Plantronics 2011 Annual Report Download - page 13

We believe that a number of fundamental factors are likely to increase our customers’ need for PC-compatible headsets in the
future, including the convergence of telephony and entertainment, internet multimedia applications such as streaming audio and
video, VoIP, gaming, and video conferencing. As devices providing these users’ needs converge, our headsets need to be PC-
compatible, mobile phone compatible, MP3 compatible and various combinations of these. We believe our product roadmaps
address the convergence brought about by these needs.
Specialty Products
Our specialty products sold under our Clarity brand address the unique needs of various consumer groups, one of which is the
increasing number of people worldwide suffering from hearing loss. We offer a comprehensive range of communications products
that serves customers with mild, moderate, and severe hearing loss as well as the deaf community.
FOREIGN OPERATIONS
In fiscal 2011, 2010 and 2009 net revenues outside the U.S. accounted for approximately 41%, 38%, and 37%, respectively, of
our total net revenues. Revenues derived from foreign sales generally are subject to additional risks such as fluctuations in exchange
rates, increased tariffs, the imposition of other trade barriers, and potential currency restrictions. In fiscal 2011, we continued to
engage in hedging activities to limit our transaction and economic exposures, and to mitigate our exchange rate risks. We hedged
our economic exposure by hedging a portion of our anticipated Euro and Great Britain Pound denominated sales and our Mexican
Peso denominated expenditures, which together constitute the most significant portion of our currency exposure. In addition, we
hedged our balance sheet exposure by hedging Euro, Great Britain Pound and Australian Dollar denominated cash balances,
accounts receivable and accounts payable. The U.S. Dollar has recently declined in value relative to the Euro and Great Britain
Pound. While our existing hedges cover a certain amount of exposure for our fiscal 2012, any long-term weakening of the Euro
and Great Britain Pound relative to the U.S. Dollar may have a material adverse impact on our financial results.
Further information regarding our foreign operations, as required by Item 101(d) of Regulation S-K, can be found in the Consolidated
Financial Statements and related notes herein.
COMPETITION
The market for our products is very competitive and some of our competitors have greater financial resources than we do, as well
as production, marketing, engineering and other capabilities to develop, manufacture, market and sell their products.
One of our primary competitors is GN Netcom, a subsidiary of GN Store Nord A/S., a Danish telecommunications conglomerate,
who competes with us in the office, contact center, and mobile markets and on a limited scale, in the PC market. In addition,
Motorola, Logitech, and Aliph are significant competitors in the consumer headset market and Sennheiser Communications is a
competitor in the computer, office, and contact center markets. We also believe there may be increased competition from the
major mobile phone device makers such as Nokia, Motorola, LG Electronics, Samsung and Sony.
We believe the principal factors to be successful and competitive in each of the markets we serve are:
• our understanding of emerging markets and new technologies, such as UC, and our ability to react quickly to the
opportunities that they provide;
• our ability to bring to market products that deliver on performance, product design, style, comfort, features, sound quality,
simplicity, price and reliability;
• maintenance of our brand name recognition and reputation;
• superior customer service, support and warranty terms; and
• effective and efficient distribution channels that allow us to market and sell our products.
We believe that our products and our strategy enable us to compete based on these factors.
RESEARCH AND DEVELOPMENT
We believe that the future success of our business depends upon our ability to enhance our existing products, to develop compelling
new products, to develop cost effective products, to have our products qualified by our technology partners and customers, to
successfully introduce these products to existing and new markets on a timely basis, and to commence and sustain volume production
to meet customer demands.
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