Plantronics 2011 Annual Report Download - page 65

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Treasury Shares
From time to time, the Company repurchases shares of its common stock in the open market in accordance with repurchase plans
approved by the Board of Directors. The cost of reacquired shares of treasury stock which are returned to the status of authorized
but unissued shares are recorded as a deduction to both Retained earnings and Treasury stock. (See Note 12)
Concentration of Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents,
short-term and long-term investments, and trade receivables.
Plantronics’ investment policies for cash limit investments to those that are 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. As of March 31, 2011, the
Company's investments were composed of U.S. Treasury Bills, Government Agency Securities, Commercial Paper, U.S. Corporate
Bonds and Certificates of Deposit ("CDs"). As of March 31, 2010, the Company’s short-term investments consisted of Auction
Rate Securities ("ARS") which were sold at par value at the end of June 2010.
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 a provision for doubtful accounts based upon expected collectibility of all accounts receivable.
Certain inventory 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.
3. RECENT ACCOUNTING PRONOUNCEMENTS
Recently Adopted Pronouncements
In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2009-13,
Revenue Recognition (Topic 605)-Multiple Deliverable Revenue Arrangements (“ASU 2009-13”). ASU 2009-13 eliminates the
residual method of allocation and requires the relative selling price method when allocating deliverables of a multiple-deliverable
revenue arrangement. The determination of the selling price for each deliverable requires the use of a hierarchy designed to
maximize the use of available objective evidence including VSOE, TPE, or ESP.
In October 2009, the FASB also issued ASU No. 2009-14, Software (Topic 985)-Certain Revenue Arrangements That Include
Software Elements (“ASU 2009-14”). ASU 2009-14 excludes tangible products containing software and non-software components
that function together to deliver the product's essential functionality, from the scope of ASC 605-985, Software-Revenue
Recognition.
ASU 2009-13 and ASU 2009-14 are effective prospectively for revenue arrangements entered into or materially modified in fiscal
years beginning on or after June 15, 2010, and must be adopted in the same period using the same transition method. If adoption
is elected in a period other than the beginning of a fiscal year, the amendments in these standards must be applied retrospectively
to the beginning of the fiscal year. Full retrospective application of these amendments to prior fiscal years is optional. We
implemented both ASU 2009-13 and ASU 2009-14 in the second quarter of fiscal 2011 with retrospective application to the
beginning of fiscal 2011 for transactions that were initiated or materially modified during fiscal 2011. Implementation of these
ASUs did not have a material impact on reported net revenues as compared to net revenues under previous guidance as we do not
typically enter into multiple element arrangements. In addition, the new guidance did not change the units of accounting within
sales arrangements and the elimination of the residual method for the allocation of arrangement consideration had no material
impact on the amount and timing of reported net revenues. We do not believe that the effect of adopting these standards will have
a material impact on future financial periods.
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