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Business and Operational Risks
−Removed: We are subject to risks associated with climate change, including increased regulation of GHG emissions, changing consumer preferences and other risks related to our transition to Electrification, and the potential increased impacts of severe weather events on our operations and infrastructure.
−Removed: Climate change is receiving increasing attention worldwide, which has led to increased stakeholder and societal expectations on companies to address change and significant legislative and regulatory efforts to limit GHG emissions.
−Removed: For example, adoption of GHG or climate change rules in jurisdictions in which we operate facilities could require installation of emission controls, acquisition of emission credits, emission reductions, or other measures that could be costly, and could also impact utility rates and increase the amount we spend annually for energy.
−Removed: Additionally, jurisdictions throughout the world are enacting more stringent disclosure requirements related to climate change impacts of an entity’s business.
−Removed: Such increased disclosure requirements could increase our costs and could result in risks to our reputation or consumer demand for our products if we do not meet increasingly demanding stakeholder expectations and standards.
−Removed: Changes in consumer preferences due to transitioning to a greener economy may result in increased costs, reduced demand for our ICE products, and reduced profits.
−Removed: Part of our strategy to address these risks includes our transition to EVs, which presents additional risks, including reduced demand for, and therefore profits from, our ICE vehicles, which we are using to fund our growth strategy;
−Removed: higher costs or reduced availability of materials related to EV technologies impacting profitability;
−Removed: and risks related to the success of our EV strategy.
−Removed: Finally, given the worldwide scope of our supply chain and operations, we and our suppliers face a risk of disruption or operating inefficiencies that may increase costs due to the adverse physical effects of climate change, which are predicted to increase the frequency and severity of weather and other natural events, e.g., tropical cyclones, extended droughts, and extreme temperatures.
−Removed: Climate change could also disrupt our operations by impacting the availability and cost of materials within our supply chain, and could also increase insurance and other operating costs.
−Removed: These factors may impact our decisions to construct
−Removed: new facilities.
−Removed: If a business interruption occurs and we are unsuccessful in our continuing efforts to minimize the impact of these events, our business, results of operations, financial position, and cash flows could be materially adversely affected.
−Removed: Our business is subject to numerous global risks, including regulatory, political, economic, governmental, and military concerns and instability.
−Removed: Our business, including our employees, customers, and suppliers, is located throughout the world.
−Removed: We employ approximately 92% of our workforce outside of the U.S.
−Removed: We have many manufacturing, administrative, and sales facilities outside of the U.S.
−Removed: Our subsidiaries located outside of the U.S.
−Removed: generated approximately 59% of our net revenue in fiscal year 2023 (including approximately 18% in China) and we expect sales from non-U.S.
−Removed: markets to continue to represent a significant portion of our total net revenue.
−Removed: International sales and operations are subject to changes in local government regulations and policies, including those related to tariffs and trade barriers, economic sanctions, investments, taxation, exchange controls, and repatriation of earnings.
−Removed: As a result, we are exposed to numerous global, regional, and local risks that could decrease revenue and/or increase expenses, and therefore decrease our profitability.
−Removed: Such risks may result from instability in economic or political conditions, inflation, recession, and/or actual or anticipated military or political conflicts, and include, without limitation:
−Removed: trade regulations, including customs, import, export, and sourcing restrictions, tariffs, trade barriers, trade disputes, and economic sanctions;
−Removed: changes in local employment costs, laws, regulations, and conditions;
−Removed: difficulties with, and costs for, protecting our intellectual property;
−Removed: challenges in collecting accounts receivable;
−Removed: tax laws and regulatory changes, including examinations by taxing authorities, variations in tax laws from country to country, changes to the terms of income tax treaties, and difficulties in the tax-efficient repatriation of earnings generated or held in a number of jurisdictions;
−Removed: natural disasters;
−Removed: and the impact of each of the foregoing on our business operations, manufacturing, and supply chain.
−Removed: Other risks are inherent in our non-U.S.
−Removed: operations, including:
−Removed: the potential for changes in socio-economic conditions and/or monetary and fiscal policies;
−Removed: intellectual property protection difficulties and disputes;
−Removed: the settlement of legal disputes through certain foreign legal systems;
−Removed: the collection of receivables;
−Removed: exposure to possible expropriation or other government actions;
−Removed: unsettled political conditions;
−Removed: and possible terrorist attacks.
−Removed: These and other factors may have a material adverse effect on our non-U.S.
−Removed: operations and, therefore, on our business and results of operations.
−Removed: In addition, a scarcity of resources or other hardships caused by a global pandemic may result in increased nationalism, protectionism, and political tensions which may cause governments and/or other entities to take actions that may have a significant negative impact on our ability – and the ability of our suppliers and customers – to conduct business.
Adverse conditions in the industries upon which we are dependent, including the automotive industry, have had, and may in the future have, adverse effects on our business.
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Increasing costs for, or limitations on the supply of or access to, manufactured components and raw materials may adversely affect our business and results of operations.
−Removed: We use a broad range of manufactured components, subassemblies, and raw materials in the manufacture of our products in both our Performance Sensing and Sensing Solutions segments, including those containing certain commodities (e.g., semiconductors, resins, and metals), which may experience significant volatility in their price and availability due to, among
−Removed: other things, new laws or regulations, including the impact of tariffs, trade barriers, trade disputes, export or sourcing restrictions, economic sanctions, and global economic or political events including government actions, labor strikes, suppliers' allocations to other purchasers, interruptions in production by suppliers, changes in foreign currency exchange rates, and prevailing price levels.
+Added: We use a broad range of manufactured components, subassemblies, and raw materials in the manufacture of our products in both our Performance Sensing and Sensing Solutions segments, including those containing certain commodities (e.g., semiconductors, resins, and metals), which may experience significant volatility in their price and availability due to, among other things, new laws or regulations, including the impact of tariffs, trade barriers, trade disputes, export or sourcing restrictions, economic sanctions, and global economic or political events including government actions, labor strikes, suppliers' allocations to other purchasers, interruptions in production by suppliers, changes in foreign currency exchange rates, and prevailing price levels.
It has historically been difficult to pass increased prices for manufactured components and raw materials to our customers through price increases.
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Accordingly, we continue to actively work with our customers to share the inflationary burden of these factors.
−Removed: In addition, where possible, we have been working to adjust our long-term supply agreements, strengthen our relationships with our suppliers, increase inventory on hand, increase visibility into long-term supply and demand, and accelerate the use of alternate materials to increase supply chain visibility.
+Added: In addition, where possible, we have been working to adjust our long-term supply agreements, strengthen our relationships with our suppliers, manage inventory on hand, increase visibility into long-term supply and demand, and accelerate the use of alternate materials to increase supply chain visibility.
If the future impacts of these shortages are more severe than we currently expect, or if our efforts to share the inflationary burden of these factors do not sufficiently offset our costs, it could result in deterioration of our results.
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Accordingly, the change in fair value of these hedges is recognized in earnings immediately, which could cause volatility in our results of operations from quarter to quarter.
−Removed: In connection with the implementation of our corporate strategies, we face risks associated with the acquisition of businesses, the integration of acquired businesses, and the growth and development of these businesses.
−Removed: In pursuing our corporate strategy, we have in the past, and may in the future, acquire other businesses.
−Removed: The success of this strategy is dependent upon our ability to identify appropriate acquisition targets, negotiate transactions on favorable terms, complete transactions, and successfully integrate them into our existing businesses.
−Removed: There can be no assurance that we will realize the anticipated synergies or cost savings related to acquisitions, including, but not limited to, revenue growth and operational efficiencies, or that they will be achieved in our estimated timeframe.
−Removed: We may not be able to successfully integrate and streamline overlapping functions from future acquisitions, and integration may be more costly to accomplish than we expect.
−Removed: There is also no guarantee that the acquired businesses will perform according to the business case used in justifying the acquisition.
−Removed: In addition, we could encounter difficulties in managing our combined company due to its increased size and scope.
−Removed: Subject to the terms of our indebtedness, we may finance future acquisitions with cash from operations, additional indebtedness, and/or by issuing additional equity securities.
−Removed: In addition, we could face financial risks associated with incurring additional indebtedness such as reducing our liquidity, limiting our access to financing markets, and increasing the amount of service on our debt.
−Removed: The availability of debt to finance future acquisitions may be restricted, and our ability to make future acquisitions may be limited.
−Removed: Refer to separate risk factor for additional information related to risks regarding our level of indebtedness.
−Removed: In addition, many of the businesses that we acquire and develop will likely have significantly smaller scales of operations prior to the implementation of our growth strategy.
−Removed: If we are not able to manage the growing complexity of these businesses, including improving, refining, or revising our systems and operational practices, and enlarging the scale and scope of the businesses, our business may be adversely affected.
−Removed: Other risks include developing knowledge of and experience in the new business, integrating the acquired business into our systems and culture, recruiting professionals, and developing and capitalizing on new relationships with experienced market participants.
−Removed: External factors, such as compliance with new or revised regulations, competitive alternatives, and shifting market preferences may also impact the successful implementation of a new line of business.
−Removed: Failure to manage these risks in the acquisition or development of new businesses could materially and adversely affect our business, results of operations, and financial condition.
Restructuring our business or divesting some of our businesses or product lines in the future may have a material adverse effect on our results of operations, financial condition, and cash flows.
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Any divestitures may result in significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our results of operations and financial condition.
−Removed: Divestitures could involve additional risks, including difficulties in the
−Removed: separation of operations, services, products, and personnel;
+Added: Divestitures could involve additional risks, including difficulties in the separation of operations, services, products, and personnel;
the diversion of management's attention from other business concerns;
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There can be no assurance that we will be successful in addressing these or any other significant risks encountered.
−Removed: In the year ended December 31, 2022, we sold various assets and liabilities comprising our semiconductor test and thermal business (collectively, the "Qinex Business").
−Removed: Refer to Note 21:
−Removed: Acquisitions and Divestitures of our audited consolidated financial statements and accompanying notes thereto (the "Financial Statements") included elsewhere in this Report for additional information.
We also may seek to restructure our business in the future by relocating operations, disposing of certain assets, or consolidating operations.
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In addition, any significant restructuring of our business will require significant managerial attention, which may be diverted from our other operations.
−Removed: In the year ended December 31, 2023, we exited the marine energy storage business (the "Marine Business") of Spear Power Systems (“Spear”).
−Removed: In addition, we committed to a plan to reorganize our business (the “Q3 2023 Plan”), which consisted of voluntary and involuntary reductions-in-force, site closures, and other cost-savings initiatives.
−Removed: Refer to Note 5:
−Removed: Restructuring and Other Charges, Net of our Financial Statements included elsewhere in this Report for additional information on these activities.
Labor disruptions or increased labor costs have had, and may in the future have, adverse impacts on our business.
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In addition, certain of our competitors in the transportation sensor market are influenced or controlled by major OEMs or suppliers, thereby limiting our access to these customers.
−Removed: Many of our customers also rely on us as their sole source of supply for many of the products that we have historically sold to them.
These customers may choose to develop relationships with additional suppliers or elect to produce some or all of these products internally, primarily to reduce risk of delivery interruptions or as a means of extracting more value from us.
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If we are unable to attract and retain key personnel, our business, financial condition, and results of operations could be adversely affected.
−Removed: We are subject to various risks related to public health crises, including the COVID-19 pandemic, which have had, and may in the future have, material and adverse impacts on our business, financial condition, liquidity, and results of operations.
+Added: We are subject to risks associated with climate change, including increased regulation of GHG emissions, changing consumer preferences and other risks related to our transition to Electrification, and the potential increased impacts of severe weather events on our operations and infrastructure.
+Added: Climate change is receiving increasing attention worldwide, which has led to increased stakeholder and societal expectations on companies to address change and significant legislative and regulatory efforts to limit GHG emissions.
+Added: For example, adoption of GHG or climate change rules in jurisdictions in which we operate facilities could require installation of emission controls, acquisition of emission credits, emission reductions, or other measures that could be costly, and could also impact utility rates and increase the amount we spend annually for energy.
+Added: Additionally, jurisdictions throughout the world are enacting more stringent disclosure requirements related to climate change impacts of an entity’s business.
+Added: Such increased disclosure requirements could increase our costs and could result in risks to our reputation or consumer demand for our products if we do not meet increasingly demanding stakeholder expectations and standards.
+Added: Changes in consumer preferences due to transitioning to a greener economy may result in increased costs, reduced demand for our ICE products, and reduced profits.
+Added: Part of our strategy to address these risks includes our transition to EVs, which presents additional risks, including reduced demand for, and therefore profits from, our ICE vehicles, which we are using to fund our growth strategy;
+Added: higher costs or reduced availability of materials related to EV technologies impacting profitability;
+Added: and risks related to the success of our EV strategy.
+Added: Finally, given the worldwide scope of our supply chain and operations, we and our suppliers face a risk of disruption or operating inefficiencies that may increase costs due to the adverse physical effects of climate change, which are predicted to increase the frequency and severity of weather and other natural events, e.g., tropical cyclones, extended droughts, and extreme temperatures.
+Added: Climate change could also disrupt our operations by impacting the availability and cost of materials within our supply chain, and could also increase insurance and other operating costs.
+Added: These factors may impact our decisions to construct new facilities.
+Added: If a business interruption occurs and we are unsuccessful in our continuing efforts to minimize the impact of these events, our business, results of operations, financial position, and cash flows could be materially adversely affected.
+Added: Our business is subject to numerous global risks, including regulatory, political, economic, governmental, and military concerns and instability.
+Added: Our business, including our employees, customers, and suppliers, is located throughout the world.
+Added: We employ approximately 93% of our workforce outside of the U.S.
+Added: We have many manufacturing, administrative, and sales facilities outside of the U.S.
+Added: Our subsidiaries located outside of the U.S.
+Added: generated approximately 60% of our net revenue in fiscal year 2024 (including approximately 18% in China) and we expect sales from non-U.S.
+Added: markets to continue to represent a significant portion of our total net revenue.
+Added: International sales and operations are subject to changes in local government regulations and policies, including those related to tariffs and trade barriers, economic sanctions, investments, taxation, exchange controls, and repatriation of earnings.
+Added: As a result, we are exposed to numerous global, regional, and local risks that could decrease revenue and/or increase expenses, and therefore decrease our profitability.
+Added: Such risks may result from instability in economic or political conditions, inflation, recession, and/or actual or anticipated military or political conflicts, and include, without limitation:
+Added: trade regulations, including customs, import, export, and sourcing restrictions, tariffs, trade barriers, trade disputes, and economic sanctions;
+Added: changes in local employment costs, laws, regulations, and conditions;
+Added: difficulties with, and costs for, protecting our intellectual property;
+Added: challenges in collecting accounts receivable;
+Added: tax laws and regulatory changes, including examinations by taxing authorities, variations in tax laws from country to country, changes to the terms of income tax treaties, and difficulties in the tax-efficient repatriation of earnings generated or held in a number of jurisdictions;
+Added: natural disasters;
+Added: and the impact of each of the foregoing on our business operations, manufacturing, and supply chain.
+Added: Other risks are inherent in our non-U.S.
+Added: operations, including:
+Added: the potential for changes in socio-economic conditions and/or monetary and fiscal policies;
+Added: intellectual property protection difficulties and disputes;
+Added: the settlement of legal disputes through certain foreign legal systems;
+Added: the collection of receivables;
+Added: exposure to possible expropriation or other government actions;
+Added: unsettled political conditions;
+Added: and possible terrorist attacks.
+Added: These and other factors may have a material adverse effect on our non-U.S.
+Added: operations and, therefore, on our business and results of operations.
+Added: In addition, a scarcity of resources or other hardships caused by a global pandemic may result in increased nationalism, protectionism, and political tensions which may cause governments and/or other entities to take actions that may have a significant negative impact on our ability – and the ability of our suppliers and customers – to conduct business.
+Added: We are subject to various risks related to public health crises, which have had, and may in the future have, material and adverse impacts on our business, financial condition, liquidity, and results of operations.
Any outbreaks of contagious diseases and other adverse public health developments in countries where we operate could have a material and adverse impact on our business, financial condition, liquidity, and results of operations.
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Risk Factors .
+Added: In connection with the implementation of our corporate strategies, we face risks associated with the acquisition of businesses, the integration of acquired businesses, and the growth and development of these businesses.
+Added: In pursuing our corporate strategy, we have in the past, and may in the future, acquire other businesses.
+Added: The success of this strategy is dependent upon our ability to identify appropriate acquisition targets, negotiate transactions on favorable terms, complete transactions, and successfully integrate them into our existing businesses.
+Added: There can be no assurance that we will realize the anticipated synergies or cost savings related to acquisitions, including, but not limited to, revenue growth and operational efficiencies, or that they will be achieved in our estimated timeframe.
+Added: We may not be able to successfully integrate and streamline overlapping functions from future acquisitions, and integration may be more costly to accomplish than we expect.
+Added: There is also no guarantee that the acquired businesses will perform according to the business case used in justifying the acquisition.
+Added: In addition, we could encounter difficulties in managing our combined company due to its increased size and scope.
+Added: Subject to the terms of our indebtedness, we may finance future acquisitions with cash from operations, additional indebtedness, and/or by issuing additional equity securities.
+Added: In addition, we could face financial risks associated with incurring additional indebtedness such as reducing our liquidity, limiting our access to financing markets, and increasing the amount of service on our debt.
+Added: The availability of debt to finance future acquisitions may be restricted, and our ability to make future acquisitions may be limited.
+Added: Refer to separate risk factor for additional information related to risks regarding our level of indebtedness.
+Added: In addition, many of the businesses that we acquire and develop will likely have significantly smaller scales of operations prior to the implementation of our growth strategy.
+Added: If we are not able to manage the growing complexity of these businesses, including improving, refining, or revising our systems and operational practices, and enlarging the scale and scope of the businesses, our business may be adversely affected.
+Added: Other risks include developing knowledge of and experience in the new business, integrating the acquired business into our systems and culture, recruiting professionals, and developing and capitalizing on new relationships with experienced market participants.
+Added: External factors, such as compliance with new or revised regulations, competitive alternatives, and shifting market preferences may also impact the successful implementation of a new line of business.
+Added: Failure to manage these risks in the acquisition or development of new businesses could materially and adversely affect our business, results of operations, and financial condition.
Financial Risks
−Removed: We have identified material weaknesses in our internal control over financial reporting.
−Removed: These material weaknesses could in the future adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
−Removed: We have identified material weaknesses in our internal control over financial reporting and those weaknesses have led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2023.
−Removed: We did not specify objectives with sufficient clarity to enable an appropriate level of risk assessment and monitoring.
−Removed: Additionally, our control activities did not adequately establish policies, procedures, information protocols and communications to design and operate effective control, due in part, to a lack of appropriate accounting personnel, impacting areas such as inventory and account reconciliation processes in our Americas Accounting and Shared Services teams located in Mexico.
−Removed: Our management is taking action to remediate the deficiencies in its internal controls over financial reporting by developing a remediation plan, which could include the engagement of third-party consultants to evaluate and help formalize internal controls design and framework;
−Removed: the completion of a risk assessment to determine areas within the internal control structure to strengthen, document and execute;
−Removed: and the augmentation, reorganization or replacement of personnel where necessary to ensure appropriate levels of knowledge and execution to support internal control structure assessment, design, and execution.
−Removed: If actions to remediate these material weaknesses are not completed on a timely basis, or if other remediation efforts are not successful, we may, in the future, identify additional internal control deficiencies that could rise to the level of a material weakness or uncover other errors in financial reporting.
−Removed: Failure to have effective internal control over financial reporting and disclosure controls and procedures could impair our ability to produce accurate financial statements on a timely basis, or provide reliable financial statements needed for business decision processes, and our business and results of operations could be harmed.
−Removed: Additionally, investors could lose confidence in our reported financial information and our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected.
−Removed: Also, failure to maintain effective internal control over financial reporting could result in sanctions by regulatory authorities, and our independent registered public accounting firm may not be able to attest that such internal controls are effective when they are required to do so.
We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
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dollar ("USD").
−Removed: We derive a significant portion of our net revenue from markets outside the U.S.
+Added: We derive a significant portion of our net revenue from and incur expenses in markets outside the U.S.
For financial reporting purposes, the functional currency of all of our subsidiaries has historically been the USD because of the significant influence of the USD on our operations.
−Removed: Effective October 1, 2023, as a result of significant changes in economic facts and circumstances in the operations of our China foreign entities, the functional currency of our wholly-owned subsidiaries in China changed to the Chinese Renminbi ("CNY").
+Added: In fiscal year 2023, as a result of significant changes in economic facts and circumstances in the operations of our China foreign entities, the functional currency of our wholly-owned subsidiaries in China changed to the Chinese Renminbi ("CNY").
The changes in economic facts and circumstances caused a permanent change to our strategy in China toward a more self-contained model making China the primary economic environment in which these subsidiaries operate.
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Our level of indebtedness could adversely affect our financial condition and our ability to operate our business, including our ability to service our debt and/or comply with the related covenants.
+Added: As of December 31, 2024, we had $3,223.4 million of gross outstanding indebtedness, including various tranches of senior unsecured notes (the “Senior Notes”).
The credit agreement governing our secured credit facility (as amended, supplemented, waived, or otherwise modified, the "Credit Agreement") provides for senior secured credit facilities (the "Senior Secured Credit Facilities") consisting of a term loan facility (the "Term Loan"), a $750.0 million revolving credit facility (the "Revolving Credit Facility"), and incremental availability (the "Accordion") under which additional secured credit facilities could be issued under certain circumstances.
In fiscal year 2023, we repaid the remaining balance on the Term Loan.
−Removed: As of December 31, 2023, we had $3,425.2 million of gross outstanding indebtedness, including various tranches of senior unsecured notes (the “Senior Notes”).
Refer to Note 14:
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If we complete additional acquisitions, our debt service requirements could also increase.
−Removed: If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity investments, or reducing or delaying capital expenditures, strategic acquisitions, investments, and alliances, any of which could have a material adverse effect on our operations.
+Added: If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity financing, or reducing or delaying capital expenditures, strategic acquisitions, investments, and alliances, any of which could have a material adverse effect on our operations.
Additionally, we may not be able to complete such actions, if necessary, on commercially reasonable terms, or at all.
−Removed: If we experience an event of default under any of our debt instruments that is not cured or waived, the holders of the defaulted debt could cause all amounts outstanding with respect to the debt to become due and payable immediately, which, in turn, would result in cross-defaults under our other debt instruments.
+Added: If we experience an event of default under any of our debt instruments that is not cured or waived, the holders of the defaulted debt could cause all amounts outstanding with respect to the debt to become due and payable immediately, which, in turn, could result in cross-defaults under our other debt instruments.
Our assets and cash flows may not be sufficient to fully repay borrowings if accelerated upon an event of default.
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we could be adversely affected by changes in such program, or by our failure to comply with its requirements.
−Removed: Further tariffs may be imposed on other imports of our products, or our business may be further impacted by retaliatory trade measures taken by China or other countries in response to existing or future U.S.
+Added: Further tariffs may be imposed on other imports of our products.
+Added: For example, effective February 4, 2025, the U.S.
+Added: announced additional tariffs for goods imported into the U.S.
+Added: from Mexico, Canada, and China beginning in Q1 2025.
+Added: We cannot predict what additional actions may ultimately be taken by the U.S.
+Added: or other governments with respect to tariffs or trade relations and our business may be further impacted by retaliatory trade measures taken by other countries in response to existing or future U.S.
tariffs or other measures (e.g., subsidies).
We may raise our prices on products subject to such tariffs to share the cost with our customers, which could harm our operating performance or cause our customers to seek alternative suppliers.
−Removed: In addition, we may seek to shift some of our China manufacturing to other countries, which could result in additional costs and disruption to our operations.
+Added: In addition, we may seek to shift some of our manufacturing to other countries, which could result in additional costs and disruption to our operations.
We also sell our products globally and, therefore, our export sales could be impacted by the tariffs.
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Goodwill and other identifiable intangible assets were recognized at fair value as of the corresponding acquisition date.
−Removed: We evaluated our goodwill for impairment as of October 1, 2023.
−Removed: Based on this analysis, we determined that as of October 1, 2023, goodwill related to our Insights reporting unit was impaired, and in the fourth quarter of 2023, we recorded a $321.7 million non-cash impairment charge, representing the entire goodwill balance allocated to Insights.
−Removed: This impairment was primarily driven by a lower long-range financial forecast resulting from the impact of restructuring actions taken in the third and fourth quarters of 2023 and consequent business decisions regarding our level of investment in Insights in future years, considering our focus on electrification.
−Removed: Other valuation assumptions for the Insights reporting unit valuation that are impacted by macroeconomic factors also contributed to the impairment.
+Added: In the third quarter of 2024, impairment indicators were identified that suggested the carrying value of the Dynapower reporting unit could exceed its fair values.
+Added: Accordingly, we evaluated the Dynapower reporting unit for impairment and determined that our Dynapower reporting unit was impaired.
+Added: In the third quarter of 2024, we recorded a $150.1 million non-cash impairment charge.
+Added: This impairment was primarily driven by a lower long-range financial forecast resulting from specific discrete events that changed the timing of our forecasted performance.
+Added: If Dynapower does not achieve the forecasted future cash flows, there is a possibility that additional impairments of the remaining $229.8 million of goodwill may be recognized in the future.
Additional impairment of goodwill or other identifiable intangible assets may result from, among other things, deterioration in our performance, adverse market conditions, adverse changes in laws or regulations, significant unexpected or planned changes in the use of assets or future changes to go-to-market or product offerings strategy, and a variety of other factors.
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the timing of our most recent quantitative impairment tests and the relative amount by which a reporting unit’s fair value exceeded its then carrying value, the inputs and assumptions underlying our valuation models and the sensitivity of our fair value measurements to those inputs and assumptions, the impact that adverse economic or market conditions may have on the degree of uncertainty inherent in our long-term operating forecasts, and changes in the carrying value of a reporting unit’s net assets from the time of our most recent goodwill impairment test.
−Removed: We also consider the impact of recent acquisitions in our expectations of the reporting units, such as the Insights and Dynapower reporting units, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.
−Removed: Based on the results of this analysis, we do not consider any of our reporting units outside of Insights, which was already fully impaired, to be at risk of failing the goodwill impairment test.
+Added: We also consider the impact of recent acquisitions in our expectations of the reporting units, such as the Dynapower reporting unit, and how these acquisitions perform against their original expected performance, as these might put pressure on the reporting units' fair value over carrying value in the short term.
+Added: Based on the results of this analysis, we do not consider any of our other reporting units to be at risk of failing the goodwill impairment test.
The amount of any quantified impairment must be expensed immediately as a charge that is included in operating income, which may impact our ability to raise capital.
1 unchanged sentence
Refer to Note 11:
−Removed: Goodwill and Other Intangible Assets, Net of our Financial Statements included elsewhere in this Report for additional information related to our goodwill and other identifiable intangible assets and the Insights impairment charge.
+Added: Goodwill and Other Intangible Assets, Net of our Financial Statements included elsewhere in this Report for additional information related to our goodwill and other identifiable intangible assets and the Dynapower impairment charge.
Refer to Critical Accounting Policies and Estimates , in Item 7:
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EC findings may have retroactive effect and can cause increases in tax liabilities where we considered ourselves in full compliance with local legislation.
−Removed: Furthermore, on December 15, 2022, the EU Member States formally adopted the EU's Pillar Two Directive, which generally provides for a minimum jurisdictional effective tax rate of 15%.
+Added: Furthermore, most OECD members, including EU member states, have implemented the Pillar Two framework, which establishes a global minimum jurisdictional effective tax rate of 15% for large multinational enterprises.
The legislation is effective for our fiscal year beginning January 1, 2024.
−Removed: We continue to evaluate the potential impact on future periods due to the Pillar Two framework, as such changes could result in complexity and uncertainty in countries where we do business and could increase our effective tax rate.
+Added: The dynamic nature of the legislative landscape, with outgoing changes and updates to the rules, creates uncertainty and potential for retroactive tax liabilities.
+Added: We continue to evaluate the guidance and regulations of the Pillar Two framework.
+Added: Any further developments could result in complexity and uncertainty in countries where we do business and could increase our effective tax rate.
We could be subject to future audits conducted by both foreign and domestic tax authorities, and the resolution of such audits could impact our tax rate in future periods, as would any reclassification or other changes (such as those in applicable accounting rules) that increases the amounts we have provided for income taxes in our consolidated financial statements.
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We rely on dividends, interest, and other payments from these subsidiaries to meet our obligations for paying principal and interest on outstanding debt, repurchasing ordinary shares, and corporate expenses.
−Removed: Certain of our subsidiaries are subject to regulatory requirements of the jurisdictions in which they operate or other restrictions that may limit the amounts that subsidiaries can pay in dividends or other payments to us.
−Removed: No assurance can be given that there will not be further changes in law, regulatory actions, or other circumstances that could restrict the ability of our subsidiaries to pay dividends or otherwise make payments to
+Added: Certain of our subsidiaries are subject to regulatory requirements of the jurisdictions in which they operate or other restrictions that may limit the amounts that subsidiaries can pay
+Added: in dividends or other payments to us.
+Added: No assurance can be given that there will not be further changes in law, regulatory actions, or other circumstances that could restrict the ability of our subsidiaries to pay dividends or otherwise make payments to us.
Furthermore, no assurance can be given that our subsidiaries may be able to make timely payments to us in order for us to meet our obligations.
8 unchanged sentences
Violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our results of operations, financial condition, and/or cash flows.
−Removed: Export of our products is subject to various export control regulations and may require a license for export.
−Removed: Any failure to comply with such regulations could result in governmental enforcement actions, fines, penalties, loss of export privileges, or other remedies, which could have a material adverse effect on our business, results of operations, and financial condition.
−Removed: We are subject to compliance with laws and regulations controlling the import and export of goods, services, software, and technical data.
−Removed: Certain of our products are subject to export regulations of the various jurisdictions in which we operate (“Controlled Items”).
−Removed: The export of many such Controlled Items requires a license from the applicable government agency.
−Removed: Licensing decisions are made based on type of product, its destination, end use, end user, the parties involved in the transaction, national security, and foreign policy.
−Removed: As a result, export license approvals are not guaranteed.
−Removed: We have a trade compliance team and other systems in place to apply for licenses and otherwise comply with import and export regulations.
−Removed: Any failure to maintain compliance with such regulations could limit our ability to import or export raw material and finished goods.
−Removed: These laws and regulations are subject to change, and any such change may limit or exclude existing or future business opportunities, require us to change technology, or incur expenditures to comply with such laws and regulations.
−Removed: We have discovered in the past, and may discover in the future, deficiencies in our trade compliance program.
−Removed: Although we continue to enhance our trade compliance program, we cannot guarantee that any such enhancements will ensure full compliance with applicable laws and regulations at all times, or that applicable authorities will not raise compliance concerns or perform audits to confirm our compliance with applicable laws and regulations.
−Removed: Any failure by us to comply with applicable laws and regulations could result in governmental enforcement actions, fines, penalties, criminal and/or civil proceedings, or other remedies, any of which could have a material adverse effect on our business, results of operations, and/or financial condition.
Changes in existing environmental or safety laws, regulations, and programs could reduce demand for our products, which could cause our revenue to decline.
22 unchanged sentences
and the China law on Management Methods for Controlling Pollution by Electronic Information Products.
−Removed: These laws prohibit the use of certain substances in the manufacture of our products and directly and indirectly impose a variety of requirements for modification of manufacturing processes, registration, chemical testing, labeling, and other matters.
+Added: These laws prohibit the use of certain substances in the manufacture of our products and directly and indirectly impose a variety of requirements for modification of manufacturing processes, registration, chemical testing, labeling, and other
These laws continue to proliferate and expand in these and other jurisdictions to address other materials and aspects of our product manufacturing and sale.
These laws could make the manufacture or sale of our products more expensive or impossible, could limit our ability to sell our products in certain jurisdictions, and could result in liability for product recalls, penalties, or other claims.
+Added: Export of our products is subject to various export control regulations and may require a license for export.
+Added: Any failure to comply with such regulations could result in governmental enforcement actions, fines, penalties, loss of export privileges, or other remedies, which could have a material adverse effect on our business, results of operations, and financial condition.
+Added: We are subject to compliance with laws and regulations controlling the import and export of goods, services, software, and technical data.
+Added: Certain of our products are subject to export regulations of the various jurisdictions in which we operate (“Controlled Items”).
+Added: The export of many such Controlled Items requires a license from the applicable government agency.
+Added: Licensing decisions are made based on type of product, its destination, end use, end user, the parties involved in the transaction, national security, and foreign policy.
+Added: As a result, export license approvals are not guaranteed.
+Added: We have a trade compliance team and other systems in place to apply for licenses and otherwise comply with import and export regulations.
+Added: Any failure to maintain compliance with such regulations could limit our ability to import or export raw material and finished goods.
+Added: These laws and regulations are subject to change, and any such change may limit or exclude existing or future business opportunities, require us to change technology, or incur expenditures to comply with such laws and regulations.
+Added: We have discovered in the past, and may discover in the future, deficiencies in our trade compliance program.
+Added: Although we continue to enhance our trade compliance program, we cannot guarantee that any such enhancements will ensure full compliance with applicable laws and regulations at all times, or that applicable authorities will not raise compliance concerns or perform audits to confirm our compliance with applicable laws and regulations.
+Added: Any failure by us to comply with applicable laws and regulations could result in governmental enforcement actions, fines, penalties, criminal and/or civil proceedings, or other remedies, any of which could have a material adverse effect on our business, results of operations, and/or financial condition.
Our ability to compete effectively depends, in part, on our ability to maintain the proprietary nature of our products and technology.
15 unchanged sentences
The defense of these lawsuits may divert our management's attention, and we may incur significant expenses in defending these lawsuits.
−Removed: In addition, we may be required to pay damage awards or settlements, or become subject to injunctions or other equitable remedies, that could cause a material adverse effect on our results of operations, financial condition, and/or cash flows.
+Added: In addition, we may be required to pay damage awards or settlements, or become subject to
+Added: injunctions or other equitable remedies, that could cause a material adverse effect on our results of operations, financial condition, and/or cash flows.
+Added: We have identified material weaknesses in our internal control over financial reporting.
+Added: These material weaknesses could in the future adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
+Added: We have identified material weaknesses in our internal control over financial reporting and those weaknesses have led to a conclusion that our internal control over financial reporting and disclosure controls and procedures were not effective as of December 31, 2024 or 2023.
+Added: We did not specify objectives with sufficient clarity to enable an appropriate level of risk assessment and monitoring.
+Added: Additionally, our control activities did not adequately establish policies, procedures, information protocols and communications to design and operate effective control, due in part, to a lack of appropriate accounting personnel, impacting areas such as inventory and account reconciliation processes in our Americas Accounting and Shared Services teams located in Mexico.
+Added: Our management is taking action to remediate the deficiencies in its internal controls over financial reporting by developing a remediation plan, which could include the engagement of third-party consultants to evaluate and help formalize internal controls design and framework;
+Added: the completion of a risk assessment to determine areas within the internal control structure to strengthen, document and execute;
+Added: and the augmentation, reorganization or replacement of personnel where necessary to ensure appropriate levels of knowledge and execution to support internal control structure assessment, design, and execution.
+Added: If actions to remediate these material weaknesses are not completed on a timely basis, or if other remediation efforts are not successful, we may, in the future, identify additional internal control deficiencies that could rise to the level of a material weakness, or uncover errors in financial reporting.
+Added: Failure to have effective internal control over financial reporting and disclosure controls and procedures could impair our ability to produce accurate financial statements on a timely basis, or provide reliable financial statements needed for business decision processes, and our business and results of operations could be harmed.
+Added: Additionally, investors could lose confidence in our reported financial information and our ability to obtain additional financing, or additional financing on favorable terms, could be adversely affected.
+Added: Also, failure to maintain effective internal control over financial reporting could result in sanctions by regulatory authorities, and our independent registered public accounting firm may not be able to attest that such internal controls are effective when they are required to do so.
Domicile Risks
14 unchanged sentences
Our shares are traded on the New York Stock Exchange, which is not a recognized investment exchange in the U.K.
−Removed: Consequently, any repurchase of our shares is currently considered an "off-market purchase." Our current authorization expires on May 28, 2025, and we intend to renew this authorization periodically.
+Added: Consequently, any repurchase of our shares is currently considered an "off-market purchase." Our current authorization expires on June 10, 2029, and we intend to renew this authorization periodically.
As a public limited company incorporated under the laws of England and Wales, the enforcement of civil liabilities against us may be more difficult.
31 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.