Adaptec 2001 Annual Report Download - page 44

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44
supply or assembly. This could lead to supply constraints or product delivery delays that, in
turn, may result in the loss of revenues. We have less control over delivery schedules, assembly
processes, quality assurances and costs than competitors that do not outsource these tasks.
We depend on a limited number of design software suppliers, the loss of which could
impede our product development.
A limited number of suppliers provide the computer aided design, or CAD, software we use to
design our products. Factors affecting the price, availability or technical capability of these
products could affect our ability to access appropriate CAD tools for the development of highly
complex products. In particular, the CAD softw are industry has been the subject of extensive
intellectual property rights litigation, the results of w hich could materially change the pricing
and nature of the softw are we use. We also have limited control over whether our software
suppliers will be able to overcome technical barriers in time to fulfill our needs.
We are subject to the ri sk s of conducting business outside the United States to a greater extent
than companies that operate their busi nesses mostly in the Uni ted States, which may impair
our sal es, devel opment or manufacturing of our products.
We are subject to the risks of conducting business outside the United States to a greater extent
than most companies because, in addition to selling our products in a number of countries, a
significant portion of our research and development and manufacturing is conducted outside
the United States.
The geographic diversity of our business operations could hinder our ability to coordinate
design and sales activities. If we are unable to develop systems and communication processes
to support our geographic diversity, w e may suffer product development delays or strained
customer relationships.
We may lose our ability to design or produce products, could face additional unforeseen
costs or could lose access to key customers if any of the nations in which we conduct
business impose trade barriers or new communications standards.
We may have difficulty obtaining export licenses for certain technology produced for us
outside the United States. If a foreign country imposes new taxes, tariffs, quotas, and other
trade barriers and restrictions or the United States and a foreign country develop hostilities or
change diplomatic and trade relationships, w e may not be able to continue manufacturing or
sub-assembly of our products in that country and may have few er sales in that country. We
may also have fewer sales in a country that imposes new communications standards or
technologies. This could inhibit our ability to meet our customers’ demand for our products
and lower our revenues.
If foreign exchange rates fluctuate significantly, our profitability may decline.
We are exposed to foreign currency rate fluctuations because a significant part of our
development, test, marketing and administrative costs are denominated in Canadian dollars,
and our selling costs are denominated in a variety of currencies around the world.