Adaptec 2007 Annual Report Download - page 22

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Table of Contents
downturn in their industries, delays in manufacturing their own product offerings into which our products are incorporated, and natural disasters. Accordingly,
our future operating results will continue to depend on the success of our largest customers and on our ability to sell existing and new products to these customers
in significant quantities.
The loss of a key customer, or a reduction in our sales to any major customer or our inability to attract new significant customers could materially and
adversely affect our business, financial condition or results of operations.
The loss of personnel could delay us from designing new products.
To succeed, we must retain and hire technical personnel highly skilled at the design and test functions needed to develop high-speed networking products.
The competition for such employees is intense.
We do not have employment agreements in place with many of our key personnel. As employee incentives, we issue common stock options and restricted
stock grants that are subject to time vesting, and, in the case of options, have exercise prices at the market value on the grant date. As our stock price varies
substantially, the equity awards to employees are effective as retention incentives only if they have economic value.
Retirement of our Chief Executive Officer
In the fourth quarter of 2007, we announced that our Chief Executive Officer and President, Robert Bailey, intends to retire from the positions of President
and Chief Executive Officer once his successor has been appointed. Mr. Bailey has been nominated to be re-elected as the Chairman of the Board of Directors at
the upcoming 2008 Annual Stockholder Meeting. The Search Committee of Board of Directors is actively searching for a successor to Mr. Bailey. While we do
not believe that our business has been adversely affected by the announcement of Mr. Bailey’s retirement plans, it is important that we identify a successor to
Mr. Bailey to mitigate any potential uncertainty in the market or the senior management team.
Changes in the political and economic climate in the countries we do business may adversely affect our operating results.
Our results of operations are increasingly dependent on our sales in China, which accounted for 20% of our revenues in 2007. Government agencies in
China have broad discretion and authority over all aspects of the telecommunications and information technology industry in China; accordingly their decisions
may impact our ability to do business in China. Therefore, significant changes in China’s political and economic conditions and governmental policies could
have a substantial impact on our business. The growth of FTTH technology in China has continued to be strong, however, a slowdown in that growth would have
an adverse impact on our operating results.
16
Source: PMC SIERRA INC, 10-K, February 22, 2008