Plantronics 2008 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 of the 2008 Plantronics annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

69
to focus on its core product categories. As a result of this triggering event, the Company reviewed the recoverability of the
Professional Audio asset grouping including the related technology intangible asset. Other than disposing of the remaining inventory,
the Company expects no further cash flows from the Professional Audio product line. The Company determined that the intangible
asset had no remaining value and wrote off the remaining carrying value of $0.5 million in cost of revenues.
The estimated future amortization expense for each fiscal year subsequent to fiscal 2008 is as follows:
Estimated amortization expense
Fiscal Year Ending March 31,
2009 $ 7,872
2010 7,412
2011 7,368
2012 4,787
2013 3,213
Thereafter 1,759
Total estimated amortization expense $ 32,411
9. RESTRUCTURING AND OTHER RELATED CHARGES
In November 2007, the Company announced plans to close AEG’s manufacturing facility in Dongguan, China, to shut down a related
Hong Kong research and development, sales and procurement office and to consolidate procurement, research and development
activities for AEG in the Shenzhen, China site. The selling, general and administrative functions of AEG in China will also be
consolidated with those of ACG through-out the Asia-Pacific region. These actions will result in the elimination of all manufacturing
operation positions in Dongguan, China and certain related support functions. In the third quarter of fiscal 2008, the production line at
the Dongguan, China facility was shut down. This restructuring plan is part of a strategic initiative designed to reduce fixed costs by
outsourcing the majority of AEG manufacturing to the network of qualified contract manufacturers already in place. The plan will
proceed in phases and is expected to be complete in the third quarter of fiscal 2009.
The Company recorded the restructuring activities in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or
Disposal Activities” (“SFAS No. 146”) and SFAS No. 112, “Employees’ Accounting for Post-employment Benefits” (“SFAS No.
112”). During fiscal 2008, the Company recorded $3.6 million in restructuring and other related charges.
The following table summarizes the Company’s restructuring activities (in thousands):
Severance
and
Benefits
Facilities
and
Equipment Other Total
Restructuring and other related charges $ 1,272 $ 1,519 $ 793 $ 3,584
Cash
(
980
)
-
(
241
)
(
1,221
)
Non-cash - (1,519) (38) (1,557)
Restructuring accrual at March 31, 2008 $ 292 $ - $ 514 $ 806
The restructuring accrual is included in accrued liabilities in the Company’s consolidated balance sheet.
In November 2007, 730 employees were notified for termination, 708 in manufacturing, 20 in research and development and 2 in
selling, general and administrative. As of March 31, 2008, 672 employees have been terminated.
Including the $3.6 million recognized in fiscal 2008, the Company expects to record total restructuring charges of approximately $4.0
to $4.5 million, consisting of $1.6 million for the write-off of facilities and equipment and accelerated depreciation, $1.4 million for
severance and benefits, and $1.0 to $1.5 million in professional and administrative fees. We expect to incur restructuring and other
related charges of $0.4 to $0.9 million in fiscal 2009.