1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 25, 1999July 1, 2000 or
------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from ___________________________________________ to ___________________________________________
Commission File Number 1-12696
-------
PLANTRONICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0207692
- ------------------------------------------ -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
345 Encinal Street
Santa Cruz, California 95060
- ------------------------------------------ -----------------------------
Delaware 77-0207692
- ------------------------------------------ ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
345 Encinal Street
Santa Cruz, California 95060
- ------------------------------------------ ----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (831) 426-5858
----------------------------------------------------- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at December 25, 1999
---------------------------- --------------------------------
Common Stock, $.01 par value 16,178,334
Class Outstanding at August 8, 2000
---------------------------- -----------------------------
Common Stock, $.01 par value 48,922,654
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PLANTRONICS, INC.
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
MARCH 31, DECEMBER 31,
1999 1999
--------- ------------JUNE 30,
2000 2000
========= =========
ASSETS
Current assets:
Cash and cash equivalents $ 42,99940,271 $ 35,57546,147
Marketable securities -- 8,8995,038 2,790
Accounts receivable, net 46,807 44,06648,481 56,814
Inventory, 18,889 30,720net 33,752 40,059
Deferred income taxes 3,159 6,8476,721 7,072
Other current assets 7,880 1,2851,603 1,525
--------- ---------
Total current assets 119,734 127,392135,866 154,407
Property, plant and equipment, net 20,323 22,49623,577 24,317
Other assets 2,811 2,52710,587 10,247
--------- ---------
Total assets $ 142,868170,030 $ 152,415188,971
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 9,45311,447 $ 9,03412,703
Accrued liabilities 33,475 31,91734,330 29,806
Income taxes payable 510 8,03411,783 17,627
--------- ---------
Total current liabilities 43,438 48,98557,560 60,136
Deferred tax liability 10,025 11,1197,094 6,729
--------- ---------
Total liabilities 53,463 60,10464,654 66,865
--------- ---------
Stockholders' equity:
Common stock, $0.01 par value per share; 100,000 shares
authorized, 16,79857,582 shares and 16,17857,807 shares issued
and outstanding 185 188192 193
Additional paid-in capital 91,423 102,200114,739 121,121
Accumulated other comprehensive incomeincome: (891) (891)
Retained Earnings 69,559 115,288134,076 154,180
--------- ---------
160,276 216,785248,116 274,603
Less: Treasury stock (common: 1,669 shares in fiscal year 19998,685 and 2,649
shares as of December 25, 1999)8,979) at cost (70,871) (124,474)(142,740) (152,497)
--------- ---------
Total stockholders' equity 89,405 92,311105,376 122,106
--------- ---------
Total liabilities and stockholders' equity $ 142,868170,030 $ 152,415188,971
========= =========
See Notes to Unaudited Condensed Consolidated Financial Statements
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PLANTRONICS, INC.
PART I, ITEM 1. FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
QUARTER ENDED
NINE MONTHS ENDED
---------------------------- ----------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998-----------------------
JUNE 30, JUNE 30,
1999 1998 1999
------------ ------------ ------------ ------------2000
======== ========
Net sales $ 72,038 $ 76,059 $ 213,248 $ 222,81274,715 $100,352
Cost of sales 31,002 30,946 95,091 91,270
--------- --------- --------- ---------30,792 43,095
-------- --------
Gross profit 41,036 45,113 118,157 131,542
--------- --------- --------- ---------43,923 57,257
Operating expense:
Research, development and engineering 5,177 5,080 14,182 15,6685,499 5,635
Selling, general and administrative 14,563 17,949 42,425 49,863
--------- --------- --------- ---------15,938 22,541
-------- --------
Total operating expenses 19,740 23,029 56,607 65,531
--------- --------- --------- ---------21,437 28,176
-------- --------
Operating income 21,296 22,084 61,550 66,01122,486 29,081
Interest expense including amortization of debt
issuance costs 1,888 8 5,476 2610 33
Interest income(income) and other income,expense (income), net (1,801) (583) (3,494) (1,262)
--------- --------- --------- ---------(174) 329
-------- --------
Income before income taxes 21,209 22,659 59,568 67,24722,650 28,719
Income tax expense 6,786 7,250 19,061 21,518
--------- --------- --------- ---------7,246 8,615
-------- --------
Net income $ 14,42315,404 $ 15,409 $ 40,507 $ 45,729
========= ========= ========= =========20,104
======== ========
Basic earnings per common share (Note 6) $ 0.870.31 $ 0.94 $ 2.45 $ 2.76
========= ========= ========= =========0.41
======== ========
Shares used in basic per share calculations 16,562 16,333 16,516 16,579
========= ========= ========= =========50,238 48,951
======== ========
Diluted earnings per common share (Note 6) $ 0.790.28 $ 0.89 $ 2.22 $ 2.58
========= ========= ========= =========0.38
======== ========
Shares used in diluted per share calculations 18,246 17,352 18,268 17,746
========= ========= ========= =========54,105 52,616
======== ========
See Notes to Unaudited Condensed Consolidated Financial Statements
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PLANTRONICS, INC.
PART I, ITEM 1. FINANCIAL STATEMENTS
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
NINE MONTHSQUARTER ENDED
----------------------------
DECEMBER 31, DECEMBER 31,
1998-----------------------
JUNE 30, JUNE 30,
1999 ------------ ------------2000
======== ========
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 40,50715,404 $ 45,72920,104
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization of property and equipment 4,133 2,9211,323 1,226
Deferred income taxes 1,300 (2,594)(2,208) (716)
Provision for doubtful accounts 481 (47)81 108
Income tax benefit associated with stock options 10,586 6,830767 3,068
Changes in assets and liabilities:
Accounts receivable (3,248) 2,788(1,653) (8,441)
Inventory 10,407 (11,831)(2,747) (6,307)
Other current assets 384 6,5956,660 76
Other assets 898 28452 41
Accounts payable (907) (419)31 1,256
Accrued liabilities 7,133 (1,558)(4,053) (4,524)
Income taxes payable (378) 7,524
--------- ---------7,716 5,844
-------- --------
Cash provided by operating activities 71,296 56,222
--------- ---------21,373 11,735
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of marketable
securities -- 5,000
Purchase of marketable securities (8,899)-- (2,750)
Capital expenditures (2,455) (5,094)
--------- ---------(2,052) (1,667)
-------- --------
Cash provided by (used for) provided by investing activities (2,455) (13,993)
--------- ---------(2,052) 583
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock (18,716) (54,040)(10,749) (10,001)
Proceeds from sale of treasury stock 915 1,257815 983
Proceeds from exercise of stock options 3,290 3,130
--------- ---------1,016 2,576
-------- --------
Cash (used for) provided byused for financing activities (14,511) (49,653)
--------- ---------(8,918) (6,442)
-------- --------
Net increase in cash and cash equivalents 54,330 (7,424)10,403 5,876
Cash and cash equivalents at beginning of period 64,901 42,999 --------- ---------40,271
-------- --------
Cash and cash equivalents at end of period $ 119,23153,402 $ 35,575
========= =========46,147
======== ========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest $ 3,2627 $ 2115
Income taxes $ 7,82356 $ 11,695769
See Notes to Unaudited Condensed Consolidated Financial Statements
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PLANTRONICS, INC.
PART I, ITEM 1. FINANCIAL STATEMENTS
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PRESENTATION. The accompanying interim condensed consolidated
financial statements of Plantronics, Inc. ("Plantronics," the "Company" or the
"Registrant") have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. These financial statements have been
prepared in conformity with generally accepted accounting principles, consistent
in all material respects with those applied in the Company's Annual Report on
Form 10-K for the year ended March 31, 1999.2000. The interim financial information
is unaudited, but reflects all normal recurring adjustments which are, in the
opinion of management, necessary to provide a fair statement of results for the
interim periods presented. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain prior period
balances have been reclassified to conform to the current period presentation.
The interim financial statements should be read in connection with the financial
statements in the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1999.2000 and the Company's Amended Registration Statement on Form S-3
filed on June 13, 2000.
NOTE 2. PERIODS PRESENTED. The Company's fiscal year-end is the Saturday closest
to March 31 and the thirdfirst fiscal quarter-end is the last Saturday in December.June. For
purposes of presentation, the Company has indicated its accounting year ending
on March 31 or the month-end for interim quarterly periods. Plantronics' fiscal
quarters ended December 31, 1998June 30, 1999 and December 31, 1999June 30, 2000 consisted of thirteen weeks each.
NOTE 3. DETAILS OF CERTAIN BALANCE SHEET COMPONENTS (IN THOUSANDS):
March 31, December 31,
1999 1999
--------- ------------June 30,
2000 2000
========= ========
Inventories:Inventory, net:
Finished goods $ 9,42517,887 $ 16,12924,176
Work in process 1,461 1,6301,540 1,668
Purchased parts 8,003 12,96114,325 14,215
-------- --------
$ 18,88933,752 $ 30,72040,059
======== ========
Property, plant and equipment:equipment, net:
Land $ 4,693 $ 4,693
Buildings and improvements (useful lives: 10-307-30
years) 9,923 11,03411,296 11,379
Machinery and equipment (useful lives: 2-102-8 years) 32,853 36,83638,341 39,925
-------- --------
47,469 52,56354,330 55,997
Less accumulated depreciation (27,146) (30,067)(30,753) (31,680)
-------- --------
$ 20,32323,577 $ 22,49624,317
======== ========
NOTE 4. FOREIGN CURRENCY TRANSACTIONS. The Company's functional currency for all
operations is the U.S. dollar. Accordingly, gains and losses resulting from the
remeasurement of the financial statements of foreign subsidiaries into U.S.
dollars are included in other incomeexpense (income) in the consolidated statements of
operations. Gains and losses resulting from foreign currency transactions are
also included in other income.expense (income). Aggregate exchange losses in the fiscal
quarter ended December 31, 1999 were immaterial. ThereJune 30, 2000 were approximately $0.2$0.6 million, aggregate exchange gainscompared to
approximately $0.4 million in the comparable period ended December 31, 1998.June 30, 1999.
NOTE 5. COMPUTATION OF EARNINGS PER COMMON SHARE. Basic earnings per common
share is computed by dividing net income by the weighted average number of
common shares outstanding during the period. Diluted earnings per common share
is computed using the weighted average number of common and dilutive common
equivalent shares outstanding during the period. Dilutive common equivalent
shares consist only of stock options. In computing diluted earnings per common
share, the average stock price for the period is used in determining the number
of shares assumed to be purchased from exercise of stock options.
See Notes to Unaudited Condensed Consolidated Financial Statements
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PLANTRONICS, INC.
PART I, ITEM 1. FINANCIAL STATEMENTS
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6. STOCKHOLDERS' EQUITY AND STOCK SPLIT. On June 29, 2000, our Board of
Directors approved a three-for-one split of the Company's common stock, effected
as a stock dividend. All stockholders of record on July 18, 2000 (the "Record
Date") received two additional shares for each share owned on the Record Date.
Shares resulting from the split were distributed by the transfer agent on August
8, 2000. All share and per-share numbers contained herein for all periods
presented reflect this stock split, unless otherwise noted.
NOTE 7. COMPREHENSIVE INCOME. Comprehensive income was the same as net income
for all periods presented. Accumulated other comprehensive income presented in
the accompanying condensed consolidated balance sheets consists of cumulative
translation adjustments from local currencies to the functional currency in
prior years.
NOTE 6.8. SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION.
OPERATING SEGMENT
We organize the reporting segments based on geographic areas. The Company hasnature of our
products (telecommunications equipment), development, manufacturing, marketing
and servicing are similar in each geographic area. We evaluate segment
performance based on profit or loss from operations before interest expense,
foreign exchange gains and losses and income taxes. No one reportable segment under the criteriacustomer accounted
for 10% or more of Statement of Financial Accounting
Standards ("SFAS") No. 131, "Disclosures about Segments of an Enterprise and
Related Information".
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NOTE 7. START-UP ACTIVITIES. Effective March 28, 1999, the Company adopted
Statement of Position 98-5, "Reporting on the Costs of Start-Up Activities"
("SOP 98-5"). The statement is effectivetotal revenue from consolidated sales for the Company'squarters ended
June 30, 2000 and 1999.
GEOGRAPHIC SEGMENTS
In geographical reporting, revenues are attributed to the geographical location
of the sales and service organizations. Costs directly and indirectly incurred
in generating revenues are similarly assigned.
Quarter Ended
----------------------
June 30, June 30,
1999 2000
-------- --------
Net revenues from unaffiliated customers:
United States $ 50,725 $ 67,467
International 23,990 32,885
-------- --------
$ 74,715 $100,352
======== ========
Intersegment revenues $ 23,040 $ 38,032
-------- --------
Operating profit:
United States $ 15,440 $ 19,714
International 7,046 9,367
-------- --------
$ 22,486 $ 29,081
======== ========
Long lived assets:
United States $ 18,312 $ 15,985
International 2,740 8,332
-------- --------
$ 21,052 $ 24,317
======== ========
The geographical reporting classification reflects the international
restructuring completed in fiscal year ending
April 1, 2000. SOP 98-5 broadly defines costs1997. The establishment of start-upPlantronics B.V., a
wholly-owned subsidiary of Plantronics based in The Netherlands, changed the
ownership of inventory and requires that such
costs be chargedthe methodology of intersegment revenues.
Intersegment revenues are from Plantronics B.V. to expense as incurredthe U.S., and that any previously capitalized
start-up costs be chargedare at
arms-length prices sufficient to expense in the fiscal year in which the statement
becomes effective. The Company had previously deferred $0.2 million of start-up
costs which were chargedrecover a reasonable profit.
See Notes to expense for the quarter ended September 31, 1999.
There were no start-up costs charged to expense in the quarter ended December
31, 1999.Unaudited Condensed Consolidated Financial Statements
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PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CERTAIN FORWARD LOOKINGFORWARD-LOOKING INFORMATION:
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements include the statement related
to the sufficiency of cash to fund operations for at least the next 12 months
set out in the last paragraph in the subsection headed "Liquidity" under
Financial Condition; variousCondition and certain statements marked with an asterisk ("*") in the
section captioned "Year 2000",
including the statement that we do not expect there will be any material impact
upon our revenues due to customer readiness for the Year 2000 and our belief
that there will be no material impact of Year 2000 problems due to failures of
our systems or those of third parties with which we do business; and the
statement of belief under Part I, Item 3 that the Company has minimal exposure
to financial market and foreign currency exchange risks.titled "Risk Factors Affecting Future Operating Results." In addition,
the Company may from time to time make oral forward-looking statements. These
forward-looking statements are based on current expectations and entail various
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of a
number of factors, including those set forth below under "Risk Factors Affecting
Future Operating Results." The following discussions titled "Results of
Operations" and "Financial Condition" should be read in conjunction with the
unaudited condensed consolidated financial statements and related notes included
elsewhere herein, the Company's annual report on Form 10-K, as well as the
section below entitled "Risk Factors Affecting Future Operating Results." We
disclaim any obligation to update any forward-looking statements as a result of
developments occurring after the date of this Quarterly Report.
RESULTS OF OPERATIONS:
The following table sets forth items from the Unaudited Condensed Consolidated
Statements of Operations as a percentage of net sales.
Quarter Ended
Nine Months Ended
---------------------------- ----------------------------
December 31, December 31, December 31, December 31,
1998---------------------
June 30, June 30,
1999 1998 1999
------------ ------------ ------------ ------------2000
======== ========
Net sales 100.0% 100.0%
100.0% 100.0%
Cost of sales 43.0 40.7 44.6 41.0
------ ------ ------ ------41.2 42.9
----- -----
Gross profit 57.0 59.3 55.4 59.0
------ ------ ------ ------58.8 57.1
----- -----
Research and development and
engineering 7.2 6.7 6.6 7.07.4 5.6
Selling, general and administrative 20.2 23.6 19.9 22.4
------ ------ ------ ------admin 21.3 22.5
----- -----
Total operating expenses 27.4 30.3 26.5 29.4
------ ------ ------ ------28.7 28.1
----- -----
Operating income 29.630.1 29.0 28.9 29.6
Other (income) expense 0.2 (0.8) 1.0 (0.6)
------ ------ ------ ------(0.2) 0.4
----- -----
Income before income taxes 29.4 29.8 27.9 30.230.3 28.6
Income tax expense 9.4 9.5 8.9 9.7 ------ ------ ------ ------8.6
----- -----
Net incomeIncome 20.6% 20.0%
20.3% 19.0% 20.5%
====== ====== ====== =========== =====
6See Notes to Unaudited Condensed Consolidated Financial Statements
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PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
Net Sales. Net sales for the quarter ended December 31, 1999June 30, 2000 increased by 5.6%34% to
$76.1$100.4 million, compared to $72.0$74.7 million for the quarter ended December 31,
1998. Net sales for the nine months ended December 31, 1999 were $222.8 million
compared to $213.2 million for the nine months ended December 31, 1998, an
increase of 4.5%. This steady rate of growth reflects strong salesJune 30, 1999.
Revenues increased in our retailalmost every channel and mobile communications division with particular strength
in International, retail, US distribution as well as good growth
internationally, offset by flat salesour mobile and computer
divisions. We also benefited from a Y2K rebound in our U.S. distributor channelthe call center market and
lower
salesthe level of revenues in U.S. OEM.this market may therefore slow down.
Gross Profit. Gross profit for the quarter ended December 31, 1999June 30, 2000 increased 10%30%,
but decreased 1.7 percentage points relative to $45.1net sales, to $57.3 million
(59.3%(57.1% of net sales), compared to $41.0$43.9 million (57.0%(58.8% of net sales) for the
quarter ended December 31, 1998. Gross profit for the first three
quarters of fiscal 2000 was $131.5 million, an increase of 11% over the
comparable period of fiscalJune 30, 1999. The increase in gross profit reflects ourWhile cost reduction efforts particularly on component costs, and relatively flat
manufacturing overhead costs on higher volumes leadingcontinued to lower product costs.
The increase in gross margin was somewhatbe
successful, they were more than offset by the unfavorable impact of European
foreign exchange rates during the quarter as well as by the strong salesgrowth of products
into our emerging markets which havenew
product offerings for computer, mobile and certain small office and residential
applications with lower margins but are growing at a faster
rate than the traditional call center business.margins.
Research, Development and Engineering. Research, development and engineering
expenses for the quarter ended December 31, 1999June 30, 2000 increased 2%, but decreased 2%1.8
percentage points relative to $5.1net sales, to $5.6 million (6.7%(5.6% of net sales),
compared to $5.2$5.5 million (7.2%(7.4% of net sales) for the quarter ended December 31, 1998. Expenses for the first three quarters of fiscal
2000 were $15.7 million compared to $14.2 million for the first three quarters
of fiscalJune 30,
1999. The year over year growthincrease in these expenses is fundingdue to increased investments in our
office, computer and mobile product lines and for new office, mobiletechnology initiatives.
The decline in the expenses relative to net sales was due in part to delays in
hiring and computer product development activities.commencing all programs that we have planned.
Selling, General and Administrative. Selling, general and administrative
expenses for the quarter ended December 31, 1999June 30, 2000 increased 23%41% to $18.0$22.5 million
(23.6%(22.5% of net sales), compared to $14.6$15.9 million (20.2%(21.3% of net sales) for the
quarter ended December 31, 1998. For the nine months ended December 31, 1999,
expenses were $49.9 million, an increase of $7.4 million over the nine months
ended December 31, 1998. The majority of the increase in sales expense was due
to sales programs to support our international operations as well as funded
initiatives in our computer division. Retail variable selling expenses have
increased related to the incremental retail revenue.June 30, 1999. Marketing expenses increased substantially due to
increased activities including test advertising campaigns, new product launches,
international marketing and programs for our mobile and computer divisions.
Variable selling expense and sales commissions increased in relation to
incremental revenue. General and administrative expenses decreased as a
percentage of net sales from the year ago quarter.
Operating Income. Operating income for the quarter ended December 31, 1999June 30, 2000 increased
4%29%, but decreased 1.1 percentage points relative to $22.1net sales, to $29.1 million
(29.0% of net sales), compared to $21.3$22.5 million (29.6%(30.1% of net sales) for the
quarter ended December 31, 1998. For the first
three quarters of fiscal 2000, operating income was $66.0 million compared to
$61.6 million for the first three quarters of fiscalJune 30, 1999. The increasedecrease relative to net sales was primarily gained through increased revenue anddue to the
decline in gross margin improvement.coupled with substantial increases in marketing
expenditures.
Interest Expense. Interest expense for both the quarter and for the nine months
ended December 31, 1999 was minimal as the Company paid down $65 million
principal for its outstanding long-term debt in January 1999. Interest expense
for the nine month period ended December 31, 1998 was $5.5 million and
principally represented interest payable on the 10% Senior Notes.fiscal 2001 is expected to be minimal.*
In November 1999, the Companywe entered into a Revolving Line of Credit Agreementcredit agreement with a major bank under
which we have the right to borrow up to $100 million with a major bank. The Companymillion. We currently hashave no
borrowings under this agreement.
Interest (Income) and Other Income.Expense (Income). Interest (income) and other
expense (income) for the quarter ended June 30, 2000 was $0.3 million in expense
compared to $0.2 million in income for the quarter ended December 31, 1999 decreasedJune 30, 1999. The net
$0.5 million increase in expense was primarily due to $0.6costs incurred in
connection with a secondary offering of stock by one of our stockholders.
Income Tax Expense Income tax expense for the quarter ended June 30, 2000 was
$8.6 million compared to $1.8$7.2 million for the quarter ended December 31, 1998. Interest incomeJune 30, 1999 and
other income for the first
three quartersrepresented tax rates of fiscal 2000 was $1.3 million compared to $3.5 million for the
first three quarters of fiscal 1999.30% and 32%, respectively. The decrease in interest incomethe overall
tax rate was primarily attributabledue to increased sales and profits in lower cash and cash equivalents balances as a result
of the January 15, 1999 redemption of $65 million in Senior Notes.tax jurisdictions.
FINANCIAL CONDITION:
Liquidity. As of December 31, 1999,June 30, 2000, we had working capital of $78.4$94.3 million,
including $44.5$46.1 million of cash and cash equivalents, and marketable securities,
compared with working
capital of $76.3$78.3 million, including $43.0$40.3 million of cash and cash equivalents,
at March 31, 1999.2000. During the ninethree months ended December
31, 1999,June 30, 2000, we generated
$56.2$11.7 million of cash from operating activities, due primarily to $45.7$20.1 million
in net income a tax benefit on stock options
exercised of approximately $6.8 million and an increase of $5.8 million in income taxes payable, of $7.5 million. Increases in inventory were offset by
changesincreases of $8.4 and $6.3 million in other current
assetsaccounts receivable and liabilities.inventory,
respectively. In comparison, we 7
8
generated $71.3$21.4 million in cash from operating
activities for the ninethree months ended December 31, 1998,June 30,
See Notes to Unaudited Condensed Consolidated Financial Statements
8
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PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
1999, due mainly to $40.5$15.4 million in net income a tax
benefit on stock options exercised of $10.6 million, a decrease of $10.4 million
in inventory and an increase of $7.7 million
in accrued liabilitiesincome taxes payable, offset by increases of $7.1 million.$1.7 million and $2.7 million in
accounts receivable and inventory, respectively.
We have a $100.0 million revolving credit facility, including a $10.0 million
letter-of-credit subfacility, with a major bank, both of which matureexpire in
November 2000. As of December 31, 1999,June 30, 2000, we had no cash borrowings under the
revolving credit facility and $1.2$0.8 million outstanding under the
letter-of-credit subfacility. The amounts outstanding under the letter-of-credit
subfacility were principally associated with purchases of inventory. The terms
of the credit facility contain covenants that materially limit our ability to
incur debt and pay dividends, among other matters. These covenants may adversely
affect our
financial positionus to the extent we cannot comply with them. We are currently in
compliance with the covenants under this agreement.
We believe that our current cash balance and cash provided by operations,
together with available borrowing capacity under our revolving credit facility
and letter-of-credit subfacility, will be sufficient to fund operations for at
least the next 12 months.
Investing Activities. Capital expenditures of $5.1$1.7 million in the ninethree months
ended December 31, 1999June 30, 2000 were incurred principally in tooling, leasehold improvements
and investments in computer and software upgrades.
Financing Activities. In the ninethree months ended December 31, 1999,June 30, 2000, we reissued
through employee benefit plans 24,15940,482 shares of our treasury stock for
approximately $1.3$1.0 million and repurchased 1,004,400333,900 shares of our common stock
for approximately $54.0$10.0 million. As of December 31, 1999, 448,007June 30, 2000, approximately 220,821
shares remained under the repurchase plan authorized on November 4,in the fourth quarter of
fiscal 1999. As of January
24, 2000 there remained 328,907 shares to be repurchased under the existing
program.
We received approximately $3.1$2.6 million in proceeds from the exercise of stock
options during the ninethree months ended December 31, 1999.June 30, 2000. The maximum aggregate
number of shares that may be issued under the 1993 Stock Plan is 5,459,24218,927,726
shares.
YEAR 2000:
Year 2000 Readiness Statement. The following discussion contains both "Year 2000
Statements" and "Year 2000 Readiness Disclosures" as defined in the Year 2000
Information and Readiness Disclosure Act, United States Public Law No. 105-271
(1998).
State of Readiness. Many existing electronic systems, including computer
systems, use only the last two digitsSee Notes to refer to a year. Therefore, these
systems may recognize a date using "00" as 1900 rather than the year 2000. If
not corrected, many computer and other electronic applications and systems could
fail or create erroneous results when addressing dates on and after January 1,
2000. Our products do not address or utilize dates in their operation, and,
accordingly, our products should not fail due to the year 2000 problem. However,
we use and depend on information technology systems (including business
information computer systems and design and manufacturing computer systems) and
other machinery and equipment that include embedded date sensitive technology.
We also depend on the proper functioning of date sensitive electronic systems of
third parties, such as customers and suppliers. The failure of any of these
systems to appropriately interpret the year 2000 could have a material adverse
effect on our business, financial condition and results of operations. We have
undertaken efforts to ensure that our business systems and those of our
suppliers and customers are compliant with the requirements of the year 2000.
We established a worldwide year 2000 task force, led by an Executive Steering
Committee of our senior management, including representatives of each of our
business and corporate functions, to oversee and regularly review the status of
our year 2000 compliance plan. Through our year 2000 task force, we implemented
a formal year 2000 compliance program. The compliance program addressed three
key elements: (i) internal infrastructure, addressing internal hardware and
software and non-information technology systems; (ii) supplier readiness,
addressing the preparedness of our suppliers of goods and services; and (iii)
customer readiness, addressing the preparedness of our customer support and the
preparedness of our customers to transact business with us. In each of those
compliance areas, we performed a global risk assessment, conducted testing,
implemented upgrades, communicated with and assisted suppliers and customers in
raising awareness of the year 2000 issues and developed
8Unaudited Condensed Consolidated Financial Statements
9
9
contingency plans to mitigate known and unknown year 2000 risks. The status of
our compliance efforts in those three areas is set forth below:
Internal Infrastructure. We assessed all internal applications and computer
software and hardware. Our key business information systems and other critical
applications, such as product testing and product design hardware and software,
have been made year 2000 compliant. As of the date of this report, we have
experienced no adverse internal infrastructure problems as a result of the Year
2000.
Supplier Readiness. This program focused on minimizing the risks associated with
supplier year 2000 issues in two areas: (i) the suppliers' business capability
to continue providing products and services in and after the year 2000 and (ii)
the year 2000 readiness of products supplied to us for our use. Requests for
information and certification of compliance were sent to our principal and
critical suppliers. We completed compliance audits of the most critical of those
and, as of the date of this report, have experienced no adverse effects related
to supplier readiness as a result of the Year 2000.
Customer Readiness. This program focused on ensuring that customers were aware
of the year 2000 issues and that customers were capable of placing orders for
our products, receiving products ordered and paying our invoices for products
sold and delivered. Requests for information and certification of year 2000
compliance were sent to our major customers. We did not experience any impact
upon our revenues due to customer readiness for the Year 2000 in the quarter
ended December 31, 1999 and do not expect any material impact on revenues for
the Year 2000.
Costs to Address Year 2000 Issues. We estimate that the aggregate cost of our
year 2000 compliance efforts will be less than $1.25 million. The costs consist
principally of (i) fees paid to outside consultants and software programmers,
(ii) purchase of telephone PBX systems which require upgrades to be year 2000
compliant, (iii) purchase of software and software upgrades to meet the year
2000 issue and (iv) purchase of other equipment. The funds expended were funded
through operating cash flows. Approximately $0.5 million of the total cost,
related to the purchase of fixed assets, was capitalized, with the balance
expensed as incurred.
Contingency Plans. In July 1999, we completed development of contingency plans
to mitigate the potential disruptions that may result from the year 2000 issue.
The contingency plan identified the risks to our business from various potential
Y2K related failures and established readiness and contingency remediation
efforts that were successfully put into place to mitigate the risks from such
potential failures. To date, our advance planning and the relatively modest
impact worldwide of the Year 2000 issues has made the recovery elements of our
contingency plan moot. The plan remains in effect in the event that any Year
2000 related failures occur and we believe that our contingency plan adequately
addresses the risks to our business from potential Y2K failures.
Risks of the Year 2000 Issues. We currently believe that our internal year 2000
compliance efforts were successful. As of the date of this report, we
experienced no material impact to us by reason of the failure or malfunction of
any systems owned or operated by us or third parties with which we do business.
However, there may be adverse implications that have not yet surfaced related to
year 2000 that could materially affect our business.10
PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
RISK FACTORS AFFECTING FUTURE OPERATING RESULTS
Investors or potential investors in the stock of Plantronics should
carefully consider the risks described below. Our stockholders may be subject to
the risks inherent in our business. The performance of Plantronics shares of
stock will reflect the performance of our business relative to, among other
things, our competition, general economic and market conditions and industry
conditions. You should carefully consider the following factors in connection
with any investment in Plantronics stock. Our business, financial condition and
results of operations of Plantronics could be materially adversely affected if any of the risks
occur. If the risks occur, the trading price of Plantronics stock could decline
and an investor could lose all or part of his or her investment.
DEPENDENCE ONA SUBSTANTIAL PORTION OF OUR SALES COME FROM THE CALL CENTER MARKET AND A
DECREASE OF DEMAND IN THAT MARKET COULD MATERIALLY AFFECT OUR RESULTS.
We have historically derived, and continue to derive, a substantial
majorityportion of our net sales from the call center market. This market has grown
significantly in recent years as new call centers have proliferated and existing
call centers have expanded. While we believe this market is continuing to grow,*
in the future this growth could slow or revenues from this market could decline
due to various factors. For example, technological advances such as automated
interactive voice response systems could reduce or eliminate the need for call
center agents in certain
9
10 applications. In addition, consumer resistance to
telemarketing could adversely affect growth in the call center market. Due to
our reliance on the call center market, we will be affected more by changes in
the rate of call center establishment and expansion and the communications
products that call center agents use than would a company serving a broader
market. We believe that there
may be some slowness in the establishment of new call centers in the first
calendar quarter of 2000 due to prior concerns by call center operators over
Year 2000 issues. We also believe that some call centers and organizations which
supply them have inventoried additional headsets due to Year 2000 concerns and
intend to reduce those inventories during the first calendar quarter of 2000.
Any decrease in the demand for call centers and related headset products
could cause a decrease in the demand for our products, which would materially
adversely affect our business, financial condition and results of operations.
FAILURE OFWE ARE COUNTING ON THE OFFICE, MOBILE, COMPUTER AND RESIDENTIAL MARKETS TO
DEVELOP AND WE COULD BE ADVERSELY AFFECTED IF THEY DO NOT DEVELOP AS WE EXPECT.
While the call center market is still the most significant parta substantial portion of our
business, we believe that our future prospects will depend in large part on the
growth in demand for headsets in the office, mobile, computer and residential
markets.* These communications headset markets are relatively new and
undeveloped. Moreover, we do not have extensive experience in selling headset
products to customers in these markets. If the demand for headsets in these
markets fails to develop, or develops more slowly than we currently anticipate,
or if we are unable to effectively market our products to customers in these
markets, it would have a material adverse effect on the potential demand for our
products and on our business, financial condition and results of operations.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO A NUMBER OF
CAUSES OUTSIDE OUR CONTROL.
Our quarterly results of operations may vary significantly in the future
for a variety of reasons, including the following:
-~ changes in demand for our products;
- changes in the levels of inventories held by our resellers;
-~ timing and size of orders from customers;
- distribution channel volume variations;
-~ cancellations or delays of deliveries of components and
subassemblies by our suppliers;
-~ variances in the timing and amount of engineering and operating
expenses;
-~ distribution channel volume variations;
~ delays in shipments of our products;
-See Notes to Unaudited Condensed Consolidated Financial Statements
10
11
PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
~ product returns and customer credits;
-~ new product introductions by us or our competitors;
-~ entrance of new competitors;
-~ increases in the costs of our components and subassemblies;
-~ price erosion;
-~ changes in the mix of products sold by us;
-~ seasonal fluctuations in demand; and
-~ general economic conditions.
10
11
Each of the above factors is difficult to forecast and thus could have a
material adverse effect on our business, financial condition and results of
operations.
We generally ship most orders during the quarter in which they are
received, and, consequently, we do not have a significant backlog of orders. As
a result, quarterly net sales and operating results depend primarily on the
volume and timing of orders received during the quarter. It is difficult to
forecast orders for a given quarter. Since a large portion of our operating
expenses, including rent, salaries and certain manufacturing expenses, are fixed
and difficult to reduce or modify, if net sales do not meet our expectations,
our business, financial condition and results of operations could be materially
adversely affected.
Our operating results can also vary substantially in any period
depending on the mix of products sold and the distribution channels through
which they are sold. In the event that sales of lower margin products or sales
through lower margin distribution channels in any period represent a
disproportionate share of total sales during such period, our operating results
would be materially adversely affected.
We believe that period-to-period comparisons of our operating results
are not necessarily meaningful and should not be relied upon as indicative of
future operating results. In addition, our operating results in a future quarter
or quarters may fall below the expectations of securities analysts or investors,
and, as a result, the price of our common stock might fall.
IF WE MUSTDO NOT MATCH PRODUCTION TO DEMAND WE WILL BE AT RISK OF LOSING BUSINESS OR
OUR GROSS MARGINS COULD BE ADVERSELY AFFECTED.
Historically, we have seen steady increases in customer demand for our
products and have generally been able to increase production to meet that demand. And
more recently, certain product lines have experienced rapid increases and
fluctuations in
demand. However, the demand for our products is dependent on many factors and
such demand is inherently difficult to forecast. Significant unanticipated
fluctuations in demand could cause the following operating problems, among
others:
- -~ If demand increases beyond that forecasted, we would have to rapidly
increase production. We depend on suppliers to provide additional
volumes of components and subassemblies, and, therefore, might not be
able to increase production rapidly enough to meet unexpected demand.
This could cause us to fail to meet customer expectations. There could
be short-term losses of sales while we are trying to increase
production. If customers turn to competitive sources of supply to meet
their needs, there could be a long-term impact on our revenues.
- -See Notes to Unaudited Condensed Consolidated Financial Statements
11
12
PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
~ Rapid increases in production levels to meet unanticipated
demand could result in higher costs for components and
subassemblies, 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.
- -~ If forecasted demand does not develop, we could have excess
production or excess capacity. Excess production could result in
higher inventories of finished products, components and
subassemblies. If we were unable to sell these inventories, we
would have to write off some or all of our inventories of
obsolete products and unusable components and subassemblies.
Excess manufacturing capacity could lead to higher production
costs and lower margins.
Any of the foregoing problems could materially adversely affect our business,
financial condition and results of operations.
WE DEPEND ON OUR SUPPLIERS AND FAILURE OF OUR SUPPLIERS TO PROVIDE QUALITY
COMPONENTS OR SERVICES IN A TIMELY MANNER COULD ADVERSELY AFFECT OUR RESULTS.
We buy components and subassemblies from a variety of suppliers and assemble
them into finished products. We also have certain of our products manufactured
for us by third party suppliers. The cost, quality, and availability of such
components are essential to the successful production and sale of our products.
Obtaining components and subassemblies entails various risks, including the
following:
11
12
- -~ Prices of components and subassemblies may rise. If this occurs
and we are not able to pass these increases on to our customers
or to achieve operating efficiencies that would offset the
increases, it would have a material adverse effect on our
business, financial condition and results of operations.
- -~ We obtain certain subassemblies, components and componentsproducts from
single suppliers, and alternate sources for these items are not
readily available. To date, we have experienced only minor
interruptions in the supply of these subassemblies, components
and subassemblies,products, none of which has significantly affected our
results of operations. However, an interruption in supply from
any of our single source suppliers in the future would
materially adversely affect our business, financial condition
and results of operations.
- -~ Most of our suppliers are not obligated to continue to provide
us with components and subassemblies. Rather, we buy most
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
components and subassemblies. This would materially adversely
affect our business, financial condition and results of
operations.
WE SELL OUR PRODUCTS THROUGH VARIOUS CHANNELS OF DISTRIBUTION AND A FAILURE OF
THOSE CHANNELS TO OPERATE AS WE EXPECT COULD DECREASE OUR REVENUES.
We sell substantially all of our products through distributors, OEMs,
retailers and telephony service providers. Our existing relationships with these
parties are nonexclusive and can be terminated by either party without cause.
Our channel partners also sell or can potentially sell products offered by our
competitors. To the extent that our competitors offer our channel partners more
favorable terms, such partners may decline to carry, de-emphasize or discontinue
carrying our products. In the future, we may not be able to retain or attract a
sufficient number of qualified channel partners. Further, such partners may not
recommend, or continue to recommend, our products. The inability to establish or
maintain successful relationships with distributors, OEMs, retailers and
telephony service providers or to expand our distribution channels could
materially adversely affect our business, financial condition or results of
operations.
See Notes to Unaudited Condensed Consolidated Financial Statements
12
13
PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
Our distribution channels generally hold inventories of our products,
determined in their own business judgment to be sufficient to meet their
customer's delivery requirements. Such inventory levels are subject to market
conditions, business judgment by the reseller and our ability to meet their
time-to-ship needs. Rapid reductions by our distributors, OEMs, retailers and
other customers in the levels of inventories held in our products could
materially adversely affect our business, financial condition or results of
operations.
WE HAVE STRONG COMPETITORS AND WILL LIKELY FACE ADDITIONAL COMPETITION IN THE
HEADSET MARKET IS HIGHLY COMPETITIVEFUTURE.
The marketmarkets for our products isare highly competitive. We compete with a
variety of companies in the various segmentsmarkets for communications headsets. Our
single largest competitor is GN Netcom, a subsidiary of GN Great Nordic Ltd., a
Danish telecommunications conglomerate with revenues of 5.4 billion Danish Krone
(approximately $700 million) in calendar 1999. On May 21, 2000, GN Netcom
announced that it had signed an agreement to acquire Jabra Corporation, a
supplier of headsets in the mobile phone market. It is not clear how this merger
will affect us but the merged entity will have a broader product offering and
greater marketing presence than either of the communications headset market.two entities had separately.
We also anticipate that we will face additional competition from companies
that currently do not offer communications headsets. This is particularly true
in the office, mobile, computer and residential markets. As these markets
mature, we will face increased competition from consumer electronics companies
and other companies that currently manufacture and sell mobile phones or
computer peripheral equipment. These new competitors are likely to be larger,
offer broader product lines, bundle or integrate with other products
communications headset tops and bases manufactured by them or others, offer
products containing bases that are incompatible with our headset tops and have
substantially greater financial, marketing and other resources than we do.
We believe that important competitive factors for us are product
reliability, product features, customer service and support, reputation,
distribution, ability to meet delivery schedules, warranty terms, product life
and price. If we do not compete successfully with respect to any of these or
other factors it could materially adversely affect our business, financial
condition and results of operations. If we do not successfully develop and
market products that compete successfully with those of our competitors it would
materially adversely affect our business, financial condition and results of
operations.
NEW PRODUCT DEVELOPMENT IS RISKY;RISKY AND WE MUSTWILL BE ADVERSELY AFFECTED IF WE DO NOT
RESPOND TO CHANGING CUSTOMER REQUIREMENTS AND TECHNOLOGIESNEW TECHNOLOGIES.
Our product development efforts historically have been directed toward
enhancement of existing products and development of new products that capitalize
on our core capabilities. The success of new product introductions is dependent
on severala number of factors, including the proper selection of new product features,
timely completion and introduction of new product designs, cost-effective
manufacture of such products, quality of new products and market acceptance. To
be successful in the future, we must develop new products, qualify these new
products, successfully introduce these products to the market on a timely basis,
and commence and sustain low-cost, volume production to meet customers' demands.
Although we attempt to determine the specific needs of headset users in our
target markets, because almost all of our sales are indirect, we may not always
be able to timely and accurately predict end-user requirements. As a result, our
products may not be timely developed, designed to address current or future
end-user requirements, offered at competitive prices or accepted, which could
materially adversely affect our business, financial condition and results of
operations. Moreover, we generally incur substantial research and development
costs before the technical feasibility and commercial viability of a new product
can be ascertained. Accordingly, revenues from new products may not be
sufficient to recover the associated development costs.
Historically, the technology used in lightweight communications headsets has
evolved slowly. New products have primarily offered stylistic changes and
quality improvements, rather than significant new technologies. We anticipate
that the technology used in hands-free communications devices, including our
products, will begin to evolve more rapidly in the future. We believe that this
is particularly true of the office, mobile and residential 12
13
markets, which may
require us to develop new headset technologies to support cordless and
See Notes to Unaudited Condensed Consolidated Financial Statements
13
14
PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
wireless operation and to interface with new communications and computing
devices. As a result, our success depends upon our ability to enhance existing
products, to respond to changing market requirements, and to develop and
introduce in a timely manner new products that keep pace with technological
developments. If we are unable to develop and introduce enhanced products or new
products in a timely manner in response to changing market conditions or
customer requirements, it will materially and adversely affect our business,
financial condition and results of operations.
WE DEPEND ON OUR DISTRIBUTION CHANNELS
We sell substantially allDue to the historically slow evolvement of our products, through distributors, OEMs, retailerswe have
generally been able to phase out obsolete products without significant impact to
our operating margins. However, as we develop new generations of products more
quickly, we expect that the pace of product obsolescence will increase
concurrently. The disposition of inventories of obsolete products may result in
reductions to our operating margins and telephony service providers.affect our earnings and results of
operations.
CHANGES IN REGULATORY REQUIREMENTS MAY ADVERSELY IMPACT OUR GROSS MARGINS AS WE
COMPLY WITH SUCH CHANGES OR REDUCE OUR ABILITY TO GENERATE REVENUES IF WE ARE
UNABLE TO COMPLY.
Our existing relationshipsproducts must meet the requirements set by regulatory authorities in
the numerous jurisdictions in which we sell them. As regulations and local laws
change, we must modify our products to address those changes. Regulatory
restrictions may increase the costs to design and manufacture our products,
resulting in a decrease in demand for our products if the costs are passed along
or a decrease in our margins. Compliance with these parties
are nonexclusiveregulatory restrictions may impact
the technical quality and can be terminated by either party without cause. The
relationships with our distributors, OEMs, retailers and other resellerscapabilities of our products, do not require that they purchase any minimum quantities ofreducing their
marketability. We are currently facing a substantial change in the regulations
applicable to our products or carry minimum inventory levels ofin the European Union and there is no certainty that
we can meet those regulatory requirements in a timely and cost-effective manner.
Failure to conform our products. Therefore, changes
in their ordering patterns or reduction in their inventory levels canproducts to these new European regulatory requirements
would result in lower orders to us.
Our channel partners also sell or can potentially sell products offered by our
competitors. To the extent that our competitors offer our channel partners more
favorable terms, such partners may decline to carry, de-emphasize or discontinue
carrying our products. In the future, we may not be able to retain or attract a
sufficient number of qualified channel partners. Further, such partners may not
recommend, or continue to recommend, our products. The inability to establish or
maintain successful relationships with distributors, OEMs, retailers and
telephony service providers or to expand our distribution channels could
materially adversely affect our business, financial condition or results of
operations.
WE DEPEND ON S. KENNETH KANNAPPAN AND OTHER KEY PERSONNEL
Our success depends to a significant extent upon the services of a limited
number of executive officers and other key employees, including S. Kenneth
Kannappan, our President and Chief Executive Officer. The unanticipated loss of
the services of Mr. Kannappan or one or more of our other executive officers or
key employees could havesell such products in Europe, resulting in a
material adverse effect uponimpact to our business, financial condition and results of operations.
We also believe that our future success will depend in large part upon our
ability to attract and retain additional highly skilled technical, management,
sales and marketing personnel. Competition for such personnel is intense. We may
not be successful in attracting and retaining such personnel, and, our failure
to do so could have a material adverse effect on our business, operating results
or financial condition.
CITICORP VENTURE CAPITAL RETAINSWE HAVE SIGNIFICANT CONTROL
Our largest stockholder, Citicorp Venture Capital, Ltd. ("CVC"), beneficially
owns 4,509,168 sharesFOREIGN OPERATIONS AND THERE ARE INHERENT RISKS IN OPERATING
ABROAD.
Approximately 33.5% of our common stock (excluding any shares that may be
owned by employees of CVC or its affiliates), which representsnet sales in fiscal 2000 were derived from
customers outside the United States, compared with approximately 28%
of our outstanding common stock as of December 24, 1999. We also have an
agreement with CVC under which it is entitled to have up to three of its
designees serve on our Board of Directors, depending on the level of CVC's
continuing stock ownership. Messrs. Robert F. B. Logan, M. Saleem Muqaddam and
John Mowbray O'Mara are currently serving as CVC's designees under that
agreement. Accordingly, CVC has the ability to exert substantial influence on
the full Board of Directors, which currently consists of seven members. In
addition, our bylaws contain provisions that require a two-thirds (66 2/3 %)
supermajority vote of the Board of Directors to approve certain transactions,
including amendments of our Certificate of Incorporation, certain provisions of
our bylaws, mergers and sales of substantial assets, acquisitions of other
companies and sales of capital stock. These provisions may have the effect of
giving a small number of directors the ability to block such transactions.
FUTURE SALES OF OUR COMMON STOCK
As of December 24, 1999, we had 18,827,537 shares of common stock outstanding,
including 2,649,203 shares we have repurchased and hold in our treasury account.
With the exception of 5,100,000 shares held by affiliates of Plantronics, these
shares are freely tradable. These approximately 5,100,000 shares may only be
sold in reliance on
13
14
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), or
pursuant to an effective registration statement filed with the Securities and
Exchange Commission. Some of our current stockholders, including CVC, Citigroup
Foundation and certain of our directors also have certain contractual rights to
require Plantronics to register their shares for public sale. An additional
approximately 2,800,000 shares are subject to outstanding stock options as of
December 24, 1999. As of January 21, 2000, Mrs. Louise Cecil holds vested
options on 227,896 shares of our common stock (assigned to her by her late
husband Robert S. Cecil) and has in place an effective registration statement
filed with the Securities Exchange Commission, meaning she may sell any or all
of them at any time without reliance upon Rule 144.
Sales of a substantial number of shares of common stock in the public market by
CVC, Mrs. Cecil, or any of our officers, directors or other stockholders could
adversely affect the prevailing market price of the common stock and impair our
ability to raise capital through the sale of equity securities.
RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS
Approximately 30.5% of our
net sales in both fiscal 1998 and1999. In the first fiscal 1999quarter of fiscal 2001,
approximately 32.8% of our net sales were derived from customers outside the
United States. In addition, we conduct substantially all of our headset assembly
operations in our manufacturing facility located in Mexico, and we obtain most
of the components and subassemblies used in our products from various foreign
suppliers. The inherent risks of international operations, particularly in
Mexico, could materially adversely affect our business, financial condition and
results of operations. The types of risks faced in connection with international
operations and sales include:
-~ cultural differencedifferences in the conduct of business;
- the abilities of local distributors and other resellers;
-~ greater difficulty in accounts receivable collection;
-~ unexpected changes in regulatory requirements;
-~ tariffs and other trade barriers;
-~ economic and political conditions in each country;
-~ management and operation of an enterprise spread over various
countries; and
-~ burden of complying with a wide variety of foreign laws.
See Notes to Unaudited Condensed Consolidated Financial Statements
14
15
PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
In calendar 2000, the value of major European currencies has dropped
against the U.S. dollar. To date, we have partially but not fully reflected that
change in currency value in our selling prices. In order to maintain a
competitive price for our products in Europe, we may have to effectively reduce
our current prices further, resulting in a lower margin on products sold in
Europe. Continued change in the values of European currencies or changes in the
values of other foreign currencies could have a material adverse effect on our
business, financial condition and results of operations.
OUR FOREIGN OPERATIONS PUT US AT RISK OF LOSS IF THERE ARE MATERIAL CHANGES IN
CURRENCY VALUES AS COMPARED TO THE U.S. DOLLAR.
A significant portion of our business is conducted in currencies other
than the U.S. dollar. As a result, fluctuations in exchange rates create risk to
us in both the salessale of our products and our purchase of supplies. Fluctuations
in the value of the currencies in which we conduct our business relative to the
U.S. dollar have caused and will continue to cause currency transaction gains
and losses. Although we do not currently engage in any hedging activities to
mitigate exchange rate risks, we continually evaluate programs to reduce our
foreign currency exposure. However, there can be no assurance that we will not
continue to experience currency losses in the future, nor can we predict the
effects of future exchange rate fluctuations on future operating results. To the
extent that sales to our foreign customers increase or transactions in foreign
currencies increase, our business, financial condition and results of operations
could be materially adversely affected by exchange rate fluctuations. In
addition, we cannot predict the potential consequences to our business of the
adoption of the Euro as a common currency in Europe.
WE DEPEND ONMAY BE EXPERIENCING A NON-SUSTAINABLE INCREASE IN SALES AS A RESULT OF
PENT-UP DEMAND FROM Y2K CONCERNS.
Our results for the first part of calendar year 2000 may not be
indicative of longer-term market conditions. We currently may be enjoying a
non-sustainable rebound from purchases by call center and office customers who
delayed investment in new call centers or information technologies due to
concerns over the effects of Y2K.
IF THERE ARE PROBLEMS THAT AFFECT OUR PRINCIPAL MANUFACTURING FACILITY IN
MEXICO, WE COULD FACE LOSSES IN REVENUES OR MATERIAL INCREASES IN COSTS OF OUR
OPERATIONS.
Substantially all of our manufacturing operations are currently
performed in a single facility in Tijuana, Mexico. A fire, flood or earthquake,
political unrest or other disaster or condition affecting our facility could
have a material adverse effect on our business, financial condition and results
of operations. While we have developed a disaster recovery plan and believe we
are adequately insured with respect to this facility, we may not be able to
implement the plan effectively or on a timely basis or recover under applicable
insurance policies.
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15
FAILURE OF ELECTRONIC SYSTEMS TO RECOGNIZE THE YEAR 2000
Many existing electronic systems, including computer systems, use only the last
two digits to refer to a year. Therefore, these systems may recognize a date
using "00" as 1900 rather than the year 2000. It was widely anticipated that, if
not corrected, many computer and other electronic applications and systems could
fail or create erroneous results when addressing dates after January 1, 2000.
Our products do not address or utilize dates in their operation, and,
accordingly, our products should not fail due to the year 2000 problem. You
should refer to the Section above titled "Year 2000" and the Section titled
"Year 2000" in the 1999 Annual Report to Stockholders for a discussion of our
Year 2000 compliance efforts. As of the date of this report, we have experienced
no adverse effects on our business due to the failure or malfunction of any
systems owned or operated by us or third parties with which we do business. Our
year 2000 efforts may not ensure against disruptions caused in the future by the
year 2000. Any significant, even if sporadic, disruption due to the change to
the year 2000 may cause business interruptions or shutdowns, financial loss,
regulatory actions, and exposure to liability.
RISKS OF INADEQUATE PROTECTION OFWE HAVE INTELLECTUAL PROPERTY RIGHTS THAT COULD BE INFRINGED BY OTHERS AND WE
ARE POTENTIALLY AT RISK OF INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF
OTHERSOTHERS.
Our success will depend in part on our ability to protect our
proprietary technology. We rely primarily on a combination of nondisclosure
agreements and other contractual provisions as well as patent, trademark, trade
secret, and copyright laws to protect our proprietary rights. We currently hold
thirty-four
(34)35 United States patents and additional foreign patents and intend to continue
to seek patents on our inventions when we believe it to be appropriate. The
process of seeking patent protection can be lengthy and expensive. Patents may
not be issued in response to our applications, and patents that are issued may
be invalidated, circumvented or challenged by others. If we are required to
enforce our patents or other proprietary rights through litigation, the costs
and diversion of management's attention could be substantial. In addition, the
rights granted under any patents may not provide us competitive advantages or be
adequate to safeguard and maintain our proprietary rights. Moreover, the laws of
certain countries do not protect our proprietary rights to the same extent as do
the laws of the United States. If we do not enforce and protect our intellectual
property rights, it could materially adversely affect our business, financial
condition and results of operations.
See Notes to Unaudited Condensed Consolidated Financial Statements
15
16
PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
From time to time, third parties, including our competitors, may assert
patent, copyright and other intellectual property rights against us. Such
claims, if they are asserted, could result in costly litigation and diversion of
management's attention. In addition, we may not ultimately prevail in any such
litigation or be able to license any valid and infringed patents from such third
parties on commercially reasonable terms, if at all. Any infringement claim or
other litigation against us could materially adversely affect our business,
financial condition and results of operations.
PRODUCT LIABILITY EXPOSUREWE ARE EXPOSED TO POTENTIAL LAWSUITS ALLEGING DEFECTS IN OUR PRODUCTS.
The use of our products exposes us to the risk of product liability
claims. Product liability claims have in the past been, and are currently being,
asserted against us. None of the previously resolved claims have materially
affected our business, financial condition or results of operations, nor do we
believe that any of the pending claims will have such an effect. Although we
maintain product liability insurance, the coverage provided under our policies
could be unavailable or insufficient to cover the full amount of any such claim.
Therefore, successful product liability claims brought against us could have a
material adverse effect upon our business, financial condition and results of
operations.
OUR STOCK PRICE MAY BE VOLATILE
The market priceOur mobile headsets are used with mobile telephones. There has been
continuing public controversy over whether the radio frequency emissions from
mobile telephones are harmful to users of mobile phones. We believe that there
is no conclusive proof of any health hazard from the use of mobile telephones
but that research in this area is incomplete. If research was to establish a
health hazard from the use of mobile telephones or public controversy grows even
in the absence of conclusive research findings, there could be an adverse impact
on the demand for our common stockmobile headsets. There is also continuing and increasing
public controversy over the use of mobile telephones by operators of motor
vehicles. While we believe that our products enhance driver safety by permitting
a motor vehicle operator to generally be able to keep both hands free to operate
the vehicle, there is no certainty that this is the case and we may be affected bysubject
to claims arising from allegations that use of a numbermobile telephone and headset
contributed to a motor vehicle accident. We maintain product liability insurance
and general liability insurance which we believe would cover any such claims.
However, the coverage provided under our policies could be unavailable or
insufficient to cover the full amount of factors,
including the announcement of new products orany such claim. Therefore, successful
product enhancements byliability claims brought against us orcould have a material adverse effect
upon our competitors, the loss of services of one or more of our executive officers or
other key employees, quarterly variations in our or our competitors'business, financial condition and results of operations, changes in earnings estimates or recommendation by securities
analysts, developments in our industry, sales of substantial numbers of shares
of our common stock in the public market, general market conditions and other
factors, including factors unrelated to our operating performance or the
operating performance of our competitors. In addition, stock prices for many
companies in the technology sector have experienced wide fluctuations that have
15
16
often been unrelated to the operating performances of such companies. Such
factors and fluctuations, as well as general economic, political and market
conditions, such as recessions, may materially adversely affect the market price
of our common stock.operations.
WHILE WE BELIEVE WE COMPLY WITH ENVIRONMENTAL MATTERSLAWS AND REGULATIONS, WE ARE STILL
EXPOSED TO POTENTIAL RISKS FROM ENVIRONMENTAL MATTERS.
We are subject to various federal, state, local and foreign
environmental laws and regulations, including those governing the use, discharge
and disposal of hazardous substances in the ordinary course of our manufacturing
process. Although we believe that our current manufacturing operations comply in
all material respects with applicable environmental laws and regulations,
environmental legislation has been enacted and may in the future be enacted or
interpreted to create environmental liability with respect to our facilities or
operations. We have included in our financial statements a reserve of $1.5
million for possible environmental remediation of the site of one of our
previous businesses. While no claims have been asserted against us in connection
with this matter, such claims could be asserted in the future and any liability
that might result could exceed the amount of the reserve.
EFFECTSTHE SEC MAY DETERMINE THAT OUR ACCOUNTANTS ARE NOT INDEPENDENT.
Until June 4, 2000, our independent public accountants, PricewaterhouseCoopers
LLP, performed payroll and bookkeeping services for our Hong Kong sales office,
an immaterial operation with one employee, no assets or equity, and no authority
to conclude any sales on behalf of Plantronics. The selling, general and
administrative expenses incurred by our Hong Kong office accounted for 0.38,
0.53 and 0.64 percent of our total selling, general and administrative expenses
for fiscal years 2000, 1999 and 1998, respectively. PricewaterhouseCoopers
received
See Notes to Unaudited Condensed Consolidated Financial Statements
16
17
PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF ANTITAKEOVERFINANCIAL CONDITION AND RESULTS
fees for these services of approximately $10,000, or approximately 7% of total
audit fees, in each of fiscal years 2000, 1999 and 1998. Due to the immaterial
nature of our Hong Kong office's operations, PricewaterhouseCoopers performed no
audit work on that office's financial statements for fiscal years 2000, 1999 or
1998. However, this level of compensation for bookkeeping services compared to
the compensation for audit services exceeds certain guidance from the Securities
and Exchange Commission for the determination of accountant independence.
PricewaterhouseCoopers has represented to the SEC and to us that all affected
audits were conducted with an objective state of mind and the requisite degree
of professional skepticism. Payroll and bookkeeping services for our Hong Kong
office are now being performed by KPMG LLP. KPMG also conducted an audit of the
prior bookkeeping work done by PricewaterhouseCoopers and determined that the
records had been kept in a manner consistent with applicable accounting
principles. However, the SEC might not concur with PricewaterhouseCoopers's view
that it was independent under the applicable SEC rules. If the SEC determines
that PricewaterhouseCoopers is or was not independent, we might be required to
engage a different outside auditing firm on a prospective basis and we might be
required to have that firm re-audit our previous years' financial statements. We
cannot predict whether the SEC will require a re-audit or what effect a re-audit
might have on Plantronics.
OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE LOSE THE BENEFIT OF THE SERVICES
OF KEN KANNAPPAN OR OTHER KEY PERSONNEL.
Our success depends to a significant extent upon the services of a
limited number of executive officers and other key employees. The unanticipated
loss of the services of our president and chief executive officer, Mr.
Kannappan, or one or more of our other executive officers or key employees could
have a material adverse effect upon our business, financial condition and
results of operations.
We also believe that our future success will depend in large part upon
our ability to attract and retain additional highly skilled technical,
management, sales and marketing personnel. Competition for such personnel is
intense. We may not be successful in attracting and retaining such personnel,
and our failure to do so could have a material adverse effect on our business,
operating results or financial condition.
OUR STOCK PRICE MAY BE VOLATILE AND YOUR INVESTMENT IN PLANTRONICS STOCK COULD
BE LOST.
The market price for our common stock may be affected by a number of
factors, including the announcement of new products or product enhancements by
us or our competitors, the loss of services of one or more of our executive
officers or other key employees, quarterly variations in our or our competitors'
results of operations, 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, general market conditions
and other factors, including factors unrelated to our operating performance or
the operating performance of our competitors. In addition, stock prices for many
companies in the technology sector have experienced wide fluctuations that have
often been unrelated to the operating performances of such companies. Such
factors and fluctuations, as well as general economic, political and market
conditions, such as recessions, may materially adversely affect the market price
of our common stock.
ANTI-TAKEOVER PROVISIONS IN OUR CURRENT BY-LAWS OR WHICH COULD BE PUT INTO PLACE
BY OUR BOARD OF DIRECTORS COULD AFFECT MARKET PRICES OF OUR STOCK.
Our Boardboard of Directorsdirectors has the authority to issue preferred stock and to
determine the price, rights, preferences, privileges and restrictions, including
voting and conversion rights, of those shares without any further vote or action
by the stockholders. The issuance of our preferred stock could have the effect
of making it more difficult for a third party to acquire us. In addition, we are
subject to the antitakeoveranti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which could also have the effect of delaying or preventing our
acquisition by a third party. Further, certain provisions of our Certificate of
Incorporation and bylaws could delay or make more difficult a merger, tender
offer or proxy contest, which could adversely affect the market price of our
common stock.
See Notes to Unaudited Condensed Consolidated Financial Statements
17
18
PLANTRONICS, INC.
PART I, ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
CITICORP VENTURE CAPITAL HAS SIGNIFICANT CONTROL OVER OUR BUSINESS.
Our largest stockholder, Citicorp Venture Capital, Ltd. ("CVC"),
beneficially owns 10,077,504 shares of our common stock (excluding any shares
that may be owned by employees of CVC or its affiliates), which represents
approximately 20.6% of our outstanding common stock as of August 8, 2000. We
also have an agreement with CVC under which it is entitled to have up to two of
its designees serve on our Board of Directors, depending on the level of CVC's
continuing stock ownership. Messrs. Robert F. B. Logan, M. Saleem Muqaddam and
John M. O'Mara are currently serving as CVC's designees under that agreement
(having been nominated for election in a period in which the agreement with CVC
required us to nominate and support the election of three designees of CVC). In
addition, our bylaws contain provisions that require a two-thirds (66 2/3%)
supermajority vote of the Board of Directors to approve certain transactions,
including amendments of our Certificate of Incorporation, certain provisions of
our bylaws, mergers and sales of substantial assets, acquisitions of other
companies and sales of capital stock. These provisions may have the effect of
giving a small number of directors the ability to block such transactions.
WE HAVE ACQUIREDSEVERAL SIGNIFICANT STOCKHOLDERS AND, GIVEN THE LOW TRADING VOLUME OF
OUR STOCK, IF THEY SELL THEIR SHARES IN A COMPANY AND EXPECT TO MAKE FUTURE ACQUISITIONS AND
ACQUISITIONS INVOLVE MATERIAL RISKS
On December 30, 1999,SHORT PERIOD OF TIME, WE COULD SEE AN
ADVERSE AFFECT ON THE MARKET PRICES OF OUR STOCK.
As of August 8, 2000, we purchased ClearVox Communications, Inc., a California
corporation. We mayhad 48,922,654 shares of common stock
outstanding and in the future,public market. All of these shares are freely tradable
except for approximately 11,100,000 shares held by affiliates of Plantronics
(including CVC and the directors and officers of Plantronics). These
approximately 11,100,000 shares may only be sold in orderreliance on Rule 144 under
the Securities Act of 1933, as amended (the "Securities Act"), or pursuant to addressan
effective registration statement filed with the needSecurities and Exchange
Commission. Some of our current stockholders, including CVC and certain of our
directors, also have certain contractual rights to develop new
productsrequire Plantronics to
register their shares for public sale. Approximately 8,100,000 additional shares
are subject to outstanding stock options as of August 8, 2000. As of August 8,
2000, Ms. Louise Cecil, the widow of our former CEO and enter new markets, acquire other companies. There are inherent
risksChairman, Robert S.
Cecil, holds options on approximately 510,600 shares of our common stock,
transferred to her by Mr. Cecil during his life. She has registered those shares
for resale and can sell any or all of those shares at any time.
Plantronics stock is not heavily traded. Our average daily trading
volume in twelve calendar month period prior to August 8, 2000 was approximately
94,068 shares per day with a median volume in that period of 66,000 shares per
day (volume not split-adjusted). Sales of a substantial number of shares of
common stock in the acquisitionpublic market by CVC or any of another company thatour officers, directors or
other stockholders could materially adversely affect our business, financial condition and results of operations. The types of
risks faced in connection with acquisitions include:
- cultural difference in the conduct of business;
- difficulties in integrationprevailing market price of the
operations, technologies,common stock and productsimpair our ability to raise capital through the sale of the acquired company;
- the risk of diverting management's attention from normal daily
operations of the business;
- potential difficulties in completing projects associated with
purchased in-process research and development;
- risks of entering markets in which we have no or limited direct
prior experience and where competitors in such markets have stronger
market positions;
- the abilities of representatives, distributors, OEM customers and
other resellers which are retained or customers of the acquired
company;
- differences in the business information systems of the companies;
- difficulties in integrating the transactions and business
information systems of the company; and
- the potential loss of key employees of the acquired company.
Mergers and acquisitions, particularly those of high-technology companies, are
inherently risky, and no assurance can be given that the ClearVox or future
acquisitions will be successful and will not materially adversely affect our
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business, operating results or financial condition. We must also manage any such
growth effectively. Failure to manage growth effectively and successfully
integrate acquisitions made by us could materially harm our business and
operating results.equity
securities.
PART 1, ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Plantronics considered the provision of Financial Reporting Release No. 48
"Disclosure of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments, and Disclosure of Quantitative and Qualitative
Information about Market Risk inherent in Derivative Financial Instruments,
Other Financial Instruments and Derivative Commodity Instruments." Plantronics
had no holdings of derivative financial or commodity instruments at December 31,
1999.June 30,
2000. Plantronics believes it has minimal exposure to financial market risks and
risks associated with changes in foreign currency exchange rates at this time.
See Notes to Unaudited Condensed Consolidated Financial Statements
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PLANTRONICS, INC.
PART II -II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
(a) The 2000 Annual Meeting of Stockholders of Plantronics, Inc. (the
"Company") was held at The Museum of Art History at the McPherson
Center, 705 Front Street, Santa Cruz, California on June 29, 2000 (the
"Annual Meeting").
(b) At the Annual Meeting, the following seven individuals were elected to
the Company's Board of Directors, constituting all members of the Board
of Directors. All votes reflect the Company's recent stock split.
Nominee Votes Cast For Withheld or Against
------- -------------- -------------------
S. Kenneth Kannappan 44,047,515 230,349
Robert F.B. Logan 44,038,260 239,604
M. Saleem Muqaddam 44,039,034 238,830
John Mowbray O'Mara 44,036,859 241,005
Trude C. Taylor 44,037,030 240,834
Marvin Tseu 44,045,682 232,182
David A. Wegmann 44,039,370 238,494
(c) The following additional proposals were considered at the Annual Meeting
and were approved by the vote of the Stockholders, in accordance with
the tabulation shown below.
(1) Proposal to amend the 1993 Stock Plan to increase by 2,550,000
shares the number of shares of common stock authorized for
issuance under the plan.
Votes For Votes Against Abstain Broker Non-Vote
--------- ------------- ------- ---------------
29,476,746 9,611,784 487,686 4,701,648
(2) Proposal to amend the 1993 Director's Stock Option Plan to
increase by 120,000 shares the number of shares of common stock
authorized for issuance under the plan.
Votes For Votes Against Abstain Broker Non-Vote
--------- ------------- ------- ---------------
31,093,845 8,016,570 493,701 4,673,748
(3) Proposal to ratify the appointment of PricewaterhouseCoopers LLP
as the independent public accountants of the Company for the
fiscal year ending March 31, 2001.
Votes For Votes Against Abstain
--------- ------------- -------
39,420,867 4,835,175 21,822
ITEM 5. OTHER INFORMATION
On November 4, 1999 Plantronics'June 29, 2000, our Board of Directors authorizedapproved an increase in the Company to
increase its existing stock repurchase program by an additional 500,000 shares.
During the quarter we repurchased 408,000 shares of our common stock. As of
January 24, 2000 there remained 328,907 shares to be repurchased under the
existing program, which represents approximately 2%membership
of the 16,178,334 sharesBoard of common stock outstanding as December 24, 1999.
On December 30, 1999, Plantronics closedDirectors increased by one to eight (8) members and elected
Patti Hart to fill the acquisitionnewly created vacancy. Ms. Hart is President and Chief
Executive Officer of ClearVox
Communications,Telocity, Inc., a privately held California corporation. The purchase
priceleading provider of broadband services to
the residential market. Prior to joining Telocity, Ms. Hart was not material to Plantronics. We expect the transaction to haveat Sprint
Corporation, where she served as President and Chief Operating Officer of
Sprint's Long Distance Division from February 1994 through April 1999. Ms. Hart
is also a minimal effect on our reported earning per share (EPS) during the fourth fiscal
quartermember of the current fiscal year,board of directors of Brigade Solutions, Mariner
Networks, Illinois State University Foundation, Starbright Foundation, Committee
of 200 and expect the acquisitionSteppenwolf Theatre in Chicago, Illinois.
See Notes to be nominally
accretive to EPS beginning in the first fiscal quarter of the Company's fiscal
2001 which commences on April 2, 2000.Unaudited Condensed Consolidated Financial Statements
19
20
PLANTRONICS, INC.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS & REPORTS ON FORM 8-K
(a) Exhibits. The following exhibit is filed as part of this Quarterly
Report on Form 10-Q.
Exhibit
Number Description
------ -----------
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed by Registrant
during the fiscal quarter ended December 31, 1999.June 30, 2000.
Items 1, 2 3 and 43 are not applicable and have been omitted.
17See Notes to Unaudited Condensed Consolidated Financial Statements
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SIGNATURE21
PLANTRONICS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PLANTRONICS, INC.
(Registrant)
FEBRUARY 8,AUGUST 15, 2000 By: /s/ Barbara V. Scherer
- ---------------- ------------------------------------------------------ ------------------------------------
(Date) (Signature)
Barbara V. Scherer
Senior Vice President - Finance and
Administration and Chief Financial
Officer
(Principal Financial Officer and Duly
Authorized Officer of the Registrant)
18See Notes to Unaudited Condensed Consolidated Financial Statements
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1922
INDEX TO EXHIBITS
Exhibit
Number Description
-
------ -----------
27 Financial Data Schedule