FY2021 10-K Document - FINAL 11 15 21 - Flipbook - Page 15
Table of Contents
A write-off of all or part of our goodwill or other intangible assets could adversely affect our operating results
and net worth. Goodwill and other intangible assets are a substantial portion of our assets. At October 2, 2021,
goodwill was $852 million and other intangible assets were $106 million of our total assets of $3.4 billion. Our goodwill
and other intangible assets may increase in the future since our growth strategy includes acquisitions. However, we
may have to write off all or part of our goodwill or other intangible assets if their value becomes impaired. Although this
write-off would be a non-cash charge, it could reduce our earnings and our financial condition significantly. We review
whether goodwill or other intangible assets have been impaired annually, or more frequently, if there have been
changes in circumstances or conditions.
Unforeseen exposure to additional income tax liabilities may affect our operating results. Our distribution of
taxable income is subject to domestic and, as a result of our significant manufacturing and sales presence in foreign
countries, foreign tax jurisdictions. Our effective tax rate and earnings may be affected by shifts in our mix of earnings
in countries with varying statutory tax rates, changes in the valuation of deferred tax assets and outcomes of any
audits performed on previous tax returns. Additionally, any alterations to domestic and foreign government tax
regulations or interpretations, global minimum taxes or other tax law changes could have significant impacts on our
effective tax rate and on our deferred tax assets and liabilities.
LEGAL AND COMPLIANCE RISKS
Contracting on government programs is subject to significant regulation, including rules related to bidding,
billing and accounting standards, and any false claims or non-compliance could subject us to fines, penalties
or possible debarment. We are subject to risks associated with government program contracting, including
substantial civil and criminal fines and penalties. These fines and penalties could be imposed for failing to follow
procurement integrity and bidding rules, employing improper billing practices or otherwise failing to follow cost
accounting standards, receiving or paying kickbacks or filing false claims. We have been, and expect to continue to
be, subjected to audits and investigations by U.S. and foreign government agencies and authorities. The failure to
comply with the terms of our government contracts could harm our business reputation. It could also result in our
progress payments being withheld or our suspension or debarment from future government contracts, which could
have a material effect on our operational and financial results.
Our operations in foreign countries expose us to currency, political and trade risks and adverse changes in
local legal and regulatory environments could impact our results of operations. We have significant
manufacturing and sales operations in foreign countries. In addition, our domestic operations sell to foreign
customers. Our financial results may be adversely affected by fluctuations in foreign currencies and by the translation
of the financial statements of our foreign subsidiaries from local currencies into U.S. dollars. Both the sales from
international operations and export sales are subject in varying degrees to risks inherent in doing business outside of
the United States. Such risks include the possibility of unfavorable circumstances arising from host country laws or
regulations including, but not limited to privacy laws protecting personal data, changes in tariff and trade barriers and
import or export licensing requirements. Uncertainty also remains with respect to trade policies and treaties between
the United States and other countries including China, both where we source products and where we have large
customers. Changes to tariffs or other trade restrictions may result in higher prices for aircraft, which may negatively
impact customer order volume, and restrict our future orders. The potential loss of orders would negatively impact our
financial results including lower sales, operating profits and cash flow. For our sales mix by country, see Note 21,
Segments, of Item 8, Financial Statements and Supplementary Data, of this report.
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