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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED MARCH 27, 1999 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, P.O. BOX 1802
SANTA CRUZ, CALIFORNIA 95061-1802
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (831) 426-5858
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
COMMON STOCK, $.01 PAR VALUE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, based upon the closing price of $61.94 for shares of the
registrant's Common Stock on June 4, 1999 as reported by the New York Stock
Exchange, was approximately $673,156,983. In calculating such aggregate market
value, shares of Common Stock owned of record or beneficially by officers,
directors, and persons known to the registrant to own more than five percent of
the registrant's voting securities (other than such persons of whom the Company
became aware only through the filing of a Schedule 13G filed with the Securities
and Exchange Commission) were excluded because such persons may be deemed to be
affiliates. The registrant disclaims the existence of control or any admission
thereof for any other purpose.
Number of shares of Common Stock outstanding as of June 4, 1999: 16,716,922.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference in Parts I, II, III
and IV of this Annual Report on Form 10-K: (1) portions of registrant's annual
report to security holders for the fiscal year ended March 27, 1999 (Parts I, II
and IV) and (2) portions of registrant's proxy statement for its annual meeting
of stockholders to be held on July 20, 1999 (Part III).
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PLANTRONICS, INC.
1999 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PAGE
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PART I
Item 1. Business....................................................................................... 3
Item 2. Properties..................................................................................... 13
Item 3. Legal Proceedings.............................................................................. 13
Item 4. Submission of Matters to a Vote of Security-Holders............................................ 13
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters........................... 14
Item 6. Selected Financial Data........................................................................ 14
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.......... 14
Item 8. Financial Statements and Supplementary Data.................................................... 20
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure........... 21
PART III
Item 10. Directors and Executive Officers of the Registrant............................................. 22
Item 11. Executive Compensation 22
Item 12. Security Ownership of Certain Beneficial Owners and Management................................. 22
Item 13. Certain Relationships and Related Transactions................................................. 22
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K............................... 23
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Plantronics, the logo design, Plantronics and the logo design together, Clarity,
Encore, FreeHand, Mirage, PLX, Silent Sentry, SoundGuard, StarSet, Supra and
TriStar are registered United States trademarks of Plantronics, Inc. AirSet,
DuoSet, Headset Switcher, Practica, Quick Disconnect, SoundGuard Plus, the clear
color and the curvature of the Plantronics voice tube, Vista and Walker are
trademarks of Plantronics, Inc. Certain of the foregoing trademarks are
registered trademarks in certain foreign countries. This report also includes
trademarks of companies other than Plantronics.
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PART I
CERTAIN FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K 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. Such statements include, our belief that the
number of call center users will continue to grow (at page 3 of this Annual
Report), our belief that the current level of adoption of headsets in the office
presents a long-term opportunity to increase headset sales to office workers (at
page 4), our intent to ship a full line of headsets for use with computers (at
page 8), our intent to increase our spending for research, development and
engineering in subsequent fiscal years (at page 8), our belief that
technological advances in managing telephone calls will be more than offset by
the expansion of telemarketing and catalog sales (at page 9), the belief that
our experience in design and manufacture of comfortable and well fitting
headsets for use in the call center will assist us in our efforts to sell
headset products in the office and residential market segments (at page 9), and
our intent to continue to seek patents on our inventions when appropriate (at
page 10). In addition, we may from time to time make oral forward-looking
statements. Such forward-looking statements are based on current expectations
and entail various risks and uncertainties. Our actual results could differ
materially from those anticipated in such forward-looking statements as a result
of a number of factors, including without limitation those factors discussed in
the Risk Factors section of this Report commencing at page 14. This Annual
Report on Form 10-K and should be read in conjunction with the condensed
consolidated financial statements and related notes set forth in our Annual
Report to security holders for the fiscal year ended March 27, 1999, and the
section titled Management's Discussion and Analysis of Financial Condition and
Results of Operation of such Annual Report to security holders.
ITEM 1. BUSINESS
GENERAL
Plantronics, Inc. ("we", the "Company" or the "Registrant") is a leading
designer, manufacturer and marketer of lightweight communications headsets and
headset accessories and services. In addition, we manufacture and market
specialty telephone products, such as amplified telephone handsets and specialty
telephones for hearing-impaired users, and noise-canceling handsets for use in
high-noise environments.
Our headsets, which can be worn over the head, in the ear or on either ear,
are recognized in the industry for their safety, quality and reliability. Our
headset products are used worldwide by call center users, such as telemarketing
personnel, reservation agents, telephone operators and air traffic controllers,
whose occupations involve the constant use of a telephone or communications
console. In North America and Europe, the number of call center users has grown
significantly over the last 10 years. The use of headsets by call center users
has become an industry standard. While we believe that the number of call center
users in these geographic markets will continue to grow, we expect that the
primary source of future sales in this market segment will result from repeat
sales to existing customers, including the replacement of products presently in
use with new and improved products.
We have well-developed distribution channels in North America and Europe,
where growth of telemarketing activities and deregulation of the telephone
companies have led to more widespread use of telephone headsets. Our headsets
are also becoming more widely used in the Middle East, Africa, Australia, the
Far East and Latin America. The potential for growth in the foreign market
segments is the result of such developments as the rapid expansion of the
telecommunications infrastructure and increasing worldwide use of telemarketing
techniques.
We also sell headsets in the business and home office user market segment,
which we have identified as an area of long-term growth potential. Users in this
market segment consist of business executives, agents, brokers, lawyers,
accountants, home office business people and other professionals whose
occupations may require intensive (but not constant) use of a telephone. The
business and home office user market segment can be divided into users who
attach their headsets to telephones, cellular telephones or to computers. The
use of headsets for mobile communications and as computer peripherals is a
significant growth area for headset sales. Potential applications in this market
segment include mobile communications, voice recognition, personal computer
conferencing, computer telephony integration ("CTI"), and multimedia
applications.
We sell our headsets to a broad and diverse group of end-user customers
worldwide, including regional telephone operating companies worldwide, operators
of private telephone networks, and governmental agencies in the United States.
We distribute our products through large electronics wholesalers, specialized
headset distributors, directly to original equipment manufacturers
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("OEMs"), and through retail channels, such as office supply and consumer
electronics stores, mail order catalogs, warehouse clubs and office supply
distributors.
INDUSTRY BACKGROUND
Headsets are used in call centers, offices, cars and homes and with various
terminal devices such as wireline, cellular and cordless telephones and
computers. Specifically, headsets:
- allow people to have both hands free to use a computer, take notes,
organize files, drive a car, complete household tasks or perform other
tasks while they talk on the telephone;
- provide increased sound quality to telephone users by reducing
background noise;
- relieve the repetitive stress and discomfort associated with placing a
telephone handset between the shoulder and neck; o allow people to use
speech recognition software instead of keyboards for faster, more
convenient writing with a computer; and
- provide greater privacy than speakerphones.
The largest group of headset users are call center agents who are on the
telephone throughout their work day. The number of call center agents has grown
as companies have sought to (i) focus on customer service to provide a
competitive advantage, (ii) reduce costs through the use of real-time
centralized information exchange and customer interaction, and (iii) make
greater use of cost-effective direct distribution models. As the benefits of
call centers become more widely recognized and the system cost per agent
declines, the establishment of call centers is spreading to smaller
organizations and international firms. Agent productivity in call centers is
important in minimizing costs and reducing customer wait time, and, therefore,
the ability to effectively and simultaneously use a telephone and keyboard is
critical. As the call center market segment has grown, the benefits of headsets
have become widely recognized as an essential component of a productive and safe
workplace.
The office market segment, both corporate and small office/home office
("SOHO"), has become an increasingly important market segment for headsets over
the last five years. The increasing and simultaneous use of telephones and
computers by office workers and a growing awareness of the benefits of headsets
have contributed to the growth of this market segment. Professionals who spend
significant time on the telephone have been early adopters of headset products.
These professionals include securities brokers, insurance agents, sales
executives, credit controllers, and purchasing agents. We believe that the level
of headset use in the office is low, providing a long-term opportunity to
increase headset sales to office workers.
Headset demand is also emerging in the mobile, computer and residential
market segments. Drivers increasingly seek the hands-free benefits of headsets,
as the use of mobile phones in cars continues to grow worldwide. Headsets are
also an important interface for computerized speech recognition programs, which
broaden the application of headsets from voice to written communication by
substituting voice for keyboard entry. Finally, the availability of low-cost
cordless phones with headset ports is beginning to facilitate headset adoption
in the residential market segment by individuals who want the ability to perform
multiple tasks while speaking on the telephone.
INDUSTRY SEGMENTS AND FOREIGN OPERATIONS
We operate in one industry segment. Financial information about foreign and
domestic operations and export sales, included in Note 9 to our Consolidated
Financial Statements, appearing at page 19 of our 1999 Annual Report to
Stockholders is incorporated herein by this reference.
In each of the past three fiscal years (fiscal 1999, 1998 and 1997)
approximately 30.5% of our net sales were derived from sales to foreign
customers. Sales to foreign customers are generally subject to such risks as
fluctuations in exchange rates, increased tariffs and the imposition of other
trade barriers. We do not currently engage in any hedging activities to mitigate
exchange rate risks and to date have not been adversely affected by fluctuating
currencies. To the extent that we are successful in increasing our sales to
foreign customers, or to the extent that we increase our transactions in foreign
currencies, our results of operations could be adversely affected by exchange
rate fluctuations.
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PRODUCTS
Our product line consists of lightweight communications headsets, headset
accessories and services, and specialty telephone products. Our headsets
incorporate unique features that we believe offer compelling performance
advantages:
- Comfort. We maintain what we believe is the industry's most extensive
database for the design of comfortable headsets. Our database includes
measurements from over 800 physical molds taken of different ear
types. The measurements are digitized and stored in a CAD/CAM database
along with critical head contour measurements. In addition, we study
weight drag to determine optimum weight distribution on the ear. We
believe our focus on ergonomics has been critical to our success in
designing products which are more comfortable, including our more
recent adjustable Encore and TriStar product families.
- Sound Quality. In designing our products, we have conducted headset
sound quality (e.g. preference and intelligibility) research on
substantially all telephone systems in both listening and speaking
modes. We believe we have achieved the industry's best signal-to-noise
ratios, the most powerful noise canceling performance (to block out
background sounds in unusually loud environments) and the only design
(the trademark clear and curved Plantronics Voice Tube - the "Voice
Tube") which does not require the microphone boom to be positioned
precisely for proper functioning and is ideal for most office and call
center environments. The Voice Tube design has the additional benefits
of a more attractive appearance, easy hygienic replacement, and
lighter weight. The Encore product family also incorporates what we
believe is the industry's only tone control in a headset top.
- Durability. We have over 37 years of experience understanding headset
durability and have successfully incorporated this knowledge into
certain product designs which we believe generally last longer than
the best comparable competitive products.
In addition to the features incorporated into our products, we provide
service, support, supplies and accessories. We believe our customer support and
service program provides our end users and customers with easier access to
Plantronics and is an important competitive advantage.
HEADSETS
Headsets consist of two distinct units. The "top," which is the portion
that the user wears and which is comprised of the receiver capsule and voice
tube, and the "bottom," or amplifier adapter which interfaces with the telephone
or other equipment. Both units are currently required in most applications. In
some circumstances, however, the interface is built into the telephone, computer
or other equipment with which the headset is being used, allowing use of the
"top" alone.
There are four basic headset "top" styles:
- Over-the-head headsets with ear cushions. The Supra headset is an
over-the-head model available with sound reception in one or both
ears, and the unit's dual ear cushions help block out background
noise. We introduced a new product in this category in fiscal
year 1996, the Encore headset, with a design developed from data
in our human factors database. The Encore headset features all of
the qualities of the Supra headset, plus user-controllable tone
adjustment.
- Behind-the-ear headsets with a receiver that rests on either ear.
The Mirage headset uses a miniaturized behind-the-ear capsule.
Attached to it is a small disc-shaped receiver that rotates to
fit against either ear. The receiver rests gently on the ear, not
in it.
- Behind-the-ear headsets with an ear tip. The StarSet headset is
the distinctive Plantronics headset that uses a small capsule
that fits behind and in the outer portion of the ear. Sound is
delivered to the ear by an acoustic ear tip. The headset is
extremely lightweight, requiring no headband, and the ear tip's
acoustic coupling provides exceptional sound quality. The TriStar
headset, the industry's lightest commercial headset, was
introduced during fiscal year 1996. This product features maximum
user adjustments for excellent stability, comfort and sound
quality.
- Headsets that rest in the outer portion of the ear. The FreeHand
headset, introduced during fiscal year 1995, offers a functional
and lightweight design that allows it to be easily and quickly
placed on or removed from its position in the outer portion of
the ear with one hand. Its adjustable microphone boom may be
rotated for optimum transmit
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performance. Our CAT132 and CHS132 models are versions of the
FreeHand headset designed for use with personal computers and
mobile telephones, respectively.
We manufacture a broad line of headset top styles, which can be worn over
the head, in the ear or on either ear. Most of our headsets offer either the
proprietary Plantronics Voice Tube (our most popular solution, suitable for the
majority of environments) or a noise-canceling microphone (appropriate for users
in very loud environments). All telephone-based headset tops, in conjunction
with their associated bases, are designed for use with substantially all of the
different telephone systems currently available. Basic models include features
such as user volume control, a mute switch and quick-disconnect, which allows
users to leave the phone without removing their headsets or disconnecting their
call.
Our principal headset top styles and major products in each category are as
follows:
PRODUCT DESCRIPTION FEATURES
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OVER-THE-HEAD HEADSETS WITH EAR CUSHIONS
SUPRA Our most popular headset, ideal for Engineered for sound quality and durability.
phone-intensive jobs and call center Sound reception in one or both ears.
environments.
ENCORE Also used in call centers; designed for User-controllable tone adjustment and powerful
near-universal fit and all-day comfort. noise canceling performance.
BEHIND-THE-EAR HEADSETS
MIRAGE Uses a miniaturized behind-the-ear capsule Rests gently on the ear, not in the ear. Can be
with an adjustable receiver. worn on either ear.
STARSET Has an acoustic eartip that fits gently in Ultra-lightweight, with an acoustic seal to block
the outer portion of the ear. out unwanted background noise.
TRISTAR Stylish design for phone intensive jobs and Feather-weight ( 1/2 ounce), with maximum user
call center environments. adjustments designed for stability, comfort and
sound quality.
IN-THE-OUTER-PORTION-OF-THE-EAR HEADSET
FREEHAND Designed for business professionals, this Small and unobtrusive, easy to put on and
headset features a small earbud which rests take off.
comfortably in the ear.
CONVERTIBLE HEADSET
DUOSET Appropriate for business professionals who Easily convertible from over-the-head to
want a headband for longer calls as well as over-the-ear for greater versatility.
an over-the-ear headset for intermittent
phone use.
COMPUTER HEADSETS
SR1 Speech recognition headset for use with Monaural headset with noise canceling
speech recognition applications and general microphone in a lightweight over-the-head
use with the computer. form.
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LS1 Multimedia stereo headset for use with Lightweight stereo headset with noise
speech recognition applications and canceling microphone and an inline control
multimedia applications. module for speaker volume and microphone
mute.
HS1 Gaming headset for use with all multimedia High fidelity speakers with dynamic bass
applications and computer games, as well as response, a noise canceling microphone
voice recognition and voice command swings out of the way when not needed.
applications. Complete with an inline control module for
speaker volume and microphone mute.
MOBILE HEADSETS
CHS LINE Available in various styles, including Reduces background noise and can be used
over-the-head and over-the-ear. with both cellular and PCS phones.
CORDLESS HEADSET
CT-901-HS 900 MHz cordless headset telephone. Provides extended cordless mobility with
hands-free convenience.
BUNDLED HEADSETS
SP/PLX SERIES Designed specially for the SOHO user; sold Offers comfort and ease of use.
with an adapter or telephone.
PRACTICA SERIES Designed for low to medium intensive phone Offers good sound quality and durability at
users who require a less expensive headset; an attractive retail price.
sold with an adapter or telephone.
HEADSET AMPLIFIERS AND TELEPHONES
We sell a full range of amplifiers or "bases" designed to work with
substantially all telephone systems. Our amplifiers include the following:
- Vista Universal Modular Amplifier -- compatible with single or
multi-line telephones; features the SoundGuard Plus system, which
provides volume control for improved audio comfort and clarity.
- Plug Prong Amplifier -- designed for automatic call distribution
systems.
- Headset Switcher Multimedia Amplifier -- allows for use with a
telephone or computer by simply flipping a switch.
- E-10 In-Line Amplifier -- designed for use directly on the
telephone line to reduce desk clutter.
- SP/PLX Series - single and two-line amplifiers or headset
telephones, bundled with a headset
- Practica Series - entry level amplifier or telephone system,
bundled with a headset
- Wireless Amplifier - the CT-901 900 MHz cordless amplifier
- Mobile Phone Adapters -- designed for use with cellular and PCS
phones lacking built-in headset ports.
Our Walker Equipment Division also sells the Clarity telephone, a
full-featured, single line telephone designed for hearing-impaired users. It
features volume control circuitry, oversized buttons, a ringer volume control
and a light that flashes when the telephone rings.
HEADSET ACCESSORIES AND SERVICES
Headset accessories include replacement voice tubes, training cords, ear
cushions, eartips, in-use indicators, theft protection devices and background
noise suppressors. These products allow end users to revitalize their headset
tops to maintain maximum performance and comfort. We support our product
offering with a service center which addresses consumer questions and provides
access to our full suite of product offerings and refurbishment accessories.
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SPECIALTY PRODUCTS
Through our Walker Equipment Division we also manufacture and sell
specialty telephone products including amplified telephones and handsets and
telephone amplifier accessories for the hearing-impaired and line test
equipment. The Walker Equipment Division sells special amplified and
noise-canceling handsets for high-noise environments, as well as for entry and
elevator phones and for use in telephone booths and information kiosks.
In addition, our specialty products operation provides headsets and other
equipment for special applications that are not served by our standard headset
product lines.
In Europe we developed the StarBase headset telephone, which is a
full-featured single-line telephone to which nearly all of our headsets may be
attached. This product enables many more businesses to use headsets for
non-operator functions.
PRODUCT DEVELOPMENT
Since the introduction of the original lightweight headset in 1962, the
user has been the primary focus of our design efforts. We maintain an extensive
database of head and ear shapes to assist in the development of our products.
Our concern for "human engineering" and our efforts to "design-in" comfort and
safety have resulted in such product innovations as a behind-the-ear capsule
(containing both microphone and receiver) designed to fit all users comfortably
and the SoundGuard Plus system, which provides volume control and improved audio
comfort and quality.
We have a number of product development programs currently underway,
including a new generation of headset systems, computer and mobile products, a
wireless product family and several core technology programs. In April 1999, we
announced the creation of a new division, the Computer Audio Systems Division
("CASD"). CASD was founded to develop headset solutions for an emerging
generation of speech applications. We have developed and will be shipping in
fiscal year 2000 a full line of headsets for use with personal computers. The
product line includes a speech recognition headset for office use, a speech
recognition/stereo headset for both office and home entertainment and a
multimedia/gaming headset for use with multimedia applications.
Most of our research and development is carried out by our in-house
engineering staff in the United States, England and Mexico. We supplement our
in-house engineering capabilities through selected outside contracting
arrangements. Research, development and engineering expenditures were $14.5
million, $17.5 million and $19.5 million for the fiscal years ended March 29,
1997, March 28, 1998 and March 27, 1999, respectively. We believe that
substantial investment in research and development is important for the Company
to maintain our position in the industry and, therefore, intend to increase our
spending for research, development and engineering in subsequent fiscal years.
Our product development efforts are directed toward both enhancing our
existing products and developing new products that capitalize on our core
technology and expand our product offerings to new user market segments. The
success of new product introductions is dependent on a number of factors,
including proper new product selection, timely completion and introduction of
new product designs, cost-effective manufacturing of such products, quality of
new products and market acceptance. To be successful in the future, we must be
able to develop new products, qualify these products with our customers,
successfully introduce these products to the market on a timely basis, and
commence and sustain volume production to meet customer demands. Although we
have attempted to determine the specific needs of the telephone, mobile
telephone, computer, individual and home office user segments of the market,
there can be no assurance that the market niches identified will in fact
materialize or that our existing and future products designed for these market
segments will gain substantial market acceptance. Further, assuming the market
segments develop and our products meet customer needs, there is no assurance
that such new products can be manufactured cost effectively to meet the
potential demand.
The technology of telephone headsets, both "tops" and "bottoms," has
traditionally evolved slowly. Products are currently exhibiting life cycles of
three to five years before introduction of the next generation of products,
which usually include stylistic changes and quality improvements, but have
historically been based on similar technology. We believe that future changes in
technology may come at a faster pace, particularly in the telephone, cellular
telephone and computer segments of the business and home office user portions of
the market. Our future success will be dependent in part on our ability to
develop products that utilize new technologies and to introduce them to the
marketplace successfully. In addition, in order to avoid product obsolescence,
we will have to monitor technological changes in telephony, as well as users'
demands for new technologies. Failure by the Company to keep pace with future
technological changes could materially adversely affect our revenues and
operating results.
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SALES AND DISTRIBUTION
Our principal customers are distributors, OEM partners and telephony
service providers who primarily sell our products in the call center and office
end-user market segments. Additionally, we sell into retail channels primarily
for the office market segment. We sell products to over 250 customers in more
than 60 countries.
Specialized headset distributors represent our largest distribution
channel. These distributors generally sell on a national basis, and the bulk of
their revenues are from headset sales. Electronics wholesalers represent our
second largest channel. They typically offer a wide variety of products from
multiple vendors to both resellers and end users.
OEMs supply to their customers automatic call distributor systems and other
telecommunications and computer equipment that utilize headsets. OEMs do not
typically manufacture their own headsets, and therefore they often distribute
Plantronics headsets on a private label or co-branded basis. We believe that we
are currently the predominant supplier of headsets to Lucent Technologies
(formerly part of AT&T) and, although Lucent Technologies does not account for
ten percent (10%) or more of our consolidated revenues, we believe that the loss
of that customer could have a material adverse effect on our business and
results of operations.
The telephony service provider channel is comprised of former Regional Bell
Operating Companies and other telephone service providers which purchase
headsets from us for use by their own agents. Certain of these service providers
also resell headsets to their customers.
The retail channel encompasses office supply and consumer electronics
retailers, warehouse clubs, consumer products and office supply distributors,
and catalog and mail order companies. Retailers primarily sell headsets to small
businesses, small offices and home offices.
We also make direct sales to certain government agencies, including NASA
and the FAA. In addition, certain of our distributors are authorized resellers
under a GSA schedule price list and sell our products to government customers
under that agreement.
We maintain a sales force in the United States and in various overseas
countries to provide ongoing customer support and service. We also employ
manufacturers' representatives to assist in selling through the retail channel.
BACKLOG
Our backlog of unfilled orders was $11.1 million on March 27, 1999,
compared to $31.4 million on March 28, 1998. This reduction in backlog is the
result of our efforts to increase customer service by reducing lead times,
defined as the average length of time between our receipt of an order and the
date which we ship the order. Generally, we are shipping products within two to
four weeks from receipt of an order, compared to longer lead times as of the end
of fiscal 1998. We include in backlog all purchase orders scheduled for delivery
over the next 12 months. Our backlog is generally subject to cancellation or
rescheduling by the customer on short notice with little or no penalty. While we
have not experienced any significant cancellations in the past, we do not
believe our backlog as of any particular date is indicative of actual sales for
any future period and therefore should not be used as a measure of future
revenue. Our business is not seasonal.
COMPETITION
We compete in several different market segments, specifically the call
center, the office and for residential use. There are a number of different
competitors in each of the market segments in which we compete. We believe the
principal competitive factors in our business are product reliability; product
features, comfort and fit; customer service and support; reputation;
distribution; ability to meet delivery schedules; warranty terms; product life;
and price. We believe that our brand name recognition, distribution network,
large user base and large number of product variations, together with our
extensive experience in designing safe, comfortable and reliable products,
dealing with regulatory agencies and servicing and repairing headsets, are the
key factors for the Company to maintain our position as a leading supplier of
lightweight communications headsets.
In the call center user segment of the market, we face different
competitors depending on the channel of distribution and the geographic
location. We anticipate that we may face additional indirect competition in this
market segment from technological advances such as interactive voice response
systems which require no human interface for certain applications, such as
account balance inquiries or airplane arrival and departure schedules. We
believe that this trend will be more than offset by the expansion of
telemarketing and catalog sales. Although we have historically competed very
successfully in the call center user segment of the market, there can be no
assurance that we will be able to continue our leadership position in that
segment of the market.
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Our market in the office, including both traditional offices and the small
or home office, and residential segments involves the sale of headsets for
connection to single line or office telephone systems, cellular telephones and
computers. Certain of the entities which are our competitors in the call center
user market currently sell headsets for use in the office and residential
segments. There are also certain competitors who sell exclusively outside the
call center segment. As we develop new generations of products and enter new
market segments, including the developing business and home office user segment
of the market, we anticipate that we may face additional competition from
companies which currently do not offer communication headsets. Such companies
may be larger, offer broader product lines and have substantially greater
financial and other resources than the Company. Such competition could
negatively affect pricing and gross margins. We believe that our experience in
design and manufacture of comfortable and well fitting headsets for use in the
call center will assist us in our efforts to sell headset products in the office
and residential market segments. However, there is no assurance that we will be
able to compete successfully in these newly developing market segments.
MANUFACTURING AND SOURCES OF MATERIALS
The majority of our manufacturing operations consists of assembly and
testing, substantially all of which is performed at our facility in Mexico. We
have smaller manufacturing operations in California, Georgia and the United
Kingdom. In addition, we outsource the manufacture of a limited number of
products to third parties.
We purchase the components for our headset products, including proprietary
semi-custom integrated circuits, amplifier boards and other electrical
components, from suppliers in the United States, Mexico, Asia and Europe.
Although most components and subassemblies used in our manufacturing operations
are obtained, or are reasonably available, from numerous sources, certain of our
products and components are currently procured only from single suppliers in
order to obtain volume pricing.
We generally manufacture our products to meet forecasted customer
requirements. Special products and large orders submitted with short lead times
are manufactured to order. Since most manufacturing occurs prior to the receipt
of purchase orders, Plantronics maintains an inventory of finished goods in
addition to inventories of raw materials, work in process and subassemblies and
components.
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 management believes that our current manufacturing operations comply in
all material respects with applicable environmental laws and regulations,
environmental legislation has been enacted and in the future may 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 related to one of our
discontinued businesses. While no claims have been asserted against us in
connection with this matter, there can be no assurance that such claims will not
be asserted in the future or that any resulting liability will not exceed the
amount of the reserve.
PATENTS AND TRADEMARKS
We maintain a program of seeking patent protection for our technology.
Significant product features for which we have, or is currently seeking, patent
protection include our StarSet II capsule design, SoundGuard receiver gain
compression integrated circuit, Mirage headset, Clarity frequency enhancing
telephone, battery-powered in-line amplifier with an automatic by-pass feature
to provide continuous receive signal when battery power gets low, integrated
circuit implementation for an audio amplifier operating at extremely low power
with an expander function for noise reduction in telephony applications, headset
receiver mechanical-acoustical tone control devices, earbud receiver positioning
mechanisms, self-configuring telephone interface units and various other
products and features including certain wireless technology and electronic
components. We presently have thirty-four patents in force, expiring in 2000 to
2018.
Our success will depend in part on our ability to obtain patents and
preserve other intellectual property rights covering the design and operation of
our products. We intend to continue to seek patents on our inventions when
appropriate. The process of seeking patent protection can be lengthy and
expensive, and there can be no assurance that patents will issue from currently
pending or future applications or that our existing patents or any new patents
issued will be of sufficient scope or strength or provide meaningful protection
or any commercial advantage to the Company. We may be subjected to, or may
initiate, litigation or patent office
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interference proceedings, which may require significant financial and management
resources. The failure to obtain necessary licenses or other rights or the
advent of litigation arising out of any such claims could have a material
adverse effect on our operations.
We own registered trademarks with respect to our name and logo design and
many of our products, including, but not limited to, our Encore, FreeHand,
Mirage, StarSet, Supra, and TriStar products and currently has trademark
applications pending in connection with new products. We also claim common law
trademark rights in many of our products and/or features. We also attempt to
protect our trade secrets and other proprietary information through
comprehensive security measures, including agreements with customers and
suppliers, and proprietary information agreements with employees and
consultants.
EMPLOYEES
On March 27, 1999, there were 1,824 persons employed by the Company. No
employees are currently covered by collective bargaining agreements or are
members of any labor organization as far as the Company is aware. We have not
experienced any work stoppages and believe that our employee relations are good.
EXECUTIVE OFFICERS
Set forth below is certain information regarding the executive officers of
the Company and their ages as of June 4, 1999.
NAME AGE POSITION
---- --- --------
Benjamin Brussell 38 Vice President-- Corporate Development
Robert S. Cecil 64 Chairman of the Board of Directors
Donald S. Houston 45 Senior Vice President-- Sales
David Huddart 49 Senior Vice President-- Engineering and Technology
S. Kenneth Kannappan 39 President, Chief Executive Officer and Director
Farhad Kashani 46 Senior Vice President-- Operations
John A. Knutson 53 Vice President-- Legal, Senior General Counsel and Secretary
H. Craig May 39 Senior Vice President-- Marketing
Barbara V. Scherer 43 Senior Vice President-- Finance & Administration and Chief Financial Officer
MR. BRUSSELL joined the Company in March 1998 as Vice President --
Corporate Development and reports directly to the President and Chief Executive
Officer. Prior to joining the Company, Mr. Brussell was Vice President,
Corporate Development at Storage Technology Corporation, a leading provider of
enterprise and network information storage systems, from March 1992 to March
1998. From June 1990 until March 1992, Mr. Brussell acted as a consultant to
Storage Technology Corporation and other technology and health care industry
companies. From January 1985 to June 1990, Mr. Brussell held various positions
with Solomon Brothers, the last of which was Vice President, Corporate Finance,
Technology Group. Mr. Brussell has a Bachelor of Arts degree in Math/Economics
from Wesleyan University and a Masters Degree in Management from M.I.T. Sloan
School of Management. Mr. Brussell is a director of Box Hill Systems
Corporation, a manufacturer of high performance data storage systems.
MR. CECIL joined the Company in March 1992 as President, Chief Executive
Officer and Director, and in September 1993 he was elected Chairman of the Board
of Directors. Mr. Cecil ceased serving as President of the Company in March 1998
and ceased serving as Chief Executive Officer in January 1999, due to the
promotion of Mr. Kannappan. Mr. Cecil has announced that he will not seek
re-election to the Plantronics Board of Directors at the Company's 1999 Annual
Stockholders Meeting to be held on July 20, 1999, and will no longer serve as
Chairman of the Board of Directors or as an employee of the Company as of that
date. From 1984 to December 1991, Mr. Cecil held a number of positions with LIN
Broadcasting Corporation, a subsidiary of McCaw Cellular Communications, Inc.
that provides cellular services in North America, including President of its
Cellular Group. From 1977 to 1984, he held various positions with Motorola,
Inc., including Vice President and Corporate Director of Marketing. Prior to
that he held various senior sales and marketing management positions with IBM
Corporation. Mr. Cecil has a Bachelor of Science degree in Engineering from the
U.S. Naval Academy and a Masters of Business Administration in Finance from the
Harvard Graduate School of Business Administration. Mr. Cecil also serves on the
Board of Directors of Xantrex Technology, Inc., a Canadian company which designs
and manufactures programmable DC power supply systems and CW Saskfund III Ltd.,
a Canadian investment fund.
MR. HOUSTON joined the Company in November 1996 as Vice President -- Sales
and was promoted to Senior Vice President -- Sales in March 1998. From February
1995 through November 1996, Mr. Houston served as Vice President -- Worldwide
Sales for Proxima Corporation, a designer, developer, manufacturer and marketer
of multimedia projection products. From 1985 until January
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of 1995, Mr. Houston held a number of positions at Calcomp, Inc., which is
engaged in the business of manufacturing computer peripherals for the CAD and
graphic market, including Regional Sales Manager and most recently Vice
President of Sales, Service and Marketing. Prior to 1985, Mr. Houston held
various sales and marketing management positions with IBM Corporation. Mr.
Houston is a graduate of the University of Arizona with a Bachelor of Science
degree in Business/Marketing. He reports directly to the President and Chief
Executive Officer.
MR. HUDDART was appointed Vice President -- Engineering and Technology in
April 1996, and became Senior Vice President --Engineering and Technology in
March 1998. He joined Plantronics Limited in September 1994 as Engineering
Manager. Prior to joining Plantronics Limited, he was the Technical Marketing
and Sales Director for IST Laboratories Ltd., a developer of electronic
substrate interconnections, from May 1991 through April 1994. From October 1986
through May 1991, he was employed by Tunstall Group plc and its subsidiaries,
and held various positions, including Group Technical Director of Tunstall Group
plc, and Marketing Director and Technical Director of Tunstall Telecom. From
1972 until June of 1986, he was employed by TMC Philips Ltd. as an engineer in
positions with increasing levels of responsibility. Mr. Huddart has a Bachelor
of Science degree from the University of North London Polytechnic and a
Management Diploma from Ashridge Management College. Mr. Huddart reports
directly to the President and Chief Executive Officer.
MR. KANNAPPAN joined the Company in February 1995 as Vice President --
Sales, responsible for OEM Sales and International Markets for Plantronics, Inc.
He was promoted to Vice President -- Sales, responsible for all U.S., Asian and
Latin American Sales in September 1995. He was promoted to Managing Director --
Plantronics Limited in England in March 1996. In March 1997, Mr. Kannappan
returned from England and was promoted to Senior Vice President responsible for
Plantronics' Worldwide Operations, Mobile Division, Walker Division and
Plantronics Limited. In March 1998, Mr. Kannappan was promoted to President and
Chief Operating Officer and in January 1999, Mr. Kannappan was promoted to Chief
Executive Officer and was appointed to the Board of Directors. Prior to joining
Plantronics, Mr. Kannappan was Senior Vice President of Investment Banking for
Kidder, Peabody & Co. Incorporated from August 1985 through January 1995. Mr.
Kannappan has a Bachelor of Arts degree in Economics from Yale University and a
Masters of Business Administration from Stanford University. Mr. Kannappan also
serves on the Board of Directors of Mattson Technology, Inc., a supplier of
advanced process equipment for the semiconductor industry.
MR. KASHANI joined the Company in February 1998 as Senior Vice President --
Operations and reports directly to the President and Chief Executive Officer.
Prior to joining the Company, Mr. Kashani spent ten years with Wyse Technology,
and a subsidiary company, Link Technologies, in various positions of increasing
responsibility, from 1987 to February 1998. From August 1997 to February 1998,
Mr. Kashani was Vice President of Operations, Service and Quality with Wyse
Technology, USA, and from December 1996 to July 1997, he was Vice President of
Operations, Wyse Technology, Hsin Chu, Taiwan. From 1994 to 1996, Mr. Kashani
was Vice President of Operations, Wyse Technology, USA; from 1990 to 1994 he was
Vice President of Operations for Link Technologies, a subsidiary of Wyse
Technology; from 1989 to 1990 he was Director of U.S. Manufacturing, Wyse
Technology and from 1987 to 1989 he was Director of Quality Assurance, Link
Technologies. Mr. Kashani has a Bachelor of Science degree in Agricultural
Engineering from Pahlavi University and a Masters of Business Administration
from the Iran Center for Management Studies.
MR. KNUTSON has served as Vice President -- Legal, Senior General Counsel
and Secretary since March 1994. Mr. Knutson was Managing Partner of the law firm
of Kenney, Burd, Knutson & Markowitz, San Francisco, California, from January
1991 until shortly before joining the Company. From August 1979 until December
1990, he practiced law with the law firm of Fisher & Hurst, San Francisco,
California, as a partner from April 1982 to December 1986, and as Managing
Partner from January 1987 to December 1990. After graduating from the University
of California - Hastings College of Law with a Juris Doctorate degree and being
admitted to the California Bar in 1974, Mr. Knutson practiced law in San
Francisco with the Law Offices of Garrett McEnerney until August 1979.
MR. MAY joined the Company in May 1998 as Senior Vice President --
Marketing and reports directly to the President and Chief Executive Officer. Mr.
May was most recently with Siemens Business Communication Systems, Inc., as
Director of Product Management, Desktops and Mobility, from October 1993 to May
1998. Prior to that position, Mr. May served on special assignment to the
President of Siemens Business Communications Systems, Inc. from July 1993 to
October 1993. From June 1992 to July 1993, Mr. May was ROLM Executive Delegate
for Siemens AG, Private Networks Group, Desktop Products, Munich, Germany. Mr.
May held a number of positions with ROLM from July 1987 to June 1992, such as
Director of Systems Planning, Manager of New Product Planning and Senior Product
Manager. From 1981 to June 1987 Mr. May worked for ROLM, an IBM company, and
Shell Oil
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Company in various product manager and engineering positions of increasing
authority. Mr. May has a Bachelor of Science degree in Electrical Engineering
from the University of Houston.
MS. SCHERER joined the Company in March 1997, and in April 1997 was named
Vice President -- Finance & Administration and Chief Financial Officer. In March
1998, Ms. Scherer was promoted to Senior Vice President -- Finance &
Administration and Chief Financial Officer. Prior to joining the Company, Ms.
Scherer was Senior Vice President and Chief Financial Officer at StreamLogic
Corporation, a developer of video delivery, digital media storage, networking
RAID and data management products, from October 1996 until March 1997; before
that she was Senior Vice President of Operations from April 1996 until October
1996. Prior to that she held various positions spanning a nine year career with
Micropolis Corporation, a disk drive manufacturer, including, from 1995 until
April 1996, Vice President Finance, Chief Financial Officer and Treasurer, and
from 1993 until 1994, Vice President, Treasurer and Video Systems Division
Controller. Ms. Scherer is a graduate of the University of California at Santa
Barbara and received her Masters from Yale School of Organization and
Management. She reports directly to the President and Chief Executive Officer.
Executive officers serve at the discretion of the Board of Directors. There
are no family relationships between any of the directors and executive officers
of the Company.
ITEM 2. PROPERTIES
Our principal executive offices are located in Santa Cruz, California. We
own or lease a total of approximately 320,000 square feet of manufacturing,
administrative, engineering and office facilities, including: (i) approximately
160,000 square feet of manufacturing and administrative facilities owned by the
Company in Santa Cruz, California, approximately 52,200 square feet of which are
leased to third parties as office and warehouse space; (ii) approximately 11,600
square feet of manufacturing and administrative facilities related to operations
in Ringgold, Georgia under a lease expiring in 2000; (iii) approximately 93,600
square feet for assembly and related operations in Tijuana, Mexico, under a
lease expiring in 2002; (iv) approximately 38,400 square feet for assembly
operations, sales and administration in Wootton Bassett, England under leases
expiring in 2015; (v) approximately 4,000 square feet for administrative
facilities in Hoofddorp, The Netherlands, under a lease expiring in 1999; and
(vi) smaller leased or rented facilities in Singapore, Japan, Hong Kong, France,
Germany, Italy, Spain, Brazil, Australia, Taiwan, Colorado and New Jersey. We
believe that our existing properties are generally suitable and adequate for our
business with excess capacity available for expansion.
ITEM 3. LEGAL PROCEEDINGS
Neither the Company, nor any of our subsidiaries, is a party to any
litigation, other than non-material litigation incidental to our business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matters were submitted to a vote of the security holders of the Company
during the fourth quarter of the fiscal year ended March 27, 1999.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Our Common Stock is publicly traded on the New York Stock Exchange. As of
June 4, 1999 there were ninety (90) holders of record of our Common Stock.
Information included in the Corporate Directory appearing on the back cover of
our 1999 Annual Report to Stockholders concerning the market price of and cash
dividends declared on our Common Stock for each quarterly period within the two
most recent fiscal years is incorporated herein by reference. The market price
of our stock as of the close of the New York Stock Exchange on June 14, 1999 was
$61 1/2 per share. Our Credit Agreement with Bank of America restricts us from
paying cash dividends on shares of our capital in an amount in excess of 50% of
our cumulative net income (net of cumulative losses) for the period commencing
February 19, 1997 through the date of declaration of any such dividend.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing under the caption "Selected Financial Data"
appearing at page 30 of our 1999 Annual Report to Stockholders is incorporated
herein by this reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The information appearing under the caption "Management's Discussion and
Analysis" appearing at pages 25 through 29 of our 1999 Annual Report to
Stockholders is incorporated herein by this reference.
RISK FACTORS AFFECTING FUTURE OPERATING RESULTS
Investors or potential investors in the stock of Plantronics should carefully
consider the risks described below. The 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 ON CALL CENTER MARKET SEGMENT
We have historically derived, and continue to derive, a substantial majority of
our net sales from the call center market segment. This market segment has grown
significantly in recent years as new call centers have proliferated and existing
call centers have expanded. While we believe this market segment is continuing
to grow, in the future this growth could slow or revenues from this market
segment 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 applications. In addition,
consumer resistance to telemarketing could adversely affect growth in the call
center market segment. Due to our reliance on the call center market segment, 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 our sales growth in fiscal
1999 may have been favorably affected by call centers upgrading their automatic
call distribution systems in order to be year 2000 compliant. Since our products
are sometimes bundled with new call distribution systems, this may have
accelerated some headset sales. If this has occurred, it could adversely affect
our net sales in future periods, once call centers have completed their system
upgrades. 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 OF THE OFFICE, MOBILE, COMPUTER AND RESIDENTIAL MARKET SEGMENTS TO
DEVELOP
While the call center market segment is still the most significant part 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
market segments. These communications headset market segments are relatively new
and undeveloped. Moreover, we do not have extensive experience in selling
headset products to customers in these market segments. If the demand for
headsets in these market segments 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 market segments, it would have a material adverse effect
on the potential demand for our products and on our business, financial
condition and results of operations.
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OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY
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;
- timing and size of orders from customers;
- 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;
- 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.
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.
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WE MUST MATCH PRODUCTION TO DEMAND
Historically, we have seen steady increases in customer demand for our products
and have generally been able to increase production to meet that 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.
- - Rapid increases in production levels to meet unanticipated demand could
result in higher costs for components and subassemblies 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
We buy components and subassemblies from a variety of suppliers and assemble
them into finished products. 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:
- - 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 and components 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 components
and subassemblies, 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.
THE HEADSET MARKET IS HIGHLY COMPETITIVE
The market for our products is highly competitive. We compete with a variety of
companies in various segments of the communications headset market. In the call
center segment, the largest market segment in which we compete, our two largest
competitors, GN Netcom and ACS Wireless, Inc., merged to form a single company.
Although it is unclear how this merger will affect us, the merged entity will
have a broader product offering and greater marketing presence than either of
the two entities had separately. Moreover, the economies of scale that may
result from the merger could lead to increased pricing pressures in our market.
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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 market segments. As these market
segments 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; WE MUST RESPOND TO CHANGING CUSTOMER
REQUIREMENTS AND 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 several 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 market segments, 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 market segments,
which may require us to develop new headset technologies to support cordless and
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 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.
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. On January 4, 1999, S.
Kenneth Kannappan was promoted to Chief Executive Officer of our company,
succeeding Robert S. Cecil in that capacity, and was appointed to our Board of
Directors. Mr. Kannappan joined our company in February 1995 and has held a
number
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of executive management positions, including President and Chief Operating
Officer. The unanticipated loss of the services of 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.
CITICORP VENTURE CAPITAL RETAINS SIGNIFICANT CONTROL
Our largest stockholder, Citicorp Venture Capital, Ltd. ("CVC"), beneficially
owns 4,509,168 shares of our common stock (excluding any shares that may be
owned by employees of CVC or its affiliates), which represents approximately 27%
of our outstanding common stock as of June 4, 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 June 4, 1999, we had 16,716,922 shares of common stock outstanding. All of
these shares are freely tradable except for approximately 5,100,000 shares held
by affiliates of Plantronics. These approximately 5,100,000 shares may only be
sold in reliance on 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 officers, directors and
key employees, also have certain contractual rights to require Plantronics to
register their shares for public sale. An additional approximately 2,580,848
shares are subject to outstanding stock options as of June 4, 1999. Mrs. Louise
Cecil holds vested options on 628,696 shares of our common stock (assigned to
her by her husband Robert S. Cecil) and has in place an effective registration
statement filed with the Securities Exchange Commission, which allows her to
sell any or all of such shares 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 and fiscal 1999 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 difference in the conduct of business;
- greater difficulty in accounts receivable collection;
- unexpected changes in regulatory requirements;
- tariffs and other trade barriers;
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- 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.
A significant portion of our business is conducted in currencies other than the
U.S. dollar. As a result, fluctuations in exchange rates creates risk to us in
both the sale 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 ON OUR PRINCIPAL MANUFACTURING FACILITY
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.
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. 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 includes 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 are undertaking efforts to
ensure that our business systems and those of our suppliers and customers are
compliant with the requirements of the year 2000. You should refer to the
Section titled "Year 2000" in the 1999 Annual Report to Stockholders for a more
complete discussion of our Year 2000 compliance efforts. However, our year 2000
program may not be effective or we may not be able to implement it in a timely
and cost-effective manner. Our year 2000 efforts may not, therefore, ensure
against disruptions caused by the approach or advent of the year 2000. The year
2000 problem is potentially very widespread, and it is not possible to determine
all the potential risks that we may face. Our inability to remedy our own year
2000 problems or the failure of third parties to do so may cause business
interruptions or shutdowns, financial loss, regulatory actions, harm to our
reputation and exposure to liability.
RISKS OF INADEQUATE PROTECTION OF INTELLECTUAL PROPERTY AND INFRINGEMENT OF
RIGHTS OF OTHERS
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) 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
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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.
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 EXPOSURE
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 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 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
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.
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.
EFFECTS OF ANTITAKEOVER PROVISIONS
Our Board of Directors 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 antitakeover 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information appearing in our 1999 Annual Report to
Stockholders is incorporated herein by this reference:
Consolidated Balance Sheets -- March 27, 1999 and March 28, 1998
Consolidated Financial Statements for fiscal years ended March 27,
1999, March 28, 1998 and March 29, 1997:
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders' Equity
Notes to Consolidated Financial Statements
Report of Independent Accountants, dated April 16, 1999.
With the exception of the information mentioned in Items 5, 6, 7 and 8,
our 1999 Annual Report to Stockholders is not to be deemed filed as part of this
Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no disagreements with accountants on any matter of
accounting principles and practices or financial disclosure.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information regarding the identification and business experience of
our directors under the caption "Nominees" under the main caption "Proposal One
- -- Election of Directors" in our definitive 1999 Proxy Statement for the annual
meeting of stockholders to be held, as filed with the Securities and Exchange
Commission within 120 days after the end of our fiscal year ended March 27,
1999, is incorporated herein by this reference. For information regarding the
identification and business experience of our executive officers, see "Executive
Officers" at the end of Item 1 in Part I of this Annual Report on Form 10-K. The
Registrant's Chief Financial Officer, Barbara V. Scherer, joined the Company in
March 1997, having last been employed as Chief Financial Officer of StreamLogic
Corporation. StreamLogic Corporation filed voluntarily for protection under
Chapter 11 of the Federal Bankruptcy Code on June 26, 1997. Information
concerning filing requirements applicable to our executive officers and
directors under the caption "Compliance With Section 16(a) of the Exchange Act"
in our 1999 Proxy Statement is incorporated herein by this reference.
ITEM 11. EXECUTIVE COMPENSATION
The information under the captions "Executive Compensation" and
"Compensation of Directors" in our 1999 Proxy Statement is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the caption "Security Ownership of Principal
Stockholders and Management" under the main caption "Additional Information" in
the 1999 Proxy Statement is incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Certain Transactions" in the 1999
Proxy Statement is incorporated herein by this reference.
With the exception of the information specifically incorporated by
reference from the 1999 Proxy Statement in Part III of this Annual Report on
Form 10-K, the 1999 Proxy Statement shall not be deemed to be filed as part of
this Report. Without limiting the foregoing, the information under the captions
"Report of the Compensation Committee of the Board of Directors" and "Company's
Stock Performance" under the main caption "Additional Information" in the 1999
Proxy Statement is not incorporated by reference in this Annual Report on Form
10-K.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Incorporation by Reference. The following documents are filed as
part of, or incorporated by reference into, this Annual Report on Form 10-K:
(1) Financial Statements. The consolidated financial
statements of the Company (including the notes thereto) are
incorporated by reference from our 1999 Annual Report to Stockholders
as indicated in Item 8 of this report.
(2) Financial Statement Schedules. All financial statement
schedules have been omitted because the required information is not
applicable or not present in amounts sufficient to require submission
of the schedule, or because the information required is included in the
consolidated financial statements or the notes thereto.
(3) Exhibits. The exhibits listed under Item 14(c) hereof are
filed with, or incorporated by reference into, this Annual Report on
Form 10-K.
(b) Reports on Form 8-K. During the fourth quarter of the fiscal year
ended March 27, 1999, the Registrant filed a Current Report on Form 8-K on
January 12, 1999.
(c) Exhibits. The following exhibits are filed as part of, or
incorporated by reference into, this Annual Report on Form 10-K:
3.1 Amended and Restated By-Laws of the Registrant (as
amended to date).
3.2 Restated Certificate of Incorporation of the Registrant
filed with the Secretary of State of Delaware on January
19, 1994 (incorporated herein by reference to Exhibit
(3.1) to the Registrant's Quarterly Report on Form 10-Q,
SEC File Number 1-12696, for the fiscal quarter ended
December 25, 1993, filed on March 4, 1994).
Certificate of Retirement and Elimination of Preferred
Stock and Common Stock of the Registrant filed with the
Secretary of State of Delaware on January 11, 1996
(incorporated herein by reference to Exhibit (3.3) of the
Registrant's Annual Report on Form 10-K, SEC File Number
1-12696, for the fiscal year ended March 30, 1996, filed
on June 27, 1996).
Certificate of Amendment of Restated Certificate of
Incorporation of the Registrant filed with the Secretary
of State of Delaware on August 7, 1997 (incorporated
herein by reference to Exhibit (3.1) to the Registrant's
Quarterly Report on Form 10-Q, SEC File Number 1-12696,
for the fiscal quarter ended June 28, 1997, filed on
August 8, 1997).
10.1 Quarterly Profit Sharing Plan (as amended) (incorporated
herein by reference to Exhibit (10.2) to Registrant's
predecessor, Plantronics, Inc.'s Report on Form 10-K, SEC
File Number 1-6642, for the fiscal year ended May 29,
1982, filed on August 27, 1982).
10.2 Board Designation Agreement dated as of October 22, 1993
between the Registrant and Citicorp Venture Capital, Ltd.
(incorporated herein by reference to Exhibit (10.21) to
the Registrant's Registration Statement on Form S-1 (as
amended), Reg. No. 33-70744, filed October 20, 1993).
10.3 Lease Agreement dated July 1993 between Inmobiliara
Mexhong S.A. de C.V. and Plamex, S.A. de C.V., a
subsidiary of the Registrant, for premises located in
Tijuana, Mexico (translation from Spanish original)
(incorporated herein by reference to Exhibit (10.30) to
the Registrant's Registration Statement on Form S-1 (as
amended), Reg. No. 33-70744, filed on October 20, 1993).
10.4 Lease dated December 7, 1990 between Canyge Bicknell
Limited and Plantronics Limited, a subsidiary of the
Registrant, for premises located in Wootton Bassett,
England (incorporated herein by reference to Exhibit
(10.32) to the Registrant's Registration Statement on
Form S-1 (as amended), Reg. No. 33-70744, filed on
October 20, 1993).
10.5 1993 Stock Plan (incorporated herein by reference to
Exhibit (10.1) to the Registrant's Registration Statement
on Form S-1 (as amended), Reg. No. 33-70744, filed on
October 20, 1993).
Amendment effective as of April 23, 1996 to the 1993
Stock Plan (incorporated herein by reference to Exhibit
(4.2) to the Registrant's Registration Statement on Form
S-8, Reg. No. 333-14833, filed on October 25, 1996).
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Amendment Number Two to the 1993 Stock Plan effective as
of July 30, 1998.
10.6 1993 Director Stock Option Plan (incorporated herein by
reference to Exhibit (10.29) to the Registrant's
Registration Statement on Form S-1 (as amended), Reg. No.
33-70744, filed on October 20, 1993).
Amendment Effective as of April 23, 1996 to the 1993
Director Stock Option Plan (incorporated herein by
reference to Exhibit (4.4) to the Registrant's
Registration Statement on Form S-8, Reg. No. 333-14833,
filed on October 25, 1996).
10.7 1996 Employee Stock Purchase Plan (incorporated herein by
reference to Exhibit (4.5) to the Registrant's
Registration Statement on Form S-8, Reg. No. 333-14833,
filed on October 25, 1996).
10.8 Plantronics, Inc. Annual Profit Sharing/Individual
Savings Plan (incorporated herein by reference to Exhibit
(4.1) to the Registrant's Registration Statement on Form
S-8, Reg. No. 333-19351, filed on January 7, 1997).
Amendment Number One to the Plantronics, Inc. Annual
Profit Sharing/Individual Savings Plan (incorporated
herein by reference to Exhibit (4.2) to the Registrant's
Registration Statement on Form S-8, Reg. No. 333-19351,
filed on January 7, 1997).
Trust Agreement Establishing the Plantronics, Inc. Annual
Profit Sharing/Individual Savings Plan Trust
(incorporated herein by reference to Exhibit (4.3) to the
Registrant's Registration Statement on Form S-8, Reg No.
333-19351, filed on January 7, 1997).
Amendment Number Two to the Plantronics, Inc. Annual
Profit Sharing/Individual Savings Plan.
10.9 Resolutions of the Board of Directors of Plantronics,
Inc. Concerning Executive Stock Purchase Plan
(incorporated herein by reference to Exhibit (4.4) to the
Registrant's Registration Statement on Form S-8 (as
amended), Reg. No. 333-19351, filed on March 25, 1997).
10.10 Plantronics, Inc. Basic Deferred Compensation Plan, as
amended August 8, 1996 (incorporated herein by reference
to Exhibit (4.5) to the Registrant's Registration
Statement on Form S-8 (as amended), Reg. No. 333-19351,
filed on March 25, 1997).
Trust Agreement Under the Plantronics, Inc. Basic
Deferred Stock Compensation Plan (incorporated herein by
reference to Exhibit (4.6) to the Registrant's
Registration Statement on Form S-8 (as amended), Reg.
No. 333-19351, filed on March 25, 1997).
Plantronics, Inc. Basic Deferred Compensation Plan
Participant Election (incorporated herein by reference to
Exhibit (4.7) to the Registrant's Registration Statement
on Form S-8 (as amended), Reg. No. 333-19351, filed on
March 25, 1997).
10.11 Employment Agreement between the Registrant and Robert S.
Cecil dated January 4, 1994 (supersedes Employment
Agreement between Plantronics and Robert S. Cecil dated
January 20, 1993) (incorporated herein by reference to
Exhibit (10.16) to the Registrant's Registration
Statement on Form S-1 (as amended), Reg. No. 33-70744,
filed on October 20, 1993).
Amendment Number One to Employment Agreement between the
Registrant and Robert S. Cecil entered into as of January
4, 1995 (incorporated herein by reference to Exhibit
(10.6) of the Registrant's Annual Report on Form 10-K,
SEC File Number 1-12696, for the fiscal year ended March
30, 1996, filed on June 27, 1996).
Letter agreement between Registrant and Robert S. Cecil
dated April 10, 1996 (incorporated herein by reference to
Exhibit (10.6) of the Registrant's Annual Report on Form
10-K, SEC File Number 1-12696, for the fiscal year ended
March 30, 1996, filed on June 27, 1996).
Amendment Number Two to Employment Agreement between the
Registrant and Robert S. Cecil entered into as of January
1, 1998 (incorporated herein by reference to Exhibit
(10.11) to the Registrant's Annual Report on Form 10-K,
SEC File Number 1-12696, for the fiscal year ended March
30, 1998, filed on June 24, 1998).
Amendment Number Three to Employment Agreement between
the Registrant and Robert S. Cecil entered into as of
March 22, 1999.
10.12 Credit Agreement dated as of February 19, 1997 between
Registrant and Bank of America National Trust and Savings
Association and First Amendment to Credit Agreement,
dated as of May 15, 1997 (incorporated herein by
reference to Exhibit (10.22) to the Registrant's Annual
Report on Form 10-K , SEC File Number 1-12696, for the
fiscal year ended March 30, 1997, filed on June 25,
1997).
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Second Amendment to Credit Agreement, dated as of
February 18, 1998, between Registrant and Bank of America
National Trust and Savings Association (incorporated
herein by reference to Exhibit (10.18) to the
Registrant's Annual Report on Form 10-K, SEC File Number
1-12696, for the fiscal year ended March 30, 1998, filed
on June 24, 1998).
Third Amendment to Credit Agreement, dated as of November
30, 1998, between Registrant and Bank of America National
Trust and Savings Association.
13 Sections of the Registrant's annual report to security
holders for the fiscal year ended March 27, 1999, as
referenced in Parts I, II and IV of this Annual Report on
Form 10-K.
21 Subsidiaries of the Registrant.
23 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
27 Financial Data Schedule.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PLANTRONICS, INC.
Dated: June 15, 1999 By: /s/ S. KENNETH KANNAPPAN
-------------------------
S. Kenneth Kannappan,
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
/s/ S. KENNETH KANNAPPAN President, Chief Executive Officer June 15, 1999
- ------------------------------------- and Director
(S. Kenneth Kannappan) (Principal Executive Officer)
/s/ BARBARA V. SCHERER Senior Vice President and Chief Financial June 15, 1999
- ------------------------------------- Officer (Principal Financial Officer and
(Barbara V. Scherer) Principal Accounting Officer)
/s/ ROBERT S. CECIL Chairman of the Board and Director June 15, 1999
- -------------------------------------
(Robert S. Cecil)
/s/ ROBERT F.B. LOGAN Director June 15, 1999
- -------------------------------------
(Robert F.B. Logan)
/s/ M. SALEEM MUQADDAM Director June 15, 1999
- -------------------------------------
(M. Saleem Muqaddam)
/s/ JOHN MOWBRAY O'MARA Director June 15, 1999
- -------------------------------------
(John Mowbray O'Mara)
/s/ TRUDE C. TAYLOR Director June 15, 1999
- -------------------------------------
(Trude C. Taylor)
/s/ DAVID A. WEGMANN Director June 15, 1999
- -------------------------------------
(David A. Wegmann)
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EXHIBIT INDEX
Exhibit
No. Document Description
- ------- --------------------
3.1 Amended and Restated By-Laws of the Registrant (as
amended to date).
3.2 Restated Certificate of Incorporation of the Registrant
filed with the Secretary of State of Delaware on January
19, 1994 (incorporated herein by reference to Exhibit
(3.1) to the Registrant's Quarterly Report on Form 10-Q,
SEC File Number 1-12696, for the fiscal quarter ended
December 25, 1993, filed on March 4, 1994).
Certificate of Retirement and Elimination of Preferred
Stock and Common Stock of the Registrant filed with the
Secretary of State of Delaware on January 11, 1996
(incorporated herein by reference to Exhibit (3.3) of the
Registrant's Annual Report on Form 10-K, SEC File Number
1-12696, for the fiscal year ended March 30, 1996, filed
on June 27, 1996).
Certificate of Amendment of Restated Certificate of
Incorporation of the Registrant filed with the Secretary
of State of Delaware on August 7, 1997 (incorporated
herein by reference to Exhibit (3.1) to the Registrant's
Quarterly Report on Form 10-Q, SEC File Number 1-12696,
for the fiscal quarter ended June 28, 1997, filed on
August 8, 1997).
10.1 Quarterly Profit Sharing Plan (as amended) (incorporated
herein by reference to Exhibit (10.2) to Registrant's
predecessor, Plantronics, Inc.'s Report on Form 10-K, SEC
File Number 1-6642, for the fiscal year ended May 29,
1982, filed on August 27, 1982).
10.2 Board Designation Agreement dated as of October 22, 1993
between the Registrant and Citicorp Venture Capital, Ltd.
(incorporated herein by reference to Exhibit (10.21) to
the Registrant's Registration Statement on Form S-1 (as
amended), Reg. No. 33-70744, filed October 20, 1993).
10.3 Lease Agreement dated July 1993 between Inmobiliara
Mexhong S.A. de C.V. and Plamex, S.A. de C.V., a
subsidiary of the Registrant, for premises located in
Tijuana, Mexico (translation from Spanish original)
(incorporated herein by reference to Exhibit (10.30) to
the Registrant's Registration Statement on Form S-1 (as
amended), Reg. No. 33-70744, filed on October 20, 1993).
10.4 Lease dated December 7, 1990 between Canyge Bicknell
Limited and Plantronics Limited, a subsidiary of the
Registrant, for premises located in Wootton Bassett,
England (incorporated herein by reference to Exhibit
(10.32) to the Registrant's Registration Statement on
Form S-1 (as amended), Reg. No. 33-70744, filed on
October 20, 1993).
10.5 1993 Stock Plan (incorporated herein by reference to
Exhibit (10.1) to the Registrant's Registration Statement
on Form S-1 (as amended), Reg. No. 33-70744, filed on
October 20, 1993).
Amendment effective as of April 23, 1996 to the 1993
Stock Plan (incorporated herein by reference to Exhibit
(4.2) to the Registrant's Registration Statement on Form
S-8, Reg. No. 333-14833, filed on October 25, 1996).
Amendment Number Two to the 1993 Stock Plan effective as
of July 30, 1998.
10.6 1993 Director Stock Option Plan (incorporated herein by
reference to Exhibit (10.29) to the Registrant's
Registration Statement on Form S-1 (as amended), Reg. No.
33-70744, filed on October 20, 1993).
Amendment Effective as of April 23, 1996 to the 1993
Director Stock Option Plan (incorporated herein by
reference to Exhibit (4.4) to the Registrant's
Registration Statement on Form S-8, Reg. No. 333-14833,
filed on October 25, 1996).
10.7 1996 Employee Stock Purchase Plan (incorporated herein by
reference to Exhibit (4.5) to the Registrant's
Registration Statement on Form S-8, Reg. No. 333-14833,
filed on October 25, 1996).
10.8 Plantronics, Inc. Annual Profit Sharing/Individual
Savings Plan (incorporated herein by reference to Exhibit
(4.1) to the Registrant's Registration Statement on Form
S-8, Reg. No. 333-19351, filed on January 7, 1997).
Amendment Number One to the Plantronics, Inc. Annual
Profit Sharing/Individual Savings Plan (incorporated
herein by reference to Exhibit (4.2) to the Registrant's
Registration Statement on Form S-8, Reg. No. 333-19351,
filed on January 7, 1997).
Trust Agreement Establishing the Plantronics, Inc. Annual
Profit Sharing/Individual Savings Plan Trust
(incorporated herein by reference to Exhibit (4.3) to the
Registrant's Registration Statement on Form S-8, Reg No.
333-19351, filed on January 7, 1997).
Amendment Number Two to the Plantronics, Inc. Annual
Profit Sharing/Individual Savings Plan.
10.9 Resolutions of the Board of Directors of Plantronics,
Inc. Concerning Executive Stock Purchase Plan
(incorporated herein by reference to Exhibit (4.4) to the
Registrant's Registration Statement on Form S-8 (as
amended), Reg. No. 333-19351, filed on March 25, 1997).
10.10 Plantronics, Inc. Basic Deferred Compensation Plan, as
amended August 8, 1996 (incorporated herein by reference
to Exhibit (4.5) to the Registrant's Registration
Statement on Form S-8 (as amended), Reg. No. 333-19351,
filed on March 25, 1997).
Trust Agreement Under the Plantronics, Inc. Basic
Deferred Stock Compensation Plan (incorporated herein by
reference to Exhibit (4.6) to the Registrant's
Registration Statement on Form S-8 (as amended), Reg.
No. 333-19351, filed on March 25, 1997).
Plantronics, Inc. Basic Deferred Compensation Plan
Participant Election (incorporated herein by reference to
Exhibit (4.7) to the Registrant's Registration Statement
on Form S-8 (as amended), Reg. No. 333-19351, filed on
March 25, 1997).
10.11 Employment Agreement between the Registrant and Robert S.
Cecil dated January 4, 1994 (supersedes Employment
Agreement between Plantronics and Robert S. Cecil dated
January 20, 1993) (incorporated herein by reference to
Exhibit (10.16) to the Registrant's Registration
Statement on Form S-1 (as amended), Reg. No. 33-70744,
filed on October 20, 1993).
Amendment Number One to Employment Agreement between the
Registrant and Robert S. Cecil entered into as of January
4, 1995 (incorporated herein by reference to Exhibit
(10.6) of the Registrant's Annual Report on Form 10-K,
SEC File Number 1-12696, for the fiscal year ended March
30, 1996, filed on June 27, 1996).
Letter agreement between Registrant and Robert S. Cecil
dated April 10, 1996 (incorporated herein by reference to
Exhibit (10.6) of the Registrant's Annual Report on Form
10-K, SEC File Number 1-12696, for the fiscal year ended
March 30, 1996, filed on June 27, 1996).
Amendment Number Two to Employment Agreement between the
Registrant and Robert S. Cecil entered into as of January
1, 1998 (incorporated herein by reference to Exhibit
(10.11) to the Registrant's Annual Report on Form 10-K,
SEC File Number 1-12696, for the fiscal year ended March
30, 1998, filed on June 24, 1998).
Amendment Number Three to Employment Agreement between
the Registrant and Robert S. Cecil entered into as of
March 22, 1999.
10.12 Credit Agreement dated as of February 19, 1997 between
Registrant and Bank of America National Trust and Savings
Association and First Amendment to Credit Agreement,
dated as of May 15, 1997 (incorporated herein by
reference to Exhibit (10.22) to the Registrant's Annual
Report on Form 10-K , SEC File Number 1-12696, for the
fiscal year ended March 30, 1997, filed on June 25,
1997).
Second Amendment to Credit Agreement, dated as of
February 18, 1998, between Registrant and Bank of America
National Trust and Savings Association (incorporated
herein by reference to Exhibit (10.18) to the
Registrant's Annual Report on Form 10-K, SEC File Number
1-12696, for the fiscal year ended March 30, 1998, filed
on June 24, 1998).
Third Amendment to Credit Agreement, dated as of November
30, 1998, between Registrant and Bank of America National
Trust and Savings Association.
13 Sections of the Registrant's annual report to security
holders for the fiscal year ended March 27, 1999, as
referenced in Parts I, II and IV of this Annual Report on
Form 10-K.
21 Subsidiaries of the Registrant.
23 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
27 Financial Data Schedule.