Plantronics 2008 Annual Report Download - page 44

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AEG
Selling, general and administrative expenses decreased due to the following:
· decreased spending on integration and retention of employees of $2.7 million as we have completed significant portions of
our planned systems integration;
· increased allocation of support services to cost of revenues and research and development resulting in a decrease of
$1.1million.
In fiscal 2007, compared to fiscal 2006, consolidated selling, general and administrative expenses increased primarily as a result of
stock-based compensation charges of $10.2 million, of which $9.5 million related to ACG, increased compensation expense of $7.1
million due to higher headcount in sales, marketing and general administrative functions within the ACG segment and AEG expenses
reflecting a full year of expenses compared to only seven and one-half months of expenses in fiscal 2006.
We anticipate that our consolidated selling, general and administrative expenses will be relatively flat in comparison to fiscal 2008.
Restructuring and Other Related Charges
In November 2007, the Company announced plans to close AEG’s manufacturing facility in Dongguan, China, to shut down a related
Hong Kong research and development, sales and procurement office and to consolidate procurement, research and development
activities for AEG in the Shenzhen, China site. The selling, general and administrative functions of AEG in China will also be
consolidated with those of ACG through-out the Asia-Pacific region. These actions will result in the elimination of all manufacturing
operation positions in Dongguan, China and certain related support functions. In the third quarter of fiscal 2008, the production line at
the Dongguan, China facility was shut down. This restructuring plan is part of a strategic initiative designed to reduce fixed costs by
outsourcing the majority of AEG manufacturing to the network of qualified contract manufacturers already in place. The plan will
proceed in phases and is expected to be complete in the third quarter of fiscal 2009.
In fiscal 2008, we recorded $3.6 million in restructuring and other related charges, which was comprised of the following:
· $1.3 million for severance and benefits;
· $1.5 million related to facilities and equipment including $0.5 million related to the write-off of production equipment and
$1.0 million in accelerated depreciation for property and equipment to be abandoned;
· $0.8 million in other related charges primarily related to professional and other administrative fees.
In November 2007, 730 employees were notified for termination, 708 in manufacturing, 20 in research and development and 2 in
selling, general and administrative. As of March 31, 2008, 672 employees have been terminated.
Including the $3.6 million recognized in fiscal 2008, we expect to record total restructuring charges of approximately $4.0 to $4.5
million, consisting of the following:
· $1.6 million for the write-off of facilities and equipment and accelerated depreciation;
· $1.4 million for severance and benefits;
· $1.0 to $1.5 million in professional and administrative fees.
We expect to incur restructuring and other related charges of $0.4 to $0.9 million in fiscal 2009. These charges include cash payments
which we expect to fund from our operating cash. We currently expect cost savings as a result of the restructuring plan of
approximately $3.0 million in fiscal 2009 and $4.0 million in fiscal 2010.
Gain on Sale of Land
During the first quarter of fiscal 2007, we sold a parcel of land in Frederick, Maryland, for net proceeds of $2.7 million and recorded a
gain of $2.6 million from the sale of this property.