Alight(ALIT)2025-02-27 21:13Financial Risks - The company has a substantial amount of goodwill and purchased intangible assets on its consolidated balance sheet, which may be subject to impairment charges that could materially impact financial statements [116]. - A portion of the company's revenues is derived from government contracts, which are subject to heightened risks, including potential civil and criminal penalties for non-compliance [117]. - Changes in government funding or political developments could result in lower governmental sales and may adversely affect the company's financial condition and operating results [119]. - The company is subject to taxation-related risks in multiple jurisdictions, with significant judgment required in determining global provisions for income taxes [120]. - New tax laws and interpretations globally could increase the company's tax obligations, particularly with proposals for digital services taxes in the European Union [121]. - The OECD's proposed Pillar Two framework could impose a global minimum corporate tax rate of 15%, potentially increasing tax complexity and uncertainty for the company [122]. Market Performance - The market price of the company's Class A Common Stock has fluctuated significantly, with a trading range from $6.52 to $10.32 during the year ended December 31, 2024 [130]. - The company's decision to maintain or discontinue cash dividends could cause the market price of its Class A Common Stock to decline significantly [132]. - The existence of anti-takeover measures could limit the price that investors might be willing to pay for the company's shares and deter potential acquirers [128]. Debt and Liquidity - As of December 31, 2024, the Company had approximately $2.0 billion of outstanding debt at variable interest rates, exposing it to interest rate risk [142]. - Payments under the Tax Receivable Agreement (TRA) may significantly exceed actual tax benefits realized, potentially impacting liquidity [140]. - The Company expects substantial payments under the TRA in the event of a change of control, which may impair the ability to consummate such transactions [141]. - Alight Holdings is obligated to make tax distributions to unit holders, which may lead to excess cash accumulation at the Company [136]. - A hypothetical increase of 25 basis points in term loans, net of hedging activity, would result in a change to annual interest expense of approximately $1 million in fiscal year 2024 [263]. - The Company utilizes interest rate swap agreements to fix portions of floating interest rates through December 2026 [263]. - Credit rating changes could adversely impact operations and profitability, affecting access to debt markets [143]. - The Company is subject to restrictions on distributions based on financial performance and applicable laws [135]. - The Company has no obligation to distribute accumulated cash, which may benefit Continuing Tempo Unitholders [136]. Corporate Structure - The Company is a holding entity with no material assets other than its interests in Alight Holdings, relying on distributions from Alight Holdings for dividends and expenses [134].