Plantronics 2003 Annual Report Download - page 22

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Pre-tax earnings of the foreign subsidiaries were $34.5 million, $24.0 million and $21.9 million
for fiscal years 2001, 2002 and 2003, respectively. Undistributed earnings intended to be
reinvested indefinitely in foreign subsidiaries were approximately $107.1 million at March 31,
2003. If these earnings were distributed, foreign withholding taxes would be imposed;
however, foreign tax credits would become available to substantially reduce any resulting U.S.
income tax liability. Plantronics has not provided taxes for these earnings at U.S. tax rates due
to the fact that these earnings are considered permanently reinvested.
During fiscal 2002 and 2003, the successful completion of routine tax audits and a
reassessment of reserves related to certain foreign tax matters, research and development tax
credits and the expiration of certain statutes of limitation, resulted in favorable tax
adjustments. These favorable tax adjustments reduced income tax expense by $5.1 million
and $1.7 million, respectively.
The following is a reconciliation between statutory federal income taxes and the total
provision for taxes on pre-tax income:
Fiscal Year Ended March 31,
(in thousands) 2001 2002 2003
Tax expense at statutory rate $35,753 $15,120 $19,866
Foreign operations taxed at different rates (7,451) (2,956) (1,787)
Foreign tax credit (2,097) (181) (135)
State taxes, net of federal benefit 1,900 273 154
Research and development credit (640) (3,049) (898)
Favorable tax assessment —(2,562) —
Expiration of statutes of limitation ——(1,744)
Other, net 1,137 307 (172)
$28,602 $ 6,952 $15,284
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Notes to Consolidated Financial Statements
NOTE 5. CAPITAL STOCK
As of the beginning of fiscal 2001, there were 554,721 shares of Common Stock authorized for
repurchase. During fiscal 2001, the Board of Directors authorized Plantronics to repurchase an
additional 1,500,000 shares of Common Stock. During fiscal 2001, we repurchased 1,333,100
shares of our Common Stock in the open market at a total cost of $40.1 million, and an average
price of $30.02 per share. Through our employee benefit plans, we reissued 99,925 shares for
proceeds of $2.8 million. As of March 31, 2001, there were 721,621 remaining shares available
for repurchase under all repurchase authorizations.
During fiscal 2002, the Board of Directors authorized Plantronics to repurchase an additional
3,000,000 shares of Common Stock. During fiscal 2002, we repurchased 3,581,421 shares of our
Common Stock in the open market at a total cost of $72.1 million, and an average price of
$20.10 per share. Through our employee benefit plans, we reissued 133,110 shares for
proceeds of $2.5 million. Shares repurchased in fiscal year 2002 that exceeded the additional
3,000,000 shares pertained to authorizations from prior years. As of March 31, 2002, there were
140,200 remaining shares authorized for repurchase under all repurchase authorizations.
During fiscal 2003, the Board of Directors authorized Plantronics to repurchase an additional
3,000,000 shares of Common Stock. During fiscal 2003, we repurchased 2,874,800 shares of our
Common Stock in the open market at a total cost of $44.8 million, and an average price of
$15.56 per share. Through our employee benefit plans, we reissued 152,700 shares for
proceeds of $2.2 million. As of March 31, 2003, there were 265,400 remaining shares
authorized for repurchase under all repurchase authorizations.
In March 2002, Plantronics established a stock purchase rights plan under which stockholders
may be entitled to purchase Plantronics stock or stock of an acquirer of Plantronics at a
discounted price in the event of certain efforts to acquire control of Plantronics. The rights
expire on the earliest of (a) April 12, 2012, or (b) the exchange or redemption of the rights
pursuant to the rights plan.
NOTE 6. INCOME TAXES
Income tax expense for fiscal 2001, 2002 and 2003 consisted of the following:
Fiscal Year Ended March 31,
(in thousands) 2001 2002 2003
Current:
Federal $23,132 $ 2,782 $8,056
State 1,900 (2,310) 154
Foreign 4,976 5,446 5,863
Deferred:
Federal (1,371) 940 1,216
State (35) 94 (5)
$28,602 $ 6,952 $15,284