Plantronics 2015 Annual Report Download - page 46

Based on past performance and current expectations, we believe that our current cash and cash equivalents, short-term investments,
cash provided by operations, and the availability of additional funds under the Credit Agreement will be sufficient to support
business operations, capital expenditures, contractual obligations, and other liquidity requirements associated with our operations
for at least the next twelve months. However, any projections of future financial needs and sources of working capital are subject
to uncertainty. See “Certain Forward-Looking Information” and “Risk Factors” in this Annual Report on Form 10-K for factors
that could affect our estimates for future financial needs and sources of working capital.
OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained
interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities,
or any other obligation under a variable interest in an unconsolidated entity that provides us with financing and liquidity support,
market risk, or credit risk support.
A substantial portion of the raw materials, components, and subassemblies used in our products are provided by our suppliers on
a consignment basis. These consigned inventories are not recorded on our consolidated balance sheet until we take title to the
raw materials, components, and subassemblies, which occurs when they are consumed in the production process. Prior to
consumption in the production process, our suppliers bear the risk of loss and retain title to the consigned inventory. The terms
of the agreements allow the Company to return parts in excess of maximum order quantities to the suppliers at the supplier’s
expense. Returns for other reasons are negotiated with the suppliers on a case-by-case basis and to date have been immaterial. If
our suppliers were to discontinue financing consigned inventory, it would require us to make cash outlays and we could incur
expenses which, if material, could negatively affect our business and financial results. As of March 31, 2015 and 2014, we had
off-balance sheet consigned inventories of $33.4 million and $40.0 million, respectively.
The following table summarizes our future contractual obligations as of March 31, 2015 and the effect that such obligations are
expected to have on our liquidity and cash flows in future periods:
Payments Due by Period
(in thousands) Total
Less than 1
year 1-3 years 4-5 years
More than
5 years
Revolving line of credit $ 34,500 $ — $ — $ 34,500 $ —
Operating leases $ 8,009 $ 2,236 $ 2,151 $ 1,487 $ 2,135
Unconditional purchase obligations 123,022 121,481 1,541 — —
Total contractual cash obligations $ 165,531 $ 123,717 $ 3,692 $ 35,987 $ 2,135
Operating Leases
We lease certain facilities under operating leases expiring through our fiscal year 2025. Certain of these leases provide for renewal
options for periods ranging from one to three years and in the normal course of business, we may exercise the renewal options.
Unconditional Purchase Obligations
We utilize several contract manufacturers to manufacture raw materials, components, and subassemblies for our products. We
provide these contract manufacturers with demand information that typically covers periods up to 13 weeks, and they use this
information to acquire components and build products. We also obtain individual components for our products from a wide variety
of individual suppliers. Consistent with industry practice, we acquire components through a combination of purchase orders,
supplier contracts, and open orders based on projected demand information. As of March 31, 2015, we had outstanding off-balance
sheet third-party manufacturing commitments and component purchase commitments of $123.0 million, all of which we expect
to consume in the normal course of business.
Unrecognized Tax Benefits
As of March 31, 2015, long-term income taxes payable reported on our consolidated balance sheet included unrecognized tax
benefits and related interest of $12.8 million and $1.8 million, respectively. We are unable to reliably estimate the timing of future
payments related to unrecognized tax benefits and they are not included in the contractual obligations table above. We do not
anticipate any material cash payments associated with our unrecognized tax benefits to be made within the next twelve months.
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