Plantronics 2007 Annual Report Download - page 55

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part ii
51A R 2 0 0 7
Total Operating Expenses and Operating Income
Audio Communications Group
Fiscal Year Ended Fiscal Year Ended
($ in thousands)
March 31,
2005 March 31,
2006 Increase
(Decrease) March 31,
2006 March 31,
2007 Increase
(Decrease)
Operating expense $161,837 $ 189,437 $ 27,600 17.1% $189,437 $210,803 $ 21,366 11.3%
% of total segment net
revenues 28.9% 30.1% 1.2 ppt. 30.1% 31.2% 1.1 ppt.
Operating income $126,621 $ 99,851 $ (26,770) (21.1)% $ 99,851 $ 84,677 $(15,174) (15.2)%
% of total segment net
revenues 22.6% 15.9% (6.8) ppt. 15.9% 12.5% (3.3) ppt.
In comparison to fiscal 2006, fiscal 2007 operating income decreased 15.2% or 3.3 percentage points due
to the 2.3 percentage point decrease in gross profit and higher operating expenses of 1.1 percentage points
as a percentage of revenue, primarily resulting from stock-based compensation charges of $16.1
million. The increased expenses were partially offset by a $2.6 million pre-tax gain in the first quarter of
fiscal 2007 due to the sale of land in Frederick, Maryland.
In comparison to fiscal 2005, our fiscal 2006 operating income decreased 21.1% or 6.8 percentage points
due to the 5.6 percentage point decrease in gross profit and higher operating expenses of 1.2 percentage
points as a percentage of revenue.
Audio Entertainment Group
Fiscal Year Ended Fiscal Year Ended
($ in thousands)
March 31,
2005 March 31,
2006 Increase
(Decrease) March 31,
2006 March 31,
2007 Increase
(Decrease)
Operating expense $ — $26,455 $ 26,455 $ 26,455 $ 40,563 $ 14,108 53.3%
% of total segment net
revenues 21.9% 21.9 ppt. 21.9% 31.2
%
9.2 ppt.
Operating income (loss) $ — $10,511 $ 10,511 $ 10,511 $(27,228
)
$(37,739) (359.0)%
% of total segment net
revenues 8.7% 8.7 ppt. 8.7% (22.0
)
% (30.7) ppt.
In comparison to fiscal 2006, the fiscal 2007 operating loss reflects a reduced gross profit percentage
compared to the prior year and higher operating expenses both in dollar terms and as a percentage of
revenues. Results for fiscal 2006 include the period following the acquisition on August 18, 2005. Fiscal
2007 includes $7.1 million of non-cash charges related to the amortization of acquired intangibles
compared to $4.7 million in fiscal 2006. These charges include $4.2 million in cost of revenues relating
to the amortization of acquired technology assets and $2.9 million recorded under selling, general and
administrative expense representing primarily the amortization of acquired intangibles, excluding
technology assets. These non-cash purchase accounting charges will continue for the next 5 to 7 years.