What changed in this filing

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Item 1A. Risk Factors

2022-02-15 compared with 2021-02-16 · 50 added, 31 removed, 162 unchanged (33% of the section changed)

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If any of the following risks actually occur, our business, financial condition or results of operations could be negatively affected.

Readers should not interpret the disclosure of any risk factor to imply that the risk has not already materialized.

Risk Relating to our Business

The bearing industry is highly competitive, and this competition results in significant pricing pressure for our bearings products that could affect our revenues and profitability.

The bearing industry and the industries into which we sell our various power transmission products are highly competitive, and this competition results in significant pricing pressure for our products that could affect our revenues and profitability.

The global bearing industry is highly competitive.

We compete with domestic manufacturers and many foreign manufacturers of anti-friction bearings, including SKF Group, Schaeffler Group, NTN Corporation, JTEKT Corporation and NSK Ltd., and an increasing number of emerging market competitors.

Due to competitiveness within the bearing industry, we may not be able to increase prices for our products to cover increases in our costs or to achieve desired profitability.

In many cases we face pressure from our customers to reduce prices, which could adversely affect our revenues and profitability.

We compete with many domestic and foreign manufacturers of anti-friction bearings.

In addition, the industries into which we sell our power transmission products are also highly competitive.

Due to competitiveness within these industries, we may not be able to increase prices for our products to cover increases in our costs or to achieve desired profitability.

In addition, we face pressure from our customers to reduce prices, and the contractual nature of business with OE customers, could adversely affect our revenues and profitability.

In addition, our customers may choose to purchase products from one of our competitors rather than pay the prices we seek for our products, which could adversely affect our revenues and profitability.

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Our supply of raw materials could be interrupted for a variety of reasons, including availability and pricing.

Prices for raw materials necessary for production have fluctuated significantly in the past and could do so in the future.

Prices for raw materials necessary for production have fluctuated significantly in the past, have risen substantially over the past year, and could continue to do so in the future.

We generally attempt to manage these fluctuations by passing along increased raw material prices to our customers in the form of price increases or surcharges;

however, we may be unable to increase the price of our products due to pricing pressure, contract terms or other factors, which could adversely impact our revenue and profit margins.

Moreover, future disruptions in the supply of our raw materials could impair our ability to manufacture our products for our customers or require us to pay higher prices in order to obtain these raw materials from other sources.

however, we may be unable to increase the price of our products, or may experience a lag in doing so, due to pricing pressure, contract terms or other factors, which could adversely impact our revenue and profit margins.

Moreover, future disruptions in the supply of our raw materials could impair our ability to manufacture our products for our customers, impact our ability to manufacture and deliver our products on a timely basis, or require us to pay higher prices in order to obtain these raw materials from other sources.

Any significant increase in the prices for such raw materials could adversely affect our results of operations and profit margins.

The COVID-19 pandemic has, and could continue to, adversely and materially impact our business.

The global outbreak of COVID-19 and associated variants has negatively impacted our business operations in a number of ways, including:

volatility in economic demand;

higher levels of absenteeism and reduced labor availability;

shipping and logistics delays;

supply chain and manufacturing disruptions;

and higher levels of inflation for raw material, purchased components, freight and other costs.

We could continue to experience these and other impacts from the pandemic, and collectively or individually, these factors could adversely and materially impact our short-term and long-term operations, cost structure, and related results of operations, including revenue, gross margins, operating margins and cash flows.

We may not realize the improved operating results that we anticipate from past and future acquisitions and we may experience difficulties in integrating acquired businesses.

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Risks Related to our Capital Structure, the Global Financial Markets, and Currency Exchange Rates

Our level of debt and financial covenants or a failure to maintain our credit ratings could limit our ability to invest in our business.

At times, our debt level may lead us to have less cash flow available for our business operations, capital expenditures, and strategic transactions and our ability to service our debt obligations or to obtain future financing could be negatively impacted by general adverse economic and industry conditions and interest rate trends.

An increase in our levels of debt and the corresponding impact to our financial covenants or a failure to maintain our credit ratings could limit our ability to invest in our business.

An increase in our levels of debt might lead us to have less cash flow available for our business operations, capital expenditures, and strategic transactions and our ability to service our debt obligations or to obtain future financing could be negatively impacted by general adverse economic and industry conditions and interest rate trends.

In addition, a failure to maintain our credit ratings could adversely affect our cost of borrowing, liquidity and access to capital markets.

Some of our debt has variable interest rates, which could increase the cost of servicing such debt.

Interest rates may rise in the future due to anticipated future inflation or other causes.

As a result, the costs of servicing our variable interest rate debt could increase even if the amount borrowed under such facilities remained the same.

Increased servicing costs could in turn negatively impact our profitability and cash flow.

The global nature of our business exposes us to foreign currency fluctuations that may affect our asset values, results of operations and competitiveness.

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Our international operations expose us to risks not present in a purely domestic business, including primarily:

• changes in international treaties or trade unions (e.g., the UK's recent withdrawal from the European Union, commonly referred to as "Brexit"), which may make our products or our customers' products more costly to export or import;

• changes in international treaties or trade unions (e.g., the UK's withdrawal from the European Union, commonly referred to as "Brexit"), which may make our products or our customers' products more costly to export or import;

• changes in tariff regulations, which may make our products more costly to export or import;

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• disadvantages of competing against companies from countries that are not subject to U.S.

laws and regulations, including the Foreign Corrupt Practices Act ("FCPA");

laws and regulations, including the FCPA;

• difficulty in staffing and managing geographically diverse operations;

• disruptions to our global supply chain and logistical issues associated with port closures or congestion, delays or increased costs;

• tax exposures related to cross-border intercompany transfer pricing and other tax risks unique to international operations;

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These and other risks also may increase the relative price of our products compared to those manufactured in other countries, reducing the demand for our products in the markets in which we operate, which could have a material adverse effect on our revenues and earnings.

Changes in U.S.

trade policy, including the imposition of tariffs and the resulting consequences, could adversely impact our revenue and profit margins.

We have global operations, and changes to government trade policies including the imposition of tariffs and other trade barriers, as well as the resulting consequences, could adversely impact our revenue and profit margins.

government has imposed tariffs on certain foreign goods, including steel and other raw materials as well as certain products made from such materials.

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trading partners adopting responsive trade policies that make it more difficult or costly for us to export our products to those countries.

These measures have resulted in increased costs for goods imported into the U.S.

In addition, the governments of other countries in which we have substantial operations could impose tariffs on, or restrict trade in, the materials and components necessary for the production of our products.

These measures could result in an increase in our production costs.

If we are unable to increase the price of our products or otherwise mitigate these increased costs, it could adversely impact our revenue and profit margins.

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Our future success also will depend on our ability to attract, retain and develop highly skilled personnel, such as engineering, finance, marketing and senior management professionals, as well as skilled labor.

Competition for these types of employees is intense, and we could experience difficulty from time to time in hiring, developing and retaining the personnel necessary to support our business.

Competition for these types of employees is intense and has increased recently, and we could experience difficulty from time to time in hiring, developing and retaining the personnel necessary to support our business.

If we do not succeed in retaining and developing our current employees and attracting new high-quality employees, our business could be materially adversely affected.

Work stoppages or similar difficulties could significantly disrupt our operations, reduce our revenues and materially affect our earnings.

A work stoppage at one or more of our facilities, whether caused by fire, flooding, epidemics, pandemics (including the COVID-19 outbreak), other natural disaster or otherwise, could have a material adverse effect on our business, financial condition and results of operations.

A work stoppage at one or more of our facilities, whether caused by fire, flooding, epidemics, pandemics (including the COVID-19 outbreak), severe weather, including that caused by climate change, other natural disaster or otherwise, could have a material adverse effect on our business, financial condition and results of operations.

In addition, some of our employees are represented by labor unions or works councils under collective bargaining agreements with varying durations and terms.

We have experienced work stoppages at certain of our facilities historically at times, and while these stoppages have been short-term in nature, no assurances can be made that we will not experience additional work stoppages due to government directives, employee health concerns, and other types of conflicts with labor unions, works councils, and other similar groups in the future.

A work stoppage at one of our suppliers, whether caused by epidemic, pandemic or otherwise could also materially and adversely affect our operations if an alternative source of supply were not readily available.

In addition, if one or more of our customers were to experience a work stoppage, whether due to an epidemic, pandemic or otherwise, that customer could halt or limit purchases of our products, which could have a material adverse effect on our business, finan cial condition and results of operations.

A work stoppage at one of our suppliers could also materially and adversely affect our operations if an alternative source of supply were not readily available.

In addition, if one or more of our customers were to experience a work stoppage, that customer could halt or limit purchases of our products, which could have a material adverse effect on our business, finan cial condition and results of operations.

In addition, the credit and default risk or bankruptcy of customers or suppliers as a result of work stoppages could also materially and adversely affect our operations and results.

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If government-imposed restrictions continue, are re-imposed, or are expanded, our business could be further adversely impacted.

The global outbreak of COVID-19 continues to create uncertainty with respect to economic demand and operations.

We have global operations and customers and suppliers, in countries most impacted by COVID-19.

The global outbreaks of COVID-19 and new variants of the virus continue to create uncertainty with respect to economic demand and operations.

The COVID-19 outbreak has resulted in significant governmental measures being implemented to control the spread of COVID-19, including, among others, restrictions on travel and manufacturing operations in many regions of the world that are changing frequently as the pandemic evolves.

In addition, we have implemented risk mitigation plans across the enterprise (including work-from-home policies, "social distancing," and use of personal protective equipment) to reduce the risk of spreading the virus in many of our global locations.

To the extent that governments implement more restrictive mandates to combat the spread of COVID‐19, or reimpose restrictions that have now lapsed, or to the extent that the COVID‐19 outbreak intensifies, we could experience additional material impacts on our short-term and long-term operations and related results of operations, including revenue, gross margins, operating margins and cash flows.

The full magnitude of the COVID‐19 pandemic, including the extent of the total impact on the Company’s business, financial position, results of operations or liquidity, which could be material, cannot be reasonably estimated at this time due to the fluidity of the situation.

The full impact of the COVID‐19 pandemic will be determined by its duration, its geographic spread, the rate and intensity of individual spread, the extent and length of business disruptions due to government mandates and health authority guidance and the overall impact on the global economy, among other factors.

Environmental health and safety laws and regulations impose substantial costs and limitations on our operations and compliance may be more costly than we expect.

In addition, we have implemented risk mitigation plans across the enterprise (including flexible work-from-home policies, encouraging employee vaccinations, "social distancing," and use of personal protective equipment) to reduce the risk of spreading the virus in many of our global locations.

To the extent that governments implement more restrictive mandates to combat the spread of COVID‐19 such as vaccination mandates or others, or reimpose restrictions that have now lapsed, or to the extent that the COVID‐19 outbreak intensifies, we could experience additional material impacts to our short-term and long-term operations, access to skilled labor or raw materials, and related results of operations, including revenue, gross margins, operating margins and cash flows.

Environmental health and safety laws, regulations, and customer requirements impose substantial costs and limitations on our operations and compliance may be more costly than we expect.

We are subject to the risk of substantial environmental liability and limitations on our operations due to environmental laws and regulations.

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Actual or alleged violations of environmental, health and safety laws or environmental permit requirements could result in restrictions or prohibitions on operations and substantial civil or criminal fines, as well as, under some environmental, health, and safety laws, the assessment of strict liability and/or joint and several liability.

New laws and regulations, including those that may relate to emissions of greenhouse gases, stricter enforcement of existing laws and regulations, the discovery of previously unknown contamination or the imposition of new clean-up requirements could require us to incur costs or become the basis for new or increased liabilities that could have a material adverse effect on our business, financial condition or results of operations.

New laws and regulations, including those that may relate to emissions of greenhouse gases, stricter enforcement of existing laws and regulations, new and more stringent customer requirements, the discovery of previously unknown contamination or the imposition of new clean-up requirements could require us to incur costs or become the basis for new or increased liabilities that could have a material adverse effect on our business, financial condition or results of operations.

We are subject to a wide variety of domestic and foreign laws and regulations that could adversely affect our results of operations, cash flow or financial condition.

We are subject to a wide variety of domestic and foreign laws and regulations, and legal compliance risks, including securities laws, tax laws, employment and pension-related laws, competition laws, U.S.

and foreign export and trade laws, and laws governing improper business practices.

We are subject to a wide variety of domestic and foreign laws and regulations, and legal compliance risks, including securities laws, tax laws, data privacy laws, employment and pension-related laws, competition laws, U.S.

and foreign export and trade laws, government procurement regulations, and laws governing improper business practices.

We are affected by both new laws and regulations, and changes to existing laws and regulations which may continue to evolve through interpretations by courts and regulators.

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Also, our sales to public-sector customers are subject to complex regulations.

Noncompliance with government procurement regulations or other applicable laws or regulations could result in civil, criminal and administrative liability, termination of government contracts or other public-sector customer contracts, and suspension, debarment or ineligibility from doing business with governmental entities or other customers in the public sector.

Noncompliance with government procurement regulations, information security requirements, or other applicable laws or regulations could result in civil, criminal and administrative liability, termination of government contracts or other public-sector customer contracts, and suspension, debarment or ineligibility from doing business with governmental entities or other customers in the public sector.

Compliance with the laws and regulations described above or with other applicable foreign, federal, state, and local laws and regulations currently in effect or that may be adopted in the future could materially adversely affect our competitive position, operating results, financial condition and liquidity.

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Due to increasing global concern over the effects of climate change, new or more stringent regulations and standards may be mandated.

In addition, various stakeholders may demand additional controls beyond what is required by such regulations or standards.

In addition, various stakeholders (including our investors, customers, and suppliers) may demand additional controls beyond what is required by such regulations or standards.

Tighter emissions controls as a result of these actions could increase our operational costs and could lead to disruptions in our operations as compliance is attained.

In addition, environmental activism and initiatives aimed at limiting climate change and reducing global greenhouse gas emissions could interfere with our business strategy and operations.

Severe weather associated with a changing climate could also negatively impact the operation of our facilities, as well as those of our customers and suppliers.

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As such, we cannot predict the cost of compliance with future data privacy laws, regulations and standards, future interpretations of current laws, regulations and standards, or the potential effects on our business.

Government enforcement actions can be costly and interrupt the regular operation of our business, and a violation of data privacy laws or a security breach involving personal data can result in fines, reputational damage and civil lawsuits, any of which may adversely affect our results of operations and profitability.

Government enforcement actions can be costly and interrupt the regular operation of our business, and a violation of data privacy laws or a security breach involving personal or customer data can result in fines, reputational damage, loss of business, and civil lawsuits, any of which may adversely affect our results of operations and profitability.

General Risk Factors

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As a result, our revenues and earnings are impacted by overall levels of industrial production.

Rising inflationary pressure has resulted in and could further result in increased employee expenses, shipping costs, raw material costs, energy and fuel costs and other costs of production.

If we cannot absorb or pass these increases in our costs of production to our customers, our results of operations, profit margins and cash flows could be adversely affected.

Increases in compensation, wage pressure, and other expenses for our employees have adversely affected our profitability and could continue to do so.

These cost increases may result from inflationary pressures that could further reduce our sales or profitability.

Inflation could also lead to increases in other operating costs, such as shipping costs, costs of raw materials, and energy and fuel prices.

If we are unable to increase the price of our products to offset these cost increases, or experience a lag in doing so, due to pricing pressure, contract terms or other factors, our financial condition, results of operations and cash flows may be adversely affected.

Warranty, recall, quality or product liability claims could materially adversely affect our earnings.

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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