FY2021 10-K Document - FINAL 11 15 21 - Flipbook - Page 11
Table of Contents
We believe that the principal points of competition in our markets are product quality, reliability, design and
engineering capabilities, price, innovation, conformity to customers' specifications, timeliness of delivery, effectiveness
of the distribution organization and quality of support after the sale. Maintaining or improving our competitive position
requires continued investment in manufacturing, engineering, quality standards, marketing, customer service and
support and our distribution networks. If we do not maintain sufficient resources to make these investments, are not
successful in meeting our quality or delivery standards or are not successful in maintaining our competitive position,
we could face pricing pressures or loss in market share, causing our operations and financial performance to suffer.
Our new products and technology research and development efforts are substantial and may not be
successful, which could reduce our sales and earnings. Technologies related to our products have undergone,
and in the future may undergo, significant changes. In order to maintain a leadership position in the high-performance,
precision controls market in the future, we have incurred, and we expect to continue to incur, expenses associated
with research and development activities during the introduction of new products. Our technology has been developed
through customer-funded and internally-funded research and development, as well as through business acquisitions.
If we fail to predict customers' preferences or fail to provide viable technological solutions, we may experience
inefficiencies that could delay or prevent the acceptance of new products or product enhancements. Also, the
research and development expenses we incur may exceed our cost estimates and the new products we develop may
not generate sales sufficient to offset our costs. Additionally, our competitors may develop technologies and products
that have more competitive advantages than ours and render our technology noncompetitive or obsolete.
If we are unable to adequately enforce and protect our intellectual property or defend against assertions of
infringement, our business and our ability to compete could be harmed. Protecting our intellectual property is
critical in order to maintain a competitive advantage. We therefore rely on internally developed and acquired patents,
trademarks, copyrights, trade secrets, proprietary know-how to establish and protect our technologies and products.
However, these measures afford only limited protection, and our patent rights and other intellectual property
protections may be infringed, misappropriated, misrepresented, copied without authorization, circumvented or
invalidated in the U.S. or in foreign countries that do not offer the same level of intellectual property protections. Also,
as our patents and other intellectual property protections expire, we may face increased competition. Additionally, we
cannot be assured that our existing or planned products do not, or will not, infringe on the intellectual property rights of
others or that others will not claim such infringement. When others infringe on our intellectual property rights, the
value of our products is diminished, and we may incur substantial litigation costs to enforce our rights. Litigation could
also divert management's focus and resources away from operations. If we are unable to adequately enforce and
protect our intellectual property or defend against assertions of infringement, we could face reputational harm and our
inability to defend against these scenarios could have an adverse effect on our competitive position, our business
operations and financial condition.
Our sales and earnings may be affected if we cannot identify, acquire or integrate strategic acquisitions, or as
we conduct divestitures. Acquisitions are an element of our growth strategy as we opportunistically resume
investments in our businesses. Our historical growth has depended, and our future growth is likely to depend, in part,
on our ability to successfully identify, acquire and integrate acquired businesses. We intend to continue to seek
additional acquisition opportunities throughout the world, both to expand into new markets and to enhance our
position in existing markets. Growth by acquisition involves risk that could adversely affect our financial condition and
operating results. We may not know the potential exposure to unanticipated liabilities. Additionally, the expected
benefits or synergies might not be fully realized, integrating operations and personnel may be slowed and key
employees, suppliers or customers of the acquired business may depart. As a result of our ongoing operational
assessment, we may continue to divest assets or businesses if we deem the operations as non-strategic or no longer
match the current customer demand. Divestitures could adversely affect our profitability and, under certain
circumstances, require us to record impairment charges or a loss as a result of a transaction. In pursuing acquisition
opportunities, integrating acquired businesses, or divesting business operations, management's time and attention
may be diverted from our core business, while consuming resources and incurring expenses for these activities.
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