<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 29, 1996 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 0-22764
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.)
337 Encinal Street, P.O. Box 1802
Santa Cruz, California 95061-1802
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (408) 426-6060
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 29, 1996
- ---------------------------- -------------------------------------------
Common Stock, $.01 par value 8,224,311
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PLANTRONICS, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1996 1996
================ ============
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 23,888 $ 26,787
Accounts receivable 38,897 38,555
Inventory 18,385 18,007
Deferred income taxes 5,094 5,094
Other current assets 2,785 1,227
---------------- ------------
Total current assets 89,049 89,670
Property, plant and equipment, net 16,038 13,710
Other assets 5,238 5,281
================ ============
$ 110,325 $ 108,661
================ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable 8,030 8,384
Accrued liabilities 22,663 20,692
Income taxes payable 13,057 12,040
---------------- ------------
Total current liabilities 43,750 41,116
Deferred income tax 1,081 1,081
Long-term debt 65,050 65,050
---------------- ------------
Total liabilities 109,881 107,247
---------------- ------------
Stockholders' equity:
Common stock; $0.01 par value, 25,000,000 shares authorized,
8,224,311 and 8,388,956 shares issued and outstanding 85 84
Additional paid-in capital 55,966 55,726
Cumulative translation adjustment (891) (891)
Accumulated deficit (46,882) (53,505)
---------------- ------------
8,278 1,414
Less: Treasury stock
(common: 216,700 shares in fiscal year 1997) at cost (7,834) --
---------------- ------------
Total stockholders' equity 444 1,414
---------------- ------------
$ 110,325 $ 108,661
================ ============
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
<PAGE> 3
PLANTRONICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------
JUNE 30, JUNE 30,
1996 1995
=============== ==============
<S> <C> <C>
Net sales $ 45,584 $ 44,109
Cost of sales 21,084 21,296
--------------- --------------
Gross profit 24,500 22,813
--------------- --------------
Operating expense:
Research, development and engineering 3,463 3,586
Selling, general and administrative 9,520 8,243
--------------- --------------
Total operating expenses 12,983 11,829
--------------- --------------
Operating income 11,517 10,984
Interest expense, including amortization
of debt issuance costs of $132 1,790 1,790
Interest income and other income, net (308) (123)
--------------- --------------
Income before income taxes 10,035 9,317
Income tax expense 3,412 3,634
--------------- --------------
Net income attributable to holders
of common stock $ 6,623 $ 5,683
=============== ==============
Net income per common share
attributable to holders of common stock 0.73 0.64
=============== ==============
Shares used in per share calculations 9,037 8,901
=============== =============-
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements.
<PAGE> 4
PLANTRONICS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------
JUNE 30, JUNE 30,
1996 1995
=========== ==========
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from operations $ 6,623 $ 5,683
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization of property and intangible assets 665 495
Other non-cash charges, net 174 191
Changes in assets and liabilities:
Accounts receivable (357) (2,006)
Provision for doubtful accounts 15 236
Inventory (378) 3,004
Other current assets (1,558) 153
Other assets (89) 26
Accounts payable (354) (402)
Accrued liabilities 1,971 226
Income taxes 1,017 2,347
----------- ----------
Cash provided by operating activities 7,729 9,953
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,993) (600)
----------- ----------
Cash used by investing activities (2,993) (600)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 199 8
Purchase of treasury stock (7,834) --
----------- ----------
Cash used for financing activities (7,635) 8
----------- ----------
Net increase (decrease) in cash and
cash equivalents (2,899) 9,361
Cash and cash equivalents at beginning
of period 26,787 3,360
=========== ==========
Cash and cash equivalents at end of period $ 23,888 $ 12,721
=========== ==========
Supplemental disclosures:
Cash paid for:
Interest 18 13
Income taxes $ 2,383 $ 1,256
=========== ==========
</TABLE>
See Notes to Unaudited Condensed Consolidated Financial Statements
<PAGE> 5
The unaudited consolidated condensed financial statements included herein have
been prepared by Plantronics, Inc. ("Plantronics") pursuant to the rules and
regulations of the Securities and Exchange Commission. These financial
statements reflect, in the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position and results of operations as of and for the periods indicated. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although
Plantronics believes the disclosures which are made, when read in conjunction
with the audited fiscal 1996 financial statements, are adequate to make the
information presented not misleading. As used herein, references to the
"Company" mean Plantronics and its consolidated subsidiaries.
PERIODS PRESENTED. The Company's fiscal year-end is the Saturday closest to
March 31st. For purposes of presentation, the Company has indicated its
accounting year-end as March 31 and its first quarter-end as June 30.
Plantronics' fiscal quarters ended June 30, 1996 and June 30, 1995 consisted of
thirteen weeks each.
1. DETAILS OF CERTAIN BALANCE SHEET COMPONENTS: (in thousands)
<TABLE>
<CAPTION>
June 30, March 31,
1996 1996
================ ================
<S> <C> <C>
Inventories:
Finished goods $6,606 $6,890
Work in process 5,807 4,631
Purchased parts 5,972 6,486
---------------- ----------------
$18,385 $18,007
================ ================
Property, plant and equipment:
Land $4,693 $4,693
Buildings and improvements (useful lives: 10-40 years) 9,388 8,869
Machinery and equipment (useful lives: 4-8 years) 22,324 19,850
---------------- ----------------
36,405 33,412
Less accumulated depreciation (20,367) (19,702)
---------------- ----------------
$16,038 $13,710
================ ================
</TABLE>
2. FOREIGN CURRENCY TRANSACTIONS:
The Company's functional currency for all operations is the U.S dollar.
Accordingly, gains and losses resulting from the remeasurement of
foreign subsidiaries' financial statements into U.S.dollars are
included in other income (expense) in the consolidated statements of
operations. Gains and losses resulting from foreign currency
transactions are also included in other income (expense). Aggregate
exchange losses in the three months ended June 30, 1996 and June 30,
1995 were $.1 million in each period.
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
PLANTRONICS, INC.
INTERIM RESULTS OF OPERATIONS (THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO
THREE MONTHS ENDED JUNE 30, 1995)
NET SALES. Net sales for the quarter ended June 30, 1996 were $45.6 million, an
increase of 3% over the net sales of $44.1 million for the quarter ended June
30, 1995. Revenues in the international markets during the first quarter of
fiscal 1997 grew 20% over the comparable period in fiscal 1996 as a result of
increased investment and expansion during fiscal 1995 and fiscal 1996. Domestic
revenues were down $0.7 million primarily as a result of the anticipated decline
($2.4 million) in headset shipments to Lucent Technologies (formerly AT&T), but
which was largely offset by revenue increases in the US distributor and retail
channels.
GROSS PROFIT. Gross profit for the quarter ended June 30, 1996 was $24.5 million
(53.7% of net sales), compared to $22.8 million (51.7% of net sales), reflecting
continuing benefit from manufacturing efficiencies and cost reduction programs.
RESEARCH, DEVELOPMENT AND ENGINEERING. Research, development and engineering
expenses for the quarter ended June 30, 1996 were $3.5 million (7.6% of net
sales) compared to $3.6 million (8.1% of net sales) for the quarter ended June
30, 1995, reflecting continued significant investment in product development.
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
expenses for the quarter ended June 30, 1996 were $9.5 million (20.9% of net
sales) compared to $8.2 million (18.7% of net sales) for the quarter ended June
30, 1995. The increase was the result of continued increased spending in
European sales and market development and increased selling costs in the US
retail channel due to higher volumes.
FOREIGN CURRENCY. Through fiscal 1996, intercompany transactions between the
Company and its United Kingdom subsidiary posed the greatest foreign currency
risk. The Company managed this risk by timely payments of intercompany
liabilities. Remaining currency risk, in the opinion of management, was not
material and, accordingly, the Company did not engage in hedging transactions.
Beginning in fiscal 1997, the intercompany transaction risk described above has
been eliminated as a result of the restructuring of the Company's international
operations. However, the Company is subject to greater remeasurement exposure to
its operating results with the United Kingdom subsidiary's adoption of the U.S.
dollar as its functional currency. The Company's peso transaction exposure at
its manufacturing subsidiary in Tijuana, Mexico is limited mostly to payroll. In
the opinion of management, the favorable effects to the Company on the
devaluation of the peso in the periods reported were not material.
INCOME TAX EXPENSE. The Company's effective tax rate declined to 34% in the
quarter ended June 30, 1996 from 39% in the quarter ended June 30, 1995,
primarily as a result of the international restructuring which began in the
fourth quarter of fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal source of liquidity in the quarter ended June 30, 1996
was $7.7 million of cash generated from operating activities. In the quarter
ended June 30, 1995, liquidity was provided by $10.0 million from operating
activities. Cash and cash equivalents increased to $23.9 million at June 30,
1996 from $12.7 million at June 30, 1995, primarily due to cash provided by
operating activities. In the last quarter of fiscal 1996, the Company terminated
$9.0 million of its $29.0 million revolving credit facility. The remaining $20.0
million facility includes a $4.0 million letter of credit facility. As of June
30, 1996, the Company had no cash borrowings under the revolving credit facility
and $2.1 million outstanding under the letter of credit facility. According to
borrowing base limitations, available borrowings under the revolving credit
facility at June 30, 1996 were $16.7 million, after reductions for letter of
credit obligations. The revolving credit facility is secured by accounts
receivable and related assets. The terms of the credit facility contain
covenants which materially limit the Company's ability to incur debt,
<PAGE> 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
PLANTRONICS, INC.
make capital expenditures and pay dividends, among other matters. These
covenants may have a materially adverse effect on the Company to the extent it
cannot comply with them or it must limit its ordinary course activities.
OPERATING ACTIVITIES. In the three-month period ended June 30, 1996 the Company
generated $7.7 million in net cash from operating activities, primarily as a
result of $6.6 million in net income and increases in accrued liabilities and
income taxes payable of $2.0 million and $1.0 million, respectively, partially
offset by increases in current assets of $1.6 million. Increases in both current
assets and accrued liabilities were due principally to an accounting
reclassification to present value added taxes receivable separately from value
added taxes payable.
INVESTING ACTIVITIES. Capital expenditures were $3.0 million in the quarter
ended June 30, 1996, compared to $.6 million in the quarter ended June 30, 1995.
The increase in capital expenditures was primarily due to investment in a
significant upgrade to the Company's business information system in the first
quarter of fiscal 1997. The Company expects to invest an additional $3.0 to $4.0
million in the systems upgrade by the middle of fiscal 1998.
FINANCING ACTIVITIES. In the quarter ended June 30, 1996, the Company
repurchased 216,700 shares for $7.8 million and received $0.2 million in
proceeds from the exercise of stock options. The Company's financing activities
during the quarter ended June 30, 1995 were limited to the receipt of less than
$.1 million in stock option exercise proceeds. As of August 7, 1996, 56,947
additional shares were repurchased for $2.1 million.
The Company has Senior Notes in a principal amount of $65.1 million outstanding
that bear interest, payable semiannually, at a rate of 10% per annum and mature
on January 15, 2001. The Senior Notes are redeemable, at the Company's option,
in whole or in part, any time after January 15, 1999. The Senior Note Indenture
contains certain covenants that, among other things, limit the ability of the
Company and its subsidiaries to incur indebtedness, pay dividends, issue
preferred stock of subsidiaries, engage in transactions with affiliates, create
liens, engage in mergers and consolidations, make certain asset sales or make
certain investments. The Senior Note Indenture also provides that holders of the
Senior Notes have the right to require the Company to repurchase their Senior
Notes in the event of a "change in control" and certain various customary events
of default.
The Company believes that current balances and cash provided by operations,
together with available borrowing capacity under the revolving credit facility,
will be sufficient to make required interest payments under the Senior Notes and
to fund operations at least through fiscal 1997. Subject to the terms and
conditions of the 10% Senior Note Indenture and the Company's revolving credit
facility, the Company may use cash for such purposes as paying down the line of
credit, repurchasing Senior Notes or acquiring complementary businesses,
products or technologies.
FORWARD LOOKING STATEMENTS AND FACTORS AFFECTING FUTURE OPERATING RESULTS
The statement in the last sentence of the paragraph captioned "Investing
Activities" is a forward looking statement which involves risk and
uncertainties. In addition, the Company may from time to time make oral forward
looking statements. The Company's actual results could differ materially from
those anticipated in these forward looking statements as a result of the
following factors:
NEED TO SUCCESSFULLY DEVELOP NEW PRODUCTS AND MARKETS. The Company's net sales
to date have been derived principally from the sale of lightweight
communications headsets ("tops") and associated bases ("bottoms"). Historically,
a substantial amount of the Company's sales have been made through distributors
to call center users and its product development efforts have primarily been
directed toward incremental enhancements of existing products. In the future,
the Company intends to both enhance its existing products and to develop new
products that capitalize on its core technology and expand the Company's product
offerings to new user market segments. The success of new product introductions
is dependent on several factors, including proper new product selection, timely
completion and introduction of new product designs, quality of new products and
market acceptance. The Company
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
PLANTRONICS, INC.
has recently expanded its marketing efforts to sell lightweight headsets to the
business and home office user market. Although the Company has attempted to
determine the specific needs of these new market segments, there can be no
assurance that the market niches identified will in fact materialize or that the
Company's future products designed for these market segments will gain
substantial market acceptance.
COMPETITION. As the Company develops new generations of products and enters new
market segments, including the developing business and home office user segment
of the market, the Company anticipates that it may face additional competition
from companies which currently do not offer communication headsets. Such
companies may be larger, offer broader product lines and have substantially
greater financial and other resources than the Company. Such competition could
negatively affect pricing and gross margins. Although the Company has
historically competed very successfully in the call center segment of the
market, there can be no assurance that it will be able to continue its
leadership position in that segment of the market or that the Company will be
able to compete successfully in new market segments.
DEMAND OF CHANGING TECHNOLOGIES. The technology of telephone headsets, both
"tops" and "bottoms," has traditionally evolved slowly. Products have generally
exhibited life cycles of three to five years before introduction of the next
generation of products, which usually included stylistic changes and quality
improvements but were based on similar technology. The Company believes that
future changes in technology may come at a faster pace, particularly in the
telephone, cellular telephone and computer segments of the business and home
office user parts of the market. The Company's future success will be dependent
in part on its ability to develop products that utilize new technologies and to
introduce them to the marketplace successfully. In addition, in order to avoid
product obsolescence, the Company will have to monitor technological changes in
telephony, as well as users' demands for new technologies. Failure by the
Company to keep pace with future technological changes could materially
adversely affect the Company's revenues and operating results.
UTILIZATION OF SINGLE SOURCE SUPPLIERS. The Company's manufacturing operations
primarily consist of assembly of components and subassemblies that Plantronics
manufactures or purchases from a variety of sources. Although most components
and subassemblies used in the Company's manufacturing operations are obtained,
or are reasonably available, from numerous sources, certain of its products and
components (including semicustom integrated circuits that are key components of
the Company's products) are currently obtained only from single suppliers. The
Company currently purchases such components on a purchase order basis and does
not intend to enter into master purchase agreements with any of its single
source suppliers. The Company has to date experienced only minor interruptions
in the supply of these components, none of which has adversely affected its
operations. However, an interruption in supply from any of the Company's single
source suppliers in the future could temporarily result in the Company's
inability to deliver products on a timely basis, which in turn could adversely
affect its operations.
IMPORTANCE OF PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS. The Company's
success will depend in part on its ability to obtain patents and preserve other
intellectual property rights covering the design and operation of its products.
The Company currently holds certain patents and intends to continue to seek
patents on its inventions when appropriate. The process of seeking patent
protection can be lengthy and expensive, and there can be no assurance that
patents will issue from currently pending or future applications or that the
Company's existing patents or any new patents issued will be of sufficient scope
or strength or provide meaningful protection or any commercial advantage to the
Company. The Company 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 the Company's operations.
RISK ASSOCIATED WITH FOREIGN OPERATIONS AND SALES. Approximately 26.8% of the
Company's net sales in fiscal 1996 were derived from sales to foreign customers.
In addition, the Company conducts approximately 94% of its headset assembly
operations in Mexico and obtains components from various foreign suppliers.
Manufacturing and
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
PLANTRONICS, INC.
sales of the Company's products could be adversely affected by political or
economic conditions in the United States or abroad, particularly in Mexico.
Sales to foreign customers and purchases of materials and components from
foreign suppliers are also generally subject to such risks as increased tariffs
and the imposition of other trade barriers.
Although the Company generally transacts business internationally in United
States currency, declines in the values of local currencies relative to the
United States dollar in countries in which the Company does business could
adversely affect the Company by resulting in less competitive pricing for the
Company's products. The Company does not currently engage in any hedging
activities to mitigate exchange rate risks and to date has not been adversely
affected by fluctuating currencies. To the extend that the Company is successful
in increasing its sales to foreign customers, or to the extend that the Company
increases its transactions in foreign currencies, the Company's results of
operations could be adversely affected by exchange rate fluctuations.
DEPENDENCE UPON SENIOR MANAGEMENT. The Company believes that it has benefited
substantially from the leadership of Robert S. Cecil, the Chairman of the Board,
President and Chief Executive Officer of the Company, and the other current
members of senior management, and that the loss of their services could have a
material adverse effect on the Company's business and future operations.
Although the Company has an employment agreement with Mr. Cecil, such agreement
permits him to voluntarily terminate his employment at any time. In addition,
although Mr. Cecil's agreement contains a five-year non-compete covenant which
takes effect upon termination of his employment, such covenants are generally
not enforceable under California law.
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are filed as part of this Quarterly
Report on Form 10-Q.
01 Plantronics, Inc. 1996 Employee Stock Purchase Plan
27 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed by Registrant
during the fiscal quarter ended June 30, 1996.
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PLANTRONICS, INC.
---------------------------------------------
(Registrant)
August 12, 1996 DANIEL A. GAUDREAU
- --------------------------- ---------------------------------------------
(Date) (Signature)
Daniel A. Gaudreau
Vice President
August 12, 1996 DANIEL A. GAUDREAU
- --------------------------- ---------------------------------------------
(Date) (Signature)
Daniel A. Gaudreau
Vice President - Finance and Administration
and Chief Financial Officer
(Principal Financial Officer)
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- --------
<S> <C>
01 Plantronics, Inc. 1996 Employee Stock Purchase Plan
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 01
PLANTRONICS, INC.
1996 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1996 Employee Stock
Purchase Plan of Plantronics, Inc.
1. PURPOSE
The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the
Company. It is the intention of the Company to qualify this Plan as an "Employee
Stock Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended, and to receive full benefits of this qualification for the Company and
the Plan Participants. The provisions of the Plan shall accordingly be construed
so as to extend and limit participation in a manner consistent with any and all
requirements of Section 423 of the Code.
2. DEFINITIONS
a) "Board" shall mean the Board of Directors of the Company.
b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
c) "Common Stock" shall mean the Common Stock of the Company.
d) "Company" shall mean Plantronics, Inc., a Delaware Corporation.
e) "Compensation" shall mean all regular gross earnings of an Employee,
excluding payments for overtime, shift premium, incentive compensation, bonus,
commission, car allowance, profit-sharing and other earnings.
f) "Continuous Employment" shall mean continuous service as an Employee
without termination, resignation, or other interruption. In the case of a leave
of absence pursuant to a written policy of the Company, and provided such leave
is for a period of less than ninety (90) days or re-employment is guaranteed
upon the expiration of such leave, employment will be deemed to be continuous.
g) "Contributions" shall mean all payroll deduction amounts credited to
the account of a Participant under the Plan for an Offering Period.
h) "Designated Subsidiaries" shall mean the Subsidiaries of the Company
that have been designated by the Board, in its sole discretion, as eligible to
participate in the Plan. Designation may be amended by the Board from time to
time or from one Offering Period to another.
i) "Employee" shall mean any person who is customarily employed for at
least twenty (20) hours per week and more than 5 months in a calendar year by
the Company or one of its Designated Subsidiaries, and who meets all
requirements to be an Employee of the Company under section 423 of the Code.
j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
-1-
<PAGE> 2
PLANTRONICS, INC.
1996 Employee Stock Purchase Plan
k) "Exercise Date" shall mean the last market trading day of each
Offering Period of the Plan.
l) "Exercise Price" shall mean 95% of the closing price of the
Company's Common Stock for the last market trading day preceding the
commencement of the Offering Period.
m) "Holding Period" shall mean a period of six calendar months
beginning on the Exercise Date during which shares purchased by the Participant
under the Plan may not be sold, traded, transferred, pledged or otherwise
hypothecated and these shares are held by the Company in the Participant's
account.
n) "Highly Compensated Employee" shall mean any Employee who, as of the
last day of the prior fiscal year of the Company is considered to be a "highly
compensated employee" within the meaning of Section 414(q) of the Code.
o) "Offering Date" shall mean the first business day of each Offering
Period of the Plan.
p) "Offering Period" shall mean a period of six calendar months
commencing on the Offering Date.
q) "Participant" shall mean any Employee of the Company or a Designated
Subsidiary who qualifies to be eligible for the Plan under paragraph 3 and who
provides the Company with a written subscription agreement to participate in the
Plan during the Offering Period.
r) "Plan" shall mean this Plantronics, Inc. 1996 Employee Stock
Purchase Plan.
s) "Subsidiary" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a Subsidiary,
regardless of whether such Subsidiary now exists or is hereafter organized or
acquired by the Company or a Subsidiary.
3. ELIGIBILITY FOR PARTICIPATION
(a) An Employee who has provided the Company with Continuous Employment
for ninety (90) days as of the Offering Date of a given Offering Period shall be
eligible to participate in such Offering Period under the Plan.
(b) An Employee who is a Highly Compensated Employee as of the Offering
Date of a given Offering Period shall not be eligible to participate in such
Offering Period under the Plan.
(c) No Employee shall be granted an option under the Plan if:
(i) Immediately after the grant, the Employee would own stock
and/or hold outstanding options to purchase stock representing five percent (5%)
or more of the total combined voting power or value of all classes of stock of
the Company or of any subsidiary of the Company, by virtue of current holdings
or attribution under Section 424(d) of the Code; or
-2-
<PAGE> 3
PLANTRONICS, INC.
1996 Employee Stock Purchase Plan
(ii) The grant would provide the Employee, at any time, with the
right to purchase stock under all Company and Subsidiary employee stock purchase
plans at a rate that exceeds Twenty-Five Thousand Dollars ($25,000) of the fair
market value of such stock, as determined at the time such option is granted,
for each calendar year in which such option is outstanding.
4. OFFERING PERIODS
The Plan shall be implemented using a series of Offering Periods, with
a new Offering Period commencing on or around March 1 and September 1 of each
year, or at such other time or times as may be determined by the Board.
The Plan shall continue until terminated in accordance with paragraph
20 hereof. The Board shall have the power to change the duration and/or
frequency with respect to future Offering Periods without shareholder approval
if such change is announced at least fifteen (15) days prior to the scheduled
beginning of the first Offering Period to be affected.
5. PARTICIPATION
(a) An eligible Employee may become a Participant in the Plan by
completing and filing a subscription agreement with the Company's Human Resource
Department prior to the applicable Offering Date, unless a later time for filing
the subscription agreement is set by the Board for all eligible Employees with
respect to a given Offering Period.
The subscription agreement shall set forth the percentage of the
Participant's Compensation to be withheld as a Contribution during the Offering
Period.
(b) Payroll deductions of Contributions shall commence on the first
payroll following the Offering Date and shall end on the last payroll paid on or
prior to the Exercise Date to which the subscription agreement is applicable,
unless terminated sooner as provided under paragraph 11.
6. CONTRIBUTION METHOD
(a) Under the subscription agreement, the Participant shall elect to
have payroll deductions made from each payroll during the Offering Period in an
amount not less than one percent (1%) and not more than ten percent (10%) of
such Participant's Compensation on each such payday. Contribution deductions are
a reduction of the Participant's net payroll check amount. All payroll
deductions shall be credited to the Participant's account under the Plan. A
Participant may not make any additional payments into such account.
(b) A Participant may discontinue participation in the Plan at any time
during the Offering Period, as provided under paragraph 11.
(c) On one occasion during the Offering Period, the Participant may
decrease (but not increase) the rate of Contribution during the Offering Period
by completing and filing a new subscription agreement. The rate change shall be
effective as soon as possible within the Offering Period.
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<PAGE> 4
PLANTRONICS, INC.
1996 Employee Stock Purchase Plan
(d) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b) of the Code and paragraph 3(c) herein, a Participant's
payroll deductions may be decreased to 0% at such time during any Offering
Period.
7. OPTION GRANT
On the Offering Date of each Offering Period, each Participant shall be
granted an option to purchase a number of shares of the Company's Common Stock
on the Exercise Date.
The number of shares to be purchased is determined by dividing such
Participant's Contributions accumulated during the Offering Period prior to such
Exercise Date by the Exercise Price, up to the maximum number of shares
determined in paragraphs 3(c) and 13 hereof; provided, however, that the maximum
number of shares of Common Stock that a Participant may purchase during an
Offering Period shall be five hundred (500) shares (or such other number as the
Board may specify).
8. OPTION EXERCISE
Unless the Participant withdraws from the Plan as provided in paragraph
11, the Participant's option to purchase shares will be exercised automatically
on the Exercise Date of the Offering Period and the maximum number of full
shares subject to option will be purchased at the Option Price with the
accumulated Contributions of the Participant for the Offering Period. A
Participant's option to purchase shares herein is not exercisable except by the
Participant.
Any cash remaining to the credit of the Participant's account under the
Plan after purchase of shares at the end of the Offering Period, which is
insufficient to purchase a full share of Common Stock, shall be returned to the
Participant (or his beneficiaries as outlined in paragraph 15).
Shares purchased shall be issued subject to the Holding Period, as
described in paragraph 9.
Fees and/or commissions related to the purchase of shares shall be paid
by the Company.
9. HOLDING PERIOD
Shares purchased by the Participant will be held in the Participant's
account pursuant to the Plan for the duration of a six (6)-month Holding Period.
The Holding Period will commence on the first day following the
Exercise Date and end after six calendar months on or around March 1 or
September 1, whichever is sooner after the Exercise Date. Upon completion of the
Holding Period, the relevant shares will be transferred to the Participant.
Notwithstanding the foregoing, the Holding Period shall lapse in the
event of a sale of all or substantially all of the Company's assets or a merger
with or into another corporation.
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<PAGE> 5
PLANTRONICS, INC.
1996 Employee Stock Purchase Plan
10. DELIVERY
As promptly as practicable after the Offering Period, the Company shall
arrange the return of any and all excess Contributions, as described in
paragraph 8 and 13(b), to the Participant.
11. WITHDRAWAL AND RETURN OF CONTRIBUTIONS
(a) A Participant may withdraw all, but not less than all,
Contributions credited to his or her account under that Plan at any time prior
to the Exercise Date of the Offering Period by giving written notice to the
Company. All of the Participant's Contributions credited to the account will be
paid as soon as possible after receipt of notice of withdrawal.
Upon notice of withdrawal, the Participant's option for the Offering
Period will be automatically terminated and no further Contributions for the
purchase of shares will be made during the Offering Period.
(b) Upon termination of the Participant's Continuous Employment with
the Company prior to the Exercise Date of the Offering Period for any reason,
including retirement or death, the Contributions credited to the Participant's
account will be returned to the Participant.
In the case of death of the Participant, Contributions will be returned
to the person or persons so entitled under paragraph 15 and the Participant's
option will be automatically terminated.
(c) If the Participant fails to fulfill the requirements of an Employee
under paragraph 2(i), the Participant will be deemed to have elected to withdraw
from the Plan and the Contributions credited will be returned and the option
terminated.
(d) Withdrawal from an Offering Period will not effect the Employee's
ability to participate in a succeeding Offering Period or in any similar plan
that may be hereafter adopted by the Company.
12. INTEREST
No interest shall accrue for the Contributions held in the account of a
Participant.
13. STOCK
(a) The maximum number of shares of the Company's Common Stock that
shall be made available for sale under the Plan shall be 20,000 shares, subject
to adjustment upon changes in capitalization of the Company, as provided in
paragraph 19.
(b) If the total number of shares which would otherwise be subject to
options granted pursuant to paragraph 7 hereof on the Offering Date of the
Offering Period exceeds the number of shares then available under the Plan
(after deduction of all shares for which options have been exercised or are then
outstanding), the Company shall make a pro rata allocation of shares remaining
available for grant in a uniform and equitable manner.
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<PAGE> 6
PLANTRONICS, INC.
1996 Employee Stock Purchase Plan
In such event, the Company shall give written notice of such reduction
in the number of shares subject to option for each Participant. Any excess
Contributions not used will be returned to the Participant, as described in
paragraph 11.
(c) The Participant will receive the right to obtain cash dividends on
the shares held on account, if any Common Stock cash dividend is declared by the
Company.
(d) Shares purchased by a Participant under the Plan shall be
registered in the name of the Participant or in the names of the Participant and
his/her spouse.
14. ADMINISTRATION
The Board, or its designated committee, shall supervise and administer
the Plan and shall have full power to adopt, amend and rescind any rules deemed
desirable and appropriate for the administration of the Plan and not
inconsistent with the Plan, to construe and interpret the Plan, and to make all
other determinations necessary or advisable for the administration of the Plan.
The composition of the committee shall be in accordance with the
requirements to obtain or retain any available exemption from the operation of
Section 16(b) of the Exchange Act, pursuant to 16b-3 promulgated thereunder, to
the extent applicable.
15. DESIGNATION OF BENEFICIARY
(a) Each Participant will be asked to file a written designation of
beneficiary who is to receive any cash, if any, from the Participant's account
under the Plan in the event of such Participant's death subsequent to the end of
the Offering Period but prior to the exercise of the option.
If a Participant is married and the designated beneficiary is not the
spouse, spousal consent will be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the Participant
at any time by written notice.
(c) In the event a Participant dies in the absence of a living
beneficiary who is validly designated under the Plan, the Company shall deliver
such shares and/or cash to the executor or administrator of the estate of the
Participant. If, to the knowledge of the Company, no such executor or
administrator has been appointed, the Company may, in its discretion, deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the Participant. If no spouse, dependent, or relative is known to
the Company, then the Company will deliver the Participant's shares and/or cash
to such other persons as the Company may designate.
16. TRANSFERABILITY
Neither Contributions credited to the Participant's account nor any
rights with regard to the exercise of an option or to receive shares under the
Plan may be assigned, transferred, pledged, hypothecated or otherwise disposed
of in any way by the Participant, other than by will, the laws of
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<PAGE> 7
PLANTRONICS, INC.
1996 Employee Stock Purchase Plan
descent and distribution, or as described in paragraph 15 hereof. Any such
attempt at assignment, transfer, pledge, hypothecation, or other disposition
shall be without effect, except the Company may treat such act as an election to
withdraw funds in accordance with paragraph 11.
17. USE OF FUNDS
All Contributions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such Contributions.
18. REPORTS
Individual accounts will be maintained for each Participant in the
Plan. Statements of account will be given to each Participant promptly following
the Exercise Date. Statements will set forth the total amount of Contribution
for the Offering Period, the per share purchase price, the number of shares
purchased and the remaining cash balance that will be returned to the
Participant, if any.
19. ADJUSTMENTS FOR CHANGES IN CAPITALIZATION
Subject to any required action by the stockholders of the Company, the
number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised and the number of shares of Common Stock which have been
authorized for issuance under the Plan but have not yet been placed under option
(collectively, the Reserves), as well as the price per share of Common Stock
covered by each option under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of Common Stock, or any other increase
or decreased in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration."
Such adjustments shall be made by the Board, whose determination in
that respect shall be final, binding, and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of common stock subject to an option.
In the event of the proposed dissolution or liquidation of the Company,
the Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, the Offering Period then
in progress shall be shortened by setting a new Exercise Date (the "New Exercise
Date"). The New Exercise Date shall be before the date of the Company's proposed
sale or merger. The Board shall notify each Participant in writing, at least ten
(10) business days prior to the New Exercise Date, that the Exercise Date for
the Participant's option has been changed to the new Exercise Date and that the
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<PAGE> 8
PLANTRONICS, INC.
1996 Employee Stock Purchase Plan
Participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the Participant has withdrawn from the Offering Period
as provided in paragraph 11.
The Board may, if it so determined in the exercise of its sole
discretion, also make provision for adjusting the Reserves, as well as the price
per share of Common Stock covered by each outstanding option, in the event the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
20. AMENDMENT OR TERMINATION
(a) The Board may at any time terminate or amend the Plan. Except as
provided in paragraph 19, no such termination may affect options previously
granted, nor may an amendment make any change in any option theretofore granted
which adversely affects the rights of any Participant without the Participant's
written consent.
In addition, to the extent necessary to comply with applicable law, the
Company shall obtain stockholder approval in such a manner and to such a degree
as so required.
(b) Without stockholder consent and without regard to whether any
participant rights may be considered to have been "adversely affected," the
Board (or its committee) shall be entitled to change the Offering Periods, limit
the frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
21. NOTICES
All notices or other communications by a Participant to the Company
under or in connection with the Plan shall be deemed to have been duly given
when received in the form specified by the Company at the location or by the
person designated by the Company for receipt thereof.
22. CONDITIONS UPON THE ISSUANCE OF SHARES
Shares shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares pursuant
thereto shall comply with all applicable provisions of law, domestic and
foreign, including without limitation, the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
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<PAGE> 9
PLANTRONICS, INC.
1996 Employee Stock Purchase Plan
As a condition to the exercise of the option, the Company may require the person
exercising such option to represent and warrant at the time of any such exercise
that the shares are being purchased only for investment and without any present
intention to sell or distribute such shares, if, in the opinion of counsel for
the Company, such representation is required by any of the aforementioned
applicable provisions of law.
23. TERM OF PLAN
The Plan became effective upon its adoption by the Board in April 1996
and Shareholder Approval in August 1996, and shall continue in effect for a term
of twenty (20) years unless sooner terminated under paragraph 20.
-9-
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1996
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