Raw materials used in manufacturing Eagle's products include leather, rubber, nylon, and
other fabrics. For the year ended 31 December 2011 and the period ended 31 August 2012,
six overseas vendors supplied 60% of these raw materials (Source: Management Accounts).
This has an impact on the profile of accounts payable, and has been taken into account in
our audit plan for the balance and related disclosures.
Eagle has supply agreements with four of these vendors all of which expire one year from
commencement and can be renewed annually.
Eagle has not experienced difficulties in obtaining raw materials to satisfy their demand.
Eagle competes with much larger companies but has a long-standing history with their
vendors. Management believes they have strong business relationships that will continue.
Nevertheless, in the event of a supply interruption, management believes alternative sources
could be identified to replace current suppliers.
Eagle's practice of procuring raw materials overseas exposes the entity to possible supply
interruptions as a result of actions by the government or other foreign government agencies
adverse to continued trade with specific countries.
Eagle contracts with two third parties in this country for the manufacture of their Winning
Feel apparel. Eagle considers that the most important consideration for these garments is
performance and quality - it therefore prefers to work with domestic companies so that it can
monitor these attributes closely.