Delaware
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77-0207692
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification Number)
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345
Encinal Street, Santa Cruz, California
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95060
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(Address
of principal executive offices)
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(Zip
Code)
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Title of each class
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Name
of each exchange on which registered
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COMMON
STOCK, $.01 PAR VALUE
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NEW
YORK STOCK EXCHANGE
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PREFERRED
SHARE PURCHASE RIGHTS
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NEW
YORK STOCK EXCHANGE
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Large
Accelerated Filer x
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Accelerated
Filer ¨
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Non-accelerated
Filer ¨
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Part
I.
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Page
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Item
1.
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Item
1A.
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Item
1B.
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Item
2.
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Item
3.
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Item
4.
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Part
II.
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Item
5.
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Item
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Item
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Item
7A.
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9.
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Item
9A.
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Item
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Part
III.
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Part
IV.
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Item
15.
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89
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·
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Audio
Communications Group: Our ACG segment is our core
business and is engaged in the design, manufacture, marketing and sales of
headsets for business and consumer applications, and other specialty
products. We make headsets for use in office and contact centers, with
mobile and cordless phones, and with computers and gaming consoles.
Plantronics headsets are communications tools, providing freedom to use
your hands while staying “connected,” freedom to move around, and freedom
from using keyboards. We apply a variety of technologies to
develop high quality products to meet the needs of our customers, whether
it is for communications or personal entertainment. Plantronics
headsets are widely used with cell phones, in contact centers, in the
office, in the home, for computer applications such as Voice over Internet
Protocol (“VoIP”), for gaming, and other specialty
applications. Major product categories include Office and
Contact Center,
which includes corded and cordless communication headsets, audio
processors and telephone systems; Mobile, which includes Bluetooth and corded products for mobile
phone applications; Gaming and
Computer Audio,
which includes PC and gaming headsets; and Other, which includes specialty
products such as Clarity products marketed for hearing impaired
individuals. Products developed and managed by ACG are included
in this segment and may be sold under any of our family of
brands.
|
|
·
|
Audio
Entertainment Group: Our AEG segment is engaged in the
design, manufacture, sales and marketing of audio solutions and related
technologies. We offer docking audio products, computer and
digital audio systems, headphones and microphones for personal digital
media, and digital radio frequency audio systems. Major product
categories include Docking
Audio, which
includes all speakers whether AC or battery-powered that work with
portable digital players, such as iPod and other MP3 players; PC
Audio, which
includes self-powered speaker systems used for computers and other
multi-media application systems; and Other, which includes all of our
personal audio (headphones) and home audio systems. Products
developed and managed by AEG are included in this segment. Such
products are generally sold under the Altec Lansing brand and/or the
inMotion sub-brand.
|
·
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Better sound quality that
provides clearer conversations on both ends of a call through a variety of
features and technologies, including noise-canceling microphones, Digital
Signal Processing (“DSP”), and
more;
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·
|
Wireless freedom allowing people
to take and make calls as they move freely around their office or home
without cords or cables;
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·
|
Multi-tasking benefits that allow
people to use a computer, a Personal Data Assistant (“PDA”) or other
device, take notes and organize files while talking
hands-free;
|
·
|
Contributing to greater driving
safety by enabling a person already using a cell phone to have both hands
free to drive while talking on a cell
phone;
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·
|
Voice command and control that
let people take advantage of voice dialing and/or other voice-based
features to make communications and the human/electronic interface more
natural and convenient;
|
·
|
Providing ergonomic relief from
repetitive stress injuries and discomfort associated with placing a
telephone handset between the shoulder and
neck;
|
·
|
Providing greater comfort and
convenience than a telephone alone on longer
calls;
|
·
|
Enabling emerging PC and VoIP
applications, including speech recognition, Internet telephony and
gaming;
|
·
|
Providing a convenient means for
connecting between various applications and voice networks, whether that
be between land line and mobile phones, or between PC-based communications
and other networks; and
|
·
|
Providing greater privacy than
speakerphones, and with wireless products, the ability to move from public
to private space when
required.
|
|
·
|
Unified communications
(UC) is the
integration of disparate communications systems, media, devices and
applications. It may include the integration of fixed and mobile voice,
e-mail, instant messaging, desktop and advanced business applications,
Internet Protocol (IP)-PBX, voice over IP (VoIP), presence, voice-mail,
fax, audio video and web conferencing, unified messaging, unified
voicemail, and whiteboarding into a single environment offering the user a
more complete but simpler and more effective experience. A primary goal is
to reduce latency for users.
|
|
·
|
Bluetooth is a wireless technology using
short-range radio links that can eliminate cables and wires that were
formerly required to connect computing and communications
devices. It can be used to provide low-cost, wireless
connectivity between computers, mobile phones, PDAs or other portable
handheld devices, and access to the
Internet.
|
|
·
|
VoIP is a technology that allows a
person to make telephone calls using a broadband Internet connection
instead of a regular (or analog) phone line. VoIP converts the voice
signal from a person’s telephone into a digital signal that travels over
the Internet and then converts it back at the other end so that the caller
can speak to anyone with a regular (or analog) phone
line.
|
|
·
|
Digital
Enhanced Cordless Telecommunications (“DECT™”) 6.0 is a technology that optimizes
audio quality, lowers interference with other wireless devices, and is
digitally encrypted for maximum call
security.
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|
·
|
DSP is a technology
that delivers acoustic protection and optimal sound quality through noise
reduction, echo cancellation, and other algorithms to improve both
transmit and receive quality.
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|
·
|
the adoption of wireless
solutions and the freedom they allow;
and
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|
·
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a growing awareness of the
benefits of headsets.
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·
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leadership in
innovation;
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|
·
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a powerful brand;
and
|
|
·
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global
distribution.
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|
·
|
we continue efforts to maintain
our strength in this category, domestically, while expanding into
international markets; and
|
|
·
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introduce new
products that incorporate breakthrough technologies and
designs.
|
|
·
|
The remainder of the AEG
products, which represent a small portion of total AEG net revenues,
include speech recognition and VoIP (headsets) markets, a wide array of
headphone products for portable stereos, CD players, MP3 players and other
audio devices, and home audio and home theater
products.
|
|
·
|
Office market - performance,
product design and style, comfort, simplicity, price and
reliability. We also believe that our brand, reputation and
channels of distribution are important success
factors;
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|
·
|
Contact center
market - performance, reliability, price, comfort, style
and support;
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|
·
|
Mobile market - product styling,
competitive pricing, simplicity of product operation, product reliability,
product features, sound quality, comfort, fit, ability to meet delivery
schedules, customer service and support, reputation, distribution,
warranty terms, and product
life;
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|
·
|
Gaming and entertainment market -
in retail channel, the primary factors for success are differentiated
packaging, price, superior microphone and speaker performance and headset
style and color ;
|
|
·
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OEM business - key
success factors are meeting unique requirements within customer
timeframes, unique styling, excellent sound, product simplicity, price
targets, and consistent quality with low defect rates;
and
|
|
·
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Specialty
products - key success factors are performance, reliability,
end-user support and price.
|
|
·
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Our understanding of changing
market trends, consumer needs, technologies and our ability to capitalize
on the opportunities resulting from these market
changes;
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·
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Bringing to market
well-differentiated products that perform well against competitive
offerings, price, style, brand, and effective displays in retail
settings;
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·
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Efficient and cost-effective
supply chain processes; and
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·
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Excellent channel service
and support with a reputation for
quality.
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|
·
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Tijuana,
Mexico, which provides logistics services for products destined to
customers in
the U.S., Canada, Asia Pacific, and Latin America
regions;
|
|
·
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Etten-Leur,
Netherlands, which provides logistics services for products shipped to
customers in Europe, Middle East and Africa
market;
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|
·
|
Milford,
Pennsylvania, which provides logistics services for products which are
primarily shipped to customers in the
US;
|
|
·
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Hong
Kong, which provides logistics services for products which are shipped to
our Tijuana, Mexico, Milford, Pennsylvania and Netherlands distribution
centers as well as to customers located in
Asia;
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|
·
|
Suzhou,
China, which provides logistics services for products which are shipped
within Mainland China.
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NAME
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AGE
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POSITION
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||
Ken
Kannappan
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48
|
President
and Chief Executive Officer
|
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Clay
Hausmann
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36
|
Vice
President, Corporate Marketing
|
||
Don
Houston
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53
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Senior
Vice President, Sales
|
||
Barry
Margerum
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56
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Chief
Strategy Officer
|
||
Vicki
Marion
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54
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President,
Audio Entertainment Group
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||
Renee
Niemi
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43
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Vice
President, General Manager, Mobile & Entertainment
|
||
Barbara
Scherer
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52
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Senior
Vice President, Finance & Administration and Chief Financial
Officer
|
||
Joyce
Shimizu
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53
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Vice
President, General Manager Home & Home Office
|
||
Jim
Sotelo
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60
|
Vice
President, Product Development & Technology
|
||
Carsten
Trads
|
52
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President,
Clarity Equipment
|
||
Philip
Vanhoutte
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52
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Managing
Director, Europe, Middle East & Africa
|
||
Larry
Wuerz
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50
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Senior
Vice President, Worldwide Operations
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||
Chuck
Yort
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49
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Vice
President, General Manager, B2B
Solutions
|
|
·
|
our
operating results are highly dependent on the volume and timing of orders
received during the quarter, which are difficult to forecast. Customers
generally order on an as-needed basis, and we typically do not obtain
firm, long-term purchase commitments from our customers. As a result, our
revenues in any quarter depend primarily on orders booked and shipped in
that quarter;
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|
·
|
we
incur a large portion of our costs in advance of sales orders because we
must plan research and production, order components and enter into
development, sales and marketing, and other operating commitments prior to
obtaining firm commitments from our customers. In the event we acquire too
much inventory for certain products, the risk of future inventory
write-downs increases. In the event we have inadequate inventory to meet
the demand for particular products, we may miss significant revenue
opportunities or incur significant expenses such as air freight,
expediting shipments, and other negative variances in our manufacturing
processes as we attempt to make up for the shortfall. When a
significant portion of our revenue is derived from new products,
forecasting the appropriate volumes of production is even more
difficult;
|
|
·
|
in
the ACG segment, our prices and gross margins are generally lower for
sales to Business-to-Consumer (“B2C”) customers compared to sales to our
Business-to-Business (“B2B”) customers. In addition, our prices and gross
margins can vary significantly by product line as well as within product
lines. Therefore, our profitability depends, in part, on the mix of
our B2B to B2C customers as well as our product mix. In the AEG
segment, our prices and gross margins are generally lower for our PC Audio
products than our Docking Audio products. Therefore, our
profitability depends, in part, on our mix of PC Audio to Docking Audio
products. The size and timing of our product mix and
opportunities in these markets are difficult to
predict;
|
|
·
|
we
are working [to refresh virtually the entire AEG product line]; however,
market adoption of new products is difficult to
predict;
|
|
·
|
a
significant portion of our annual retail sales for AEG generally occur in
the third fiscal quarter, thereby increasing the difficulty of predicting
revenues and profitability from quarter to quarter and in managing
inventory levels;
|
|
·
|
fluctuations
in 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 British Pound (“GBP”). Furthermore,
fluctuations in foreign currencies impact our global pricing strategy
resulting in our lowering or raising selling prices in a currency in order
to avoid disparity with U.S. dollar prices and to respond to
currency-driven competitive pricing actions. We have experienced a
significant favorable impact on our gross profit in fiscal 2008 as a
result of the strength of the Euro and GBP. Currency exchange
rates are difficult to predict, and we may not be able to either predict
changes in exchange rates in the future and our gross profit and
profitability could be negatively impacted in the future by currency
exchange rates;
|
|
·
|
because
we have significant manufacturing operations in Mexico and China,
fluctuations in currency exchange rates in those two countries can impact
our gross profit and profitability.
|
|
·
|
prices
of certain raw materials, components and sub-assemblies may rise or fall
depending upon global market conditions. In general, we are
experiencing a net increase in the costs of these
components. If we are unable to pass these increases on to our
customers or to achieve operating efficiencies that offset these
increases, our business, financial condition and results of operations may
be materially and adversely
affected;
|
|
·
|
rapid
increases in production levels to meet unanticipated demand for our
products could result in higher costs for components and sub-assemblies,
increased expenditures for freight to expedite delivery of required
materials, and higher overtime costs and other expenses. These higher
expenditures could lower our profit margins. Further, if production is
increased rapidly, there may be decreased manufacturing yields, which may
also lower our margins;
|
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·
|
we
obtain certain raw materials, sub-assemblies, components and products from
single suppliers and alternate sources for these items are not readily
available. Any failure of our suppliers to remain in business or to be
able to purchase the raw materials, subcomponents and parts required by
them to produce and provide to us the parts we need could materially
adversely affect our business, financial condition and results of
operations;
|
|
·
|
although
we generally use standard raw materials, parts and components for our
products, the high development costs associated with emerging wireless
technologies permit us to work with only a single source of silicon
chip-sets on any particular new product. We, or our supplier(s) of
chip-sets, may experience challenges in designing, developing and
manufacturing components in these new technologies which could affect our
ability to meet market schedules. Due to our dependence on single
suppliers for certain chip sets, we could experience higher prices, a
delay in development of the chip-set, or the inability to meet our
customer demand for these new products. Additionally, these suppliers or
other suppliers may discontinue production of the parts we depend
on. If this occurs, we may have difficulty obtaining sufficient
product to meet our needs. This could cause us to fail to meet
customer expectations. If customers turn to our competitors to meet
their needs, there could be a long-term adverse impact on our revenues and
profitability. Our business, operating results and financial
condition could therefore be materially adversely affected as a result of
these factors;
|
|
·
|
because
of the lead times required to obtain certain raw materials,
sub-assemblies, components and products from certain foreign suppliers, we
may not be able to react quickly to changes in demand, potentially
resulting in either excess inventories of such goods or shortages of the
raw materials, sub-assemblies, components and products. Lead times are
particularly long on silicon-based components incorporating radio
frequency and digital signal processing technologies and such components
are an increasingly important part of our product costs. In
particular, many B2C customer orders have shorter lead times than the
component lead times, making it increasingly necessary to carry more
inventory in anticipation of those orders, which may not
materialize. Failure in the future to match the timing of
purchases of raw materials, sub-assemblies, components and products to
demand could increase our inventories and/or decrease our revenues, and
could materially adversely affecting our business, financial
condition and results of
operations;
|
|
·
|
most
of our suppliers are not obligated to continue to provide us with raw
materials, components and sub-assemblies. Rather, we buy most
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.
|
|
·
|
developing new
product. We believe that the turnaround for AEG is
largely dependent on the development of a new product
portfolio. We are currently working on the new portfolio
which we are anticipating will be fully completed in December 2009
although ongoing refreshes on a routine basis after that will also be
required. The development of these new products may not evolve
as anticipated. There can be no assurance that these new
products will be successful, and, during the time we are developing the
new products, our competitors and selling products to our
customers and increasing their market
share;
|
|
·
|
controlling costs in the AEG
business and making business operations more efficient in order to
increase profitability. We are in the process of
restructuring AEG’s China operations. During the last quarter, we closed
AEG’s manufacturing facility in Dongguan, China; initiated plans to shut
down a related Hong Kong research and development, sales and procurement
office; and consolidated procurement, research and development activities
for AEG in a new Shenzhen, China site which we began to use in the fourth
quarter. The selling, general and administrative functions of AEG
have been consolidated with those of ACG throughout the Asia-Pacific
region. These steps are part of a strategic initiative designed to
reduce fixed costs by outsourcing the majority of AEG manufacturing to the
network of qualified contract manufacturers already in place. In addition,
we continue to review AEG’s cost structure and may implement additional
cost-cutting initiatives in the future. There is a risk that
the consolidation of the AEG Asian operations may cost more than we
currently expect. There is also a risk that the savings that we currently
predict may not materialize and that the timing of costs and benefits may
be different than what we currently expect. If the cost of consolidation
is more than we currently anticipate or the savings that we currently
anticipate from these activities do not materialize, our future financial
results may be adversely affected;
|
|
·
|
the potential loss of key
employees of Altec Lansing and Plantronics. As a result
of our restructuring, we are relocating many of our research and
development engineers and procurement staff from Dongguan, China and Hong
Kong into a Shenzhen, China facility. As a result of this
change, we may lose key personnel which could negatively impact our new
AEG product portfolio refresh;
|
|
·
|
competition may continue to
increase in AEG’s markets more than we
expect;
|
|
·
|
meeting the spring and fall market windows for AEG
products;
|
|
·
|
difficulties retaining or
obtaining shelf space for these products in our sales
channel;
|
|
·
|
difficulties retaining or
improving the brand recognition associated with the Altec Lansing brand
during the turnaround;
|
|
·
|
difficulties
in integration of the operations, technologies, and products of Altec
Lansing. We have transitioned a significant portion of Altec
Lansing’s operations onto our ERP system; however, we have not
completed our integration effort. There has been a significant cost to
implement new systems and business processes. We anticipate that
there will continue to be significant business processes and internal
controls which will change as a result of the
integration.
|
|
·
|
if
forecasted demand does not develop, we could have excess inventory and
excess capacity. Over-forecast of demand could result in higher
inventories of finished products, components and sub-assemblies. In
addition, because our retail customers have pronounced seasonality, we
must build inventory well in advance of the December quarter in order to
stock up for the anticipated future demand. If we were unable
to sell these inventories, we would have to write off some or all of our
inventories of excess products and unusable components and sub-assemblies.
Excess manufacturing capacity could lead to higher production costs and
lower margins;
|
|
·
|
if
demand increases beyond that forecasted, we would have to rapidly increase
production. We currently depend on suppliers to provide additional volumes
of components and sub-assemblies, and we are experiencing greater
dependence on single source suppliers; therefore, we might not be able to
increase production rapidly enough to meet unexpected demand. There
could be short-term losses of sales while we are trying to increase
production;
|
|
·
|
the
production and distribution of Bluetooth and other
wireless headsets presents many significant manufacturing, marketing and
other operational risks and
uncertainties:
|
|
·
|
our
dependence on third parties to supply key components, many of which have
long lead times;
|
|
·
|
our
ability to forecast demand for the variety of products within this new
product category for which relevant data is incomplete or
unavailable;
|
|
·
|
longer lead times
with suppliers than commitments from some of our
customers.
|
|
·
|
if
we are unable to deliver products on time to meet the market window of our
retail customers, we will lose opportunities to increase revenues and
profits or we may incur penalties for late delivery. We may also be
unable to sell these finished goods, which would result in excess or
obsolete inventory;
|
|
·
|
we
are increasing the use of design and manufacturing of Bluetooth headset
products at our new facilities in China. Development of new
wireless products and ramping of production can be
complex. Unexpected difficulties may arise. Failure
to meet our planned design deadlines or production quantities for new or
existing products can adversely affect our financial
results;
|
|
·
|
increasing
production beyond planned capacity involves increased tooling, test
equipment and hiring and training additional staff. Lead times to increase
tooling and test equipment are typically several months, or more. Once
such additional capacity is in place, we incur increased depreciation and
the resulting overhead. Should we fail to ramp production once capacity is
in place, we would not be able to absorb this incremental overhead, and
this could lead to lower gross
margins;
|
|
·
|
we
are working on a new initiative to re-engineer our supply chain by
implementing new product forecasting systems, increasing automation within
supply chain activities, improving the integrity of our supply chain data,
and creating dashboards in order to improve our ability to match
production to demand. If we are not able to successfully
implement this initiative, we may not be able to meet demand or compete
effectively with other companies who have successfully implemented similar
initiatives.
|
|
·
|
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 design that appeals to our customers and
end-users;
|
|
·
|
manufacture
and deliver high-quality products in sufficient
volumes;
|
|
·
|
price
our products competitively.
|
|
·
|
if
supply or demand for iPod products decreases, demand for certain of our
Docking Audio products could be negatively
affected;
|
|
·
|
if
Apple does not renew or cancels our licensing agreement, our products may
not be compatible with iPods, resulting in loss of revenues and excess
inventories which would negatively impact our financial
results;
|
|
·
|
if
Apple changes its iPod product design more frequently than we update
certain of our Docking Audio products, certain of our products may not be
compatible with the changed design. Moreover, if Apple makes
style changes to its products more frequently than we update certain of
our Docking Audio products, consumers may not like the look of our
products with the iPod. Both of these factors could result in
decreased demand for our products and excess inventories could result
which would negatively impact our financial
results;
|
|
·
|
Apple
has introduced its own line of iPod speaker products, which compete with
certain of our Altec Lansing branded speaker
products. As the manufacturer of the iPod, Apple has unique
advantages with regard to product changes or introductions that we do not
possess, which could negatively impact our ability to compete effectively
against Apple’s speaker products. Moreover, certain consumers
may prefer to buy Apple’s iPod speakers rather than other vendors’
speakers because Apple is the manufacturer. As a result, this
could lead to decreased demand for our products and excess inventories
could result which would negatively impact our financial
results;
|
|
·
|
Similar
risks exist for MP3 players manufactured by companies other than
Apple.
|
|
·
|
uncertain
economic conditions, including the possibility of a domestic and global
recession, inflationary pressures, and the decline in investor
confidence in the market place;
|
|
·
|
changes
in our published forecasts of future results of
operations;
|
|
·
|
quarterly
variations in our or our competitors' results of operations and changes in
market share;
|
|
·
|
the
announcement of new products or product enhancements by us or our
competitors;
|
|
·
|
the
loss of services of one or more of our executive officers or other key
employees;
|
|
·
|
changes
in earnings estimates or recommendations by securities
analysts;
|
|
·
|
developments
in our industry;
|
|
·
|
sales
of substantial numbers of shares of our common stock in the public
market;
|
|
·
|
the
timing and success of the integration of the AEG
business;
|
|
·
|
our
ability to successfully complete the product refresh for the Altec Lansing
products and turnaround the AEG business in a timeline consistent with our
internal financial models;
|
|
·
|
general
economic, political, and market conditions, including market
volatility;
|
|
·
|
other
factors unrelated to our operating performance or the operating
performance of our competitors.
|
|
·
|
fluctuations
in foreign exchange rates ;
|
|
·
|
cultural
differences in the conduct of
business;
|
|
·
|
greater
difficulty in accounts receivable collection and longer collection
periods;
|
|
·
|
impact
of recessions in economies outside of the United
States;
|
|
·
|
reduced
protection for intellectual property rights in some
countries;
|
|
·
|
unexpected
changes in regulatory requirements;
|
|
·
|
tariffs
and other trade barriers;
|
|
·
|
political
conditions in each country;
|
|
·
|
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
|
|
·
|
currency
restrictions.
|
Location
|
Square
Footage
|
Lease/Own
|
Primary
Use
|
Audio
Communications Group
|
|||
Chattanooga,
Tennessee
|
16,650
|
Lease
|
Light
Assembly, Sales and Marketing, Engineering,
Administration
|
Hoofddorp,
Netherlands
|
14,788
|
Lease
|
Administrative
|
San
Diego, California
|
10,248
|
Lease
|
Industrial
and Office Space
|
Santa
Cruz, California
|
79,253
|
Own
|
Light
Assembly, Sales and Marketing, Engineering,
Administration
|
Santa
Cruz, California
|
44,183
|
Own
|
Light
Assembly, Sales, Engineering, Administration
|
Santa
Cruz, California
|
39,892
|
Own
|
Light
Assembly, Sales, Engineering, Administration
|
Santa
Cruz, California
|
18,250
|
Lease
|
Light
Assembly, Sales, Engineering, Administration
|
Santa
Cruz, California
|
20,325
|
Lease
|
Light
Assembly, Sales, Engineering, Administration
|
Shenzhen,
China
|
23,250
|
Lease
|
Engineering,
Administration and Design Center
|
Suzhou,
P.R.China
|
145,732
|
Own
|
Assembly
|
Suzhou,
P.R.China
|
64,051
|
Own
|
Engineering,
Administration and Design Center
|
Tijuana,
Mexico
|
95,980
|
Lease
|
Engineering,
Assembly, Administration
|
Tijuana,
Mexico
|
61,785
|
Lease
|
Engineering,
Assembly
|
Tijuana,
Mexico
|
56,065
|
Lease
|
Engineering,
Assembly, Administration
|
Tijuana,
Mexico
|
289,589
|
Lease
|
Logistic
and Distribution Center
|
Tijuana,
Mexico
|
53,732
|
Lease
|
Engineering,
Assembly, Design Center
|
Wootton
Basset, UK
|
21,824
|
Own
|
Light
Assembly, Sales, Engineering, Administration
|
Wootton
Basset, UK
|
15,970
|
Own
|
Light
Assembly, Sales, Engineering, Administration
|
Wootton
Basset, UK
|
5,445
|
Lease
|
Sales
and Marketing
|
Audio
Entertainment Group
|
|||
Milford,
Pennsylvania
|
187,000
|
Own
|
Sales
and Marketing, Engineering, Administration,
Distribution
|
Kowloon,
Hong Kong 1
|
5,523
|
Lease
|
Engineering,
Administration
|
Dongguan,
P.R. China 1
|
180,000
|
Lease
|
Engineering,
Assembly, Administration
|
Low
|
High
|
|||||||
Fiscal
2007
|
||||||||
First
Quarter
|
$ | 21.30 | $ | 38.62 | ||||
Second
Quarter
|
14.83 | 22.50 | ||||||
Third
Quarter
|
17.62 | 21.84 | ||||||
Fourth
Quarter
|
19.45 | 23.62 | ||||||
Fiscal
2008
|
||||||||
First
Quarter
|
$ | 22.82 | $ | 26.22 | ||||
Second
Quarter
|
25.77 | 29.92 | ||||||
Third
Quarter
|
22.32 | 32.71 | ||||||
Fourth
Quarter
|
17.82 | 26.00 |
Total
Number of Shares Purchased
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|
|||||||||||||
December
30, 2007 to January 26, 2008
|
- | $ | - | - | 1,000,000 | |||||||||||
January
27, 2008 to March 1, 2008
|
81,500 | $ | 18.92 | 81,500 | 918,500 | |||||||||||
March
2, 2008 to March 29, 2008
|
- | $ | - | - | 918,500 |
Fiscal
Year Ended March 31,
|
||||||||||||||||||||
2004
|
2005
|
20061
|
20072
|
20082,3,4
|
||||||||||||||||
(in
thousands, except income per share)
|
||||||||||||||||||||
STATEMENT
OF OPERATIONS DATA:
|
||||||||||||||||||||
Net
revenues
|
$ | 416,965 | $ | 559,995 | $ | 750,394 | $ | 800,154 | $ | 856,286 | ||||||||||
Net
income
|
$ | 62,279 | $ | 97,520 | $ | 81,150 | $ | 50,143 | $ | 68,395 | ||||||||||
Basic
net income per common share
|
$ | 1.39 | $ | 2.02 | $ | 1.72 | $ | 1.06 | $ | 1.42 | ||||||||||
Diluted
net income per common share
|
$ | 1.31 | $ | 1.92 | $ | 1.66 | $ | 1.04 | $ | 1.39 | ||||||||||
Cash
dividends declared per common share
|
$ | - | $ | 0.15 | $ | 0.20 | $ | 0.20 | $ | 0.20 | ||||||||||
Shares
used in diluted per share calculations
|
47,492 | 50,821 | 48,788 | 48,020 | 49,090 | |||||||||||||||
BALANCE
SHEET DATA:
|
||||||||||||||||||||
Cash,
cash equivalents, and short-term investments
|
$ | 180,616 | $ | 242,814 | $ | 76,732 | $ | 103,365 | $ | 163,091 | ||||||||||
Total
assets
|
$ | 368,252 | $ | 487,929 | $ | 612,249 | $ | 651,304 | $ | 741,393 | ||||||||||
Long-term
liabilities
|
$ | - | $ | 2,930 | $ | 1,453 | $ | 696 | $ | 14,989 | ||||||||||
Total
stockholders' equity
|
$ | 299,303 | $ | 405,719 | $ | 435,621 | $ | 496,807 | $ | 578,620 |
1
|
On August 18, 2005, we completed
the acquisition of Altec Lansing., a privately-held Pennsylvania corporation for a cash purchase
price including acquisition costs of approximately $165 million. The
results of operations of Altec Lansing have been included in our
consolidated results of operations subsequent to the acquisition on August
18, 2005. See Note 6 of the Consolidated Financial Statements
and related notes, included elsewhere,
herein.
|
2
|
We began recognizing the
provisions of SFAS No. 123(R) beginning in fiscal 2007; as a
result, $16.9 million and $16.0 million in stock-based compensation
expense has been included in our consolidated results of operations for
the years ended March 31, 2007 and 2008,
respectively. See Note 12 of the Consolidated Financial
Statements and related notes, included elsewhere,
herein.
|
3
|
In
November 2007, we announced plans to close AEG’s manufacturing facility in
Dongguan, China, to shut down a related Hong Kong research and
development, sales and procurement office and to consolidate procurement,
research and development activities for AEG in the Shenzhen, China
site. As a result of these activities, $3.6 million in
restructuring and other related charges has been included in our
consolidated results of operations for the year ended March 31,
2008. See Note 9 of the Consolidated Financial Statements and
related notes, included elsewhere,
herein.
|
4
|
In the first quarter of fiscal
2008, we adopted the provisions of FIN 48; as a result, the liability for
uncertain tax provisions not expected to be paid within the next twelve
months was reclassified to long-term income taxes payable. See
Note 15 of the Consolidated Financial Statements and related notes,
included elsewhere, herein.
|
·
|
Strengthen
brand value. We
are investing in a number of initiatives to further improve the sound
quality and ease of use of our products. Our brand promise is
sound, style, and simplicity, and we intend to continue investing
resources to ensure we deliver on this pledge to our
customers.
|
·
|
Grow our
B2B business. We plan to continue to invest in research and
development which should improve the overall sound quality and the
appearance and functionality of our products. We plan to grow
the office market through the introduction of compelling, easy to use,
wireless products and demand generation campaign. We will also
focus on gaining market share.
|
·
|
Strengthen
B2C profitability. Revitalize the high-end Bluetooth portfolio to
gain share, and, within the AEG business, we are developing new product
lines which we believe will help us to gain share and improve profit
margins.
|
·
|
Configure
the Company to increase
profitability.
|
|
·
|
Reduce supply chain
costs.
We will continue to implement our supply chain optimization and
re-engineering initiatives that are designed to increase inventory turns,
improve forecast accuracy and reduce excess and obsolete inventory.
We will also continue our focus on reducing total supply chain costs by
increasing the utilization of our Suzhou, China plant, improving direct
labor productivity and reducing logistics and warranty
costs.
|
|
·
|
Continue implementing
our turnaround plan for AEG. Development of the next
generation products with lower cost points and higher margins continue to
be a key priority for the next fiscal year. We have also been taking
advantage of the industrial design capabilities that exist within the ACG
segment with a goal of making these next generation products more
appealing to buyers.
|
|
·
|
New Product Development
effectiveness. We
will continue to increase the use of common platforms from which we can
produce multiple generations of products. In addition, we are
also focused on a more stringent analysis of product development
opportunities in order to reduce the number of product
variants.
|
|
|
Consolidated
|
||||||||||||||||||||||||
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||||||||||||||
2006
|
2007
|
2008
|
||||||||||||||||||||||
Net
revenues
|
$ | 750,394 | 100.0 | % | $ | 800,154 | 100.0 | % | $ | 856,286 | 100.0 | % | ||||||||||||
Cost
of revenues
|
424,140 | 56.5 | % | 491,339 | 61.4 | % | 507,181 | 59.2 | % | |||||||||||||||
Gross
profit
|
326,254 | 43.5 | % | 308,815 | 38.6 | % | 349,105 | 40.8 | % | |||||||||||||||
Operating
expense:
|
||||||||||||||||||||||||
Research,
development and engineering
|
62,798 | 8.4 | % | 71,895 | 9.0 | % | 76,982 | 9.0 | % | |||||||||||||||
Selling,
general and administrative
|
153,094 | 20.4 | % | 182,108 | 22.7 | % | 189,156 | 22.1 | % | |||||||||||||||
Restructuring
and other related charges
|
- | 0.0 | % | - | 0.0 | % | 3,584 | 0.4 | % | |||||||||||||||
Gain
on sale of land
|
- | 0.0 | % | (2,637 | ) | (0.3 | )% | - | 0.0 | % | ||||||||||||||
Total
operating expenses
|
215,892 | 28.8 | % | 251,366 | 31.4 | % | 269,722 | 31.5 | % | |||||||||||||||
Operating
income
|
110,362 | 14.7 | % | 57,449 | 7.2 | % | 79,383 | 9.3 | % | |||||||||||||||
Interest
and other income (expense), net
|
2,192 | 0.3 | % | 4,089 | 0.5 | % | 5,854 | 0.7 | % | |||||||||||||||
Income
before income taxes
|
112,554 | 15.0 | % | 61,538 | 7.7 | % | 85,237 | 10.0 | % | |||||||||||||||
Income
tax expense
|
31,404 | 4.2 | % | 11,395 | 1.4 | % | 16,842 | 2.0 | % | |||||||||||||||
Net
income
|
$ | 81,150 | 10.8 | % | $ | 50,143 | 6.3 | % | $ | 68,395 | 8.0 | % |
Audio
Communications Group
|
||||||||||||||||||||||||
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||||||||||||||
2006
|
2007
|
2008
|
||||||||||||||||||||||
Net
revenues
|
$ | 629,725 | 100.0 | % | $ | 676,514 | 100.0 | % | $ | 747,935 | 100.0 | % | ||||||||||||
Cost
of revenues
|
340,437 | 54.1 | % | 381,034 | 56.3 | % | 403,863 | 54.0 | % | |||||||||||||||
Gross
profit
|
289,288 | 45.9 | % | 295,480 | 43.7 | % | 344,072 | 46.0 | % | |||||||||||||||
Operating
expense:
|
||||||||||||||||||||||||
Research,
development and engineering
|
56,570 | 8.9 | % | 61,583 | 9.1 | % | 65,733 | 8.8 | % | |||||||||||||||
Selling,
general and administrative
|
132,867 | 21.1 | % | 151,857 | 22.5 | % | 163,173 | 21.8 | % | |||||||||||||||
Gain
on sale of land
|
- | 0.0 | % | (2,637 | ) | (0.4 | )% | - | 0.0 | % | ||||||||||||||
Total
operating expenses
|
189,437 | 30.0 | % | 210,803 | 31.2 | % | 228,906 | 30.6 | % | |||||||||||||||
Operating
income
|
$ | 99,851 | 15.9 | % | $ | 84,677 | 12.5 | % | $ | 115,166 | 15.4 | % |
Audio
Entertainment Group
|
||||||||||||||||||||||||
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||||||||||||||
2006
|
2007
|
2008
|
||||||||||||||||||||||
Net
revenues
|
$ | 120,669 | 100.0 | % | $ | 123,640 | 100.0 | % | $ | 108,351 | 100.0 | % | ||||||||||||
Cost
of revenues
|
83,703 | 69.4 | % | 110,305 | 89.2 | % | 103,318 | 95.4 | % | |||||||||||||||
Gross
profit
|
36,966 | 30.6 | % | 13,335 | 10.8 | % | 5,033 | 4.6 | % | |||||||||||||||
Operating
expense:
|
||||||||||||||||||||||||
Research,
development and engineering
|
6,228 | 5.1 | % | 10,312 | 8.3 | % | 11,249 | 10.4 | % | |||||||||||||||
Selling,
general and administrative
|
20,227 | 16.8 | % | 30,251 | 24.5 | % | 25,983 | 23.9 | % | |||||||||||||||
Restructuring
and other related charges
|
- | 0.0 | % | - | 0.0 | % | 3,584 | 3.3 | % | |||||||||||||||
Total
operating expenses
|
26,455 | 21.9 | % | 40,563 | 32.8 | % | 40,816 | 37.6 | % | |||||||||||||||
Operating
income (loss)
|
$ | 10,511 | 8.7 | % | $ | (27,228 | ) | (22.0 | )% | $ | (35,783 | ) | (33.0 | )% |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||||||
(in
thousands)
|
2006
|
2007
|
(Decrease)
|
2007
|
2008
|
(Decrease)
|
|||||||||||||||||||||||||||
Net
revenues from unaffiliated customers:
|
|||||||||||||||||||||||||||||||||
Office
and Contact Center
|
$ | 446,524 | $ | 475,323 | $ | 28,799 | 6.4 | % | $ | 475,323 | $ | 519,958 | $ | 44,635 | 9.4 | % | |||||||||||||||||
Mobile
|
119,333 | 146,859 | 27,526 | 23.1 | % | 146,859 | 171,880 | 25,021 | 17.0 | % | |||||||||||||||||||||||
Gaming
and Computer Audio
|
35,656 | 30,162 | (5,494 | ) | (15.4 | )% | 30,162 | 33,612 | 3,450 | 11.4 | % | ||||||||||||||||||||||
Other
Specialty Products
|
28,212 | 24,170 | (4,042 | ) | (14.3 | )% | 24,170 | 22,485 | (1,685 | ) | (7.0 | )% | |||||||||||||||||||||
Total
segment net revenues
|
$ | 629,725 | $ | 676,514 | $ | 46,789 | 7.4 | % | $ | 676,514 | $ | 747,935 | $ | 71,421 | 10.6 | % |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||||||
(in
thousands)
|
2006
|
2007
|
(Decrease)
|
2007
|
2008
|
(Decrease)
|
|||||||||||||||||||||||||||
Revenues
from unaffiliated customers:
|
|||||||||||||||||||||||||||||||||
Docking
audio
|
$ | 70,878 | $ | 61,068 | $ | (9,810 | ) | (13.8 | )% | $ | 61,068 | $ | 55,399 | $ | (5,669 | ) | (9.3 | )% | |||||||||||||||
PC
audio
|
40,515 | 52,922 | 12,407 | 30.6 | % | 52,922 | 46,652 | (6,270 | ) | (11.8 | )% | ||||||||||||||||||||||
Other
|
9,276 | 9,650 | 374 | 4.0 | % | 9,650 | 6,300 | (3,350 | ) | (34.7 | )% | ||||||||||||||||||||||
Total
segment net revenues
|
$ | 120,669 | $ | 123,640 | $ | 2,971 | 2.5 | % | $ | 123,640 | $ | 108,351 | $ | (15,289 | ) | (12.4 | )% |
|
·
|
OCC
product net revenues increased as a result of growth of $35.8 million in
cordless products and $8.8 million from corded products. The
increases are primarily due to the addition of the CS70N to our product
line in fiscal 2008, corded product revenue growth internationally, mostly
in Europe and Asia Pacific, and some benefit from foreign exchange
rates;
|
|
·
|
Mobile
product net revenues increased as a result of market growth and greater
acceptance of our product portfolio which contributed to a year-over-year
increase of $29.8 million in our Bluetooth headsets,
partially offset by a decline of $4.8 million in net revenues from corded
mobile headsets;
|
|
·
|
Gaming
and Computer Audio product net revenues increased due to the transfer of
the Altec Lansing branded PC headsets into this category in fiscal
2008.
|
|
·
|
OCC
product net revenues increased primarily from growth of $42.1 million in
cordless products, offset in part by a $13.3 million decrease in corded
products reflecting the trend towards wireless
products;
|
|
·
|
Mobile
product net revenues increased as a result of market growth and greater
acceptance of our product portfolio which contributed to a year-over-year
increase of $47.2 million in our Bluetooth headsets,
partially offset by a decline of $19.7 million in net revenues from corded
mobile headsets;
|
|
·
|
Gaming
and Computer Audio product net revenues decreased due to competitive
pressure in Europe, the end of life of an OEM headset in the second
quarter of fiscal 2006, and the transition in Europe from products not in
compliance with the Restriction on Hazardous Substances Directive (“RoHS”)
and our older product lines, to RoHS-compliant products and our new lineup
of .Audio and DSP computer
headsets;
|
|
·
|
Other
Specialty Products net revenues decreased due to decreased sales of our
Clarity products to two major retail customers as the result of a decrease
in the number of product models carried. Sales of Clarity
products to state government programs and other distributors were
relatively flat.
|
|
·
|
Docking
Audio product net revenues decreased primarily as a result of intense
competition in the MP3 accessories market, particularly in the U.S., our
reduced share of the MP3 accessories market and price
reductions;
|
|
·
|
PC
Audio product net revenues decreased primarily in Asia and the U.S. due to
increased competition and price
reductions;
|
|
·
|
Other
products net revenues decreased due to the transition of the Altec Lansing
branded PC headsets from the AEG segment to the ACG segment resulting in a
decrease of $7.0 million, partially offset by an increase in headphone and
other net revenues of $3.4 million.
|
|
·
|
PC
Audio product net revenues increased primarily due to the fiscal 2007
results reflecting a full year of operations while the fiscal 2006 results
reflect only net revenues from the time of acquisition in August 2005
through fiscal year end, approximately seven and one-half
months;
|
|
·
|
Docking
Audio product net revenues decreased primarily as a result of intense
competition in the MP3 accessories market, particularly in the U.S., and
our reduced share of the MP3 accessories
market.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2006
|
2007
|
(Decrease)
|
2007
|
2008
|
(Decrease)
|
||||||||||||||||||||||||||
United
States
|
$ | 483,513 | $ | 490,551 | $ | 7,038 | 1.5 | % | $ | 490,551 | $ | 521,148 | $ | 30,597 | 6.2 | % | ||||||||||||||||
Europe,
Middle East and Africa
|
178,315 | 195,090 | 16,775 | 9.4 | % | 195,090 | 214,621 | 19,531 | 10.0 | % | ||||||||||||||||||||||
Asia
Pacific
|
47,921 | 59,927 | 12,006 | 25.1 | % | 59,927 | 62,742 | 2,815 | 4.7 | % | ||||||||||||||||||||||
Americas,
excluding United States
|
40,645 | 54,586 | 13,941 | 34.3 | % | 54,586 | 57,775 | 3,189 | 5.8 | % | ||||||||||||||||||||||
Total
International
|
266,881 | 309,603 | 42,722 | 16.0 | % | 309,603 | 335,138 | 25,535 | 8.2 | % | ||||||||||||||||||||||
Total
consolidated net revenues
|
$ | 750,394 | $ | 800,154 | $ | 49,760 | 6.6 | % | $ | 800,154 | $ | 856,286 | $ | 56,132 | 7.0 | % |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2006
|
2007
|
(Decrease)
|
2007
|
2008
|
(Decrease)
|
||||||||||||||||||||||||||
Net
revenues
|
$ | 750,394 | $ | 800,154 | $ | 49,760 | 6.6 | % | $ | 800,154 | $ | 856,286 | $ | 56,132 | 7.0 | % | ||||||||||||||||
Cost
of revenues
|
424,140 | 491,339 | 67,199 | 15.8 | % | 491,339 | 507,181 | 15,842 | 3.2 | % | ||||||||||||||||||||||
Consolidated
gross profit
|
$ | 326,254 | $ | 308,815 | $ | (17,439 | ) | (5.3 | )% | $ | 308,815 | $ | 349,105 | $ | 40,290 | 13.0 | % | |||||||||||||||
Consolidated
gross profit %
|
43.5 | % | 38.6 | % | (4.9 | ) |
ppt.
|
38.6 | % | 40.8 | % | 2.2 |
ppt.
|
Net
revenues
|
$ | 629,725 | $ | 676,514 | $ | 46,789 | 7.4 | % | $ | 676,514 | $ | 747,935 | $ | 71,421 | 10.6 | % | ||||||||||||||||
Cost
of revenues
|
340,437 | 381,034 | 40,597 | 11.9 | % | 381,034 | 403,863 | 22,829 | 6.0 | % | ||||||||||||||||||||||
Segment
gross profit
|
$ | 289,288 | $ | 295,480 | $ | 6,192 | 2.1 | % | $ | 295,480 | $ | 344,072 | $ | 48,592 | 16.4 | % | ||||||||||||||||
Segment
gross profit %
|
45.9 | % | 43.7 | % | (2.2 | ) |
ppt.
|
43.7 | % | 46.0 | % | 2.3 |
ppt.
|
Net
revenues
|
$ | 120,669 | $ | 123,640 | $ | 2,971 | 2.5 | % | $ | 123,640 | $ | 108,351 | $ | (15,289 | ) | (12.4 | )% | |||||||||||||||
Cost
of revenues
|
83,703 | 110,305 | 26,602 | 31.8 | % | 110,305 | 103,318 | (6,987 | ) | (6.3 | )% | |||||||||||||||||||||
Segment
gross profit
|
$ | 36,966 | $ | 13,335 | $ | (23,631 | ) | (63.9 | )% | $ | 13,335 | $ | 5,033 | $ | (8,302 | ) | (62.3 | )% | ||||||||||||||
Segment
gross profit %
|
30.6 | % | 10.8 | % | (19.8 | ) |
ppt.
|
10.8 | % | 4.6 | % | (6.2 | ) |
ppt.
|
|
·
|
a 1.6 percentage point benefit from
cost reductions on wireless office and Bluetooth
products;
|
|
·
|
a 1.5 percentage point
improvement
primarily resulting
from improved productivity in our manufacturing
process;
|
|
·
|
a
0.7 percentage point benefit from foreign
exchange;
|
|
·
|
a
0.6 percentage point benefit from a reduction in excess and obsolete
inventory costs.
|
|
·
|
a
6.2 percentage point decline due to a 12% decline in the overall sales
volume and reduced selling prices of surplus inventory, primarily in
the Docking Audio category;
|
|
·
|
increased
freight, duty, royalties and warehousing which yielded a 5.4 percentage
point decline.
|
|
·
|
a 3.1 percentage point decline
due to a product mix shift towards consumer products, which have lower
gross margins than many of our office products, coupled with competitive
pricing pressure, especially on consumer Bluetooth
headsets;
|
|
·
|
a
0.6 percentage point decline in excess and obsolete inventory
costs;
|
|
·
|
a
0.5 percentage point decline due to higher warranty costs as a result of
increased sales and shift in product mix towards wireless products which
have a higher rate of return under warranty and higher product
costs;
|
|
·
|
a
0.4 percentage point decline due to stock-based
compensation;
|
|
·
|
a
0.2 percentage point decline resulting from an increase in capacity in our
production facilities in Suzhou, China and Tijuana, Mexico, in preparation
for anticipated future demand, primarily related to our Bluetooth
products.
|
|
·
|
competitive pricing pressures
resulting in significant discounting and price protection programs,
particularly for the Docking Audio product category, which yielded a 4.6
percentage point decline;
|
|
·
|
a
2.1 percentage point decline due to a product mix shift towards PC Audio
products, which have lower gross margins than our Docking Audio
products;
|
|
·
|
a
4.6 percentage point decline due to increased co-op advertising and
marketing development funds programs along with higher product
returns;
|
|
·
|
a
4.1 percentage point decline from increased requirements for excess and
obsolete inventory costs of $2.1 million and adverse purchase commitments
of $3.0 million due to unanticipated shifts in
demand;
|
|
·
|
increased freight expense, due in
part to surcharges related to rising fuel costs, which resulted in a 1.3
percentage point
decline.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2006
|
2007
|
(Decrease)
|
2007
|
2008
|
(Decrease)
|
||||||||||||||||||||||||||
Research,
development and engineering
|
$ | 62,798 | $ | 71,895 | $ | 9,097 | 14.5 | % | $ | 71,895 | $ | 76,982 | $ | 5,087 | 7.1 | % | ||||||||||||||||
%
of total consolidated net revenues
|
8.4 | % | 9.0 | % | 0.6 |
ppt.
|
9.0 | % | 9.0 | % | 0.0 |
ppt.
|
Research,
development and engineering
|
$ | 56,570 | $ | 61,583 | $ | 5,013 | 8.9 | % | $ | 61,583 | $ | 65,733 | $ | 4,150 | 6.7 | % | ||||||||||||||||
%
of total segment net revenues
|
8.9 | % | 9.1 | % | 0.2 |
ppt.
|
9.1 | % | 8.8 | % | (0.3 | ) |
ppt.
|
Research,
development and engineering
|
$ | 6,228 | $ | 10,312 | $ | 4,084 | 65.6 | % | $ | 10,312 | $ | 11,249 | $ | 937 | 9.1 | % | ||||||||||||||||
%
of total segment net revenues
|
5.1 | % | 8.3 | % | 3.2 |
ppt.
|
8.3 | % | 10.4 | % | 2.1 |
ppt.
|
|
·
|
the design and development of
wireless office system
products;
|
|
·
|
Bluetooth products and
technology;
|
|
·
|
product line
platforming;
|
|
·
|
refresh
of product lines for AEG.
|
|
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2006
|
2007
|
(Decrease)
|
2007
|
2008
|
(Decrease)
|
||||||||||||||||||||||||||
Selling,
general and administrative
|
$ | 153,094 | $ | 182,108 | $ | 29,014 | 19.0 | % | $ | 182,108 | $ | 189,156 | $ | 7,048 | 3.9 | % | ||||||||||||||||
%
of total consolidated net revenues
|
20.4 | % | 22.7 | % | 2.3 |
ppt.
|
22.7 | % | 22.1 | % | (0.6 | ) |
ppt.
|
Selling,
general and administrative
|
$ | 132,867 | $ | 151,857 | $ | 18,990 | 14.3 | % | $ | 151,857 | $ | 163,173 | $ | 11,316 | 7.5 | % | ||||||||||||||||
%
of total segment net revenues
|
21.1 | % | 22.5 | % | 1.4 |
ppt.
|
22.5 | % | 21.8 | % | (0.7 | ) |
ppt.
|
Selling,
general and administrative
|
$ | 20,227 | $ | 30,251 | $ | 10,024 | 49.6 | % | $ | 30,251 | $ | 25,983 | $ | (4,268 | ) | (14.1 | )% | |||||||||||||||
%
of total segment net revenues
|
16.8 | % | 24.5 | % | 7.7 |
ppt.
|
24.5 | % | 23.9 | % | (0.6 | ) |
ppt.
|
|
·
|
increased compensation expense of
$11.8 million as a result of merit increases and higher bonus and
commission costs associated with higher net revenues and
profits;
|
|
·
|
increased professional service
fees of $3.4 million primarily related to increased retail rep fees
resulting from higher net revenues and increased fees for accounting and
tax services;
|
|
·
|
decreased marketing and sales
promotions of $3.8 million.
|
|
·
|
decreased spending on integration
and retention of employees of $2.7 million as we have
completed significant portions of our planned systems
integration;
|
|
·
|
increased
allocation of support services to cost of revenues and research and
development resulting in a decrease of
$1.1million.
|
|
·
|
$1.3 million for severance and
benefits;
|
|
·
|
$1.5 million related to
facilities and equipment including $0.5 million related to the write-off
of production equipment and $1.0 million in accelerated depreciation for
property and equipment to be
abandoned;
|
|
·
|
$0.8 million in other related
charges primarily related to professional and other administrative
fees.
|
|
·
|
$1.6 million for the write-off of
facilities and equipment and accelerated
depreciation;
|
|
·
|
$1.4 million for severance and
benefits;
|
|
·
|
$1.0 to $1.5 million
in professional and
administrative fees.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2006
|
2007
|
(Decrease)
|
2007
|
2008
|
(Decrease)
|
||||||||||||||||||||||||||
Operating
income
|
$ | 110,362 | $ | 57,449 | $ | (52,913 | ) | (47.9 | )% | $ | 57,449 | $ | 79,383 | $ | 21,934 | 38.2 | % | |||||||||||||||
%
of total consolidated net revenues
|
14.7 | % | 7.2 | % | (7.5 | ) |
ppt.
|
7.2 | % | 9.3 | % | 2.1 |
ppt.
|
Operating
income
|
$ | 99,851 | $ | 84,677 | $ | (15,174 | ) | (15.2 | )% | $ | 84,677 | $ | 115,166 | $ | 30,489 | 36.0 | % | |||||||||||||||
%
of total segment net revenues
|
15.9 | % | 12.5 | % | (3.4 | ) |
ppt.
|
12.5 | % | 15.4 | % | 2.9 |
ppt.
|
Operating
income (loss)
|
$ | 10,511 | $ | (27,228 | ) | $ | (37,739 | ) | (359.0 | )% | $ | (27,228 | ) | $ | (35,783 | ) | $ | (8,555 | ) | 31.4 | % | |||||||||||
%
of total segment net revenues
|
8.7 | % | (22.0 | )% | (30.7 | ) |
ppt.
|
(22.0 | )% | (33.0 | )% | (11.0 | ) |
ppt.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2006
|
2007
|
(Decrease)
|
2007
|
2008
|
(Decrease)
|
||||||||||||||||||||||||||
Interest
and other income (expense), net
|
$ | 2,192 | $ | 4,089 | $ | 1,897 | 86.5 | % | $ | 4,089 | $ | 5,854 | $ | 1,765 | 43.2 | % | ||||||||||||||||
%
of total net revenues
|
0.3 | % | 0.5 | % | 0.2 |
ppt.
|
0.5 | % | 0.7 | % | 0.2 |
ppt.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2006
|
2007
|
(Decrease)
|
2007
|
2008
|
(Decrease)
|
||||||||||||||||||||||||||
Income
before income taxes
|
$ | 112,554 | $ | 61,538 | $ | (51,016 | ) | (45.3 | )% | $ | 61,538 | $ | 85,237 | $ | 23,699 | 38.5 | % | |||||||||||||||
Income
tax expense
|
31,404 | 11,395 | (20,009 | ) | (63.7 | )% | 11,395 | 16,842 | 5,447 | 47.8 | % | |||||||||||||||||||||
Net
income
|
$ | 81,150 | $ | 50,143 | $ | (31,007 | ) | (38.2 | )% | $ | 50,143 | $ | 68,395 | $ | 18,252 | 36.4 | % | |||||||||||||||
Effective
tax rate
|
27.9 | % | 18.5 | % | (9.4 | ) |
ppt.
|
18.5 | % | 19.8 | % | 1.3 |
ppt.
|
March
31,
|
March
31,
|
March
31,
|
||||||||||
(in
thousands)
|
2006
|
2007
|
2008
|
|||||||||
Cash
provided by operating activities
|
$ | 78,348 | $ | 73,048 | $ | 102,900 | ||||||
Cash
used for capital expenditures and other assets
|
(41,860 | ) | (24,028 | ) | (23,298 | ) | ||||||
Cash
used for acquisitions
|
(165,393 | ) | - | - | ||||||||
Cash
provided by (used for) other investing activities
|
156,387 | 1,546 | (18,850 | ) | ||||||||
Cash
used for investing activities
|
(50,866 | ) | (22,482 | ) | (42,148 | ) | ||||||
Cash
provided by (used for) financing activities
|
$ | (36,558 | ) | $ | (26,244 | ) | $ | 5,618 |
Payments
Due by Period
|
||||||||||||||||||||
Less
than
|
1-3
|
3-5
|
More
than
|
|||||||||||||||||
(in
thousands)
|
Total
|
1
year
|
years
|
years
|
5
years
|
|||||||||||||||
Operating
leases
|
$ | 16,317 | $ | 5,166 | $ | 7,913 | $ | 2,883 | $ | 355 | ||||||||||
Unconditional
purchase obligations
|
110,687 | 110,687 | - | - | - | |||||||||||||||
Total
contractual cash obligations
|
$ | 127,004 | $ | 115,853 | $ | 7,913 | $ | 2,883 | $ | 355 |
|
·
|
Revenue
Recognition
|
|
·
|
Investments
|
|
·
|
Allowance for Doubtful
Accounts
|
|
·
|
Excess and Obsolete
Inventory
|
|
·
|
Warranty
|
|
·
|
Goodwill and
Intangibles
|
|
·
|
Income
Taxes
|
|
·
|
Stock-Based Compensation
Expense
|
|
·
|
title and risk of ownership are
transferred to customers;
|
|
·
|
persuasive evidence of an
arrangement exists;
|
|
·
|
the price to the buyer is fixed or
determinable; and
|
|
·
|
collection is reasonably
assured.
|
Currency
- forward contracts
|
Position
|
USD
Value of Net FX Contracts
|
FX
Gain (Loss) From 10% Appreciation of USD
|
FX
Gain (Loss)From 10% Depreciation of USD
|
|||||||||
Euro
|
Sell
Euro
|
$ | 24.9 | $ | 2.5 | $ | (2.5 | ) | |||||
Great
British Pound
|
Sell
GBP
|
12.3 | 1.2 | (1.2 | ) | ||||||||
Net
position
|
$ | 37.2 | $ | 3.7 | $ | (3.7 | ) |
FX
|
FX
|
|||||||||||
Gain
(Loss)
|
Gain
(Loss)
|
|||||||||||
USD
Value
|
From
10%
|
From
10%
|
||||||||||
of
Net FX
|
Appreciation
|
Depreciation
|
||||||||||
Currency
- option contracts
|
Contracts
|
of
USD
|
of
USD
|
|||||||||
Call
options
|
$ | (109.0 | ) | $ | 5.9 | $ | (9.8 | ) | ||||
Put
options
|
103.4 | 4.0 | (0.8 | ) | ||||||||
Net
position
|
$ | (5.6 | ) | $ | 9.9 | $ | (10.6 | ) |
March
31,
|
||||||||
2007
|
2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 94,131 | $ | 163,091 | ||||
Short-term
investments
|
9,234 | - | ||||||
Accounts
receivable, net
|
113,758 | 131,493 | ||||||
Inventory
|
126,605 | 127,088 | ||||||
Deferred
income taxes
|
12,659 | 13,760 | ||||||
Other
current assets
|
18,474 | 14,771 | ||||||
Total
current assets
|
374,861 | 450,203 | ||||||
Long-term
investments
|
- | 25,136 | ||||||
Property,
plant and equipment, net
|
97,259 | 98,530 | ||||||
Intangibles,
net
|
100,120 | 91,511 | ||||||
Goodwill
|
72,825 | 69,171 | ||||||
Other
assets
|
6,239 | 6,842 | ||||||
Total
assets
|
$ | 651,304 | $ | 741,393 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 49,956 | $ | 47,896 | ||||
Accrued
liabilities
|
54,025 | 67,318 | ||||||
Income
taxes payable
|
12,476 | - | ||||||
Total
current liabilities
|
116,457 | 115,214 | ||||||
Deferred
tax liability
|
37,344 | 32,570 | ||||||
Long-term
income taxes payable
|
- | 14,137 | ||||||
Other
long-term liabilities
|
696 | 852 | ||||||
Total
liabilities
|
154,497 | 162,773 | ||||||
Commitments
and contingencies (Note 11)
|
||||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, $0.01 par value per share; 1,000 shares authorized, no shares
outstanding
|
- | - | ||||||
Common
stock, $0.01 par value per share; 100,000 shares authorized, 66,641 shares
and 67,295 shares issued at 2007 and 2008, respectively
|
666 | 673 | ||||||
Additional
paid-in capital
|
340,661 | 369,655 | ||||||
Accumulated
other comprehensive income (loss)
|
2,666 | (3,581 | ) | |||||
Retained
earnings
|
550,165 | 608,849 | ||||||
894,158 | 975,596 | |||||||
Less:
Treasury stock (common: 18,576 and 18,351 shares at 2007 and 2008,
respectively) at cost
|
(397,351 | ) | (396,976 | ) | ||||
Total
stockholders' equity
|
496,807 | 578,620 | ||||||
Total
liabilities and stockholders' equity
|
$ | 651,304 | $ | 741,393 |
Fiscal
Year Ended March 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
Net
revenues
|
$ | 750,394 | $ | 800,154 | $ | 856,286 | ||||||
Cost
of revenues
|
424,140 | 491,339 | 507,181 | |||||||||
Gross
profit
|
326,254 | 308,815 | 349,105 | |||||||||
Operating
expenses:
|
||||||||||||
Research,
development and engineering
|
62,798 | 71,895 | 76,982 | |||||||||
Selling,
general and administrative
|
153,094 | 182,108 | 189,156 | |||||||||
Restructuring
and other related charges
|
- | - | 3,584 | |||||||||
Gain
on sale of land
|
- | (2,637 | ) | - | ||||||||
Total
operating expenses
|
215,892 | 251,366 | 269,722 | |||||||||
Operating
income
|
110,362 | 57,449 | 79,383 | |||||||||
Interest
and other income, net
|
2,192 | 4,089 | 5,854 | |||||||||
Income
before income taxes
|
112,554 | 61,538 | 85,237 | |||||||||
Income
tax expense
|
31,404 | 11,395 | 16,842 | |||||||||
Net
income
|
$ | 81,150 | $ | 50,143 | $ | 68,395 | ||||||
Net
income per share - basic
|
$ | 1.72 | $ | 1.06 | $ | 1.42 | ||||||
Shares
used in basic per share calculations
|
47,120 | 47,361 | 48,232 | |||||||||
Net
income per share - diluted
|
$ | 1.66 | $ | 1.04 | $ | 1.39 | ||||||
Shares
used in diluted per share calculations
|
48,788 | 48,020 | 49,090 | |||||||||
Cash
dividends declared per common share
|
$ | 0.20 | $ | 0.20 | $ | 0.20 |
Fiscal
Year Ended March 31,
|
||||||||||||
2006
|
2007
|
2008
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
income
|
$ | 81,150 | $ | 50,143 | $ | 68,395 | ||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
23,083 | 29,151 | 28,486 | |||||||||
Stock-based
compensation
|
1,161 | 16,919 | 15,992 | |||||||||
Provision
for (benefit from) doubtful accounts
|
1,518 | (288 | ) | (232 | ) | |||||||
Provision
for excess and obsolete inventories
|
10,424 | 14,551 | 7,776 | |||||||||
Deferred
income taxes
|
(4,595 | ) | (8,430 | ) | (9,313 | ) | ||||||
Income
tax benefit associated with stock option exercises
|
4,141 | 501 | 1,459 | |||||||||
Excess
tax benefit from stock-based compensation
|
- | (1,208 | ) | (1,763 | ) | |||||||
Loss
(gain) on disposal of property, plant, and equipment, net
|
69 | (2,535 | ) | 253 | ||||||||
Impairment
of intangible assets
|
- | 800 | 517 | |||||||||
Non-cash
restructuring charges
|
- | - | 1,557 | |||||||||
Changes
in assets and liabilities, net of effect of acquisitions:
|
||||||||||||
Accounts
receivable
|
(15,093 | ) | 4,538 | (19,196 | ) | |||||||
Inventory
|
(26,670 | ) | (35,140 | ) | (8,273 | ) | ||||||
Other
assets
|
1,368 | (5,334 | ) | (3,100 | ) | |||||||
Accounts
payable
|
5,349 | 1,382 | (2,060 | ) | ||||||||
Accrued
liabilities
|
(4,938 | ) | 8,712 | 8,731 | ||||||||
Income
taxes payable
|
1,381 | (714 | ) | 13,671 | ||||||||
Cash
provided by operating activities
|
78,348 | 73,048 | 102,900 | |||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Proceeds
from sales and maturities of short-term investments
|
604,510 | 311,439 | 328,285 | |||||||||
Purchase
of short-term investments
|
(448,123 | ) | (312,560 | ) | (347,135 | ) | ||||||
Acquisitions
of Altec Lansing and Octiv, net of cash acquired
|
(165,393 | ) | - | - | ||||||||
Proceeds
from the sale of land
|
- | 2,667 | - | |||||||||
Capital
expenditures and other assets
|
(41,860 | ) | (24,028 | ) | (23,298 | ) | ||||||
Cash
used for investing activities
|
(50,866 | ) | (22,482 | ) | (42,148 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Purchase
of treasury stock
|
(70,395 | ) | (4,021 | ) | (1,542 | ) | ||||||
Proceeds
from sale of treasury stock
|
4,333 | 4,886 | 5,346 | |||||||||
Proceeds
from issuance of common stock
|
16,916 | 3,266 | 9,762 | |||||||||
Proceeds
from line of credit
|
45,000 | - | - | |||||||||
Repayment
of line of credit
|
(22,957 | ) | (22,043 | ) | - | |||||||
Payment
of cash dividends
|
(9,455 | ) | (9,540 | ) | (9,711 | ) | ||||||
Excess
tax benefit from stock-based compensation
|
- | 1,208 | 1,763 | |||||||||
Cash
(used for) provided by financing activities
|
(36,558 | ) | (26,244 | ) | 5,618 | |||||||
Effect
of exchange rate changes on cash and cash equivalents
|
(619 | ) | 1,106 | 2,590 | ||||||||
Net
(decrease) increase in cash and cash equivalents
|
(9,695 | ) | 25,428 | 68,960 | ||||||||
Cash
and cash equivalents at beginning of year
|
78,398 | 68,703 | 94,131 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 68,703 | $ | 94,131 | $ | 163,091 | ||||||
SUPPLEMENTAL
DISCLOSURES
|
||||||||||||
Cash
paid for:
|
||||||||||||
Interest
|
$ | 1,094 | $ | 632 | $ | 100 | ||||||
Income
taxes
|
$ | 32,156 | $ | 24,836 | $ | 13,027 |
Accumulated
|
||||||||||||||||||||||||||||||||
Other
|
Total
|
|||||||||||||||||||||||||||||||
Additional
|
Deferred
|
Compre-
|
Stock-
|
|||||||||||||||||||||||||||||
Common
Stock
|
Paid-In
|
Stock-Based
|
hensive
|
Retained
|
Treasury
|
holders'
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Compensation
|
Income(Loss)
|
Earnings
|
Stock
|
Equity
|
|||||||||||||||||||||||||
Balances
at March 31, 2005
|
48,430 | $ | 651 | $ | 293,735 | $ | (2,220 | ) | $ | 1,583 | $ | 437,867 | $ | (325,897 | ) | $ | 405,719 | |||||||||||||||
Net
income
|
- | - | - | - | - | 81,150 | - | 81,150 | ||||||||||||||||||||||||
Foreign
currency translation adjustments
|
- | - | - | - | (1,132 | ) | - | - | (1,132 | ) | ||||||||||||||||||||||
Unrealized
gain on hedges, net of tax
|
- | - | - | - | 3,183 | - | - | 3,183 | ||||||||||||||||||||||||
Comprehensive
income
|
83,201 | |||||||||||||||||||||||||||||||
Exercise
of stock options
|
884 | 8 | 16,905 | - | - | - | - | 16,913 | ||||||||||||||||||||||||
Issuance
of restricted common stock
|
276 | 3 | 7,540 | (7,540 | ) | - | - | - | 3 | |||||||||||||||||||||||
Cash
dividends declared
|
- | - | - | - | - | (9,455 | ) | - | (9,455 | ) | ||||||||||||||||||||||
Stock-based
compensation
|
- | - | - | 1,161 | - | - | - | 1,161 | ||||||||||||||||||||||||
Income
tax benefit associated with stock options
|
- | - | 4,141 | - | - | - | - | 4,141 | ||||||||||||||||||||||||
Purchase
of treasury stock
|
(2,198 | ) | - | - | - | - | - | (70,395 | ) | (70,395 | ) | |||||||||||||||||||||
Sale
of treasury stock
|
146 | - | 3,443 | - | - | - | 890 | 4,333 | ||||||||||||||||||||||||
Balances
at March 31, 2006
|
47,538 | 662 | 325,764 | (8,599 | ) | 3,634 | 509,562 | (395,402 | ) | 435,621 | ||||||||||||||||||||||
Net
income
|
- | - | - | - | - | 50,143 | - | 50,143 | ||||||||||||||||||||||||
Foreign
currency translation adjustments
|
- | - | - | - | 2,006 | - | - | 2,006 | ||||||||||||||||||||||||
Unrealized
loss on hedges, net of tax
|
- | - | - | - | (2,974 | ) | - | - | (2,974 | ) | ||||||||||||||||||||||
Comprehensive
income
|
49,175 | |||||||||||||||||||||||||||||||
Exercise
of stock options
|
331 | 3 | 3,262 | - | - | - | - | 3,265 | ||||||||||||||||||||||||
Issuance
of restricted common stock
|
79 | 1 | - | - | - | - | - | 1 | ||||||||||||||||||||||||
Repurchase
of restricted common stock
|
(39 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Cash
dividends declared
|
- | - | - | - | - | (9,540 | ) | - | (9,540 | ) | ||||||||||||||||||||||
Reclassification
of unamortized stock-based compensation upon
adoption of SFAS 123(R)
|
- | - | (8,599 | ) | 8,599 | - | - | - | - | |||||||||||||||||||||||
Stock-based
compensation
|
- | - | 16,919 | - | - | - | - | 16,919 | ||||||||||||||||||||||||
Income
tax benefit associated with stock options
|
- | - | 501 | - | - | - | - | 501 | ||||||||||||||||||||||||
Purchase
of treasury stock
|
(175 | ) | - | - | - | - | - | (4,021 | ) | (4,021 | ) | |||||||||||||||||||||
Sale
of treasury stock
|
331 | - | 2,814 | - | - | - | 2,072 | 4,886 | ||||||||||||||||||||||||
Balances
at March 31, 2007
|
48,065 | 666 | 340,661 | - | 2,666 | 550,165 | (397,351 | ) | 496,807 | |||||||||||||||||||||||
Net
income
|
- | - | - | - | - | 68,395 | - | 68,395 | ||||||||||||||||||||||||
Foreign
currency translation adjustments
|
- | - | - | - | 1,053 | - | - | 1,053 | ||||||||||||||||||||||||
Unrealized
loss on hedges, net of tax
|
- | - | - | - | (4,436 | ) | - | - | (4,436 | ) | ||||||||||||||||||||||
Unrealized
loss on long-term investments, net of tax
|
(2,864 | ) | (2,864 | ) | ||||||||||||||||||||||||||||
Comprehensive
income
|
62,148 | |||||||||||||||||||||||||||||||
Exercise
of stock options
|
576 | 6 | 9,755 | - | - | - | - | 9,761 | ||||||||||||||||||||||||
Issuance
of restricted common stock
|
113 | 1 | - | - | - | - | - | 1 | ||||||||||||||||||||||||
Repurchase
of restricted common stock
|
(35 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Cash
dividends declared
|
- | - | - | - | - | (9,711 | ) | - | (9,711 | ) | ||||||||||||||||||||||
Stock-based
compensation
|
- | - | 15,992 | - | - | - | - | 15,992 | ||||||||||||||||||||||||
Income
tax benefit associated with stock options
|
- | - | (182 | ) | - | - | - | - | (182 | ) | ||||||||||||||||||||||
Purchase
of treasury stock
|
(82 | ) | - | - | - | - | - | (1,542 | ) | (1,542 | ) | |||||||||||||||||||||
Sale
of treasury stock
|
307 | - | 3,429 | - | - | - | 1,917 | 5,346 | ||||||||||||||||||||||||
Balances
at March 31, 2008
|
48,944 | $ | 673 | $ | 369,655 | $ | - | $ | (3,581 | ) | $ | 608,849 | $ | (396,976 | ) | $ | 578,620 |
1.
|
THE
COMPANY
|
2.
|
SIGNIFICANT ACCOUNTING
POLICIES
|
|
·
|
title and risk of ownership are
transferred to customers;
|
|
·
|
persuasive evidence of an
arrangement exists;
|
|
·
|
the price to the buyer is fixed or
determinable; and
|
|
·
|
collection is reasonably
assured.
|
3.
|
RECENT ACCOUNTING
PRONOUNCEMENTS
|
4.
|
INVESTMENTS
|
(in
thousands)
|
Balances
at March 31, 2007
|
Balances
at March 31, 2008
|
||||||||||||||||||||||||||||||
Cost
|
Unrealized
|
Accrued
|
Fair
|
Cost
|
Unrealized
|
Accrued
|
Fair
|
|||||||||||||||||||||||||
Basis
|
Gain(Loss)
|
Interest
|
Value
|
Basis
|
Gain(Loss)
|
Interest
|
Value
|
|||||||||||||||||||||||||
Short-term
investments:
|
||||||||||||||||||||||||||||||||
Auction
rate securities
|
$ | 9,150 | $ | - | $ | 84 | $ | 9,234 | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
Total
short-term investments
|
9,150 | - | 84 | 9,234 | - | - | - | - | ||||||||||||||||||||||||
Long-term
investments:
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Auction
rate securities
|
- | - | - | - | 28,000 | (2,864 | ) | - | 25,136 | |||||||||||||||||||||||
Total
long-term investments
|
- | - | - | - | 28,000 | (2,864 | ) | - | 25,136 | |||||||||||||||||||||||
Total
short-term and long-term investments
|
$ | 9,150 | $ | - | $ | 84 | $ | 9,234 | $ | 28,000 | $ | (2,864 | ) | $ | - | $ | 25,136 |
5.
|
DETAILS
OF CERTAIN BALANCE SHEET ACCOUNTS
|
March
31,
|
||||||||
(in
thousands)
|
2007
|
2008
|
||||||
Accounts
receivable, net:
|
||||||||
Accounts
receivable
|
$ | 149,731 | $ | 171,611 | ||||
Less:
provisions for returns, promotions and rebates
|
(30,895 | ) | (38,383 | ) | ||||
Less:
allowance for doubtful accounts
|
(5,078 | ) | (1,735 | ) | ||||
$ | 113,758 | $ | 131,493 | |||||
Inventory,
net:
|
||||||||
Purchased
parts
|
$ | 57,406 | $ | 36,081 | ||||
Work
in process
|
6,268 | 3,611 | ||||||
Finished
goods
|
62,931 | 87,396 | ||||||
$ | 126,605 | $ | 127,088 | |||||
Property,
plant and equipment, net:
|
||||||||
Land
|
$ | 8,630 | $ | 8,647 | ||||
Buildings
and improvements (useful life 7-30 years)
|
64,693 | 70,518 | ||||||
Machinery
and equipment (useful life 2-10 years)
|
120,619 | 131,779 | ||||||
Construction
in progress
|
5,622 | 6,071 | ||||||
199,564 | 217,015 | |||||||
Less:
accumulated depreciation and amortization
|
(102,305 | ) | (118,485 | ) | ||||
$ | 97,259 | $ | 98,530 | |||||
Accrued
liabilities:
|
||||||||
Employee
compensation and benefits
|
$ | 20,574 | $ | 25,089 | ||||
Warranty
accrual
|
7,240 | 10,441 | ||||||
Accrued
advertising and sales and marketing
|
5,104 | 5,762 | ||||||
Accrued
other
|
21,107 | 26,026 | ||||||
$ | 54,025 | $ | 67,318 |
(in
thousands)
|
||||
Warranty
obligation at March 31, 2006
|
$ | 6,276 | ||
Warranty
provision relating to products shipped during the year
|
15,946 | |||
Deductions
for warranty claims processed
|
(14,982 | ) | ||
Warranty
obligation at March 31, 2007
|
7,240 | |||
Warranty
provision relating to products shipped during the year
|
22,095 | |||
Deductions
for warranty claims processed
|
(18,894 | ) | ||
Warranty
obligation at March 31, 2008
|
$ | 10,441 |
6.
|
ACQUISITIONS
|
(in
thousands)
|
||||
Paid
to Altec Lansing
|
$ | 154,273 | ||
Payment
of Altec Lansing pre-existing debt
|
9,906 | |||
Direct
acquisition costs
|
977 | |||
Total
cash consideration
|
$ | 165,156 |
(in
thousands)
|
Fair
Value at August 18, 2005
|
|||
Total
cash consideration
|
$ | 165,156 | ||
Less
cash balance acquired
|
7,577 | |||
157,579 | ||||
Allocated
to:
|
||||
Prepaid
compensation
|
1,067 | |||
Inventory
|
27,524 | |||
Other
current assets
|
17,630 | |||
Property,
plant, and equipment, net
|
8,290 | |||
Identifiable
intangible assets
|
108,300 | |||
Deferred
tax assets
|
4,424 | |||
Current
liabilities assumed
|
(29,368 | ) | ||
Deferred
tax liability
|
(22,691 | ) | ||
Goodwill
|
$ | 42,403 |
(in
thousands)
|
Fair
Value
|
Useful
Life
|
|||
Existing
technology
|
$ | 24,200 |
6
years
|
||
OEM
relationships
|
700 |
7
years
|
|||
Customer
relationships
|
17,600 |
8
years
|
|||
Trade
name - inMotion
|
5,000 |
8
years
|
|||
Trade
name - Altec Lansing
|
59,100 |
Not
amortized
|
|||
In-process
technology
|
900 |
Fully
expensed in the second fiscal quarter of
2006
|
|||
Total
|
$ | 107,500 |
Pro
forma
|
Fiscal
Year Ended March 31,
|
|||
(in
thousands except per share data)
|
2006
|
|||
Net
revenues
|
$ | 806,893 | ||
Operating
income
|
$ | 118,922 | ||
Net
income
|
$ | 84,107 | ||
Basic
net income per common share
|
$ | 1.78 | ||
Diluted
net income per common share
|
$ | 1.72 |
As
Reported
|
Fiscal
Year Ended March 31,
|
|||
(in
thousands except per share data)
|
2006
|
|||
Net
revenues
|
$ | 750,394 | ||
Operating
income
|
$ | 110,362 | ||
Net
income
|
$ | 81,150 | ||
Basic
net income per common share
|
$ | 1.72 | ||
Diluted
net income per common share
|
$ | 1.66 |
7.
|
GOODWILL
|
(in
thousands)
|
Audio
Communications Group
|
Audio
Entertainment Group
|
Consolidated
|
|||||||||
Balance
at March 31, 2006
|
$ | 11,214 | $ | 63,863 | $ | 75,077 | ||||||
Carrying
value adjustments
|
- | (2,252 | ) | (2,252 | ) | |||||||
Balance
at March 31, 2007
|
$ | 11,214 | $ | 61,611 | $ | 72,825 | ||||||
Re-allocation
of goodwill
|
2,902 | (2,902 | ) | - | ||||||||
Carrying
value adjustments
|
- | (3,654 | ) | (3,654 | ) | |||||||
Balance
at March 31, 2008
|
$ | 14,116 | $ | 55,055 | $ | 69,171 |
8.
|
INTANGIBLES
|
Gross
|
Accumulated
|
Net
|
Useful
|
||||||||||
March
31, 2007 (in thousands)
|
Amount
|
Amortization
|
Amount
|
Life
|
|||||||||
Technology
|
$ | 30,960 | $ | (9,431 | ) | $ | 21,529 |
6-10
years
|
|||||
In-process
technology
|
996 | (996 | ) | - |
Immediate
|
||||||||
State
contracts
|
1,300 | (975 | ) | 325 |
7
years
|
||||||||
Patents
|
1,420 | (876 | ) | 544 |
7
years
|
||||||||
Customer
relationships
|
18,133 | (4,108 | ) | 14,025 |
3-8
years
|
||||||||
Trademarks
|
300 | (225 | ) | 75 |
7
years
|
||||||||
Trade
name - inMotion
|
5,000 | (1,016 | ) | 3,984 |
8
years
|
||||||||
Trade
name - Altec Lansing
|
59,100 | - | 59,100 |
Indefinite
|
|||||||||
OEM
relationships
|
700 | (162 | ) | 538 |
7
years
|
||||||||
Non-compete
agreements
|
200 | (200 | ) | - |
5
years
|
||||||||
Total
|
$ | 118,109 | $ | (17,989 | ) | $ | 100,120 |
Gross
|
Accumulated
|
Net
|
Useful
|
||||||||||
March
31, 2008 (in thousands)
|
Amount
|
Amortization
|
Amount
|
Life
|
|||||||||
Technology
|
$ | 30,160 | $ | (13,883 | ) | $ | 16,277 |
6-10
years
|
|||||
In-process
technology
|
996 | (996 | ) | - |
Immediate
|
||||||||
State
contracts
|
1,300 | (1,161 | ) | 139 |
7
years
|
||||||||
Patents
|
1,420 | (1,079 | ) | 341 |
7
years
|
||||||||
Customer
relationships
|
18,133 | (6,308 | ) | 11,825 |
3-8
years
|
||||||||
Trademarks
|
300 | (268 | ) | 32 |
7
years
|
||||||||
Trade
name - inMotion
|
5,000 | (1,641 | ) | 3,359 |
8
years
|
||||||||
Trade
name - Altec Lansing
|
59,100 | - | 59,100 |
Indefinite
|
|||||||||
OEM
relationships
|
700 | (262 | ) | 438 |
7
years
|
||||||||
Non-compete
agreements
|
200 | (200 | ) | - |
5
years
|
||||||||
Total
|
$ | 117,309 | $ | (25,798 | ) | $ | 91,511 |
Estimated
amortization expense
|
||||
Fiscal
Year Ending March 31,
|
||||
2009
|
$ | 7,872 | ||
2010
|
7,412 | |||
2011
|
7,368 | |||
2012
|
4,787 | |||
2013
|
3,213 | |||
Thereafter
|
1,759 | |||
Total
estimated amortization expense
|
$ | 32,411 |
Severance
and Benefits
|
Facilities
and Equipment
|
Other
|
Total
|
|||||||||||||
Restructuring
and other related charges
|
$ | 1,272 | $ | 1,519 | $ | 793 | $ | 3,584 | ||||||||
Cash
|
(980 | ) | - | (241 | ) | (1,221 | ) | |||||||||
Non-cash
|
- | (1,519 | ) | (38 | ) | (1,557 | ) | |||||||||
Restructuring
accrual at March 31, 2008
|
$ | 292 | $ | - | $ | 514 | $ | 806 |
10.
|
BANK LINE OF
CREDIT
|
11.
|
COMMITMENTS AND
CONTINGENCIES
|
Fiscal
Year Ending March 31,
|
||||
2009
|
$ | 5,166 | ||
2010
|
3,923 | |||
2011
|
3,060 | |||
2012
|
930 | |||
2013
|
945 | |||
Thereafter
|
2,293 | |||
Total
minimum future rental payments
|
$ | 16,317 |
12.
|
STOCKHOLDERS’
EQUITY
|
March
31,
|
||||||||
(in
thousands)
|
2007
|
2008
|
||||||
Accumulated
unrealized loss on cash flow hedges, net of tax
|
$ | (1,407 | ) | $ | (5,843 | ) | ||
Accumulated
unrealized loss on long-term investments, net of tax
|
- | (2,864 | ) | |||||
Accumulated
foreign currency translation adjustments
|
4,073 | 5,126 | ||||||
$ | 2,666 | $ | (3,581 | ) |
Options
Outstanding
|
||||||||||||||||
Number
of Shares
|
Weighted
Average Exercise Price
|
Weighted
Average Remaining Contractual Life
|
Aggregate
Intrinsic Value
|
|||||||||||||
(in
thousands)
|
(in
years)
|
(in
thousands)
|
||||||||||||||
Outstanding
at March 31, 2007
|
9,033 | $ | 26.17 | |||||||||||||
Options
granted
|
772 | $ | 26.85 | |||||||||||||
Options
exercised
|
(576 | ) | $ | 16.94 | $ | 5,519 | ||||||||||
Options
forfeited or expired
|
(668 | ) | $ | 32.98 | ||||||||||||
Outstanding
at March 31, 2008
|
8,561 | $ | 26.32 | 4.12 | $ | 3,363 | ||||||||||
Exercisable
at March 31, 2008
|
6,510 | $ | 26.80 | 3.63 | $ | 3,304 |
Number
of Shares
|
Weighted
Average Grant Date Fair Value
|
|||||||
(in
thousands)
|
||||||||
Non-vested
at March 31, 2007
|
287 | $ | 27.09 | |||||
Granted
|
113 | $ | 27.17 | |||||
Vested
|
(77 | ) | $ | 27.59 | ||||
Forfeited
|
(35 | ) | $ | 28.90 | ||||
Non-vested
at March 31, 2008
|
288 | $ | 26.77 |
Fiscal
Year Ended March 31,
|
||||||||
(in
thousands, except per share data)
|
2007
|
2008
|
||||||
Cost
of revenues
|
$ | 2,908 | $ | 2,474 | ||||
Research,
development and engineering
|
3,835 | 3,552 | ||||||
Selling,
general and administrative
|
10,176 | 9,966 | ||||||
Stock-based
compensation expense included in operating expenses
|
14,011 | 13,518 | ||||||
Total
stock-based compensation
|
16,919 | 15,992 | ||||||
Income
tax benefit
|
(5,599 | ) | (5,173 | ) | ||||
Total
stock-based compensation expense, net of tax
|
$ | 11,320 | $ | 10,819 | ||||
Decrease
in basic and diluted earnings per share
|
$ | 0.24 | $ | 0.22 |
Fiscal
Year Ended
|
||||
(in
thousands, except per share data)
|
March
31, 2006
|
|||
Net
income - as reported
|
$ | 81,150 | ||
Add
stock-based employee compensation expense included in net
income, net of tax
|
748 | |||
Less
stock-based compensation expense determined under fair
value-based method, net of tax
|
(11,967 | ) | ||
Net
income - pro forma
|
$ | 69,931 | ||
Basic
net income per share - as reported
|
$ | 1.72 | ||
Basic
net income per share - pro forma
|
$ | 1.48 | ||
Diluted
net income per share - as reported
|
$ | 1.66 | ||
Diluted
net income per share - pro forma
|
$ | 1.43 |
Employee
Stock Options
|
Employee
Stock Purchase Plan
|
|||||||||||||||||||||||
Fiscal
Year Ended March 31,
|
2006
|
2007
|
2008
|
2006
|
2007
|
2008
|
||||||||||||||||||
Expected
volatility
|
53.1 | % | 42.1 | % | 39.6 | % | 34.0 | % | 43.4 | % | 45.3 | % | ||||||||||||
Risk-free
interest rate
|
4.2 | % | 4.7 | % | 4.0 | % | 4.4 | % | 5.2 | % | 3.4 | % | ||||||||||||
Expected
dividends
|
0.7 | % | 1.0 | % | 0.8 | % | 0.6 | % | 1.2 | % | 0.9 | % | ||||||||||||
Expected
life (in years)
|
4.9 | 4.2 | 4.2 | 0.5 | 0.5 | 0.5 | ||||||||||||||||||
Weighted-average
grant date fair value
|
$ | 14.79 | $ | 7.60 | $ | 9.35 | $ | 8.67 | $ | 4.74 | $ | 6.20 |
13.
|
EMPLOYEE BENEFIT
PLANS
|
Local
Currency
|
USD
Equivalent
|
Position
|
Maturity
|
||||||||
EUR
|
15,800 | $ | 24,897 |
Sell
Euro
|
1
month
|
||||||
GBP
|
6,200 | 12,323 |
Sell
GBP
|
1
month
|
15.
|
INCOME
TAXES
|
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||
2006
|
2007
|
2008
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 26,789 | $ | 12,587 | $ | 10,096 | ||||||
State
|
4,221 | 1,976 | 2,443 | |||||||||
Foreign
|
5,860 | 6,158 | 9,242 | |||||||||
Total
current provision for income taxes
|
36,870 | 20,721 | 21,781 | |||||||||
Deferred:
|
||||||||||||
Federal
|
(4,042 | ) | (7,419 | ) | (3,210 | ) | ||||||
State
|
(1,328 | ) | (1,045 | ) | (778 | ) | ||||||
Foreign
|
(96 | ) | (862 | ) | (951 | ) | ||||||
Total
deferred benefit for income taxes
|
(5,466 | ) | (9,326 | ) | (4,939 | ) | ||||||
Provision
for income taxes
|
$ | 31,404 | $ | 11,395 | $ | 16,842 |
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||
2006
|
2007
|
2008
|
||||||||||
Tax
expense at statutory rate
|
$ | 39,394 | $ | 21,538 | $ | 29,833 | ||||||
Foreign
operations taxed at different rates
|
(9,962 | ) | (9,646 | ) | (13,868 | ) | ||||||
State
taxes, net of federal benefit
|
2,063 | 930 | 1,665 | |||||||||
Research
and development credit
|
(941 | ) | (1,978 | ) | (814 | ) | ||||||
Other,
net
|
850 | 551 | 26 | |||||||||
Provision
for income taxes
|
$ | 31,404 | $ | 11,395 | $ | 16,842 |
March
31,
|
||||||||
2007
|
2008
|
|||||||
Accruals
and other reserves
|
$ | 11,784 | $ | 12,249 | ||||
Deferred
state tax
|
523 | 422 | ||||||
Deferred
foreign tax
|
352 | 685 | ||||||
Net
operating loss carryover
|
2,658 | 3,293 | ||||||
Stock
compensation
|
4,219 | 6,314 | ||||||
Other
deferred tax assets
|
684 | 3,325 | ||||||
Valuation
allowance
|
- | (1,088 | ) | |||||
Total
deferred tax assets
|
20,220 | 25,200 | ||||||
Deferred
gains on sales of properties
|
(2,223 | ) | (2,160 | ) | ||||
Purchased
intangibles
|
(37,791 | ) | (36,871 | ) | ||||
Unremitted
earnings of certain subsidiaries
|
(3,064 | ) | (3,064 | ) | ||||
Other
deferred tax liabilities
|
(1,827 | ) | (1,915 | ) | ||||
Total
deferred tax liabilities
|
(44,905 | ) | (44,010 | ) | ||||
Net
deferred tax asset (liabilities)
|
$ | (24,685 | ) | $ | (18,810 | ) |
(in
thousands)
|
Gross
Unrecognized Income Tax Benefits
|
|||
Balance
at April 1, 2007
|
$ | 12,456 | ||
Increase
of unrecognized tax benefits related to prior years
|
396 | |||
Increase
of unrecognized tax benefits related to the current year
|
2,977 | |||
Decrease
of unrecognized tax benefits related to settlements
|
(3,156 | ) | ||
Reductions
to unrecognized tax benefits related to lapse of applicable statute of
limitations
|
(237 | ) | ||
Balance
at March 31, 2008
|
$
|
12,436 |
16.
|
COMPUTATION OF EARNINGS PER
COMMON SHARE
|
(in
thousands, except earnings per share)
|
Fiscal
Year Ended March 31,
|
|||||||||||
2006
|
2007
|
2008
|
||||||||||
Net
income
|
$ | 81,150 | $ | 50,143 | $ | 68,395 | ||||||
Weighted
average shares-basic
|
47,120 | 47,361 | 48,232 | |||||||||
Dilutive
effect of employee equity incentive plans
|
1,668 | 659 | 858 | |||||||||
Weighted
average shares-diluted
|
$ | 48,788 | $ | 48,020 | $ | 49,090 | ||||||
Earnings
per share-basic
|
$ | 1.72 | $ | 1.06 | $ | 1.42 | ||||||
Earnings
per share-diluted
|
$ | 1.66 | $ | 1.04 | $ | 1.39 | ||||||
Potentially
dilutive securities excluded from earnings per diluted
share because their effect is anti-dilutive
|
2,504 | 5,931 | 5,791 |
17.
|
SEGMENTS AND ENTERPRISE-WIDE
DISCLOSURES
|
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2006
|
2007
|
2008
|
|||||||||
Net
revenues
|
||||||||||||
Audio
Communications Group
|
$ | 629,725 | $ | 676,514 | $ | 747,935 | ||||||
Audio
Entertainment Group
|
120,669 | 123,640 | 108,351 | |||||||||
Consolidated
net revenues
|
$ | 750,394 | $ | 800,154 | $ | 856,286 | ||||||
Gross
profit
|
||||||||||||
Audio
Communications Group
|
$ | 289,288 | $ | 295,480 | $ | 344,072 | ||||||
Audio
Entertainment Group
|
36,966 | 13,335 | 5,033 | |||||||||
Consolidated
gross profit
|
$ | 326,254 | $ | 308,815 | $ | 349,105 | ||||||
Operating
income (loss)
|
||||||||||||
Audio
Communications Group
|
$ | 99,851 | $ | 84,677 | $ | 115,166 | ||||||
Audio
Entertainment Group
|
10,511 | (27,228 | ) | (35,783 | ) | |||||||
Consolidated
operating income
|
$ | 110,362 | $ | 57,449 | $ | 79,383 |
Fiscal
Year Ended
|
||||
(in
thousands)
|
March
31, 2008
|
|||
Net
revenues
|
||||
Audio
Communications Group
|
$ | 742,155 | ||
Audio
Entertainment Group
|
114,131 | |||
Consolidated
net revenues
|
$ | 856,286 | ||
Gross
profit
|
||||
Audio
Communications Group
|
$ | 341,999 | ||
Audio
Entertainment Group
|
7,106 | |||
Consolidated
gross profit
|
$ | 349,105 |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2006
|
2007
|
2008
|
|||||||||
Net
revenues from unaffiliated customers:
|
||||||||||||
Office
and contact center
|
$ | 446,524 | $ | 475,323 | $ | 519,958 | ||||||
Mobile
|
119,333 | 146,859 | 171,880 | |||||||||
Gaming
and computer audio
|
35,656 | 30,162 | 33,612 | |||||||||
Other
specialty products
|
28,212 | 24,170 | 22,485 | |||||||||
Total
segment net revenues
|
$ | 629,725 | $ | 676,514 | $ | 747,935 |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2006
|
2007
|
2008
|
|||||||||
Net
revenues from unaffiliated customers:
|
||||||||||||
Docking
audio
|
$ | 70,878 | $ | 61,068 | $ | 55,399 | ||||||
PC
audio
|
40,515 | 52,922 | 46,652 | |||||||||
Other
|
9,276 | 9,650 | 6,300 | |||||||||
Total
segment net revenues
|
$ | 120,669 | $ | 123,640 | $ | 108,351 |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2006
|
2007
|
2008
|
|||||||||
Net
sales from unaffiliated customers:
|
||||||||||||
United
States
|
$ | 483,513 | $ | 490,551 | $ | 521,148 | ||||||
Europe,
Middle East and Africa
|
178,315 | 195,090 | 214,621 | |||||||||
Asia
Pacific
|
47,921 | 59,927 | 62,742 | |||||||||
Americas,
excluding United States
|
40,645 | 54,586 | 57,775 | |||||||||
Total
International
|
266,881 | 309,603 | 335,138 | |||||||||
Total
consolidated net revenues
|
$ | 750,394 | $ | 800,154 | $ | 856,286 | ||||||
Property,
plant and equipment, net:
|
||||||||||||
United
States
|
$ | 48,356 | $ | 54,490 | ||||||||
China
|
25,817 | 23,191 | ||||||||||
Mexico
|
12,734 | 11,321 | ||||||||||
Other
countries
|
10,352 | 9,528 | ||||||||||
$ | 97,259 | $ | 98,530 |
Quarter
Ended
|
||||||||||||||||
June
30,
|
Sept.
30,
|
Dec.
31,
|
Mar.
31,
|
|||||||||||||
20061
|
2006
|
2006
|
2007
|
|||||||||||||
(in
thousands, except income per share)
|
||||||||||||||||
Net
revenues
|
$ | 195,069 | $ | 194,934 | $ | 215,435 | $ | 194,716 | ||||||||
Gross
profit
|
$ | 75,599 | $ | 76,895 | $ | 80,851 | $ | 75,470 | ||||||||
Net
income
|
$ | 12,291 | $ | 12,525 | $ | 15,190 | $ | 10,137 | ||||||||
Basic
net income per common share
|
$ | 0.26 | $ | 0.27 | $ | 0.32 | $ | 0.21 | ||||||||
Diluted
net income per common share
|
$ | 0.25 | $ | 0.26 | $ | 0.32 | $ | 0.21 | ||||||||
Cash
dividends declared per common share
|
$ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 |
Quarter
Ended
|
||||||||||||||||
June
30,
|
Sept.
30,
|
Dec.
31,
|
Mar.
31,
|
|||||||||||||
20071
|
2007
|
20072
|
20082,3
|
|||||||||||||
(in
thousands, except income per share)
|
||||||||||||||||
Net
revenues
|
$ | 206,495 | $ | 208,224 | $ | 232,824 | $ | 208,743 | ||||||||
Gross
profit
|
$ | 83,546 | $ | 84,456 | $ | 93,757 | $ | 87,346 | ||||||||
Net
income
|
$ | 14,975 | $ | 16,522 | $ | 19,108 | $ | 17,790 | ||||||||
Basic
net income per common share
|
$ | 0.31 | $ | 0.34 | $ | 0.39 | $ | 0.37 | ||||||||
Diluted
net income per common share
|
$ | 0.31 | $ | 0.34 | $ | 0.39 | $ | 0.36 | ||||||||
Cash
dividends declared per common share
|
$ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 |
1
|
In
the first quarter of fiscal 2007, the Company sold a parcel of land in
Frederick, Maryland and recorded a gain of $2.6 million on the sale of
this property.
|
2
|
In November 2007, the Company
announced plans to close AEG’s manufacturing facility in Dongguan, China,
to shut down a related Hong Kong research and development, sales and
procurement office and to consolidate procurement, research and
development activities for AEG in the Shenzhen, China site. As
a result of these activities, $2.9 million and $0.7 million in
restructuring and other related charges was recorded in the third and
fourth quarters of fiscal 2008, respectively.
|
3
|
In
the fourth quarter of fiscal 2008, the Company recorded adjustments to
foreign currency gains and losses recognized in prior periods, a
correction of depreciation expense and income tax expense related to prior
periods, and a reversal of an allowance for customer discounts recorded in
a prior period. The impact of these adjustments on fourth
quarter income from operations, net income, and net income per share was a
decrease of $0.2 million, a decrease of $1.9 million, and a decrease of
$0.04, respectively. The Company and its Audit Committee
believe that such amounts are not material to the current and previously
reported financial statements.
|
|
•
|
pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of our
Company;
|
|
•
|
provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of our Company;
and
|
|
•
|
provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use
or disposition of our Company’s assets that could have a material effect
on the financial statements.
|
/s/ Ken
Kannappan
Ken
Kannappan
President
and Chief Executive Officer
May
27, 2008
|
/s/ Barbara
Scherer
Barbara
Scherer
Senior
Vice President—Finance &
Administration
and Chief Financial Officer
May
27, 2008
|
|
(a)
|
Management’s
Annual Report on Internal Control Over Financial
Reporting
|
|
(b)
|
Changes
in Internal Control Over Financial
Reporting
|
(a)
|
The
following documents are filed as part of this Annual Report on Form
10-K:
|
|
|
(1)
|
Financial
Statements. The following
consolidated financial statements and supplementary information and Report
of Independent Registered Public Accounting Firm are included in Part II
of this Report.
|
page
|
|
CONSOLIDATED
BALANCE SHEETS
|
51
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
52
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
53
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
54
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
55
|
MANAGEMENT'S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
|
82
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
83
|
(2)
|
Financial Statement
Schedules.
|
Balance
at Beginning of Year
|
Charged
to Expenses or Other Accounts
|
Deductions
|
Balance
at End of Year
|
|||||||||||||
Allowance
for doubtful accounts:
|
||||||||||||||||
Year
ended March 31, 2006
|
$ | 3,820 | $ | 1,971 | $ | (425 | ) | $ | 5,366 | |||||||
Year
ended March 31, 2007
|
5,366 | 1,590 | (1,878 | ) | 5,078 | |||||||||||
Year
ended March 31, 2008
|
5,078 | (232 | ) | (3,111 | ) | 1,735 | ||||||||||
Warranty
reserves:
|
||||||||||||||||
Year
ended March 31, 2006
|
5,970 | 12,594 | (12,288 | ) | 6,276 | |||||||||||
Year
ended March 31, 2007
|
6,276 | 15,946 | (14,982 | ) | 7,240 | |||||||||||
Year
ended March 31, 2008
|
$ | 7,240 | $ | 22,095 | $ | (18,894 | ) | $ | 10,441 |
PLANTRONICS,
INC.
|
||
May
27, 2008
|
||
By:
|
/s/ Ken
Kannappan
|
|
Ken
Kannappan
|
||
Chief
Executive Officer
|
Signature
|
Title
|
Date
|
/s/ Ken
Kannappan
(Ken
Kannappan)
|
President,
Chief Executive Officer and Director (Principal Executive
Officer)
|
May
27, 2008
|
/s/ Barbara
Scherer
(Barbara
Scherer)
|
Senior
Vice President and Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer)
|
May
27, 2008
|
/s/ Marv
Tseu
(Marv
Tseu)
|
Chairman
of the Board and Director
|
May
27, 2008
|
/s/ Brian
Dexheimer
(Brian Dexheimer)
|
Director
|
May
27, 2008
|
/s/ Gregg
Hammann
(Gregg
Hammann)
|
Director
|
May
27, 2008
|
/s/ John
Hart
(John
Hart)
|
Director
|
May
27, 2008
|
/s/ Marshall
Mohr
(Marshall
Mohr)
|
Director
|
May
27, 2008
|
/s/ Roger
Wery
(Roger
Wery)
|
Director
|
May
27, 2008
|
Exhibit
Number
|
Description
of Document
|
|
2.1
|
Agreement
and Plan of Merger by and among Plantronics, Inc., Sonic Acquisition
Corporation, Altec Lansing Technologies, Inc. and the other parties named
herein, dated July 11, 2005 (incorporated herein by reference from Exhibit
10.15 of the Registrant’s Form 10-Q, filed on August 8,
2005).
|
|
3.1.1
|
Amended
and Restated By-Laws of the Registrant (incorporated herein by reference
from Exhibit (3.1) to the Registrant’s Annual Report on Form 10-K, filed
on June 21, 2002).
|
|
3.1.2
|
Certificate
of Amendment to Amended and Restated Bylaws of Plantronics, Inc.
(incorporated herein by reference from Exhibit (3.1.2) of the Registrant's
Current Report on Form 10-K, filed on May 31,
2005).
|
|
3.2.1
|
Restated
Certificate of Incorporation of the Registrant filed with the Secretary of
State of Delaware on January 19, 1994 (incorporated herein by reference
from Exhibit (3.1) to the Registrant’s Quarterly Report on Form 10-Q,
filed on March 4, 1994).
|
|
3.2.2
|
Certificate
of Retirement and Elimination of Preferred Stock and Common stock of the
Registrant filed with the Secretary of State of Delaware on January 11,
1996 (incorporated herein by reference from Exhibit (3.3) of the
Registrant’s Annual Report on Form 10-K, filed on September 27,
1996).
|
|
3.2.3
|
Certificate
of Amendment of Restated Certificate of Incorporation of the Registrant
filed with the Secretary of State of Delaware on August 7, 1997
(incorporated herein by reference from Exhibit (3.1) to the Registrant’s
Quarterly Report on Form 10-Q, filed on August 8,
1997).
|
|
3.2.4
|
Certificate
of Amendment of Restated Certificate of Incorporation of the Registrant
filed with the Secretary of State of Delaware on May 23, 2000
(incorporated herein by reference from Exhibit (4.2) to the Registrant’s
Registration Statement on Form S-8, filed on October 31,
2000).
|
|
3.3
|
Registrant’s
Certificate of Designation of Rights, Preferences and Privileges of Series
A Participating Preferred Stock filed with the Secretary of State of the
State of Delaware on April 1, 2002 (incorporated herein by reference from
Exhibit (3.6) to the Registrant’s Form 8-A, filed on March 29,
2002).
|
|
4.1
|
Preferred
Stock Rights Agreement, dated as of March 13, 2002 between the Registrant
and Equiserve Trust Company, N.A., including the Certificate of
Designation, the form of Rights Certificate and the Summary of Rights
attached thereto as Exhibits A, B, and C, respectively (incorporated
herein by reference from Exhibit (4.1) to the Registrant’s Form 8-A, filed
on March 29, 2002).
|
|
10.1*
|
Plantronics,
Inc. Non-EMEA Quarterly Profit Sharing Plan (incorporated herein by
reference from Exhibit (10.1) to the Registrant’s Report on Form 10-K,
filed on June 1, 2001).
|
|
10.2*
|
Form
of Indemnification Agreement between the Registrant and certain directors
and executives. (incorporated herein by reference from Exhibit (10.2) to
the Registrant’s Report on Form 10-K, filed on May 31,
2005).
|
|
10.3.1*
|
Regular
and Supplemental Bonus Plan (incorporated herein by reference from Exhibit
(10.4(a)) to the Registrant’s Report on Form 10-K, filed on June 1,
2001).
|
|
10.3.2*
|
Overachievement
Bonus Plan (incorporated herein by reference from Exhibit (10.4(b)) to the
Registrant’s Report on Form 10-K, filed on June 1,
2001).
|
Exhibit
Number
|
Description
of Document
|
|
10.3.3*
|
Executive
Incentive Plan (incorporated herein by reference from Exhibit 10.1 to the
Registrant’s Report on Form 8-K, filed on May 2,
2007.
|
|
10.4.1
|
Lease
Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and
Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located
in Tijuana, Mexico (translation from Spanish original) (incorporated
herein by reference from Exhibit (10.5.1) of the Registrant's Quarterly
Report on Form 10-Q (File No. 001-12696), filed on June 1,
2004).
|
|
10.4.2
|
Lease
Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and
Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located
in Tijuana, Mexico (translation from Spanish original) (incorporated
herein by reference from Exhibit (10.5.2) of the Registrant's Quarterly
Report on Form 10-Q (File No. 001-12696), filed on August 6,
2004).
|
|
10.4.3
|
Lease
Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and
Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located
in Tijuana, Mexico (translation from Spanish original) (incorporated
herein by reference from Exhibit (10.5.3) of the Registrant's Quarterly
Report on Form 10-Q, filed on August 6, 2004).
|
|
10.4.4
|
Lease
Agreement dated October 2004 between Finsa Portafolios, S.A. DE C.V.and
Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located
in Tijuana, Mexico (translation from Spanish original) (incorporated
herein by reference from Exhibit (10.5.4) of the Registrant's Quarterly
Report on Form 10-Q, filed on August 6, 2004).
|
|
10.5
|
Lease
dated December 7, 1990 between Canyge Bicknell Limited and Plantronics
Limited, a subsidiary of the Registrant, for premises located in Wootton
Bassett, The United Kingdom (incorporated herein by reference from Exhibit
(10.32) to the Registrant’s Registration Statement on Form S-1 (as
amended), filed on October 20, 1993).
|
|
10.6*
|
Amended
and Restated 2003 Stock Plan (incorporated herein by reference from the
Registrant's Definitive Proxy Statement on Form 14-A, filed on May 26,
2004).
|
|
10.7*
|
1993
Stock Option Plan (incorporated herein by reference from Exhibit (10.8) to
the Registrant's Annual Report on Form 10-K, filed on June 21,
2002).
|
|
10.8
1*
|
1993
Director Stock Option Plan (incorporated herein by reference from Exhibit
(10.29) to the Registrant's Registration Statement on Form S-1 (as
amended), filed on October 20, 1993).
|
|
10.8.2*
|
Amendment
to the 1993 Director Stock Option Plan (incorporated herein by reference
from Exhibit (4.4) to the Registrant's Registration Statement on Form S-8,
filed on October 25, 1996).
|
|
10.8.3*
|
Amendment
No. 2 to the 1993 Director Stock Option Plan (incorporated herein by
reference from Exhibit (10.9(a)) to the Registrant's Report on Form 10-K,
filed on June 1, 2001).
|
|
10.8.4
*
|
Amendment
No. 3 to the 1993 Director Stock Option Plan (incorporated herein by
reference from Exhibit (10.9(b)) to the Registrant's Report on Form 10-K,
filed on June 1, 2001).
|
|
10.8.5*
|
Amendment
No. 4 to the 1993 Director Stock Option Plan (incorporated herein by
reference from Exhibit (10.9.5) to the Registrant's Annual Report on Form
10-K, filed on June 21, 2002).
|
|
10.9.1*
|
2002
Employee Stock Purchase Plan (incorporated herein by reference from the
Registrant's Definitive Proxy Statement on Form 14A, filed on June 3,
2005).
|
Exhibit
Number
|
Description
of Document
|
|
10.9.1
|
Trust
Agreement Establishing the Plantronics, Inc. Annual Profit
Sharing/Individual Savings Plan Trust (incorporated herein by reference
from Exhibit (4.3) to the Registrant's Registration Statement on Form S-8,
filed on January 7, 1997).
|
|
10.9.2*
|
Plantronics,
Inc. 401(k) Plan, effective as of April 2, 2000 (incorporated herein by
reference from Exhibit (10.11) to the Registrant's Report on Form 10-K,
filed on June 1, 2001).
|
|
10.10*
|
Resolutions
of the Board of Directors of Plantronics, Inc. Concerning Executive Stock
Purchase Plan (incorporated herein by reference from Exhibit (4.4) to the
Registrant's Registration Statement on Form S-8 (as amended), filed on
March 25, 1997).
|
|
10.11.1*
|
Plantronics,
Inc. Basic Deferred Compensation Plan, as amended August 8, 1996
(incorporated herein by reference from Exhibit (4.5) to the Registrant's
Registration Statement on Form S-8 (as amended) (File No. 333-19351),
filed on March 25, 1997).
|
|
10.11.2
|
Trust
Agreement Under the Plantronics, Inc. Basic Deferred Stock Compensation
Plan (incorporated herein by reference from Exhibit (4.6) to the
Registrant's Registration Statement on Form S-8 (as amended), filed on
March 25, 1997).
|
|
10.11.3
|
Plantronics,
Inc. Basic Deferred Compensation Plan Participant Election (incorporated
herein by reference from Exhibit (4.7) to the Registrant's Registration
Statement on Form S-8 (as amended), filed on March 25,
1997).
|
|
10.12.1*
|
Employment
Agreement dated as of July 4, 1999 between Registrant and Ken Kannappan
(incorporated herein by reference from Exhibit (10.15) to the Registrant's
Annual Report on Form 10-K405 (File No. 001-12696), filed on June 1,
2000).
|
|
10.12.2*
|
Employment
Agreement dated as of November 1996 between Registrant and Don Houston
(incorporated herein by reference from Exhibit (10.14.2) to the
Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on
June 2, 2003).
|
|
10.12.3*
|
Employment
Agreement dated as of March 1997 between Registrant and Barbara Scherer
(incorporated herein by reference from Exhibit (10.14.4) to the
Registrant's Annual Report on Form 10-K, filed on June 2,
2003).
|
|
10.12.4*
|
Employment
Agreement dated as of June 2003 between Registrant and Philip Vanhoutte
(incorporated herein by reference from Exhibit (10.12.4) to the
Registrant's Annual Report on Form 10-K, filed on May 31,
2005).
|
|
10.12.5*
|
Employment
Agreement dated as of May 2001 between Registrant and Joyce Shimizu
(incorporated herein by reference from Exhibit (10.14.5) to the
Registrant's Annual Report on Form 10-K, filed on June 2,
2003).
|
|
10.13.1
|
Credit
Agreement dated as of October 31, 2003 between Registrant and Wells Fargo
Bank N.A. (incorporated herein by reference from Exhibit (10.1) of the
Registrant's Quarterly Report on Form 10-Q, filed on November 7,
2003).
|
|
10.13.2
|
Credit
Agreement Amendment No. 1 dated as of August, 1, 2004, between Registrant
and Wells
Fargo Bank N.A. (incorporated herein by reference from Exhibit (10.15.2)
to the Registrant’s
Quarterly Report on Form 10-Q, filed on November 5,
2004).
|
|
10.13.3
|
Credit
Agreement Amendment No.2 dated as of July 11, 2005, between Registrant and
Wells Fargo Bank National Association (incorporated herein by reference
from Exhibit (10.15.1) to the Registrants Form 8-K, filed on July 15,
2005).
|
Exhibit
Number
|
Description
of Document
|
|
10.13.4
|
Credit
Agreement Amendment No.3 dated as of August 11, 2005, between Registrant
and Wells Fargo Bank National Association (incorporated herein by
reference from Exhibit (10.2) to the Registrants Form 8-K, filed on
November 23, 2005).
|
|
10.13.5
|
Credit
Agreement Amendment No.4 dated as of November 17, 2005, between Registrant
and Wells Fargo Bank National Association (incorporated herein by
reference from Exhibit (10.1) to the Registrant’s current report on Form
8-K, filed on November 23, 2005).
|
|
10.14*
|
Restricted
Stock Award Agreement dated as of October 12, 2004, between Registrant and
certain of its executive officers (incorporated herein by reference from
Exhibit (10.1) of the Registrant's Current Report on Form 8-K, filed on
October 14, 2004).
|
|
14
|
Worldwide
Code of Business Conduct and Ethics (incorporated herein by reference from
Exhibit (14) of the Registrant's Current Report on Form 10-K, filed on May
31, 2005).
|
|
Subsidiaries
of the Registrant
|
||
Consent
of Independent Registered Public Accounting Firm
|
||
24
|
Power
of Attorney – Power of Attorney (incorporated by reference to the
signature page of this Annual Report on Form
10-K.)
|
|
Certification
of the President and CEO Pursuant to Rule 13a-14(a)/15d-14(a), pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification
of Senior VP, Finance and Administration, and CFO Pursuant to Rule
13a-14(a)/15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
||
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
||
*
|
Indicates
a management contract or compensatory plan, contract or arrangement in
which any Director or any Executive Officer
participates.
|