Plantronics 2008 Annual Report Download - page 26

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xuncertain economic conditions, including the possibility of a domestic and global recession, inflationary pressures, and the
decline in investor confidence in the market place;
xchanges in our published forecasts of future results of operations;
xquarterly variations in our or our competitors' results of operations and changes in market share;
xthe announcement of new products or product enhancements by us or our competitors;
xthe loss of services of one or more of our executive officers or other key employees;
xchanges in earnings estimates or recommendations by securities analysts;
xdevelopments in our industry;
xsales of substantial numbers of shares of our common stock in the public market;
xthe timing and success of the integration of the AEG business;
xour ability to successfully complete the product refresh for the Altec Lansing products and turnaround the AEG business in a
timeline consistent with our internal financial models;
xgeneral economic, political, and market conditions, including market volatility;
xother factors unrelated to our operating performance or the operating performance of our competitors.
Our corporate tax rate may increase, which could adversely impact our cash flow, financial condition and results of operations.
We have significant operations in various tax jurisdictions throughout the world, and a substantial portion of our taxable income
historically has been generated in these jurisdictions. Currently, some of our operations are taxed at rates substantially lower than U.S.
tax rates. If our income in these lower tax jurisdictions were no longer to qualify for these lower tax rates, if the applicable tax laws
were rescinded or changed, or if the mix of our earnings shifts from lower rate jurisdictions to higher rate jurisdictions, our operating
results could be materially adversely affected. While we are looking at opportunities to reduce our tax rate, there is no assurance that
our tax planning strategies will be successful. In addition, many of these strategies will require a period of time to
implement. Moreover, if U.S. or other foreign tax authorities change applicable foreign tax laws or successfully challenge the manner
in which our profits are currently recognized, our overall taxes could increase, and our business, cash flow, financial condition and
results of operations could be materially adversely affected.
During the first quarter of fiscal 2008, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109” (“FIN 48”), which clarifies the accounting for
uncertainty in income tax positions. This interpretation requires the Company to recognize in the consolidated financial statements
only those tax positions determined to be more likely than not of being sustained which has the potential to add more variability to our
future effective tax rates.
We have significant foreign manufacturing operations which are inherently risky, and a significant amount of our revenues are
generated internationally.
We completed construction of a manufacturing facility and design center in Suzhou, China, in the fourth quarter of fiscal 2006, and
we are transitioning new products and outsourced production to our new facility to increase production. If we are unable to effectively
produce new products or to transition outsourced production into our Suzhou facility, we may be unable to meet demand for these
products, and our margins on these products may decrease. There are risks in operating the Suzhou factory and expanding our
competency in a rapidly evolving economy because, among other reasons, we may be unable to attract sufficient qualified personnel,
intellectual property rights may not be enforced as we expect, electricity may not be available as contemplated or the like. Should any
of these risks occur, we may be unable to maximize the output from the facility and our financial results may decrease from our
anticipated levels. We also purchase a number of turnkey products directly from vendors in Asia. Further, most of our AEG products
are manufactured by foreign vendors, primarily in China. In addition, we assemble the majority of our ACG headsets in our
manufacturing facility located in Tijuana, Mexico, and we obtain most of the components and sub-assemblies used in our products
from various foreign suppliers. The inherent risks of international operations, either in Mexico or in Asia, could materially adversely
affect our business, financial condition and results of operations.