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Filed Pursuant to Rule 424(b)(5)
Registration No. 333-77631
PROSPECTUS
PLANTRONICS, INC.
UP TO 628,696 SHARES OF COMMON STOCK
WHICH PLANTRONICS MAY SELL UNDER THIS PROSPECTUS
Plantronics, Inc. may offer and sell up to 628,696 shares of Plantronics
common stock to you under this prospectus. Plantronics will only sell these
shares if, and to the extent, you exercise those options which you hold to
purchase up to 628,696 shares of Plantronics common stock.
If and when you exercise the options, in whole or in part, Plantronics will
issue shares to you at a per share price equal to the per share exercise price
under the option agreements which govern the options. Examine the option
agreements which cover the options you wish to exercise in order to determine
the applicable per share exercise price.
<TABLE>
<CAPTION>
PER SHARE PRICE TOTAL PRICE
--------------- -----------
<S> <C> <C>
241,439 of your options: $ 0.90 $ 217,295.10
387,257 of your options: $2.735 $1,059,147.90
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Total: $1,276,443.00
</TABLE>
Plantronics common stock is listed on the New York Stock Exchange under the
ticker symbol "PLT". On May 4, 1999, the last reported sale price on the NYSE of
one share of Plantronics common stock was $68 3/8.
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CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE 3 IN THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is May 5, 1999
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TABLE OF CONTENTS
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Plantronics' Address................................................... 2
Forward-Looking Statements............................................. 2
Risk Factors........................................................... 3
Business............................................................... 9
Use of Proceeds........................................................ 14
Information Incorporated by Reference.................................. 14
How to Get Information About Plantronics............................... 15
Accounting Experts..................................................... 15
</TABLE>
PLANTRONICS' ADDRESS
Plantronics' principal executive offices are located at 345 Encinal Street,
Santa Cruz, California 95060. Plantronics' telephone number at that location is
(831) 426-5858. Its internet website is at http://www.plantronics.com.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. Such forward-looking statements are subject to various risks and
uncertainties that could cause actual results to differ materially from those
projected in such statements. These risks and uncertainties include those set
forth under "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations." The forward-looking statements
contained in this prospectus include statements about the following:
o anticipated trends in our business, including trends in the call center,
office, mobile, computer and residential market segments;
o our intention to develop and introduce new products;
o our anticipated growth and growth strategies;
o anticipated levels of headset adoption; and
o our expectations regarding year 2000 compliance and the cost of such
compliance.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties, and assumptions, the forward-looking
events discussed in this prospectus might not occur.
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You should rely only on the information contained in this prospectus. We have
not authorized any other person to provide you with different information. If
anyone provides you with different or inconsistent information, you should not
rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate as of the date on the
front cover of this prospectus only. Our business, financial condition, results
of operations and prospectus may have changed since that date.
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Plantronics, the logo design, Plantronics and the logo design together,
Clarity, Encore, FreeHand, Mirage, PLX, SoundGuard, StarSet, Supra and TriStar
are registered United States trademarks of Plantronics, Inc. CHS132 (and
family), CT-901, DuoSet, Headset Switcher, Practica, Quick Disconnect,
SoundGuard Plus, the clear color and the curvature of the Plantronics voice
tube, and Vista are trademarks of Plantronics, Inc. Certain of the foregoing
trademarks are registered trademarks in certain foreign countries. This
prospectus also includes trademarks of companies other than Plantronics.
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RISK FACTORS
Investing in our common stock will provide you with an equity ownership
interest in Plantronics. As a Plantronics shareholder, you may be subject to
risks inherent in our business. The performance of your shares will reflect the
performance of our business relative to, among other things, our competition,
general economic and market conditions and industry conditions. The value of
your investment may increase or decline and could result in a loss. You should
carefully consider the following factors as well as other information contained
in this prospectus before deciding to invest in our common stock.
Dependence On Call Center Market Segment
We have historically derived, and continue to derive, a substantial majority
of our net sales from the call center market segment. This market segment has
grown significantly in recent years as new call centers have proliferated and
existing call centers have expanded. While we believe this market segment is
continuing to grow, in the future this growth could slow or revenues from this
market segment could decline due to various factors. For example, technological
advances such as automated interactive voice response systems could reduce or
eliminate the need for call center agents in certain applications. In addition,
consumer resistance to telemarketing could adversely affect growth in the call
center market segment. Due to our reliance on the call center market segment, we
will be affected more by changes in the rate of call center establishment and
expansion and the communications products that call center agents use than would
a company serving a broader market. We believe that our sales growth in fiscal
1999 may have been favorably affected by call centers upgrading their automatic
call distribution systems in order to be year 2000 compliant. Since our products
are sometimes bundled with new call distribution systems, this may have
accelerated some headset sales. If this has occurred, it could adversely affect
our net sales in future periods, once call centers have completed their system
upgrades. Any decrease in the demand for call centers and related headset
products could cause a decrease in the demand for our products, which would
materially adversely affect our business, financial condition and results of
operations.
Failure of the Office, Mobile, Computer and Residential Market Segments To
Develop
While the call center market segment is still the most significant part of
our business, we believe that our future prospects will depend in large part on
the growth in demand for headsets in the office, mobile, computer and
residential market segments. These communications headset market segments are
relatively new and undeveloped. Moreover, we do not have extensive experience in
selling headset products to customers in these market segments. If the demand
for headsets in these market segments fails to develop, or develops slower than
we currently anticipate, or if we are unable to effectively market our products
to customers in these market segments, it would have a material adverse effect
on the potential demand for our products and on our business, financial
condition and results of operations.
Our Quarterly Operating Results May Fluctuate Significantly
Our quarterly results of operations may vary significantly in the future for
a variety of reasons, including the following:
o changes in demand for our products;
o timing and size of orders from customers;
o cancellations or delays of deliveries of components and subassemblies by
our suppliers;
o variances in the timing and amount of engineering and operating expenses;
o distribution channel volume variations;
o delays in shipments of our products;
o product returns and customer credits;
o new product introductions by us or our competitors;
o entrance of new competitors;
o increases in the costs of our components and subassemblies;
o price erosion;
o changes in the mix of products sold by us;
o seasonal fluctuations in demand; and
o general economic conditions.
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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.
We Must Match Production To Demand
Historically, we have seen steady increases in customer demand for our
products and have generally been able to increase production to meet that
demand. However, the demand for our products is dependent on many factors and
such demand is inherently difficult to forecast. Significant unanticipated
fluctuations in demand could cause the following operating problems, among
others:
o 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.
o Rapid increases in production levels to meet unanticipated demand could
result in higher costs for components and subassemblies and higher
overtime costs and other expenses. These higher expenditures could lower
our profit margins. Further, if production is increased rapidly, there may
be decreased manufacturing yields, which may also lower our margins.
o If forecasted demand does not develop, we could have excess production or
excess capacity. Excess production could result in higher inventories of
finished products, components and subassemblies. If we were unable to sell
these inventories, we would have to write off some or all of our
inventories of obsolete products and unusable components and
subassemblies. Excess manufacturing capacity could lead to higher
production costs and lower margins.
Any of the foregoing problems could materially adversely affect our business,
financial condition and results of operations.
We Depend On Our Suppliers
We buy components and subassemblies from a variety of suppliers and assemble
them into finished products. The cost, quality, and availability of such
components are essential to the successful production and sale of our products.
Obtaining components and subassemblies entails various risks, including the
following:
o 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.
o We obtain certain subassemblies and components from single suppliers, and
alternate sources for these items are not readily available. To date, we
have experienced only minor interruptions in the supply of these
components and subassemblies, none
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of which has significantly affected our results of operations. However, an
interruption in supply from any of our single source suppliers in the
future would materially adversely affect our business, financial condition
and results of operations.
o Most of our suppliers are not obligated to continue to provide us with
components and subassemblies. Rather, we buy most components and
subassemblies on a purchase order basis. If our suppliers experience
increased demand or shortages, it could affect deliveries to us. In turn,
this would affect our ability to manufacture and sell products that are
dependent on those components and subassemblies. This would materially
adversely affect our business, financial condition and results of
operations.
The Headset Market Is Highly Competitive
The market for our products is highly competitive. We compete with a variety
of companies in various segments of the communications headset market. In the
call center segment, the largest market segment in which we compete, our two
largest competitors, GN Netcom and ACS Wireless, Inc., recently merged to form a
single company. Although it is unclear how this merger will affect us, the
merged entity will have a broader product offering and greater marketing
presence than either of the two entities had separately. Moreover, the economies
of scale that may result from the merger could lead to increased pricing
pressures in our market.
We also anticipate that we will face additional competition from companies
that currently do not offer communications headsets. This is particularly true
in the office, mobile, computer and residential market segments. As these market
segments mature, we will face increased competition from consumer electronics
companies and other companies that currently manufacture and sell mobile phones
or computer peripheral equipment. These new competitors are likely to be larger,
offer broader product lines, bundle or integrate with other products
communications headset tops and bases manufactured by them or others, offer
products containing bases that are incompatible with our headset tops and have
substantially greater financial, marketing and other resources than we do.
We believe that important competitive factors for us are product reliability,
product features, customer service and support, reputation, distribution,
ability to meet delivery schedules, warranty terms, product life and price. If
we do not compete successfully with respect to any of these or other factors it
could materially adversely affect our business, financial condition and results
of operations. If we do not successfully develop and market products that
compete successfully with those of our competitors it would materially adversely
affect our business, financial condition and results of operations.
New Product Development Is Risky; We Must Respond To Changing Customer
Requirements And Technologies
Our product development efforts historically have been directed toward
enhancement of existing products and development of new products that capitalize
on our core capabilities. The success of new product introductions is dependent
on several factors, including the proper selection of new product features,
timely completion and introduction of new product designs, cost-effective
manufacture of such products, quality of new products and market acceptance. To
be successful in the future, we must develop new products, qualify these new
products, successfully introduce these products to the market on a timely basis,
and commence and sustain low-cost, volume production to meet customers' demands.
Although we attempt to determine the specific needs of headset users in our
target market segments, because almost all of our sales are indirect, we may not
always be able to timely and accurately predict end-user requirements. As a
result, our products may not be timely developed, designed to address current or
future end-user requirements, offered at competitive prices or accepted, which
could materially adversely affect our business, financial condition and results
of operations. Moreover, we generally incur substantial research and development
costs before the technical feasibility and commercial viability of a new product
can be ascertained. Accordingly, revenues from new products may not be
sufficient to recover the associated development costs.
Historically, the technology used in lightweight communications headsets has
evolved slowly. New products have primarily offered stylistic changes and
quality improvements, rather than significant new technologies. We anticipate
that the technology used in hands-free communications devices, including our
products, will begin to evolve more rapidly in the future. We believe that this
is particularly true of the office, mobile and residential market segments,
which may require us to develop new headset technologies to support cordless and
wireless operation and to interface with new communications and computing
devices. As a result, our success depends upon our ability to enhance existing
products, to respond to changing market requirements, and to develop and
introduce in a timely manner new products that keep pace with technological
developments. If we are unable to develop and introduce enhanced
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products or new products in a timely manner in response to changing market
conditions or customer requirements, it will materially and adversely affect our
business, financial condition and results of operations.
We Depend On Our Distribution Channels
We sell substantially all of our products through distributors, original
equipment manufacturers ("OEMs"), retailers and telephony service providers. Our
existing relationships with these parties are nonexclusive and can be terminated
by either party without cause. Our channel partners also sell or can potentially
sell products offered by our competitors. To the extent that our competitors
offer our channel partners more favorable terms, such partners may decline to
carry, de-emphasize or discontinue carrying our products. In the future, we may
not be able to retain or attract a sufficient number of qualified channel
partners. Further, such partners may not recommend, or continue to recommend,
our products. The inability to establish or maintain successful relationships
with distributors, OEMs, retailers and telephony service providers or to expand
our distribution channels could materially adversely affect our business,
financial condition or results of operations.
We Depend On S. Kenneth Kannappan And Other Key Personnel
Our success depends to a significant extent upon the services of a limited
number of executive officers and other key employees. On January 4, 1999, S.
Kenneth Kannappan was promoted to Chief Executive Officer of our company,
succeeding Robert S. Cecil in that capacity, and was appointed to our Board of
Directors. Mr. Kannappan joined our company in February 1995 and has held a
number of executive management positions, including President and Chief
Operating Officer. Mr. Kannappan has been assuming increasing responsibilities
for our day-to-day operations since his March 1998 appointment as President and
Chief Operating Officer. The unanticipated loss of the services of Mr. Kannappan
or one or more of our other executive officers or key employees could have a
material adverse effect upon our business, financial condition and results of
operations.
We also believe that our future success will depend in large part upon our
ability to attract and retain additional highly skilled technical, management,
sales and marketing personnel. Competition for such personnel is intense. We may
not be successful in attracting and retaining such personnel, and, our failure
to do so could have a material adverse effect on our business, operating results
or financial condition.
Citicorp Venture Capital Retains Significant Control
As of the date on the front cover of this prospectus, our largest
stockholder, Citicorp Venture Capital, Ltd. ("CVC"), beneficially owns 4,509,168
shares of our common stock (excluding any shares that may be owned by Citigroup
Foundation or by employees or affiliates of CVC or Citigroup Foundation), which
represents approximately 27.0% of the outstanding common stock. We also have an
agreement with CVC under which it is entitled to have up to three of its
designees serve on our Board of Directors, depending on the level of CVC's
continuing stock ownership. Messrs. Robert F.B. Logan, M. Saleem Muqaddam and
John Mowbray O'Mara are currently serving as CVC's designees under that
agreement. Accordingly, CVC has the ability to exert substantial influence on
the full Board of Directors, which currently consists of seven members. In
addition, our bylaws contain provisions that require a supermajority vote of the
Board of Directors to approve certain transactions, including amendments of our
Certificate of Incorporation and bylaws, mergers and sales of substantial
assets, acquisitions of other companies and sales of capital stock. These
provisions may have the effect of giving a small number of directors the ability
to block such transactions.
Future Sales Of Our Common Stock
As of April 28, 1999, we had 16,698,055 shares of common stock outstanding.
All of these shares are freely tradable except for approximately 5,100,000
shares held by affiliates of Plantronics. These approximately 5,100,000 shares
may only be sold in reliance on Rule 144 under the Securities Act of 1933, as
amended (the "Securities Act"), or pursuant to an effective registration
statement filed with the Securities and Exchange Commission. Certain of our
current stockholders, including CVC, Citigroup Foundation and certain of our
officers, directors and key employees, also have contractual rights to require
Plantronics to register their shares for public sale. An additional
approximately 1,900,000 shares are subject to outstanding stock options as of
April 28, 1999. Sales of a substantial number of shares of common stock in the
public market following the offering, as well as sales of shares issued upon
exercise of stock options could adversely affect the prevailing market price of
the common stock and impair our ability to raise capital through the sale of
equity securities.
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Risks Associated With Our Foreign Operations
A portion of our net sales is derived from customers outside the United
States. In addition, we conduct substantially all of our headset assembly
operations in our manufacturing facility located in Mexico, and we obtain most
of the components and subassemblies used in our products from various foreign
suppliers. The inherent risks of international operations, particularly in
Mexico, could materially adversely affect our business, financial condition and
results of operations. The types of risks faced in connection with international
operations and sales include:
o cultural difference in the conduct of business;
o greater difficulty in accounts receivable collection;
o unexpected changes in regulatory requirements;
o tariffs and other trade barriers;
o economic and political conditions in each country;
o management and operation of an enterprise spread over various countries;
and
o burden of complying with a wide variety of foreign laws.
A significant portion of our business is conducted in currencies other than
the U.S. dollar. As a result, fluctuations in exchange rates creates risk to us
in both the sale of our products and our purchase of supplies. Fluctuations in
the value of the currencies in which we conduct our business relative to the
U.S. dollar have caused and will continue to cause currency transaction gains
and losses. Although we do not currently engage in any hedging activities to
mitigate exchange rate risks, we continually evaluate programs to reduce our
foreign currency exposure. However, there can be no assurance that we will not
continue to experience currency losses in the future, nor can we predict the
effects of future exchange rate fluctuations on future operating results. To the
extent that sales to our foreign customers increase or transactions in foreign
currencies increase, our business, financial condition and results of operations
could be materially adversely affected by exchange rate fluctuations. In
addition, we cannot predict the potential consequences to our business of the
adoption of the Euro as a common currency in Europe.
We Depend On Our Principal Manufacturing Facility
Substantially all of our manufacturing operations are currently performed in
a single facility in Tijuana, Mexico. A fire, flood or earthquake, political
unrest or other disaster or condition affecting our facility could have a
material adverse effect on our business, financial condition and results of
operations. While we have developed a disaster recovery plan and believe we are
adequately insured with respect to this facility, we may not be able to
implement the plan effectively or on a timely basis or recover under applicable
insurance policies.
Failure of Electronic Systems To Recognize The Year 2000
Many existing electronic systems, including computer systems, use only the last
two digits to refer to a year. Therefore, these systems may recognize a date
using "00" as 1900 rather than the year 2000. If not corrected, many computer
and other electronic applications and systems could fail or create erroneous
results when addressing dates on and after January 1, 2000. Our products do not
address or utilize dates in their operation, and, accordingly, our products
should not fail due to the year 2000 problem. However, we use and depend on
information technology systems (including business information computer systems
and design and manufacturing computer systems) and other machinery and equipment
that includes embedded date sensitive technology. We also depend on the proper
functioning of date sensitive electronic systems of third parties, such as
customers and suppliers. The failure of any of these systems to appropriately
interpret the year 2000 could have a material adverse effect on our business,
financial condition and results of operations. We are undertaking efforts to
ensure that our business systems and those of our suppliers and customers are
compliant with the requirements of the year 2000. However, our year 2000 program
may not be effective or we may not be able to implement it in a timely and
cost-effective manner. Our year 2000 efforts may not, therefore, ensure against
disruptions caused by the approach or advent of the year 2000. The year 2000
problem is potentially very widespread, and it is not possible to determine all
the potential risks that we may face. Our inability to remedy our own year 2000
problems or the failure of third parties to do so may cause business
interruptions or shutdowns, financial loss, regulatory actions, harm to our
reputation and exposure to liability.
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Risks of Inadequate Protection of Intellectual Property and Infringement of
Rights of Others
Our success will depend in part on our ability to protect our proprietary
technology. We rely primarily on a combination of nondisclosure agreements and
other contractual provisions as well as patent, trademark, trade secret, and
copyright laws to protect our proprietary rights. We currently hold 33 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.
From time to time, third parties, including our competitors, may assert
patent, copyright and other intellectual property rights against us. Such
claims, if they are asserted, could result in costly litigation and diversion of
management's attention. In addition, we may not ultimately prevail in any such
litigation or be able to license any valid and infringed patents from such third
parties on commercially reasonable terms, if at all. Any infringement claim or
other litigation against us could materially adversely affect our business,
financial condition and results of operations.
Product Liability Exposure
The use of our products exposes us to the risk of product liability claims.
Product liability claims have in the past been, and are currently being,
asserted against us. None of the previously resolved claims have materially
affected our business, financial condition or results of operations, nor do we
believe that any of the pending claims will have such an effect. Although we
maintain product liability insurance, the coverage provided under our policies
could be unavailable or insufficient to cover the full amount of any such claim.
Therefore, successful product liability claims brought against us could have a
material adverse effect upon our business, financial condition and results of
operations.
Our Stock Price May Be Volatile
The market price for our common stock may be affected by a number of factors,
including the announcement of new products or product enhancements by us or our
competitors, the loss of services of one or more or our executive officers or
other key employees, quarterly variations in our or our competitors' results of
operations, changes in earnings estimates or recommendation by securities
analysts, developments in our industry, sales of substantial numbers of shares
of our common stock in the public market, general market conditions and other
factors, including factors unrelated to our operating performance or the
operating performance of our competitors. In addition, stock prices for many
companies in the technology sector have experienced wide fluctuations that have
often been unrelated to the operating performances of such companies. Such
factors and fluctuations, as well as general economic, political and market
conditions, such as recessions, may materially adversely affect the market price
of our common stock.
Environmental Matters
We are subject to various federal, state, local and foreign environmental
laws and regulation, 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.
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Effects of Antitakeover Provisions
Our Board of Directors has the authority to issue preferred stock and to
determine the price, rights, preferences, privileges and restrictions, including
voting and conversion rights, of those shares without any further vote or action
by the stockholders. The issuance of our preferred stock could have the effect
of making it more difficult for a third party to acquire us. In addition, we are
subject to the antitakeover provisions of Section 203 of the Delaware General
Corporation Law, which could also have the effect of delaying or preventing our
acquisition by a third party. Further, certain provisions of our Certificate of
Incorporation and bylaws could delay or make more difficult a merger, tender
offer or proxy contest, which could adversely affect the market price of our
common stock.
BUSINESS
Overview
Plantronics introduced the first lightweight communications headset in 1962.
Since that time we have established ourselves as a world-leading designer,
manufacturer and marketer of lightweight communications headset products. We
manufacture a broad line of headsets designed for use with substantially all of
the different telephone systems currently in use. Our products are designed to
increase the productivity, effectiveness and comfort of telephone use. We
believe our customers and end-users recognize our headsets for their sound
quality, comfort, reliability and industry-leading safety. Historically, we have
sold products primarily for use in the call center market segment, but in recent
years we have been increasingly leveraging our expertise to become a leading
headset supplier to the office, mobile and residential market segments. Our
products are available through a global network of distributors, original
equipment manufacturers, retailers and telephony service providers.
Industry Background
Headsets are used in call centers, offices, cars and homes and with various
terminal devices such as wireline, cellular and cordless telephones and
computers. Specifically, headsets:
o allow people to have both hands free to use a computer, take notes,
organize files, drive a car, complete household tasks or perform other
tasks while they talk on the telephone;
o provide increased sound quality to telephone users by reducing background
noise;
o relieve the repetitive stress and discomfort associated with placing a
telephone handset between the shoulder and neck; and
o provide greater privacy than speakerphones.
The largest group of headset users are call center agents who are on the
telephone throughout their work day. The number of call center agents has grown
as companies have sought to (i) focus on customer service to provide a
competitive advantage, (ii) reduce costs through the use of real-time
centralized information exchange and customer interaction, and (iii) make
greater use of cost-effective direct distribution models. As the benefits of
call centers become more widely recognized and the system cost per agent
declines, the establishment of call centers is spreading to smaller
organizations and international firms. Agent productivity in call centers is
important in minimizing costs and reducing customer wait time, and, therefore,
the ability to effectively and simultaneously use a telephone and keyboard is
critical. As the call center market segment has grown, the benefits of headsets
have become widely recognized as an essential component of a productive and safe
workplace.
The office market segment, both corporate and small office/home office
("SOHO"), has become an increasingly important market segment for headsets over
the last five years. The increasing and simultaneous use of telephones and
computers by office workers and a growing awareness of the benefits of headsets
have contributed to the growth of this market segment. Professionals who spend
significant time on the telephone have been early adopters of headset products.
These professionals include securities brokers, insurance agents, sales
executives, credit controllers, and purchasing agents. We believe that the level
of headset use in the office is low, providing a long-term opportunity to
increase headset sales to office workers.
Headset demand is also emerging in the mobile, computer and residential
market segments. Drivers increasingly seek the hands-free benefits of headsets,
as the use of mobile phones in cars continues to grow worldwide. Headsets are
also an important interface for computerized speech recognition programs, which
broaden the application of headsets from voice to written communication by
substituting voice for keyboard entry. Finally, the availability of low-cost
cordless phones with headset ports is beginning to facilitate
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headset adoption in the residential market segment by individuals who want the
ability to perform multiple tasks while speaking on the telephone.
Plantronics' Strategy
We intend to extend our position as a leading worldwide supplier of
lightweight communications headsets and to promote increased headset use
globally. Our strategy to achieve these goals includes:
Extend Headset Product Leadership. Since introducing the first lightweight
communications headset in 1962, we have developed the knowledge and expertise
to provide our customers with leading products and services. We intend to
focus on maintaining the highest standards of excellence in comfort, ease of
use, sound quality, durability, style and service. By focusing on these core
strengths relative to our existing and new market segments, we plan to
continue to be an industry leader in customer and end-user satisfaction.
Drive Headset Adoption. We intend to work to increase awareness of our
headsets and to provide products people require to make their lives easier
and more productive. We will continue to educate potential users on the
benefits of headsets, to leverage the Plantronics brand name and to design
headsets appropriate for use in the environments in which prospective users
are operating. Accordingly, we are currently expanding our advertising and
promotional activities and are working with key OEMs and other channel
partners to facilitate the adoption of our products in the office, mobile,
computer and residential markets. We believe that the level of adoption of
headsets in these new market segments is low, providing a long-term
opportunity to increase our headset sales.
Strengthen Distribution Channels. Historically, we have developed and
maintained diverse distribution channel relationships to meet the different
purchasing requirements of our customers. We intend to leverage the
relationships we have developed with our existing channel partners, including
the leading telecommunications equipment manufacturers, distributors,
retailers, and contract stationers, to increase the rate of headset adoption
and sales. For example, we have recently increased co-marketing activities
with many of our channel partners. To capitalize on new market segment
opportunities, we intend to selectively broaden our distribution. Thus, we
have recently initiated relationships with leading mobile phone service
providers and distributors of mobile phones and accessories.
Drive Stockholder Value Through Low Cost Manufacturing. We seek to provide
the highest value products while maintaining a focus on reducing
manufacturing and materials costs. Through a combination of (i) working with
suppliers to reduce component costs, (ii) redesigning products to lower
manufacturing costs, and (iii) reducing overhead as a percent of revenue, we
believe we are the low cost producer of high quality headsets in our
principal market segments. We intend to maintain our focus on minimizing
manufacturing costs where possible. We believe this strategy allows us to
realize attractive profit margins and, when necessary, to match competitors
on price.
Products and Technology
Our product line consists of lightweight communications headsets, headset
accessories and services, and specialty telephone products. Our headsets
incorporate unique features that we believe offer compelling performance
advantages:
Comfort. We maintain what we believe is the industry's most extensive
database for the design of comfortable headsets. Our database includes
measurements from over 800 physical molds taken of different ear types. The
measurements are digitized and stored in a CAD/CAM database along with
critical head contour measurements. In addition, we study weight drag to
determine optimum weight distribution on the ear. We believe our focus on
ergonomics has been critical to our success in designing products which are
more comfortable, including our more recent adjustable Encore and TriStar
product families.
Sound Quality. In designing our products, we have conducted headset sound
quality (e.g. preference and intelligibility) research on substantially all
telephone systems in both listening and speaking modes. We believe we have
achieved the industry's best signal-to-noise ratios, the most powerful noise
cancelling performance (to block out background sounds in unusually loud
environments) and the only design (the trademark clear and curved Plantronics
Voice Tube) (the "Voice Tube") which does not require the microphone boom to
be positioned precisely for proper functioning and is ideal for most office
and call center
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environments. The Voice Tube design has the additional benefits of a more
attractive appearance, easy hygienic replacement, and lighter weight. The
Encore product family also incorporates what we believe is the industry's
only tone control in a headset top.
Durability. We have over 30 years of experience understanding headset
durability and have successfully incorporated this knowledge into certain
product designs which we believe generally last longer than the best
comparable competitive products.
In addition to the features incorporated into our products, we provide
service, support, supplies and accessories. We believe our customer support and
service program provides our end users and customers with easier access to
Plantronics and is an important competitive advantage.
Headsets consist of two distinct units: the "top" and the "base." The top is
the portion that the user wears and that includes the speaker and microphone;
and the base, or amplifier adapter, interfaces with the telephone or other
communications equipment. Tops account for approximately two-thirds of our
business, while bases comprise the remaining one-third. Both units are required
in most applications; however, in some applications, the interface is built into
the telephone, computer or other communications equipment with which the headset
is being used, removing the need for an adapter.
We manufacture a broad line of headset top styles, which can be worn over the
head, in the ear or on either ear. Each headset other than the FreeHand headset
offers either a Voice Tube (our most popular solution, suitable for the majority
of environments) or a noise-canceling microphone (appropriate for users in very
loud environments). All telephone-based headset tops, in conjunction with their
associated bases, are designed for use with substantially all of the different
telephone systems currently available. Basic models include features such as
user volume control, a mute switch and quick-disconnect, which allows users to
leave the phone without removing their headsets or disconnecting their call.
Our principal headset top styles and major products in each category are as
follows:
<TABLE>
<S> <C> <C>
Over-the-Head Headsets
With Ear Cushions
SUPRA Our most popular headset, ideal for Engineered for sound quality and
phone-intensive jobs and call durability. Sound reception in one or
center environments. both ears.
ENCORE Also used in call centers; designed User-controllable tone adjustment and for
near-universal fit and all-day powerful noise cancelling performance.
comfort.
Behind-the-Ear Headsets
MIRAGE Uses a miniaturized behind-the-ear Rests gently on the ear, not in the
capsule with an adjustable receiver. ear. Can be worn on either ear.
STARSET Has an acoustic eartip that fits gently Ultra-lightweight, with an acoustic seal
in the outer portion of the ear. out unwanted background noise.
TRISTAR Stylish design for phone intensive Feather-weight ( 1/2 ounce), with
jobs and call center environments. maximum user adjustments designed for
stability, comfort and sound quality.
</TABLE>
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<PAGE> 12
<TABLE>
<S> <C> <C>
In-the-Outer-Portion-
of-the-Ear Headset
FREEHAND Designed for business Small and unobtrusive, easy to put on
professionals, this headset and take off.
features a small earbud which rests
comfortably in the ear.
Convertible Headset
DUOSET Appropriate for business Easily convertible from over-the-head to
professionals who want a over-the-ear for greater versatility.
headband for longer calls as well as an
over-the-ear headset for
intermittent phone use.
Mobile Headsets
CHS LINE Available in various styles, Reduces background noise and can be used
including over-the-head and with both cellular and PCS phones.
over-the-ear.
Cordless Headset
CT-901-HS 900 MHz cordless headset telephone. Provides extended cordless mobility
with hands-free convenience.
Bundled Headsets
SP/PLX SERIES Designed specially for the SOHO Offers comfort and ease of use.
user; sold with an adapter or telephone.
PRACTICA SERIES Designed for low to medium Offers good sound quality and durability
intensive phone users who require a at an attractive retail price.
less expensive headset; sold with an
adapter or telephone.
</TABLE>
We sell a full range of adapters or "bases" designed to work with
substantially all telephone systems. Our adapters include the following:
o Vista Universal Modular Adapter -- compatible with single or multi-line
telephones; features the SoundGuard Plus system, which provides volume
control for improved audio comfort and clarity.
o Plug Prong Adapter -- designed for automatic call distribution systems. o
Headset Switcher Multimedia Adapter -- allows for use with a telephone or
computer by simply flipping a switch.
o E-10 Adapter (an in-line amplifier) -- designed for use directly on the
telephone line to reduce desk clutter.
o Mobile Phone Adapters -- designed for use with cellular and PCS phones
lacking built-in headset ports.
Headset accessories include replacement voice tubes, training cords, ear
cushions, eartips, in-use indicators, theft protection devices and background
noise suppressors. These products allow end users to revitalize their headset
tops to maintain maximum performance and comfort. We support our product
offering with a service center which addresses consumer questions and provides
access to our full suite of product offerings and refurbishment accessories.
Through our Walker Equipment Division we also manufacture and sell specialty
telephone products including amplified telephones and handsets and telephone
amplifier accessories for the hearing-impaired and line test equipment. The
Walker Equipment Division sells special amplified and noise-canceling handsets
for high-noise environments, as well as for entry and elevator phones and for
use in telephone booths and information kiosks. In addition, the Clarity
telephone is 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.
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<PAGE> 13
Customers, Sales And Marketing
Our customers are primarily distributors, OEM partners and telephony service
providers who primarily sell our products in the call center and office end-user
market segments. Additionally, we sell into retail channels primarily for the
office market segment. We sell products to over 250 customers in more than 60
countries.
Specialized headset distributors represent our largest distribution channel.
These distributors generally sell on a national basis, and the bulk of their
revenues are from headset sales. Electronics wholesalers represent our second
largest channel. They typically offer a wide variety of products from multiple
vendors to both resellers and end users.
OEMs supply to their customers automatic call distributor systems and other
telecommunications and computer equipment that utilize headsets. OEMs do not
typically manufacture their own headsets, and therefore they often distribute
Plantronics headsets on a private label or co-branded basis.
The telephony service provider channel is comprised of former Regional Bell
Operating Companies and Post, Telephone and Telegraph companies which purchase
headsets from us for use by their own agents. Certain of these service providers
also resell headsets to their customers.
The retail channel encompasses office supply and consumer electronics
retailers, warehouse clubs, consumer products and office supply distributors,
and catalog and mail order companies. Retailers primarily sell headsets to small
businesses, small offices and home offices. This channel is currently our
fastest growing area of distribution.
We also make direct sales to certain government agencies, including NASA and
the FAA. In addition, certain of our distributors are authorized resellers under
a GSA schedule price list and sell our products to government customers under
that agreement.
We maintain a sales force in the United States and in various overseas
countries to provide ongoing customer support and service. We also employ
manufacturers' representatives to assist in selling through the retail channel.
Research And Development
Since we introduced the original lightweight communications headset in 1962,
the headset end-user has been the primary focus of our design efforts. We
maintain an extensive database of head and ear shapes to assist in the
development of our products. Our concern for "human factors" and our efforts to
design in comfort and safety have resulted in such product innovations as a
behind-the-ear capsule (containing both microphone and receiver) designed to fit
all users comfortably and the SoundGuard Plus system, which provides volume
control and improved audio comfort and quality.
We have a number of product development programs currently underway,
including a new generation of headset systems, computer and mobile products, a
wireless product family and several programs to both capitalize on and improve
our core technology. We supplement our in-house engineering capabilities through
selected contracting arrangements.
Research, development and engineering expenditures were $17.5 million, $14.5
million and $13.7 million for fiscal years 1998, 1997, and 1996, respectively.
We believe that investment in research and development is important for us to
maintain our position in the industry and, therefore, intend to increase our
spending for research, development and engineering in subsequent fiscal years.
Manufacturing
The majority of our manufacturing operations consists of assembly and
testing, substantially all of which is performed at our facility in Mexico. We
have smaller manufacturing operations in California, Georgia and the United
Kingdom. In addition, we outsource the manufacture of a limited number of
products to third parties.
Finished goods are generally manufactured to meet forecasted customer
requirements. Special products and large orders submitted with short lead times
are manufactured to order. Since most manufacturing occurs prior to the receipt
of purchase orders, Plantronics maintains an inventory of finished goods in
addition to inventories of raw materials, work in process and subassemblies and
components.
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<PAGE> 14
Plantronics purchases components for its headset products, including semi-custom
integrated circuits, amplifier boards and other electrical components, from
suppliers in the United States, Mexico, Asia and Europe. Although most of the
items purchased are obtained, or are reasonably available, from numerous
sources, certain products and components are currently procured only from single
suppliers in order to obtain volume pricing.
Competition
The market for our products is highly competitive. We compete with a variety
of companies in various segments of the communications headset market. In the
call center segment, the largest market segment in which we compete, our two
largest competitors, GN Netcom and ACS Wireless, Inc., recently merged to form a
single company. Although it is unclear how this merger will affect us, the
merged entity will have a broader product offering and greater marketing
presence than either of the two entities had separately. Moreover, the economies
of scale that may result from the merger could lead to increased pricing
pressures in our market.
We also anticipate that we will face additional competition from companies
that currently do not offer communications headsets. This is particularly true
in the office, mobile, computer and residential market segments. As these market
segments mature, we will face increased competition from consumer electronics
companies and other companies that currently manufacture and sell mobile phones
or computer peripheral equipment. These new competitors are likely to be larger,
offer broader product lines, bundle or integrate with other products
communications headset tops and bases manufactured by them or others, offer
products containing bases that are incompatible with our headset tops and have
substantially greater financial, marketing and other resources than we do.
We believe that important competitive factors for us are product reliability,
product features, customer service and support, reputation, distribution,
ability to meet delivery schedules, warranty terms, product life and price.
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. 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.
Facilities
Our principal offices are located in Santa Cruz, California. We own three
buildings totaling approximately 160,000 square feet, of which a portion is
leased to third parties. Our primary production facilities are leased premises
located in Tijuana, Mexico. Our Walker Equipment Division leases offices and a
small production facility in Ringgold, Georgia. We also lease sales and
administrative offices in various foreign countries.
USE OF PROCEEDS
Plantronics will use the proceeds from the sale of the shares for working
capital and general corporate purposes.
INFORMATION INCORPORATED BY REFERENCE
This prospectus incorporates by reference the following documents and
information, all of which Plantronics has filed in the past with the SEC:
- Plantronics' Annual Report on Form 10-K for the fiscal year ended March
28, 1998, filed on June 24, 1998.
- Plantronics' Quarterly Report on Form 10-Q for the quarterly period ended
June 27, 1998, filed on August 6, 1998.
- Plantronics' Quarterly Report on Form 10-Q for the quarterly period ended
September 26, 1998, filed on November 10, 1998.
- Plantronics' Current Report on Form 8-K filed January 12, 1999.
- Plantronics' Quarterly Report on Form 10-Q for the quarterly period ended
December 26, 1998, filed on February 3, 1999.
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<PAGE> 15
- Item 1 of Plantronics' Registration Statement on Form 8-A, filed on
December 20, 1993, as amended on January 14, 1994 and November 7, 1997
(which in turn incorporates by reference the description of Plantronics'
common stock set forth in Plantronics' Registration Statement on Form S-1
(Reg. No. 33-70744), filed on October 20, 1993, as amended by Amendment
No. 1, filed on November 30, 1993, Amendment No. 2, filed on December 27,
1993, and Amendment No. 3, filed on January 18, 1994).
Unless Plantronics has filed a post-effective amendment to the registration
statement under the Securities Act which contains this prospectus indicating
that all of the shares have been sold or which deregisters all shares then
remaining unsold, all documents which Plantronics subsequently files under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act shall be deemed to be
incorporated by reference in this prospectus and to be part of this prospectus
from the date of filing of such documents.
Plantronics will provide without charge to each person to whom a copy of this
prospectus is delivered, upon written or oral request, a copy of the information
that has been or may be incorporated by reference in this prospectus, other than
exhibits to such documents. Direct any request for such copies to John A.
Knutson, Vice President--Legal, Senior General Counsel and Secretary,
Plantronics, Inc., 345 Encinal Street, Santa Cruz, California 95060, Tel: (831)
426-5858.
HOW TO GET INFORMATION ABOUT PLANTRONICS
Plantronics is subject to the informational requirements of the Exchange Act
and therefore files reports, proxy and information statements and other
information with the SEC. You can inspect many of such reports, proxy and
information statements and other information on the SEC's internet website at
http://www.sec.gov.
You can also inspect and copy such reports, proxy and information statements
and other information at the SEC's Public Reference Room, 450 Fifth Street,
N.W., Washington, D.C. 20549. You can obtain information on the operation of the
Public Reference Room by calling the SEC at Tel: 1-800-SEC-0330. You can also
inspect and copy such reports, proxy and information statements and other
information may also be inspected and copied at the following Regional Offices
of the SEC: New York Regional Office, Seven World Trade Center, Suite 1300, New
York, New York 10048; and Chicago Regional Office, Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Plantronics' common
stock is listed on the NYSE, and you can inspect such reports, proxy and
information statements and other information at the offices of the NYSE, 20
Broad Street, New York, New York 10005.
This prospectus constitutes part of a registration statement on Form S-3
(Reg. No. 333-77631) initially filed by Plantronics with the SEC under the
Securities Act on May 3, 1999. This prospectus does not contain all of the
information set forth in the registration statement. For further information
with respect to Plantronics and the shares, you should refer to the registration
statement either at the SEC's website or at the addresses set forth in the
preceding paragraph. Statements in this prospectus concerning any document filed
as an exhibit to this prospectus are not necessarily complete, and, in each
instance, you should refer to the copy of such document which has been filed as
an exhibit to the registration statement. Each such statement is qualified in
its entirety by such reference.
No one is authorized to give any information or to make any representations
not contained in this prospectus in connection with any offering made by this
prospectus. If given or made, you must not rely on such information or
representations as having been authorized by Plantronics or by any other person.
This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any security other than the shares offered hereby. This prospectus
also does not constitute an offer to sell or a solicitation of an offer to buy
any of the shares offered hereby to any person in any jurisdiction in which it
is unlawful to make such an offer or solicitation. Neither delivery of this
prospectus, nor any sale or offer to sell shares hereunder, shall under any
circumstances create any implication that there has been no change in the
affairs of Plantronics since the date of this prospectus or that the information
contained in this prospectus is correct as of any time subsequent to the date of
this prospectus.
ACCOUNTING EXPERTS
The financial statements incorporated in this prospectus by reference to
Plantronics' Annual Report on Form 10-K for the fiscal year ended March 28, 1998
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of PricewaterhouseCoopers
as experts in auditing and accounting.
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