Plantronics 2011 Annual Report Download - page 15

Computer OEMs include both manufacturers of computer hardware (including PCs and specialized components and accessories
for PCs) and software. Most computer OEMs do not manufacture headsets but look for manufacturers such as Plantronics to
supply headsets that can be used with their products. We supply certain headsets to computer OEMs particularly for use in UC
systems.
We also make direct sales as a General Services Administration (“GSA”) contractor to certain government agencies, including the
National Aeronautics and Space Administration ("NASA") and the Federal Aviation Administration ("FAA"). In addition, certain
distributors are authorized resellers under a GSA schedule price list and sell our products to government customers pursuant to
that agreement. These sales did not comprise a significant portion of our net revenues in fiscal 2011.
Our products may also be purchased directly from our website at www.plantronics.com.
We continue to evaluate our logistics processes and implement new strategies to further reduce our transportation costs and improve
lead-times to customers. Currently, we have distribution centers located in the following locations:
• Tijuana, Mexico, which provides logistics services for products destined for customers in the U.S., Canada, Asia Pacific,
and Latin America regions;
• Prague, Czech Republic, which provides logistics services for products shipped to customers in our Europe, Middle East
and Africa regions;
• Suzhou, China, which provides logistics services for products which are shipped within Mainland China;
• Melbourne, Australia, which provides logistics services for products which are shipped to the retail channel in Australia
and New Zealand;
• Sao Paulo, Brazil, which provides logistics services for products which are shipped to customers within Brazil; and
• Tokyo, Japan, which provides logistics services for products which are shipped to customers within Japan.
With respect to the above locations, we use third party warehouses in the Czech Republic, Australia, Brazil, and Japan. We operate
all other warehouse facilities.
BACKLOG
Our backlog of unfilled orders was $29.6 million at March 31, 2011 compared to $31.4 million at March 31, 2010. We include
all purchase orders scheduled for delivery over the next 12 months in backlog. We have a “book and ship” business model whereby
we fulfill the majority of our orders within 48 hours of our receipt of the order. Our backlog is occasionally subject to cancellation
or rescheduling by the customer on short notice with little or no penalty. Because of our “book and ship” model, as well as the
uncertainty of order cancellations or rescheduling, we do not believe our backlog as of any particular date is indicative of actual
sales for any future period and, therefore, should not be used as a measure of future revenue.
MANUFACTURING AND SOURCES OF MATERIALS
Manufacturing operations consist primarily of assembly and testing which is performed in our manufacturing facilities in Tijuana,
Mexico, and we maintain a small assembly operation in California primarily for custom products. In March 2009, we entered
into an agreement with GoerTek, Inc., an existing third party contract manufacturer, to outsource the manufacturing of our Bluetooth
products in China which resulted in the discontinuance of manufacturing of our Bluetooth products at the Suzhou, China facility
in fiscal 2010. In addition, we outsource the manufacturing of a limited number of our other products to third parties, typically
in China and other countries in Asia. See further discussion on our business risks associated with our manufacturers under the
risk titled “We depend on original design manufacturers and contract manufacturers who may not have adequate capacity to fulfill
our needs or may not meet our quality and delivery objectives which could have an adverse effect on our business” within Item
1A Risk Factors of this 10-K.
We purchase the components for our products, including proprietary semi-custom integrated circuits, amplifier boards and other
electrical components, primarily from suppliers in Asia, Mexico, the U.S., and Europe. The majority of our components and sub-
assemblies used in our manufacturing operations are obtained, or are reasonably available, from dual-source suppliers, although
we do have a certain number of sole-source suppliers. The earthquake, tsunami and nuclear issues arising in Japan in March 2011
have not materially interfered with our supply chain; however, we cannot predict what impact, if any, these events may have in
the future.
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