Plantronics 2006 Annual Report Download - page 56

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Gaming and Computer Audio
In comparison to fiscal 2005, our fiscal 2006 Gaming and Computer Audio net revenues decreased
predominantly due to a decline in revenues of our Halo 2 Edition of the GameCom headset for the
Xbox, as consumer interest in the Halo 2 headset peaked during the holiday and post-holiday sales in the
third and fourth quarters of fiscal 2005. This decline in gaming headsets was offset by growth in PC
headsets, driven by the increasing use of VoIP by consumers. We launched a number of new products,
including a new .Audio family, toward the end of fiscal 2006.
Other Specialty Products
In comparison to fiscal 2005, our fiscal 2006 Specialty product net revenues, which consist primarily of
our Clarity products marketed for hearing impaired individuals, decreased slightly. We anticipate that net
revenues for this category will slightly increase in fiscal 2007.
Domestic and International
In comparison to fiscal 2005, we experienced growth in fiscal 2006 for all of our major international
regions, both in the Asia Pacific Latin America region (‘‘APLA’’) which increased 26.4%, and in our
Europe, Middle East, and Africa (‘‘EMEA’’) region, which increased 19.7%. This growth, particularly in
the wireless office and Bluetooth mobile headsets, was broad based across all of our major product groups,
except for our mobile products in the EMEA regions.
Audio Entertainment Group
Fiscal Year Ended
March 31, March 31, Increase
($ in thousands) 2005 2006 (Decrease)
Audio Entertainment Group
Net revenues from customers:
Total segment net revenues $ — $120,669 $120,669
The Audio Entertainment Group is engaged in the 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 include portable audio, which is defined as all speakers
whether AC or battery-powered that work with portable digital players, such as iPod or MP3 players;
powered audio, which is defined as self-powered speaker systems used for computers and other multi-
media application systems; and personal audio (headphones) and interactive audio (headsets). Currently,
all the revenues in the Audio Entertainment Group are derived from Altec Lansing products.
In fiscal 2006, net revenues represent results since the acquisition of Altec Lansing on August 18, 2005,
and thus reflect only a seven and a half month period of revenues rather than a year of revenues. Portable
Audio and Powered Audio accounted for approximately 58% and 34% of Audio Entertainment Group
net revenues. Personal Audio, and Interactive Audio make up the remainder. Because the Altec Lansing
products are primarily consumer goods sold in the retail channel, the holiday sales in the December
quarter account for a seasonal spike in net revenues, which is not continued into the next quarters when
sales return to a more normalized and lower level. This seasonality has a major impact on quarterly
results. The strength of the MP3 market contributed heavily to sales of Altec Lansing speaker products in
the Portable products category, which attach to MP3 players. The strong growth of the MP3 market
50 ⯗Plantronics