5
developments in energy prices, inflation,
labor market challenges
and terrorist activities, could have a
material adverse effect on our business,
financial condition, results of
operations and liquidity
and may
adversely impact the demand
for our products and services. These
and other factors may prevent
our
customers and suppliers from obtaining
the financing required
to pursue their business activities as
planned.
Financial and other reasons may force
them to modify, delay or cancel orders or plans to purchase
or supply
our products or services. In addition,
if our customers do not generate
sufficient revenue, or fail to timely
obtain access to the capital markets,
they may not be able to pay, or may delay payment of,
the amounts
they owe us. Customers with liquidity
issues have delayed payments of
amounts they owe us and
this has
led and may lead to additional
bad debt expense for us, which may adversely
affect our results of operations
and cash flows. We are also subject to
the risk that the counterparties
to our credit agreements and hedging
transactions may go bankrupt if
they suffer catastrophic demand
on their liquidity that prevents them
from
fulfilling their contractual obligations
to us.
Our business environment is influenced
also by numerous other economic
or political uncertainties which
may affect the global economy and
the international capital markets.
In periods of slow economic growth or
decline, our customers are more likely
to buy less of our products and services,
and as a result we are more
likely to experience decreased
revenues. Our businesses are affected by
the level of investments and
demand in the markets that we serve,
principally utilities, industry and
transport & infrastructure. At various
times during the last several years,
we also have experienced,
and may experience in the
future, gross
margin declines in certain businesses,
reflecting the effect of factors such as
competitive pricing pressures,
inventory write-downs, charges associated
with the cancellation
of planned expansion and increases
in
component and manufacturing costs
resulting from higher labor
and material costs borne by our
manufacturers and suppliers that, as
a result of competitive pricing
pressures or other factors, we are
unable
to pass on to our customers. Economic
downturns also may
lead to restructuring actions and
associated
expenses. Uncertainty about future economic
conditions makes it difficult for us
to forecast operating results
and to make decisions about future
investments.
In addition, we are subject to
the risks that our business operations
in or with certain countries may
be
adversely affected by trade tariffs, trade or economic
sanctions or other restrictions
imposed on these
countries,
including sanctions against
Russia relating to the war in Ukraine,
contributing to our decision to
exit
the Russian market, and the trade
tensions in recent years
with China.
These could lead to increased
costs
for us or for our customers or limit
our ability to do business in
or with certain countries. In addition,
actual or
potential investors that object to
certain of these business operations
may adversely affect the price of our
shares by disposing or deciding
not to purchase our shares. These
countries may from time to time
include
countries that are identified by the United
States as state sponsors
of terrorism. If any countries
where or with
whom we do business are subject
to such sanctions or restrictions, our
business, consolidated operating
results, financial condition
and the trading price of our shares
may be adversely affected. In 2022, our
total
revenues from business with countries
identified by the U.S. government
as state sponsors of terrorism
represented significantly less than 1
percent of our total revenues.
Based on the amount of revenues
and
other relevant quantitative and qualitative
factors, we have determined
that our business in 2022
with
countries identified by the U.S. government
as state sponsors of terrorism was
not material.
Our business is exposed to risks
associated with the COVID-19
pandemic.
The novel coronavirus (COVID-19) pandemic
has had, and continues to have, significant
impacts on the
global economy including
on demand for products, operational
predictability, the movement of people and
products across borders, supply chains
(including the supply
of semiconductors) and the cost of
capital.
Given the global nature of our business,
COVID-19 has had an adverse
impact on our revenues and
operating margins in all of our businesses
and is expected to continue
to have an impact at least in the short
term. Our Robotics business in China
has been particularly impacted.
The ultimate extent to which the
pandemic impacts our business, liquidity, results of operations
and financial condition will
depend on future
developments, which are highly
uncertain and cannot be predicted
with confidence, including
future
mutations of the COVID-19 virus and
any resulting impact on the effectiveness
of vaccines, the duration and
extent of the pandemic and waves of
infection, any new travel restrictions
and social distancing orders
imposed,
as well as future business closures
and business
disruptions that may be caused by
actions taken
to contain, treat and prevent the disease.
If we or our customers experience
prolonged shutdowns or other
business disruptions, our business,
liquidity, results of operations and financial
condition may be materially