LensCrafters 2011 Annual Report Download - page 106

ANNUAL REPORT 2011> 30 |
rates and other matters that influence consumer confidence. Many of these factors are
outside its control. Purchases of discretionary items could decline during periods in which
disposable income is lower or prices have increased in response to rising costs or in periods
of actual or perceived unfavorable economic conditions. If this occurs or if unfavorable
economic conditions continue to challenge the consumer environment, its business, results
of operations, financial condition and cash flows could be materially adversely affected.
In the event of renewed financial turmoil affecting the banking system and financial markets,
additional consolidation of the financial services industry or significant failure of financial
services institutions, there could be a new or incremental tightening of the credit markets,
decreased liquidity and extreme volatility in fixed income, credit, currency and equity
markets. In addition, the credit crisis could continue to have material adverse effects on
business of the Group, including the inability of customers of its wholesale distribution
business to obtain credit to finance purchases of its products, restructurings, bankruptcies,
liquidations and other unfavorable events for the Group’s consumers, customers, vendors,
suppliers, logistics providers, other service providers and the financial institutions that are
counterparties to its credit facilities and other derivative transactions. The likelihood that such
third parties will be unable to overcome such unfavorable financial difficulties may increase.
If the third parties on which the Group relies for goods and services or the Group’s wholesale
customers are unable to overcome financial difficulties resulting from the deterioration of
worldwide economic conditions or if the counterparties to its credit facilities or its derivative
transactions do not perform their obligations, the Group’s business, results of operations,
financial condition and cash flows could be materially adversely affected.
b) If business of the Group suffers due to changing local conditions, its profitability and
future growth may be affected
The Group currently operates worldwide and has begun to expand its operations in
many countries, including certain developing countries in Asia, South America and
Africa. Therefore, the Group is 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 and similar laws;
• 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 the Group vary from
country to country and are unpredictable, but any such occurrence may result in the loss