What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2022-10-24 compared with 2021-10-22 · 110 added, 79 removed, 239 unchanged (44% of the section changed)

1 unchanged sentence

Global economic conditions may negatively impact our financial condition and results of operations.

A general weakening or decline in the global economy or a reduction in industrial outputs, business or consumer spending or confidence could delay or significantly decrease purchases of our products by our customers and end users.

Adverse developments in the global economy or a reduction in industrial outputs, consumer spending or confidence could significantly decrease purchases of our products by our customers and end users.

Consumer purchases of discretionary items, which could include our maintenance products and homecare and cleaning products, may decline during periods where disposable income is reduced or there is economic uncertainty, and this may negatively impact our financial condition and results of operations.

2 unchanged sentences

Public health crises, including epidemics or pandemics, may affect the principal markets, trade channels, and industrial segments in which we conduct our business.

For example, we are continuously monitoring the impact of the current COVID-19 pandemic, which has caused a significant disruption to global financial markets and supply chains beginning in early calendar year 2020.

Supply chains at many companies globally have been strained due to increased competition for production line capacity and logistics resources, labor shortages, and shortages of certain materials as a result of the pandemic.

For example, the impact of the ongoing COVID-19 pandemic has caused a significant disruption to global financial markets and supply chains beginning in early calendar year 2020.

Certain ongoing direct and indirect impacts of the pandemic have continued to affect recent periods.

Supply chains at many companies globally continue to be strained due to increased competition for production line capacity, freight and logistics resources, as well as labor shortages, and shortages of certain materials.

These constraints have sometimes impacted the ability of our third-party manufacturers to procure certain raw materials needed to manufacture our products and this has periodically resulted in us not being able to meet the demand for our products from customers and end-users in certain markets.

The additional costs resulting from these recent constraints in our supply chain and distribution networks may continue to unfavorably impact our gross margin and operating results in future periods for as long as such constraints and challenges exist

The extent to which the COVID-19 pandemic impacts our results will depend on future developments, which remain uncertain and cannot be predicted, including new information which may emerge concerning the severity of outbreaks associated with new variants, as well as the international actions that are being taken to contain these outbreaks.

Although several vaccines and treatments are authorized for use against COVID-19, these vaccines and treatments are being produced, distributed and accepted by the public at varying rates globally.

Therefore, uncertainty continues to exist regarding the severity and duration of this rapidly evolving pandemic and it remains difficult for us to estimate the extent to which the COVID-19 pandemic will impact our financial results and operations in future periods and whether those impacts will be favorable or unfavorable.

The COVID-19 pandemic has resulted in high levels of renovation and maintenance activities by end-users in recent periods and this contributed to our strong sales of maintenance products in fiscal year 2021.

If renovation activities decrease by our end-users or spending patterns change as the pandemic evolves or improves in future periods, this could adversely impact our financial results.

If economic or market conditions in key global markets deteriorate, we may experience material adverse effects on our business, financial condition and results of operations.

In addition, global supply chain issues and other macroeconomic factors have resulted in an inflationary environment that has led to increased raw material costs and other input costs.

The additional costs resulting from this inflationary environment and the constraints in our supply chain and distribution networks may continue to unfavorably impact our gross margin and operating results in future periods for as long as such constraints and challenges exist.

The severity and duration of the COVID-19 pandemic, as well as the current inflationary environment, remain uncertain and it is difficult to predict the extent to which these conditions will impact our financial results and operations in future periods.

It is also uncertain how changes in the pandemic or inflationary conditions will impact demand from our customers and end-users.

If demand from our customers and end-users decreases in future periods, this could adversely impact our financial results.

If economic or market conditions in certain of our key global markets deteriorate, we may experience material adverse effects on our business, financial condition and results of operations.

Adverse economic and market conditions could also harm our business by negatively affecting the parties with whom we do business, including our customers, retailers, distributors and wholesalers, and third-party contract manufacturers and suppliers.

15 unchanged sentences

Any failure to preserve and evolve our culture could negatively affect our future success, including our ability to retain and recruit employees.

Our success also depends on the continued service of our executive officers, key employees and other talented people, as well as effective

succession planning.

The loss of the services of key employees could have a material adverse effect on our business and prospects.

Competition for such talent is intense, and there can be no assurance that we can retain our key employees or attract, assimilate and retain employees who are fully engaged in the future.

Our success also depends on the continued service of our executive officers, key employees and other talented people.

Further, our ability to successfully execute organizational changes, including succession planning and the transition of our executive officers and key employees, is critical to the continued success of our business.

The unexpected loss of the services of key employees or executive officers could have a material adverse effect on our business and prospects.

In addition current economic conditions have led to an unusually competitive labor market in which experienced personnel are in high demand.

Since the competition for such talent

is intense there can be no assurance that we can retain our key employees or attract, assimilate and retain employees who are fully engaged in the future.

If we are unable to implement and successfully manage our strategic initiatives in accordance with our business plans, our business and financial results could be adversely affected.

Moreover, the Company cannot be certain that the implementation of our strategic initiatives will necessarily advance our business or financial results as intended.

Moreover, we cannot be certain that the implementation of our strategic initiatives will necessarily advance our business or financial results as intended.

If the success and reputation of one or more of our leading brands erodes, our business, financial condition and results of operations could be negatively impacted .

The financial success of the Company is directly dependent on the success and reputation of its brands, particularly its WD-40 Brand.

Our financial success is directly dependent on the success and reputation of our brands, particularly our WD-40 Brand.

The success and reputation of our brands can suffer if marketing plans or product development and improvement initiatives, including the release of new products or innovative packaging, do not have the desired impact on the brands’ image or do not attract customers as intended.

4 unchanged sentences

In addition, our brand value depends on our ability to maintain a positive consumer perception of our corporate integrity and brand culture.

Negative claims or publicity involving the Company, our products, or any of our key employees could damage our reputation and brand image, regardless of whether such claims are accurate.

Negative claims or publicity involving us, our products, or any of our key employees could damage our reputation and brand image, regardless of whether such claims are accurate.

This risk is compounded by the increasing use of social and digital media by consumers and the speed by which information and opinions are shared.

1 unchanged sentence

Although we make every effort to prevent brand erosion and preserve our reputation and the reputation of our brands, there can be no assurance that such efforts will be successful.

Sales unit volume growth may be difficult to achieve .

Our ability to achieve sales volume growth will depend on our ability to (i) execute certain of our strategic initiatives, (ii) drive growth in new markets by making targeted end users aware of our products and making them easier to buy, (iii) drive growth within our existing markets through innovation, renovation and enhanced merchandising and marketing of our established brands, and (iv) capture market share from our competitors.

It is more difficult for us to achieve sales volume growth in developed markets where our products are widely used as compared to in developing or emerging markets where our products have been newly introduced or are not as well known by consumers.

In order to protect our existing market share or capture additional market share from our competitors, we may need to increase our expenditures related to promotions and advertising or introduce and establish new products or product lines.

In addition, we also periodically implement sales price increases within certain markets or for certain product lines in response to increased costs associated with components, raw materials, manufacturing and distribution.

For example, we implemented significant sales price increases during fiscal year 2022 in response to the current inflationary environment that has significantly increased our cost of goods sold.

Sales price increases may slow sales volume growth or create declines in volume in the short term as customers and end users adjust to sales price increases or purchase alternative products at lower prices.

In addition, the continued prominence and growth of the online retail sales channel has presented both us and our customers that sell our products online with the challenge of balancing online and physical store retailing methods.

As a result of the COVID-19 pandemic and changes in end-user preference, some sales are shifting more to these online retail sales channels, and this may present a challenge in our markets where we have a less developed e-commerce business.

Although we are engaged in e-commerce with respect to our products, if we are not successful in expanding sales in such alternative retail channels or we experience challenges with operating in such channels, our financial condition and results of operations may be negatively impacted.

In addition, a change in the strategies of our existing customers, including shelf simplification, the discontinuation of certain product offerings or the shift in shelf space to competitors’ products could reduce our sales and potentially offset sales volume increases achieved as a result of other sales growth initiatives.

If we are unable to increase market share in our existing product lines by developing product improvements, investing adequately in our existing brands, building usage among new customers, developing, acquiring or successfully launching new products or product line extensions, or successfully penetrating emerging and developing markets and sales channels globally, we may not achieve our sales volume growth objectives.

Cost increases or cost volatility in finished goods, components, raw materials, transportation and other necessary supplies or services could harm or impact our financial condition and results of operations .

Increases in the cost of finished goods, which may be driven by higher costs for components, raw materials and third-party manufacturing fees, as well as increases in the cost of transportation and other necessary supplies or services may harm our financial condition and results of operations.

Specialty chemicals and aerosol cans, which constitute a significant portion of the

costs for many of our maintenance products, have experienced significant price volatility in the past, and may continue to do so in the future.

In particular, volatility in the price of oil impacts the cost of specialty chemicals, many of which are indexed to the price of regional crude oil or related refined products.

Fluctuations in oil and diesel fuel prices have also historically impacted our cost of transporting our products, compounded recently by increased regulations imposed on the freight industry and additional macroeconomic factors which have resulted in increased freight costs.

For example, the COVID-19 pandemic has resulted in global supply chain constraints and transportation disruptions that have led to increased competition for freight resources, higher fees charged by our third-party manufacturers, increased raw material costs and other input costs that have negatively impacted our results of operations.

In addition, other macroeconomic factors have recently resulted in an inflationary environment that has compounded these impacts and led to further increases in raw material costs, manufacturing and distribution costs, and other input costs.

When there are significant increases in the costs of components, raw materials, third-party manufacturing fees and other expenses, and we are not able to increase the prices of our products or achieve other cost savings to an extent that they will offset such cost increases, our gross margin and operating results will be negatively impacted.

In addition, if we increase our sales prices in response to increases in the cost of such raw materials, and those raw material costs later decline significantly, we may not be able to sustain our sales prices at these higher levels.

As component and raw material costs are the principal contributors to the cost of goods sold for all of our products, any significant fluctuation in the costs of components and raw materials could have a material impact on the gross margins realized on our products.

Sustained increases in the cost of raw materials, components, fees from our third-party contract packagers, transportation and other necessary supplies or services, or significant volatility in such costs, could have a material adverse effect on our financial condition and results of operations.

Reliance on a limited base of third-party contract manufacturers, logistics providers and suppliers of raw materials and components may result in disruption to our business and this could adversely affect our financial condition and results of operations .

9 unchanged sentences

In addition, if we are unable to contract with third-party manufacturers or suppliers for the quantity and quality levels needed for our business, we could experience disruptions in production and our financial results could be adversely affected.

In particular, the COVID-19 pandemic has resulted in significant supply chain constraints and transportation disruptions that have arisen periodically throughout the pandemic.

In particular, the COVID-19 pandemic, extreme weather events and other macroeconomic factors have resulted in significant supply chain constraints and transportation disruptions that have periodically arisen.

Some of the challenges that we have experienced include general aerosol-related production capacity constraints and competition for such capacity by other companies who utilize the same third-party manufacturers for their aerosol production.

These challenges have periodically resulted in us not being able to meet the demand for our products by customers and end-users in certain markets, most significantly those markets in our Americas segment where demand for aerosols has, for certain products, outpaced the available production capacity in the region.

Although we have been actively working on various initiatives in partnership with our third-party manufacturers in order to increase the capacity and resilience of our supply chain to meet strong end-user demand, we are not able to estimate the degree of the impact or the costs associated with potential future disruptions within our supply chain and distribution networks as these issues are being resolved.

These challenges have periodically resulted in us not being able to meet the demand for our products by customers and end-users in certain markets where demand for aerosols has, for certain products, outpaced the available production capacity in the region.

We have been actively working on various initiatives in partnership with our third-party manufacturers and we are also identifying and onboarding new third-party manufacturers in order to increase the capacity and resilience of our supply chain to meet strong end-user demand.

When we onboard new third-party manufacturers, it comes with inherent risks and in the current economic environment, it also potentially comes with higher costs.

In addition, actions we have taken to increase inventory levels of certain raw materials and finished goods, given the current challenges within supply chain and increased lead times required by suppliers, has also come with higher transportation, storage and distribution costs.

We are not able to estimate the degree of the impact or the costs associated with potential future disruptions within our supply chain and distribution networks as these supply chain issues are being resolved.

Global operations outside the U.S.

10 unchanged sentences

These risks could have a significant impact on our ability to sell our products on a competitive basis in global markets outside the United States.

In addition, continued developments in the U.S.

political climate have introduced greater uncertainty with respect to tax policies, trade relations, tariffs and government regulations affecting trade between the U.S.

In addition, continued developments in global political climates have introduced greater uncertainty with respect to tax policies, trade relations, tariffs and government regulations affecting trade between the U.S.

and other countries.

For example, on February 24, 2022, Russian forces launched significant military action against Ukraine, which has resulted in conflict and disruption in the region.

In response to this action taken by Russia, the U.S.

and other countries immediately imposed various economic sanctions against Russia.

These geopolitical tensions have continued and it is uncertain when conditions will improve or whether additional governmental sanctions will be enacted in future periods.

The direct and indirect impacts of this evolving situation and its effect on global economies in future periods are difficult to predict.

We suspended selling our products to markets in Russia and Belarus beginning in March 2022, which has had an unfavorable impact on our sales.

In addition, we are currently unable to sell our products in Ukraine due to the disruption in the country.

As a result of this conflict, commodity markets remain subject to heightened levels of uncertainty, especially as they relate to the price of crude oil, which increased significantly in the immediate aftermath of the sanctions against Russia.

Increases in crude oil prices unfavorably impact the cost of our products, as well as the cost of the transportation and distribution of our products.

The duration and severity of the recent increases in the price of crude oil are highly unpredictable and may unfavorably impact our cost of goods sold for as long as these conditions exist.

These developments, as well as the risks outlined above, could have a material adverse effect on our business, financial condition and results of operations.

11 unchanged sentences

are subject to risks relating to appropriate compliance with legal and regulatory requirements in local jurisdictions, potential difficulties in staffing and managing local operations, potentially higher incidence of fraud or corruption, credit risk of local customers and distributors and potentially adverse tax consequences.

As we further develop and grow our business operations outside the U.S., we are exposed to additional complexities and risks, particularly in China, Russia and other emerging markets.

As we further develop and grow our business operations outside the U.S., we are exposed to additional complexities and risks, particularly in China and other emerging markets.

In many foreign countries, particularly in those with developing economies, business practices that are prohibited by the U.S.

6 unchanged sentences

Violations of these laws could be costly and disrupt our business, which could have a material adverse effect on our business, financial condition and results of operations.

Sales unit volume growth may be difficult to achieve .

Our ability to achieve sales volume growth will depend on our ability to (i) execute our strategic initiatives, (ii) drive growth in new markets by making targeted end users aware of our products and making them easier to buy, (iii) drive growth within our existing markets through innovation, renovation and enhanced merchandising and marketing of our established brands, and (iv) capture market share from our competitors.

In past periods, we have also increased sales prices on certain of our products in response to increased costs for components and raw materials.

As a result of the COVID-19

pandemic, some sales are shifting more to these online retail sales channels, and this may present a challenge in our markets where we have a less developed e-commerce business.

Petroleum-based specialty chemicals and aerosol cans, which constitute a significant portion of the costs for many of our maintenance products, have experienced significant price volatility in the past, and may continue to do so in the future.

In particular, volatility in the price of oil impacts the cost of petroleum-based specialty chemicals, many of which are indexed to the price of regional crude oil or related refined products .

When there are significant increases in the costs of components, raw materials, third-party manufacturing fees and other expenses, and if we are not able to increase the prices of our products or achieve cost savings to offset such cost increases, our gross margins and operating results will be negatively impacted.

Malfunctions or implementation issues related to the critical information systems that we use for the daily operations of our business, cyberattacks and data breaches could adversely affect our ability to conduct business .

5 unchanged sentences

The increasing number of information technology security threats and the development of more sophisticated cyberattacks, including ransomware, pose a potential risk to the security of our information technology systems and networks, as well as to the confidentiality, availability and integrity of our data.

In addition, the increased use of remote work infrastructure due to the COVID-19 pandemic also increases the possible cybersecurity risks.

In addition, the increased use of remote work infrastructures also increases the possible cybersecurity risks.

Further, such incidents could also materially increase the costs that we already incur to protect against such risks.

While we maintain cyber insurance, our coverage may not be adequate for liabilities or costs actually incurred, and we cannot be certain that any insurer will not deny coverage of a future claim.

We also cannot be certain that such insurance will continue to be available to us on economically reasonable terms, or at all, in future periods.

In addition, system failure, malfunction or loss of data that is housed in the Company’s or its third-party service providers’ critical information systems could disrupt our ability to timely and accurately process transactions and produce key financial reports, including information on our operating results, financial position and cash flows.

9 unchanged sentences

were to cease its operations or were unable to provide continued support for this application, it could adversely affect our daily operations or our business, financial condition and results of operations.

Management determined in fiscal year 2020 that it is appropriate to implement a new information system that will be used at all of these offices.

We are currently in the development and early testing stages of this implementation.

This information system will be used to process all of the daily transactions and to produce key financial reports for all of these offices.

If we encounter difficulties in completing this critical information system implementation, we may experience interruptions in our ability to manage our daily operations and report financial results and this could adversely affect our business, financial condition and results of operations.

Management determined that it is appropriate to replace this information system so we are currently in the process of implementing a new information system that will be used at all of these offices.

We are currently configuring the system based on our design work to date and have been performing various stages of testing.

We are also in the process of determining our implementation rollout strategy and timing for the offices transitioning to this new information system.

This information system, along with other integrated software platforms, will be used to process all of the daily transactions and to produce key financial reports for all of these offices.

If we encounter difficulties in completing this critical information system implementation, or if the implementation takes longer than intended, we may experience interruptions in our ability to manage our daily operations and report financial results and we may experience significant incremental costs, which could adversely affect our business, financial condition and results of operations.

Our ability to achieve our environmental, social and governance and sustainability initiatives are subject to emerging risks and the outcomes may not achieve the anticipated benefits or align with new regulations and stakeholders’ expectations.

There has been an increasing focus from stakeholders and regulators related to environmental, social and governance (“ESG”) matters across all industries in recent years.

ESG standard setting and stakeholder expectations continue to evolve.

Criteria used to evaluate ESG practices and metrics may change rapidly in future periods, which could result in increased expectations of public companies and may cause us to undertake costly initiatives to satisfy any new requirements.

Non-compliance with these emerging regulations or a failure to address stakeholder and societal expectations may result in potential cost increases, litigation, fines, penalties, production and sales restrictions, brand or reputational damage, loss of customers, failure to retain and attract talent, lower valuation and higher investor activism activities.

The increased attention directed towards publicly traded companies surrounding ESG matters includes the recent release of proposed rules by the SEC that would require companies to enhance and standardize disclosures related to climate change, specifically those associated with physical risks and transitional risks.

Physical risks include acute risks associated with extreme weather events or chronic risks associated with gradual shifts in climate or weather.

Transition risks are the risks that may arise from the adoption of climate-related regulatory policies, including those that may be necessary to achieve the national climate

goals in the United States and other countries, or risks associated with changing stakeholder expectations and demands.

Our first strategic initiative, “building a business for the future”, was developed to further align and integrate our business decisions with ESG factors and considerations and we anticipate achieving compliance with current and future ESG expectations and standards, as well as ESG expectations from our stakeholders.

We are expecting to publish our next ESG Report in November 2022, which will include certain ESG and sustainability objectives.

However, any failure or perceived failure, whether or not valid, to pursue and fulfill our ESG initiatives and objectives or to satisfy various ESG reporting standards timely could increase the risk of litigation and this could negatively impact our financial condition and results of operations.

Government laws and regulations, including environmental laws and regulations, could result in material costs or otherwise adversely affect our financial condition and results of operations .

The manufacturing, chemical composition, packaging, storage, distribution and labeling of our products and the manner in which our business operations are conducted must comply with an extensive array of federal, state and foreign laws and regulations.

If we are not successful in complying with the requirements of all such regulations, we could be fined or other actions could be taken against us by the applicable governing body, including the possibility of a required product recall.

1 unchanged sentence

It is also possible that governments and regulatory agencies will increase regulation, including the adoption of further regulations relating to the transportation, storage or use of certain chemicals, to enhance homeland security or protect the environment and such increased regulation could negatively impact our ability to obtain raw materials, components and/or finished goods or could result in increased costs.

In particular, legislators, consumers, investors and other stakeholders are increasingly focusing on climate change, petroleum usage, waste, recycled material content, and other sustainability concerns pertaining to companies’ ESG policies.

Concern over climate change may result in new or increased legal and regulatory requirements to reduce or mitigate negative impacts to the environment or may result in new reporting and disclosure requirements.

In the event that such regulations result in increased product or administrative costs, we may not be in a position to increase selling prices, and therefore an increase in costs could have a material adverse effect on our business, financial condition and results of operations.

Some of our products have chemical compositions that are controlled by various state, federal and international laws and regulations that are subject to change.

3 unchanged sentences

A delay or other inability of the Company to complete product research and development and successfully reformulate our products in response to any such regulatory requirements could have a material adverse effect on our business, financial condition and results of operations.

We are subject to an SEC rule mandated by Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that requires management to conduct annual due diligence to determine whether certain minerals and metals, known as “conflict minerals”, are contained in our products and, if so, whether they originate from the Democratic Republic of Congo (“DRC”) or adjoining countries.

Although we have concluded that our current products do not contain such “conflict minerals” in our annual evaluations to date, if we were to conclude that these materials exist within our products in future periods, we may have difficulty verifying the origin of such materials for purposes of disclosures required by the SEC rules.

16 unchanged sentences

We cannot be certain that these rights, if obtained, will not be withdrawn, invalidated, circumvented or challenged in the future, and we could incur significant costs in connection with legal actions to defend and preserve our intellectual property rights.

In addition, even if such rights are obtained in the U.S., it may be that the laws of some of the other countries in which our products are or may be sold do not protect intellectual property rights to the same extent as the laws of the United States, or they may be difficult to enforce.

In addition, even if such rights are obtained in the U.S., the laws of some of the other countries in which our products are or may be sold might not protect intellectual property rights to the same extent as the laws of the United States, or they may be difficult to enforce.

Our failure to protect or successfully assert our intellectual property rights or failure to protect our other proprietary information could make us less competitive and this could have a material adverse effect on our business, financial condition and results of operations.

Trade secret protection, particularly for our most valuable product formulation for the WD-40 Multi-Use Product, requires specific agreements, policies and procedures to assure the secrecy of information classified as a trade secret.

If such agreements, policies and procedures are not effective enough to maintain the secrecy of our trade secrets or if chemical disclosure regulations do not allow for continued protection of essential elements of our trade secret formulations, the loss of trade secret protection could have an adverse effect on our financial condition.

If we are found to have violated the trademark, copyright, patent or other intellectual property rights of others, such a finding could result in the need to cease the use of a trademark, trade secret, copyrighted work or patented invention in our business and an obligation to pay a substantial amount for past infringement.

2 unchanged sentences

Our operating results and financial performance may not meet expectations , which could adversely affect our stock price .

We cannot be sure that our operating results and financial performance, which include sales growth, net income, earnings per common share, gross margin and cash flows, will meet expectations.

We cannot be sure that our operating results and financial performance, which include sales, net income, earnings per common share, gross margin and cash flows, will meet expectations.

If our assumptions and estimates are incorrect or if we do not achieve all of our key goals or strategic initiatives, then our actual performance could vary materially from our internal expectations and those of the market.

Failure to meet or exceed these expectations could cause the market price of our stock to decline.

In addition, the trading market for our common stock is influenced by the research and reports that securities analysts and industry analysts publish about the Company or our business.

In addition, the trading market for our common stock is influenced by the research and reports that securities analysts, industry analysts and other third parties publish about us or our business.

We do not have any control over these reports or analysts.

If securities or industry analysts adversely change their recommendations regarding our common stock or if any of these analysts cease coverage of the Company in their reports, our stock price and trading volume could decline.

If securities or industry analysts adversely change their recommendations regarding our common stock or if any of these analysts cease coverage of us in their reports, our stock price and trading volume could decline.

Our operating results and financial performance may be negatively influenced by a number of factors, many of which are discussed in this Item 1A “Risk Factors”.

5 unchanged sentences

In addition, we frequently discover products in certain markets that are counterfeit reproductions of our WD-40 products as well as products otherwise bearing an infringing trade dress.

The availability of counterfeits and other infringing products, particularly in China, Russia and other emerging markets, could adversely impact our sales and potentially damage the value and reputation of our brands.

The availability of counterfeits and other infringing products, particularly in China and other emerging markets, could adversely impact our sales and potentially damage the value and reputation of our brands.

Our products generally compete on the basis of product performance, brand recognition, price, quality or other benefits to consumers and meeting end users’ needs.

29 unchanged sentences

There are inherent risks associated with new product development and marketing efforts, including product development or launch delays, product performance issues during development, changing regulatory frameworks that affect the new products in development and the availability of key raw materials included in such products.

These inherent risks could

result in the failure of new products and product line extensions to achieve anticipated levels of market acceptance, additional costs resulting from failed product introductions and the product not being first to market.

These inherent risks could result in the failure of new products and product line extensions to achieve anticipated levels of market acceptance, additional costs resulting from failed product introductions and the product not being first to market.

As we continue to focus on innovation and renovation of our products, our business, financial condition or results of operations could be adversely affected in the event that we are not able to effectively develop and introduce new or renovated products and line or brand extensions.

8 unchanged sentences

Should our relationship with a marketing distributor change or terminate, our sales within such a marketing distributor’s territory could be adversely impacted until such time as a suitable replacement can be found and our key marketing strategies are implemented.

There is a risk that changes in such marketing distributor relationships, including a change in key marketing distributor personnel or a transition to the direct distribution model, that if not managed successfully, could result in a disruption in the affected markets and that such a disruption could have a material adverse effect on our business, financial condition and results of operations.

There is a risk that changes in such marketing distributor relationships, including a change in key marketing distributor personnel or a transition to the direct distribution model, if not managed successfully, could result in a disruption in the affected markets and that such a disruption could have a material adverse effect on our business, financial condition and results of operations.

Additionally, in some countries, local laws may require substantial payments to terminate existing marketing distributor relationships, which could also have a material adverse effect on our business, financial condition and results of operations.

15 unchanged sentences

When particular tax matters arise, a number of years may elapse before such matters are audited and finally resolved.

Favorable resolution of such matters could be recognized as a reduction to our effective tax rate in the year of resolution.

Unfavorable resolution of any tax matter could increase our effective tax rate.

Favorable or unfavorable resolution of such matters would be recognized as a reduction to our effective tax rate in the year of resolution.

Any resolution of a tax matter may require the adjustment of tax assets or tax liabilities or the use of cash in the year of resolution.

1 unchanged sentence

Changes in tax rules may also materially affect, either adversely or favorably, our future financial results or the way management conducts its business.

For example, on September 13, 2021, the House Ways & Means Committee formally released a tax proposal to be part of the “ Build Back Better Act ” reconciliation bill.

The release of the legislative text is a significant milestone toward the passage of new tax laws.

If made into law, this proposal may materially impact the Company’s statutory and effective tax rate and as a result impact future financial results.

For example, on August 16, 2022, President Biden signed the “Inflation Reduction Act” (the “IRA”) into law.

Although we do not at this time foresee this new law having a material impact on the Company, the new law is under evaluation as to how it might affect the Company’s future results and decisions of management.

Previously, on December 22, 2017, the “ Tax Cuts and Jobs Act ” (the “Tax Act”) was signed into law and became effective beginning January 1, 2018.

The Tax Act significantly changed U.S.

tax rates, as well as mandated the application of a one-time “toll tax” on unremitted foreign earnings, among other things.

tax law and tax rates, as well as mandated the application of a one-time “toll tax” on unremitted foreign earnings, among other things.

International tax changes that occur in locations where we operate can also materially affect future financial results or operations.

For example, we have significant operations in Europe that are subject to income tax rates and laws in multiple jurisdictions.

A significant portion of European income is subject to taxation in the U.K as a result of our European subsidiary being

headquartered in the United Kingdom.

In June of 2021 an Act of Parliament received Royal Assent, changing the U.K.

corporate tax rate from 19% to 25% effective on April 1, 2023 and this change may have a material impact on our future financial results.

In addition, we are required to make assertions on whether our foreign subsidiaries will invest their undistributed earnings indefinitely and these assertions are based on the capital needs of the foreign subsidiaries.

Generally, unremitted earnings of our foreign subsidiaries are not considered to be indefinitely reinvested.

However, there are exceptions regarding our newly formed subsidiary in Mexico as well as specific statutory remittance restrictions imposed on our China subsidiary.

However, there are exceptions regarding specific statutory remittance restrictions imposed on our China subsidiary.

Costs associated with repatriating unremitted foreign earnings, including U.S.

1 unchanged sentence

For additional information on income tax matters, see Part IV—Item 15, “Exhibits, Financial Statement Schedules” Note 13 — Income Taxes, included in this report.

Although many impacts of the Tax Act have been favorable for us both in the near term and long term, the Tax Act also authorized the Treasury Department to issue regulations with respect to the new provisions.

We cannot predict how subsequent changes in the Tax Act, regulations, or other guidance issued under it, including conforming or non-conforming state tax rules, might affect our business, financial condition and results of operations.

Although many impacts of the Tax Act have been favorable for us both in the near term and long term and the IRA may have a negligible effect, the Tax Act and IRA have also authorized the U.S.

Department of the Treasury to issue regulations with respect to the new provisions.

We cannot predict how subsequent changes in the Tax Act, and IRA, regulations, or other guidance issued under each, including conforming or non-conforming state tax rules, might affect our business, financial condition and results of operations.

In addition, there can be no assurance that U.S.

tax laws, including the corporate income tax rate, will not undergo significant additional changes in the near future.

tax laws, including the corporate income tax rate, will not undergo significant additional changes in the future.

Our business development activities may not be successful .

13 unchanged sentences

Changes in management estimates and assumptions as they relate to valuation of goodwill and intangible assets could affect our financial condition or results of operations in the future.

Our review of events and circumstances during fiscal year 2021 included consideration of the ongoing COVID-19 pandemic.

Our review of events and circumstances during fiscal year 2022 included consideration of the ongoing COVID-19 pandemic, the current inflationary environment, and the impact of Russian military action against Ukraine.

For additional information, see Part IV – Item 15, “Exhibits, Financial Statement Schedules” Note 5 – Goodwill and Other Intangible Assets, included in this report.

We may also divest of certain of our assets, businesses or brands that do not align with our strategic initiatives.

We may also divest certain of our assets, businesses or brands that do not align with our strategic initiatives.

Any divestiture could negatively impact our profitability as a result of losses that may result from such a sale, the loss of sales and operating income or a decrease in cash flows subsequent to the divestiture.

2 unchanged sentences

Our debt consists of fixed rate senior notes and a revolving credit facility.

Prior to April 2020, management has used the proceeds of the revolving credit facility primarily for stock repurchases.

In order to service our debt, we are required to use our income from operations to make interest and principal payments required by the terms of our borrowing agreements.

We use income from operations to make interest and principal payments required by the terms of our borrowing agreements.

In addition, our borrowing agreements include covenants to maintain certain financial ratios and to comply with other financial terms, conditions and covenants.

Also, we have historically paid out a large part of its earnings to stockholders in the form of regular quarterly cash dividends.

Also, we have historically paid out a large part of our earnings to stockholders in the form of regular quarterly cash dividends.

We may incur substantial debt in the future for general business and development activities.

5 unchanged sentences

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