Plantronics 2009 Annual Report Download - page 28

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20
• Most of our suppliers are not obligated to continue to provide us with raw materials, components and sub-assemblies.
Rather, we buy most of our raw materials, components and subassemblies on a purchase order basis. If our suppliers
experience increased demand or shortages, it could affect deliveries to us. In turn, this would affect our ability to
manufacture and sell products that are dependent on those raw materials, components and subassemblies. Any such
shortages would materially adversely affect our business, financial condition and results of operations.
We have significant foreign manufacturing operations that are inherently risky, and a significant amount of our revenues are
generated internationally.
We have a manufacturing facility in Tijuana, Mexico and a design and manufacturing facility in Suzhou, China. In our Suzhou, China
location, we intend to stop our manufacturing operations in fiscal 2010. We also have suppliers and other vendors throughout Asia,
including GoerTek, Inc. who will be the sole manufacturer of our Bluetooth products located in Weifang, China. We also generate a
significant amount of our revenues from foreign customers. The inherent risks of international operations could materially adversely
affect our business, financial condition and results of operations.
The types of risks faced in connection with international operations and sales include, among others:
• fluctuations in foreign exchange rates;
• cultural differences in the conduct of business;
• greater difficulty in accounts receivable collection and longer collection periods;
• the impact of the global recession;
• reduced protection for intellectual property rights in some countries;
• unexpected changes in regulatory requirements;
• tariffs and other trade barriers;
• political conditions, civil unrest or criminal activities within each country;
• the management and operation of an enterprise spread over various countries;
• the burden and administrative costs of complying with a wide variety of foreign laws and regulations; and
• currency restrictions.
We are exposed to fluctuations in foreign currency exchange rates which may adversely affect our gross profit and profitability.
Fluctuations in foreign currency exchange rates impact our revenues and profitability because we report our financial statements in
U.S. dollars, whereas a significant portion of our sales to customers are transacted in other currencies, particularly the Euro and Great
Britain Pound (“GBP”). Furthermore, fluctuations in foreign currencies impact our global pricing strategy resulting in our lowering or
raising selling prices in one or more currencies in order to avoid disparity with U.S. dollar prices and to respond to currency-driven
competitive pricing actions. We also have significant manufacturing operations in Mexico and fluctuations in the currency exchange
rate can impact our gross profit and profitability. During the last half of fiscal 2009, we experienced an unfavorable impact on our net
income primarily as a result of the weakening of the Euro and GBP against the U.S. dollar. Currency exchange rates are difficult to
predict, and we may not be able to predict changes in exchange rates in the future. We hedge a portion of our Euro and GBP
forecasted revenue exposure for the future 12 month period, which partially offset the impact of a stronger dollar during part of fiscal
2009. However, over time, the current exchange rates or a further increase in the value of the U.S. dollar relative to the Euro or the
GBP could negatively impact our revenues, gross profit and profitability in the future.
We have intangible assets and goodwill recorded on our balance sheet and we have recently recognized an impairment loss. If the
carrying value of our goodwill or intangible assets is not recoverable, a further impairment loss may be recognized, which would
adversely affect our financial results.
As a result of the acquisition of Altec Lansing and Volume Logic in fiscal 2006, we recorded a significant amount of goodwill and
intangible assets on our balance sheet.