Plantronics 2008 Annual Report Download - page 27

Download and view the complete annual report

Please find page 27 of the 2008 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 104

  • 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

21
We also generate a significant amount of our revenues from foreign customers. The types of risks faced in connection with
international operations and sales include, among others:
xfluctuations in foreign exchange rates ;
xcultural differences in the conduct of business;
xgreater difficulty in accounts receivable collection and longer collection periods;
ximpact of recessions in economies outside of the United States;
xreduced protection for intellectual property rights in some countries;
xunexpected changes in regulatory requirements;
xtariffs and other trade barriers;
xpolitical conditions in each country;
xmanagement and operation of an enterprise spread over various countries;
xthe burden and administrative costs of complying with a wide variety of foreign laws; and
xcurrency restrictions.
We may be required to record impairment charges in future quarters as a result of the decline in value of our investments in
auction rate securities.
We hold a variety of auction rate securities, or ARS, primarily comprised of interest bearing state sponsored student loan revenue
bonds guaranteed by the Department of Education. Historically these ARS investments have provided liquidity via an auction process
that resets the applicable interest rate at predetermined calendar intervals, typically every 7 or 35 days. The recent uncertainties in the
credit markets have affected all of our holdings, and, as a consequence, the investments are not currently liquid. As a result, we will
not be able to access these funds until a future auction of these investments is successful, the underlying securities are redeemed by the
issuer, or a buyer is found outside of the auction process. Maturity dates for these ARS investments range from 2029 to 2039. During
the fourth quarter of fiscal 2008, we determined there was a decline in the fair value of our ARS investments of $2.9 million, which
was deemed temporary.
The valuation of our investment portfolio is subject to uncertainties that are difficult to predict. Factors that may impact its valuation
include changes to credit rating, interest rate changes, and general liquidity in the Student Loan Market.
Although we currently have the ability to hold these ARS investments until a recovery of the auction process or until maturity, if the
current market conditions deteriorate further, or the anticipated recovery in market values does not occur, we may incur further
temporary impairment charges requiring us to record additional unrealized losses in other comprehensive income (loss). We could
also incur other-than-temporary impairment charges resulting in realized losses in our statement of operations which would reduce net
income.
War, terrorism, public health issues or other business interruptions could disrupt supply, delivery or demand of products, which
could negatively affect our operations and performance.
War, terrorism, public health issues or other business interruptions whether in the United States or abroad, have caused or could cause
damage or disruption to international commerce by creating economic and political uncertainties that may have a strong negative
impact on the global economy, our company, and our suppliers or customers. Our major business operations are subject to
interruption by earthquake, flood or other natural disasters, fire, power shortages, terrorist attacks, and other hostile acts, public health
issues, and other events beyond our control. Our corporate headquarters, information technology, manufacturing, certain research and
development activities, and other critical business operations, are located near major seismic faults or flood zones. While we are
partially insured for earthquake-related losses or floods, our operating results and financial condition could be materially affected in
the event of a major earthquake or other natural or manmade disaster.
Although it is impossible to predict the occurrences or consequences of any of the events described above, such events could
significantly disrupt our operations. In addition, should major public health issues, including pandemics, arise, we could be negatively