Plantronics 2011 Annual Report Download - page 26

If we are unable to develop, manufacture, market and introduce enhanced or new products in a timely manner in response to
changing market conditions or customer requirements, including changing fashion trends and styles, it will materially adversely
affect our business, financial condition and results of operations. Furthermore, as we develop new generations of products more
quickly, we expect that the pace of product obsolescence will increase concurrently. The disposition of inventories of excess or
obsolete products may result in reductions to our operating margins and materially adversely affect our earnings and results of
operations.
We have significant foreign manufacturing operations and rely on third party manufacturers that are inherently risky, and a
significant amount of our revenues are generated internationally.
We have a manufacturing facility in Tijuana, Mexico. We also have suppliers and other vendors throughout Asia, including
GoerTek, Inc. located in Weifang, China, which is the manufacturer of the majority of our Bluetooth products. 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:
• fluctuations in foreign currency exchange rates;
• cultural differences in the conduct of business;
• greater difficulty in accounts receivable collection and longer collection periods;
• the impact of recessionary, volatile or adverse global economic conditions;
• reduced protection for intellectual property rights in some countries;
• unexpected changes in regulatory requirements;
• tariffs and other trade barriers;
• political conditions, health epidemics, civil unrest or criminal activities within each country;
• the management and operation of an enterprise spread over various countries;
• the burden and administrative costs of complying with a wide variety of foreign laws and regulations;
• currency restrictions; and
• compliance with anti-bribery laws, including, without limitation, compliance with the Foreign Corrupt Practices Act
(“FCPA”).
The above-listed and other inherent risks of international operations could materially adversely affect our business, financial
condition and results of operations.
We sell our products through various channels of distribution that can be volatile, and failure to establish and maintain
successful relationships with our channel partners could materially adversely affect our business, financial condition, or results
of operations. In addition, bankruptcies or financial difficulties of our customers may impact our business.
We sell substantially all of our products through distributors, retailers, OEMs, and telephony service providers. Our existing
relationships with these parties are not exclusive and can be terminated by either party without cause. These customers also sell
or may sell products offered by our competitors. To the extent that our competitors offer these customers more favorable terms
or more compelling products, such customers may decline to carry, de-emphasize, or discontinue carrying our products. In the
future, we may not be able to retain or attract a sufficient number of qualified distributors, retailers, OEMs, and telephony service
providers. Further, such customers may not recommend or may stop recommending our products. In the future, our OEMs or
potential OEMs may elect to manufacture their own products that are similar to those we currently sell to them. The inability to
establish or maintain successful relationships with distributors, OEMs, retailers and telephony service providers or to expand our
distribution channels could materially adversely affect our business, financial condition, or results of operations. Finally, as a
result of the global economic weakness we have experienced the bankruptcy of certain customers, and it is not possible to predict
whether additional bankruptcies of our customers may occur.
As a result of the evolution of our consumer business, our customer mix is changing, and certain retailers, OEMs, and wireless
carriers are more significant. This reliance on certain large channel partners could increase the volatility of our revenues and
earnings. In particular, we have several large customers whose order patterns are difficult to predict. Offers and promotions by
these customers may result in significant fluctuations of their purchasing activities over time. If we are unable to anticipate the
purchase requirements of these customers, our revenues may be adversely affected, or we may be exposed to large volumes of
inventory that cannot be immediately resold to other customers.
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