Plantronics 2013 Annual Report Download - page 50

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In addition, we and our subsidiaries are required to maintain, on a consolidated basis, unrestricted cash, cash equivalents, and
marketable securities plus availability under the Credit Agreement at the end of each fiscal quarter of at least $200.0 million. The
line of credit contains affirmative covenants, including covenants regarding the payment of taxes and other liabilities, maintenance
of insurance, reporting requirements, and compliance with applicable laws and regulations. The line of credit also contains negative
covenants, among other things, limiting our ability to incur debt, make capital expenditures, grant liens, make acquisitions, and
make investments. The events of default under the line of credit include payment defaults, cross defaults with certain other
indebtedness, breaches of covenants, judgment defaults, and bankruptcy and insolvency events involving us or any of our
subsidiaries. As of March 31, 2013, we were in compliance with all covenants under the line of credit.
Our liquidity, capital resources, and results of operations in any period could be affected by repurchases of our common stock,
the exercise of outstanding stock options, restricted stock grants under stock plans, and the issuance of common stock under our
employee stock purchase plan ("ESPP"). We receive cash from the exercise of outstanding stock options and the issuance of
shares under our ESPP; however, the resulting increase in the number of outstanding shares from these equity grants and issuances
could affect our earnings per share. We cannot predict the timing or amount of proceeds from the sale or exercise of these securities
or whether they will be exercised, forfeited, or expire unexercised.
Based on past performance and current expectations, we believe that our current cash and cash equivalents, short-term investments,
cash provided by operations, and the availability of additional funds under the Credit Agreement will be sufficient to support
business operations, capital expenditures, contractual obligations, and other liquidity requirements associated with our operations
for at least the next twelve months. However, any projections of future financial needs and sources of working capital are subject
to uncertainty. See “Certain Forward-Looking Information” and “Risk Factors” in this Annual Report on Form 10-K for factors
that could affect our estimates for future financial needs and sources of working capital.
OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained
interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities,
or any other obligation under a variable interest in an unconsolidated entity that provides us with financing and liquidity support,
market risk, or credit risk support.
A substantial portion of the raw materials, components, and subassemblies used in our products are provided by our suppliers on
a consignment basis. These consigned inventories are not recorded on our consolidated balance sheet until we take possession of
and title to the raw materials, components, and subassemblies, which occurs when they are consumed in the production process.
Prior to consumption in the production process, our suppliers bear the risk of loss and retain title to the consigned inventory.
Consigned inventory not consumed in the production process is returnable to our suppliers in accordance with the terms of our
agreements with them. If our suppliers were to discontinue financing consigned inventory, it would require us to make cash outlays
and we could incur expenses, including write-downs for excess and obsolete inventory, which, if material, could negatively affect
our business and financial results. As of March 31, 2013 and 2012, we had off-balance sheet consigned inventories of $31.3
million and $24.7 million, respectively.
The following table summarizes our future contractual obligations as of March 31, 2013 and the effect that such obligations are
expected to have on our liquidity and cash flows in future periods:
Payments Due by Period
(in thousands) Total Less than 1
year 1-3 years 4-5 years More than 5 years
Operating leases $ 10,878 $ 4,686 $ 3,247 $ 1,377 $ 1,568
Unconditional purchase obligations 182,460 182,231 229 — —
Total contractual cash obligations $ 193,338 $ 186,917 $ 3,476 $ 1,377 $ 1,568
Operating Leases
We lease certain facilities under operating leases expiring through our fiscal year 2022. Certain of these leases provide for renewal
options for periods ranging from one to three years and in the normal course of business, we exercise the renewal options.
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