Plantronics 2007 Annual Report Download - page 44

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40 P l a n t r o n i c s
Audio Entertainment Group
Fiscal Year Ended March 31,
($ in thousands) 2006 2007
Net revenues $120,669 100.0% $123,640 100.0%
Cost of revenues 83,703 69.4% 110,305 89.2%
Gross profit 36,966 30.6% 13,335 10.8%
Operating expense:
Research, development and engineering 6,228 5.2% 10,312 8.3%
Selling, general and administrative 20,227 16.8% 30,251 24.5%
Total operating expenses 26,455 21.9% 40,563 32.8%
Operating income $ 10,511 8.7% $ (27,228) (22.0)%
Net Revenues
Audio Communications Group
($ in thousands)
Fiscal Year Ended Fiscal Year Ended
March 31,
2005 March 31,
2006 Increase
(Decrease) March 31,
2006 March 31,
2007 Increase
(Decrease)
Net revenues from
unaffiliated customers:
Office and Contact Center $366,335 $446,524 $80,189 21.9% $446,524 $475,323 $28,799 6.4%
Mobile 125,262 119,333 (5,929) (4.7)% 119,333 146,859 27,526 23.1%
Gaming and Computer
Audio 39,804 35,656 (4,148) (10.4)% 35,656 30,162 (5,494) (15.4)%
Other Specialty Products 28,594 28,212 (382) (1.3)% 28,212 24,170 (4,042) (14.3)%
Total segment net revenues $559,995 $629,725 $69,730 12.5% $629,725 $676,514 $46,789 7.4%
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 a growing trend
toward wireless products and a corresponding shift away from our corded products. We have a “book and
ship” business model, whereby we ship most orders to our customers within 48 hours of receipt of those
orders. Thus, we cannot rely on the level of backlog to provide visibility into potential future revenues.
In fiscal 2007, our ACG segment net revenues grew 7.4% to $676.5 million, derived primarily from
revenues from our OCC products as well as our Mobile products.
In comparison to fiscal 2005, fiscal 2006 ACG segment net revenues grew 12.5% to $629.7 million
primarily on the strength of our wireless headset offerings for the office and for Bluetooth mobile
applications.