Kontoor Brands Inc

Previous wording

The Company operates and reports using a 52/53-week fiscal year ending on the Saturday closest to December 31 of each year. Accordingly, this Form 10-Q presents the first quarter of the Company's fiscal year ending December 28, 2024 ("fiscal 2024"), which is a 52-week fiscal year. For presentation purposes herein, all references to periods ended March 2024, December 2023 and March 2023 correspond to the fiscal periods ended March 30, 2024, December 30, 2023 and April 1, 2023, respectively.

Current wording

The Company operates and reports using a 52/53-week fiscal year ending on the Saturday closest to December 31 of each year. Accordingly, this Form 10-Q presents the second quarter of the Company's fiscal year ending December 28, 2024 ("fiscal 2024"), which is a 52-week fiscal year. For presentation purposes herein, all references to periods ended June 2024, December 2023 and June 2023 correspond to the fiscal periods ended June 29, 2024, December 30, 2023 and July 1, 2023, respectively.

Previous wording

Macroeconomic conditions impacting the Company include inflation, elevated interest rates, recessionary concerns and fluctuating foreign currency exchange rates, as well as continuing global supply chain issues and inconsistent economic results in China. These factors continue to contribute to uncertain global economic conditions and consumer spending patterns, which are impacting retailers' and the Company's operations. Additionally, the conflicts in Ukraine and the Middle East are causing disruption in the surrounding areas and greater uncertainty in the global economy.

Current wording

Global macroeconomic conditions that continued to impact the Company include elevated interest rates, inflation, recessionary concerns, fluctuating foreign currency exchange rates, supply chain issues and inconsistent consumer demand, particularly in China. These factors continue to contribute to uncertain global economic conditions and consumer spending patterns, which are impacting retailers' and the Company's operations. Additionally, the conflicts in Ukraine and the Middle East are causing disruption in the surrounding areas and greater uncertainty in the global economy. Inflationary pressures have moderated in recent quarters, and although these pressures continue to impact us, current period results reflect continued favorability from lower product costs compared to the second quarter of 2023.

Previous wording

Inflationary pressures have moderated in recent quarters, and although these pressures continue to impact us, current period results reflect favorability from lower product costs compared to the first quarter of 2023. However, the macroeconomic factors discussed above, primarily inflation, interest rates and recessionary concerns, continued to impact consumer spending patterns leading to retailer actions to proactively manage inventory levels, which impacted our results during the three months ended March 2024.

Current wording

The macroeconomic factors discussed above, primarily elevated interest rates, inflation and recessionary concerns, continued to impact consumer spending patterns leading to retailer actions to proactively manage inventory levels, which impacted our results during the six months ended June 2024.

Previous wording

Recent disruptions to key trade routes, such as the Red Sea and Panama Canal, affected our global supply chain during the first quarter of 2024 but did not have a significant impact on first quarter results. Although we continue to proactively manage our shipping carriers and routes to minimize costs and delays, our results of operations will reflect higher freight costs during 2024.

Current wording

Recent disruptions to key trade routes, such as the Red Sea and Panama Canal, affected our global supply chain during the second quarter of 2024 but did not have a significant impact on second quarter results. Although we continue to proactively manage our shipping carriers and routes to minimize costs and delays, these disruptions will impact freight costs during 2024.

Previous wording

We continue to execute on our Horizon 2 multi-year strategic vision, "Catalyzing Growth," which outlines four growth catalysts: (i) expansion of our core U.S. Wholesale business, (ii) category extensions such as outdoor, workwear and t-shirts, (iii) geographic expansion of our Wrangler®and Lee® brands, and (iv) channel expansion focused on the digital platforms in our U.S. Wholesale and Direct-to-Consumer channels. We are focused on driving brand growth and delivering long-term value to our stakeholders including our consumers, customers, shareholders, suppliers and communities around the world.

Current wording

We continue to execute on our strategic vision which focuses on four growth catalysts: (i) expansion of our core U.S. Wholesale business, (ii) category extensions such as outdoor, workwear and t-shirts, (iii) geographic expansion of our Wrangler®and Lee® brands, and (iv) channel expansion focused on the digital platforms in our U.S. Wholesale and Direct-to-Consumer channels. We are focused on driving brand growth and delivering long-term value to our stakeholders including our consumers, customers, shareholders, suppliers and communities around the world.

Previous wording

During the first quarter of 2024, the Company incurred total restructuring and other transformation charges of $8.4 million related to business optimization activities and actions to streamline and transfer select production within our internal manufacturing network. In late 2023, we launched the planning phase of Project Jeanius, a comprehensive end-to-end business model transformation focused on simplifying the organization and creating significant investment capacity to accelerate growth and increase profitability. Certain of the restructuring and transformation costs incurred during the first quarter of 2024 related to Project Jeanius, and we anticipate additional costs in future periods as we execute on this multi-year initiative. Refer to Note 14 to the Company's financial statements for additional information related to restructuring charges.

Current wording

During the second quarter of 2024, the Company incurred total restructuring and transformation charges of $4.5 million related to actions to streamline and transfer select production within our internal manufacturing network and other business optimization activities. Certain of the restructuring and transformation costs incurred during the second quarter of 2024 related to Project Jeanius, a comprehensive end-to-end business model transformation focused on simplifying the organization and creating significant investment capacity to accelerate growth and increase profitability. We are progressing in the detailed planning phase of Project Jeanius, and have started to execute on certain initiatives. We anticipate additional costs and benefits in future periods as we execute on this multi-year initiative. Refer to Note 15 to the Company's financial statements for additional information related to restructuring charges.

Previous wording

FIRST QUARTER OF FISCAL 2024 SUMMARY

Current wording

SECOND QUARTER OF FISCAL 2024 SUMMARY

Previous wording

•Non-U.S. Wholesale revenues decreased 8% compared to the three months ended March 2023, and represented 17% of total revenues in the current period.

Current wording

•Non-U.S. Wholesale revenues decreased 8% compared to the three months ended June 2023, and represented 14% of total revenues in the current period.

Previous wording

•Direct-to-Consumer revenues remained flat compared to the three months ended March 2023, and represented 12% of total revenues in the current period.

Current wording

•Direct-to-Consumer revenues increased 3% compared to the three months ended June 2023, and represented 12% of total revenues in the current period.

Previous wording

•Selling, general and administrative expenses as a percentage of net revenues increased to 31.8% compared to 28.7% for the three months ended March 2023.

Current wording

•Selling, general and administrative expenses as a percentage of net revenues increased to 32.3% compared to 30.3% for the three months ended June 2023.

Previous wording

•Diluted earnings per share was $1.05 in the first quarter, compared to $1.16 in the same period last year.

Current wording

•Diluted earnings per share was $0.92 in the second quarter, compared to $0.64 in the same period last year.

Previous wording

Additionally, the following table presents a summary of the changes in net revenues for the three months ended March 2024 as compared to March 2023:

Current wording

Additionally, the following table presents a summary of the changes in net revenues for the three and six months ended June 2024 as compared to June 2023:

Previous wording

Gross margin increased 220 basis points, primarily related to 410 basis points from lower product costs and favorable channel mix. This increase was partially offset by 100 basis points from pricing adjustments and product mix and 50 basis points due to restructuring and other transformation charges in the first quarter of 2024.

Current wording

Gross margin increased 410 basis points, primarily related to 560 basis points of favorability from product costs, product mix and lower downtime from internal manufacturing. These benefits were partially offset by 130 basis points from pricing adjustments and channel mix along with a 10 basis point decrease due to restructuring and transformation charges.

Previous wording

Net revenues decreased 5%, driven by a 6% decrease in U.S. Wholesale revenues primarily attributable to retailer inventory management actions and a decrease in revenue from seasonal product. Non-U.S. Wholesale revenues decreased 8%, primarily driven by a decline in our EMEA wholesale business, partially offset by growth in our digital wholesale business and a 2% favorable impact from foreign currency. Global Direct-to-Consumer revenues remained flat with growth in e-commerce sales offset by declines in retail store sales.

Current wording

Net revenues decreased 4%, driven by a 3% decrease in U.S. Wholesale revenues primarily attributable to retailer inventory management actions and a decrease in revenue from seasonal product, partially offset by growth in our digital wholesale business. Non-U.S. Wholesale revenues decreased 8%, primarily driven by lower sales in EMEA and China. Global Direct-to-Consumer revenues increased 1% with growth in e-commerce sales partially offset by declines in retail store sales.

Previous wording

Selling, general and administrative expenses as a percentage of net revenues increased to 31.8% compared to 28.7% in the prior period, driven by $5.4 million of restructuring and other transformation charges in the first quarter of 2024, a $2.3 million increase in investments in our direct-to-consumer business and information technology and a $1.7 million increase in demand creation costs. These increases were partially offset by a $1.8 million decrease in distribution and freight costs.

Current wording

Selling, general and administrative expenses increased $18.2 million, from 29.5% to 32.1% of net revenues, driven by a $10.8 million increase in certain incentive compensation-related expenses and a $7.0 million increase in investments in our direct-to-consumer business, demand creation and information technology, partially offset by a $2.6 million decrease in distribution and freight costs.

Previous wording

The effective income tax rate for the three months ended March 2024 was 20.3% compared to 20.0% in the 2023 period. The three months ended March 2024 and March 2023 included a net discrete tax benefit primarily related to stock-based compensation which decreased the effective income tax rate by 1.0% and 0.2%, respectively. The effective tax rate without discrete items for the three months ended March 2024 was 21.3% compared to 20.2% in the 2023 period. The increase was primarily due to changes in our jurisdictional mix of earnings.

Current wording

The effective income tax rate for the six months ended June 2024 was 20.0% compared to 23.4% in the 2023 period. The six months ended June 2024 included a net discrete tax benefit primarily related to stock-based compensation which decreased the effective income tax rate by 1.2%. The six months ended June 2023 included a net discrete tax expense primarily related to a remeasurement of deferred tax assets associated with a tax holiday granted from local income taxes in a foreign jurisdiction which increased the effective income tax rate by 3.9%. The effective tax rate without discrete items for the six months ended June 2024 was 21.2% compared to 19.5% in the 2023 period. This increase was primarily due to changes in our jurisdictional mix of earnings.

Previous wording

The following tables present a summary of the changes in segment revenues and segment profit for the three months ended March 2024 as compared to the three months ended March 2023:

Current wording

The following tables present a summary of the changes in segment revenues and segment profit for the three and six months ended June 2024 as compared to the three and six months ended June 2023:

Previous wording

Global revenues for the Wrangler® brand decreased 3%, due to declines in the U.S. Wholesale and Non-U.S. Wholesale channels, partially offset by growth in the Direct-to-Consumer channel.

Current wording

Global revenues for the Wrangler® brand decreased 1%, due to declines in the U.S. Wholesale and Non-U.S. Wholesale channels, partially offset by growth in the Direct-to-Consumer channel.

Previous wording

•Revenues in the EMEA region decreased 6%, attributable to a decrease in our wholesale business, partially offset by growth in our digital wholesale business and a 2% favorable impact from foreign currency.

Current wording

•Revenues in the EMEA region decreased 6%, due to a decline in our wholesale business, partially offset by growth in our direct-to-consumer business and a 2% favorable impact from foreign currency.

Previous wording

Operating margin increased to 18.2%, compared to 16.8% for the 2023 period, driven by lower product costs, favorable channel mix and decreases in distribution and freight costs. These improvements were partially offset by restructuring and other transformation charges, increases in investments in our direct-to-consumer business and information technology and higher demand creation costs.

Current wording

Operating margin increased to 19.4%, compared to 16.7% for the 2023 period, primarily attributable to lower product costs, favorable product mix, lower downtime associated with proactive actions taken in the prior year to manage internal production and decreases in distribution and freight costs. These improvements were partially offset by pricing adjustments, increases in restructuring and transformation charges compared to the prior period, increases in investments in our direct-to-consumer business and information technology, higher incentive compensation-related expense and higher demand creation costs.

Previous wording

Global revenues for the Lee® brand decreased 9%, due to declines in all channels.

Current wording

Global revenues for the Lee® brand decreased 7%, due to declines in all regions and channels.

Previous wording

Operating margin decreased to 16.0%, compared to 16.4% for the 2023 period, primarily attributable to unfavorable product mix, pricing adjustments and increases in investments in our direct-to-consumer business. These decreases were partially offset by lower product costs.

Current wording

Operating margin decreased to 7.6%, compared to 9.1% for the 2023 period. Benefits from lower product costs were more than offset by unfavorable product mix, pricing adjustments, increases in investments in our direct-to-consumer business and deleverage of fixed expenses on lower revenues.

Previous wording

•Revenues in the Americas region decreased 10%, driven by a 12% decrease in the U.S. wholesale channel due to retailer inventory management actions and a decrease in revenue from seasonal product, partially offset by growth in our digital wholesale business.

Current wording

•Revenues in the Americas region decreased 7%, driven by an 8% decrease in the U.S. wholesale channel due to retailer inventory management actions and a decrease in revenue from seasonal product, partially offset by growth in our digital wholesale business.

Previous wording

•Revenues in the APAC region decreased 7%, primarily resulting from a decrease in our direct-to-consumer business due to lower retail store sales in China, a decrease in wholesale revenue and a 4% unfavorable impact from foreign currency.

Current wording

•Revenues in the APAC region decreased 11%, primarily resulting from decreases in wholesale revenue and retail store sales in China and a 4% unfavorable impact from foreign currency, partially offset by growth in e-commerce sales.

Previous wording

The costs below are necessary to reconcile total reportable segment profit to income before taxes. Corporate and other expenses, including certain restructuring and other transformation costs, and interest income and expense are not controlled by segment management and therefore are excluded from the measurement of segment profit.

Current wording

The costs below are necessary to reconcile total reportable segment profit to income before taxes. Corporate and other expenses, including certain restructuring and transformation costs, and interest income and expense are not controlled by segment management and therefore are excluded from the measurement of segment profit.

Previous wording

Interest expense decreased $1.0 million due to lower average debt outstanding during the three months ended March 2024 compared to the three months ended March 2023.

Current wording

Interest expense increased $0.7 million, primarily due to the higher effective interest rate as a result of the expiration of interest rate swap agreements in April 2024, partially offset by the effect of lower average debt outstanding during the three months ended June 2024 compared to the three months ended June 2023.

Previous wording

The Company's ability to fund our operating needs is dependent upon our ability to generate positive long-term cash flow from operations and maintain our debt financing on acceptable terms. The Company has historically generated strong positive cash flows from operations and continues to take proactive measures to manage working capital. We believe cash flows from operations will support our short-term liquidity needs as well as any future liquidity and capital requirements, in combination with available cash balances and borrowing capacity from our revolving credit facility.

Current wording

The Company's ability to fund our operating needs is dependent upon our ability to generate positive long-term cash flow from operations and maintain our debt financing on acceptable terms. The Company has historically generated strong positive cash flows from operations and continues to take proactive measures to manage working capital. During the six months ended June 2024, the Company repaid a total of $35.0 million of the principal outstanding on Term Loan A, including $25.0 million of voluntary early quarterly repayments during the second quarter of 2024. We believe cash flows from operations will support our short-term liquidity needs as well as any future liquidity and capital requirements, in combination with available cash balances and borrowing capacity from our revolving credit facility.

Previous wording

(1)Available borrowing capacity under the Revolving Credit Facility is net of $6.7 million of outstanding standby letters of credit issued on behalf of the Company under this facility.

Current wording

(1)Available borrowing capacity under the Revolving Credit Facility is net of $6.5 million of outstanding standby letters of credit issued on behalf of the Company under this facility.

Previous wording

At March 2024, the Company had $23.9 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either the Company or the banks. There were no outstanding balances under these arrangements at March 2024.

Current wording

At June 2024, the Company had $19.3 million of international lines of credit with various banks, which are uncommitted and may be terminated at any time by either the Company or the banks. There were no outstanding balances under these arrangements at June 2024.

Previous wording

During the three months ended March 2024, the Company repurchased 0.3 million shares of Common Stock for $20.0 million, including commissions, under its $300.0 million share repurchase program authorized by the Company's Board of Directors. All shares reacquired in connection with the repurchase program are treated as authorized and unissued shares upon repurchase. As of March 2024, $280.0 million remained available for repurchase under the program.

Current wording

During the six months ended June 2024, the Company repurchased 0.7 million shares of Common Stock for $45.0 million, including commissions, under its $300.0 million share repurchase program authorized by the Company's Board of Directors. All shares reacquired in connection with the repurchase program are treated as authorized and unissued shares upon repurchase. As of June 2024, $255.0 million remained available for repurchase under the program.

Previous wording

During the three months ended March 2024, the Company paid $27.8 million of dividends to its shareholders. On April 18, 2024, the Board of Directors declared a regular quarterly cash dividend of $0.50 per share of the Company's Common Stock. The cash dividend will be payable on June 20, 2024, to shareholders of record at the close of business on June 10, 2024.

Current wording

During the six months ended June 2024, the Company paid $55.7 million of dividends to its shareholders. On July 25, 2024, the Board of Directors declared a regular quarterly cash dividend of $0.50 per share of the Company's Common Stock. The cash dividend will be payable on September 20, 2024, to shareholders of record at the close of business on September 10, 2024.

Previous wording

We anticipate that we will have sufficient cash flows from operations, along with existing borrowing capacity, to support continued investments in our brands, infrastructure, talent and capabilities, dividend payments to shareholders, repayment of our current and long-term debt obligations when due and repurchases of Common Stock. In addition, we would use current liquidity as well as access to capital markets to fund any strategic investment opportunities that may arise.

Current wording

We anticipate that we will have sufficient cash flows from operations, along with existing borrowing capacity, to support continued investments in our brands, infrastructure, talent and capabilities, dividend payments to shareholders, repayment of our debt obligations when due and repurchases of Common Stock. In addition, we would use current liquidity as well as access to capital markets to fund any strategic investment opportunities that may arise.

Previous wording

We currently expect capital expenditures to be approximately $40.0 million in 2024, primarily to support manufacturing, distribution, facility improvement, information technology, and owned retail store investments.

Current wording

We currently expect capital expenditures to be approximately $35.0 million in 2024, primarily to support manufacturing, distribution, facility improvement, information technology and owned retail store investments.

Previous wording

During the three months ended March 2024, cash provided by operating activities was $56.5 million as compared to cash used by operating activities of $12.6 million in the prior year period. The increase was primarily due to favorable changes in inventory and accounts payable, partially offset by unfavorable changes in accounts receivable compared to the prior year period.

Current wording

During the six months ended June 2024, cash provided by operating activities was $152.7 million as compared to $111.7 million in the prior year period. The increase was primarily due to higher net income as well as favorable changes in working capital, which included inventory, accounts payable and income taxes, partially offset by unfavorable changes in accounts receivable compared to the prior year period.

Previous wording

During the three months ended March 2024, cash used by investing activities decreased $5.4 million as compared to the prior year period, primarily due to a decrease in capitalized computer software expenditures in the current year period.

Current wording

During the six months ended June 2024, cash used by investing activities was $11.4 million as compared to $20.0 million in the prior year period, primarily due to decreases in expenditures of property, plant and equipment and capitalized computer software in the current year period.

Previous wording

During the three months ended March 2024, cash used by financing activities was $54.6 million as compared to cash provided by financing activities of $17.0 million in the prior year period. The change was primarily due to $50.0 million of net borrowings under the Revolving Credit Facility during the three months ended March 2023 and $20.0 million of Common Stock repurchases made by the Company during the three months ended March 2024.

Current wording

During the six months ended June 2024, cash used by financing activities was $137.0 million as compared to $69.0 million in the prior year period. The increase was primarily due to $45.0 million of Common Stock repurchases and $35.0 million in repayments of Term Loan A during the six months ended June 2024.

Previous wording

Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this report include, but are not limited to: macroeconomic conditions, including inflation, elevated interest rates, recessionary concerns and fluctuating foreign currency exchange rates, as well as continuing global supply chain issues and geopolitical events, continue to adversely impact global economic conditions and have had, and may continue to have, a negative impact on the Company’s business, results of operations, financial condition and cash flows (including future uncertain impacts); the level of consumer demand for apparel; reliance on a small number of large customers; supply chain and shipping disruptions, which could continue to result in shipping delays, an increase in transportation costs and increased product costs or lost sales; intense industry competition; the ability to accurately forecast demand for products; the Company’s ability to gauge consumer preferences and product trends, and to respond to constantly changing markets; the Company’s ability to maintain the images of its brands; increasing pressure on margins; e-commerce operations through the Company’s direct-to-consumer business; the financial difficulty experienced by the retail industry; possible goodwill and other asset impairment; the ability to implement the Company’s business strategy; the stability of manufacturing facilities and foreign suppliers; fluctuations in wage rates and the price, availability and quality of raw materials and contracted products; the reliance on a limited number of suppliers for raw material sourcing and the ability to obtain raw materials on a timely basis or in sufficient quantity or quality; disruption to distribution systems; seasonality; unseasonal or severe weather conditions; the Company's and its vendors’ ability to maintain the strength and security of information technology systems; the risk that facilities and systems and those of third-party service providers may be vulnerable to and unable to anticipate or detect data security breaches and data or financial loss; ability to properly collect, use, manage and secure consumer and employee data; foreign currency fluctuations; disruption and volatility in the global capital and credit markets and its impact on the Company's ability to obtain short-term or long-term financing on favorable terms; legal, regulatory, political and economic risks; changes to trade policy, including tariff and import/export regulations;

Current wording

Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially from those expressed or implied by forward-looking statements in this report include, but are not limited to: macroeconomic conditions, including elevated interest rates, inflation, recessionary concerns and fluctuating foreign currency exchange rates, as well as continuing global supply chain issues and geopolitical events, continue to adversely impact global economic conditions and have had, and may continue to have, a negative impact on the Company’s business, results of operations, financial condition and cash flows (including future uncertain impacts); the level of consumer demand for apparel; reliance on a small number of large customers; supply chain and shipping disruptions, which could continue to result in shipping delays, an increase in transportation costs and increased product costs or lost sales; intense industry competition; the ability to accurately forecast demand for products; the Company’s ability to gauge consumer preferences and product trends, and to respond to constantly changing markets; the Company’s ability to maintain the images of its brands; increasing pressure on margins; e-commerce operations through the Company’s direct-to-consumer business; the financial difficulty experienced by the retail industry; possible goodwill and other asset impairment; the ability to implement the Company’s business strategy; the stability of manufacturing facilities and foreign suppliers; fluctuations in wage rates and the price, availability and quality of raw materials and contracted products; the reliance on a limited number of suppliers for raw material sourcing and the ability to obtain raw materials on a timely basis or in sufficient quantity or

Previous wording

Kontoor Brands, Inc. Q1 FY24 Form 10-Q 28 the impact of climate change and related legislative and regulatory responses; compliance with anti-bribery, anti-corruption and anti-money laundering laws by the Company and third-party suppliers and manufacturers; changes in tax laws and liabilities; the costs of compliance with or the violation of national, state and local laws and regulations for environmental, consumer protection, employment, privacy, safety and other matters; continuity of members of management; labor relations; the ability to protect trademarks and other intellectual property rights; the ability of the Company’s licensees to generate expected sales and maintain the value of the Company’s brands; the Company maintaining satisfactory credit ratings; restrictions on the Company’s business relating to its debt obligations; volatility in the price and trading volume of the Company’s common stock; anti-takeover provisions in the Company’s organizational documents; and fluctuations in the amount and frequency of our share repurchases. Many of the foregoing risks and uncertainties will be exacerbated by any worsening of the global business and economic environment.

Current wording

Kontoor Brands, Inc. Q2 FY24 Form 10-Q 30 quality; disruption to distribution systems; seasonality; unseasonal or severe weather conditions; the Company's and its vendors’ ability to maintain the strength and security of information technology systems; the risk that facilities and systems and those of third-party service providers may be vulnerable to and unable to anticipate or detect data security breaches and data or financial loss or maintain operational performance; ability to properly collect, use, manage and secure consumer and employee data; disruption and volatility in the global capital and credit markets and its impact on the Company's ability to obtain short-term or long-term financing on favorable terms; legal, regulatory, political and economic risks; changes to trade policy, including tariff and import/export regulations; the impact of climate change and related legislative and regulatory responses; compliance with anti-bribery, anti-corruption and anti-money laundering laws by the Company and third-party suppliers and manufacturers; changes in tax laws and liabilities; the costs of compliance with or the violation of national, state and local laws and regulations for environmental, consumer protection, employment, privacy, safety and other matters; continuity of members of management; labor relations; the ability to protect trademarks and other intellectual property rights; the ability of the Company’s licensees to generate expected sales and maintain the value of the Company’s brands; the Company maintaining satisfactory credit ratings; restrictions on the Company’s business relating to its debt obligations; volatility in the price and trading volume of the Company’s common stock; anti-takeover provisions in the Company’s organizational documents; and fluctuations in the amount and frequency of our share repurchases. Many of the foregoing risks and uncertainties will be exacerbated by any worsening of the global business and economic environment.