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Accordingly, you should carefully consider the following risk factors, as well as other information contained in or incorporated by reference in this Annual Report.
−Removed: Epidemics, pandemics or similar widespread public health concerns, such as COVID-19, could adversely affect our business, financial condition, results of operations and demand for our products and services.
−Removed: Epidemics, pandemics or similar public health concerns, such as COVID-19, could cause a widespread health crisis and significantly disrupt the U.S.
−Removed: and global economies, markets and supply chains.
−Removed: The ultimate impact of any future pandemic or disease outbreak on our business, financial condition, results of operations and the demand for our products and services in the future is uncertain, and it is impossible to predict whether any impacts we have experienced to date would continue or worsen in the future.
−Removed: The extent to which any pandemic or disease outbreak will impact our business, financial condition, results of operations, and demand for our products and services will depend on future developments including the ongoing geographic spread of the health crisis, the impact of disease mutations, the severity and duration of the health crisis, and the type and duration of actions that may be taken by various governmental authorities in response to the pandemic or disease outbreak and the impact on the U.S.
−Removed: and the global economies, markets, and supply chains.
−Removed: Adverse public health developments in countries and states where we operate, therefore, could have a material and adverse effect on our business, financial condition, results of operations and the demand for our products and services.
−Removed: These effects could include a negative impact on the availability of our employees, temporary closures of our facilities or the facilities of our business partners, customers, suppliers, third party service providers or other vendors, and the interruption of domestic and global supply chains, distribution channels, liquidity and capital markets.
−Removed: Our business continuity plans and other safeguards, however, may not be effective to mitigate the results of epidemics, pandemics, or similar widespread health concerns.
Operating Factors
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Due to their lower cost structures, they often can offer prices on products and services that are lower than our prices.
−Removed: Our customers also directly source leaf tobacco from farmers to meet some of their raw material needs.
+Added: Some of our customers also directly source leaf tobacco from farmers to meet some of their raw material needs.
Direct sourcing provides our customers with some qualities and quantities of leaf tobacco that they prefer not to use in their existing blends and that may be offered for sale.
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As a supplier of leaf tobacco and plant-based ingredients, we source our raw materials globally and rely on labor, energy, packing materials, and distribution resources to produce and distribute our products.
−Removed: Many of these materials and inputs are subject to price fluctuations from a number of factors, including but not limited to changes in crop sizes, crop qualities, crop disease, product scarcity, fertilizer costs, energy costs, labor costs, currency fluctuations, import and export requirements (including tariffs), adverse weather events, pandemic illness (such as the COVID-19 pandemic), political instability or military conflict such as the ongoing conflict in Ukraine, and other factors that may be beyond our control.
+Added: Many of these materials and inputs are subject to price fluctuations from a number of factors, including but not limited to changes in crop sizes, crop qualities, crop disease, product scarcity, fertilizer costs, energy costs, labor costs, currency fluctuations, import and export requirements (including tariffs), adverse weather events, pandemic illness, political instability or military conflict, and other factors that may be beyond our control.
We try to pass along to our customers some or all cost increases through increases in the sales prices of our products.
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Severe weather conditions may occur with higher frequency or may be less predictable in the future due to the effects of climate change.
−Removed: If a weather event or other event is particularly severe, such as a volcanic eruption, major drought, hurricane, cyclone, typhoon, windstorm, or temperature or precipitation extreme, the affected crop could be destroyed or damaged to an extent that it would be less desirable to our customers, which would result in a reduction in operating results.
+Added: If a weather event or other event is particularly severe, such as a volcanic eruption, major drought, hurricane, cyclone, typhoon, windstorm, or extreme temperatures or precipitation, the affected crop could be destroyed or damaged to an extent that it would be less desirable to our customers, which would result in a reduction in operating results.
If such an event is also widespread, it could affect our ability to acquire the quantity of tobacco or plant-based ingredients required by our customers or could prevent or impair our ability to process or ship products as planned.
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Our suppliers would likely pass all or a portion of their increased costs along to us.
−Removed: We may not be able to pass any resulting cost increases to our customers.
+Added: We may not be able to pass all resulting cost increases to our customers.
Furthermore, we may be required to make additional investments of capital to maintain compliance with new laws and regulations.
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Disruption of our supply chain for our plant-based ingredients operations could adversely affect our business .
−Removed: Damages or disruption to raw material supplies or our manufacturing or distribution capabilities due to weather, climate change, natural disaster, fire, terrorism, cyber-attack, pandemics (such as the COVID-19 pandemic), governmental restrictions or mandates, strikes, import/export restrictions, political instability or military conflict such as the ongoing conflict in Ukraine, or other factors could impair our ability to produce or sell our plant-based ingredient products.
−Removed: Many of our plant-based ingredient product lines are manufactured at a single location or require raw materials that are currently sourced from a limited number of regions.
+Added: Damages or disruption to raw material supplies or our manufacturing or distribution capabilities due to weather, climate change, natural disaster, fire, terrorism, cyber-attack, pandemics, governmental restrictions or mandates, strikes, import/export restrictions, political instability or military conflict, or other factors could impair our ability to produce or sell our plant-based ingredients products.
+Added: Many of our plant-based ingredients product lines are manufactured at a single location or require raw materials that are currently sourced from a limited number of regions.
The failure of third parties on which we rely, including those third parties who supply our raw materials, packaging, capital equipment and other necessary operation materials, to meet their obligations to us, or significant disruptions in their ability to do so, may negatively impact our operations, as well as require additional resources to restore our supply chain.
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Cyber-attacks, data breaches or other breaches of our information security systems may cause equipment failures or disruptions to our operations.
−Removed: Our inability to operate our networks and security information systems as a results of such events, even for a short period of time, may result in significant expenses or operating disruptions.
−Removed: If we are unable to prevent physical and electronic break-ins, cyber-attacks and other information security breaches, we may suffer financial and reputational damage, be subject to litigation, or incur remediation costs or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers, suppliers, or employees.
+Added: Our inability to operate our networks and security information systems as a result of such events, even for a short period of time, may result in significant expenses or operating disruptions.
+Added: If we are unable to prevent physical and electronic break-ins, cyber-attacks and other information security breaches, we may suffer financial and
+Added: reputational damage, be subject to litigation, or incur remediation costs or penalties because of the unauthorized disclosure of confidential information belonging to us or to our partners, customers, suppliers, or employees.
We have invested and expect to continue to invest in technology security initiatives, information technology risk management, and disaster recovery plans.
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and international operations such as procurement, manufacturing, and sales, all of which are critical to our future growth and profitability.
−Removed: Changes in labor markets as a result of COVID-19 and other socioeconomic and demographic changes, have increased the competition for hiring and retaining talent.
+Added: Changes in labor markets and other socioeconomic and demographic changes have increased the competition for hiring and retaining talent.
As a result of this competition, we may be unable to continue to attract, develop, retain, motivate, and maintain good relationships with suitably qualified individuals at acceptable compensation levels who have the managerial, operational, and technical knowledge and experience to meet our needs.
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We are dependent on a seasonal workforce to meet our operational needs.
−Removed: Our tobacco operations depend in part on our ability to attract, train, motivate and retain qualified employees, many of whom are seasonal employees.
+Added: Our operations depend in part on our ability to attract, train, motivate and retain qualified employees, many of whom are seasonal employees.
We seek to manage seasonal wages and the timing of the hiring process to ensure the appropriate workforce is in place for peak and low seasons.
−Removed: Many of our tobacco operations are located in rural communities that may not have sufficient labor pools.
+Added: Many of our operations are located in rural communities that may not have sufficient labor pools.
If we are unable to hire sufficient personnel or successfully manage our seasonal workforce needs, we may not be able to meet our operational needs and our financial results could be negatively impacted.
+Added: Epidemics, pandemics or similar widespread public health concerns could adversely affect our business, financial condition, results of operations and demand for our products and services.
+Added: Epidemics, pandemics or similar public health concerns could cause a widespread health crisis and significantly disrupt the U.S.
+Added: and global economies, markets and supply chains.
+Added: The ultimate impact of any future pandemic or disease outbreak on our business, financial condition, results of operations and the demand for our products and services in the future is uncertain, and it is impossible to predict whether any impacts we have experienced to date would continue or worsen in the future.
+Added: The extent to which any pandemic or disease outbreak will impact our business, financial condition, results of operations, and demand for our products and services will depend on future developments including the ongoing geographic spread of the health crisis, the impact of disease mutations, the severity and duration of the health crisis, and the type and duration of actions that may be taken by various governmental authorities in response to the pandemic or disease outbreak and the impact on the U.S.
+Added: and the global economies, markets, and supply chains.
+Added: Adverse public health developments in countries and states where we operate, therefore, could have a material and adverse effect on our business, financial condition, results of operations, and the demand for our products and services.
+Added: These effects could include a negative impact on the availability of our employees, temporary closures of our facilities or the facilities of our business partners, customers, suppliers, third party service providers or other vendors, and the interruption of domestic and global supply chains, distribution channels, liquidity and capital markets.
+Added: Our business continuity plans and other safeguards, however, may not be effective to mitigate the results of epidemics, pandemics, or similar widespread health concerns.
Regulatory and Governmental Factors
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A number of such measures are included in the WHO Framework Convention on Tobacco Control (“FCTC”), which entered into force on February 27, 2005, and currently has 183 Parties to the Convention.
−Removed: The Conference of the Parties (“COP”), which is the governing body of the WHO FCTC and is comprised of all Parties to the Convention, meets every two years to consider amendments to the agreement and track progress in the implementation of the treaty’s 38 articles.
+Added: The Conference of the Parties (“COP”),
+Added: which is the governing body of the WHO FCTC and is comprised of all Parties to the Convention, meets every two years to consider amendments to the agreement and track progress in the implementation of the treaty’s 38 articles.
It is not possible to predict how the signatories to the FCTC may choose to fulfill their obligations or the manner or the pace with which they may implement the FCTC articles, and they may take actions that could restrict or prohibit tobacco usage that could materially affect our business and our results of operations.
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We have established programs that begin at the farm level to assist our customers’ collection of raw material information to support leaf traceability and customer testing requirements, including the identification of nicotine levels.
−Removed: Additionally, given our global presence, we also have the ability to source different types and styles of tobacco for our customers should their needs change due to regulation.
+Added: Additionally, given our global presence, we also can source different types and styles of tobacco for our customers should their needs change due to regulation.
Despite our programs, the extent to which governmental actions will impact our business, financial condition, results of operations and demand for our products and services will depend on future developments, which are highly uncertain and cannot be predicted.
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Our customers’ operations are subject to similar uncertainties and risks relating to the political stability of the foreign governments in the countries in which their operations are located.
−Removed: Political or economic instability in those countries, such as the ongoing conflict in Ukraine, may impede or disrupt our ability to meet our customers’ needs in or source raw materials from those impacted countries.
+Added: Political or economic instability in those countries may impede or disrupt our ability to meet our customers’ needs in or source raw materials from those impacted countries.
If the political situation in any of the countries where we conduct business were to deteriorate significantly, our ability to recover assets located there could be impaired.
To the extent that we do not replace any lost volumes of leaf tobacco with leaf tobacco from other sources, or we incur increased costs related to such replacement, our financial condition or results of operations, or both, would suffer.
−Removed: In addition, if we are unable to supply leaf tobacco to our customers’ locations or otherwise conduct business with our customers due to political stability or interference in their countries of operation, or if we incur increased cost related to such challenges, our performance and results of operations could suffer.
+Added: In addition, if we are unable to supply leaf tobacco to our customers’ locations or otherwise
+Added: conduct business with our customers due to political stability or interference in their countries of operation, or if we incur increased cost related to such challenges, our performance and results of operations could suffer.
Increasing scrutiny and changing expectations from governments, as well as other stakeholders such as investors and customers, with respect to our ESG considerations may impose additional costs on us or expose us to additional risks.
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Changes in tax laws in the countries where we do business may adversely affect our results of operations.
−Removed: Through our subsidiaries, we are subject to the tax laws of many jurisdictions.
+Added: We operate in the United States and many foreign countries and are subject to the tax laws of many jurisdictions.
Changes in tax laws or the interpretation of tax laws can affect our earnings, as can the resolution of various pending and contested tax issues.
+Added: For example, numerous foreign jurisdictions in which we operate have enacted or are in the process of enacting legislation to adopt the Global Anti-Base Erosion ("Pillar Two") model rules issued by the Organization for Economic Co-operation and Development (the “OECD”).
+Added: For those jurisdictions that have legislation with an effective enactment date of January 1, 2024, these rules will apply beginning with our fiscal year 2025 reporting year.
+Added: We are evaluating the impact of these new rules and will continue to monitor potential and enacted tax changes in the countries in which we operate.
+Added: The impact of the changes in domestic and international tax rules and regulations could have a material effect on our effective tax rate.
In most jurisdictions, we regularly have audits and examinations by the designated tax authorities, and additional tax assessments are common.
−Removed: We believe that we comply with applicable tax laws in the jurisdictions where we operate, and we vigorously contest all significant tax assessments where we believe we are in compliance with the tax laws.
+Added: We believe that we comply with applicable tax laws in the jurisdictions where we operate, and we vigorously contest all significant tax assessments where we believe we comply with the tax laws.
Financial Factors
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Fluctuations in foreign currency exchange rates may affect our results of operations.
−Removed: We account for most of our tobacco operations using the U.S.
+Added: We account for most of our tobacco operations and all of our ingredients companies using the U.S.
dollar as the functional currency.
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dollar terms, it may be less attractive in the world market.
−Removed: This could negatively affect the profitability of
−Removed: that crop and our results of operations.
+Added: This could negatively affect the profitability of that crop and our results of operations.
In tobacco markets that are primarily domestic, the local currency is the functional currency.
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Although GAAP expense and pension funding contributions are not directly related, key economic factors that affect GAAP expense can also affect the amount of cash we are required to contribute to our pension plans under requirements of the Employee Retirement Income Security Act (“ERISA”).
−Removed: Failure to achieve expected returns on plan assets could also result in an increase to the amount of cash we would be required to contribute to our pension plans.
+Added: Failure to achieve expected returns on plan assets could also result in an increase in the amount of cash we would be required to contribute to our pension plans.
In order to maintain or improve the funded status of our plans, we may also choose to contribute more cash to our plans than required by ERISA regulations.
−Removed: 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.