SOURCE: Plantronics

Plantronics

October 27, 2009 16:00 ET

Plantronics Announces Second Quarter Fiscal 2010 Results

Second Quarter Revenues and EPS Exceed Guidance; Company Achieves Targeted Gross & Operating Margins

SANTA CRUZ, CA--(Marketwire - October 27, 2009) - Plantronics, Inc. (NYSE: PLT) today announced second quarter fiscal 2010 net revenues of $167.4 million compared with $216.9 million in the second quarter of fiscal 2009. Net revenues were above the previously provided guidance of $155 million to $160 million. Plantronics' GAAP loss per share was $0.02 in the second quarter of fiscal 2010, primarily due to non-cash asset impairment charges, compared with diluted earnings per share of $0.36 in the same quarter of the prior year. Non-GAAP diluted earnings per share for the second quarter of fiscal 2010 were $0.40 compared with $0.44 in the second quarter of fiscal 2009 and were greater than the previously provided non-GAAP guidance of $0.27 to $0.32. The difference between GAAP and non-GAAP earnings (loss) per share for the second quarter of fiscal 2010 includes a $15.6 million impairment charge, net of tax on our Audio Entertainment Group ("AEG") long-lived assets, restructuring and other related costs, purchase accounting amortization and the cost of stock-based compensation.

Plantronics also announced that its Board of Directors declared a quarterly dividend of $0.05 per share. The dividend is payable on December 10, 2009 to stockholders of record at the close of business on November 20, 2009.

"Revenues were above expectations as we experienced stable demand in our Office & Contact Center business and increased demand in our consumer markets. Our improved cost structure allowed us to achieve our long-term targeted gross and operating margins at the current revenue level," stated Ken Kannappan, President & CEO. "Our new corporate organizational structure along with the pending sale of Altec Lansing, our AEG segment, will produce better and more efficient corporate alignment to target our top market opportunity, Unified Communications ("UC"), providing an excellent earnings growth opportunity ahead as UC adoption becomes more substantial."

Audio Communications Group (ACG) Non-GAAP Results

(Office & Contact Center, Mobile, Gaming and Computer & Clarity)

Comparisons are to the Same Quarter in the Prior Year

Second quarter fiscal 2010 net revenues of $144.4 million decreased 26% compared with $195.3 million in the prior year quarter, but increased 2% from $141.1 million in the first quarter of fiscal 2010. General economic weakness led to declines in net revenues in all major geographies and most product groups compared with the prior year quarter. Revenues in the U.S., Asia Pacific and Latin America regions improved sequentially.

Office and Contact Center net revenues were $93.5 million, a decrease of 22% from $119.5 million in the second quarter of fiscal 2009 and a sequential decrease of 3% from $95.9 million in the prior quarter. Bluetooth headset net revenues were $33.3 million, a decrease of 42% from the year ago quarter of $57.4 million, and a sequential increase of 10% from $30.3 million. The prior year quarter was stronger in part due to higher demand driven by hands-free legislation in California and Washington states which was partially offset by higher average selling prices in the second quarter of fiscal 2010. The Discovery 975 Bluetooth headset, introduced during the quarter, received positive editorial and consumer reviews and is now available through a number of top consumer electronics retailers.

Gross margin in the second quarter of fiscal 2010 was 48.7% compared with 47.9% in the second quarter of the prior year. The improvement was primarily due to a favorable product mix, lower freight costs, and lower requirements for excess and obsolete inventory provisions, partially offset by higher manufacturing costs as a result of lower production volumes.

Actions taken by the Company earlier this calendar year continued to have a beneficial effect, with operating expenses down by 22% from $55.6 million in the prior year quarter to $43.6 million in the current quarter. As a result of the leaner cost structure, operating income was $26.7 million resulting in an 18.5% operating margin. While these results were down from the second quarter in the prior year, the results are within the Company's long term target model for this business.

The Company continues to believe that the implementation of UC technologies by large corporations will be a significant long-term driver of office headset adoption, and, as a result, a key long-term driver of revenue and profit growth. Our UC portfolio continued to enjoy strong customer and partner reception. The Company expects that there will be a significantly higher level of growth in UC enabled products compared to headsets for desk phones in the future, and continues to believe that revenue from headset sales related to UC will be material to the Company beginning in fiscal 2011.

Audio Entertainment Group (AEG) Non-GAAP Results

(Docking Audio, PC Audio & Other)

Comparisons are to the Same Quarter in the Prior Year

Second quarter fiscal 2010 net revenues of $23.0 million increased 7% from $21.5 million in the prior year quarter driven by higher sales of Docking Audio products in all major geographies, and were up 21% sequentially from $19.0 million in the prior quarter. In addition, we experienced higher PC Audio sales in Asia and EMEA, which were offset by lower PC Audio sales in the U.S.

Gross margin increased to 20.9% from 9.0% as a result of improved product mix and margins along with lower requirements for excess and obsolete inventory provisions. This was partially offset by higher freight charges, royalty costs and other manufacturing costs.

Operating expenses declined by 12% from $6.5 million in the prior year quarter to $5.7 million in the current quarter, and the operating loss decreased from $4.6 million in the prior year quarter to $0.9 million in the current quarter.

On October 2, 2009, the Company entered into an Asset Purchase Agreement to sell Altec Lansing, its AEG segment, to an affiliate of Prophet Equity LP, a Southlake, Texas based private equity firm ("Prophet"). On October 23, 2009, the Company and Prophet entered into a letter agreement which amended the Asset Purchase Agreement to provide that the closing date for the sale of the AEG segment will be extended to not later than December 1, 2009.

Subsequent to the closing of the sale of the AEG segment, the Company will report all future and historical AEG segment results as discontinued operations in its financial statements beginning in the third quarter of fiscal 2010.

Business Outlook

Continuing Operations (Excludes Audio Entertainment Group business segment due to pending sale expected to be completed no later than December 1, 2009)

The following statements are based on current expectations. As described in "Safe Harbor" below, many of these statements are forward-looking. Actual results are subject to a variety of risks and uncertainties and may differ materially from the forward-looking statements.

Plantronics has a "book and ship" business model whereby it ships most orders to customers within 48 hours of its receipt of those orders, and, therefore, the level of backlog does not provide reliable visibility into potential future revenues. The Company's business is inherently difficult to forecast, and there can be no assurance that the incoming orders it expects to receive over the balance of the quarter will materialize. With continuing uncertainty resulting from the global economic conditions, the Company's business remains difficult to forecast. The December quarter tends to be characterized by an increase in incoming sales orders during October which diminishes in December.

Net revenues in the third quarter of fiscal 2010 are expected to be higher than the second quarter of fiscal 2010 and the third quarter of fiscal 2009, primarily based on the fact that the December quarter has historically been a stronger quarter than the September quarter and the current bookings trend supports our belief that revenues will be in the ranges below.

Subject to the foregoing, we are currently expecting the following range of financial results for continuing operations (excludes AEG due to the pending sale expected to be completed no later than December 1, 2009) for the third quarter of fiscal 2010:

--  Net revenues of $155 million - $160 million;
--  Non-GAAP operating income of $26 million to $29 million;
--  Non-GAAP earnings per share of $0.38 - $0.42;
--  Non-GAAP consolidated tax rate to be approximately 26%;
--  The EPS cost of stock-based compensation to be approximately $0.05;
    and
--  GAAP earnings per share of $0.33 to $0.37.
    

If these results are achieved, the performance compared with Q3 Fiscal 2009 would be revenue growth of approximately 2% to 5% and Non-GAAP operating income growth of 189% to 222%.

Plantronics does not intend to update these targets during the quarter or to report on its progress toward these targets. Plantronics will not comment on these targets to analysts or investors except by its next press release announcing its third quarter fiscal 2010 results or by other public disclosure. Any statements by persons outside Plantronics speculating on the progress of the third quarter fiscal 2010 will not be based on internal Company information and should be assessed accordingly by investors.

Conference Call Scheduled to Discuss Actual Financial Results

Plantronics has scheduled a conference call to discuss second quarter fiscal 2010 results. The conference call will take place Tuesday, October 27th at 2:00 PM (PDT). All interested investors and potential investors in Plantronics stock are invited to participate. To listen to the call, please dial in five to ten minutes prior to the scheduled starting time and refer to the "Plantronics Conference Call." Participants from North America should call (888) 301-8736 and other participants should call (706) 634-7260.

A replay of the call with the conference ID #22257821 will be available for 72 hours at (800) 642-1687 for callers from North America and at (706) 645-9291 for all other callers. The conference call will also be simultaneously web cast at www.plantronics.com under Investor Relations, and the web cast of the conference call will remain available at the Plantronics website for thirty days.

Use of Non-GAAP Financial Information

Plantronics excludes non-recurring transactions and non-cash expenses and charges such as restructuring and other related charges, certain tax credits and the release of certain tax reserves, stock-based compensation expenses related to stock options, awards and employee stock purchases, purchase accounting amortization and impairment of goodwill and long-lived assets from non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating income, non-GAAP gross margin, non-GAAP operating margin and non-GAAP effective tax rate. Plantronics excludes these expenses from its non-GAAP measures primarily because Plantronics does not believe they are reflective of ongoing operating results and are not considered as part of its target operating model. Plantronics believes that the use of non-GAAP financial measures provides meaningful supplemental information regarding its performance and liquidity, and helps investors compare actual results to its long-term target operating model goals. Plantronics believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning, forecasting and analyzing future periods.

Safe Harbor

This release contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to (i) implementation of UC technologies by large enterprises as a significant driver of headset adoption, and, its effect on our revenue and profit growth; (ii) our products, including the Discovery 975 and the Savi Office and Savi Go headsets; (iii) revenue from headset sales related to UC and its materiality to the Company beginning in fiscal 2011; (iv) growing adoption and deployment of UC in general and our expectation that this will be advantageous for headset sales; (v) seasonality during the December quarter and its effect on our financial results; (vi) our estimates of GAAP and non-GAAP financial results for the third quarter of fiscal 2010, including revenue and earnings per share; (vii) our estimated tax rate for the third quarter of fiscal 2010; (viii) our estimated stock-based compensation expense for the third quarter of fiscal 2010; (ix) the anticipated closing of the sale of the AEG segment no later than December 1, 2009, as well as other matters discussed in this press release that are not purely historical data. Plantronics does not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated by such statements. Among the factors that could cause actual results to differ materially from those contemplated are:

--  economic conditions in both the domestic and international markets;
--  fluctuations in foreign exchange rates;
--  the bankruptcy or financial weakness of distributors or key customers,
    or the bankruptcy of or reduction in capacity of our key suppliers;
--  the effect of restructuring actions on GAAP results;
--  our ability to realize our UC plans and to achieve the financial
    results projected to arise from UC adoption could be adversely affected by
    the following factors: (i) as UC becomes more widely adopted, the risk that
    competitors will offer solutions that will effectively commoditize our
    headsets which, in turn, will reduce the sales prices for our headsets;
    (ii) our plans are dependent upon adoption of our UC solution by major
    platform providers such as Microsoft, Avaya, IBM and Cisco, and we have a
    limited ability to influence such providers with respect to the
    functionality of their platforms, their rate of deployment, and their
    willingness to integrate their platforms with our solutions; (iii) the
    development of UC solutions is technically complex and this may delay or
    obstruct our ability to introduce solutions to the market on a timely basis
    and that are cost effective, feature rich, stable and attractive to our
    customers; (iv) as UC becomes more widely adopted we anticipate that
    competition for market share will increase, and some competitors may have
    superior technical and economic resources, and (v) UC solutions may not be
    adopted with the breadth and speed in the marketplace that we currently
    anticipate;
--  failure to match production to demand given long lead times and the
    difficulty of forecasting unit volumes and acquiring the component parts to
    meet demand without having excess inventory or incurring cancellation
    charges;
--  further impairment losses on the carrying value of our intangible
    assets and goodwill could be recognized if it is determined the value is
    not recoverable which would adversely affect our financial results;
--  volatility in prices from our suppliers, including our manufacturers
    located in China, have and could negatively affect our profitability and/or
    market share;
--  the consummation of the sale of the AEG segment is subject to certain
    closing conditions which may not be met and, in the event the sale does not
    close, our business may be materially and adversely affected;
--  in the event the sale of the AEG segment is consummated, the effects
    of the sale, including the level of cash flow and the timing of the receipt
    of any cash flow resulting from such sale are uncertain; and
--  additional risk factors including: interruption in the supply of sole-
    sourced critical components, continuity of component supply at costs
    consistent with our plans, the inherent risks of our substantial foreign
    operations, and problems which might affect our manufacturing facilities in
    Mexico, and unexpected delays and uncertainties affecting our ability to
    realize targeted expense reductions and annualized savings by outsourcing
    the manufacturing of our Bluetooth products in China to GoerTek, Inc.
    

For more information concerning these and other possible risks, please refer to the Company's Annual Report on Form 10-K filed May 26, 2009, quarterly reports filed on Form 10-Q and other filings with the Securities and Exchange Commission as well as recent press releases. These filings can be accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html.

Financial Summaries

The following related charts are provided:

--  Summary Unaudited Condensed Consolidated Financial Statements
--  Summary Unaudited Condensed Statements of Operations by Segment
--  Unaudited GAAP to Non-GAAP Statements of Operations Reconciliations
    for the three and six months ended September 30, 2009 and September 30,
    2008
--  Summary Unaudited Statements of Operations and Related Data on a Non-
    GAAP Basis
    

About Plantronics

Plantronics is a world leader in personal audio communications for professionals and consumers. From unified communication solutions to Bluetooth headsets, Plantronics delivers unparalleled audio experiences and quality that reflect our nearly 50 years of innovation and customer commitment. Plantronics is used by every company in the Fortune 100 and is the headset of choice for air traffic control, 911 dispatch and the New York Stock Exchange. For more information, please visit www.plantronics.com or call (800) 544-4660.

Altec Lansing, Clarity, Plantronics, the logo design and Savi are trademarks or registered trademarks of Plantronics, Inc. The Bluetooth name and the Bluetooth trademarks are owned by Bluetooth SIG, Inc. and are used by Plantronics, Inc. under license. All other trademarks are the property of their respective owners.




                            PLANTRONICS, INC.
            SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
          (in thousands, except per share data and percentages)


UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                             Three Months Ended       Six Months Ended
                                September 30,           September 30,
                           ----------------------  ----------------------
                              2008        2009        2008        2009
                           ----------  ----------  ----------  ----------

Net revenues               $  216,856  $  167,415  $  436,020  $  327,540
Cost of revenues              123,083      94,729     251,368     187,298
                           ----------  ----------  ----------  ----------
Gross profit                   93,773      72,686     184,652     140,242
  Gross profit %                 43.2%       43.4%       42.3%       42.8%

Research, development
 and engineering               18,850      15,179      38,545      30,258
Selling, general and
 administrative                47,745      37,439      96,143      74,921
Restructuring and other
 related charges                 (140)        857         235       1,454
Impairment of long-lived
 assets                             -      25,194           -      25,194
                           ----------  ----------  ----------  ----------
  Total operating
   expenses                    66,455      78,669     134,923     131,827
                           ----------  ----------  ----------  ----------
    Operating income
     (loss)                    27,318      (5,983)     49,729       8,415
    Operating income
     (loss) %                    12.6%       (3.6%)      11.4%        2.6%

Interest and other income
 (expense), net                (3,170)        884      (1,630)      2,231
                           ----------  ----------  ----------  ----------
Income (loss) before
 income taxes                  24,148      (5,099)     48,099      10,646
Income tax expense
 (benefit)                      6,500      (4,353)      9,957         742
                           ----------  ----------  ----------  ----------
    Net income (loss)      $   17,648  $     (746) $   38,142  $    9,904
                           ==========  ==========  ==========  ==========

    % of net revenues             8.1%       (0.4%)       8.7%        3.0%

Earnings (loss) per
 common share:
  Basic                    $     0.36  $    (0.02) $     0.78  $     0.20
  Diluted                  $     0.36  $    (0.02) $     0.77  $     0.20

Shares used in computing
 earnings (loss) per
 share:
  Basic                        48,796      48,737      48,738      48,632
  Diluted                      49,489      48,737      49,362      49,118

  Tax rate                       26.9%       85.4%       20.7%        7.0%


UNAUDITED CONSOLIDATED BALANCE SHEETS

                            March 31, September 30,
                              2009        2009
                           ----------  ----------
ASSETS
  Cash and cash
   equivalents             $  158,193  $  244,170
  Short-term investments       59,987      24,999
                           ----------  ----------
    Total cash, cash
     equivalents, and
     short-term
     investments              218,180     269,169
  Accounts receivable, net     83,657     103,003
  Inventory, net              119,296     100,024
  Deferred income taxes        12,486      12,765
  Other current assets         29,936      17,191
  Assets held for sale              -       9,267
                           ----------  ----------
    Total current assets      463,555     511,419
  Long-term investments        23,718      22,015
  Property, plant and
   equipment, net              95,719      71,224
  Intangibles, net             26,575       4,067
  Goodwill                     14,005      14,005
  Other assets                  9,548      10,978
                           ----------  ----------
    Total assets           $  633,120  $  633,708
                           ==========  ==========

LIABILITIES AND STOCKHOLDERS'
 EQUITY
  Accounts payable         $   32,827  $   34,315
  Accrued liabilities          53,143      54,005
                           ----------  ----------
    Total current
     liabilities               85,970      88,320
  Deferred tax liability        8,085           -
  Long-term income taxes
   payable                     12,677      14,215
  Other long-term
   liabilities                  1,021         991
                           ----------  ----------
    Total liabilities         107,753     103,526
  Stockholders' equity        525,367     530,182
                           ----------  ----------
    Total liabilities and
     stockholders' equity  $  633,120  $  633,708
                           ==========  ==========





                        AUDIO COMMUNICATIONS GROUP
                  SUMMARY CONDENSED FINANCIAL STATEMENTS
                    (in thousands, except percentages)


UNAUDITED STATEMENTS OF OPERATIONS

                             Three Months Ended       Six Months Ended
                                September 30,           September 30,
                           ----------------------  ----------------------
                              2008        2009        2008        2009
                           ----------  ----------  ----------  ----------

Net revenues               $  195,349  $  144,458  $  393,876  $  285,620
Cost of revenues              102,603      76,527     211,960     152,685
                           ----------  ----------  ----------  ----------
Gross profit                   92,746      67,931     181,916     132,935
  Gross profit %                 47.5%       47.0%       46.2%       46.5%

Research, development
 and engineering               16,879      13,542      34,076      27,211
Selling, general and
 administrative                42,358      32,913      85,308      66,097
Restructuring and other
 related charges                    -         857           -       1,435
                           ----------  ----------  ----------  ----------
  Total operating
   expenses                    59,237      47,312     119,384      94,743
                           ----------  ----------  ----------  ----------
    Operating income       $   33,509  $   20,619  $   62,532  $   38,192
    Operating income %           17.2%       14.3%       15.9%       13.4%





                        AUDIO ENTERTAINMENT GROUP
                  SUMMARY CONDENSED FINANCIAL STATEMENTS
                    (in thousands, except percentages)


UNAUDITED STATEMENTS OF OPERATIONS

                             Three Months Ended       Six Months Ended
                               September 30,            September 30,
                           ----------------------  ----------------------
                              2008        2009        2008        2009
                           ----------  ----------  ----------  ----------

Net revenues               $   21,507  $   22,957  $   42,144  $   41,920
Cost of revenues               20,480      18,202      39,408      34,613
                           ----------  ----------  ----------  ----------
Gross profit                    1,027       4,755       2,736       7,307
  Gross profit %                  4.8%       20.7%        6.5%       17.4%

Research, development
 and engineering                1,971       1,637       4,469       3,047
Selling, general and
 administrative                 5,387       4,526      10,835       8,824
Restructuring and other
 related charges                 (140)          -         235          19
Impairment of long-lived
 assets                             -      25,194           -      25,194
                           ----------  ----------  ----------  ----------
  Total operating
   expenses                     7,218      31,357      15,539      37,084
                           ----------  ----------  ----------  ----------
    Operating loss         $   (6,191) $  (26,602) $  (12,803) $  (29,777)
    Operating loss %            (28.8%)    (115.9%)     (30.4%)     (71.0%)





                            PLANTRONICS, INC.
                UNAUDITED GAAP TO NON-GAAP RECONCILIATION
          (in thousands, except per share data and percentages)



UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                Three Months Ended              Six Months Ended
                September 30, 2009             September 30, 2009
           ------------------------------  ------------------------------
             GAAP    Excluded    Non-GAAP    GAAP    Excluded    Non-GAAP
           --------  --------    --------  --------  --------    --------
Net
 revenues  $167,415  $      -    $167,415  $327,540  $      -    $327,540
Cost of
 revenues    94,729    (2,422)(2)  92,307   187,298    (6,605)(3) 180,693
           --------  --------    --------  --------  --------    --------
Gross
 profit      72,686     2,422      75,108   140,242     6,605     146,847
  Gross
   profit %    43.4%                 44.9%     42.8%                 44.8%

Research,
 development
 and
 engineer-
 ing         15,179      (854)(1)  14,325    30,258    (1,700)(1)  28,558
Selling,
 general
 and
 adminis-
 trative     37,439    (2,472)(1)  34,967    74,921    (5,061)(1)  69,860
Restructuring
 and other
 related
 charges        857      (857)(4)       -     1,454    (1,454)(4)       -
Impairment
 of
 long-lived
 assets      25,194   (25,194)(5)       -    25,194   (25,194)(5)       -
           --------  --------    --------  --------  --------    --------
  Total
   operating
   expenses  78,669   (29,377)     49,292   131,827   (33,409)     98,418
           --------  --------    --------  --------  --------    --------
    Operat-
     ing
     income
     (loss)  (5,983)   31,799      25,816     8,415    40,014      48,429
    Operat-
     ing
     income
     (loss) %  (3.6%)                15.4%      2.6%                 14.8%

Interest
 and other
 income
 (expense),
 net            884         -         884     2,231         -       2,231
           --------  --------    --------  --------  --------    --------
Income
 (loss)
 before
 income
 taxes      (5,099)   31,799      26,700    10,646    40,014      50,660
Income tax
 expense
 (benefit)   (4,353)   11,056 (6)   6,703       742    12,430 (6)  13,172
           --------  --------    --------  --------  --------    --------
  Net
  income
   (loss)  $   (746) $ 20,743    $ 19,997  $  9,904  $ 27,584    $ 37,488
           ========  ========    ========  ========  ========    ========

  % of net
   revenues    (0.4%)                11.9%      3.0%                 11.4%

Diluted
 earnings
 (loss) per
 common
 share     $  (0.02) $   0.42    $   0.40  $   0.20  $   0.56    $   0.76

Shares used
 in diluted
 per share
 calculat-
 ions        48,737    49,567 (7)  49,567    49,118    49,118      49,118





                        AUDIO COMMUNICATIONS GROUP
                UNAUDITED GAAP TO NON-GAAP RECONCILIATION
                  (in thousands, except percentages)


UNAUDITED STATEMENTS OF OPERATIONS

                Three Months Ended              Six Months Ended
                September 30, 2009             September 30, 2009
           ------------------------------  ------------------------------
             GAAP    Excluded    Non-GAAP    GAAP    Excluded    Non-GAAP
           --------  --------    --------  --------  --------    --------
Net
 revenues  $144,458  $      -    $144,458  $285,620  $      -    $285,620
Cost of
 revenues    76,527    (2,382)(2)  74,145   152,685    (6,504)(3) 146,181
           --------  --------    --------  --------  --------    --------
Gross
 profit      67,931     2,382      70,313   132,935     6,504     139,439
  Gross
   profit %    47.0%                 48.7%     46.5%                 48.8%

Research,
 development
 and
 engineer-
 ing         13,542      (809)(1)  12,733    27,211    (1,628)(1)  25,583
Selling,
 general
 and
 adminis-
 trative     32,913    (2,090)(1)  30,823    66,097    (4,216)(1)  61,881
Restructuring
 and other
 related
 charges        857      (857)(4)       -     1,435    (1,435)(4)       -
           --------  --------    --------  --------  --------    --------
  Total
   operating
   expenses  47,312    (3,756)     43,556    94,743    (7,279)     87,464
           --------  --------    --------  --------  --------    --------
   Operat-
    ing
    income $ 20,619  $  6,138    $ 26,757  $ 38,192  $ 13,783    $ 51,975
   Operat-
    ing
    income %   14.3%                 18.5%     13.4%                 18.2%





                        AUDIO ENTERTAINMENT GROUP
                UNAUDITED GAAP TO NON-GAAP RECONCILIATION
                  (in thousands, except percentages)


UNAUDITED STATEMENTS OF OPERATIONS

                Three Months Ended              Six Months Ended
                September 30, 2009             September 30, 2009
           ------------------------------  ------------------------------
             GAAP    Excluded    Non-GAAP    GAAP    Excluded    Non-GAAP
           --------  --------    --------  --------  --------    --------
Net
 revenues  $ 22,957  $      -    $ 22,957  $ 41,920  $      -    $ 41,920
Cost of
 revenues    18,202       (40)(1)  18,162    34,613      (101)(1)  34,512
           --------  --------    --------  --------  --------    --------
Gross
 profit       4,755        40       4,795     7,307       101       7,408
  Gross
   profit %    20.7%                 20.9%     17.4%                 17.7%

Research,
 development
 and
 engineering  1,637       (45)(1)   1,592     3,047       (72)(1)   2,975
Selling,
 general
 and
 adminis-
 trative      4,526      (382)(1)   4,144     8,824      (845)(1)   7,979
Restructuring
 and other
 related
 charges          -         -           -        19       (19)(4)       -
Impairment
 of
 long-lived
 assets      25,194   (25,194)(5)       -    25,194   (25,194)(5)       -
           --------  --------    --------  --------  --------    --------
  Total
   operating
   expenses  31,357   (25,621)      5,736    37,084   (26,130)     10,954
           --------  --------    --------  --------  --------    --------
    Operat-
     ing
     loss  $(26,602) $ 25,661    $   (941) $(29,777) $ 26,231    $ (3,546)
    Operat-
     ing
     loss %  (115.9%)                (4.1%)   (71.0%)                (8.5%)


(1) Excluded amount represents stock-based compensation and purchase
    accounting amortization.
(2) Excluded amount represents stock-based compensation, purchase
    accounting amortization and $1,707 of accelerated depreciation on
    assets related to restructuring activity.
(3) Excluded amount represents stock-based compensation, purchase
    accounting amortization and $5,205 of accelerated depreciation on
    assets related to restructuring activity.
(4) Excluded amount represents restructuring and other related charges.
(5) Excluded amount represents impairment of long-lived assets
(6) Excluded amount represents tax benefit from stock-based compensation,
    purchase accounting amortization, restructuring and other related
    charges, and impairment of long-lived assets.
(7) As the Company incurred a GAAP net loss for the period, the inclusion
    of stock options in the shares used for computing diluted earnings per
    share would have been anti-dilutive and would have reduced the net loss
    per share. However, as we have non-GAAP net income, the diluted shares
    used for the Non-GAAP diluted earnings per share includes the effect of
    stock options.

Use of Non-GAAP Financial Information
To supplement our consolidated financial statements presented on a GAAP
basis, Plantronics uses non-GAAP measures of operating results, which are
adjusted to exclude non-recurring and non-cash expenses and charges, such
as restructuring and other related charges, certain tax credits and the
release of certain tax reserves, stock-based compensation expenses related
to stock options, awards and employee stock purchases, purchase accounting
amortization and impairment of goodwill and long-lived assets. Plantronics
does not believe these expenses and charges are reflective of ongoing
operating results and are not part of our target operating model. At the
segment level, we have presented non-GAAP statements that only show our
results to the operating income line. On a consolidated basis, we have
presented full non-GAAP statement of operations. The non-GAAP financial
measures should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the financial
results calculated in accordance with GAAP and the reconciliations to those
financial statements should be carefully evaluated. The non-GAAP financial
measures used by Plantronics may be calculated differently from, and
therefore may not be comparable to, similarly titled measures used by other
companies.





                            PLANTRONICS, INC.
                UNAUDITED GAAP TO NON-GAAP RECONCILIATION
          (in thousands, except per share data and percentages)



UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                Three Months Ended              Six Months Ended
                September 30, 2008             September 30, 2008
           ------------------------------  ------------------------------
             GAAP    Excluded    Non-GAAP    GAAP    Excluded    Non-GAAP
           --------  --------    --------  --------  --------    --------
Net
 revenues  $216,856  $      -    $216,856  $436,020  $      -    $436,020
Cost of
 revenues   123,083    (1,793)(1) 121,290   251,368    (3,614)(1) 247,754
           --------  --------    --------  --------  --------    --------
Gross
 profit      93,773     1,793      95,566   184,652     3,614     188,266
  Gross
   profit %    43.2%                 44.1%     42.3%                 43.2%

Research,
 development
 and
 enginee-
 ring        18,850    (1,039)(1)  17,811    38,545    (2,074)(1)  36,471
Selling,
 general
 and
 adminis-
 trative     47,745    (3,412)(1)  44,333    96,143    (6,830)(1)  89,313
Restructuring
 and other
 related
 charges       (140)      140 (2)       -       235      (235)(2)       -
           --------  --------    --------  --------  --------    --------
  Total
   operating
   expenses  66,455    (4,311)     62,144   134,923    (9,139)    125,784
           --------  --------    --------  --------  --------    --------
    Operat-
     ing
     income  27,318     6,104      33,422    49,729    12,753      62,482
    Operat-
     ing
     income %  12.6%                 15.4%     11.4%                 14.3%

Interest
 and other
 income
 (expense),
 net         (3,170)        -      (3,170)   (1,630)        -      (1,630)
           --------  --------    --------  --------  --------    --------
Income
 before
 income
 taxes       24,148     6,104      30,252    48,099    12,753      60,852
Income
 tax
 expense      6,500     2,192 (3)   8,692     9,957     6,074 (4)  16,031
           --------  --------    --------  --------  --------    --------
  Net
   income  $ 17,648  $  3,912    $ 21,560  $ 38,142  $  6,679    $ 44,821
           ========  ========    ========  ========  ========    ========

  % of net
   revenues     8.1%                   9.9%      8.7%                10.3%

Diluted
 earnings
 per common
 share     $   0.36  $   0.08     $   0.44  $   0.77  $   0.14    $  0.91

Shares
 used in
 diluted
 per share
 calculat-
 ions        49,489    49,489       49,489    49,362    49,362     49,362





                        AUDIO COMMUNICATIONS GROUP
                UNAUDITED GAAP TO NON-GAAP RECONCILIATION
                  (in thousands, except percentages)


UNAUDITED STATEMENTS OF OPERATIONS

                Three Months Ended              Six Months Ended
                September 30, 2008             September 30, 2008
           ------------------------------  ------------------------------
             GAAP    Excluded    Non-GAAP    GAAP    Excluded    Non-GAAP
           --------  --------    --------  --------  --------    --------
Net
 revenues  $195,349  $      -    $195,349  $393,876  $      -    $393,876
Cost of
 revenues   102,603      (883)(1) 101,720   211,960    (1,791)(1) 210,169
           --------  --------    --------  --------  --------    --------
Gross
 profit      92,746       883      93,629   181,916     1,791     183,707
  Gross
   profit %    47.5%                 47.9%     46.2%                 46.6%

Research,
 development
 and
 engineer-
 ing         16,879    (1,001)(1)  15,878    34,076    (1,994)(1)  32,082
Selling,
 general
 and
 adminis-
 trative     42,358    (2,584)(1)  39,774    85,308    (5,165)(1)  80,143
Restructuring
 and other
 related
 charges          -         -           -         -         - (2)       -
           --------  --------    --------  --------  --------    --------
  Total
   operating
   expenses  59,237    (3,585)     55,652   119,384    (7,159)    112,225
           --------  --------    --------  --------  --------    --------
   Operat-
    ing
    income $ 33,509  $  4,468    $ 37,977  $ 62,532  $  8,950    $ 71,482
   Operat-
    ing
    income %   17.2%                 19.4%     15.9%                 18.1%





                        AUDIO ENTERTAINMENT GROUP
                UNAUDITED GAAP TO NON-GAAP RECONCILIATION
                  (in thousands, except percentages)


UNAUDITED STATEMENTS OF OPERATIONS

                Three Months Ended              Six Months Ended
                September 30, 2008             September 30, 2008
           ------------------------------  ------------------------------
             GAAP    Excluded    Non-GAAP    GAAP    Excluded    Non-GAAP
           --------  --------    --------  --------  --------    --------
Net
 revenues  $ 21,507  $      -    $ 21,507  $ 42,144  $      -    $ 42,144
Cost of
 revenues    20,480      (910)(1)  19,570    39,408    (1,823)(1)  37,585
           --------  --------    --------  --------  --------    --------
Gross
 profit       1,027       910       1,937     2,736     1,823       4,559
  Gross
   profit %     4.8%                  9.0%      6.5%                 10.8%

Research,
 development
 and
 engineer-
 ing          1,971       (38)(1)   1,933     4,469       (80)(1)   4,389
Selling,
 general
 and
 adminis-
 trative      5,387      (828)(1)   4,559    10,835    (1,665)(1)   9,170
Restructuring
 and other
 related
 charges       (140)      140 (2)       -       235      (235)(2)       -
           --------  --------    --------  --------  --------    --------
  Total
   operating
   expenses   7,218      (726)      6,492    15,539    (1,980)     13,559
           --------  --------    --------  --------  --------    --------
    Operat-
     ing
     loss  $ (6,191) $  1,636    $ (4,555) $(12,803) $  3,803    $ (9,000)
    Operat-
     ing
     loss %   (28.8%)               (21.2%)   (30.4%)               (21.4%)


(1) Excluded amount represents stock-based compensation and purchase
    accounting amortization.
(2) Excluded amount represents restructuring and other related charges.
(3) Excluded amount represents tax benefit from stock-based compensation,
    purchase accounting amortization and restructuring and other related
    charges.
(4) Excluded amount represents tax benefit from stock-based compensation,
    purchase accounting amortization, restructuring and other related
    charges and $1,735 related to a tax benefit from expiration of certain
    statutes of limitations.

Use of Non-GAAP Financial Information
To supplement our consolidated financial statements presented on a GAAP
basis, Plantronics uses non-GAAP measures of operating results, which are
adjusted to exclude non-recurring and non-cash expenses and charges, such
as restructuring and other related charges, certain tax credits and the
release of certain tax reserves, stock-based compensation expenses related
to stock options, awards and employee stock purchases, purchase accounting
amortization and impairment of goodwill and long-lived assets. Plantronics
does not believe these expenses and charges are reflective of ongoing
operating results and are not part of our target operating model. At the
segment level, we have presented non-GAAP statements that only show our
results to the operating income line. On a consolidated basis, we have
presented full non-GAAP statement of operations. The non-GAAP financial
measures should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the financial
results calculated in accordance with GAAP and the reconciliations to those
financial statements should be carefully evaluated. The non-GAAP financial
measures used by Plantronics may be calculated differently from, and
therefore may not be comparable to, similarly titled measures used by other
companies.





Summary of Unaudited Statements of Operations and Related Data- Non-GAAP
(in thousands, except per share data and percentages)


                                   Q109       Q209       Q309       Q409
Net revenues                    $ 219,164  $ 216,856  $ 182,836  $ 146,763
Cost of revenues                  126,464    121,290    120,581     95,517
Gross profit                       92,700     95,566     62,255     51,246
Gross profit %                       42.3%      44.1%      34.0%      34.9%

Research, development and
 engineering                       18,660     17,811     17,810     13,938
Selling, general and
 administrative                    44,980     44,333     40,271     33,633
Operating expenses                 63,640     62,144     58,081     47,571

Operating income                   29,060     33,422      4,174      3,675
Operating income %                   13.3%      15.4%       2.3%       2.5%

Income before income taxes         30,600     30,252      2,675      3,260
Income tax expense (benefit)        7,339      8,692     (1,338)     2,714
Income tax expense (benefit)
 as a percent of income
 before taxes                        24.0%      28.7%     (50.0%)     83.3%

Net income                      $  23,261  $  21,560  $   4,013  $     546
Diluted shares outstanding         49,245     49,489     48,449     48,431
Diluted earnings per share      $    0.47  $    0.44  $    0.08  $    0.01

Net revenues from unaffiliated
 customers:
Audio Communication Group
  Office and Contact Center     $ 122,803  $ 119,530  $ 101,694  $  85,642
  Mobile                           59,882     60,911     36,011     30,615
  Gaming and Computer Audio         9,621      8,977      8,531      6,923
  Clarity                           6,221      5,931      6,380      4,918
Audio Entertainment Group          20,637     21,507     30,220     18,665


Net revenues by geographic area
 from unaffiliated customers:
   Domestic                     $ 134,402  $ 139,856  $ 107,799  $  90,182
   International                   84,762     77,000     75,037     56,581

Balance Sheet accounts and
 metrics:
Accounts receivable, net        $ 130,530  $ 115,032  $ 106,463  $  83,657
Days sales outstanding                 54         48         52         51
Inventory, net                  $ 136,974  $ 163,433  $ 137,563  $ 119,296
Inventory turns                       3.7        3.0        3.5        3.2



                                   FY09       Q110       Q210
Net revenues                    $ 765,619  $ 160,125  $ 167,415
Cost of revenues                  463,852     88,386     92,307
Gross profit                      301,767     71,739     75,108
Gross profit %                       39.4%      44.8%      44.9%

Research, development and
 engineering                       68,219     14,233     14,325
Selling, general and
 administrative                   163,217     34,893     34,967
Operating expenses                231,436     49,126     49,292

Operating income                   70,331     22,613     25,816
Operating income %                    9.2%      14.1%      15.4%

Income before income taxes         66,787     23,960     26,700
Income tax expense (benefit)       17,407      6,469      6,703
Income tax expense (benefit)
 as a percent of income
 before taxes                        26.1%      27.0%      25.1%

Net income                      $  49,380  $  17,491  $  19,997
Diluted shares outstanding         48,589     48,665     49,567
Diluted earnings per share      $    1.02  $    0.36  $    0.40

Net revenues from unaffiliated
 customers:
Audio Communication Group
  Office and Contact Center     $ 429,669  $  95,923  $  93,503
  Mobile                          187,419     32,310     34,665
  Gaming and Computer Audio        34,052      8,810      9,015
  Clarity                          23,450      4,119      7,275
Audio Entertainment Group          91,029     18,963     22,957


Net revenues by geographic area
 from unaffiliated customers:
   Domestic                     $ 472,239  $  98,787  $ 104,027
   International                  293,380     61,338     63,388

Balance Sheet accounts and
 metrics:
Accounts receivable, net        $  83,657  $  88,350  $ 103,003
Days sales outstanding                            50         55
Inventory, net                  $ 119,296  $ 108,898  $ 100,024
Inventory turns                                  3.2        3.7

Contact Information

  • FOR INFORMATION, CONTACT:
    Greg Klaben
    Vice President of Investor Relations
    (831) 458-7533