Plantronics 2010 Annual Report Download - page 15

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7
BACKLOG
Our backlog of unfilled orders was $31.4 million at March 31, 2010 compared to $23.7 million at March 31, 2009. We include all
purchase orders scheduled for delivery over the next 12 months in backlog. We have a “book and ship” business model whereby we
fulfill the majority of our orders within 48 hours of our receipt of the order. Our backlog is occasionally subject to cancellation or
rescheduling by the customer on short notice with little or no penalty. Because of our “book and ship” model, as well as the
uncertainty of order cancellations or rescheduling, we do not believe our backlog as of any particular date is indicative of actual sales
for any future period and, therefore, should not be used as a measure of future revenue.
MANUFACTURING AND SOURCES OF MATERIALS
Manufacturing operations consist primarily of assembly and testing which is performed in our manufacturing facilities in Tijuana,
Mexico, and we maintain a small assembly operation in California primarily for custom products. In March 2009, we entered into an
agreement with GoerTek, Inc., an existing third party contract manufacturer, to outsource the manufacturing of our Bluetooth products
in China which resulted in the discontinuance of manufacturing of our Bluetooth products at the Suzhou, China facility in fiscal 2010.
We also closed a small assembly operation in the United Kingdom in fiscal 2009. In addition, we outsource the manufacturing of a
limited number of our other products to third parties, typically in China and other countries in Asia. See further discussion on our
business risks associated with our manufacturers under the risk titled “We depend on original design manufacturers and contract
manufacturers who may not have adequate capacity to fulfill our needs or may not meet our quality and delivery objectives which
could have an adverse effect on our business” within Item 1A Risk Factors of this 10-K.
We purchase the components for our products, including proprietary semi-custom integrated circuits, amplifier boards and other
electrical components, primarily from suppliers in Asia, Mexico, the U.S., and Europe. The majority of our components and sub-
assemblies used in our manufacturing operations are obtained, or are reasonably available, from dual-source suppliers, although we do
have a certain number of sole-source suppliers.
As a result of our restructuring activities initiated in fiscal 2009 in China, Mexico, and, to a lesser extent, the United Kingdom, we
have been able to reduce manufacturing costs as well as costs associated with procurement activities.
We procure materials to meet forecasted customer requirements. Special products and certain large orders are quoted for delivery
after receipt of orders at specific lead times. We maintain minimum levels of finished goods based on market demand in addition to
inventories of raw materials, work in process, and sub-assemblies and components. In addition, certain vendors maintain inventories
on consignment which primarily consist of raw materials and components. We write-down inventory items determined to be either
excess or obsolete to the lower of cost or market value.
ENVIRONMENTAL MATTERS
We have complied with the European Union and other Directives on the Restrictions of the use of Certain Hazardous Substances in
Electrical and Electronic Equipment (“RoHS”) and on Waste Electrical and Electronic Equipment requirements. Additionally, we are
compliant with the RoHS initiatives in China and Korea.
We are subject to various federal, state, local, and foreign environmental laws and regulations, including those governing the use,
discharge, and disposal of hazardous substances in the ordinary course of our manufacturing process. We believe that our current
manufacturing and other operations comply in all material respects with applicable environmental laws and regulations; however, it is
possible that future environmental legislation may be enacted or current environmental legislation may be interpreted to create
environmental liability with respect to our facilities, operations, or products.