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8-K - FORM 8-K COMPLETION OF ALTEC SALE - PLANTRONICS INC /CA/form8-k.htm
EX-99.1 - EXHIBIT 99-1 PRESS RELEASE - PLANTRONICS INC /CA/exhibit99-1.htm
 


Exhibit 99.2


On October 2, 2009, Plantronics, Inc. (“Plantronics” or “the Company”) and certain of its foreign subsidiaries entered into an Asset Purchase Agreement (the “Agreement”) with Audio Technologies Acquisition, LLC, a Delaware limited liability corporation (“the Purchaser”) an affiliate of Prophet Equity, L.P., a Southlake, Texas based private equity firm, for the sale of certain assets of Altec Lansing, the Audio Entertainment Group (“AEG”) business segment of the Company (the “Transaction”), for a purchase price of $18 million in cash, subject to certain post-closing adjustments.  Pursuant to the Agreement, the Purchaser will acquire substantially all the assets associated with the AEG business, including customer and vendor contracts, certain patents and trademarks and other intellectual property, inventory, property, plant and equipment, and the name Altec Lansing.  In addition, the Purchaser will assume certain liabilities related to AEG.  

On December 1, 2009, Plantronics entered into a First Amendment to the Asset Purchase Agreement (the “Amendment”)  by and among Altec Lansing, LLC (f/k/a Audio Technologies Acquisition, LLC), a Delaware limited liability company (“Altec”), Audio Technologies Acquisition B.V., a private limited liability company organized under the laws of the Netherlands (“Altec B.V.”), Plantronics and Plantronics B.V., a private limited liability company organized under the laws of the Netherlands (“Plantronics BV”) which amends the Agreement, dated as of October 2, 2009 by and among the Purchaser, Plantronics and Plantronics B.V. (as amended by the Amendment, the “Purchase Agreement”).  Altec and Altec B.V. are collectively referred to herein as the “Purchasers”. The Purchasers are affiliates of Prophet Equity, L.P.

The Amendment (i) extended the termination date of the Purchase Agreement to December 1, 2009, (ii) reduced the purchase price by $1,800,000 to account for the change in the estimated value of net assets being delivered at closing together with the negotiated after-tax value of Altec Lansing's income in November, (iii) addressed certain employee matters and (iv) made certain other changes as set forth in the Amendment.  Plantronics and certain of its affiliates completed the sale of Altec Lansing, its AEG business segment, to the Purchasers on December 1, 2009.
 
The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2009 set forth below has been presented after giving effect to the sale of AEG as if it had occurred on September 30, 2009.  The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the six month period ended September 30, 2008 and 2009 and the fiscal years ended March 31, 2007, 2008 and 2009, set forth below has been presented after giving effect to the sale of AEG as if it had occurred on April 1, 2006. The Company will account for the sale of AEG as a discontinued operation in its consolidated financial statements effective in the third quarter of fiscal 2010 for all periods presented.

The unaudited pro forma consolidated financial information has been provided for informational purposes and should not be considered indicative of the financial condition or results of operations that would have been achieved had the divestiture occurred as of the periods presented. In addition, the unaudited pro forma financial information does not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The unaudited pro forma financial statement information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its Annual Report on Form 10-K for the year ended March 31, 2009 and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2009.


 
 

 


PLANTRONICS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
(in thousands, except per share data)

 
                     
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
         
   
As of September 30, 2009
 
                     
         
Sale of Altec
         
   
Historical
   
Lansing (1)
     
Pro Forma
 
ASSETS
                   
Cash and cash equivalents
  $ 244,170     $ 11,075     $ 255,245  
Short-term investments
    24,999       -         24,999  
Total cash, cash equivalents, and
                         
short-term investments
    269,169       11,075         280,244  
Accounts receivable, net
    103,003       4,795       107,798  
Inventory, net
    100,024       (21,998 ) c     78,026  
Deferred income taxes
    12,765       -         12,765  
Other current assets
    17,191       5,125   b     22,316  
Assets held for sale
    9,267       -         9,267  
Total current assets
    511,419       (1,003 )       510,416  
Long-term investments
    22,015       -         22,015  
Property, plant and equipment, net
    71,224       (828 ) c     70,396  
Intangibles, net
    4,067       -         4,067  
Goodwill
    14,005       -         14,005  
Other assets
    10,978       -         10,978  
Total assets
  $ 633,708     $ (1,831 )     $ 631,877  
                           
LIABILITIES AND STOCKHOLDERS' EQUITY
                         
Accounts payable
  $ 34,315     $ -       $ 34,315  
Accrued liabilities
    54,005       (1,097 )     52,908  
Total current liabilities
    88,320       (1,097 )       87,223  
Long-term income taxes payable
    14,215       -         14,215  
Other long-term liabilities
    991       -         991  
Total liabilities
    103,526       (1,097 )       102,429  
Stockholders' equity
    530,182       (734     529,448  
Total liabilities and stockholders' equity
  $ 633,708     $ (1,831 )     $ 631,877  
 
                         

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
 
(1) Effective December 1, 2009, Plantronics and certain of its affiliates completed the sale of Altec Lansing, its Audio Entertainment Group ("AEG") business segment.  The adjustments presented represent the removal of the book value of assets and liabilities based on their carrying amounts at September 30, 2009 that would transfer as part of the sale.  The value of the assets and liabilities that will actually transfer upon the sale will differ from the amounts presented.
   
  The pro forma adjustments are as follows:
   
  a.
To record the cash consideration received from the Purchaser.
   
  b. To record the escrow amounts due from the Purchaser at future dates.
   
  c. To eliminate the assets sold to Purchaser. 
   
  d. To eliminate the liabilities assumed by Purchaser, including sales-related reserves assumed by the Purchaser. 
   
  e. Solely for purposes of the pro-forma balance sheet, to record the preliminary loss on the sale of AEG as if the transaction had been consummated on September 30, 2009 applying the actual purchase price to the net assets as of September 30, 2009.  The loss calculation is preliminary and will change upon the finalization of Plantronics' financial statements for the quarter ended December 31, 2009, including the completion of the income tax accounting associated with the sale.  Plantronics expects to record a pre-tax loss of approximately $0.7 million calculated as follows:
 

 
Proceeds from sale
  $ 16,200  
 
Assets sold
    (22,826 )
 
Liabilities assumed, including sales related reserves
    5,892  
 
Pro forma estimated loss on sale
  (734 )
 

 
 

 

                                         
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(in thousands, except per share data)
                             
                                         
   
Six Months Ended
   
Six Months Ended
 
   
September 30, 2008
   
September 30, 2009
 
                                         
           
Sale of Altec
   
 
           
Sale of Altec
 
 
 
   
Historical
   
Lansing (1)
   
Pro Forma
   
Historical
   
Lansing (1)
   
Pro Forma
 
                                         
Net revenues
  $ 436,020     $ (42,144 )     $ 393,876     $ 327,540     $ (41,920 )     $ 285,620  
Cost of revenues
    251,368       (39,408 )       211,960       187,298       (34,613 )       152,685  
Gross profit
    184,652       (2,736 )       181,916       140,242       (7,307 )       132,935  
                                                     
Research, development and engineering
    38,545       (4,469 )       34,076       30,258       (3,047 )       27,211  
Selling, general and administrative
    96,143       (10,835 )       85,308       74,921       (8,824 )       66,097  
Restructuring and other related charges
    235       (235 )       -       1,454       (19 )       1,435  
Impairment of long-lived assets
    -       -         -       25,194       (25,194 )       -  
Total operating expenses
    134,923       (15,539 )       119,384       131,827       (37,084 )       94,743  
Operating income
    49,729       12,803         62,532       8,415       29,777         38,192  
                                                     
Interest and other income (expense), net
    (1,630 )     -         (1,630 )     2,231       -         2,231  
Income before income taxes
    48,099       12,803         60,902       10,646       29,777         40,423  
Income tax expense
    9,957        4,845   (3)     14,802       742        11,280   (3)     12,022  
Net income
  $ 38,142     $ 7,958       $ 46,100     $ 9,904     $ 18,497       $ 28,401  
                                                     
Earnings per common share:
                                             
Basic
  $ 0.78     $ 0.16       $ 0.95     $ 0.20     $ 0.38       $ 0.58  
Diluted
  $ 0.77     $ 0.16       $ 0.93     $ 0.20     $ 0.38       $ 0.58  
                                                     
Shares used in computing earnings per share:
                                     
Basic
    48,738       48,738         48,738       48,632       48,632         48,632  
Diluted
    49,362       49,362         49,362       49,118       49,118         49,118  
                                                     


                     
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(in thousands, except per share data)
 
                     
   
Year Ended
 
   
March 31, 2009
 
                     
         
Sale of Altec
         
   
Historical
   
Lansing (1)
     
Pro Forma
 
                     
Net revenues
  $ 765,619     $ (91,029 )     $ 674,590  
Cost of revenues
    469,591       (86,932 )       382,659  
Gross profit
    296,028       (4,097 )       291,931  
                           
Research, development and engineering
    72,061       (8,221 )       63,840  
Selling, general and administrative
    175,601       (19,923 )       155,678  
Restructuring and other related charges
    12,074       (1,122 )       10,952  
Impairment of goodwill and long-lived assets
    117,464       (117,464 )       -  
Total operating expenses
    377,200       (146,730 )       230,470  
Operating income (loss)
    (81,172 )     142,633         61,461  
                           
Interest and other income (expense), net
    (3,544 )     -         (3,544 )
Income (loss) before income taxes
    (84,716 )     142,633         57,917  
Income tax expense (benefit)
    (19,817 )      33,094   (3)     13,277  
Net income (loss)
  $ (64,899 )   $ 109,539       $ 44,640  
                           
Earnings (loss) per common share:
                         
Basic
  $ (1.34 )   $ 2.25       $ 0.92  
Diluted
  $ (1.34 )   $ 2.25       $ 0.91  
                           
Shares used in computing earnings (loss) per share:
 
Basic
    48,589       48,589         48,589  
Diluted
    48,589       48,589         48,947 (2)
                           
 
 

 
                     
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(in thousands, except per share data)
 
                     
   
Year Ended
 
   
March 31, 2008
 
                     
         
Sale of Altec
         
   
Historical
   
Lansing (1)
     
Pro Forma
 
                     
Net revenues
  $ 856,286     $ (108,351 )     $ 747,935  
Cost of revenues
    507,181       (103,318 )       403,863  
Gross profit
    349,105       (5,033 )       344,072  
                           
Research, development and engineering
    76,982       (11,249 )       65,733  
Selling, general and administrative
    189,156       (25,983 )       163,173  
Restructuring and other related charges
    3,584       (3,584 )       -  
Total operating expenses
    269,722       (40,816 )       228,906  
Operating income
    79,383       35,783         115,166  
                           
Interest and other income, net
    5,854       -         5,854  
Income before income taxes
    85,237       35,783         121,020  
Income tax expense
    16,842       12,573   (3)     29,415  
Net income
  $ 68,395     $ 23,210       $ 91,605  
                           
Earnings per common share:
                         
Basic
  $ 1.42     $ 0.48       $ 1.90  
Diluted
  $ 1.39     $ 0.47       $ 1.87  
                           
Shares used in computing earnings per share:
 
Basic
    48,232       48,232         48,232  
Diluted
    49,090       49,090         49,090  
                           

 
                     
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(in thousands, except per share data)
 
                     
   
Year Ended
 
   
March 31, 2007
 
                     
         
Sale of Altec
         
   
Historical
   
Lansing (1)
     
Pro Forma
 
                     
Net revenues
  $ 800,154     $ (123,640 )     $ 676,514  
Cost of revenues
    491,339       (110,305 )       381,034  
Gross profit
    308,815       (13,335 )       295,480  
                           
Research, development and engineering
    71,895       (10,312 )       61,583  
Selling, general and administrative
    182,108       (30,251 )       151,857  
Gain on sale of land
    (2,637     -         (2,637
Total operating expenses
    251,366       (40,563 )       210,803  
Operating income
    57,449       27,228         84,677  
                           
Interest and other income, net
    4,089       -         4,089  
Income before income taxes
    61,538       27,228         88,766  
Income tax expense
    11,395       10,314   (3)     21,709  
Net income
  $ 50,143     $ 16,914       $ 67,057  
                           
Earnings per common share:
                         
Basic
  $ 1.06     $ 0.36       $ 1.42  
Diluted
  $ 1.04     $ 0.35       $ 1.40  
                           
Shares used in computing earnings per share:
 
Basic
    47,361       47,361         47,361  
Diluted
    48,020       48,020         48,020  
                           

 
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(1) These adjustments reflect the elimination of the historical operations of Altec Lansing, the Audio Entertainment Group (“AEG”) business segment of the Company for the six months ended September 30, 2008 and 2009 and the fiscal years ended March 31, 2007, 2008 and 2009.  The Company's fiscal year ends on the Saturday closest to the last day of March.  For purposes of presentation, the Company has indicated its accounting year as ending on March 31.  Effective as of December 1, 2009, the sale of AEG was completed.  The Company will account for the sale of AEG as a discontinued operation in its consolidated financial statements effective in the third quarter of fiscal 2010 for all periods presented. 
   
(2) As the Company incurred a GAAP net loss for the year ended March 31, 2009, the inclusion of stock options in the shares used for computing diluted earnings per share would have been anti-dilutive and would have reduced the net loss per share.  However, as we have pro forma net income, the diluted shares used for the pro forma diluted earnings per share includes the effect of stock options. 
   
(3) Pro forma income tax expense is based on preliminary estimates and subject to change upon completion of the tax accounting related to the discontinued operations.