Plantronics 2001 Annual Report Download - page 6

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conjunction with mobile, cellular and cordless phones and for computer applications. Our
U.S. distribution channel which most closely ties to our call center and office market also
experienced strong growth.
International sales in fiscal 2001 increased 18.6% to $125.0 million compared to $105.5
million in fiscal 2000, which in turn increased 20.7% compared to the prior fiscal year. The
growth in fiscal 2001 was experienced in each of the European, Asia Pacific/Latin American
and Canadian regions and reflects our investment in the international sales force as well as
marketing programs.
Revenues grew strongly in the first three quarters of the year, but declined sharply and
unexpectedly from our third fiscal quarter to our fourth fiscal quarter as a result of the current
slowdown in economic conditions. Our business continues to be impacted by a slowdown in
global telecom and IT spending, resulting from the lagging economy. We do not believe that a
rebound will occur soon and we believe that our revenues and earnings in the first fiscal quar-
ter of 2002 could be weaker than our fourth fiscal quarter. We are hopeful this may represent a
bottoming with some rebound in the second half of our fiscal year. However, we believe it is
unlikely that secular factors will outweigh cyclical factors in our upcoming fiscal year and we thus
believe it is likely that revenue for fiscal 2002 may be lower than that achieved in fiscal 2001.
Gross Profit. Gross profit in fiscal 2001 increased 18.6% to $220.1 million (54.9% of net sales),
compared to $185.5 million (58.9% of net sales) in fiscal 2000. Gross profit in fiscal 2000
increased 15.5% compared to gross profit of $160.6 million (56.1% of net sales) in fiscal 1999.
The decrease in gross profit as a percent of net sales in fiscal 2001 mainly reflects our change
in product mix with higher growth in lower margin products as well as detrimental effects
from foreign currency fluctuations.
Research, Development and Engineering. Research, development and engineering expenses in fis-
cal 2001 increased 23.5% to $27.0 million (6.7% of net sales), compared to $21.9 million
(6.9% of net sales) in fiscal 2000. Research, development and engineering expenses in fiscal
2000 increased 12.0% compared to $19.5 million (6.8% of net sales) in fiscal 1999. The
increase in these expenses reflects continued investment in new product development and
technologies including Bluetooth.
Selling, General and Administrative. Selling, general and administrative expenses in fiscal 2001
increased 29.5% to $91.1 million (22.7% of net sales), compared to $70.3 million (22.3% of
net sales) in fiscal 2000. Selling, general and administrative expenses in fiscal 2000 increased
22.2% compared to $57.5 million (20.1% of net sales) in fiscal 1999. Retail variable selling
expenses increased due to incremental retail revenue. Marketing expenses increased sub-
stantially due to increased activities including advertising campaigns, new product launches,
international marketing, and programs for our mobile and computer divisions.
Plantronics 2001 Annual Report 2