LensCrafters 2010 Annual Report Download - page 60

ANNUAL REPORT 2010> 58 |
results, which are reported in Euro, are affected by currency exchange rate fluctuations, particularly between the U.S.
dollar and the Euro.
As our international operations grow, future changes in the exchange rate of the Euro against the U.S. dollar and other
currencies may negatively impact our reported results, although we have in place policies designed to manage such risk.
J) IF OUR BUSINESS SUFFERS DUE TO CHANGING LOCAL CONDITIONS, OUR PROFITABILITY AND FUTURE
GROWTH WILL BE AFFECTED
We currently operate worldwide and have begun to expand our operations in many countries, including certain developing
countries in Asia, South America and Africa.
Therefore, we are subject to various risks inherent in conducting business internationally, including the following:
exposure to local economic and political conditions;•
export and import restrictions;•
currency exchange rate fluctuations and currency controls;•
cash repatriation restrictions;•
application of the Foreign Corrupt Practices Act to our U.S. activities;•
difficulty in enforcing intellectual property and contract rights;•
disruptions of capital and trading markets;•
accounts receivable collection and longer payment cycles;•
potential hostilities and changes in diplomatic and trade relationships;•
legal or regulatory requirements;•
withholding and other taxes on remittances and other payments by subsidiaries;•
investment restrictions or requirements; and•
local content laws requiring that certain products contain a specified minimum percentage of domestically produced •
components.
The likelihood of such occurrences and their potential effect on us vary from country to country and are unpredictable, but
any such occurrence may result in the loss of sales or increased costs of doing business and may have a material adverse
effect on our business, results of operations, financial condition and prospects.
Compliance with U.S. and foreign laws and regulations that apply to our international operations increases our costs of doing
business, including cost of compliance, in certain jurisdictions, and such costs may rise in the future as a result of changes
in these laws and regulations or in their interpretation or enforcement. We have implemented policies and procedures
designed to facilitate our compliance with these laws and regulations, but there can be no assurance that our employees,
contractors or agents will not violate such laws and regulations or our policies. Any such violations could individually, or in the
aggregate, materially adversely affect our financial condition or operating results.
Additionally, as a U.S. government contractor through our Oakley and Eye Safety Systems subsidiaries, we must comply with,
and are affected by, U.S. laws and regulations related to our government business. These laws and regulations, including
requirements to obtain applicable governmental approvals, clearances and certain export licenses, may impose additional
costs and risks on our business. We also may become subject to audits, reviews and investigations of our compliance with
these laws and regulations.
K) IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS, OUR SALES MIGHT SUFFER, AND WE MAY
INCUR SIGNIFICANT COSTS TO DEFEND SUCH RIGHTS
We rely on trade secret, unfair competition, trade dress, trademark, patent and copyright laws to protect our rights
to certain aspects of our products and services, including product designs, proprietary manufacturing processes and
technologies, product research and concepts and recognized trademarks, all of which we believe are important to the
success of our products and services and our competitive position. However, pending trademark or patent applications
may not in all instances result in the issuance of a registered trademark or patent, and trademarks or patents granted may
not be effective in thwarting competition or be held valid if subsequently challenged.