Plantronics 2010 Annual Report Download - page 69

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On March 1, 2010, the Board of Directors authorized a new plan to repurchase 1,000,000 shares of common stock. During fiscal
2010, the Company repurchased 24,100 shares of its common stock under this plan in the open market at a total cost of $0.8 million
and an average price of $31.31 per share. As of March 31, 2010, there were 975,900 remaining shares authorized for repurchase.
On January 13, 2009 and December 2, 2009, the Company retired 16.0 million shares and 2.0 million shares, respectively, of treasury
stock which were returned to the status of authorized but unissued shares. These were non-cash equity transactions in which the cost
of the reacquired shares was recorded as a deduction to both retained earnings and treasury stock.
Concentration of Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, short-
term securities, long-term investments, and trade receivables. Plantronics’ investment policies for cash limit investments to those that
are short-term and low risk and also limit the amount of credit exposure to any one issuer and restrict placement of these investments
to issuers evaluated as creditworthy. Cash equivalents have a remaining maturity of three months or less at the date of purchase.
Short-term securities have a remaining maturity of greater than three months at the date of purchase. Long-term investments have
maturities greater than one year or we do not currently have the ability to liquidate the investment. As a result of the uncertainties in
the credit markets and the UBS right offer, as of March 31, 2009, the Company had classified all of its ARS investments as long-term
since these investments were not currently liquid, and the Company would not be able to access these funds until a future auction of
these investments is successful, the underlying securities are redeemed by the issuer, or a buyer is found outside of the auction
process. As of March 31, 2010, the Company’s ARS portfolio is classified as a short-term trading security due to management’s
intent to exercise the put option with UBS and the expectation that the ARS will be sold within twelve months.
All of the ARS investments were investment grade quality and were in compliance with the Company’s investment policy at the time
of acquisition. Concentrations of credit risk with respect to trade receivables are generally limited due to the large number of
customers that comprise the Company’s customer base and their dispersion across different geographies and markets. Plantronics
performs ongoing credit evaluations of its customers' financial condition and generally requires no collateral from its customers. The
Company maintains an allowance for uncollectible accounts receivable based upon expected collectibility of all accounts receivable.
Certain components that meet the Company’s requirements are available only from a limited number of suppliers. The rapid rate of
technological change and the necessity of developing and manufacturing products with short lifecycles may intensify these risks. The
inability to obtain components as required, or to develop alternative sources, as required in the future, could result in delays or
reductions in product shipments, which in turn could have a material adverse effect on the Company’s business, financial condition,
results of operations and cash flows.
Other Guarantees and Obligations
As is customary in the Company’s industry, as provided for in local law in the U.S. and other jurisdictions, Plantronics’ standard
contracts provide remedies to its customers, such as defense, settlement, or payment of judgment for intellectual property claims
related to the use of its products. From time to time, the Company indemnifies customers against combinations of loss, expense, or
liability arising from various trigger events relating to the sale and use of its products and services. In addition, Plantronics also
provides protection to customers against claims related to undiscovered liabilities, additional product liability, or environmental
obligations. In the Company’s experience, claims made under these indemnifications are rare and the associated estimated fair value
of the liability is not material.
3. RECENT ACCOUNTING PRONOUNCEMENTS
In January 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-6, Improving Disclosures About Fair Value
Measurements, that amends existing disclosure requirements under the Fair Value Measurements and Disclosures Topic of the ASC
by adding required disclosures about items transferring into and out of levels 1 and 2 in the fair value hierarchy; adding separate
disclosures about purchase, sales, issuances, and settlements relative to level 3 measurements; and clarifying, among other things, the
existing fair value disclosures about the level of disaggregation. For Plantronics, this ASU is effective for the fourth quarter of fiscal
2010, except for the requirement to provide level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which is
effective beginning the first quarter of fiscal 2012. Since this standard impacts disclosure requirements only, its adoption did not have
a material impact on the Company’s consolidated financial statements.