Plantronics 2015 Annual Report Download - page 63

The Company uses the “with and without” approach in determining the order in which tax attributes are utilized. As a result, the
Company only recognizes a tax benefit from stock-based awards in additional paid-in capital if an incremental tax benefit is
realized after all other tax attributes currently available to the Company have been utilized. When tax deductions from stock-
based awards are less than the cumulative book compensation expense, the tax effect of the resulting difference (“shortfall”) is
charged first to additional paid-in capital to the extent of the Company's pool of windfall tax benefits, with any remainder recognized
in income tax expense. The Company has determined that it had a sufficient windfall pool available through the end of fiscal year
2015 to absorb any shortfalls. In addition, the Company accounts for the indirect effects of stock-based awards on other tax
attributes, such as the research tax credit, through the consolidated statements of operations.
Treasury Shares
From time to time, the Company repurchases shares of its common stock, depending on market conditions, in the open market or
through privately negotiated transactions, in accordance with programs authorized by the Board of Directors. Repurchased shares
are held as treasury stock until such time as they are retired or re-issued. Retirements of treasury stock are non-cash equity
transactions in which the reacquired shares are returned to the status of authorized but unissued shares and the cost is recorded as
a reduction to both retained earnings and treasury stock. The stock repurchase programs are intended to offset the impact of
dilution resulting from the Company's stock-based compensation programs.
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 accounts receivable.
Plantronics’ investment policy limits investments to highly-rated securities. In addition, the Company limits the amount of credit
exposure to any one issuer and restricts placement of these investments to issuers evaluated as creditworthy. As of March 31,
2015 the Company's investments were composed of Mutual Funds, Government Agency Securities, Commercial Paper, and
Corporate Bonds. As of March 31, 2014, the Company's investments were composed of Mutual Funds, Government Agency
Securities, Commercial Paper, Corporate Bonds, and CDs.
Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers that comprise the
Company’s customer base and their dispersion across different geographies and markets. One customer, D&H Distributing,
accounted for 11.1% of total net accounts receivable as of March 31, 2015. No customer accounted for 10% or more of total net
accounts receivable as of March 31, 2014. The Company does not believe other significant concentrations of credit risk exist.
Plantronics performs ongoing credit evaluations of its customers' financial condition and 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 required by the Company are only available 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 Issued Pronouncements
In April 2015, the Financial Accounting Standards Board ("FASB") issued additional guidance regarding cloud computing
arrangements. The guidance requires registrants to account for a cloud computing arrangement that includes a software license
element consistent with the acquisition of other software licenses. Cloud computing arrangement without software licenses are to
be accounted for as a service contract. This guidance is effective for fiscal years and interim periods beginning after December
15, 2015. The Company has elected to adopt the new standard beginning in the first quarter of its fiscal year 2016. The adoption
is not expected to have a material impact on the Company's results of operations, financial position, or cash flows.
In April 2015, the FASB issued additional guidance regarding the presentation of debt issuance costs. The guidance requires debt
issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This guidance is effective
for fiscal years and interim periods beginning after December 15, 2015. The Company has elected to adopt the new standard
beginning in the first quarter of its fiscal year 2016. The adoption is not expected to have a material impact on the Company's
results of operations, financial position, or cash flows.
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