Plantronics 1998 Annual Report Download - page 18

P.10
ANNUAL REPORT . 199 8
PLANTRONICS
Notes TO CONSOLIDATED
FINANCIAL STATEMENTS
NOTE. 4DEBT:
Long-term debt, consisting of Senior Notes, was $65.1 million at the end of fiscal 1996, 1997 and 1998. The Senior Notes
are general unsecured obligations of the Company that bear interest, payable semiannually, at a rate of 10% per
annum and will mature on January 15, 2001. The Senior Notes are redeemable, at the Company’s option, in whole or
in part, at any time on or after January 15, 1999. Redemption prior to January 15, 2001 will be at a premium.
The Senior Note Indenture contains certain covenants that, among other things, limit the ability of the Company
and its subsidiaries to incur indebtedness, pay dividends, issue preferred stock of subsidiaries, engage in transactions
with affiliates, create liens, engage in mergers and consolidations, or make certain asset sales and investments. The
Senior Note Indenture also provides that holders of the Senior Notes have the right to require that the Company
repurchase their Senior Notes in the event of a “change in control” and contain various customary events of default.
The Company has a one-year $20.0 million revolving unsecured credit facility with Bank of America. The facility
expires on February 17, 1999. The facility includes a $10.0 million letter of credit subfacility. Combined borrowings
and commitments under both facilities cannot exceed $20.0 million. Principal outstanding bears interest at the
Company’s choice of the Bank of America base rate, the offshore rate or a CD rate plus a margin ranging from 0.000%
to 1.375%, depending on the rate choice and performance level ratios. There were no borrowings outstanding under
the revolving credit facility at March 31, 1998, however, at that date $2.3 million, associated with inventory purchases
and other matters, was committed under the letter of credit subfacility. The revolving credit facility includes covenants
relating to, among other things, the maintenance of a maximum net funded debt ratio, a minimum tangible net worth
ratio and a maximum interest coverage ratio. The Company was in compliance with the terms of the covenants as of
March 31, 1998.
The revolving credit facility also expressly restricts the ability of the Company to incur additional indebtedness (including
contingent liabilities and guarantees), grant additional liens, dispose of and acquire assets, incur lease obligations,
and make investments, including loans, joint ventures, and acquisitions of other businesses. The Company is permitted
to pay cash dividends on shares of its capital stock in an amount not to exceed 50% of the Company’s cumulative
net income (net of cumulative losses) for the period commencing February 19, 1997 through the date of declaration.
NOTE. 5COMMON AND TREASURY STOCK:
EFFECT OF INCREASE IN STOCK AND STOCK SPLIT
In July 1997, the Company’s stockholders approved an increase in the authorized shares of Common Stock of Plantronics,
Inc., to 40,000,000. On September 2, 1997, the Company effected a two-for-one stock split in the form of a stock
dividend to stockholders of record as of August 18, 1997. All share, per share, Common Stock, and capital in excess
of par value amounts herein have been restated to reflect the effect of this split.
During fiscal 1998 the Company purchased 317,600 shares of its Common Stock in the open market at a total cost
of $13.2 million and 51,072 shares were reissued for $1.3 million.