Plantronics 2003 Annual Report Download - page 21

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NOTE 3. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS
March 31,
(in thousands) 2002 2003
Accounts receivable, net:
Accounts receivable $58,195 $65,931
Less: sales returns, promotions and rebates (11,347) (12,067)
Less: allowance for doubtful accounts (3,010) (3,361)
$43,838 $50,503
Inventory, net:
Finished goods $23,576 $18,273
Work in process 831 1,229
Purchased parts 18,068 22,664
Less: allowance for excess and obsolete inventory (6,372) (8,408)
$36,103 $33,758
Property, plant and equipment, net:
Land $4,693 $4,693
Buildings and improvements (useful life 7-30 years) 16,350 19,189
Machinery and equipment (useful life 2-10 years) 52,747 61,496
73,790 85,378
Less: accumulated depreciation (38,090) (48,421)
$35,700 $36,957
Accrued liabilities:
Employee benefits $11,008 $12,283
Accrued advertising and sales and marketing 1,938 2,150
Warranty accrual 6,420 5,905
Accrued other 6,502 6,897
$25,868 $27,235
NOTE 4. DEBT
We have an unsecured revolving credit facility and letter of credit subfacility, with a major
bank for $75 million that matures on July 31, 2003. Any principal outstanding bears interest at
our choice of prime rate minus 1% or LIBOR plus 0.875%, depending on the rate choice and
performance level ratios. As of March 31, 2003, we had no borrowings under the revolving
credit facility and $0.9 million outstanding under the letter of credit subfacility. The revolving
credit facility includes certain covenants including a net funded debt to EBITDA ratio, an
interest coverage ratio, and a quick ratio, that materially limit our ability to incur debt and pay
dividends, among other matters. We were in compliance with the terms of the covenants as of
March 31, 2003.
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Notes to Consolidated Financial Statements
In January 2003, the FASB issued Financial Interpretation No. 46 (“FIN 46”), “Consolidation
of Variable Interest Entities, an Interpretation of ARB No. 51.” FIN 46 requires certain
variable interest entities to be consolidated by the primary beneficiary of the entity if the
equity investors in the entity do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. FIN 46 is effective for all new variable
interest entities created or acquired after January 31, 2003. For variable interest entities
created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the
first interim or annual period beginning after June 15, 2003. We believe that the adoption of
FIN 46 will not have a material impact on our financial position or results of operations.
In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative
Instruments and Hedging Activities.” SFAS 149 amends and clarifies accounting for
derivative instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS 133. In particular, this Statement clarifies
under what circumstances a contract with an initial net investment meets the characteristic
of a derivative and when a derivative contains a financing component that warrants special
reporting in the statement of cash flows. This Statement is generally effective for contracts
entered into or modified after June 30, 2003 and is not expected to have a material impact on
our financial statements.
Reclassifications. Certain reclassifications have been made to prior year balances in order to
conform to the current year presentation.