Plantronics 2007 Annual Report Download - page 12

8 P l a n t r o n i c s
FOREIGN OPERATIONS
In fiscal 2005, 2006 and 2007 revenues outside the U.S. accounted for approximately 33%, 36% and 39%,
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 2007, we continued to engage in hedging activities
to limit our transaction and economic exposures, and to mitigate our exchange rate risks. We hedged a
portion of our positions in the Euro and the Great British Pound, which constitute the majority of our
currency exposure. To the extent that our revenues from non-U.S. customers increase or we increase our
transactions in foreign currencies, or that we are unsuccessful in our hedging strategies, our results of
operations could be materially adversely affected by exchange rate fluctuations. Further information
regarding our foreign operations, as required by Item 101(d) of Regulation S-K, can be found in the
consolidated financial statements.
COMPETITION
The market for our products is very competitive and some of our competitors have significant financial
resources, including production, marketing, engineering and other capabilities to develop, manufacture,
market and sell their products.
In the ACG segment, one of our primary competitors is GN Netcom, a subsidiary of GN Great Nordic
Ltd., 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 and Logitech 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 cell phone device makers such as Nokia, Motorola, Sony and Samsung.
We believe the principal factors for ACG to be successful and competitive in each of its markets are the
following:
• Office market - performance, product design and style, comfort, simplicity, price and
reliability. We also believe that our brand, reputation and channels of distribution are important
success factors. Although we have historically competed successfully in this market, there can
be no assurance that we will be able to retain our leadership position in the future;
• Contact center market - performance, reliability, price, comfort, style and support;
• Mobile market - product styling, competitive pricing, simplicity of product operation, product
reliability, product features, sound quality, comfort, fit, ability to meet delivery schedules,
customer service and support, reputation, distribution, warranty terms, and product life;
• Gaming and entertainment market - in retail channel, the primary factors for success are
differentiated packaging, price, superior microphone and speaker performance and headset style
and color ;
• OEM business - key success factors are meeting unique requirements within customer
timeframes, unique styling, excellent sound, product simplicity, price targets, and consistent
quality with low defect rates; and
• Specialty products - key success factors are performance, reliability, end-user support and
price.
In the AEG segment, our major competitors include Bose, Apple, Logitech, Creative Labs, iHome, and
Harman International. AEG predominantly serves the consumer electronics market. This market is
principally served by the retail channel and, to a lesser extent, through certain OEMs. We are experiencing
a new dynamic in the consumer electronics industry driven by the digital evolution that is influencing the
way consumers look for solutions to their musical entertainment needs. Our key competition is coming
from new and existing solution providers that offer a convenient, cost effective and lifestyle-compatible
method of delivering content when people want it, where they want it, and how they want it.