Exhibit 99.2
On October 2, 2009, Plantronics, Inc. (“Plantronics” or “the Company”) and certain of its foreign subsidiaries entered into an Asset Purchase Agreement (the “Agreement”) with Audio Technologies Acquisition, LLC, a Delaware limited liability corporation (“the Purchaser”) an affiliate of Prophet Equity, L.P., a Southlake, Texas based private equity firm, for the sale of certain assets of Altec Lansing, the Audio Entertainment Group (“AEG”) business segment of the Company (the “Transaction”), for a purchase price of $18 million in cash, subject to certain post-closing adjustments. Pursuant to the Agreement, the Purchaser will acquire substantially all the assets associated with the AEG business, including customer and vendor contracts, certain patents and trademarks and other intellectual property, inventory, property, plant and equipment, and the name Altec Lansing. In addition, the Purchaser will assume certain liabilities related to AEG.
On December 1, 2009, Plantronics entered into a First Amendment to the Asset Purchase Agreement (the “Amendment”) by and among Altec Lansing, LLC (f/k/a Audio Technologies Acquisition, LLC), a Delaware limited liability company (“Altec”), Audio Technologies Acquisition B.V., a private limited liability company organized under the laws of the Netherlands (“Altec B.V.”), Plantronics and Plantronics B.V., a private limited liability company organized under the laws of the Netherlands (“Plantronics BV”) which amends the Agreement, dated as of October 2, 2009 by and among the Purchaser, Plantronics and Plantronics B.V. (as amended by the Amendment, the “Purchase Agreement”). Altec and Altec B.V. are collectively referred to herein as the “Purchasers”. The Purchasers are affiliates of Prophet Equity, L.P.
The Amendment (i) extended the termination date of the Purchase Agreement to December 1, 2009, (ii) reduced the purchase price by $1,800,000 to account for the change in the estimated value of net assets being delivered at closing together with the negotiated after-tax value of Altec Lansing's income in November, (iii) addressed certain employee matters and (iv) made certain other changes as set forth in the Amendment. Plantronics and certain of its affiliates completed the sale of Altec Lansing, its AEG business segment, to the Purchasers on December 1, 2009.
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2009 set forth below has been presented after giving effect to the sale of AEG as if it had occurred on September 30, 2009. The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the six month period ended September 30, 2008 and 2009 and the fiscal years ended March 31, 2007, 2008 and 2009, set forth below has been presented after giving effect to the sale of AEG as if it had occurred on April 1, 2006. The Company will account for the sale of AEG as a discontinued operation in its consolidated financial statements effective in the third quarter of fiscal 2010 for all periods presented.
The unaudited pro forma consolidated financial information has been provided for informational purposes and should not be considered indicative of the financial condition or results of operations that would have been achieved had the divestiture occurred as of the periods presented. In addition, the unaudited pro forma financial information does not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The unaudited pro forma financial statement information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its Annual Report on Form 10-K for the year ended March 31, 2009 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.
PLANTRONICS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
| | | | | | | | | | | |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET | | | | | |
| | | As of September 30, 2009 | |
| | | | | | | | | | | |
| | | | | | Sale of Altec | | | | | |
| | | Historical | | | Lansing (1) | | | | Pro Forma | |
| ASSETS | | | | | | | | | | |
| Cash and cash equivalents | | $ | 244,170 | | | $ | 11,075 | | a | | $ | 255,245 | |
| Short-term investments | | | 24,999 | | | | - | | | | | 24,999 | |
| Total cash, cash equivalents, and | | | | | | | | | | | | | |
| short-term investments | | | 269,169 | | | | 11,075 | | | | | 280,244 | |
| Accounts receivable, net | | | 103,003 | | | | 4,795 | | d | | | 107,798 | |
| Inventory, net | | | 100,024 | | | | (21,998 | ) | c | | | 78,026 | |
| Deferred income taxes | | | 12,765 | | | | - | | | | | 12,765 | |
| Other current assets | | | 17,191 | | | | 5,125 | | b | | | 22,316 | |
| Assets held for sale | | | 9,267 | | | | - | | | | | 9,267 | |
| Total current assets | | | 511,419 | | | | (1,003 | ) | | | | 510,416 | |
| Long-term investments | | | 22,015 | | | | - | | | | | 22,015 | |
| Property, plant and equipment, net | | | 71,224 | | | | (828 | ) | c | | | 70,396 | |
| Intangibles, net | | | 4,067 | | | | - | | | | | 4,067 | |
| Goodwill | | | 14,005 | | | | - | | | | | 14,005 | |
| Other assets | | | 10,978 | | | | - | | | | | 10,978 | |
| Total assets | | $ | 633,708 | | | $ | (1,831 | ) | | | $ | 631,877 | |
| | | | | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | | | | | |
| Accounts payable | | $ | 34,315 | | | $ | - | | | | $ | 34,315 | |
| Accrued liabilities | | | 54,005 | | | | (1,097 | ) | d | | | 52,908 | |
| Total current liabilities | | | 88,320 | | | | (1,097 | ) | | | | 87,223 | |
| Long-term income taxes payable | | | 14,215 | | | | - | | | | | 14,215 | |
| Other long-term liabilities | | | 991 | | | | - | | | | | 991 | |
| Total liabilities | | | 103,526 | | | | (1,097 | ) | | | | 102,429 | |
| Stockholders' equity | | | 530,182 | | | | (734 | ) | e | | | 529,448 | |
| Total liabilities and stockholders' equity | | $ | 633,708 | | | $ | (1,831 | ) | | | $ | 631,877 | |
| | | | | | | | | | | | | | |
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| (1) | Effective December 1, 2009, Plantronics and certain of its affiliates completed the sale of Altec Lansing, its Audio Entertainment Group ("AEG") business segment. The adjustments presented represent the removal of the book value of assets and liabilities based on their carrying amounts at September 30, 2009 that would transfer as part of the sale. The value of the assets and liabilities that will actually transfer upon the sale will differ from the amounts presented. |
| | |
| | The pro forma adjustments are as follows: |
| | |
| | a. | To record the cash consideration received from the Purchaser. |
| | |
| | b. | To record the escrow amounts due from the Purchaser at future dates. |
| | |
| | c. | To eliminate the assets sold to Purchaser. |
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| | d. | To eliminate the liabilities assumed by Purchaser, including sales-related reserves assumed by the Purchaser. |
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| | e. | Solely for purposes of the pro-forma balance sheet, to record the preliminary loss on the sale of AEG as if the transaction had been consummated on September 30, 2009 applying the actual purchase price to the net assets as of September 30, 2009. The loss calculation is preliminary and will change upon the finalization of Plantronics' financial statements for the quarter ended December 31, 2009, including the completion of the income tax accounting associated with the sale. Plantronics expects to record a pre-tax loss of approximately $0.7 million calculated as follows: |
| | Proceeds from sale | | $ | 16,200 | |
| | Assets sold | | | (22,826 | ) |
| | Liabilities assumed, including sales related reserves | | | 5,892 | |
| | Pro forma estimated loss on sale | | $ | (734 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (in thousands, except per share data) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| | | Six Months Ended | | | Six Months Ended | |
| | | September 30, 2008 | | | September 30, 2009 | |
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | Sale of Altec | | | | | | | | | Sale of Altec | | | |
| | | Historical | | | Lansing (1) | | | Pro Forma | | | Historical | | | Lansing (1) | | | Pro Forma | |
| | | | | | | | | | | | | | | | | | | | | |
| Net revenues | | $ | 436,020 | | | $ | (42,144 | ) | | | $ | 393,876 | | | $ | 327,540 | | | $ | (41,920 | ) | | | $ | 285,620 | |
| Cost of revenues | | | 251,368 | | | | (39,408 | ) | | | | 211,960 | | | | 187,298 | | | | (34,613 | ) | | | | 152,685 | |
| Gross profit | | | 184,652 | | | | (2,736 | ) | | | | 181,916 | | | | 140,242 | | | | (7,307 | ) | | | | 132,935 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Research, development and engineering | | | 38,545 | | | | (4,469 | ) | | | | 34,076 | | | | 30,258 | | | | (3,047 | ) | | | | 27,211 | |
| Selling, general and administrative | | | 96,143 | | | | (10,835 | ) | | | | 85,308 | | | | 74,921 | | | | (8,824 | ) | | | | 66,097 | |
| Restructuring and other related charges | | | 235 | | | | (235 | ) | | | | - | | | | 1,454 | | | | (19 | ) | | | | 1,435 | |
| Impairment of long-lived assets | | | - | | | | - | | | | | - | | | | 25,194 | | | | (25,194 | ) | | | | - | |
| Total operating expenses | | | 134,923 | | | | (15,539 | ) | | | | 119,384 | | | | 131,827 | | | | (37,084 | ) | | | | 94,743 | |
| Operating income | | | 49,729 | | | | 12,803 | | | | | 62,532 | | | | 8,415 | | | | 29,777 | | | | | 38,192 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest and other income (expense), net | | | (1,630 | ) | | | - | | | | | (1,630 | ) | | | 2,231 | | | | - | | | | | 2,231 | |
| Income before income taxes | | | 48,099 | | | | 12,803 | | | | | 60,902 | | | | 10,646 | | | | 29,777 | | | | | 40,423 | |
| Income tax expense | | | 9,957 | | | | 4,845 | | (3) | | | 14,802 | | | | 742 | | | | 11,280 | | (3) | | | 12,022 | |
| Net income | | $ | 38,142 | | | $ | 7,958 | | | | $ | 46,100 | | | $ | 9,904 | | | $ | 18,497 | | | | $ | 28,401 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 0.78 | | | $ | 0.16 | | | | $ | 0.95 | | | $ | 0.20 | | | $ | 0.38 | | | | $ | 0.58 | |
| Diluted | | $ | 0.77 | | | $ | 0.16 | | | | $ | 0.93 | | | $ | 0.20 | | | $ | 0.38 | | | | $ | 0.58 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Shares used in computing earnings per share: | | | | | | | | | | | | | | | | | | | |
| Basic | | | 48,738 | | | | 48,738 | | | | | 48,738 | | | | 48,632 | | | | 48,632 | | | | | 48,632 | |
| Diluted | | | 49,362 | | | | 49,362 | | | | | 49,362 | | | | 49,118 | | | | 49,118 | | | | | 49,118 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (in thousands, except per share data) | |
| | | | | | | | | | | |
| | | Year Ended | |
| | | March 31, 2009 | |
| | | | | | | | | | | |
| | | | | | Sale of Altec | | | | | |
| | | Historical | | | Lansing (1) | | | | Pro Forma | |
| | | | | | | | | | | |
| Net revenues | | $ | 765,619 | | | $ | (91,029 | ) | | | $ | 674,590 | |
| Cost of revenues | | | 469,591 | | | | (86,932 | ) | | | | 382,659 | |
| Gross profit | | | 296,028 | | | | (4,097 | ) | | | | 291,931 | |
| | | | | | | | | | | | | | |
| Research, development and engineering | | | 72,061 | | | | (8,221 | ) | | | | 63,840 | |
| Selling, general and administrative | | | 175,601 | | | | (19,923 | ) | | | | 155,678 | |
| Restructuring and other related charges | | | 12,074 | | | | (1,122 | ) | | | | 10,952 | |
| Impairment of goodwill and long-lived assets | | | 117,464 | | | | (117,464 | ) | | | | - | |
| Total operating expenses | | | 377,200 | | | | (146,730 | ) | | | | 230,470 | |
| Operating income (loss) | | | (81,172 | ) | | | 142,633 | | | | | 61,461 | |
| | | | | | | | | | | | | | |
| Interest and other income (expense), net | | | (3,544 | ) | | | - | | | | | (3,544 | ) |
| Income (loss) before income taxes | | | (84,716 | ) | | | 142,633 | | | | | 57,917 | |
| Income tax expense (benefit) | | | (19,817 | ) | | | 33,094 | | (3) | | | 13,277 | |
| Net income (loss) | | $ | (64,899 | ) | | $ | 109,539 | | | | $ | 44,640 | |
| | | | | | | | | | | | | | |
| Earnings (loss) per common share: | | | | | | | | | | | | | |
| Basic | | $ | (1.34 | ) | | $ | 2.25 | | | | $ | 0.92 | |
| Diluted | | $ | (1.34 | ) | | $ | 2.25 | | | | $ | 0.91 | |
| | | | | | | | | | | | | | |
| Shares used in computing earnings (loss) per share: | |
| Basic | | | 48,589 | | | | 48,589 | | | | | 48,589 | |
| Diluted | | | 48,589 | | | | 48,589 | | | | | 48,947 | (2) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (in thousands, except per share data) | |
| | | | | | | | | | | |
| | | Year Ended | |
| | | March 31, 2008 | |
| | | | | | | | | | | |
| | | | | | Sale of Altec | | | | | |
| | | Historical | | | Lansing (1) | | | | Pro Forma | |
| | | | | | | | | | | |
| Net revenues | | $ | 856,286 | | | $ | (108,351 | ) | | | $ | 747,935 | |
| Cost of revenues | | | 507,181 | | | | (103,318 | ) | | | | 403,863 | |
| Gross profit | | | 349,105 | | | | (5,033 | ) | | | | 344,072 | |
| | | | | | | | | | | | | | |
| Research, development and engineering | | | 76,982 | | | | (11,249 | ) | | | | 65,733 | |
| Selling, general and administrative | | | 189,156 | | | | (25,983 | ) | | | | 163,173 | |
| Restructuring and other related charges | | | 3,584 | | | | (3,584 | ) | | | | - | |
| Total operating expenses | | | 269,722 | | | | (40,816 | ) | | | | 228,906 | |
| Operating income | | | 79,383 | | | | 35,783 | | | | | 115,166 | |
| | | | | | | | | | | | | | |
| Interest and other income, net | | | 5,854 | | | | - | | | | | 5,854 | |
| Income before income taxes | | | 85,237 | | | | 35,783 | | | | | 121,020 | |
| Income tax expense | | | 16,842 | | | | 12,573 | | (3) | | | 29,415 | |
| Net income | | $ | 68,395 | | | $ | 23,210 | | | | $ | 91,605 | |
| | | | | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | | | | |
| Basic | | $ | 1.42 | | | $ | 0.48 | | | | $ | 1.90 | |
| Diluted | | $ | 1.39 | | | $ | 0.47 | | | | $ | 1.87 | |
| | | | | | | | | | | | | | |
| Shares used in computing earnings per share: | |
| Basic | | | 48,232 | | | | 48,232 | | | | | 48,232 | |
| Diluted | | | 49,090 | | | | 49,090 | | | | | 49,090 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | |
| UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |
| (in thousands, except per share data) | |
| | | | | | | | | | | |
| | | Year Ended | |
| | | March 31, 2007 | |
| | | | | | | | | | | |
| | | | | | Sale of Altec | | | | | |
| | | Historical | | | Lansing (1) | | | | Pro Forma | |
| | | | | | | | | | | |
| Net revenues | | $ | 800,154 | | | $ | (123,640 | ) | | | $ | 676,514 | |
| Cost of revenues | | | 491,339 | | | | (110,305 | ) | | | | 381,034 | |
| Gross profit | | | 308,815 | | | | (13,335 | ) | | | | 295,480 | |
| | | | | | | | | | | | | | |
| Research, development and engineering | | | 71,895 | | | | (10,312 | ) | | | | 61,583 | |
| Selling, general and administrative | | | 182,108 | | | | (30,251 | ) | | | | 151,857 | |
| Gain on sale of land | | | (2,637 | ) | | | - | | | | | (2,637 | ) |
| Total operating expenses | | | 251,366 | | | | (40,563 | ) | | | | 210,803 | |
| Operating income | | | 57,449 | | | | 27,228 | | | | | 84,677 | |
| | | | | | | | | | | | | | |
| Interest and other income, net | | | 4,089 | | | | - | | | | | 4,089 | |
| Income before income taxes | | | 61,538 | | | | 27,228 | | | | | 88,766 | |
| Income tax expense | | | 11,395 | | | | 10,314 | | (3) | | | 21,709 | |
| Net income | | $ | 50,143 | | | $ | 16,914 | | | | $ | 67,057 | |
| | | | | | | | | | | | | | |
| Earnings per common share: | | | | | | | | | | | | | |
| Basic | | $ | 1.06 | | | $ | 0.36 | | | | $ | 1.42 | |
| Diluted | | $ | 1.04 | | | $ | 0.35 | | | | $ | 1.40 | |
| | | | | | | | | | | | | | |
| Shares used in computing earnings per share: | |
| Basic | | | 47,361 | | | | 47,361 | | | | | 47,361 | |
| Diluted | | | 48,020 | | | | 48,020 | | | | | 48,020 | |
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| (1) | These adjustments reflect the elimination of the historical operations of Altec Lansing, the Audio Entertainment Group (“AEG”) business segment of the Company for the six months ended September 30, 2008 and 2009 and the fiscal years ended March 31, 2007, 2008 and 2009. The Company's fiscal year ends on the Saturday closest to the last day of March. For purposes of presentation, the Company has indicated its accounting year as ending on March 31. Effective as of December 1, 2009, the sale of AEG was completed. The Company will account for the sale of AEG as a discontinued operation in its consolidated financial statements effective in the third quarter of fiscal 2010 for all periods presented. |
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| (2) | As the Company incurred a GAAP net loss for the year ended March 31, 2009, the inclusion of stock options in the shares used for computing diluted earnings per share would have been anti-dilutive and would have reduced the net loss per share. However, as we have pro forma net income, the diluted shares used for the pro forma diluted earnings per share includes the effect of stock options. |
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| (3) | Pro forma income tax expense is based on preliminary estimates and subject to change upon completion of the tax accounting related to the discontinued operations. |
