Operations and performance of the Group depend significantly on worldwide economic conditions. Uncertainty about current global economic conditions poses a risk to its business because consumers and businesses may continue to postpone spending in response to tighter credit markets, unemployment, negative financial news and/or declines in income or asset values, which could have a material adverse effect on demand for its products and services. Discretionary spending is affected by many factors, including general business conditions, inflation, interest rates, consumer debt levels, unemployment rates, availability of consumer credit, conditions in the real estate and mortgage markets, currency exchange 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.
 

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 of sales or increased costs of doing business and may have a material adverse effect on business, results of operations, financial condition and prospects of the Group.

Business of the Group could be negatively impacted by the availability and acceptance of vision correction alternatives to prescription eyeglasses, such as contact lenses and refractive optical surgery. According to industry estimates, over 39 million people wear contact lenses in the United States, and the disposable contact lens market is the fastest growing segment of the lens subsector. In addition, the use of refractive optical surgery has grown in the United States since it was approved by the US Food and Drug Administration in 1995.

Increased use of vision correction alternatives could result in decreased use of prescription eyewear products of the Group, including a reduction of sales of lenses and accessories sold in Group retail outlets, which could have a material adverse impact on its business, results of operations, financial condition and prospects.
 

For certain risks, the Group does not maintain insurance coverage because of cost and/ or availability. Because the Group retains some portion of its insurable risks, and in some cases self-insure completely, unforeseen or catastrophic losses in excess of insured limits could materially adversely affect its results of operations and financial condition.