Plantronics 2015 Annual Report Download - page 41

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The increase in gross profit in fiscal year 2014 compared to fiscal year 2013 was due primarily to the increase in net revenues.
As a percentage of net revenues, gross profit decreased primarily from our UC revenues growing faster than our overall Enterprise
revenues. Secondarily, revenues from Consumer products, which carry lower margins than our weighted average margin, grew
faster than our overall revenues.
There are significant variances in gross profit percentages between our higher and lower margin products; therefore, small variations
in product mix, which can be difficult to predict, can have a significant impact on gross profit. Gross profit may also vary based
on distribution channel, return rates, and other factors.
Research, Development, and Engineering
Research, development, and engineering costs are expensed as incurred and consist primarily of compensation costs, outside
services, including legal fees associated with protecting our intellectual property, expensed materials, depreciation, and an allocation
of overhead expenses, including facilities, IT, and human resources costs.
Fiscal Year Ended Fiscal Year Ended
(in thousands)
March 31,
2015
March 31,
2014 Change
March 31,
2014
March 31,
2013 Change
Research, development
and engineering $ 91,627 $ 84,781 $ 6,846 8.1% $ 84,781 $ 80,373 $ 4,408 5.5%
% of total net revenues 10.6% 10.4% 10.4% 10.5%
The increase in research, development, and engineering expenses in fiscal year 2015 compared to fiscal year 2014 was due primarily
to $4.7 million in headcount-related costs, including increased salary expense, and performance-based compensation, including
an increase to equity-based compensation resulting from restricted stock grants made after May 2013, which vest over three years,
compared to restricted stock grants made prior to May 2013, which vest over four years.
The increase in research, development and engineering expenses in fiscal year 2014 compared to fiscal year 2013 was due primarily
to $4.0 million in headcount-related costs, including increased salary expense, and performance-based compensation, including
an increase to equity-based compensation resulting from restricted stock grants made after May 2013, which vest over three years,
compared to restricted stock grants made prior to May 2013, which vest over four years.
Selling, General, and Administrative
Selling, general, and administrative expense consists primarily of compensation costs, marketing costs, travel expenses,
professional service fees, and allocations of overhead expenses, including IT, facilities, and human resources costs.
Fiscal Year Ended Fiscal Year Ended
(in thousands)
March 31,
2015
March 31,
2014 Change
March 31,
2014
March 31,
2013 Change
Selling, general and
administrative $229,569 $ 201,176 $ 28,393 14.1% $201,176 $ 182,445 $ 18,731 10.3%
% of total net revenues 26.5% 24.6% 24.6% 23.9%
The increase in selling, general, and administrative expenses in fiscal year 2015 compared to fiscal year 2014 was due primarily
to $13.5 million in higher headcount-related costs resulting from higher performance-based compensation reflecting higher net
revenues and higher overall achievement against targets, including an increase to equity-based compensation resulting from the
shorter vesting schedule of restricted stock grants made after May 2013 compared to restricted stock grants made prior to May
2013. We also experienced an increase of $3.3 million in depreciation related to capital investments made in the past year and
$7.1 million in higher legal expenses driven mainly by ongoing litigation.
The increase in selling, general, and administrative expenses in fiscal year 2014 compared to fiscal year 2013 was due primarily
to $12.7 million in higher costs resulting from increased headcount, mainly resulting from our investment in Plantronics' global
sales presence, and from higher performance-based compensation, including sales commissions, reflecting higher net revenues
and higher overall achievement against targets. We also made investments in marketing programs of $4.6 million, including product
launch activities and brand awareness campaigns.
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