Delaware
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77-0207692
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|||
(State or other jurisdiction of incorporation or
organization)
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(I.R.S.
Employer Identification Number)
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345
Encinal Street, Santa Cruz, California
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95060
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(Address
of principal executive offices)
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(Zip
Code)
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Title of each class
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Name
of each exchange on which registered
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COMMON
STOCK, $.01 PAR VALUE
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NEW
YORK STOCK EXCHANGE
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PREFERRED
SHARE PURCHASE RIGHTS
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NEW
YORK STOCK EXCHANGE
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Large
Accelerated Filer x
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Accelerated
Filer ¨
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Non-accelerated
Filer ¨ (Do
not check if a smaller reporting company)
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Smaller
Reporting Company ¨
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Part
I.
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Page
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Item
1.
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1
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Item 1A.
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13
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Item 1B.
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26
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Item
2.
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26
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Item
3.
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Item
4.
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Part
II.
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Item
5.
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28
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Item
6.
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30
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Item
7.
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32
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Item 7A.
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58
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Item
8.
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60
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Item
9.
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Item 9A.
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99
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Item
9B.
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Part
III.
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Item
10.
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100
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Item
11.
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100
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Item
12.
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Item
13.
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101
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Item
14.
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101
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Part
IV.
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Item
15.
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102
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104
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·
|
Audio
Communications Group: Our ACG segment is
our core business and is engaged in the design, manufacture, marketing and
sales of headsets for business and consumer applications, and other
specialty products. We make headsets for use in offices and
contact centers, with mobile and cordless phones, and with computers and
gaming consoles. Plantronics headsets are communications tools,
providing freedom to use your hands while staying “connected,” freedom to
move around, and freedom from using keyboards by enhancing speech
recognition capabilities. We apply a variety of technologies to
develop high quality products to meet the needs of our customers, whether
it is for communications or personal entertainment. Plantronics
headsets are widely used with cell phones, in contact centers, in the
office, in the home, for computer applications such as Unified
Communications (“UC”), Voice over Internet Protocol (“VoIP”), for gaming,
and for other specialty applications. Our major product
categories include Office and
Contact Center (“OCC”), which includes corded and
cordless communication headsets, audio processors and telephone systems;
Mobile, which includes Bluetooth and corded products for mobile
phone applications; Gaming and
Computer Audio,
which includes PC and gaming headsets; and Clarity, which includes specialty
products marketed for hearing impaired individuals. All
products developed and managed by ACG are included in this segment and are
generally sold under the Plantronics and Clarity
brands.
|
|
·
|
Audio
Entertainment Group: Our AEG segment is engaged in the
design, manufacture, sales and marketing of audio solutions and related
technologies. We offer docking audio products, computer and
digital audio systems, headphones and microphones for personal digital
media, and digital radio frequency audio systems. Our
major product categories include Docking
Audio, which
includes all speakers whether USB, AC or battery-powered that work with
portable digital players, such as Apple iPod and other MP3 players;
PC
Audio, which
includes self-powered speaker systems used for computers and other
multi-media application systems; and Other, which includes all of our
personal audio (headphones) and home audio systems. All
products developed and managed by AEG are included in this
segment. Such products are generally sold under the Altec
Lansing brand and/or the inMotion
sub-brand.
|
·
|
better sound quality that
provides clearer conversations on both ends of a call through a variety of
features and technologies, including noise-canceling microphones, Digital
Signal Processing (“DSP”), and
more;
|
·
|
wireless freedom allowing people
to take and make calls as they move freely around their office or home
without cords or cables;
|
·
|
multi-tasking benefits that allow
people to use a computer, a Personal Data Assistant (“PDA”) or other
device, take notes and organize files while talking hands
free;
|
·
|
contributing to greater driving
safety and enabling a motor vehicle operator to comply with hands-free
legislation by having both hands free to drive while talking on a cell
phone;
|
·
|
voice command and control that
let people take advantage of voice dialing and/or other voice-based
features to make communications and the human/electronic interface more
natural and convenient;
|
·
|
providing ergonomic relief from
repetitive stress injuries and discomfort associated with placing a
telephone handset between the shoulder and
neck;
|
·
|
providing greater comfort and
convenience than a telephone alone on longer
calls;
|
·
|
enabling emerging UC integration
and PC and VoIP applications, including speech recognition, Internet
telephony and gaming;
|
·
|
providing a convenient means for
connecting between various applications and voice networks, whether that
be between land line and mobile phones, or between PC-based communications
and other networks; and
|
·
|
providing greater privacy than
speakerphones, and with wireless products, the ability to move from public
to private space when
required.
|
|
·
|
UC is the integration
of voice and video-based communications systems enhanced with software
applications and IP networks. It may include the integration of
devices and media associated with a variety of business workflows and
applications, including e-mail, instant messaging,
presence, audio, video and web conferencing and unified
messaging. UC seeks to provide seamless connectivity and user
experience for enterprise workers regardless of their location and
environment, improving the overall business efficiency and providing more
effective collaboration among an increasingly distributed
workforce.
|
|
·
|
Bluetooth wireless technology is a
short-range communications technology intended to replace the cables
connecting portable and/or fixed devices while maintaining high levels of
security. The key features of Bluetooth technology are robustness, low
power and low cost. The Bluetooth specification defines a uniform
structure for a wide range of devices to connect and communicate with each
other. Bluetooth technology has achieved global
acceptance such that any Bluetooth
enabled device,
almost anywhere in
the world, can connect to other Bluetooth enabled devices in
proximity.
|
|
·
|
VoIP is a technology that allows a
person to make telephone calls using a broadband Internet connection
instead of a regular (or analog) phone line. VoIP converts the
voice signal from a person’s telephone into a digital signal that travels
over the Internet and then converts it back at the other end so that the
caller can speak to anyone with a regular (or analog) phone
line.
|
|
·
|
DECT™
is a technology that optimizes
audio quality, lowers interference with other wireless devices, and is
digitally encrypted for maximum call
security.
|
|
·
|
DSP is a technology that delivers
acoustic protection and optimal sound quality through noise reduction,
echo cancellation, and other algorithms to improve both transmit and
receive quality.
|
|
·
|
the
adoption of wireless solutions and the freedom they
allow;
|
|
·
|
increasing
deployment of UC systems; and
|
|
·
|
a growing awareness of the
benefits of headsets.
|
|
·
|
leadership in
innovation;
|
|
·
|
a powerful brand;
and
|
|
·
|
global
distribution.
|
|
·
|
continue efforts to maintain our
strength in this category domestically, while expanding into international
markets; and
|
|
·
|
introduce new products that
incorporate breakthrough technologies and
designs.
|
|
·
|
our understanding of emerging
markets and new technologies, such as UC, and our ability to react quickly
to the opportunities that they
provide;
|
|
·
|
our ability to bring to market
products that deliver on performance, product design, style, comfort,
features, sound quality, simplicity, price and
reliability;
|
|
·
|
maintenance of our brand name
recognition and reputation;
|
|
·
|
superior customer service,
support and warranty terms;
and
|
|
|
|
·
|
effective and efficient
distribution channels that allow us to meet delivery
schedules.
|
|
·
|
our understanding of changing
market trends, consumer needs, technologies and our ability to capitalize
on the opportunities resulting from these market
changes;
|
|
·
|
bringing to market
well-differentiated products that perform well against competitive
offerings, price, style, brand, and effective displays in retail
settings;
|
|
·
|
efficient and cost-effective
supply chain processes; and
|
|
·
|
excellent channel service
and support with a reputation for
quality.
|
|
·
|
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.
|
NAME
|
AGE
|
POSITION
|
||
Ken
Kannappan
|
49
|
President
and Chief Executive Officer
|
||
Clay
Hausmann
|
37
|
Vice
President, Corporate Marketing
|
||
Don
Houston
|
54
|
Senior
Vice President, Sales
|
||
Barry
Margerum
|
57
|
Chief
Strategy Officer
|
||
Vicki
Marion
|
55
|
President,
Audio Entertainment Group
|
||
Renee
Niemi
|
44
|
Vice
President, General Manager, Mobile & Entertainment
|
||
Mike
Perkins
|
50
|
Vice
President, Product Development & Technology
|
||
Barbara
Scherer
|
53
|
Senior
Vice President, Finance & Administration and Chief Financial
Officer
|
||
Joyce
Shimizu
|
54
|
Vice
President, General Manager Home & Home Office
|
||
Carsten
Trads
|
53
|
President,
Clarity Equipment
|
||
Philip
Vanhoutte
|
53
|
Managing
Director, Europe, Middle East & Africa
|
||
Larry
Wuerz
|
51
|
Senior
Vice President, Worldwide Operations
|
||
Chuck
Yort
|
50
|
Vice
President, General Manager, Business to Business
Solutions
|
|
·
|
Our
operating results are highly dependent on the volume and timing of orders
received during the quarter, which are difficult to
forecast. Customers generally order on an as-needed basis, and
we typically do not obtain firm, long-term purchase commitments from our
customers. As a result, our revenues in any quarter depend
primarily on orders booked and shipped in that
quarter.
|
|
·
|
We
incur a large portion of our costs in advance of sales orders because we
must plan research and production, order components and enter into
development, sales and marketing, and other operating commitments prior to
obtaining firm commitments from our customers. In the event we
acquire too much inventory for certain products, the risk of future
inventory write-downs increases. In the event we have
inadequate inventory to meet the demand for particular products, we may
miss significant revenue opportunities or incur significant expenses such
as air freight, expediting shipments, and other negative variances in our
manufacturing processes as we attempt to make up for the
shortfall. When a significant portion of our revenue is derived
from new products, forecasting the appropriate volumes of production is
even more difficult.
|
|
·
|
In
the ACG segment, our prices and gross margins are generally lower for
sales to Business-to-Consumer (“B2C”) customers compared to sales to our
Business-to-Business (“B2B”) customers. In addition, our prices
and gross margins can vary significantly by product line as well as within
product lines. Therefore, our profitability depends, in part, on the
mix of our B2B to B2C customers as well as our product mix. In the
AEG segment, our prices and gross margins are generally lower for our PC
Audio products than for our Docking Audio products; therefore, our
profitability depends, in part, on our mix of PC Audio to Docking Audio
products. The size and timing of our product mix and
opportunities in these markets are difficult to
predict.
|
|
·
|
We
have substantially refreshed our AEG product line; however, market
adoption of new products is difficult to
predict.
|
|
·
|
A
significant portion of our annual retail sales for AEG generally occurs in
the third fiscal quarter, thereby increasing the difficulty of predicting
revenues and profitability from quarter to quarter and in managing
inventory levels.
|
|
·
|
we
believe that the turnaround for AEG is largely dependent on the market
success of its new product portfolio. We placed some of the
products within our new portfolio beginning in the Fall of 2008 which
continued through the end of fiscal 2009 and will continue through fiscal
2010, although ongoing product refreshes on a routine basis after that
will also be required. The development of these new products
may not evolve as anticipated. There can be no assurance that
these new products will be successful and, during the time we are
developing the new products, our competitors are selling products to our
customers and increasing their market
share;
|
|
·
|
competition
may continue to increase in the retail markets more than we
expect;
|
|
·
|
meeting
the spring and fall market windows for consumer
products;
|
|
·
|
difficulties
retaining or obtaining shelf space for consumer products in our sales
channel;
|
|
·
|
difficulties
retaining or improving the brand recognition associated with the Altec
Lansing brand during the
turnaround;
|
|
·
|
difficulties
in achieving a sufficient gross margin and uncertainties in the demand for
consumer audio products in the current economic environment;
and
|
|
·
|
the
global downturn in the economy has lessened the amount spent generally by
consumers decreasing the demand for our consumer
products.
|
|
·
|
If
forecasted demand does not develop, we could have excess inventory and
excess capacity. Over-forecast of demand could result in higher
inventories of finished products, components and sub-assemblies. In
addition, because our retail customers have pronounced seasonality, we
must build inventory well in advance of the December quarter in order to
stock up for the anticipated future demand. If we were unable
to sell these inventories, we would have to write off some or all of our
inventories of excess products and unusable components and
sub-assemblies. Excess manufacturing capacity could lead to higher
production costs and lower margins.
|
|
·
|
If
demand increases beyond that forecasted, we would have to rapidly increase
production. We currently depend on suppliers to provide additional
volumes of components and sub-assemblies, and we are experiencing greater
dependence on single source suppliers; therefore, we might not be able to
increase production rapidly enough to meet unexpected demand. There
could be short-term losses of sales while we are trying to increase
production.
|
|
·
|
The
production and distribution of Bluetooth and other
wireless headsets presents many significant manufacturing, marketing and
other operational risks and
uncertainties:
|
|
·
|
our
dependence on third parties to supply key components, many of which have
long lead times;
|
|
·
|
our
ability to forecast demand for the variety of new products within this
product category for which relevant data is incomplete or unavailable;
and
|
|
·
|
longer
lead times with suppliers than commitments from some of our
customers.
|
|
·
|
If
we are unable to deliver products on time to meet the market window of our
retail customers, we will lose opportunities to increase revenues and
profits, or we may incur penalties for late delivery. We may also be
unable to sell these finished goods, which would result in excess or
obsolete inventory.
|
|
·
|
anticipate
technology and market trends;
|
|
·
|
develop
innovative new products and enhancements on a timely
basis;
|
|
·
|
distinguish
our products from those of our
competitors;
|
|
·
|
create
industrial design that appeals to our customers and
end-users;
|
|
·
|
manufacture
and deliver high-quality products in sufficient volumes;
and
|
|
·
|
price
our products competitively.
|
|
·
|
Rapid
increases in production levels to meet unanticipated demand for our
products could result in higher costs for components and sub-assemblies,
increased expenditures for freight to expedite delivery of required
materials, and higher overtime costs and other expenses. These
higher expenditures could lower our profit margins. Further, if
production is increased rapidly, there may be decreased manufacturing
yields, which may also lower our
margins.
|
|
·
|
We
obtain certain raw materials, sub-assemblies, components and products from
single suppliers, including all of our Bluetooth products from
GoerTek, Inc. Alternate sources for these items are not readily
available. Any failure of our suppliers to remain in business,
to provide us with the quantity of components or products that we need or
to purchase the raw materials, subcomponents and parts required by them to
produce and provide to us the components or products we need could
materially adversely affect our business, financial condition and results
of operations.
|
|
·
|
Although
we generally use standard raw materials, parts and components for our
products, the high development costs associated with emerging wireless
technologies requires us to work with only a single source of silicon
chip-sets on any particular new product. We, or our supplier(s) of
chip-sets, may experience challenges in designing, developing and
manufacturing components in these new technologies which could affect our
ability to meet market schedules. Due to our dependence on single
suppliers for certain chip sets, we could experience higher prices, a
delay in development of the chip-set, or the inability to meet our
customer demand for these new products. Additionally, these
suppliers or other suppliers may enter into bankruptcy, discontinue
production of the parts we depend on or may not be able to produce due to
financial difficulties or to the global recession. If this
occurs, we may have difficulty obtaining sufficient product to meet our
needs. This could cause us to fail to meet customer
expectations. If customers turn to our competitors to meet their
needs, there could be a long-term adverse impact on our revenues and
profitability. Our business, operating results and financial
condition could therefore be materially adversely affected as a result of
these factors.
|
|
·
|
Because
of the lead times required to obtain certain raw materials,
sub-assemblies, components and products from certain foreign suppliers, we
may not be able to react quickly to changes in demand, potentially
resulting in either excess inventories of such goods or shortages of the
raw materials, sub-assemblies, components and products. Lead times
are particularly long on silicon-based components incorporating radio
frequency and digital signal processing technologies and such components
are an increasingly important part of our product costs. In
particular, many B2C customer orders have shorter lead times than the
component lead times, making it increasingly necessary to carry more
inventory in anticipation of those orders, which may not
materialize. Failure in the future to match the timing of
purchases of raw materials, sub-assemblies, components and products to
demand could increase our inventories and/or decrease our revenues and
could materially adversely affect our business, financial condition and
results of operations.
|
|
·
|
Most
of our suppliers are not obligated to continue to provide us with raw
materials, components and sub-assemblies. Rather, we buy most
of our raw materials, components and subassemblies on a purchase order
basis. If our suppliers experience increased demand or shortages, it
could affect deliveries to us. In turn, this would affect our
ability to manufacture and sell products that are dependent on those raw
materials, components and subassemblies. Any such shortages
would materially adversely affect our business, financial condition and
results of operations.
|
|
·
|
fluctuations
in foreign exchange rates;
|
|
·
|
cultural
differences in the conduct of
business;
|
|
·
|
greater
difficulty in accounts receivable collection and longer collection
periods;
|
|
·
|
the
impact of the global recession;
|
|
·
|
reduced
protection for intellectual property rights in some
countries;
|
|
·
|
unexpected
changes in regulatory requirements;
|
|
·
|
tariffs
and other trade barriers;
|
|
·
|
political
conditions, civil unrest or criminal activities within each
country;
|
|
·
|
the
management and operation of an enterprise spread over various
countries;
|
|
·
|
the
burden and administrative costs of complying with a wide variety of
foreign laws and regulations; and
|
|
·
|
currency
restrictions.
|
|
·
|
uncertain
economic conditions, including the length and severity of the domestic and
global recession, inflationary pressures, and the decline in investor
confidence in the market place;
|
|
·
|
changes
in our published forecasts of future results of
operations;
|
|
·
|
quarterly
variations in our or our competitors' results of operations and changes in
market share;
|
|
·
|
the
announcement of new products or product enhancements by us or our
competitors;
|
|
·
|
further
deterioration of the current economy could impact our decision to declare
future dividends;
|
|
·
|
the
loss of services of one or more of our executive officers or other key
employees;
|
|
·
|
changes
in earnings estimates or recommendations by securities
analysts;
|
|
·
|
developments
in our industry;
|
|
·
|
sales
of substantial numbers of shares of our common stock in the public
market;
|
|
·
|
our
ability to successfully complete the product refresh for the Altec Lansing
products and turn around the AEG
business;
|
|
·
|
general
economic, political, and market conditions, including market volatility;
and
|
|
·
|
other
factors unrelated to our operating performance or the operating
performance of our competitors.
|
Location
|
Square
Footage
|
Lease/Own
|
Primary
Use
|
Audio
Communications Group
|
|||
Chattanooga,
Tennessee
|
16,650
|
Lease
|
Light
Assembly, Sales and Marketing, Engineering,
Administration
|
Hoofddorp,
Netherlands
|
14,788
|
Lease
|
Administrative
|
San
Diego, California
|
10,248
|
Lease
|
Industrial
and Office Space
|
Santa
Cruz, California
|
79,253
|
Own
|
Light
Assembly, Sales and Marketing, Engineering,
Administration
|
Santa
Cruz, California
|
44,183
|
Own
|
Light
Assembly, Sales, Engineering, Administration
|
Santa
Cruz, California
|
39,892
|
Own
|
Light
Assembly, Sales, Engineering, Administration
|
Santa
Cruz, California
|
18,250
|
Lease
|
Light
Assembly, Sales, Engineering, Administration
|
Santa
Cruz, California
|
20,325
|
Lease
|
Light
Assembly, Sales, Engineering, Administration
|
Shenzhen,
China
|
23,250
|
Lease
|
Engineering,
Administration and Design Center
|
Suzhou,
P.R. China 1
|
145,732
|
Own
|
Assembly
|
Suzhou,
P.R.China
|
64,051
|
Own
|
Engineering,
Administration and Design Center
|
Tijuana,
Mexico
|
95,980
|
Lease
|
Engineering,
Assembly, Administration
|
Tijuana,
Mexico
|
61,785
|
Lease
|
Engineering,
Assembly
|
Tijuana,
Mexico
|
289,589
|
Lease
|
Logistic
and Distribution Center
|
Tijuana,
Mexico
|
53,732
|
Lease
|
Engineering,
Assembly, Design Center
|
Wootton
Basset, UK
|
21,824
|
Own
|
Light
Assembly, Sales, Engineering, Administration
|
Wootton
Basset, UK
|
15,970
|
Own
|
Light
Assembly, Sales, Engineering, Administration
|
Wootton
Basset, UK
|
5,445
|
Lease
|
Sales
and Marketing
|
Audio
Entertainment Group
|
|||
Milford,
Pennsylvania
|
187,000
|
Own
|
Sales
and Marketing, Engineering, Administration,
Distribution
|
1
|
In
March 2009, we announced our plans to outsource the production of our
Bluetooth
products in China. As a result, our 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.
|
Low
|
High
|
|||||||
Fiscal
2008
|
||||||||
First
Quarter
|
$ | 22.82 | $ | 26.22 | ||||
Second
Quarter
|
25.77 | 29.92 | ||||||
Third
Quarter
|
22.32 | 32.71 | ||||||
Fourth
Quarter
|
17.82 | 26.00 | ||||||
Fiscal
2009
|
||||||||
First
Quarter
|
$ | 18.89 | $ | 25.18 | ||||
Second
Quarter
|
20.69 | 26.06 | ||||||
Third
Quarter
|
9.89 | 22.52 | ||||||
Fourth
Quarter
|
7.84 | 14.06 |
Total
Number of
|
Maximum
Number
|
|||||||||||||||
Shares
Purchased
|
of
Shares that May
|
|||||||||||||||
as
Part of Publicly
|
Yet
Be Purchased
|
|||||||||||||||
Total
Number of
|
Average
Price
|
Announced
Plans
|
Under
the Plans
|
|||||||||||||
Shares
Purchased
|
Paid
per Share
|
or
Programs
|
or
Programs
|
|||||||||||||
December
28, 2008 to January 24, 2009
|
26,700 | $ | 11.93 | 26,700 | 926,700 | |||||||||||
January
25, 2009 to February 28, 2009
|
15,700 | $ | 10.86 | 15,700 | 911,000 | |||||||||||
March
1, 2009 to March 28, 2009
|
- | $ | - | - | 911,000 |
Fiscal
Year Ended March 31,
|
||||||||||||||||||||
2005
|
20061
|
20072
|
|
20082,3,4
|
20092,3,4,5,6
|
|||||||||||||||
(in
thousands, except earnings (loss) per share)
|
||||||||||||||||||||
STATEMENT
OF OPERATIONS DATA:
|
||||||||||||||||||||
Net
revenues
|
$ | 559,995 | $ | 750,394 | $ | 800,154 | $ | 856,286 | $ | 765,619 | ||||||||||
Net
income (loss)
|
$ | 97,520 | $ | 81,150 | $ | 50,143 | $ | 68,395 | $ | (64,899 | ) | |||||||||
Basic
net income (loss) per common share
|
$ | 2.02 | $ | 1.72 | $ | 1.06 | $ | 1.42 | $ | (1.34 | ) | |||||||||
Diluted
net income (loss) per common share
|
$ | 1.92 | $ | 1.66 | $ | 1.04 | $ | 1.39 | $ | (1.34 | ) | |||||||||
Cash
dividends declared per common share
|
$ | 0.15 | $ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 | ||||||||||
Shares
used in basic per share calculations
|
48,249 | 47,120 | 47,361 | 48,232 | 48,589 | |||||||||||||||
Shares
used in diluted per share calculations
|
50,821 | 48,788 | 48,020 | 49,090 | 48,589 | |||||||||||||||
BALANCE
SHEET DATA:
|
||||||||||||||||||||
Cash,
cash equivalents, and short-term investments
|
$ | 242,814 | $ | 76,732 | $ | 103,365 | $ | 163,091 | $ | 218,180 | ||||||||||
Total
assets
|
$ | 487,929 | $ | 612,249 | $ | 651,304 | $ | 741,393 | $ | 633,120 | ||||||||||
Long-term
liabilities
|
$ | 2,930 | $ | 1,453 | $ | 696 | $ | 14,989 | $ | 13,698 | ||||||||||
Total
stockholders' equity
|
$ | 405,719 | $ | 435,621 | $ | 496,807 | $ | 578,620 | $ | 525,367 |
1
|
On August 18, 2005, we completed
the acquisition of Altec Lansing, a privately-held Pennsylvania corporation for a cash purchase
price including acquisition costs of approximately $165 million. The
results of operations of Altec Lansing have been included in our
consolidated results of operations subsequent to the acquisition on August
18, 2005.
|
2
|
We began recognizing the
provisions of SFAS No. 123(R) beginning in fiscal 2007; as a result, $16.9
million, $16.0 million and $15.7 million in stock-based
compensation expense has been included in our consolidated results of
operations for the years ended March 31, 2007, 2008 and 2009,
respectively. See Note 11
of the Consolidated
Financial Statements and related notes, included elsewhere,
herein.
|
3
|
In
November 2007, we 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. As a result of these activities, $3.6 million and $0.1
million in restructuring and other related charges has been included in
our consolidated results of operations for the years ended March 31, 2008
and 2009, respectively. See Note 8 of the Consolidated
Financial Statements and related notes, included elsewhere,
herein.
|
4
|
In the first quarter of fiscal
2008, we adopted the provisions of FIN 48; as a result, the liability of
$13.5 million for uncertain tax provisions not expected to be paid within
the next twelve months was reclassified to long-term income taxes
payable. See Note 14 of the Consolidated Financial Statements
and related notes, included elsewhere,
herein.
|
5
|
In
the third quarter of fiscal 2009, we recorded non-cash impairment charges
in the amount of $117.5 million
which consisted of $54.7 million related to the goodwill arising from the
purchase of Altec Lansing in August 2005, $58.7 million related to
intangible assets primarily associated with the Altec Lansing trademark
and trade name and $4.1 million related to property, plant and equipment
related to the AEG segment. See Notes 6 and 7 of the Consolidated
Financial Statements and related notes, included elsewhere,
herein.
|
6
|
During
fiscal 2009, we announced several restructuring plans which included
reductions in force in both AEG and ACG’s operations including the planned
closure of ACG’s Suzhou, China Bluetooth manufacturing
facility in fiscal 2010. As a result of these activities, $12.0
million in restructuring and other related charges has been included in
our consolidated results of operations for the year ended March 31,
2009. See Note 8 of the Consolidated Financial Statements and
related notes, included elsewhere,
herein.
|
|
·
|
Be profitable
and cash flow positive. We
announced and implemented several restructuring plans in fiscal 2009 along
with other cost cutting measures, including management salary reductions,
to significantly decrease our operating expenses and overall cost
structure. We also began reducing inventory in the second half of
fiscal 2009 and have plans for improved inventory management and
lower capital expenditures and operating expenses in fiscal 2010
than in fiscal 2009. We believe our cost structure is now aligned
with current market conditions and supports our plans to be profitable and
cash flow positive in fiscal 2010; however, we will monitor and
realign our cost structure as needed to match the actual economic
conditions.
|
|
·
|
Establish
strong Unified Communications market position for future
growth. We will continue to focus on Unified
Communications technologies as we believe the implementation of UC by
large corporations will be a significant long-term driver of office
headset adoption, and as a result, a key long-term driver of revenue and
profit growth.
|
|
·
|
Improve
return on invested capital. We are focused on increasing
our profits and reducing our net assets with the goal of improving our
return on invested capital. Initiatives designed to reduce
capital include the transition to an outsourced original design
manufacturer model for Bluetooth
which will reduce inventory and ultimately enable us to sell our plant in
China; a broad-based tightening of capital expenditures which we believe
will yield a 50% reduction in capital expenditures globally in fiscal 2010
compared to fiscal 2009; and leveraging the investments we have made in
supply chain management systems to reduce inventory and improve inventory
turns.
|
Consolidated
|
||||||||||||||||||||||||
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||||||||||||||
2007
|
2008
|
2009
|
||||||||||||||||||||||
Net
revenues
|
$ | 800,154 | 100.0 | % | $ | 856,286 | 100.0 | % | $ | 765,619 | 100.0 | % | ||||||||||||
Cost
of revenues
|
491,339 | 61.4 | % | 507,181 | 59.2 | % | 469,591 | 61.3 | % | |||||||||||||||
Gross
profit
|
308,815 | 38.6 | % | 349,105 | 40.8 | % | 296,028 | 38.7 | % | |||||||||||||||
Operating
expense:
|
||||||||||||||||||||||||
Research,
development and engineering
|
71,895 | 9.0 | % | 76,982 | 9.0 | % | 72,061 | 9.4 | % | |||||||||||||||
Selling,
general and administrative
|
182,108 | 22.7 | % | 189,156 | 22.1 | % | 175,601 | 22.9 | % | |||||||||||||||
Restructuring
and other related charges
|
- | 0.0 | % | 3,584 | 0.4 | % | 12,074 | 1.6 | % | |||||||||||||||
Impairment
of goodwill and long-lived assets
|
- | 0.0 | % | - | 0.0 | % | 117,464 | 15.4 | % | |||||||||||||||
Gain
on sale of land
|
(2,637 | ) | (0.3 | )% | - | 0.0 | % | - | 0.0 | % | ||||||||||||||
Total
operating expenses
|
251,366 | 31.4 | % | 269,722 | 31.5 | % | 377,200 | 49.3 | % | |||||||||||||||
Operating
income (loss)
|
57,449 | 7.2 | % | 79,383 | 9.3 | % | (81,172 | ) | (10.6 | )% | ||||||||||||||
Interest
and other income (expense), net
|
4,089 | 0.5 | % | 5,854 | 0.7 | % | (3,544 | ) | (0.5 | )% | ||||||||||||||
Income
(Loss) before income taxes
|
61,538 | 7.7 | % | 85,237 | 10.0 | % | (84,716 | ) | (11.1 | )% | ||||||||||||||
Income
tax expense (benefit)
|
11,395 | 1.4 | % | 16,842 | 2.0 | % | (19,817 | ) | (2.6 | )% | ||||||||||||||
Net
income (loss)
|
$ | 50,143 | 6.3 | % | $ | 68,395 | 8.0 | % | $ | (64,899 | ) | (8.5 | )% |
Audio
Communications Group
|
||||||||||||||||||||||||
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||||||||||||||
2007
|
2008
|
2009
|
||||||||||||||||||||||
Net
revenues
|
$ | 676,514 | 100.0 | % | $ | 747,935 | 100.0 | % | $ | 674,590 | 100.0 | % | ||||||||||||
Cost
of revenues
|
381,034 | 56.3 | % | 403,863 | 54.0 | % | 382,659 | 56.7 | % | |||||||||||||||
Gross
profit
|
295,480 | 43.7 | % | 344,072 | 46.0 | % | 291,931 | 43.3 | % | |||||||||||||||
Operating
expense:
|
||||||||||||||||||||||||
Research,
development and engineering
|
61,583 | 9.1 | % | 65,733 | 8.8 | % | 63,840 | 9.5 | % | |||||||||||||||
Selling,
general and administrative
|
151,857 | 22.5 | % | 163,173 | 21.8 | % | 155,678 | 23.1 | % | |||||||||||||||
Restructuring
and other related charges
|
- | 0.0 | % | - | 0.0 | % | 10,952 | 1.6 | % | |||||||||||||||
Gain
on sale of land
|
(2,637 | ) | (0.4 | )% | - | 0.0 | % | - | 0.0 | % | ||||||||||||||
Total
operating expenses
|
210,803 | 31.2 | % | 228,906 | 30.6 | % | 230,470 | 34.2 | % | |||||||||||||||
Operating
income
|
$ | 84,677 | 12.5 | % | $ | 115,166 | 15.4 | % | $ | 61,461 | 9.1 | % |
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||||||||||||||
2007
|
2008
|
2009
|
||||||||||||||||||||||
Net
revenues
|
$ | 123,640 | 100.0 | % | $ | 108,351 | 100.0 | % | $ | 91,029 | 100.0 | % | ||||||||||||
Cost
of revenues
|
110,305 | 89.2 | % | 103,318 | 95.4 | % | 86,932 | 95.5 | % | |||||||||||||||
Gross
profit
|
13,335 | 10.8 | % | 5,033 | 4.6 | % | 4,097 | 4.5 | % | |||||||||||||||
Operating
expense:
|
||||||||||||||||||||||||
Research,
development and engineering
|
10,312 | 8.3 | % | 11,249 | 10.4 | % | 8,221 | 9.0 | % | |||||||||||||||
Selling,
general and administrative
|
30,251 | 24.5 | % | 25,983 | 23.9 | % | 19,923 | 21.9 | % | |||||||||||||||
Restructuring
and other related charges
|
- | 0.0 | % | 3,584 | 3.3 | % | 1,122 | 1.2 | % | |||||||||||||||
Impairment
of goodwill and long-lived assets
|
- | 0.0 | % | - | 0.0 | % | 117,464 | 129.0 | % | |||||||||||||||
Total
operating expenses
|
40,563 | 32.8 | % | 40,816 | 37.6 | % | 146,730 | 161.1 | % | |||||||||||||||
Operating
loss
|
$ | (27,228 | ) | (22.0 | )% | $ | (35,783 | ) | (33.0 | )% | $ | (142,633 | ) | (156.6 | )% |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
|||||||||||||||||||||||||||
Net
revenues from unaffiliated customers:
|
|||||||||||||||||||||||||||||||||
Office
and Contact Center
|
$ | 475,323 | $ | 519,958 | $ | 44,635 | 9.4 | % | $ | 519,958 | $ | 429,669 | $ | (90,289 | ) | (17.4 | )% | ||||||||||||||||
Mobile
|
146,859 | 171,880 | 25,021 | 17.0 | % | 171,880 | 187,419 | 15,539 | 9.0 | % | |||||||||||||||||||||||
Gaming
and Computer Audio
|
30,162 | 33,612 | 3,450 | 11.4 | % | 33,612 | 34,052 | 440 | 1.3 | % | |||||||||||||||||||||||
Clarity
|
24,170 | 22,485 | (1,685 | ) | (7.0 | )% | 22,485 | 23,450 | 965 | 4.3 | % | ||||||||||||||||||||||
Total
segment net revenues
|
$ | 676,514 | $ | 747,935 | $ | 71,421 | 10.6 | % | $ | 747,935 | $ | 674,590 | $ | (73,345 | ) | (9.8 | )% |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
|||||||||||||||||||||||||||
Net
revenues from unaffiliated customers:
|
|||||||||||||||||||||||||||||||||
Docking
Audio
|
$ | 61,068 | $ | 55,399 | $ | (5,669 | ) | (9.3 | )% | $ | 55,399 | $ | 46,204 | $ | (9,195 | ) | (16.6 | )% | |||||||||||||||
PC
Audio
|
52,496 | 45,828 | (6,668 | ) | (12.7 | )% | 45,828 | 38,884 | (6,944 | ) | (15.2 | )% | |||||||||||||||||||||
Other
|
10,076 | 7,124 | (2,952 | ) | (29.3 | )% | 7,124 | 5,941 | (1,183 | ) | (16.6 | )% | |||||||||||||||||||||
Total
segment net revenues
|
$ | 123,640 | $ | 108,351 | $ | (15,289 | ) | (12.4 | )% | $ | 108,351 | $ | 91,029 | $ | (17,322 | ) | (16.0 | )% |
|
·
|
OCC
product net revenues decreased by $90.3 million as a result of weak
economic conditions.
|
|
·
|
Mobile
product net revenues increased by $15.5 million primarily due to increased
retail placements as a result of an improved product portfolio as well as
demand attributable to hands-free driving legislation enacted in several
states in the U.S. in fiscal year 2009. Within this category of products,
Bluetooth product revenue grew $23.1 million partially offset by a decline
of $7.6 million in corded product
revenues.
|
|
.
|
Gaming
and Computer Audio increased by $0.4 million due to the strength of the
product portfolio, primarily in the U.S. retail
market.
|
|
.
|
Clarity
increased by $1.0 million primarily due to increased OEM sales in
Europe.
|
|
·
|
OCC
product net revenues increased as a result of growth of $35.8 million in
cordless products and $8.8 million from corded products. The
increases are primarily due to the addition of the CS70N to our product
line in fiscal 2008, corded product revenue growth internationally, mostly
in Europe and Asia Pacific, and some benefit from foreign exchange
rates.
|
|
·
|
Mobile
product net revenues increased as a result of market growth and greater
acceptance of our product portfolio which contributed to a year-over-year
increase of $29.8 million in our Bluetooth headsets net
revenues, partially offset by a decline of $4.8 million in net revenues
from corded mobile headsets.
|
|
·
|
Gaming
and Computer Audio product net revenues increased due to the transfer of
the Altec Lansing branded PC headsets into this category in fiscal
2008.
|
|
.
|
Clarity
decreased by $1.7 million due to lower shipments to state government
programs within the U.S. along with lower OEM sales in
Europe.
|
|
·
|
Docking
Audio product net revenues decreased by $9.2 million due to a decline
in sales to warehouse clubs from the prior year along
with reduced sales of surplus
products.
|
|
·
|
PC
Audio product net revenues decreased by $6.9 million as a result of an
older product portfolio which is currently being refreshed, weaker
economic conditions in the U.S. and Europe along with a focus on selective
product placement with higher margin
customers.
|
|
·
|
Other
net revenues decreased by $1.2 million primarily due to a decrease of $1.7
million due to the transfer of responsibility for headset products to ACG
in the second quarter of fiscal 2008 partially offset by increased revenue
related to new product
introductions.
|
|
·
|
Docking
Audio product net revenues decreased primarily as a result of intense
competition in the MP3 accessories market, particularly in the U.S., our
reduced share of the MP3 accessories market and price
reductions.
|
|
·
|
PC
Audio product net revenues decreased primarily in Asia and the U.S. due to
increased competition and price
reductions.
|
|
·
|
Other
products net revenues decreased due to the transition of the Altec Lansing
branded PC headsets from the AEG segment to the ACG segment resulting in a
decrease of $7.0 million, partially offset by an increase in headphone and
other net revenues of $3.4
million.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
||||||||||||||||||||||||||
Net
revenues from unaffiliated customers:
|
||||||||||||||||||||||||||||||||
United
States
|
$ | 490,551 | $ | 521,148 | $ | 30,597 | 6.2 | % | $ | 521,148 | $ | 472,239 | $ | (48,909 | ) | (9.4 | )% | |||||||||||||||
Europe,
Middle East and Africa
|
195,090 | 214,621 | 19,531 | 10.0 | % | 214,621 | 185,023 | (29,598 | ) | (13.8 | )% | |||||||||||||||||||||
Asia
Pacific
|
59,927 | 62,742 | 2,815 | 4.7 | % | 62,742 | 56,160 | (6,582 | ) | (10.5 | )% | |||||||||||||||||||||
Americas,
excluding United States
|
54,586 | 57,775 | 3,189 | 5.8 | % | 57,775 | 52,197 | (5,578 | ) | (9.7 | )% | |||||||||||||||||||||
Total
international net revenues
|
309,603 | 335,138 | 25,535 | 8.2 | % | 335,138 | 293,380 | (41,758 | ) | (12.5 | )% | |||||||||||||||||||||
Total
consolidated net revenues
|
$ | 800,154 | $ | 856,286 | $ | 56,132 | 7.0 | % | $ | 856,286 | $ | 765,619 | $ | (90,667 | ) | (10.6 | )% |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
|||||||||||||||||||||||||||
Net
revenues
|
$ | 800,154 | $ | 856,286 | $ | 56,132 | 7.0 | % | $ | 856,286 | $ | 765,619 | $ | (90,667 | ) | (10.6 | )% | ||||||||||||||||
Cost
of revenues
|
491,339 | 507,181 | 15,842 | 3.2 | % | 507,181 | 469,591 | (37,590 | ) | (7.4 | )% | ||||||||||||||||||||||
Consolidated
gross profit
|
$ | 308,815 | $ | 349,105 | $ | 40,290 | 13.0 | % | $ | 349,105 | $ | 296,028 | $ | (53,077 | ) | (15.2 | )% | ||||||||||||||||
Consolidated
gross profit %
|
38.6 | % | 40.8 | % | 2.2 | ppt. | 40.8 | % | 38.7 | % | (2.1 | ) | ppt. |
Net
revenues
|
$ | 676,514 | $ | 747,935 | $ | 71,421 | 10.6 | % | $ | 747,935 | $ | 674,590 | $ | (73,345 | ) | (9.8 | )% | ||||||||||||||||
Cost
of revenues
|
381,034 | 403,863 | 22,829 | 6.0 | % | 403,863 | 382,659 | (21,204 | ) | (5.3 | )% | ||||||||||||||||||||||
Segment
gross profit
|
$ | 295,480 | $ | 344,072 | $ | 48,592 | 16.4 | % | $ | 344,072 | $ | 291,931 | $ | (52,141 | ) | (15.2 | )% | ||||||||||||||||
Segment
gross profit %
|
43.7 | % | 46.0 | % | 2.3 | ppt. | 46.0 | % | 43.3 | % | (2.7 | ) | ppt. |
Net
revenues
|
$ | 123,640 | $ | 108,351 | $ | (15,289 | ) | (12.4 | )% | $ | 108,351 | $ | 91,029 | $ | (17,322 | ) | (16.0 | )% | |||||||||||||||
Cost
of revenues
|
110,305 | 103,318 | (6,987 | ) | (6.3 | )% | 103,318 | 86,932 | (16,386 | ) | (15.9 | )% | |||||||||||||||||||||
Segment
gross profit
|
$ | 13,335 | $ | 5,033 | $ | (8,302 | ) | (62.3 | )% | $ | 5,033 | $ | 4,097 | $ | (936 | ) | (18.6 | )% | |||||||||||||||
Segment
gross profit %
|
10.8 | % | 4.6 | % | (6.2 | ) | ppt. | 4.6 | % | 4.5 | % | (0.1 | ) | ppt. |
|
·
|
a
2.9 percentage point detriment mostly due to a higher proportion of
consumer products than commercial products in the overall revenue
mix. While consumer products carry lower margins than
commercial products, the level of product margin on our consumer products
has increased significantly primarily due to cost
reductions;
|
|
·
|
a
0.7 percentage point detriment from higher freight expenses and other
manufacturing costs; and
|
|
·
|
a
0.6 percentage point detriment from higher excess and obsolete inventory
provisions. These higher provisions were in part a result
of our decision to end of life certain models in our Bluetooth portfolio of
products coinciding with the decline in consumer demand due to poor
economic conditions and our announcement in March 2009 to outsource Bluetooth manufacturing
to an existing supplier in China, thus limiting the number of Bluetooth models to
transition.
|
|
·
|
a
2.8 percentage point benefit from cost reductions including lower
intangible asset amortization as a result of the impairment of certain
long-lived assets in the third quarter of fiscal
2009;
|
·
|
a
1.5 percentage point benefit from decreased discounting, price protection
programs and co-op advertising and marketing development funds
programs;
|
·
|
a
1.9 percentage point detriment from increased adverse purchase commitments
and higher warranty costs;
|
·
|
a
1.4 percentage point detriment due to increased freight and duty;
and
|
·
|
a
1.0 percentage point detriment due to a product mix shift to lower margin
products.
|
|
·
|
a 1.6 percentage point benefit
from material cost reductions on wireless office and Bluetooth
products;
|
|
·
|
a 1.5 percentage point benefit
primarily from improved productivity in our manufacturing
process;
|
|
·
|
a
0.7 percentage point benefit from foreign exchange;
and
|
|
·
|
a
0.6 percentage point benefit from a reduction in excess and obsolete
inventory costs.
|
|
·
|
a
6.2 percentage point decline due to a 12% decline in the overall sales
volume and reduced selling prices of surplus inventory, primarily in
the Docking Audio category; and
|
|
·
|
increased
freight, duty, royalties and warehousing which yielded a 5.4 percentage
point decline.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
||||||||||||||||||||||||||
Research,
development and engineering
|
$ | 71,895 | $ | 76,982 | $ | 5,087 | 7.1 | % | $ | 76,982 | $ | 72,061 | $ | (4,921 | ) | (6.4 | )% | |||||||||||||||
%
of total consolidated net revenues
|
9.0 | % | 9.0 | % | 0.0 | ppt. | 9.0 | % | 9.4 | % | 0.4 | ppt. |
Audio
Communications Group
|
||||||||||||||||||||||||||||||||
Research,
development and engineering
|
$ | 61,583 | $ | 65,733 | $ | 4,150 | 6.7 | % | $ | 65,733 | $ | 63,840 | $ | (1,893 | ) | (2.9 | )% | |||||||||||||||
%
of total segment net revenues
|
9.1 | % | 8.8 | % | (0.3 | ) | ppt. | 8.8 | % | 9.5 | % | 0.7 | ppt. | |||||||||||||||||||
Audio
Entertainment Group
|
||||||||||||||||||||||||||||||||
Research,
development and engineering
|
$ | 10,312 | $ | 11,249 | $ | 937 | 9.1 | % | $ | 11,249 | $ | 8,221 | $ | (3,028 | ) | (26.9 | )% | |||||||||||||||
%
of total segment net revenues
|
8.3 | % | 10.4 | % | 2.1 | ppt. | 10.4 | % | 9.0 | % | (1.4 | ) | ppt. |
|
·
|
the
design and development of wireless office system
products;
|
|
·
|
UC
products;
|
|
·
|
Bluetooth products and
technology;
|
|
·
|
developing
common architectures across multiple products and increasing the use of
common components across product lines;
and
|
|
·
|
the
refresh of product lines for AEG.
|
|
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
||||||||||||||||||||||||||
Selling,
general and administrative
|
$ | 182,108 | $ | 189,156 | $ | 7,048 | 3.9 | % | $ | 189,156 | $ | 175,601 | $ | (13,555 | ) | (7.2 | )% | |||||||||||||||
%
of total consolidated net revenues
|
22.7 | % | 22.1 | % | (0.6 | ) | ppt. | 22.1 | % | 22.9 | % | 0.8 | ppt. |
Audio
Communications Group
|
||||||||||||||||||||||||||||||||
Selling,
general and administrative
|
$ | 151,857 | $ | 163,173 | $ | 11,316 | 7.5 | % | $ | 163,173 | $ | 155,678 | $ | (7,495 | ) | (4.6 | )% | |||||||||||||||
%
of total segment net revenues
|
22.5 | % | 21.8 | % | (0.7 | ) | ppt. | 21.8 | % | 23.1 | % | 1.3 | ppt. | |||||||||||||||||||
Audio
Entertainment Group
|
||||||||||||||||||||||||||||||||
Selling,
general and administrative
|
$ | 30,251 | $ | 25,983 | $ | (4,268 | ) | (14.1 | )% | $ | 25,983 | $ | 19,923 | $ | (6,060 | ) | (23.3 | )% | ||||||||||||||
%
of total segment net revenues
|
24.5 | % | 23.9 | % | (0.6 | ) | ppt. | 23.9 | % | 21.9 | % | (2.0 | ) | ppt. |
·
|
decreased marketing and sales
promotions of $6.2 million;
|
|
·
|
decreased
expenses of $3.9 million mostly due to lower performance-based
compensation costs; and
|
|
·
|
a
decrease of $2.0 million in travel and entertainment related
expenses.
|
|
·
|
an
increase of $1.6 million in depreciation expenses;
and
|
|
·
|
an
increase of $1.9 million for provisions on doubtful accounts receivable
primarily due to the bankruptcy of a significant international
distributor.
|
|
·
|
decreased
compensation and recruitment costs of $2.0 million primarily related to
reduced headcount;
|
|
·
|
decreased
retail representative commissions of $1.0 million primarily due
to lower sales volume;
|
|
·
|
decreased
$1.1 million due to lower outside services due to completion of
integration related projects, reduced consulting costs from completion of
an Oracle project along with lower audit and legal fees;
and
|
|
.
|
decreased
intangibles amortization expense of $0.8 million as a result of the
impairment recognized in the third quarter of fiscal
2009.
|
|
·
|
increased compensation expense of
$11.8 million as a result of merit increases and higher bonus and
commission costs associated with higher net revenues and profits;
and
|
|
·
|
increased
professional service fees of $3.4 million primarily related to increased
retail representation fees resulting from higher net revenues and
increased fees for accounting and tax
services.
|
|
·
|
decreased spending on integration
and retention of employees of $2.7 million as we have
completed significant portions of our planned systems integration;
and
|
|
·
|
increased
allocation of support services to cost of revenues and research and
development resulting in a decrease of
$1.1 million.
|
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
|||||||||||||||||||||||||||
Restructuring
and other related charges
|
$ | - | $ | 3,584 | $ | 3,584 | - | $ | 3,584 | $ | 12,074 | $ | 8,490 | 236.9 | % | ||||||||||||||||||
%
of total consolidated net revenues
|
0.0 | % | 0.4 | % | 0.4 | ppt. | 0.4 | % | 1.6 | % | 1.2 | ppt. |
Restructuring
and other related charges
|
$ | - | $ | - | $ | - | - | $ | - | $ | 10,952 | $ | 10,952 | - | |||||||||||||||||||
%
of total segment net revenues
|
0.0 | % | 0.0 | % | - | ppt. | 0.0 | % | 1.6 | % | 1.6 | ppt. |
Restructuring
and other related charges
|
$ | - | $ | 3,584 | $ | 3,584 | - | $ | 3,584 | $ | 1,122 | $ | (2,462 | ) | (68.7 | )% | |||||||||||||||||
%
of total segment net revenues
|
0.0 | % | 3.3 | % | 3.3 | ppt. | 3.3 | % | 1.2 | % | (2.1 | ) | ppt. |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
|||||||||||||||||||||||||||
Operating
income (loss)
|
$ | 57,449 | $ | 79,383 | $ | 21,934 | 38.2 | % | $ | 79,383 | $ | (81,172 | ) | $ | (160,555 | ) | (202.3 | )% | |||||||||||||||
%
of total consolidated net revenues
|
7.2 | % | 9.3 | % | 2.1 | ppt. | 9.3 | % | (10.6 | )% | (19.9 | ) | ppt. |
Operating
income
|
$ | 84,677 | $ | 115,166 | $ | 30,489 | 36.0 | % | $ | 115,166 | $ | 61,461 | $ | (53,705 | ) | (46.6 | )% | ||||||||||||||||
%
of total segment net revenues
|
12.5 | % | 15.4 | % | 2.9 | ppt. | 15.4 | % | 9.1 | % | (6.3 | ) | ppt. |
Operating
income (loss)
|
$ | (27,228 | ) | $ | (35,783 | ) | $ | (8,555 | ) | 31.4 | % | $ | (35,783 | ) | $ | (142,633 | ) | $ | (106,850 | ) | 298.6 | % | |||||||||||
%
of total segment net revenues
|
(22.0 | )% | (33.0 | )% | (11.0 | ) | ppt. | (33.0 | )% | (156.6 | )% | (123.6 | ) | ppt. |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
||||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
||||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
|||||||||||||||||||||||||||
Interest
and other income (expense), net
|
$ | 4,089 | $ | 5,854 | $ | 1,765 | 43.2 | % | $ | 5,854 | $ | (3,544 | ) | $ | (9,398 | ) | (160.5 | )% | |||||||||||||||
%
of total net revenues
|
0.5 | % | 0.7 | % | 0.2 | ppt. | 0.7 | % | (0.5 | )% | (1.2 | ) | ppt. |
Fiscal
Year Ended
|
Fiscal
Year Ended
|
|||||||||||||||||||||||||||||||
March
31,
|
March
31,
|
Increase
|
March
31,
|
March
31,
|
Increase
|
|||||||||||||||||||||||||||
(in
thousands)
|
2007
|
2008
|
(Decrease)
|
2008
|
2009
|
(Decrease)
|
||||||||||||||||||||||||||
Income
(loss) before income taxes
|
$ | 61,538 | $ | 85,237 | $ | 23,699 | 38.5 | % | $ | 85,237 | $ | (84,716 | ) | $ | (169,953 | ) | (199.4 | )% | ||||||||||||||
Income
tax expense (benefit)
|
11,395 | 16,842 | 5,447 | 47.8 | % | 16,842 | (19,817 | ) | (36,659 | ) | (217.7 | )% | ||||||||||||||||||||
Net
income (loss)
|
$ | 50,143 | $ | 68,395 | $ | 18,252 | 36.4 | % | $ | 68,395 | $ | (64,899 | ) | $ | (133,294 | ) | (194.9 | )% | ||||||||||||||
Effective
tax rate
|
18.5 | % | 19.8 | % | 1.3 | ppt. | 19.8 | % | 23.4 | % | 3.6 | ppt. |
Fiscal
Year Ended
|
||||||||||||
March
31,
|
March
31,
|
March
31,
|
||||||||||
(in
thousands)
|
2007
|
2008
|
2009
|
|||||||||
Cash
provided by operating activities
|
$ | 73,048 | $ | 102,900 | $ | 99,150 | ||||||
Cash
used for capital expenditures and other assets
|
$ | (24,028 | ) | $ | (23,298 | ) | $ | (23,682 | ) | |||
Cash
provided by (used for) other investing activities
|
1,546 | (18,850 | ) | (59,490 | ) | |||||||
Cash
used for investing activities
|
$ | (22,482 | ) | $ | (42,148 | ) | $ | (83,172 | ) | |||
Cash
provided by (used for) financing activities
|
$ | (26,244 | ) | $ | 5,618 | $ | (14,915 | ) |
Payments
Due by Period
|
||||||||||||||||||||
Less
than
|
1-3
|
3-5
|
More
than
|
|||||||||||||||||
(in
thousands)
|
Total
|
1
year
|
years
|
years
|
5
years
|
|||||||||||||||
Operating
leases
|
$ | 14,774 | $ | 5,066 | $ | 5,678 | $ | 3,037 | $ | 993 | ||||||||||
Unconditional
purchase obligations
|
63,365 | 63,365 | - | - | - | |||||||||||||||
Total
contractual cash obligations
|
$ | 78,139 | $ | 68,431 | $ | 5,678 | $ | 3,037 | $ | 993 |
|
·
|
Revenue
Recognition
|
|
·
|
Investments
|
|
·
|
Allowance for Doubtful
Accounts
|
|
·
|
Inventory and Related
Reserves
|
|
·
|
Product Warranty
Obligations
|
|
·
|
Goodwill and
Intangibles
|
|
·
|
Income
Taxes
|
|
·
|
title and risk of ownership are
transferred to customers;
|
|
·
|
persuasive evidence of an
arrangement exists;
|
|
·
|
the price to the buyer is fixed or
determinable; and
|
|
·
|
collection is reasonably
assured.
|
Foreign
|
Foreign
|
||||||||||||
USD
Value of
|
Exchange
Gain
|
Exchange
(Loss)
|
|||||||||||
Net
Foreign
|
From
10%
|
From
10%
|
|||||||||||
Exchange
|
Appreciation
|
Depreciation
|
|||||||||||
Currency
- forward contracts
|
Position
|
Contracts
|
of
USD
|
of
USD
|
|||||||||
Euro
|
Sell
Euro
|
$ | 24.9 | $ | 2.5 | $ | (2.5 | ) | |||||
Great
Britain Pound
|
Sell
GBP
|
9.3 | 0.9 | (0.9 | ) | ||||||||
Net
position
|
$ | 34.2 | $ | 3.4 | $ | (3.4 | ) |
Foreign
|
Foreign
|
|||||||||||
USD
Value of
|
Exchange
Gain
|
Exchange
(Loss)
|
||||||||||
Net
Foreign
|
From
10%
|
From
10%
|
||||||||||
Exchange
|
Appreciation
|
Depreciation
|
||||||||||
Currency
- option contracts
|
Contracts
|
of
USD
|
of
USD
|
|||||||||
Call
options
|
$ | (95.3 | ) | $ | 1.6 | $ | (3.0 | ) | ||||
Put
options
|
90.0 | 6.1 | (4.5 | ) | ||||||||
Net
position
|
$ | (5.3 | ) | $ | 7.7 | $ | (7.5 | ) |
March
31,
|
||||||||
2008
|
2009
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 163,091 | $ | 158,193 | ||||
Short-term
investments
|
- | 59,987 | ||||||
Accounts
receivable, net
|
131,493 | 83,657 | ||||||
Inventory,
net
|
127,088 | 119,296 | ||||||
Deferred
income taxes
|
13,760 | 12,486 | ||||||
Other
current assets
|
14,771 | 29,936 | ||||||
Total current assets
|
450,203 | 463,555 | ||||||
Long-term
investments
|
25,136 | 23,718 | ||||||
Property,
plant and equipment, net
|
98,530 | 95,719 | ||||||
Intangibles,
net
|
91,511 | 26,575 | ||||||
Goodwill
|
69,171 | 14,005 | ||||||
Other
assets
|
6,842 | 9,548 | ||||||
Total
assets
|
$ | 741,393 | $ | 633,120 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 47,896 | $ | 32,827 | ||||
Accrued
liabilities
|
67,318 | 53,143 | ||||||
Total
current liabilities
|
115,214 | 85,970 | ||||||
Deferred
tax liability
|
32,570 | 8,085 | ||||||
Long-term
income taxes payable
|
14,137 | 12,677 | ||||||
Other
long-term liabilities
|
852 | 1,021 | ||||||
Total
liabilities
|
162,773 | 107,753 | ||||||
Commitments
and contingencies (Note 10)
|
||||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, $0.01 par value per share; 1,000 shares authorized, no shares
outstanding
|
- | - | ||||||
Common
stock, $0.01 par value per share; 100,000 shares authorized, 67,295 shares
and 51,820 shares issued at 2008 and 2009, respectively
|
673 | 678 | ||||||
Additional
paid-in capital
|
369,655 | 386,224 | ||||||
Accumulated
other comprehensive income (loss)
|
(3,581 | ) | 8,855 | |||||
Retained
earnings
|
608,849 | 203,936 | ||||||
975,596 | 599,693 | |||||||
Less:
Treasury stock (common: 18,351 and 2,928 shares at 2008 and 2009,
respectively) at cost
|
(396,976 | ) | (74,326 | ) | ||||
Total
stockholders' equity
|
578,620 | 525,367 | ||||||
Total
liabilities and stockholders' equity
|
$ | 741,393 | $ | 633,120 |
Fiscal
Year Ended March 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
Net
revenues
|
$ | 800,154 | $ | 856,286 | $ | 765,619 | ||||||
Cost
of revenues
|
491,339 | 507,181 | 469,591 | |||||||||
Gross
profit
|
308,815 | 349,105 | 296,028 | |||||||||
Operating
expenses:
|
||||||||||||
Research,
development and engineering
|
71,895 | 76,982 | 72,061 | |||||||||
Selling,
general and administrative
|
182,108 | 189,156 | 175,601 | |||||||||
Restructuring
and other related charges
|
- | 3,584 | 12,074 | |||||||||
Impairment
of goodwill and long-lived assets
|
- | - | 117,464 | |||||||||
Gain
on sale of land
|
(2,637 | ) | - | - | ||||||||
Total
operating expenses
|
251,366 | 269,722 | 377,200 | |||||||||
Operating
income (loss)
|
57,449 | 79,383 | (81,172 | ) | ||||||||
Interest
and other income (expense), net
|
4,089 | 5,854 | (3,544 | ) | ||||||||
Income
(loss) before income taxes
|
61,538 | 85,237 | (84,716 | ) | ||||||||
Income
tax expense (benefit)
|
11,395 | 16,842 | (19,817 | ) | ||||||||
Net
income (loss)
|
$ | 50,143 | $ | 68,395 | $ | (64,899 | ) | |||||
Net
income (loss) per share - basic
|
$ | 1.06 | $ | 1.42 | $ | (1.34 | ) | |||||
Shares
used in basic per share calculations
|
47,361 | 48,232 | 48,589 | |||||||||
Net
income (loss) per share - diluted
|
$ | 1.04 | $ | 1.39 | $ | (1.34 | ) | |||||
Shares
used in diluted per share calculations
|
48,020 | 49,090 | 48,589 | |||||||||
Cash
dividends declared per common share
|
$ | 0.20 | $ | 0.20 | $ | 0.20 |
Fiscal
Year Ended March 31,
|
||||||||||||
2007
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||||
Net
income (loss)
|
$ | 50,143 | $ | 68,395 | $ | (64,899 | ) | |||||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
29,151 | 28,486 | 25,822 | |||||||||
Stock-based
compensation
|
16,919 | 15,992 | 15,742 | |||||||||
Provision
for (benefit from) sales allowances and doubtful accounts
|
(288 | ) | (232 | ) | 2,698 | |||||||
Provision
for excess and obsolete inventories
|
14,551 | 7,776 | 11,364 | |||||||||
Benefit
from deferred income taxes
|
(8,430 | ) | (9,313 | ) | (26,853 | ) | ||||||
Income
tax benefit associated with stock option exercises
|
501 | 1,459 | 1,025 | |||||||||
Excess
tax benefit from stock-based compensation
|
(1,208 | ) | (1,763 | ) | (592 | ) | ||||||
Impairment
of goodwill, intangibles and long-lived assets
|
800 | 517 | 117,464 | |||||||||
Non-cash
restructuring charges
|
- | 1,557 | 581 | |||||||||
Other
operating activities
|
(2,535 | ) | 253 | 358 | ||||||||
Changes
in assets and liabilities:
|
||||||||||||
Accounts
receivable, net
|
4,538 | (19,196 | ) | 50,706 | ||||||||
Inventory,
net
|
(35,140 | ) | (8,273 | ) | (5,358 | ) | ||||||
Other
assets
|
(5,334 | ) | (3,100 | ) | (6,935 | ) | ||||||
Accounts
payable
|
1,382 | (2,060 | ) | (15,069 | ) | |||||||
Accrued
liabilities
|
8,712 | 8,731 | (6,701 | ) | ||||||||
Income
taxes payable
|
(714 | ) | 13,671 | (203 | ) | |||||||
Cash
provided by operating activities
|
73,048 | 102,900 | 99,150 | |||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Proceeds
from sales of short-term investments
|
311,439 | 328,285 | - | |||||||||
Proceeds
from maturities of short-term investments
|
- | - | 30,000 | |||||||||
Purchase
of short-term investments
|
(312,560 | ) | (347,135 | ) | (89,896 | ) | ||||||
Proceeds
from the sale of land
|
2,667 | - | - | |||||||||
Capital
expenditures and other assets
|
(24,028 | ) | (23,298 | ) | (23,682 | ) | ||||||
Funds
released from escrow related to the Altec acquisition
|
- | - | 406 | |||||||||
Cash
used for investing activities
|
(22,482 | ) | (42,148 | ) | (83,172 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Purchase
of treasury stock
|
(4,021 | ) | (1,542 | ) | (17,817 | ) | ||||||
Proceeds
from sale of treasury stock
|
4,886 | 5,346 | 5,198 | |||||||||
Proceeds
from issuance of common stock
|
3,266 | 9,762 | 6,899 | |||||||||
Repayment
of line of credit
|
(22,043 | ) | - | - | ||||||||
Payment
of cash dividends
|
(9,540 | ) | (9,711 | ) | (9,787 | ) | ||||||
Excess
tax benefit from stock-based compensation
|
1,208 | 1,763 | 592 | |||||||||
Cash
(used for) provided by financing activities
|
(26,244 | ) | 5,618 | (14,915 | ) | |||||||
Effect
of exchange rate changes on cash and cash equivalents
|
1,106 | 2,590 | (5,961 | ) | ||||||||
Net
(decrease) increase in cash and cash equivalents
|
25,428 | 68,960 | (4,898 | ) | ||||||||
Cash
and cash equivalents at beginning of year
|
68,703 | 94,131 | 163,091 | |||||||||
Cash
and cash equivalents at end of year
|
$ | 94,131 | $ | 163,091 | $ | 158,193 | ||||||
SUPPLEMENTAL
DISCLOSURES
|
||||||||||||
Cash
paid for:
|
||||||||||||
Interest
|
$ | 632 | $ | 100 | $ | 101 | ||||||
Income
taxes
|
$ | 24,836 | $ | 13,027 | $ | 12,519 |
Accumulated
|
||||||||||||||||||||||||||||||||
Other
|
Total
|
|||||||||||||||||||||||||||||||
Additional
|
Deferred
|
Compre-
|
Stock-
|
|||||||||||||||||||||||||||||
Common
Stock
|
Paid-In
|
Stock-Based
|
hensive
|
Retained
|
Treasury
|
holders'
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Compensation
|
Income(Loss)
|
Earnings
|
Stock
|
Equity
|
|||||||||||||||||||||||||
Balances
at March 31, 2006
|
47,538 | $ | 662 | $ | 325,764 | $ | (8,599 | ) | $ | 3,634 | $ | 509,562 | $ | (395,402 | ) | $ | 435,621 | |||||||||||||||
Net
income
|
- | - | - | - | - | 50,143 | - | 50,143 | ||||||||||||||||||||||||
Foreign
currency translation adjustments
|
- | - | - | - | 2,006 | - | - | 2,006 | ||||||||||||||||||||||||
Unrealized
gain on hedges, net of tax
|
- | - | - | - | (2,974 | ) | - | - | (2,974 | ) | ||||||||||||||||||||||
Comprehensive
income
|
49,175 | |||||||||||||||||||||||||||||||
Exercise
of stock options
|
331 | 3 | 3,262 | - | - | - | - | 3,265 | ||||||||||||||||||||||||
Issuance
of restricted common stock
|
79 | 1 | - | - | - | - | - | 1 | ||||||||||||||||||||||||
Repurchase
of restricted common stock
|
(39 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Cash
dividends declared
|
- | - | - | - | - | (9,540 | ) | - | (9,540 | ) | ||||||||||||||||||||||
Reclassification
of unamortized stock-based compensation upon adoption of SFAS
123(R)
|
- | - | (8,599 | ) | 8,599 | - | - | - | - | |||||||||||||||||||||||
Stock-based
compensation
|
- | - | 16,919 | - | - | - | - | 16,919 | ||||||||||||||||||||||||
Income
tax benefit associated with stock options
|
- | - | 501 | - | - | - | - | 501 | ||||||||||||||||||||||||
Purchase
of treasury stock
|
(175 | ) | - | - | - | - | - | (4,021 | ) | (4,021 | ) | |||||||||||||||||||||
Sale
of treasury stock
|
331 | - | 2,814 | - | - | - | 2,072 | 4,886 | ||||||||||||||||||||||||
Balances
at March 31, 2007
|
48,065 | 666 | 340,661 | - | 2,666 | 550,165 | (397,351 | ) | 496,807 | |||||||||||||||||||||||
Net
income
|
- | - | - | - | - | 68,395 | - | 68,395 | ||||||||||||||||||||||||
Foreign
currency translation adjustments
|
- | - | - | - | 1,053 | - | - | 1,053 | ||||||||||||||||||||||||
Unrealized
loss on hedges, net of tax
|
- | - | - | - | (4,436 | ) | - | - | (4,436 | ) | ||||||||||||||||||||||
Unrealized
loss on long-term investments, net of tax
|
- | - | - | - | (2,864 | ) | - | - | (2,864 | ) | ||||||||||||||||||||||
Comprehensive
income
|
- | 62,148 | ||||||||||||||||||||||||||||||
Exercise
of stock options
|
576 | 6 | 9,755 | - | - | - | - | 9,761 | ||||||||||||||||||||||||
Issuance
of restricted common stock
|
113 | 1 | - | - | - | - | - | 1 | ||||||||||||||||||||||||
Repurchase
of restricted common stock
|
(35 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Cash
dividends declared
|
- | - | - | - | - | (9,711 | ) | - | (9,711 | ) | ||||||||||||||||||||||
Stock-based
compensation
|
- | - | 15,992 | - | - | - | - | 15,992 | ||||||||||||||||||||||||
Income
tax benefit associated with stock options
|
- | - | (182 | ) | - | - | - | - | (182 | ) | ||||||||||||||||||||||
Purchase
of treasury stock
|
(82 | ) | - | - | - | - | - | (1,542 | ) | (1,542 | ) | |||||||||||||||||||||
Sale
of treasury stock
|
307 | - | 3,429 | - | - | - | 1,917 | 5,346 | ||||||||||||||||||||||||
Balances
at March 31, 2008
|
48,944 | 673 | 369,655 | - | (3,581 | ) | 608,849 | (396,976 | ) | 578,620 | ||||||||||||||||||||||
Net
loss
|
- | - | - | - | - | (64,899 | ) | - | (64,899 | ) | ||||||||||||||||||||||
Foreign
currency translation adjustments
|
- | - | - | - | (2,606 | ) | - | - | (2,606 | ) | ||||||||||||||||||||||
Unrealized
loss on hedges, net of tax
|
- | - | - | - | 12,179 | - | - | 12,179 | ||||||||||||||||||||||||
Unrealized
loss on long-term investments, net of tax
|
- | - | - | - | 2,863 | - | - | 2,863 | ||||||||||||||||||||||||
Comprehensive
loss
|
(52,463 | ) | ||||||||||||||||||||||||||||||
Exercise
of stock options
|
359 | 4 | 6,894 | - | - | - | - | 6,898 | ||||||||||||||||||||||||
Issuance
of restricted common stock
|
187 | 1 | - | - | - | - | - | 1 | ||||||||||||||||||||||||
Repurchase
of restricted common stock
|
(20 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Cash
dividends declared
|
- | - | - | - | - | (9,787 | ) | - | (9,787 | ) | ||||||||||||||||||||||
Stock-based
compensation
|
- | - | 15,742 | - | - | - | - | 15,742 | ||||||||||||||||||||||||
Income
tax benefit associated with stock options
|
- | - | (1,025 | ) | - | - | - | - | (1,025 | ) | ||||||||||||||||||||||
Purchase
of treasury stock
|
(1,007 | ) | - | - | - | - | - | (17,817 | ) | (17,817 | ) | |||||||||||||||||||||
Sale
of treasury stock
|
429 | - | (5,042 | ) | - | - | - | 10,240 | 5,198 | |||||||||||||||||||||||
Retirement
of treasury stock
|
- | - | - | - | - | (330,227 | ) | 330,227 | - | |||||||||||||||||||||||
Balances
at March 31, 2009
|
48,892 | $ | 678 | $ | 386,224 | $ | - | $ | 8,855 | $ | 203,936 | $ | (74,326 | ) | $ | 525,367 |
1.
|
THE
COMPANY
|
2.
|
SIGNIFICANT ACCOUNTING
POLICIES
|
|
·
|
title and risk of ownership are
transferred to customers;
|
|
·
|
persuasive evidence of an
arrangement exists;
|
|
·
|
the price to the buyer is fixed or
determinable; and
|
|
·
|
collection is reasonably
assured.
|
3.
|
RECENT ACCOUNTING
PRONOUNCEMENTS
|
4.
|
INVESTMENTS AND FAIR VALUE
MEASUREMENTS
|
(in
thousands)
|
Balances
at March 31, 2008
|
Balances
at March 31, 2009
|
||||||||||||||||||||||||||||||
Cost
|
Unrealized
|
Accrued
|
Fair
|
Adjusted
Cost
|
Unrealized
|
Accrued
|
Fair
|
|||||||||||||||||||||||||
Basis
|
Gain(Loss)
|
Interest
|
Value
|
Basis
|
Gain(Loss)
|
Interest
|
Value
|
|||||||||||||||||||||||||
Short-term
investments:
|
||||||||||||||||||||||||||||||||
U.S.
Treasury Bills
|
$ | - | $ | - | $ | - | $ | - | $ | 59,977 | $ | - | $ | 10 | $ | 59,987 | ||||||||||||||||
Total
short-term investments
|
- | - | - | - | 59,977 | - | 10 | 59,987 | ||||||||||||||||||||||||
Long-term
investments:
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Auction
rate securities
|
28,000 | (2,864 | ) | - | 25,136 | 23,718 | - | - | 23,718 | |||||||||||||||||||||||
Total
long-term investments
|
28,000 | (2,864 | ) | - | 25,136 | 23,718 | - | - | 23,718 | |||||||||||||||||||||||
Total
short-term and long-term investments
|
$ | 28,000 | $ | (2,864 | ) | $ | - | $ | 25,136 | $ | 83,695 | $ | - | $ | 10 | $ | 83,705 |
(in
thousands)
|
Level
1
|
Level
2
|
Level
3
|
Total
|
||||||||||||
Money
market funds
|
$ | 171,585 | $ | - | $ | - | $ | 171,585 | ||||||||
Derivative
assets
|
- | 7,613 | - | 7,613 | ||||||||||||
Auction
rate securities - trading securities
|
- | - | 23,718 | 23,718 | ||||||||||||
Derivative
- UBS Rights Agreement
|
- | - | 4,180 | 4,180 | ||||||||||||
Reserve
Primary Fund
|
- | - | 162 | 162 | ||||||||||||
Total
assets measured at fair value
|
$ | 171,585 | $ | 7,613 | $ | 28,060 | $ | 207,258 | ||||||||
Derivative
liabilities
|
$ | 950 | $ | 875 | $ | - | $ | 1,825 |
Changes
in Fair Value of Level 3 Financial Assets:
|
||||
Year
ended
|
||||
(in
thousands)
|
March
31, 2009
|
|||
Balance
at March 31, 2008
|
$ | 25,136 | ||
Change
in temporary valuation adjustment included in Accumulated other
comprehensive income (loss)
|
2,863 | |||
Unrealized
loss included in Interest and other income (expense), net
|
(4,281 | ) | ||
Recognition
of Rights agreement and unrealized gains in Interest and other income
(expense), net
|
3,904 | |||
Unrealized
gain included in Interest and other income (expense), net
|
276 | |||
Transfer
of Reserve Primary Fund from Level 1 to Level 3
|
162 | |||
Balance
at March 31, 2009
|
$ | 28,060 |
March
31,
|
||||||||
(in
thousands)
|
2008
|
2009
|
||||||
Accounts
receivable, net:
|
||||||||
Accounts
receivable
|
$ | 171,611 | $ | 118,221 | ||||
Less:
Provisions for returns, promotions and rebates
|
(38,383 | ) | (31,580 | ) | ||||
Less:
Allowance for doubtful accounts
|
(1,735 | ) | (2,984 | ) | ||||
$ | 131,493 | $ | 83,657 | |||||
Inventory,
net:
|
||||||||
Purchased
parts
|
$ | 36,081 | $ | 37,646 | ||||
Work
in process
|
3,611 | 4,494 | ||||||
Finished
goods
|
87,396 | 77,156 | ||||||
$ | 127,088 | $ | 119,296 | |||||
Property,
plant and equipment, net:
|
||||||||
Land
|
$ | 8,647 | $ | 8,234 | ||||
Buildings
and improvements (useful life: 7-30 years)
|
70,518 | 74,334 | ||||||
Machinery
and equipment (useful life: 2-10 years)
|
106,375 | 106,129 | ||||||
Software
(useful life: 5 years)
|
25,404 | 29,231 | ||||||
Construction
in progress
|
6,071 | 2,069 | ||||||
217,015 | 219,997 | |||||||
Less:
Accumulated depreciation and amortization
|
(118,485 | ) | (124,278 | ) | ||||
$ | 98,530 | $ | 95,719 | |||||
Accrued
liabilities:
|
||||||||
Employee
compensation and benefits
|
$ | 25,089 | $ | 17,380 | ||||
Warranty
accrual
|
10,441 | 12,424 | ||||||
Accrued
advertising and sales and marketing
|
5,762 | 3,286 | ||||||
Accrued
other
|
26,026 | 20,053 | ||||||
$ | 67,318 | $ | 53,143 |
(in
thousands)
|
||||
Warranty
obligation at March 31, 2007
|
$ | 7,240 | ||
Warranty
provision relating to products shipped during the year
|
22,095 | |||
Deductions
for warranty claims processed
|
(18,894 | ) | ||
Warranty
obligation at March 31, 2008
|
10,441 | |||
Warranty
provision relating to products shipped during the year
|
21,595 | |||
Deductions
for warranty claims processed
|
(19,612 | ) | ||
Warranty
obligation at March 31, 2009
|
$ | 12,424 |
6.
|
GOODWILL
|
(in
thousands)
|
Audio
Communications Group
|
Audio
Entertainment Group
|
Consolidated
|
|||||||||
Balance
at March 31, 2007
|
$ | 11,214 | $ | 61,611 | $ | 72,825 | ||||||
Re-allocation
of goodwill
|
2,902 | (2,902 | ) | - | ||||||||
Carrying
value adjustments
|
- | (3,654 | ) | (3,654 | ) | |||||||
Balance
at March 31, 2008
|
$ | 14,116 | $ | 55,055 | $ | 69,171 | ||||||
Carrying
value adjustments
|
(111 | ) | (406 | ) | (517 | ) | ||||||
Impairment
to goodwill
|
- | (54,649 | ) | (54,649 | ) | |||||||
Balance
at March 31, 2009
|
$ | 14,005 | $ | - | $ | 14,005 |
7.
|
INTANGIBLES
|
March
31, 2008 (in thousands)
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Amount
|
Useful
Life
|
|||||||||
Technology
|
$ | 30,160 | $ | (13,883 | ) | $ | 16,277 |
6-10
years
|
|||||
State
contracts
|
1,300 | (1,161 | ) | 139 |
7
years
|
||||||||
Patents
|
1,420 | (1,079 | ) | 341 |
7
years
|
||||||||
Customer
relationships
|
18,133 | (6,308 | ) | 11,825 |
3-8
years
|
||||||||
Trademarks
|
300 | (268 | ) | 32 |
7
years
|
||||||||
Trade
name - inMotion
|
5,000 | (1,641 | ) | 3,359 |
8
years
|
||||||||
Trade
name - Altec Lansing
|
59,100 | - | 59,100 |
Indefinite
|
|||||||||
OEM
relationships
|
700 | (262 | ) | 438 |
7
years
|
||||||||
Total
|
$ | 116,113 | $ | (24,602 | ) | $ | 91,511 | ||||||
March
31, 2009 (in thousands)
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Net
Amount
|
Useful
Life
|
|||||||||
Technology
|
$ | 9,460 | $ | (5,728 | ) | $ | 3,732 |
3-10
years
|
|||||
Patents
|
1,420 | (1,257 | ) | 163 |
7
years
|
||||||||
Customer
relationships
|
4,405 | (787 | ) | 3,618 |
3-8
years
|
||||||||
Trade
name - inMotion
|
500 | (56 | ) | 444 |
3
years
|
||||||||
Trade
name - Altec Lansing
|
18,600 | - | 18,600 |
Indefinite
|
|||||||||
OEM
relationships
|
27 | (9 | ) | 18 |
7
years
|
||||||||
Total
|
$ | 34,412 | $ | (7,837 | ) | $ | 26,575 |
Fiscal
Year Ending March 31,
|
(in
thousands)
|
|||
2010
|
$ | 2,470 | ||
2011
|
2,427 | |||
2012
|
1,643 | |||
2013
|
630 | |||
2014
|
805 | |||
Total
estimated amortization expense
|
$ | 7,975 |
(in
thousands)
|
Severance
and Benefits
|
Facilities
and Equipment
|
Other
|
Total
|
||||||||||||
Restructuring
and other related charges
|
$ | 1,272 | $ | 1,519 | $ | 793 | $ | 3,584 | ||||||||
Cash
payments
|
(980 | ) | - | (241 | ) | (1,221 | ) | |||||||||
Non-cash
|
- | (1,519 | ) | (38 | ) | (1,557 | ) | |||||||||
Restructuring
accrual at March 31, 2008
|
292 | - | 514 | 806 | ||||||||||||
Restructuring
and other related charges
|
11,346 | 545 | 183 | 12,074 | ||||||||||||
Cash
payments
|
(6,170 | ) | 107 | (712 | ) | (6,775 | ) | |||||||||
Non-cash
|
- | (535 | ) | - | (535 | ) | ||||||||||
Restructuring
accrual at March 31, 2009
|
$ | 5,468 | $ | 117 | $ | (15 | ) | $ | 5,570 |
9.
|
BANK LINE OF
CREDIT
|
10.
|
COMMITMENTS AND
CONTINGENCIES
|
Fiscal
Year Ending March 31,
|
(in
thousands)
|
|||
2010
|
$ | 5,066 | ||
2011
|
3,942 | |||
2012
|
1,736 | |||
2013
|
1,720 | |||
2014
|
1,317 | |||
Thereafter
|
993 | |||
Total
minimum future rental payments
|
$ | 14,774 |
11.
|
STOCKHOLDERS’
EQUITY
|
March
31,
|
||||||||
(in
thousands)
|
2008
|
2009
|
||||||
Net
income (loss)
|
$ | 68,395 | $ | (64,899 | ) | |||
Accumulated
unrealized loss on cash flow hedges, net of tax
|
(5,843 | ) | 12,179 | |||||
Accumulated
foreign currency translation adjustments
|
5,126 | (2,606 | ) | |||||
Accumulated
unrealized loss on long-term investments, net of tax
|
(2,864 | ) | 2,863 | |||||
$ | 64,814 | $ | (52,463 | ) |
Options
Outstanding
|
|||||||||||||
Weighted
|
Weighted
|
||||||||||||
Average
|
Average
|
Aggregate
|
|||||||||||
Number
of
|
Exercise
|
Remaining
|
Intrinsic
|
||||||||||
Shares
|
Price
|
Contractual
Life
|
Value
|
||||||||||
(in
thousands)
|
(in
years)
|
(in
thousands)
|
|||||||||||
Outstanding
at March 31, 2008
|
8,561 | $ | 26.32 | ||||||||||
Options
granted
|
1,502 | $ | 18.77 | ||||||||||
Options
exercised
|
(359 | ) | $ | 19.22 | $ | 2,031 | |||||||
Options
forfeited or expired
|
(811 | ) | $ | 27.29 | |||||||||
Outstanding
at March 31, 2009
|
8,893 | $ | 25.25 |
3.60
|
$ | 35 | |||||||
Exercisable
at March 31, 2009
|
6,637 | $ | 26.82 |
2.90
|
$ | - |
Number
of Shares
|
Weighted
Average Grant Date Fair Value
|
|||||||
(in
thousands)
|
||||||||
Non-vested
at March 31, 2008
|
288 | $ | 26.77 | |||||
Granted
|
187 | $ | 14.50 | |||||
Vested
|
(92 | ) | $ | 26.88 | ||||
Forfeited
|
(20 | ) | $ | 27.38 | ||||
Non-vested
at March 31, 2009
|
363 | $ | 20.39 |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2007
|
2008
|
2009
|
|||||||||
Cost
of revenues
|
$ | 2,908 | $ | 2,474 | $ | 2,265 | ||||||
Research,
development and engineering
|
3,835 | 3,552 | 3,663 | |||||||||
Selling,
general and administrative
|
10,176 | 9,966 | 9,814 | |||||||||
Stock-based
compensation expense included in operating expenses
|
14,011 | 13,518 | 13,477 | |||||||||
Total
stock-based compensation
|
16,919 | 15,992 | 15,742 | |||||||||
Income
tax benefit
|
(5,599 | ) | (5,173 | ) | (4,940 | ) | ||||||
Total
stock-based compensation expense, net of tax
|
$ | 11,320 | $ | 10,819 | $ | 10,802 |
Employee
Stock Options
|
Employee
Stock Purchase Plan
|
|||||||||||||||||||||||
Fiscal
Year Ended March 31,
|
2007
|
2008
|
2009
|
2007
|
2008
|
2009
|
||||||||||||||||||
Expected
volatility
|
42.1 | % | 39.6 | % | 51.6 | % | 43.4 | % | 45.3 | % | 63.0 | % | ||||||||||||
Risk-free
interest rate
|
4.7 | % | 4.0 | % | 2.9 | % | 5.2 | % | 3.4 | % | 0.9 | % | ||||||||||||
Expected
dividends
|
1.0 | % | 0.8 | % | 1.2 | % | 1.2 | % | 0.9 | % | 1.6 | % | ||||||||||||
Expected
life (in years)
|
4.2 | 4.2 | 4.4 | 0.5 | 0.5 | 0.5 | ||||||||||||||||||
Weighted-average
grant date fair value
|
$ | 7.60 | $ | 9.35 | $ | 7.65 | $ | 4.74 | $ | 6.20 | $ | 4.56 |
12.
|
EMPLOYEE BENEFIT
PLANS
|
Local
Currency
|
USD
Equivalent
|
Position
|
Maturity
|
|||||||
EUR
|
18,700 | $ | 24,876 |
Sell
Euro
|
1
month
|
|||||
GBP
|
6,500 | 9,296 |
Sell
GBP
|
1
month
|
Derivative
Liabilites
|
||||||||||||||||||||||||
Derivative
Assets Reported
|
Reported
in Other Current
|
|||||||||||||||||||||||
in
Other Current Assets
|
Long-term
Investments
|
Accrued
Liabilities
|
||||||||||||||||||||||
March
31,
|
March
31,
|
March
31,
|
March
31,
|
March
31,
|
March
31,
|
|||||||||||||||||||
(in
thousands)
|
2008
|
2009
|
2008
|
2009
|
2008
|
2009
|
||||||||||||||||||
Foreign
exchange contracts designated as cash flow hedges
|
$ | 177 | $ | 7,613 | $ | - | $ | - | $ | 6,394 | $ | 875 | ||||||||||||
Total
derivatives designated as hedging instruments
|
177 | 7,613 | - | - | 6,394 | 875 | ||||||||||||||||||
Foreign
exchange contracts not designated
|
- | - | - | - | (50 | ) | (2 | ) | ||||||||||||||||
Total
derivatives
|
$ | 177 | $ | 7,613 | $ | - | $ | - | $ | 6,444 | $ | 877 |
Amount
of gain (loss)
|
Amount
of gain (loss)
|
|||||||||||||||
March
31,
|
recognized
in OCI
|
to
income (loss)
|
March
31,
|
|||||||||||||
(in thousands)
|
2008
|
(effective portion)
|
(effective portion)
|
2009
|
||||||||||||
Foreign
exchange contracts designated as cash flow hedges
|
$ | (6,217 | ) | $ | 17,460 | $ | 4,505 | $ | 6,738 |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2007
|
2008
|
2009
|
|||||||||
Foreign
exchange contracts designated as cash flow hedges
|
$ | (2,861 | ) | $ | (3,945 | ) | $ | 4,505 |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2007
|
2008
|
2009
|
|||||||||
Gain
(loss) on foreign exchange contracts
|
$ | (2,002 | ) | $ | (5,015 | ) | $ | 5,590 |
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||
2007
|
2008
|
2009
|
||||||||||
Current:
|
||||||||||||
Federal
|
$ | 12,587 | $ | 10,096 | $ | (1,071 | ) | |||||
State
|
1,976 | 2,443 | 1,735 | |||||||||
Foreign
|
6,158 | 9,242 | 4,934 | |||||||||
Total
current provision for income taxes
|
20,721 | 21,781 | 5,598 | |||||||||
Deferred:
|
||||||||||||
Federal
|
(7,419 | ) | (3,210 | ) | (21,402 | ) | ||||||
State
|
(1,045 | ) | (778 | ) | (3,506 | ) | ||||||
Foreign
|
(862 | ) | (951 | ) | (507 | ) | ||||||
Total
deferred benefit for income taxes
|
(9,326 | ) | (4,939 | ) | (25,415 | ) | ||||||
Income
tax expense (benefit)
|
$ | 11,395 | $ | 16,842 | $ | (19,817 | ) |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2007
|
2008
|
2009
|
|||||||||
United
States
|
$ | 7,136 | $ | 19,980 | $ | (110,216 | ) | |||||
Foreign
|
54,402 | 65,257 | 25,500 | |||||||||
Income
(loss) before income tax expense (benefit)
|
61,538 | 85,237 | (84,716 | ) |
(in
thousands)
|
Fiscal
Year Ended March 31,
|
|||||||||||
2007
|
2008
|
2009
|
||||||||||
Tax
expense (benefit) at statutory rate
|
$ | 21,538 | $ | 29,833 | $ | (29,651 | ) | |||||
Foreign
operations taxed at different rates
|
(9,646 | ) | (13,868 | ) | (3,574 | ) | ||||||
State
taxes, net of federal benefit
|
930 | 1,665 | (1,771 | ) | ||||||||
Research
and development credit
|
(1,978 | ) | (814 | ) | (3,117 | ) | ||||||
Goodwill
impairment
|
- | - | 19,127 | |||||||||
Other,
net
|
551 | 26 | (831 | ) | ||||||||
Income
tax expense (benefit)
|
$ | 11,395 | $ | 16,842 | $ | (19,817 | ) |
March
31,
|
||||||||
(in
thousands)
|
2008
|
2009
|
||||||
Accruals
and other reserves
|
$ | 12,249 | $ | 9,887 | ||||
Deferred
state tax
|
422 | 233 | ||||||
Deferred
foreign tax
|
685 | 254 | ||||||
Net
operating loss carryover
|
3,293 | 3,118 | ||||||
Stock
compensation
|
6,314 | 8,714 | ||||||
Other
deferred tax assets
|
3,325 | 3,654 | ||||||
Valuation
allowance
|
(1,088 | ) | (123 | ) | ||||
Total
deferred tax assets
|
25,200 | 25,737 | ||||||
Deferred
gains on sales of properties
|
(2,160 | ) | (2,096 | ) | ||||
Purchased
intangibles
|
(36,871 | ) | (10,024 | ) | ||||
Unremitted
earnings of certain subsidiaries
|
(3,064 | ) | (3,064 | ) | ||||
Fixed
asset depreciation
|
(1,358 | ) | (3,949 | ) | ||||
Other
deferred tax liabilities
|
(557 | ) | (2,203 | ) | ||||
Total
deferred tax liabilities
|
(44,010 | ) | (21,336 | ) | ||||
Net
deferred tax asset (liabilities)
|
$ | (18,810 | ) | $ | 4,401 |
March
31,
|
||||||||
(in
thousands)
|
2008
|
2009
|
||||||
Balance
at beginning of period
|
$ | 12,456 | $ | 12,436 | ||||
Increase
(decrease) of unrecognized tax benefits related to prior
years
|
396 | (155 | ) | |||||
Increase
of unrecognized tax benefits related to the current year
|
2,977 | 2,205 | ||||||
Decrease
of unrecognized tax benefits related to settlements
|
(3,156 | ) | - | |||||
Reductions
to unrecognized tax benefits related to lapse of applicable statute of
limitations
|
(237 | ) | (3,396 | ) | ||||
Balance
at end of period
|
$ | 12,436 | $ | 11,090 |
15.
|
COMPUTATION OF EARNINGS (LOSS)
PER COMMON SHARE
|
(in
thousands, except earnings per share)
|
Fiscal
Year Ended March 31,
|
|||||||||||
2007
|
2008
|
2009
|
||||||||||
Net
income (loss)
|
$ | 50,143 | $ | 68,395 | $ | (64,899 | ) | |||||
Weighted
average shares-basic
|
47,361 | 48,232 | 48,589 | |||||||||
Dilutive
effect of employee equity incentive plans
|
659 | 858 | - | |||||||||
Weighted
average shares-diluted
|
48,020 | 49,090 | 48,589 | |||||||||
Earnings
(loss) per share-basic
|
$ | 1.06 | $ | 1.42 | $ | (1.34 | ) | |||||
Earnings
(loss) per share-diluted
|
$ | 1.04 | $ | 1.39 | $ | (1.34 | ) | |||||
Potentially
dilutive securities excluded from earnings per diluted share because their
effect is anti-dilutive
|
5,931 | 5,791 | 7,521 |
16.
|
SEGMENTS AND ENTERPRISE-WIDE
DISCLOSURES
|
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2007
|
2008
|
2009
|
|||||||||
Net
revenues
|
||||||||||||
Audio
Communications Group
|
$ | 676,514 | $ | 747,935 | $ | 674,590 | ||||||
Audio
Entertainment Group
|
123,640 | 108,351 | 91,029 | |||||||||
Consolidated
net revenues
|
$ | 800,154 | $ | 856,286 | $ | 765,619 | ||||||
Gross
profit
|
||||||||||||
Audio
Communications Group
|
$ | 295,480 | $ | 344,072 | $ | 291,931 | ||||||
Audio
Entertainment Group
|
13,335 | 5,033 | 4,097 | |||||||||
Consolidated
gross profit
|
$ | 308,815 | $ | 349,105 | $ | 296,028 | ||||||
Operating
income (loss)
|
||||||||||||
Audio
Communications Group
|
$ | 84,677 | $ | 115,166 | $ | 61,461 | ||||||
Audio
Entertainment Group
|
(27,228 | ) | (35,783 | ) | (142,633 | ) | ||||||
Consolidated
operating income (loss)
|
$ | 57,449 | $ | 79,383 | $ | (81,172 | ) |
Fiscal
Year Ended March
31,
|
||||||||
(in
thousands)
|
2008
|
2009
|
||||||
Net
revenues
|
||||||||
Audio
Communications Group
|
$ | 742,155 | $ | 667,023 | ||||
Audio
Entertainment Group
|
114,131 | 98,596 | ||||||
Consolidated
net revenues
|
$ | 856,286 | $ | 765,619 | ||||
Gross
profit
|
||||||||
Audio
Communications Group
|
$ | 341,999 | $ | 289,948 | ||||
Audio
Entertainment Group
|
7,106 | 6,080 | ||||||
Consolidated
gross profit
|
$ | 349,105 | $ | 296,028 |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2007
|
2008
|
2009
|
|||||||||
Net
revenues from unaffiliated customers:
|
||||||||||||
Office
and contact center
|
$ | 475,323 | $ | 519,958 | $ | 429,669 | ||||||
Mobile
|
146,859 | 171,880 | 187,419 | |||||||||
Gaming
and computer audio
|
30,162 | 33,612 | 34,052 | |||||||||
Clarity
|
24,170 | 22,485 | 23,450 | |||||||||
Total
segment net revenues
|
$ | 676,514 | $ | 747,935 | $ | 674,590 |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2007
|
2008
|
2009
|
|||||||||
Net
revenues from unaffiliated customers:
|
||||||||||||
Docking
Audio
|
$ | 61,068 | $ | 55,399 | $ | 46,204 | ||||||
PC
Audio
|
52,496 | 45,828 | 38,884 | |||||||||
Other
|
10,076 | 7,124 | 5,941 | |||||||||
Total
segment net revenues
|
$ | 123,640 | $ | 108,351 | $ | 91,029 |
Fiscal
Year Ended March 31,
|
||||||||||||
(in
thousands)
|
2007
|
2008
|
2009
|
|||||||||
Net
sales from unaffiliated customers:
|
||||||||||||
United
States
|
$ | 490,551 | $ | 521,148 | $ | 472,239 | ||||||
Europe,
Middle East and Africa
|
195,090 | 214,621 | 185,023 | |||||||||
Asia
Pacific
|
59,927 | 62,742 | 56,160 | |||||||||
Americas,
excluding United States
|
54,586 | 57,775 | 52,197 | |||||||||
Total
International net revenues
|
309,603 | 335,138 | 293,380 | |||||||||
Total
Consolidated net revenues
|
$ | 800,154 | $ | 856,286 | $ | 765,619 |
Fiscal
Year Ended March 31,
|
||||||||
(in
thousands)
|
2008
|
2009
|
||||||
United
States
|
$ | 215,172 | $ | 100,173 | ||||
China
|
23,191 | 21,130 | ||||||
Mexico
|
11,321 | 8,785 | ||||||
Other
countries
|
9,528 | 6,211 | ||||||
$ | 259,212 | $ | 136,299 |
Quarter
Ended
|
||||||||||||||||
June
30,
|
September
30,
|
December
31,
|
March
31,
|
|||||||||||||
2007
|
2007
|
20071
|
20081,2 | |||||||||||||
(in
thousands, except income per share)
|
||||||||||||||||
Net
revenues
|
$ | 206,495 | $ | 208,224 | $ | 232,824 | $ | 208,743 | ||||||||
Gross
profit
|
$ | 83,546 | $ | 84,456 | $ | 93,757 | $ | 87,346 | ||||||||
Net
income
|
$ | 14,975 | $ | 16,522 | $ | 19,108 | $ | 17,790 | ||||||||
Basic
net income per common share7
|
$ | 0.31 | $ | 0.34 | $ | 0.39 | $ | 0.37 | ||||||||
Diluted
net income per common share7
|
$ | 0.31 | $ | 0.34 | $ | 0.39 | $ | 0.36 | ||||||||
Cash
dividends declared per common share
|
$ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 | ||||||||
Quarter
Ended
|
||||||||||||||||
June
30,
|
September
30,
|
December
31,
|
March
31,
|
|||||||||||||
20081,3 | 20081 | 20084,5 | 20095,6 | |||||||||||||
(in
thousands, except income (loss) per share)
|
||||||||||||||||
Net
revenues
|
$ | 219,164 | $ | 216,856 | $ | 182,836 | $ | 146,763 | ||||||||
Gross
profit
|
$ | 90,879 | $ | 93,773 | $ | 60,865 | $ | 50,511 | ||||||||
Net
income (loss)
|
$ | 20,494 | $ | 17,648 | $ | (92,009 | ) | $ | (11,032 | ) | ||||||
Basic
net income (loss) per common share7
|
$ | 0.42 | $ | 0.36 | $ | (1.90 | ) | $ | (0.23 | ) | ||||||
Diluted
net income (loss) per common share7
|
$ | 0.42 | $ | 0.36 | $ | (1.90 | ) | $ | (0.23 | ) | ||||||
Cash
dividends declared per common share
|
$ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.05 | ||||||||
1
|
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. As
a result of these activities, $2.9 million and $0.7 million in
restructuring and other related charges was recorded in the third and
fourth quarters of fiscal 2008, respectively. In addition, in
fiscal 2009, $0.2 million and $(0.1) million in restructuring and other
related charges was recorded in the first and second quarters,
respectively.
|
2
|
In
the fourth quarter of fiscal 2008, the Company recorded adjustments to
foreign currency gains and losses recognized in prior periods, a
correction of depreciation expense and income tax expense related to prior
periods, and a reversal of an allowance for customer discounts recorded in
a prior period. The impact of these adjustments on fourth
quarter net income and earnings per share was a decrease of $1.9 million
and a decrease of $0.04, respectively. The Company and its
Audit Committee believe that such amounts are not material to the current
and previously reported financial
statements.
|
3
|
In
the first quarter of fiscal 2009, the Company announced a reduction in
force in AEG’s operations in Milford, Pennsylvania as part the strategic
initiative to reduce costs. As a result of these activities,
$0.2 million in restructuring and other related charges was recorded in
the first quarter of fiscal 2009.
|
4
|
In
the third quarter of fiscal 2009, the Company recorded non-cash impairment
charges in the amount of $117.5 million which consisted of $54.7 million
related to the goodwill arising from the purchase of Altec Lansing in
August 2005, $58.7 million related to intangible assets primarily
associated with the Altec Lansing trademark and trade name and $4.1
million related to property, plant and equipment related to the AEG
segment.
|
5
|
In
the third quarter of fiscal 2009, the Company announced a reduction in
force in AEG’s operation in Luxemburg and Shenzhen, china and ACG’s
operations in China, Mexico and various other worldwide
locations. As a result of these activities, $1.0 million and
$7.8 million in restructuring and other related charges was recorded in
the third and fourth quarters of fiscal 2009,
respectively.
|
6
|
In
March 2009, the Company announced a restructuring plan to close its ACG
Suzhou, China manufacturing operations in fiscal 2010 in order to
outsource manufacturing of its Bluetooth products to
an existing supplier in China. As a result of these activities,
$3.0 million in restructuring and other related charges was recorded in
the fourth quarter of fiscal 2009.
|
7
|
Basic
and diluted earnings per share are computed independently for each of the
quarters presented. Therefore, the sum of the quarterly basic
and diluted per share information may not equal annual basic and diluted
earnings per share.
|
|
|
(1)
|
Financial
Statements. The following
consolidated financial statements and supplementary information and Report
of Independent Registered Public Accounting Firm are included in Part II
of this Report.
|
page
|
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
60
|
CONSOLIDATED
BALANCE SHEETS
|
61
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
62
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
63
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
|
64
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
65
|
Charged
|
||||||||||||||||
Balance
|
to
|
|||||||||||||||
at
|
Expenses
|
Balance
|
||||||||||||||
Beginning
|
or
Other
|
at
End
|
||||||||||||||
of
Year
|
Accounts
|
Deductions
|
of
Year
|
|||||||||||||
Allowance
for doubtful accounts:
|
||||||||||||||||
Year
ended March 31, 2007
|
$ | 5,366 | $ | 1,590 | $ | (1,878 | ) | $ | 5,078 | |||||||
Year
ended March 31, 2008
|
5,078 | (232 | ) | (3,111 | ) | 1,735 | ||||||||||
Year
ended March 31, 2009
|
1,735 | 1,784 | (535 | ) | 2,984 | |||||||||||
Warranty
reserves:
|
||||||||||||||||
Year
ended March 31, 2007
|
$ | 6,276 | $ | 15,946 | $ | (14,982 | ) | $ | 7,240 | |||||||
Year
ended March 31, 2008
|
7,240 | 22,095 | (18,894 | ) | 10,441 | |||||||||||
Year
ended March 31, 2009
|
10,441 | 21,595 | (19,612 | ) | 12,424 |
PLANTRONICS,
INC.
|
||
May
26, 2009
|
||
By: /s/ Ken Kannappan | ||
Ken
Kannappan
|
||
Chief
Executive Officer
|
Signature
|
Title
|
Date
|
/s/ Ken
Kannappan
(Ken
Kannappan)
|
President,
Chief Executive Officer and Director (Principal Executive
Officer)
|
May
26, 2009
|
/s/ Barbara
Scherer
(Barbara
Scherer)
|
Senior
Vice President and Chief Financial Officer (Principal Financial Officer
and Principal Accounting Officer)
|
May
26, 2009
|
/s/
Marv
Tseu
(Marv
Tseu)
|
Chairman
of the Board and Director
|
May
26, 2009
|
/s/
Brian
Dexheimer
(Brian Dexheimer)
|
Director
|
May
26, 2009
|
/s/
Gregg
Hammann
(Gregg
Hammann)
|
Director
|
May
26, 2009
|
/s/
John
Hart
(John
Hart)
|
Director
|
May
26, 2009
|
/s/ Marshall
Mohr
(Marshall
Mohr)
|
Director
|
May
26, 2009
|
/s/
Roger
Wery
(Roger
Wery)
|
Director
|
May
26, 2009
|
Exhibit
Number
|
Description
of Document
|
|
3.1.1
|
Amended
and Restated By-Laws of the Registrant (incorporated herein by reference
from Exhibit 3(ii) to the Registrant’s Current Report on Form 8-K, filed
on January 20, 2009).
|
|
3.2.1
|
2009
Restated Certificate of Incorporation of the Registrant filed with the
Secretary of State of Delaware on January 20, 2009 (incorporated herein by
reference from Exhibit 3(i) to the Registrant’s Current Report on Form
8-K, filed on January 20, 2009).
|
|
3.2.2
|
Certificate
of Retirement and Elimination of Preferred Stock and Common Stock of the
Registrant filed with the Secretary of State of Delaware on January 11,
1996 (incorporated herein by reference from Exhibit (3.3) of the
Registrant’s Annual Report on Form 10-K, filed on September 27,
1996).
|
|
3.3
|
Registrant’s
Certificate of Designation of Rights, Preferences and Privileges of Series
A Participating Preferred Stock filed with the Secretary of State of the
State of Delaware on April 1, 2002 (incorporated herein by reference from
Exhibit (3.6) to the Registrant’s Form 8-A, filed on March 29,
2002).
|
|
4.1
|
Preferred
Stock Rights Agreement, dated as of March 13, 2002 between the Registrant
and Equiserve Trust Company, N.A., including the Certificate of
Designation, the form of Rights Certificate and the Summary of Rights
attached thereto as Exhibits A, B, and C, respectively (incorporated
herein by reference from Exhibit (4.1) to the Registrant’s Form 8-A, filed
on March 29, 2002).
|
|
10.1*
|
Plantronics,
Inc. Non-EMEA Quarterly Profit Sharing Plan (incorporated herein by
reference from Exhibit (10.1) to the Registrant’s Report on Form 10-K,
filed on June 1, 2001).
|
|
10.2*
|
Form
of Indemnification Agreement between the Registrant and certain directors
and executives. (incorporated herein by reference from Exhibit (10.2) to
the Registrant’s Report on Form 10-K, filed on May 31,
2005).
|
|
10.3.1*
|
Regular
and Supplemental Bonus Plan (incorporated herein by reference from Exhibit
(10.4(a)) to the Registrant’s Report on Form 10-K, filed on June 1,
2001).
|
|
10.3.2*
|
Overachievement
Bonus Plan (incorporated herein by reference from Exhibit (10.4(b)) to the
Registrant’s Report on Form 10-K, filed on June 1,
2001).
|
|
10.3.3*
|
Executive
Incentive Plan (incorporated herein by reference from Exhibit 10.1 to the
Registrant’s Report on Form 8-K, filed on May 2,
2007.
|
|
10.3.4*
|
Executive
Incentive Plan, dated May 8, 2009, as
amended.
|
Exhibit
Number
|
Description
of Document
|
|
10.4.1
|
Lease
Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and
Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located
in Tijuana, Mexico (translation from Spanish original) (incorporated
herein by reference from Exhibit (10.5.1) of the Registrant's Quarterly
Report on Form 10-Q (File No. 001-12696), filed on June 1,
2004).
|
|
10.4.2
|
Lease
Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and
Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located
in Tijuana, Mexico (translation from Spanish original) (incorporated
herein by reference from Exhibit (10.5.2) of the Registrant's Quarterly
Report on Form 10-Q (File No. 001-12696), filed on August 6,
2004).
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|
10.4.3
|
Lease
Agreement dated October 2004 between Finsa Portafolios, S.A. DE C.V.and
Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located
in Tijuana, Mexico (translation from Spanish original) (incorporated
herein by reference from Exhibit (10.5.4) of the Registrant's Quarterly
Report on Form 10-Q (File No. 001-12696), filed on August 6,
2004).
|
|
10.5
|
Lease
dated December 7, 1990 between Canyge Bicknell Limited and Plantronics
Limited, a subsidiary of the Registrant, for premises located in Wootton
Bassett, The United Kingdom (incorporated herein by reference from Exhibit
(10.32) to the Registrant’s Registration Statement on Form S-1 (as
amended), filed on October 20, 1993).
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|
10.6*
|
Amended
and Restated 2003 Stock Plan (incorporated herein by reference from the
Registrant's Definitive Proxy Statement on Form 14-A, filed on May 26,
2004).
|
|
10.7*
|
1993
Stock Option Plan (incorporated herein by reference from Exhibit (10.8) to
the Registrant's Annual Report on Form 10-K, filed on June 21,
2002).
|
|
10.8.1*
|
1993
Director Stock Option Plan (incorporated herein by reference from Exhibit
(10.29) to the Registrant's Registration Statement on Form S-1 (as
amended), filed on October 20, 1993).
|
|
10.8.2*
|
Amendment
to the 1993 Director Stock Option Plan (incorporated herein by reference
from Exhibit (4.4) to the Registrant's Registration Statement on Form S-8,
filed on October 25, 1996).
|
|
10.8.3*
|
Amendment
No. 2 to the 1993 Director Stock Option Plan (incorporated herein by
reference from Exhibit (10.9(a)) to the Registrant's Report on Form 10-K,
filed on June 1, 2001).
|
|
10.8.4
*
|
Amendment
No. 3 to the 1993 Director Stock Option Plan (incorporated herein by
reference from Exhibit (10.9(b)) to the Registrant's Report on Form 10-K,
filed on June 1, 2001).
|
|
10.8.5*
|
Amendment
No. 4 to the 1993 Director Stock Option Plan (incorporated herein by
reference from Exhibit (10.9.5) to the Registrant's Annual Report on Form
10-K, filed on June 21, 2002).
|
|
10.9.1*
|
2002
Employee Stock Purchase Plan (incorporated herein by reference from the
Registrant's Definitive Proxy Statement on Form 14A, filed on June 3,
2005).
|
Exhibit
Number
|
Description
of Document
|
|
10.9.2
|
Trust
Agreement Establishing the Plantronics, Inc. Annual Profit
Sharing/Individual Savings Plan Trust (incorporated herein by reference
from Exhibit (4.3) to the Registrant's Registration Statement on Form S-8,
filed on January 7, 1997).
|
|
10.9.3*
|
Plantronics,
Inc. 401(k) Plan, effective as of April 2, 2000 (incorporated herein by
reference from Exhibit (10.11) to the Registrant's Report on Form 10-K,
filed on June 1, 2001).
|
|
10.10*
|
Resolutions
of the Board of Directors of Plantronics, Inc. Concerning Executive Stock
Purchase Plan (incorporated herein by reference from Exhibit (4.4) to the
Registrant's Registration Statement on Form S-8 (as amended), filed on
March 25, 1997).
|
|
10.11.1*
|
Plantronics,
Inc. Basic Deferred Compensation Plan, as amended August 8, 1996
(incorporated herein by reference from Exhibit (4.5) to the Registrant's
Registration Statement on Form S-8 (as amended) (File No. 333-19351),
filed on March 25, 1997).
|
|
10.11.2
|
Trust
Agreement Under the Plantronics, Inc. Basic Deferred Stock Compensation
Plan (incorporated herein by reference from Exhibit (4.6) to the
Registrant's Registration Statement on Form S-8 (as amended), filed on
March 25, 1997).
|
|
10.11.3
|
Plantronics,
Inc. Basic Deferred Compensation Plan Participant Election (incorporated
herein by reference from Exhibit (4.7) to the Registrant's Registration
Statement on Form S-8 (as amended), filed on March 25,
1997).
|
|
10.12.1*
|
Amended
and Restated Employment Agreement dated on or about January 26, 2009
between Registrant and Ken Kannappan (incorporated herein by reference
from Exhibit (10.2) to the Registrant's Current Report on Form 8-K, filed
on January 30, 2009).
|
|
10.12.2*
|
Employment
Agreement dated as of November 1996 between Registrant and Don Houston
(incorporated herein by reference from Exhibit (10.14.2) to the
Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on
June 2, 2003).
|
|
10.12.3*
|
Employment
Agreement dated as of March 1997 between Registrant and Barbara Scherer
(incorporated herein by reference from Exhibit (10.14.4) to the
Registrant's Annual Report on Form 10-K, filed on June 2,
2003).
|
|
10.12.4*
|
Employment
Agreement dated as of June 2003 between Registrant and Philip Vanhoutte
(incorporated herein by reference from Exhibit (10.12.4) to the
Registrant's Annual Report on Form 10-K, filed on May 31,
2005).
|
|
10.12.5*
|
Employment
Agreement dated as of May 2001 between Registrant and Joyce Shimizu
(incorporated herein by reference from Exhibit (10.14.5) to the
Registrant's Annual Report on Form 10-K, filed on June 2,
2003).
|
|
10.12.6*
|
Form
of Change of Control Severance Agreement, dated on or about January 26,
2009, between Registrant, Barbara Scherer, Don Houston and Rich Pickard
(incorporated by reference from Exhibit (10.1) to the Registrant’s Current
Report on Form 8-K, filed on January 30, 2009
|
|
10.13.1
|
Credit
Agreement dated as of October 31, 2003 between Registrant and Wells Fargo
Bank N.A. (incorporated herein by reference from Exhibit (10.1)
of the Registrant’s Quarterly Report on Form 10-Q, filed on November 7,
2003).
|
|
10.13.2
|
Credit
Agreement Amendment No. 1 dated as of August, 1, 2004, between Registrant
and Wells Fargo Bank N.A. (incorporated herein by reference from Exhibit
(10.15.2) to the Registrant’s Quarterly Report on Form 10-Q, filed on
November 5, 2004).
|
|
10.13.3
|
Credit
Agreement Amendment No.2 dated as of July 11, 2005, between Registrant and
Wells Fargo Bank National Association (incorporated herein by reference
from Exhibit (10.15.1) to the Registrant's Form 8-K, filed on July 15,
2005).
|
Exhibit
Number
|
Description
of Document
|
|
10.13.4
|
Credit
Agreement Amendment No.3 dated as of August 11, 2005, between Registrant
and Wells Fargo Bank National Association (incorporated herein by
reference from Exhibit (10.2) to the Registrant's Form 8-K, filed on
November 23, 2005).
|
|
10.13.5
|
Credit
Agreement Amendment No.4 dated as of November 17, 2005, between Registrant
and Wells Fargo Bank National Association (incorporated herein by
reference from Exhibit (10.1) to the Registrant’s Form 8-K, filed on
November 23, 2005).
|
|
10.13.6
|
Standby
Letter of Credit Agreement dated as of March 31, 2009 between Registrant,
Plantronics BV and Wells Fargo Bank N.A.
|
|
10.14*
|
Restricted
Stock Award Agreement dated as of October 12, 2004, between Registrant and
certain of its executive officers (incorporated herein by reference from
Exhibit (10.1) of the Registrant's Form 8-K, filed on October 14,
2004).
|
|
10.15**
|
Second
Amended and Restated Development and Manufacturing Agreement dated March
20, 2009, between Plantronics, B.V., and GoerTek, Inc.
|
|
14
|
Worldwide
Code of Business Conduct and Ethics (incorporated herein by reference from
Exhibit (14) of the Registrant's Annual Report on Form 10-K, filed on May
31, 2005).
|
|
Subsidiaries
of the Registrant
|
||
Consent
of Independent Registered Public Accounting Firm
|
||
24
|
Power
of Attorney – Power of Attorney (incorporated by reference to the
signature page of this Annual Report on Form
10-K.)
|
|
Certification
of the President and CEO Pursuant to Rule 13a-14(a)/15d-14(a), pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification
of Senior VP, Finance and Administration, and CFO Pursuant to Rule
13a-14(a)/15d-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
||
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
||
*
|
Indicates
a management contract or compensatory plan, contract or arrangement in
which any Director or any Executive Officer
participates.
|
|
**
|
Confidential
treatment has been requested as to certain portions of this
Exhibit.
|