Plantronics 2008 Annual Report Download - page 81

Download and view the complete annual report

Please find page 81 of the 2008 Plantronics annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 104

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104

75
assumptions:
Fiscal Year Ended March 31, 2006 2007 2008 2006 2007 2008
Expected volatility 53.1% 42.1% 39.6% 34.0% 43.4% 45.3%
Risk-free interest rate 4.2% 4.7% 4.0% 4.4% 5.2% 3.4%
Expected dividends 0.7% 1.0% 0.8% 0.6% 1.2% 0.9%
Expected life (in years) 4.9 4.2 4.2 0.5 0.5 0.5
Weighted-average grant date fair value 14.79$ 7.60$ 9.35$ 8.67$ 4.74$ 6.20$
Employee Stock Purchase PlanEmployee Stock Options
Prior to the adoption of SFAS No. 123(R), the Company used historical volatility in deriving its expected volatility assumption. The
expected stock price volatility for the year ended March 31, 2007 and 2008 was determined based on an equally weighted average of
historical and implied volatility. Implied volatility is based on the volatility of the Company’s publicly traded options on its common
stock. The Company determined that a blend of implied volatility and historical volatility is more reflective of market conditions and a
better indicator of expected volatility than using purely historical volatility. The expected life was determined based on historical
experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and
expectations of future employee behavior. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of
grant for periods corresponding with the expected life of the option. The dividend yield assumption is based on our current dividend
and the market price of our common stock at the date of grant.
13. EMPLOYEE BENEFIT PLANS
Subject to eligibility requirements, substantially all ACG employees, with the exception of direct labor and certain executives,
participate in quarterly cash profit sharing plans. The profit sharing benefits are based on ACG’s results of operations before interest
and taxes, adjusted for other items. The profit sharing is calculated and paid quarterly. Profit sharing payments are allocated to
employees based on each participating employee's base salary as a percent of all participants' base salaries. Eligible ACG employees
in the U.S. may defer a portion of their profit sharing under the 401(k) plan.
The profit sharing plan provides for the distribution of 5% of quarterly profits to qualified employees. Total profit sharing payments
were $3.8 million, $3.6 million and $4.4 million for fiscal 2006, 2007 and 2008, respectively.
The Company has a 401(k) plan that matches 50% of the first 6% of compensation and provides a non-elective company contribution
equal to 3% of base salary. Total Company 401(k) contributions were $2.9 million in fiscal 2006 and pertained only to ACG
employees. Prior to fiscal 2007, AEG had a 401(k) plan that matched 50% of the first 4% of compensation. Total AEG 401(k)
contributions were $0.2 million from the acquisition date of August 18, 2005 through March 31, 2006, which included a rollover of all
outstanding AEG balances. Effective January 1, 2007, the AEG 401(k) plan was merged into the company’s existing 401(k)
plan. Total Company contributions in fiscal 2007 and 2008 for both the ACG and AEG segments were $3.2 million and $3.8 million,
respectively.
14. FOREIGN CURRENCY DERIVATIVES
Non-Designated Hedges
The Company enters into foreign exchange forward contracts to reduce the impact of foreign currency fluctuations on assets and
liabilities denominated in currencies other than the functional currency of the reporting entity. These foreign exchange forward
contracts are not subject to the hedge accounting provisions of SFAS No. 133, but are carried at fair value with changes in the fair
value recorded within interest and other income, net on the statement of operations in accordance with SFAS No. 52, "Foreign
Currency Translation". Gains and losses on these hedge contracts are intended to offset the impact of foreign exchange rate changes
on the underlying foreign currency denominated assets and liabilities, and therefore, do not subject the Company to material balance
sheet risk. We do not enter into foreign currency forward contracts for trading purposes.
As of March 31, 2008, the Company had foreign currency forward contracts of €15.8 million and £6.2 million denominated in Euros
and Great British Pounds. As of March 31, 2007, the Company had foreign currency forward contracts of €25.7 million and £6.2
denominated in Euros.
The following table summarizes the Company’s outstanding foreign exchange currency contracts, and approximate U.S. dollar