Item 1A. Risk Factors
Item 1A. Risk Factors.
An investment in our securities involves various risks. You should consider carefully all of the risk factors described in our 2021 Annual Report, Part I, under the heading “Item 1A. Consolidated Financial Statements and Notes - Risk Factors ” and other information included and incorporated by reference in this report. As of March 31, 2022, there have been no material changes in our assessment of our risk factors from those set forth in our 2021 Annual Report and our Registration Statement, except as described below.
A period of sustained inflation across all the major markets in which we operate could result in higher operating costs.
Inflationary pressures typically result in increases to our operating expenses. While we take actions wherever possible to reduce the impact of the effects of inflation, in cases of sustained inflation across several of our major markets, it becomes increasingly difficult to effectively control the increase to our costs. In addition, the effects of inflation could result in the reduction of our clients’ budgets and spending plans. If we are unable to increase our pricing or take other actions to mitigate the effect of the resulting higher costs, our profitability and financial position could be negatively impacted.
On February 24, 2022, Russia invaded Ukraine and the countries remain engaged in a broad military conflict. The results of these events could result in an adverse impact on the global economy and our business.
The United States, the European Union, the United Kingdom and other countries have imposed broad sanctions against Russia, certain Russian individuals and certain activities involving Russia or Russian individuals. While global events continue to evolve rapidly, we continue to monitor and intend to remain in full compliance with the fast evolving sanctions landscape and will continue to fulfill existing contractual obligations within applicable international laws and sanctions. The impact from an armed conflict, geopolitical risk and/or civil unrest, such as this military conflict, in areas we operate, may negatively impact both the global economy and our business and may prevent others, and us from meeting our financial objectives and obligations. Additionally, we may incur a loss of assets due to destruction and incur other perils associated with the military conflict.
A significant portion of our revenue is derived from our operations outside the United States, which exposes us to risks inherent in doing business in each of the 75 countries in which we operate.
Our non-United States operations accounted for approximately 80% of our consolidated revenue in 2021. Operations in countries like Russia and Ukraine, and countries other than the United States are subject to various risks, including:
• volatility in political, social and economic conditions including currency exchange controls, inflation, and currency exchange rate fluctuations and devaluations;
• exposure to expropriation of our assets, deprivation of contract rights or other governmental actions, like martial law in Ukraine;
• social unrest, acts of terrorism, war or other armed conflict;
• fraud and political corruption;
• varying international laws and regulations;
• adequate responses to COVID-19 pandemic and restrictions;
• confiscatory taxation or other adverse tax policies;
• trade and economic sanctions or other restrictions imposed by the European Union, the United States or other countries;
• exposure under the United States Foreign Corrupt Practices Act or similar legislation; and
• restrictions on the repatriation of income or capital.
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Further, our assets generally are not insured against loss from political violence such as war, terrorism or civil unrest. If any of our assets are damaged, destroyed, expropriated or that we no longer control, as a result of an uninsured cause, we could recognize a loss of those assets. In addition, should our claims increase, our premiums could increase. Similarly, if the same occurs with our customers’ assets or to an infrastructure integral to their business, it may be difficult or impossible for us to earn revenues associated with those customers.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.