Plantronics 2013 Annual Report Download - page 30

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We sell our products through various distribution channels that can be volatile, and failure to establish and maintain successful
relationships with our channel partners could materially adversely affect our business, financial condition, or results of
operations. In addition, bankruptcies or financial difficulties of our customers may impact our business.
We sell substantially all of our products to end users through distributors, retailers, OEMs, and telephony service providers.
Effectively managing these relationships and avoiding channel conflicts can be difficult and time-consuming. Our existing
relationships with these parties are generally not exclusive and can be terminated by us or them without cause on short notice. In
the future, we may be unable to retain or attract a sufficient number of qualified distributors, retailers, OEMs, and telephony service
providers. These customers also sell or may sell products offered by our competitors. To the extent that our competitors offer
these customers more favorable terms or more compelling products, such customers may decline to carry, de-emphasize, or
discontinue carrying our products. Further, such customers may not recommend or may stop recommending our products. In the
future, our OEMs or potential OEMs may elect to manufacture their own products that are similar to those we currently sell to
them. The inability to establish or maintain successful relationships with distributors, OEMs, retailers, and telephony service
providers or to expand our distribution channels could materially adversely affect our business, financial condition, or results of
operations. We have experienced the bankruptcy of certain customers; for example, in fiscal year 2012, the bankruptcy of one of
our customers negatively impacted our operating income by $1.2 million. If global or regional economic conditions deteriorate,
more of our customers or suppliers may become insolvent. It is impossible to reliably determine whether additional bankruptcies
may occur.
As a result of the evolution of our consumer business, our customer mix is changing, and certain retailers, OEMs, and wireless
carriers are more significant. This reliance on certain large channel partners could increase the volatility of our revenues and
earnings. In particular, we have several large customers whose order patterns are difficult to predict. Offers and promotions by
these customers may result in significant fluctuations of their purchasing activities over time. If we are unable to correctly anticipate
the quantities and timing of the purchase requirements of these customers, our revenues may be adversely affected, or we may be
exposed to large volumes of inventory that cannot be resold to other customers.
Our corporate tax rate may increase or we may incur additional income tax liabilities, 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
has been generated historically in jurisdictions outside of the U.S. 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, the
applicable tax laws were rescinded or changed, or the mix of our earnings shifts from lower rate jurisdictions to higher rate
jurisdictions, our operating results could be materially adversely affected. In addition, various governmental tax authorities have
recently increased their scrutiny of tax strategies employed by corporations and individuals. If U.S. or other foreign tax authorities
change applicable 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.
We are also subject to examination by the Internal Revenue Service ("IRS") and other tax authorities, including state revenue
agencies and foreign governments. In July 2012, the IRS commenced an examination of our 2010 tax year. While we regularly
assess the likelihood of favorable or unfavorable outcomes resulting from examinations by the IRS and other tax authorities to
determine the adequacy of our provision for income taxes, there can be no assurance that the actual outcome resulting from these
examinations will not materially adversely affect our financial condition and results of operations.
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