Plantronics 2005 Annual Report Download - page 52

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products. Therefore, we intend to increase our advertising spending in the U.S., and we expect
the costs to affect our selling, general and administrative results in fiscal 2006.*
Looking forward, we are focused on the implementation of our key initiatives. If successful, we can
capitalize on these high-growth, emerging markets with competitively priced products, which are
attractive to the consumer.*
In addition, during fiscal 2005, we generated $93.6 million in operating cash flows, which significantly
contributed to the increase in our liquidity and cash balances at March 31, 2005.
We intend for the following discussion of our financial condition and results of operations to provide
information that will assist in understanding our financial statements.
ANNUAL RESULTS OF OPERATIONS
The following table sets forth items from the Consolidated Statements of Operations as a percentage of
net sales:
Fiscal Year Ended March 31, 2004 2005
Net revenues 100.0% 100.0%
Cost of sales 48.2 48.5
Gross profit margin 51.8 51.5
Operating expenses:
Research, development and engineering 8.5 8.1
Selling, general and administrative 23.0 20.8
Total operating expenses 31.5 28.9
Operating income 20.3 22.6
Interest and other income, net 0.4 0.7
Income before income taxes 20.7 23.3
Income tax expense 5.8 5.9
Net income 14.9% 17.4%
24 ⯗Plantronics