acquisition, the Company may not realize all or any of the anticipated benefits of the acquisition, and the Company’s future results of operations could be adversely affected.

In addition, the acceleration of the Company’s transformation to a marketing solutions partner is expected to be partially dependent upon the Company’s ability to identify and execute strategic divestiture opportunities to generate cash and related benefits.

For example, on October 30, 2019, the Company announced plans to divest its book business as part of ongoing portfolio optimization.

In addition, the acceleration of the Company’s transformation to a marketing solutions partner is partially dependent upon the Company’s continued ability to identify and execute strategic divestiture opportunities to generate cash and related benefits.

There can be no assurance whether the strategic benefits and expected financial impact of any divestitures will be achieved.

The Company may suffer a data-breach of sensitive information.

The Company and its clients are subject to various United States and foreign cyber-security laws, which require the Company to maintain adequate protections for electronically held information.

Moreover, unauthorized parties may attempt to access the Company’s systems or facilities, or the systems of the Company’s clients or vendors, through fraud or deception.

In the event and to the extent that a data breach occurs, such breach could have an adverse effect on the Company’s business and results of operations.

Complying with these various laws could cause the Company to incur substantial costs or require changes to the Company’s business practices in a manner adverse to the Company’s business.

The Company’s business depends substantially on customer contract renewals and/or customer retention.

Any contract non-renewals, renewals on different terms and conditions or decline in the Company’s customer retention or expansion could materially adversely affect the Company’s results of operations, financial condition and cash flows.

The Company has historically derived a significant portion of its revenue from long-term contracts with significant clients.

If the Company loses significant clients, is unable to renew such contracts on similar terms and conditions, or at all, or is not awarded new long-term contracts with important clients in the future, its results of operations, financial condition and cash flows may be adversely affected.

The Company is exposed to risks of loss in the event of nonperformance by its clients.

Some of the Company’s clients are highly leveraged or otherwise subject to their own operating and regulatory risks.

Any increase in the nonpayment or nonperformance by clients could adversely affect the Company’s results of operations and financial condition.

Certain industries in which the Company’s clients operate are experiencing consolidation.

In addition, new and enhanced technologies, including search, web and infrastructure computing services, digital content, and electronic devices, may affect customers.

The internet facilitates competitive entry and comparison shopping, and the reliance on digital retailing may reduce customers’ volume.

Any such reduction or loss of work could adversely affect the Company’s results of operations and financial condition.

Future declines in economic conditions may adversely affect the Company’s results of operations.

In general, demand for the Company’s products and services is highly related to general economic conditions in the markets the Company’s clients serve.

Declines in economic conditions in the United States or in other countries in which the Company operates may adversely impact the Company’s financial results, and these impacts may be material.

Declines in economic conditions in the United States or in other countries in which the Company operates, including as a result of the COVID-19 pandemic, may adversely impact the Company’s financial results, and these impacts may be material.

Because such declines in demand are difficult to predict, the Company or the industry may have increased excess capacity as a result.

An increase in excess capacity has resulted, and may continue to result, in declines in prices for the Company’s products and services.

In addition, a prolonged decline in the global economy and an uncertain economic outlook has and could further reduce the demand in the printing industry.

In addition, a prolonged decline in the global economy and an uncertain economic outlook, including as a result of the COVID-19 pandemic, has and could further reduce the demand in the printing industry.

Economic weakness and constrained advertising spending have resulted, and may in the future result, in decreased revenue, operating margin, earnings and growth rates and difficulty in managing inventory levels and collecting accounts receivable.

The Company has experienced, and expects to experience in the future, excess capacity and lower demand due to economic factors affecting consumers’ and businesses’ spending behavior.

The Company has experienced, and expects to experience in the future, excess capacity and lower demand due to economic factors affecting consumers’ and businesses’ spending behavior, including as a result of the COVID-19 pandemic.

Uncertainty about future economic conditions makes it difficult for the Company to predict results of operations, financial position and cash flows and to make strategic decisions regarding the allocation and deployment of capital.

The fragility of and decline in overall distribution channels, including newspaper distribution channels, may adversely impact customers’ access to cost effective distribution of their advertising materials, and therefore may adversely impact the Company’s business.

Failure to attract and retain qualified talent across the enterprise could materially adversely affect the Company’s business, competitive position, financial condition and results of operations.

The Company continues to be substantially dependent on its production personnel to print the Company’s products in a cost-effective and efficient manner that allows the Company to obtain new clients and to drive sales from the Company’s existing clients.

The Company believes that there is significant competition for production personnel with the skills and technical knowledge that the Company requires.

The Company’s ability to continue efficient operations, reduce production costs, and consolidate operations will depend, in large part, on the Company’s success in recruiting, training, integrating and retaining sufficient numbers of production personnel to support the Company’s production, cost savings and consolidation targets.

New hires require extensive training and it may take significant time before they achieve full productivity.

In addition, an increase in the wages paid by competing employers could result in an increase in the wage rates that the Company must pay.

As a result, the Company may incur additional costs to attract, train and retain employees, including expenditures related to salaries and benefits, and the Company may lose new, as well as existing, employees to competitors or other companies before the Company realizes the benefit of its investment in recruiting and training them.

If the Company is unable to hire and train sufficient numbers of personnel, the Company’s business would be adversely affected.

The Company’s future success also depends on its continuing ability to identify, hire, develop, and retain its executive management team, including its Chief Executive Officer, and other personnel for all areas of the organization.

Approximately 1,400 of the Company’s United States and international employees are covered by an industry wide agreement, a collective bargaining agreement or through a works council or similar arrangement.

While the Company believes its employee relations are good and that the Company maintains an employee-centric culture, and there has not been any material disruption in operations resulting from labor disputes, a strike or other forms of labor protest affecting the Company’s United States or international plants, distribution centers or other facilities in the future could materially disrupt the Company’s operations and result in an adverse impact on its financial condition, results of operations and cash flows, which could force the Company to reassess its strategic alternatives involving certain of its operations.

The fragility of and decline in overall distribution channels may adversely impact clients’ access to cost effective distribution of their advertising materials, and therefore may adversely impact the Company’s business.

The distribution channels of print products and services, including the newspaper industry, face significant competition from other sources of news, information and entertainment content delivery.

If overall distribution channels, including newspaper distribution channels, continue to decline, the Company’s customers may be adversely impacted by the lack of access to cost effective distribution of their advertising materials.

In turn, this decline in cost effective distribution channels may force customers to use other avenues of distribution that may be at significantly higher cost, which may decrease customer demand for the Company’s products and services, and thus adversely affect the Company’s financial condition, results of operations and cash flows.

Changes in postal rates, postal regulations and postal services may adversely impact customers’ demand for print products and services.

Postal costs are a significant component of the cost structures of many of the Company’s clients and potential clients.

Postal rate changes and USPS regulations that result in higher overall costs can influence the volume that these clients will be willing to print and ultimately send through the USPS .

Integrated distribution with the postal service is an important component of the Company’s business.

Any material change in the current service levels provided by the postal service could impact the demand that clients have for print services.

The USPS continues to experience financial problems.

Without increased revenues or action by Congress to reform the USPS ’ cost structure, these losses will continue into the future.

As a result of these financial difficulties, the USPS has come under increased pressure to adjust its postal rates and service levels.

Additional price increases may result in customers reducing mail volumes and exploring the use of alternative methods for delivering a larger portion of their products, such as continued diversion to the internet and other alternative media channels in order to ensure that they stay within their expected postage budgets.

The USPS offers “work-share” discounts that provide incentives to co-mail and place product as far down the mail-stream as possible.

Discounts are earned as a result of less handling of the mail, and therefore, lower costs for the USPS .

As a result, the Company has made substantial investments in co-mailing technology and equipment to ensure customers benefit from these discounts.

As the USPS reacts to its financial difficulties, it often revises design standards for mail entering its system.

These design standards often increase costs for customers and, in turn, decrease the value of the cost reductions that the Company’s co-mailing services provide.

If the incentives to co-mail are decreased by USPS regulations, the overall cost to mail printed products will increase and may result in print volumes declining.

Current federal law limits postal rate increases (outside of an “exigent circumstance”) to the increase in the Consumer Price Index (“ CPI ”).

This cap works to ensure funding stability and predictability for mailers.

However, that same federal statute requires the Postal Regulatory Commission (“ PRC ”) to conduct a review of the overall rate-making structure for the USPS .

T he results of that study found that the current rate structure has been partially successful in meeting the USPS’ goals.

The current system does result in predictable and stable rate making.

However, the PRC also concluded that the current rate structure does not meet USPS’ revenue needs and lacks pricing efficiency.

As a result, the PRC proposed a new rate-making structure that would provide the USPS with additional pricing flexibility over the current CPI cap, which may result in a substantially altered rate structure for mailers.

Any newly revised rates that would be effective as a result of new rules issued by the PRC may include a higher rate cap, or potentially the elimination of a rate cap altogether, which will result in no restrictions on the USPS ’ ability to increase rates from year to year.

The result may be reduced demand for printed products as customers may move more aggressively into other delivery methods, such as the many digital and mobile options now available to consumers.

If overall distribution channels, including newspaper distribution channels, continue to decline, the Company’s clients may be adversely impacted by the lack of access to cost effective distribution of their advertising materials.

In turn, this decline in cost effective distribution channels may force clients to use other avenues of distribution that may be at significantly higher cost, which may decrease demand for the Company’s products and services, and thus adversely affect the Company’s financial condition, results of operations and cash flows.

There are additional risks associated with the Company’s operations outside of the United States.

Net sales from the Company’s wholly-owned subsidiaries outside of the United States accounted for approximately 10% of its consolidated net sales for the years ended December 31, 2020 and 2019.

As a result, the Company is subject to the risks inherent in conducting business outside of the United States, including, but not limited to:

the impact of economic and political instability;

fluctuations in currency values, foreign-currency exchange rates, devaluation and conversion restrictions;

exchange control regulations and other limits on the Company’s ability to import raw materials or finished product;

tariffs and other trade barriers;

trade restrictions and economic embargoes by the United States or other countries;

health concerns regarding infectious diseases (such as COVID-19), adverse weather or natural disasters;

social unrest, acts of terrorism, force majeure, war or other armed conflicts;

inflation and fluctuations in interest rates;

language barriers;

difficulties in staffing, training, employee retention and managing international operations;

logistical and communications challenges;

differing local business practices and cultural consideration;

restrictions on the ability to repatriate funds;

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

longer accounts receivable payment cycles;

potential adverse tax consequences and being subject to different legal and regulatory regimes that may preclude or make more costly certain initiatives or the implementation of certain elements of its business strategy.

Financial Risks

The Company’s debt facilities include various covenants imposing restrictions that may affect the Company’s ability to operate its business.

1 unchanged sentence

As of December 31, 2020, the borrowings outstanding under the Master Note and Security Agreement were $15.6 million.

On April 28, 2014 , and as last amended on January 31, 2019 , the Company entered into a senior secured credit facility (the “ Senior Secured Credit Facility ,”) which included three different loan facilities:

an $825.0 million delayed draw Term Loan A, a $500.0 million Term Loan B, and an $800.0 million revolving credit facility.

On July 26, 2019, following the termination of the proposed acquisition of LSC Communications, Inc.

(“ LSC ”), Quad fully funded the $825.0 million delayed draw Term Loan A to retire the entire amount outstanding on the $500.0 million Term Loan B and reduced the borrowings under the revolving credit facility.

On April 28, 2014, and as last amended on June 29, 2020, the Company entered into a senior secured credit facility (the “Senior Secured Credit Facility,”) which now includes two different loan facilities:

an $825.0 million Term Loan A, and a $500.0 million revolving credit facility.

The $500.0 million revolving credit facility and the $825.0 million Term Loan A both mature on January 31, 2024.

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Such default could cause the outstanding indebtedness to become immediately due and payable, by virtue of cross-acceleration or cross-default provisions.

Failure to attract and retain qualified talent across the enterprise could materially adversely affect the Company’s business, competitive position, financial condition and results of operations.

The Company continues to be substantially dependent on its production personnel to print the Company’s products in a cost-effective and efficient manner that allows the Company to obtain new customers and to drive sales from the Company’s existing customers.

The Company believes that there is significant competition for production personnel with the skills and technical knowledge that the Company requires.

New hires require significant training and it may take significant time before they achieve full productivity.

In addition, an increase in the wages paid by competing employers could result in an increase in the wage rates that the Company must pay.

As a result, the Company may incur significant costs to attract, train and retain employees, including significant expenditures related to salaries and benefits, and the Company may lose new , as well as existing, employees to competitors or other companies before the Company realizes the benefit of its investment in recruiting and training them.

The Company’s recent hires and planned hires may not become productive as quickly as the Company expects, and the Company may be unable to hire or retain sufficient numbers of qualified individuals in the markets where the Company does business or plans to do business.

In addition, due to turnover, a large percentage of employees will be new to the Company.

If the Company is unable to hire and train sufficient numbers of personnel, the Company’s business would be adversely affected.

The Company is heavily dependent on its executive management team, including its Chief Executive Officer and other skilled personnel and, if the Company is unable to retain such personnel or hire qualified personnel, the Company may not be able to compete effectively.

The Company’s future success depends on its continuing ability to identify, hire, develop, and retain its executive management team, including its Chief Executive Officer, and other skilled personnel for all areas of the organization.

The Company’s continued ability to compete effectively depends on its ability to attract new employees and retain its existing employees.

The Company and its facilities are subject to various consumer protection and privacy laws and regulations, and will become subject to additional laws and regulations in the future.

If the Company’s efforts to comply with such laws or protect the security of information are unsuccessful, any failure may subject the Company to material liability, require it to incur material costs or otherwise adversely affect its results of operations as a result of compliance with such laws, costly enforcement actions and private litigation.

The nature of the Company’s business includes the receipt and storage of information about the Company’s clients, vendors and the end-users of the Company’s products and services.

The Company and its clients are subject to various United States and foreign consumer protection, information security, data privacy and “do not mail” requirements at the federal, states, provincial and local levels.

The Company is subject to many legislative and regulatory laws and regulations around the world concerning data protection and privacy.

In addition, the interpretation and application of consumer and data protection laws in the United States and elsewhere are often fluid and uncertain.

To the extent that the Company or its clients become subject to additional or more stringent requirements or that the Company is not successful in its efforts to comply with existing requirements or protect the security of information, demand for the Company’s services may decrease and the Company’s reputation may suffer, which could adversely affect the Company’s results of operations.

In addition, such laws may be interpreted and applied in a manner inconsistent with the Company’s internal policies.

If so, the Company could suffer costly enforcement actions (including an order requiring changes to the Company’s data practices) and private litigation, which could have an adverse effect on the Company’s business and results of operations.

Complying with these various laws could cause the Company to incur substantial costs or require changes to the Company’s business practices in a manner adverse to the Company’s business.

The Company may be required to make capital expenditures to sustain its platforms and processes, in part to keep pace with industry developments and client expectations, and to remain technologically and economically competitive, which may increase its costs, reduce its profits, disrupt its operations or adversely affect its ability to implement its business strategy.

The printing and marketing services industries are experiencing rapid change as new digital technologies are developed that offer clients an array of choices for their marketing and publication needs.

In order to grow and remain competitive, the Company will need to adapt to future changes, especially with regard to technology, to enhance the Company’s existing offerings and introduce new offerings to address the changing demands of clients.

In order to remain competitive, the Company will need to adapt to future changes, especially with regard to technology, to enhance the Company’s existing offerings and introduce new offerings to address the changing demands of clients.

In order to remain technologically and economically competitive, the Company may need to make significant capital expenditures as it develops and continues to maintain its platforms and processes, and to develop and integrate new technologies.

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In addition, even if capital is available to the Company, there is risk that the Company’s vendors will have discontinued the production of parts needed for repairs, replacements or improvements to the Company’s existing platforms, leading the Company to expend more capital than expected to perform such repairs, replacements or improvements.

The Company’s ability to grow will also depend upon its ability to keep pace with technological advances, industry evolutions and client expectations on a continuing basis and to integrate available technologies and provide additional services commensurate with client needs in a commercially appropriate manner.

The Company’s business and operating results may be adversely affected if the Company is unable to keep pace with relevant technological and industry changes or if the technologies or business strategies that the Company adopts or services it promotes do not receive widespread market acceptance.

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The Company may not be able to accurately predict technological trends or the success of new services in the market.

There are risks associated with the Company’s operations outside of the United States.

Although the substantial majority of the Company’s business activity takes place in the United States, a portion of the Company’s net sales are derived from operations in foreign countries.

The Company’s products and services are sold primarily throughout North America, South America and Europe.

In addition, the Company strategically sources packaging product manufacturing over multiple end markets in Central America and Asia.

The Company’s printing operations located in Europe and Latin America include operations in England, France, Germany, Poland, Argentina, Colombia, Mexico and Peru, as well as investments in printing operations in Brazil and India.

Net sales from the Company’s wholly-owned subsidiaries outside of the United States accounted for approximately 10% of its consolidated net sales for the years ended December 31, 2019 , 2018 and 2017 .

As a result, the Company is subject to the risks inherent in conducting business outside of the United States, including, but not limited to:

the impact of economic and political instability;

fluctuations in currency values, foreign-currency exchange rates, devaluation and conversion restrictions;

exchange control regulations and other limits on the Company’s ability to import raw materials or finished product;

tariffs and other trade barriers;

trade restrictions and economic embargoes by the United States or other countries;

social unrest, acts of terrorism, force majeure, war or other armed conflicts;

inflation and fluctuations in interest rates;

language barriers;

difficulties in staffing, training, employee retention and managing international operations;

logistical and communications challenges;

differing local business practices and cultural consideration;

restrictions on the ability to repatriate funds;

foreign ownership restrictions and the

potential for nationalization or expropriation of property or other resources;

longer accounts receivable payment cycles;

Any international expansion or acquisition that the Company undertakes could amplify these risks related to operating outside of the United States.

The Company is exposed to the economic and political conditions in Argentina.

The Argentine economy has experienced significant volatility in recent years, characterized by periods of low or negative growth, high and variable levels of inflation and currency devaluation.

As a consequence, the Company’s business and operations have been, and could be in the future, affected from time to time to varying degrees by economic and political developments and other material events affecting the Argentine economy.

The majority of the Company’s employees in Argentina are covered by a collective bargaining agreement.

A strike, work stoppage or other form of labor protest in Argentina in the future could disrupt the Company’s Argentina operations and result in a material adverse impact to the Company’s Argentina operations’ financial condition, results of operations and cash flows, which could force the Company to reassess its strategic alternatives involving operations in Argentina.

In addition, on March 25, 2015, due to deteriorating economic conditions, including inflation and currency devaluation, combined with uncertain political conditions, declining print volumes and labor challenges, the Company’s Argentina subsidiaries, Anselmo L.

Morvillo S.A.

(“ Morvillo ”) and World Color Argentina, S.A.

(the “ Argentina Subsidiaries ”) commenced bankruptcy restructuring proceedings with a goal of consolidating operations.

The Company completed such consolidation and emerged from bankruptcy;

however, the Company’s Argentina operations’ repayment and other obligations resulting from such consolidation, if not successfully completed as and when due, may result in an adverse effect on the Company’s Argentina operations’ financial position and cash flows.

As of December 31, 2019 , the Company had $18.2 million of total assets in Argentina, representing 0.8% of the Company’s consolidated total assets.

For the year ended December 31, 2019 , the Company recognized $29.9 million of net sales in Argentina, representing 0.8% of the Company’s consolidated net sales.

The Company may incur costs or suffer reputational damage due to improper conduct of its employees, contractors or agents.

The Company could be adversely affected by engaging in business practices that are in violation of United States and foreign anti-corruption laws, including the United States Foreign Corrupt Practices Act.

The Company operates in parts of the world with developing economies that have experienced governmental corruption to some degree, and in certain circumstances, strict compliance with anti-corruption laws may conflict with local customs and practices.

In certain countries, the Company does substantial business with government entities or instrumentalities, which creates increased risk of a violation of the Foreign Corrupt Practices Act and international laws.

There can be no assurance that all of the Company’s employees, contractors or agents, including those representing the Company in countries where practices which violate anti-corruption laws may be customary, will not take actions that violate the Company’s policies and procedures.

The failure to comply with the laws governing international business practices may result in substantial penalties and fines.

For additional information, see Note 11 , “ Commitments and Contingencies — Litigation,” to the consolidated financial statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.

Changes in the legal and regulatory environment could limit the Company’s business activities, increase its operating costs, reduce demand for its products or result in litigation.

The conduct of the Company’s businesses is subject to various laws and regulations administered by federal, state and local government agencies in the United States, as well as to foreign laws and regulations administered by government entities and agencies in markets in which the Company operates.

These laws and regulations and interpretations thereof may change, sometimes dramatically, as a result of political, economic or social events, such as the election of the new administration.

Such regulatory environment changes may include changes in taxation requirements, accounting and disclosure standards, immigration laws and policy, environmental laws, and requirements of United States and foreign occupational health and safety laws.

Changes in laws, regulations or governmental policy and the related interpretations may alter the environment in which the Company does business, and therefore, may impact its results or increase its costs or liabilities.

In addition, the Company and its subsidiaries are party to a variety of legal and environmental remediation obligations arising in the normal course of business, as well as environmental remediation and related indemnification proceedings in connection with certain historical activities, former facilities and contractual obligations of acquired businesses.

Permits are required for the operation of certain parts of the Company’s business, and these permits are subject to renewal, modification and, in some circumstances, revocation.

Due to regulatory complexities, uncertainties inherent in litigation and the risk of unidentified contaminants on current and former properties, the potential exists for remediation, liability and indemnification costs to differ materially from the costs the Company has estimated.

The Company cannot assure you that the Company’s costs in relation to these matters will not exceed its established liabilities or otherwise have an adverse effect on its results of operations.

Various laws and regulations addressing climate change are being considered at the federal and state levels.

Proposals under consideration include limitations on the amount of greenhouse gas that can be emitted (so-called “caps”) together with systems of trading allowed emissions capacities.

The impacts of such proposals could have a material adverse impact on the Company’s financial condition and results of operations.

The Company’s revenue, operating income from continuing operations and cash flows are subject to cyclical and seasonal variations.

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If the Company does not successfully manage the increased workflow, necessary increases in paper and ink inventory, production capacity flows and other business elements during these high seasons of activity, this seasonality could adversely affect the Company’s cash flows and results of operations.

The Company may be adversely affected by interest rates, particularly floating interest rates, and foreign exchange rates.

As of December 31, 2019 , 35% of the Company’s borrowings were subject to variable interest rates.

As a result, the Company is exposed to market risks associated with fluctuations in interest rates, and increases in interest rates could adversely affect the Company.

The Company currently holds two interest rate swap contracts designated as cash flow hedges, as the purpose is to reduce the variability of cash flows from interest payments related to a portion of the Company’s variable-rate debt.

The swaps effectively convert the notional value of the Company’s variable rate debt based on one-month London Interbank Offered Rate (“ LIBOR ”) to a fixed rate, including a spread on underlying debt, and a monthly reset in the variable interest rate.

Because a portion of the Company’s operations are outside of the United States, significant revenues and expenses are denominated in local currencies.

Although operating in local currencies may limit the impact of currency rate fluctuations on the results of operations of the Company’s non-United States subsidiaries and business units, fluctuations in such rates may affect the translation of these results into the Company’s consolidated financial statements.

To the extent revenues and expenses are not in the applicable local currency, the Company may enter into foreign exchange forward contracts to hedge the currency risk.

There can be no assurance, however, that the Company’s efforts at hedging will be successful.

There is always a possibility that attempts to hedge currency risks will lead to greater losses than predicted.

An other than temporary decline in operating results and enterprise value could lead to non-cash impairment charges due to the impairment of property, plant and equipment, goodwill and other intangible assets.

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As of December 31, 2020, the Company had the following long-lived assets on its consolidated balance sheet included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K:

Property, plant and equipment of $1,036.5 million ;

Goodwill of $103.0 million ;

Other intangible assets, primarily representing the value of customer relationships acquired, of $137.2 million .

(a) property, plant and equipment of $884.2 million;

(b) goodwill of $103.0 million;

and (c) other intangible assets, primarily representing the value of customer relationships acquired, of $104.3 million.

As of December 31, 2020, these assets represented approximately 57% of the Company’s total assets.

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These valuations include management’s estimates of sales, profitability, cash flow generation, capital structure, cost of debt, interest rates, capital expenditures and other assumptions.

A decline in expected profitability, significant negative industry or economic trends, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets or in entity structure, divestitures and discontinued operations may adversely impact the assumptions used in the valuations.

A decline in expected profitability, significant negative industry or economic trends (including the negative impacts of the COVID-19 pandemic), inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in use of the assets or in entity structure, divestitures and discontinued operations may adversely impact the assumptions used in the valuations.

As a result, the recoverability of these assets could be called into question, and the Company could be required to write down or write off these assets.

Such an occurrence could have a material adverse effect on the Company’s results of operations and financial position.

Holders of class A common stock are not able to independently elect directors of the Company or control any of the Company’s management policies or business decisions because the holders of class A common stock have substantially less voting power than the holders of the Company’s class B common stock, all of which is owned by certain members of the Quadracci family, trusts for their benefit or other affiliates of the Company, whose interests may be different from the holders of class A common stock.

The Company’s outstanding stock is divided into two classes of common stock:

class A common stock (“ class A stock ”) and class B common stock (“ class B stock ”).

The class B stock has ten votes per share on all matters and the class A stock is entitled to one vote per share.

As of January 31, 2020 , the class B stock constitutes approximately 77% of the Company’s total voting power.

As a result, holders of class B stock are able to exercise a controlling influence over the Company’s business, have the power to elect its directors and indirectly control decisions such as whether to issue additional shares, declare and pay dividends or enter into corporate transactions.

All of the class B stock is owned by certain members of the Quadracci family or trusts for their benefit, whose interests may differ from the interests of the holders of class A stock.

As of January 31, 2020 , approximately 93% of the outstanding class B stock was held of record by the Quad Voting Trust, and that constitutes approximately 71% of the Company’s total voting power.

The trustees of the Quad Voting Trust have the authority to vote the stock held by the Quad Voting Trust.

Accordingly, the trustees of the Quad Voting Trust are able to exercise a controlling influence over the Company’s business, have the power to elect its directors and indirectly control decisions such as whether to issue additional shares, declare and pay dividends or enter into corporate transactions.

Furthermore, in response to recent public focus on dual class capital structures, certain stock index providers are implementing limitations on the inclusion of dual class share structures in their indices.

If these restrictions increase, they may impact who buys and holds the Company’s stock.

The Company is a controlled company within the meaning of the rules of the New York Stock Exchange (“ NYSE ”) and, as a result, it relies on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

Since the Quad Voting Trust owns more than 50% of the total voting power of the Company’s stock, the Company is considered a controlled company under the corporate governance listing standards of the NYSE .

As a controlled company, an exception under the NYSE listing standards exempts the Company from the obligation to comply with certain of the NYSE’s corporate governance requirements, including the requirements:

that a majority of the Company’s Board of Directors consist of independent directors, as defined under the rules of the NYSE;

that the Company have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities;

that the Company have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

Accordingly, for so long as the Company is a controlled company, holders of class A stock may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NYSE.

If QuadMed , a wholly-owned subsidiary of the Company, fails to comply with applicable healthcare laws and regulations, the Company could face substantial penalties, and its business, reputation, operations, prospects and financial condition of the Company’s subsidiary could be adversely affected.

QuadMed provides employer-sponsored healthcare solutions on a national level to employers of all sizes, including the Company and other private and public-sector companies.

These solutions include, but are not limited to, on-site and near-site healthcare clinics, occupational health services, telemedicine, and health and wellness programs.

The healthcare industry is heavily regulated, constantly evolving and subject to significant change and fluctuation.

federal and state healthcare laws and regulations that impact the QuadMed subsidiary business include, among others:

the Health Insurance Portability and Accountability and the Health Information Technology for Economic and Clinical Health Acts, which, in general and among other things, establish comprehensive federal standards with respect to privacy, security and transmission of individually identifiable health information and impose requirements for the use of standardized electronic transactions with respect to transmission of such information;

the laws and regulations administered and enforced by the Food and Drug Administration, including the Federal Food Drug and Cosmetics Act, Controlled Substances Act and other federal statutes and regulations;

the federal Anti-Kickback Statute, which generally prohibits, among other things, soliciting, receiving or providing remuneration to induce the referral of an individual for an item or service or the purchasing or ordering of an item or service for which payment may be made under federal healthcare programs;

the federal false claims laws, which generally prohibit, among other things, knowingly presenting or causing to be presented claims for payment from third-party payors that are false or fraudulent;

state law equivalents of each of these federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not be preempted by applicable federal laws, thus complicating compliance efforts;

state prohibitions on the Corporate Practice of Medicine (many of these state laws differ from one another in significant ways and are not preempted by federal law).

The Company may be adversely affected by interest rates, particularly floating interest rates, and foreign exchange rates.

As of December 31, 2020, 30% of the Company’s borrowings were subject to variable interest rates.

As a result, the Company is exposed to market risks associated with fluctuations in interest rates, and increases in interest rates could adversely affect the Company.

The Company currently holds two interest rate swap contracts.

The purpose of entering into these contracts is to reduce the variability of cash flows from interest payments related to a portion of the Company’s variable-rate debt.

The swaps convert the notional value of the Company’s variable rate debt based on one-month London Interbank Offered Rate (“LIBOR”) to a fixed rate, including a spread on underlying debt, and a monthly reset in the variable interest rate.

Because a portion of the Company’s operations are outside of the United States, significant revenues and expenses are denominated in local currencies.

To the extent revenues and expenses are not in the applicable local currency, the Company may enter into foreign exchange forward contracts to hedge the currency risk.

There can be no assurance, however, that the Company’s efforts at hedging will be successful.

There is always a possibility that attempts to hedge currency risks will lead to greater losses than predicted.

The Company has significant liabilities with respect to defined benefit pension plans that could cause the Company to incur additional costs.

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In addition, in the future, the Company may be required to record a valuation allowance against the deferred tax assets if the Company believes it is unable to utilize them, which would have an adverse effect on the Company’s results of operations and financial position.

The Company may be adversely affected by strikes and other labor protests, and catastrophic events.

As of December 31, 2019 , the Company had a total of approximately 19,600 full-time equivalent employees, of which approximately 1,600 were covered by an industry wide agreement, a collective bargaining agreement or through a works council or similar arrangement.

As of December 31, 2019 , the Company had four collective bargaining agreements in the United States and seven agreements outside of the United States that are either industry-wide individual collective bargaining agreements or works councils or similar arrangements.

While the Company believes its employee relations are good and that the Company maintains an employee-centric culture, and there has not been any material disruption in operations resulting from labor disputes, the Company cannot be certain that it will be able to maintain a productive and efficient labor environment.

The Company cannot predict the outcome of any future negotiations relating to the renewal of the collective bargaining agreements, nor can there be any assurance that work stoppages, strikes or other forms of labor protests pending the outcome of any future negotiations will not occur.

A strike or other forms of labor protest affecting a series of major plants in the future, natural disasters, conflicts, wars, terrorist attacks, fires or other catastrophic events affecting the Company’s plants, distribution centers or other facilities, could materially disrupt the Company’s operations and result in an adverse impact on its financial condition, results of operations and cash flows, which could force the Company to reassess its strategic alternatives involving certain of its operations.

Legal and Regulatory Risks

The Company and its facilities are subject to various consumer protection and privacy laws and regulations, and will become subject to additional laws and regulations in the future.

The nature of the Company’s business includes the receipt and storage of information about the Company’s clients, vendors and the end-users of the Company’s products and services.

The Company is subject to many legislative and regulatory laws and regulations around the world concerning data protection and privacy.

In addition, the interpretation and application of consumer and data protection laws in the United States and elsewhere are often fluid and uncertain.

In addition, such laws may be interpreted and applied in a manner inconsistent with the Company’s internal policies.

Complying with these various laws could cause the Company to incur substantial costs or require changes to the Company’s business practices in a manner adverse to the Company’s business.

Unfavorable outcomes in legal proceedings could result in substantial costs and may harm the Company’s financial condition.

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The actions seek to recover unspecified damages, and costs and expenses, including attorneys’ and expert fees.

Even if the lawsuits are without merit, defending against these claims, any similar future litigation, or any other legal proceedings to which the Company is subject, can result in substantial costs and divert management time and resources.

Even if the lawsuits are without merit, defending against these or any such claims, any similar future litigation, or any other legal proceedings to which the Company is subject, can result in substantial costs and divert management time and resources.

An adverse judgment could result in monetary damages, which could have a negative impact on the Company’s liquidity and financial condition and/or cause significant reputational harm to the Company’s business.

The Company may incur costs or suffer reputational damage due to improper conduct of its employees, contractors or agents under laws governing business practices, including the United States Foreign Corrupt Practices Act.

The Company could be adversely affected by engaging in business practices that are in violation of United States or foreign anti-corruption laws, including the United States Foreign Corrupt Practices Act.