Black & Decker 2015 Annual Report Download - page 23

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The Company has significant operations outside of the United States, which are subject to political, economic and other
risks inherent in operating outside of the United States.
The Company generates a significant portion of its total revenue outside of the United States. Business operations outside of
the United States are subject to political, economic and other risks inherent in operating in certain countries, such as:
• the difficulty of enforcing agreements and protecting assets through legal systems outside the U.S.;
• managing widespread operations and enforcing internal policies and procedures such as compliance with U.S. and
foreign anti-bribery and anti-corruption regulations;
• trade protection measures and import or export licensing requirements;
• the application of certain labor regulations outside of the United States;
• compliance with a wide variety of non-U.S. laws and regulations;
• changes in the general political and economic conditions in the countries where the Company operates, particularly in
emerging markets;
• the threat of nationalization and expropriation;
• increased costs and risks of doing business in a wide variety of jurisdictions;
• government controls limiting importation of goods;
• government controls limiting payments to suppliers for imported goods;
• limitations on repatriation of earnings; and
• exposure to wage, price and capital controls.
Changes in the political or economic environments in the countries in which the Company operates could have a material
adverse effect on its financial condition, results of operations or cash flows.
The Company’s business is subject to risks associated with sourcing and manufacturing overseas.
The Company imports large quantities of finished goods, component parts and raw materials. Substantially all of its import
operations are subject to customs requirements and to tariffs and quotas set by governments through mutual agreements,
bilateral actions or, in some cases unilateral action. In addition, the countries in which the Company’s products and materials
are manufactured or imported may from time to time impose additional quotas, duties, tariffs or other restrictions on its imports
(including restrictions on manufacturing operations) or adversely modify existing restrictions. Imports are also subject to
unpredictable foreign currency variation which may increase the Company’s cost of goods sold. Adverse changes in these
import costs and restrictions, or the Company’s suppliers’ failure to comply with customs regulations or similar laws, could
harm the Company’s business.
The Company’s operations are also subject to the effects of international trade agreements and regulations such as the North
American Free Trade Agreement, and the activities and regulations of the World Trade Organization. Although these trade
agreements generally have positive effects on trade liberalization, sourcing flexibility and cost of goods by reducing or
eliminating the duties and/or quotas assessed on products manufactured in a particular country, trade agreements can also
impose requirements that adversely affect the Company’s business, such as setting quotas on products that may be imported
from a particular country into key markets including the U.S. or the European Union, or making it easier for other companies to
compete, by eliminating restrictions on products from countries where the Company’s competitors source products.
The Company’s ability to import products in a timely and cost-effective manner may also be affected by conditions at ports or
issues that otherwise affect transportation and warehousing providers, such as port and shipping capacity, labor disputes, severe
weather or increased homeland security requirements in the U.S. and other countries. These issues could delay importation of
products or require the Company to locate alternative ports or warehousing providers to avoid disruption to customers. These
alternatives may not be available on short notice or could result in higher transit costs, which could have an adverse impact on
the Company’s business and financial condition.
The Company’s success depends on its ability to improve productivity and streamline operations to control or reduce costs.
The Company is committed to continuous productivity improvement and evaluating opportunities to reduce fixed costs,
simplify or improve processes, and eliminate excess capacity. The Company has undertaken restructuring actions, the savings
of which may be mitigated by many factors, including economic weakness, competitive pressures, and decisions to increase