Plantronics 2011 Annual Report Download - page 22

• We obtain certain raw materials, sub-assemblies, components and products from single suppliers, including
substantially all of our Bluetooth products from GoerTek, Inc. Alternate sources for these items may not be readily
available. Any failure of GoerTek, Inc. or our other suppliers to remain in business, to provide us with the quantity
of components or products that we need or to purchase the raw materials, subcomponents and parts required by them
to produce and provide to us the components or products we need could materially adversely affect our business,
financial condition and results of operations.
• Although we generally use standard raw materials, parts and components for our products, the high development
costs associated with emerging wireless and other technologies may require us to work with only a single source of
silicon chips, chip-sets or other components or materials (“components or materials”) on any particular new product.
We, or our supplier(s) of components or materials, may experience challenges in designing, developing and
manufacturing components or materials using these new technologies which could affect our ability to meet market
schedules. Our components or materials suppliers may decide for commercial reasons to discontinue components
or materials that we have designed into our products. Due to our dependence on single suppliers for certain components
or materials, we could experience higher prices, a delay in development of the components or materials, or the
inability to meet our customer demand for these new products. Additionally, these suppliers or other suppliers may
enter into bankruptcy, discontinue production of the components or materials we depend on, or may not be able to
produce for their own commercial reasons due to financial difficulties or global economic conditions. If this occurs,
we may have difficulty obtaining sufficient product to meet our needs. This could cause us to fail to meet customer
expectations. If customers cease purchasing our products or turn to our competitors to meet their needs, there could
be a long-term adverse impact on our revenues and profitability. Our business, financial condition and results of
operations could therefore be materially adversely affected as a result of these factors.
• We were apprised by one of our sole sourced suppliers that a wafer fabrication foundry it uses to produce integrated
circuits for certain of our call center and office headsets is no longer producing those integrated circuit products.
The production of these products was shifted to a different wafer fabrication foundry that previously produced these
integrated circuits on our behalf. We expect to have new products before our supply of integrated circuits is depleted;
however, the new foundry could have difficulties re-establishing the process and re-qualifying the integrated circuits
that they are producing on our behalf. If the new wafer fabrication foundry cannot produce these integrated circuits
with good quality and in the quantities we require in a timely manner, it is possible that we will not have product
available to meet demand. Our revenue might decrease as a result and our customers might be forced to turn to
alternative suppliers. A failure to properly produce the integrated circuits in the re-qualified foundry could materially
affect our business, financial condition and results of operations.
• Because of the lead times required to obtain certain raw materials, sub-assemblies, components and products from
certain suppliers, we may not be able to react quickly to changes in demand, potentially resulting in either excess
inventories of such goods or shortages of the raw materials, sub-assemblies, components, and products. Lead times
are particularly long on silicon-based components incorporating radio frequency and digital signal processing
technologies and such components are an increasingly important part of our product costs. In particular, many
consumer product orders have shorter lead times than the component lead times, making it increasingly necessary
to carry more inventory in anticipation of those orders, which may not materialize. Failure in the future to match
the timing of purchases of raw materials, sub-assemblies, components and products to demand could increase our
inventories and/or decrease our revenues and could materially adversely affect our business, financial condition and
results of operations.
• Most of our suppliers are not obligated to continue to provide us with raw materials, components, and sub-assemblies.
Rather, we buy most of our raw materials, components and subassemblies on a purchase order basis. Prices for many
commodities are rising and are increasing our costs. Additionally, if our suppliers experience increased demand or
shortages, it could affect deliveries to us. Any such shortages or further increases in prices could materially adversely
affect our business, financial condition, and results of operations.
• As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the U.S. Securities and Exchange
Commission ("SEC") has proposed disclosure requirements regarding the use of certain minerals, known as conflict
minerals, which are mined from the Democratic Republic of Congo and adjoining countries, as well as procedures
regarding a manufacturer’s efforts to prevent the sourcing of such minerals and metals produced from those minerals.
The implementation of these requirements could affect the sourcing and availability of metals used in the manufacture
of a limited number of raw material parts contained in our products. This may reduce the number of suppliers who
provide conflict free metals, and may affect our ability to obtain products in sufficient quantities or at competitive
prices. Our material sourcing is broad based and multi-tiered, and we may not be able to conclusively verify the
origins for all metals used in our products.
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