Plantronics 2009 Annual Report Download - page 85

Download and view the complete annual report

Please find page 85 of the 2009 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 120

  • 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
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120

77
Changes in the warranty obligation, which are included as a component of accrued liabilities on the consolidated balance sheets, are as
follows:
(in thousands)
Warranty obligation at March 31, 2007 $ 7,240
Warranty provision relating to products shipped during the year 22,095
Deductions for warranty claims processed (18,894)
Warranty obligation at March 31, 2008 10,441
Warranty provision relating to products shipped during the year 21,595
Deductions for warranty claims processed (19,612)
Warranty obligation at March 31, 2009 $12,424
6. GOODWILL
The changes in the carrying value of goodwill during the fiscal years ended March 31, 2008 and 2009 by segment were as follows:
(in thousands)
Audio
Communications
Group
Audio
Entertainment
Group Consolidated
Balance at March 31, 2007
$
11,214
$
61,611
$
72,825
Re-allocation of goodwill 2,902 (2,902) -
Carrying value adjustments - (3,654) (3,654)
Balance at March 31, 2008
$
14,116
$
55,055
$
69,171
Carrying value adjustments (111) (406) (517)
Impairment to goodwill - (54,649) (54,649)
Balance at March 31, 2009
$
14,005
$
-
$
14,005
In the second quarter of fiscal 2008, the Company transitioned the responsibility and management of the Altec branded headsets from
the AEG segment to the ACG segment; as a result, the related goodwill of $2.9 million was transferred from AEG to ACG. During
fiscal 2008, the Company adjusted deferred tax account balances and long-term tax payable accounts related to the purchase of Altec
Lansing. The adjustments to the deferred tax assets and long term payable account of $1.0 million and $2.6 million respectively,
resulted in a reduction of goodwill of $3.6 million.
In the third quarter of fiscal 2009, the Company considered the effect of the current economic environment and determined that
sufficient indicators existed requiring it to perform an interim impairment review of the Company’s two reporting segments, ACG and
AEG. The indicators primarily consisted of (1) a decline in revenue and operating margins during the third quarter and the projected
future operating results, (2) deteriorating industry and economic trends, and (3) the decline in the Plantronics’ stock price for a
sustained period.
In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”), the Company utilized a two-step
method for determining goodwill impairment. In step one, the fair value of each reporting unit, which the Company has determined to
be consistent with its operating segments, is determined and compared to the carrying value.