Plantronics 2000 Annual Report Download - page 27

INVENTORY
Inventory is stated at the lower of cost, determined on the first-in, first-out method, or market.
DEPRECIATION AND AMORTI ZATION
Depreciation and amortization of property, plant and equipment are principally calculated using the straight-
line method over the estimated useful lives of the respective assets. In connection with the acquisition of
ClearVox Communications, goodwill is amortized over ten years and intangible assets are amortized over
three to five years.
DEFERRED DEBT ISSUANCE COSTS
Debt issuance costs are assigned to the various debt instruments and amortized over the shorter of the
terms of the respective debt agreements or the estimated period the debt will be outstanding.
REVENUE RECOGNITION
Revenue is recognized when products are shipped.We provide for estimated potential customer returns
and warranty costs at the time of shipment.
CONCENTRATION OF CREDI T RISK
Financial instruments that potentially subject Plantronics to concentrations of credit risk consist principally
of cash equivalents, marketable securities and trade receivables. Our cash investment policies limit invest-
ments to those that are short-term and low risk. Cash equivalents have an original maturity of ninety days
or less; marketable securities have an original maturity of greater than ninety days, but less than one year.
Concentrations of credit risk with respect to trade receivables are generally limited due to the large number
of customers that comprise our customer base, and their dispersion across different geographic areas.We
perform ongoing credit evaluations of our customers’financial condition and generally require no collateral
from our customers.We maintain an allowance for uncollectible accounts receivable based upon expected
collectibility of all accounts receivable.
FAI R VALUE OF FINANCIAL INSTRUM ENTS
The carrying value of our financial instruments, including cash, cash equivalents, marketable securities,
accounts receivable, accrued expenses and liabilities, approximate fair value due to their short maturities.
INCOM E TAXES
We account for income taxes under the liability method, which recognizes deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the tax basis of assets and
liabilities and their financial statement reported amounts.We account for tax credits as a reduction of tax
expense in the year in which the credits reduce taxes payable.
FOREIGN OPERATI ONS AND CURRENCY TRANSLATION
We have foreign assembly and manufacturing operations in Mexico, light assembly, research and development,
sales and marketing operations in the United Kingdom, an international finance, customer service and
logistics headquarters in the Netherlands, an international procurement office in Taiwan, and sales offices
in Canada, Asia, Europe,Australia and South America. For fiscal 1998, 1999 and 2000, the functional
currency of all foreign operations was the U.S. dollar.Accordingly, gains or losses arising from the translation
of foreign currency statements and transactions are included in determining consolidated results of
operations. Aggregate exchange losses for fiscal 1998, 1999 and 2000 were $0.2 million, $0.2 million and
$0.8 million, respectively.
N OTES TO consolidated financial statements
PLANTRONICS ANN UAL REPORT 2 0 0 0 page 25