What changed in this filing

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Item 1A. Risk Factors

2023-02-16 compared with 2022-02-15 · 49 added, 38 removed, 174 unchanged (33% of the section changed)

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Risk Relating to our Business

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.

The bearing industry and the industries into which we sell our various industrial motion 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 and consolidated.

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.

In addition, the industries into which we sell our industrial motion products are also highly competitive and consolidating.

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, we face pressure from our customers to reduce prices, and the contractual nature of business with OEM 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 profitability is dependent on factors such as labor compensation and productivity and inventory and supply chain management, which are subject to risks that we may not be able to control.

If there are downturns in the industries that we serve, we may be forced to significantly curtail or suspend our operations with respect to those industries, including laying-off employees, reducing production, recording asset impairment charges and other measu res, which may adversely affect our results of operations and profitability.

If there are downturns in the industries that we serve, including as a result of high inflation or a recession, we may be forced to significantly curtail or suspend our operations with respect to those industries, including laying-off employees, reducing production, recording asset impairment charges and other measures, which may adversely affect our results of operations and profitability.

We have taken approximately $86 million in impairment and restructuring charges in the aggregate during the last five years.

Changes in business or economic conditions, or our business strategy, may result in additional restructuring programs and may require us to take additional charges in the future, which could have a material adverse effect on our earnings.

Changes in business or economic conditions, or our business strategy, may result in additional restructuring actions and may require us to take additional charges in the future, which could have a material adverse effect on our earnings.

Changes in customer preferences and inventory reductions by customers or distributors could adversely affect the Company's business.

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The Company's results in a period may be adversely impacted by similar customer inventory adjustments in the future, as well as changes in customer buying preferences.

Any change in raw material prices or the availability or cost of raw materials could adversely affect our results of operations and profit margins.

Any change in raw material prices, the availability or cost of raw materials or logistics expenses could adversely affect our results of operations and profit margins.

We require substantial amounts of raw materials, including steel, to operate our business.

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, have risen substantially over the past year, and could continue to do so in the future.

Our supply of raw materials could be and has in the past been interrupted for a variety of reasons, including availability and pricing.

Prices for raw materials necessary for production have fluctuated significantly in the past, have risen substantially over the past few years, 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, 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.

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, require us to pay higher prices in order to obtain these raw materials from other sources or necessitate the use of expedited or more costly freight options.

Any significant increase in the prices for such raw materials or logistics expenses 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.

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volatility in economic demand;

higher levels of absenteeism and reduced labor availability;

higher levels of absenteeism, turnover and reduced labor availability;

shipping and logistics delays;

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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.

We may not realize the improved operating results that we anticipate from past and future acquisitions, may experience difficulties in integrating acquired businesses, and may incur unanticipated liabilities and costs associated with such acquired businesses.

We seek to grow, in part, through strategic acquisitions, joint ventures and other alliances, which are intended to complement or expand our businesses, and expect to continue to do so in the future.

These acquisitions involve challenges and risks.

In the event that we do not successfully integrate these acquisitions into our existing operations so as to realize the expected return on our investment or we uncover material issues that were not identified during our due diligence review, our results of operations, cash flow or financial condition could be adversely affected.

In the event that we do not successfully integrate these acquisitions into our existing operations so as to realize the expected return on our investment, issues identified in our due diligence review are not addressed or the costs associated with such issues are higher than expected, or we uncover material issues (including historical environmental, trade, sanctions, or tax compliance violations) that were not identified during our due diligence review, our results of operations, cash flow or financial condition could be adversely affected.

Our operating results depend in part on continued successful research, development and marketing of new and/or improved products and services, and there can be no assurance that we will continue to successfully introduce new products and services.

The success of new and improved products and services depends on their initial and continued acceptance by our customers.

Our businesses are affected, to varying degrees, by technological change and corresponding shifts in customer demand, which could result in unpredictable product transitions or shortened life cycles, especially as it relates to market and technological changes driven by electrification, environmental requirements, the continued rising importance of e-commerce and increased digitization.

Our businesses are affected, to varying degrees, by technological change and corresponding shifts in customer demand, which could result in unpredictable product transitions or shortened life cycles, especially as it relates to market and technological changes driven by electrification, environmental requirements, automation, the continued rising importance of e-commerce and increased digitization.

We may experience difficulties or delays in the research, development, production, or marketing of new products and services that may prevent us from recouping or realizing a return on the investments required to bring new products and services to market.

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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.

Interest rates have risen significantly over the past year and may rise in the future due to inflation or other causes.

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

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

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where we have significant sales, a strengthening in the U.S.

dollar or devaluation in the local currency would reduce the value of our local inventory as presented in our Consolidated Financial Statements.

dollar as we have seen over the past few years or devaluation in the local currency would reduce the value of our local inventory as presented in our Consolidated Financial Statements.

In addition, a stronger U.S.

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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 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, 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;

• threatened or actual state seizure of foreign-owned manufacturing assets;

• hostilities between countries in which we operate which could limit our ability to manufacture in, sell into, or export out of such jurisdictions;

• political protests or unrest which could negatively impact our operations;

• difficulties establishing and maintaining relationships with local OEMs, distributors and dealers;

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• compliance with a variety of foreign laws and regulations, including unexpected changes in taxation and environmental or other regulatory requirements, which could increase our operating and other expenses and limit our operations;

• additional costs, taxes and restrictions related to repatriation of cash in international jurisdictions;

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

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Risks Related to Human Capital Management and Employee Benefits

If we are unable to attract, retain and develop key personnel, our business could be materially adversely affected.

If we are unable to attract, retain and develop key personnel and develop and successfully execute succession plans, our business could be materially adversely affected.

Our business substantially depends on the continued service of key members of our management and other key employees.

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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.

If we do not succeed in retaining and developing our current employees, attracting new high-quality employees, and developing and successfully executing succession plans, 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), 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.

A work stoppage at one or more of our facilities, whether caused by fire, flooding, epidemics, pandemics (including the COVID-19 outbreak), military hostilities, government-imposed shutdowns, 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.

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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 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.

We are subject to extensive federal, state, local and foreign environmental, health and safety laws and regulations concerning matters such as air emissions, wastewater discharges, solid and hazardous waste handling and disposal and the investigation and remediation of contamination.

To the extent that governments reimpose restrictions that have now lapsed, or to the extent that the COVID‐19 outbreak intensifies or new dangerous variants develop and new restrictions are implemented, 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.

Current and future 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 current environmental laws and regulations and future environmental laws and regulations could impose additional risks and limitations.

We are or may become subject to extensive federal, state, local and foreign environmental, health and safety laws and regulations concerning matters such as air emissions, wastewater discharges, the use of per- and polyfluoroalkyl substances or other chemicals of concern, waste management (e.g.

storage, disposal) and the investigation and remediation of contamination.

The risks of substantial costs and liabilities related to compliance with these laws and regulations are an inherent part of our business, and future conditions may develop, arise or be discovered that create substantial environmental compliance or remediation liabilities and costs.

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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, 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.

New laws and regulations, including those that may relate to emissions of greenhouse gases or the use, discharge or disposal of chemicals of concern utilized in our manufacturing processes, 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 or standards 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.

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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.

New or more stringent government regulations or standards designed to address climate change could increase our operational costs and severe weather associated with a changing climate could negatively impact our operations and those of our customers and suppliers.

We are subject to domestic and foreign regulations and standards governing emissions controls which are, in part, designed to address climate change.

New or more stringent government regulations or standards associated with climate change could increase our operational costs and severe weather associated with a changing climate could negatively impact our operations and those of our customers and suppliers.

We are subject to domestic and foreign regulations and standards governing emission limits which are, in part, designed to address climate change.

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 (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.

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 as well as require material investment in energy efficiency projects and renewable energy sourcing.

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.

Responses to corporate social responsibility (“CSR”) topics, including those related to climate change, could adversely affect our business and performance.

Investors, customers, suppliers, employees, regulators and other stakeholders are increasingly focused on CSR practices and disclosures, and expectations in this area are rapidly evolving and growing.

We have announced goals covering certain CSR topics, such as those related to reductions in greenhouse gas emissions and maintaining employee health and safety.

Over time, stakeholder expectations for, and regulatory requirements related to, our CSR program and initiatives may change, and our investors, customers, suppliers, employees or regulators may demand that we implement additional, or stricter, goals and initiatives related to CSR topics.

Greater expectations or legal requirements may cause us to undertake costly initiatives to satisfy such new criteria.

If we are unable to respond effectively, stakeholders may conclude that our CSR program and initiatives are inadequate.

If we do not meet, or are perceived to have not met, announced CSR goals or do not accurately disclose our progress on such goals, our reputation, competitive position, financial condition and operating results could be adversely impacted.

Risks Related to Data Privacy and Information Security

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The Company relies on information technology systems to manage and operate its business and to process, transmit and store sensitive and confidential data, including its intellectual property and other proprietary business information and that of its customers and suppliers.

Despite security measures taken by the Company, the Company’s information technology systems (both on-premises and third-party managed) may be vulnerable to attacks by hackers or breached due to employee error, supplier error, malfeasance or other disruptions.

While we have utilized and continue to utilize various controls and systems to mitigate such risks, we cannot assure that the actions we have implemented and are implementing, or that we cause or have caused third-party service providers to implement, will be sufficient to protect our systems or sensitive and confidential data.

We have been and may in the future be subject to attempts to gain unauthorized access to our information technology systems.

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Data privacy and security concerns, as well as evolving government regulation, could adversely affect our results of operations and profitability.

We collect, store, access and otherwise process certain confidential or sensitive data, including proprietary business information, personal data or other information that is subject to privacy and security laws, regulations and/or customer-imposed controls.

We operate in a global environment in which the data privacy regulatory and legal framework is evolving quickly.

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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.

If we cannot continue to 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.

Inflation has led to and could continue to lead to further 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 further 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