Plantronics 2009 Annual Report Download - page 16

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During fiscal 2007, 2008 and 2009, we incurred approximately $71.9 million, $77.0 million and $72.1 million, respectively, in
research, development and engineering expenses. Historically, we have conducted most of our research and development with an in-
house staff, with limited use of contractors. Key locations for our research and development staff are our facilities in the United States
(“U.S.”), Mexico, China, and the United Kingdom. During the fourth quarter of fiscal 2006, we opened a design facility in Suzhou,
China, co-located with our other Asia Pacific hub operations, which focused primarily on ACG products. In March 2009, we
announced our plans to outsource the production of our Bluetooth products in China. As a result, our manufacturing facility in
Suzhou, China will be closed, and we are currently in the process of putting the facility and the related land rights up for sale. Our
intention is for Bluetooth research and development, supply chain management as well as sales, marketing and administrative support
functions, which are all part of our Asia Pacific hub, to continue to be led from our Suzhou facility until our Suzhou facility is sold, at
which time, our employees will be relocated to a new nearby location better suited for their continuing responsibilities. In the second
half of fiscal 2008 and the first half of fiscal 2009, in conjunction with our restructuring of AEG’s China operations, we moved AEG’s
research and development facilities which had been located in Dongguan, China and Hong Kong to a new site located in Shenzhen,
China.
SALES AND DISTRIBUTION
We maintain a direct sales force worldwide to provide ongoing customer support and service globally. We use commissioned
manufacturers' representatives to assist in selling through the retail channel. We have substantially integrated our sales organization
between our two business segments.
We have a well-established, multi-level worldwide distribution network to support our customers’ needs. To more efficiently and
effectively service customer orders, we have substantially integrated our distribution processes for our ACG and AEG businesses in
order to take advantages of synergies, which has resulted in a reduced number of distribution centers. We are continuing to evaluate
our logistics processes, and are in the process of implementing new strategies to further reduce our transportation costs. Currently, we
have distribution centers located in the following locations:
• Tijuana, Mexico, which provides logistics services for products destined for customers in the U.S., Canada, Asia Pacific, and
Latin America regions;
• Etten-Leur, Netherlands, which provides logistics services for products shipped to customers in our Europe, Middle East and
Africa market;
• Milford, Pennsylvania, which provides logistics services for products which are primarily shipped to customers in the US;
• Hong Kong, which provides logistics services for products which are shipped to our Tijuana, Mexico, Milford, Pennsylvania
and Netherlands distribution centers as well as to customers located in Asia;
• Suzhou, China, which provides logistics services for products which are shipped within Mainland China;
• Melbourne, Australia, which provides logistics services for products which are shipped to the retail channel in Australia and
New Zealand;
• Sao Paulo, Brazil, which provides logistics services for products which are shipped to customers within Brazil; and
• Tokyo, Japan, which provides logistics services for products which are shipped to customers within Japan.
We use third party warehouses in Etten-Leur, Netherlands as well as in Hong Kong, Australia, Brazil and Japan. We operate all other
warehouse facilities.
Our commercial distributors include headset specialists, national wholesalers, and regional wholesalers. The wholesalers typically
offer a wide variety of products from multiple vendors to both resellers and end users. Our commercial distribution channel generally
maintains inventory of our products.
Our retail channel consists of (1) consumer electronics retailers, consumer products retailers, office supply distributors; (2) catalog and
mail order companies; (3) mass merchants; (4) warehouse clubs; and (5) 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, small
businesses, and to individuals who use them for a variety of personal and professional purposes. Revenues from this channel are
cyclical, with our third fiscal quarter typically being the strongest quarter due to holiday seasonality. Our retail channel also maintains
a substantial inventory of our products, and a substantial amount of our domestic retail partners manage inventories of both ACG and
AEG products on consignment.
We have a broad, diverse group of customers whose businesses are located throughout the world. Our principal customers are
distributors, retailers, carriers, and OEMs. Our commercial distributors and retailers represent our first and second largest sales
channels in terms of net revenues, respectively. Our two business segments share many of the same customers. No customer
accounted for more than 10% of our consolidated net revenues in fiscal 2007, 2008 or 2009.