1
EXHIBIT 13
FINANCIAL CONTENTS
9 CONSOLIDATED BALANCE SHEETS
10 CONSOLIDATED STATEMENTS OF OPERATIONS
11 CONSOLIDATED STATEMENTS OF CASH FLOWS
12 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
24 REPORT OF INDEPENDENT ACCOUNTANTS
25 MANAGEMENT'S DISCUSSION AND ANALYSIS
30 SELECTED FINANCIAL DATA
31 CORPORATE OFFICERS AND INFORMATION
32 INVESTOR INFORMATION
2
Consolidated balance sheets
MARCH 31,
(IN THOUSANDS) 1998 1999
- ---------------------------------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 64,901 $ 42,999
Accounts receivable,net 41,550 46,807
Inventory 29,741 18,889
Deferred income taxes 2,130 3,159
Other current assets 1,774 7,880
----------
Total current assets 140,096 119,734
Property,plant and equipment,net 21,255 20,323
Other assets 4,124 2,811
----------
Total assets $ 165,475 $ 142,868
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,327 $ 9,453
Accrued liabilities 26,629 33,475
Income taxes payable 6,381 510
----------
Total current liabilities 41,337 43,438
Deferred tax liability 5,652 10,025
Long-term debt 65,050 --
----------
Total liabilities 112,039 53,463
----------
Commitments and contingencies (note 8)
Stockholders' equity:
Common stock,$0.01 par value per share;40,000 shares authorized,
16,449 shares and 16,798 shares issued and outstanding 174 185
Additional paid-in capital 63,816 91,423
Accumulated other comprehensive income (891) (891)
Retained earnings 15,355 69,559
----------
78,454 160,276
Less: Treasury stock (common:963 and 1,669) at cost (25,018) (70,871)
----------
Total stockholders' equity 53,436 89,405
----------
Total liabilities and stockholders' equity $ 165,475 $ 142,868
==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
PLANTRONICS ANNUAL REPORT 1999 page 9
3
Consolidated statements of operations
FISCAL YEAR ENDED MARCH 31,
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE) 1997 1998 1999
- -----------------------------------------------------------------------------------------------
Net sales $ 195,307 $ 236,112 $ 286,261
Cost of sales 90,567 108,514 125,698
----------
Gross profit 104,740 127,598 160,563
----------
Operating expenses:
Research,development and engineering 14,503 17,543 19,521
Selling,general and administrative 39,898 47,682 57,528
----------
Total operating expenses 54,401 65,225 77,049
----------
Operating income 50,339 62,373 83,514
Interest expense,including amortization
of debt issuance costs 7,104 6,984 5,785
Interest income and other income,net (1,722) (2,243) (3,525)
----------
Income before income taxes 44,957 57,632 81,254
Income tax expense 15,286 18,443 26,001
----------
Income before extraordinary item 29,671 39,189 55,253
Extraordinary item--retirement of debt,
net of taxes (note 4) -- -- 1,049
----------
Net income $ 29,671 $ 39,189 $ 54,204
==========
Net income per share:basic
Income before extraordinary item $ 1.75 $ 2.38 $ 3.33
Extraordinary item -- -- 0.06
==========
Basic earnings per common share $ 1.75 $ 2.38 $ 3.27
==========
Shares used in basic per share calculations 17,003 16,481 16,574
==========
Net income per share:diluted
Income before extraordinary item $ 1.67 $ 2.15 $ 3.02
Extraordinary item -- -- 0.06
----------
Diluted earnings per common share $ 1.67 $ 2.15 $ 2.96
==========
Shares used in diluted per share calculations 17,792 18,223 18,282
==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
page 10 PLANTRONICS ANNUAL REPORT 1999
4
Consolidated statements of cash flows
FISCAL YEAR ENDED MARCH 31,
(IN THOUSANDS) 1997 1998 1999
- ------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 29,671 $ 39,189 $ 54,204
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of property
and equipment 2,935 3,632 4,738
Deferred income taxes 2,789 4,746 3,344
Provision for doubtful accounts (50) 455 574
Other non-cash charges,net 649 (225) --
Changes in assets and liabilities:
Accounts receivable 1,624 (5,024) (5,831)
Inventory (2,035) (9,699) 10,852
Other current assets 318 (865) (6,106)
Other assets (459) 1,113 1,313
Accounts payable 1,194 (1,251) 1,126
Accrued liabilities (251) 6,188 6,846
Income taxes payable (1,769) 986 15,863
---------
Cash provided by operating activities 34,616 39,245 86,923
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (8,195) (5,917) (3,806)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of long-term debt -- -- (65,050)
Purchase of treasury stock (12,880) (13,162) (46,384)
Proceeds from sale of treasury stock 99 1,250 1,275
Proceeds from exercise of stock options 1,835 1,223 5,140
---------
Cash provided by (used for) financing activities (10,946) (10,689) (105,019)
---------
Net increase (decrease) in cash and cash equivalents 15,475 22,639 (21,902)
Cash and cash equivalents at beginning of year 26,787 42,262 64,901
---------
Cash and cash equivalents at end of year $ 42,262 $ 64,901 $ 42,999
=========
Supplemental disclosures:
Cash paid for:
Interest $ 6,577 $ 6,550 $ 6,525
Income taxes $ 14,192 $ 12,439 $ 7,913
Extraordinary charge on retirement of debt -- -- $ 1,301
Noncash operating and financing activities:
Income tax benefit associated with stock options $ 597 $ 4,279 $ 21,734
Write off of unamortized debt issuance costs -- -- $ 390
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
PLANTRONICS ANNUAL REPORT 1999 page 11
5
Consolidated statements of stockholders' equity
COMMON STOCK ACCUMULATED
------------------------ ADDITIONAL OTHER TOTAL
PAID-IN COMPREHENSIVE RETAINED TREASURY STOCKHOLDERS'
SHARES AMOUNT CAPITAL INCOME EARNINGS STOCK EQUITY
---------------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
Balance at March 31,1996 16,777,912 $ 169 $ 55,642 $ (891) $ (53,505) $ -- $ 1,415
---------------------------------------------------------------------------------------------
Stock option compensation
amortization -- -- 146 -- -- -- 146
Exercise of stock options 284,442 2 1,832 -- -- -- 1,834
Income tax benefit associated
with stock options -- -- 597 -- -- -- 597
Purchase of treasury stock (701,226) -- -- -- -- (12,873) (12,873)
Sale of treasury stock 5,084 -- -- -- -- 92 92
Net income -- -- -- -- 29,671 -- 29,671
Balance at March 31,1997 16,366,212 171 58,217 (891) (23,834) (12,781) 20,882
---------------------------------------------------------------------------------------------
Stock option compensation
amortization -- -- (225) -- -- -- (225)
Exercise of stock options 348,958 3 1,220 -- -- -- 1,223
Income tax benefit associated
with stock options -- -- 4,279 -- -- -- 4,279
Purchase of treasury stock (317,600) -- -- -- -- (13,162) (13,162)
Sale of treasury stock 51,072 -- 325 -- -- 925 1,250
Net income -- -- -- -- 39,189 -- 39,189
---------------------------------------------------------------------------------------------
Balance at March 31,1998 16,448,642 174 63,816 (891) 15,355 (25,018) 53,436
---------------------------------------------------------------------------------------------
Exercise of stock options 1,056,093 11 5,129 -- -- -- 5,140
Income tax benefit associated
with stock options -- -- 21,734 -- -- -- 21,734
Purchase of treasury stock (735,593) -- -- -- -- (46,384) (46,384)
Sale of treasury stock 29,301 -- 744 -- -- 531 1,275
Net income -- -- -- -- 54,204 -- 54,204
---------------------------------------------------------------------------------------------
Balance at March 31,1999 16,798,443 $ 185 $ 91,423 $ (891) $ 69,559 $ (70,871) $ 89,405
=============================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
page 12 PLANTRONICS ANNUAL REPORT 1999
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Notes to consolidated financial statements
note 1. THE COMPANY:
Plantronics, Inc. (the "Company"), introduced the first lightweight
communications headset in 1962. Since that time, the Company has established
itself as a world leading designer, manufacturer and marketer of lightweight
communications headset products.
note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
MANAGEMENT'S USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of financial statements and the
reported amounts of sales and expenses during the reporting period. Actual
results could differ from those estimates.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its subsidiary companies. Intercompany transactions and balances have been
eliminated in consolidation.
FISCAL YEAR
The Company's fiscal year end is the Saturday closest to March 31. For purposes
of presentation, the Company has indicated its accounting year ending on March
31. Results of operations for fiscal years 1997, 1998 and 1999 each included 52
weeks.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of 90 days
or less at the date of purchase to be cash equivalents. The Company's cash and
cash equivalents consist of the following:
MARCH 31,
(IN THOUSANDS) 1998 1999
------- -------
Cash $ 9,662 $ 7,427
Cash equivalents 55,239 35,572
-----------------------
Cash and cash equivalents $64,901 $42,999
=======================
INVENTORY
Inventory is stated at the lower of cost, determined on the first-in, first-out
method, or market.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization of property, plant and equipment are principally
calculated using the straight-line method over the estimated useful lives of the
respective assets.
DEFERRED DEBT ISSUANCE COSTS
Debt issuance costs are assigned to the various debt instruments and amortized
over the shorter of the terms of the respective debt agreements or the estimated
period the debt will be outstanding.
PLANTRONICS ANNUAL REPORT 1999 page 13
7
Notes to consolidated financial statements
REVENUE RECOGNITION
Revenue is recognized when products are shipped. Provision is made for estimated
potential customer returns and warranty costs at the time of shipment.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash equivalents and trade receivables. The
Company's cash investment policies limit investments to those that are
short-term and low risk. Concentrations of credit risk with respect to trade
receivables are generally limited due to the large number of customers
comprising the Company's customer base, and their dispersion across different
geographic areas. The Company performs ongoing credit evaluations of its
customers' financial condition and, generally, requires no collateral from its
customers. The Company maintains an allowance for uncollectible accounts
receivable based upon expected collectibility of all accounts receivable.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of the Company's financial instruments, including cash, cash
equivalents, accounts receivable, accrued expenses and liabilities, approximate
fair value due to their short maturities.
INCOME TAXES
The Company accounts for income taxes under the liability method, which
recognizes deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the tax basis of assets and
liabilities and their financial statement reported amounts. Tax credits are
accounted for as a reduction of tax expense in the year in which the credits
reduce taxes payable.
FOREIGN OPERATIONS AND CURRENCY TRANSLATION
The Company has foreign assembly and manufacturing operations in Mexico, light
assembly, research and development and sales and marketing in the United
Kingdom, an international finance, customer service and logistics headquarters
in the Netherlands, and sales offices in Canada, Asia, Europe, Australia and
South America. For fiscal 1997, 1998 and 1999, the functional currency of all
foreign operations was the US dollar. Accordingly, gains or losses arising from
the translation of foreign currency statements and transactions are included in
determining consolidated results of operations. Aggregate exchange gains
(losses) for fiscal 1997, 1998 and 1999 were $0.4 million, ($0.2) million and
($0.2) million, respectively. Gains or losses arising from the translation of
the United Kingdom statements prior to fiscal 1997 were recorded as a separate
component of stockholders' equity and are presented as accumulated other
comprehensive income.
COMPREHENSIVE INCOME
Effective April 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). The statement
establishes presentation and disclosure requirements for reporting comprehensive
income. Comprehensive income includes charges or credits to equity that are not
the result of transactions with owners. Total comprehensive income was the same
as net income for all periods presented.
SEGMENT REPORTING
In fiscal 1999, the Company adopted Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information"
("SFAS 131"). The statement requires the Company to report certain information
about operating segments in its annual financial statements. It also establishes
standards for related disclosures about products and services, geographic areas
and major customers (see note 9).
page 14 PLANTRONICS ANNUAL REPORT 1999
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Notes to consolidated financial statements
STOCK-BASED COMPENSATION
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," ("FAS 123"), encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans based on
the fair value of options granted. The Company has elected to continue to
account for stock-based compensation using the intrinsic value method prescribed
in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations, and to provide additional disclosures
with respect to the pro forma effects of adoption had the Company recorded
compensation expense as provided in FAS 123, (see note 10).
note 3. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS:
MARCH 31,
(IN THOUSANDS) 1998 1999
- --------------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE:
Accounts receivable from customers $ 43,302 $ 49,133
Allowance for doubtful accounts (1,752) (2,326)
------------------------
$ 41,550 $ 46,807
========================
INVENTORY:
Finished goods $ 13,224 $ 9,425
Work in process 4,431 1,461
Purchased parts 12,086 8,003
------------------------
$ 29,741 $ 18,889
========================
PROPERTY, PLANT AND EQUIPMENT:
Land $ 4,693 $ 4,693
Buildings and improvements (useful life 10-30 years) 9,486 9,923
Machinery and equipment (useful life 2-8 years) 31,484 32,853
------------------------
45,663 47,469
Less accumulated depreciation (24,408) (27,146)
------------------------
$ 21,255 $ 20,323
========================
ACCRUALS:
Employee benefits 11,689 15,209
Other 14,940 18,266
------------------------
$ 26,629 $ 33,475
========================
PLANTRONICS ANNUAL REPORT 1999 page 15
9
Notes to consolidated financial statements
note 4. DEBT:
During 1999, the Company retired $65.1 million of 10% subordinated debentures
due in 2001. The Company paid a premium to debenture holders, and the
transaction resulted in an extraordinary loss of approximately $1.0 million
($0.06 per diluted share), net of income tax benefits of $0.7 million. The
transaction was paid out of available cash.
Effective November 30, 1998, the Company increased its revolving unsecured
credit facility with Bank of America from $20.0 million to $30.0 million. The
facility expires on November 29, 1999. The facility includes a $10.0 million
letter-of-credit subfacility. Principal outstanding bears interest at the
Company's choice of the Bank of America base rate, the offshore rate or a CD
rate plus a margin ranging from 0.000% to 1.375%, depending on the rate choice
and performance level ratios. There were no borrowings outstanding under the
facility at March 31, 1999, however, at that date $2.3 million, associated with
inventory purchases and other matters, was committed under the letter-of-credit
subfacility. The revolving credit facility includes covenants relating to, among
other things, the maintenance of a maximum net funded debt ratio, a minimum
tangible net worth ratio and a minimum interest coverage ratio. The Company was
in compliance with the terms of the covenants as of March 31, 1999.
The revolving credit facility also expressly restricts the ability of the
Company to incur additional indebtedness (including contingent liabilities and
guarantees), grant additional liens, redeem stock, dispose of and acquire
assets, incur lease obligations, and make investments, including loans, joint
ventures, and acquisitions of other businesses. The Company is permitted to pay
cash dividends on shares of its capital stock in an amount not to exceed 50% of
the Company's cumulative net income (net of cumulative losses) for the period
commencing February 19, 1997 through the date of declaration.
note 5. COMMON AND TREASURY STOCK:
In July 1997, the Company's stockholders approved an increase in the authorized
shares of Common Stock of Plantronics, Inc., to 40,000,000. On September 2,
1997, the Company effected a two-for-one stock split in the form of a stock
dividend to stockholders of record as of August 18, 1997. All share, per share,
Common Stock, and capital in excess of par value amounts herein have been
restated to reflect the effect of this split.
On January 8, 1999, the Company filed with the Securities Exchange Commission a
Registration Statement on Form S-3 for the sale by certain stockholders in an
underwritten offering of 1,250,000 shares of Common Stock. Plantronics did not
receive any proceeds from this offering, other than approximately $0.8 million
(net of offering expenses) received upon the exercise of options to purchase
443,548 shares of Common Stock by two of the stockholders selling in the
offering. The offering increased outstanding shares by 443,548.
During fiscal 1999, the Board of Directors authorized the Company to repurchase
a total of 1,000,000 shares of Common Stock. During fiscal 1999, the Company
repurchased 735,593 shares of its Common Stock in the open market at a total
cost of $46.4 million and 29,301 shares for proceeds of $1.3 million were
reissued through employee benefit plans.
page 16 PLANTRONICS ANNUAL REPORT 1999
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Notes to consolidated financial statements
note 6. INCOME TAXES:
Income tax expense for fiscal 1997, 1998 and 1999 consisted of the following:
FISCAL YEAR ENDED MARCH 31,
(IN THOUSANDS) 1997 1998 1999
- --------------------------------------------------------------------------------
Federal
Current $ 8,744 $10,109 $18,127
Deferred 2,789 4,746 3,344
State 1,854 1,472 1,943
Foreign 1,899 2,116 2,587
-------------------------------------------
$15,286 $18,443 $26,001
===========================================
Pre-tax earnings of the foreign subsidiaries were $8.2 million, $15.7 million
and $24.5 million for fiscal years 1997,1998 and 1999, respectively. Cumulative
earnings of foreign subsidiaries that have been permanently reinvested as of
March 31, 1999 totaled $22.5 million.
The following is a reconciliation between statutory federal income taxes and the
total provision for taxes on pre-tax income:
FISCAL YEAR ENDED MARCH 31,
(IN THOUSANDS) 1997 1998 1999
- ------------------------------------------------------------------------------------------
Tax expense at statutory rate $ 15,735 $ 20,171 $ 27,847
Foreign operations taxed at different rates (971) (4,364) (3,609)
State taxes, net of federal benefit 1,204 1,476 1,263
Other, net (682) 1,160 500
----------------------------------------
$ 15,286 $ 18,443 $ 26,001
========================================
Deferred tax liabilities (assets) represent the tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting and income tax purposes. Significant components of the Company's
deferred tax liabilities and assets are as follows:
MARCH 31,
(IN THOUSANDS) 1998 1999
- -------------------------------------------------------------------------------
Deferred gains on sales of properties $ 2,476 $ 2,413
Deferred state tax 314 793
Unremitted earnings of certain subsidiaries 5,749 7,249
Other deferred tax liabilities 1,111 1,200
------------------------
Gross deferred tax liabilities 9,650 11,655
------------------------
Accruals and other reserves (5,670) (4,122)
Other deferred tax assets (458) (667)
------------------------
Gross deferred tax assets (6,128) (4,789)
------------------------
Total net deferred tax liabilities $ 3,522 $ 6,866
========================
PLANTRONICS ANNUAL REPORT 1999 page 17
11
Notes to consolidated financial statements
note 7. EMPLOYEE BENEFIT PLANS:
Subject to eligibility requirements, substantially all domestic employees
participate in quarterly cash, annual cash and annual deferred profit sharing
plans. All other employees, with the exception of direct labor in Mexico,
participate in quarterly cash profit sharing plans. Domestic employees also have
the option of participating in a salary deferral plan qualified under Section
401(k) of the Internal Revenue Code. The Quarterly Profit Sharing Plan benefits
are paid on the basis of profitability and the relationship of each
participating employee's base salary as a percent of the total base salaries of
all participants. The percent of profit distributed to employees varies by
location. The Annual Profit Sharing Plan benefits are based on 10% of the
Company's results of operations before interest and taxes, adjusted for other
items, minus quarterly profit sharing cash distributions and administrative
expenses, and are allocated to employees based on the relationship of each
participating employee's base salary as a percent of all participants' base
salaries. The Annual Profit Sharing Plan distributions include a cash
distribution and a tax deferred distribution made to individual accounts of
participants held in trust. The deferred portion is subject to a two year
vesting schedule based on an employee's date of hire. Total annual and quarterly
profit sharing contributions were $5.5 million, $6.9 million and $9.4 million
for fiscal 1997, 1998 and 1999, respectively.
note 8. COMMITMENTS AND CONTINGENCIES:
MINIMUM FUTURE RENTAL PAYMENTS
The Company leases certain equipment and facilities under operating leases
expiring in various years through and after 2004. Minimum future rental payments
under non-cancelable operating leases having remaining terms in excess of one
year as of March 31, 1999:
FISCAL YEAR ENDING MARCH 31,
(IN THOUSANDS) AMOUNT
- --------------------------------------------------------------------------------
2000 $1,234
2001 947
2002 427
2003 412
2004 410
Thereafter 4,510
------
Total minimum future rental payments $7,940
======
Rent expense for operating leases was approximately $1.1 million in fiscal 1997,
$1.3 million in fiscal 1998 and $1.1 million in fiscal 1999.
EXISTENCE OF RENEWAL OPTIONS
Certain operating leases provide for renewal options for periods from one to
three years. In the normal course of business, operating leases are generally
renewed or replaced by other leases.
CLAIMS AND LITIGATION
In the opinion of management, litigation, contingent liabilities and claims
against the Company arising in the ordinary course of business are not expected
to involve any judgments or settlements which would be material to the Company's
consolidated financial condition or results of operations.
page 18 PLANTRONICS ANNUAL REPORT 1999
12
Notes to consolidated financial statements
note 9. SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION:
The Company adopted SFAS No. 131 in fiscal 1999 which changes the way the
Company reports information about its operating segments.
OPERATING SEGMENT
The Company organizes the reporting segments based on geographic areas. The
nature of products, (telecommunications equipment), development, manufacturing,
marketing and servicing are similar in each geographic area. The Company
evaluates segment performance based on profit or loss from operations before
interest expense, foreign exchange gains and losses and income taxes. No one
customer accounted for 10% or more of total revenue from consolidated sales for
fiscal year 1997, 1998 or 1999.
GEOGRAPHIC SEGMENTS
In geographical reporting, revenues are attributed to the geographical location
of the sales and service organizations. Costs directly and indirectly incurred
in generating revenues are similarly assigned.
FISCAL YEAR ENDED MARCH 31,
(IN THOUSANDS) 1997 1998 1999
- --------------------------------------------------------------------------------------
NET REVENUES FROM UNAFFILIATED CUSTOMERS:
United States $135,664 $164,074 $198,910
International 59,643 72,038 87,351
--------------------------------------
$195,307 $236,112 $286,261
======================================
Intersegment revenues $ 47,952 $ 80,421 $ 92,141
--------------------------------------
OPERATING PROFIT:
United States $ 36,718 $ 45,051 $ 63,169
International 13,621 17,322 20,345
--------------------------------------
$ 50,339 $ 62,373 $ 83,514
======================================
LONG LIVED ASSETS:
United States $ 97,138 $121,627 $ 76,339
International 30,103 43,848 66,529
--------------------------------------
$127,241 $165,475 $142,868
======================================
The geographical reporting classification reflects the international
restructuring completed in fiscal 1997. The establishment of Plantronics B.V.
changed the ownership of inventory and the methodology of intersegment
revenues. Intersegment revenues are from Plantronics B.V. to the US and are at
arms length prices sufficient to recover a reasonable profit.
PLANTRONICS ANNUAL REPORT 1999 page 19
13
Notes to consolidated financial statements
note 10. STOCK OPTION PLANS AND STOCK PURCHASE PLANS:
STOCK OPTION PLAN
In September 1993, the Board of Directors approved the PI Parent Corporation
1993 Stock Plan (the "1993 Stock Plan"). Under the 1993 Stock Plan, 5,459,242
shares of Common Stock (which number is subject to adjustment in the event of
stock splits, reverse stock splits, recapitalization or certain corporate
reorganizations) are reserved for issuance to employees and consultants of the
Company, as approved from time to time by the Compensation Committee of the
Board of Directors. The reserved shares include 980,000 shares in 1997 and
1,300,000 in 1999, which were authorized by the Board of Directors and approved
by the stockholders for issuance in 1997 and 1999 respectively. The 1993 Stock
Plan, which has a term of ten years, provides for incentive as well as
nonqualified stock options to purchase shares of Common Stock. The Board of
Directors may terminate the 1993 Stock Plan at any time at its discretion.
Incentive stock options may not be granted at less than 100% of the estimated
fair market value, as determined by the Board of Directors, of the Company's
Common Stock at the date of grant and the option term may not exceed 10 years.
For holders of 10% or more of the total combined voting power of all classes of
the Company's stock, incentive stock options may not be granted at less than
110% of the estimated fair market value of the Common Stock at the date of grant
and the option term may not exceed five years. Nonqualified stock options may be
granted at less than fair market value. Options generally vest over four years.
DIRECTORS' STOCK OPTION PLAN
In September 1993, the Board of Directors adopted a Directors' Stock Option Plan
(the "Directors' Option Plan") and reserved 40,000 shares of Common Stock for
issuance to non-employee directors of the Company. An additional 20,000 shares
were authorized for issuance in 1997 under the Directors' Option Plan, pursuant
to Board of Directors' and stockholder approval. The Directors' Option Plan
provides that each non-employee director shall be granted an option to purchase
4,000 shares of Common Stock on the later of the effective date of the Company's
initial public offering or the date on which the person becomes a director.
Thereafter, each non-employee director shall be granted an option to purchase
1,000 shares of Common Stock each year. At the end of fiscal 1999, options for
48,500 shares of Common Stock were outstanding under the Directors' Option Plan.
All options were granted at fair market value and generally vest over a
four-year period.
page 20 PLANTRONICS ANNUAL REPORT 1999
14
Notes to consolidated financial statements
Stock option activity under the 1993 Stock Plan and the Directors' Stock Option
Plan are as follows:
OPTIONS OUTSTANDING
SHARES --------------------------
AVAILABLE WEIGHTED AVERAGE
FOR GRANT SHARES PRICE
- --------------------------------------------------------------------------------
Balance at March 31, 1996 58,754 2,783,282 $ 4.52
Options Authorized 1,000,000
Options Granted (631,588) 631,588 $ 19.80
Options Exercised (284,442) $ 6.45
Options Cancelled 111,048 (111,048) $ 6.49
Balance at March 31, 1997 538,214 3,019,380 $ 7.46
Options Granted (654,500) 654,500 $ 27.37
Options Exercised (348,958) $ 3.49
Options Cancelled 233,010 (233,010) $ 18.53
---------------------------------------------
Balance at March 31, 1998 116,724 3,091,912 $ 11.29
Options Authorized 1,300,000
Options Granted (666,000) 666,000 $ 55.75
Options Exercised (1,056,093) $ 4.91
Options Cancelled 184,445 (184,445) $ 18.55
Balance at March 31, 1999 935,169 2,517,374 $ 25.19
---------------------------------------------
Exercisable at March 31, 1999 1,293,104
=========
Significant option groups outstanding at March 31, 1999 and related weighted
average prices and lives are as follows:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
- -------------------------------------------------------------------------------------------------------------------
NUMBER WEIGHTED NUMBER
OUTSTANDING AVERAGE WEIGHTED EXERCISABLE WEIGHTED
RANGE OF AS OF REMAINING AVERAGE AS OF AVERAGE
EXERCISE PRICE MARCH 31, 1999 CONTRACTUAL LIFE EXERCISE PRICE MARCH 31, 1999 EXERCISE PRICE
- -------------------------------------------------------------------------------------------------------------------
$ 0.90-$ 0.90 292,216 4.50 $ 0.90 292,216 $ 0.90
2.74- 17.44 716,102 5.31 7.14 685,190 6.69
18.44- 21.06 519,093 7.82 19.74 234,849 19.61
21.13- 59.75 693,213 8.91 41.69 80,849 27.94
61.13- 81.25 297,000 9.60 63.41 0 0.00
- -------------------------------------------------------------------------------------------------------------------
$ 0.90-$81.25 2,517,374 7.23 $ 25.16 1,293,104 $ 9.06
===================================================================================================================
PLANTRONICS ANNUAL REPORT 1999 page 21
15
Notes to consolidated financial statements
FAIR VALUE DISCLOSURES
All options in fiscal 1997, 1998 and 1999 were granted at an exercise price
equal to the fair market value of the Company's Common Stock at the date of
grant. The weighted average fair value at date of grant for options granted
during 1997, 1998 and 1999 were $6.34, $9.79 and $25.25 per share, respectively.
The fair value of options at date of grant was estimated using the Black-Scholes
model with the following assumptions for 1997: dividend yield of 0%, an expected
life of 5 years, expected volatility of 17% and risk free interest rate of 6.6%.
For 1998 the assumptions were: dividend yield of 0%, an expected life of 5
years, expected volatility of 28% and risk free interest rate of 5.6%. For 1999
the assumptions were:dividend yield of 0%, an expected life of 5.6 years,
expected volatility of 39% and risk free interest rate of 5.3%.
Volatility is a measure of the amount by which a price has fluctuated over a
historical period. The higher the volatility, the more the returns on the stock
can be expected to vary. The risk free interest rate is the rate on a US
Treasury bill or bond that approximates the expected life of the option.
Had compensation expense for the Company's stock-based compensation plans been
determined based on the methods prescribed by SFAS No. 123, the Company's net
income and net income per share would have been as follows:
FISCAL YEAR ENDED MARCH 31,
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1997 1998 1999
- -----------------------------------------------------------------------------------------------
Net income:
As reported $ 29,671 $ 39,189 $ 54,204
Pro forma $ 29,044 $ 37,381 $ 51,771
Net income per share:
As reported $ 1.67 $ 2.15 $ 2.96
Pro forma $ 1.63 $ 2.05 $ 2.83
page 22 PLANTRONICS ANNUAL REPORT 1999
16
Notes to consolidated financial statements
EMPLOYEE STOCK PURCHASE PLAN
On April 23, 1996 the Board of Directors of the Company approved the 1996
Employee Stock Purchase Plan,(the "ESPP") which was approved by the stockholders
on August 6, 1996, to provide certain employees with an opportunity to purchase
Common Stock through payroll deductions. The plan is a qualified plan under
applicable IRS guidelines and certain highly compensated employees are excluded
from participation. Under the ESPP, the purchase price of the Common Stock will
equal 95% of the market price of the Common Stock immediately before the
beginning of the applicable participation period. Each participation period is
six months long. Once purchased the shares are restricted for six months. During
fiscal 1997, 581 shares were issued under the plan. The fair value of the
employee's purchase rights was estimated using the Black-Scholes model with the
following assumptions:dividend yield of 0%, an expected life of six months,
expected volatility of 17%, and risk free interest rate of 6.6%. During fiscal
1998, 2,021 shares were issued under the plan. The fair value of the employee's
purchase rights was estimated using the Black-Scholes model with the following
assumptions:dividend yield of 0%, an expected life of six months, expected
volatility of 28%, and risk free interest rate of 5.6%. The weighted-average
fair value of these purchase rights granted in fiscal 1998 was $4.85. During
fiscal 1999, 2,531 shares were issued under the plan. The fair value of the
employee's purchase rights was estimated using the Black-Scholes model with the
following assumptions:dividend yield of 0%, an expected life of six months,
expected volatility of 39%, and risk free interest rate of 4.6%. The
weighted-average fair value of these purchase rights granted in fiscal 1999 was
$5.92.
SENIOR EXECUTIVE STOCK OWNERSHIP PLAN
In November, 1996 the Board of Directors approved a Senior Executive Stock
Purchase Plan, effective January 1, 1997, to encourage ownership of the
Company's Common Stock by senior executives. This is a voluntary plan in which
executives are encouraged to participate and achieve a target ownership over a
five year period in annual increments of 20% or more. The target ownership is
equal to two times the Chief Executive Officer's base salary and one times the
individual Vice Presidents' base salary. To encourage participation, the Company
will sell the Company's Treasury Stock to executives under this voluntary
purchase program. The price will be equal to the greater of: 95% of the price
set by the Board of Directors on an annual basis or 85% of the fair market value
of the stock on the date of transaction. The various vehicles that are available
to executives to obtain ownership of the Company's stock are as follows: 401 (k)
Plan contributions, personal IRA account purchases, Deferred Compensation Plan
contributions, outright purchase of stock or exercising and holding vested stock
options. The discounted price is not applicable to exercising and holding of
vested stock options.
PLANTRONICS ANNUAL REPORT 1999 page 23
17
Report of independent accountants
To the Board of Directors and Stockholders of Plantronics, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of Plantronics,
Inc. and its subsidiaries at March 31, 1998 and 1999 and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1999, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
/s/ PricewaterhouseCoopers LLP
San Jose, California
April 16, 1999
page 24 PLANTRONICS ANNUAL REPORT 1999
18
Management's discussion and analysis of
financial condition and results of operations
CERTAIN FORWARD-LOOKING INFORMATION:
This Annual Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements include, without limitation, the
statements that (i) we expect interest expenses in future periods to be minimal
discussed in the last sentence of the paragraph below titled "Interest Expense"
under Annual Results of Operations; (ii) cash from operations and available
borrowings will be sufficient to fund operations for the next 12 months
discussed in the final paragraph of the section titled "Liquidity" under
Financial Condition; (iii) we expect that the repurchase of Senior Notes will
increase diluted earnings per share by approximately $0.10 on an annual pro
forma basis discussed in the final paragraph in the section titled "Financing
Activities" under Financial Condition; and (iv) the Year 2000 readiness
statements set out in various paragraphs under Year 2000, including the expected
Year 2000 compliance of our information systems and applications by June 1999,
the expected Year 2000 certifications from our principal suppliers and customers
by July 1999 and August 1999, respectively, our belief that there will be no
material impact of Year 2000 problems due to failures of our systems or those of
third parties with whom we do business, and the expectation that we will
substantially complete our contingency planning by July 1999. In addition, the
Company may from time to time make oral forward-looking statements. These
forward-looking statements are based on current expectations and entail various
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of a number of
factors, including those set forth below under "Risk Factors Affecting Future
Operating Results" set forth in the Company's Annual Report on Form 10-K filed
with the Securities Exchange Commission on or before June 25, 1999. The
following discussions titled "Results of Operations" and "Financial Condition"
should be read in conjunction with those risk factors, the consolidated
financial statements and related notes included elsewhere herein, and the
discussion and additional disclosures in our Annual Report on Form 10-K.
ANNUAL RESULTS OF OPERATIONS
Net Sales. Net sales in fiscal 1999 increased 21.2% to $286.3 million compared
to $236.1 million in fiscal 1998, which in turn increased 20.9% compared to
fiscal 1997 net sales of $195.3 million. Both domestic and international sales
contributed to the growth in net sales. Domestic sales increased 21.2% to $198.9
million in fiscal 1999, compared to an increase of 20.9% to $164.1 million in
fiscal 1998 compared to the prior year. Domestic sales growth occurred in all
our sales channels, with the largest percentage increases coming in the retail
and Original Equipment Manufacturer ("OEM") channels.
International sales in fiscal 1999 increased 21.3% to $87.4 million compared to
$72.0 million in fiscal 1998, which in turn increased 20.8% compared to the
prior year. Most of the growth in fiscal 1999 occurred in Europe, with sales in
the Asia Pacific/Latin America region and Canada growing at a slower rate.
International sales in fiscal 1999, 1998 and 1997 have accounted for
approximately 30.5% of total net sales in each of these periods.
Gross Profit. Gross profit in fiscal 1999 increased 25.8% to $160.6 million
(56.1% of net sales), compared to $127.6 million (54.0% of net sales) in fiscal
1998. Gross profit in fiscal 1998 increased 21.8% compared to gross profit of
$104.7 million (53.6% of net sales) in fiscal 1997. The increases in gross
profit as a percent of net sales in the last two fiscal years mainly reflect
reductions in product costs through design and manufacturing efficiencies and by
obtaining lower costs from our suppliers.
PLANTRONICS ANNUAL REPORT 1999 page 25
19
Management's discussion and analysis of
financial condition and results of operations
Research, Development and Engineering
Research, development and engineering expenses in fiscal 1999 increased 11.3% to
$19.5 million (6.8% of net sales), compared to $17.5 million (7.4% of net sales)
in fiscal 1998. Research, development and engineering expenses in fiscal 1998
increased 21.0% compared to $14.5 million (7.4% of net sales) in fiscal 1997.
The increase in these expenses reflects continued investment in new product
development and technologies.
Selling, General and Administrative
Selling, general and administrative expenses in fiscal 1999 increased 20.6% to
$57.5 million (20.1% of net sales), compared to $47.7 million (20.2% of net
sales) in fiscal 1998. Selling, general and administrative expenses in fiscal
1998 increased 19.5% compared to $39.9 million (20.4% of net sales) in fiscal
1997. Increases in expenses in fiscal 1999 were primarily from costs associated
with the expansion of sales programs and higher worldwide sales and related
variable expenses, such as sales commissions and employee profit sharing.
General and administrative expenses also increased due to the addition of two
senior corporate executive positions.
Operating Income
Operating income in fiscal 1999 increased 33.9% to $83.5 million (29.2% of net
sales), compared to $62.4 million (26.4% of net sales) in fiscal 1998. Operating
income in fiscal 1998 increased 23.9% compared to $50.3 million (25.8% of net
sales) in fiscal 1997. The increase in operating income over the past two fiscal
years was primarily due to:(i) higher net sales, (ii) the increase in gross
margin and (iii) a concerted effort to limit the growth of operating expenses
relative to sales growth.
Interest Expense
Interest expense in fiscal 1999 decreased 17.2% to $5.8 million, compared to
$7.0 million in fiscal 1998, which in turn decreased 1.7% from $7.1 million in
fiscal 1997. Interest expense for all periods reported principally represents
interest payable on our 10% Senior Notes Due 2001 (Senior Notes) which were
redeemed on January 15, 1999. The early redemption of these Senior Notes was the
reason for the decrease in interest expense in fiscal 1999, and we expect
interest expense to be minimal in fiscal 2000.
Interest and Other Income
Interest and other income in fiscal 1999 increased 57.2% to $3.5 million
compared to $2.2 million in fiscal 1998, which in turn increased 30.3% compared
to $1.7 million in fiscal 1997. The increases were primarily attributable to
interest income derived from increases in cash and cash equivalents.
Income Tax Expense
In fiscal 1999, fiscal 1998 and fiscal 1997, income tax expense was $26.0
million, $18.4 million and $15.3 million, respectively, representing effective
tax rates of 32% in fiscal 1999 and fiscal 1998 with a 34% effective tax rate in
fiscal 1997. The decrease in the overall rate from fiscal 1997 was due to the
faster relative increase in income in countries with tax rates lower than the
United States.
FINANCIAL CONDITION
Liquidity
As of March 31, 1999, we had working capital of $76.3 million, including $43.0
million of cash and cash equivalents, compared with working capital of $98.8
million, including $64.9 million of cash and cash equivalents, as of March 31,
1998. During the fiscal year ended March 31, 1999, we generated $86.9 million of
cash from operating activities, due primarily to $54.2 million in net income,
decreases of $10.9 million in inventory, $6.8 million in accrued liabilities and
the income tax benefit associated with the exercise of options of $21.7 million.
In comparison, we generated $39.2 million in cash from operating activities for
the fiscal year ended March 31, 1998, due mainly to $39.2 million in net income
and increases of $6.2 million in accrued liabilities, partially offset by
increases of $9.7 million in inventory and $5.0 million in accounts receivable.
page 26 PLANTRONICS ANNUAL REPORT 1999
20
Management's discussion and analysis of
financial condition and results of operations
We have a $30.0 million revolving credit facility, including a $10.0 million
letter-of-credit subfacility, with a major bank, both of which expire in
November 1999. As of March 31, 1999, we had no cash borrowings under the
revolving credit facility and $2.3 million outstanding under the
letter-of-credit subfacility. The amounts outstanding under the letter-of-credit
subfacility were principally associated with purchases of inventory. The terms
of the credit facility contain covenants that materially limit our ability to
incur debt, make capital expenditures and pay dividends, among other matters.
After giving effect to the redemption of the Senior Notes, we believe that our
current cash balance and cash to be provided by operations, together with
available borrowing capacity under our revolving credit facility and
letter-of-credit subfacility, will be sufficient to fund operations for at least
the next 12 months.
Investing Activities
Capital expenditures of $3.8 million in the fiscal year ended March 31, 1999
were incurred principally in tooling to expand manufacturing capacity and
investments in computer and telephone equipment.
Financing Activities
In the fiscal year ended March 31, 1999, we sold 29,301 shares of our treasury
stock for approximately $1.3 million and repurchased 735,593 shares of our
Common Stock for approximately $46.4 million. As of March 31, 1999, we remained
authorized to repurchase approximately 452,407 shares under all repurchase
plans.
We received $5.1 million in proceeds from the exercise of stock options during
the fiscal year ended March 31, 1999. In July 1998, our stockholders approved an
increase of 1,300,000 shares of Common Stock issuable under our 1993 Stock Plan
(the "1993 Stock Plan"). This increased the maximum aggregate number of shares
that may be optioned and sold under the 1993 Stock Plan to 5,459,242 shares.
Effective January 15, 1999, we repurchased all of our Senior Notes. The
transaction resulted in a net extraordinary charge of approximately $1.0
million, or approximately $0.06 per diluted share, in the fourth quarter of
fiscal 1999. Based on current interest rates and the alternative of investing
the cash, we expect the transaction to increase diluted earnings per share by
approximately $0.10 on an annual pro forma basis.
YEAR 2000
State of Readiness
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 include embedded date sensitive technology. We also depend on the proper
functioning of date sensitive electronic systems of third parties, such as
customers and suppliers. The failure of any of these systems to appropriately
interpret the year 2000 could have a material adverse effect on our business,
financial condition and results of operations. We 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.
PLANTRONICS ANNUAL REPORT 1999 page 27
21
Management's discussion and analysis of
financial condition and results of operations
We have established a worldwide year 2000 task force, led by an Executive
Steering Committee of our senior management, including representatives of each
of our operating organizations and corporate functions, to oversee and regularly
review the status of our year 2000 compliance plan. Through our year 2000 task
force, we are proceeding with implementation of a formal year 2000 compliance
program. The compliance program addresses three key elements: (i) internal
infrastructure, addressing internal hardware and software and non-information
technology systems; (ii) supplier readiness, addressing the preparedness of our
suppliers of goods and services; and (iii) customer readiness, addressing the
preparedness of our customer support and the preparedness of our customers to
transact business with us. In each of those compliance areas, we are
systematically performing a global risk assessment, conducting testing,
implementing upgrades, communicating with and assisting suppliers and customers
in raising awareness of the year 2000 issues and developing contingency plans to
mitigate known and unknown year 2000 risks. The status of our compliance efforts
in those three areas is set forth below:
Internal Infrastructure
We are assessing all internal applications and computer software and hardware.
Our key business information systems have been made year 2000 compliant.
Resources have been assigned to address other applications, such as product
testing and product design hardware and software, based upon our determination
of how critical each of those systems is to our business operations and the time
required to bring them into full year 2000 compliance. We currently expect that
all our critical business information systems and other critical applications
will be fully year 2000 compliant by June 1999.
Supplier Readiness
This program focuses on minimizing the risks associated with supplier year 2000
issues in two areas: (i) the suppliers' business capability to continue
providing products and services in and after the year 2000 and (ii) the year
2000 readiness of products supplied to us for our use. Requests for information
and certification of compliance have been and are being sent to our principal
and critical suppliers. The year 2000 task force is monitoring responses from
suppliers and following up where necessary and appropriate. We expect that we
will have certification from our principal and critical suppliers of goods and
services by July 1999.
Customer Readiness
This program focuses on ensuring that customers are aware of the year 2000
issues and that customers are capable of placing orders for our products,
receiving products ordered and paying our invoices for products sold and
delivered. Requests for information and certification of year 2000 compliance
have been sent to our major customers. The year 2000 task force will follow up
with customers where necessary and appropriate. We expect that we will have
certification from our principal customers by August 1999.
Costs to Address Year 2000 Issues
We currently estimate that the aggregate cost of our year 2000 compliance
efforts will be approximately $1.2 million, of which approximately $0.7 million
has been incurred to date. The costs consist principally of (i) fees paid to
outside consultants and software programmers, (ii) purchase of telephone PBX
systems which require upgrades to be year 2000 compliant and (iii) purchase of
software and software upgrades to meet the year 2000 issue. The funds expended
and to be expended are being funded through operating cash flows. Approximately
$0.5 million of the total cost, related to the purchase of fixed assets, will be
capitalized, with the balance expensed as incurred.
page 28 PLANTRONICS ANNUAL REPORT 1999
22
Management's discussion and analysis of
financial condition and results of operations
Risks of the Year 2000 Issues
We currently believe that our internal year 2000 compliance efforts will be
successful and there will be no material impact to us by reason of the failure
or malfunction of any systems owned or operated by us or third parties with whom
we do business. 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.
Contingency Plans
We are developing contingency plans to mitigate the potential disruptions that
may result from the year 2000 issue. We expect to substantially complete our
contingency planning by July 1999. These plans may include identifying and
securing alternate suppliers of components, containers, packaging materials and
utilities; adjusting manufacturing facility production, shutdown and start-up
schedules; stockpiling of critical inventory components and other measures
considered appropriate by management. Once developed and approved, contingency
plans, and the related cost estimates, will be continually refined as additional
information becomes available.
PLANTRONICS ANNUAL REPORT 1999 page 29
23
Selected financial data
FISCAL YEAR ENDED MARCH 31,
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE) 1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS DATA
Net sales $169,923 $182,959 $195,307 $236,112 $286,261
Income before extraordinary item 20,808 25,470 29,671 39,189 55,253
Extraordinary item, net of taxes -- -- -- -- 1,049
Net income $ 20,808 $ 25,470 $ 29,671 $ 39,189 $ 54,204
--------------------------------------------------------------------
Diluted net income per common share:
Income before extraordinary item$ 1.19 $ 1.42 $ 1.67 $ 2.15 $ 3.02
Extraordinary item,net of taxes -- -- -- -- 0.06
Net income $ 1.19 $ 1.42 $ 1.67 $ 2.15 $ 2.96
Shares used in diluted
per share calculations 17,512 17,964 17,792 18,223 18,282
FISCAL YEAR ENDED MARCH 31,
(IN THOUSANDS) 1995 1996 1997 1998 1999
-------- -------- -------- -------- --------
BALANCE SHEET DATA
Total assets $ 74,855 $108,661 $127,241 $165,475 $142,868
Long-term debt 65,050 65,050 65,050 65,050 --
QUARTER ENDED
(IN THOUSANDS, JUN. 30 SEP. 30 DEC. 31 MAR. 31 JUN. 30 SEP. 30 DEC. 31 MAR. 31
EXCEPT EARNINGS PER SHARE) 1997 1997 1997 1998 1998 1998 1998 1999
- -----------------------------------------------------------------------------------------------------------------------------------
QUARTERLY DATA UNAUDITED
Net sales $54,023 $56,539 $62,017 $63,533 $70,060 $71,150 $72,038 $73,013
Gross profit 29,067 30,536 33,553 34,442 38,163 38,958 41,036 42,406
Income before
extraordinary item 8,305 9,366 10,421 11,097 12,471 13,613 14,423 14,746
Extraordinary item,
net of taxes -- -- -- -- -- -- -- 1,049
Net income $ 8,305 $ 9,366 $10,421 $11,097 $12,471 $13,613 $14,423 $13,697
Diluted net income
per common share:
Income before
extraordinary item $ 0.47 $ 0.51 $ 0.57 $ 0.61 $ 0.68 $ 0.74 $ 0.79 $ 0.81
Extraordinary item,
net of taxes -- -- -- -- -- -- -- 0.06
Net income $ 0.47 $ 0.51 $ 0.57 $ 0.61 $ 0.68 $ 0.74 $ 0.79 $ 0.75
page 30 PLANTRONICS ANNUAL REPORT 1999
24
Corporate officers and information
BOARD OF DIRECTORS
Robert S. Cecil(*) M. Saleem Muqaddam Trude C. Taylor
Chairman of the Board Vice President Private Investor
Citicorp Venture Capital, Ltd.
Robert F.B. Logan David A. Wegmann
Private Investor John Mowbray O'Mara Private Investor
Management Consultant
Ken Kannappan
President and Chief Executive Officer
EXECUTIVE OFFICERS
Robert S. Cecil(*) Donald S. Houston John A. Knutson
Chairman of the Board Senior Vice President--Sales Vice President--Legal, Senior
General Counsel and Secretary
Ken Kannappan David Huddart
President and Chief Executive Officer Senior Vice President-- H. Craig May
Engineering and Technology Senior Vice President--Marketing
Benjamin Brussell
Vice President-- Farhad Kashani Barbara V.Scherer
Corporate Development Senior Vice President--Operations Senior Vice President--
Finance and Administration and
Chief Financial Officer
CORPORATE INFORMATION
Corporate Headquarters Registrar and Transfer Agent Independent Accountants
345 Encinal Street Boston EquiServe, L.P. PricewaterhouseCoopers LLP
Santa Cruz, California 95060 Shareholder Services San Jose, California
Telephone: 831-426-5858 MailStop: 45-01-06
Fax: 831-426-6098 P.O. Box 644 Corporate Counsel
http://www.plantronics.com Boston, Massachusetts 02102-0644 Wilson Sonsini Goodrich & Rosati
Palo Alto, California
(*)Mr.Cecil will not seek re-election to the Board of Directors at the Company's
1999 Annual Meeting of Stockholders.
PLANTRONICS ANNUAL REPORT 1999 page 31
25
Investor information
FORM 10-K
A copy of the Annual Report on Form 10-K filed with the Securities and Exchange
Commission that contains additional information about the Company may be
obtained without charge by writing to:
Investor Relations
Plantronics,Inc.
P.O. Box 1802
Santa Cruz, CA 95061-1802
Or visit the Plantronics web site at
www.plantronics.com
MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock, $.01 par value, has traded on the New York Stock
Exchange, under the symbol "PLT," since the Company's initial public offering on
January 19, 1994. The initial offering price was $6.25 per share.
The following table sets forth the quarterly high and low sales prices for the
Common Stock for the Company's 1998 and 1999 fiscal years.
FY 1998 LOW HIGH
- -----------------------------------------------------------------------
First Quarter $20 1/4 $25 3/16
Second Quarter $25 $38 3/4
Third Quarter $33 15/16 $41 7/16
Fourth Quarter $39 1/4 $44 3/4
FY 1999 LOW HIGH
- -----------------------------------------------------------------------
First Quarter $39 1/2 $59 13/16
Second Quarter $45 $65 1/2
Third Quarter $48 $72 1/4
Fourth Quarter $59 $87 1/2
No cash dividends were declared or paid during fiscal 1998 and fiscal 1999, and
the Company has no current intention to pay dividends. As of March 31, 1999,
there were approximately 93 holders of record of the Company's Common Stock.
page 32 PLANTRONICS ANNUAL REPORT 1999
26
Plantronics worldwide operations
COMPUTER AUDIO SYSTEMS DIVISION
345 Encinal Street
Santa Cruz, California 95060
Telephone: 831-426-5858
Fax: 831-426-3516
MOBILE COMMUNICATIONS DIVISION
345 Encinal Street
Santa Cruz, California 95060
Telephone: 831-426-5858
Fax: 831-458-7787
PLAMEX, S.A. DE C.V.
Avenida Produccion, #12
Parque Industrial Internacional
Tijuana
Mesa de Otay
Tijuana, Baja California 22390
Mexico
Telephone: 011-52-66-822798
Fax: 011-52-66-822796
PLANTRONICS ACOUSTICS ITALIA S.R.L.
Centro Direzionale Lombardo
Palazzo E/2
Via Roma 108
20060 Cassina de' Pecchi
Milano, Italy
Telephone: 011-39-295-11900-1-2
Fax: 011-39-295-11903
PLANTRONICS A.G.
c/o Plantronics Limited
Interface Business Park
Bincknoll Lane
Wootton Bassett, Wiltshire
SN4 8QQ England
Telephone: 011-44-1793-848999
Fax: 011-44-1793-848853
PLANTRONICS B.V.
Antareslaan 9
2132 JE Hoofddorp
Netherlands
Telephone: 011-31-23-5648010
Fax: 011-31-23-5626790
PLANTRONICS CANADA LIMITED
c/o Andrews & Associates
225 Hymus Boulevard, Suite 10
Pointe Claire, Quebec
H9R 1G4 Canada
Telephone: 514-694-3185
Fax: 514-694-7770
PLANTRONICS DENMARK
Andersen Nexo vej 29
2860 Soborg, Denmark
Telephone: 011-45-39-55-1051
Fax: 011-45-39-55-1052
PLANTRONICS FRANCE S.A.R.L.
Parc Technologique "La Corvette"
142-176 Avenue de Stalingrad
92700 Colombes, France
Telephone: 011-33-1-46-49-83-00
Fax: 011-33-1-46-49-83-09
PLANTRONICS GMBH
Mail: Postfach 7146
50342 Hurth, (Cologne) Germany
Telephone: 011-49-2233-932340
Fax: 011-49-2233-373274
PLANTRONICS HONG KONG
Ste. 1111, Tower II
Silvercord Bldg., 30 Canton Road
Tsim Sha Tsui, Kowloon
Hong Kong
Telephone: 011-852-2375-8480
Fax: 011-852-2377-0573
PLANTRONICS INTERNATIONAL DO BRASIL LTDA
Rua Jesuino Arruda, 676-154
04532-082 Sao Paulo, SP Brazil
Telephone: 011-55-11-282-8759
Fax: 011-55-11-3064-5309
PLANTRONICS IRELAND
Portmanna
Clonee, Co. Meath
Southern Ireland
Telephone: 011-353-1-878-1934
Fax: 011-353-1-825-2238
PLANTRONICS K.K.
Hibiya Central Bldg 14F
1-2-9, Nishi-Shinbashi, Minato-ku
Tokyo 105-003, Japan
Telephone: 011-813-5532-7293
Fax: 011-813-5532-7425
PLANTRONICS LIMITED
Interface Business Park
Bincknoll Lane
Wootton Bassett, Wiltshire
SN4 8QQ England
Telephone: 011-44-1793-848999
Fax: 011-44-1793-848853
PLANTRONICS NORDIC
Oskarsvagen 10
S-702 14 Orebro
Sweden
Telephone: 011-46-19-121930
Fax: 011-46-19-121933
PLANTRONICS PTY LIMITED
Level 2, 200 Arden St.
North Melbourne, Victoria 3051
Australia
Telephone: 011-61-3-9321-0144
Fax: 011-61-3-9321-0162
PLANTRONICS SINGAPORE
391 A Orchard Road
#12-01 Ngee Ann City, Tower A
Singapore 238873
Telephone: 011-65-838-5239
Fax: 011-65-235-1447
PLANTRONICS SPAIN
Calle Orense 8
(Oficinas) First Floor
28020 Madrid, Spain
Telephone: 011-34-91-514-94-06
Fax: 011-34-91-514-94-66
PLANTRONICS TAIWAN
17F-3 No. 400 Hwang-PE1 Road
Chung-LI Taiwan R.O.C.
Telephone: 011-886-3-422-9249
Fax: 011-886-3-427-3555
WALKER EQUIPMENT DIVISION
4009 Cloud Springs Road
Ringgold, Georgia 30736
Telephone: 706-861-2212
Fax: 706-861-5069