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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 31, 2001 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 1-12696
PLANTRONICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 77-0207692
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
345 ENCINAL STREET
SANTA CRUZ, CALIFORNIA 95060
(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 twelve 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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing price of $21.59 for shares of the
Registrant's Common Stock on May 11, 2001 as reported by the New York Stock
Exchange, was approximately $825,065,456. 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
Registrant 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 May 11, 2001: 48,390,671.
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 31, 2001 (Parts I, II
and IV) and (2) portions of Registrant's proxy statement for its annual meeting
of stockholders to be held on June 27, 2001 (Part III).
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PLANTRONICS, INC.
2001 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
PAGE
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PART I
Item 1. Business................................................................................. 3
Item 2. Properties............................................................................... 20
Item 3. Legal Proceedings........................................................................ 20
Item 4. Submission of Matters to a Vote of Security-Holders...................................... 20
PART II
Item 5. Market for Registrant's Common Stock and Related Stockholder Matters..................... 21
Item 6. Selected Financial Data.................................................................. 21
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.... 21
Item 7A. Quantitative and Qualitative Disclosures About Market Risk............................... 31
Item 8. Financial Statements and Supplementary Data.............................................. 31
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..... 32
PART III
Item 10. Directors and Executive Officers of the Registrant....................................... 33
Item 11. Executive Compensation................................................................... 33
Item 12. Security Ownership of Certain Beneficial Owners and Management........................... 33
Item 13. Certain Relationships and Related Transactions........................................... 33
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K......................... 34
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Plantronics, the logo design, Plantronics and the logo design together, Clarity,
DuoSet, Encore, FreeHand, Mirage, PLX, SoundGuard, StarBase, StarSet, Supra and
TriStar are registered United States trademarks of Plantronics, Inc. AttiTubes,
ClearVox, Headset Switcher, PerSono, Practica, QuickAdjust, 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
This Annual Report on Form 10-K is filed with respect to our fiscal year
2001. Each of our fiscal years ends on the Saturday closest to the last day of
March. Our fiscal 2001 ended on March 31, 2001. For purposes of consistent
presentation, we have indicated in this report that each fiscal year ended
"March 31" of the given year, even though the actual fiscal year end may have
been on a different date.
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. In addition, we may from time to time make oral
forward-looking statements. These statements may generally be identified by the
use of such words as "expect," "anticipate," "believe," "intend," "plan,"
"will," or "shall," and include, but are not necessarily limited to, all of the
statements marked below with an asterisk ("*"). 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. For a discussion
of such factors, this Annual Report on Form 10-K should be read in conjunction
with certain portions of our 2001 Annual Report to Stockholders, consisting of
the condensed consolidated financial statements and related notes and the
section titled "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Reference should also be made to the risk factors
discussed in the portion captioned "Risk Factors Affecting Future Operating
Results," commencing on page 21 of this Annual Report on Form 10-K.
ITEM 1. BUSINESS
GENERAL
Plantronics, Inc. ("we", "our," "us," the "Company" or the "Registrant") is
a worldwide leading designer, manufacturer and marketer of lightweight
communications headsets, telephone headset systems, headset accessories, and
related services. In addition, we manufacture and market specialty telephone
products, such as amplified telephone handsets, specialty telephones for
hearing-impaired users, and noise-canceling handsets for use in high-noise
environments. Our call center and office business is not seasonal; sales of our
products through retail channels does have seasonality, with generally higher
sales in the period before the winter holiday season.
Plantronics' headsets are recognized for their safety, reliability, comfort,
and sound quality. Plantronics has come to be highly regarded for leading-edge
technological innovations, particularly for our emerging market products, such
as cellular and computer headsets. Our headset products are used globally for
call center, mobile, computer, and residential applications. Plantronics' broad
compatibility with an extensive range of telephony systems has made us the
industry standard in call centers worldwide.
Our broad range of communications products is sold in more than seventy
countries through a global network of distributors, original equipment
manufacturers, retailers, and telephony service providers. We have
well-developed distribution channels in North America and Europe, where the
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 call centers in the Middle East, Africa, Australia,
Asia, and Latin America. The potential for growth in foreign markets is the
result of developments in the rapidly expanding telecommunications
infrastructure and increasing use of telephone-based customer service.
Plantronics also sells headsets to business, home and office users who have
been identified as user markets with long-term growth potential.* Users in these
markets consist of business executives, agents, brokers, lawyers, accountants,
home-office business people, and other professionals whose occupations may
require extensive use of a telephone.
The use of headsets for mobile communications and as a computer peripheral
is a potentially significant growth area for headset sales.* Headsets in these
markets are proving to be a key communications tool, providing greater mobility
and freedom from dial pads and keyboards. Applications in this market include
mobile communications,
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voice recognition, personal computer conferencing, computer telephony
integration (CTI), and multimedia applications.
Our headsets are purchased by a broad and diverse group of business customers
worldwide, including telephone-operating companies, operators of private
telephone networks, and governmental agencies. Our headset products are also
purchased directly by end-users for use in the home and home-office. We
distribute our products through specialized headset distributors, large
electronics wholesalers, original equipment manufacturers (OEMs), and retail
channels, such as office supply stores, consumer electronics stores, mail order
catalogs, warehouse clubs, and office supplies distributors. We sell certain
products directly to governmental agencies and also distribute products to the
government market through distributors, OEMs and other sales channels.
Plantronics products may also be purchased from our website,
www.plantronics.com.
INDUSTRY BACKGROUND
GENERAL BACKGROUND
Over the past few years, we have broadened our product offerings to target
the office, and the emerging mobile and computer markets. The proliferation of
desktop computing has made communications headsets a necessity in many
occupations, both in terms of functionality as well as ergonomics. In the mobile
market, growing awareness of driver safety is increasing the adoption of
headsets for mobile phone users.
Headsets enhance the communications experience through:
MULTI-TASKING BENEFITS which allow people to use a computer, take notes,
and organize files while talking hands free;
IMPROVED MOBILITY, for example, being able to talk more easily on a
cellular or cordless phone while on the go;
BETTER SOUND QUALITY for telephone users by reducing background noise;
ERGONOMIC RELIEF from repetitive stress injuries and discomfort
associated with placing a telephone handset between the shoulder and
neck;
ENABLING EMERGING PC APPLICATIONS, including speech recognition,
Internet telephony and gaming, and premium audio quality; and
PROVIDING GREATER PRIVACY than speakerphones.
MARKETS
CALL CENTER
Call center agents comprise the largest group of headset users. Call
center agents are on the telephone throughout their workday and a communications
headset is a standard piece of their work equipment. 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 has grown, the benefits of
headsets have become widely recognized as an essential component of a productive
and ergonomically safe workplace. The number of call center agents has increased
as companies endeavor to compete in the marketplace by (i) focusing on customer
service to provide a competitive advantage, (ii) reducing costs through the use
of real-time centralized information exchange and customer interaction, and
(iii) making greater use of cost-effective direct distribution models. As the
benefits of call centers have become more widely recognized and the system cost
per agent has declined, the establishment of call centers has spread and
continues to spread to smaller organizations and international firms.* In late
fiscal 2000, we introduced several new headset solutions -- the CA10 (Wireless
Amplifier) and A20 (Telephone Headset Amplifier and Accessory Deck) -- for the
call center market. In fiscal 2001, we moved these new products into the channel
and into the hands of end users.
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OFFICE
The office market, both corporate and small office/home office ("SOHO"),
has become an increasingly important market 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
headset penetration in this market. 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.* In late fiscal 2000, Plantronics introduced a range of new
headset solutions -- the T10, S10, S20, A20 and CS10 -- for the office market
and we successfully ramped production and sales of these products to end users
in fiscal 2001.
CORDLESS AND MOBILE HEADSETS
Mobile use of headsets, particularly with cellular phones, is undergoing
explosive growth worldwide.* In an increasingly mobile world, people want hands
free comfort and convenience. There has also been a growing focus on increased
safety when driving. Using a hands free device while in a motor vehicle is
perceived to be safer than holding a mobile telephone handset. In fiscal 2001,
Plantronics followed on the success of the new M-series line with the
introduction of the M130 and the M135 headset in September 2000. The M130
headset has a sleek, stylish design and is available in two colors, which has
proven very popular as headsets are increasingly considered for both fashion and
functionality. In January, we also launched the M205 premium "earbud" series.
"Earbud" headsets do not have a microphone boom, but, instead, have the
microphone attached to the cable between the headset speaker and the telephone.
The unique feature set of the M205 headset includes technology that provides
natural voice delivery and enhanced sound quality, addressing a historical
weakness of the earbud-style headset. Our complete range of mobile products meet
the growing demand for attractive and comfortable cellular accessories that
offer superior sound quality and better voice accuracy. In March 2001, we
announced the worldwide launch of the M1000, a Bluetooth(TM) wireless headset.
The M1000 Bluetooth headset is the first wireless headset to be powered by
second-generation chipset technology, which delivers better sound quality,
longer talk time and lighter weight than earlier chipset designs.
COMPUTER PC HEADSETS
In fiscal 2001, we continued our strategic commitment to design and
manufacture communications headsets for emerging speech recognition and Internet
telephony applications. We introduced the DSP computer headset series, a new
line of digitally-enhanced Universal Serial Bus (USB) headsets for the PC and
Mac with superb audio quality. These headsets offer digital-quality stereo and
microphone capabilities to make sound clearer, speech more accurate and
multimedia applications more realistic. We support the digital headset
experience with PerSono(TM) Audio Control Center Software, a proprietary
software interface that allows unprecedented ability to control and enhance
audio performance in the computer environment. In our DSP line of headsets, we
employ the industry's most advanced digital processing technology to create an
entirely new listening and interactive voice experience for consumers.
INDUSTRY SEGMENTS AND FOREIGN OPERATIONS
We are engaged in the design, manufacture, marketing and sales of
telecommunications equipment including headsets, telephone headset systems, and
other specialty telecommunications products. We operate in one business segment.
Our operations are organized to focus on three principle markets: call center
and office products; mobile and computer products; and other specialty products
(Walker Equipment Division). Because we operate in one segment, all financial
segment information required by the Financial Accounting Standards Boards
Statement No. 131 (Disclosures about Segments of an Enterprise and Related
Information) can be found in the consolidated financial statements and related
notes, and are incorporated by reference from our 2001 Annual Report to
Stockholders.
In fiscal 1999 and 2000, approximately 30.5% and 33.5% of our net sales
were derived from sales to foreign customers, respectively. In fiscal 2001,
non-US sales accounted for approximately 31.2% of total net sales. Sales to
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foreign customers are generally subject to such additional risks as fluctuations
in exchange rates, increased tariffs and the imposition of other trade barriers.
In fiscal 2001, we did not engage in any hedging activities to mitigate exchange
rate risks and our international revenues were affected by fluctuating
currencies. In April 2002, we began hedging our transaction exposure in Europe,
specifically hedging both our positions in the Great British Pound and the Euro,
as these are where the majority of our currency exposure lies. To the extent
that we increase sales to foreign customers, or to the extent that we increase
our transactions in foreign currencies, or that we are unsuccessful in our
hedging strategies, our results of operations could continue to be materially
adversely affected by exchange rate fluctuations.
PRODUCTS
SUMMARY
Our product line consists of lightweight communications headsets, telephone
headset systems, headset accessories and services, and specialty telephone
products. Our headset products incorporate unique features that we believe offer
compelling performance advantages:
COMFORT. We believe our focus on ergonomics has been critical to
our success. 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.
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
a voice tube design that does not require the microphone boom to be
positioned precisely for proper functioning. The clear Voice Tube, a
Plantronics trademark, is ideal for most office and call center
environments, with the additional benefits of an attractive
appearance, easy hygienic replacement, and lighter weight.
DURABILITY. We have forty years of experience understanding
headset durability and have successfully incorporated this knowledge
into our product designs which we believe generally last longer than
the best comparable competitive products.
In addition to a complete line of industry-leading headsets, headset systems,
headset telephones and amplifiers, we also provide headset accessories which
include replacement Plantronics Voice Tubes, ear cushions, eartips and wind
noise suppressors. These replacement parts allow end users to revitalize their
headset to maintain maximum performance and comfort. We also sell a full line of
accessory products, including, handset lifters and in-use indicators which allow
our customers increased mobility and ease of use. We also provide exceptional
customer service and support. We believe that our customer support and service
programs offer market leading advantages that provide our end users and
customers with easier access to Plantronics. We have consistently received the
highest customer satisfaction ratings in the industry and we believe that our
customer service programs provide an important competitive advantage.
HEADSETS
TELEPHONY APPLICATIONS: Headsets for use with corded telephones generally
consist of two distinct units. The "top" is the portion that the user wears.
This portion is what is generally associated with the term "headset." The
headset top contains the speaker and the microphone and a means to have these in
the correct location for comfortable use. The headset "base" often referred to
as an amplifier or telephone adapter, interfaces with the telephone or other
equipment. The headset base is currently required in most standard telephone
applications. Increasingly, the headset interface is being built into the corded
telephone or call center call distribution system with which the headset is
being used, allowing use of the headset top alone.
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MOBILE APPLICATIONS: Many mobile telephones (both cellular and portable
units) come with a dedicated standard 2.5mm headset port, permitting the headset
to be plugged directly into the telephone handset. On those mobile telephones
that do not have a standard headset port, we often sell an adapter that plugs
into the telephone and permits attachment of a headset top. As the adoption of
headsets increases, we expect that more corded telephones, mobile telephones and
other equipment will be equipped with headset interfaces.*
COMPUTER APPLICATIONS: Computers and other electronic equipment generally
do not require a separate adapter and our headsets are designed to plug directly
to the equipment (either to the computer's analog sound card or, in the case of
our recently introduced digital signal processing (DSP) line, into the USB port
of the computer).
HEADSET TOP STYLES: There are four basic headset "top" styles:
Over-the-head headsets with ear cushions. The Supra(R) headset,
still our most popular model, is an over-the-head model available
with sound reception in one or both ears. The Encore(R) headset
features all of the qualities of the Supra headset, plus
user-controllable tone adjustment. The DuoSet(R) headset has a
comfortable and adjustable headband and the flexibility to convert
quickly to the over-the-ear style discussed below. Most of our
present models of headsets for use with computers, the SR1, LS1 and
HS1 models, and the newly introduced line utilizing DSP technology,
are over-the-head style. Several of our headsets for use with mobile
telephones, the M110, M114, M170 and M175 models, are also
over-the-head headsets (with the M170 and M175 models readily
converting to the over-the-ear style).
Over-the-ear headsets with a receiver that rests on either ear.
The Mirage(R) telephone 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. The M120, M124, M130 and M135 mobile headsets are also
designed with the receiver resting on the ear with a comfortable
earloop that holds the headset in place. The M1000 Bluetooth headset
is an over-the-ear headset. As noted above, the mobile headset models
M170 and M175 and the DuoSet telephone headset convert from
over-the-head to the over-the-ear style.
Over-the-ear headsets with an ear tip. The TriStar(R) headset,
the industry's lightest commercial telephone headset, features
maximum user adjustments for excellent stability, comfort and sound
quality. Sound is delivered to the ear by an acoustic ear tip that
attaches to the comfortable earloop of the headset. The StarSet(R)
headset is the distinctive Plantronics headset that uses a small
capsule that fits behind and in the outer portion of the ear. The
headset is extremely lightweight, requiring no headband, and the ear
tip's acoustic coupling provides exceptional sound quality.
Headsets that rest in the outer portion of the ear. The
FreeHand(R) headset 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
performance. Our M140 and M145 models are versions of the FreeHand
headset designed for use with mobile telephones. The CAT132 is a
version of the FreeHand headset optimized for use with computer
applications. The receiver of the new M205 earbud style headset rests
in the outer part of the ear with the microphone incorporated into
the cord leading to the mobile telephone.
We manufacture a broad line of headset styles that can be worn over the
head, in the ear or over either ear. Many 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 headsets, in conjunction with
their associated amplifiers, 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(TM) connector,
which allow users to leave the phone without removing their headsets or
disconnecting their call. We sell a full range of amplifiers designed to work
with substantially all telephone systems. We also sell telephone headset systems
that plug directly to the phone line and adapters to allow headsets to connect
to mobile telephones.
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PRINCIPAL PRODUCTS: Our principal headset tops, headset amplifiers and
telephones are as follows:
OFFICE AND CALL CENTER HEADSETS AND ACCESSORIES
PRODUCT DESCRIPTION FEATURES
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SUPRA Our most popular headset, Engineered for sound quality
ideal for phone-intensive jobs and durability. Sound
and call center environments. reception in one or both
ears.
ENCORE Also used in call centers; User-controllable tone
designed for near-universal adjustment and powerful
fit and all-day comfort. noise-canceling performance.
MIRAGE Uses a miniaturized Rests gently on the ear, not
over-the-ear capsule with an in the ear. Can be worn on
adjustable receiver. either ear.
STARSET Has an acoustic eartip that Ultra-lightweight, with an
fits gently in the outer acoustic seal to block out
portion of the ear. unwanted background noise.
TRISTAR Stylish design for phone Featherweight (1/2 ounce),
intensive jobs and call center with maximum user
environments. adjustments designed for
stability, comfort and sound
quality.
FREEHAND Designed for business Small and unobtrusive, easy
professionals, this headset to put on and take off.
features a small earbud which
rests comfortably in the ear.
DUOSET Appropriate for business Easily convertible from
professionals who want a over-the-head to
headband for longer calls as over-the-ear for greater
well as an over-the-ear versatility.
headset for intermittent phone
use.
Vista(TM) Universal Modular Amplifier -- Unique SoundGuard(R) Plus(TM)
compatible with single or and Call Clarity(TM) technology
multi-line telephones. provide improved sound
quality while delivering
automatic audio comfort by
reducing the sound received
to comfortable levels.
E-10 In-Line Amplifier -- designed So small and lightweight
for use directly on the that it is worn on the body
telephone line. instead of taking up
valuable desktop space, yet
offers full desktop adapter
functionality.
A20 Telephone Headset Amplifier Includes an under-the-telephone
and Accessory Deck. accessory deck, with top-of-the-
Professional headset amplifier line amplifier, cord management,
system with easy configuration an online indicator and headset
and universal compatibility is stand.
ideal for business
professionals and executives.
Plug Prong Amplifier Perfect for the call center Designed for automatic call
environment and, in distribution systems.
specialized situations, for
air traffic control and other
environments.
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OFFICE AND CALL CENTER HEADSETS AND ACCESSORIES
PRODUCT DESCRIPTION FEATURES
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CA10 Wireless Amplifier - 900 MHz Built to permit call center
cordless amplifier that and office users up to 150
connects to single-line or feet of mobility.
multi-line corded telephones.
CS10 Cordless Headset System - Provides a turnkey easy to
identical to the CA10 model install cordless headset for
and comes bundled with a use in the office
comfortable and convenient environment.
convertible headset.
CA20 Wireless Amplifier - DECT Built to permit call center
cordless amplifier that and office users up to 150
connects to single-line or feet of mobility.
multi-line corded telephones
for our European customers.
COMPUTER HEADSETS
PRODUCT DESCRIPTION FEATURES
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SR1 Speech recognition headset for Monaural headset with
use with speech recognition noise-canceling microphone
applications and general use in a lightweight
with the computer. over-the-head form.
LS1 Multimedia stereo headset for Lightweight stereo headset
use with speech recognition with noise-canceling
applications and multimedia microphone and an inline
applications. control module for speaker
volume and microphone mute.
HS1 Gaming headset for use with High-fidelity speakers with
all multimedia applications dynamic bass response, a
and computer games, as well as noise-canceling microphone
voice recognition and voice swings out of the way when
command applications. not needed. Complete with
an inline control module for
speaker volume and
microphone mute.
DSP-100 A digitally-enhanced USB A monaural headset with
headset for speech recognition noise-canceling microphone
Internet telephony/chat, voice to enhance speech accuracy.
and speech recognition Packaged with Plantronics'
applications. PerSono Audio Control Center
Software, as well as leading
speech recognition and voice
applications.
DSP-300 A digitally-enhanced USB A stereo headset with
headset with full-range stereo noise-canceling microphone
sound for all multimedia to enhance speech accuracy.
applications including Packaged with Plantronics'
listening to CDs, DVDs, or PerSono Audio Control Center
MP3s in high-quality stereo Software, as well as
sound. leading speech recognition
and voice applications.
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COMPUTER HEADSETS
PRODUCT DESCRIPTION FEATURES
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DSP-400 A digitally-enhanced foldable A foldable stereo headset
stereo USB headset with well suited to business
full-range stereo sound. The travelers. The noise-canceling
foldable design allows for microphone enhances speech
easy storage and transport. accuracy. Packaged with
Listen to CDs, DVDs, or MP3s. Plantronics' PerSono Audio
Control Center Software, as well
as leading speech recognition and
voice applications.
DSP-500 A digitally-enhanced USB A stereo headset for premium
gaming/multimedia headset with audio sound. The 40mm
full-range stereo sound. speakers provide dynamic
Perfect for multimedia bass response. Software
applications such as games, includes Plantronics'
CDs and MP3 music, speech PerSono Audio Control
recognition and voice command Center Software, as well as
applications. leading speech recognition,
voice and gaming
applications.
CAT 132 Convenient, portable PC Features include a miniature
headset ideal for use with wide-band receiver,
laptop computers. noise-canceling microphone
with adjustable boom for
optimal fit in a compact and
extremely lightweight (less
than 1/3 of an ounce)
form factor.
Headset A multimedia amplifier --
Switcher(TM) allows for use of a single
headset with a telephone or
computer by simply flipping
a switch.
MOBILE HEADSETS
PRODUCT DESCRIPTION FEATURES
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M110/M114 A low-priced headset for use Comfortable adjustable
with mobile telephones. headband and noise-canceling
microphone. The M114 model
comes with a convenient
inline volume control.
M120/M124 Sleek over-the-ear headset for Quick and easy to put on
use with cellular and mobile with one hand, leaving both
telephones. hands free to drive or perform
other tasks. Both models come
with a noise-canceling microphone;
the M124 model has a convenient
inline volume control.
M130/M135 A stylish over-the-ear Lightweight, comfortable
telephone headset with a design. Both models come
comfortable adjustable earloop. with a noise-canceling
microphone; the M135 model
has a convenient inline
volume control.
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MOBILE HEADSETS
PRODUCT DESCRIPTION FEATURES
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M140/M145 This headset features a small Lightweight, comfortable
earbud which rests comfortably design. Both models come
in the ear with an optional with a noise-canceling
earloop to hold the headset microphone; the M145 model
securely in place. has a convenient inline
volume control.
M170/M175 Headset converts from over-the The ultimate in comfort and
head to over-the-ear style to choice. Both models come
give the maximum freedom of with a noise-canceling
choice to the mobile user. microphone; the M175 model
has a convenient inline
volume control.
M205 Announced in January 2001 at The M205 headset features
Winter CES and scheduled for microphone technology that
shipment in April, the M205 is provides natural voice
Plantronics' first delivery, acoustic sound
earbud-style headset. protection to help safeguard
users' hearing, and
Plantronics' Flexfit(TM) design
for comfort and improved fit.
M1000 Plantronics' first Bluetooth Bluetooth headset profile
wireless headset was announced v1.1 compliant, lightweight
in March 2001 at CTIA and and compact, with up to 3.5
scheduled for shipment in late hours talk time and range up
Summer 2001. to 30 feet.
ClearVox C90 An affordably priced Easy-on/easy-off design that
earbud-style headset. fits on either ear.
ClearVox C300 An affordably priced Support triangle provides a
over-the-ear style headset. universal fit.
Mobile Phone Adapters Designed for use with mobile Available for most of the
telephones lacking built-in commonly used mobile
headset ports. telephones not equipped with
a headset port.
RESIDENTIAL AND SMALL OFFICE HEADSET SYSTEMS
PRODUCT DESCRIPTION FEATURES
------- ----------- --------
CT10 The CT10 model is a 900 MHz Designed for home and small
cordless headset telephone in office applications, the
a stylish compact form so CT10 headset telephone
small it fits in a pocket. offers the ideal combination
of size, mobility and
convenience.
SP and PLX(R) SERIES Designed specially for the Offers comfort and ease of
SOHO user; sold with an use.
adapter or telephone.
PRACTICA(TM) SERIES Designed for low-to Offers good sound quality
medium-intensive phone users and durability at an
who require a less expensive attractive retail price.
headset; sold with an adapter
or telephone with convertible
headset.
S10 Telephone Headset Full-featured amplifier works Headset stand and full tone
System with virtually any phone. control, mute switch, and
transmit and receive volume
control.
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RESIDENTIAL AND SMALL OFFICE HEADSET SYSTEMS
PRODUCT DESCRIPTION FEATURES
------- ----------- --------
T10 Headset Telephone Complete single-line telephone Automatic noise-canceling
with convertible headset. technology, adjustable
volume and tone control,
redial, flash and mute
buttons, as well as built-in
online indicator and
headset stand.
T20 Headset Telephone Complete dual-line telephone All the features of the T10
with headset. telephone plus a hold button
with three-way conference
calling.
StarBase(TM) Headset A full-featured single-line This headset telephone, to
Telephone telephone developed for use in which nearly all of our
Europe. headsets may be attached,
enables businesses to use
headsets for non-operator
functions.
HEADSET ACCESSORIES AND SERVICES
We have developed and sell the HL1 Handset Lifter, an accessory product
for use with our CA10 and CS10 wireless amplifier systems, and the HS2 Handset
Lifter for use with the A20 amplifier and the S20 Telephone Headset System. The
HL1 Lifter allows completely remote call answering. When the phone rings, the
HL1 Lifter rings the remote unit of the wireless amplifier and, at the touch of
a button on the remote, lifts the telephone handset. The HL2 Lifter allows
A20/S20 users to answer the phone with the touch of a button on the A20 or S20
amplifier base.
Headset spares and accessories allow end users to revitalize their headset
tops to maintain maximum performance and comfort or increase the functionality
of the headset solution. Spares and accessories include replacement Plantronics
Voice Tubes, training cords, ear cushions, eartips, in-use indicators, theft
protection devices and background noise suppressors. In fiscal 2001, we
introduced AttiTubes(TM), a new line of accessory color voice tubes for some of
our most popular office and call center headsets. AttiTubes are available in two
sizes and five colors: Outrageous Orange, Serene Green, Passion Pink, Cool Blue
and Peaceful Purple. The trademark Plantronics Voice Tubes are also still
available.
We support our product offerings with a technical assistance center to
assist our customers with technical questions. Our worldwide service center
operations provide a quick response to warranty support and out-of-warranty
service needs.
SPECIALTY PRODUCTS
Our Walker Equipment Division sells special amplified and noise-canceling
handsets for high-noise environments, and a full line of replacement and
original equipment handsets for entry and elevator phones and for use in
telephone booths and information kiosks. Through our Walker Equipment Division,
we also manufacture line test equipment and sell specialty telephone products,
including amplified telephone handsets and telephone amplifier accessories for
the hearing-impaired. Our Walker Equipment Division also sells the Clarity(R)
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. In fiscal 2001, the
Walker Equipment Division launched the Cordless Clarity telephone, a 900 MHz
version of the popular Clarity telephone - giving greater mobility with clarity
of hearing to those with hearing impairment.
Our specialty products operation provides headsets and other equipment for
special applications that are not served by our standard headset product lines.
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PRODUCT DEVELOPMENT
Since our introduction of the original lightweight headset in 1962, enhancing
communications has been the primary focus of our development efforts. As we
expand into the global marketplace, we have increased the scope of these efforts
to support international product needs. We maintain an extensive database of
head and ear shapes to assist in the development of our products. Our concern
for ergonomics and our efforts to design-in comfort and safety have resulted in
such product innovations as a conformable earloop designed to conform to the
human anatomy and the SoundGuard Plus system, which provides intelligibility and
superior sound quality.
We have a number of product development programs currently underway,
including a new generation of headset systems for our emerging computer and
mobile markets. In addition, we are developing long and short-range wireless
mobility solutions for the call center, office and home-office markets. Our
Computer Audio Systems Division recently completed development efforts on the
next generation of digitally-enhanced USB headsets for the PC and Mac. These are
the first headsets available offering digital-quality stereo and microphone
capabilities to make sound clearer, speech more accurate and multimedia
applications more realistic. Our Mobile Communications Division recently
developed an innovative earbud-style headset for people who want the ease and
subtlety of an earbud-style product, coupled with improved acoustic performance.
During fiscal 2001, we previewed the first of our planned Bluetooth compliant
headset solutions at the Winter CES 2001 show in Las Vegas. We introduced
Bluetooth headset solutions for the mobile telephone market and also solutions
for the office and call center markets. Our new M1000 headset allows users of
mobile telephones to communicate with other Bluetooth devices such as mobile
phones, PDAs and laptops. We recently introduced several new products for the
office and call center, developed under the project names "Venus" and
"Stargate." These innovative designs, scheduled for general availability in the
third quarter of fiscal 2002, extend Bluetooth convenience and interoperability
to the office and call center markets. Bluetooth is a low-cost, short-range
wireless technology that promises to eliminate the cables and wires that
currently connect most computing and communications devices. We were one of the
earliest members of the Bluetooth consortium, which now includes over 2000
companies. Our Bluetooth offerings are the result of a major development effort
using second-generation chip technology. We believe this new technology will
allow us to offer better sound quality and longer battery life at a lower cost
than earlier Bluetooth headset offerings.* We are focusing additional
development efforts, using Bluetooth wireless technology, to service the needs
of all our markets.
Most of our research and development is carried out by our in-house
engineering staff in the United States and England. We supplement our in-house
engineering capabilities through selected outside contracting arrangements.
Research, development and engineering expenditures were $19.5 million, $21.9
million and $27.0 million for fiscal years 1999, 2000 and 2001, respectively. We
believe that substantial investment in research and development is imperative to
maintain our position in the industry and, therefore, intend to increase our
spending for research, development and engineering in fiscal 2002 and 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 markets. The success of
new product introductions is dependent on a number of factors, including
appropriate new product selection, timely completion and introduction of new
product designs, cost-effective manufacturing of such products, quality of new
products, the acceptance of new technologies such as Bluetooth, and general
market acceptance of all new products. 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 markets, there can be no
assurance that the market niches identified will, in fact, materialize, or that
our existing and future products designed for these markets will gain
substantial market acceptance. Further, assuming the markets develop and our
products meet customer needs, there is no assurance that such new products can
be manufactured cost effectively and in sufficient volumes to meet the potential
demand.
The technology of telephone headsets 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. Our newer emerging
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technology products, particularly in the mobile and computer markets, are
exhibiting shorter life cycles more in line with the consumer electronics
market, and are consequently more sensitive to market trends and fashion. We
believe that future changes in technology will come at a faster pace.* Our
future success will be dependent in part on our ability to develop products that
utilize new technologies and to adapt to changing market trends quickly. 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 to keep pace with future technological changes could
materially adversely affect our revenues and operating results.
SALES AND DISTRIBUTION
We have a well-established multilevel worldwide distribution network. Our
principal customers are distributors, OEM partners, retailers and telephony
service providers.
Specialized headset distributors represent our largest distribution channel.
These distributors generally sell on a national basis. Electronics wholesalers
represent our second largest channel. They typically offer a wide variety of
products from multiple vendors to both resellers and end users. These
distribution channels generally maintain inventory of our products, and our
revenues may be affected by our distributors' fluctuating inventory levels even
when market demand is stable. In fiscal 2001, we were successful in
substantially reducing our order lead times as well as inventory levels in the
channel.
The retail channel consists of 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.
Call center OEMs and manufacturers of automatic call distributor systems
(ACDs) and other telecommunications and computer equipment also utilize
Plantronics headsets. Call center equipment OEMs do not typically manufacture
their own peripheral products, and therefore distribute our headsets on its own
private label, as a Plantronics branded product or as a co-branded product.
Mobile telephone OEMs include both manufacturers of mobile telephone handsets
and wireless carriers operating cellular, PCS, GSM and other mobile telephone
networks. They do not manufacture headsets but increasingly will distribute our
headsets on a privately labeled or co-branded basis.
Computer OEMs include both manufacturers of computer hardware (including
personal computers and specialized components and accessories for personal
computers) and software suppliers (such as suppliers of voice recognition
systems for use with personal computers). Many companies do not typically
manufacture headsets but look to us for bundling our headsets with their
products. Currently most of the OEM bundling is done on a Plantronics-labeled
basis, with some of the OEMs doing so on a privately labeled or
co-branded basis.
The telephony service provider channel is comprised of former Regional Bell
Operating Companies and other telephone service providers that purchase headsets
from us for use by their own agents. Certain of these service providers also
resell headsets to their customers.
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 pursuant
to that agreement.
We maintain a direct sales force worldwide to provide ongoing customer
support and service globally. We also retain commissioned manufacturers'
representatives to assist in selling through the retail channel.
BACKLOG
Our backlog of unfilled orders was $16.6 million on March 31, 2001, compared
to $22.4 million at the end of fiscal 2000. We include in backlog all purchase
orders scheduled for delivery over the next twelve months. As part of our
commitment to customer service, our goal has been to ship products to meet
customers' requested shipment dates. The majority of our orders are fulfilled
within two to five business days. Our backlog is occasionally subject
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to cancellation or rescheduling by the customer on short notice with little or
no penalty. 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.
COMPETITION
We compete in several different markets, specifically the call center, the
office, mobile, computer and residential markets. There are a number of
different competitors in each of these market niches. We believe the principal
competitive factors in each market are product features, comfort and fit;
product reliability; 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, extensive and
responsive customer service and support programs, large user base and extensive
number of product variations, together with our comprehensive experience in
designing safe, comfortable and reliable products and dealing with regulatory
agencies, are the key factors necessary in maintaining our position as a leading
supplier of lightweight communications headsets.
In the call center user 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 from technological
advances such as wireless and Bluetooth systems. Although we have historically
competed very successfully in the call center market, there can be no assurance
that we will be able to continue our leadership position in that market.
The office market, including both traditional and small or home office, and
residential markets, involves the sale of headsets for connection to single line
or office telephone systems, cellular and cordless telephones and computers.
Certain competitors in the call center user market also sell headsets for use in
the office market.
Competitors in the mobile market generally come from outside of the call
center market. They include the mobile phone manufacturers who typically
outsource phone accessories like headsets, and companies that focus primarily on
the mobile and/or cordless phone accessories markets. There is indirect
competition from hands free car kits that also allow users to drive with both
hands on the wheel. Important competitive factors in the mobile market include
product styling, product reliability, product features, competitive pricing,
sound quality, comfort and fit, customer service and support, reputation,
distribution, ability to meet delivery schedules, warranty terms, and product
life.
In the computer market, we compete for business in both the retail channel
and through OEMs. We face competition principally from established computer
peripheral vendors. These vendors have established relationships with their
distribution channels, enabling them to gain broad and deep global distribution.
There is indirect competition from stand-alone microphones and loudspeakers for
use with computers. Competition through the retail channel is based upon
differentiated retail packaging, superior microphone and speaker performance,
price and headset style and color. Competition for OEM business is based upon
offering highly accurate microphones optimized to the OEM's software or system,
unique styling, competitive pricing, and consistent quality with low defect
rates.
The residential market involves the sale of headsets, telephones for use by
the hearing impaired, and single and multi-line corded and cordless headset
telephone solutions. This market is principally served by the retail channel and
through certain OEMs. Our competition in the residential market comes
principally from competitors in the mobile and computer markets and, in the case
of our Walker Clarity telephones for the hearing impaired, from certain niche
market manufacturers of similar products.
As we develop new generations of products and enter new markets, including
the developing business and home office user markets, we anticipate facing
additional competition from companies that currently do not offer communications
headsets. Such companies may be larger, offer broader product lines and have
substantially greater financial resources. Such competition could negatively
affect pricing and gross margins. We believe that our experience in design and
manufacture of comfortable and well fitting headsets will assist us in our
efforts to sell headset products in the face of this new competition.* However,
there is no assurance that we will be able to compete successfully.
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We believe that the following key factors enable us to maintain our position
as a leading supplier of lightweight communications headsets:
- brand name recognition;
- large, diverse distribution networks;
- strong customer service;
- diverse product offerings;
- ability to design safe and reliable products; and
- an understanding of regulations.
Although we believe we compete successfully with respect to these factors, 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.
MANUFACTURING AND SOURCES OF MATERIALS
The majority of our manufacturing operations consists of assembly and
testing, most of which is performed at our facility in Mexico. We have smaller
manufacturing operations in California, Tennessee 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 Asia, the United States, Mexico, and Europe. The
majority of our components and subassemblies used in our manufacturing
operations are obtained, or are reasonably available, from dual-source
suppliers.
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, we maintain 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. We
believe that our current manufacturing operations comply in all material
respects with applicable environmental laws and regulations. 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. It is possible
that future environmental legislation may be enacted or current environmental
legislation may be interpreted to create environmental liability with respect to
our facilities or operations.
PATENTS AND TRADEMARKS
We maintain a program of seeking patent protection for our technology.
Significant product features for which we have, or are currently seeking, patent
protection include our A20 detachable phone base configuration, SoundGuard
receiver gain compression integrated circuit, features of the Mirage headset,
the TriStar headset, Clarity frequency enhancing telephone, adapter serial bus,
auditory user interface, adaptive transmit level circuit, battery-powered
in-line amplifier with an automatic by-pass feature to provide continuous
receive signal when battery power gets low, noise canceling headset
configuration, integrated circuit implementation for an audio amplifier
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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. As of June 1, 2001, we have
thirty-six United States patents in force, expiring in 2002 to 2019. Some of
these patents are also issued in certain foreign countries.
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 be issued for
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 us. We may be subjected to, or may
initiate, litigation or patent office 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 the Plantronics name and our
logo design and the names of many of our products and product features,
including, but not limited to, our Encore, FreeHand, Mirage, SoundGuard,
StarSet, Supra, and TriStar products and features. We currently have United
States and foreign trademark applications pending in connection with certain new
products and product features. We have such trademark registrations in place on
some or all of those marks in the United States and a number of countries
throughout the world. We claim common law trademark rights in many of our
products and/or product 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 31, 2001, we employed 2,208 people worldwide, including 1,532 in our
manufacturing facility in Tijuana, Mexico. No employees are currently covered by
collective bargaining agreements or are members of any labor organization as far
as we are aware. We have not experienced any work stoppages and believe that our
employee relations are good.
SENIOR MANAGEMENT AND EXECUTIVE OFFICERS
Set forth below is certain information regarding the senior management and
executive officers of Plantronics and their ages as of June 1, 2001.
NAME AGE POSITION
---- --- --------
Owen Brown 54 Vice President - Development and Chief Technology Officer
Benjamin Brussell 40 Vice President - Corporate Development
Lyndall Fry 44 Vice President - Quality
Kevin Goodwin 45 Vice President - Legal, General Counsel and Secretary
Don Houston 47 Senior Vice President - Sales
Ken Kannappan 41 President and Chief Executive Officer
Steve Krug 43 President - Walker Equipment Division
Jean-Claude Malraison 54 Managing Director - Europe, Middle East & Africa
Craig May 41 Senior Vice President - Marketing and Development and
President - Call Center and Office Division
Barbara Scherer 45 Senior Vice President - Finance & Administration and Chief
Financial Officer
Joyce Shimizu 46 President - Mobile Communications Division
Neil Snyder 49 President - Computer Audio Systems Division
Terry Walters 52 Vice President - Operations
MR. BROWN was appointed Vice President - Development and Chief Technology
Officer in July 1999. Prior to joining Plantronics, Mr. Brown worked for
Omnipoint Technologies, Inc. as the Product Development Director from 1996 to
1998 and as Vice President, Products and Technology at JRC International, Inc.
from 1994 to 1996. He received his Bachelor's degree in Engineering Physics at
McMaster University of Canada and went on to receive his
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Masters degree in Electrical Engineering from the same institution.
MR. BRUSSELL joined Plantronics in March 1998 as Vice President - Corporate
Development and reports directly to the President and Chief Executive Officer.
Prior to joining Plantronics, 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 Dot Hill Systems Corporation, a
manufacturer of high performance data storage systems.
MS. FRY joined Plantronics in August of 1998 and is the Vice President of
Quality. Prior to joining Plantronics, Ms. Fry was with Siemens A.G. for
fourteen years, most recently as the Head of Quality Assurance with the Siemens
Wireless Terminals Division in Austin, Texas, from 1993 to 1998. Ms. Fry has
over fifteen years of manufacturing, materials and quality experience. Ms. Fry
received a Bachelor of Arts from the University of California, Irvine and an
M.B.A. in International Business from the College of Notre Dame.
MR. GOODWIN has served as Vice President - Legal, General Counsel and
Secretary since July 1999. Mr. Goodwin joined Plantronics in July 1996 as a
full-time contract counsel and in November 1997 became an employee and General
Counsel. In July 1998, Mr. Goodwin was appointed Assistant Secretary of
Plantronics. Prior to joining Plantronics, Mr. Goodwin was in private practice
with several law firms with offices in Silicon Valley, including Carr & Ferrell
(from 1995 to 1996) and Pettit & Martin (from 1989 to 1995). Mr. Goodwin
received his law degree from Columbia University and a Bachelor of Arts degree
in Economics and Philosophy from Claremont Men's College.
MR. HOUSTON joined Plantronics 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 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 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.
MR. KANNAPPAN joined Plantronics in February 1995 as Vice President - Sales,
responsible for OEM Sales and the Asia Pacific/Latin America markets for
Plantronics, Inc. He was promoted to Vice President - Sales, responsible for the
United States, Asian and Latin American markets in September 1995. He was
promoted to Managing Director of our Plantronics Limited subsidiary 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, the Company's Mobile and Walker Equipment Divisions and Plantronics
Limited. In March 1998, Mr. Kannappan was promoted to President and Chief
Operating Officer. In January 1999, he was promoted to Chief Executive Officer
and appointed to the Board of Directors. Prior to joining Plantronics, Mr.
Kannappan was Senior Vice President of Investment Banking for Kidder, Peabody &
Co. Incorporated, where he was employed 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
is also a Director of Mattson Technology, Inc., a supplier of advanced process
equipment for the semiconductor industry, and Integrated Device Technology,
Inc., a manufacturer of communications integrated circuits.
MR. KRUG joined Plantronics in December 1996 as President, of Walker
Equipment Corporation, then a wholly-owned subsidiary of Plantronics. Walker
Equipment Corporation was merged into, and became a division of Plantronics in
1997. Mr. Krug is responsible for all activities of this handset and specialty
phone products division. Prior to joining Plantronics, Mr. Krug was Executive
Vice President and General Manager of BEL-Tronics, Ltd., a consumer electronics
firm, from 1994 to 1996. Mr. Krug also served as Chief Executive Officer and
Director of Almor Corporation from 1993 to 1994. Prior to that, he held
progressively responsible positions in general
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management and strategic marketing and technology with FLIR Systems, Inc. (an
affiliate company of Hughes Aircraft Company - 1990 to 1993) and Hughes Aircraft
Company (1978 to 1990). Mr. Krug received his Bachelor degrees in Management
Science and Applied Mathematics from University of California, San Diego and has
done non-degreed work at Stanford University, MIT and University of California,
San Diego.
MR. MALRAISON joined Plantronics in July 1999 as the Managing Director -
Europe, Middle East & Africa. Mr. Malraison is resident in the Swindon, England
and Hoofddorp, the Netherlands offices of Plantronics and is responsible for
our European, Middle East and African sales and operations. Mr. Malraison
received his Engineering degree at the Institute Superior D'Electronic Du Nord
in France. Prior to joining Plantronics, Mr. Malraison spent twenty-eight years
with IBM in a number of roles, most recently as Vice-President, Business
Partners, EMEA.
MR. MAY joined Plantronics in May 1998 as Vice President - Marketing. In July
1999, Mr. May was promoted to Senior Vice President - Marketing and Development.
In Fall 1999, Mr. May's responsibilities expanded to include President of the
Call Center and Office Division. Prior to joining Plantronics, Mr. May was most
recently with Siemens Business Communications 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 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 Plantronics 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 us, 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 Ms. Scherer
was Senior Vice President of Operations from April 1996 until October 1996.
Prior to that Ms. Scherer held various positions spanning a nine year career
with Micropolis Corporation, a disk drive manufacturer, including, from 1995
until 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, Santa
Barbara and received her Masters from the Yale School of Organization and
Management.
MS. SHIMIZU joined Plantronics in July 1983, and was promoted to President of
the Mobile Communications Division in 1999. Prior to that, Ms. Shimizu was the
Senior Marketing Director for the Computer and Mobile Systems Division, the
predecessor to the Mobile Communications Division. Prior to that position, Ms.
Shimizu held various positions in our marketing and sales organizations. Ms.
Shimizu received an MBA from the Monterey Institute of International Studies and
a Bachelor's Degree in Japanese from University of California, Los Angeles.
MR. SNYDER joined Plantronics as Vice President and General Manager of the
Computer Audio Systems Division in November 1998. Mr. Snyder was promoted to
President of the Computer Audio Systems Division in July 1999. Before joining
Plantronics, Mr. Snyder was the General Manager of the Zip Aftermarket group at
Iomega Corporation from 1997 to 1998. Prior to that Mr. Snyder has held various
executive positions at Colordesk, Ltd., Gold Disk Inc., and Borland
International. Mr. Snyder attended the Rochester Institute of Technology and
Michigan State University.
MR. WALTERS has been the Vice President - Operations since April 2000 and is
responsible for the worldwide operations of Plantronics. Mr. Walters joined
Plantronics in September 1997 as Vice President New Product Introduction and
more recently directed development of Plantronics e-commerce business before his
current assignment. Prior to joining Plantronics, Mr. Walters spent twenty-four
years in Silicon Valley firms developing and manufacturing computer systems. Mr.
Walters holds both a Bachelor of Science Degree and a Masters Degree in
Industrial Operations from Bradley University.
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Executive officers serve at the discretion of the Board of Directors and
senior management serves at the discretion of the President and Chief Executive
Officer. There are no family relationships between any of the directors and
executive officers of Plantronics.
ITEM 2. PROPERTIES
Our principal executive offices are located in Santa Cruz, California. As of
May 11, 2001, we owned or leased a total of approximately 500,000 square feet of
manufacturing, administrative, engineering and office facilities, including: (i)
approximately 204,309 square feet of research and development, light assembly
operations, and warehouse and administrative facilities in Santa Cruz,
California, approximately 40,000 square feet of which are leased to third
parties as office and warehouse space; (ii) approximately 6,500 square feet of
office and warehouse space in Los Gatos, California, all of which is sub-leased
to a third party; (iii) 8,375 square feet of light assembly and administrative
facilities in Chattanooga, Tennessee under a lease expiring in 2005; (iv)
approximately 215,000 square feet for assembly and related operations in
Tijuana, Mexico, under several leases expiring in 2001 and 2005, each with
options to renew; (v) approximately 48,684 square feet for research and
development, assembly operations, sales and administration in Wootton Bassett,
England under leases expiring in 2015; (vi) approximately 13,924 square feet for
administrative facilities in Hoofddorp, The Netherlands, under a lease expiring
in 2005; and (vii) smaller leased or rented facilities in Australia, Brazil,
France, Germany, Hong Kong, Italy, Japan, Spain and Taiwan. We believe that our
existing properties are suitable and adequate for our business. We believe that
our premises have sufficient capacity available for expansion over the next few
years.* We are currently engaging in a long-term space planning process with
respect to our Santa Cruz, California headquarters facilities and our Tijuana,
Mexico manufacturing plant. We believe that these facilities are unlikely to
support all of our requirements for capacity over a mid to longer term planning
horizon and are, therefore, evaluating our alternatives.
ITEM 3. LEGAL PROCEEDINGS
We are presently engaged in a lawsuit filed in the Superior Court in Santa
Clara County, California by GN Hello Direct, Inc., a former Plantronics retail
catalog distributor that was acquired by our single largest competitor, GN
Netcom. GN Hello Direct makes various claims associated with the termination of
the distribution relationship between Plantronics and Hello Direct, including
that Hello Direct has suffered approximately $11 million in damages as a result
of that termination. We consider Hello Direct's claims to be without merit. We
will defend the claims vigorously and have filed counterclaims against Hello
Direct for, among other claims, breach of contract and material
misrepresentations related to our entering into that contract.
We are also engaged in the defense of a patent infringement claim, relating
to a ClearVox product, brought by Cotron Corporation, a Taiwanese company. We
consider the claims in this lawsuit to be without merit. The action was
originally filed in the United States District Court, for the Central District
of California and we successfully moved the Court to transfer the case to the
United States District Court, for the Northern District of California. We will
defend this action vigorously and have filed a counterclaim alleging that the
Cotron patent is invalid, unenforceable, and not infringed.
We are also involved in various other legal actions arising in the normal
course of our business. We believe that it is unlikely that any of these actions
will have a material adverse impact on our operating results.* However, because
of the inherent uncertainties of litigation, the outcome of any of these actions
could be unfavorable and could have a material adverse effect on our financial
condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matters were submitted to a vote of the security holders of Plantronics
during the fourth quarter of the fiscal year ended March 31, 2001.
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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.
Information included under the caption "Corporate Information" appearing at page
31 of our 2001 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. As of May 11,
2001, there were 109 holders of record of our Common Stock.
ITEM 6. SELECTED FINANCIAL DATA
The information appearing under the caption "Selected Financial Data"
appearing at page 27 of our 2001 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 1 through 4 of our 2001 Annual Report to
Stockholders is incorporated herein by this reference.
RISK FACTORS AFFECTING FUTURE OPERATING RESULTS
Investors or potential investors in our stock should carefully consider the
risks described below. The performance of our stock will reflect the performance
of our business relative to, among other things, our competition, general
economic and market conditions and industry conditions. You should carefully
consider the following factors in connection with any investment in our stock.
Our business, financial condition and results of operations 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.
A GENERAL ECONOMIC SLOWDOWN COULD RESULT IN REDUCTION IN OVERALL DEMAND FOR OUR
PRODUCTS WHICH WOULD MATERIALLY ADVERSELY AFFECT OUR RESULTS AND WE BELIEVE THIS
IS CURRENTLY TAKING PLACE.
While our markets have not exhibited highly cyclical behavior in the past,
our sales are affected by overall economic activity. In the fourth quarter of
fiscal 2001 we saw a drop in the overall level of demand for our products which
we attribute principally to a slowing in national and international economic
growth. We believe there has been a continued decline in the economy and that a
recession may yet occur. Since the beginning of fiscal 2002, we have seen a
further reduction in the overall level of demand for our products. If these
trends are worse or longer than presently anticipated, this could cause us not
to achieve the levels of sales required to achieve our anticipated financial
results, which could in turn materially adversely affect the market price of our
stock. Also, if the overall economy slows or there is a recession, this could
affect the financial health of certain purchasers of our products, potentially
resulting in the failure of such purchasers to pay amounts due to us.
A SUBSTANTIAL PORTION OF OUR SALES COME FROM THE CALL CENTER MARKET AND A
DECREASE OF DEMAND IN THAT MARKET COULD MATERIALLY ADVERSELY AFFECT OUR RESULTS.
We have historically derived, and continue to derive, a substantial portion
of our net sales from the call center market. This market has grown
significantly in recent years as new call centers have proliferated and existing
call centers have expanded. We also may have benefited from a short term bubble
in call center demand in the first half of fiscal 2001 due to post-year 2000
activities and due to a possibly aberrational growth of internet related
businesses. In the fourth quarter of fiscal 2001 and in the portion of fiscal
2002 that has passed before the filing of this report, our sales in the call
center market have been below the level of sales in that market in recent prior
periods. We do not believe that our decreasing sales are a result of market
share gains by our competitors but, instead, believe that the sales slowdown is
due to reduction in the level of overall market demand. While we believe that
the call center market will grow in future periods,* this growth could slow or
revenues from this market could
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continue to 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 materially adversely affect growth in the call
center market. A continued deterioration in general economic conditions could
result in a reduction in the establishment of new call centers and in capital
investments to expand or upgrade existing centers, and we believe this is in
fact negatively affecting our business. Due to our reliance on the call center
market, we will be affected more by changes in the rate of call center
establishment and expansion and the communications products that call center
agents use than would a company serving a broader market. 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.
WE ARE COUNTING ON THE OFFICE, MOBILE, COMPUTER AND RESIDENTIAL MARKETS TO
DEVELOP AND WE COULD BE MATERIALLY ADVERSELY AFFECTED IF THEY DO NOT DEVELOP AS
WE EXPECT.
While the call center market is still a substantial portion of our business,
we believe that our future prospects will depend in large part on the growth in
demand for headsets in the office, mobile, computer and residential markets.
These communications headset markets are relatively new and undeveloped.
Moreover, we do not have extensive experience in selling headset products to
customers in these markets. If the demand for headsets in these markets fails to
develop, or develops more slowly than we currently anticipate, or if we are
unable to effectively market our products to customers in these markets, it
would have a material adverse effect on the potential demand for our products
and on our business, financial condition and results of operations. These
headset markets are also subject to general economic conditions and if there is
a continued slowing of national or international economic growth or a recession,
these markets may not materialize to the levels we require to achieve our
anticipated financial results, which could in turn materially adversely affect
the market price of our stock.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO A NUMBER OF
CAUSES OUTSIDE OUR CONTROL.
Our quarterly results of operations may vary significantly in the future for
a variety of reasons, including the following:
- general economic conditions;
- changes in demand for our products;
- insolvency of purchasers of our products or failure of purchasers of
our products to pay amounts due to us;
- timing and size of orders from customers;
- price erosion;
- 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 mix variations;
- changes in the levels of cooperative advertising or market development
funding required by retail resellers of our products;
- delays in shipments of our products;
- material product returns and customer credits;
- new product introductions by us or our competitors;
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- entrance of new competitors;
- changes in actual or target inventory levels of our channel partners;
- increases in the costs of our components and subassemblies;
- changes in the mix of products sold by us; and
- seasonal fluctuations in demand.
Each of the above factors is difficult to forecast and thus could have a
material adverse effect on our business, financial condition and results of
operations.
We generally ship most orders during the quarter in which they are received,
and, consequently, we do not have a significant backlog of orders. As a result,
quarterly net sales and operating results depend primarily on the volume and
timing of orders received during the quarter. It is difficult to forecast orders
for a given quarter. Since a large portion of our operating expenses, including
rent, salaries and certain manufacturing expenses, are fixed and difficult to
reduce or modify, if net sales do not meet our expectations, our business,
financial condition and results of operations could be materially adversely
affected.
Our operating results can also vary substantially in any period depending on
the mix of products sold and the distribution channels through which they are
sold. In the event that sales of lower margin products or sales through lower
margin distribution channels in any period represent a disproportionate share of
total sales during such period, our operating results would be materially
adversely affected.
We believe that period-to-period comparisons of our operating results are not
necessarily meaningful and should not be relied upon as indicative of future
operating results. In addition, our operating results in a future quarter or
quarters may fall below the expectations of securities analysts or investors,
and, as a result, the price of our Common Stock might fall.
IF WE DO NOT MATCH PRODUCTION TO DEMAND WE WILL BE AT RISK OF LOSING BUSINESS OR
OUR GROSS MARGINS COULD BE MATERIALLY ADVERSELY AFFECTED.
We saw good increases in customer demand for our products through most of
fiscal 2001. Historically, we have generally been able to increase production to
meet increasing 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 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.
- Significant reduction in production levels to address current decreases
in demand may leave us unprepared to meet a rapid increase in demand
for our products.
- 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.
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- Rapid increases in production levels to meet unanticipated demand could
result in higher costs for components and subassemblies, increased
expenditures for freight to expedite delivery of required materials,
and higher overtime costs and other expenses. These higher expenditures
could lower our profit margins. Further, if production is increased
rapidly, there may be decreased manufacturing yields, which may also
lower our margins.
Any of the foregoing problems could materially adversely affect our business,
financial condition and results of operations.
WE DEPEND ON OUR SUPPLIERS AND FAILURE OF OUR SUPPLIERS TO PROVIDE QUALITY
COMPONENTS OR SERVICES IN A TIMELY MANNER COULD ADVERSELY AFFECT OUR RESULTS.
We buy components and subassemblies from a variety of suppliers and assemble
them into finished products. We also have certain of our products manufactured
for us by third party suppliers. The cost, quality, and availability of such
goods are essential to the successful production and sale of our products.
Obtaining components, subassemblies and finished products entails various risks,
including the following:
- We obtain certain subassemblies, components and products from single
suppliers, and alternate sources for these items are not readily
available. To date, we have experienced only minor interruptions in the
supply of these subassemblies, components and products, none of which
has significantly affected our results of operations. Current adverse
economic conditions could lead to a higher risk of failure of our
suppliers to remain in business or to be able to purchase the
subcomponents and parts required by them to produce and provide to us
the parts we need. 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.
- 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.
- Due to the lead times required in order to obtain certain
subassemblies, components and products from certain foreign suppliers,
we may not be able to react quickly to changes in demand, potentially
resulting in either excess inventories of such goods or shortages of
the subassemblies, components and products. In the second quarter of
fiscal 2001, we experienced a substantial rise in finished goods
inventories in part resulting from purchases of finished products from
our suppliers in excess of forecasted demand. Those inventory levels
remained high through the fourth quarter of fiscal 2001. Failure in the
future to match the timing of purchases of subassemblies, components
and products to demand would materially adversely affect our business,
financial condition and results of operations.
- Most of our suppliers are not obligated to continue to provide us with
components and subassemblies. Rather, we buy most components and
subassemblies on a purchase order basis. If our suppliers experience
increased demand or shortages, it could affect deliveries to us. In
turn, this would affect our ability to manufacture and sell products
that are dependent on those components and subassemblies. This would
materially adversely affect our business, financial condition and
results of operations.
WE SELL OUR PRODUCTS THROUGH VARIOUS CHANNELS OF DISTRIBUTION AND A FAILURE OF
THOSE CHANNELS TO OPERATE AS WE EXPECT COULD DECREASE OUR REVENUES.
We sell substantially all of our products through distributors, retailers,
OEMs 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. In the future, our OEM
customers or potential OEM customers may elect to manufacture their own
products, similar to those we currently sell to them. The inability to establish
or maintain successful relationships with distributors,
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OEMs, retailers and telephony service providers or to expand our distribution
channels could materially adversely affect our business, financial condition or
results of operations.
Our distribution channels generally hold inventories of our products,
determined in their own business judgment to be sufficient to meet their
customer's delivery requirements. Such inventory levels are subject to market
conditions, business judgment by the reseller and our ability to meet their
time-to-ship needs. Rapid reductions by our distributors, OEMs, retailers and
other customers in the levels of inventories held in our products could
materially adversely affect our business, financial condition or results of
operations.
We generally offer our customers certain credit terms, allowing them to pay
for products purchased from us between thirty and sixty days or more after we
ship the products. Our receipt of payment for our products depends on the
financial liquidity of those customers. If significant customers or a
significant number of customers experience liquidity problems, this could affect
our ability to collect our accounts receivables, which could materially
adversely affect our business, financial condition or results of operations.
WE HAVE STRONG COMPETITORS AND WILL LIKELY FACE ADDITIONAL COMPETITION IN THE
FUTURE.
The markets for our products are highly competitive. We compete with a
variety of companies in the various markets for communications headsets. Our
single largest competitor is GN Netcom, a subsidiary of GN Great Nordic Ltd., a
Danish telecommunications conglomerate. GN Great Nordic reported revenues of 7.0
billion Danish Krone (approximately $884 million) in calendar 2000.
In calendar year 2000, GN Netcom continued its practice of acquiring other
companies in the headset business. In 2000, GN Netcom acquired Jabra
Corporation, a supplier of headsets in the mobile phone market, resulting in an
entity with a broader mobile product offering and greater marketing presence
than either of the two entities had separately. On October 4, 2000, GN Netcom
announced that it had signed an agreement to acquire Hello Direct, Inc., a
retail channel seller of communications products and our former customer. On
October 25, 2000, we announced that we terminated our contract for the supply of
products to Hello Direct due to the impending acquisition of Hello Direct, Inc.
by GN Netcom. It is not clear how this acquisition will affect us other than the
termination of the product purchase contract, which we do not believe will have
a material adverse effect.* However, the acquisition by GN Netcom of Hello
Direct does give it a directly owned retail channel presence it did not have
before the acquisition.
We currently operate principally in a multilevel distribution model - we sell
most of our products to distributors who, in turn, resell to dealers or
end-customers. GN Netcom's acquisition of Hello Direct and its recent
acquisition of one or more European distributors indicates it may be moving to a
direct sales model. While we believe that our business and our customers benefit
from our current distribution structure, if GN Netcom or other competitors sell
directly, they may offer lower prices which could materially adversely affect
our business and results of operations.
On February 7, 2001, Logitech International S.A., a manufacturer and seller
of computer accessory products, announced that it had agreed to purchase Labtec
Inc., a Vancouver, Washington-based provider of, among other products, headsets
for use with computers. The acquisition was completed in March 2001. Due to this
acquisition, Labtec will have greater resources with which to compete with us
than it did prior to its acquisition.
We anticipate that we will face additional competition from companies that
currently do not offer communications headsets. This is particularly true in the
office, mobile, computer and residential markets. As these markets mature, we
will face increased competition from consumer electronics companies and other
companies that currently manufacture and sell mobile phones or computer
peripheral equipment. These new competitors are likely to be larger, offer
broader product lines, bundle or integrate with other products communications
headset tops and bases manufactured by them or others, offer products containing
bases that are incompatible with our headset tops and have substantially greater
financial, marketing and other resources than we do.
We anticipate that we will also face additional competition from companies,
principally located in the Far East, which offer very low cost headset products,
including products which are modeled on or direct copies of our products. These
new competitors are likely to offer very low cost products which may result in
price pressure in the
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market. If market prices are substantially reduced by such new entrants into the
headset market, our business, financial condition or results of operations could
be materially adversely affected.
Historically, our expertise in acoustics and design has allowed us to design,
develop and manufacture products with the levels of sound quality enabling us to
meet the needs of our customers. Due to technological advances, including but
not limited to better digital signal processing, our current and future
competitors may be able to develop products with the same or better audio
quality at lower costs. These technological advances may allow current and
future competitors to compete more effectively in terms of product quality or
price that could materially adversely affect our business and results of
operations.
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. Further, 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 AND WE WILL BE MATERIALLY ADVERSELY AFFECTED IF
WE DO NOT RESPOND TO CHANGING CUSTOMER REQUIREMENTS AND NEW 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 a number of factors, including the proper selection of new product features,
timely completion and introduction of new product designs, cost-effective
manufacture of such products, quality of new products and market acceptance. To
be successful in the future, we must develop new products, qualify these new
products, successfully introduce these products to the market on a timely basis,
and commence and sustain low-cost, volume production to meet customers' demands.
Although we attempt to determine the specific needs of headset users in our
target markets, because almost all of our sales are indirect, we may not always
be able to timely and accurately predict end-user requirements. As a result, our
products may not be timely developed, designed to address current or future
end-user requirements, offered at competitive prices or accepted, which could
materially adversely affect our business, financial condition and results of
operations. Moreover, we generally incur substantial research and development
costs before the technical feasibility and commercial viability of a new product
can be ascertained. Accordingly, revenues from new products may not be
sufficient to recover the associated development costs.
Historically, the technology used in lightweight communications headsets has
evolved slowly. New products have primarily offered stylistic changes and
quality improvements, rather than significant new technologies. We anticipate
that the technology used in hands free communications devices, including our
products, will begin to evolve more rapidly in the future. We believe that this
is particularly true of the office, mobile and residential markets, 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 adversely affect our business, financial
condition and results of operations.
Due to the historically slow evolvement of our products, we have generally
been able to phase out obsolete products without significant impact to our
operating margins. However, as we develop new generations of products more
quickly, we expect that the pace of product obsolescence will increase
concurrently. The disposition of inventories of obsolete products may result in
reductions to our operating margins and materially adversely affect our earnings
and results of operations.
CHANGES IN REGULATORY REQUIREMENTS MAY ADVERSELY IMPACT OUR GROSS MARGINS AS WE
COMPLY WITH SUCH CHANGES OR REDUCE OUR ABILITY TO GENERATE REVENUES IF WE ARE
UNABLE TO COMPLY.
Our products must meet the requirements set by regulatory authorities in the
numerous jurisdictions in which we sell them. As regulations and local laws
change, we must modify our products to address those changes.
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Regulatory restrictions may increase the costs to design and manufacture our
products, resulting in a decrease in demand for our products if the costs are
passed along or a decrease in our margins. Compliance with regulatory
restrictions may impact the technical quality and capabilities of our products,
reducing their marketability. We are currently facing a substantial change in
the regulations applicable to our products in the European Union and there is no
certainty that we can meet those regulatory requirements in a timely and
cost-effective manner. Failure to conform our products to these new European
regulatory requirements would result in our inability to sell such products in
Europe, resulting in a material adverse impact to our financial condition and
results of operations.
WE HAVE SIGNIFICANT FOREIGN OPERATIONS AND THERE ARE INHERENT RISKS IN OPERATING
ABROAD.
In fiscal 2001, approximately 31.2% of our net sales were derived from
customers outside the United States. Approximately 33.5% of our net sales in
fiscal 2000 were derived from customers outside the United States, compared with
approximately 30.5% of our net sales in fiscal 1999. 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 differences in the conduct of business;
- greater difficulty in accounts receivable collection;
- unexpected changes in regulatory requirements;
- tariffs and other trade barriers;
- economic and political conditions in each country;
- management and operation of an enterprise spread over various
countries; and
- the burden of complying with a wide variety of foreign laws.
In fiscal 2001, the value of major European currencies dropped against the
U.S. dollar. To date, we have partially but not fully reflected that change in
currency value in our selling prices. In order to maintain a competitive price
for our products in Europe, we may have to effectively reduce our current prices
further, resulting in a lower margin on products sold in Europe. Continued
change in the values of European currencies or changes in the values of other
foreign currencies could have a material adverse effect on our business,
financial condition and results of operations.
OUR FOREIGN OPERATIONS PUT US AT RISK OF LOSS IF THERE ARE MATERIAL CHANGES IN
CURRENCY VALUES AS COMPARED TO THE U.S. DOLLAR.
A significant portion of our business is conducted in currencies other than
the U.S. dollar. As a result, fluctuations in exchange rates create risk to us
in both the 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. In fiscal 2001, the value of major European currencies dropped
against the U.S. dollar, resulting in currency transaction losses. Although we
did not engage in any hedging activities in fiscal 2001 to mitigate exchange
rate risks, in fiscal 2002 we have introduced programs designed to reduce our
foreign currency net asset exposure and thus have a goal to reduce transaction
gains and losses that are accounted for in other income/expense. Substantially
all of our revenues throughout Europe are priced and thus denominated in local
currencies. Thus, our economic exposure to foreign currency fluctuations has not
changed and revenues and margins can be adversely impacted by such fluctuations.
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
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transactions in foreign currencies increase, our business, financial condition
and results of operations could be materially adversely affected by exchange
rate fluctuations.
WE MAY HAVE EXPERIENCED IN CALENDAR 2000 A NON-SUSTAINABLE INCREASE IN SALES AS
A RESULT OF PENT-UP DEMAND FROM Y2K CONCERNS AND THE RAPID GROWTH OF INTERNET
RELATED BUSINESSES.
Our results for the first half of calendar year 2000 may not be indicative of
longer-term market conditions. Our results of operations for that period,
including the first three quarters of fiscal 2001, may reflect a non-sustainable
increase in sales as a result of purchases by call center and office customers
who delayed investment in new call centers or information technologies due to
concerns over the effects of Y2K. Further, there may have been an unsustainable
increase in calendar 2000 in the level of spending on information technology
infrastructure, including telecommunications devices which use headsets, due to
customers addressing the rapid growth of Internet related businesses.
IF THERE ARE PROBLEMS THAT AFFECT OUR PRINCIPAL MANUFACTURING FACILITY IN
MEXICO, WE COULD FACE LOSSES IN REVENUES OR MATERIAL INCREASES IN COSTS OF OUR
OPERATIONS.
The majority 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.
WE RELY ON A CONTINUOUS POWER SUPPLY TO CONDUCT OUR BUSINESS OPERATIONS AND
CALIFORNIA'S CURRENT ENERGY CRISIS COULD DISRUPT OR MAKE SUBSTANTIALLY MORE
EXPENSIVE THE OPERATIONS AT OUR HEADQUARTERS FACILITY.
California is in the midst of an energy crisis that could disrupt the conduct
of sales, marketing, research and development, finance and other operations at
our headquarters facilities. In the event of an acute power shortage, California
has, on some occasions, implemented, and may in the future continue to
implement, rolling blackouts throughout California. We have emergency back-up
generators which keep our business information systems in operation but we do
not have sufficient back-up generating capacity or alternate sources of power to
keep our headquarters in full operation in the event of a blackout. If blackouts
interrupt our power supply, we would be temporarily unable to continue full
operations at our headquarters. Any such interruption could damage our
reputation, harm our ability to retain existing customers and to obtain new
customers, and could result in lost revenue, any of which could substantially
harm our business and results of operations. Further, it is likely that the cost
of electrical power at our California facilities is going to increase
substantially. We do not currently believe that the increased expense for
electrical power will be a material impact on our financial condition* but if
prices increase beyond that currently expected, we could be materially adversely
affected.
WE HAVE INTELLECTUAL PROPERTY RIGHTS THAT COULD BE INFRINGED BY OTHERS AND WE
ARE POTENTIALLY AT RISK OF INFRINGEMENT OF THE INTELLECTUAL PROPERTY 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-six
United States patents and additional foreign patents and intend to continue to
seek patents on our inventions when we believe it to be appropriate. The process
of seeking patent protection can be lengthy and expensive. Patents may not be
issued in response to our applications, and patents that are issued may be
invalidated, circumvented or challenged by others. If we are required to enforce
our patents or other proprietary rights through litigation, the costs and
diversion of management's attention could be substantial. In addition, the
rights granted under any patents may not provide us competitive advantages or be
adequate to safeguard and maintain our proprietary rights. Moreover, the laws of
certain countries do not protect our proprietary rights to the same extent as do
the laws of the United States. If we do not enforce and protect our intellectual
property rights, it could materially adversely affect our business, financial
condition and results of operations.
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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.
WE ARE EXPOSED TO POTENTIAL LAWSUITS ALLEGING DEFECTS IN OUR PRODUCTS.
The use of our products exposes us to the risk of product liability claims.
Product liability claims have in the past been, and are currently being,
asserted against us. None of the previously resolved claims have materially
affected our business, financial condition or results of operations, nor do we
believe that any of the pending claims will have such an effect.* Although we
maintain product liability insurance, the coverage provided under our policies
could be unavailable or insufficient to cover the full amount of any such claim.
Therefore, successful product liability claims brought against us could have a
material adverse effect upon our business, financial condition and results of
operations.
Our mobile headsets are used with mobile telephones. There has been
continuing public controversy over whether the radio frequency emissions from
mobile telephones are harmful to users of mobile phones. We believe that there
is no conclusive proof of any health hazard from the use of mobile telephones
but that research in this area is incomplete. We have tested our headsets
through independent laboratories and have found that use of our headsets reduces
radio frequency emissions at the user's head to virtually zero. However, if
research was to establish a health hazard from the use of mobile telephones or
public controversy grows even in the absence of conclusive research findings,
there could be an adverse impact on the demand for our mobile headsets.
There is also continuing and increasing public controversy over the use of
mobile telephones by operators of motor vehicles. While we believe that our
products enhance driver safety by permitting a motor vehicle operator to
generally be able to keep both hands free to operate the vehicle, there is no
certainty that this is the case and we may be subject to claims arising from
allegations that use of a mobile telephone and headset contributed to a motor
vehicle accident. We maintain product liability insurance and general liability
insurance that we believe would cover any such claims. However, the coverage
provided under our policies could be unavailable or insufficient to cover the
full amount of 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.
WHILE WE BELIEVE WE COMPLY WITH ENVIRONMENTAL LAWS AND REGULATIONS, WE ARE STILL
EXPOSED TO POTENTIAL RISKS FROM ENVIRONMENTAL MATTERS.
We are subject to various federal, state, local and foreign environmental
laws and regulations, including those governing the use, discharge and disposal
of hazardous substances in the ordinary course of our manufacturing process.
Although we believe that our current manufacturing operations comply in all
material respects with applicable environmental laws and regulations,
environmental legislation has been enacted and may in the future be enacted or
interpreted to create environmental liability with respect to our facilities or
operations. We have included in our financial statements a reserve of $1.5
million for possible environmental remediation of the site of one of our
previous businesses. While no claims have been asserted against us in connection
with this matter, such claims could be asserted in the future and any liability
that might result could exceed the amount of the reserve.
OUR BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED IF WE LOSE THE BENEFIT OF
THE SERVICES OF KEN KANNAPPAN OR OTHER KEY PERSONNEL.
Our success depends to a significant extent upon the services of a limited
number of executive officers and other key employees. The unanticipated loss of
the services of our president and chief executive officer, Mr. Kannappan, or one
or more of our other executive officers or key employees could have a material
adverse effect upon our business, financial condition and results of operations.
We also believe that our future success will depend in large part upon our
ability to attract and retain additional highly skilled technical, management,
sales and marketing personnel. Competition for such personnel is intense.
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We may not be successful in attracting and retaining such personnel, and our
failure to do so could have a material adverse effect on our business, operating
results or financial condition.
OUR STOCK PRICE MAY BE VOLATILE AND YOUR INVESTMENT IN PLANTRONICS STOCK COULD
BE LOST.
The market price for our Common Stock may continue to 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 our published forecasts of future results of
operations, changes in earnings estimates or recommendations by securities
analysts, developments in our industry, sales of substantial numbers of shares
of our Common Stock in the public market, general market conditions and other
factors, including factors unrelated to our operating performance or the
operating performance of our competitors. Stock prices for many companies,
particularly 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, could materially adversely affect the market
price of our Common Stock.
ANTI-TAKEOVER PROVISIONS IN OUR CURRENT BY-LAWS OR WHICH COULD BE PUT INTO PLACE
BY OUR BOARD OF DIRECTORS COULD AFFECT MARKET PRICES OF OUR STOCK.
Our 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 anti-takeover provisions of Section 203 of the Delaware General
Corporation Law, which could also have the effect of delaying or preventing our
acquisition by a third party. Further, certain provisions of our Certificate of
Incorporation and bylaws could delay or make more difficult a merger, tender
offer or proxy contest, which could adversely affect the market price of our
Common Stock.
CITICORP VENTURE CAPITAL HAS SIGNIFICANT CONTROL OVER OUR BUSINESS.
Our largest stockholder, Citicorp Venture Capital, Ltd. ("CVC"), beneficially
owns 8,995,824 shares of our Common Stock (excluding any shares that may be
owned by employees of CVC or its affiliates), which represents approximately
18.3% of our outstanding Common Stock as of February 15, 2001. 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. Based on its current ownership of our outstanding
Common Stock, CVC is entitled to designate two nominees. Messrs. M. Saleem
Muqaddam and John M. O'Mara are currently serving as CVC's designees pursuant to
that agreement (having been nominated for election in a period in which the
agreement with CVC required us to nominate and support the election of three
designees of CVC). In addition, our bylaws contain provisions that require a
two-thirds (66 2/3%) supermajority vote of the Board of Directors to approve
certain transactions, including amendments of our Certificate of Incorporation,
certain provisions of our bylaws, mergers and sales of substantial assets,
acquisitions of other companies and sales of capital stock. These provisions may
have the effect of giving a small number of directors the ability to block such
transactions.
WE HAVE SEVERAL SIGNIFICANT STOCKHOLDERS AND, GIVEN THE LOW TRADING VOLUME OF
OUR STOCK, IF THEY SELL THEIR SHARES IN A SHORT PERIOD OF TIME, WE COULD SEE AN
ADVERSE EFFECT ON THE MARKET PRICES OF OUR STOCK.
As of May 11, 2001, we had 48,390,671 shares of Common Stock outstanding and
in the public market. All of these shares are freely tradable except for
approximately 10,176,000 shares held by affiliates of Plantronics (including CVC
and the directors and officers of Plantronics). These approximately 10,176,000
shares may 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 and certain of our directors,
also have certain contractual rights to require Plantronics to register their
shares for public sale. Approximately 7,531,988 additional shares are subject to
outstanding stock options as of May 11, 2001. As of May 11, 2001, Ms. Louise
Cecil, the widow of our former CEO and Chairman, Robert S. Cecil, held options
on approximately 433,000 shares of our Common Stock,
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transferred to her by Mr. Cecil during his life. She has registered those shares
for resale and can sell any or all of those shares at any time.
Plantronics stock is not heavily traded. The average daily trading volume of
our stock in fiscal year 2001 was approximately 328,226 shares per day with a
median volume in that period of 225,800 shares per day. Sales of a substantial
number of shares of our Common Stock in the public market by CVC or any of our
officers, directors or other stockholders could adversely affect the prevailing
market price of our Common Stock and impair our ability to raise capital through
the sale of equity securities.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discusses our exposure to market risk related to changes in
interest rates and foreign currency exchange rates. This discussion contains
forward-looking statements that are subject to risks and uncertainties. Actual
results could vary materially as a result of a number of factors including those
set forth in "Risk Factors Affecting Future Operating Results" beginning on page
21.
INTEREST RATE RISK
At March 31, 2001, we had cash and cash equivalents totaling $60.5
million, compared to $40.3 million at March 31, 2000. At March 31, 2001, we had
marketable securities totaling $13.4 million compared to $5 million at March 31,
2000. Cash equivalents have an original maturity of ninety days or less;
marketable securities have an original maturity of greater than ninety days, but
less than one year. We believe we are not currently exposed to significant
interest rate risk as the majority of our cash and marketable securities were
invested in securities or interest bearing accounts with maturities of less than
ninety days. The average maturity period for our marketable securities at March
31, 2001 was ten months. The interest rates locked in on those investments
ranged from 4.7% to 6.4%. Our investment policy requires that we only invest in
deposit accounts, certificates of deposit or commercial paper with minimum
ratings of A1/P1 and money market mutual funds with minimum ratings of AAA.
In fiscal 2001, we renewed our $100 million revolving credit facility,
including a $10 million letter-of-credit subfacility with a major bank. The
revolving credit facility and letter of credit subfacility both expire in
November 2001. As of March 31, 2001, we have no cash borrowings under the
revolving credit facility. If we choose to borrow under this facility in the
future, and market interest rates rise, then our interest payments would
increase accordingly.
FOREIGN CURRENCY EXCHANGE RATE RISK
Approximately 31% of our revenue was realized outside of the United
States, with approximately 18% denominated in foreign currencies, predominately
the Great British Pound and the Euro. During fiscal years 2000 and 2001 we did
not engage in any hedging activities. In fiscal 2002, we implemented a hedging
strategy to minimize the effect of these currency fluctuations. Specifically, we
began to hedge our European transaction exposure, hedging both our Great British
Pound and Euro Positions. However, we have no assurance that exchange rate
fluctuations will not materially adversely affect our business in the future.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following information appearing in our 2001 Annual Report to Stockholders
is incorporated herein by this reference:
Consolidated Balance Sheets -- March 31, 2001 and March 31, 2000
Consolidated Financial Statements for fiscal years ended March 31, 2001,
March 31, 2000, and March 31, 1999:
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
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Consolidated Statements of Stockholders' Equity
Notes to Consolidated Financial Statements
Market price and dividend information.
Report of Independent Accountants, dated April 23, 2001.
With the exception of the information mentioned in Items 5, 6, 7 and 8, our
2001 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 2001 Proxy Statement for the annual
meeting of stockholders to be held on June 27, 2001, as filed with the
Securities and Exchange Commission on or about June 1, 2001, 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. 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 2001 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 2001 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 2001 Proxy Statement is incorporated herein by this reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under the caption "Certain Transactions" in the 2001 Proxy
Statement is incorporated herein by this reference.
With the exception of the information specifically incorporated by reference
from the 2001 Proxy Statement in Part III of this Annual Report on Form 10-K,
the 2001 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 2001 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
Plantronics (including the notes thereto) are incorporated by
reference from our 2001 Annual Report to Stockholders as
indicated in Item 8 of this report.
(2) Financial Statement Schedules.
PLANTRONICS, INC.
SCHEDULE II: VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
(IN THOUSANDS)
BALANCE AT CHARGED TO BALANCE AT
BEGINNING EXPENSES OR END
OF PERIOD OTHER ACCOUNTS DEDUCTIONS OF PERIOD
--------- -------------- ---------- ---------
Allowance for doubtful accounts:
Year ended March 31, 1999 $1,752 $1,348 $ (774) $2,326
Year ended March 31, 2000 2,326 205 (387) 2,144
Year ended March 31, 2001 2,144 1,433 (904) 2,673
Inventory reserves:
Year ended March 31, 1999 8,177 2,263 (4,397) 6,043
Year ended March 31, 2000 6,043 159 (2,484) 3,718
Year ended March 31, 2001 3,718 1,328 (1,276) 3,770
(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. No reports on Form 8-K were filed by Registrant
during the fourth quarter of the fiscal year ended March 31, 2001.
(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.
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).
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Certificate of Amendment of Restated Certificate of
Incorporation of the Registrant filed with the Secretary of
State of Delaware on May 23, 2000 (incorporated herein by
reference to Exhibit (4.2) to the Registrant's Registration
Statement on Form S-8, No. 33-70744, filed on July 31, 2000).
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).
Plantronics, Inc. Non-EMEA Quarterly Profit Sharing Plan.
10.2 Form of Indemnification Agreement between the Registrant and
certain directors and executives and Schedule of Other
Documents Omitted (incorporated herein by reference to
Exhibit (10.1) to PI Holdings Inc.'s Quarterly Report on Form
10-Q for the fiscal quarter ended December 26, 1992, SEC File
Number 33-26770, filed February 9, 1993).
10.3 Form of Employment Agreement, Addendum to Employment
Agreement and Second Addendum to Employment Agreement between
the Registrant and certain executives; and Schedule of Other
Documents Omitted (incorporated herein by reference to
Exhibit (10.2) to PI Holdings Inc.'s Quarterly Report on Form
10-Q for the fiscal quarter ended December 26, 1992, SEC File
Number 33-26770, filed February 9, 1993).
10.4(a) Regular and Supplemental Bonus Plan.
10.4(b) Overachievement Bonus Plan.
10.5 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),
No. 33-70744, filed October 20, 1993).
10.6 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), No. 33-70744, filed on
October 20, 1993).
10.7 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), No.33-70744,
filed on October 20, 1993).
10.8 1993 Stock Option Plan.
10.9 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), SEC File Number 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, SEC File Number 333-14833, filed on October 25,
1996).
10.9(a) Amendment No. 2 effective as of November 4, 1996 to the 1993
Director Stock Option Plan.
10.9(b) Amendment No. 3 to the 1993 Director Stock Option Plan
effective as of June 29, 2000.
10.10 1996 Employee Stock Purchase Plan (incorporated herein by
reference to Exhibit (4.5) to the Registrant's Registration
Statement on Form S-8, SEC File Number 333-14833, filed on
October 25, 1996).
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10.11 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, SEC File Number
333-19351, filed on January 7, 1997).
Plantronics, Inc. 401(k) Plan, effective as of April 2, 2000.
10.12 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), SEC File
Number 333-19351, filed on March 25, 1997).
10.13 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), SEC File Number 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), SEC File Number 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), SEC File Number 333-19351, filed on
March 25, 1997).
10.14 Employment Agreement dated as of July 4, 1999 between
Registrant and Ken Kannappan (incorporated herein by
reference to Exhibit (10.15) of the Registrant's Annual
Report on Form 10-K405, SEC File Number 001-12696, for the
fiscal year ended April 1, 2000, filed on June 1, 2000).
10.15 Credit Agreement dated as of November 29, 1999 between
Registrant and Wells Fargo Bank N.A (incorporated herein by
reference to Exhibit (10.16) of the Registrant's Annual
Report on Form 10-K405, SEC File Number 001-12696, for the
fiscal year ended April 1, 2000, filed on June 1, 2000).
First Amendment to Credit Agreement, dated as of November 27,
2000.
13 Portions of Registrants 2001 Annual Report to Security
Holders which have been incorporated by reference 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.
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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 1, 2001 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 and June 1, 2001
- ------------------------------- Director
(S. Kenneth Kannappan) (Principal Executive Officer)
/s/ Barbara V. Scherer Senior Vice President and Chief Financial June 1, 2001
- ------------------------------- Officer (Principal Financial Officer and
(Barbara V. Scherer) Principal Accounting Officer)
/s/ Marvin Tseu Chairman of the Board and Director June 1, 2001
- -------------------------------
(Marvin Tseu)
/s/ Patti Hart Director June 1, 2001
- -------------------------------
(Patti Hart)
/s/ Robert F.B. Logan Director June 1, 2001
- -------------------------------
(Robert F.B. Logan)
/s/ M. Saleem Muqaddam Director June 1, 2001
- -------------------------------
(M. Saleem Muqaddam)
/s/ John M. O'Mara Director June 1, 2001
- -------------------------------
(John M. O'Mara)
/s/ Trude C. Taylor Director June 1, 2001
- -------------------------------
(Trude C. Taylor)
/s/ David A. Wegmann Director June 1, 2001
- -------------------------------
(David A. Wegmann)
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EXHIBITS INDEX
EXHIBIT
NUMBER DESCRIPTION
3.1 Amended and Restated By-Laws of the Registrant.
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).
Certificate of Amendment of Restated Certificate of
Incorporation of the Registrant filed with the Secretary of
State of Delaware on May 23, 2000 (incorporated herein by
reference to Exhibit (4.2) to the Registrant's Registration
Statement on Form S-8, No. 33-70744, filed on July 31, 2000).
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).
Plantronics, Inc. Non-EMEA Quarterly Profit Sharing Plan.
10.2 Form of Indemnification Agreement between the Registrant and
certain directors and executives and Schedule of Other Documents
Omitted (incorporated herein by reference to Exhibit (10.1) to
PI Holdings Inc.'s Quarterly Report on Form 10-Q for the fiscal
quarter ended December 26, 1992, SEC File Number 33-26770, filed
February 9, 1993).
10.3 Form of Employment Agreement, Addendum to Employment Agreement
and Second Addendum to Employment Agreement between the
Registrant and certain executives; and Schedule of Other
Documents Omitted (incorporated herein by reference to Exhibit
(10.2) to PI Holdings Inc.'s Quarterly Report on Form 10-Q for
the fiscal quarter ended December 26, 1992, SEC File Number
33-26770, filed February 9, 1993).
10.4(a) Regular and Supplemental Bonus Plan.
10.4(b) Overachievement Bonus Plan.
10.5 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), No. 33-70744, filed October 20,
1993).
10.6 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),
No. 33-70744, filed on October 20, 1993).
10.7 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), No.33-70744,
filed on October 20, 1993).
10.8 1993 Stock Option Plan.
38
39
EXHIBIT
NUMBER DESCRIPTION
10.9 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), SEC File Number 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, SEC File Number
333-14833, filed on October 25, 1996).
10.9(a) Amendment No. 2 effective as of November 4, 1996 to the 1993
Director Stock Option Plan.
10.9(b) Amendment No. 3 to the 1993 Director Stock Option Plan effective as
of June 29, 2000.
10.10 1996 Employee Stock Purchase Plan (incorporated herein by
reference to Exhibit (4.5) to the Registrant's Registration
Statement on Form S-8, SEC File Number 333-14833, filed on
October 25, 1996).
10.11 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, SEC File Number 333-19351, filed on
January 7, 1997).
Plantronics, Inc. 401(k) Plan, effective as of April 2, 2000.
10.12 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), SEC File Number 333-19351, filed
on March 25, 1997).
10.13 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), SEC File Number 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), SEC File Number 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), SEC File Number 333-19351, filed on March 25, 1997).
10.14 Employment Agreement dated as of July 4, 1999 between Registrant
and Ken Kannappan (incorporated herein by reference to Exhibit
(10.15) of the Registrant's Annual Report on Form 10-K405, SEC
File Number 001-12696, for the fiscal year ended April 1, 2000,
filed on June 1, 2000).
10.15 Credit Agreement dated as of November 29, 1999 between
Registrant and Wells Fargo Bank N.A (incorporated herein by
reference to Exhibit (10.16) of the Registrant's Annual Report
on Form 10-K405, SEC File Number 001-12696, for the fiscal year
ended April 1, 2000, filed on June 1, 2000).
First Amendment to Credit Agreement, dated as of November 27, 2000.
13 Portions of Registrants 2001 Annual Report to Security Holders which
have been incorporated by reference 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.
39