Plantronics 2007 Annual Report Download - page 77

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part ii
73A R 2 0 0 7
The functional currency of the Company’s European finance, sales and logistics headquarters in the
Netherlands, sales office, warehouse and distribution center in Hong Kong, sales office and warehouse in
Japan, and manufacturing facilities in Suzhou and Dongguan, China, is the U.S. dollar. For these foreign
operations, assets and liabilities are re-measured at the period-end or historical rates, as appropriate.
Revenues and expenses are re-measured at average monthly rates. Currency transaction gains and losses
are recognized in current operations.
Stock-based Compensation Expense
Adoption of SFAS 123(R)
The Company has stock plans pursuant to which equity awards can be made to its employees and non-
employee directors, including stock options and restricted stock awards. The Company also has an
employee stock purchase plan (“ESPP”) pursuant to which employees can purchase the Company’s
common stock.
Effective April 2, 2006, the first day of fiscal year 2007, the Company adopted SFAS No. 123-Revised
2004 (“SFAS No. 123(R)”), which requires the measurement and recognition of compensation expense
for all share-based payment awards made to employees and non-employee directors based on estimated
fair values. SFAS No. 123(R) replaced SFAS No. 123, “Accounting for Stock-Based Compensation”
(“SFAS No. 123”), and supersedes the Company’s previous accounting under the intrinsic value method
prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees”
(“APB 25”). Under the intrinsic value method, with the exception of the Company’s restricted stock
awards, the Company generally recorded no stock-based compensation expense associated with its stock
option and ESPP awards.
The Company elected to apply the modified prospective transition adoption method as provided by SFAS
No. 123(R), and consequently, previously reported amounts have not been restated. Under this method,
compensation expense for share-based payments include: (a) compensation expense for all share-based
payment awards granted prior to but not yet vested as of April 2, 2006, based on the grant date fair value
estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation expense for
all share-based payment awards granted or modified on or after April 2, 2006, based on the grant date
fair value estimated in accordance with the provisions of SFAS No. 123(R). The estimated fair value of
the Company’s stock-based awards is amortized over the vesting period of the awards on a straight-line
basis. Compensation expense is recognized only for those awards that are expected to vest, and as such,
amounts have been reduced by estimated forfeitures. Previously, under SFAS No. 123, the Company
recorded forfeitures as they occurred.