Plantronics 2005 Annual Report Download - page 40

customers in the U.S. and Asian Pacific and Latin American (‘‘APLA’’) regions from our manufacturing
facility in Mexico. For all other customers, our products are shipped from our Netherlands distribution
center. Our principal customers are distributors, retailers, carriers, and OEMs, as well as telephone
operating companies and government agencies.
Commercial distributors represent our largest sales channel. This channel is comprised of headset
specialists, national wholesalers, and regional wholesalers. The wholesalers typically offer a wide variety
of products from multiple vendors to both resellers and end users. This distribution channel generally
maintains inventory of our products, and our revenues may be affected by our distributors’ fluctuating
inventory levels even when market demand is stable.
The retail channel is our second largest channel and consists of office supply and consumer electronics
retailers; consumer products and office supply distributors; catalog and mail order companies; mass
merchants; and wireless carrier stores. Retailers primarily sell headsets to corporate customers, small
businesses, and to individuals who use them for a variety of purposes, both personal and professional. The
retail channel also maintains a substantial inventory of Plantronics’ products.
Telephony OEMs and manufacturers of automatic call distributor systems (‘‘ACDs’’) and other
telecommunications and computer equipment also utilize Plantronics headsets. Contact center equipment
OEMs do not typically manufacture their own peripheral products and, therefore, distribute our headsets
under their own private label, or as a Plantronics-branded product.
‘‘Mobile’’ OEMs include both manufacturers of cell phones and wireless carriers. Wireless carriers do not
manufacture headsets, but distribute our headsets as a Plantronics-branded product or under their own
private label. Mobile OEMs, on the other hand, generally require their own design and will sell products
under their private label.
Computer OEMs include both manufacturers of computer hardware (including personal computers and
specialized components and accessories for personal computers) and software. Most computer OEM’s do
not manufacture headsets, but look for manufacturers such as Plantronics to supply headsets that can be
used with their products.
The telephony service provider channel is comprised of telephone service providers that purchase headsets
from us for use by their own agents. Certain service providers also resell headsets to their customers.
We also make direct sales to certain government agencies, including NASA and the FAA. In addition,
certain distributors are authorized resellers under a General Services Administration (‘‘GSA’’) schedule
price list and sell our products to government customers pursuant to that agreement.
We maintain a direct sales force worldwide to provide ongoing customer support and service globally. We
also retain commissioned manufacturers’ representatives to assist in selling through the retail channel.
Our products may also be purchased from our website at www.plantronics.com.
BACKLOG
Our backlog of unfilled orders was $17.1 million on March 31, 2005 compared to $26.8 million at the
end of fiscal 2004. We include in backlog all purchase orders scheduled for delivery over the next
12 months. As part of our commitment to customer service, our goal has been to ship products to meet
the customers’ requested shipment dates. 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.
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