E-Z-GO 2012 Annual Report Download - page 25

Textron Inc. Annual Report ● 2012 13
generally extend over several years and may include penalties if we fail to meet the offset requirements, which could adversely
impact our results of operations. Additionally, we are facing increasing competition in our international markets from foreign and
multinational firms that may have certain home country advantages over us; as a result, our ability to compete successfully in those
markets may be adversely affected, which could negatively impact our revenues and profitability.
We maintain manufacturing facilities, service centers, supply centers and other facilities worldwide, including in various emerging
market countries. We also have entered into, and expect to continue to enter into, joint venture arrangements in emerging market
countries, some of which may require capital investment, guaranties or other commitments. We expect that our investment in
emerging market countries will continue to increase. Emerging market operations can present many risks in addition to those
discussed above, including civil disturbances, economic and government instability, terrorism and related safety concerns, cultural
differences in employment and business practices, difficulties in protecting intellectual property, and the imposition of exchange
controls. The impact of any one or more of these or other factors could adversely affect our business, financial condition or
operating results.
We also are exposed to risks associated with using foreign representatives and consultants for international sales and operations
and teaming with international subcontractors and suppliers in connection with international programs. In many foreign countries,
particularly in those with developing economies, it is common to engage in business practices that are prohibited by laws and
regulations applicable to us, such as the Foreign Corrupt Practices Act. Although we implement policies and procedures designed
to facilitate compliance with these laws, a violation of such laws by any of our international representatives, consultants, joint
ventures, business partners, subcontractors or suppliers, even if prohibited by our policies, could have an adverse effect on our
business and reputation.
We are subject to increasing compliance risks that could adversely affect our operating results.
As a global business, we are subject to laws and regulations in the U.S. and other countries in which we operate. Our increased
focus on international sales and global operations requires importing and exporting goods and technology, some of which have
military applications subjecting them to more stringent import-export controls across international borders on a regular basis. Both
U.S. and foreign laws and regulations applicable to us have been increasing in scope and complexity. For example, we could be
affected by U.S. or foreign laws or regulations imposed in response to climate change concerns. Likewise, pursuant to the
requirements of the Dodd-Frank Act and recently enacted Securities and Exchange Commission rules, we will be required to
report on our use of “conflict minerals” originating from the Democratic Republic of Congo and surrounding countries.
Compliance with these rules is expected to be time-consuming and costly and also could affect the cost and availability of minerals
used to manufacture certain of our products. Compliance with new or changing laws and regulations or related interpretation and
policies could increase our costs of doing business, affect how we conduct our operations and limit our ability to sell our products
and services. Compliance with laws and regulations of increasing scope and complexity is even more challenging in our current
business environment in which reducing our operating costs is often necessary to remain competitive. In addition, a violation of
U.S. and/or foreign laws by one of our employees or business partners could subject us or our employees to civil or criminal
penalties, including material monetary fines, or other adverse actions, including denial of import or export privileges and
debarment as a government contractor. These improper actions could damage our reputation and have an adverse effect on our
business.
We are subject to legal proceedings and other claims.
We are subject to legal proceedings and other claims arising out of the conduct of our business, including proceedings and claims
relating to commercial and financial transactions; government contracts; alleged lack of compliance with applicable laws and
regulations; production partners; product liability; patent and trademark infringement; employment disputes; and environmental,
safety and health matters. Due to the nature of our manufacturing business, we may be subject to liability claims arising from
accidents involving our products, including claims for serious personal injuries or death caused by weather or by pilot, driver or
user error. In the case of litigation matters for which reserves have not been established because the loss is not deemed probable, it
is reasonably possible that such claims could be decided against us and could require us to pay damages or make other
expenditures in amounts that are not presently estimable. In addition, we cannot be certain that our reserves are adequate and that
our insurance coverage will be sufficient to cover one or more substantial claims. Furthermore, we may not be able to obtain
insurance coverage at acceptable levels and costs in the future. Litigation is inherently unpredictable, and we could incur
judgments, receive adverse arbitration awards or enter into settlements for current or future claims that could adversely affect our
financial position or our results of operations in any particular period.
Intellectual property infringement claims of others and the inability to protect our intellectual property rights could harm our
business and our customers.
Intellectual property infringement claims may be asserted by third parties against us or our customers. Any related indemnification
payments or legal costs we may be obliged to pay on behalf of our businesses, our customers or other third parties could be costly.
In addition, we own the rights to many patents, trademarks, brand names, trade names and trade secrets that are important to our