Colgate-Palmolive (CL) Risk Analysis

While we currently generate significant cash flows from ongoing operations and have access to global credit markets through our various financing activities, a disruption or volatility in the credit markets, interest rate increases or changes to our credit rating could negatively impact the availability or further increase the cost of funding. Reduced access to credit or increased costs could adversely affect our liquidity and capital resources or significantly increase our cost of capital. In addition, if any financial institutions that hold our cash or other investments or that are parties to our undrawn revolving credit facility supporting our commercial paper programs or other financing arrangements, such as interest rate, foreign exchange or commodity hedging instruments, were to declare bankruptcy or become insolvent, they may be unable to perform under their agreements with us. This could leave us with reduced borrowing capacity or unhedged against certain interest rate, foreign currency or commodity price exposures. In addition, tighter or more volatile credit markets may lead to business disruptions for certain of our suppliers, contract manufacturers or trade customers which could, in turn, adversely impact our business, results of operations, cash flows and financial condition.

Our business is subject to extensive legal and regulatory requirements in the United States and abroad. Such legal and regulatory requirements apply to most aspects of our products, including their development, ingredients, formulation, manufacture, packaging, labeling, storage, transportation, distribution, export, import, advertising, sale and environmental impact. U.S. federal authorities, including the FDA, the Federal Trade Commission, the Consumer Product Safety Commission, the Occupational Safety and Health Administration and the Environmental Protection Agency, regulate different aspects of our business, along with parallel authorities at the state and local levels and comparable authorities overseas. In addition, our selling practices are regulated by competition law authorities in the United States and abroad. New or more stringent legal or regulatory requirements, or more restrictive interpretations of existing requirements, could adversely impact our business, results of operations, cash flows and financial condition. For example, regulatory authorities globally are increasingly reviewing ingredients or other substances in consumer products, such as fluoride, titanium dioxide, synthetic colors and per- and polyfluoroalkyl (PFAS). While we monitor and seek to mitigate the impact of any emerging regulations, a decision by a regulatory or governmental authority that any of these or other ingredients or other substances in our products should be restricted or should otherwise be newly regulated could adversely impact our business and reputation, as could negative reactions by our consumers, customers or non-governmental organizations to our current or prior use of such ingredients or other substances. Additionally, an inability to develop new or reformulated products containing alternative ingredients, to obtain regulatory approval of such products or ingredients on a timely basis or to effectively market and sell such products could likewise adversely affect our business. Because of our extensive international operations, we could be adversely affected by violations of worldwide anti-bribery laws, including those that prohibit companies and their intermediaries from making improper payments to government officials or other third parties for the purpose of obtaining or retaining business, such as the U.S. Foreign Corrupt Practices Act, and laws that prohibit commercial bribery. We are also subject to laws, regulations or other government directives imposed by the United States (including those imposed by OFAC) and/or by other jurisdictions that impose tariffs, sanctions, import restrictions, export controls or other trade barriers, may prohibit us or certain of our affiliates from doing business in certain countries, or restrict the kind of business that may be conducted. While our policies mandate compliance with these laws, we cannot provide assurance that our internal control policies and procedures will always protect us from reckless or criminal acts committed by our employees, joint venture partners, agents or other third parties. Violations of these laws, or allegations of such violations, could disrupt our business and adversely affect our reputation and our business, results of operations, cash flows and financial condition. While it is our policy and practice to comply with all legal and regulatory requirements applicable to our business, findings that we are in violation of, or out of compliance with, applicable laws or regulations have subjected us to, and could subject us to, civil remedies, including fines, damages, injunctions or product recalls, or criminal sanctions, any of which could adversely affect our business, results of operations, cash flows and financial condition. Even if a claim is unsuccessful, is without merit or is not fully pursued, the cost of responding to such a claim, including management time and out-of-pocket expenses, and the negative publicity surrounding such assertions regarding our products, processes or business practices could adversely affect our reputation, brand image and our business, results of operations, cash flows and financial condition. For information regarding our legal and regulatory matters, see Item 3 "Legal Proceedings" and Note 13, Commitments and Contingencies to the Consolidated Financial Statements.

As a global company serving consumers in more than 200 countries and territories, we are and may continue to be subject to a wide variety of legal claims and proceedings, including disputes relating to intellectual property, contracts, product liability, marketing, advertising, foreign exchange controls, antitrust and trade regulation, labor and employment, pension and benefits, data privacy and security, environmental and tax matters and consumer class actions. Regardless of their merit, these claims can require significant time and expense to investigate and defend, and since litigation, particularly product liability and consumer class action litigation in the United States, is inherently uncertain, there is no guarantee that we will be successful in these matters. In particular, the potential impact of talc-related litigation is highly uncertain, as outcomes in cases filed against manufacturers of talcum powder products have ranged from dismissals to defense verdicts to outsized jury awards of both compensatory and punitive damages. While we and our legal counsel believe that we have strong legal grounds to contest any claims brought against us and we are challenging them vigorously, our assessment of the materiality of these matters, including any reserves taken in connection with them, may not be consistent with the ultimate outcome of such matters. In addition, if one of our products, or an ingredient contained in our products, is perceived or found to be defective or unsafe or have a quality issue, we have had to and may in the future need to withdraw, recall or reformulate some of our products. Whether or not a legal claim or proceeding is successful, or a withdrawal, recall or reformulation is required or advisable, such assertions could have an adverse effect on our business, results of operations, cash flows and financial condition, and the negative publicity surrounding them could harm our reputation and brand image. The resolution of, or increase in the reserves taken in connection with, one or more of these matters in any reporting period could have a material adverse effect on our business, results of operations, cash flows and financial condition for that period. See Item 3 "Legal Proceedings" and Note 13, Commitments and Contingencies to the Consolidated Financial Statements for additional information on certain of our legal claims and proceedings.

We are subject to taxes in the United States and in the foreign jurisdictions where we do business. Due to economic and political conditions, tax rates in the United States and various foreign jurisdictions have been and may be subject to significant change. Changes in the mix of our earnings between countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities related to changes in tax rates, changes in tax laws, including how existing tax laws are interpreted or enforced, or contemplated changes in long-standing tax principles, if finalized and adopted, could adversely impact our future effective tax rate and business, results of operations, cash flows and financial condition. For example, long-standing international tax norms that determine each country's jurisdiction to tax cross-border international trade are evolving as a result of a multilateral project, the Base Erosion and Profit Shifting Project (the "BEPS Project"), that has established new principles and reporting requirements for the member countries of the Organization for Economic Cooperation and Development (the "OECD") and its Inclusive Framework ("IF"). In connection with the BEPS Project, companies are required to disclose more information to tax authorities and the public on operations around the world, which may lead to greater audit scrutiny of profits earned in countries outside of the United States. Many jurisdictions have already enacted legislation and adopted policies resulting from the BEPS Project. The OECD is also addressing the challenges of the digitization of the global economy with detailed guidance to redefine jurisdictional taxation rights in market countries and establish a global minimum tax. The European Union member states and other countries within the OECD's IF have established minimum tax regulations ("Pillar II") that provide for a minimum level of taxation for certain large corporations in every jurisdiction in which they operate. Other than the significant additional time and resources required to comply with these regulations, Pillar II did not have a material impact as of December 31, 2025 and we do not believe it will have a material impact going forward on our business, results of operations, cash flows and financial condition. In January 2026, IF reached an agreement known as the "Side-by-Side Package" that modifies key aspects of Pillar II and is effective from January 1, 2026. The Company is currently evaluating the potential impact of the Side-by-Side Package on its future tax liability and compliance burden. As these and other tax laws and related regulations change, our business, results of operations, cash flows and financial condition could be materially impacted. For more information regarding recent legislation, refer to Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Income Taxes." Furthermore, we are seeing an increase in regular reviews, examinations and audits by the Internal Revenue Service and increasingly aggressive enforcement actions by other taxing authorities with respect to taxes outside of the United States. Although we believe our tax positions are sustainable, when a taxing authority disagrees with the positions we have taken, we have faced, and in the future may face, additional tax liabilities, including interest and penalties, in excess of reserves. The payment of such additional amounts upon final adjudication of any disputes could adversely impact our business, results of operations, cash flows and financial condition.

We face vigorous competition worldwide, including from strong local competitors (including private label competition) and from other companies, some of which have greater resources than we do. In addition, the substantial growth in eCommerce and the use of AI have encouraged the entry of new competitors, some of which sell products direct-to-consumer. We face competition in several aspects of our business, including pricing, promotional activities, new product introductions and expansion into new geographies and channels. Some of our competitors may spend more aggressively on or have more effective advertising and promotional activities than we do, introduce competing products more quickly and/or respond more effectively to business and economic conditions and changing consumer preferences, including by launching innovative new products or products with on-trend or novel ingredients. Such competition also extends to administrative and legal challenges of product claims and advertising. Our success is and will likely increasingly be dependent on our ability to excel at omni-channel demand generation, effectively leverage AI, data analytics and other existing and emerging digital technologies to gain new commercial insights and develop relevant products, marketing and advertising to reach customers and consumers. Our ability to compete also depends on the strength of our brands and products and on our ability to enforce and defend our intellectual property, including patent, trademark, copyright, trade secret and trade dress rights, against infringement and legal challenges by competitors. We may be unable to anticipate the timing and scale of such initiatives or challenges by competitors or to successfully respond to them, which could harm our business and/or reputation. In addition, the cost of responding to such initiatives and challenges, including management time, out-of-pocket expenses and price reductions, may affect our performance. A failure to compete effectively could adversely affect our business, results of operations, cash flows and financial condition.

Our products are sold in a highly competitive global omni-channel marketplace that is increasingly defined by the integration of traditional and digital retail operations and evolving consumer purchasing behaviors and preferences, as consumers continue to shop online and increasingly through social commerce and with the assistance of AI. The increased presence of alternative retail channels, such as subscription services and direct-to-customer businesses, has also intensified competition for consumer attention. While we continue to sell our products to a variety of customers, including large-format retailers, discounters and eCommerce retailers, our growth is increasingly dependent on our ability to generate consumer demand across key touchpoints in the omni-channel ecosystem whether through traditional retail, eCommerce, social media or digital. We are also increasingly dependent on certain key retailers, some of which exercise greater bargaining strength than we do, including the exclusive access to valuable first-party consumer data and analytics. They have demanded and may continue to demand higher trade discounts, allowances, slotting fees, significant investment (including through display media, paid search and co-op programs) or changes to product assortments, which have led to and could continue to lead to reduced sales or profitability in certain markets. Furthermore, the consolidation of retail customers globally may further increase our concentration risk. The loss of a key customer or distributor or a significant reduction in sales to a key customer or distributor could adversely affect our business, results of operations, cash flows and financial condition. For additional information regarding our customers, see "Distribution; Raw Materials; Competition; Trademarks and Patents" in Item 1 "Business." We also have been and may continue to be negatively affected by changes in the policies or practices of our customers, such as inventory destocking, automated fulfillment requirements, AI-aided category pricing pressures and algorithms, limitations on access to shelf space (including the digital shelf), delisting of our products or sustainability, supply chain or packaging standards or initiatives. For example, a determination by a key retailer that any of our ingredients should not be used in certain consumer products or that our packaging does not comply with certain requirements and standards could adversely impact our business, results of operations, cash flows and financial condition. In addition, "private label" products sold by our retail customers, which are typically sold at lower prices than branded products, are a source of competition for certain of our products. If we are not successful in adapting or effectively reacting to the rapidly changing retail landscape, changes in consumer behavior, preferences or purchasing patterns and/or executing our 2030 business strategy which is, in part, focused on omni-channel demand generation, our business, results of operations, cash flows and financial condition could be adversely affected.

Maintaining our strong reputation with consumers and our trade partners globally is critical to selling our branded products. Accordingly, we devote significant time and resources to programs designed to protect and preserve our reputation, such as our ethics and compliance, sustainability, social impact, brand protection, product safety, regulatory and quality initiatives and our enterprise risk management program. Negative publicity about us, our brands, our products, our supply chain, our ingredients, our packaging or our sustainability or social impact practices, or our employees, whether or not deserved, could jeopardize our reputation. Such negative publicity could relate to, among other things, health or quality concerns, threatened or pending litigation or regulatory proceedings, animal welfare, labor and human rights and environmental impact (including responsible sourcing, deforestation, packaging, plastic, energy and water use and waste management) or where we operate. In addition, the proliferation of digital and social media has greatly increased the accessibility of information, the speed of its dissemination and the potential for negative publicity and misinformation. Negative publicity, posts or comments on digital and social media (including those that are AI-generated), whether true or untrue, could damage our brands and our reputation. The success of our brands could also suffer if our marketing initiatives do not have the desired impact on a brand's image or its ability to attract consumers. In addition, the legal, regulatory and ethics landscape around the use of AI continues to rapidly evolve. Our ability to successfully adopt and leverage this emerging technology in an effective and ethical manner may impact our reputation and our ability to compete, as outputs from generative AI models could be, among other things, false, biased or inconsistent with our values or strategies. Further, the use of generative AI tools may compromise our confidential or sensitive information or put our intellectual property at risk or subject us to claims of intellectual property infringement, which could in turn damage our reputation. Additionally, due to the scale and scope of our business, we must rely on relationships with third parties, including our suppliers, distributors, contract manufacturers, manufacturing logistics providers, joint venture partners, financial services providers and cloud-based service providers. While we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, compliance and sustainability practices, thereby potentially increasing our reputational and legal risk. We have taken and, in the future may take, certain actions to safeguard our reputation and uphold our ethical values, such as changes to how and where we sell, advertise and invest behind our products and operations, which could adversely affect our business, results of operations, cash flows and financial condition. In addition, third parties sell counterfeit versions of our products, which are inferior and may pose safety risks. While we take actions to identify and remove counterfeit versions of our products from the market, these actions may not be successful. Consumers of our brands could confuse our products with counterfeit products, which could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our business, results of operations, cash flows and financial condition. Damage to our reputation or loss of consumer confidence in our products for these or any other reasons could adversely affect our business, results of operations, cash flows and financial condition, as well as require resources to rebuild our reputation.

Uncertain or unfavorable global macroeconomic conditions could adversely affect our business. Unfavorable global macroeconomic conditions, such as a recession, an economic slowdown, inflation, high interest rates and/or reduced category growth rates, including as a result of geopolitical events and tensions, wars and military conflicts, such as in Ukraine, the Middle East and Venezuela, and developments in trade relations (including new or increased tariffs, sanctions, export controls, import restrictions or other trade barriers), have negatively impacted and/or could negatively impact our business and result in declining revenues, profitability and/or cash flows. Although we continue to devote significant resources to support our brands and market our products at multiple price points, during periods of uncertain or unfavorable macroeconomic or geopolitical conditions, consumers may have less consumer confidence, reduce consumption or discretionary spending and/or change their purchasing patterns by foregoing purchasing certain of our products or by switching to "private label," or lower-priced product offerings. These changes have reduced and could continue to reduce demand for our products or result in a shift in our product mix, as consumers choose products that sell at lower prices. Additionally, our customers may be impacted and they may increase pressure on our selling prices or increase promotional activity for lower-priced or value offerings as they seek to maintain sales volumes and margins. Furthermore, economic conditions can cause our customers, suppliers, distributors, contract manufacturers, logistics providers or other third-party partners to suffer financial or operational difficulties, which may impact their ability to buy our products or provide us with or distribute finished product, raw and packaging materials and/or services in a timely manner or at all. In addition, we could face difficulty collecting or recovering accounts receivable from third parties facing financial or operational difficulties, including bankruptcies.

We operate on a global basis serving consumers in more than 200 countries and territories with approximately two-thirds of our Net sales originating in markets outside the United States. While geographic diversity helps to reduce our exposure to risks in any one country or part of the world, it also means that we face risks associated with significant international operations, including: - changing macroeconomic conditions in our markets, including as a result of inflationary pressure, economic slowdown or recession, major developments in trade relations, volatile commodity prices and increases and/or volatility in the cost of raw and packaging materials, labor, energy and logistics;- changes in exchange rates for foreign currencies, which may reduce the U.S. dollar value of revenues, profits and cash flows from non-U.S. markets or increase our supply costs, as measured in U.S. dollars, in those markets;-     political instability or uncertainty, including as a result of elections, economic instability, geopolitical events and tensions, wars and military conflicts, such as in Ukraine, the Middle East and Venezuela;- changes to trade policies and agreements and other foreign or domestic legal and regulatory requirements, including those resulting in potentially adverse tax consequences or the imposition of and/or the increase in trade restrictions and/or tariffs, sanctions, price controls, labor laws, travel or immigration restrictions, profit controls or other government controls;- environmental events, widespread health emergencies, such as pandemics or epidemics, natural disasters or social or labor unrest;- exchange controls and other limits on our ability to import or export raw materials or finished product or to repatriate cash from overseas, including as a result of the war in Ukraine;- lack of well-established, reliable and/or impartial legal systems in certain countries where we operate and difficulties in enforcing contractual, intellectual property or other legal rights; and - foreign ownership and investment restrictions and the potential for nationalization or expropriation of property or other resources. Any or all of the foregoing risks could have a significant impact on our ability to sell our products on a competitive basis in international markets and may adversely affect our business, results of operations, cash flows and financial condition. In addition, a number of these risks have adversely impacted and may continue to adversely impact consumer sentiment (including as it relates to the perception of U.S. brands internationally) and consumption, which has reduced and may continue to reduce sales volumes of our products or result in a shift in our product mix from higher margin to lower margin product offerings. We face risks resulting from political and macroeconomic instability and geopolitical events and tensions, wars and military conflicts, such as in Ukraine, the Middle East and Venezuela, which may also heighten other risks disclosed in this Annual Report on Form 10-K, any of which could have an adverse impact on our business, results of operations, cash flows or financial condition. Uncertainties and risks remain as to the evolving situation in Venezuela. We have operations, including a manufacturing facility, in Venezuela; however, since December 31, 2015, the local operating results from our Venezuela operations have not been included in our Consolidated Financial Statements. Nonetheless, the situation in Venezuela could have ramifications for our business in Venezuela and the broader Latin American region and on geopolitical relations more generally. The situation may impact consumer sentiment and consumption and category growth rates in the Latin American region, supply chain and logistics, and the availability and cost of raw and packaging materials and commodities, such as oil. The war in Ukraine, and the related geopolitical tensions, have had and continue to have a significant impact on our operations in Ukraine and Russia, though it has not been material to our Consolidated Financial Statements. We have no manufacturing facilities in Russia. For the year ended December 31, 2025, our business in the Eurasia region constituted approximately 1% of our consolidated net sales and approximately 2% of our consolidated operating profit. We, however, have experienced, and expect to continue to experience, risks related to the impact of the war in Ukraine, including increases in the cost and, in certain cases, limitations on the availability of certain raw and packaging materials and commodities (including oil and natural gas), supply chain and logistics challenges, import restrictions, foreign currency volatility and reputational concerns. We also have faced and continue to face challenges to our ability to repatriate cash from Russia and to identify financial institutions and services to support our Russian operations and may face challenges to our ability to protect our assets in Russia. We also continue to monitor the impact of sanctions, export controls and import restrictions. Major developments in trade relations, including the imposition of new or increased tariffs by the United States and/or other countries, such as China, including those threatened or imposed following the United States' 2025 executive orders, retaliatory tariffs imposed by the United States' trading partners or through the renegotiation of trade agreements, have contributed to and are expected to continue to contribute to inflationary pressures, geopolitical tensions, macroeconomic and market volatility and consumer uncertainty. These developments have also impacted and may continue to impact consumer sentiment, consumption, discretionary spending and/or purchasing patterns. In addition, they have impacted and may continue to impact the cost and/or availability of raw and packaging materials and the price of our products. While we have made and will continue to make efforts to mitigate the impact of these and any additional tariffs imposed by the United States and/or other countries or shifts in trade agreements, they or our mitigating actions could have a material effect on our business, results of operations, cash flows and financial condition. In an effort to minimize the impact on earnings of foreign currency rate movements, we engage in a combination of selling price increases, where permitted, sourcing strategies, cost containment measures and selective hedging of foreign currency transactions. However, the impact of these measures has not and may not in the future fully offset any negative impact of foreign currency rate movements on our business, results of operations, cash flows and financial condition.

Climate change resulting in the increased frequency and severity of natural disasters and other extreme weather conditions may adversely impact our business, results of operations, cash flows and financial condition. Specifically, the predicted physical effects of climate change may pose physical risks to our facilities and those of our key suppliers, disrupt our global supply chain, impact demand for our products or exacerbate challenges regarding the cost, quality and availability of raw and packaging materials and the availability and quality of water. In addition, concern over climate change has resulted and is likely to continue to result in transition risks, including additional legal and regulatory requirements intended to, among other things, reduce or mitigate the effects of climate change and have related and may relate to, among other things, greenhouse gas emissions (e.g., carbon pricing), alternative energy policy and additional disclosure obligations and extended producer responsibility obligations that relate to our product packaging. Such risks, including additional legal and regulatory requirements, may adversely affect our business, results of operations, cash flows and financial condition by increasing our compliance and manufacturing costs and/or negatively impacting our reputation if we are unable to, or are perceived (whether or not valid) not to, satisfy such requirements or expectations. Achieving our sustainability targets will require significant efforts from us and our stakeholders, such as our suppliers and other third parties. It will also require capital investment, additional expense (e.g., renewable energy costs) and the development of technology that may not currently exist. In addition, certain of our stakeholders have expressed negative sentiment regarding corporate sustainability initiatives. Our practices and efforts in this area may not align with the expectations of all stakeholders, which could negatively affect our relationships with certain stakeholders. Furthermore, our activities in this area could expose us to increased regulatory or legal scrutiny, potential product boycotts or other actions that may harm our reputation or adversely affect our reputation, business, results of operations, cash flows and financial condition. There is also increased focus by certain stakeholders on these and other sustainability matters, including responsible sourcing, deforestation, animal welfare, labor, employment and human rights, ingredients of interest, the use of plastic, energy and water, the recyclability or recoverability of packaging, including single-use and other plastic packaging. From certain stakeholders, there is also a growing demand for natural or organic products and ingredient transparency, such as sources of palm oil and palm kernel oil, and an increased focus on reducing our impact on nature. Failure to achieve our sustainability targets (including our net zero carbon target) or the perception (whether or not valid) that we have failed to act responsibly with respect to such matters or to effectively respond to new or additional legal or regulatory requirements regarding climate change or other sustainability matters could result in adverse publicity and increased litigation risk and adversely affect our reputation, business, results of operations, cash flows and financial condition.

Our growth depends on the continued success of existing products, the successful identification, development and launch of innovative new and differentiated products and the expansion into adjacent categories, channels of distribution or geographies. Our ability to launch new products, to sustain existing products and to expand into adjacent categories, channels of distribution or geographies is affected by whether we can successfully: - identify, develop and fund technological innovations;- obtain and maintain necessary intellectual property protection and avoid infringing intellectual property rights of others;- obtain approvals and registrations of regulated products, including from the U.S. Food and Drug Administration (the "FDA") and other regulatory bodies in the United States and abroad; and - anticipate and quickly respond to the needs and preferences of consumers and customers. The identification, development and introduction of innovative new products that drive incremental sales involves considerable costs and effort, and any new product may not generate sufficient customer and consumer interest and sales to become a profitable product or to cover the costs of its development and promotion. Our ability to achieve a successful launch of a new product could also be adversely affected by preemptive actions taken by competitors in response to the launch, such as increased promotional activities and advertising. In addition, new products may not be accepted quickly or significantly in the marketplace. Our ability to quickly innovate to adapt and market our products and to adapt our packaging or the sustainability profile of our products to meet evolving consumer preferences and/or regulatory requirements is an essential part of our business strategy. The failure to develop and launch successful new products or to adapt our packaging, the sustainability profile of our products or supply chain to meet such preferences could hinder the growth of our business and any delay in the development or launch of a new product could result in us not being the first to market, which could compromise our competitive position and adversely affect our business, results of operations, cash flows and financial condition. In addition, our success in launching new products is dependent on our ability to deliver effective and efficient marketing in an evolving media landscape, which is subject to dynamic and increasingly restrictive privacy requirements and emerging regulations. Our ability to launch new products, including our ability to deliver effective and efficient marketing campaigns, is also impacted by our ability to successfully adopt and effectively leverage AI, including machine learning and generative AI, and other existing and emerging technologies. If, in the course of identifying or developing new products, we are found to have infringed the trademark, trade secret, copyright, patent or other intellectual property rights of others, such a finding could adversely affect our ability to develop innovative new products and adversely affect our business, results of operations, cash flows and financial condition. Even if we are not found to infringe a third party's intellectual property rights, claims of infringement could adversely affect us, including by increasing costs and by delaying the launch of new products.

We rely extensively on information and operational technology systems ("IT/OT Systems"), some of which are managed, hosted, provided and/or used by third parties, including cloud-based service providers, and their vendors, in order to conduct our business. Our uses of these systems include, but are not limited to: - communicating within our company and with other parties, including our customers, suppliers and consumers;- ordering and managing materials from suppliers;- converting materials to finished products;- receiving and processing orders from, shipping products to and invoicing our customers, suppliers and consumers;- marketing products to consumers;- collecting, storing, transferring and/or processing customer, consumer, employee, vendor, investor and other stakeholder information and personal data, including such data from residents of states, countries and regions with comprehensive data protection laws and regulations;- processing transactions, including employee payroll, employee and retiree benefits and payments to customers, suppliers and vendors;- hosting, processing and sharing confidential and proprietary research, intellectual property, business plans and financial information;- summarizing and reporting results of operations, including financial reporting;- managing our banking and other cash liquidity systems and platforms;- complying with legal, regulatory and tax requirements;- providing data security; and - handling other processes involved in managing our business. Although we have a broad array of information and operational security measures in place, our IT/OT Systems, including those of third-party service providers with whom we have contracted, including cloud-based software providers and manufacturing logistics providers, have been, and will likely continue to be, subject to computer viruses or other malicious codes, unauthorized access attempts, phishing and other cyberattacks. Cyberattacks and other cyber incidents are occurring more frequently, are constantly evolving in nature, are becoming more sophisticated and are being made by different threat actors including groups, individuals and nation states with a wide range of expertise and motives. Such cyberattacks and cyber incidents can take many forms, including cyber extortion, social engineering, password theft or introduction of viruses or malware, such as ransomware. In addition, the techniques used in cyberattacks and cyber incidents continue to evolve and develop, including through the use of AI and other existing and emerging technologies. We cannot guarantee that our security efforts will prevent breaches or breakdowns of our or our third-party service providers' IT/OT Systems because the techniques used in these attacks change frequently and may be difficult to detect for periods of time. In addition, although we have policies and procedures in place to ensure that all personal information collected by us or our third-party service providers is securely maintained, data leakages due to human error or intentional or unintentional conduct by our employees or third parties have occurred and likely will occur again. Furthermore, we periodically upgrade our IT/OT Systems or adopt new technologies. If such an upgrade or new technology does not function as designed or does not go as planned or if an attacker identifies a vulnerability in our IT/OT Systems, then our exposure to a cyberattack or cyber incident may increase significantly. A cyberattack or cyber incident may adversely impact our business, including our ability to ship products to customers, issue invoices and process payments or order raw and packaging materials. Although we have seen no material impact on our business operations from the cybersecurity incidents or data incidents we have experienced to date, if we suffer a significant loss or disclosure of confidential business or stakeholder information as a result of a breach of our IT/OT Systems, including those of third-party service providers with whom we have contracted, or otherwise, we may suffer reputational, competitive and/or business harm, incur significant costs and be subject to government investigations, litigation, fines and/or damages, which may adversely impact our business, results of operations, cash flows and financial condition. In addition, the rapid evolution and increased adoption of AI and other technologies will continue to intensify these risks. Further, while we currently maintain insurance coverage that, subject to its terms and conditions, is intended to address costs associated with certain aspects of cybersecurity incidents, data incidents and IT/OT System failures, this insurance coverage may not, depending on the specific facts and circumstances surrounding an incident, cover all losses or all types of claims that arise from an incident, or the damage to our business, reputation or brands that may result from an incident. As the frequency and magnitude of such incidents increase globally, we may be unable to obtain the insurance coverage that we think is appropriate or necessary to offset the risk. While we have disaster recovery and business continuity plans in place, if our or our third-party service providers' IT/OT Systems are damaged, breached or cease to function properly for any reason, including the poor performance of, failure of or cyberattack on third-party service providers, catastrophic events, power outages, cybersecurity incidents, network outages, failed upgrades or other similar events and, if the disaster recovery and business continuity plans do not effectively resolve such issues on a timely basis, we may suffer interruptions in our ability to manage or conduct business as well as reputational harm, and may be subject to governmental investigations and litigation, any of which may adversely impact our business, results of operations, cash flows and financial condition.