What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2024-02-26 compared with 2023-02-16 · 46 added, 56 removed, 167 unchanged (38% of the section changed)

6 unchanged sentences

Risk Relating to our Business

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 bearing and industrial motion industries 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.

1 unchanged sentence

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.

Due to competitiveness within these industries, we may not be able to continue 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 OEM customers, could adversely affect our revenues and profitability.

14 unchanged sentences

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.

however, we may be unable to continue 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, 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.

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, turnover 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, may experience difficulties in integrating acquired businesses, and may incur unanticipated liabilities and costs associated with such acquired businesses.

1 unchanged sentence

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, 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.

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 adequately addressed or the costs associated with such issues are higher than expected, or we uncover material issues (including historical environmental, trade, sanctions, tax or 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, 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.

3 unchanged sentences

We rely on a combination of patents, trademarks, trade secret laws, invention assignment agreements, confidentiality agreements, and other arrangements to protect our intellectual property rights.

These rights are important to our business, and their loss, whether through patent infringement, counterfeiting, theft of trade secrets, or otherwise, could have a material adverse effect on the Company.

These rights are important to our business, and their loss, whether through patent infringement, counterfeiting, theft of trade secrets, data breach, or otherwise, could have a material adverse effect on the Company.

Additionally, third parties may bring claims to challenge the validity of our patents or other intellectual property rights or allege that we infringe their patents or other intellectual property rights.

3 unchanged sentences

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

Some of our debt has variable interest rates, which could increase the cost of servicing such debt, and fixed rate debt may have increased cost to refinance at maturity.

Interest rates have risen significantly over the past few years and may remain elevated or 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.

In addition, fixed rate debt currently outstanding that matures in the future may be refinanced with higher interest rates leading to additional servicing costs.

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

8 unchanged sentences

Changes in exchange rates between the U.S.

dollar and other currencies and volatile economic, political and market conditions in emerging market countries have in the past adversely affected our financial performance and may in the future adversely affect the value of our assets located outside the United States, our gross profit and our results of operations.

dollar and other currencies and volatile economic, political and market conditions in emerging market countries have in the past adversely affected our financial performance and may in the future adversely affect the value of our assets located outside the U.S., our gross profit and our results of operations.

Our results of operations may be materially affected by conditions in global financial markets or in any of the geographic regions in which we, our customers or our suppliers operate.

3 unchanged sentences

Accordingly, we may be forced to delay raising capital, issue shorter tenors than we prefer or pay unattractive interest rates, which could increase our interest expense, decrease our profitability and significantly reduce our financial flexibility.

If a customer becomes insolvent or files for bankruptcy, our ability to recover accounts receivable from that customer would be affected adversely and any payment we received during the preference period prior to a bankruptcy filing potentially may be recoverable by the bankruptcy estate.

If a customer becomes insolvent or files for bankruptcy, our ability to recover accounts receivable from that customer would be adversely affected and any payment we received during the preference period prior to a bankruptcy filing potentially may be recoverable by the bankruptcy estate.

Furthermore, if certain of our customers liquidate in bankruptcy, we may incur impairment charges relating to obsolete inventory and machinery and equipment.

10 unchanged sentences

• 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;

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

• the imposition of sanctions on countries in which we operate, from which we receive critical supplies or into which we sell our products;

• strained geopolitical relations between countries in which we have significant operations including the U.S.

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

1 unchanged sentence

• import and export licensing requirements;

• 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;

• compliance with a variety of foreign laws and regulations, including unexpected changes in taxation, environmental, sustainability 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;

18 unchanged sentences

The loss of the services of a significant number of members of our management or other key employees could have a material adverse effect on our business.

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 has increased recently, and we could experience difficulty from time to time in hiring, developing and retaining the personnel necessary to support our business.

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

Competition for these types of employees is intense, particularly in developed countries such as the U.S., 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, 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), 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.

A work stoppage at one or more of our facilities, whether caused by fire, flooding, epidemics, pandemics, public health concerns, 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.

12 unchanged sentences

Risks Related to Legal, Compliance and Regulatory Matters

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

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 certain regions of the world.

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.

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, such as polytetrafluoroethylene, 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 or which may require that we change certain production methods or materials used in our manufacturing processes or products.

Compliance with environmental, health and safety legislation and regulatory requirements may prove to be more limiting and costly than we anticipate.

2 unchanged sentences

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 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.

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, change production methods or materials 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.

6 unchanged sentences

government officials for the purpose of obtaining or retaining business.

Recently, there has been a substantial increase in the global enforcement of anti-corruption laws.

In the past, there has been a substantial increase in the global enforcement of anti-corruption laws.

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.

4 unchanged sentences

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 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.

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 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.

The global regulatory landscape is rapidly evolving and new and potentially conflicting requirements, including with respect to climate change, environmental sustainability and other matters, could lead to added operational complexity and compliance risks while adversely impacting our costs and financial results.

In addition, severe weather associated with a changing climate could negatively impact our operations and those of our customers and suppliers.

The pace at which regulators in many jurisdictions are implementing regulatory change is currently heightened across a wide variety of topics including climate change, environmental sustainability, employment and labor, ethics, data privacy, governance, and others.

Rapid changes in the regulatory environment may lead to additional costs of compliance and risks associated with non-compliance.

Furthermore, regulations governing our global operations may at times conflict across jurisdictions leading to additional complexity and operating costs.

In addition, environmental activism, government regulations and reporting standards, and other 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, renewable energy sourcing, emission controls, data collection and verification resources.

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 and impact our ability to insure our assets on commercially desirable terms and conditions.

Actions required to comply with regulations or stakeholder expectations associated with 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.

Over time, stakeholder expectations for, and regulatory requirements (such as the Corporate Sustainability Reporting Directive) related to, our CSR program and initiatives may change, and our investors, customers, suppliers, employees or regulators may advocate 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

The Company may be subject to risks relating to its information technology systems, including the risk of security breaches.

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, technological 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.

The Company may be subject to risks relating to its information technology systems, including the risk of cybersecurity incidents.

The Company relies on information technology systems and those of third parties who provide products or services to us to manage and operate its business and to process, transmit and store data, including its intellectual property, personal data 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 subject to unauthorized access due to employee error, technology vulnerabilities or misconfigurations, supplier error, malfeasance or other causes.

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 have required or will require third-party service providers to implement, will be sufficient to protect our systems or data.

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

To date, the impacts of prior events have not had a material adverse effect on us.

Any such breach in security could expose the Company and its employees, customers and suppliers to risks of misuse of confidential information, manipulation and destruction of data, production downtimes, litigation and operational disruptions, which in turn could adversely affect the Company's reputation, competitive position, business or results of operations.

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 government or customer-imposed controls.

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

To date, the impacts of prior incidents have not had a material adverse effect on us.

A cybersecurity incident could expose the Company and its employees, customers and suppliers to risks of misuse of confidential information, manipulation and destruction of data, production downtimes and operational disruptions, which in turn could result in litigation, business disputes and government investigations, and related monetary damages, injunctive requirements and fines, and could adversely affect the Company's reputation, competitive position, business or results of operations.

Data privacy and security concerns, as well as evolving regulation and enforcement, 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, data protection and security laws, regulations and/or government or customer-imposed controls.

We operate in a global environment in which the data privacy regulatory and legal framework and corresponding enforcement and litigation landscape are evolving quickly.

Moreover, the data privacy laws of the specific jurisdictions in which we operate may vary and potentially conflict.

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 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.

As such, we incur and expect to continue to incur significant ongoing costs as part of our efforts to comply with applicable law.

Any failure, or perceived failure, to comply with our data protection or privacy-related legal obligations may result in reputational damage, loss of business, regulatory investigations and fines, and civil lawsuits, and related monetary damages and injunctive requirements, any of which may adversely affect our results of operations and profitability.

General Risk Factors

7 unchanged sentences

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.

These cost increases may continue to be impacted by inflationary pressures that could further reduce our sales or profitability.

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.

If we are unable to continue 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.

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

In our business, we are exposed to warranty and product liability claims.

In our business, we are exposed to warranty and product liability claims, including in certain industry segments with potential high value claims, such as rail, aerospace and wind energy, and through our automotive customer contracts which often contain negotiated warranty provisions.

In addition, we may be required to participate in the recall of a product.

13 unchanged sentences

It is possible that future accounting guidance we are required to adopt, or future changes in accounting principles, could change the current accounting treatment that we apply to our consolidated financial statements and that such changes could have an adverse effect on our results of operations, as reported in our consolidated financial statements.

Unresolved Staff Comments

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