Plantronics Announces Second Quarter Fiscal Year 2014 Results

Share Name	Share Symbol	Market	Type
Plantronics Inc	NYSE:PLT	NYSE	Common Stock

	Price Change	% Change	Share Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	31.87				0	01:00:00

Plantronics (NYSE:PLT)
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Revenue and Earnings per Share Meet Guidance; Unified Communications Net Revenues Grow 22% Year-over-Year, 36% Year-to-Date

Plantronics, Inc. (NYSE: PLT) today announced second quarter fiscal year 2014 results. Highlights of the quarter include the following (comparisons are against the second quarter of fiscal year 2013):

Net revenues were $194.0 million, an increase of 8% compared with $179.3 million.
GAAP gross margin was 51.4% compared with 54.2%; non-GAAP gross margin was 52.3% compared with 54.7%.
GAAP operating income was $30.8 million compared with $34.5 million; non-GAAP operating income was $38.0 million compared with $39.9 million.
GAAP diluted earnings per share (“EPS”) was $0.53 compared with $0.61, and within our guidance of $0.51 to $0.57.
Non-GAAP diluted EPS was $0.64 compared with $0.70, and within our guidance of $0.62 to $0.68.

Q2 GAAP Results

Q2 2014

Q2 2013

Change (%)

Net revenues $194.0 million $179.3 million 8.1% Operating income $30.8 million $34.5 million -10.7% Operating Margin 15.9% 19.3% Diluted EPS $0.53 $0.61 -13.1% Q2 Non-GAAP Results

Q2 2014

Q2 2013

Change (%)

Operating income $38.0 million $39.9 million -4.7% Operating Margin 19.6% 22.3% Diluted EPS $0.64 $0.70 -8.5%

A reconciliation between our GAAP and non-GAAP results is provided in the tables at the end of this press release.

“We achieved our revenue guidance through continued growth in Unified Communications (UC) and mobile headset revenues,” said Ken Kannappan, President & CEO. “Year to date, our UC revenues are up 36% compared to the first half of the prior year, and are in-line with our long-term expectations.”

“We generated approximately $23 million in cash flow from operations in the second quarter of fiscal year 2014, and grew our cash, cash equivalents and short and long term investments position to approximately $439 million,” said Pam Strayer, Senior Vice President and Chief Financial Officer.

OCC net revenues increased 5% to $139.9 million compared with $133.1 million in the second quarter of fiscal year 2013 driven by the strength of our UC revenues, a subset of OCC. Net revenues from UC products grew by 22% to $36.9 million in the second quarter of fiscal year 2014 compared with $30.1 million in the second quarter of fiscal year 2013.

Mobile net revenues were $42.7 million in the second quarter of fiscal year 2014, an increase of 28% compared with $33.3 million in the second quarter of fiscal year 2013, with growth in all major geographies.

Ken Kannappan, President & CEO Returns from Temporary Leave of Absence

Ken Kannappan has returned to his full responsibilities as President & CEO after taking a medical leave of absence beginning April 14, 2013 for a treatable form of cancer.

“I would like to thank everyone for their support during my leave of absence. In particular, I would like to thank Pam Strayer for her assumption of additional responsibilities as acting CEO, and her excellence in carrying out those duties. I would also like to thank the entire management team at Plantronics and all of our associates, for furthering our progress on our UC strategy and our corporate goals.”

Dividend Announcement

We also announced that our Board of Directors declared a quarterly dividend of $0.10 per share. The dividend will be payable on December 10, 2013 to stockholders of record at the close of business on November 20, 2013.

Business Outlook

The following statements are based on our current expectations and many of these statements are forward-looking. Actual results are subject to a variety of risks and uncertainties and may differ materially from our expectations.

We have a “book and ship” business model whereby we fulfill the majority of orders received within 48 hours of receipt of those orders. However, our backlog is occasionally subject to cancellation or rescheduling by our customers on short notice with little or no penalty. Therefore, there is a lack of meaningful correlation between backlog at the end of a fiscal period and net revenues in a succeeding fiscal period.

Our business is inherently difficult to forecast, particularly with continuing uncertainty in regional economic conditions, and there can be no assurance that expectations of incoming orders over the balance of the current quarter will materialize.

Subject to the foregoing, we currently expect the following range of financial results for the third quarter of fiscal year 2014:

Net revenues of $202 million to $210 million;
GAAP operating income of $30 million to $33 million;
Non-GAAP operating income of $36 million to $39 million, excluding the impact of $6 million from stock-based compensation and purchase accounting amortization from GAAP operating income;
Assuming approximately 43.8 million diluted average weighted shares outstanding:
- GAAP diluted EPS of $0.50 to $0.55;
- Non-GAAP diluted EPS of $0.60 to $0.65; and
- Cost of stock-based compensation and purchase accounting amortization to be approximately $0.10 per diluted share.

Please see our updated Investor Relations Presentation available on our corporate website at www.plantronics.com/ir.

Conference Call Scheduled to Discuss Financial Results

We have scheduled a conference call to discuss second quarter fiscal year 2014 results. The conference call will take place today, October 29, 2013, at 2:00 PM (Pacific Time). All interested investors and potential investors in our 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 #65762101 will be available until December 6, 2013 at (855) 859-2056 for callers from North America and at (404) 537-3406 for all other callers. The conference call will also be simultaneously webcast in the Investor Relations section of our corporate website at www.plantronics.com/ir, and the webcast of the conference call will remain available on our website for one month.

Use of Non-GAAP Financial Information

To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP measures of operating results, which are adjusted to exclude certain non-cash expenses and charges from non-GAAP operating income, non-GAAP operating margin and non-GAAP diluted EPS, including stock-based compensation related to stock options, restricted stock and employee stock purchases made under our employee stock purchase plan, purchase accounting amortization and accelerated depreciation, and early lease termination charges, all net of the associated tax impact, tax benefits from the release of tax reserves, transfer pricing adjustments, and the impact of the retroactive reinstatement of the U.S. federal R&D tax credit. We exclude these expenses from our non-GAAP measures primarily because Plantronics’ management does not believe they are part of our target operating model. We believe that the use of non-GAAP financial measures provides meaningful supplemental information regarding our performance and liquidity and helps investors compare actual results with our long-term target operating model goals. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods; however, non-GAAP financial measures are not meant to be considered in isolation or as a substitute for, or superior to, gross margin, operating income, operating margin, net income or EPS prepared in accordance with GAAP.

Safe Harbor

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to (i) our estimates of GAAP and non-GAAP financial results for the third quarter of fiscal year 2014, including net revenues, operating income and diluted EPS; (ii) our estimates of stock-based compensation and purchase accounting amortization and other related charges, as well as the impact of these non-cash expenses on Non-GAAP operating income and diluted EPS; and (iii) our estimate of weighted average shares outstanding for the third quarter of fiscal year 2014, in addition to other matters discussed in this press release that are not purely historical data. We do 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:

Micro and macro economic conditions in our domestic and international markets;
our ability to realize our UC plans and to achieve the financial results projected to arise from UC adoption could be adversely affected by a variety of factors including the following: (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 and strategic partners such as Microsoft Corporation, Cisco Systems, Inc., Avaya, Inc., Alcatel-Lucent, and IBM, and we have a limited ability to influence such providers with respect to the functionality of their platforms or their product offerings, their rate of deployment, and their willingness to integrate their platforms and product offerings with our solutions, and our support expenditures may substantially increase over time due to the complex nature of the platforms and product offerings developed by the major UC providers as these platforms and product offerings continue to evolve and become more commonly adopted; (iii) the development of UC solutions is technically complex and this may delay or limit 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 on a timely basis; (iv) our development of UC solutions is dependent on our ability to implement and execute new and different processes in connection with the design, development and manufacturing of complex electronic systems comprised of hardware, firmware and software that must work in a wide variety of environments and multiple variations, which may in some instances increase the risk of development delays or errors and require the hiring of new personnel and/or fourth party contractors which increases our costs; (v) because UC offerings involve complex integration of hardware and software with UC infrastructure, our sales model and expertise will need to continue to evolve; (vi) 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; (vii) UC solutions may not be adopted with the breadth and speed in the marketplace that we currently anticipate; and, (viii) UC may evolve rapidly and unpredictably and our inability to timely and cost-effectively adapt to those changes and future requirements may impact our profitability in this market and our overall margins;
failure to match production to demand given long lead times and the difficulty of forecasting unit volumes and acquiring the component parts and materials to meet demand without having excess inventory or incurring cancellation charges;
volatility in prices from our suppliers, including our manufacturers located in China, have in the past and could in the future negatively affect our profitability and/or market share;
fluctuations in foreign exchange rates;
with respect to our stock repurchase program, prevailing stock market conditions generally, and the price of our stock specifically;
the bankruptcy or financial weakness of distributors or key customers, or the bankruptcy of or reduction in capacity of our key suppliers;
additional risk factors including: interruption in the supply of sole-sourced critical components, continuity of component supply at costs consistent with our plans, and the inherent risks of our substantial foreign operations; and
seasonality in one or more of our business segments.

For more information concerning these and other possible risks, please refer to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 24, 2013 and other filings with the Securities and Exchange Commission, as well as recent press releases. The Securities and Exchange Commission 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
Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and Other Unaudited GAAP Data

About Plantronics

Plantronics is a global leader in audio communications for businesses and consumers. We have pioneered new trends in audio technology for over 50 years, creating innovative products that allow people to simply communicate. From Unified Communication solutions to Bluetooth headsets, we deliver uncompromising quality, an ideal experience, and extraordinary service. Plantronics is used by every company in the Fortune 100, as well as 911 dispatch, air traffic control and the New York Stock Exchange. For more information, please visit www.plantronics.com or call (800) 544-4660.

Plantronics and the logo design 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) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Six Months Ended September 30, September 30, 2013 2012 2013 2012 Net revenues $ 193,980 $ 179,280 $ 396,798 $ 360,645 Cost of revenues 94,366 82,052 191,552 165,721 Gross profit 99,614 97,228 205,246 194,924 Gross profit % 51.4 % 54.2 % 51.7 % 54.0 % Research, development and engineering 20,447 19,581 41,310 39,277 Selling, general and administrative 48,507 43,130 96,604 89,034 Restructuring and other related charges (176 ) - 547 - Total operating expenses 68,778 62,711 138,461 128,311 Operating income 30,836 34,517 66,785 66,613 Operating income % 15.9 % 19.3 % 16.8 % 18.5 % Interest and other income (expense), net 359 275 (127 ) 287 Income before income taxes 31,195 34,792 66,658 66,900 Income tax expense 8,057 8,868 16,567 17,413 Net income $ 23,138 $ 25,924 $ 50,091 $ 49,487 % of net revenues 11.9 % 14.5 % 12.6 % 13.7 % Earnings per common share: Basic $ 0.54 $ 0.62 $ 1.17 $ 1.19 Diluted $ 0.53 $ 0.61 $ 1.15 $ 1.16 Shares used in computing earnings per common share: Basic 42,810 41,482 42,751 41,571 Diluted 43,597 42,403 43,667 42,521 Effective tax rate 25.8 % 25.5 % 24.9 % 26.0 % PLANTRONICS, INC. SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ($ in thousands, except per share data) UNAUDITED CONSOLIDATED BALANCE SHEETS September 30, March 31, 2013 2013 ASSETS Cash and cash equivalents $ 245,980 $ 228,776 Short-term investments 113,143 116,581 Total cash, cash equivalents and short-term investments 359,123 345,357 Accounts receivable, net 123,748 128,209 Inventory, net 69,150 67,435 Deferred tax assets 10,065 10,120 Other current assets 15,289 15,369 Total current assets 577,375 566,490 Long-term investments 79,475 80,261 Property, plant and equipment, net 118,318 99,111 Goodwill and purchased intangibles, net 16,265 16,440 Other assets 2,240 2,303 Total assets $ 793,673 $ 764,605 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 29,500 $ 37,067 Accrued liabilities 60,926 66,419 Total current liabilities 90,426 103,486 Deferred tax liabilities 2,833 1,742 Long-term income taxes payable 12,685 12,005 Other long-term liabilities 1,686 925 Total liabilities 107,630 118,158 Stockholders' equity 686,043 646,447 Total liabilities and stockholders' equity $ 793,673 $ 764,605 PLANTRONICS, INC. SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ($ in thousands, except per share data) UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended Six Months Ended September 30, September 30, 2013 2012 2013 2012 Cash flows from operating activities Net income $ 23,138 25,924 $ 50,091 $ 49,487 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,783 4,094 7,891 7,880 Stock-based compensation 5,965 4,862 10,953 9,482 Provision for excess and obsolete inventories 1,498 649 3,281 899 Deferred income taxes (410 ) (464 ) 5,293 (902 ) Excess tax benefit from stock-based compensation (513 ) (539 ) (4,086 ) (679 ) Other operating activities 135 693 1,200 1,265 Changes in assets and liabilities: Accounts receivable, net (2,834 ) 557 3,082 5,008 Inventory, net (4,780 ) (3,077 ) (4,552 ) (8,230 ) Current and other assets (1,362 ) 1,463 (659 ) (1,218 ) Accounts payable (3,227 ) 608 (7,567 ) (3,854 ) Accrued liabilities 3,392 875 (3,885 ) (559 ) Income taxes (1,319 ) (3,817 ) (3,436 ) 1,445 Cash provided by operating activities 23,466 31,828 57,606 60,024 Cash flows from investing activities Proceeds from sales of short-term investments 24,087 9,200 50,118 25,057 Proceeds from maturities of short-term investments 19,770 33,295 54,970 60,890 Purchase of short-term investments (7,619 ) (30,349 ) (41,634 ) (65,411 ) Proceeds from sales of long-term investments 10,228 2,000 15,012 2,000 Purchase of long-term investments (51,614 ) (25,528 ) (74,720 ) (33,951 ) Acquisitions, net of cash acquired - (1,723 ) - (1,723 ) Capital expenditures (14,199 ) (4,949 ) (27,213 ) (21,526 ) Cash used for investing activities (19,347 ) (18,054 ) (23,467 ) (34,664 ) Cash flows from financing activities Repurchase of common stock (16,547 ) (3,457 ) (27,313 ) (19,930 ) Proceeds from issuances under stock-based compensation plans 5,474 10,569 18,637 11,888 Employees' tax withheld and paid for restricted stock and restricted stock units (343 ) (439 ) (4,369 ) (1,729 ) Proceeds from revolving line of credit - - - 18,000 Repayments of revolving line of credit - (13,000 ) - (26,000 ) Payment of cash dividends (4,397 ) (4,243 ) (8,765 ) (8,490 ) Excess tax benefit from stock-based compensation 513 539 4,086 679 Cash used for financing activities (15,300 ) (10,031 ) (17,724 ) (25,582 ) Effect of exchange rate changes on cash and cash equivalents 818 (453 ) 789 (1,184 ) Net increase (decrease) in cash and cash equivalents (10,363 ) 3,290 17,204 (1,406 ) Cash and cash equivalents at beginning of period 256,343 204,639 228,776 209,335 Cash and cash equivalents at end of period $ 245,980 $ 207,929 $ 245,980 $ 207,929 PLANTRONICS, INC. UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES ($ in thousands, except per share data) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA Three Months Ended Six Months Ended September 30, September 30, 2013 2012 2013 2012 GAAP Gross profit $ 99,614 $ 97,228 $ 205,246 $ 194,924 Stock-based compensation 638 526 1,173 1,122 Accelerated depreciation 41 318 261 442 Lease termination charges 1,126 - 1,388 - Non-GAAP Gross profit $ 101,419 $ 98,072 $ 208,068 $ 196,488 Non-GAAP Gross profit % 52.3 % 54.7 % 52.4 % 54.5 % GAAP Research, development and engineering $ 20,447 $ 19,581 $ 41,310 $ 39,277 Stock-based compensation (1,652 ) (1,256 ) (3,020 ) (2,380 ) Accelerated depreciation (49 ) (226 ) (200 ) (283 ) Lease termination charges (21 ) - (21 ) - Purchase accounting amortization (50 ) - (100 ) - Non-GAAP Research, development and engineering $ 18,675 $ 18,099 $ 37,969 $ 36,614 GAAP Selling, general and administrative $ 48,507 $ 43,130 $ 96,604 $ 89,034 Stock-based compensation (3,675 ) (3,080 ) (6,759 ) (5,980 ) Lease termination charges (45 ) - (45 ) - Purchase accounting amortization (35 ) - (106 ) - Non-GAAP Selling, general and administrative $ 44,752 $ 40,050 $ 89,694 $ 83,054 GAAP Operating expenses $ 68,778 $ 62,711 $ 138,461 $ 128,311 Stock-based compensation (5,327 ) (4,336 ) (9,779 ) (8,360 ) Accelerated depreciation (49 ) (226 ) (200 ) (283 ) Lease termination charges (66 ) - (66 ) - Purchase accounting amortization (85 ) - (206 ) - Restructuring and other related charges 176 - (547 ) - Non-GAAP Operating expenses $ 63,427 $ 58,149 $ 127,663 $ 119,668

PLANTRONICS, INC.

UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES

($ in thousands, except per share data) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED) Three Months Ended Six Months Ended September 30, September 30, 2013 2012 2013 2012 GAAP Operating income $ 30,836 $ 34,517 $ 66,785 $ 66,613 Stock-based compensation 5,965 4,862 10,952 9,482 Accelerated depreciation 90 544 461 725 Lease termination charges 1,192 - 1,454 - Purchase accounting amortization 85 - 206 - Restructuring and other related charges (176 ) - 547 - Non-GAAP Operating income $ 37,992 $ 39,923 $ 80,405 $ 76,820 GAAP Net income $ 23,138 $ 25,924 $ 50,091 $ 49,487 Stock-based compensation 5,965 4,862 10,952 9,482 Accelerated depreciation 90 544 461 725 Lease termination charges 1,192 - 1,454 - Purchase accounting amortization 85 - 206 - Restructuring and other related charges (176 ) - 547 - Income tax effect (2,298 )

(1)

(1,648 )

(2)

(5,122 )

(3)

(3,069 )

(2)

Non-GAAP Net income $ 27,996 $ 29,682 $ 58,589 $ 56,625 GAAP Diluted earnings per common share $ 0.53 $ 0.61 $ 1.15 $ 1.16 Stock-based compensation 0.14 0.11 0.25 0.22 Accelerated depreciation - 0.01 0.01 0.01 Lease termination charges 0.02 - 0.03 - Restructuring and other related charges - - 0.02 - Income tax effect (0.05 ) (0.03 ) (0.12 ) (0.06 ) Non-GAAP Diluted earnings per common share $ 0.64 $ 0.70 $ 1.34 $ 1.33 Shares used in diluted earnings per common share calculation 43,597 42,403 43,667 42,521 (1) Excluded amount represents tax benefits from stock-based compensation, accelerated depreciation, lease termination charges, purchase accounting amortization, restructuring and other related charges, and the release of tax reserves. (2) Excluded amount represents tax benefits from stock-based compensation and purchase accounting amortization. (3) Excluded amount represents tax benefits from stock-based compensation, accelerated depreciation, lease termination charges, purchase accounting amortization, restructuring and other related charges, the release of tax reserves, and transfer pricing adjustments.

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 stock-based compensation related to stock options, restricted stock and employee stock purchases, accelerated depreciation, lease termination charges, purchase accounting amortization, restructuring and other related charges, all net of the associated tax impact, tax benefits from the release of tax reserves, transfer pricing adjustments, and the impact of the retroactive reinstatement of the U.S. federal R&D tax credit. Plantronics does not believe these expenses and charges are reflective of ongoing operating results and are not part of our target operating model. 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 Reconciliations of GAAP Measures to Non-GAAP Measures and other Unaudited GAAP Data ($ in thousands, except per share data) Q113 Q213 Q313 Q413 Q114 Q214 GAAP Gross profit $ 97,696 $ 97,228 $ 102,164 $ 106,093 $ 105,632 $ 99,614 Stock-based compensation 596 526 507 391 535 638 Accelerated depreciation 124 318 318 252 220 41 Lease termination charges - - - - 262 1,126 Non-GAAP Gross profit $ 98,416 $ 98,072 $ 102,989 $ 106,736 $ 106,649 $ 101,419 Non-GAAP Gross profit % 54.3 % 54.7 % 52.2 % 52.3 % 52.6 % 52.3 % GAAP Operating expenses $ 65,600 $ 62,711 $ 67,558 $ 69,215 $ 69,683 $ 68,778 Stock-based compensation (4,024 ) (4,336 ) (4,185 ) (3,785 ) (4,452 ) (5,327 ) Accelerated depreciation (57 ) (226 ) (223 ) (176 ) (151 ) (49 ) Lease termination charges - - - - - (66 ) Purchase accounting amortization - - - - (121 ) (85 ) Restructuring and other related charges - - (1,868 ) (398 ) (723 ) 176 Non-GAAP Operating expenses $ 61,519 $ 58,149 $ 61,282 $ 64,856 $ 64,236 $ 63,427 GAAP Operating income $ 32,096 $ 34,517 $ 34,606 $ 36,878 $ 35,949 $ 30,836 Stock-based compensation 4,620 4,862 4,692 4,176 4,987 5,965 Accelerated depreciation 181 544 541 428 371 90 Lease termination charges - - - - 262 1,192 Purchase accounting amortization - - - - 121 85 Restructuring and other related charges - - 1,868 398 723 (176 ) Non-GAAP Operating income $ 36,897 $ 39,923 $ 41,707 $ 41,880 $ 42,413 $ 37,992 Non-GAAP Operating income % 20.3 % 22.3 % 21.1 % 20.5 % 20.9 % 19.6 % GAAP Income before income taxes $ 32,108 $ 34,792 $ 34,783 $ 36,742 $ 35,463 $ 31,195 Stock-based compensation 4,620 4,862 4,692 4,176 4,987 5,965 Accelerated depreciation 181 544 541 428 371 90 Lease termination charges - - - - 262 1,192 Purchase accounting amortization - - - - 121 85 Restructuring and other related charges - - 1,868 398 723 (176 ) Non-GAAP Income before income taxes $ 36,909 $ 40,198 $ 41,884 $ 41,744 $ 41,927 $ 38,351 GAAP Income tax expense $ 8,545 $ 8,868 $ 6,577 $ 8,033 $ 8,510 $ 8,057 Income tax effect of stock-based compensation 1,382 1,532 1,342 1,223 1,437 1,838 Income tax effect of accelerated depreciation 39 116 124 90 88 - Income tax effect of lease termination charges - - - - 57 276 Income tax effect of purchase accounting amortization - - - - 37 24 Income tax effect of restructuring and other related charges - - 600 103 270 (66 ) Tax benefit from the release of tax reserves & transfer pricing adjustments - - 2,071 - 935 226 Tax benefit from the retroactive reinstatement of the R&D tax credit - - - 1,835 - - Non-GAAP Income tax expense $ 9,966 $ 10,516 $ 10,714 $ 11,284 $ 11,334 $ 10,355 Non-GAAP Income tax expense as a % of Non-GAAP Income before income taxes 27.0 % 26.2 % 25.6 % 27.0 % 27.0 % 27.0 % Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and other Unaudited GAAP Data (Continued) ($ in thousands, except per share data) Q113 Q213 Q313 Q413 Q114 Q214 GAAP Net income $ 23,563 $ 25,924 $ 28,206 $ 28,709 $ 26,953 $ 23,138 Stock-based compensation 4,620 4,862 4,692 4,176 4,987 5,965 Accelerated depreciation 181 544 541 428 371 90 Lease termination charges - - - - 262 1,192 Purchase accounting amortization - - - - 121 85 Restructuring and other related charges - - 1,868 398 723 (176 ) Income tax effect (1,421 ) (1,648 ) (4,137 ) (3,251 ) (2,824 ) (2,298 ) Non-GAAP Net income $ 26,943 $ 29,682 $ 31,170 $ 30,460 $ 30,593 $ 27,996 GAAP Diluted earnings per common share $ 0.55 $ 0.61 $ 0.66 $ 0.67 $ 0.62 $ 0.53 Stock-based compensation 0.11 0.11 0.11 0.11 0.11 0.14 Accelerated depreciation - 0.01 0.01 0.01 0.01 - Lease termination charges - - - - 0.01 0.02 Restructuring and other related charges - - 0.05 - 0.02 - Income tax effect (0.03 ) (0.03 ) (0.10 ) (0.08 ) (0.07 ) (0.05 ) Non-GAAP Diluted earnings per common share $ 0.63 $ 0.70 $ 0.73 $ 0.71 $ 0.70 $ 0.64 Shares used in diluted earnings per common share calculation 42,570 42,403 42,618 43,119 43,650 43,597 SUMMARY OF UNAUDITED GAAP DATA ($ in thousands) Net revenues from unaffiliated customers: Office and Contact Center $ 134,033 $ 133,119 $ 139,449 $ 142,700 $ 151,183 $ 139,945 Mobile 36,157 33,305 44,138 49,860 41,624 42,685 Gaming and Computer Audio 6,789 7,797 9,024 7,137 6,451 8,156 Clarity 4,386 5,059 4,791 4,482 3,560 3,194 Total net revenues $ 181,365 $ 179,280 $ 197,402 $ 204,179 $ 202,818 $ 193,980 Net revenues by geographic area from unaffiliated customers: Domestic $ 104,078 $ 107,513 $ 111,847 $ 113,009 $ 121,318 $ 115,795 International 77,287 71,767 85,555 91,170 81,500 78,185 Total net revenues $ 181,365 $ 179,280 $ 197,402 $ 204,179 $ 202,818 $ 193,980 Balance Sheet accounts and metrics: Accounts receivable, net $ 108,300 $ 108,070 $ 112,677 $ 128,209 $ 120,903 $ 123,748 Days sales outstanding (DSO) 54 54 51 57 54 57 Inventory, net $ 58,932 $ 61,639 $ 66,905 $ 67,435 $ 65,314 $ 69,150 Inventory turns 5.7 5.3 5.7 5.8 6.0 5.5

Plantronics, Inc.Greg Klaben, 831-458-7533 (Investor)Vice President of Investor RelationsGenevieve Haldeman, 831-458-7343 (Media)Vice President of Global Communications

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