Plantronics 2009 Annual Report Download - page 32

24
In connection with the acceptance of the UBS offer in November 2008, we transferred our ARS from long-term investments available-
for-sale to long-term trading securities. The transfer to trading securities reflects management’s intent to exercise the Rights option
during the period June 30, 2010 to July 3, 2012. Prior to the Agreement with UBS, the intent was to hold the ARS until the market
recovered. At the time of transfer, we recognized a loss on the ARS of approximately $4.0 million in Interest and other income
(expense), net in the third quarter of fiscal 2009, an increase of $1.1 million from the unrealized loss of $2.9 million recorded in
Accumulated other comprehensive income (loss) within Stockholders’ Equity as of March 31, 2008. In the fourth quarter of fiscal
2009, an additional unrealized loss of $0.3 million was recorded in Interest and other income (expense), net which was offset by a $0.3
million unrealized gain on the Rights.
Although we currently have the ability to hold these ARS investments until a recovery of the auction process, until maturity or until
purchased by UBS, if the current market conditions deteriorate further, a recovery in market values does not occur or UBS does not
purchase, we may incur further other-than-temporary impairment charges resulting in realized losses in our statement of operations,
which would reduce net income.
War, terrorism, public health issues or other business interruptions could disrupt supply, delivery or demand of products, which
could negatively affect our operations and performance.
War, terrorism, public health issues or other business interruptions whether in the U.S. or abroad, have caused or could cause damage
or disruption to international commerce by creating economic and political uncertainties that may have a strong negative impact on the
global economy, our company, and our suppliers or customers. Our major business operations are subject to interruption by
earthquake, flood or other natural disasters, fire, power shortages, terrorist attacks, and other hostile acts, public health issues, and
other events beyond our control. Our corporate headquarters, information technology, manufacturing, certain research and
development activities, and other critical business operations, are located near major seismic faults or flood zones. While we are
partially insured for earthquake-related losses or floods, our operating results and financial condition could be materially affected in
the event of a major earthquake or other natural or manmade disaster.
We have a production facility in Mexico, which is one of the countries that has been most affected by the H1N1 “swine flu” virus.
We have not experienced any disruption in our operations as a result of the emergence of the swine flu virus. However, the
manufacturing and distribution of our products in Mexico could be severely impacted if the Mexican government were to close or
quarantine our facilities in Mexico or if we had to temporarily close our facilities due to an outbreak of the swine flu or a similar
disease or epidemic. Concerns related to the swine flu have not been limited to Mexico, and swine flu or other epidemics could also
affect our other facilities. In addition, these factors could also affect our suppliers, leading to a shortage of components, or our
customers, leading to a reduction in their demand for our products.
Although it is impossible to predict the occurrences or consequences of any of the events described above, such events could
significantly disrupt our operations. In addition, should major public health issues, including pandemics, arise, we could be negatively
impacted by the need for more stringent employee travel restrictions, limitations in the availability of freight services, governmental
actions limiting the movement of products between various regions, delays in production ramps of new products, and disruptions in
the operations of our manufacturing vendors and component suppliers. Our operating results and financial condition could be
adversely affected by these events.
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 may not be successful in
attracting and retaining such personnel, and our failure to do so could have a material adverse effect on our business, operating results
or financial condition.
We are required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002,
and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have an
adverse effect on our stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, our management is required to report on, and our independent registered
public accounting firm to attest to, the effectiveness of our internal control over financial reporting. We have an ongoing program to
perform the system and process evaluation and testing necessary to comply with these requirements.