Plantronics 2011 Annual Report Download - page 54

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We experienced immaterial net foreign currency gains in the year ended March 31, 2011. Although we hedge a portion of our
foreign currency exchange exposure, the weakening of certain foreign currencies, particularly the Euro and the Great Britain Pound
in comparison to the U.S. Dollar ("USD"), could result in material foreign exchange losses in future periods.
Non-designated Hedges
We hedge our EUR, GBP and AUD denominated cash, receivables and payables balances by entering into foreign exchange
forward contracts.
The table below presents the impact on the foreign exchange gain (loss) of a hypothetical 10% appreciation and a 10% depreciation
of the USD against the forward currency contracts as of March 31, 2011 (in millions):
Currency - forward contracts
EUR
GBP
AUD
Net position
Position
Sell Euro
Sell GBP
Sell AUD
USD Value of Net
Foreign Exchange
Contracts
$ 25.5
6.4
$ 3.5
$ 35.4
Foreign Exchange
Gain From 10%
Appreciation of USD
$ 2.6
0.6
$ 0.4
$ 3.6
Foreign Exchange
(Loss) From 10%
Depreciation of USD
$(2.6)
(0.6)
$(0.4)
$(3.6)
Cash Flow Hedges
Approximately 41%, 38% and 37% of net revenue from continuing operations in fiscal 2011, 2010 and 2009, respectively, was
derived from sales outside of the U.S., which were denominated predominantly in EUR and GBP in each of the fiscal years.
As of March 31, 2011, we had foreign currency call option contracts with notional amounts of approximately €52.7 million and
£14.5 million denominated in EUR and GBP, respectively. As of March 31, 2011, we also had foreign currency put option contracts
with notional amounts of approximately €52.7 million and £14.5 million denominated in EUR and GBP, respectively. Collectively,
our option contracts hedge against a portion of our forecasted foreign currency denominated sales. If the USD is subjected to
either a 10% appreciation or 10% depreciation versus these net exposed currency positions, we could incur a gain of $6.3 million
or a loss of $7.9 million, respectively.
The table below presents the impact on the Black-Scholes valuation of our currency option contracts of a hypothetical 10%
appreciation and a 10% depreciation of the USD against the indicated option contract type for cash flow hedges as of March 31,
2011(in millions):
Currency - option contracts
Call options
Put options
Net position
USD Value of Net
Foreign Exchange
Contracts
$(96.0)
89.2
$(6.8)
Foreign Exchange
Gain From 10%
Appreciation of USD
$ 3.5
2.8
$ 6.3
Foreign Exchange
(Loss) From 10%
Depreciation of USD
$(7.1)
(0.8)
$(7.9)
Collectively, our swap contracts hedge against a portion of our forecasted MS$ denominated expenditures. As of March 31, 2011,
we had cross currency swap contracts with notional amounts of approximately MX$343.9 million.
The table below presents the impact on the valuation of our cross-currency swap contracts of a hypothetical 10% appreciation and
a 10% depreciation of the USD as of March 31, 2011 (in millions):
Currency - cross-currency swap contracts
Position: Buy MX$
USD Value of Cross-
Currency Swap
Contracts
$ 27.9
Foreign Exchange
(Loss) From 10%
Appreciation of USD
$(2.6)
Foreign Exchange
Gain From 10%
Depreciation of USD
$ 3.1
Table of Contents
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