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TableofContents
addition,deteriorationinbusinessandeconomicconditionscouldexacerbatepriceerosionandvolatilityasdistributorslowerpricestocompensateforlower
demandandhigherinventorylevels.Ourdistributors'abilitytoaccesscreditforpurposesoffundingtheiroperationsmayalsoaffectpurchasesofourproductsby
thesecustomers.
Ifdistributorsreducetheirpurchasesofourproductsorpricesdeclinesignificantlyinthedistributionchannelorifdistributorsexperiencefinancialdifficulties
orterminatetheirrelationshipswithus,ourrevenuesandresultsofoperationswouldbeadverselyaffected.
Webelievethatindustrydemandforstorageproductsinthelong-termisincreasingduetotheproliferationofmedia-richdigitalcontentinconsumer
applicationsandisfuelingincreasedconsumerdemandforstorage.Thishasledtotheexpansionofourbrandedsolutionssuchasexternalstorageproductsto
provideadditionalstoragecapacityandtosecuredataincaseofdisasterorsystemfailure,ortoprovideindependentstoragesolutionsformultipleusersinhomeor
smallbusinessenvironments.Consumerspendingonretailsalesofourbrandedsolutionshasdeterioratedinsomemarketsandmaycontinuetodosoifpoorglobal
economicconditionscontinueandhigherlevelsofunemploymentpersist.Thiscouldhaveamaterialadverseeffectondemandforourproductsandservicesandon
ourfinancialconditionandresultsofoperations.
Inaddition,suchretailsalesofourbrandedsolutionstraditionallyexperienceseasonalvariabilityindemandwithhigherlevelsofdemandinthefirsthalfof
ourfiscalyeardrivenbyconsumerspendingintheback-to-schoolseasonfromlatesummertofallandthetraditionalholidayshoppingseasonfromfalltowinter.
Additionally,ourabilitytoreachsuchconsumersdependsonusmaintainingeffectiveworkingrelationshipswithmajorretailersanddistributors.Failureto
anticipateconsumerdemandforourbrandedsolutionsaswellasaninabilitytomaintaineffectiveworkingrelationshipswithretailandonlinedistributorsmay
adverselyimpactourfutureresultsofoperations.
Ourinternationalsalesandmanufacturingoperationssubjectustorisksrelatedtodisruptionsinforeignmarkets,currencyexchangefluctuations,longer
paymentcycles,seasonality,limitationsimposedbyavarietyoflegalandregulatoryregimes,potentialadversetaxconsequences,increasedcosts,our
customers'creditandaccesstocapital,health-relatedrisks,andaccesstopersonnel.
Wehavesignificantsalesandmanufacturingoperationsinforeigncountries,includingmanufacturingfacilities,salespersonnelandcustomersupport
operations.WehavemanufacturingfacilitiesinChina,Malaysia,NorthernIreland,SingaporeandThailand,inadditiontothoseintheUnitedStates.Asubstantial
portionofourclientcomputediskdriveassemblyoccursinourfacilityinChina.
Ourinternationaloperationsaresubjecttoeconomicrisksinherentindoingbusinessinforeigncountries,includingthefollowing:
•DisruptionsinForeignMarkets.Disruptionsinfinancialmarketsandthedeteriorationoftheunderlyingeconomicconditionsinthepastinsome
countries,includingthoseinAsia,UnitedKingdomandtheEuropeanUnionhavehadanimpactonoursalestocustomerslocatedin,orwhoseend-
usercustomersarelocatedin,thesecountries.
•FluctuationsinCurrencyExchangeRates.PricesforourproductsaredenominatedpredominatelyinU.S.dollars,evenwhensoldtocustomers
thatarelocatedoutsidetheUnitedStates.Anincreaseinthevalueofthedollarcouldincreasetherealcosttoourcustomersofourproductsinthose
marketsoutsideoftheU.S.wherewesellindollars.Thiscouldadverselyimpactoursalesandmarketshareinsuchareasorincreasepressureonus
tolowerourprice,andadverselyimpactourprofitmargins.Aweakeneddollarcouldincreasethecostofexpensessuchaspayroll,utilities,tax,and
marketingexpenses,aswellasoverseascapitalexpenditures.Anyoftheseeventscouldhaveamaterialadverseeffectonourresultsofoperations.
Wemayattempttomanagetheimpactofforeigncurrencyexchangeratechangesby,amongotherthings,enteringintoforeigncurrency
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