--- ticker: CLX company: Clorox Company filing_type: 10-K year_current: 2024 year_prior: 2023 risks_added: 3 risks_removed: 1 risks_modified: 15 risks_unchanged: 10 source: SEC EDGAR url: https://riskdiff.com/clx/2024-vs-2023/ markdown_url: https://riskdiff.com/clx/2024-vs-2023/index.md generated: 2026-05-10 --- # Clorox Company: 10-K Risk Factor Changes 2024 vs 2023 > Source: U.S. Securities and Exchange Commission (EDGAR) > Generated: 2026-05-10 > All data extracted directly from official filings. No hallucinated content. > **[AI-Generated Summary]** The paragraph below was produced by a language > model and may contain errors. All other content on this page is deterministically > extracted from the original SEC filing. > Clorox substantively modified 15 of its risk disclosures while adding three new risks focused on third-party service provider dependencies and governance structures, reflecting heightened operational and operational control concerns. The company eliminated its strategic alliances risk disclosure, suggesting a shift away from partnership-dependent business models. Cost volatility and sales growth challenges emerged as the most heavily revised risk areas, indicating management's intensified focus on inflation pressures and competitive market positioning. --- ## Summary | Status | Count | |--------|-------| | New risks added | 3 | | Risks removed | 1 | | Risks modified | 15 | | Unchanged | 10 | --- ## New in Current Filing: Reliance on third-party service providers could have an adverse effect on the Company's business. The Company relies on third-party service providers for certain areas of its business operations, including aspects of the implementation of the Company's transformational initiatives (such as its digital capabilities upgrade including enhancing operating efficiencies, transitioning to a cloud-based platform and replacing its enterprise resource planning system), IT, procurement, supply chain, manufacturing, certain finance and accounting functions, including financial reporting, and legal, regulatory and tax compliance. Failure by these third parties to meet their contractual, regulatory and other obligations to the Company, or failure to adequately monitor their performance, has in the past and could continue to result in the Company's 15 15 15 Table of Contents Table of Contents inability to achieve expected cost savings or efficiencies and result in additional costs to correct errors made by such service providers. Depending on the function involved and despite the availability of contractual remedies against these providers, such errors can also lead to business disruption, systems performance degradation, processing inefficiencies or other systems disruptions, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, incorrect or adverse effects on financial reporting, litigation, claims, legal or regulatory proceedings, inquiries or investigations, fines or penalties, remediation costs, damage to the Company's reputation or have a negative impact on employee morale, all of which can adversely affect the Company's business. --- ## New in Current Filing: Risk Management and Strategy The Company maintains a comprehensive program and processes designed to assess, identify, evaluate and manage vulnerabilities to the Company's business and operations, and other material risks from cybersecurity threats, as part of its overall Enterprise Risk Management (ERM) and cybersecurity risk management program and processes. The Company's cybersecurity risk management program includes the following features. •Leverages the National Institute of Standards and Technology (NIST) and Zero Trust Architecture frameworks for managing cybersecurity risks; •Maintenance of security policies and standards, regular updates to response planning and protocols, and implementation of new technology to monitor new vulnerabilities, emerging threats and risks; •A cybersecurity incident response plan designed to facilitate cross-functional coordination across the Company (including escalation based on the severity of the impact of an incident), mitigate brand and reputational damage, and comply with applicable legal obligations, which includes guidance to support the Company's assessment of whether an incident is considered "material" for purposes of U.S. securities laws; •Executive and IT team tabletop exercises; 21 21 21 Table of Contents Table of Contents •A cybersecurity insurance program to reimburse covered costs, losses and claims relating to a data or security breach; •Use of consultants, third-party service providers and information security firms to provide technology systems or administer aspects of this program, conduct assessments of the Company's cybersecurity practices and penetration testing, and cybersecurity, risk management and legal experts; •A third-party risk assessment process that utilizes a risk-based approach for vendors engaged through the Company's procurement process; and •Regular phishing and cybersecurity awareness and engagement training for all employees who have access to Company email and connected devices. The Company's business strategy, results of operations and financial condition have been materially affected by our previously disclosed August 2023 cyberattack. See "Risk Factors" in Item 1A of this Annual Report on Form 10-K for more information on risks from cybersecurity threats that are reasonably likely to materially affect the Company's business strategy, results of operations and financial condition. The August 2023 cyberattack resulted in wide-scale disruptions to the Company's business operations. Impacts of these system disruptions included order processing delays and significant product outages, resulting in a negative impact on net sales and earnings. The costs incurred included third-party consulting services, such as IT recovery and forensic experts, and other professional services to investigate and remediate the attack, as well as incremental operating costs from the resulting disruption to the Company's business operations. These costs have been partially offset by recognized insurance recoveries in fiscal year 2024. See Notes to the Consolidated Financial Statements for additional details regarding the impact of the August 2023 cyberattack. Governance Management The Chief Information Security and Infrastructure Officer (CISIO) is responsible for the Company's cybersecurity risk management program. The CISIO oversees the Company's technology risk management team. This team works in partnership with the legal, financial reporting controls and internal audit functions to review information technology-related internal controls with the Company's independent auditors as part of the overall internal controls process. The CISIO has information technology and information security experience, including enterprise risk management leadership, and holds a Certified Information Security Manager certification from the Information Systems Audit and Control Association (ISACA). The CISIO reports to the Chief Information and Data Officer (CIDO), who is a member of the Clorox Executive Committee and reports directly to the CEO. The CIDO has experience overseeing and executing technology strategies and implementations in complex, global organizations. The CIDO has been in this role for the Company since June 2020 and has experience leading technology strategy in the consumer packaged goods, manufacturing and retail industries. The Company has established the Clorox Information Security Executive Committee (CISEC) which oversees the information security strategy, policies and practices of the Company. The CISEC supports the Company's objective of maintaining a strong security culture by overseeing alignment between the Company's security objectives and business goals, risk exposure, and compliance requirements. The CISEC is chaired by the CISIO and includes in its membership the CIDO and Chief Legal Officer, who are both members of the Clorox Executive Committee, as well as the Chief Accounting Officer and Controller and VP, Internal Audit. The CISIO also provides periodic reports to the Clorox Executive Committee and quarterly reports to the Audit Committee. These reports may include updates on critical information security and cybersecurity risks and the threat landscape; cybersecurity improvement initiatives, the internal control environment, and ongoing internal audit activities; and, if relevant, the status of actions taken with respect to significant cybersecurity incidents. --- ## New in Current Filing: Board of Directors The Board, through the Audit Committee, is responsible for the oversight of the Company's compliance with legal and regulatory requirements relating to data privacy, cybersecurity and IT risks and its framework and guidelines with respect to risk assessment and risk management. The Audit Committee receives quarterly updates from the CISIO on the topics set forth above, in addition to the Chief Legal Officer and CIDO. The Board retains responsibility for the overall process for assessing and managing major risks facing the Company and receives updates regarding information security and cybersecurity risks as part of its oversight of ERM. The CIDO and Chief Legal Officer provide quarterly updates to the Board on topics that may include information security and cybersecurity matters. The Board may also be notified and engaged as part of the Company's cybersecurity incident response plans, depending on the 22 22 22 Table of Contents Table of Contents severity of the impact of an incident. The Board and Audit Committee include directors with knowledge, skills and experience in data security, privacy, IT governance, and management of cyber risks. --- ## No Match in Current: The performance of strategic alliances and other business relationships could adversely affect our business, reputation, financial condition and results of operations. *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* We enter into strategic alliances and other business relationships, such as relationships in connection with the co-development of products or devices, or promotion and sales relationships with companies in industries operating in public spaces. These relationships may not generate the level of sales we anticipate when entering into the relationship or may otherwise adversely impact our business, reputation, financial condition and results of operations. Furthermore, such relationships have and, in the future, could create additional exposure to litigation, investigations, disputes or other proceedings, as well as product safety, quality, sustainability and other concerns. --- ## Modified: Volatility and increases in the costs of raw materials, energy, transportation, labor and other necessary supplies or services have negatively impacted, and may continue to negatively impact, the Company's net earnings and cash flow. **Key changes:** - Reworded sentence: "Significant inflationary pressures have impacted the Company's gross margin in fiscal years 2023 and, to a lesser extent, 2024, and it expects inflationary pressures to continue into fiscal year 2025." - Removed sentence: "For further information regarding the Company's use of derivative instruments, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Exhibit 99.1." **Prior (2023):** Volatility and increases in the cost of raw materials, including resin, non-woven fabrics for wipes products, sodium hypochlorite, corrugated cardboard and other packaging materials, soybean oil, solvent, derivatives of amines, and other chemicals and agricultural commodities, and rapid increases in the cost of energy, transportation, labor and other necessary supplies or services, have harmed, and are likely to continue to harm, the Company's results of operations. Significant inflationary pressures have impacted our gross margin in fiscal year 2023, and we expect inflationary pressures to continue into fiscal year 2024. We have also experienced and may continue to experience disruption in our manufacturing operations and supply chain. Many of the raw and packaging materials and supplies used in the production of our products are subject to price volatility and fluctuations in availability caused by many factors, including macroeconomic and geopolitical developments and uncertainty (see "Unfavorable and uncertain general economic and geopolitical conditions beyond our control could negatively impact our financial results" in this section), supplier capacity restraints, changes in supply and demand, weather conditions (including the potential effects of climate change), fire, natural disasters, growing and harvesting conditions, energy costs, health epidemics, pandemics or other contagious outbreaks, labor shortages, currency fluctuations, governmental actions (including import and export requirements such as new or increased tariffs, sanctions, quotas or trade barriers), port congestions or delays, transport capacity constraints, cybersecurity incidents or other disruptions, loss or impairment of key manufacturing sites, acts of terrorism and other factors beyond our control. Although we are unable to predict the impact to our ability to source raw and packaging materials and services in the future, we expect these supply pressures and market disruptions to continue into fiscal year 2024. If such cost pressures occur or exceed the Company's estimates and the Company is not able to increase the prices of its products or achieve cost savings to offset such cost increases, its margins would be harmed. In addition, even if the Company increases the prices of its products in response to increases in the cost of commodities or other cost increases, it may not be able to sustain its price increases. Sustained price increases may lead to declines in volume as competitors may not adjust their prices or customers may decide to purchase a lower priced alternative, which could lead to sales declines and loss of market share. The Company's projections may not accurately predict the volume impact of price increases, which could adversely affect its business, financial condition and results of operations. To reduce the cost volatility associated with anticipated purchases of certain commodities, the Company uses derivative instruments, including commodity futures and swaps. The extent of the Company's derivative position at any given time depends on the Company's assessment of the markets for these commodities, the cost volatility in the markets and the cost of the derivative instruments. Many of the commodities used by the Company in its products do not have actively traded derivative instruments. If the Company does not or is unable to take a derivative position and costs subsequently increase, or if it executes a position and costs subsequently decrease, the Company's costs may be greater than anticipated or higher than its competitors' costs and the Company's financial results and margins could be adversely affected. For further information regarding the Company's use of derivative instruments, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Exhibit 99.1. **Current (2024):** Volatility and increases in the cost of raw materials, including resin, non-woven fabrics for wipes products, sodium hypochlorite, corrugated cardboard and other packaging materials, soybean oil, solvent, derivatives of amines, and other chemicals and agricultural commodities, and rapid increases in the cost of energy, transportation, labor and other necessary supplies or services, have harmed, and are likely to continue to harm, the Company's results of operations. Significant inflationary pressures have impacted the Company's gross margin in fiscal years 2023 and, to a lesser extent, 2024, and it expects inflationary pressures to continue into fiscal year 2025. Many of the raw and packaging materials and supplies used in the production of the Company's products are subject to price volatility and fluctuations in availability caused by many factors, including macroeconomic and geopolitical developments and uncertainty, supplier or transport capacity constraints, changes in supply and demand, weather conditions and natural disasters (including the potential effects of climate change, which could also pose physical risks to the Company's facilities as well as those of its key external manufacturers and suppliers), fire, growing and harvesting conditions, energy costs, health epidemics, pandemics or other contagious outbreaks, labor shortages, currency fluctuations, governmental actions (including import and export requirements such as new or increased tariffs, sanctions, quotas or trade barriers), port congestions or delays, cybersecurity incidents or other disruptions, loss or impairment of key manufacturing sites, acts of terrorism and other factors beyond the Company's control. The Company has also experienced and may continue to experience disruption in its manufacturing operations and supply chain, as a result of the factors set forth above. Although the Company is unable to predict the impact on its ability to source raw and packaging materials and services in the future, it expects limited supply pressures and market disruptions to continue into fiscal year 2025. If such cost pressures are incurred or exceed the Company's estimates and the Company is not able to increase the prices of its products (or sustain such price increases) or achieve cost savings to offset such cost increases, its margins would be harmed. Sustained price increases may also lead to declines in sales volumes and loss of market share, as competitors may not adjust their prices or customers may decide to purchase a lower-priced alternative. The Company's projections may not accurately predict the volume impact of price increases, which could adversely affect its business, financial condition and results of operations. To reduce the cost volatility associated with anticipated purchases of certain commodities, the Company uses derivative instruments, including commodity futures and swaps. The extent of the Company's derivative position at any given time depends on the Company's assessment of the markets for these commodities, the cost volatility in the markets and the cost of the derivative instruments. Many of the commodities used by the Company in its products do not have actively traded derivative instruments. If the Company does not or is unable to take a derivative position and costs subsequently increase, or if it executes a position and costs subsequently decrease, the Company's costs may be greater than anticipated or higher than its competitors' costs and the Company's financial results and margins could be adversely affected. --- ## Modified: Sales growth objectives may be difficult to achieve, and market and category declines and changes to the Company's product and geographic mix may adversely impact the Company's financial condition and results of operations. **Key changes:** - Reworded sentence: "During fiscal year 2024, 84% of the Company's net sales were attributable to U.S." - Reworded sentence: "The Company has implemented price increases and may implement additional price increases in the future, including to account for increasing costs, which may adversely affect sales volumes." - Reworded sentence: "If the Company is unable to increase market share in existing product lines, develop product innovations, undertake sales, marketing and advertising initiatives that grow its product categories, effectively adopt and leverage existing and emerging technologies, such as artificial intelligence or machine learning, and/or develop, acquire or successfully launch new products or brands, it may not achieve its sales growth objectives." **Prior (2023):** A large percentage of the Company's revenues comes from mature markets that are subject to high levels of competition. During fiscal year 2023, 84% of the Company's net sales were attributable to U.S. markets, including U.S. territories. The Company's ability to achieve sales growth depends on its ability to drive growth through innovation, including as part of its IGNITE Strategy, expand into new products and categories, channels and countries, invest in its established brands and enhanced merchandising, grow categories with retailers and capture market share from competitors. The Company has implemented price increases and may implement additional price increases in the future, which may slow sales growth or create volume declines in the short term as customers and consumers adjust to these price increases. In addition, competitors may or may not take competitive actions, which may lead to sales declines and loss of market share. If the Company is unable to increase market share in existing product lines, develop product innovations, undertake sales, marketing and advertising initiatives that grow its product categories, effectively adopt new technologies, such as artificial intelligence or machine learning, and/or develop, acquire or successfully launch new products or brands, it may not achieve its sales growth objectives. Furthermore, a general decline in the markets for certain product categories has had and may in the future have a negative impact on the Company's financial condition and results of operations. In addition, changes to the mix of products that the Company sells, as well as the mix of countries in which its products are sold, may adversely impact the Company's net sales, profitability and cash flow. **Current (2024):** A large percentage of the Company's revenues comes from mature markets that are subject to high levels of competition. During fiscal year 2024, 84% of the Company's net sales were attributable to U.S. markets, including U.S. territories. The Company's ability to achieve sales growth depends on its ability to drive growth through innovation, including as part of its IGNITE Strategy, expand into new products and categories, channels and countries, invest in its established brands and enhanced merchandising, grow categories with retailers and capture market share from competitors. The Company has implemented price increases and may implement additional price increases in the future, including to account for increasing costs, which may adversely affect sales volumes. In addition, competitors may or may not take competitive actions, which may lead to sales declines and loss of market share. If the Company is unable to increase market share in existing product lines, develop product innovations, undertake sales, marketing and advertising initiatives that grow its product categories, effectively adopt and leverage existing and emerging technologies, such as artificial intelligence or machine learning, and/or develop, acquire or successfully launch new products or brands, it may not achieve its sales growth objectives. Furthermore, a general decline in the markets for certain product categories has had and may in the future have a negative impact on the Company's financial condition and results of operations. In addition, changes to the mix of products that the Company sells, as well as the mix of countries in which its products are sold, may adversely impact the Company's net sales, profitability and cash flow. --- ## Modified: Government regulations could impose material costs. **Key changes:** - Reworded sentence: "Generally, the manufacture, processing, formulation, packaging, labeling, storage, distribution, advertising and sale of the Company's products and its business operations must comply with extensive federal, state and foreign laws and regulations, including, in the U.S., the Environmental Protection Agency, the Food and Drug Administration (including applicable current good manufacturing practice regulations), the Consumer Product Safety Commission, the Federal Trade Commission, and the Occupational Safety and Health Administration." - Reworded sentence: "The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting." - Reworded sentence: "Fluctuations in federal, state, local and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may also impact the Company's effective tax rate and the Company's results of operations." - Reworded sentence: "The Company cannot provide assurance that its internal controls policies and procedures that mandate compliance with these laws will protect the Company from reckless, intentional or unintentional criminal acts committed by its employees, joint-venture partners or agents." - Reworded sentence: "Such regulations could negatively impact the Company's ability to obtain raw materials or could increase its acquisition and compliance costs or cause the Company to contribute funds to recycling and other waste management infrastructure, thus making its products more costly, less competitive than other competitive products or reduce 16 16 16 Table of Contents Table of Contents consumer demand." **Prior (2023):** Generally, the manufacture, processing, formulation, packaging, labeling, storage, distribution, advertising and sale of the Company's products and the conduct of its business operations must comply with extensive federal, state and foreign laws and regulations. For example, in the U.S., many of the Company's products are regulated by the Environmental Protection Agency, the Food and Drug Administration (including applicable current good manufacturing practice regulations) and/or the Consumer Product Safety Commission, and the Company's product claims and advertising are regulated by the Federal Trade Commission, among other regulatory agencies. Additionally, the Company's and its suppliers' manufacturing and distribution operations are also subject to regulation by the Occupational Safety and Health Administration. Most states have agencies that regulate in parallel to these federal agencies. The Company's international operations are also subject to regulation in each of the foreign jurisdictions in which it manufactures or distributes its products. There is also an increased risk of fraud or corruption in certain foreign jurisdictions and related difficulties in maintaining effective internal controls. Additionally, the Company could be subject to future inquiries or investigations by governmental and other regulatory bodies. Any determination that the Company's operations or activities are not in compliance with applicable law could expose the Company to future impairment charges or significant fines, penalties or other sanctions that may result in a reduction in net income or otherwise adversely impact the business and reputation of the Company. 16 16 16 Table of Contents Table of Contents The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. Our multi-year phased upgrade to our digital capabilities will result in changes to our processes and procedures which, in turn, could result in changes to our internal controls over financial reporting, which may require significant effort and judgment. Any failure to maintain an effective system of internal control over financial reporting could limit the Company's ability to report its results of operations accurately and on a timely basis, or to detect and prevent fraud and could expose it to regulatory enforcement action and stockholder claims, which could have a material adverse effect on the Company's business, financial condition and results of operations. Fluctuations in federal, state, local and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may also impact the Company's effective tax rate and the Company's results of operations, and changes in tax laws, including additional guidance issued by the U.S. Treasury Department or the U.S. Internal Revenue Service, could create uncertainty, impact our recorded liability in future periods and have a material impact on the Company's results of operations. In particular, because of the Company's extensive international operations, we could be adversely affected by violations, or allegations of violations, of the FCPA and similar international anti-bribery laws. These anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to government officials or other third parties for the purpose of obtaining or retaining business. We cannot provide assurance that our internal controls policies and procedures that mandate compliance with these laws will protect us from reckless, intentional or unintentional criminal acts committed by our employees, joint-venture partners or agents. Alleged or actual violations of these laws could disrupt our business and adversely affect our reputation and our business, financial condition and results of operations. Federal, state and foreign governments may introduce new or expand existing legislation and regulations, or courts or governmental authorities could impose more stringent interpretations of existing legislation and regulations, affecting the Company's operations, which may require the Company to increase its resources, capabilities and expertise in certain areas. For example, the Company is subject to regulations regarding the transportation, storage or use of certain chemicals to protect the environment, including as a result of evolving climate change standards, and is and may become subject to increased costs or mandatory funding or financial support requirements for recycling and waste management programs under extended producer responsibility regulation or laws, through plastic or packaging taxes, or restrictions on certain products and materials or on the use of certain types of packaging. Such regulations could negatively impact the Company's ability to obtain raw materials or could increase its acquisition and compliance costs or cause the Company to contribute funds to recycling and other waste management infrastructure, thus making our products more costly, less competitive than other competitive products or reduce consumer demand. Furthermore, additional or amended legislation in the areas of ESG disclosure, including the SEC's proposal on climate change disclosure, healthcare reform, sustainability of packaging, including plastic packaging, executive compensation and corporate governance, could also increase the Company's costs. The Company is also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data in the U.S. and other jurisdictions, which have and could continue to subject the Company to additional compliance costs. If the Company is found to be noncompliant with applicable laws and regulations in these or other areas, it could be subject to governmental or regulatory actions, including fines, import detentions, injunctions, product withdrawals or recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on its business. Loss of or failure to obtain necessary permits and registrations, particularly with respect to its charcoal business, could delay or prevent the Company from meeting current product demand, introducing new products, building new facilities or acquiring new businesses and could adversely affect its financial condition and results of operations. In addition, the Company markets and sells products that are subject to regulations relating to dietary supplements. In order to comply with any changes in these laws and regulations, including any changes that result from newly published clinical studies and emerging studies that may assert or prove that ingredients in our products or our products themselves are ineffective or harmful to consumers, the Company may be required to make changes to product formulation, labeling or marketing claims, perform additional testing to substantiate its product claims, make costly changes in its manufacturing processes or supply chain or stop selling certain products until corrective actions have been taken. Any of these developments could increase the Company's costs significantly, which could have a material adverse effect on the Company's financial condition and results of operations. **Current (2024):** Generally, the manufacture, processing, formulation, packaging, labeling, storage, distribution, advertising and sale of the Company's products and its business operations must comply with extensive federal, state and foreign laws and regulations, including, in the U.S., the Environmental Protection Agency, the Food and Drug Administration (including applicable current good manufacturing practice regulations), the Consumer Product Safety Commission, the Federal Trade Commission, and the Occupational Safety and Health Administration. There is also an increased risk of fraud or corruption in certain foreign jurisdictions and related difficulties in maintaining effective internal controls. Additionally, the Company could be subject to future inquiries or investigations by governmental and other regulatory bodies. Any determination that the Company's operations or activities are not in compliance with applicable law could expose the Company to future impairment charges or significant fines, penalties or other sanctions that may result in a reduction in net income or otherwise adversely impact the business and reputation of the Company. The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's multi-year phased upgrade to its digital capabilities will result in changes to its processes and procedures which, in turn, could result in changes to its internal controls over financial reporting, which may require significant effort and judgment. Any failure to maintain an effective system of internal control over financial reporting could limit the Company's ability to report its results of operations accurately and on a timely basis, or to detect and prevent fraud and could expose it to regulatory enforcement action and stockholder claims, which could have a material adverse effect on the Company's business, financial condition and results of operations. Fluctuations in federal, state, local and foreign taxes or a change to uncertain tax positions, including related interest and penalties, may also impact the Company's effective tax rate and the Company's results of operations. Changes in tax laws, including additional guidance issued by the U.S. Treasury Department, the U.S. Internal Revenue Service or similar bodies of state, local and foreign governments could create uncertainty, impact the Company's recorded liability in future periods and have a material impact on the Company's results of operations. For example, on December 20, 2021, the Organization for Economic Development released a set of model rules designed to ensure that large multinational enterprises pay a minimum 15% tax on income arising in each jurisdiction in which they operate. The model rules are known as the Global Anti-Base Erosion rules (GloBE rules) or "Pillar Two". Many countries have agreed to implement Pillar Two, and the Company will be subject to Pillar Two in certain foreign jurisdictions beginning with its fiscal year ending June 30, 2025. The Company does not expect Pillar Two to materially impact its effective tax rate or cash flows. The Company will continue to monitor and evaluate new legislation and guidance, which could impact this assessment. The, Company, because of the its extensive international operations, could be adversely affected by violations, or allegations of violations, of the FCPA and similar international anti-bribery laws. These anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to government officials or other third parties for the purpose of obtaining or retaining business. The Company cannot provide assurance that its internal controls policies and procedures that mandate compliance with these laws will protect the Company from reckless, intentional or unintentional criminal acts committed by its employees, joint-venture partners or agents. Alleged or actual violations of these laws could disrupt the Company's business and adversely affect its reputation and its business, financial condition and results of operations. Federal, state and foreign governments may introduce new or expand existing legislation and regulations, or courts or governmental authorities could impose more stringent interpretations of existing legislation and regulations, affecting the Company's operations, which may require the Company to increase its resources, capabilities and expertise in certain areas. For example, the Company is subject to regulations regarding the transportation, storage or use of certain chemicals to protect the environment, including as a result of evolving climate change standards, and is and may become subject to increased costs or mandatory funding or financial support requirements for recycling and waste management programs under extended producer responsibility regulation or laws, through plastic or packaging taxes, or restrictions on certain products and materials or on the use of certain types of packaging. Such regulations could negatively impact the Company's ability to obtain raw materials or could increase its acquisition and compliance costs or cause the Company to contribute funds to recycling and other waste management infrastructure, thus making its products more costly, less competitive than other competitive products or reduce 16 16 16 Table of Contents Table of Contents consumer demand. Furthermore, additional or amended legislation in the areas of ESG disclosure, healthcare reform, sustainability of packaging, including plastic packaging, executive compensation and corporate governance, could also increase the Company's costs. The Company is also required to comply with increasingly complex and changing laws and regulations enacted to protect business and personal data in the U.S. and other jurisdictions, which have and could continue to subject the Company to additional compliance costs. If the Company is found to be noncompliant with applicable laws and regulations in these or other areas, it could be subject to governmental or regulatory actions, including fines, import detentions, injunctions, product withdrawals or recalls or asset seizures, as well as potential criminal sanctions, any of which could have a material adverse effect on its business. Loss of or failure to obtain necessary permits and registrations, particularly with respect to its charcoal business, could delay or prevent the Company from meeting current product demand, introducing new products, building new facilities or acquiring new businesses and could adversely affect its financial condition and results of operations. In addition, the Company markets and sells products that are subject to regulations relating to dietary supplements. In order to comply with any changes in these laws and regulations, including any changes that result from newly published clinical studies and emerging studies that may assert or prove that ingredients in the Company's products or the products themselves are ineffective or harmful to consumers, the Company may be required to make changes to product formulation, labeling or marketing claims, perform additional testing to substantiate its product claims, make costly changes in its manufacturing processes or supply chain or stop selling certain products until corrective actions have been taken. Any of these developments could increase the Company's costs significantly, which could have a material adverse effect on the Company's financial condition and results of operations. --- ## Modified: The Company may not successfully introduce new products and line extensions, or expand into adjacent categories and countries, which could adversely impact its financial condition and results of operations. **Key changes:** - Reworded sentence: "The Company's future performance and growth depends on innovation and its ability to successfully develop or license capabilities to introduce new products, brands, line extensions and product innovations or enter or expand into adjacent product categories, sales channels or countries." - Removed sentence: "demographics, reflecting various factors including cultural and socioeconomic changes." - Reworded sentence: "These risks include product development or launch delays, noncompliance with applicable laws or regulations, or infringement of third-party intellectual property, any of which could result in the Company not being first to market, and the failure of new products, brands and line extensions to achieve 10 10 10 Table of Contents Table of Contents anticipated levels of market acceptance." - Reworded sentence: "The Company may not be able to fully recoup the cost of unsuccessful product introductions or may experience a decline in sales of existing products as a result of consumer adoption of its new products, both of which could materially adversely affect the Company's business, net earnings, margins, financial condition and results of operations." **Prior (2023):** The Company's future performance and growth depends on innovation and its ability to successfully develop or license capabilities to introduce new products, brands, line extensions and product innovations or enter into or expand into adjacent product categories, sales channels or countries. The Company's ability to anticipate changes in consumer preferences and quickly innovate in order to adapt its products (including product packaging and sustainability profile) to meet changing consumer demands is essential, especially in light of the reduction in barriers for even small competitors to quickly introduce new brands and products directly to consumers that e-commerce permits. This risk is further heightened by the continued evolution of consumer needs, habits and preferences as a result of shifts in U.S. demographics, reflecting various factors including cultural and socioeconomic changes. The Company cannot be certain that it will successfully achieve its innovation goals. New product and product packaging development and marketing efforts, including efforts to enter markets or product categories in which the Company has limited or no prior experience, not only incur substantial capital expenditures but also contain inherent risks. These risks include product development or launch delays, which could result in the Company not being first to market, and the failure of new products, brands and line extensions to achieve anticipated levels of market acceptance. In addition, success in launching new products is also dependent on the Company's ability to deliver effective and efficient marketing in an evolving media landscape (including digital), which is subject to dynamic and increasingly restrictive privacy requirements. If product introductions are not successful, costs associated with these efforts may not be fully recouped and the Company's net earnings or margins could be adversely affected. In addition, if sales generated by new products cause a decline in sales of the Company's existing products, the Company's business, financial condition and results of operations could be materially adversely affected. **Current (2024):** The Company's future performance and growth depends on innovation and its ability to successfully develop or license capabilities to introduce new products, brands, line extensions and product innovations or enter or expand into adjacent product categories, sales channels or countries. The Company's ability to anticipate changes in consumer preferences and quickly innovate in order to adapt its products (including product packaging, environmental impact and sustainability profile) to meet changing consumer demands and/or evolving regulatory requirements is essential, especially in light of the reduction in barriers for even small competitors, and these innovations may result in increased costs. This risk is further heightened by the continued evolution of consumer needs, habits and preferences as a result of shifts in U.S. demographics. The Company cannot be certain that it will successfully achieve its innovation goals. New product and product packaging development and marketing efforts, including efforts to enter markets or product categories in which the Company has limited or no prior experience, not only incur substantial capital expenditures but also contain inherent risks. These risks include product development or launch delays, noncompliance with applicable laws or regulations, or infringement of third-party intellectual property, any of which could result in the Company not being first to market, and the failure of new products, brands and line extensions to achieve 10 10 10 Table of Contents Table of Contents anticipated levels of market acceptance. In addition, success in launching new products is also dependent on the Company's ability to deliver effective and efficient marketing in an evolving media landscape (including digital), which is subject to dynamic and increasingly restrictive privacy requirements. The Company may not be able to fully recoup the cost of unsuccessful product introductions or may experience a decline in sales of existing products as a result of consumer adoption of its new products, both of which could materially adversely affect the Company's business, net earnings, margins, financial condition and results of operations. --- ## Modified: The COVID-19 pandemic and related impacts has had, and could continue to have, an adverse effect on the Company's business, financial condition and results of operations. **Key changes:** - Reworded sentence: "The COVID-19 pandemic has affected and could continue to negatively affect the Company's business by causing or contributing to, among other things: •Disruptions in business operations and in the ability of significant third-party vendors, manufacturers and other business partners, including customers, to meet their obligations to us; •Worldwide, regional and local adverse economic and financial market conditions, all of which could impact the manufacturing operations of the Company or third-party partners; •Adverse impacts on the supply chain, including manufacturing by the Company or third-party partners, due to raw material, packaging or other supply shortages, labor shortages or reduced availability of commercial transport and port operational disruptions; and •Sustained labor shortages or increased turnover rates." **Prior (2023):** The COVID-19 pandemic has affected and could continue to negatively affect the Company's business by causing or contributing to, among other things: • Significant disruptions in business operations and in the ability of significant third-party vendors, manufacturing and other business or commercial partners, including customers, to meet their obligations to us; • Significant decrease or volatility in sales of or demand for the Company's primary products due to the transition from a pandemic to endemic state; • Worldwide, regional and local adverse economic and financial market conditions (see "Unfavorable and uncertain general economic and geopolitical conditions beyond our control could negatively impact our financial results" in this section), all of which could impact the manufacturing operations of the Company or third-party partners; • Adverse impacts on the supply chain, including manufacturing by the Company or third-party partners, due to raw material, packaging or other supply shortages, labor shortages or reduced availability of commercial transport and port operational disruptions; and 11 11 11 Table of Contents Table of Contents • Sustained labor shortages or increased turnover rates (see "Loss of or inability to attract key personnel could adversely impact the Company's business" in this section). Although the World Health Organization and the federal government recently declared an end to COVID-19 as a global and national health emergency, respectively, risks related to COVID-19 have adversely affected and may continue to adversely affect our business, results of operations, cash flows and financial condition. **Current (2024):** The COVID-19 pandemic has affected and could continue to negatively affect the Company's business by causing or contributing to, among other things: •Disruptions in business operations and in the ability of significant third-party vendors, manufacturers and other business partners, including customers, to meet their obligations to us; •Worldwide, regional and local adverse economic and financial market conditions, all of which could impact the manufacturing operations of the Company or third-party partners; •Adverse impacts on the supply chain, including manufacturing by the Company or third-party partners, due to raw material, packaging or other supply shortages, labor shortages or reduced availability of commercial transport and port operational disruptions; and •Sustained labor shortages or increased turnover rates. Although the World Health Organization and the federal government have declared an end to COVID-19 as a global and national health emergency, respectively, risks related to COVID-19 have adversely affected and may continue to adversely affect the Company's business, results of operations, cash flows and financial condition. --- ## Modified: Acquisitions, new venture investments and divestitures may not be successful, which could have an adverse effect on the Company's business, financial condition and results of operations. **Key changes:** - Reworded sentence: "In connection with its strategy, the Company expects to continue to seek acquisition, joint venture and investment opportunities." - Reworded sentence: "Furthermore, all acquisitions and investments entail numerous risks, including risks relating to the Company's ability to: • successfully integrate acquired companies, brands, products, technologies, systems or personnel into the Company's existing business operations in an effective, timely and cost-efficient manner; • maintain uniform standards, controls, procedures and policies throughout acquired companies, including effective integration of acquired companies into the Company's internal control over financial reporting; • successfully enter categories, markets and business models in which the Company may have limited or no prior experience; • achieve expected synergies and obtain the desired financial or strategic benefits from acquisitions within the anticipated time periods, if at all; • achieve distribution expansion related to products, categories and markets from acquisition and retain key relationships and or personnel of acquired companies; • identify and manage any legal or reputational risks that may predate or be associated with a transaction, which could negatively impact the Company following the consummation of such transaction; and • manage other unanticipated problems or liabilities, including relating to a system shutdown, service disruption, or cyberattack on an acquired company's IT/operational technology (OT) systems." - Reworded sentence: "Furthermore, acquisitions or ventures could also result in dilutive issuances of equity securities, the incurrence of debt, the assumption of contingent liabilities (such as those relating to advertising claims, environmental issues and litigation, negative reputational issues), an increase in expenses related to intangible assets, including trademarks and goodwill, and increased operating expenses, all of which could adversely affect the Company's financial condition, margins and results of operations." - Reworded sentence: "A divestiture could affect the profitability of the Company as a result of the gains or losses on such sale of a business or brand, the loss of the operating income or sales resulting from such sale or the costs or liabilities that are not assumed by the acquirer that may negatively impact profitability and cash flow subsequent to any divestiture." - Added sentence: "For example, in March 2024, the Company completed the sale of its Argentina business, which consisted of two production plants in Argentina as well as the rights to the Company's brands in Argentina, Uruguay and Paraguay, and in July 2024, the Company entered into a definitive agreement to sell its Better Health VMS business." **Prior (2023):** In connection with the Company's strategy, the Company expects to continue to seek acquisition, joint venture and investment opportunities. However, the Company may not be able to identify and successfully negotiate suitable strategic transactions at attractive prices. In addition, an increase in regulatory restrictions or continued market volatility could hinder the Company's ability to execute strategic business activities including any acquisitions or investments. Furthermore, all acquisitions and investments entail numerous risks, including risks relating to the Company's ability to: • successfully integrate acquired companies, brands, products, technologies, systems or personnel into the Company's existing business operations in an effective, timely and cost efficient manner; • maintain uniform standards, controls, procedures and policies throughout acquired companies, including effective integration of acquired companies into the Company's internal control over financial reporting; • successfully enter categories, markets and business models in which the Company may have limited or no prior experience; • achieve expected synergies and obtain the desired financial or strategic benefits from acquisitions within the anticipated time periods, if at all; • achieve distribution expansion related to products, categories and markets from acquisition and retain key relationships and or personnel of acquired companies; • identify and manage any legal or reputational risks that may predate or be associated with a transaction, which could negatively impact the Company following the consummation of such transaction; and • manage other unanticipated problems or liabilities. Acquired companies or operations, joint ventures or investments may not be profitable or may not achieve sales levels and profitability and cash flow expectations. Furthermore, acquisitions or ventures could also result in dilutive issuances of equity securities, the incurrence of debt, the assumption of contingent liabilities, such as those relating to advertising claims, environmental issues and litigation, negative reputational issues, an increase in expenses related to intangible assets, including trademarks and goodwill, and increased operating expenses, all of which could adversely affect the Company's financial condition, margins and results of operations. Future acquisitions of foreign companies or new foreign ventures would subject the Company to local regulations and could potentially lead to risks related to, among other things, increased exposure to foreign exchange rate changes, tax or labor laws, government price control, repatriation of profits and liabilities relating to the Foreign Corrupt Practices Act ("FCPA"). In addition, to the extent that the economic benefits associated with an acquisition or investment diminish in the future or the performance of an acquired company or business is less robust than expected, we may be required to record impairments of intangible assets, such as the $362 million post-tax noncash impairment charge that the Company recorded during the third quarter of fiscal year 2023, as a result of an adjustment to the carrying values of goodwill and certain indefinite-lived trademarks in the VMS business. Any impairment charges could adversely affect the Company's financial condition, margins and results of operations. The Company has divested and may, in the future, divest certain assets, businesses or brands. With respect to any potential future divestiture, the Company may encounter difficulty finding potential acquirers or other divestiture options on favorable terms. Any future divestiture could affect the profitability of the Company as a result of the gains or losses on such sale of a business or brand, the loss of the operating income or sales resulting from such sale or the costs or liabilities that are not assumed by the acquirer that may negatively impact profitability and cash flow subsequent to any divestiture. The Company may also be required to recognize impairment charges or other losses as a result of a divestiture. In addition, any potential future acquisitions, new ventures or divestitures may divert the attention of management and resources from other business priorities. The occurrence of any of these risks or uncertainties may have a material adverse effect on the Company's business, financial condition and results of operations. 12 12 12 Table of Contents Table of Contents **Current (2024):** In connection with its strategy, the Company expects to continue to seek acquisition, joint venture and investment opportunities. However, the Company may not be able to identify and successfully negotiate suitable strategic transactions at attractive prices. In addition, an increase in regulatory restrictions or continued market volatility could hinder the Company's ability to execute strategic business activities including any acquisitions or investments. Furthermore, all acquisitions and investments entail numerous risks, including risks relating to the Company's ability to: • successfully integrate acquired companies, brands, products, technologies, systems or personnel into the Company's existing business operations in an effective, timely and cost-efficient manner; • maintain uniform standards, controls, procedures and policies throughout acquired companies, including effective integration of acquired companies into the Company's internal control over financial reporting; • successfully enter categories, markets and business models in which the Company may have limited or no prior experience; • achieve expected synergies and obtain the desired financial or strategic benefits from acquisitions within the anticipated time periods, if at all; • achieve distribution expansion related to products, categories and markets from acquisition and retain key relationships and or personnel of acquired companies; • identify and manage any legal or reputational risks that may predate or be associated with a transaction, which could negatively impact the Company following the consummation of such transaction; and • manage other unanticipated problems or liabilities, including relating to a system shutdown, service disruption, or cyberattack on an acquired company's IT/operational technology (OT) systems. Acquired companies or operations, joint ventures or investments may not be profitable or may not achieve sales levels and profitability and cash flow expectations. Furthermore, acquisitions or ventures could also result in dilutive issuances of equity securities, the incurrence of debt, the assumption of contingent liabilities (such as those relating to advertising claims, environmental issues and litigation, negative reputational issues), an increase in expenses related to intangible assets, including trademarks and goodwill, and increased operating expenses, all of which could adversely affect the Company's financial condition, margins and results of operations. Future acquisitions of foreign companies or new foreign ventures would subject the Company to local regulations and could potentially lead to risks related to, among other things, increased exposure to foreign exchange rate changes, tax or labor laws, government price controls, or repatriation of profits and liabilities relating to the Foreign Corrupt Practices Act ("FCPA"). In addition, to the extent that the economic benefits associated with an acquisition 11 11 11 Table of Contents Table of Contents or investment diminish in the future or the performance of an acquired company or business is less robust than expected, the Company may be required to record impairments of intangible assets. Any impairment charges could adversely affect the Company's financial condition, margins and results of operations. The Company has divested and may, in the future, divest certain assets, businesses or brands. A divestiture could affect the profitability of the Company as a result of the gains or losses on such sale of a business or brand, the loss of the operating income or sales resulting from such sale or the costs or liabilities that are not assumed by the acquirer that may negatively impact profitability and cash flow subsequent to any divestiture. If the Company is unable to complete a divestiture or successfully transition a divested business, including the effective management of the related separation and overhead costs, transition services, and the maintenance of relationships with customers, suppliers, and other business partners, its business and financial results could be negatively impacted. The Company may also be required to recognize impairment charges or other losses as a result of a divestiture. For example, in March 2024, the Company completed the sale of its Argentina business, which consisted of two production plants in Argentina as well as the rights to the Company's brands in Argentina, Uruguay and Paraguay, and in July 2024, the Company entered into a definitive agreement to sell its Better Health VMS business. The Better Health VMS transaction is expected to close in the first quarter of fiscal year 2025. As a result of these transactions, the Company recorded a loss for the sale of its Argentina business in the third quarter of fiscal year 2024 and expects to record a loss for the sale of its Better Health VMS business during the first quarter of fiscal year 2025. The Company may also encounter difficulty finding potential acquirers or other divestiture options on favorable terms. In addition, any potential future acquisitions, new ventures or divestitures may divert the attention of management and resources from other business priorities. The occurrence of any of these risks or uncertainties may have a material adverse effect on the Company's business, financial condition and results of operations. --- ## Modified: Harm to the Company's reputation or the reputation of one or more of its leading brands or products could have an adverse effect on the business, financial condition and results of operations. **Key changes:** - Reworded sentence: "The Company devotes significant time and resources to programs designed to protect and preserve its reputation such as ethics and compliance, brand protection, product safety and quality, and enterprise risk management, and has published ESG goals, including relating to environmental impact and sustainability and inclusion and diversity, as part of its IGNITE Strategy." - Reworded sentence: "Emerging studies have, in the past, and could, in the future, prove or allege that ingredients or substances that are present or allegedly present in the Company's products, the products themselves, or similar products of other companies, are ineffective or harmful to consumers." - Reworded sentence: "Widespread use of social media and networking sites by consumers has greatly increased the accessibility and speed of dissemination of information and misinformation." - Reworded sentence: "Additionally, marketing initiatives 9 9 9 Table of Contents Table of Contents may not have the desired effect on a brand's or product's image." - Added sentence: "In addition, the legal, regulatory and ethical landscape around the use of artificial intelligence and machine learning is rapidly evolving." **Prior (2023):** Maintaining a strong reputation with consumers, customers and trade and other third-party partners is critical to the success of the Company's business. The Company devotes significant time and resources to training programs, relating to, among other things, ethics, compliance and product safety and quality, as well as sustainability goals, and has published ESG goals, including relating to environmental impact and sustainability and inclusion and diversity, as part of its IGNITE Strategy. Despite these efforts or if the Company is not successful in achieving its goals or provides materially inaccurate information, 10 10 10 Table of Contents Table of Contents the Company could receive negative publicity, including relating to product safety and ingredients or substances present or allegedly present in the Company's products or packaging, quality, efficacy, ESG or similar issues, whether real or perceived. In addition, the Company's products have, in the past, and could, in the future, face withdrawal, recall or other quality issues, which could lead to decreased demand for and reputational damage to the related brands. The Company's products, especially its dietary supplement and related products, are dependent on consumers' perception of their efficacy, safety and quality. Emerging studies have, in the past, and could, in the future, prove or allege that ingredients or substances that are present or allegedly present in our products, the products themselves, or similar products of other companies, are ineffective or harmful to consumers. The Company also licenses certain of its brands to third parties. Such licenses and partnerships may create additional exposure for those brands to product safety, quality, sustainability and other concerns. Widespread use of social media and networking sites by consumers has greatly increased the accessibility and speed of dissemination of information. Negative publicity, posts or comments about the Company, its brands, its products, its marketing activities, whether accurate or inaccurate, or disclosure of non-public sensitive information about the Company, could be widely disseminated through the use of social media or in other formats. Additionally, marketing initiatives may not have the desired effect on a brand's or product's image. Such events, if they were to occur, could harm the Company's image and adversely affect its business, financial condition and results of operations, as well as require resources to rebuild the Company's reputation. **Current (2024):** Maintaining a strong reputation with consumers, customers and trade and other third-party partners is critical to the success of the Company's business. The Company devotes significant time and resources to programs designed to protect and preserve its reputation such as ethics and compliance, brand protection, product safety and quality, and enterprise risk management, and has published ESG goals, including relating to environmental impact and sustainability and inclusion and diversity, as part of its IGNITE Strategy. The Company could be the subject of negative publicity in spite of or as a result of these efforts, including relating to product safety, quality or efficacy, ingredients or substances present or allegedly present in the Company's products or packaging, or ESG and related issues, including if the Company is not successful in achieving its ESG goals or provides inaccurate information. In addition, the Company's products have, in the past, and could, in the future, face withdrawal, recall or other quality issues, which could lead to decreased demand for and reputational damage to the related brands. The Company's products, especially its dietary supplement and related products, are dependent on consumers' perception of their efficacy, safety and quality. Emerging studies have, in the past, and could, in the future, prove or allege that ingredients or substances that are present or allegedly present in the Company's products, the products themselves, or similar products of other companies, are ineffective or harmful to consumers. The Company also licenses certain of its brands to third parties. Such licenses and partnerships may create additional exposure for those brands to product safety, quality, sustainability and other concerns. Widespread use of social media and networking sites by consumers has greatly increased the accessibility and speed of dissemination of information and misinformation. Negative publicity, posts or comments about the Company, its brands, its products, its marketing activities, whether accurate or inaccurate, or disclosure of non-public sensitive information about the Company, could be widely disseminated through the use of social media or in other formats. Additionally, marketing initiatives 9 9 9 Table of Contents Table of Contents may not have the desired effect on a brand's or product's image. Such events, if they were to occur, could harm the Company's image and adversely affect its business, financial condition and results of operations, as well as require resources to rebuild the Company's reputation. In addition, the legal, regulatory and ethical landscape around the use of artificial intelligence and machine learning is rapidly evolving. The Company's ability to adopt this emerging technology in an effective and ethical manner may impact its reputation and ability to compete, and this technology could be, among other things, false, biased, or inconsistent with the Company's values and strategies. Further, the use of generative artificial intelligence tools may compromise confidential or sensitive information, put the Company's intellectual property at risk, or subject the Company to claims of intellectual property infringement, all of which could damage the Company's reputation. --- ## Modified: Failure to effectively utilize, successfully assert or successfully defend, the Company's intellectual property rights could impact its competitiveness. If the Company is found to have infringed the intellectual property rights of others or cannot obtain necessary intellectual property rights, its competitiveness could be negatively impacted. **Key changes:** - Reworded sentence: "The Company's intellectual property rights are a significant and valuable aspect of its business, and the Company utilizes trademark, trade secret, copyright, and patent laws to protect its brands, products, product packaging, goodwill, inventions and 18 18 18 Table of Contents Table of Contents confidential information." **Prior (2023):** The Company relies on intellectual property rights based on trademark, trade secret, copyright, and patent laws to protect its brands, products, packaging for its products, inventions and confidential information. There is a risk that the Company will not be able to obtain and perfect its own intellectual property rights or, where appropriate, license intellectual property rights necessary to support new product introductions and product innovations. The Company cannot be certain that these rights, if obtained, will not later be invalidated, circumvented or challenged, and the Company could incur significant costs in connection with legal actions to assert its intellectual property rights or to defend those rights from assertions of invalidity. In addition, even if such rights are obtained in the U.S., the laws of some of the other countries in which the Company's products are or may be sold may not protect intellectual property rights to the same extent as the laws of the U.S. It is also possible that the Company's brands may not be available for use in certain countries due to prior third party rights, thereby limiting expansion of the Company's brands. The Company also licenses certain of its brands to third parties and has increased its focus on licensing its intellectual property in connection with the co-development of products or devices, or promotion and sales relationships with companies in industries operating in public spaces. If other parties infringe the Company's intellectual property rights, they may dilute or diminish the value of the Company's brands and products in the marketplace, which could diminish the value that consumers associate with the Company's brands and harm its net sales. The failure to perfect and protect its intellectual property rights could make the Company less competitive and could have a material adverse effect on its business, financial condition and results of operations. In addition, if the Company is found to have violated the trademark, trade secret, copyright, patent or other intellectual property rights of others, directly or indirectly, through the use of third-party marks, ideas or technologies, such a finding could result in the need to cease use of such trademark, trade secret, copyrighted work or patented invention in the Company's business as well as the obligation to pay for past infringement. If holders are willing to permit the Company to continue to use such intellectual property rights, they could require a payment of a substantial amount for continued use of those rights. Either ceasing use or paying such amounts could cause the Company to become less competitive and could have a material adverse effect on the Company's business, financial condition and results of operations. Even if the Company is not found to infringe a third party's intellectual property rights, the Company could incur material legal costs and related expenses to defend against such claims of infringement and the Company could incur significant costs associated with suspending its use of the challenged intellectual property rights even if it is ultimately found not to have infringed such rights. 19 19 19 Table of Contents Table of Contents **Current (2024):** The Company's intellectual property rights are a significant and valuable aspect of its business, and the Company utilizes trademark, trade secret, copyright, and patent laws to protect its brands, products, product packaging, goodwill, inventions and 18 18 18 Table of Contents Table of Contents confidential information. If the Company fails to obtain, perfect, enforce, or adequately protect its intellectual property rights; license intellectual property rights necessary to support new product introductions and product innovations; or if changes in laws diminish or remove the current legal protections available to them, the competitiveness of the Company's products may be eroded and its business could suffer. The Company also licenses certain of its brands to third parties, including for the co-development of products or devices, or promotion and sales relationships with companies in industries operating in public spaces. These licensees' actions or inaction may dilute or diminish the value of the Company's brands and products in the marketplace, or create additional exposure to litigation, investigations, disputes or other proceedings, as well as product safety, quality, sustainability and other concerns. The Company could come into conflict with third parties over intellectual property rights, including to assert and defend those rights, which could result in costly and disruptive litigation. If the Company is found to have violated a third party's intellectual property rights, the Company may be required to cease use of such intellectual property and pay a substantial amount for past infringement or for continued use of those intellectual property rights. Any of the foregoing could have a material adverse effect on the Company's business, financial condition and results of operations. --- ## Modified: The Company's amended and restated bylaws designate specific courts as the exclusive forum for certain stockholder litigation, which could limit the Company's stockholders' ability to obtain a judicial forum of their choice. **Key changes:** - Reworded sentence: "The Company's amended and restated bylaws provide that, unless it consents in writing to the selection of an alternative forum, the state courts of Delaware (or if no state court has jurisdiction, the federal district court of the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for certain types of actions or proceedings under Delaware statutory or common law." - Reworded sentence: "The Company's exclusive forum provision may limit the ability of its stockholders to bring a claim in a judicial forum of such stockholders' choice for disputes with the Company or its directors, officers or employees, which may discourage such lawsuits, even though an action, if successful, might benefit its stockholders." **Prior (2023):** Our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the state courts of Delaware (or if no state court has jurisdiction, the federal district court of the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for certain types of actions or proceedings under Delaware statutory or common law. The choice of forum provision in our bylaws does not waive our compliance with our obligations under the federal securities laws and the rules and regulations thereunder. Moreover, the provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or by the Securities Act. Our exclusive forum provision may limit the ability of our stockholders to bring a claim in a judicial forum of such stockholders' choice for disputes with us or our directors, officers or employees, which may discourage such lawsuits, even though an action, if successful, might benefit our stockholders. If a court were to find our exclusive forum provision either to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, all of which may increase our costs of litigation. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our amended and restated bylaws described in the preceding sentences. **Current (2024):** The Company's amended and restated bylaws provide that, unless it consents in writing to the selection of an alternative forum, the state courts of Delaware (or if no state court has jurisdiction, the federal district court of the District of Delaware) will, to the fullest extent permitted by law, be the sole and exclusive forum for certain types of actions or proceedings under Delaware statutory or common law. The choice of forum provision in the Company's bylaws does not waive its compliance with its obligations under the federal securities laws and the rules and regulations thereunder. Moreover, the provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or by the Securities Act. The Company's exclusive forum provision may limit the ability of its stockholders to bring a claim in a judicial forum of such stockholders' choice for disputes with the Company or its directors, officers or employees, which may discourage such lawsuits, even though an action, if successful, might benefit its stockholders. If a court were to find the exclusive forum provision either to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving such action in other jurisdictions, all of which may increase costs of litigation. Any person or entity purchasing or otherwise acquiring any interest in shares of the Company's capital stock will be deemed to have notice of, and consented to, the provisions of its amended and restated bylaws described in the preceding sentences. --- ## Modified: The Company is subject to risks related to its international operations and international trade. **Key changes:** - Reworded sentence: "In fiscal year 2024, 16% of the Company's net sales were attributable to international markets." - Reworded sentence: "markets; • difficulty in obtaining non-local currency (e.g., U.S." - Removed sentence: "For further information regarding Argentina, including its designation as a highly inflationary economy, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to Consolidated Financial Statements in Exhibit 99.1." **Prior (2023):** In fiscal year 2023, 16% of the Company's net sales were attributable to international markets. The Company faces and will continue to face substantial risks associated with its foreign operations, including, but not limited to: • unfavorable and uncertain macroeconomic and geopolitical conditions (see "Unfavorable and uncertain general economic and geopolitical conditions beyond our control could negatively impact our financial results" in this section) and potential operational or supply chain disruptions as a result of these developments; • environmental events, civil unrest, work stoppages, labor disputes, widespread health emergencies, pandemics or epidemics, terrorism, kidnapping, and drug‐related or other types of violence; • foreign currency fluctuations, including devaluations, currency controls and inflation, which may adversely affect the Company's ability to do business in certain markets and reduce the U.S. dollar value of revenues, profits or cash flows it generates in non-U.S. markets; • continued high levels of inflation and potential economic and political instability in Argentina, which have required and are likely to continue to require, the Company to record gains and losses in net earnings to reflect the remeasurement of the 15 15 15 Table of Contents Table of Contents Company's non‐U.S. dollar monetary assets and liabilities of Argentina, which may result in significant losses and/or devaluation of assets and which may have an adverse effect on the Company's results of operations; • difficulty in obtaining non-local currency (e.g., U.S. dollars) to pay for the raw materials needed to manufacture the Company's products and contract-manufactured products; • the imposition of tariffs, trade restrictions or sanctions, price, profit or other government controls, labor laws, immigration restrictions, travel restrictions, including as a result of COVID-19 or other pandemics or epidemics, import and export laws or other government actions generating a negative impact on the Company's business, including changes in trade policies that may be implemented and the impact of geopolitical events generally; • employment litigation related to employees, contractors and suppliers, particularly in Argentina; • potential loss of distribution channels as a result of retailer consolidation; • increased credit risk of customers, suppliers and distributors, and defaults on obligations of foreign governments; • potential harm to third parties, the Company's employees and/or surrounding communities, and related liabilities and damages to the Company's reputation, from the use, storage and transportation of chlorine in certain international markets where chlorine is used in the production of bleach, whether such actions are undertaken by the Company or by the Company's business partners; • lack of well-established or reliable, and impartial legal systems in certain countries where the Company operates, including difficulties in enforcing intellectual property and contractual rights; • challenges relating to enforcement of or compliance with local laws and regulations and with U.S. laws affecting operations outside of the U.S., including without limitation, the FCPA; • continuing legal, political and economic uncertainty from the United Kingdom's exit from the European Union, including the long-term impact of the bilateral trade and cooperation deal governing the relationship between the United Kingdom and the European Union and the potential for increasing divergence between the European Union and United Kingdom legal regimes; and • the possibility of nationalization, expropriation of assets or other similar government actions. All of the foregoing risks could have a significant adverse impact on the Company's ability to commercialize its products on a competitive basis in international markets and may have a material adverse effect on its business, financial condition and results of operations. The Company's small sales volume in some countries, relative to some multinational and local competitors, could exacerbate such risks. For further information regarding Argentina, including its designation as a highly inflationary economy, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Notes to Consolidated Financial Statements in Exhibit 99.1. **Current (2024):** In fiscal year 2024, 16% of the Company's net sales were attributable to international markets. The Company has faced and will continue to face substantial risks associated with its foreign operations, including, but not limited to: • unfavorable and uncertain macroeconomic and geopolitical conditions and potential operational or supply chain disruptions as a result of these developments; • environmental events, civil unrest, work stoppages, labor disputes, widespread health emergencies, pandemics or epidemics, terrorism, kidnapping, and drug‐related or other types of violence; • foreign currency fluctuations, including devaluations, currency controls and inflation, which may adversely affect the Company's ability to do business in certain markets and reduce the U.S. dollar value of revenues, profits or cash flows it generates in non-U.S. markets; • difficulty in obtaining non-local currency (e.g., U.S. dollars) to pay for the raw materials needed to manufacture the Company's products and contract-manufactured products; • the imposition of tariffs, trade restrictions or sanctions, price, profit, capital or other government controls, labor laws, immigration restrictions, travel restrictions, including as a result of pandemics or epidemics, import and export laws or other government actions generating a negative impact on the Company's business, including changes in trade policies that may be implemented and the impact of geopolitical events generally; • employment litigation related to employees, contractors and suppliers; • potential loss of distribution channels as a result of retailer consolidation; • increased credit risk of customers, suppliers and distributors, and defaults on obligations of foreign governments; • potential harm to third parties, the Company's employees and/or surrounding communities, and related liabilities and damages to the Company's reputation, from the use, storage and transportation of chlorine in certain international markets where chlorine is used in the production of bleach, whether such actions are undertaken by the Company or by the Company's business partners; • lack of well-established or reliable, and impartial legal systems in certain countries where the Company operates, including difficulties in enforcing intellectual property and contractual rights; • challenges relating to enforcement of or compliance with local laws and regulations and with U.S. laws affecting operations outside of the U.S., including without limitation, the FCPA and intellectual property laws and protections; • the possibility of nationalization, expropriation of assets or other similar government actions. All of the foregoing risks could have a significant adverse impact on the Company's ability to commercialize its products on a competitive basis in international markets and may have a material adverse effect on its business, financial condition and results of operations. The Company's small sales volume in some countries, relative to some multinational and local competitors, could exacerbate such risks. --- ## Modified: Unfavorable and uncertain general economic and geopolitical conditions beyond the Company's control could negatively impact its financial results. **Key changes:** - Reworded sentence: "Unfavorable general economic factors that are beyond the Company's control have materially adversely affected, and could continue to materially adversely affect, its business, results of operations, financial condition and liquidity." - Reworded sentence: "Sustained macroeconomic uncertainty and volatility and geopolitical instability, including relating to the results of elections, could undermine global consumer confidence and could continue to reduce consumers' purchasing power, thereby reducing demand for the Company's products, and continue to disrupt global supply chains, impacting the availability and cost of transportation, logistics, raw materials, commodities, labor and packaging." **Prior (2023):** Unfavorable general economic factors that are beyond our control have materially adversely affected, and could continue to materially adversely affect, our business, results of operations, financial condition and liquidity. These factors include, but are not limited to, supply chain disruptions, labor shortages, wage pressures, rising inflation and economic slowdown or growing recession risk, as well as housing markets, consumer credit availability, consumer debt levels, fuel and energy costs (for example, the price of gasoline), interest rates, tax rates and policy, unemployment trends, the impact of natural disasters, pandemics, civil disturbances and terrorist activities, foreign currency exchange rate fluctuations, conditions affecting the retail environment for products sold by us and other matters that influence consumer demand, spending and preferences that could impact the demand for our products and negatively impact our net sales and results of operations. In addition, the COVID-19 pandemic, geopolitical instability, including the conflict in Ukraine and rising tensions between China and Taiwan, actual and potential shifts in U.S. and foreign, trade, economic and other policies, including as a result of escalating trade tensions between the U.S. and its trading partners, including China, as well as other global events, have significantly increased global macroeconomic uncertainty and volatility. Sustained macroeconomic uncertainty and volatility and geopolitical instability could undermine global consumer confidence and could continue to reduce consumers' purchasing power, thereby reducing demand for our products, and continue to disrupt global supply chains, impacting the availability and 7 7 7 Table of Contents Table of Contents cost of transportation, logistics, raw materials, commodities, labor and packaging. This uncertainty and volatility also make it difficult for the Company, as well as its customers, suppliers, distributors and business partners to anticipate the resulting impacts and to accurately forecast and plan future business activities, which may, in turn, cause customers to limit their purchase orders or affect their ability to pay amounts owed to us in a timely manner or at all, or adversely affect our business partners' ability to supply or provide services to us. We have experienced, and expect to continue to experience, the indirect impacts of the conflict in Ukraine, including increases in the cost of raw and packaging materials and commodities (including the price of oil), supply chain and logistics challenges and foreign currency volatility, and it is not possible to predict the broader or longer-term consequences of this conflict or the sanctions and export controls imposed in response to the conflict. The situation continues to evolve and significant uncertainties regarding the full impact of the conflict in Ukraine or the related impacts on the global economy and geopolitical relations remain. Increasing unfavorable macroeconomic and geopolitical conditions, including growing recession risk, may also lead to increased credit and collectability risks, higher borrowing costs or reduced availability of capital and credit markets, reduced liquidity, asset impairments, declines in the value of our financial instruments, and failures of counterparties including financial institutions and insurers. If any financial institution party to our credit or other financing arrangements were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with us, which could leave us with reduced borrowing capacity. In addition, if any parties with which we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties' ability to continue to fund their business and perform their obligations to us could be adversely affected. Any of these factors could negatively and materially impact our business, financial condition, and results of operations. **Current (2024):** Unfavorable general economic factors that are beyond the Company's control have materially adversely affected, and could continue to materially adversely affect, its business, results of operations, financial condition and liquidity. These factors include, but are not limited to, supply chain disruptions, labor shortages, wage pressures, ongoing elevated levels of inflation, recession and economic slowdown, as well as housing markets, consumer credit availability, consumer debt levels, fuel and energy costs (for example, the price of gasoline or alternative energy sources), rising interest rates, tax rates and policy, unemployment trends, the impact of natural disasters, pandemics/epidemics, civil disturbances and terrorist activities, foreign currency exchange rate fluctuations, conditions affecting the retail environment for the Company's products and other matters that influence consumer demand, spending and preferences that could impact the demand for the Company's products and negatively impact its net sales and results of operations. In addition, geopolitical instability, including the conflicts in Ukraine and the Middle East and rising tensions between China and Taiwan, actual and potential shifts in U.S. and foreign trade, economic and other policies, including as a result of escalating trade tensions between the U.S. and its trading partners, including China, as well as other global events, have significantly increased global macroeconomic uncertainty and volatility. Sustained macroeconomic uncertainty and volatility and geopolitical instability, including relating to the results of elections, could undermine global consumer confidence and could continue to reduce consumers' purchasing power, thereby reducing demand for the Company's products, and continue to disrupt global supply chains, impacting the availability and cost of transportation, logistics, raw materials, commodities, labor and packaging. This uncertainty and volatility also make it difficult for the Company, as well as its customers, suppliers, distributors and business partners to anticipate the resulting impacts and to accurately forecast and plan future business activities, which may, in turn, cause customers to limit their purchase orders or affect their ability to pay amounts owed to the Company in a timely manner or at all, or adversely affect its business partners' ability to supply or provide services. These situations are evolving, and there is significant uncertainty as to their full or related impacts on the global economy and geopolitical relations, in general, and on the Company's business, in particular. These geopolitical conflicts and tensions may also heighten other risks 7 7 7 Table of Contents Table of Contents disclosed in this Report, any of which could have an adverse impact on the Company's business, results of operations, cash flows and/or financial condition. The Company has experienced, and expects to continue to experience, the indirect impacts of the conflicts in Ukraine and the Middle East, including increases in the cost of raw and packaging materials and commodities (including the price of oil), supply chain and logistics challenges, and it is not possible to predict the broader or longer-term consequences of these conflicts or the sanctions and export controls imposed in response to each conflict. The situation continues to evolve and significant uncertainties regarding the full impact of these conflicts or the related impacts on the global economy and geopolitical relations remain. Increasing unfavorable macroeconomic and geopolitical conditions have caused, and may also lead to, recession risk, increased credit and collectability risks, higher borrowing costs or reduced availability of capital and credit markets, reduced liquidity, asset impairments, declines in the value of the Company's financial instruments, and failures of counterparties including financial institutions and insurers. If any financial institution party to the Company's credit or other financing arrangements were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with the Company, which could result in reduced borrowing capacity. In addition, if any parties with which the Company conducts business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties' ability to continue to fund their business and perform their obligations to the Company could be adversely affected. Any of these factors could negatively and materially impact the Company's business, financial condition, and results of operations. --- ## Modified: Supply chain issues can result in product shortages or disruptions to the Company's business. **Key changes:** - Reworded sentence: "The Company also relies on a number of single-source suppliers for certain commodities and raw material inputs, including packaging, product components, finished products and other necessary supplies." **Prior (2023):** The Company has a complex global network of suppliers that may, in the future, expand and further evolve in response to market conditions. The Company also relies on a number of - single-source suppliers for certain commodities and raw material inputs, including packaging, product components, finished products and other necessary supplies. The Company has experienced and could continue to experience material disruptions in production and other supply chain issues, including as a result of supply chain dependencies. See "Volatility and increases in the costs of raw materials, energy, transportation, labor and other necessary supplies or services have negatively impacted, and may continue to negatively impact, the Company's net earnings and cash flow" in this section. This could result in out-of-stock conditions, and its results of operations and relationships with customers could be adversely affected if new or existing suppliers are unable to meet any standards set by the 13 13 13 Table of Contents Table of Contents Company, government or industry regulations, or the Company's customers; if the Company is unable to contract with suppliers at the quantity, quality and price levels needed for its business; if any of the Company's key suppliers becomes insolvent, ceases or significantly reduces its operations or experiences financial distress; or if any environmental, economic or other outside factors impact its operations. The Company also requires new and existing suppliers to meet its ethical and business partner standards, and if our existing or new suppliers fail to meet such standards or if we are unable to contract with suppliers on favorable terms, our business, results of operations, cash flows and financial condition could be adversely affected. Suppliers may also have to meet governmental and industry standards and any relevant standards required by the Company's customers, which may require additional investment and time on behalf of suppliers and the Company. In addition, the Company may increase production in-house and reduce its supply and manufacturing arrangements with third parties, which may lead to additional costs connected to such transition and unwinding of certain manufacturing relationships. **Current (2024):** The Company has a complex global network of suppliers that may, in the future, expand and further evolve in response to market conditions. The Company also relies on a number of single-source suppliers for certain commodities and raw material inputs, including packaging, product components, finished products and other necessary supplies. The Company has experienced and could continue to experience material disruptions in production and other supply chain issues, including as a result of supply chain dependencies, which could result in out-of-stock conditions. The Company has business continuity and disaster recovery plans to address disruptions to the manufacturing or sourcing of products or raw materials, and these plans may not be sufficient. Significant disruptions have and could, in the future, interrupt product supply and, if not remedied in a timely manner or at all, could have an adverse impact on the Company's business, results of operations, cash flows and financial condition. 14 14 14 Table of Contents Table of Contents The Company also requires new and existing suppliers to meet its ethical and business partner standards. If the Company's existing or new suppliers fail to meet such standards or any other relevant governmental, industry, customer or Company standards; if the Company is unable to contract with suppliers on favorable terms or at the quantity, quality and price levels needed for its business; if any of the Company's key suppliers becomes insolvent, ceases or significantly reduces its operations or experiences financial distress; or if any environmental, economic or other outside factors impact its operations, the Company's business, results of operations, cash flows and financial condition could be adversely affected. In addition, the Company may increase production in-house and reduce its supply and manufacturing arrangements with third parties, which may lead to additional costs connected to such transition and unwinding of certain manufacturing relationships. --- ## Modified: Failure of key technology systems, cyberattacks, privacy breaches or data breaches could have a material adverse effect on the Company's business, financial condition, results of operations and reputation. **Key changes:** - Reworded sentence: "To conduct its business, the Company relies extensively on IT and OT systems, many of which are managed, hosted, provided and/or used by third parties and their vendors." - Reworded sentence: "If a new system does not function properly or is not adequately supported by third-party service providers and processes, it could adversely affect the Company's business and operations, which, in turn, could adversely impact the Company's results of operations and cash flows." - Removed sentence: "A breach or other breakdown in the Company's technology, including a cyber-attack, privacy breach, data breach or other incident involving the Company or any of the Company's third-party service providers or vendors, that results in unauthorized disclosure or significant unavailability of business, financial, personal or stakeholder information could adversely affect the Company's financial condition and results of operations." - Removed sentence: "In addition, if the Company's service providers, suppliers or customers experience a breach or unauthorized disclosure or system failure, their businesses could be disrupted or otherwise negatively affected, which may result in a disruption in the Company's supply chain or reduced customer orders or other business operations disruption, which would adversely affect the Company." - Removed sentence: "These risks also may be present to the extent any of our partners, distributors, joint venture partners or suppliers using separate information or operational technology systems, not integrated with the systems of the Company, suffers a cybersecurity incident and could result in increased costs related to our involvement in investigations or notifications conducted by these third parties." **Prior (2023):** To conduct its business, the Company relies extensively on information and operational technology systems, many of which are managed, hosted, provided and/or used by third parties and their vendors. These systems include, but are not limited to, programs and processes relating to communicating within the Company and with customers, consumers, vendors, investors and other parties; ordering and managing materials from suppliers; converting materials to finished products; receiving and processing purchase orders and shipping products to customers; processing transactions; storing, processing and transmitting data, including personal confidential information and payment card industry data; hosting, processing and sharing confidential and proprietary research, business and financial information; and complying with financial reporting, regulatory, legal and tax requirements. Furthermore, the Company sells certain of its natural personal care products, vitamins, minerals, supplements and other products directly to consumers online and through websites, mobile apps and connected devices, and the Company also engages in online activities, including promotions, rebates and customer loyalty and other programs, through which it may receive personal information. Through the use of any of these information and operational technology systems or processes, the Company or its vendors have in the past and could in the future again experience cyber-attacks, privacy breaches, data breaches or other incidents that may result in unauthorized access, disclosure and misuse of consumer, customer, employee, vendor or Company information, especially as the Company continues operating under a hybrid working model under which employees can work and access the Company's technology infrastructure remotely. The Company is in the process of upgrading its enterprise resource planning system but also uses various hardware, software and operating systems that may need to be upgraded or replaced in the near future as such systems cease to be supported by third-party service providers, and may be vulnerable to increased risks, including the risk of security breaches, system failures and disruptions. Any such upgrade could take time, oversight and be costly to the Company. If such systems are not successfully upgraded or replaced in a timely manner, system outages, disruptions or delays, or other issues may arise. If a new system does not function properly, or is not adequately supported by third-party service providers and processes, it could adversely affect the Company's business and operations, which, in turn, adversely impact the Company's results of operations and cash flows. Despite the security measures the Company has in place, the information and operational technology systems, including those of our customers, vendors, suppliers and other third-party service providers with whom we have contracted, have, in the past, and may, in the future, be vulnerable to cyber-threats such as computer viruses or other malicious codes, security breaches, unauthorized access, phishing attacks and other disruptions from employee error, unauthorized uses, system failures, including Internet outages, unintentional or malicious actions of employees or contractors or cyber-attacks by hackers, criminal groups, nation-states and nation-state-sponsored organizations and social-activist organizations. The Company's information and operational technology systems and its third-party providers' systems, have been, and will likely continue to be, subject to cyber-threats such as computer viruses or other malicious codes, ransomware, unauthorized access attempts, business email compromise, cyber extortion, denial of service attacks, phishing, social engineering, hacking and other cyberattacks attempting to exploit vulnerabilities. The Company has seen and may continue to see an increase in the number of such attacks as the Company has shifted to a hybrid working model under which employees will continue working remotely and accessing its technology infrastructure remotely. In addition, while we have purchased cybersecurity insurance, costs related to a cyberattack may exceed the amount of insurance coverage or be excluded under the terms of our cybersecurity insurance policy. As cyberattacks increase in frequency and magnitude, we may be unable to obtain cybersecurity insurance in amounts and on terms we view as appropriate for our operations. To date, the Company is not aware that its business or operations have been materially impacted by these cyberattacks. However, the Company's security efforts and the efforts of its third-party providers may not prevent or timely detect attacks and resulting breaches or breakdowns of the Company's, or its third-party service providers', databases or systems. In addition, if the Company or its third-party providers are unable to effectively resolve such breaches or breakdowns on a timely basis, the Company may experience interruptions in its ability to manage or conduct business, as well as reputational harm, governmental 14 14 14 Table of Contents Table of Contents fines, penalties, regulatory proceedings, and litigation and remediation expenses. In addition, such incidents could result in unauthorized disclosure and misuse of material confidential information, including personal information. Cyber threats are becoming more sophisticated, are constantly evolving and are being made by groups and individuals with a wide range of expertise and motives, and this increases the difficulty of detecting and successfully defending against them. We have incurred, and will continue to incur, expenses to comply with privacy and data protection standards and protocols imposed by law, regulation, industry standards and contractual obligations. Increased regulation of data collection, use, and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, including reporting requirements, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm our business. In addition, data breaches or theft of personal information collected by the Company and its third-party service providers as well as data breaches or theft of Company information and assets have occurred in the past and may occur in the future. The Company is subject to the laws and regulations of various countries where it operates or does business related to solicitation, collection, processing, transferring, storing or use of consumer, customer, vendor or employee information or related data. These laws and regulations change frequently, and new legislation continues to be introduced and may be interpreted and applied differently from jurisdiction to jurisdiction and may create inconsistent or conflicting requirements. The changes introduced by data privacy and protection regulations increase the complexity of regulations enacted to protect business and personal data and they subject the Company to additional costs and have required, and may in the future require, costly changes to the Company's security systems, policies, procedures and practices. These laws and regulations also may result in the Company incurring additional expenses and liabilities in the event of unauthorized access to or disclosure of personal data. A breach or other breakdown in the Company's technology, including a cyber-attack, privacy breach, data breach or other incident involving the Company or any of the Company's third-party service providers or vendors, that results in unauthorized disclosure or significant unavailability of business, financial, personal or stakeholder information could adversely affect the Company's financial condition and results of operations. In addition, if the Company's service providers, suppliers or customers experience a breach or unauthorized disclosure or system failure, their businesses could be disrupted or otherwise negatively affected, which may result in a disruption in the Company's supply chain or reduced customer orders or other business operations disruption, which would adversely affect the Company. These risks also may be present to the extent any of our partners, distributors, joint venture partners or suppliers using separate information or operational technology systems, not integrated with the systems of the Company, suffers a cybersecurity incident and could result in increased costs related to our involvement in investigations or notifications conducted by these third parties. These risks may also be present to the extent a business we have acquired, that does not use our information or operational technology systems, experiences a system shutdown, service disruption, or cybersecurity incident. In addition, there is a possibility that the continuing conflict in Ukraine could result in cyberattacks that could either directly or indirectly affect our operations. In addition, we are in the process of a multi-year phased upgrade to our digital capabilities, including replacing our enterprise resource planning system to enhance operating efficiencies and transitioning to a cloud-based platform, as well as the implementation of a suite of other digital technologies. The upgrade poses several challenges, including training of personnel, migration of data and the potential instability of the new system. If we do not allocate and effectively manage the resources necessary to build and sustain the upgraded technology infrastructure, or if we fail to achieve the expected benefits from this enhancement or it does not operate as designed, our business and operations could be adversely affected. **Current (2024):** To conduct its business, the Company relies extensively on IT and OT systems, many of which are managed, hosted, provided and/or used by third parties and their vendors. These systems include, but are not limited to, programs and processes relating to communicating within the Company and with customers, consumers, business partners, investors and other parties; ordering and managing materials from suppliers; converting materials to finished products; receiving and processing purchase orders and shipping products to customers; processing transactions; storing, processing and transmitting data, including personal confidential information and historical payment card industry data; hosting, processing and sharing confidential and proprietary research, business and financial information; and complying with financial reporting, regulatory, legal and tax requirements. On Monday, August 14, 2023, the Company disclosed it had identified unauthorized activity on some of its IT systems. That activity began on Friday, August 11, 2023 and after becoming aware of it that evening, the Company immediately began taking steps to stop and remediate the activity. The Company also took certain systems offline and engaged third-party cybersecurity experts to support its investigation and recovery efforts. The Company implemented its business continuity plans, including 12 12 12 Table of Contents Table of Contents manual ordering and processing procedures at a reduced rate of operations in order to continue servicing its customers. However, the incident resulted in wide-scale disruptions to the Company's business operations throughout the remainder of the quarter ended September 30, 2023 and negatively impacted fiscal year 2024 results, though some of the anticipated net sales not recognized in the first quarter of fiscal year 2024 as a result of the disruptions were recognized in the later quarters of fiscal year 2024. The impacts of these system disruptions included order processing delays and significant product outages, resulting in a negative impact on net sales and earnings. The Company has since transitioned back to automated order processing. The Company experienced lessening operational impacts starting in the second quarter of fiscal year 2024 and has since returned to substantially normalized operations. The cyberattack may also lead to additional regulatory scrutiny or litigation exposure. The Company is in the process of a multi-year phased upgrade of its digital capabilities, including enhancing operating efficiencies and transitioning to a cloud-based platform, as well as replacing its enterprise resource planning system. It also uses various other hardware, software and operating systems that may need to be upgraded or replaced in the near future as such systems cease to be supported by third-party service providers, and may be vulnerable to increased risks, including the risk of further security breaches, system failures and disruptions. Any such upgrade could take time, oversight and be costly to the Company, and may include potential challenges, such as the cost of training personnel, migration of data, the potential instability of the new system and cost overruns. If such systems are not successfully upgraded or replaced in a timely manner, system outages, disruptions or delays, or other issues may arise. If a new system does not function properly or is not adequately supported by third-party service providers and processes, it could adversely affect the Company's business and operations, which, in turn, could adversely impact the Company's results of operations and cash flows. The IT/OT systems of the Company, its customers, business partners, suppliers, and third-party providers have been, and will continue to be, subject to cyber-threats such as computer viruses or other malicious codes, security breaches, ransomware, unauthorized access attempts, business email compromise, cyber extortion, denial of service attacks, phishing, deepfakes, social engineering, unintentional or malicious actions of employees or contractors, hacking and other cyberattacks attempting to exploit vulnerabilities by hackers, criminal groups, nation-states and nation-state-sponsored organizations and social-activist organizations. These activities may result in unauthorized access, disclosure and misuse of customer, employee, vendor, Company, or consumer information, including personal consumer information obtained through online and e-commerce sales, and online activities, including promotions, rebates and customer loyalty programs, as well as increased costs related to the Company's involvement in investigations or notifications conducted by the Company's business partners. The Company has seen and may continue to see an increase in the number of such attacks, especially as the Company continues operating under a hybrid working model under which employees can work and access the Company's technology infrastructure remotely. The rapid evolution and increased adoption of emerging technologies, such as artificial intelligence, may also increase the frequency and magnitude of cyberattacks on the Company and amplify its cybersecurity risks. In addition, while the Company has purchased cybersecurity insurance, costs related to a cyberattack may exceed the amount of insurance coverage or be excluded under the terms of its cybersecurity insurance policy. The Company may be unable to obtain cybersecurity insurance in amounts and on terms the Company views as appropriate for its operations. The security efforts of the Company and its third-party providers may not prevent or timely detect future attacks and resulting breaches or breakdowns of its databases or systems. The Company has in place disaster recovery and business continuity plans to address these incidents, but if these plans or those of its third-party providers do not effectively resolve such breaches or breakdowns on a timely basis or at all, the Company may experience interruptions in its ability to manage or conduct business, as well as reputational harm, governmental fines, penalties, regulatory proceedings, and litigation and remediation expenses. The need to coordinate with various third-party service providers, including with respect to timely notification and access to personnel and information concerning an incident, may complicate the Company's efforts to address issues that arise. As a result, the Company is subject to the risk that the activities associated with its third-party service providers can adversely affect its business, financial condition and results of operations, even if the attack or breach does not directly impact its systems or information. Cyber-threats and techniques are becoming more sophisticated and are constantly evolving, including through the use of emerging technologies such as artificial intelligence, and are being made by groups and individuals with a wide range of expertise and motives, and this increases the difficulty of detecting and successfully defending against them. Continued geopolitical instability has also heightened the risk of cyberattacks. The Company has incurred, and will continue to incur, expenses to comply with privacy and data protection standards and protocols imposed by law, regulation, industry standards and contractual obligations. Increased regulation of data collection, use, and retention practices, including self-regulation and industry standards, changes in existing laws and regulations, including reporting requirements, enactment of new laws and regulations, increased enforcement activity, and changes in interpretation of laws, could increase the Company's cost of compliance and operation, limit its ability to grow its business or otherwise harm its business. 13 13 13 Table of Contents Table of Contents In addition, data breaches or theft of personal information collected by the Company and its third-party service providers as well as data breaches or theft of Company information and assets have occurred in the past and may occur in the future. The Company is subject to the laws and regulations of various countries where it operates or does business related to solicitation, collection, processing, transferring, storing or use of consumer, customer, business partner or employee information or related data. These laws and regulations change frequently, and new legislation continues to be introduced and may include different standards and requirements, be interpreted and applied differently from jurisdiction to jurisdiction and create inconsistent or conflicting requirements. The changes introduced by data privacy and protection regulations increase the complexity of regulations enacted to protect business and personal data and they subject the Company to additional costs and have required, and may in the future require, costly changes to the Company's security systems, policies, procedures and practices. These laws and regulations also may result in the Company incurring additional expenses and liabilities in the event of unauthorized access to or disclosure of personal data. --- ## Modified: Loss of, or inability to attract, key personnel could adversely impact the Company's business. **Key changes:** - Reworded sentence: "The Company's ability to attract and retain talent has been and may continue to be impacted by a number of factors, including employee morale, its reputation, competition from other employers and availability of qualified individuals in key geographic areas such as the San Francisco Bay Area, and challenges in the labor market, particularly in the U.S., which has increasing labor costs, sustained labor shortages, and changing worker and talent market expectations around flexible work models and relocation." - Removed sentence: "In addition, labor costs in the U.S." - Removed sentence: "continue to rise, and our industry has experienced a shortage of workers." - Removed sentence: "Labor is one of the primary components in the cost of operating our business." - Removed sentence: "If we face labor shortages and increased labor costs as a result of increased competition for employees, higher employee turnover rates, increases in employee benefits costs, or labor union organizing efforts, our operating expenses could increase and our growth and results of operations could be adversely impacted." **Prior (2023):** The Company's success depends, in part, on its continuing ability to identify, hire, develop and retain highly qualified and diverse personnel. The labor market for these employees is very competitive, and wages and compensation costs continue to increase. Our ability to attract and retain talent has been and may continue to be impacted by challenges in the labor market, particularly in the U.S., which has experienced wage inflation, sustained labor shortages, a shift toward remote work and the effects of COVID-19. The Company is also in the process of implementing its streamlined operating model and executing organizational change, which may impact hiring and retention efforts. The Company's ability to attract or retain qualified personnel in the future has been and may continue to be impacted by a number of factors, including the labor market, employee morale, our reputation, competition from other employers and availability of qualified individuals in key geographic areas such as the San Francisco Bay Area. Related activities to identify, hire and onboard qualified talent at increasing compensation costs may require significant time and expense which could further adversely affect the Company's operations and financial results. The Company's success also depends on its ability to retain its key personnel, including its executive officers and senior management team, and to continue to implement its succession plans for senior management and other key employees. The unexpected loss or unavailability of one or more of the Company's key leaders could disrupt its business. In addition, labor costs in the U.S. continue to rise, and our industry has experienced a shortage of workers. Labor is one of the primary components in the cost of operating our business. If we face labor shortages and increased labor costs as a result of increased competition for employees, higher employee turnover rates, increases in employee benefits costs, or labor union organizing efforts, our operating expenses could increase and our growth and results of operations could be adversely impacted. Labor shortages, higher employee turnover rates and labor union organizing efforts could also lead to disruptions in our business. We may be unable to increase prices of our products in order to pass future increased labor costs onto our customers, in which case our margins would be negatively affected. Additionally, if we increase product prices to cover increased labor costs, the higher prices could adversely affect sales volumes. **Current (2024):** The Company's success depends, in part, on its continuing ability to identify, hire, develop and retain highly qualified and diverse personnel. The Company's ability to attract and retain talent has been and may continue to be impacted by a number of factors, including employee morale, its reputation, competition from other employers and availability of qualified individuals in key geographic areas such as the San Francisco Bay Area, and challenges in the labor market, particularly in the U.S., which has increasing labor costs, sustained labor shortages, and changing worker and talent market expectations around flexible work models and relocation. Increased labor costs as a result of increased competition for employees, higher employee turnover rates, increased employee benefit costs, or labor union organizing efforts could increase the Company's operating expenses, and its growth and results of operations could be adversely impacted. The Company continues executing organizational change, which may impact hiring and retention efforts. Related activities to identify, hire and onboard qualified talent at increasing compensation costs may require significant time and expense which could further adversely affect the Company's operations and financial results. The Company's success also depends on its ability to retain its key personnel, including its executive officers and senior management team, and to continue to implement its succession plans for senior management and other key employees. The unexpected loss or unavailability of one or more of the Company's key leaders could disrupt its business. --- ## Modified: ESG issues, including those related to climate change and sustainability, may have an adverse effect on the Company's business, financial condition and results of operations and could damage its reputation. **Key changes:** - Reworded sentence: "In particular, customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, water use, deforestation, biodiversity, plastic waste, responsible sourcing and other sustainability concerns." **Prior (2023):** Companies across all industries are facing increasing scrutiny relating to their ESG policies. Increased focus and activism related to ESG may hinder the Company's access to capital, as investors may reconsider their capital investment as a result of their assessment of the Company's ESG practices. In particular, customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, water use, deforestation, plastic waste, responsible sourcing and other sustainability concerns. Changing consumer preferences may also result in increased demands regarding plastics and packaging materials, including single-use and non-recyclable plastic packaging, and other components of our products and their environmental impact on sustainability; a growing demand for natural or organic products and ingredients; or 17 17 17 Table of Contents Table of Contents increased consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain consumer products. These demands could impact the profitability of some of our products, cause us to incur additional costs, to make changes to our operations, or to make additional commitments, set targets or establish additional goals and take actions to meet them, which could expose us to market, operational and execution costs or risks. In addition, governmental and non-governmental organizations, investors, customers, consumers, our employees and other stakeholders have placed increasing importance on ESG matters, and depending on their assessment of our ESG practices, certain investors may reconsider their investment in the Company. Concern over climate change or plastics and packaging materials, in particular, may result in new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Increased regulatory requirements, including in relation to various aspects of ESG including the SEC's disclosure proposal on climate change, or environmental causes may result in increased compliance or input costs of energy, raw materials or compliance with emissions standards, which may cause disruptions in the manufacture of our products or an increase in operating costs. We may undertake additional costs to control, assess and report on ESG metrics as the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand. Our ability to achieve any stated goal, target, or objective is subject to numerous factors and conditions, many of which are outside of our control. Any failure to achieve our ESG goals or a perception (whether or not valid) of our failure to act responsibly with respect to the environment or to effectively respond to new, or changes in, legal or regulatory requirements concerning environmental or other ESG matters, or increased operating or manufacturing costs due to increased regulation or environmental causes could adversely affect our business and reputation. If the Company does not adapt to or comply with new regulations, or fails to meet the ESG goals under its IGNITE Strategy or evolving investor, industry or stakeholder expectations and standards, or if the Company is perceived to have not responded appropriately to the growing concern for or made sufficient progress on certain ESG issues, or is perceived to have made inaccurate ESG claims, these developments could result in negative publicity and increased litigation or regulatory risk. Customers and consumers may also choose to stop purchasing our products or purchase products from another company or a competitor. As a result, the Company's reputation, business or financial condition may be adversely affected. **Current (2024):** Companies across all industries are facing increasing scrutiny relating to their ESG policies. In particular, customers, consumers, investors and other stakeholders are increasingly focusing on environmental issues, including climate change, water use, deforestation, biodiversity, plastic waste, responsible sourcing and other sustainability concerns. Changing consumer preferences may also result in increased demands regarding plastics and packaging materials, including single-use and non-recyclable plastic packaging, and other components of the Company's products and their environmental impact on sustainability; a growing demand for natural or organic products and ingredients; or increasing consumer concerns or perceptions (whether accurate or inaccurate) regarding the effects of ingredients or substances present in certain consumer products. These demands could impact the profitability of some of the Company's products, cause it to incur additional costs, to make changes to its operations, or to make additional commitments, set targets or establish additional goals and take actions to meet them, which could expose the Company to market, operational and execution costs or risks. In addition, governmental and non-governmental organizations, investors, customers, consumers, employees and other stakeholders have placed increasing importance on ESG matters, such as animal welfare, labor and employment practices and human rights, and depending on their assessment of its ESG practices, certain investors may reconsider their investment in the Company, which may hinder the Company's access to capital. The Company is subject to climate-related transition risks, including increased energy costs due to increasing demand for alternative energy sources and new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment. Increased regulatory requirements, including in relation to various aspects of ESG, such as extended producer responsibility, or environmental causes may result in increased compliance or input costs of energy, raw materials or compliance with emissions standards, which may cause disruptions in the manufacture of the Company's products or an increase in operating costs. The Company may undertake additional costs to control, assess and report on ESG metrics as the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand. The ability to achieve any stated goal, target, or objective is subject to numerous factors and conditions, many of which are outside of the Company's control. For example, working towards achieving the Company's goals will require significant effort by and resources from the Company and stakeholders, including suppliers and business partners, governmental entities and the development and adoption of technology that may not currently exist or exist at scale. Lack of progress on or failure to achieve its ESG goals or a perception (whether or not valid) of its failure to act responsibly with respect to the environment and other sustainability matters, such as single-use plastic, or to effectively respond to new, or changes in, legal or regulatory requirements concerning environmental or other ESG matters, or increased operating or manufacturing costs due to increased regulation or environmental causes could lead to negative publicity, which could result in reduced demand for the Company's products, damage to its reputation or increase the risk of litigation, regulatory proceedings, inquiries or investigations and could adversely affect the Company's business and reputation. --- *Data sourced from SEC EDGAR. Last updated 2026-05-10.*