News Corp (NWSA) Risk Analysis

From time to time, the Company is party to litigation, as well as to regulatory and other proceedings with governmental authorities and administrative agencies, including with respect to antitrust, tax, data privacy and security, intellectual property, employment, alleged defamation or libel, consumer protection and other matters. See Note 16 in the accompanying Consolidated Financial Statements for a discussion of certain matters. The outcome of these matters and other litigation and proceedings is subject to significant uncertainty, and it is possible that an adverse resolution of one or more such proceedings could result in reputational harm and/or significant monetary damages, injunctive relief, behavioral remedies or changes, consent decrees or settlement costs that could adversely affect the Company's results of operations or financial condition as well as the Company's ability to conduct its business as it is presently being conducted. In addition, regardless of merit or outcome, such proceedings can have an adverse impact on the Company as a result of legal costs, diversion of management and other personnel and other factors. While the Company maintains insurance for certain potential liabilities, such insurance does not cover all types and amounts of potential liabilities and is subject to various exclusions as well as caps on amounts recoverable. Even if the Company believes a claim is covered by insurance, insurers may dispute its entitlement to recovery for a variety of potential reasons, which may affect the timing and, if they prevail, the amount of the Company's recovery.

As a U.S.-based multinational business, the Company is subject to taxation in U.S. and numerous non-U.S. jurisdictions, including Australia and the U.K. The Company's effective tax rate is impacted by the tax laws, regulations, practices and interpretations in the jurisdictions in which it operates and may fluctuate significantly from period to period depending on, among other things, the geographic mix of the Company's profits and losses, changes in tax laws and regulations or their application and interpretation, the outcome of tax audits and changes in valuation allowances associated with the Company's deferred tax assets. Changes to enacted tax laws could have an adverse impact on the Company's future tax rate and increase its tax provision. The Company may be required to record additional valuation allowances if, among other things, changes in tax laws or adverse economic conditions negatively impact the Company's ability to realize its deferred tax assets. Evaluating and estimating the Company's tax provision, current and deferred tax assets and liabilities and other tax accruals requires significant management judgment, and there are often transactions for which the ultimate tax determination is uncertain. The Company's tax returns are routinely audited by various tax authorities. Tax authorities may not agree with the treatment of items reported in the Company's tax returns or positions taken by the Company, and as a result, tax-related settlements or litigation may occur, resulting in additional income tax liabilities against the Company. Although the Company believes it has appropriately accrued for the expected outcome of tax reviews and examinations and any related litigation, the final outcomes of these matters could differ materially from the amounts recorded in the financial statements. As a result, the Company may be required to recognize additional charges in its Statements of Operations and pay significant additional amounts with respect to current or prior periods, or its taxes in the future could increase, which could adversely affect its operating results and financial condition.

Network and information systems and other technologies used by the Company or used or supplied by third-party providers or partners, including those related to content delivery, network management and cloud-based services (collectively, the "Systems"), are critical to the Company's business activities and contain its proprietary, confidential and sensitive business information, including personal data of its customers and personnel. Events affecting the Systems such as computer compromises, cyber threats and attacks, computer viruses or other destructive or disruptive software, process breakdowns, ransomware and denial of service attacks, malicious social engineering or other malicious activities by individuals (including employees) or state-sponsored or other groups, or any combination of the foregoing, as well as power, telecommunications and internet outages, equipment failure, fire, natural disasters, extreme weather (which may occur with increasing frequency and intensity), terrorist activities, war, human or technological error or malfeasance that may affect such systems, could cause a failure, compromise, breach or interruption of these Systems, adversely impact the confidentiality, integrity or availability of the Systems or information or data maintained in the Systems, disrupt the Company's services and business, or otherwise negatively impact its business, results of operations and reputation. Unauthorized parties may also fraudulently induce the Company's employees or other agents to disclose sensitive or confidential information in order to gain access to the Systems or the Company's or third parties' facilities or data. In addition, any "bugs," errors or other defects in, or the improper implementation of, hardware or software applications the Company develops or procures from third parties could unexpectedly disrupt the Company's network and information systems or other technologies or compromise information security. System resilience and/or redundancy, and the Company's disaster recovery and business continuity planning, may not be sufficient to address all potential cyber events or other disruptions. The risks associated with cyberattacks are increasing, particularly as the Company's digital businesses expand. The number of cyberattacks continues to rise, and such attacks are becoming increasingly more sophisticated, targeted and difficult to detect, mitigate and prevent, particularly with the emergence and maturation of AI capabilities, which has led to new and more effective methods of cyberattacks. A number of factors further heighten cybersecurity risks, such as (1) the high profile nature of the Company's businesses, (2) geopolitical tensions and conflicts, (3) remote access to Company systems by employees, (4) the increasing number of integrations and network connections with third-party providers and customers and (5) access to Systems, products and services by Company personnel, customers and other third parties using personal devices outside of the Company's network and apps or tools available on such devices, including AI tools. Acquisitions or other transactions could also expose the Company to cybersecurity risks if there are vulnerabilities present in acquired or integrated entities' systems and technologies. The Company has experienced, and will continue to be subject to, cybersecurity threats. To date, the Company is not aware of any cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company. However, there is no assurance that cybersecurity threats or incidents will not have a material adverse effect in the future. Measures that the Company and its third-party providers or partners have developed and implemented to address risks arising from Systems-related events may not always be successful, particularly given that techniques used to access, disable or degrade service, or sabotage Systems have continued to become more sophisticated and change frequently, and some measures may limit the functionality of or otherwise negatively impact the Company's products, services and systems. Additionally, it is difficult to detect and defend against certain threats and vulnerabilities that can persist over extended periods. Events affecting the Systems could require significant Company resources to remedy. The development and maintenance of these measures is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. While the Company maintains cyber risk insurance, this insurance may not be sufficient to cover, or extend to, all costs or damage relating to any cybersecurity incident, and the Company cannot be certain that its current coverage will continue to be available on economically reasonable terms. A significant failure, compromise, breach, interruption of or other incident affecting the Systems could adversely impact the confidentiality, integrity or availability of the Systems or information or data maintained in the Systems and result in a disruption of the Company's operations, including degradation or disruption of service, equipment damage, customer, audience or advertiser dissatisfaction, damage to its reputation or brands, regulatory investigations and enforcement actions, lawsuits, fines, penalties and other payments, response, recovery and remediation costs, a loss of or inability to attract new customers, audience, advertisers or business partners or loss of revenues and other financial losses. Any such event that results in loss, improper access to or disclosure of information maintained in the Systems, including financial, personal and credit card data, as well as confidential and proprietary information relating to personnel, customers, vendors and the Company's business, including its intellectual property, could subject the Company to liability under relevant contractual obligations and laws and regulations protecting personal data and privacy, as well as private individual or class action lawsuits or regulatory enforcement actions. The Company may also be required to notify certain governmental agencies and/or regulators and affected individuals about any actual or perceived data security breach within strict time periods and at significant cost. Media or other reports of actual or perceived security vulnerabilities in any Systems could also adversely impact the Company's brand and reputation and materially affect its business, results of operations and financial condition.

The Company is incorporating AI into its business, including developing products and services that integrate AI solutions and for internal productivity purposes. The development of AI technologies, including generative AI, is complex and evolving and there are challenges associated with achieving desired levels of accuracy, efficiency and reliability. AI algorithms, models and data may have limitations, including biases, errors or the inability to handle certain data types or scenarios. If the Company's use of AI in its products and services produces content, information, analyses or recommendations that are alleged to be deficient, inaccurate, biased, harmful, discriminatory or infringing or otherwise problematic, it may negatively impact its brands and reputation and adversely affect its business, and the Company may be subject to legal and regulatory scrutiny and increased litigation. Additionally, if the Company's products and services that integrate AI solutions fail to operate as anticipated or as well as competing products or services or otherwise do not meet customer needs or if the Company is unable to bring such products or services to market as effectively or with the same speed as its competitors, its competitive position may be harmed and its business and reputation may be adversely impacted. The use of AI tools may implicate intellectual property and data protection laws and regulations and raise cybersecurity, confidentiality and technical risks. Regulation of AI is evolving rapidly, including the recent adoption of AI-focused consumer protection and data privacy laws in certain jurisdictions, and the Company's use of AI tools will continue to require resources to address regulatory requirements, implement appropriate governance practices and minimize associated risks. The Company's obligations to comply with the evolving legal and regulatory landscape could limit its ability to incorporate certain AI solutions into its products and services. The use of AI tools may also impact the Company's relationship with employees and/or result in labor disputes if the tools are viewed as displacing workers. Given that the development, adoption and use of AI technologies, including generative AI, remains in the early stages, it is not possible to predict all of the risks related to the use of AI and the impact they may have on the Company.

The Company's businesses depend on a single or limited number of third-party suppliers for certain products, services, data and information. For example, the Company relies on Amazon Web Services to supply cloud-based services used in many of the Company's business activities and Google to provide workspace and other enterprise services. The Company also obtains significant data and information through contractual arrangements with content suppliers, some of which may be competitors. From time to time, suppliers seek to change the fees and other terms of supply arrangements and may terminate existing arrangements, in some cases with short notice, to gain a marketplace advantage. Any consolidation among suppliers would further decrease the number of providers and increase their scale and leverage. Issues affecting the Company's suppliers, including cybersecurity incidents, data center or systems outages, labor shortages, insufficient capacity and supply chain issues, may reduce, interrupt, or delay the supply of, or cause defects or errors in, the products, services, data and information on which the Company's businesses rely. If any key supplier is unable to meet demand or otherwise fails to perform its obligations in a timely manner, the Company's relationship with key suppliers deteriorates or any of these suppliers breaches or terminates its agreement with the Company, experiences operating or financial difficulties, significantly increases the amount it charges the Company for necessary products, services, data or information or ceases production or provision of any necessary product, service, data or information, the Company's business, results of operations and financial condition may be adversely affected. While the Company will seek alternative sources where possible and/or permissible under applicable agreements, it may not be able to secure these sources quickly and cost-effectively or at all, which could impair its ability to timely deliver its products and services or operate its business.

Printing and distribution costs, including the cost of paper, are a significant expense for the Company's book and newspaper publishing units, and the price of paper has historically been volatile. The Company also relies on third-party suppliers for deliveries of paper and on third-party printing and distribution partners to print and distribute its books and newspapers. Factors such as inflationary pressures, labor shortages, higher transportation costs and delays and other supply chain issues, financial pressures, industry trends or economics (including the closure or conversion of newsprint mills and consolidation among suppliers and partners), labor unrest, changes in laws and regulations, such as the E.U.'s Deforestation Regulation, natural disasters, extreme weather (which may occur with increasing frequency and intensity), pandemics and other widespread health crises, tariffs or other changes in trade policy or other circumstances affecting the Company's paper and other third-party suppliers and print and distribution partners have increased, or could in the future increase, the Company's printing and distribution costs and lead to disruptions, reduced operations or consolidations within the Company's printing and distribution supply chains and/or of third-party print sites and/or distribution routes. The Company may not be able to secure alternative providers quickly and cost-effectively, which could disrupt printing and distribution operations or increase the cost of printing and distributing the Company's books and newspapers. Significant increases in these costs, undersupply or significant disruptions in the supply chain or the Company's printing and distribution channels have had, and could in the future have, an adverse effect on the Company's business, results of operations and financial condition.

The Company faces significant competition, including from other providers of information, news, real estate-related and entertainment products and services. See "Business Overview" for more information regarding competition within each of the Company's segments. This competition continues to intensify as a result of changes in technologies, including developments in generative AI, platforms and business models and corresponding changes in consumer and customer behavior. For example, the proliferation of content distribution platforms and media channels, as well as AI-generated content, have (i) increased the choices available to consumers for content consumption and the risk of content commoditization and (ii) adversely impacted, and may continue to adversely impact, demand and pricing for the Company's products and services. Consumption of the Company's content on third-party platforms reduces its control over how its content is discovered, displayed and monetized and may affect its ability to attract, retain and monetize consumers directly and compete effectively. Generative AI-powered chatbots, search overviews and other tools using models trained or grounded on the Company's content or that produce responses that contain, are similar to or are based on the Company's content without permission, attribution or compensation, have, and may continue to, reduce traffic to, and subscriber demand for, the Company's digital products and services and harm existing and potential revenue streams. Technological advances, including in AI, have also increased the availability of public sources of free or inexpensive information and reduced the cost to process and package this information, which enables additional third parties to compete with the Company's information products and services, often at a lower cost, and potentially diminishes their perceived value. The Company's ability to compete depends on many factors, including its ability to: - differentiate its brands and their associated products and services based on quality, reliability and comprehensiveness and through its marketing and selling efforts;- respond to new and evolving technologies, distribution channels and platforms, including generative AI tools, content distribution platforms, media channels, online retailers and digital marketplaces, some of which have significant scale and leverage;- develop new products and services and consistently anticipate and respond to consumer and customer needs and preferences, which change frequently and are difficult to predict;- effectively protect and monetize its intellectual property;- manage and adapt to changes made by large digital platforms that affect the visibility of its content and other products and services (and, in turn, visits and advertiser interest), which occur frequently and are outside the Company's control; and - continue improving and scaling its data and technology infrastructure. The Company expects to continue to pursue new strategic initiatives, incorporate new technologies and develop new and enhanced products and services to remain competitive. These include licensing arrangements with certain large platforms for the use of its content by or on such platforms, the continued expansion into new business models and adjacencies at its digital real estate services businesses, streaming audio partnerships for its books, multi-product digital bundles and other innovative digital news products and experiences. The Company is also developing additional products and services that incorporate AI solutions to enhance insights and value for consumers and customers and respond to industry trends. The Company has incurred, and expects to continue to incur, significant costs in connection with these efforts, including costs relating to the initiatives referenced above, as well as other costs to acquire, develop, adopt, upgrade and exploit new and existing technologies and attract and retain employees with the necessary knowledge and skills. There can be no assurance any of these efforts will be successful, that they can be implemented in the time period or at the cost the Company expects or that it will realize the anticipated benefits. For example, not all of the Company's content license agreements have been renewed, and there is no guarantee that existing agreements will be renewed on terms favorable to the Company or at all. Some of the Company's current and potential competitors have greater resources, fewer regulatory burdens, better competitive positions in certain areas, greater operating capabilities, greater access to sources of content, data, information, technology (including AI) or other services or strategic relationships and/or easier access to financing. These advantages may allow them to respond more effectively to changes in technology, consumer and customer needs and preferences and market conditions, including by developing new or enhanced products and services or leveraging new technologies, including generative AI, more quickly or successfully than the Company. Continued consolidation or strategic alliances in certain industries in which the Company operates or otherwise affecting the Company's businesses may increase these advantages, including through greater scale, financial leverage and/or access to content, data, information, technology (including AI) and other offerings. If the Company is unable to compete successfully, its business, results of operations and financial condition could be adversely affected.

The Company generates substantial revenues from the sale of advertising, and a decline in advertising revenues has had, and could continue to have, an adverse effect on its business, financial condition and results of operations. Shifting consumer preferences toward digital content consumption and the increasing number of content consumption choices have intensified competition for advertising, increased audience fragmentation and advertising inventory and decreased demand for the Company's traditional media offerings and their attractiveness to advertisers. Different ways of purchasing advertising such as programmatic buying channels have further shifted advertising from traditional media to digital offerings, some of which generate lower rates or are not otherwise as beneficial to the Company. Large digital platforms command a substantial share of the digital advertising market and are also responsible for a significant amount of traffic to the Company's digital properties, which drives advertiser spending. Visibility on these platforms depends on algorithms that are outside the Company's control and change frequently, and recent changes have adversely affected traffic to some of the Company's digital properties, particularly in the U.K. Certain of these platforms also control significant technologies such as ad servers on which the Company's digital advertising operations rely, and interruptions or changes affecting these technologies, including the economic terms, could adversely impact advertising revenues and/or operating costs. Evolving standards for the delivery of digital advertising, the development and implementation of technology, standards, regulations, policies and practices and changing consumer expectations that adversely affect the Company's ability to deliver, target or measure the effectiveness of its advertising, including the phase-out of support for third-party cookies and mobile identifiers, as well as platform and browser requirements, news blocking or bias and new privacy regulations, may also negatively impact digital advertising revenues. There can be no assurance that the Company will be able to successfully navigate the evolving digital advertising market or that its digital advertising revenues will be able to offset declines in advertising revenue from traditional media offerings. The Company's advertising revenue is also affected generally by national and local economic and business conditions, which tend to be cyclical, as well as election and other news cycles. During fiscal 2025, factors such as trade issues, geopolitical tensions and conflicts and elevated interest rates contributed to continued economic uncertainty, reduced spending by advertisers and lower advertising revenues at certain of the Company's businesses. Other events outside the Company's control, including inflationary pressures, recessionary or stagflation concerns, supply chain disruptions, natural disasters, extreme weather, pandemics and other widespread health crises, political and social unrest or acts of terrorism, have had, and may in the future have, a similar impact. Certain sectors of the economy account for a significant portion of the Company's advertising revenues, including retail, technology and finance. Declines in the economic prospects of these and other advertisers or the economy in general could alter current or prospective advertisers' spending priorities, which may further reduce the Company's overall advertising revenue. Advertising sales are also dependent on the accurate measurement of demand for the Company's products and services, and any difficulty or failure in doing so, particularly for digital offerings or across multiple platforms, may adversely impact advertising volume and rates or, in the case of inaccuracies, the Company's reputation and relationships with advertisers.

The Company accepts a variety of different payment methods, including credit and debit cards, prepaid cards, ACH payments and online wallets, as payment for the Company's products and services and to facilitate payments between third-party users of its platforms such as renters and landlords. The Company relies on internal systems and third-party vendors to process payment. Acceptance and processing of these payment methods are subject to certain certifications, rules, regulations and industry standards and require payment of interchange and other fees. To the extent there are increases in payment processing fees, material changes in the payment ecosystem, delays in receiving payments from payment processors, errors in charges, failures to comply with, or changes to, certifications, rules, regulations or industry standards concerning payment processing, loss of payment processing partners and/or disruptions or failures in payment processing systems or payment products, the Company's ability to accept payments or retain customers could be negatively affected, it may be subject to fines and increased costs and it could suffer reputational harm, all of which may adversely impact its results of operations. The Company and its payment processing partners also experience fraudulent use of payment methods, and these efforts are becoming increasingly sophisticated. If the Company is unable to maintain its fraud and chargeback rates at acceptable levels, card networks may impose fines and additional card authentication requirements or terminate the Company's ability to process payments. Measures the Company implements to reduce fraud may not be effective and may add friction to the subscription or payment process. The loss of the Company's ability to process payments via any major payment method would adversely affect its business and results of operations.

The Company's products and services are distributed under some of the world's most recognizable and respected brands, including The Wall Street Journal and premier news brands in Australia and the U.K., Dow Jones, HarperCollins Publishers, realestate.com.au, Realtor.com and many others, and the Company believes its success depends on its continued ability to maintain and enhance these brands. The Company's brands, credibility and reputation could be damaged by incidents that erode consumer and customer trust or a perception that the Company's products and services, such as its journalism, real estate information, benchmark and pricing services and other data and information, are low quality, unreliable, biased or fail to maintain independence and integrity, including as a result of generative AI tools misattributing incorrect information to the Company. The Company's brands and reputation may also be impacted by its sustainability and corporate responsibility commitments and disclosures and positions the Company, its businesses or its publications take or do not take on social issues. Changes in reporting methodologies, available data or the Company's operations or reporting processes and disparate and evolving reporting standards, including regulatory requirements, may impact the Company's disclosure and progress towards achieving its commitments. Various stakeholders, regulators and lawmakers also have expressed or pursued different, and sometimes conflicting, views, expectations and/or legislation on ESG-related matters, and the Company may not be able to successfully navigate these divergent viewpoints and/or legislation. Significant negative claims or publicity regarding the Company's products and services, operations, customer service, management, employees, advertisers and other business partners, business decisions, positions on sustainability and corporate responsibility issues and culture may damage its brands or reputation and result in legal liability, even if such claims are untrue. To the extent the Company's brands, reputation and credibility are damaged, the Company's ability to attract and retain consumers, customers, advertisers and employees, as well as the Company's sales, business opportunities and profitability, could be adversely affected, which could in turn have an adverse impact on its business and results of operations.

The Company's business is subject to risks and uncertainties from events and circumstances outside its control that impact macroeconomic and market conditions or disrupt its business, including economic weakness, uncertainty or volatility, geopolitical tensions, conflicts or wars, pandemics and other health crises, natural disasters, severe weather events (which may occur with increasing frequency and intensity), political or social unrest, terrorism or other similar events. Recent changes in political policies and priorities in the U.S. and internationally, including expanded or retaliatory tariffs and other trade barriers, and an increase in hostilities and conflicts have created business and economic uncertainty and lowered consumer confidence. These conditions, as well as inflationary pressures, changes in monetary policy, elevated interest rates, recessionary or stagflation concerns, geopolitical tensions, supply chain disruptions and volatile foreign currency exchange rates, have affected, and may in the future, adversely affect the U.S. and global economies and markets and the Company's business. During fiscal 2025, persistent inflation in home prices and other housing-related costs, elevated interest rates and lower levels of consumer confidence continued to adversely impact the U.S. real estate market and depress real estate lead and transaction volumes and adjacent businesses at the Digital Real Estate Services segment. Recent economic uncertainty and lower consumer confidence have also contributed to softer consumer spending within the U.S. book publishing industry, which may continue in the near term. These and other events or conditions outside the Company's control have in the past also resulted in, and could in the future lead to, disruption of the Company's business, a tightening of, or more limited access to, the credit and capital markets, lower levels of liquidity, increases in the rates of default and bankruptcy, lower consumer net worth and a decline in other markets such as energy and commodities, and could, in turn, lead to a broader, prolonged economic downturn. Such downturns have resulted, and could in the future result, in lower advertising expenditures, lower demand for the Company's products and services, unfavorable changes in the mix of products and services purchased, pricing pressures, longer sales and payment cycles, a credit ratings downgrade and/or higher borrowing costs and decreased ability of third parties to satisfy their obligations to the Company and have adversely affected, and could in the future adversely affect, the Company's business, results of operations, financial condition and liquidity. The Company is particularly exposed to business risks in the U.S., Australia and the U.K., its three main operating geographies. The Company may also be impacted by other events outside its control, such as developments in the industries in which it operates. In the U.S. residential real estate industry, settlements of recent class action lawsuits against certain brokerages and franchisors, as well as NAR, have led to changes in NAR's rules and practices, including elimination of the cooperative compensation rule, thereby prohibiting REALTOR MLSs from publishing buyer broker compensation offers. While the impact of such changes is uncertain and difficult to predict, if they significantly affect how home buyers and sellers engage with agents or negatively impact agent commissions, that could reduce the number of leads and other services agents purchase from Move and adversely affect its business and results of operations or require changes to its business model. The settlements are also being appealed, and the Company cannot predict the final outcomes of these matters or any future lawsuits, which could result in additional changes that impact the industry.

A substantial portion of the Company's revenues are derived outside the U.S., and the Company may continue to expand its international operations. There are risks inherent in doing business internationally and other risks may be heightened, including (1) issues related to staffing and managing international operations, including maintaining the health and safety of its personnel around the world; (2) economic uncertainties and volatility in local markets, including as a result of trade policies, inflationary pressures or a general economic slowdown or recession, and political or social instability; (3) the impact of events in relevant jurisdictions such as geopolitical tensions and conflicts, natural disasters, extreme weather (which may occur with increasing frequency and intensity), pandemics and other widespread health crises and acts of terrorism or war; (4) compliance with foreign laws, regulations and policies and potential adverse changes thereto, including with respect to tax regimes, ownership restrictions, restrictions on repatriation of funds and currency exchange, data privacy, intellectual property, competition, AI, consumer protection and labor and employment, as well as U.S. laws affecting the conduct of business in foreign countries; (5) compliance with the Foreign Corrupt Practices Act, the U.K. Bribery Act and other anti-corruption laws and regulations, trade restrictions and economic sanctions; and (6) regulatory or governmental action against the Company's products, services and personnel such as censorship or other restrictions on access, barring, detention or expulsion of journalists or other employees and other retaliatory actions, which may increase due to geopolitical tensions and conflicts. Events or developments related to these and other risks associated with the Company's international operations could result in reputational harm and have an adverse impact on the Company's business, results of operations, financial condition and prospects. Challenges associated with operating globally may increase as the Company expands into geographic areas that it believes represent the highest growth opportunities.

The Company is exposed to fluctuations in foreign currency exchange rates because it has significant operations in a number of foreign jurisdictions and certain of its operations are conducted in currencies other than the Company's reporting currency, primarily the Australian dollar and the British pound sterling. Because the Company's financial statements are denominated in U.S. dollars, changes in foreign currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, a currency translation impact on the Company's earnings when the results of those operations that are reported in foreign currencies are translated into U.S. dollars for inclusion in the Company's financial statements, which could, in turn, have an adverse effect on its reported results of operations in a given period or in specific markets. The Company is also exposed to foreign currency exchange rate fluctuations with respect to cash and cash equivalents held in currencies other than the U.S. dollar. The Company's policy is to evaluate hedging against the risk of foreign currency exchange rate movements with respect to this exposure to reduce volatility and enhance predictability where commercially reasonable. However, there can be no assurance that it will be able to continue to do so at a reasonable cost or at all, or that there will not be a default by any of the counterparties to those arrangements.