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What changed in PREFORMED LINE PRODUCTS CO's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of PREFORMED LINE PRODUCTS CO's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+133 added−151 removedSource: 10-K (2024-03-08) vs 10-K (2023-03-03)

Top changes in PREFORMED LINE PRODUCTS CO's 2023 10-K

133 paragraphs added · 151 removed · 113 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIn addition, the Company has incurred and may in the future incur exit-related costs and impairments of goodwill, definite and indefinite-lived intangible assets and property, fixtures and equipment as the Company makes corresponding changes to its business to reflect these changes and uncertainties in the Company’s industries and customer demand, and these costs and impairments could have a significant negative impact on the Company’s operating results for the period in which they are incurred.
Biggest changeIn addition, as the Company adjusts its business to reflect such changes and uncertainties in the Company’s industries and customer demand, the Company has incurred and may in the future incur exit-related costs and impairments of goodwill, definite lived intangible assets and property, fixtures and equipment.
As a result of these factors, the Company’s operating results could be adversely affected. 10 The Company’s international operations subject the Company to additional business risks that may have a material adverse effect on the Company’s business, operating results and financial condition.
As a result of these factors, the Company’s operating results and financial condition could be adversely affected. 10 The Company’s international operations subject the Company to additional business risks that may have a material adverse effect on the Company’s business, operating results and financial condition.
The Company’s operations are also exposed to general geopolitical risks, such as political and economic instability, social unrest, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts in connection with its international operations.
The Company’s operations are also exposed to general geopolitical risks, such as political and economic instability, social unrest, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts in connection with its operations.
These risks of conducting business internationally and instability in global economic conditions may have a material adverse effect on the Company’s business, operating results and financial condition. The Company's financial condition and results could be adversely affected by its level of debt and changes in interest rates. Any period of interest rate increases may adversely affect the Company’s profitability.
These risks of conducting business internationally and the instability in global economic conditions may have a material adverse effect on the Company’s business, operating results and financial condition. The Company's financial condition and results could be adversely affected by its level of debt and changes in interest rates. Any period of interest rate increases may adversely affect the Company’s profitability.
Natural disasters, severe weather and the effects of climate change, including increased frequency and severity of storms, floods, fires, fog, mist, freezing conditions, sea-level rise and other climate-related events, and other catastrophic events could disrupt our operations, cause damage to our business operations, our suppliers or our customers and could have an adverse effect on the Company’s operations, business and financial condition.
Natural disasters, severe weather and the effects of climate change, including increased frequency and severity of storms, floods, fires, fog, mist, freezing conditions, sea-level rise and other climate-related events, and other catastrophic events could disrupt our operations, cause damage to our business operations, our suppliers or our customers; and have an adverse effect on the Company’s operations, business and financial condition.
The Company’s operations have been affected and could continue to be adversely affected by global economic conditions such as recession, political or social unrest, economic instability, inflation, rising interest rates, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts, public health concerns or otherwise.
The Company’s operations have been affected by and could continue to be adversely affected by global economic conditions such as recession, political or social unrest, economic instability, inflation, rising interest rates, acts of war, military conflict, international hostilities or the perception that hostilities may be imminent, terrorism and changes in diplomatic and trade relationships, including any retaliatory measures, sanctions or tariffs imposed in response to any acts of war or military conflicts, public health concerns or otherwise.
For example, extensive environmental regulations related to air and water quality, the discharge of pollutants, climate change, the handling of toxic waste and the handling and transport of products and components classified as hazardous impact its daily operations. Various employment and labor laws and regulations govern the Company’s relationships with its employees throughout the world and affect operating costs.
For example, extensive environmental regulations related to air and water quality, the discharge of pollutants, climate change, the handling of toxic waste and 13 the handling and transport of products and components classified as hazardous impact its daily operations. Various employment and labor laws and regulations govern the Company’s relationships with its employees throughout the world and affect operating costs.
Others, including its competitors may independently develop similar technology, duplicate or design around the Company’s intellectual property, and in such cases, it could not assert its intellectual property rights against such parties. The Company may also be subject to costly litigation in the event its technology infringes upon or otherwise violates a third party’s proprietary rights.
Others, including its competitors may independently develop similar technology, duplicate or design around the Company’s intellectual property, and in such cases, the Company could not assert its intellectual property rights against such parties. The Company may also be subject to costly litigation in the event its technology infringes upon or otherwise violates a third party’s proprietary rights.
The Company may be forced to litigate to enforce or determine the scope and enforceability of its intellectual property rights, trade secrets and know-how, which is expensive, could cause a diversion of 13 resources and may not prove successful, especially in countries where such rights are more difficult to enforce.
The Company may be forced to litigate to enforce or determine the scope and enforceability of its intellectual property rights, trade secrets and know-how, which is expensive, could cause a diversion of resources and may not prove successful, especially in countries where such rights are more difficult to enforce.
Over the past few years, the Company has experienced inflationary pressures that have impacted its profit margins, primarily due to raw materials increases (specifically, plastic resins, aluminum, petroleum and sand (grit)), coupled with increased freight costs.
Over the past few years, the Company has experienced temporary inflationary pressures that have impacted its profit margins, primarily due to raw materials increases (specifically, plastic resins, aluminum, petroleum and sand (grit)), coupled with increased freight costs.
The Company has implemented price increases in the U.S. and internationally to mitigate rising material costs, and additional increases may be needed in the future to maintain profit margins. This may have impacted or could continue to impact the demand for the Company’s products.
The Company has implemented price increases in the U.S. and internationally to mitigate rising material costs, and additional increases may be needed in the future to maintain profit margins. Price increases may have impacted or could continue to impact the demand for the Company’s products.
In the ordinary course of business, the Company relies on information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities.
In the ordinary course of business, the Company relies on information technology networks and 12 systems, some of which are managed by third parties, to process, transmit and store electronic information, and to manage or support a variety of business processes and activities.
The trend toward consolidation of the energy, telecommunication and data communication industries may require the Company to quickly adapt to rapidly changing market conditions and customer requirements. In addition, as the Company expands its offerings in new areas, its success with these products and services will depend on its ability to offer quality, reliability and other competitive advantages.
The trend toward consolidation of the energy, telecommunications and data communication industries may require the Company to quickly adapt to rapidly changing market conditions and customer requirements. In addition, as the Company expands its offerings in new areas, its success with these products and services will depend on its ability to offer quality, reliability and other competitive advantages.
Item 1A. Ri sk Factors The Company’s business, operating results, financial condition and cash flows may be affected by a number of factors including, but not limited to those discussed below. Any of these factors could cause the Company’s actual results to vary material from recent results or future anticipated results.
Item 1A. Ri sk Factors The Company’s business, operating results, financial condition and cash flows may be affected by a number of factors including, but not limited to those discussed below. Any of these factors could cause the Company’s actual results to vary materially from recent results or future anticipated results.
Despite the Company’s cybersecurity measures and oversight of such matters by the Board of Directors, which are continuously reviewed and upgraded, the Company’s information technology networks and infrastructure and protected data may still be vulnerable to damage, disruptions or shutdowns due to attack by hackers or breaches, 12 employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, service providers including cloud services, natural disasters or other catastrophic events.
Despite the Company’s cybersecurity measures and oversight of such matters by the Audit Committee and the Board of Directors, which are continuously reviewed and upgraded, the Company’s information technology networks and infrastructure and protected data may still be vulnerable to damage, disruptions or shutdowns due to attack by hackers or breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, service providers including cloud services, natural disasters or other catastrophic events.
In addition, the pace of technological development in the telecommunication market is rapid and these advances (i.e., wireless, fiber optic network infrastructure, etc.) and the ability of the Company’s larger competitors or new providers to adapt more efficiently may adversely affect the Company’s ability to compete in this market.
In addition, the pace of technological development in the telecommunication market is rapid and these advances (i.e., wireless, fiber optic network infrastructure, etc.) and the ability of the Company’s larger competitors or new providers to adapt more efficiently may adversely affect the Company’s ability to compete in the telecommunications market.
Due to its international sales, the Company is subject to the risks of conducting business internationally, including unexpected changes in, or impositions of, legislative or regulatory requirements, which could materially adversely affect U.S. dollar sales or operating expenses, tariffs and other barriers and restrictions, potentially longer payment cycles, greater difficulty in accounts receivable collection, reduced or limited protection of intellectual property rights, potentially adverse taxes and the burdens of complying with a variety of international laws and communications standards.
Due to its international sales, the Company is subject to the risks of conducting business internationally, including unexpected changes in, or impositions of, legislative or regulatory requirements, which could materially adversely affect U.S. dollar sales or operating expenses, tariffs and other barriers and restrictions, potentially longer payment cycles, greater difficulty in accounts receivable collection, reduced or limited protection of intellectual property rights, potentially adverse taxes and the burdens of complying with a variety of international laws and communications standards, including implementing appropriate internal controls.
These factors include actual or anticipated fluctuations in the Company’s operating results, changes in or its ability to achieve estimates of its operating results by analysts, investors or management, analysts’ recommendations regarding its stock or its competitors’ stock, sales of substantial amounts of its common shares by shareholders, actions or announcements by the Company or its competitors, the maintenance and growth of the value of the Company’s brands, litigation, legislation or other regulatory developments affecting the Company or its industry, widespread/pandemic illness, natural disasters, cyber-attacks, terrorist acts, war or other calamities and changes in general market and economic conditions.
These factors include actual or anticipated fluctuations in the Company’s operating results; changes in, or the inability to, achieve estimates of its operating results by analysts, investors or management; analysts’ recommendations regarding its stock or its competitors’ stock; sales of substantial amounts of its common shares by shareholders; actions or announcements by the Company or its competitors; the maintenance and growth of the value of the Company’s brands; litigation; legislation or other regulatory developments affecting the Company or its industry; widespread illness or pandemics; natural disasters; cyber-attacks; terrorist acts; war or other calamities and changes in general market and economic conditions.
Insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters. A judgment or other liability in excess of the Company’s insurance coverage or financial statement accruals for any claims could adversely affect the Company’s business and operating results.
Insurance may not be available at all or in sufficient amounts to cover any liabilities with respect to these or other matters. An unfavorable judgment or other liability in excess of the Company’s insurance coverage or financial statement accruals for any claims could adversely affect the Company’s business and operating results.
On August 31, 2022, the Company amended the Facility and elected to change its rate from BSBY to SOFR, all other terms remain the same. The Facility agreement also contains, among other provisions, requirements for maintaining levels of net worth and profitability.
On August 31, 2022, the Company amended the Facility and elected to change its rate from BSBY to SOFR, with all other terms remaining the same. The Facility agreement also contains, among other provisions, requirements for maintaining levels of net worth and profitability.
The introduction of new laws or regulations, or changes in existing laws or regulations, including minimum wage increases, mandated benefits or other requirements that impose additional obligations on the Company, could increase the costs of doing business.
The introduction of new laws or regulations, or changes in existing laws or regulations, including minimum wage increases, mandated benefits, climate change-related disclosures or other requirements that impose additional obligations on the Company, could increase the costs of doing business.
Risk Factors Related to Human Capital The Company depends on maintaining a skilled workforce and any interruption in the workforce could negatively impact the Company’s operating results and financial condition. The Company’s ability to sustain and grow its business requires a commitment to hire, retain and develop a highly skilled and diverse management team and workforce.
The Company depends on maintaining a skilled workforce, and any interruption in the workforce could negatively impact the Company’s operating results and financial condition. The Company’s ability to sustain and grow its business requires a commitment to hire, retain and develop a highly skilled and diverse management team and workforce.
Failure to ensure that the Company has the depth and breadth of personnel with the necessary skill set and experience, the loss of key employees or interruptions in the Company's workforce, including unionization efforts and changes in labor relations, could impede the Company’s ability to deliver its growth objectives and execute its strategy.
Failure to ensure that the Company has the depth and breadth of personnel with the necessary skill set and experience, failure to compete within and outside the Company’s markets to attract and retain employees, the loss of key employees or interruptions in the Company's workforce, including unionization efforts and changes in labor relations, could impede the Company’s ability to deliver its growth objectives and execute its strategy.
The amount of capital spending and, therefore, the Company’s sales and profitability are affected by a variety of factors, including general economic conditions, access by customers to financing, government regulation, demand for energy and cable services, energy prices and technological factors.
The amount of capital spending and, therefore, the Company’s sales and profitability are affected by a variety of factors, including general economic conditions, access by customers to financing, government regulation, demand for energy and cable services, energy prices, technological factors and the ability of our customers to utilize available inventory.
These covenants may restrict the Company’s operations and prevent it from pursuing opportunities that would otherwise be in the Company’s best interest for long-term growth. Natural disasters, severe weather, public health concerns, epidemics or pandemics could, and the COVID-19 pandemic may continue to, have a material adverse effect on the Company’s business, operating results and financial condition.
These covenants may restrict the Company’s operations and prevent it from pursuing opportunities that would otherwise be in the Company’s best interest for long-term growth. Natural disasters, severe weather, climate change concerns, public health concerns, epidemics or pandemics could have a material adverse effect on the Company’s business, operating results and financial condition.
International sales account for a substantial portion of the Company’s net sales (47%, 50% and 57% in 2022, 2021 and 2020, respectively).
International sales account for a substantial portion of the Company’s net sales (48%, 47%, and 50% in 2023, 2022 and 2021, respectively).
In addition, a higher level of floating rate debt would increase the exposure to changes in interest rates. As of December 31, 2022, the Company’s total debt, including notes payable, was $89.5 million and the unused availability under its credit facility (the "Facility") was $43.3 million.
In addition, a higher level of floating rate debt would increase the exposure to changes in interest rates. As of December 31, 2023, the Company’s total debt, including notes payable, was $62.3 million and the unused availability under its credit facility (the "Facility") was $55.7 million.
In connection with this growth strategy, the Company faces certain risks and uncertainties in addition to the risks faced in the Company’s day-to-day operations, including the risks pertaining to integrating acquired businesses, realizing the benefits of acquired technology, expanding exposure to unknown liabilities, utilizing and retaining new personnel and operating in new jurisdictions.
In connection with this growth strategy, the Company faces certain risks and uncertainties in addition to the risks faced in the Company’s day-to-day operations, including the risks pertaining to integrating acquired businesses (including integrating the acquired businesses’ internal controls and procedures into our existing control structure), realizing the benefits of acquired technology, expanding exposure to unknown liabilities, utilizing and retaining new personnel and operating in new jurisdictions.
The energy and communication industries are characterized by rapid technological change. Satellite, wireless and other communication technologies currently being deployed may represent a threat to copper, coaxial and fiber optic-based systems by reducing the need for wire-line networks.
The energy and communication industries are characterized by rapid change in technology and customer requirements. 5G, wireless and other communication technologies currently being deployed may represent a threat to copper, coaxial and fiber optic-based systems by reducing the need and desire for wire-line networks.
COVID-19 has disrupted and could continue to disrupt the global supply chain, which could have a material, adverse effect on the Company’s ability to secure raw materials and supplies and could result in increased costs and the loss of sales and customers.
COVID-19 has disrupted and any future viral outbreak or health pandemic could disrupt the global supply chain, which could have a material adverse effect on the Company’s ability to secure raw materials and supplies and could result in increased costs and the loss of sales and customers.
Any events that compromise the Company’s systems or failures to comply with applicable privacy laws could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to the Company’s reputation, which could adversely affect the Company’s business. The Company’s stock price is subject to volatility. The stock market in general is highly volatile.
Any events that compromise the Company’s systems or failures to comply with applicable privacy laws could result in legal claims or proceedings, liability or penalties under privacy laws, disruption in operations, and damage to the Company’s reputation, which could adversely affect the Company’s business.
In addition, many countries are actively pursuing changes to their tax laws applicable to corporate multinationals such as the U.S. Inflation Reduction Act, which could affect our U.S. federal corporate income tax rate and the tax credits we could receive from foreign income.
In addition, many countries are actively pursuing changes to their tax laws applicable to corporate multinationals, which could affect our U.S. federal corporate income tax rate and the tax credits we could receive from foreign income. These future changes could materially affect the Company’s financial position and results of operations. Item 1B.
The Company may have interruptions in or lose business due to the uncertainty of the global economy, including due to the lack of available funding for the Company’s customers. The demand for the Company’s products is significantly affected by the amount of discretionary business and consumer spending, each of which is impacted by the continued uncertainty of the global economy.
The demand for the Company’s products is significantly affected by the amount of discretionary business and consumer spending, each of which is impacted by the continued uncertainty of the global economy.
The markets in which the Company operates are highly competitive. The level of intensity of competition may increase in the foreseeable future due to anticipated growth in the telecommunication and data communication industries and potential new entrants into the market.
The level of intensity of competition may increase in the foreseeable future due to anticipated growth in the telecommunication and data communication industries and potential new entrants into the market. The Company’s current competitors in the telecommunication and data communication markets are larger companies with significant influence over the distribution network.
Consolidation presents an additional risk to the Company in that merged customers will rely on relationships with a source other than the Company. Consolidation may also increase the pressure on suppliers, such as the Company, to sell product at lower prices. The intense competition in the Company’s markets, particularly communication, may lead to a reduction in sales and earnings.
Consolidation may also increase the pressure on suppliers, such as the Company, to sell product at lower prices. The intense competition in the Company’s markets, particularly communication, may lead to a reduction in sales and earnings. The markets in which the Company operates are highly competitive.
The duration and scope of the COVID-19 pandemic cannot be predicted, and therefore, any anticipated negative financial impact to the Company’s operating results cannot be reasonably estimated. 11 Business and Operations Risks The Company’s business will suffer if the Company fails to offer quality products and a high level of customer service, as well as develop and successfully introduce new and enhanced products that meet the changing needs of the Company’s customers.
Business, Operations and Human Capital Risks The Company’s business could suffer if the Company fails to offer quality products and a high level of customer service, as well as develop and successfully introduce new and enhanced products that meet the changing needs of the Company’s customers.
The Company’s current competitors in the telecommunication and data communication markets are larger companies with significant influence over the distribution network. The Company may not be able to compete successfully against its competitors, many of which may have access to greater financial resources than the Company.
The Company may not be able to compete successfully against its competitors, many of which may have access to greater financial resources than the Company.
Extreme weather conditions could also limit the availability of our resources, increase the costs of our products or could cause the installation of our products and systems to be delayed or canceled. Further, legislative and regulatory responses to climate change initiatives could require the Company to incur increased costs and make additional and significant capital investments in the Company’s business.
Extreme weather conditions could also limit the availability of our resources, increase the costs of our products or cause the installation of our products and systems to be delayed or canceled.
Additionally, the health of the Company's employees is critical and protection of its employees is the Company's top priority. The Company continues to develop and invest in human capital through continuing education, work-related certifications, and talent and performance management systems. These efforts directly impact the ability to deliver its growth objectives and execute its strategy. Item 1B.
Labor shortages or increased labor-related costs could also directly affect our financial condition. Additionally, the health of the Company's employees is critical, and workplace safety is the Company's top priority. The Company continues to develop and invest in human capital through continuing education, work-related certifications, and talent and performance management systems.
Covenant restrictions relating to additional indebtedness could restrict the Company’s ability to pay dividends, fund capital expenditures, consummate additional acquisitions and significantly increase the Company’s interest expense. Any failure to successfully complete acquisitions or to successfully integrate such strategic acquisitions could have a material adverse effect on the Company’s business, operating results and financial condition.
Any failure to successfully complete acquisitions or to successfully integrate such strategic acquisitions could have a material adverse effect on the Company’s business, operating results and financial condition. The Company may have interruptions in or lose business due to the uncertainty of the global economy, including due to the lack of available funding for the Company’s customers.
The process of identifying, negotiating and integrating acquisitions can divert substantial time and attention of management and impose unexpected costs. In addition, the Company may incur debt to finance future acquisitions, and the Company may issue securities in connection with future acquisitions that may dilute the holdings of current and future shareholders.
In addition, the Company may incur debt to finance future acquisitions, and the Company may issue securities in connection with future acquisitions that may dilute the holdings of current and future shareholders. Covenant restrictions relating to additional indebtedness could restrict the Company’s ability to pay dividends, fund capital expenditures, consummate additional acquisitions and significantly increase the Company’s interest expense.
Worldwide economic conditions have been significantly impacted by COVID-19 and the effects could continue to have an adverse effect on the Company’s operations and businesses as government authorities could continue to impose restrictions to manage it, including mandatory closures, work-from-home orders and social distancing protocols.
Worldwide economic conditions have been significantly impacted by COVID-19 since 2020. Although the Federal Public Health Emergency Declaration issued in response to COVID-19 was lifted on May 11, 2023, the lingering effects of the COVID-19 pandemic could continue to have an adverse effect on the Company’s operations and businesses.
The Company also is subject to public health concerns, including viral outbreaks such as the COVID-19 pandemic.
Further, legislative and regulatory responses to climate change initiatives could require the Company to incur increased costs, such as costs incurred to purchase carbon offsets or otherwise pay for the Company’s emissions, and make additional and significant capital investments in the Company’s business. The Company also is subject to public health concerns, including viral outbreaks such as the COVID-19 pandemic.
Removed
The impact of the COVID-19 pandemic and recent inflation, which is expected to continue, has disrupted and may continue to disrupt the global supply chain and could have a material, adverse effect on the ability to secure raw materials and supplies.
Added
These costs and impairments could have a significant negative impact on the Company’s operating results for the period in which they are incurred. Consolidation presents an additional risk to the Company in that merged customers will rely on relationships with a source other than the Company.
Removed
Additionally, due to the COVID-19 pandemic, foreign governments facilitated economic stimulus by enacting new tax legislation throughout 2022. Foreign governments will continue to contemplate future changes to tax law to assist in economic recovery. These future changes could materially affect the Company’s financial position and results of operations.
Added
The duration and scope of 11 the any future viral outbreak or health pandemic cannot be predicted, and therefore, any anticipated negative financial impact to the Company’s operating results cannot be reasonably estimated.
Added
Further, internal controls over financial reporting of acquired businesses may not meet required U.S. public company standards. The process of identifying, negotiating and integrating acquisitions can divert substantial time and attention of management and impose unexpected costs.
Added
These efforts directly impact the Company’s ability to deliver its growth objectives and execute its strategy, though the Company is susceptible to interruptions in the workforce that could affect the Company’s operating results and financial condition. A material disruption or unforeseen difficulties with any of our manufacturing facilities could negatively impact our operating results and financial condition.
Added
The Company operates 26 manufacturing facilities domestically and internationally to strategically serve its worldwide markets. Equipment failures, operational interruptions, natural disasters and other unanticipated disruptions may decrease our ability to manufacture our products in a timely manner at our anticipated cost.
Added
Interruptions in our production due to such a disruption may lead to decreasing sales and necessitating capital expenditures, therefore negatively impacting our operating results and financial condition. The Company may also face unforeseen difficulties if we decide to build, lease, expand, redesign, relocate or consolidate facilities.
Added
Despite planning, a real estate project may entail uncertainties regarding cost, timeliness, personnel and materials, and any of these variables may negatively impact the Company’s operating results and financial condition. The Company’s stock price is subject to volatility. The stock market in general is highly volatile.

Item 2. Properties

Properties — owned and leased real estate

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Item 2. P roperties The Company currently owns or leases various facilities, which together contain approximately 2.6 million square feet of manufacturing, warehouse, research and development, sales and office space worldwide. Most of the Company’s international facilities contain space for offices, research and engineering (R&E), warehousing and manufacturing with manufacturing using a majority of the space.
Added
Item 2. P roperties Our corporate headquarters is located in Mayfield Village, Ohio, and, at December 31, 2023, the Company maintained 26 manufacturing plants. We also maintain various sales, research and engineering, administrative offices and distribution centers throughout the world. None of these manufacturing plants, administrative offices or distribution centers are individually material to our operations.
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The following table provides information regarding the Company’s principal facilities: Total Approximate Type of Facilities Square Feet Segment Location Manufacturing Warehouse R&E Office Owned Leased United States United States 2 2 1 4 721,900 Americas Brazil 2 1 1 2 167,600 46,000 Argentina 1 1 1 26,400 Canada 2 2 1 2 124,400 Mexico 2 1 3 140,000 1,100 Asia-Pac Australia 1 1 1 4 122,900 79,200 China 1 1 1 1 132,100 Indonesia 2 1 1 197,800 Malaysia 1 1 18,600 Thailand 1 3 1 80,000 49,500 New Zealand 1 2 1 2 34,200 6,200 Vietnam 1 1 8,700 India 1 EMEA Great Britain 1 1 1 1 90,400 Austria 1 1 14,100 Czech Republic 3 1 1 2 22,000 66,700 South Africa 1 1 1 1 68,800 Spain 1 1 1 1 63,300 10,800 France 2 2 53,700 Poland 1 1 1 1 175,000 Item 3.
Added
The facilities are situated in three states within the United States and in 19 other countries. We own the majority of our manufacturing plants, and our leased properties consist of manufacturing plants, research and engineering, sales, administrative offices and distribution centers.
Added
We believe that our properties have been adequately maintained, are in good condition generally and are suitable and adequate for our business as presently conducted. The extent to which we utilize our properties varies by property and from time to time and aligns with manufacturing needs. Most of our manufacturing facilities remain capable of handling volume increases. 15 Item 3.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe comparison of the cumulative total returns for each investment assumes that $100 was invested in PLP's common shares and the respective indices on December 31, 2017 through December 31, 2022 and assumes the reinvestment of dividends. 2017 2018 2019 2020 2021 2022 PREFORMED LINE PRODUCTS CO 100.00 77.26 87.18 100.36 96.00 124.72 NASDAQ MARKET INDEX 100.00 97.16 132.81 192.47 235.15 158.65 PEER GROUP INDEX 100.00 84.86 117.29 158.40 157.22 147.50 Purchases of Equity Securities On July 28, 2021, the Board of Directors authorized a plan to repurchase up to an additional 191,163 of Preformed Line Products Company common shares, resulting in a total of 250,000 shares available for repurchase with no expiration date.
Biggest changeThe comparison of the cumulative total returns for each investment assumes that $100 was invested in PLP's common shares and the respective indices on December 31, 2018 through December 31, 2023 and assumes the reinvestment of dividends. 17 2018 2019 2020 2021 2022 2023 PREFORMED LINE PRODUCTS CO 100.00 112.84 129.90 124.25 161.44 261.18 NASDAQ MARKET INDEX 100.00 136.69 198.10 242.03 163.28 236.17 PEER GROUP INDEX 100.00 131.46 170.83 189.17 162.66 202.93 Repurchases of Equity Securities On November 1, 2023, the Board of Directors authorized a new plan to repurchase up to an additional 212,952 of Preformed Line Products Company common shares, resulting in a total of 250,000 shares available for repurchase with no expiration date.
The following graph compares the cumulative total return to holders of PLP's common shares against the cumulative total return of the NASDAQ Composite Index and the Hemscott Industry Group 627 (Industrial Electrical Equipment) (the “Peer Group Index”) for the five-year period ended December 31, 2022.
The following graph compares the cumulative total return to holders of PLP's common shares against the cumulative total return of the NASDAQ Composite Index and the Hemscott Industry Group 627 (Industrial Electrical Equipment) (the “Peer Group Index”) for the five-year period ended December 31, 2023.
Year Ended December 31, 2022 2021 Quarter High Low Dividend High Low Dividend First 65.14 55.27 $ 0.20 79.00 $ 64.29 $ 0.20 Second 64.99 58.40 0.20 81.30 65.45 0.20 Third 84.70 59.55 0.20 75.76 64.50 0.20 Fourth 94.34 71.80 0.20 71.47 57.15 0.20 While the Company expects to continue to pay dividends of a comparable amount in the near term, the declaration and payment of future dividends will be made at the discretion of the Company’s Board of Directors in light of the current needs of the Company.
Year Ended December 31, 2023 2022 Quarter High Low Dividend High Low Dividend First $ 128.04 $ 79.29 $ 0.20 $ 65.14 $ 55.27 $ 0.20 Second 172.40 119.62 0.20 64.99 58.40 0.20 Third 182.06 151.00 0.20 84.70 59.55 0.20 Fourth 162.36 110.28 0.20 94.34 71.80 0.20 While the Company expects to continue to pay dividends of a comparable amount in the near term, the declaration and payment of future dividends will be made at the discretion of the Company’s Board of Directors in light of the current needs of the Company.
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that may yet be Purchased under the Plans or Programs October — $ 0.00 — 186,591 November — $ 0.00 — 186,591 December 17,174 $ 90.18 80,584 169,417 Total 17,174 18 Item 6. [Reserved] 19
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that may yet be Purchased under the Plans or Programs October — $ — — 37,048 November 3,150 $ 134.18 3,150 246,850 December — $ — — 246,850 Total 3,150 18 Item 6. [Reserved]
Therefore, there can be no assurance that the Company will continue to make such dividend payments in the future. Number of common shareholders As of March 1, 2023, the Company had approximately 4,779 shareholders of record. Repurchase of equity securities There were no equity compensation plans not approved by security holders during the year ended December 31, 2022.
Therefore, there can be no assurance that the Company will continue to make such dividend payments in the future. Number of common shareholders As of February 23, 2024, the Company had approximately 6,582 shareholders of record. Performance Graph Historical share price performance should not be relied upon as an indication of future share price performance.
Removed
The approved transactions for the year ended December 31, 2022 are as follows.
Removed
(a) (b) (c) Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a) Plan Category (1) (1) (2) Equity compensation plans approved by security holders 266,869 $ 57.75 473,110 (1) Of these shares, 206,569 were issued in the form of restricted stock units, which have no exercise price.
Removed
Accordingly, such shares were not included in the weighted average exercise price. For further detail, refer to Note 10, “Share-Based Compensation.” (2) The Company’s Long-Term Incentive Plan of 2008 was replaced in May 2016 by the 2016 Incentive Plan.
Removed
Up to 900,000 of the 1,000,000 shares initially authorized may be issued in the form of restricted shares or units under the new plan.
Removed
See Note 10 in the Notes to Consolidated Financial Statements for information relating to the Company’s 2016 Incentive Plan. 17 Performance Graph Historical share price performance should not be relied upon as an indication of future share price performance.
Removed
There were 17,174 shares repurchased under this plan for the three months ended December 31, 2022. There were 169,417 shares remaining to be purchased as of December 31, 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

56 edited+10 added−26 removed36 unchanged
Biggest changeYear Ended December 31, (Thousands of dollars) 2022 2021 Change Net sales $ 637,021 100.0 % $ 517,417 100.0 % $ 119,604 Cost of products sold 421,841 66.2 351,175 67.9 70,666 GROSS PROFIT 215,180 33.8 166,242 32.1 48,938 Costs and expenses 145,819 22.9 118,693 22.9 27,126 OPERATING INCOME 69,361 10.9 47,549 9.2 21,812 Other income, net 4,343 0.7 1,347 0.3 2,996 INCOME BEFORE INCOME TAXES 73,704 11.6 48,896 9.5 24,808 Income taxes 19,305 3.0 13,175 2.5 6,130 NET INCOME 54,399 8.5 35,721 6.9 18,678 Net (income) loss attributable to noncontrolling interests (4 ) (0.0 ) 8 0.0 (12 ) NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS $ 54,395 8.5 % $ 35,729 6.9 % $ 18,666 2022 RESULTS OF OPERATIONS COMPARED TO 2021 Net sales.
Biggest changeThe Company’s past operating results are not necessarily indicative of future operating results. 20 Year Ended December 31, (Thousands of dollars) 2023 2022 Change Net sales $ 669,679 100.0 % $ 637,021 100.0 % $ 32,658 Cost of products sold 434,831 64.9 421,841 66.2 12,990 GROSS PROFIT 234,848 35.1 215,180 33.8 19,668 Costs and expenses 150,694 22.5 145,819 22.9 4,875 OPERATING INCOME 84,154 12.6 69,361 10.9 14,793 Other (expense) income, net (1,810 ) (0.3 ) 4,343 0.7 (6,153 ) INCOME BEFORE INCOME TAXES 82,344 12.3 73,704 11.6 8,640 Income taxes 19,007 2.8 19,305 3.0 (298 ) NET INCOME 63,337 9.5 54,399 8.5 8,938 Net income attributable to noncontrolling interests (5 ) (0.0 ) (4 ) (0.0 ) (1 ) NET INCOME ATTRIBUTABLE TO PREFORMED LINE PRODUCTS COMPANY SHAREHOLDERS $ 63,332 9.5 % $ 54,395 8.5 % $ 8,937 2023 RESULTS OF OPERATIONS COMPARED TO 2022 Net sales.
The fair value estimates are subjective and sensitive to significant assumptions, such as revenue growth rates, operating margins, the weighted-average cost of capital ("WACC"), and estimated market multiples, of which are affected by expectations of future market or economic conditions.
The fair value estimates are subjective and sensitive to significant assumptions, such as revenue growth rates, operating margins, the weighted-average cost of capital, and estimated market multiples, of which are affected by expectations of future market or economic conditions.
Our effective tax rate is affected by recurring items, such as tax rates in foreign jurisdictions, which differ from the U.S. federal statutory income tax rate, and the relative amount of income earned in those jurisdictions where such earnings are permanently reinvested.
Our effective tax rate was affected by recurring items, such as tax rates in foreign jurisdictions, which differ from the U.S. federal statutory income tax rate, and the relative amount of income earned in those jurisdictions where such earnings are permanently reinvested.
The expected long-term return on plan assets of 6.50% reflects the plan’s historical returns and represents our best estimate of the likely future returns on the plan’s asset mix. We believe the assumptions used in recording obligations under the plans are reasonable based on prior experience, market conditions and the advice of plan actuaries.
The 2024 expected long-term return on plan assets of 6.25% reflects the plan’s historical returns and represents our best estimate of the likely future returns on the plan’s asset mix. We believe the assumptions used in recording obligations under the plans are reasonable based on prior experience, market conditions and the advice of plan actuaries.
We believe that we are well positioned to supply the needs of the world’s diverse energy and communication markets as a result of our focused portfolio, strategic operational footprint, including expansion from recent acquisitions and product designs and technologies. 20 PREFACE The following discussion describes our results of operations for the years ended December 31, 2022, 2021 and 2020.
We believe that we are well positioned to supply the needs of the world’s diverse energy and communication markets as a result of our focused portfolio, strategic operational footprint, including expansion from recent acquisitions and product designs and technologies. 19 PREFACE The following discussion describes our results of operations for the years ended December 31, 2023, 2022 and 2021.
In addition, an increase in the expected long-term return on plan assets would decrease the net periodic pension cost, while a decrease in expected long-term return on plan assets would increase the net periodic pension cost. 27
In addition, an increase in the expected long-term return on plan assets would decrease the net periodic pension cost, while a decrease in expected long-term return on plan assets would increase the net periodic pension cost. 25
At December 31, 2022, the outstanding balance on the term loan was $16.7 million, of which $2.1 million was classified as current. See Note 7 in the Notes to Consolidated Financial Statements for more information.
At December 31, 2023, the outstanding balance on the term loan was $14.7 million, of which $2.1 million was classified as current. See Note 7 in the Notes to Consolidated Financial Statements for more information.
While these factors are likely to continue to provide inherent uncertainty going forward, the COVID-19 pandemic and other large scale environmental events have placed a renewed focus on key infrastructure priorities around the world, including bolstering grid reliability, strengthening grid resilience to climate events, upgrading aging infrastructure, enhancing communication networks and transitioning to renewable energy.
While these factors generally moderated in 2023, they may continue to provide inherent uncertainty going forward, the COVID-19 pandemic and other large scale environmental events have placed a renewed focus on key infrastructure priorities around the world, including bolstering grid reliability, strengthening grid resilience to climate events, upgrading aging infrastructure, enhancing communication networks and transitioning to renewable energy.
Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, cash dividends, business acquisitions and access to bank lines of credit. 24 Our investments include expenditures required for equipment and facilities as well as expenditures in support of our strategic initiatives. In 2022, we used cash of $40.6 million for capital expenditures.
Significant factors affecting the management of liquidity are cash flows from operating activities, capital expenditures, cash dividends, business acquisitions and access to bank lines of credit. Our investments include expenditures required for equipment and facilities as well as expenditures in support of our strategic initiatives. In 2023, we used cash of $35.3 million for capital expenditures.
The discount rate of 5.55% at December 31, 2022 reflects an analysis of yield curves as of the end of the year and the schedule of expected cash needs of the plan.
The discount rate of 5.34% at December 31, 2023 reflects an analysis of yield curves as of the end of the year and the schedule of expected cash needs of the plan.
PLP’s foreign currency exchange losses were primarily related to translating into U.S. dollars its foreign currency denominated loans, trade receivables and royalty receivables from its foreign subsidiaries at the December 2022 year-end exchange rates.
PLP’s foreign currency exchange gains or (losses) were primarily related to translating into U.S. dollars its foreign currency denominated loans, trade receivables and payables from its foreign subsidiaries at the December 2023 year-end exchange rates.
The effect of currency translation had a favorable impact on net income in the year ended December 31, 2022 of $0.3 million and a favorable impact of $0.4 million in the year ended December 31, 2021.
The effect of currency translation had a unfavorable impact on net income in the year ended December 31, 2023 of $0.2 million and a favorable impact of $0.3 million in the year ended December 31, 2022.
At December 31, 2022, we had $37.2 million of cash, cash equivalents and restricted cash (collectively “Cash”). Our Cash is held in various locations throughout the world. At December 31, 2022, the majority of our cash is held outside the U.S.
At December 31, 2023, we had $53.6 million of cash, cash equivalents and restricted cash (collectively “Cash”). Our Cash is held in various locations throughout the world. At December 31, 2023, the majority of our cash is held outside the U.S.
Our cash flows are based on historical results adjusted to reflect the best estimate of future market and operating conditions. The net carrying value of assets not recoverable is then reduced to fair value.
Our cash flows are based on historical results adjusted to reflect the best estimate of future market and operating conditions. The net carrying value of assets not recoverable is then reduced to fair value. The estimates of fair value represent the best estimate based on industry trends and reference to market rates and transactions.
International net sales for the year ended December 31, 2022 were unfavorably affected by $24.2 million when local currencies were converted to U.S. dollars. The following discussion of changes in net sales excludes the effect of currency translation.
International net sales for the year ended December 31, 2023 were favorably affected by $0.4 million when local currencies were converted to U.S. dollars. The following discussion of changes in net sales excludes the effect of currency translation.
The proceeds of the sale were used to pay off the debt associated with the former aircraft. On January 19, 2021, the Company received funding for a term loan in the amount of $20.5 million to fund the purchase of a new corporate aircraft, which replaces the Company's previously-owned aircraft that was sold in December 2020.
On January 19, 2021, the Company received funding for a term loan in the amount of $20.5 million to fund the purchase of a new corporate aircraft, which replaces the Company's previously-owned aircraft that was sold in December 2020.
Our focused portfolio is well-positioned to respond to these priorities. Strong domestic demand in 2022 drove record net sales, in both of our core energy and communications markets.
Our focused portfolio is well-positioned to respond to these priorities. Strong domestic demand in 2023 drove record net sales, in our core energy and communications markets, primarily in the first half of the year.
The fluctuations of foreign currencies during the year ended December 31, 2022 had an unfavorable impact on net sales of $24.2 million and a favorable impact of $9.3 million during the year ended December 31, 2021.
The fluctuations of foreign currencies during the years ended December 31, 2023 and December 31, 2022 had a favorable impact on net sales of $0.4 million and an unfavorable impact of $24.2 million, respectively.
It is also affected by discrete items that may occur in any given period but are not consistent from year to year. The following items had the most significant impact on the difference between our statutory U.S. federal income tax rate of 21.0%: 23 2022 1.
It is also affected by discrete items that may occur in any given period but are not consistent from year to year. The following items had the most significant impact on the difference between our statutory U.S. federal income tax rate of 21.0%: 2023 1. A $3.7 million, or 4.5%, net decrease resulting from generation of foreign tax credits. 2.
A $2.9 million, or 6.0%, net increase resulting from earnings in jurisdictions with higher tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested. 2. A $1.2 million, or 2.5 %, net decrease resulting from foreign tax credits. 3.
A $1.7 million, or 2.0%, net increase resulting from earnings in jurisdictions with higher tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested. 2022 1. A $2.1 million, or 2.9%, net increase resulting from a valuation allowance recorded in certain international jurisdictions. 2.
The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the years ended December 31, 2022 and 2021. The Company’s past operating results are not necessarily indicative of future operating results.
The following table sets forth a summary of the Company’s Statements of Consolidated Income and the percentage of net sales for the years ended December 31, 2023 and 2022.
PLP-USA’s increase was primarily attributable to increased sales and personnel-related expenses as well as professional services costs. PLP’s costs and expenses for the year ended December 31, 2022 were favorably impacted by $6.2 million when local currencies were translated to U.S. dollars. The following discussions of costs and expenses exclude the effect of currency translation.
PLP-USA’s increase was primarily attributable to increased salary-related, insurance and depreciation costs, partially offset by lower professional services costs. PLP’s costs and expenses for the year ended December 31, 2023 were unfavorably impacted by $0.3 million when local currencies were translated to U.S. dollars. The following discussions of costs and expenses exclude the effect of currency translation.
The estimates of fair value represent the best estimate based on industry trends and reference to market rates and transactions. 26 Goodwill Goodwill is reviewed for impairment annually on October 1 or more frequently when changes in circumstances indicate the carrying amount may be impaired. We may use both quantitative and qualitative approaches when testing goodwill for impairment.
Goodwill Goodwill is reviewed for impairment annually on October 1 or more frequently when changes in circumstances indicate the carrying amount may be impaired. We may use both quantitative and qualitative approaches when testing goodwill for impairment.
Income taxes for the years ended December 31, 2022 and 2021 were $19.3 million and $13.2 million, respectively, based on pre-tax income of $73.7 million and $48.9 million, respectively. The effective tax rate for the years ended December 31, 2022 and 2021 was 26.2% and 26.9%, respectively, compared to the U.S. federal statutory rate of 21.0%.
Income taxes for the years ended December 31, 2023 and 2022 were $19.0 million and $19.3 million, respectively, based on pre-tax income of $82.3 million and $73.7 million, respectively. The effective tax rate for the years ended December 31, 2023 and 2022 was 23.1% and 26.2%, respectively.
We also believe that we can further expand our borrowing capacity, if necessary; however, we do not believe we would increase our debt to a level that would have a material adverse impact upon results of operations or financial condition. Sources and Uses of Cash Cash at December 31, 2022 increased $0.8 million when compared to December 31, 2021.
We also believe that we can further expand our borrowing capacity, if necessary; however, we do not believe we would increase our debt to a level that would have a material adverse impact upon results of operations or financial condition. 23 Sources and Uses of Cash Net Cash provided by operating activities for the years ended December 31, 2023 and 2022 was $107.7 million and $26.2 million, respectively.
As of December 31, 2022, the Company had total outstanding guarantees of $13.0 million. Additionally, certain domestic and foreign customers require the Company to issue letters of credit or performance bonds as a condition of placing an order. As of December 31, 2022, the Company had total outstanding letters of credit of $6.7 million.
See Note 8 in the Notes to Consolidated Financial Statements for more information. As of December 31, 2023, the Company had total outstanding guarantees of $14.1 million. Additionally, certain domestic and foreign customers require the Company to issue letters of credit or performance bonds as a condition of placing an order.
We record estimated allowances for uncollectible accounts receivable based upon the number of days the accounts are past due, the current business environment, and specific information such as bankruptcy or liquidity issues of customers. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.
We record estimated allowances for uncollectible accounts receivable based upon the number of days the accounts are past due, the current business environment, and specific information such as bankruptcy or liquidity issues of customers.
The year-over-year change in cash was mainly due to proceeds from long-term debt. We have commitments under operating leases primarily for office and manufacturing space, transportation equipment, office and computer equipment and capital leases, primarily for equipment. See Note 8 in the Notes to Consolidated Financial Statements for more information.
The year-over-year change in cash was mainly due to payments of notes payable and long-term debt, as well as an increase in the repurchase of shares during the year. We have commitments under operating leases primarily for office and manufacturing space, transportation equipment, office and computer equipment and capital leases, primarily for equipment.
The restricted cash was used to secure bank debt and is included in Cash, cash equivalents and restricted cash on the balance sheet. We sold our corporate aircraft in December of 2020, thereby eliminating the balance due on the previous loan which was secured by the corporate aircraft.
We sold our corporate aircraft in December of 2020, thereby eliminating the balance due on the previous loan which was secured by the corporate aircraft. The proceeds of the sale were used to pay off the debt associated with the former aircraft.
More recently, increasing commodity prices, inflation, rising interest rates, transportation costs, and foreign currency fluctuations coupled with the varying degrees of recovery from the COVID-19 pandemic throughout the global economy has led to a challenging operating environment.
More recently, increasing commodity prices, inflation, rising interest rates, transportation costs, and foreign currency fluctuations have led to a challenging operating environment.
Net Cash used in investing activities of $46.8 million for the year ended December 31, 2022 represents an increase of $28.5 million when compared to Cash used in investing activities for the year ended December 31, 2021.
The $81.5 million increase was primarily a result of an increase in cash from working capital and an increase in net income. Net Cash used in investing activities of $44.8 million for the year ended December 31, 2023 represents a decrease of $2.0 million when compared to Cash used in investing activities for the year ended December 31, 2022.
Other income, net for the year ended December 31, 2022 includes a gain of $4.4 million related to a settlement of a Company-owned life insurance policy, partially offset by an increase in interest expense. Income taxes.
The increase in expense was primarily due to a nonrecurring gain of $4.4 million that was recorded in March 2022 related to a settlement of a Company-owned life insurance policy and higher interest expense for the twelve-months ended December 31, 2023. Income taxes.
As a result of the preceding items, net income for the year ended December 31, 2022 was $54.4 million, compared to $35.7 million for 2021.
As a result of the preceding items, net income for the year ended December 31, 2023 was $63.3 million, compared to $54.4 million for 2022. Excluding the effect of currency translation, net income increased $9.2 million as summarized in the following table.
International gross profit for the year ended December 31, 2022 was unfavorably impacted by $5.7 million when local currencies were translated to U.S. dollars. The following discussion of gross profit changes excludes the effects of currency translation.
The impact on International gross profit for the year ended December 31, 2023, when local currencies were translated to U.S. dollars was de minimis. The following discussion of gross profit changes excludes the effects of currency translation. The Americas gross profit 21 decreased $2.2 million, or 7.0%, which was primarily due to higher manufacturing and depreciation costs.
A $1.8 million, or 2.4%, net decrease resulting from earnings in jurisdictions with lower tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested. 4. A $1.6 million, or 2.2%, net decrease resulting from non-taxable Company-owned life insurance policy. 2021 1.
A $2.0 million, or 2.7%, net increase resulting from a goodwill impairment charge as discussed in Note 12 of the Notes to the Consolidated Financial Statements. 3. A $1.8 million, or 2.4%, net decrease resulting from earnings in jurisdictions with lower tax rates than the U.S. federal statutory rate where such earnings are permanently reinvested. 22 Net income.
Excluding the effect of currency translation, costs and expenses increased $33.3 million, or 28%, as summarized in the following table: Year Ended December 31, Change Change (Thousands of dollars) Due to Excluding Currency Currency % 2022 2021 Change Translation Translation Change Costs and expenses PLP-USA $ 73,941 $ 55,111 $ 18,830 $ — $ 18,830 34.2 % The Americas 16,816 13,807 3,009 (682 ) 3,691 26.7 EMEA 25,884 25,505 379 (3,044 ) 3,423 13.4 Asia-Pacific 29,178 24,270 4,908 (2,477 ) 7,385 30.4 Consolidated $ 145,819 $ 118,693 $ 27,126 $ (6,203 ) $ 33,329 28.1 % PLP-USA costs and expenses of $73.9 million increased $18.8 million, or 34% year-over-year.
Excluding the effect of currency translation, costs and expenses increased $4.6 million, or 3.1%, as summarized in the following table: Year Ended December 31, Change Change (Thousands of dollars) Due to Excluding Currency Currency % 2023 2022 Change Translation Translation Change Costs and expenses PLP-USA $ 79,289 $ 73,941 $ 5,348 $ — $ 5,348 7.2 % The Americas 22,724 16,816 5,908 490 5,418 32.2 EMEA 28,193 25,884 2,309 397 1,912 7.4 Asia-Pacific 20,488 29,178 (8,690 ) (591 ) (8,099 ) (27.8 ) Consolidated $ 150,694 $ 145,819 $ 4,875 $ 296 $ 4,579 3.1 % PLP-USA costs and expenses of $79.3 million increased $5.3 million, or 7.2% year-over-year.
The increased use of Cash was primarily related to an increase in capital expenditures and acquisitions of businesses. 25 Net Cash provided by financing activities for the year ended December 31, 2022 was $22.5 million compared to a use of cash of $23.2 million for the year ended December 31, 2021.
Net Cash used in financing activities for the year ended December 31, 2023 was $48.9 million compared to cash provided by financing activities of $22.5 million for the year ended December 31, 2022.
On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the years ended December 31, 2022 and 2021, respectively, was as follows: Foreign Currency Translation Impact Net Sales Net Income (Loss) (Thousands of dollars) 2022 2021 2022 2021 The Americas $ (2,306 ) $ (893 ) $ 330 $ 59 EMEA (15,189 ) 5,295 (686 ) 335 Asia-Pacific (6,662 ) 4,864 686 20 Total $ (24,157 ) $ 9,266 $ 330 $ 414 Loss on foreign currency translation on operating income for the years ended December 31, 2022 and 2021 was $0.5 million and $0.7 million, respectively.
On a reportable segment basis, the impact of foreign currency translation on net sales and net income for the years ended December 31, 2023 and 2022, respectively, was as follows: Foreign Currency Translation Impact Net Sales Net Income (Loss) (Thousands of dollars) 2023 2022 2023 2022 The Americas $ 1,771 $ (2,306 ) $ 166 $ 330 EMEA 1,696 (15,189 ) (101 ) (686 ) Asia-Pacific (3,042 ) (6,662 ) (278 ) 686 Total $ 425 $ (24,157 ) $ (213 ) $ 330 As shown in our strong financial results, we believe our business portfolio and our financial position are sound and strategically well-positioned.
In 2022, net sales were 637.0 million, an increase of $119.6 million, or 23%, compared to 2021.
In 2023, net sales were $669.7 million, an increase of $32.7 million, or 5.1%, compared to 2022.
These conditions include, among other things, future demand for product, product utility, unique customer order patterns or unique raw material purchase patterns, changes in customer and quality issues. The reserve for excess and obsolete inventory was 6.3% and 6.6% of gross inventory for the years ended December 31, 2022 and December 31, 2021, respectively.
These conditions include, among other things, future demand for product, product utility, unique customer order patterns or unique raw material purchase patterns, changes in customer and quality issues. If the impact of market conditions deteriorates from those projected by management, additional inventory reserves may be necessary.
The Americas net sales of $85.2 million increased $16.8 million, or 24%, primarily due to contributions from the 2022 Maxxweld and Delta acquisitions. EMEA net sales of $122.7 million increased $41.9 million, or 44%, primarily due to volume increases in communication product sales in the region. Asia-Pacific net sales of $88.9 million increased $2.4 million, or 3%, compared to 2021.
EMEA net sales of $135.1 million increased $10.7 million, or 8.7%, primarily due to volume increases in energy product and communication sales in the region. Asia-Pacific net sales of $102.9 million increased $17.1 million, or 19.2%, primarily due to volume increases in energy product sales. Gross Profit.
See Note 7 "Debt and Credit Arrangements" in the Notes to Consolidated Financial Statements for more information related to our debt position.
A consolidated decrease in debt of $27.3 million as of December 31, 2023 was primarily a result of improved cash conversion and less funding needs for capital expenditures and business acquisitions. See Note 7 "Debt and Credit Arrangements" in the Notes to Consolidated Financial Statements for more information related to our debt position.
We have continued to invest in the business to expand into new markets for the Company, evaluate strategic mergers and acquisitions, improve efficiency, develop new products and increase our capacity. Our liquidity remains strong and we currently have a bank debt to equity percentage of 25.0%.
If necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, increase sales volume and deliver value to our customers. We have continued to invest in the business to expand into new markets for the Company, evaluate strategic mergers and acquisitions, improve efficiency, develop new products and increase our capacity.
Asia-Pacific costs and expenses of $29.2 million increased $7.4 million primarily due to the effect of a $6.5 million goodwill impairment charge. Other income, net. Other income, net of $4.3 million for the year ended December 31, 2022 was favorable by $3.0 million when compared to Other income, net for the twelve months ended December 31, 2021 of $1.3 million.
Other expense, net of $(1.8) million for the year ended December 31, 2023 was unfavorable by $(6.1) million when compared to Other income, net for the year ended December 31, 2022 of $4.3 million.
Excluding the effect of currency translation, gross profit increased $54.6 million, or 33%, as summarized in the following table: Year Ended December 31, Change Change (Thousands of dollars) Due to Excluding Currency Currency % 2022 2021 Change Translation Translation Change Gross profit PLP-USA $ 129,169 $ 87,740 $ 41,429 $ — $ 41,429 47.2 % The Americas 31,451 23,312 8,139 (419 ) 8,558 36.7 EMEA 29,405 30,839 (1,434 ) (3,450 ) 2,016 6.5 Asia-Pacific 25,155 24,351 804 (1,801 ) 2,605 10.7 Consolidated $ 215,180 $ 166,242 $ 48,938 $ (5,670 ) $ 54,608 32.8 % PLP-USA gross profit of $129.2 million increased by $41.4 million, or 47%, compared to 2021, primarily due to increased sales volume of $82.7 million within communications and energy markets and operational efficiencies, which were partially offset by the negative impact of inflationary pressures impacting raw materials and transportation costs.
Excluding the effect of currency translation, gross profit increased $19.6 million, or 9.1%, as summarized in the following table: Year Ended December 31, Change Change (Thousands of dollars) Due to Excluding Currency Currency % 2023 2022 Change Translation Translation Change Gross profit PLP-USA $ 138,961 $ 129,169 $ 9,792 $ — $ 9,792 7.6 % The Americas 30,005 31,451 (1,446 ) 740 (2,186 ) (7.0 ) EMEA 36,372 29,405 6,967 264 6,703 22.8 Asia-Pacific 29,510 25,155 4,355 (973 ) 5,328 21.2 Consolidated $ 234,848 $ 215,180 $ 19,668 $ 31 $ 19,637 9.1 % PLP-USA gross profit of $139.0 million increased by $9.8 million, or 7.6%, compared to 2022, primarily due to increased sales volume combined with previously enacted price increases and lower material costs, partially offset by higher depreciation charges.
Overall customer demand remained strong and contributed to record net sales revenue of $637.0 million for the year ended December 31, 2022. However, we have also experienced some inflationary pressures that has impacted our profit margins. Raw material price increases, specifically for plastic resins, aluminum, petroleum and sand (grit), coupled with increased freight costs were the primary contributing inflationary pressures.
Overall customer demand remained strong, predominantly in the first half of the year and contributed to record net sales revenue of $669.7 million for the year ended December 31, 2023. During the twelve months ending December 31, 2023, the inflationary headwinds we experienced related to raw materials, specifically plastic resins, aluminum and sand (grit), have generally subsided.
Excluding the effect of currency translation, net sales increased 28% as summarized in the following table: Year Ended December 31, Change Change (Thousands of dollars) Due to Excluding Currency Currency % 2022 2021 Change Translation Translation Change Net sales PLP-USA $ 340,288 $ 257,602 $ 82,686 $ — $ 82,686 32.1 % The Americas 85,200 70,732 14,468 (2,306 ) 16,774 23.7 EMEA 122,657 95,922 26,735 (15,189 ) 41,924 43.7 Asia-Pacific 88,876 93,161 (4,285 ) (6,662 ) 2,377 2.6 Consolidated $ 637,021 $ 517,417 $ 119,604 $ (24,157 ) $ 143,761 27.8 % The increase in PLP-USA net sales of $82.7 million, or 32%, was primarily due to a volume increase in energy product and communication sales, combined with the tailwinds from previous price increases.
Excluding the effect of currency translation, net sales increased 5.1% as summarized in the following table: Year Ended December 31, Change Change (Thousands of dollars) Due to Excluding Currency Currency % 2023 2022 Change Translation Translation Change Net sales PLP-USA $ 345,613 $ 340,288 $ 5,325 $ — $ 5,325 1.6 % The Americas 86,059 85,200 859 1,771 (912 ) (1.1 ) EMEA 135,080 122,657 12,423 1,696 10,727 8.7 Asia-Pacific 102,927 88,876 14,051 (3,042 ) 17,093 19.2 Consolidated $ 669,679 $ 637,021 $ 32,658 $ 425 $ 32,233 5.1 % The increase in PLP-USA net sales of $5.3 million, or 1.6%, was primarily due to a volume increase in energy product sales, combined with previously enacted price increases, partially offset by lower volume in communication sales, particularly in the second half of the year as a result of customer inventory destocking.
Asia-Pacific’s gross profit increased $2.6 million, or 11% when compared to the year ended December 31, 2021, primarily due to cost containment measures. Costs and expenses. Costs and expenses of $145.8 million for the year ended December 31, 2022 increased $27.1 million, or 23%, when compared to 2021.
Costs and expenses of $150.7 million for the year ended December 31, 2023 increased $4.9 million, or 3.3%, when compared to 2022.
A $0.8 million, or 1.7%, net decrease resulting from other tax credits such as the Research and Development Tax Credit. 4. A $0.8 million, or 1.6%, net increase resulting from Global Intangible Low-Taxed Income. 5. A $0.8 million, or 1.6%, net increase resulting from higher U.S. permanent items primarily related to limitations on the deductibility of executive compensation. Net income.
A $3.0 million, or 3.6%, net increase resulting from the inclusion of Global Intangible Low-Taxed Income. 3. A $1.8 million, or 2.2%, net increase resulting from earnings in various U.S. States. 4.
Total debt, including Notes payable to banks, at December 31, 2022 was $89.5 million. At December 31, 2022, our unused availability under the Facility was $43.3 million and our bank debt to equity percentage was 25.0%. On March 2, 2022, the Company amended the Facility to increase the capacity from $65.0 million to $90.0 million.
Total debt, including notes payable, at December 31, 2023 was $62.3 million. At December 31, 2023, our unused availability under our credit facility (the "Facility") was $55.7 million and our bank debt to equity percentage was 15.0%. The Facility contains, among other provisions, requirements for maintaining levels of net worth and profitability.
The Americas costs and expenses of $16.8 million increased $3.7 million primarily due to personnel-related expenses, purchase price accounting charges, and sales-related expenses. EMEA costs and expenses of $25.9 million increased by $3.4 million primarily due sales-related expenses, offset by decreases in personnel costs.
The Americas costs and expenses of $22.7 million increased $5.4 million primarily due to a one-time legal settlement, as disclosed in Note 4, higher personnel and sales-related expenses and the impact of the devaluation of the Argentina Peso. EMEA costs and expenses of $28.2 million increased by $1.9 million primarily due to an increase in salary-related and bad debt expenses.
On August 31, 2022, the Company amended the Facility and elected to change its rate from BSBY to SOFR, and added its New Zealand subsidiary as a co-borrower. All other terms remain the same. Our Asia-Pacific segment had $0.2 million in restricted cash for both years ended December 31, 2022 and 2021.
At December 31, 2023, the Company was in compliance with these covenants. Our Asia-Pacific segment had $0.2 million in restricted cash for both years ended December 31, 2023 and 2022. The restricted cash was used to secure bank debt and is included in Cash, cash equivalents and restricted cash on the balance sheet.
Due to the large volume in our order backlog, we expect tailwinds from these increases into 2023; however, continued cost inflation in these areas may require further price adjustments to maintain profit margin and any price increases may have a negative effect on demand.
If inflationary pressures increase again, it may require further price adjustments to maintain profit margin and any price increases may have a negative effect on demand. Our financial statements are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar.
We can borrow needed funds at a competitive interest rate 21 under our credit facility. A consolidated increase in debt of $30.0 million as of December 31, 2022 was primarily a result of current year funding needs for capital expenditures and business acquisitions.
Our liquidity remains strong and we currently have a bank debt to equity percentage of 15.0%. We can borrow needed funds at a competitive interest rate under our credit facility.
These investments in our U.S. operations will allow us to further enhance the service we provide to our U.S. customers in 2023. If necessary, we will modify redundant processes and further utilize our global manufacturing network to manage costs, increase sales volume and deliver value to our customers.
These investments in our U.S. operations will allow us to further enhance the service we provide to our U.S. customers and reduce our lead times. Additionally, our continued commitment to manufacturing in the USA positions us well for Build America, Buy America requirements of the Broadband Equity, Access, and Deployment Program.
The allowance for credit losses represents approximately 3.8% and 3.0% of our trade receivables balance at December 31, 2022 and 2021, respectively. Excess and Obsolescence Reserves We provide excess and obsolescence reserves to state inventories at the lower of cost or estimated net realizable value.
If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. 24 Excess and Obsolescence Reserves We provide excess and obsolescence reserves to state inventories at the lower of cost or estimated net realizable value.
Removed
We expect growth in our communications business from opportunities with low deployment of fixed line and wireless telecommunications services and those areas with low broadband penetration rates as a percentage of the total population.
Added
Costs related to shipping and freight have similarly fallen from their 2022 peak. The decreases in these underlying costs along with the impacts of our previous price increases have benefited gross margins.
Removed
For PLP-USA, our largest business segment, the impacts of inflation on raw materials and transportation costs impacted cost of sales by approximately $23.2 million for the year ended December 31, 2022. To mitigate the ongoing inflationary pressures, we implemented price increases in the U.S. and internationally.
Added
For PLP-USA, our largest business segment, we saw a year-over-year benefit for the twelve-month period ended December 31, 2023 of $19.7 million related to the reduction in these costs. Given the uncertainties in the macro-economic environment, we cannot determine if these trends will continue.
Removed
Due to the ongoing conflict in Ukraine and overt hostilities shown by Russia in the conflict, the Company determined to wind down its Russian operations in 2022.
Added
The Americas net sales of $86.1 million decreased $0.9 million, or 1.1%, primarily due to volume decreases within communications sales, partially offset by increases in energy product sales resulting from the contributions of the 2022 Delta acquisition.
Removed
As a result of the decision to wind-down operations, charges of $1.0 million were recorded, mainly as a result of asset impairments, one-time termination benefits and other impacts during the twelve-month period ending December 31, 2022. Our financial statements are subject to fluctuations in the exchange rates of foreign currencies in relation to the U.S. dollar.
Added
Gross profit of $234.8 million for 2023 increased $19.7 million, or 9.1%, compared to 2022.
Removed
There were transaction losses of $0.3 million that were combined with losses on forward currency contracts of $0.1 million for the year ended December 31, 2022 and $0.3 million of transaction losses combined with losses on forward currency contracts of $0.7 million for the year ended December 31, 2021 as summarized in the following table: Foreign Currency Translation Impact Year Ended December 31, (Thousands of dollars) 2022 2021 Operating income $ 69,361 $ 47,549 Translation loss 532 733 Transaction loss 305 308 Net loss on forward currency contracts 98 690 Operating income excluding currency impact $ 70,296 $ 49,280 Despite the challenges noted in our operating environment, we believe our business portfolio and our financial position are sound and strategically well-positioned.
Added
EMEA gross profit increased $6.7 million or 22.8%, primarily due to incremental margins on the increased sales volume. Asia-Pacific’s gross profit increased $5.3 million, or 21.2%, which was primarily driven by the incremental margins on the increased sales volume. Costs and expenses.
Removed
While the ongoing COVID-19 pandemic has not had a material effect on our overall results, it has continued to create challenges in countries that have significant or changing outbreak mitigation strategies, namely, countries in our Asia-Pacific business segment, which led to project postponements and continued to impact results in this segment.
Added
Asia-Pacific costs and expenses of $20.5 million decreased $8.1 million, primarily due to a one-time $6.5 million goodwill impairment charge recorded in 2022 that did not recur and a one-time $2.5 million gain on the sale of plant and equipment in 2023. Other (expense) income, net.
Removed
This, in part, led to the $6.5 million goodwill impairment charge recorded in the period ended September 30, 2022. We are continuing to actively monitor the impact of COVID-19 on current and future periods and actively manage costs and our liquidity position to provide additional flexibility while still supporting our customers and their specific needs.
Added
Year Ended December 31, Change Change (Thousands of dollars) Due to Excluding Currency Currency % 2023 2022 Change Translation Translation Change Net income PLP-USA $ 45,392 $ 44,657 $ 735 $ — $ 735 1.6 % The Americas 5,755 11,420 (5,665 ) 166 (5,831 ) (51.1 ) EMEA 5,796 1,915 3,881 (101 ) 3,982 207.9 Asia-Pacific 6,389 (3,597 ) 9,986 (278 ) 10,264 (285.3 ) Consolidated $ 63,332 $ 54,395 $ 8,937 $ (213 ) $ 9,150 16.8 % WORKING CAPITAL, LIQUIDITY AND CAPITAL RESOURCES Management Assessment of Liquidity We measure liquidity on the basis of our ability to meet short-term and long-term operating needs, fund additional investments, including acquisitions, and make dividend payments to shareholders.
Removed
While the COVID-19 pandemic has waned, we cannot predict the impact that new variants may have and the related impact on our business and results of operations.
Added
The decreased use of Cash was primarily related to a decrease in capital expenditures and acquisitions of businesses, partially offset by one-time cash proceeds related to a life insurance settlement in 2022.
Removed
In addition, the impact of COVID-19 and new variants could potentially exacerbate other risks discussed, including inflationary impacts and supply chain disruptions, any of which could have a material adverse effect on the Company. We continue to assess all challenges related to COVID-19 and related variants and plan accordingly.
Added
As of December 31, 2023, the Company had total outstanding letters of credit of $1.0 million. The Company has other borrowing facilities at certain of its foreign subsidiaries, which consist of overdraft lines, working capital credit lines, and facilities for the issuance of letters of credit and short-term borrowing needs.
Removed
Asia-Pacific volume was generally flat due to the continued effects of changing COVID-19 mitigation strategies, primarily in China, as well as China’s continued buy local policies. 22 Gross Profit. Gross profit of $215.2 million for 2022 increased $48.9 million, or 29%, compared to 2021.
Added
At December 31, 2023, and December 31, 2022, $13.3 million and $26.1 million was outstanding, of which $11.4 million and $19.1 million were classified as current, respectively. These facilities support commitments made in the ordinary course of business.
Removed
The Americas gross profit increased $8.6 million, or 37%, which was primarily the result of the year-over-year increase in net sales volume of $16.8 million, generally as a result of the 2022 acquisitions in the region.
Removed
EMEA gross profit remained relatively flat, increasing by $2.0 million or 7% year-over-year, primarily due to increased sales volume of $41.9 million, partially offset by higher operating costs and the impacts from the exit of our Russia operations.
Removed
A $2.1 million, or 2.9%, net increase resulting from a valuation allowance recorded in certain international jurisdictions. 2. A $2.0 million, or 2.7%, net increase resulting from a goodwill impairment charge as discussed in Note 12 of the Notes to the Consolidated Financial Statements. 3.
Removed
Excluding the effect of currency translation, net income increased $18.3 million as summarized in the following table: Year Ended December 31, Change Change (Thousands of dollars) Due to Excluding Currency Currency % 2022 2021 Change Translation Translation Change Net income PLP-USA $ 44,657 $ 24,384 $ 20,273 $ — $ 20,273 83.1 % The Americas 11,420 8,351 3,069 330 2,739 32.8 EMEA 1,915 3,715 (1,800 ) (686 ) (1,114 ) (30.0 ) Asia-Pacific (3,597 ) (721 ) (2,876 ) 686 (3,562 ) 494.0 Consolidated $ 54,395 $ 35,729 $ 18,666 $ 330 $ 18,336 51.3 % PLP-USA’s net income of $44.7 million increased $20.3 million year-over-year, mainly due to an increase in operating income of $22.4 million, partially offset by an increase in income tax expense of $7.1 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+0 added−2 removed3 unchanged
Biggest changeA 50 basis point change in the expected rate of return would have a $0.1 million effect on the Plan’s subsequent year’s net periodic pension cost. As discussed elsewhere in this report, the continuing effects of COVID-19 could negatively impact the Company’s business and results of operations.
Biggest changeThe Company assumed an expected rate of return of 7.00% for the year ended December 31, 2023 and 6.50% for the year ended December 31, 2022. A 50 basis point change in the expected rate of return would have a $0.2 million effect on the Plan’s subsequent year’s net periodic pension cost. 26
As such, beginning July 1, 2018, the functional currency for the Company’s Argentina subsidiary became the U.S. dollar. Revenue from operations in Argentina represented less than 1% of total consolidated net sales for the years ended December 31, 2022, 2021 and 2020.
As such, beginning July 1, 2018, the functional currency for the Company’s Argentina subsidiary became the U.S. dollar. Revenue from operations in Argentina represented less than 1% of total consolidated net sales for the years ended December 31, 2023, 2022 and 2021.
The Company considers current market conditions, including changes in interest rates and Plan asset investment returns. Actuarial assumptions may differ materially from actual results due to changing market, demographic and economic conditions or higher or lower withdrawal rates. These differences may result in a significant impact to the amount of net pension expense or income recorded in the future.
Actuarial assumptions may differ materially from actual results due to changing market, demographic and economic conditions or higher or lower withdrawal rates. These differences may result in a significant impact to the amount of net pension expense or income recorded in the future. A discount rate is used to determine the present value of future payments.
A discount rate is used to determine the present value of future payments. In general, our liability increases as the discount rate decreases and decreases as the discount rate increases. The discount rate used to determine the future benefit obligation was 5.55% and 2.92% at December 31, 2022 and 2021, respectively.
In general, a pension liability increases as the discount rate decreases and decreases as the discount rate increases. The discount rate used to determine the future benefit obligation was 5.34% and 5.55% at December 31, 2023 and 2022, respectively. The discount rate is a significant factor in determining the amounts reported.
The Company is exposed to market risk, including changes in interest rates. The Company is subject to interest rate risk on its variable rate revolving credit facilities and term notes, which consisted of long-term borrowings of $71.4 million at December 31, 2022.
The Company is subject to interest rate risk on its variable rate revolving credit facilities and term notes, which consisted of long-term borrowings of $55.3 million at December 31, 2023. A 100 basis point increase in the interest rate would have resulted in an increase in interest expense of approximately $0.4 million for the year ended December 31, 2023.
As of December 31, 2022, the Company had $0.5 million in foreign currency forward exchange assets and $0.1 million in foreign currency forward exchange liabilities outstanding. The Company does not hold derivatives for trading purposes.
As of December 31, 2023, the Company had $0.2 million in foreign currency forward exchange assets and no foreign currency forward exchange liabilities outstanding. The Company does not hold derivatives for trading purposes. The Company's primary currency rate exposures are related to foreign denominated debt, intercompany debt, forward exchange contracts, foreign denominated receivables and payables and cash and short-term investments.
The Company's primary currency rate exposures are related to foreign denominated debt, intercompany debt, forward exchange contracts, foreign denominated receivables and payables and cash and short-term investments. A hypothetical 10% change in currency rates would have a favorable/unfavorable impact on fair values on such instruments of approximately $5.9 million and on income before tax of $2.0 million.
A hypothetical 10% change in currency rates would have a favorable/unfavorable impact on fair values on such instruments of approximately $6.5 million and on income before tax of $2.3 million. The Company is exposed to market risk, including changes in interest rates.
The Company developed the expected return on Plan assets by considering various factors which include targeted asset allocation percentages, historical returns, and expected future returns. The Company assumed an expected rate of return of 6.50% for both years ended December 31, 2022 and 2021.
A 50 basis point change in the discount rate of 5.34% used at December 31, 2023 would have a $1.9 million effect on the Plan’s projected benefit obligation. The Company developed the expected return on Plan assets by considering various factors which include targeted asset allocation percentages, historical returns, and expected future returns.
A 100 basis point increase in the interest rate would have resulted in an increase in interest expense of approximately $0.6 million for the year ended December 31, 2022. Included in the Company’s accounting for the defined benefit pension plan (“Plan”) are assumptions on future discount rates and the expected return on Plan assets.
Included in the Company’s accounting for the defined benefit pension plan (“Plan”) are assumptions on future discount rates and the expected return on Plan assets. The Company considers current market conditions, including changes in interest rates and Plan asset investment returns.
Removed
The discount rate is a significant factor in determining the amounts reported. A 50 basis point change in the discount rate of 5.55% used at December 31, 2022 would have a $1.9 million effect on the Plan’s projected benefit obligation.
Removed
Since we cannot predict the duration or scope of the COVID-19 pandemic or the possibility or severity of new variants, the potential negative financial impact to the Company’s results cannot be reasonably estimated but could be material. 28

Other PLPC 10-K year-over-year comparisons