Plantronics 2008 Annual Report Download - page 15

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9
BACKLOG
Our backlog of unfilled orders was $35.5 million at March 31, 2008 compared to $40.7 million at March 31, 2007. We include all
purchase orders scheduled for delivery over the next 12 months in backlog. For both segments of our business, we have a “book and
ship” business model whereby we fulfill the majority of our orders within 48 hours of our receipt of the order. Our backlog is
occasionally subject to cancellation or rescheduling by the customer on short notice with little or no penalty. Because of our “book and
ship” model, as well as the uncertainty of order cancellations or rescheduling, we do not believe our backlog as of any particular date
is indicative of actual sales for any future period and, therefore, should not be used as a measure of future revenue.
MANUFACTURING AND SOURCES OF MATERIALS
Manufacturing operations for our ACG products consist primarily of assembly and testing. We have two main manufacturing
facilities, which are located in Tijuana, Mexico and a newer facility which was completed in fiscal 2006 in Suzhou, China. We have
substantially smaller assembly operations in California and one in the United Kingdom, which is in the process of being shut down. In
addition, we outsource the manufacturing of a limited number of our products to third parties, typically in China and other countries in
Asia.
Prior to the fourth quarter of fiscal 2008, approximately half of our AEG products were manufactured at a facility in Dongguan,
China, and the remainder of the products were outsourced to a limited number of third party contract manufacturers who are
predominantly located in China. We shut down our Dongguan, China facility at the end of the third quarter of fiscal 2008 and were
using third parties exclusively for manufacturing in the fourth quarter of fiscal 2008. During fiscal 2009, we intend to transition a
limited amount of manufacturing of our AEG products to our Suzhou, China facility and will continue to use third party
manufacturers.
We purchase the components for our ACG products, including proprietary semi-custom integrated circuits, amplifier boards and other
electrical components, primarily from suppliers in Asia, Mexico, the United States, and Europe. We purchase the components for our
AEG products from suppliers in China, which was managed from our Hong Kong office through the third quarter of fiscal 2008. We
are in the process of shutting down our Hong Kong office and have relocated our procurement office to Shenzhen, China. The
majority of our components and sub-assemblies used in our manufacturing operations are obtained, or are reasonably available, from
dual-source suppliers, although we do have a certain number of sole-source suppliers.
As a result of our restructuring activities in Hong Kong and China for our AEG products, we expect to be able to reduce
manufacturing costs as well as costs associated with procurement activities.
We procure materials to meet forecasted customer requirements. Special products and certain 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 sub-assemblies and components. We write-down inventory items determined to be
either excess or obsolete.
ENVIRONMENTAL MATTERS
We have complied with European Union Directives on Restrictions on certain Hazardous Substances on electrical and electronic
equipment (“ROHS”) and on Waste Electrical and Electronic Equipment (“WEEE”) requirements. Additionally, we are compliant
with the ROHS initiatives in China and Korea.
We are subject to various federal, state, local and foreign environmental laws and regulations, including those governing the use,
discharge and disposal of hazardous substances in the ordinary course of our manufacturing process. We believe that our current
manufacturing operations comply in all material respects with applicable environmental laws and regulations. Although we believe
that our current manufacturing operations comply in all material respects with applicable environmental laws and regulations, it is
possible that future environmental legislation may be enacted or current environmental legislation may be interpreted to create
environmental liability with respect to our other facilities, operations, or products.
INTELLECTUAL PROPERTY
We maintain a program of seeking patent protection for our technologies when we believe it is commercially appropriate. As of March
31, 2008, we had 403 worldwide patents in force, expiring between 2008 and 2022.