Plantronics 2006 Annual Report Download - page 32

Integration of Altec Lansing Technologies, Inc. may have an adverse effect on our business and
financial condition.
There are inherent risks associated with the acquisition of Altec Lansing that could materially adversely
affect our business, financial condition and results of operations. The risks faced in connection with this
acquisition include among others:
)Cultural differences in the conduct of the business;
)Difficulties in integration of the operations, technologies, and products of Altec Lansing;
)Diversion of management’s attention from normal daily operations of the core business;
)Difficulties in integrating the transactions and business information systems of Altec Lansing;
)The potential loss of key employees of Altec Lansing and Plantronics;
)Competition may increase in Altec Lansing’s markets more than expected; and
)Altec Lansing’s product sales and new product development may not evolve as anticipated.
Mergers and acquisitions, particularly those of high-technology companies, are inherently risky, and no
assurance can be given that this or any future acquisitions will be successful and will not materially
adversely affect our business, operating results or financial condition. We must also manage any
acquisition-related growth effectively. Failure to manage growth effectively and successfully integrate this
or any future acquisitions made by us could materially harm our business and operating results. If the
anticipated future results of operations of the combined Altec Lansing and Plantronics’ businesses do not
materialize as expected, goodwill and other intangible assets which were recorded as a result of the
acquisition could become impaired and could result in write-offs which would negatively impact our
operating results.
We depend on original design manufacturers and contract manufacturers who may not have
adequate capacity to fulfill our needs or may not meet our quality and delivery objectives.
Original design manufacturers and contract manufacturers produce key portions of our product lines for
us. Our reliance on them involves significant risks, including reduced control over quality and logistics
management, the potential lack of adequate capacity and loss of services. Financial instability of our
manufacturers or contractors could result in our having to find new suppliers, which could increase our
costs and delay our product deliveries. These manufacturers and contractors may also choose to
discontinue building our products for a variety of reasons.
Consequently, we may experience delays in the timeliness, quality and adequacy of product deliveries, any
of which could harm our business and operating results.
Demand for iPod products, which are produced by Apple Computer, Inc., affects demand for certain
portable products.
Certain of our portable products under our Altec Lansing brand was developed for use with Apple
Computer, Inc.’s (‘‘Apple’’) iPod products. We have a non-exclusive right to use the Apple interface with
certain of our portable products, and we are required to pay Apple a royalty for this right. The risks faced
in conjunction with our Apple related products include, among others:
)If supply or demand for iPod products decreases, demand for certain of our portable products
could be negatively affected. MP3 integration with cell phones could take significant market
share from Apple’s iPod products;
)If Apple does not renew or cancels our licensing agreement, our products may not be compatible
with iPods, resulting in loss of revenues and excess inventories which would negatively impact
our financial results;
26 ⯗Plantronics