Plantronics 2003 Annual Report Download - page 26

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NOTE 12. GOODWILL AND INTANGIBLES
During the first quarter of fiscal 2002, we adopted Statement of Financial Accounting
Standards No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets.” In accordance with
SFAS 142, we discontinued goodwill amortization in April 2001.
The following table presents net income on a comparable basis, after adjustment for goodwill
amortization:
Fiscal Year Ended March 31,
(in thousands, except earnings per share) 2001 2002 2003
Reported net income $73,550 $ 36,248 $41,476
Add back: goodwill amortization 695 — —
Adjusted net income $74,245 $ 36,248 $41,476
Basic earnings per share:
As reported $1.49 $ 0.77 $0.92
As adjusted $1.51 $ 0.77 $0.92
Diluted earnings per share:
As reported $1.38 $ 0.74 $0.89
As adjusted $1.39 $ 0.74 $0.89
The aggregate amortization expense on intangibles for fiscal 2001, 2002, and 2003 was $0.4
million, $0.6 million and $0.9 million, respectively. The following table presents information
on acquired intangible assets (in thousands):
March 31, 2002 M arch 31, 2003
Gross Carrying Accumulated Gross Carrying Accumulated
Intangible Assets Amount Amortization Amount Amortization
Technology $2,460 $ (417) $2,460 $ (817)
State contracts 1,300 (46) 1,300 (232)
Patents 700 (25) 700 (125)
Customer lists 533 (400) 533 (533)
Tr ademarks 300 (11) 300 (54)
Non-compete agreements 200 (10) 200 (50)
Total $5,493 $ (909) $5,493 $ (1,811)
Estimated Amortization Expense
Fiscal Year Ending March 31,
2004 $654
2005 $654
2006 $654
2007 $644
2008 $614
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Notes to Consolidated Financial Statements
Volatility is a measure of the amount by which a price has fluctuated over an historical period.
The higher the volatility, the more the returns on the stock can be expected to vary. The risk
free interest rate is the rate on a U.S. Treasury bill or bond that approximates the expected life
of the options.
NOTE 11. ACQUISITION
On January 2, 2002, we acquired 100% of the capital stock of privately held Ameriphone, Inc.
(“Ameriphone”) of Garden Grove, California, to strengthen our product line in the hearing-
impaired market for specialized telephones and other equipment. The results of
Ameriphone’s operations have been included in the consolidated financial statements since
the date of acquisition. Ameriphone was a leading supplier of amplified telephones and other
solutions to address the needs of individuals with hearing impairment and other special needs.
Ameriphone was combined with Plantronics’ Walker product group, a leading supplier of
amplified telephones, specialty handsets and communication test equipment, to serve the
special needs market. The net cash purchase price was $10.4 million. We obtained valuations
of inventory, goodwill and intangible assets from an independent valuation firm.
The following table summarizes the estimated fair values of the assets acquired and liabilities
assumed at the date of acquisition:
January 2,
(in thousands) 2002
Current assets $5,555
Property, plant and equipment 503
In-process research and development 100
Intangible assets 4,500
Goodwill 3,250
Total assets acquired 13,908
Liabilities assumed (3,492)
Net assets acquired $10,416
The following unaudited pro forma summary presents our results of operations assuming the
Ameriphone acquisition had been consummated at the beginning of fiscal 2002:
Fiscal Year
Ended March 31,
(in thousands, except per share amounts) 2002
Net sales $320,307
Net income 37,510
Diluted EPS $0.76