Plantronics 2005 Annual Report Download - page 71

part ii
The Company is currently evaluating FAS 123R and SAB 107 to determine the fair value method to
measure compensation expense, the appropriate assumptions to include in the fair value model, the
transition method to use upon adoption and the period in which to adopt the provisions of FAS 123R.
The impact of the adoption of FAS 123R cannot be reasonably estimated at this time due to the factors
discussed above as well as the unknown level of share-based payments granted in future years.
We have significant foreign operations and there are inherent risks in operating abroad.
During our fourth quarter of fiscal year 2005, approximately 35% of our net sales were derived from
customers outside the United States. In addition, we conduct the majority of our headset assembly
operations in our manufacturing facility located in Mexico, and we obtain most of the components and
subassemblies used in our products from various foreign suppliers. We also purchase a growing number of
turn-key products directly from Asia. The inherent risks of international operations, either in Mexico or
in Asia, could materially adversely affect our business, financial condition and results of operations. The
types of risks faced in connection with international operations and sales include, among others:
)cultural differences in the conduct of business;
)fluctuations in foreign exchange rates;
)greater difficulty in accounts receivable collection and longer collection periods;
)impact of recessions in economies outside of the United States;
)reduced protection for intellectual property rights in some countries;
)unexpected changes in regulatory requirements;
)tariffs and other trade barriers;
)political conditions in each country;
)management and operation of an enterprise spread over various countries; and
)the burden of complying with a wide variety of foreign laws.
We have intellectual property rights that could be infringed by others and we are potentially at risk
of infringement of the intellectual property rights of others.
Our success will depend in part on our ability to protect our copyrights, patents, trademarks, trade dress,
trade secrets, and other intellectual property, including our rights to certain domain names. We rely
primarily on a combination of nondisclosure agreements and other contractual provisions as well as
patent, trademark, trade secret, and copyright laws to protect our proprietary rights. Effective trademark,
patent, copyright, and trade secret protection may not be available in every country in which our products
and media properties are distributed to customers. We currently hold 99 United States patents and
additional foreign patents and will continue to seek patents on our inventions when we believe it to be
appropriate. The process of seeking patent protection can be lengthy and expensive. Patents may not be
issued in response to our applications, and patents that are issued may be invalidated, circumvented or
challenged by others. If we are required to enforce our patents or other proprietary rights through
litigation, the costs and diversion of management’s attention could be substantial. In addition, the rights
granted under any patents may not provide us competitive advantages or be adequate to safeguard and
maintain our proprietary rights. Moreover, the laws of certain countries do not protect our proprietary
rights to the same extent as do the laws of the United States. If we do not enforce and protect our
intellectual property rights, it could materially adversely affect our business, financial condition and
results of operations.
AR 2005 ⯗43