Plantronics 2005 Annual Report Download - page 72

Download and view the complete annual report

Please find page 72 of the 2005 Plantronics 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.

Page out of 123

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123

We are exposed to potential lawsuits alleging defects in our products and/or hearing loss caused by
our products.
The use of our products exposes us to the risk of product liability and hearing loss claims. These claims
have in the past been, and are currently being, asserted against us. None of the previously resolved claims
have materially affected our business, financial condition or results of operations, nor do we believe that
any of the pending claims will have such an effect. Although we maintain product liability insurance, the
coverage provided under our policies could be unavailable or insufficient to cover the full amount of any
such claim. Therefore, successful product liability or hearing loss claims brought against us could have a
material adverse effect upon our business, financial condition and results of operations.
Our mobile headsets are used with mobile telephones. There has been continuing public controversy over
whether the radio frequency emissions from mobile telephones are harmful to users of mobile phones. We
believe that there is no conclusive proof of any health hazard from the use of mobile telephones but that
research in this area is incomplete. We have tested our headsets through independent laboratories and
have found that use of our corded headsets reduces radio frequency emissions at the user’s head to
virtually zero. Our Bluetooth and other wireless headsets emit significantly less powerful radio frequency
emissions than mobile phones. However, if research was to establish a health hazard from the use of
mobile telephones or public controversy grows even in the absence of conclusive research findings, there
could be an adverse impact on the demand for mobile phones, which reduces demands for headset
products. Likewise, should research establish a link between radio frequency emissions and wireless
headsets and public concern in this area grow, demand for our wireless headsets could be reduced creating
a material adverse effect on our financial results.
There is also continuing and increasing public controversy over the use of mobile telephones by operators
of motor vehicles. While we believe that our products enhance driver safety by permitting a motor vehicle
operator to generally be able to keep both hands free to operate the vehicle, there is no certainty that this
is the case and we may be subject to claims arising from allegations that use of a mobile telephone and
headset contributed to a motor vehicle accident. We maintain product liability insurance and general
liability insurance that we believe would cover any such claims. However, the coverage provided under
our policies could be unavailable or insufficient to cover the full amount of any such claim. Therefore,
successful product liability claims brought against us could have a material adverse effect upon our
business, financial condition and results of operations.
While we believe we comply with environmental laws and regulations, we are still exposed to
potential risks from environmental matters.
We are actively working to gain an understanding of the complete requirements concerning the removal
of certain potentially environmentally sensitive materials from our products to comply with the European
Union Directives on Restrictions on certain Hazardous Substances on electrical and electronic equipment
(‘‘ROHS’’) and on Waste Electrical and Electronic Equipment (‘‘WEEE’’). Some of our customers are
requesting that we implement these new compliance standards sooner than the legislation would require.
While we believe that we will have the resources and ability to fully meet our customers’ requests, and
spirit of the ROHS and WEEE directives, if unusual occurrences arise or if we are wrong in our
assessment of what it will take to fully comply, there is a risk that we will not be able to meet the
aggressive schedule set by our customers or comply with the legislation as passed by the EU member
states. If that were to happen, a material negative effect on our financial results may occur.
We are subject to various federal, state, local and foreign environmental laws and regulations, including
those governing the use, discharge and disposal of hazardous substances in the ordinary course of our
manufacturing process. Although we believe that our current manufacturing operations comply in all
material respects with applicable environmental laws and regulations, environmental legislation has been
44 ⯗Plantronics