Plantronics 2008 Annual Report Download - page 67

61
exposure and enable it to recover a portion of any future amounts paid.
As is customary in the Company’s industry, as provided for in local law in the U.S. and other jurisdictions, Plantronics’ standard
contracts provide remedies to its customers, such as defense, settlement, or payment of judgment for intellectual property claims
related to the use of its products. From time to time, the Company indemnifies customers against combinations of loss, expense, or
liability arising from various trigger events relating to the sale and use of its products and services. In addition, Plantronics also
provides protection to customers against claims related to undiscovered liabilities, additional product liability or environmental
obligations. In the Company’s experience, claims made under these indemnifications are rare and the associated estimated fair value
of the liability is not material.
3. RECENT ACCOUNTING PRONOUNCEMENTS
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards
No. 157, “Fair Value Measurements” (“SFAS No. 157”), which defines fair value, establishes guidelines for measuring fair value and
expands disclosures regarding fair value measurements. In February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-
1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair
Value Measurements for Purposes of Lease Classification or Measurement under Statement 13”, which amends SFAS No. 157 to
exclude accounting pronouncements that address fair value measurements for purposes of lease classification or measurement under
SFAS No. 13, “Accounting for Leases”. In February 2008, the FASB also issued FSP FAS 157-2, “Effective Date of FASB Statement
No. 157”, which delays the effective date of SFAS No. 157 until the first quarter of fiscal 2010 for all non-financial assets and non-
financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at
least annually). SFAS No. 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance
found in various prior accounting pronouncements. SFAS No. 157 is effective for the Company beginning on April 1, 2008. The
Company is currently evaluating the impact of adopting the provisions of SFAS No. 157 on its consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS
No. 159”). SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized
gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 also amends certain
provisions of SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“SFAS No. 115”). SFAS No. 159
is effective for the Company beginning on April 1, 2008. The Company is currently evaluating the impact of adopting SFAS No. 159
on its consolidated financial statements.
In June 2007, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 06-11, “Accounting for Income Tax
Benefits of Dividends on Share-Based Payment Awards” (“EITF 06-11”). EITF 06-11 states that an entity should recognize a realized
tax benefit associated with dividends on non-vested equity shares, non-vested equity share units and outstanding equity share options
charged to retained earnings as an increase in additional paid in capital. The amount recognized in additional paid in capital should be
included in the pool of excess tax benefits available to absorb potential future tax deficiencies on share-based payment awards. EITF
06-11 should be applied prospectively to income tax benefits of dividends on equity-classified share-based payment awards that are
declared in fiscal years beginning after December 15, 2007. The adoption of EITF Issue No. 06-11 is not expected to have a
significant impact on the Company’s consolidated financial statements.
In June 2007, the FASB ratified the EITF Issue No. 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services to
Be Used in Future Research and Development Activities”. EITF Issue No. 07-3 requires non-refundable advance payments for goods
and services to be used in future research and development activities to be recorded as an asset and expensing the payments when the
research and development activities are performed. EITF Issue No. 07-3 applies prospectively for new contractual arrangements
entered into in fiscal years beginning after December 15, 2007. The adoption of EITF Issue No. 07-3 is not expected to have a
significant impact on the Company’s consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” ("SFAS No. 141(R)"), which replaces
SFAS No. 141. SFAS No. 141R retains the purchase method of accounting for acquisitions, but requires a number of changes,
including changes in the way assets and liabilities are recognized in the purchase accounting. It also changes the recognition of assets
acquired and liabilities assumed arising from contingencies, requires the capitalization of in-process research and development at fair
value, and requires the expensing of acquisition-related costs as incurred. SFAS No. 141(R) is effective for the Company beginning
April 1, 2009 and will apply prospectively to any business combinations completed on or after that date, except that resolution of
certain tax contingencies and adjustments to valuation allowances related to business combinations, which previously were adjusted to
goodwill, will be adjusted to income tax expense for all such adjustments after April 1, 2009, regardless of the date of the original
business combination.