Plantronics 1999 Annual Report Download - page 30

We have established a worldwide year 2000 task force, led by an Executive Steering Committee of our
senior management, including representatives of each of our operating organizations and corporate functions,
to oversee and regularly review the status of our year 2000 compliance plan.Through our year 2000 task
force, we are proceeding with implementation of a formal year 2000 compliance program.The compliance
program addresses three key elements: (i) internal infrastructure, addressing internal hardware and software
and non-information technology systems; (ii) supplier readiness, addressing the preparedness of our suppliers
of goods and services; and (iii) customer readiness, addressing the preparedness of our customer support
and the preparedness of our customers to transact business with us. In each of those compliance areas, we
are systematically performing a global risk assessment, conducting testing, implementing upgrades, commu-
nicating with and assisting suppliers and customers in raising awareness of the year 2000 issues and developing
contingency plans to mitigate known and unknown year 2000 risks.The status of our compliance efforts
in those three areas is set forth below:
Internal Infrastructure We are assessing all internal applications and computer software and hardware.
Our key business information systems have been made year 2000 compliant. Resources have been assigned
to address other applications, such as product testing and product design hardware and software, based
upon our determination of how critical each of those systems is to our business operations and the time
required to bring them into full year 2000 compliance.We currently expect that all our critical business
information systems and other critical applications will be fully year 2000 compliant by June 1999.
Supplier Readiness This program focuses on minimizing the risks associated with supplier year 2000 issues
in two areas: (i) the suppliers’ business capability to continue providing products and services in and after
the year 2000 and (ii) the year 2000 readiness of products supplied to us for our use. Requests for infor-
mation and certification of compliance have been and are being sent to our principal and critical suppliers.
The year 2000 task force is monitoring responses from suppliers and following up where necessary and
appropriate.We expect that we will have certification from our principal and critical suppliers of goods
and services by July 1999.
Customer Readiness This program focuses on ensuring that customers are aware of the year 2000 issues and
that customers are capable of placing orders for our products, receiving products ordered and paying our
invoices for products sold and delivered. Requests for information and certification of year 2000 compliance
have been sent to our major customers.The year 2000 task force will follow up with customers where
necessary and appropriate.We expect that we will have certification from our principal customers by
August 1999.
Costs to Address Year 2000 Issues We currently estimate that the aggregate cost of our year 2000 compliance
efforts will be approximately $1.2 million, of which approximately $0.7 million has been incurred to date.
The costs consist principally of (i) fees paid to outside consultants and software programmers, (ii) purchase
of telephone PBX systems which require upgrades to be year 2000 compliant and (iii) purchase of software
and software upgrades to meet the year 2000 issue.The funds expended and to be expended are being
funded through operating cash flows.Approximately $0.5 million of the total cost, related to the purchase
of fixed assets, will be capitalized, with the balance expensed as incurred.
page 28 PLANTRONICS ANNUAL REPORT 1999
Management’s discussion and analysis of
financial condition and results of operations