What changed in this filing

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Item 1A. Risk Factors

2022-11-15 compared with 2021-11-09 · 64 added, 60 removed, 315 unchanged (28% of the section changed)

Investors should carefully consider the risks described below before investing in our securities.

Our operations and financial results are subject to various risks and uncertainties, including those described below, that could adversely affect our business, financial condition, results of operations, cash flows, and the trading price of our securities.

These risks are not the only ones facing us.

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Conditions in global or regional economies, capital and money markets, and banking systems, and cyclical industry demand may adversely affect our results of operations, financial position, and cash flows.

Our business and operating results have been and will continue to be affected by economic conditions regionally or globally, including the cost and availability of consumer and business credit, end demand from consumer and industrial markets, and concerns as to sovereign debt levels including credit rating downgrades and defaults on sovereign debt and significant bank failures or defaults.

Our business and operating results have been and will continue to be affected by economic conditions regionally or globally, including new or increased tariffs and other barriers to trade, changes to fiscal and monetary policy, inflation, slower growth or recession, higher interest rates, the cost and availability of consumer and business credit, end demand from consumer and industrial markets, and concerns as to sovereign debt levels including credit rating downgrades and defaults on sovereign debt and significant bank failures or defaults.

Any of these economic factors could cause our customers to experience deterioration of their businesses, cash flow, and ability to obtain financing.

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dollar reported revenue and income will decrease.

Recently, the strength of the U.S.

dollar has generally increased as compared to other currencies, which has had, and may continue to have, an adverse effect on our operating results as reported in U.S.

We manage certain cash, intercompany, and other balance sheet currency exposures in part by entering into financial derivative contracts.

In addition to the risk of non-performance by the counterparty to these contracts, our efforts to manage these risks might not be successful.

We have suffered and could continue to suffer significant business interruptions, including impacts resulting from the COVID-19 pandemic.

We have suffered and could continue to suffer significant business interruptions, including impacts resulting from the COVID-19 pandemic and other macroeconomic factors.

Our operations and those of our suppliers and customers, and the supply chains that support their operations, may be vulnerable to interruption by natural disasters such as earthquakes, tsunamis, typhoons, tornados, or floods;

other disasters such as fires, explosions, acts of terrorism or war, or disease or other adverse health developments, including impacts resulting from the COVID-19 pandemic;

other disasters such as fires, explosions, acts of terrorism, or war, including the continuing military conflict between Russia and Ukraine resulting from Russia’s invasion of Ukraine or escalating tensions in surrounding countries;

disease or other adverse health developments, including impacts resulting from the COVID-19 pandemic;

or failures of management information or other systems due to internal or external causes.

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As a result of the ongoing impacts of the COVID-19 pandemic, some of our employees are continuing to work from home on a full-time or part-time basis, which may increase our vulnerability to cyber and other information technology risks.

The COVID-19 pandemic had a significant, negative impact on our sales and operating results during fiscal 2020 and continued

to negatively affect certain of our businesses in fiscal 2021.

The COVID-19 pandemic may have a negative impact on our financial condition and results of operations in future periods.

The COVID-19 pandemic had a significant, negative impact on our sales and operating results during fiscal 2020 and continued to negatively affect certain of our businesses in fiscal 2021 and certain of our operations in China in fiscal 2022.

While some of our operations in China were shut down for a period of time in fiscal 2022, the COVID-19 pandemic did not have a significant impact on our businesses globally in fiscal 2022.

However, it may

have a negative impact on our financial condition, liquidity, and results of operations in future periods.

The extent to which the COVID-19 pandemic will further impact our business and our financial results will depend on future developments, which are highly uncertain and cannot be predicted.

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variations in lengths of payment cycles and challenges in collecting accounts receivable;

tax law and regulatory changes in Switzerland, the U.S., and the EU among other jurisdictions, including tax law and regulatory changes that may be effected as a result of tax policy recommendations from quasi-governmental organizations such as the Organisation for Economic Co-operation and Development ( “ OECD ” ), 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 cash generated or held in a number of jurisdictions;

tax law and regulatory changes in Switzerland, the U.S., the EU, and other jurisdictions, examinations by taxing authorities, changes to the terms of income tax treaties, and difficulties in the tax-efficient repatriation of cash generated or held in a number of jurisdictions;

employment regulations and local labor conditions, including increases in employment costs, particularly in low-cost regions in which we currently operate;

difficulties protecting intellectual property;

instability in economic or political conditions, including sovereign debt levels, Eurozone uncertainty, inflation, recession, and actual or anticipated military or political conflicts;

instability in economic or political conditions, including sovereign debt levels, Eurozone uncertainty, inflation, recession, and actual or anticipated military or political conflicts, including the continuing military conflict between Russia and Ukraine resulting from Russia ’ s invasion of Ukraine or escalating tensions in surrounding countries;

the impact of the United Kingdom ’ s withdrawal from the EU (commonly referred to as “ Brexit ” ) could cause disruptions to, and create uncertainty surrounding, our business, including affecting our relationships with existing and potential customers and suppliers;

The effects of Brexit, including long-lasting effects of Brexit on EU market access, will depend on more permanent agreements between the United Kingdom and the EU to be negotiated during the transition period;

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

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persons treated as owning 10% or more of our shares.

Although we are a Swiss corporation, recent U.S.

tax law changes have expanded application of certain ownership attribution rules and cause certain of our non-U.S.

Although we are a Swiss corporation, application of certain U.S.

tax law ownership attribution rules may cause non-U.S.

subsidiaries to be treated as Controlled Foreign Corporations (“CFCs”) for U.S.

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As a supplier of automotive electronics products, our sales of these products and our profitability have been and could continue to be negatively affected by significant declines in global or regional economic or credit conditions and changes in the operations, products, business models, part-sourcing requirements, financial condition, and market share of automotive manufacturers, as well as potential consolidations among automotive manufacturers.

During fiscal 2021, approximately 10% of our net sales were to customers in the commercial transportation market, 9% of our net sales were to customers in the industrial equipment end market, and 8% of our net sales were to customers in the data and devices end market.

Demand in the commercial transportation industry is impacted by the economic environment and market conditions in the heavy truck, construction, agriculture, and recreational vehicle markets.

The industrial equipment industry is dependent upon economic conditions, including customer investment in factory and warehouse automation, process control systems, and building automation and smart city infrastructure, as well as market conditions in the rail transportation, lighting, and other major industrial markets we serve.

Demand for data and devices can fluctuate significantly, depending on the underlying business and consumer demand for data communication, computer, and

consumer electronics products.

During fiscal 2022, approximately 12% of our net sales were to customers in the industrial equipment end market, 10% of our net sales were to customers in the commercial transportation market, and 10% of our net sales were to customers in the data and devices end market.

Demand in the industrial equipment industry is dependent upon economic conditions, including customer investment in factory and warehouse automation, process control systems, and building automation and smart city infrastructure, as well as market conditions in the rail transportation, lighting, and other major industrial markets we serve.

The commercial transportation industry is impacted by the economic environment and market conditions in the heavy truck, construction, agriculture, and recreational vehicle markets.

Demand for data and devices can fluctuate significantly, depending on the underlying business and consumer demand for data communication, computer, and consumer electronics products.

The overall market trends of increased data connectivity and continued movement to high-speed cloud applications have had a favorable impact on demand.

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We have experienced, and we expect to continue to experience, continuing pressure to lower our prices.

Although price erosion was not significant in fiscal 2021, we have historically experienced price erosion averaging from 1% to 2% each year.

Although pricing actions positively impacted our net sales in fiscal 2022, we have historically experienced price erosion averaging from 1% to 2% each year.

To maintain our margins, we must continue to reduce our costs by similar amounts.

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Many of these raw materials are produced in a limited number of countries around the world or are only available from a limited number of suppliers.

The prices of many of these raw materials continue to increase and fluctuations may persist in the future.

The prices of many of these raw materials continue to increase and fluctuations

may persist in the future.

In addition, feedstock for resins and resins themselves, as well as certain other commodities, are increasingly subject to varied and unrelated force majeure events worldwide further impacting price and availability.

If we have difficulty obtaining these raw materials, the quality of available raw materials deteriorates, or there are significant price increases for these raw materials, it could have a substantial impact on the price we pay for raw materials.

In recent years, raw material prices and availability have been affected by worldwide economic conditions, including the impacts of the COVID-19 pandemic, supply chain disruptions, and inflationary cost pressures.

If we have difficulty obtaining raw materials, the quality of available raw materials deteriorates, or there are significant price increases for these raw materials, it could have a substantial impact on the price we pay for raw materials.

To the extent we cannot compensate for cost increases through productivity improvements or price increases to our customers, our margins may decline, materially affecting our results of operations, financial position, and cash flows.

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We could experience unanticipated hedge gains or losses if these forecasts are inaccurate.

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC established annual disclosure and reporting requirements for those companies who use tin, tantalum, tungsten, or gold (“conflict minerals” or “3TG”) mined from the Democratic Republic of the Congo (“DRC”) and adjoining countries (together with the DRC, the “Covered Countries”) in their products.

These requirements, as well as new and additional regulations like the EU’s Conflict Minerals Regulation, could affect the sourcing, pricing, and availability of 3TG used in the manufacture of certain of our products, and may result in only a limited pool of suppliers who can demonstrate that they do not source any 3TG from the Covered Countries.

The SEC requires annual disclosure and reporting requirements for those companies which use tin, tantalum, tungsten, or gold (“conflict minerals” or “3TG”) mined from the Democratic Republic of the Congo (“DRC”) and adjoining countries (together with the DRC, the “Covered Countries”) in their products.

These requirements, as well as new and additional regulations like the EU’s Conflict Minerals Regulation, could affect the sourcing, pricing, and availability of 3TG used in the manufacture of certain of our products, and may result in only a limited pool of suppliers which can demonstrate that they do not source any 3TG from the Covered Countries.

Accordingly, we cannot provide assurance that we will be able to obtain non-conflict 3TG in sufficient quantities or at competitive prices.

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compromise information belonging to us, our employees, customers, and suppliers;

and expose us to liability which could adversely impact our business and reputation.

and expose us to liabilities or penalties which could adversely impact our business and reputation.

In the normal course of business, we rely on information technology networks and systems, some of which are managed by third parties, to process, transmit, and store electronic information, and to manage or support a variety of business processes and activities.

Additionally, we collect and store certain data, including proprietary business information and customer and employee data, and may have access to confidential or personal information in certain of our businesses that is subject to privacy and security laws, regulations, and

customer-imposed controls.

Specifically, we are subject to the laws of various states and countries where we operate or do business related to solicitation, collection, processing, transferring, storing, or use of consumer, customer, vendor, or employee information or related data, including the EU’s General Data Protection Regulation, which went into effect in May 2018, and the California Consumer Privacy Act of 2018, which went into effect in January 2020.

In addition, several other countries in which we operate or do business, such as China, have enacted or are considering enacting laws that impose additional data transfer restrictions.

If countries in which we operate or do business were to adopt data localization or data residency laws, we could be required to implement new or expand existing data storage protocols, build new storage facilities, and/or devote additional resources to comply with the requirements of such laws, any of which could have significant implications to business operations and costs.

In addition to our own systems, we have outsourced, and expect to continue to outsource, certain support services, including cloud storage systems, cloud computing services, and system development and support services to third parties, which has in the past and in the future may subject our information technology and other sensitive information to additional risk.

Despite our cybersecurity measures (including employee training, monitoring of networks and systems, and maintenance of backup and protective systems) which are reviewed and upgraded to mitigate evolving cybersecurity threats, our information technology networks and infrastructure has been and may still be vulnerable to damage, disruptions (including, but not limited to, computer viruses and other malware, denial of service, and ransomware), or shutdowns due to attack by hackers, state-sponsored organizations with significant financial and technological resources, breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, natural disasters, pandemics (including COVID-19), or other catastrophic events, which may require us to notify regulators, customers, or employees, and enlist identity theft protection in the event of a privacy breach.

We have been the target of attempted cyber intrusions.

Specifically, we are subject to the laws of various states and countries where we operate or do business related to solicitation, collection, processing, transferring, storing, or use of consumer, customer, vendor, or employee information or related data, including the EU’s General Data Protection Regulation, the California Consumer Privacy Act, and China’s Personal Information Protection Law.

In addition, certain countries in which we operate or do business have enacted or are considering enacting laws that impose additional data transfer restrictions.

If countries in which

we operate or do business were to adopt data localization or data residency laws, we could be required to implement new or expand existing data storage protocols, build new storage facilities, and/or devote additional resources to comply with the requirements of such laws, any of which could have significant implications to business operations and costs.

In addition to our own systems, we have outsourced, and expect to continue to outsource, certain information technology services—including cloud computing services and storage systems, system development, and information technology support services—which have in the past, and in the future may, subject our information technology and other sensitive information to additional risk.

Our cybersecurity safeguards and measures are reviewed and upgraded to mitigate evolving cybersecurity threats.

These measures notwithstanding, our information technology networks and infrastructure are vulnerable to damage, disruptions or shutdowns due to attack by malicious actors with significant financial and technological resources, breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, natural disasters, pandemics, or other catastrophic events, which may require us to notify regulators, customers, or employees, and enlist identity theft protection in the event of a privacy breach.

We continue to monitor and develop our systems to protect the integrity and functionality of our information technology infrastructure and access to and the security of our intellectual property and our employees’, customers’, and suppliers’ data.

Security breaches and other disruptions to our information technology infrastructure or violations of applicable laws could result in legal claims or proceedings, liability or penalties, disruption in operations, and damage to our reputation which could materially adversely affect our business.

While we have experienced, and expect to continue to experience, threats to our information technology networks and infrastructure, to date none of these threats have had a material impact on our business or operations.

In addition, as a result of the ongoing impacts of the COVID-19 pandemic, some of our employees are continuing to work from home on a full-time or part-time basis, which may increase our vulnerability to cyber and other information technology risks.

While we have experienced, and expect to continue to experience, threats to our information technology networks and infrastructure, including attempted cyber intrusions, to date none of these threats have had a material impact on our business or operations.

Some of our employees continue to work from home on a full-time or part-time basis, which may increase our vulnerability to cyber and other information technology risks.

Covenants in our debt instruments may adversely affect us.

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We also must comply with applicable trade regulations in the jurisdictions where we operate.

A small portion of our products, including defense-related products, may require governmental import and export licenses, whose issuance may be influenced by geopolitical and other events.

A small portion of our products, including defense-related products, may require governmental import and export licenses, the issuance of which may be influenced by geopolitical and other events.

Any failure to maintain compliance with trade regulations could limit our ability to import and export raw materials and finished goods into or from the relevant jurisdiction, which could negatively impact our results of operations, financial position, and cash flows.

In this regard, we are investigating our past compliance with relevant U.S.

In this regard, we have been investigating our past compliance with relevant U.S.

trade controls and have made voluntary disclosures of apparent trade controls violations to the U.S.

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State Department’s Directorate of Defense Trade Controls (“DDTC”).

We are cooperating with the BIS and DDTC on these matters, and both our internal assessment and the resulting investigations by the agencies remain ongoing.

We are cooperating with the BIS and DDTC on these matters, and the resulting investigations by the agencies remain ongoing.

We have also been contacted by the U.S.

Department of Justice concerning aspects of these matters.

We are unable to predict the timing and final outcome of the agencies’ investigations.

An unfavorable outcome may include fines or penalties imposed in response to our disclosures, but we are not yet able to reasonably estimate the extent of any such fines or penalties.

While we have reserved for potential fines and penalties relating to these matters based on our current understanding of the facts, the investigations into these matters have yet to be completed and the final outcome of such investigations and related fines and penalties may differ from amounts currently reserved.

Although we have reserved for potential fines and penalties relating to these matters based on our current understanding of the facts, the investigations into these matters have yet to be completed and the final outcome of such investigations and related fines and penalties may differ from amounts currently reserved.

We could be adversely affected by violations of the U.S.

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We operate in many parts of the world that have experienced governmental corruption to some degree, and in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices.

Despite our training and compliance

program, we cannot provide assurance that our internal control policies and procedures always will protect us from reckless or criminal acts committed by our employees or agents.

Despite our training and compliance program, we cannot provide assurance that our internal control policies and procedures always will protect us from reckless or criminal acts committed by our employees or agents.

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 position, and cash flows.

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These laws and regulations govern, among other things:

the generation, storage, use, and transportation of hazardous materials;

the generation, storage, use, and transportation and disposal of hazardous materials;

emissions or discharges of substances into the environment;

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In addition, environmental and health and safety laws are becoming more stringent, resulting in increased costs and compliance requirements.

Certain environmental laws assess liability on current or previous owners or operators of real property for the costs of investigation, removal, and remediation of hazardous substances or materials at their properties or at properties at which they have disposed of hazardous substances.

Liability for investigation, removal, and remediation costs under certain regulatory regimes, such as U.S.

Certain environmental laws assess liability on current or previous owners or operators of real property for the costs of investigation, reporting, removal, and remediation of hazardous substances or materials at their properties or at properties at which they have disposed of hazardous substances.

Liability for investigation, reporting, removal, and remediation costs under certain regulatory regimes, such as U.S.

federal and state laws, is retroactive, strict, and joint and several.

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The EU, China, and other jurisdictions in which our products are sold have enacted or are proposing to enact laws addressing environmental and other impacts from product disposal, use of hazardous materials in products, use of chemicals in manufacturing, recycling of products at the end of their useful life, circular economy initiatives, and other related matters.

These laws include but are not limited to the EU Restriction of Hazardous Substances, End of Life Vehicle, and Waste Electrical and Electronic Equipment Directives;

These laws include but are not limited to the EU RoHS, End-of-Life Vehicle, and WEEE Directives;

the EU REACH regulation;

and the China Administrative Measures for the Restriction of Hazardous Substances in Electrical and Electronic Products.

and the China RoHS regulation.

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.

These laws continue to proliferate and

expand in these and other jurisdictions to address other materials and other aspects of our product manufacturing and sale.

These laws continue to proliferate and expand in these and other jurisdictions to address other materials and other 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.

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As a Swiss corporation, our board of directors may not declare and pay dividends or distributions on our shares or reclassify reserves on our standalone unconsolidated Swiss balance sheet without shareholder approval and without satisfying certain other requirements.

In addition, our articles of association allow us to create authorized share capital that can be issued by the board of directors, but this authorization is limited to (i) authorized share capital up to 50% of the existing registered shares with such authorization valid for a maximum of two years, which authorization period ends on March 11, 2022, approved by our shareholders at our March 11, 2020 annual general meeting of shareholders and (ii) conditional share capital of up to 50% of the existing registered shares that may be issued only for specific purposes.

In addition, our articles of association allow us to create conditional share capital of up to 50% of the existing registered shares that may be issued only for specific purposes.

Until recently, Swiss law provided for the option to create authorized share capital that could be issued by the board of directors, but this authorization was limited to authorized share capital up to 50% of the existing registered shares with the authorization valid for a maximum of two years.

Such authorization period under our articles of association ended on March 11, 2022.

As part of the Swiss corporate law reform, effective as of January 1, 2023, the concept of authorized share capital will be replaced by a capital band.

Under a capital band, the articles of association may authorize the board of directors for a maximum period of five years to increase the ordinary share capital registered in the commercial register to a maximum of 150% and/or reduce it to a minimum of 50% of the share capital existing at the time of the introduction of the capital band.

Our articles of association do not currently provide for a capital band.

Additionally, subject to specified exceptions, Swiss law grants preemptive rights to existing shareholders to subscribe for new issuances of shares from authorized share capital and advance subscription rights to existing shareholders to subscribe for new issuances of shares from conditional share capital.

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We anticipate making distributions to shareholders through a reduction of contributed surplus (as determined for Swiss tax and statutory purposes) in order to make the distributions on our shares to shareholders free of Swiss withholding tax.

Various tax law and corporate law proposals in Switzerland, if passed in the future, may affect our ability to pay dividends or distributions to our shareholders free from Swiss withholding tax.

Various tax law proposals in Switzerland, if passed in the future, may affect our ability to pay dividends or distributions to our shareholders free from Swiss withholding tax.

There can be no assurance that we will be able to meet the legal requirements for future distributions to shareholders through dividends from contributed surplus or through a reduction of registered share capital, or that Swiss withholding rules would not be changed in the future.

In addition, over the long term, the amount of registered share capital available for reductions will be limited.

Our ability to pay dividends or distributions to our shareholders free from Swiss withholding tax is a significant component of our capital management and shareholder return practices that we believe is important to our shareholders, and any restriction on our ability to do so could make our stock less attractive to investors.

Our ability to pay dividends or distributions to our shareholders free from Swiss withholding tax is a significant component of our capital management and shareholder return practices.

Currency fluctuations between the U.S.

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The aggregate par value of our registered shares held by us and our subsidiaries may not exceed 10% of our registered share capital.

We may repurchase our registered shares

beyond the statutory limit of 10%, however, only if our shareholders have adopted a resolution at a general meeting of shareholders authorizing the board of directors to repurchase registered shares in an amount in excess of 10% and the repurchased shares are dedicated for cancellation.

Additionally, various corporate law proposals in Switzerland, if passed in the future, may affect our ability to repurchase our shares.

We may repurchase our registered shares beyond the statutory limit of 10%, however, only if our shareholders have adopted a resolution at a general meeting of shareholders authorizing the board of directors to repurchase registered shares in an amount in excess of 10% and the repurchased shares are dedicated for cancellation.

Our ability to repurchase our shares is a significant component of our capital management and shareholder return practices that we believe is important to our shareholders, and any restriction on our ability to repurchase our shares could make our stock less attractive to investors.

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These provisions may only be amended by the affirmative vote of the holders of 80% of our issued voting shares, which could have the effect of discouraging an unsolicited acquisition proposal or delaying, deferring, or preventing a change of control transaction that might involve a premium price, or otherwise be considered favorable by our shareholders.

Our articles of association also contain provisions permitting our board of directors to issue new shares from authorized or conditional capital (in either case, representing a maximum of 50% of the shares presently registered in the commercial register and in case of issuances from authorized capital, until March 11, 2022 unless re-authorized by shareholders for a subsequent two-year period) without shareholder approval and without regard for shareholders’ preemptive rights or advance subscription rights, for the purpose of the defense of an actual, threatened, or potential unsolicited takeover bid, in relation to which the board of directors, upon consultation with an independent financial advisor, has not recommended acceptance to the shareholders.

Our articles of association also contain provisions permitting our board of directors to issue new shares from authorized or conditional capital (in either case, representing a maximum of 50% of the shares presently registered in the commercial register and in case of issuances from authorized capital, such authorization period ended on March 11, 2022 and was not reapproved by our shareholders at our March 9, 2022 annual general meeting of shareholders) without shareholder approval and without regard for shareholders’ preemptive rights or advance subscription rights, for the purpose of the defense of an actual, threatened, or potential unsolicited takeover bid, in relation to which the board of directors, upon consultation with an independent financial advisor, has not recommended acceptance to the shareholders.

We note that Swiss courts have not addressed whether or not a takeover bid of this nature is an acceptable reason under Swiss law for withdrawing or limiting preemptive rights with respect to authorized share capital or advance subscription rights with respect to conditional share capital.

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There has been heightened focus on adoption of such legislation and on other initiatives, such as:

the OECD ’ s initiative to develop agreed-upon best practices to prevent base erosion and profit shifting, which contemplate the creation of a global minimum corporate tax rate and changes to numerous long-standing tax principles related to the distribution of profits between affiliated entities in different tax jurisdictions,

EU and other country efforts to adopt certain OECD proposals and modified OECD proposals (including the Anti-Tax Avoidance Directive, state aid cases, and various transparency proposals), and

tax policy changes in the U.S., such as additional federal tax reform measures, new tax regulations, and revisions to the Model Income Tax Treaty.

If these proposals are adopted in the main jurisdictions in which we do business, they could, among other things, increase cash taxes, cause double taxation, increase audit risk, and materially increase our worldwide corporate effective tax rate.

the Organisation for Economic Co-operation and Development ( “ OECD ” ) and participating countries continue to work toward implementing international tax system reforms, including the enactment of a 15% global minimum corporate tax that is expected to be effective as early as fiscal 2025,

EU and other country efforts to adopt added OECD proposals and modified OECD proposals (including the Anti-Tax Avoidance Directive, state aid cases, and various transparency proposals), and

tax policy changes in the U.S., such as additional federal tax reform measures and new tax regulations.

If these proposals are adopted, they may materially increase cash taxes, increase our worldwide corporate effective tax rate, cause double taxation, and increase audit risk.

We cannot predict the outcome of any specific legislative proposals or initiatives, and we cannot provide assurance that any such legislation or initiative will not apply to us.

In October 2021, the OECD made progress in its efforts to reform the international tax system with 136 of the 140 participating countries and jurisdictions joining a global minimum tax agreement.

This agreement introduces a 15% global minimum corporate tax rate which will apply to companies with revenue over a set threshold.

This tax will be assessed on a country-by-country basis, potentially starting as early as 2023.

Legislation in the U.S.

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

What changed 10-K

Item 1A. Risk Factors