Plantronics 2006 Annual Report Download

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Table of contents

  • Page 1

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  • Page 3
    ... cell phones to be MP3 players over the next few years, the trend will accelerate. Our $165 million acquisition of Altec Lansing prepares us to provide sound solutions for the full range of our customers' needs from a unique position of strength. Of course, Altec's core markets in digital audio are...

  • Page 4
    ... ratios Gross Profit 51.5% 43.5 Operating margin 22.6% 14.7 Return on sales 17.4% 10.8 Return on average equity 27.7% 19.3 Average days sales outstanding 49 50 Average inventory turns 5.4 5.1 $800 $700 $600 $560 $500 $417 $400 $311 $338 $300 $200 $100 '02 (in millions) $127 $125 $750 $100...

  • Page 5
    ...) PLANTRONICS, INC. (831) 426-5858 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE PREFERRED SHARE PURCHASE RIGHTS NEW...

  • Page 6
    ... Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information 39 41 43 70 72 111 111 112 Part III. Item 10. Directors and Executive Officers of the Registrant Item 11. Executive Compensation Item 12. Security...

  • Page 7
    ... portable audio products, and a line of headsets, headphones, and microphones for personal digital media under our Altec Lansing brand. In addition, we manufacture and market under our Clarity brand specialty telephone products, such as telephones for the hearing impaired, and other related products...

  • Page 8
    ... reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. Our principal executive offices are located at 345 Encinal Street, Santa Cruz, CA, 95060. Our telephone number is (831) 426-5858. Our internet address is www.plantronics.com. Our Investor Relations...

  • Page 9
    ... and technologies, including noise-canceling microphones, Digital Signal Processing (''DSP''), and more; MULTI-TASKING BENEFITS that allow people to use a computer, a Personal Data Assistant (''PDA'') or other device, take notes and organize files while talking hands-free; WIRELESS FREEDOM allowing...

  • Page 10
    ... maximum call security. DSP is a technology that delivers acoustic protection and optimal sound quality through transmit-noise reduction and echo cancellation. ) ) Markets Our ACG products are designed to meet the needs of specific markets: Office and Contact Center, Home and Home Office, Mobile...

  • Page 11
    ...cushions, ear tips, and wind-noise suppressors. These replacement parts allow end users to revitalize their headset to maintain maximum performance and comfort. We also sell a full line of accessory products, including handset lifters and inuse indicators, which give our customers increased mobility...

  • Page 12
    ... talk time; ten hours with the CS55 ) Wireless roaming range up to 200 feet; 300 feet with the CS55 ) Plantronics' PerSonoCallË› ) Optional HL10 Lifter, which allows individuals to take or end a call at the press of a button ) Noise-canceling microphones and echo elimination Wireless office headset...

  • Page 13
    ... time on the phone Voice-dedicated DECT 6.0 technology Available in multiple wearing styles Seamlessly switches between office phones and voice-enabled Bluetooth mobile phones, laptops and PDAs Noise-canceling microphones and WindSmartË› technology One-touch call control buttons Lightweight headset...

  • Page 14
    ... voice transmission, and superior sound quality ) Noise-canceling microphones and WindSmartË› technology ) Works with multiple BluetoothË› devices ) Features six hours of talk time and an easy-to-use control to answer/end calls and adjust volume with a single button Premium BluetoothË› headset...

  • Page 15
    ..., podcasts, Internet telephony, and multimedia ) Noise-canceling microphones ) DSP and PerSonoË› Audio Control Center ) Lightweight pressure-free fit ) ) Lightweight and discreet headsets that provide precise voice without overpowering the actual game audio Incorporate single-ear designs that allow...

  • Page 16
    ...as multimedia speakers, portable audio systems, headphones, headsets and other audio products. Our AEG segment targets advanced audio solutions for one of the fastest growing sectors of the electronic consumer industry, including personal computers, video gaming, personal audio, MP3 players and home...

  • Page 17
    ...a wide array of headphone products that connect easily to portable stereos, CD players, MP3 players and other audio devices; and Interactive Audio: products which include headsets used primarily for interactive gaming, speech recognition and VoIP (headsets) markets. ) Products and Features Our AEG...

  • Page 18
    ...extra long battery life ) Wireless Remote Powered Audio GT5051 ) Surround sound system, with Side-Firing SurroundTM technology ) Multiple input options-connects easily to a computer, portable audio device, and a DVD, TV or gaming consoles all at the same time ) Bass from a 5.25؆ woofer ) Dual-Mode...

  • Page 19
    ... sell their products. ) The office market, including the H2O market, involves the sale of headsets for connection to single-line or office telephone systems, wireless and cordless telephones, and computers. There is indirect competition from the speakerphone market. Competitors in the contact center...

  • Page 20
    ...office and contact center market. They include the cell phone manufacturers, who typically outsource phone accessories including headsets, and companies that focus primarily on the mobile and/or cordless phone accessory markets. There is indirect competition from hands-free car kits that allow users...

  • Page 21
    ... us to better address changing customer demands and emerging market trends. Specifically, we introduced a number of new products, which featured new technologies to address both the Audio Communication and Audio Entertainment market trends. Each segment has an operational model designed to bring the...

  • Page 22
    ... levels even when market demand is stable. The retail channel consists of consumer electronics retailers, consumer products retailers, office supply distributors; catalog and mail order companies; mass merchants; warehouse clubs; and wireless carrier stores. Our AEG products are predominantly...

  • Page 23
    ... 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 use commissioned manufacturers' representatives to assist in selling through the retail channel. Our products...

  • Page 24
    ... procure materials to meet forecasted customer requirements. Special products and large orders are quoted for delivery after receipt of orders at specific lead times. We maintain minimum levels of finished goods based on market demand in addition to inventories of raw materials, work in process, and...

  • Page 25
    part i We own trademark registrations in the United States and a number of other countries with respect to the Plantronics, Clarity and Altec Lansing trademarks as well as the names of many of our products and product features. We currently have United States and foreign trademark applications ...

  • Page 26
    ... and audio company. Mr. Savadove is a GE-trained general manager with more than twenty years of experience at international companies of various sizes. He has built six new businesses during his career, which include GE's Telephone Business, GE/RCA's Accessory Business, ProScan, Advanced Spectrum...

  • Page 27
    ... and general management positions at Dell Computer Corporation including, General Manager for the Business Systems Division in the United States, Managing Director for Dell Direct in the United Kingdom and Ireland and Vice President of Products, Marketing & Services for EMEA. Beginning in June 1991...

  • Page 28
    ... for sales to B2C customers compared to sales to our B2B customers. Our prices and gross margins can vary significantly by product line as well as within product lines. The size and timing of opportunities in this market are difficult to predict; A significant portion of our annual retail sales for...

  • Page 29
    ... longer lead times with certain suppliers than commitments from some of our customers. If we are unable to deliver product on time to meet the market window of our retail customers, we will lose opportunities to increase revenues and profits. We may also be unable to sell these finished goods, which...

  • Page 30
    ... and certain parts of the office markets. In particular, we anticipate a trend towards more integrated solutions that combine audio, video, and software functionality, while currently our focus is limited to audio products. We are also experiencing a trend away from corded headsets to cordless...

  • Page 31
    ... could affect our ability to meet market schedules. Due to our dependence on single suppliers for certain chip sets, we could experience higher prices, a delay in development of the chip-set, and/or the inability to meet our customer demand for these new products. Our business, operating results and...

  • Page 32
    ... transactions and business information systems of Altec Lansing; The potential loss of key employees of Altec Lansing and Plantronics; Competition may increase in Altec Lansing's markets more than expected; and Altec Lansing's product sales and new product development may not evolve as anticipated...

  • Page 33
    ... in the B2B market for the sale of our office and contact center products. We believe that our greatest long-term opportunity for profit growth in the Audio Communications Group is in the office market, and our foremost strategic objective for this segment is to increase headset adoption. To this...

  • Page 34
    ... of the Plantronics brand. We believe this will help increase preference for Plantronics and promote headset adoption overall. The B2C market is characterized by relatively rapid product obsolescence and we are at risk if we do not have the right products at the right time to meet consumer needs...

  • Page 35
    ... brands. Competitors in audio devices vary by product line. In the PC speaker business, competitors include Logitech and Creative Labs. In the PC and office and contact center markets, a significant competitor is Senheiser Communications. In the PC and console headset, telephony and microphone...

  • Page 36
    ...we are unable to comply. Our products must meet the requirements set by regulatory authorities in the numerous jurisdictions in which we sell them. As regulations and local laws change, we must modify our products to address those changes. Regulatory restrictions may increase the costs to design and...

  • Page 37
    ... services of one or more of our executive officers or other key employees; Changes in earnings estimates or recommendations by securities analysts; Developments in our industry; Sales of substantial numbers of shares of our common stock in the public market; Integration of the Altec Lansing business...

  • Page 38
    ... 32% of our net revenues was derived from customers outside the United States. In addition, we conduct the majority of our Audio Communications Group headset assembly operations in our manufacturing facility located in Tijuana, Mexico, and we obtain most of the components and subassemblies...

  • Page 39
    ... our suppliers or customers. Our major business operations are subject to interruption by earthquake, flood or other natural disasters, fire, power shortages, terrorist attacks, and other hostile acts, public health issues, and other events beyond its control. Our corporate headquarters, information...

  • Page 40
    ... our corded headsets reduces radio frequency emissions at the user's head to virtually zero. Our Bluetooth and other wireless headsets emit significantly less powerful radio frequency emissions than mobile phones. However, if research establishes a health hazard from the use of mobile telephones or...

  • Page 41
    ...chief financial officer or independent registered public accounting firm determine in the future that our internal control over financial reporting is not effective as defined under Section 404, investor perceptions may be adversely affected and could cause a decline in the market price of our stock...

  • Page 42
    party to acquire us, or a significant percentage of our outstanding capital stock, without first negotiating with our board of directors regarding such acquisition. Item 1B. Unresolved Staff Comments None. 36 Ó‡ P l a n t r o n i c s

  • Page 43
    ... Assembly, Sales, Engineering, Administration Sales and Marketing Hoofddorp, Netherlands Santa Cruz, California 14,788 79,253 Lease Own Santa Cruz, California Santa Cruz, California Santa Cruz, California Berkeley, California Suzhou, P.R.China Suzhou, P.R.China Tijuana, Mexico Tijuana, Mexico...

  • Page 44
    ...Square Footage Lease/Own Primary Use 187,000 Own Sales and Marketing, Engineering, Administration, Distribution Distribution Engineering, Administration Engineering, Assembly, Administration Tai Po, Hong Kong Kowloon, Hong Kong Dongguan, P.R. China 111,670 5,523 180,000 Lease Lease Lease We...

  • Page 45
    part ii Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Repurchases of Equity Securities Price Range of Common stock Our common stock is publicly traded on the New York Stock Exchange. The following table sets forth the low and high sales prices as reported by ...

  • Page 46
    ... 2,000,000 shares of common stock under our 16th and 17th repurchase programs, under which the Company may purchase shares in the open market from time to time. We repurchased 2,197,500 shares of our common stock in the open market at a total cost of $70.4 million and an average price of $32.03 per...

  • Page 47
    part ii Item 6. Selected Financial Data SELECTED FINANCIAL DATA The following selected financial information has been derived from our audited consolidated financial statements. The information set forth below is not necessarily indicative...marketable securities Total assets Long... - $130,220 $ 69,501...

  • Page 48
    ...05 On August 18, 2005, we completed the acquisition of 100% of the outstanding shares of Altec Lansing Technologies, Inc., a privately-held Pennsylvania corporation (''Altec Lansing'') for a cash purchase price including acquisition costs of approximately $165 million. The results of operations of...

  • Page 49
    ... portable audio products, and a line of headsets, headphones, and microphones for personal digital media under our Altec Lansing brand. In addition, we manufacture and market under our Clarity brand specialty telephone products, such as telephones for the hearing impaired, and other related products...

  • Page 50
    ... beyond voice communications DSP into audio DSP. Our Altec Lansing business manufactures and markets high quality computer and home entertainment sound systems and a line of headsets, headphones and microphones for personal digital media. We believe that bringing our product concepts to market will...

  • Page 51
    part ii brand to stand alongside our voice communications brand, and that as a supplier to key channel partners, we will become a more important supplier if we can satisfy a broader set of audio needs. We expect that the costs related to the expansion of our own core technology group, including ...

  • Page 52
    ... line of our statement of operations. ) ) We believe that our fiscal 2007 sales for the wireless office, our Bluetooth products for Bluetooth-enabled devices such as mobile phones and other PDA's, gaming and VOIP computer headsets, and our entertainment products, especially the portable...

  • Page 53
    part ii ANNUAL RESULTS OF OPERATIONS The following tables set forth, for the periods indicated, the consolidated statements of operations data and data by segment. The financial information...Net income Audio Communications Group...131,216 84,754 1,745 86,499 24,220 $ 62,279 8.5% 23.0% 31.5% 20... Selling,...

  • Page 54
    ...,030 34.3% The Audio Communications Group designs, manufactures, markets and sells headsets for business and consumer applications, and other specialty products for select markets. We make products for use with office and contact center phones, for use with mobile and cordless phones, and for use...

  • Page 55
    ... had significantly lower shipments to some of our key wireless OEM carrier partners, particularly for the corded mobile products; In fiscal 2005, a major customer purchased our corded mobile headsets to include in ''promotional bundles'' with sales of cell phones in the first quarter of 2005. While...

  • Page 56
    ... design, manufacture, sales, marketing and support of audio solutions and related technologies. It offers computer and digital audio systems, digital radio frequency audio systems, and portable audio products as well as headphones and microphones for personal digital media. Major product categories...

  • Page 57
    ... a significant opportunity for unit volume increases; however, this market is highly competitive and fast changing. In fiscal 2006, we introduced an entry level portable speaker for use with the iPod, the iM11, and a powered USB. two-piece speaker system, the XT2. Domestic and International Domestic...

  • Page 58
    .... Net revenues from our specialty products, which are principally our Clarity products marketed for hearing impaired individuals, grew primarily from sales of new product models, wireless products and increased distribution through our retail channels. International revenues for fiscal 2005 were...

  • Page 59
    ... to improve our gross profit through supply chain management, improvements in product launches, increasing the utilization of manufacturing capacity, particularly in our new facility in China, and improving the effectiveness of our marketing programs. Product mix has a significant impact on gross...

  • Page 60
    ... due to a product mix shift towards lower margin products, particularly our Bluetooth products within our mobile products, and a greater contribution of wireless products within our Office and Contact Center products. These were offset in part by continued component cost reductions, manufacturing...

  • Page 61
    ... quarter of fiscal 2006. We launched additional new products during the year, including the SupraPlus Wireless, a DECT wireless headset for the office market, released in the fourth quarter of fiscal 2006; growth in our design centers in Mexico and China where we spent $3.7 million and $1.5 million...

  • Page 62
    ... office and wireless mobile markets, gaming products and the home and home office markets; expansion of our industrial design center in Santa Cruz; and costs associated with technologies acquired from Octiv, Inc., which was renamed Volume Logic subsequent to the acquisition. Selling, General...

  • Page 63
    ...associated with the integration of Altec Lansing of approximately $0.5 million, retention of key employees of approximately $0.6 million, business development costs of approximately $1.3 million, and non-cash charges of $2.4 million related primarily of the amortization of acquired intangible assets...

  • Page 64
    ... global sales and marketing programs designed to generate demand for our wireless office, gaming, VoIP products, and other new products; new marketing programs to leverage hands-free regulatory laws, especially in the Japanese market, launch new products, and start a national brand awareness program...

  • Page 65
    ...fiscal year; $2.1 million in cost of revenues relating to the amortization of acquired technology assets; $2.6 million recorded under selling, general and administrative expense representing predominantly the amortization of acquired intangibles excluding technology assets; and $0.9 million recorded...

  • Page 66
    ... flat to down trend on revenues derived from professional grade corded headsets, the rapid growth of the Bluetooth consumer market with continued intense price competition and other factors such as generally shorter product life cycles. Our operating margin will also be significantly affected by the...

  • Page 67
    ...Altec Lansing, which has a higher tax rate than our core Plantronics business. This effective rate increase was offset in part by special incentives that Plantronics received under the Maquiladora program in Mexico... $2.7 million relating to a tax asset that was recorded in connection with the ...

  • Page 68
    ... 2005 to $23.1 million in fiscal 2006, primarily due to additional property, plant and equipment and intangible assets acquired in the purchase of Altec Lansing. The remaining difference relates to adjustments to net income primarily due to changes in deferred taxes. 62 Ó‡ P l a n t r o n i c s

  • Page 69
    ... in our net revenues and operating results, collection of accounts receivable, changes to inventory levels and timing of payments. We also intend to increase our marketing expenditures to promote our wireless office products in fiscal 2007 to a total of approximately $19 million. Cash Flows...

  • Page 70
    ... million on the construction of our new manufacturing and design facility in Suzhou, China; $1.8 million on the expansion of the Santa Cruz headquarters' building for the construction of the new industrial design wing; as well as improvements at our Plamex manufacturing site in Tijuana, Mexico. 64...

  • Page 71
    ... quick ...change to a financial covenant. This change...Altec Lansing does not purchase options for trading purposes. As of March 31, 2006, Altec Lansing does not have any forward contracts outstanding. During fiscal 2006, we ended a hedging program to hedge a portion of the China Yuan payments related...

  • Page 72
    ...the issuance of common stock under our employee stock purchase plan. The resulting increase in the number of outstanding shares could affect our per share results of operations. However, we cannot predict the timing or amount of proceeds from the sale or exercise of these securities, or whether they...

  • Page 73
    ... special pricing programs. Estimated product returns are deducted from revenues upon shipment, based on historical return rates, the product stage relative to its expected life cycle, and assumptions regarding the rate of sell-through to end users from our various channels based on historical sell...

  • Page 74
    ... or two years, depending on the type and brand, and the location in which the product was purchased. Where specific warranty return rights are not given to the customer but where the customers are granted limited rights of return or discounts in lieu of warranty, management records these rights of...

  • Page 75
    ... is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Income Taxes We are subject to income taxes both in the United States as well as in several foreign jurisdictions. Management must make certain...

  • Page 76
    ... our exposure to market risk related to changes in interest rates and foreign currency exchange rates. This discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors including those set forth in...

  • Page 77
    ...change in the value of the foreign currency versus the U.S. dollar. Net Underlying Foreign Currency Transaction Exposures March 31, 2006 (in millions) USD Value of Net FX Contracts Net Exposed Long...sales outside of the United... against the indicated option contract type...design center in Suzhou, China...

  • Page 78
    ...PLANTRONICS...Line of credit Accounts payable Accrued liabilities Income taxes payable Total current liabilities Deferred tax liability Long-term liabilities Total liabilities Commitments and contingencies (Note 21) Stockholders' equity: Preferred stock...,628 - 651 293,735 (2,220) 1,583 437,867 731,616...

  • Page 79
    part ii PLANTRONICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Fiscal Year Ended March 31, (in thousands, except income per share) 2004 $416,965 200,995 215,970 35,460 95,756 131,216 84,754 1,745 86,499 24,220... Research, development and engineering Selling, general and administrative Total ...

  • Page 80
    ... of Altec Lansing and Octiv, net of cash acquired Capital expenditures and other assets Purchase of equity investment Cash used for investing activities CASH FLOWS FROM FINANCING ACTIVITIES Purchase of treasury stock Proceeds from sale of treasury stock Proceeds from exercise of stock options...

  • Page 81
    ...marketable securities Unrealized gain on hedges Comprehensive income Exercise of stock options Issuance of restricted common stock Divdends paid Amortization of stock-based compensation Income tax benefit associated with stock options Purchase of treasury stock Sale of treasury stock...- - (2,220) - - ...

  • Page 82
    ... portable audio products, and a line of headsets, headphones, and microphones for personal digital media under our Altec Lansing brand. In addition, we manufacture and market under our Clarity brand specialty telephone products, such as telephones for the hearing impaired, and other related products...

  • Page 83
    ...held in the Plantronics' name at a limited number of major financial institutions. At March 31, 2005 and 2006, all of the Company's investments were classified as available-for-sale and are carried at fair value based upon quoted market prices at the end of the reporting period. Resulting unrealized...

  • Page 84
    ... or two years, depending on the type and brand, and the location in which the product was purchased. Where specific warranty return rights are not given to the customer but where the customers are granted limited rights of return or discounts in lieu of warranty, management records these rights of...

  • Page 85
    ... value of goodwill and indefinite lived intangibles is impaired. The identification and measurement of goodwill impairment involves the estimation of the fair value of the Company's reporting units. The estimates of fair value of reporting units are based on the best information available as of the...

  • Page 86
    ..., volume rebates, and special pricing programs. Estimated product returns are deducted from revenues upon shipment, based on historical return rates, the product stage relative to its expected life cycle, and assumptions regarding the rate of sell-through to end users from various channels based on...

  • Page 87
    ..., state taxes, purchase accounting, and other factors. Its future effective tax rates could be impacted by a shift in the mix of domestic and foreign income; tax treaties with foreign jurisdictions; changes in tax laws in the United States or internationally; a change in management's estimates...

  • Page 88
    ... balance sheets. The functional currency of the Company's European finance, sales and logistics headquarters in the Netherlands, sales office, warehouse and distribution center in Hong Kong, and manufacturing facilities in Suzhou and Dongguan, China, is the U.S. dollar. For these foreign operations...

  • Page 89
    part ii The impact on pro forma net income and net income per share in the table above may not be indicative of the effect in future years as options typically vest over several years, and Plantronics continues to grant stock options to new and current employees. The following table sets forth the ...

  • Page 90
    ...SBP'') awards, including shares issued under certain employee stock purchase plans, stock options, restricted stock and stock appreciation rights. In March 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 107 (''SAB 107'') relating to the adoption of SFAS 123R. 84...

  • Page 91
    ... and short-term investments. Altec Lansing, headquartered in Milford, PA, has a manufacturing plant in Dongguan, China, and sales offices in the U.S., Europe, and Asia. Altec Lansing has approximately 1,400 employees. See Note 22 for a description of Altec Lansing's business. The results of...

  • Page 92
    ... on the residual purchase price after allocating the purchase price to the fair market value of tangible and intangible assets acquired less liabilities assumed. Goodwill arises as a result of, among other factors, future unidentified new products, new technologies and new customers as well as the...

  • Page 93
    ... name applying a 12% discount rate. The inMotion trade name is relatively new and relates to specific niches of the portable audio market. Based on product life cycles, history relating to the category of products for which the inMotion brand is utilized, and similar product trademarks within the...

  • Page 94
    ...including home entertainment, digital music libraries, professional broadcast and the hearing impaired. The Octiv acquisition provides core technology to improve audio intelligibility in the Company's products. The results of operations of Volume Logic have been included in Plantronics' consolidated...

  • Page 95
    ... useful lives of ten years. Goodwill, representing the excess of the purchase price over the fair value of tangible and identified intangible assets acquired, is not amortized; however, it is reviewed annually for impairment at the reporting unit level or more frequently if impairment indicators...

  • Page 96
    ...fair values for assets acquired and liabilities assumed, and changes to deferred taxes. In accordance with SFAS No. 142, Plantronics reviews goodwill at the reporting unit level for impairment annually or more frequently if an event or circumstance indicates that an impairment loss may have occurred...

  • Page 97
    ... 637 30 $109,208 Useful Life 6-10 years Immediate 7 years 7 years 8 years 7 years 8 years Indefinite 7 years 5 years Technology In-process technology State contracts Patents Customer relationships Trademarks Tradename-inMotion Tradename-Altec Lansing OEM relationships Non-compete agreements Total...

  • Page 98
    ... (useful life 7-30 years) Machinery and equipment (useful life 2-10 years) Construction in progress Less: accumulated depreciation $ 6,161 29,752 72,773 10,009 118,695 (58,950) $ 59,745 Accrued liabilities: Employee benefits Accrued advertising and sales and marketing Warranty obligation Accrued...

  • Page 99
    ... years. Because the Company has the ability and intent to hold these securities until a recovery of fair value, which may be at maturity, management does not consider these debt securities to be other-thantemporarily impaired at March 31, 2006. 9. Bank Line of Credit Plantronics has a $100 million...

  • Page 100
    ... with the covenants under this agreement. 10. Long-Term Liability The $1.5 million long-term liability at March 31, 2006 relates to a long term incentive plan for certain executives and a deferred compensation plan for five former employees of the Audio Entertainment Group. Final payment of the...

  • Page 101
    ...at month end were marked to market and the gain or loss was immediately included in earnings. Altec Lansing did not purchase options for trading purposes. As of March 31, 2006, no forward contracts remained outstanding. The following table summarizes Plantronics' cash flow hedging positions. Balance...

  • Page 102
    ...,000 shares of common stock under our 15th repurchased programs. Plantronics purchased 770,100 shares of the Company's common stock in the open market at a total cost of $28.5 million and an average price of $36.96 per share. Through the Company's employee benefit plans, Plantronics reissued 118,752...

  • Page 103
    ... fair market value of the Company's common stock at the date of grant. In September 1993, the Board of Directors approved the Plantronics Inc. Parent Corporation 1993 Stock Option Plan (the ''1993 Stock Option Plan''). Under the 1993 Stock Option Plan, 22,927,726 shares of common stock (which number...

  • Page 104
    ... reserved 145,000 shares for the issuance of stock awards to Altec Lansing employees (the ''Inducement Plan''). Subsequent to the Altec Lansing acquisition, the Company granted 129,000 stock options to purchase shares of common stock at a weighted average exercise price of $33.49, which was equal to...

  • Page 105
    ... an opportunity to purchase common stock through payroll deductions. The plan qualifies under Section 423 of the Internal Revenue Code. Under the 2002 ESPP, which is effective through June 2012, the purchase price of Plantronics' common stock is equal to 85% of the lesser of the fair market value...

  • Page 106
    .... Its future effective tax rates could be impacted by a shift in the mix of domestic and foreign income; tax treaties with foreign jurisdictions; changes in tax laws in the United States or internationally; a change in management's estimates of future taxable income which results in a valuation...

  • Page 107
    part ii In the second quarter of fiscal 2006, Plantronics acquired Altec Lansing and recorded deferred tax liabilities for the difference between the book and tax bases that relate to certain acquired tangible and intangible assets. The balance of these deferred tax liabilities at the end of fiscal...

  • Page 108
    ...and liabilities for financial reporting and income tax purposes....: Deferred gains on sales of properties Purchased intangibles Unremitted earnings of...employee stock options. Outstanding stock options to purchase approximately 1.5 million, 0.7 million and 2.5 million shares of Plantronics' stock...

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    ... the type, brand, and location in which the product was purchased. Where specific warranty return rights are not given to the customer but where the customers are granted limited rights of return or discounts in lieu of warranty, management records these rights of return or discounts as adjustments...

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    ...assets, and major customers. The method for determining what information to report is based on the way that management has organized operating segments within the Company for making operating decisions and assessing financial performance. Plantronics' President and Chief Executive Officer (''the CEO...

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    ... The Audio Communications Group designs, manufactures, markets and sells headsets for business and consumer applications, and other specialty products for the hearing impaired. With respect to headsets, it makes products for office and contact center use, use with mobile and cordless phones, and...

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    ...$110,362 Fiscal Year Ended March 31, (in thousands) Audio Communications Group Audio Entertainment Group Consolidated operating income The reconciliation of segment information to Plantronics' consolidated net income is as follows: 2004 $84,754 1,745 24,220 $62,279 2005 $126,621 3,739 32,840 $ 97...

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    ... geographic location of the sales organization. The following table presents net revenues and long-lived assets by geographic area: 2004 2005 2006 Fiscal Year Ended March 31, (in thousands) Net sales from customers: United States Europe, Middle East and Africa Asia Pacific and Latin America Canada...

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    ... of internal control over financial reporting as of March 31, 2006 because it was acquired by the Company in a purchase business combination during fiscal year 2006. Altec Lansing is a wholly-owned subsidiary whose total assets and total revenue represent 39.4% and 16.1% of the related consolidated...

  • Page 115
    ... and on the effectiveness of the Company's internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that...

  • Page 116
    ... in Management's Report on Internal Control over Financial Reporting, management has excluded Altec Lansing, Inc. (Altec Lansing) from its assessment of internal control over financial reporting as of April 1, 2006 because it was acquired by the Company in a purchase business combination during...

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    ... our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time...

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    ..., our internal control over financial reporting. In making our assessment of changes in internal control over financial reporting in the most recent quarter, we have excluded the Altec Lansing business. Material changes in internal control over financial reporting of the Altec Lansing business, if...

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    ... granted to executive officers and directors, on this web site within five business days following the date of such amendment or waiver. Stockholders may request a free copy of the Code: Plantronics, Inc. 345 Encinal Street Santa Cruz, CA 95060 Attn: Investor Relations (831) 426-5858 Corporate...

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    ... Relationships and Related Transactions The information required by this item is included under the caption ''Director Independence'' in the 2006 Proxy Statement and is incorporated into this Item 13 by this reference. Item 14. Principal Accountant Fees and Services The information required by...

  • Page 121
    ... part of this Annual Report ...REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (2) Financial Statement Schedules. PLANTRONICS...Year ended March 31, 2005 Year ended March 31, 2006 Warranty reserves: Year ended March 31, 2004 Year ended March 31,...

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    3. Exhibits. See Item 15(b) below. (b) Exhibits We have filed, or incorporated by reference into this Report, the exhibits listed on the accompany Index to Exhibits immediately following the signature page of this Form 10-K. (c) Financial Statement Schedules See Items 8 and 15(a) (2) above. 116 Ó‡ ...

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    ... 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PLANTRONICS, INC. By: /s / KEN KANNAPPAN Ken Kannappan Chief Executive Officer June 5, 2006 POWER OF ATTORNEY KNOW ALL PERSONS...

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    SIGNATURES Signature /s / GREGGORY HAMMANN (Gregg Hammann) /s / JOHN HART (John Hart) /s / MARSHALL MOHR (Marshall Mohr) /s / TRUDE TAYLOR (Trude Taylor) /s / ROGER WERY (Roger Wery) Title Director Date June 5, 2006 Director June 5, 2006 Director June 5, 2006 Director June 5, 2006 Director...

  • Page 125
    ... Exhibit Number 2.1 Description of Document Agreement and Plan of Merger by and among Plantronics, Inc., Sonic Acquisition Corporation, Altec Lansing Technologies, Inc. and the other parties named herein, dated July 11, 2005 (incorporated herein by reference from Exhibit 10.15 of the Registrant...

  • Page 126
    ... of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 6, 2004). Lease dated December 7, 1990 between Canyge Bicknell Limited and Plantronics Limited, a subsidiary of the Registrant, for premises located in Wootton Bassett, The United Kingdom (incorporated herein...

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    Exhibit Number 10.8.5* Description of Document Amendment No. 4 to the 1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (10.9.5) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on June 21, 2002). 2002 Employee Stock Purchase Plan (incorporated...

  • Page 128
    ... No. 4 dated as of November 17, 2005, between Registrant and Wells Fargo Bank National Association (incorporated herein by reference from Exhibit (10.1) to the Registrants Form 8-K (File No. 001-12696), filed on November 23, 2005). Restricted Stock Award Agreement dated as of October 12, 2004...

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    ...512 8188-2111 China (Dongguan) Altec Lansing Electronics Dongguan Co. Ltd. Song Bai Lang Da Lang Town, 523782 T: (86) 769 318 2340 Hong Kong 1801 Yue Xiu Building 160 - 174 Lockhart Road Wanchai, Hong Kong T: (85) 2-2375-8480 F: (85) 2-2377-0573 Hong Kong Altec Lansing Hong Kong Limited Unit 3409-10...

  • Page 131
    ...-886-3-427-3555 United Kingdom Interface Business Park Bincknoll Lane Wootton Bassett, Wiltshire SN4 8QQ England T: 0800 410014 F: 44 1793 848853 United States Plantronics, Inc. 345 Encinal Street Santa Cruz, CA 95060 T: (831) 426-5858 F: (831) 426-6098 United States Altec Lansing Technologies, Inc...

  • Page 132
    ... earnings press releases. Annual Meeting The annual meeting of Plantronics stockholders will be: Wednesday, July 26, 2006 10:00 a.m., Pacific Daylight Time Plantronics, Inc. Headquarters 345 Encinal Street Santa Cruz, California 95060 Please direct inquires to: Investor Relations Plantronics, Inc...

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