Plantronics 2014 Annual Report Download - page 28

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16
Additionally, the majority of our suppliers are located internationally, principally in Asia. Accordingly, volatile or sustained
increases or decreases in exchange rates of Asian currencies may result in increased costs or reductions in the number of suppliers
qualified to meet our standards.
Although we hedge currency exchange rates exposures we deem material, changes in exchange rates may nonetheless still have
a negative impact on our financial results. Among the factors that may affect currency values are trade balances, the level of short-
term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment
and capital appreciation, and political developments.
We hedge a portion of our Euro and GBP forecasted revenue exposures for the future, typically over 12-month periods. In addition,
we hedge a portion of our Mexican Peso forecasted cost of revenues and we have foreign currency forward contracts denominated
in Euros, GBP, and Australian Dollars that hedge against a portion of our foreign-currency denominated assets and liabilities. Our
foreign currency hedging contracts reduce, but do not eliminate, the impact of currency exchange rate movements and we do not
execute hedging contracts in all currencies in which we conduct business. There is no assurance that our hedging strategies will
be effective. Additionally, even if our hedging techniques are successful in the periods during which the rates are hedged, our
future revenues, gross profit, and profitability may be negatively affected both at current rates and by adverse fluctuations in
currencies against the USD.
Our business will be materially adversely affected if we are unable to develop, manufacture, and market new products in
response to changing customer requirements and new technologies.
The technology used in our products is evolving more rapidly now than in the past and we anticipate that this trend will continue.
Historically, new products primarily offered stylistic changes and quality improvements rather than significant new technologies.
Our increasing reliance and focus on the UC market has resulted in a growing number of our products that integrate complex,
state-of-the-art technology, increasing the risks associated with new product ramp-up, including product performance and defects
in the early stages of production.
Office phones have begun to incorporate Bluetooth functionality, which has opened the market to consumer Bluetooth headsets
and reduced the demand for our traditional office telephony headsets and adapters resulting in lost revenue, lower margins, or
both. Moreover, the increasing adoption of wireless headsets has also resulted in increased development costs associated with the
introduction of new wireless standards and more frequent changes in those standards and capabilities as compared to wired
technologies. If sales and margins on our traditional corded and cordless products decline and we are unable to successfully design,
develop, and market alternatives at historically comparable margins, our revenue and profits may decrease.
In addition, innovative technologies such as UC have moved the platform for certain of our products from our customers' closed
proprietary systems to open platforms such as the PC, smart phones and tablets. In turn, these devices have become more open
as a result of technologies such as cloud computing and trends toward more open source software code development. As a result,
the risk that current and potential competitors could enter our markets and commoditize our products by offering similar products
has increased.
The success of our products depends on several factors, including our ability to:
• Anticipate technology and market trends
• Develop innovative new products and enhancements on a timely basis
• Distinguish our products from those of our competitors
• Create industrial designs that appeal to our customers and end-users
• Manufacture and deliver high-quality products in sufficient volumes and acceptable margins
• Price our products competitively
• Hire and retain qualified personnel in the highly competitive field of software development
• Provide timely, effective and accurate technical product support to our customers
• Leverage new and existing channel partners effectively
If we are unable to develop, manufacture, market, and introduce enhanced or new products in a timely manner in response to
changing market conditions or customer requirements, including changing fashion trends and styles, it will materially adversely
affect our business, financial condition, and results of operations.