Plantronics 2002 Annual Report Download - page 28

management ’s discussion and analysis of financial condition and
results of operations
C E RT A I N F O RW A R D -L O O K I N G I N F O R M AT I O N
T his Annual Report contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. In
addition, we may from time to time make oral forward-looking statements. T hese statements
may generally be identified by the use of such words as “expect,” “anticipate,” “believe,”
“intend,” “plan,” “will,” or “shall,” and include, but are not necessarily limited to, all of
the statements marked below with an asterisk (“*”). Such forward-looking statements
are based on current expectations and entail various risks and uncertainties. Our actual
results could differ materially from those anticipated in such forward-looking statements
as a result of a number of factors, including but not limited to the following: the call
c e n t e r, mobile, computer and residential markets not developing as we expect; and a
failure to respond adequately to either changes in technology or customer preferences.
For a discussion of such factors, this Annual Report should be read in conjunction with
the “Risk Factors Affecting Future Operating Results” set forth in our 2002 Annual
Report on Form 10-K as filed with the Securities and Exchange Commission. T he
following discussions titled “Annual Results of Operations” and “Financial Condition”
should be read in conjunction with those risk factors, the consolidated financial
statements and related notes included elsewhere herein, and the discussion and
additional disclosures in our Annual Report on Form 10-K.
C R I T I C A L A C C O U N T I N G P O L I C I E S A N D E S T I M AT E S
M a n a g e m e n t ’s Discussion and Analysis of Financial Condition and Results of Operations
are based upon Plantronics’ consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United States of
America. T he preparation of these financial statements requires management to make
estimates and assumptions that a ffect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Management bases estimates and judgments on historical
experience and on various other factors that are believed to be reasonable under the
circumstances; the results of which form the basis for making judgments about the
carrying values of assets and liabilities. Actual results may differ from these estimates
under different assumptions or conditions. Management believes the following critical
accounting policies, among others, affect its more significant judgments and estimates used
in the preparation of its consolidated financial statements.
Revenue Recognition. Plantronics recognizes revenue net of estimated product returns,
expected payments to resellers for customer programs, including cooperative advertising
and marketing development funds, volume rebates, and special pricing programs. Product
returns are provided for at the time r e v e n u e is recognized, based on historical return rates,
at what stage the product is in its expected life cycle and assumptions regarding the rate
of sell-through to end users from our various channels, which again, is based on historical sell-
through rates. Should these product lives vary significantly from our estimates, or should a
particular selling channel experience a higher than estimated return rate, or a slower sell-through
rate causing inventory build-up, then our estimated returns, which net against revenue, may
need to be revised. Reductions to revenue for expected and actual payments to resellers for
volume rebates and pricing protection are based on actual expenses incurred during the
period and on estimates for what is due to resellers for estimated credits earned during the
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