LeapFrog 2013 Annual Report Download - page 22
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Please find page 22 of the 2013 LeapFrog annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.intellectual property protection, and, as a consequence, we may not have the legal right to prevent others from
reverse engineering or otherwise copying and using these features in competitive products. In addition,
monitoring the unauthorized use of our intellectual property is costly, and any dispute or other litigation,
regardless of outcome, may be costly and time-consuming and may divert our management and key personnel
from our business operations. However, if we fail to protect or to enforce our intellectual property rights
successfully, our rights could be diminished and our competitive position could suffer, which could harm our
operating results.
In addition, we periodically receive claims of infringement or otherwise become aware of potentially relevant
patents, copyrights, trademarks or other intellectual property rights held by other parties. Responding to any
infringement claim, regardless of its validity, may be costly and time-consuming and may divert our
management and key personnel from our business operations. If we, our distributors, our licensors or our
manufacturers are found to be infringing on the intellectual property rights of any third party, we or they may
be required to obtain a license to use those rights, which may not be obtainable on reasonable terms, if at all.
We also may be subject to significant damages or injunctions against the development and sale of some of our
products or against the use of a trademark or copyright in the sale of some of our products. Our insurance
does not cover all types of intellectual property claims and insurance levels for covered claims may not be
adequate to indemnify us against all liability, which could harm our operating results.
Any defects contained in our products, or our failure to comply with applicable safety standards, could
result in recalls, delayed shipments, rejection of our products, product liability and damage to our
reputation, and could expose us to litigation or regulatory action.
Our products may contain defects, which could lead to product liability, personal injury or property damage
claims, or could result in the rejection of our products by retailers, damage to our reputation, lost sales, and
increased customer service and support costs and warranty claims. There is a risk that these claims or
liabilities may exceed, or fall outside the scope of, our insurance coverage. Moreover, we may be unable to
retain adequate liability insurance in the future. Concerns about potential public harm and liability may
involve involuntary recalls or lead us to voluntarily recall selected products. Recalls or post-manufacture
repairs of our products could harm our reputation and our competitive position, increase our costs or reduce
our net sales. In addition, recalls or post-manufacturing repairs by other companies in our industry could affect
consumer behavior and cause reduced purchases of our products. Any such problems, or perceived problems,
with our products could harm our operating results.
We face risks associated with international operations.
We derived approximately 30%, 27% and 25% of our net sales from markets outside the U.S. during fiscal
years 2013, 2012 and 2011, respectively.
Our business is, and will increasingly be, subject to additional risks associated with conducting business
internationally, including:
• the appeal of our products in international markets;
• difficulties managing and maintaining relationships with vendors, customers, retailers, distributors
and other commercial partners;
• increased investment and operational complexity to make our multimedia platforms and App Center
compatible with the systems in various countries and compliant with local laws;
• greater difficulty in staffing and managing foreign operations;
• transportation delays and interruptions, including cross-border delays due to customs clearance and
other point-of-entry restrictions;
• timely localization of products and content;
• currency conversion risks and currency fluctuations; and
• limitations, including taxes, on the repatriation of earnings.
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