Plantronics 2005 Annual Report Download - page 90

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In December 2004, the FASB issued SFAS No. 123R ‘‘Share Based Payment,’’ (‘‘SFAS 123R’’) which
will be effective for the first interim or annual reporting period beginning after June 15, 2005 and is
required to be adopted by Plantronics in the first quarter of fiscal 2007. The new standard will require us
to record compensation expense for stock options using a fair value method. On March 29, 2005, the
Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 107 (‘‘SAB 107’’),
which provides the Staff’s views regarding interactions between SFAS 123R and certain SEC rules and
regulations and provides interpretations of the valuation of share-based payments for public companies.
We are currently evaluating SFAS 123R and SAB 107 to determine the fair value method to measure
compensation expense, the appropriate assumptions to include in the fair value model, the transition
method to use upon adoption and the period in which to adopt the provisions of SFAS 123R. The
impact of the adoption of SFAS 123R cannot be reasonably estimated at this time due to the factors
discussed above as well as the unknown level of share-based payments granted in future years. The effect
of expensing stock options on our results of operations using the Black-Scholes model is presented in
Notes 2 and 10 to these Consolidated Financial Statements.
In November 2004, the FASB issued SFAS No. 151, ‘‘Inventory Costs — An Amendment of ARB
No. 43, Chapter 4’’ (‘‘SFAS 151’’). SFAS 151 amends the guidance in ARB No. 43, Chapter 4,
‘‘Inventory Pricing,’’ to clarify the accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material (spoilage). Among other provisions, the new rule requires that items
such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as
current-period charges regardless of whether they meet the criterion of ‘‘so abnormal’’ as stated in ARB
No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of
conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal
periods beginning after June 15, 2005 and is required to be adopted by Plantronics in the second quarter
of fiscal 2006. The adoption of SFAS 151 is not expected to have a material impact on our consolidated
financial condition, results of operations or cash flows.
In December 2004, the FASB issued SFAS No. 153, ‘‘Exchanges of Nonmonetary Assets — An
Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions’’ (‘‘SFAS 153’’).
SFAS 153 eliminates the exception from fair value measurement for nonmonetary exchanges of similar
productive assets in paragraph 21(b) of APB Opinion No. 29, ‘‘Accounting for Nonmonetary Transac-
tions,’’ and replaces it with an exception for exchanges that do not have commercial substance. SFAS 153
specifies that a nonmonetary exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange. SFAS 153 is effective for the fiscal periods
beginning after June 15, 2005 and is required to be adopted by Plantronics in the second quarter of fiscal
2006. The adoption of SFAS 153 is not expected to have a material impact on our consolidated financial
condition, results of operations or cash flows.
62 ⯗Plantronics