Plantronics Reports Third Quarter Fiscal Year 2008 Results

SANTA CRUZ, Calif., Jan. 22 /PRNewswire-FirstCall/ -- Plantronics, Inc., today announced third quarter fiscal 2008 net revenues of $232.8 million compared with $215.4 million in the third quarter of fiscal 2007. Revenues were within the guidance range of $230 to $235 million. Plantronics' GAAP diluted earnings per share were $0.39 in the third quarter of fiscal 2008, which includes $2.9 million in restructuring and other charges related to the consolidation of manufacturing operations, compared with $0.32 in the same quarter of the prior year. This compares to the GAAP EPS guidance we issued on October 23, 2007 of $0.32 to $0.37 and the subsequent announcement on November 28, 2007 that we expected to incur approximately $2.8 million in restructuring and other related charges during the quarter ending December 31, 2007 and that those charges would be expected to reduce GAAP EPS by $0.06 per share in comparison to the previously provided guidance from October 23rd.

Non-GAAP diluted earnings per share for the current quarter were $0.50 compared with $0.38 in the third quarter of fiscal 2007. Earnings per share were greater than the previously provided non-GAAP guidance of $0.37 to $0.42. The differences between GAAP and non-GAAP earnings per share for the current period are the cost of equity-based compensation and the restructuring charges.

"Our December quarter results reflect continued strength in our major product categories, with increased demand for our office wireless and consumer Bluetooth products; partially the result of robust market acceptance of our recently introduced Voyager 520, 815 and 855 models. We are making progress to return our Audio Entertainment Group to profitability as evidenced by the consolidation and restructuring announced in November and substantially completed this quarter, and by the reduction in the non-GAAP operating expenses compared to the year-ago quarter," stated Ken Kannappan, President & CEO of Plantronics. "Our Office and Call Center product group performed well with net revenues up by 10.8%, driven by continued strength in markets outside of the U.S. While the U.S. portion of this product group grew by 6.2% from the same quarter in the prior year, it declined 6.1% from the September quarter to the December quarter," Kannappan concluded.

Audio Communications Group (ACG) Non-GAAP Results (Office & Contact Center, Mobile, Computer, Clarity)

Third quarter net revenues of $196.0 million were up 11.0% compared with $176.5 million in the year-ago quarter. Revenue growth compared to the year-ago quarter was driven by demand for wireless products, with office wireless and mobile Bluetooth each up approximately 15%. In addition, certain PC headsets formerly classified in AEG are now included in ACG.

Gross margin in the third quarter of fiscal 2008 was 46.1% compared with 44.2% in the year-ago quarter. Among the factors contributing to the higher gross margin were cost reduction on our office wireless and Bluetooth mobile products and the impact of a weaker dollar. Operating income increased approximately 30% and operating margin was 17.8% compared with 15.2% in the year-ago quarter, primarily on the strength of the higher gross margin, though operating expenses as a percent of net revenue also decreased.

Audio Entertainment Group (AEG) Non-GAAP Results (Altec Lansing)

Third quarter net revenues of $36.9 million were down 5.3% from $38.9 million in the year-ago quarter, primarily as a result of the PC headset line now being managed and reported as part of the ACG segment. During the quarter, we were pleased with the continued growth and acceptance of the iM600 docking station. Gross margin was 11.1% compared with 9.3% in the year-ago quarter and the division's operating loss was $4.8 million compared with $5.8 million. In the third quarter of fiscal 2007, we incurred significant supplier claims which were not a factor in the current quarter.

While the turn-around of this division remains heavily dependent on a refreshed product portfolio, other steps are being taken to return to profitability, including the consolidation of manufacturing operations and other cost reductions. The focus on cost reduction enabled the division to operate on expenses 6.1% lower than the year-ago period. Plantronics continues to target profitability for the division by the December quarter of this calendar year.

During the quarter, Plantronics closed AEG's manufacturing facility in Dongguan, China; initiated plans to shut down a related Hong Kong research and development, sales and procurement office; and consolidated procurement, research and development activities for AEG in a new Shenzhen, China site which we expect to begin using this quarter. The selling, general and administrative functions of AEG are being consolidated with those of ACG throughout the Asia-Pacific region. These steps are part of a strategic initiative designed to reduce fixed costs by outsourcing AEG manufacturing to the network of qualified contract manufacturers already in place.

Balance Sheet and Cash Flow

Our balance sheet is strong with $170 million in cash, cash equivalents and marketable securities compared to $103 million at the end of our last fiscal year in March 2007. Year to date cash flow from operations is over $74 million with key metrics such as inventory turns up slightly to 4.2 compared to 4.0 in the December year-ago quarter and days sales outstanding at 53 days compared to 55 days in the year-ago period.

Business Outlook

The following statements are based on current expectations. Many of these statements are forward-looking, and actual results may differ materially from the forward-looking statements.

We have a "book and ship" business model whereby we ship most orders to our customers within 48 hours of our receipt of those orders, and we thus cannot rely on the level of backlog to provide visibility into potential future revenues. Our business is inherently difficult to forecast, and there can be no assurance that the incoming orders we expect to receive over the balance of the quarter will materialize. Our incoming order rate tends to be low during the last two weeks of December and the first half of January in the ACG business and then rises significantly into February and March. This historical pattern has recurred thus far this quarter and we therefore must realize an increased incoming order flow for the balance of the quarter in order to achieve the revenue range we are projecting. In addition, we believe the order rate in January compared to the most comparable year-ago periods for our U.S. Office and Contact Center business is running below that of a year ago and that this is attributable to deteriorating economic conditions. With increased economic uncertainty, our business is even more difficult to forecast than usual. We are currently expecting revenues for ACG and AEG to decrease sequentially in the fourth quarter and for the non-GAAP AEG operating loss to be higher than the third quarter. Subject to the foregoing, we are currently expecting the following financial results for the fourth quarter of fiscal 2008:

-- Net revenues for the fourth quarter of fiscal 2008 to be in the range of $195 - $205 million; -- Non-GAAP consolidated tax rate to be approximately 24%; -- Non-GAAP earnings per share for the fourth quarter of fiscal 2008 to be in the range of $0.24 - $0.32; and -- The EPS cost of equity compensation pursuant to FAS 123(R) to be approximately $0.05 - $0.06; and the EPS cost of AEG restructuring and related to be approximately $0.02, resulting in -- GAAP earnings per share of $0.17 to $0.24.

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 fourth quarter fiscal year 2008 results or by other public disclosure. Any statements by persons outside Plantronics speculating on the progress of the fourth quarter fiscal year 2008 will not be based on internal Company information and should be assessed accordingly by investors.

Conference Call Scheduled to Discuss Financial Results

Plantronics has scheduled a conference call to discuss the contents of this release. The conference call will take place today, Tuesday, January 22 at 2:00 PM (PST). 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 #20283787 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 http://www.plantronics.com/ under Investor Relations.

Use of Non-GAAP Financial Information

Plantronics excludes non-recurring transactions and non-cash expenses such as stock-based compensation related to stock options, awards and employee stock purchases from non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating income, 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 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. Specific forward- looking statements include our profitability target of December 2008 for our AEG business, the timing of the opening and successful consolidation of our AEG procurement, research and development activities in Shenzhen , China, the timing and successful ramp of outsourcing AEG manufacturing to the contract manufacturers and that the return to profitability of the AEG business can be achieved in great part based upon a refreshed product offering, and our estimates of net revenues, margins, operating expenses, tax rate and earnings for the fourth quarter of fiscal 2008. These forward-looking statements involve a number of risks and uncertainties, and are based on current information and management judgment.

Among the factors that could cause actual results to differ materially from those projected are:

-- Our operating results are difficult to predict, particularly in light of the current economic conditions in the U.S.; -- Factors that could cause demand to be different from Plantronics' expectations include changes in business and economic conditions; -- We do not know how the market for office wireless headsets and products from our other product groups may be affected in the event of a recession in the United States or global economy; -- The ability to achieve the turnaround of AEG is uncertain because: -- it is dependent upon our ability to more effectively research and implement features in our AEG products that consumers want and are willing to purchase; -- we must be able to meet the market windows for these products; -- we must be able to retain or obtain the shelf space for these products in our sales channel; -- we must retain or improve the brand recognition associated with the Altec Lansing brand during the turnaround; -- our ability to successfully complete the restructuring and consolidation activities and the financial impact that such actions may have is difficult to predict; -- there is a risk that the consolidation may cost more than we currently expect. There is also a risk that the savings that we currently predict may not materialize and that the timing of costs and benefits may be different than what we currently expect. If the cost of consolidation is more than we currently anticipate or the savings that we currently anticipate from these activities do not materialize, our future financial results may be adversely affected; -- Failure to achieve any of these objectives may adversely affect our financial results; -- We have significant intangible assets and goodwill recorded on our balance sheet. If the carrying value of our intangible assets and goodwill is not recoverable, an impairment loss must be recognized which would adversely affect our financial results; -- The market for our products is characterized by rapidly changing technology, short product life cycles, and frequent new product introductions, and we may not be able to develop, manufacture or market new products in response to changing customer requirements and new technologies; -- The actions of existing and/or new competitors, especially with regard to pricing and promotional programs; -- Product mix is difficult to estimate and standard margin varies considerably by product; -- 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; -- The inability to successfully develop, manufacture and market new products and achieve volume shipment schedules to meet demand; -- A softening of the level of market demand for our products; -- Variations in sales and profits in higher tax, as compared to lower tax, jurisdictions; -- Fluctuations in foreign exchange rates; -- Class action lawsuits are being brought against us and other Bluetooth headset manufacturers claiming "noise induced hearing loss". While we believe these suits are without merit, the costs to defend against them could be high and the results of litigation are not predictable in any event; -- Changes in the regulatory environment either as to headsets directly or as to the products, such as mobile phones, with which our products are used; and -- Additional risk factors include: changes in the timing and size of orders from our customers, price erosion, increased requirements from retail customers for marketing and advertising funding, interruption in the supply of sole-sourced critical components, continuity of component supply at costs consistent with our plans, failure of our distribution channels to operate as we expect, failure to develop products that keep pace with technological changes, the inherent risks of our substantial foreign operations, problems which might affect our manufacturing facilities in Mexico or in China, and the loss of the services of key executives and employees.

For more information concerning these and other possible risks, please refer to the Company's Annual Report on Form 10-K filed May 29, 2007, 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 nine months ended December 31, 2007 -- Unaudited GAAP to Non-GAAP Statements of Operations Reconciliations for the three and nine months ended December 31, 2006 -- Summary Unaudited Statements of Operations and Related Data About Plantronics

In 1969, a Plantronics headset carried the historic first words from the moon: "That's one small step for man, one giant leap for mankind." Since then, Plantronics has become the headset of choice for mission-critical applications such as air traffic control, 911 dispatch, and the New York Stock Exchange. Today, this history of Sound Innovation(R) is the basis for every product we build for the office, contact center, personal mobile, entertainment and residential markets. The Plantronics family of brands includes Plantronics, Altec Lansing, Clarity, and Volume Logic. For more information, go to http://www.plantronics.com/ or call (800) 544-4660.

Altec Lansing, Clarity, Plantronics, Sound Innovation, Volume Logic and AudioIQ are trademarks or registered trademarks of Plantronics, Inc. All other trademarks are the property of their respective owners.

FOR INFORMATION, CONTACT: Greg Klaben Vice President of Investor Relations (831) 458-7533 PLANTRONICS, INC. SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except per share data) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended December 31, December 31, 2006 2007 2006 2007 Net revenues $215,435 $232,824 $605,438 $647,543 Cost of revenues 134,584 139,067 372,093 385,784 Gross profit 80,851 93,757 233,345 261,759 Gross profit % 37.5% 40.3% 38.5% 40.4% Research, development and engineering 17,837 19,308 53,434 58,004 Selling, general and administrative 46,196 48,424 134,583 140,476 Restructuring and other related charges - 2,882 - 2,882 Gain on sale of land - - (2,637) - Total operating expenses 64,033 70,614 185,380 201,362 Operating income 16,818 23,143 47,965 60,397 Operating income % 7.8% 9.9% 7.9% 9.3% Interest and other income (expense), net 1,493 2,184 2,745 5,311 Income before income taxes 18,311 25,327 50,710 65,708 Income tax expense 3,121 6,219 10,704 15,103 Net income $15,190 $19,108 $40,006 $50,605 % of net revenues 7.1% 8.2% 6.6% 7.8% Diluted earnings per common share $0.32 $0.39 $0.83 $1.03 Shares used in diluted per share calculations 47,922 49,533 47,940 49,148 Tax rate 17.0% 24.6% 21.1% 23.0% UNAUDITED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2007 2007 ASSETS Cash and cash equivalents $94,131 $115,479 Short-term investments 9,234 54,085 Total cash, cash equivalents, and short-term investments 103,365 169,564 Accounts receivable, net 113,758 136,550 Inventory 126,605 131,320 Deferred income taxes 12,659 12,754 Other current assets 18,474 12,947 Total current assets 374,861 463,135 Property, plant and equipment, net 97,259 98,321 Intangibles, net 100,120 93,517 Goodwill 72,825 72,825 Other assets 6,239 6,047 $651,304 $733,845 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $49,956 $57,049 Accrued liabilities 54,025 63,863 Income taxes payable 12,476 - Total current liabilities 116,457 120,912 Deferred tax liability 37,344 32,135 Long-term income taxes payable - 16,132 Other long-term liabilities 696 960 Total liabilities 154,497 170,139 Stockholders' equity 496,807 563,706 $651,304 $733,845 AUDIO COMMUNICATIONS GROUP SUMMARY CONDENSED FINANCIAL STATEMENTS (in thousands) UNAUDITED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended December 31, December 31, 2006 2007 2006 2007 Net revenues $176,511 $195,955 $503,281 $562,574 Cost of revenues 99,254 106,257 284,445 302,216 Gross profit 77,257 89,698 218,836 260,358 Gross profit % 43.8% 45.8% 43.5% 46.3% Research, development and engineering 15,137 16,544 45,697 49,522 Selling, general and administrative 39,265 42,103 111,340 121,129 Gain on sale of land - - (2,637) - Total operating expenses 54,402 58,647 154,400 170,651 Operating income $22,855 $31,051 $64,436 $89,707 Operating income % 12.9% 15.8% 12.8% 15.9% AUDIO ENTERTAINMENT GROUP SUMMARY CONDENSED FINANCIAL STATEMENTS (in thousands) UNAUDITED STATEMENTS OF OPERATIONS Three Months Ended Nine Months Ended December 31, December 31, 2006 2007 2006 2007 Net revenues $38,924 $36,869 $102,157 $84,969 Cost of revenues 35,330 32,810 87,648 83,568 Gross profit 3,594 4,059 14,509 1,401 Gross profit % 9.2% 11.0% 14.2% 1.6% Research, development and engineering 2,700 2,764 7,737 8,482 Selling, general and administrative 6,931 6,321 23,243 19,347 Restructuring and other related charges - 2,882 - 2,882 Total operating expenses 9,631 11,967 30,980 30,711 Operating loss $(6,037) $(7,908) $(16,471) $(29,310) Operating loss % (15.5)% (21.4)% (16.1)% (34.5)% PLANTRONICS, INC. UNAUDITED GAAP TO NON-GAAP RECONCILIATION (in thousands, except per share data) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended December 31, 2007 GAAP Excluded Non-GAAP Net revenues $232,824 $- $232,824 Cost of revenues 139,067 (609)(1) 138,458 Gross profit 93,757 609 94,366 Gross profit % 40.3% 40.5% Research, development and engineering 19,308 (858)(1) 18,450 Selling, general and administrative 48,424 (2,617)(1) 45,807 Restructuring and other related charges 2,882 (2,882)(3) - Total operating expenses 70,614 (6,357) 64,257 Operating income 23,143 6,966 30,109 Operating income % 9.9% 12.9% Interest and other income (expense), net 2,184 - 2,184 Income before income taxes 25,327 6,966 32,293 Income tax expense 6,219 1,191 7,410 Net income $19,108 $5,775 $24,883 % of net revenues 8.2% 10.7% Diluted earnings per common share $0.39 $0.12 $0.50 Shares used in diluted per share calculations 49,533 49,533 49,533 Nine Months Ended December 31, 2007 GAAP Excluded Non-GAAP Net revenues $647,543 $- $647,543 Cost of revenues 385,784 (2,379)(2) 383,405 Gross profit 261,759 2,379 264,138 Gross profit % 40.4% 40.8% Research, development and engineering 58,004 (2,641)(1) 55,363 Selling, general and administrative 140,476 (7,443)(1) 133,033 Restructuring and other related charges 2,882 (2,882)(3) - Total operating expenses 201,362 (12,966) 188,396 Operating income 60,397 15,345 75,742 Operating income % 9.3% 11.7% Interest and other income (expense), net 5,311 - 5,311 Income before income taxes 65,708 15,345 81,053 Income tax expense 15,103 4,009 19,112 Net income $50,605 $11,336 $61,941 % of net revenues 7.8% 9.6% Diluted earnings per common share $1.03 $0.23 $1.26 Shares used in diluted per share calculations 49,148 49,148 49,148 AUDIO COMMUNICATIONS GROUP UNAUDITED GAAP TO NON-GAAP RECONCILIATION (in thousands) UNAUDITED STATEMENTS OF OPERATIONS Three Months Ended December 31, 2007 GAAP Excluded Non-GAAP Net revenues $195,955 $- $195,955 Cost of revenues 106,257 (587)(1) 105,670 Gross profit 89,698 587 90,285 Gross profit % 45.8% 46.1% Research, development and engineering 16,544 (823)(1) 15,721 Selling, general and administrative 42,103 (2,414)(1) 39,689 Total operating expenses 58,647 (3,237) 55,410 Operating income $31,051 $3,824 $34,875 Operating income % 15.8% 17.8% Nine Months Ended December 31, 2007 GAAP Excluded Non-GAAP Net revenues $562,574 $- $562,574 Cost of revenues 302,216 (1,800)(1) 300,416 Gross profit 260,358 1,800 262,158 Gross profit % 46.3% 46.6% Research, development and engineering 49,522 (2,540)(1) 46,982 Selling, general and administrative 121,129 (6,859)(1) 114,270 Total operating expenses 170,651 (9,399) 161,252 Operating income $89,707 $11,199 $100,906 Operating income % 15.9% 17.9% AUDIO ENTERTAINMENT GROUP UNAUDITED GAAP TO NON-GAAP RECONCILIATION (in thousands) UNAUDITED STATEMENTS OF OPERATIONS Three Months Ended December 31, 2007 GAAP Excluded Non-GAAP Net revenues $36,869 $- $36,869 Cost of revenues 32,810 (22)(1) 32,788 Gross profit 4,059 22 4,081 Gross profit % 11.0% 11.1% Research, development and engineering 2,764 (35)(1) 2,729 Selling, general and administrative 6,321 (203)(1) 6,118 Restructuring and other related charges 2,882 (2,882)(3) - Total operating expenses 11,967 (3,120) 8,847 Operating loss $(7,908) $3,142 $(4,766) Operating loss % (21.4)% (12.9)% Nine Months Ended December 31, 2007 GAAP Excluded Non-GAAP Net revenues $84,969 $- $84,969 Cost of revenues 83,568 (579)(2) 82,989 Gross profit 1,401 579 1,980 Gross profit % 1.6% 2.3% Research, development and engineering 8,482 (101)(1) 8,381 Selling, general and administrative 19,347 (584)(1) 18,763 Restructuring and other related charges 2,882 (2,882)(3) - Total operating expenses 30,711 (3,567) 27,144 Operating loss $(29,310) $4,146 $(25,164) Operating loss % (34.5)% (29.6)% (1) Excluded amount represents stock-based compensation. (2) Excluded amount represents stock-based compensation and $517 related to the impairment of an intangible asset. (3) Excluded amount represents restructuring and other related charges. 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-cash expenses, such as the impact of all stock-based compensation charges under FAS 123R, and non-recurring transactions that Plantronics does not believe are reflective of ongoing operating results and are not part of its 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 the company 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) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended December 31, 2006 GAAP Excluded Non-GAAP Net revenues $215,435 $- $215,435 Cost of revenues 134,584 (729)(1) 133,855 Gross profit 80,851 729 81,580 Gross profit % 37.5% 37.9% Research, development and engineering 17,837 (934)(1) 16,903 Selling, general and administrative 46,196 (2,578)(1) 43,618 Gain on sale of land - - - Total operating expenses 64,033 (3,512) 60,521 Operating income 16,818 4,241 21,059 Operating income % 7.8% 9.8% Interest and other income (expense), net 1,493 - 1,493 Income before income taxes 18,311 4,241 22,552 Income tax expense 3,121 1,358 4,479 Net income $15,190 $2,883 $18,073 % of net revenues 7.1% 8.4% Diluted earnings per common share $0.32 $0.06 $0.38 Shares used in diluted per share calculations 47,922 47,922 47,922 Nine Months Ended December 31, 2006 GAAP Excluded Non-GAAP Net revenues $605,438 $- $605,438 Cost of revenues 372,093 (2,200)(1) 369,893 Gross profit 233,345 2,200 235,545 Gross profit % 38.5% 38.9% Research, development and engineering 53,434 (2,843)(1) 50,591 Selling, general and administrative 134,583 (7,563)(1) 127,020 Gain on sale of land (2,637) 2,637 (2) - Total operating expenses 185,380 (7,769) 177,611 Operating income 47,965 9,969 57,934 Operating income % 7.9% 9.6% Interest and other income (expense), net 2,745 - 2,745 Income before income taxes 50,710 9,969 60,679 Income tax expense 10,704 3,085 13,789 Net income $40,006 $6,884 $46,890 % of net revenues 6.6% 7.7% Diluted earnings per common share $0.83 $0.14 $0.98 Shares used in diluted per share calculations 47,940 47,940 47,940 AUDIO COMMUNICATIONS GROUP UNAUDITED GAAP TO NON-GAAP RECONCILIATION (in thousands) UNAUDITED STATEMENTS OF OPERATIONS Three Months Ended December 31, 2006 GAAP Excluded Non-GAAP Net revenues $176,511 $- $176,511 Cost of revenues 99,254 (712)(1) 98,542 Gross profit 77,257 712 77,969 Gross profit % 43.8% 44.2% Research, development and engineering 15,137 (914)(1) 14,223 Selling, general and administrative 39,265 (2,385)(1) 36,880 Gain on sale of land - - - Total operating expenses 54,402 (3,299) 51,103 Operating income $22,855 $4,011 $26,866 Operating income % 12.9% 15.2% UNAUDITED STATEMENTS OF OPERATIONS Nine Months Ended December 31, 2006 GAAP Excluded Non-GAAP Net revenues $503,281 $- $503,281 Cost of revenues 284,445 (2,167)(1) 282,278 Gross profit 218,836 2,167 221,003 Gross profit % 43.5% 43.9% Research, development and engineering 45,697 (2,776)(1) 42,921 Selling, general and administrative 111,340 (7,102)(1) 104,238 Gain on sale of land (2,637) 2,637 (2) - Total operating expenses 154,400 (7,241) 147,159 Operating income $64,436 $9,408 $73,844 Operating income % 12.8% 14.7% AUDIO ENTERTAINMENT GROUP UNAUDITED GAAP TO NON-GAAP RECONCILIATION (in thousands) UNAUDITED STATEMENTS OF OPERATIONS Three Months Ended December 31, 2006 GAAP Excluded Non-GAAP Net revenues $38,924 $- $38,924 Cost of revenues 35,330 (17)(1) 35,313 Gross profit 3,594 17 3,611 Gross profit % 9.2% 9.3% Research, development and engineering 2,700 (20)(1) 2,680 Selling, general and administrative 6,931 (193)(1) 6,738 Total operating expenses 9,631 (213) 9,418 Operating loss $(6,037) $230 $(5,807) Operating loss % (15.5)% (14.9)% Nine Months Ended December 31, 2006 GAAP Excluded Non-GAAP Net revenues $102,157 $- $102,157 Cost of revenues 87,648 (33)(1) 87,615 Gross profit 14,509 33 14,542 Gross profit % 14.2% 14.2% Research, development and engineering 7,737 (67)(1) 7,670 Selling, general and administrative 23,243 (461)(1) 22,782 Total operating expenses 30,980 (528) 30,452 Operating loss $(16,471) $561 $(15,910) Operating loss % (16.1)% (15.6)% (1) Excluded amount represents stock-based compensation. (2) Excluded amount represents gain on sale of land. 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-cash expenses, such as the impact of all stock-based compensation charges under FAS 123R, and non-recurring transactions that Plantronics does not believe are reflective of ongoing operating results and are not part of its 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 the company 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 (1) Q107 Q207 Q307 Q407 Net revenues $195,069 $194,934 $215,435 $194,716 Cost of revenues 118,681 117,357 133,855 117,738 Gross profit 76,388 77,577 81,580 76,978 Gross profit % 39.2% 39.8% 37.9% 39.5% Research, development and engineering 17,633 16,055 16,903 17,470 Selling, general and administrative 41,832 41,570 43,618 44,911 Operating expenses 59,465 57,625 60,521 62,381 Operating income 16,923 19,952 21,059 14,597 Operating income % 8.7% 10.2% 9.8% 7.5% Income before income taxes 17,908 20,219 22,552 15,941 Income tax expense 4,261 5,049 4,479 2,507 Income tax expense as a percent of income before taxes 23.8% 25.0% 19.9% 15.7% Net income $13,647 $15,170 $18,073 $13,434 Diluted shares outstanding 48,268 47,626 47,922 48,218 EPS $0.28 $0.32 $0.38 $0.28 Net revenues from unaffiliated customers: Audio Communication Group Office and Contact center $114,267 $115,813 $118,280 $126,964 Mobile 35,806 33,199 43,080 34,774 Gaming and Computer 7,289 7,727 8,364 6,782 Other specialty products 6,375 6,294 6,787 4,713 Audio Entertainment Group 31,332 31,900 38,924 21,483 Net revenues by geographic area from unaffiliated customers: Domestic $126,728 $122,562 $125,824 $115,437 International 68,341 72,372 89,611 79,279 Balance Sheet accounts and metrics: Accounts receivable, net $121,702 $118,646 $131,735 $113,758 Days sales outstanding 56 55 55 53 Inventory, net $135,979 $139,426 $134,263 $126,605 Inventory turns 3.5 3.4 4.0 3.8 FY07 Q108 Q208 Q308 Net revenues $800,154 $206,495 $208,224 $232,824 Cost of revenues 487,631 122,308 122,639 138,458 Gross profit 312,523 84,187 85,585 94,366 Gross profit % 39.1% 40.8% 41.1% 40.5% Research, development and engineering 68,061 18,560 18,353 18,450 Selling, general and administrative 171,931 43,567 43,659 45,807 Operating expenses 239,992 62,127 62,012 64,257 Operating income 72,531 22,060 23,573 30,109 Operating income % 9.1% 10.7% 11.3% 12.9% Income before income taxes 76,620 23,394 25,366 32,293 Income tax expense 16,296 5,615 6,087 7,410 Income tax expense as a percent of income before taxes 21.3% 24.0% 24.0% 22.9% Net income $60,324 $17,779 $19,279 $24,883 Diluted shares outstanding 48,020 48,681 49,310 49,533 EPS $1.26 $0.37 $0.39 $0.50 Net revenues from unaffiliated customers: Audio Communication Group Office and Contact center $475,324 $132,205 $131,357 $131,017 Mobile 146,859 41,238 35,859 48,788 Gaming and Computer 30,162 6,485 8,277 10,449 Other specialty products 24,169 5,644 5,554 5,701 Audio Entertainment Group 123,640 20,923 27,177 36,869 Net revenues by geographic area from unaffiliated customers: Domestic $490,551 $131,108 $126,399 $139,106 International 309,603 75,387 81,825 93,718 Balance Sheet accounts and metrics: Accounts receivable, net $113,758 $121,705 $128,705 $136,550 Days sales outstanding 53 56 53 Inventory, net $126,605 $136,253 $133,516 $131,320 Inventory turns 3.6 3.7 4.2 (1) Non-GAAP.