Plantronics 2007 Annual Report Download - page 32

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28 P l a n t r o n i c s
any of the pending claims will have such an effect. Although we maintain product liability insurance, the
coverage provided under our policies could be unavailable or insufficient to cover the full amount of any
such claim. Therefore, successful product liability or hearing loss claims brought against us could have a
material adverse effect upon our business, financial condition and results of operations.
Six class action lawsuits were recently filed against the Company alleging that our Bluetooth headsets
may cause noise-induced hearing loss. Shannon Wars et al. vs. Plantronics, Inc. was filed on November 14,
2006 in the United States District Court for the Eastern District of Texas. Lori Raines, et al. vs.
Plantronics, Inc. was filed on October 20, 2006 in the United States District Court, Central District of
California. Kyle Edwards, et al vs. Plantronics, Inc. was filed on October 17, 2006 in the United States
District Court, Middle District of Florida. Ralph Cook vs. Plantronics, Inc. was filed on February 8, 2007
in the United States District Court for the Eastern District of Virginia. Randy Pierce vs. Plantronics, Inc.
was filed on January 10, 2007 in the United States District Court for the Eastern District of Arkansas. Bruce
Schiller, et al vs. Plantronics, Inc. was filed on October 10, 2006 in the Superior Court of the State of
California in and for the County of Los Angeles. The complaints state that they do not allege actual
personal injury to any individual. These complaints seek various remedies, including injunctive relief
requiring the Company to include certain additional warnings with its Bluetooth headsets and to redesign
the headsets to limit the volume produced, or, alternatively, to provide the user with the ability to
determine the level of sound emitted from the headset. Plaintiffs also seek unspecified general, special,
and punitive damages, as well as restitution. We do not believe that the allegations in these lawsuits have
any merit, and Plantronics will aggressively defend itself in these cases.
Our mobile headsets are used with mobile telephones. There has been continuing public controversy over
whether the radio frequency emissions from mobile telephones are harmful to users of mobile phones. We
believe that there is no conclusive proof of any health hazard from the use of mobile telephones but that
research in this area is incomplete. We have tested our headsets through independent laboratories and
have found that use of our corded headsets reduces radio frequency emissions at the user’s head to virtually
zero. Our Bluetooth and other wireless headsets emit significantly less powerful radio frequency emissions
than mobile phones. However, if research establishes a health hazard from the use of mobile telephones
or public controversy grows even in the absence of conclusive research findings, there could be an adverse
impact on the demand for mobile phones, which reduces demand for headset products. Likewise, should
research establish a link between radio frequency emissions and wireless headsets and public concern in
this area grows, demand for our wireless headsets could be reduced creating a material adverse effect on
our financial results.
There is also continuing and increasing public controversy over the use of mobile telephones by operators
of motor vehicles. While we believe that our products enhance driver safety by permitting a motor vehicle
operator to generally be able to keep both hands free to operate the vehicle, there is no certainty that this
is the case and we may be subject to claims arising from allegations that use of a mobile telephone and
headset contributed to a motor vehicle accident. We maintain product liability insurance and general
liability insurance that we believe would cover any such claims. However, the coverage provided under
our policies could be unavailable or insufficient to cover the full amount of any such claim. Therefore,
successful product liability claims brought against us could have a material adverse effect upon our
business, financial condition and results of operations.
Our business could be materially adversely affected if we lose the benefit of the services of key personnel.
Our success depends to a large extent upon the services of a limited number of executive officers and other
key employees. The unanticipated loss of the services of one or more of our executive officers or key
employees could have a material adverse effect upon our business, financial condition and results of
operations.
We also believe that our future success will depend in large part upon our ability to attract and retain
additional highly skilled technical, management, sales and marketing personnel. Competition for such
personnel is intense. We are currently seeing employee departures at a rate greater than that historically