Plantronics 2013 Annual Report Download - page 53

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We recognize the impact of an uncertain income tax position on income tax expense at the largest amount that is more-likely-than-
not to be sustained. An unrecognized tax benefit will not be recognized unless it has a greater than 50% likelihood of being
sustained. We adjust our tax liability for unrecognized tax benefits in the period in which an uncertain tax position is effectively
settled, the statute of limitations expires for the relevant taxing authority to examine the tax position, or when more information
becomes available. We recognize interest and penalties related to income tax matters as part of our provision for income taxes.
Our liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and apply
judgment to estimate the exposures associated with our various filing positions. Our effective income tax rate is also affected by
changes in tax law, the level of earnings and the results of tax audits.
Our provision for income taxes does not include provisions for U.S. income taxes and foreign withholding taxes associated with
the repatriation of undistributed earnings of certain foreign operations that we intend to reinvest indefinitely in the foreign
operations. If these earnings were distributed to the U.S. in the form of dividends or otherwise, we would be subject to additional
U.S. income taxes, subject to an adjustment for foreign tax credits, and foreign withholding taxes. Our current plans do not require
repatriation of earnings from foreign operations to fund the U.S. operations because we generate sufficient domestic operating
cash flow and have access to external funding under our line of credit. As a result, we do not expect a material impact on our
business or financial flexibility with respect to undistributed earnings of our foreign operations.
Although we believe that our judgments and estimates are reasonable, actual results could differ and we may be exposed to losses
or gains that could be material.
To the extent we prevail in matters for which a liability has been established, or are required to pay amounts in excess of our
established liability, our effective income tax rate in a given financial statement period could be materially affected. An unfavorable
tax settlement would generally require use of our cash and may result in an increase in our effective income tax rate in the period
of resolution. A favorable tax settlement would be recognized as a reduction in our effective income tax rate in the period of
resolution.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 2013, the Financial Accounting Standards Board (“FASB”) amended its guidance on the presentation of comprehensive
income. Under the amended guidance, an entity must present information regarding reclassification adjustments from accumulated
other comprehensive income in a single note or on the face of the financial statements. This is required for both annual and interim
reporting. We elected to adopt this guidance during the quarter ended March 31, 2013.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The following discusses our exposure to market risk related to changes in interest rates and foreign currency exchange rates. This
discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as
a result of a number of factors, including those set forth in Item 1A, Risk Factors.
INTEREST RATE AND MARKET RISK
As of March 31, 2013 and 2012, we reported the following balances in cash and cash equivalents, short-term investments, and
long-term investments:
March 31,
(in thousands) 2013 2012
Cash and cash equivalents $ 228,776 $ 209,335
Short-term investments $ 116,581 $ 125,177
Long-term investments $ 80,261 $ 55,347
As of March 31, 2013, our investments were composed of U.S. Treasury Bills, Government Agency Securities, Commercial Paper,
and U.S. Corporate Bonds, and Certificates of Deposit ("CDs").
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