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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1
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Item 1A.
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16
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Item 1B.
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30
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Item
2.
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30
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Item
3.
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31
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Item
4.
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31
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Part
II.
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Item
5.
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32
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Item
6.
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Item
7.
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34
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Item 7A.
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60
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Item
8.
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62
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Item
9.
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100
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Item 9A.
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100
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Item
9B.
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100
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Part
III.
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Item
10.
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101
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Item
11.
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101
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Item
12.
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101
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Item
13.
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102
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Item
14.
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Part
IV.
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Item
15.
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103
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105
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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 be
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. Products developed and managed by ACG are
included in this segment and may be sold under any of our family
of
brands.
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·
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Audio
Entertainment Group: Our AEG segment is engaged in the design,
manufacture, sales and marketing of audio solutions and related
technologies. We offer computer and digital audio systems,
digital radio frequency audio systems, and docking audio
products as well as headphones and microphones for personal digital
media.
Major product categories include Docking Audio, formerly
referred to as Portable and PC Audio, formerly referred to as
Powered. 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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·
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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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·
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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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·
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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;
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·
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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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·
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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;
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·
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Providing
ergonomic relief from repetitive stress injuries and discomfort associated
with placing a telephone handset between the shoulder and
neck;
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·
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Providing
greater comfort and convenience than a telephone alone on longer
calls;
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·
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Enabling
emerging PC and VoIP applications, including speech recognition,
Internet
telephony and gaming;
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·
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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
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·
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Providing
greater privacy than speakerphones, and with wireless products, the
ability to move from public to private space when
required.
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·
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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.
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|
·
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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.
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·
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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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·
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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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·
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the
advent 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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Noise-Canceling
Microphones: A microphone design that greatly reduces the
transmission of background noise, enhancing headset sound
quality.
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·
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AudioIQ®: A
digital signal processing (DSP) technology that results in improved
intelligibility on both sides of a call in a variety of environments
with
varying degrees and types of background
sound.
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·
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WindSmart™
Technology: Provides wind-noise reduction for optimal sound
clarity.
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·
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PerSonoCall™:
Allows for
remote ring detection and call answer/end at the touch of a
button.
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·
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PerSono™
Audio
Control Center: Allows users to adjust microphone and audio
characteristics such as volume, bass and treble, and launch their
favorite
voice or audio applications, as well as select audio presets such
as rock,
jazz, or classical, all from a central software interface.
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·
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Quick
Disconnect™: On the H-Series headset tops, the Quick Disconnect™ is
the connector at the end of the headset cable that lets users disconnect
their headset from an active call when you need to accept a fax or
file,
then easily reconnect.
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·
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Clearline™
Audio: Keeps incoming sounds at a consistent and comfortable
listening level.
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·
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Plantronics
FlexGrip®: A unique design for a secure, comfortable fit that permits
extended wear.
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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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·
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global
distribution.
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·
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continued
efforts to maintain our strength in this category, domestically,
while
expanding into international markets;
and
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·
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new
product introductions that incorporate breakthrough technologies
and
designs.
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·
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The
remainder of the AEG products, which represent a small portion of
total
AEG net revenues include headsets, used primarily for interactive
gaming,
speech recognition and VoIP (headsets) markets, a wide array of headphone
products for portable stereos, CD players, MP3 players and other
audio
devices, home audio and home theatre products and professional
speakers.
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·
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Side-Firing
Surround™ Technology: Provides the immediate effects of surround
sound while enabling vertical
stacking.
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·
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InConcert™
Technology: The fusion of pro audio line-array and tri-amp
technologies, InConcert uses a frequency filtering system and three
separate amplifiers to power a total of twelve high-performance full-range
micro drivers for an intense and concentrated full-volume
sound.
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·
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Extreme
Dynamic Bass™ (“XDB”): An enhanced bass technology that delivers a
low-bass sound from a front-firing, long-throw
subwoofer.
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MaxxBass™
Technology: A technology that provides deep bass without a
subwoofer.
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Toll-free
800 support with multiple-language
capabilities;
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·
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Web-based
frequently asked questions (FAQ)
database;
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·
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Web-based
question submission;
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·
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Live
on-line chat; and
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Instant
call-back support.
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·
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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. Although we have historically competed successfully in
this market, there can be no assurance that we will be able to retain
our
leadership position in the future;
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·
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Contact
center market - performance, reliability, price,
comfort, style and support;
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·
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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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·
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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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·
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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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·
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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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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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ACG:
We primarily ship products for our ACG customers in the U.S. and
Asia
Pacific and Latin America (“APLA”) regions from our manufacturing facility
in Mexico. For our customers in Europe, Middle East and Africa market
(“EMEA”), our products ship from our Netherlands distribution
center.
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AEG:
We primarily ship products for our AEG customers in the U.S
from two
distribution centers, with our main distribution center based at
our
location in Milford, Pennsylvania. For our APLA and EMEA customers,
our
products are shipped from distribution centers located in Hong Kong
and
the Netherlands, respectively. The distribution center in the
Netherlands for AEG products is not the same facility as is currently
used
for our ACG products.
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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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47
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President
and Chief Executive Officer
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Clay
Hausmann
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35
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Vice
President, Corporate Marketing
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Don
Houston
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53
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Senior
Vice President, Sales
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Barry
Margerum
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55
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Vice
President, Strategy & Business Development
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Renee
Niemi
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42
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Vice
President and General Manager, Mobile and Entertainment
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Gary
Savadove
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49
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President
and Chief Executive Officer, Plantronics Audio Entertainment Business
Group
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Barbara
Scherer
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51
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Senior
Vice President, Finance & Administration and Chief Financial
Officer
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Joyce
Shimizu
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52
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Vice
President, General Manager Home & Home Office
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Jim
Sotelo
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59
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Vice
President, Product Development &
Technology
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Carsten
Trads
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52
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President,
Clarity Equipment
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Philip
Vanhoutte
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52
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Managing
Director, Europe, Middle East & Africa
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Chuck
Yort
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48
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Vice
President and General Manager, B2B
Solutions
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·
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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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·
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We
must 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 may 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;
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·
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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. For example, in the fourth quarter of fiscal 2007, sales
of Docking Audio products declined substantially, resulting in lower
gross
margins and increased operating losses. The size and timing of
opportunities in these markets are difficult to
predict;
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·
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We
are working to refresh virtually the entire AEG product line; however,
market adoption of new products is difficult to
predict;
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·
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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;
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·
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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. 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;
and
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·
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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.
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·
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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;
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·
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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. This
could
cause us to fail to meet customer expectations. There could be short-term
losses of sales while we are trying to increase production. If customers
turn to our competitors to meet their needs, there could be a long-term
impact on our revenues and
profitability;
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·
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Rapid
increases in production levels to meet unanticipated demand 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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·
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The
introduction of Bluetooth and other wireless headsets presents
many significant manufacturing, marketing and other operational risks
and
uncertainties:
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o
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developing
and marketing these wireless headset
products;
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o
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unforeseen
delays or difficulties in introducing and achieving volume production
of
such products, as occurred in our second and third quarter of fiscal
2006;
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o
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our
dependence on third parties to supply key components, many of which
have
long lead times;
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o
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our
ability to forecast demand for this new product category for which
relevant data is incomplete or unavailable;
and
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o
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longer
lead times with certain suppliers than commitments from some of
our
customers.
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·
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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;
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·
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We
are in the process of in-sourcing some of our production from certain
third party vendors, and shifting some production from our plant
in Mexico
to our plant in Suzhou, China. If we are not able to
successfully transition production, we may not be able to meet demand
or
manufacture products at costs which are competitive with historical
costs;
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·
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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; and
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·
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Many
of our products, particularly our Docking Audio and PC Audio speaker
products, are marketed through the retail channel. Our retail
channel partners frequently have requirements around timing of when
new
products can be introduced into their stores. If we have
manufacturing delays and are unable to supply our new products within
the
retailers’ designated time frames, the retailers may cancel their orders
or look to other suppliers to provide similar products, resulting
in loss
of revenues and profits and increased inventory levels, which could
result
in excess or obsolete inventory. If we miss one market window at the
retailers, we have no assurance that the retailer will place new
orders at
the next market window, further increasing the risk of excess or
obsolete
inventory. In addition, because we have very long lead times with
many of our speaker product suppliers, we may also have non-cancellable
purchase order commitments for components or finished goods which
could
negatively impact our operating
results.
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·
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Competition
may continue to increase in Altec Lansing’s markets more than
expected;
|
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·
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Altec
Lansing’s product sales and new product development may not evolve as
anticipated;
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·
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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;
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·
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Diversion
of management's attention from normal daily operations of the core
business;
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·
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The
potential loss of key employees of Altec Lansing and Plantronics; and,
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·
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Cultural
differences in the conduct of the
business.
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·
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Anticipate
technology and market trends;
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·
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Develop
innovative new products and enhancements on a timely
basis;
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·
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Distinguish
our products from those of our
competitors;
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·
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Manufacture
and deliver high-quality products in sufficient volumes;
and
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·
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Price
our products competitively.
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·
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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. To date, we have not experienced any significant interruptions
in the supply of these raw materials, sub-assemblies, components
and
products. Adverse economic conditions could lead to a higher risk
of
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. An interruption in supply from any
of our
single source suppliers in the future would materially adversely
affect
our business, financial condition and results of
operations;
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·
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Prices
of raw materials, components and sub-assemblies may rise. If this
occurs
and we are not able to pass these increases on to our customers or
to
achieve operating efficiencies that would offset the increases, it
would
have a material adverse effect on our business, financial condition
and
results of operations;
|
|
·
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Due
to 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,
consequently materially adversely affecting our business, financial
condition and results of
operations;
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·
|
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; and
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|
·
|
Although
we generally use standard raw materials, parts and components for
our
products, the high development costs associated with emerging wireless
technologies permits us to work with only a single source of silicon
chip-sets on any particular new product. We, or our chosen supplier
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, and/or the inability to meet
our
customer demand for these new products. Our business, operating results
and financial condition could therefore be materially adversely affected
as a result of these factors.
|
|
·
|
If
supply or demand for iPod products decreases, demand for certain
of our
Docking Audio products could be negatively affected. MP3 integration
with
cell phones could take significant market share from Apple’s iPod
products;
|
|
·
|
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;
and
|
|
·
|
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.
|
|
·
|
New
Product Launch: With the growth of our product portfolio, we
experience increased complexity in coordinating product development,
manufacturing, and shipping. As this complexity increases, it places
a
strain on our ability to accurately coordinate the commercial launch
of
our products with adequate supply to meet anticipated customer demand
and
effective marketing to stimulate demand and market acceptance. If
we are
unable to scale and improve our product launch coordination, we could
frustrate our customers and lose retail shelf space and product
sales;
|
|
·
|
Forecasting,
Planning and Supply Chain Logistics: With the growth of our product
portfolio, we also experience increased complexity in forecasting
customer
demand and in planning for production, and transportation and logistics
management. If we are unable to scale and improve our forecasting,
planning and logistics management, we could frustrate our customers,
lose
product sales or accumulate excess inventory;
and
|
|
·
|
Support
Processes: To manage the growth of our operations, we will
need to continue to improve our transaction processing, operational
and
financial systems, and procedures and controls to effectively manage
the
increased complexity. If we are unable to scale and improve these
areas,
the consequences could include: delays in shipment of product, degradation
in levels of customer support, lost sales, decreased cash flows,
and
increased inventory. These difficulties could harm or limit our ability
to
expand.
|
·
|
Uncertain
economic conditions 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;
|
·
|
Integration
of the Altec Lansing business or market reaction to future
acquisitions;
|
·
|
General
market conditions; and
|
·
|
Other
factors unrelated to our operating performance or the operating
performance of our competitors.
|
|
·
|
cultural
differences in the conduct of
business;
|
|
·
|
fluctuations
in foreign exchange rates;
|
|
·
|
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
|
Santa
Cruz, California
|
79,253
|
Own
|
Light
Assembly, Sales and Marketing, Engineering,
Administration
|
Santa
Cruz, California
|
47,207
|
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
|
Berkeley,
California
|
4,080
|
Lease
|
Engineering
|
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
|
192,192
|
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
|
5,523
|
Lease
|
Engineering,
Administration
|
Dongguan,
P.R. China
|
180,000
|
Lease
|
Engineering,
Assembly, Administration
|
Low
|
High
|
|||||||
Fiscal
2006
|
||||||||
First
Quarter
|
$ |
30.93
|
$ |
39.61
|
||||
Second
Quarter
|
28.35
|
39.80
|
||||||
Third
Quarter
|
26.40
|
30.61
|
||||||
Fourth
Quarter
|
28.13
|
37.00
|
||||||
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
Year Ended March 31,
|
||||||||||||||||||||
2003
|
2004
|
2005
|
20061
|
20072
|
||||||||||||||||
(in
thousands, except income per share)
|
||||||||||||||||||||
STATEMENT
OF OPERATIONS DATA:
|
||||||||||||||||||||
Net
revenues
|
$ |
337,508
|
$ |
416,965
|
$ |
559,995
|
$ |
750,394
|
$ |
800,154
|
||||||||||
Net
income
|
$ |
41,476
|
$ |
62,279
|
$ |
97,520
|
$ |
81,150
|
$ |
50,143
|
||||||||||
Basic
net income per common share
|
$ |
0.92
|
$ |
1.39
|
$ |
2.02
|
$ |
1.72
|
$ |
1.06
|
||||||||||
Diluted
net income per common share
|
$ |
0.89
|
$ |
1.31
|
$ |
1.92
|
$ |
1.66
|
$ |
1.04
|
||||||||||
Cash
dividends declared per common share
|
$ |
-
|
$ |
-
|
$ |
0.15
|
$ |
0.20
|
$ |
0.20
|
||||||||||
Shares
used in diluted per share calculations
|
46,584
|
47,492
|
50,821
|
48,788
|
48,020
|
|||||||||||||||
BALANCE
SHEET DATA:
|
||||||||||||||||||||
Cash,
cash equivalents, and short-term investments
|
$ |
59,725
|
$ |
180,616
|
$ |
242,814
|
$ |
76,732
|
$ |
103,365
|
||||||||||
Total
assets
|
$ |
205,209
|
$ |
368,252
|
$ |
487,929
|
$ |
612,249
|
$ |
651,304
|
||||||||||
Long-term
liabilities
|
$ |
-
|
$ |
-
|
$ |
2,930
|
$ |
1,453
|
$ |
696
|
||||||||||
Total
stockholders' equity
|
$ |
146,930
|
$ |
299,303
|
$ |
405,719
|
$ |
435,621
|
$ |
496,807
|
1
|
On
August 18, 2005, we completed the acquisition of 100% of the outstanding
shares of Altec Lansing Technologies, Inc., a privately-held Pennsylvania
corporation (“Altec Lansing”) 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 in stock-based compensation expense
has
been included in our consolidated results of operations for the year
ended
March 31, 2007. See Note 4 of the Consolidated Financial
Statements and related notes, included elsewhere,
herein.
|
·
|
Bringing
advanced technologies to market. There is an emerging trend
in which the communications and entertainment spaces are converging
in the
wireless market. We expect this trend to result in a demand for
technologies that are simple and intuitive, utilize voice technology,
control noise, and rely on miniaturization and power management.
We intend
to expand our own core technology group and partner with other innovative
companies to develop new technologies. Volume Logic business
provides us with broader technology expertise, expanding beyond voice
communications DSP into audio DSP. Our Altec Lansing business
manufactures and markets high quality computer and home entertainment
sound systems and a line of headsets, headphones and microphones
for
personal digital media. We believe that bringing our product
concepts to market will be more effective if we have an audio brand
to
stand alongside our voice communications brand, and that as a supplier
to
key channel partners, we will become a more important supplier if
we can
satisfy a broader set of audio needs. We expect that the costs
related to the expansion of our own core technology group will
increase our research, development and engineering expenses for the
next
fiscal year.
|
·
|
Integration
of Altec Lansing. The Altec Lansing business is
complex, with significant overseas operations. We evaluated various
options in our integration plan to preserve the strengths of the
Altec
Lansing business model and its success in the retail markets while
incorporating efficiencies and synergies into our combined company,
and we
are in the process of implementing these plans. The integration
effort represents a significant cost to the combined company both
in terms
of time commitment for the selling, general and administrative associates
and costs for systems integration, infrastructure alignment, as well
as
costs associated with being part of a publicly traded company. We
have implemented an ERP system for most of Altec Lansing’s
operations. We are also in the process of changing our distribution
and sales processes to more effectively fulfill customer orders.
While most of our integration efforts have been focused on domestic
initiatives, we have begun to explore ways to leverage ACG’s more mature
foreign distribution processes and customers and believe that these
international markets represent growth opportunities for our speaker
products.
|
·
|
Turnaround
Plan for Altec Lansing. Our AEG operations were
negatively impacted by intense competition sooner than anticipated,
resulting in significant pricing pressure, particularly for the Docking
Audio products. This led to excess inventory and material
write-downs of this excess inventory. Because there are long lead
times for materials for our products, we also incurred material charges
for adverse purchase commitments. The root causes of the decreased
profitability of this segment were underinvestment in consumer research,
portfolio planning, and longer-term product development. We are in
the
process of developing next generation products with lower cost points
and
higher margins. We also plan to take advantage of the industrial
design capabilities that exist within the ACG
segment.
|
·
|
Development
and launch of new products. During late fiscal 2006 and
continuing into fiscal 2007, ACG launched and shipped several new
models
in our new suite of Bluetooth products including the Discovery
655 and Discovery 665 and the Explorer 330, 340 and 350. These
products have had strong market acceptance, and we expect to see
further
growth from these new products in the next fiscal year. Going forward,
we
plan to continue to develop and enhance functionality on these platforms.
We will also take advantage of the research and development opportunities
created by co-locating our design centers with our factories. We
expect that the costs related to the development of new Bluetooth
products and models will continue to increase our research, development
and engineering expenses for the next fiscal year; however, we anticipate
that research and development costs will grow at a rate slower than
our
revenue growth. In addition to our new suite of Bluetooth
products, we introduced new products for the office and entertainment
markets in fiscal 2007, which include the CS70 and products from
AEG, such
as the iM600, which is a portable speaker system with an integrated
digital FM radio tuner, the iM510, which is a portable speaker system
designed specifically for the SanDisk Sansa, the iM500, which is
a
portable speaker system designed to partner with the iPod nano, the
M604,
a portable speaker system designed for the Microsoft Zune, and the
T515 a
speaker system for use with MP3 enabled cellular phones. AEG also
introduced new PC Audio systems, the VS3251, a 5.1 surround sound
speaker
system, the FX4021 a new 2.1 speaker system and the FX5051, the first
5.1
system to provide USB plug-and-play
connectivity.
|
·
|
Reduce
manufacturing costs, particularly for our Bluetooth
products. In fiscal 2007, we focused on opportunities to
decrease manufacturing costs by improving supply chain flexibility,
taking
advantage of the low manufacturing costs in China, improving the
efficiency of transforming raw materials into finished goods, decreasing
our logistics costs and improving our design process for product
manufacturability by taking advantage of common product platforms.
We also launched a supply chain re-engineering project to improve
inventory management by implementing new systems functionality which
will
provide tools that will support and enable better supply chain decisions
and execution. We were able to improve our cost structure,
particularly in the Bluetooth market, which enhanced our
Bluetooth profitability.
|
·
|
Building
consumer product manufacture infrastructure. The consumer
products market is characterized by cost competitiveness resulting
in a
predominantly China-based manufacturing infrastructure. Our AEG products
are either manufactured by our plant in Dongguan, China or purchased
from
predominantly China-based vendors. In order to gain more flexibility
in our supply chain, to better manage inventories and reduce long-term
costs for our ACG products, we completed the construction of a
manufacturing facility and design center in Suzhou, China in February
of
2006 and began commercial operations in the fourth quarter of fiscal
2006.
|
·
|
Increase
the adoption of our products in the office markets. Growing
the office markets, through the introduction of compelling, easy
to use,
wireless products and demand generation campaigns will continue to
be our
top priority.
|
·
|
Continue
to reduce manufacturing costs, particularly for our Bluetooth
products. 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
transformation costs by increasing the utilization of our China plant,
improving direct labor productivity and reducing logistics costs.
We will
continue to increase the use of common platforms from which we can
produce
multiple generations of products.
|
·
|
Focus
on turnaround plan for Altec Lansing. Development of
the next generation products with lower cost points and higher
margins are
a key priority for the next fiscal year. We also plan to take
advantage of the industrial design capabilities that exist within
the ACG
segment to make these next generation products more appealing to
buyers.
|
Consolidated
|
||||||||||||||||||||||||
($
in thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||||||||||||||
2005
|
2006
|
2007
|
||||||||||||||||||||||
Net
revenues
|
$ |
559,995
|
100.0 | % | $ |
750,394
|
100.0 | % | $ |
800,154
|
100.0 | % | ||||||||||||
Cost
of revenues
|
271,537
|
48.5 | % |
424,140
|
56.5 | % |
491,339
|
61.4 | % | |||||||||||||||
Gross
profit
|
288,458
|
51.5 | % |
326,254
|
43.5 | % |
308,815
|
38.6 | % | |||||||||||||||
Operating
expense:
|
||||||||||||||||||||||||
Research,
development and engineering
|
45,216
|
8.1 | % |
62,798
|
8.4 | % |
71,895
|
9.0 | % | |||||||||||||||
Selling,
general and administrative
|
116,621
|
20.8 | % |
153,094
|
20.4 | % |
182,108
|
22.8 | % | |||||||||||||||
Gain
on sale of land
|
-
|
0.0 | % |
-
|
0.0 | % | (2,637 | ) | (0.3 | )% | ||||||||||||||
Total
operating expenses
|
161,837
|
28.9 | % |
215,892
|
28.8 | % |
251,366
|
31.4 | % | |||||||||||||||
Operating
income
|
126,621
|
22.6 | % |
110,362
|
14.7 | % |
57,449
|
7.2 | % | |||||||||||||||
Interest
and other income (expense), net
|
3,739
|
0.7 | % |
2,192
|
0.3 | % |
4,089
|
0.5 | % | |||||||||||||||
Income
before income taxes
|
130,360
|
23.3 | % |
112,554
|
15.0 | % |
61,538
|
7.7 | % | |||||||||||||||
Income
tax expense
|
32,840
|
5.9 | % |
31,404
|
4.2 | % |
11,395
|
1.4 | % | |||||||||||||||
Net
income
|
$ |
97,520
|
17.4 | % | $ |
81,150
|
10.8 | % | $ |
50,143
|
6.3 | % |
Audio
Communications Group
|
||||||||||||||||||||||||
($
in thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||||||||||||||
2005
|
2006
|
2007
|
||||||||||||||||||||||
Net
revenues
|
$ |
559,995
|
100.0 | % | $ |
629,725
|
100.0 | % | $ |
676,514
|
100.0 | % | ||||||||||||
Cost
of revenues
|
271,537
|
48.5 | % |
340,437
|
54.1 | % |
381,034
|
56.3 | % | |||||||||||||||
Gross
profit
|
288,458
|
51.5 | % |
289,288
|
45.9 | % |
295,480
|
43.7 | % | |||||||||||||||
Operating
expense:
|
||||||||||||||||||||||||
Research,
development and engineering
|
45,216
|
8.1 | % |
56,570
|
9.0 | % |
61,583
|
9.1 | % | |||||||||||||||
Selling,
general and administrative
|
116,621
|
20.8 | % |
132,867
|
21.1 | % |
151,857
|
22.4 | % | |||||||||||||||
Gain
on sale of land
|
-
|
0.0 | % |
-
|
0.0 | % | (2,637 | ) | (0.4 | )% | ||||||||||||||
Total
operating expenses
|
161,837
|
28.9 | % |
189,437
|
30.1 | % |
210,803
|
31.2 | % | |||||||||||||||
Operating
income
|
$ |
126,621
|
22.6 | % | $ |
99,851
|
15.9 | % | $ |
84,677
|
12.5 | % |
Audio
Entertainment Group
|
||||||||||||||||
($
in thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||||||
2006
|
2007
|
|||||||||||||||
Net
revenues
|
$ |
120,669
|
100.0 | % | $ |
123,640
|
100.0 | % | ||||||||
Cost
of revenues
|
83,703
|
69.4 | % |
110,305
|
89.2 | % | ||||||||||
Gross
profit
|
36,966
|
30.6 | % |
13,335
|
10.8 | % | ||||||||||
Operating
expense:
|
||||||||||||||||
Research,
development and engineering
|
6,228
|
5.2 | % |
10,312
|
8.3 | % | ||||||||||
Selling,
general and administrative
|
20,227
|
16.8 | % |
30,251
|
24.5 | % | ||||||||||
Total
operating expenses
|
26,455
|
21.9 | % |
40,563
|
32.8 | % | ||||||||||
Operating
income
|
$ |
10,511
|
8.7 | % | $ | (27,228 | ) | (22.0 | )% |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
Net
revenues from unaffiliated customers:
|
||||||||||||||||||||||||||||||||
Office
and Contact Center
|
$ |
366,335
|
$ |
446,524
|
$ |
80,189
|
21.9 | % | $ |
446,524
|
$ |
475,323
|
$ |
28,799
|
6.4 | % | ||||||||||||||||
Mobile
|
125,262
|
119,333
|
(5,929 | ) | (4.7 | )% |
119,333
|
146,859
|
27,526
|
23.1 | % | |||||||||||||||||||||
Gaming
and Computer Audio
|
39,804
|
35,656
|
(4,148 | ) | (10.4 | )% |
35,656
|
30,162
|
(5,494 | ) | (15.4 | )% | ||||||||||||||||||||
Other
Specialty Products
|
28,594
|
28,212
|
(382 | ) | (1.3 | )% |
28,212
|
24,170
|
(4,042 | ) | (14.3 | )% | ||||||||||||||||||||
Total
segment net revenues
|
$ |
559,995
|
$ |
629,725
|
$ |
69,730
|
12.5 | % | $ |
629,725
|
$ |
676,514
|
$ |
46,789
|
7.4 | % |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||
Revenues
from unaffiliated customers:
|
||||||||||||||||||||||||||||
Docking
audio
|
$ |
-
|
$ |
80,998
|
$ |
80,998
|
$ |
80,998
|
$ |
74,551
|
$ | (6,447 | ) | (8.0 | )% | |||||||||||||
PC
audio
|
-
|
46,136
|
46,136
|
46,136
|
63,066
|
16,930
|
36.7 | % | ||||||||||||||||||||
Other
|
-
|
10,406
|
10,406
|
10,406
|
11,463
|
1,057
|
10.2 | % | ||||||||||||||||||||
Less
revenue reserves
|
-
|
(16,871 | ) | (16,871 | ) | (16,871 | ) | (25,440 | ) | (8,569 | ) | 50.8 | % | |||||||||||||||
Total
segment net revenues
|
$ |
-
|
$ |
120,669
|
$ |
120,669
|
$ |
120,669
|
$ |
123,640
|
$ |
2,971
|
2.5 | % |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
United
States
|
$ |
375,530
|
$ |
483,513
|
$ |
107,983
|
28.8 | % | $ |
483,513
|
$ |
491,706
|
$ |
8,193
|
1.7 | % | ||||||||||||||||
Europe,
Middle East and Africa
|
135,030
|
178,315
|
43,285
|
32.1 | % |
178,315
|
195,090
|
16,775
|
9.4 | % | ||||||||||||||||||||||
Asia
Pacific and Latin America
|
33,152
|
61,880
|
28,728
|
86.7 | % |
61,880
|
77,014
|
15,134
|
24.5 | % | ||||||||||||||||||||||
Canada
and Other International
|
16,283
|
26,686
|
10,403
|
63.9 | % |
26,686
|
36,344
|
9,658
|
36.2 | % | ||||||||||||||||||||||
Total
International
|
184,465
|
266,881
|
82,416
|
44.7 | % |
266,881
|
308,448
|
41,567
|
15.6 | % | ||||||||||||||||||||||
Total
consolidated net revenues
|
$ |
559,995
|
$ |
750,394
|
$ |
190,399
|
34.0 | % | $ |
750,394
|
$ |
800,154
|
$ |
49,760
|
6.6 | % |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
Net
revenues
|
$ |
559,995
|
$ |
629,725
|
$ |
69,730
|
12.5 | % | $ |
629,725
|
$ |
676,514
|
$ |
46,789
|
7.4 | % | ||||||||||||||||
Cost
of revenues
|
271,537
|
340,437
|
68,900
|
25.4 | % |
340,437
|
381,034
|
40,597
|
11.9 | % | ||||||||||||||||||||||
Segment
gross profit
|
$ |
288,458
|
$ |
289,288
|
$ |
830
|
0.3 | % | $ |
289,288
|
$ |
295,480
|
$ |
6,192
|
2.1 | % | ||||||||||||||||
Segment
gross profit %
|
51.5 | % | 45.9 | % | (5.6 | ) |
ppt.
|
45.9 | % | 43.7 | % | (2.3 | ) |
ppt.
|
|
·
|
a
product mix shift toward consumer products, which have lower gross
margins
than many of our office products, coupled with continued
pricing pressure, especially on consumer Bluetooth
headsets. However, compared to the prior year, gross margins
for Bluetooth products have
improved;
|
|
·
|
requirements
for excess and obsolete inventory which increased $4.4 million due
to
unanticipated shifts in demand and the cost of our warranty obligation
was
higher due in part to increases in sales and in part to a mix shift
toward
wireless products which have a higher rate of return under warranty
and
higher product cost;
|
|
·
|
an
increase in capacity in our production facilities in Suzhou, China
and
Tijuana, Mexico, in preparation for anticipated future demand, especially
for our Bluetooth
products; and
|
|
·
|
stock-based
compensation charges in fiscal 2007 of $2.9
million.
|
|
·
|
increased
capacity in our production facilities in Suzhou, China and Tijuana,
Mexico. During fiscal 2006, we constructed a new manufacturing and
design center in Suzhou. While net revenues were up year
over year, production volume in the facility in Mexico was down,
as a
result of the changing mix of products from lower cost corded products
to
higher cost wireless products;
|
|
·
|
the
yield on new products was below and unit costs were above our targeted
levels, and we incurred higher scrap costs due to new product launches,
further contributing to the decline in gross
profit;
|
|
·
|
requirements
for excess and obsolete inventory increased due to unanticipated
shifts in
demand, and the cost of our warranty obligations was higher due in
part to
higher revenues and in part, to an increase in consumer products
which
have a higher rate of return under
warranty;
|
|
·
|
a
product mix shift toward consumer products coupled with continued
pricing
pressure, especially on consumer Bluetooth headsets, which
resulted in less favorable margins;
and
|
|
·
|
higher
freight and duty costs resulting from a higher proportion of more
expensive air shipments than cheaper ocean
shipments.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
|||||||||||||||||||||||
Net
revenues
|
$ |
-
|
$ |
120,669
|
$ |
120,669
|
$ |
120,669
|
$ |
123,640
|
$ |
2,971
|
2.5 | % | |||||||||||||||
Cost
of revenues
|
-
|
83,703
|
83,703
|
83,703
|
110,305
|
26,602
|
31.8 | % | |||||||||||||||||||||
Segment
gross profit
|
$ |
-
|
$ |
36,966
|
$ |
36,966
|
$ |
36,966
|
$ |
13,335
|
$ | (23,631 | ) | (63.9 | )% | ||||||||||||||
Segment
gross profit %
|
30.6 | % |
30.6
|
ppt.
|
30.6 | % | 10.8 | % | (19.8 | ) |
ppt.
|
|
·
|
competitive
pricing pressures which resulted in significant discounting and price
protection programs, particularly for the Docking Audio product
line;
|
|
·
|
a
shift in product mix. In fiscal 2007, we sold a higher proportion of
PC Audio products than in fiscal 2006. PC Audio products carry lower
gross margins than Docking Audio
products;
|
|
·
|
increased
provisions for excess and obsolete inventory of $2.1 million and
adverse
purchase commitments of $3.0 million due to unanticipated shifts
in demand
for our products; and
|
|
·
|
increased
freight expense, in part due to surcharges related to rising fuel
costs.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
Net
revenues
|
$ |
559,995
|
$ |
750,394
|
$ |
190,399
|
34.0 | % | $ |
750,394
|
$ |
800,154
|
$ |
49,760
|
6.6 | % | ||||||||||||||||
Cost
of revenues
|
271,537
|
424,140
|
152,603
|
56.2 | % |
424,140
|
491,339
|
67,199
|
15.8 | % | ||||||||||||||||||||||
Consolidated
gross profit
|
$ |
288,458
|
$ |
326,254
|
$ |
37,796
|
13.1 | % | $ |
326,254
|
$ |
308,815
|
$ | (17,439 | ) | (5.3 | )% | |||||||||||||||
Consolidated
gross profit %
|
51.5 | % | 43.5 | % | (8.0 | ) |
ppt.
|
43.5 | % | 38.6 | % | (4.9 | ) |
ppt.
|
|
·
|
decreased
net revenues in AEG due to increased price competition, loss of market
share, and pricing incentives;
|
|
·
|
a
shift in product mix within both ACG and
AEG;
|
|
·
|
increased
provisions for excess and obsolete inventory for both ACG and AEG
and
adverse purchase commitments due to unanticipated shifts in demand
for AEG
products; and
|
|
·
|
stock-based
compensation charges in fiscal 2007 of $2.9
million.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
Research,
development and engineering
|
$ |
45,216
|
$ |
56,570
|
$ |
11,354
|
25.1 | % | $ |
56,570
|
$ |
61,583
|
$ |
5,013
|
8.9 | % | ||||||||||||||||
%
of total segment net revenues
|
8.1 | % | 9.0 | % |
0.9
|
ppt.
|
9.0 | % | 9.1 | % |
0.1
|
ppt.
|
|
·
|
stock-based
compensation charges in fiscal 2007 of $3.7 million;
and
|
|
·
|
incremental
growth in our development activity at our design centers in Mexico
and
China.
|
|
·
|
incremental
spending in our ongoing design and development of wireless products,
including a new suite of Bluetooth
products;
|
|
·
|
growth
in our design centers in Mexico and China where we spent $3.7 million
and
$1.5 million, respectively, in fiscal
2006;
|
|
·
|
high
expenses for project materials, relating to verification builds of
these
newly launched products;
|
|
·
|
additional
expenses to develop new technology, including technology acquired
through
Volume Logic; and
|
|
·
|
increased
legal fees to protect our intellectual
property.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
|||||||||||||||||||||||
Research,
development and engineering
|
$ |
-
|
$ |
6,228
|
$ |
6,228
|
$ |
6,228
|
$ |
10,312
|
$ |
4,084
|
65.6 | % | |||||||||||||||
%
of total segment net revenues
|
5.2 | % |
5.2
|
ppt.
|
5.2 | % | 8.3 | % |
3.2
|
ppt.
|
|
·
|
a
full year of expenses in fiscal 2007 compared to only seven and one-half
months of expenses in the prior
year;
|
|
·
|
increased
spending on external design firms and consultants;
and
|
|
·
|
increased
headcount in research and
development.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
Research,
development and engineering
|
$ |
45,216
|
$ |
62,798
|
$ |
17,582
|
38.9 | % | $ |
62,798
|
$ |
71,895
|
$ |
9,097
|
14.5 | % | ||||||||||||||||
%
of total consolidated net revenues
|
8.1 | % | 8.4 | % |
0.3
|
ppt.
|
8.4 | % | 9.0 | % |
0.6
|
ppt.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
Selling,
general and administrative
|
$ |
116,621
|
$ |
132,867
|
$ |
16,246
|
13.9 | % | $ |
132,867
|
$ |
151,857
|
$ |
18,990
|
14.3 | % | ||||||||||||||||
%
of total segment net revenues
|
20.8 | % | 21.1 | % |
0.3
|
ppt.
|
21.1 | % | 22.4 | % |
1.3
|
ppt.
|
|
·
|
stock-based
compensation charges of $9.5
million;
|
|
·
|
higher
headcount and related compensation expense of $7.1 million in sales,
marketing and general administrative
functions;
|
|
·
|
an
increase in depreciation expense;
|
|
·
|
an
increase in costs associated with outside providers for legal,
accounting and auditing services;
and
|
|
·
|
an
increase in marketing and advertising
spending.
|
|
·
|
costs
of $10.6 million spent on the national branding campaign in fiscal
2006
compared to $1.3 million in 2005, and higher headcount in the marketing
function;
|
|
·
|
a
favorable court ruling and legal settlement which provided a one-time
benefit of approximately $2.8 million in fiscal
2005;
|
|
·
|
an
increase in sales expenses attributable to a larger global sales
presence
and an increase in sales-related compensation;
and
|
|
·
|
additional
expenditures relating to Volume Logic, which was acquired at the
beginning
of fiscal 2006.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
|||||||||||||||||||||||
Selling,
general and administrative
|
$ |
-
|
$ |
20,227
|
$ |
20,227
|
$ |
20,227
|
$ |
30,251
|
$ |
10,024
|
49.6 | % | |||||||||||||||
%
of total segment net revenues
|
16.8 | % |
16.8
|
ppt.
|
16.8 | % | 24.5 | % |
7.7
|
ppt.
|
|
·
|
a
full year of expenses in fiscal 2007 compared to only seven and one-half
months of expenses in the prior
year;
|
|
·
|
increased
marketing costs associated with trade shows;
and
|
|
·
|
stock-based
compensation expense.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
Selling,
general and administrative
|
$ |
116,621
|
$ |
153,094
|
$ |
36,473
|
31.3 | % | $ |
153,094
|
$ |
182,108
|
$ |
29,014
|
19.0 | % | ||||||||||||||||
%
of total consolidated net revenues
|
20.8 | % | 20.4 | % | (0.4 | ) |
ppt.
|
20.4 | % | 22.8 | % |
2.4
|
ppt.
|
|
·
|
stock-based
compensation charges of $10.2
million;
|
|
·
|
higher
headcount and related compensation expense in sales, marketing and
general
administrative functions; and
|
|
·
|
a
full year of AEG expenses in fiscal 2007 compared to only seven and
one-half months of expenses in the prior
year.
|
|
·
|
costs
associated with our national branding and advertising
campaign;
|
|
·
|
the
impact of the one-time benefit from the legal settlement in the comparable
period a year ago;
|
|
·
|
higher
compensation related charges and costs associated with a larger global
sales presence;
|
|
·
|
additional
expenses associated with the acquisition of AEG, of which $2.6 million
relates to amortization charges for the intangible assets acquired
in the
purchase of Altec Lansing; and
|
|
·
|
expenditures
relating to the acquisition of Volume
Logic.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
Operating
expense
|
$ |
161,837
|
$ |
189,437
|
$ |
27,600
|
17.1 | % | $ |
189,437
|
$ |
210,803
|
$ |
21,366
|
11.3 | % | ||||||||||||||||
%
of total segment net revenues
|
28.9 | % | 30.1 | % |
1.2
|
ppt.
|
30.1 | % | 31.2 | % |
1.1
|
ppt.
|
||||||||||||||||||||
Operating
income
|
$ |
126,621
|
$ |
99,851
|
$ | (26,770 | ) | (21.1 | )% | $ |
99,851
|
$ |
84,677
|
$ | (15,174 | ) | (15.2 | )% | ||||||||||||||
%
of total segment net revenues
|
22.6 | % | 15.9 | % | (6.8 | ) |
ppt.
|
15.9 | % | 12.5 | % | (3.3 | ) |
ppt.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
|||||||||||||||||||||||
Operating
expense
|
$ |
-
|
$ |
26,455
|
$ |
26,455
|
$ |
26,455
|
$ |
40,563
|
$ |
14,108
|
53.3 | % | |||||||||||||||
%
of total segment net revenues
|
21.9 | % |
21.9
|
ppt.
|
21.9 | % | 31.2 | % |
9.2
|
ppt.
|
|||||||||||||||||||
Operating
income (loss)
|
$ |
-
|
$ |
10,511
|
$ |
10,511
|
$ |
10,511
|
$ | (27,228 | ) | $ | (37,739 | ) | (359.0 | )% | |||||||||||||
%
of total segment net revenues
|
8.7 | % |
8.7
|
ppt.
|
8.7 | % | (22.0 | )% | (30.7 | ) |
ppt.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
Operating
expense
|
$ |
161,837
|
$ |
215,892
|
$ |
54,055
|
33.4 | % | $ |
215,892
|
$ |
251,366
|
$ |
35,474
|
16.4 | % | ||||||||||||||||
%
of total consolidated net revenues
|
28.9 | % | 28.8 | % | (0.1 | ) |
ppt.
|
28.8 | % | 31.4 | % |
2.6
|
ppt.
|
|||||||||||||||||||
Operating
income
|
$ |
126,621
|
$ |
110,362
|
$ | (16,259 | ) | (12.8 | )% | $ |
110,362
|
$ |
57,449
|
$ | (52,913 | ) | (47.9 | )% | ||||||||||||||
%
of total consolidated net revenues
|
22.6 | % | 14.7 | % | (7.9 | ) |
ppt.
|
14.7 | % | 7.2 | % | (7.5 | ) |
ppt.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||
Interest
and other income (expense), net
|
$ |
3,739
|
$ |
2,192
|
$ | (1,547 | ) | (41.4 | )% | $ |
2,192
|
$ |
4,089
|
$ |
1,897
|
86.5 | % | |||||||||||||||
%
of total net revenues
|
0.7 | % | 0.3 | % | (0.4 | ) |
ppt.
|
0.3 | % | 0.5 | % |
0.2
|
ppt.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
($
in thousands)
|
2005
|
2006
|
(Decrease)
|
2006
|
2007
|
(Decrease)
|
||||||||||||||||||||||||||
|
|
|
|
|||||||||||||||||||||||||||||
Income
before income taxes
|
$ |
130,360
|
$ |
112,554
|
$ | (17,806 | ) | (13.7 | )% | $ |
112,554
|
$ |
61,538
|
$ | (51,016 | ) | (45.3 | )% | ||||||||||||||
Income
tax expense
|
32,840
|
31,404
|
(1,436 | ) | (4.4 | )% |
31,404
|
11,395
|
(20,009 | ) | (63.7 | )% | ||||||||||||||||||||
Net
income
|
$ |
97,520
|
$ |
81,150
|
$ | (16,370 | ) | (16.8 | )% | $ |
81,150
|
$ |
50,143
|
$ | (31,007 | ) | (38.2 | )% | ||||||||||||||
Effective
tax rate
|
25.2 | % | 27.9 | % |
2.7
|
ppt.
|
27.9 | % | 18.5 | % | (9.4 | ) |
ppt.
|
Fiscal
Year Ended
|
||||||||||||
March
31,
|
March
31,
|
March
31,
|
||||||||||
($
in thousands)
|
2005
|
2006
|
2007
|
|||||||||
Cash
provided by operating activities
|
$ |
93,604
|
78,348
|
$ |
73,048
|
|||||||
Cash
used for capital expenditures and other assets
|
(27,723 | ) | (41,860 | ) | (24,028 | ) | ||||||
Cash
used for acquisitions
|
-
|
(165,393 | ) |
-
|
||||||||
Cash
provided by (used for) other investing activities
|
(39,776 | ) |
156,387
|
1,546
|
||||||||
Cash
used for investing activities
|
(67,499 | ) | (50,866 | ) | (22,482 | ) | ||||||
Cash
used for financing activities
|
$ | (4,061 | ) | (36,558 | ) | $ | (26,244 | ) |
|
·
|
net
income of $50.1 million for the year ended March 31, 2007 compared
to
$81.2 million in fiscal 2006; and,
|
|
·
|
increases
in net inventory balances of $20.7 million, primarily related to
finished
goods for Bluetooth and wireless office
products. Average annual inventory turns decreased from 5.1 in
fiscal 2006 to 3.8 in fiscal 2007.
|
|
·
|
a
$16.9 million non-cash stock-based compensation charge was recorded
under
the provisions of SFAS 123(R);
|
|
·
|
an
increase of $10.9 million in accrued liabilities as a result of an
increase in accruals for employee benefits, increased audit and accounting
fees, and increased accruals related to foreign exchange hedging
activities; and
|
|
·
|
an
increase in non-cash charges for depreciation and amortization of
$6.1
million. As a result of the acquisition of Altec Lansing in
August 2005, we acquired additional property, plant and equipment
resulting in more depreciation, and we acquired significant intangible
assets resulting in more amortization. Finally, we placed additional
fixed
assets into production in our new manufacturing plant in Suzhou,
China and
in our new research and development center in Tijuana, Mexico, and
completed certain building improvements in our Santa Cruz, California
headquarters facility.
|
|
·
|
net
income of $81.2 million for the year ended March 31, 2006
compared to $97.5 million in fiscal
2005;
|
|
·
|
an
increase in non-cash charges for depreciation and amortization, which
increased to $23.1 million in fiscal 2006 compared to $12.0 million
in
fiscal 2005;
|
|
·
|
increases
in inventory balances, primarily related to raw material purchases
for
manufacturing of our Bluetooth and wireless office products due
to higher demand. Average annual inventory turns decreased from
5.4 in fiscal 2005 to 5.1 in fiscal 2006;
and
|
|
·
|
increased
accounts receivable as a result of a higher level of sales and linearity
of sales higher at the end of the fourth quarter than historical
results,
offset by strong cash collections. Average annual days sales
outstanding (“DSO”) slightly increased from 49 days in fiscal 2005 to 50
days in fiscal 2006.
|
Payments
Due by Period
|
||||||||||||||||||||||||||||
Fiscal
|
Fiscal
|
Fiscal
|
Fiscal
|
Fiscal
|
||||||||||||||||||||||||
($
in thousands)
|
Total
|
2008
|
2009
|
2010
|
2011
|
2012
|
Thereafter
|
|||||||||||||||||||||
Operating
leases
|
$ |
15,410
|
$ |
4,344
|
$ |
3,720
|
$ |
2,283
|
$ |
1,149
|
$ |
913
|
$ |
3,001
|
||||||||||||||
Unconditional
purchase obligations
|
3,011
|
3,011
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Total
contractual cash obligations
|
$ |
18,421
|
$ |
7,355
|
$ |
3,720
|
$ |
2,283
|
$ |
1,149
|
$ |
913
|
$ |
3,001
|
|
·
|
Revenue
Recognition
|
|
·
|
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.
|
March
31, 2007
|
|||||||||||||
(in
millions)
|
|||||||||||||
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
|
$ |
34.4
|
$ |
3.4
|
$ | (3.4 | ) | |||||
Great
British Pound
|
Sell
GBP
|
12.2
|
1.2
|
(1.2 | ) | ||||||||
Net
position
|
$ |
46.6
|
$ |
4.6
|
$ | (4.6 | ) |
March
31, 2007
|
||||||||||||
(in
millions)
|
||||||||||||
Currency
- option contracts
|
USD
Value of Net FX Contracts
|
FX
Gain (Loss) From 10% Appreciation of USD
|
FX
Gain (Loss) From 10% Depreciation of USD
|
|||||||||
Call
options
|
$ | (109.4 | ) | $ |
2.8
|
$ | (9.5 | ) | ||||
Put
options
|
103.1
|
6.9
|
(1.3 | ) | ||||||||
Net
position
|
$ | (6.3 | ) | $ |
9.7
|
$ | (10.8 | ) |
March
31,
|
||||||||
2006
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ |
68,703
|
$ |
94,131
|
||||
Short-term
investments
|
8,029
|
9,234
|
||||||
Accounts
receivable, net
|
118,008
|
113,758
|
||||||
Inventory
|
105,882
|
126,605
|
||||||
Deferred
income taxes
|
12,409
|
12,659
|
||||||
Other
current assets
|
15,318
|
18,474
|
||||||
Total
current assets
|
328,349
|
374,861
|
||||||
Property,
plant and equipment, net
|
93,874
|
97,259
|
||||||
Intangibles,
net
|
109,208
|
100,120
|
||||||
Goodwill
|
75,077
|
72,825
|
||||||
Other
assets
|
5,741
|
6,239
|
||||||
Total
assets
|
$ |
612,249
|
$ |
651,304
|
||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Line
of credit
|
$ |
22,043
|
$ |
-
|
||||
Accounts
payable
|
48,574
|
49,956
|
||||||
Accrued
liabilities
|
43,081
|
54,025
|
||||||
Income
taxes payable
|
13,231
|
12,476
|
||||||
Total
current liabilities
|
126,929
|
116,457
|
||||||
Deferred
tax liability
|
48,246
|
37,344
|
||||||
Long-term
liabilities
|
1,453
|
696
|
||||||
Total
liabilities
|
176,628
|
154,497
|
||||||
Commitments
and contingencies (Note 17)
|
||||||||
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, 66,270
shares
and 66,641 shares issued at 2006 and 2007, respectively
|
662
|
666
|
||||||
Additional
paid-in capital
|
325,764
|
340,661
|
||||||
Deferred
stock-based compensation
|
(8,599 | ) |
-
|
|||||
Accumulated
other comprehensive income
|
3,634
|
2,666
|
||||||
Retained
earnings
|
509,562
|
550,165
|
||||||
831,023
|
894,158
|
|||||||
Less:
Treasury stock (common: 18,732 and 18,576 shares at 2006 and 2007,
respectively) at cost
|
(395,402 | ) | (397,351 | ) | ||||
Total
stockholders' equity
|
435,621
|
496,807
|
||||||
Total
liabilities and stockholders' equity
|
$ |
612,249
|
$ |
651,304
|
Fiscal
Year Ended March 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
Net
revenues
|
$ |
559,995
|
$ |
750,394
|
$ |
800,154
|
||||||
Cost
of revenues
|
271,537
|
424,140
|
491,339
|
|||||||||
Gross
profit
|
288,458
|
326,254
|
308,815
|
|||||||||
Operating
expenses:
|
||||||||||||
Research,
development and engineering
|
45,216
|
62,798
|
71,895
|
|||||||||
Selling,
general and administrative
|
116,621
|
153,094
|
182,108
|
|||||||||
Gain
on sale of land
|
-
|
-
|
(2,637 | ) | ||||||||
Total
operating expenses
|
161,837
|
215,892
|
251,366
|
|||||||||
Operating
income
|
126,621
|
110,362
|
57,449
|
|||||||||
Interest
and other income, net
|
3,739
|
2,192
|
4,089
|
|||||||||
Income
before income taxes
|
130,360
|
112,554
|
61,538
|
|||||||||
Income
tax expense
|
32,840
|
31,404
|
11,395
|
|||||||||
Net
income
|
$ |
97,520
|
$ |
81,150
|
$ |
50,143
|
||||||
Net
income per share - basic
|
$ |
2.02
|
$ |
1.72
|
$ |
1.06
|
||||||
Shares
used in basic per share calculations
|
48,249
|
47,120
|
47,361
|
|||||||||
Net
income per share - diluted
|
$ |
1.92
|
$ |
1.66
|
$ |
1.04
|
||||||
Shares
used in diluted per share calculations
|
50,821
|
48,788
|
48,020
|
|||||||||
Cash
dividends declared per common share
|
$ |
0.15
|
$ |
0.20
|
$ |
0.20
|
Fiscal
Year Ended March 31,
|
||||||||||||
2005
|
2006
|
2007
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
income
|
$ |
97,520
|
$ |
81,150
|
$ |
50,143
|
||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
12,034
|
23,083
|
29,151
|
|||||||||
Stock-based
compensation
|
194
|
1,161
|
16,919
|
|||||||||
Provision
for (benefit from) doubtful accounts
|
1,814
|
1,518
|
(288 | ) | ||||||||
Provision
for excess and obsolete inventories
|
2,311
|
10,424
|
14,551
|
|||||||||
Provision
for (benefit from) deferred income taxes
|
5,682
|
(4,595 | ) | (8,430 | ) | |||||||
Income
tax benefit associated with stock option exercises
|
11,758
|
4,141
|
501
|
|||||||||
Excess
tax benefit from stock-based compensation
|
-
|
-
|
(1,208 | ) | ||||||||
Loss
(gain) on disposal of property, plant, and equipment, net
|
583
|
69
|
(2,535 | ) | ||||||||
Impairment
of intangible asset
|
-
|
-
|
800
|
|||||||||
Changes
in assets and liabilities, net of effect of acquisitions:
|
||||||||||||
Accounts
receivable, net
|
(25,028 | ) | (15,093 | ) |
4,538
|
|||||||
Inventory
|
(21,750 | ) | (26,670 | ) | (35,140 | ) | ||||||
Other
current assets
|
3,492
|
(2,823 | ) | (4,753 | ) | |||||||
Other
assets
|
(8,237 | ) |
4,191
|
(581 | ) | |||||||
Accounts
payable
|
1,241
|
5,349
|
1,382
|
|||||||||
Accrued
liabilities
|
3,568
|
(4,938 | ) |
8,712
|
||||||||
Income
taxes payable
|
8,422
|
1,381
|
(714 | ) | ||||||||
Cash
provided by operating activities
|
93,604
|
78,348
|
73,048
|
|||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Proceeds
from sales and maturities of short-term investments
|
352,000
|
604,510
|
311,439
|
|||||||||
Purchase
of short-term investments
|
(391,776 | ) | (448,123 | ) | (312,560 | ) | ||||||
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
|
(27,723 | ) | (41,860 | ) | (24,028 | ) | ||||||
Cash
used for investing activities
|
(67,499 | ) | (50,866 | ) | (22,482 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Purchase
of treasury stock
|
(28,466 | ) | (70,395 | ) | (4,021 | ) | ||||||
Proceeds
from sale of treasury stock
|
3,947
|
4,333
|
4,886
|
|||||||||
Proceeds
from issuance of common stock
|
27,740
|
16,916
|
3,266
|
|||||||||
Proceeds
from line of credit
|
-
|
45,000
|
-
|
|||||||||
Repayment
of line of credit
|
-
|
(22,957 | ) | (22,043 | ) | |||||||
Payment
of cash dividends
|
(7,282 | ) | (9,455 | ) | (9,540 | ) | ||||||
Excess
tax benefit from stock-based compensation
|
-
|
-
|
1,208
|
|||||||||
Cash
used for financing activities
|
(4,061 | ) | (36,558 | ) | (26,244 | ) | ||||||
Effect
of exchange rate changes on cash and cash equivalents
|
402
|
(619 | ) |
1,106
|
||||||||
Net
increase (decrease) in cash and cash equivalents
|
22,446
|
(9,695 | ) |
25,428
|
||||||||
Cash
and cash equivalents at beginning of year
|
55,952
|
78,398
|
68,703
|
|||||||||
Cash
and cash equivalents at end of year
|
$ |
78,398
|
$ |
68,703
|
$ |
94,131
|
||||||
SUPPLEMENTAL
DISCLOSURES
|
||||||||||||
Cash
paid for:
|
||||||||||||
Interest
|
$ |
109
|
$ |
1,094
|
$ |
632
|
||||||
Income
taxes
|
$ |
23,950
|
$ |
32,156
|
$ |
24,836
|
Common
Stock
|
Additional
Paid-In
|
Deferred Stock-Based
|
Accumulated
Other Compre- hensive
|
Retained
|
Treasury
|
Total
Stock- holders'
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Compensation
|
Income(Loss)
|
Earnings
|
Stock
|
Equity
|
|||||||||||||||||||||||||
Balance
at March 31, 2004
|
47,606,109
|
$ |
636
|
$ |
248,495
|
$ |
-
|
$ |
681
|
$ |
347,629
|
$ | (298,138 | ) | $ |
299,303
|
||||||||||||||||
Net
income
|
-
|
-
|
-
|
-
|
-
|
97,520
|
-
|
97,520
|
||||||||||||||||||||||||
Foreign
currency translation adjustments
|
-
|
-
|
-
|
-
|
604
|
-
|
-
|
604
|
||||||||||||||||||||||||
Unrealized
loss on marketable securities, net of tax
|
-
|
-
|
-
|
-
|
(24 | ) |
-
|
-
|
(24 | ) | ||||||||||||||||||||||
Unrealized
gain on hedges, net of tax
|
-
|
-
|
-
|
-
|
322
|
-
|
-
|
322
|
||||||||||||||||||||||||
Comprehensive
income
|
98,422
|
|||||||||||||||||||||||||||||||
Exercise
of stock options
|
1,430,712
|
15
|
27,725
|
-
|
-
|
-
|
-
|
27,740
|
||||||||||||||||||||||||
Issuance
of restricted common stock
|
43,984
|
-
|
2,414
|
(2,414 | ) |
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
Cash
dividends declared
|
-
|
-
|
-
|
-
|
-
|
(7,282 | ) |
-
|
(7,282 | ) | ||||||||||||||||||||||
Stock-based
compensation
|
-
|
-
|
-
|
194
|
-
|
-
|
-
|
194
|
||||||||||||||||||||||||
Income
tax benefit associated with stock options
|
-
|
-
|
11,861
|
-
|
-
|
-
|
-
|
11,861
|
||||||||||||||||||||||||
Purchase
of treasury stock
|
(770,100 | ) |
-
|
-
|
-
|
-
|
-
|
(28,466 | ) | (28,466 | ) | |||||||||||||||||||||
Sale
of treasury stock
|
118,752
|
-
|
3,240
|
-
|
-
|
-
|
707
|
3,947
|
||||||||||||||||||||||||
Balance
at March 31, 2005
|
48,429,457
|
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
|
883,504
|
8
|
16,905
|
-
|
-
|
-
|
-
|
16,913
|
||||||||||||||||||||||||
Issuance
of restricted common stock
|
276,250
|
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
|
(2,197,500 | ) |
-
|
-
|
-
|
-
|
-
|
(70,395 | ) | (70,395 | ) | |||||||||||||||||||||
Sale
of treasury stock
|
146,059
|
-
|
3,443
|
-
|
-
|
-
|
890
|
4,333
|
||||||||||||||||||||||||
Balance
at March 31, 2006
|
47,537,770
|
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
|
331,227
|
3
|
3,262
|
-
|
-
|
-
|
-
|
3,265
|
||||||||||||||||||||||||
Issuance
of restricted common stock
|
79,000
|
1
|
-
|
-
|
-
|
-
|
-
|
1
|
||||||||||||||||||||||||
Repurchase
of restricted common stock
|
(39,315 | ) |
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||
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
|
(175,000 | ) |
-
|
-
|
-
|
-
|
-
|
(4,021 | ) | (4,021 | ) | |||||||||||||||||||||
Sale
of treasury stock
|
331,348
|
-
|
2,814
|
-
|
-
|
-
|
2,072
|
4,886
|
||||||||||||||||||||||||
Balance
at March 31, 2007
|
48,065,030
|
$ |
666
|
$ |
340,661
|
$ |
-
|
$ |
2,666
|
$ |
550,165
|
$ | (397,351 | ) | $ |
496,807
|
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.
|
($
in thousands, except per share data)
|
Fiscal
Year Ended March 31, 2007
|
|||
Cost
of revenues
|
$ |
2,908
|
||
Research,
development and engineering
|
3,835
|
|||
Selling,
general and administrative
|
10,176
|
|||
Stock-based
compensation expense included in operating expenses
|
14,011
|
|||
Total
stock-based compensation (1)
|
16,919
|
|||
Income
tax benefit
|
(5,599 | ) | ||
Total
stock-based compensation expense, net of tax
|
$ |
11,320
|
||
Decrease
in basic and diluted earnings per share
|
$ |
0.24
|
(1)
|
The
year ended March 31, 2007 includes stock-based compensation expense
associated with restricted stock awards of $2.1
million.
|
Fiscal
Year Ended March 31,
|
||||||||
(in
thousands, except per share data)
|
2005
|
2006
|
||||||
Net
income - as reported
|
$ |
97,520
|
$ |
81,150
|
||||
Add
stock-based employee compensation expense included in net income,
net of
tax
|
121
|
748
|
||||||
Less
stock-based compensation expense determined under fair value-based
method,
net of tax
|
(35,278 | ) | (11,967 | ) | ||||
Net
income - pro forma
|
$ |
62,363
|
$ |
69,931
|
||||
Basic
net income per share - as reported
|
$ |
2.02
|
$ |
1.72
|
||||
Basic
net income per share - pro forma
|
$ |
1.29
|
$ |
1.48
|
||||
Diluted
net income per share - as reported
|
$ |
1.92
|
$ |
1.66
|
||||
Diluted
net income per share - pro forma
|
$ |
1.23
|
$ |
1.43
|
3.
|
RECENT
ACCOUNTING PRONOUNCEMENTS
|
4.
|
STOCK-BASED
COMPENSATION
|
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, 2006
|
8,277
|
$ |
26.75
|
|||||||||||||
Options
granted
|
1,525
|
$ |
20.58
|
|||||||||||||
Options
exercised
|
(331 | ) | $ |
9.80
|
3,585
|
|||||||||||
Options
forfeited or expired
|
(438 | ) | $ |
30.11
|
||||||||||||
Outstanding
at March 31, 2007
|
9,033
|
$ |
26.17
|
4.74
|
$ |
20,657
|
||||||||||
Vested
and expected to vest at March 31, 2007
|
8,684
|
$ |
26.26
|
4.69
|
$ |
19,921
|
||||||||||
Exercisable
at March 31, 2007
|
6,392
|
$ |
27.20
|
4.16
|
$ |
14,915
|
Number
of Shares
|
Weighted
Average Grant Date Fair Value
|
|||||||
(in
thousands)
|
||||||||
Non-vested
at March 31, 2006
|
316
|
$ |
29.09
|
|||||
Granted
|
79
|
$ |
20.43
|
|||||
Vested
|
(69 | ) | $ |
29.26
|
||||
Forfeited
|
(39 | ) | $ |
25.99
|
||||
Non-vested
at March 31, 2007
|
287
|
$ |
27.09
|
Employee
Stock Options
|
Employee
Stock Purchase Plan
|
|||||||||||||||||||||||
Fiscal
Year Ended March 31,
|
2005
|
2006
|
2007
|
2005
|
2006
|
2007
|
||||||||||||||||||
Expected
volatility
|
58.2 | % | 53.1 | % | 42.1 | % | 33.4 | % | 34.0 | % | 43.4 | % | ||||||||||||
Risk-free
interest rate
|
3.4 | % | 4.2 | % | 4.7 | % | 2.4 | % | 4.4 | % | 5.2 | % | ||||||||||||
Expected
dividends
|
0.5 | % | 0.7 | % | 1.0 | % | 0.5 | % | 0.6 | % | 1.2 | % | ||||||||||||
Expected
life (in years)
|
5.1
|
4.9
|
4.2
|
0.5
|
0.5
|
0.5
|
||||||||||||||||||
Weighted-average
grant date fair value
|
$ |
20.70
|
$ |
14.79
|
$ |
7.60
|
$ |
7.07
|
$ |
8.67
|
$ |
4.74
|
5.
|
COMPUTATION
OF EARNINGS PER COMMON
SHARE
|
(in
thousands, except earnings per share)
|
Fiscal
Year Ended March 31,
|
|||||||||||
2005
|
2006
|
2007
|
||||||||||
Net
income
|
$ |
97,520
|
$ |
81,150
|
$ |
50,143
|
||||||
Weighted
average shares-basic
|
48,249
|
47,120
|
47,361
|
|||||||||
Effect
of unvested restricted stock awards
|
24
|
19
|
14
|
|||||||||
Effect
of Rabbi trust shares
|
-
|
15
|
15
|
|||||||||
Effect
of employee stock options
|
2,548
|
1,634
|
630
|
|||||||||
Weighted
average shares-diluted
|
50,821
|
48,788
|
48,020
|
|||||||||
Earnings
per share-basic
|
$ |
2.02
|
$ |
1.72
|
$ |
1.06
|
||||||
Earnings
per share-diluted
|
$ |
1.92
|
$ |
1.66
|
$ |
1.04
|
6.
|
ACQUISITIONS
|
(in
thousands)
|
||||
Purchase
price, net of cash acquired
|
$ |
7,430
|
||
Direct
acquisition costs
|
388
|
|||
Total
consideration
|
$ |
7,818
|
(in
thousands)
|
Fair
Value at April 4, 2005
|
|||
Total
cash consideration
|
$ |
7,818
|
||
Less
cash balance acquired
|
42
|
|||
7,776
|
||||
Allocated
to:
|
||||
Current
assets, excluding cash acquired
|
102
|
|||
Property,
plant and equipment
|
72
|
|||
Existing
technologies
|
4,500
|
|||
Deferred
tax assets
|
2,970
|
|||
Current
liabilities assumed
|
(334 | ) | ||
Deferred
tax liability
|
(1,710 | ) | ||
Goodwill
|
$ |
2,176
|
(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
|
Amortization
Period
|
|||
Existing
technology
|
$ |
25,000
|
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
|
$ |
108,300
|
Pro
forma
|
Fiscal
Year Ended
|
|||||||
March
31,
|
||||||||
(in
thousands except per share data)
|
2005
|
2006
|
||||||
Net
revenues
|
$ |
688,971
|
$ |
806,893
|
||||
Operating
income
|
$ |
137,967
|
$ |
118,922
|
||||
Net
income
|
$ |
105,713
|
$ |
84,107
|
||||
Basic
net income per common share
|
$ |
2.19
|
$ |
1.78
|
||||
Diluted
net income per common share
|
$ |
2.08
|
$ |
1.72
|
As
Reported
|
Fiscal
Year Ended
|
|||||||
March
31,
|
||||||||
(in
thousands except per share data)
|
2005
|
2006
|
||||||
Net
revenues
|
$ |
559,995
|
$ |
750,394
|
||||
Operating
income
|
$ |
126,621
|
$ |
110,362
|
||||
Net
income
|
$ |
97,520
|
$ |
81,150
|
||||
Basic
net income per common share
|
$ |
2.02
|
$ |
1.72
|
||||
Diluted
net income per common share
|
$ |
1.92
|
$ |
1.66
|
7.
|
GOODWILL
|
(in
thousands)
|
Audio
Communications Group
|
Audio
Entertainment Group
|
Consolidated
|
|||||||||
Balance
at March 31, 2005
|
$ |
9,386
|
$ |
-
|
$ |
9,386
|
||||||
Goodwill
acquired in the Octiv acquisition
|
2,176
|
-
|
2,176
|
|||||||||
Goodwill
acquired in the Altec Lansing acquisition
|
-
|
42,403
|
42,403
|
|||||||||
Deferred
tax adjustment related to Altec Lansing trade name
|
-
|
24,083
|
24,083
|
|||||||||
Carrying
value adjustments
|
(348 | ) | (2,623 | ) | (2,971 | ) | ||||||
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
|
8.
|
INTANGIBLES
|
March
31, 2006 (in thousands)
|
Gross
Amount
|
Accumulated
Amortization
|
Net
Amount
|
Useful
Life
|
|||||||||
Technology
|
$ |
31,960
|
$ | (4,728 | ) | $ |
27,232
|
6-10
years
|
|||||
In-process
technology
|
996
|
(996 | ) |
-
|
Immediate
|
||||||||
State
contracts
|
1,300
|
(789 | ) |
511
|
7
years
|
||||||||
Patents
|
1,420
|
(674 | ) |
746
|
7
years
|
||||||||
Customer
relationships
|
18,133
|
(1,908 | ) |
16,225
|
3-8
years
|
||||||||
Trademarks
|
300
|
(182 | ) |
118
|
7
years
|
||||||||
Trade
name - inMotion
|
5,000
|
(391 | ) |
4,609
|
8
years
|
||||||||
Trade
name - Altec Lansing
|
59,100
|
-
|
59,100
|
Indefinite
|
|||||||||
OEM
relationships
|
700
|
(63 | ) |
637
|
7
years
|
||||||||
Non-compete
agreements
|
200
|
(170 | ) |
30
|
5
years
|
||||||||
Total
|
$ |
119,109
|
$ | (9,901 | ) | $ |
109,208
|
March
31, 2007 (in thousands)
|
Gross
Amount
|
Accumulated
Amortization
|
Net
Amount
|
Useful
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
|
Estimated
amortization expense
|
||||
Fiscal
Year Ending March 31,
|
||||
2008
|
$ |
8,159
|
||
2009
|
8,005
|
|||
2010
|
7,545
|
|||
2011
|
7,502
|
|||
2012
|
4,837
|
|||
Thereafter
|
4,972
|
|||
Total
estimated amortization expense
|
$ |
41,020
|
9.
|
SHORT-TERM
INVESTMENTS
|
(in
thousands)
|
Short-Term
Investments
|
|||||||||||||||||||
Cost
|
Unrealized
|
Unrealized
|
Accrued
|
Fair
|
||||||||||||||||
Balances
at March 31, 2006
|
Basis
|
Gain
|
Loss
|
Interest
|
Value
|
|||||||||||||||
Auction
rate certificates
|
$ |
8,000
|
$ |
-
|
$ |
-
|
$ |
29
|
$ |
8,029
|
||||||||||
Total
short-term investments
|
$ |
8,000
|
$ |
-
|
$ |
-
|
$ |
29
|
$ |
8,029
|
(in
thousands)
|
Short-Term
Investments
|
|||||||||||||||||||
Cost
|
Unrealized
|
Unrealized
|
Accrued
|
Fair
|
||||||||||||||||
Balances
at March 31, 2007
|
Basis
|
Gain
|
Loss
|
Interest
|
Value
|
|||||||||||||||
Auction
rate certificates
|
$ |
9,150
|
$ |
-
|
$ |
-
|
$ |
84
|
$ |
9,234
|
||||||||||
Total
short-term investments
|
$ |
9,150
|
$ |
-
|
$ |
-
|
$ |
84
|
$ |
9,234
|
10.
|
DETAILS
OF CERTAIN BALANCE SHEET
ACCOUNTS
|
March
31,
|
||||||||
(in
thousands)
|
2006
|
2007
|
||||||
Accounts
receivable, net:
|
||||||||
Accounts
receivable
|
$ |
144,989
|
$ |
149,731
|
||||
Less:
provisions for returns, promotions and rebates
|
(21,615 | ) | (30,895 | ) | ||||
Less:
allowance for doubtful accounts
|
(5,366 | ) | (5,078 | ) | ||||
$ |
118,008
|
$ |
113,758
|
|||||
Inventory,
net:
|
||||||||
Purchased
parts
|
$ |
32,063
|
$ |
57,406
|
||||
Work
in process
|
3,787
|
6,268
|
||||||
Finished
goods
|
70,032
|
62,931
|
||||||
$ |
105,882
|
$ |
126,605
|
|||||
Property,
plant and equipment, net:
|
||||||||
Land
|
$ |
8,491
|
$ |
8,630
|
||||
Buildings
and improvements (useful life 7-30 years)
|
54,339
|
64,693
|
||||||
Machinery
and equipment (useful life 2-10 years)
|
103,295
|
120,619
|
||||||
Construction
in progress
|
10,195
|
5,622
|
||||||
176,320
|
199,564
|
|||||||
Less:
accumulated depreciation and amortization
|
(82,446 | ) | (102,305 | ) | ||||
$ |
93,874
|
$ |
97,259
|
|||||
Accrued
liabilities:
|
||||||||
Employee
compensation and benefits
|
$ |
19,670
|
$ |
20,574
|
||||
Warranty
accrual
|
6,276
|
7,240
|
||||||
Accrued
advertising and sales and marketing
|
5,084
|
5,104
|
||||||
Accrued
other
|
12,051
|
21,107
|
||||||
$ |
43,081
|
$ |
54,025
|
Warranty
obligation at March 31, 2005
|
$ |
5,970
|
||
Warranty
provision relating to products shipped during the year
|
12,594
|
|||
Deductions
for warranty claims processed
|
(12,288 | ) | ||
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
|
11.
|
BANK
LINE OF CREDIT
|
12.
|
EMPLOYEE
BENEFIT PLANS
|
13.
|
CAPITAL
STOCK
|
14.
|
FOREIGN
CURRENCY DERIVATIVES
|
Local
Currency
|
USD
Equivalent
|
Position
|
Maturity
|
|||||||
EUR
|
25,700
|
$
|
34,397
|
Sell
Euro
|
1
month
|
|||||
GBP
|
6,200
|
$
|
12,205
|
Sell
GBP
|
1
month
|
15.
|
ACCUMULATED
OTHER COMPREHENSIVE INCOME
|
March
31,
|
||||||||
(in
thousands)
|
2006
|
2007
|
||||||
Accumulated
unrealized gain (loss) on cash flow hedges
|
$ |
1,567
|
$ | (1,407 | ) | |||
Accumulated
foreign currency translation adjustments
|
2,067
|
4,073
|
||||||
$ |
3,634
|
$ |
2,666
|
16.
|
INCOME
TAXES
|
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||
2005
|
2006
|
2007
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ |
24,511
|
$ |
26,789
|
$ |
12,587
|
||||||
State
|
2,095
|
4,221
|
1,976
|
|||||||||
Foreign
|
5,580
|
5,860
|
6,158
|
|||||||||
Total
current provision for income taxes
|
32,186
|
36,870
|
20,721
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
584
|
(4,042 | ) | (7,419 | ) | |||||||
State
|
62
|
(1,328 | ) | (1,045 | ) | |||||||
Foreign
|
8
|
(96 | ) | (862 | ) | |||||||
Total
deferred provision (benefit) for income taxes
|
654
|
$ | (5,466 | ) | $ | (9,326 | ) | |||||
Provision
for income taxes
|
$ |
32,840
|
$ |
31,404
|
$ |
11,395
|
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||
2005
|
2006
|
2007
|
||||||||||
Tax
expense at statutory rate
|
$ |
45,626
|
$ |
39,394
|
$ |
21,538
|
||||||
Foreign
operations taxed at different rates
|
(11,089 | ) | (9,962 | ) | (9,646 | ) | ||||||
State
taxes, net of federal benefit
|
2,095
|
2,063
|
930
|
|||||||||
Research
and development credit
|
(1,257 | ) | (1,243 | ) | (2,340 | ) | ||||||
Net
favorable tax contingency adjustments
|
(694 | ) |
-
|
|||||||||
Other,
net
|
(1,841 | ) |
1,152
|
913
|
||||||||
Provision
for income taxes
|
$ |
32,840
|
$ |
31,404
|
$ |
11,395
|
March
31,
|
||||||||
2006
|
2007
|
|||||||
Current
assets:
|
||||||||
Accruals
and other reserves
|
$ |
11,904
|
$ |
11,784
|
||||
Deferred
state tax
|
351
|
523
|
||||||
Deferred
foreign tax
|
154
|
352
|
||||||
12,409
|
12,659
|
|||||||
Non-current
assets:
|
||||||||
Net
operating loss carryover
|
2,967
|
2,658
|
||||||
Stock
compensation
|
-
|
4,219
|
||||||
Other
deferred tax assets
|
518
|
684
|
||||||
3,485
|
7,561
|
|||||||
Total
deferred tax assets
|
15,894
|
20,220
|
||||||
Non-current
liabilities:
|
||||||||
Deferred
gains on sales of properties
|
(2,286 | ) | (2,223 | ) | ||||
Purchased
intangibles
|
(43,498 | ) | (37,791 | ) | ||||
Unremitted
earnings of certain subsidiaries
|
(3,064 | ) | (3,064 | ) | ||||
Other
deferred tax liabilities
|
(2,883 | ) | (1,827 | ) | ||||
Total
deferred tax liabilities
|
(51,731 | ) | (44,905 | ) | ||||
Net
deferred tax liabilities
|
$ | (35,837 | ) | $ | (24,685 | ) |
17.
|
COMMITMENTS
AND CONTINGENCIES
|
Fiscal
Year Ending March 31,
|
||||
2008
|
$ |
4,344
|
||
2009
|
3,720
|
|||
2010
|
2,283
|
|||
2011
|
1,149
|
|||
2012
|
913
|
|||
Thereafter
|
3,001
|
|||
Total
minimum future rental payments
|
$ |
15,410
|
18.
|
SEGMENTS
AND ENTERPRISE-WIDE
DISCLOSURES
|
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2005
|
2006
|
2007
|
|||||||||
Net
revenues from unaffiliated customers:
|
||||||||||||
Office
and contact center
|
$ |
366,335
|
$ |
446,524
|
$ |
475,323
|
||||||
Mobile
|
125,262
|
119,333
|
146,859
|
|||||||||
Gaming
and computer audio
|
39,804
|
35,656
|
30,162
|
|||||||||
Other
specialty products
|
28,594
|
28,212
|
24,170
|
|||||||||
Total
segment net revenues
|
$ |
559,995
|
$ |
629,725
|
$ |
676,514
|
Fiscal
Year Ended March 31,
|
||||||||
($
in thousands)
|
2006
|
2007
|
||||||
Revenues
from unaffiliated customers:
|
||||||||
Docking
audio
|
$ |
80,998
|
$ |
74,551
|
||||
PC
audio
|
46,136
|
63,066
|
||||||
Other
|
10,406
|
11,463
|
||||||
Less
revenue reserves
|
(16,871 | ) | (25,440 | ) | ||||
Total
segment net revenues
|
$ |
120,669
|
$ |
123,640
|
Revenues
by Segment
|
||||||||||||
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2005
|
2006
|
2007
|
|||||||||
Audio
Communications Group
|
$ |
559,995
|
$ |
629,725
|
$ |
676,514
|
||||||
Audio
Entertainment Group
|
-
|
120,669
|
123,640
|
|||||||||
Consolidated
net revenues
|
$ |
559,995
|
$ |
750,394
|
$ |
800,154
|
Gross
Profit by Segment
|
||||||||||||
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2005
|
2006
|
2007
|
|||||||||
Audio
Communications Group
|
$ |
288,458
|
$ |
289,288
|
$ |
295,480
|
||||||
Audio
Entertainment Group
|
-
|
36,966
|
13,335
|
|||||||||
Consolidated
gross profit
|
$ |
288,458
|
$ |
326,254
|
$ |
308,815
|
Operating
Income (Loss) by Segment
|
||||||||||||
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2005
|
2006
|
2007
|
|||||||||
Audio
Communications Group
|
$ |
126,621
|
$ |
99,851
|
$ |
84,677
|
||||||
Audio
Entertainment Group
|
-
|
10,511
|
(27,228 | ) | ||||||||
Consolidated
operating income
|
$ |
126,621
|
$ |
110,362
|
$ |
57,449
|
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2005
|
2006
|
2007
|
|||||||||
Total
operating income of segments
|
$ |
126,621
|
$ |
110,362
|
$ |
57,449
|
||||||
Interest
and other income (expense), net
|
3,739
|
2,192
|
4,089
|
|||||||||
Income
tax expense
|
32,840
|
31,404
|
11,395
|
|||||||||
Consolidated
net income
|
$ |
97,520
|
$ |
81,150
|
$ |
50,143
|
Assets
by Segment
|
||||||||
Fiscal
Year Ended March 31,
|
||||||||
(in
thousands)
|
2006
|
2007
|
||||||
Audio
Communications Group
|
$ |
370,874
|
$ |
432,863
|
||||
Audio
Entertainment Group
|
241,375
|
218,441
|
||||||
Consolidated
assets
|
$ |
612,249
|
$ |
651,304
|
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2005
|
2006
|
2007
|
|||||||||
Net
sales from unaffiliated customers:
|
||||||||||||
United
States
|
$ |
375,530
|
$ |
483,513
|
$ |
491,706
|
||||||
Europe,
Middle East and Africa
|
135,030
|
178,315
|
195,090
|
|||||||||
Asia
Pacific and Latin America
|
33,152
|
61,880
|
77,014
|
|||||||||
Canada
and Other International
|
16,283
|
26,686
|
36,344
|
|||||||||
Total
International
|
184,465
|
266,881
|
308,448
|
|||||||||
$ |
559,995
|
$ |
750,394
|
$ |
800,154
|
|||||||
Property,
plant and equipment, net:
|
||||||||||||
United
States
|
$ |
44,749
|
$ |
48,356
|
||||||||
China
|
26,520
|
25,817
|
||||||||||
Mexico
|
12,167
|
12,734
|
||||||||||
Other
countries
|
10,438
|
10,352
|
||||||||||
$ |
93,874
|
$ |
97,259
|
Quarter
Ended
|
||||||||||||||||
June
30,
|
Sept.
30,
|
Dec.
31,
|
Mar.
31,
|
|||||||||||||
2005
|
20051
|
20051
|
20061
|
|||||||||||||
(in
thousands, except income per share)
|
||||||||||||||||
Net
revenues
|
$ |
148,909
|
$ |
172,225
|
$ |
222,512
|
$ |
206,748
|
||||||||
Gross
profit
|
$ |
73,149
|
$ |
74,002
|
$ |
94,026
|
$ |
85,077
|
||||||||
Net
income
|
$ |
21,698
|
$ |
13,707
|
$ |
25,041
|
$ |
20,704
|
||||||||
Basic
net income per common share
|
$ |
0.46
|
$ |
0.29
|
$ |
0.53
|
$ |
0.44
|
||||||||
Diluted
net income per common share
|
$ |
0.44
|
$ |
0.28
|
$ |
0.52
|
$ |
0.43
|
||||||||
Cash
dividends declared per common share
|
$ |
0.05
|
$ |
0.05
|
$ |
0.05
|
$ |
0.05
|
Quarter
Ended
|
||||||||||||||||
June
30,
|
Sept.
30,
|
Dec.
31,
|
Mar.
31,
|
|||||||||||||
20062,3,4
|
20063,4
|
20063,4
|
20074
|
|||||||||||||
(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
|
1
|
The
results of operations of Altec Lansing have been included in our
consolidated results of operations subsequent to the acquisition
on August
18, 2005.
|
2
|
In
the first quarter of fiscal 2007, we sold a parcel of land in Frederick,
Maryland and recorded a gain of $2.6 million on the sale of this
property.
|
3
|
In
the fourth quarter of fiscal 2007, we classified certain expenses
in our
AEG segment within cost of revenues which had previously been classified
as selling, general and administrative expenses, to conform to our
ACG
presentation. As a result of this change, our previously reported
amounts
for gross profit for the first, second and third quarters of fiscal
2007
were reduced by $375,000, $491,000, and $486,000, respectively to
conform
to the fourth quarter presentation. Results for fiscal 2006 have
not been
reclassified due to immateriality. These reclassifications had
no impact on net revenues, net income or net income per
share.
|
4
|
We
began recognizing the provisions of SFAS No. 123(R) beginning in
fiscal
2007; as a result, $4.4 million, $3.9 million, $4.2 million and $4.3
million in stock-based compensation expense has been included in
our
consolidated results of operations for each of the quarters ended
July 1,
2006, September 30, 2006, December 30, 2006 and March 31, 2007,
respectively.
|
|
•
|
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
29, 2007
|
/s/
Barbara Scherer
Barbara
Scherer
Senior
Vice President—Finance &
Administration
and Chief Financial Officer
May
29,
2007
|
|
(a)
Management’s Annual Report on Internal Control Over Financial
Reporting
|
|
(b)
Changes in Internal Control Over Financial
Reporting
|
(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
|
62
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
63
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
64
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
|
65
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
66
|
MANAGEMENT'S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
|
97
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
98
|
(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, 2005
|
$ |
3,536
|
$ |
1,814
|
$ | (1,530 | ) | $ |
3,820
|
|||||||
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
|
|||||||||||
Warranty
reserves:
|
||||||||||||||||
Year
ended March 31, 2005
|
$ |
6,795
|
$ |
9,066
|
$ | (9,891 | ) | $ |
5,970
|
|||||||
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
|
PLANTRONICS,
INC.
|
||
May
29, 2007
|
||
|
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
29, 2007
|
/s/
Barbara Scherer
(Barbara
Scherer)
|
Senior
Vice President and Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer)
|
May
29, 2007
|
/s/
Marv Tseu
(Marv
Tseu)
|
Chairman
of the Board and Director
|
May
29, 2007
|
/s/
Gregg Hammann
(Gregg
Hammann)
|
Director
|
May
29, 2007
|
|
||
/s/
John Hart
(John
Hart)
|
Director
|
May
29, 2007
|
|
||
/s/
Marshall Mohr
(Marshall
Mohr)
|
Director
|
May
29, 2007
|
/s/
Trude Taylor
(Trude
Taylor)
|
Director
|
May
29, 2007
|
/s/
Roger Wery
(Roger
Wery)
|
Director
|
May
29, 2007
|
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 Sarbarnes-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.
|