Plantronics 2007 Annual Report Download

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ANNUAL REPORT
2007

Table of contents

  • Page 1
    ANNUAL REPORT 2007

  • Page 2
    ... our existing customers with compelling product enhancements. Grow market share in Bluetooth® while continuing to improve profitability. Improve the product portfolio and turn around the profitability in our Altec Lansing division. Improve Audio Communications Group profitability, in part by...

  • Page 3
    ... organization) 345 Encinal Street, Santa Cruz, California (Address of principal executive offices) 77-0207692 (I.R.S. Employer Identification Number) 95060 (Zip Code) PLANTRONICS, INC. (831) 426-5858 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12...

  • Page 4
    ... ...Item 9B. Other Information... 33 34 35 61 64 102 102 102 Part III. Item 10. Item 11. Item 12. Item 13. Item 14. Part IV. Item 15. Signatures Directors, Executive Officers and Corporate Governance...Executive Compensation ...Security Ownership of Certain Benef icial Owners and Management and...

  • Page 5
    ... and home entertainment sound systems, docking audio products, and a line of headsets and headphones 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...

  • Page 6
    ... develop high quality products to meet the needs of our customers, whether it be for communications or personal entertainment. Plantronics headsets are widely used with cell phones, in contact centers, in the office, in the home, for computer applications such as Voice over Internet Protocol ("VoIP...

  • Page 7
    ..., including noise-canceling microphones, Digital Signal Processing ("DSP"), and more; wireless freedom allowing people to take and make calls as they move freely around their office or home without cords or cables; multi-tasking benefits that allow people to use a computer, a Personal Data Assistant...

  • Page 8
    ... completed the transition from corded to Bluetooth products for mobile phone applications. Use of headsets is growing worldwide, particularly due to continued Bluetooth technology adoption and hands-free legislation for cell phones. As headsets become more mainstream, users are becoming more fashion...

  • Page 9
    ... and amplifiers, we provide headset accessories, which include replacement voice tubes, ear 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...

  • Page 10
    ... wireless products. Markets Docking Audio Our Docking Audio market provides the largest revenue source in the AEG business, and is defined as all speakers whether AC or battery-powered that work with portable digital players, such as iPod or MP3 players under the inMotion TM brand, and also portable...

  • Page 11
    ... provides deep bass without a subwoofer. • • PLANTRONICS SERVICE AND REPAIR We support our ACG and AEG product offerings with technical assistance centers to answer questions from our customers. Our worldwide service centers provide quick response to both warranty service needs, provided at no...

  • Page 12
    ... to meet delivery schedules, customer service and support, reputation, distribution, warranty terms, and product life; Gaming and entertainment market - in retail channel, the primary factors for success are differentiated packaging, price, superior microphone and speaker performance and headset...

  • Page 13
    ... Altec Lansing branded products over the next 18 months. We are refreshing our product line of Docking Audio products and extending our product lines with integrated music and phone audio products, and home audio products. We also have a number of new product and core technology development programs...

  • Page 14
    ... retailers, office supply distributors; catalog and mail order companies; mass merchants; warehouse clubs; and wireless carrier stores. Our AEG products are predominantly distributed through retailers. In addition, ACG headsets are sold through retailers who sell headsets to corporate customers...

  • Page 15
    ... our 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...

  • Page 16
    ...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 pending in connection with certain new products and product features...

  • Page 17
    ..., General Manager Home & Home Office Vice President, Product Development & Technology President, Clarity Equipment Managing Director, Europe, Middle East & Africa Vice President and General Manager, B2B Solutions Mr. Kannappan joined Plantronics in February 1995 as Vice President of Sales and...

  • Page 18
    ... President of Thomson Interactive Home Health Services. From 1997 to 1999, he served as President & CEO of Labtec, a leading computer peripherals 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...

  • Page 19
    ... was Vice President of Sales and Marketing for Dancall Radio A/S, a manufacturer of cell phones and cordless phones. From 1985 to 1991, he held management positions in the distribution and marketing divisions of Bang and Olufsen Group, a global manufacturer of consumer electronics. He holds a degree...

  • Page 20
    .... The size and timing of opportunities in these markets are difficult to predict; We are working to refresh virtually the entire AEG product line; however, market adoption of new products is difficult to predict; A significant portion of our annual retail sales for AEG generally occur in the third...

  • Page 21
    ... inventories of finished products, components and sub-assemblies. In addition, because our retail customers have pronounced seasonality, we must build inventory well in advance of the December quarter in order to stock up for the anticipated future demand. If we were unable to sell these inventories...

  • Page 22
    ... our Docking Audio and PC Audio speaker products, are marketed through the retail channel. Our retail channel partners frequently have requirements around timing of when new products can be introduced into their stores. If we have manufacturing delays and are unable to supply our new products within...

  • Page 23
    ...In general, our corded headsets have had higher gross margins than our cordless products. In addition, we expect that office phones will begin to incorporate Bluetooth functionality, which would open the market to consumer Bluetooth headsets and reduce the demand for our traditional office telephony...

  • Page 24
    ..., sub-assemblies, components and products. Lead times are particularly long on siliconbased components incorporating radio frequency and digital signal processing technologies and such components are an increasingly important part of our product costs. In particular, many B2C customer orders have...

  • Page 25
    ... to fulfill our needs or may not meet our quality and delivery objectives. Original design manufacturers and contract manufacturers produce key portions of our product lines for us. Our reliance on them involves significant risks, including reduced control over quality and logistics management, the...

  • Page 26
    ... all of our products through distributors, retailers, OEM customers and telephony service providers. Our existing relationships with these parties are not exclusive and can be terminated by either party without cause. Our channel partners also sell or can potentially sell products offered by our...

  • Page 27
    ... of national or international economic growth, these markets may not materialize to the levels we require to achieve our anticipated financial results, which could in turn materially adversely affect the market price of our stock. In particular, we may accept returns from our retailers of products...

  • Page 28
    ... from other consumer electronics companies that currently manufacture and sell mobile phones or computer peripheral equipment. These competitors generally are larger, offer broader product lines, bundle or integrate with other products' communications headset tops and bases manufactured by them or...

  • Page 29
    ... 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 or market reaction...

  • Page 30
    ...of our ACG headset assembly operations in our manufacturing facility located in Tijuana, Mexico, and we obtain most of the components and subassemblies used in our products from various foreign suppliers. We have recently completed construction of a factory and design center in Suzhou, China and are...

  • Page 31
    ... company, and 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 our control. Our corporate headquarters...

  • Page 32
    ... our products enhance driver safety by permitting a motor vehicle operator to generally be able to keep both hands free to operate the vehicle, there is no certainty that this is the case and we may be subject to claims arising from allegations that use of a mobile telephone and headset contributed...

  • Page 33
    ... for contact centers and related headset products could cause a decrease in the demand for our products, which would materially adversely affect our business, financial condition and results of operations. While we believe we currently have adequate internal control over financial reporting, we...

  • Page 34
    ... of our board of directors, the plan could make it more difficult for a third 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. 30 Plantronics

  • Page 35
    part i Item 2. Properties Our principal executive offices are located in Santa Cruz, California. Our facilities are located throughout the Americas, Europe, and Asia/Pacific. The table below lists the major facilities owned or leased as of March 31, 2007. Location Square Footage Lease/Own Primary ...

  • Page 36
    ..., results of operations or cash flows. Six class action lawsuits were recently filed against the Company alleging that our Bluetooth headsets may cause noise-induced hearing loss. Shannon Wars et al. vs. Plantronics, Inc. was filed on November 14, 2006 in the United States District Court for the...

  • Page 37
    ... 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 an independent source, under the symbol PLT, for each period indicated. Low Fiscal 2006 First Quarter Second Quarter...

  • Page 38
    ... DATA: Cash, cash equivalents, and short-term investments Total assets Long-term liabilities Total stockholders' equity $559,995 $ 97,520 $ $ $ 2.02 1.92 0.15 50,821 $750,...of Altec Lansing Technologies, Inc., a privately-held Pennsylvania corporation ("Altec Lansing") for a cash purchase price ...

  • Page 39
    ... and home entertainment sound systems, docking audio products, and a line of headsets and headphones 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...

  • Page 40
    ..., expanding 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...

  • Page 41
    part ii a publicly traded company. We have implemented an ERP system for most of Altec Lansing's operations. We are also in the process of changing our distribution and sales processes to more effectively fulfill customer orders. While most of our integration efforts have been focused on domestic ...

  • Page 42
    ... the office and for use with cell phones, and by an improved product portfolio in AEG. We expect corded communication headset sales to be flat to down for most markets. We intend for the following discussion of our financial condition and results of operations to provide information that will assist...

  • Page 43
    part ii ANNUAL RESULTS OF OPER ATIONS The following tables set forth, for the periods indicated, the consolidated statements of operations data and data by segment. The financial information and the ensuing discussion should be read in conjunction with the accompanying consolidated financial ...

  • Page 44
    ...46,789 The office and contact center ("OCC") products represent our largest source of revenues while the Mobile products represent our largest unit volumes. Revenues may vary due to the timing of the introduction of new products, seasonality, discounts and other incentives and channel mix. There is...

  • Page 45
    ... 14% primarily due to decreased sales of our Clarity products to two major retail customers, who decreased the number of product models that they carry. Sales of Clarity products to state government programs and other distributors were relatively flat. In comparison to fiscal 2005, fiscal 2006...

  • Page 46
    ...application systems which includes interactive audio (headsets) and personal audio (headphones). Currently, all the revenues in AEG are derived from our Altec Lansing products. Altec Lansing products are primarily consumer goods sold in the retail channel and sales are highly seasonal. The strongest...

  • Page 47
    ... $15.1 million or 24.5% in our Asia Pacific Latin America region ("APLA"), which occurred across all major product groups, but was particularly strong in Bluetooth mobile and OCC wireless office headsets. Net revenues in our Europe, Middle East, and Africa ("EMEA") region were up $16.8 million...

  • Page 48
    ... sales and in part to a mix shift toward wireless products which have a higher rate of return under warranty and higher product cost; an increase in capacity in our production facilities in Suzhou, China and Tijuana, Mexico, in preparation for anticipated future demand, especially for our Bluetooth...

  • Page 49
    ... in significant discounting and price protection programs, particularly for the Docking Audio product line; a shift in product mix. In fiscal 2007, we sold a higher proportion of PC Audio products than in fiscal 2006. PC Audio products carry lower gross margins than Docking Audio products; increased...

  • Page 50
    ... may vary depending on the product mix, customer mix, channel mix, amount of excess and obsolete inventory charges, changes in our warranty repair costs or return rates, royalty payments, competitive pricing and discounts or customer incentives, mix of higher air freight costs compared to lower...

  • Page 51
    ...higher, primarily due to the following: incremental spending in our ongoing design and development of wireless products, including a new suite of Bluetooth products; growth in our design centers in Mexico and China where we spent $3.7 million and $1.5 million, respectively, in fiscal 2006; high...

  • Page 52
    ... our design centers in Tijuana, Mexico and Suzhou, China and the additional expenses from AEG. We expect that our research, development and engineering expenses will increase due to continued expenditures for wireless office and wireless mobile products, gaming products and the home and home office...

  • Page 53
    ...; and an increase in marketing and advertising spending. In comparison to fiscal 2005, our fiscal 2006, selling, general and administrative expenses increased due to the following: costs of $10.6 million spent on the national branding campaign in fiscal 2006 compared to $1.3 million in 2005...

  • Page 54
    ... in the prior year. In comparison to fiscal 2005, the increase in consolidated selling, general and administrative expenses in fiscal 2006 can be attributed to the following: costs associated with our national branding and advertising campaign; the impact of the one-time benefit from the legal...

  • Page 55
    ... percentage of revenue, primarily resulting from stock-based compensation charges of $16.1 million. The increased expenses were partially offset by a $2.6 million pre-tax gain in the first quarter of fiscal 2007 due to the sale of land in Frederick, Maryland. In comparison to fiscal 2005, our fiscal...

  • Page 56
    ... be impacted by product mix shifts, stock-based compensation, non-cash charges associated with purchase accounting, product life cycles, and seasonality. Until the product refresh of the Altec Lansing products is completed, we anticipate that the operating results for the AEG segment will reflect...

  • Page 57
    ...2006 was negatively impacted by the acquisition of 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 and additional tax credits that we...

  • Page 58
    ... placed additional fixed assets into production in our new manufacturing plant in Suzhou, China and in our new research and development center in Tijuana, Mexico, and completed certain building improvements in our Santa Cruz, California headquarters facility. • In comparison to 2005, fiscal 2006...

  • Page 59
    ... design wing at our Santa Cruz headquarters building in fiscal 2006 and spent $1.8 million and $2.8 million on capital expenditures for this project in fiscal 2006 and 2007, respectively. We have also made $9.6 million of capital expenditures to improve our manufacturing facility in Tijuana, Mexico...

  • Page 60
    ...and the issuance of common stock under our employee stock purchase plan. Further, the resulting increase in the number of outstanding shares could affect our per share earnings. However, we cannot predict the timing or amount of proceeds from the sale or exercise of these securities, or whether they...

  • Page 61
    ... Inventory Warranty Goodwill and Intangibles Income Taxes Stock-Based Compensation Expense Revenue Recognition Revenue from sales of products to customers is recognized when the following criteria have been met: • Title and risk of ownership are transferred to customers; • • • Persuasive...

  • Page 62
    ... 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-through rates. Should product lives vary significantly from management estimates...

  • Page 63
    ...at the time revenue is recognized. Generally, warranties start at the delivery date and continue for one 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...

  • Page 64
    ... as well as assumptions regarding a number of complex and subjective variables. These variables include our expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate and expected dividends. 60 Plantronics

  • Page 65
    ... of future employee behavior. We base the risk-free interest rate on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. We base the dividend yield assumption on our current dividend and the market price of our common stock at...

  • Page 66
    ... British Pound denominated sales. However, we have no assurance our strategy will be successfully implemented and that exchange rate fluctuations will not materially adversely affect our business in the future. Non-designated Hedges We hedge our Euro and Great British Pound denominated receivables...

  • Page 67
    ... below presents the impact on our currency option contracts of a hypothetical 10% appreciation and a 10% depreciation of the U.S. dollar against the indicated option contract type for cash flow hedges: FX Gain (Loss) From 10% Appreciation of USD FX Gain (Loss) From 10% Depreciation of USD March 31...

  • Page 68
    ...Financial Statements and Supplementary Data PLANTRONICS, INC. CONSOLIDATED BALANCE SHEETS March 31, (in thousands, except share data) 2006 2007 ASSETS Current... and equipment, net Intangibles, net Goodwill Other assets Total assets LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Line of ...

  • Page 69
    part ii PLANTRONICS, INC. CONSOLIDATED STATEMENTS OF OPERATIONS Fiscal Year Ended March 31, (in thousands, except per share data) 2005 $559,995 271,537 288,458 45,216 116,621 - 161,837 126,621 3,739 130,360 32,840 $ 97,520 $ 2.02 48,249 $ 1.92 50,821 $ 0.15 $ 2006 $750,394 424,140 326,254 62...

  • Page 70
    ... of treasury stock Proceeds from sale of treasury stock Proceeds from issuance of common stock Proceeds from line of credit Repayment of line of credit Payment of cash dividends Excess tax benefit from stock-based compensation Cash used for financing activities Effect of exchange rate changes...

  • Page 71
    ... on marketable securities, net of tax Unrealized gain on hedges, net of tax Comprehensive income Exercise of stock options Issuance of restricted common stock Cash dividends declared Stock-based compensation Income tax benefit associated with stock options Purchase of treasury stock Sale of treasury...

  • Page 72
    ... and home entertainment sound systems, docking audio products, and a line of headsets, and headphones for personal digital media under the Altec Lansing brand. Founded in 1961, Plantronics is incorporated in the state of Delaware and trades on the New York Stock Exchange under the ticker symbol "PLT...

  • Page 73
    ...end user of the product. The contractual terms may vary depending upon the geographic region in which the customer is located, the brand and type of product sold, and other conditions, which affect or limit the customers' rights to return product under warranty. Where specific warranty return rights...

  • Page 74
    ...at the time revenue is recognized. Generally, warranties start at the delivery date and continue for one 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...

  • Page 75
    ... and product returns, the Company defers recognition of the revenue until the right to future price adjustments and product returns lapses, and the Company is no longer under any obligation to reduce the price or accept the return of the product. If market conditions warrant, Plantronics may...

  • Page 76
    ... Translation The functional currency of the Company's manufacturing operations and design center in Tijuana, Mexico, foreign research and development facilities, and foreign sales and marketing offices, except for the Netherlands entity, is the local currency of the respective operations. For...

  • Page 77
    part ii 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, sales office and warehouse in Japan, and manufacturing facilities in Suzhou and Dongguan, China, is the U.S. dollar. ...

  • Page 78
    ...share data) 2007 $ 2,908 3,835 10,176 14,011 16,919 (5,599) $ 11,320 $ 0.24 Cost of revenues Research, development and engineering Selling, general and administrative Stock-based compensation expense included in operating expenses Total stock-based compensation Income tax benefit Total stock-based...

  • Page 79
    ... stock plans that have exercise prices per share of $38.19 or higher. Options to purchase approximately 1.5 million shares of the Company's common stock became fully vested and exercisable immediately. In addition, in order to prevent unintended personal benefits to executive officers and directors...

  • Page 80
    ... its products. From time to time, the Company indemnifies customers against combinations of loss, expense, or liability arising from various trigger events relating to the sale and use of its products and services. In addition, Plantronics also provides protection to customers against claims related...

  • Page 81
    ... adjustment in the event of stock splits, reverse stock splits, recapitalization or certain corporate reorganizations) were cumulatively reserved since inception for issuance to employees, directors and consultants of Plantronics. Under the 2003 Stock Plan, the Company may not grant more than 20% of...

  • Page 82
    ... common stock (which number is subject to adjustment in the event of stock splits, reverse stock splits, recapitalization or certain corporate reorganizations) for issuance to non-employee directors of Plantronics. The Directors' Option Plan provides that each non-employee director shall be granted...

  • Page 83
    part ii The following is a summary of the Company's stock option activity during fiscal 2007: Options Outstanding Weighted Average Remaining Contractual Life (in years) (in thousands) Weighted Number of Average Shares Exercise Price 8,277 1,525 (331) (438) 9,033 8,684 6,392 $ 26.75 $ 20.58 $ 9.80...

  • Page 84
    ...next fiscal quarter. Valuation Assumptions The Company estimates the fair value of stock options and ESPP shares using a Black-Scholes option valuation model, consistent with the provisions of SFAS No. 123(R), SEC Staff Accounting Bulletin No. 107 ("SAB 107") and the Company's prior period pro forma...

  • Page 85
    ... currently use Octiv's Volume Logic technology, 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...

  • Page 86
    ...paid using its cash and cash equivalents 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 had approximately 1,400 employees on the date of acquisition. See Note 18 for...

  • Page 87
    ... Customer relationships Trade name - inMotion Trade name - Altec Lansing In-process technology Total $ 25,000 700 17,600 5,000 59,100 900 $108,300 6 years 7 years 8 years 8 years Not amortized Fully expensed in the second fiscal quarter of 2006 Existing technology represents audio products...

  • Page 88
    ...life cycles, history relating to the category of products for which the inMotion brand is utilized, and similar product trademarks within the retail industry, the estimated remaining useful life was determined to be eight years and is being amortized on a straight-line basis to selling, general, and...

  • Page 89
    ...2007, the Company adjusted the the fair value of the property, plant and equipment and inventory acquired, and wrote-off an accrual for direct acquisition costs relating to the purchase of Altec Lansing. In addition, as a result of the merger of Altec Lansing into Plantronics in the third quarter of...

  • Page 90
    ...million and $8.3 million, respectively. In the fourth quarter of fiscal 2007, the Company completed the annual impairment test of the Altec Lansing trade name, which indicated that there was no impairment. Due to the recent performance of the Audio Entertainment Group, it is reasonably possible that...

  • Page 91
    ... a key product. We also determined during our annual planning process in the fourth quarter that our revenue estimates for Volume Logic products would be lower in the near term than anticipated at the acquisition date in fiscal 2006. As a result of these combined triggering events, the Company began...

  • Page 92
    ... year Deductions for warranty claims processed Warranty obligation at March 31, 2006 Warranty provision relating to products shipped during the year Deductions for warranty claims processed Warranty obligation at March 31, 2007 $ $ 5,970 12,594 (12,288) 6,276 15,946 (14,982) 7,240 88 Plantronics

  • Page 93
    ...or stock of an acquirer of the Company at a discounted price in the event of certain efforts to acquire control of the Company. The rights expire on the earliest of (a) April 12, 2012, or (b) the exchange or redemption of the rights pursuant to the rights plan. In fiscal 2006, the Board of Directors...

  • Page 94
    ... Board of Directors had declared the Company's twelfth quarterly cash dividend of $0.05 per share of the Company's common stock, payable on June 8, 2007 to stockholders of record on May 18, 2007. 14. Foreign Currency Derivatives Non-Designated Hedges The Company enters into foreign exchange forward...

  • Page 95
    ... design center in Suzhou, China. At March 31, 2006 and 2007, the Company did not have any outstanding forward foreign exchange contracts for the Chinese Yuan (CNY) as the construction of the manufacturing and design center was completed; all contracts were settled at maturity in the fourth quarter...

  • Page 96
    ... U.S. net income in fiscal 2007 is primarily due to the losses in AEG and stock-based compensation due to the adoption of SFAS No. 123(R). Stock-based compensation is proportionally higher in the U.S. than in our overseas locations which impacts our effective tax rate because it lowers net income in...

  • Page 97
    ...return positions are consistent with applicable tax laws, certain positions are subject to challenge and the Company may not successfully defend its position. While it is difficult to predict the final outcome or timing of resolution of any particular tax matter, the company...reporting... Stock ...sales...

  • Page 98
    ... in the normal course of business including six class action lawsuits recently filed against the Company alleging that our Bluetooth headsets may cause noise-induced hearing loss. Shannon Wars et al. vs. Plantronics, Inc. was filed on November 14, 2006 in the United States District Court for the...

  • Page 99
    ... Company. Audio Communications Group ACG 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...

  • Page 100
    ... 2006 $ 99,851 10,511 $110,362 2007 $ 84,677 (27,228) $ 57,449 Audio Communications Group Audio Entertainment Group Consolidated operating income The reconciliation of segment information to Plantronics' consolidated net income is as follows: Fiscal Year Ended March 31, (in thousands) 2005 $126...

  • Page 101
    ...net revenues and long-lived assets by geographic area: Fiscal Year Ended March 31, (in thousands) 2005 2006 2007 Net sales from unaffiliated customers: United States Europe, Middle East and Africa Asia Pacific and Latin America Canada and Other International Total International $375,530 135,030...

  • Page 102
    ... 31, 2007, respectively. For purposes of presentation, the Company has indicated its accounting year ended on March 31 and our interim quarterly periods as ending on the applicable month end. 1 The results of operations of Altec Lansing have been included in our consolidated results of operations...

  • Page 103
    ... effectiveness of the Company's internal control over financial reporting as of March 31, 2007 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, whose attestation report on our assessment appears herein. /s/ Ken Kannappan Ken Kannappan President and...

  • Page 104
    ... reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over 100 Plantronics

  • Page 105
    ... reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or...

  • Page 106
    ... 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 periods specified in Securities and Exchange Commission...

  • Page 107
    ... 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...

  • Page 108
    ... required by this item is included under the caption "Director Independence" in the 2007 Proxy Statement and is incorporated into this Item 13 by this reference. Item 14. Principal Accounting Fees and Services The information required by this item is included under the caption "Proposal Four...

  • Page 109
    ...OF STOCKHOLDERS' EQUITY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (2) Financial Statement Schedules. PLANTRONICS, INC. SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS AND RESERVES...

  • Page 110
    3. Exhibits. See Item 15(b) below. (b) Exhibits We have filed, or incorporated by reference into this Report, the exhibits listed on the accompanying Index to Exhibits immediately following the signature page of this Form 10-K. (c) Financial Statement Schedules See Items 8 and 15(a) (2) ...

  • Page 111
    ... 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 May 29, 2007 POWER OF ATTORNEY KNOW ALL PERSONS...

  • Page 112
    SIGNATURES Signature /s/ John Hart (John Hart) /s/ Marshall Mohr (Marshall Mohr) /s/ Trude Taylor (Trude Taylor) /s/ Roger Wery (Roger Wery) Title Director Date May 29, 2007 Director May 29, 2007 Director May 29, 2007 Director May 29, 2007 108 Plantronics

  • Page 113
    ...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's Form 10-Q , filed on August 8, 2005). Amended...

  • Page 114
    ... Registrant, for premises located in Tijuana, Mexico (translation from Spanish original) (incorporated herein by reference from Exhibit (10.5.4) of the Registrant's Quarterly Report on Form 10-Q , filed on August 6, 2004). Lease dated December 7, 1990 between Canyge Bicknell Limited and Plantronics...

  • Page 115
    ... and Ken Kannappan (incorporated herein by reference from Exhibit (10.15) to the Registrant's Annual Report on Form 10-K405 (File No. 001-12696), filed on June 1, 2000). Employment Agreement dated as of November 1996 between Registrant and Don Houston (incorporated herein by reference from Exhibit...

  • Page 116
    ...on Form 10-K, filed on May 31, 2005). Subsidiaries of the Registrant Consent of Independent Registered Public Accounting Firm Power of Attorney - Power of Attorney (incorporated by reference to the signature page of this Annual Report on Form 10-K.) Certification of the President and CEO Pursuant to...

  • Page 117
    Company's Stock Performance Set forth below is a line graph comparing the annual percentage change in the cumulative return to the stockholders of Plantronics common stock with the cumulative return of the NYSE Stock Market index and a peer group index for the period commencing on the morning of ...

  • Page 118
    ... with the Securities and Exchange Commission, and financial earnings press releases. Annual Meeting The annual meeting of Plantronics stockholders will be: Friday, August 17, 2007 11:00 a.m., Pacific Daylight Time Plantronics, Inc. Headquarters 345 Encinal Street Santa Cruz, California 95060 Please...

  • Page 119
    ...Executive Officers Ken Kannappan Chief Executive Officer, President and Director Clay Hausmann Vice President, Corporate Marketing Donald Houston Senior Vice President, Sales Barry Margerum Vice President, Strategy and Business Development Renee Niemi Vice President and General Manager, Mobile and...

  • Page 120
    ... and home entertainment sound systems, docking audio products, and a line of headphones 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...