Plantronics 2005 Annual Report Download - page 59

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part ii
cash benefits resulting from the tax deductibility of increases in the value of equity instruments issued
under share-based arrangements be included as part of cash flows from financing activities rather than
from operating activities. This change in classification will likely have a significant negative effect on our
cash provided by operating activities in periods after adoption of these new rules. See Recent Accounting
Pronouncements included in footnote 2 of this Form 10-K.
We expect that cash provided by operating activities may fluctuate in future periods as a result of a
number of factors including fluctuations in our net revenues and operating results, collection of accounts
receivable, changes to inventory levels, and timing of payments.
Cash Flows From Investing Activities
During fiscal 2005, our total capital expenditures were $27.7 million, including $5.6 million for our China
manufacturing facility, which is still under construction and will not begin depreciating until it has been placed
into service. The remainder of the capital purchases were incurred principally in tooling for new products,
furniture and fixtures, and building improvements for facilities expansion. Additionally, during fiscal 2005, we
purchased approximately $391.8 million of marketable securities, which were offset by sales and maturities of a
portion of our marketable securities of approximately $352.0 million. These marketable securities consist
primarily of bonds and auction rate securities. As noted in Note 1 of the Consolidated Financial Statements,
marketable securities related to auction rate securities previously classified as cash equivalents, have been
reclassified to short-term marketable securities.
For fiscal 2005, cash flows for investing activities decreased $53.4 million compared to the prior year. The
reduction is primarily due to the increase of $67.5 million in the purchase of marketable securities, mainly
comprised of auction rate securities, compared to the prior year. We anticipate making further
investments in marketable securities as interest rates continue to rise in order to obtain more favorable
yields. As our business grows, we may need additional facilities and capital expenditures to support this
growth. We continuously evaluate new business opportunities and new markets. If we pursue new
opportunities or markets in areas in which we do not have existing facilities, we may need additional
expenditures to support future expansion.*
During fiscal 2004, our total capital expenditures were $16.9 million, which included the land and
facilities purchase of our previously leased facilities in Swindon, U.K., for approximately $5.6 million.
The remainder of the capital purchases were incurred primarily in tooling for new products, furniture and
fixtures, leasehold and building improvements for facilities expansion. During the 2004 fiscal year, we
purchased approximately $324.3 million of marketable securities, which were offset by sales and
maturities of a portion of our marketable securities of approximately $220.7 million. These marketable
securities consisted primarily of bonds and auction rate securities.
We have an unsecured revolving credit facility with a major bank for $75 million, including a letter of credit
sub facility. The facility and sub facility both expire on July 31, 2005. As of April 30, 2005, we had no cash
borrowings under the revolving credit facility and $1.9 million outstanding under the letter of credit sub
facility. The amounts outstanding under the letter-of-credit sub facility were principally associated with
purchases of inventory. The terms of the credit facility contain covenants that materially limit our ability to
incur debt and pay dividends, among other things. Under our current credit facility agreement, we have the
ability to declare dividends so long as the aggregate amount of all such dividends declared, or paid, and
common stock repurchased, or redeemed, in any four consecutive fiscal quarter periods, shall not exceed 50% of
the amount of cumulative consolidated net income in the eight consecutive fiscal quarter periods ending with
the fiscal quarter immediately preceding the date as of which the applicable distributions occurred. We are
currently in compliance with the covenants and the dividend provision under this agreement.
AR 2005 ⯗31