Plantronics 2012 Annual Report Download - page 25

3938
FINANCIAL CONDITION
The table below provides selected consolidated cash flow information for the periods indicated:
(in thousands)
March 31,
2012
March 31,
2011
March 31,
2010
Cash provided by operating activities $ 140,448 $ 158,232 $ 143,729
Capital expenditures and other assets $ (19,140) $ (18,667) $ (6,262)
Cash provided by maturities and sales of investments, net of
investment purchases 9,725 (168,937) 64,760
Proceeds received from sale of AEG segment — 1,625 9,121
Cash provided by other investing activities — 9,066 277
Cash (used for) provided by investing activities $ (9,415) $ (176,913) $ 67,896
Repurchase of common stock, including equity forward contract $ (273,791) $ (105,522) $ (49,652)
Proceeds from issuance of common stock 38,222 50,109 32,581
Net proceeds from revolving line of credit 37,000 — —
Payment of cash dividends (9,040) (9,703) (9,781)
Cash provided by other financing activities 9,348 9,939 5,870
Cash used for financing activities $ (198,261) $ (55,177) $ (20,982)
Cash Provided by Operating Activities
Cash provided by operating activities in fiscal year 2012 was $140.4 million and consisted of net income of $109.0 million, non-
cash charges of $25.9 million and working capital sources of cash of $5.5 million. Non-cash charges consisted primarily of $17.5
million of stock-based compensation expense, $13.8 million of depreciation and amortization and a $5.6 million income tax benefit
associated with stock option exercises, offset in part by a $9.1 million benefit from deferred income taxes and $7.0 million in
excess tax benefits from stock-based compensation expense. Working capital sources of cash consisted primarily of an $18.5
million net increase in accrued income taxes due to refunds received in fiscal year 2012 related to over-payments made in fiscal
year 2011 and the timing of current year income tax accruals, partly offset by a $9.4 million increase in accounts receivable and
a $4.3 million decrease in accrued liabilities. Inventory turns increased to 6.1 as of March 31, 2012 from 5.8 as of March 31, 2011
as a result of lower inventory balances on higher cost of revenues in the fourth quarter of fiscal year 2012 compared to the same
period in fiscal year 2011 due to better inventory management. Days Sales Outstanding ("DSO") increased to 57 days as of March
31, 2012 from 54 days as of March 31, 2011, resulting from a higher accounts receivable balance due to timing of revenues earned
during the fourth quarter of fiscal year 2012 as compared to the fourth quarter of fiscal year 2011. The net decrease in accrued
liabilities resulted primarily from the payout in fiscal year 2012 of performance-based compensation related to fiscal year 2011
and lower accruals for performance-based compensation in fiscal year 2012 due to lower achievement of targets than in fiscal year
2011.
Cash provided by operating activities in fiscal year 2011 was $158.2 million and consisted of net income of $109.2 million, non-
cash charges of $29.1 million and working capital sources of cash of $19.9 million. Non-cash charges consisted primarily of $16.3
million of depreciation and amortization, $15.9 million of stock-based compensation expense and a $6.2 million income tax benefit
associated with stock option exercises, offset in part by $5.7 million in excess tax benefits from stock-based compensation expense
and a $5.2 million benefit from deferred income taxes. Working capital sources of cash consisted primarily of a decrease in
inventory of $13.0 million as we continued to improve the management of our inventory levels, increases in accounts payable and
accrued liabilities of $10.2 million and $9.9 million, respectively, due to timing of payments along with an increase in income
taxes of $4.2 million. Working capital uses of cash consisted primarily of an increase in accounts receivable of $15.1 million due
to higher revenues in the fourth quarter of fiscal year 2011 than in the prior year quarter. Inventory turns, which is calculated
using Cost of revenues from continuing operations only and consolidated inventory balances, increased to 5.8 as of March 31,
2011 from 4.2 as of March 31, 2010 as a result of our lower inventory balances on higher cost of revenues in the fourth quarter
of fiscal year 2011 compared to the same period in fiscal year 2010. DSO, which is calculated using Net revenues from continuing
operations only and consolidated accounts receivable balances, increased to 54 days as of March 31, 2011 from 49 days as of
March 31, 2010 as a result of higher accounts receivable balance due to timing of revenues earned during the fourth quarter of
fiscal year 2011 as compared to the fourth quarter of fiscal year 2010.
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Cash provided by operating activities in fiscal year 2010 was $143.7 million and consisted of net income of $57.4 million, non-
cash charges of $54.3 million and working capital sources of cash of $32.0 million. Non-cash charges consisted primarily of $25.2
million related to the AEG impairment charge on long-lived assets recorded in discontinued operations, $18.1 million of depreciation
and amortization, $14.6 million of stock-based compensation expense, and non-cash restructuring charges of $6.3 million offset
in part by a $12.5 million benefit from deferred income taxes. Working capital sources of cash consisted primarily of a decrease
in inventory of $27.6 million as we continued to improve the management of our inventory levels, income tax refunds received
and decreases in other assets. Working capital uses of cash consisted primarily of decreases in accounts payable and accrued
liabilities from reduced spending during the fiscal year as a result of the sale of Altec Lansing in December 2009. Inventory turns,
which is calculated using Cost of revenues from continuing operations only and consolidated inventory balances, increased to 4.2
as of March 31, 2010 from 3.1 as of March 31, 2009 as a result of our lower inventory balances on higher revenues in the fourth
quarter of fiscal year 2010 compared to the same period in fiscal year 2009. Accounts receivable remained relatively flat from
fiscal year 2009 to fiscal year 2010; however, DSO, which is calculated using Net revenues from continuing operations only and
consolidated accounts receivable balances, decreased to 49 days as of March 31, 2010 from 59 days as of March 31, 2009 as a
result of collections of the accounts receivable related to our AEG business which were retained by us upon the sale of Altec
Lansing on December 1, 2009.
We expect that cash provided by operating activities may fluctuate in future periods as a result of a number of factors including
fluctuations in our net revenues and operating results, collection of accounts receivable, changes to inventory levels and timing
of payments.
Cash Used for Investing Activities
In fiscal year 2012, net cash used for investing activities was $9.4 million, consisting primarily of $176.9 million and $91.0 million
for the purchase of short-term and long-term investments, respectively, along with capital expenditures of $19.1 million. These
uses of cash were offset in part by net proceeds of $277.6 million from sales and maturities of short-term and long-term investments.
Capital expenditures during fiscal year 2012 related primarily to building and leasehold improvements, tooling and various IT
projects and equipment.
In fiscal year 2011, net cash used for investing activities was $169.9 million, consisting primarily of $256.3 million and $48.9
million for the purchase of short-term and long-term investments, respectively, along with capital expenditures of $18.6 million.
These uses of cash were offset in part by net proceeds of $142.5 million from sales and maturities of short-term investments, $9.1
million from the sale of Assets held for sale and $1.6 million in net proceeds from the release of escrow related to the sale of Altec
Lansing, our AEG segment. Capital expenditures during fiscal year 2011 related primarily to building and leasehold improvements,
including the installation of an expanded solar energy system in our headquarters in Santa Cruz, California, tooling and various
IT projects and equipment.
In fiscal year 2010, net cash provided by investing activities was $67.9 million, consisting primarily of net maturities and sales
of short-term investments of $64.0 million and $9.1 million in net proceeds from the sale of Altec Lansing, offset in part by capital
expenditures of $6.3 million. Capital expenditures during fiscal year 2010 related primarily to tooling and various IT projects.
We anticipate our capital expenditures in fiscal year 2013 to range from $51.0 million to $54.0 million. The increase from fiscal
year 2012 is primarily related to the potential purchase of a new manufacturing facility in Mexico that would replace and consolidate
our existing leased facilities. The estimated cost of the facility includes the purchase of an existing building, solar upgrades, labs,
and other building furnishings including furniture and fixtures. If we complete the purchase of the facility in the first half of fiscal
year 2013, we expect to complete the required upgrades and to move into the new facility in the first quarter of fiscal year 2014.
In addition, we would not renew our existing leases and will consolidate all of our operations into the new facility. As a result of
purchasing the building, we would record significant non-cash charges, including approximately $2.0 million in accelerated
depreciation related to the remaining useful lives of the leasehold improvements and, once we stop using the leased facilities, a
one-time lease charge of approximately $2.0 million representing the costs we would otherwise continue to incur under the original
lease terms. In addition to the potential new facility in Mexico, we plan to migrate to a new enterprise resource planning ("ERP")
environment, with capital expenditures commencing in the second half of fiscal year 2013 and continuing through the start of our
fiscal year 2015. The remainder of the anticipated capital expenditures for fiscal year 2013 consists primarily of building and
leasehold improvements in our U.S. headquarters, other IT related expenditures and tooling for new products. We will continue
to evaluate new business opportunities and new markets; as a result, our future growth within the existing business or new
opportunities and markets may dictate the need for additional facilities and capital expenditures to support that growth.
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