Plantronics Inc. Fourth Quarter Earnings Release

PRESS RELEASE

Plantronics Reports Record Revenue and Earnings for

Fiscal Year 2005

FOR INFORMATION, CONTACT:

Jon Alvarado

Treasurer and Director, Investor Relations

(831) 458-7533

FOR IMMEDIATE RELEASE

April 26, 2005

SANTA CRUZ, CA. - April 26, 2005 - Plantronics, Inc., (NYSE: PLT) today announced record revenues of $560 million for fiscal year 2005, an increase of 34% from $417 million in fiscal 2004. For the year as a whole, operating income was $126.6 million in comparison to $84.8 million in fiscal 2004, and operating margin was 22.6% compared to 20.3% last year. Earnings per share increased approximately 50% to $1.97 in comparison to $1.31 in fiscal 2004.

Ken Kannappan, President and CEO, noted, “Wireless, the convergence of audio and entertainment and Plantronics’ place in the market today gives us the unprecedented opportunity to apply our innovative technologies and designs to create compelling communications solutions. Our ability to innovate is evident in products like our wireless headsets, a family of solutions with the power to give people the freedom to communicate effectively wherever they are. As a result, our revenues from wireless headsets nearly doubled in fiscal 2005 compared to fiscal 2004. Our innovation is also apparent in the new family of Bluetooth products we announced at CeBIT & CTIA, which were met with an overwhelmingly positive response. Looking forward to fiscal 2006, we expect to see the growth trends in wireless continue, especially with the increased adoption of Bluetooth solutions in the U.S. and the convergence of entertainment, data and audio devices.”

“During the year, we also developed new products for gaming enthusiasts and participated in the growing but still nascent interactive gaming category. We increased our global presence and saw revenue grow in all the major geographies we serve. Our new products were well-received and contributed substantially to the $92 million increase in our office and contact center product revenues, to the $33 million increase in our mobile headset revenues and to the $16 million increase in our gaming and computer product revenues,” Kannappan concluded.

Fourth quarter revenues increased 22% to $147.8 million in comparison to $121.4 million in the fourth quarter of fiscal 2004. Plantronics' diluted earnings per share were $0.56 for the fourth quarter in comparison to $0.42 in the fourth quarter of fiscal 2004. Earnings per share benefited from a lower effective tax rate than prevailed during the first three quarters of fiscal 2005. Earnings per share in the fourth quarter of fiscal 2004 also benefited from a lower effective tax rate than had prevailed during the first three quarters of fiscal 2004.

In total, our results for the fourth fiscal quarter were above the guidance we issued on January 18th, which called for revenues of $140 to $145 million, and earnings per share of $0.49 to $0.55. Operationally, gross and therefore operating margins were lower than our guidance due to the overall product mix as well as to the effect of inventory reductions. Revenues from mobile headsets were higher than we expected, though down sequentially as anticipated. Seasonality contributed to the sequential decline while the stronger performance than expectations was primarily the result of our success reducing inventories of current generation Bluetooth headsets. Revenues from the popular and still growing CS50 and CS60, and their variants, reached an annual run rate in excess of $100 million in the quarter.

Barbara Scherer, SVP and CFO, said, "During fiscal 2005, we exceeded our goal of making at least a 21% operating margin, ending the year at 22.6% with a fourth quarter level of 20.8%. We made progress on many fronts and saw our best year ever in terms of revenues from new products. Even with the start-up costs associated with our China factory and design center, our commitment to a major branding program and a significant increase in our planned level of R&D spend including the acquisition of Octiv Technologies, we believe an operating margin goal of 20% or better is reasonable for fiscal 2006 and probably beyond. I believe we are well-positioned for revenue and earnings growth over the long term.”

“We are pleased to report that we reduced inventory by $14.9 million during the quarter and achieved inventory turns of 4.9. Although we need and plan to make further improvements in our processes to improve turns, we believe a target of 5 turns remains reasonable for the balance of fiscal 2006. Our earnings coupled with reductions in inventory enabled us to generate cash flow from operations of approximately $45.9 million in the quarter bringing the full year total to $93.6 million. During the quarter, we were active under our 15th share repurchase program, repurchasing 770,100 shares for a total of approximately $28.5 million at a weighted average purchase price of $36.97, and completed the program during the first half of April. Since that time, the Board approved a further 1 million share repurchase program and we currently have 820,000 shares remaining authorized for repurchase under what is now our 16th share repurchase plan,” said Scherer.

“Finally, due to a number of factors, we had a very low effective tax rate in the quarter. We concluded the international tax planning work that we mentioned in our January 18 press release, and we concluded certain tax audits for prior fiscal years with our tax positions upheld. The combination of the international tax planning work and the favorable outcome of our tax audits led to an effective rate of 7.6% for the quarter, bringing our full year rate to 23.1%. While it is difficult to predict the rate for fiscal 2006 given the mix of tax jurisdictions in which we operate, we are currently estimating a rate of approximately 27%,” Scherer concluded.

Business Outlook

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

We consider the trends in sell-through of our U.S. commercial distributors of office and contact center products an important indicator of demand. For the March quarter, this group of distributors reported to us an increase in sell-through of 22% in comparison to the March quarter last year, and 7% growth sequentially. Our level of revenues to this group of distributors was modestly higher than their level of reported sell-through with channel inventory levels therefore remaining largely unchanged.

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.

Based on all of the foregoing, we are currently expecting:

·	Revenues for the first quarter of fiscal 2006 to be in the range of $148 - $153 million.

·	Earnings per share for the first quarter of fiscal 2006 to be in the range of $0.43 - $0.46.

Branding and Marketing Update: Headsets are becoming mainstream. To address this growing opportunity, it is important that we build and extend our brand. As noted in our January 18, 2005 press release, we intend to launch a national, integrated marketing campaign in fiscal 2006 focusing on wireless office products. Since January, we have modified the planned timing of the launch and the associated expenses. We did incur approximately $1 million in expense in Q4 and now expect to incur very little additional expense in the first quarter, with the bulk of the remaining $9 million to be spent in Q2 and Q3 of fiscal 2006.

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 first quarter fiscal year 2006 results or by other public disclosure. Any statements by persons outside Plantronics speculating on the progress of the first quarter of the fiscal year will not be based on internal Company information and should be assessed accordingly by investors. The statements do not reflect the potential impact of any mergers or acquisitions that may be completed after the date of this release.

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, April 26 at 2:00 PM (PDT). All interested investors and potential investors in Plantronics stock are invited to participate. To listen 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 #2150394 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 Web site for thirty days.

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:

Certain statements in this press release, including our expectation of a continued strong trend in our revenues from wireless headsets, our target for fiscal 2006 operating margins, the estimated tax rate for fiscal 2006, our current expectations and projections for revenues and earnings for the June quarter, our target inventory turns of 5, other statements under the caption "Business Outlook" above, and the timing and amount of expenses for our wireless marketing campaign, are forward-looking statements based on current information and expectations. Achievement of the results projected above is subject to a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from those projected are:

·	The demand for wireless headsets may not continue to develop as we anticipate and that could lead to lower or more volatile revenue and earnings, excess inventory and/or the inability to recover the associated development costs;

·	A softening of the level of market demand for our products within our core contact center market and/or in the newer office, mobile, gaming, computer and residential markets;

·	A slowing in national or international economic growth, resulting in a reduction in the overall level of demand for our products;

·	The actions of existing and/or new competitors, especially with regard to pricing and promotional programs;

·	The inability to successfully develop, manufacture and market new products;

·	The entry of new competitors which could be spurred by changes in the regulatory environment, particularly laws requiring the use of hands-free devices by drivers when using cellular telephones;

·	Variations in sales and profits in higher tax, as compared to lower tax, jurisdictions;

·	A decrease in the liquidity of our customers caused by general economic conditions that may impact their ability to pay amounts due us;

·	Fluctuations in foreign exchange rates; and

·	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.

Additional risk factors include: our ability to meet the requirements of the Sarbanes-Oxley legislation, including Section 404 which requires attestation by management and its independent registered public accounting firm on the internal control environment; changes in the timing and size of orders from our customers; price erosion; increased requirements from retail customers for marketing and advertising funding; failure to match production to demand; 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 principal manufacturing facility in Mexico; problems which might affect the timing and/or the ultimate outcome of our development efforts in China; the loss of the services of key executives and employees; further terrorist acts; and our nation's response to terrorist attacks and the effects of these activities on capital and consumer spending. For more information concerning these and other possible risks, please refer to the Company's Form 10-K filed on May 26, 2004, filings 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 Consolidated Financial Statements

·	Summary Unaudited Income Statements and Related Data

About Plantronics

Plantronics introduced the first lightweight communications headset in 1962 and is recognized as the world leader in communications headsets. A publicly held company with approximately 3,600 employees, Plantronics is the leading provider of headsets to telephone companies and the business community worldwide. Plantronics headsets are also used widely in many Fortune 500 corporations and have been featured in numerous motion pictures and high-profile events, including Neil Armstrong's historic "One small step for man" transmission from the moon in 1969. Plantronics, Inc., headquartered in Santa Cruz, California, was founded in 1961 and maintains offices in 20 countries. Plantronics products are sold and supported through a worldwide network of authorized Plantronics marketing partners. Information about the Company and its products can be found at www.plantronics.com or by calling (800) 544-4660.

Plantronics is a registered trademark of Plantronics, Inc. Bluetooth is a trademark owned by Bluetooth SIG Inc., and is used by Plantronics under license. All other products or service names mentioned herein are trademarks of their respective owners.

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

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
	Quarter Ended						Year Ended
		March 31,			March 31,			March 31,			March 31,
		2004			2005			2004			2005

Net sales	$	121,440		$	147,822		$	416,965		$	559,995
Cost of sales		55,944			73,965			200,995			271,537
Gross profit		65,496			73,857			215,970			288,458
Gross profit %		53.9	%		50.0	%		51.8	%		51.5	%

Research, development and engineering		9,774			12,345			35,460			45,216
Selling, general and administrative		27,970			30,754			95,756			116,621
Total operating expenses		37,744			43,099			131,216			161,837
Operating income		27,752			30,758			84,754			126,621
Operating income %		22.9	%		20.8	%		20.3	%		22.6	%

Interest and other income (expense), net		(300	)		346			1,745			3,739
Income before income taxes		27,452			31,104			86,499			130,360
Income tax expense		6,506			2,369			24,220			30,161
Net income	$	20,946		$	28,735		$	62,279		$	100,199

% to Sales		17.2	%		19.4	%		14.9	%		17.9	%

Diluted earnings per common share	$	0.42		$	0.56		$	1.31		$	1.97
Shares used in diluted per share calculations		50,068			51,026			47,492			50,821



UNAUDITED CONSOLIDATED BALANCE SHEETS
		March 31,			March 31,
		2004			2005
ASSETS
Cash and cash equivalents	$	55,952		$	78,398
Marketable securities **		124,664			164,416
Total cash and marketable securities		180,616			242,814
Accounts receivable, net		64,344			87,558
Inventory, net		40,762			60,201
Deferred income taxes		13,967			8,675
Other current assets		10,938			7,446
Total current assets		310,627			406,694
Property, plant and equipment, net		42,124			59,745
Intangibles, net		3,440			2,948
Goodwill, net		9,386			9,386
Other assets		2,675			9,156
	$	368,252		$	487,929
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	19,075		$	20,316
Accrued liabilities		36,469			39,775
Income taxes payable		5,686			8,401
Total current liabilities		61,230			68,492
Deferred tax liability		7,719			8,109
Long-term liability		-			2,930
Total liabilities		68,949			79,531
Stockholders' equity		299,303			408,398
	$	368,252		$	487,929

** Certain balances related to Auction Rate Securities have been reclassified to represent March 31, 2005 classifications

Summary of Unaudited Statements of Operations and Related Data

		Q103			Q203			Q303			Q403			FY03			Q104			Q204			Q304			Q404			FY04			Q105			Q205			Q305			Q405			FY05
Net sales	$	80,268		$	82,370		$	86,811		$	88,059		$	337,508		$	92,786		$	95,117		$	107,622		$	121,440		$	416,965		$	131,370		$	130,220		$	150,583		$	147,822		$	559,995
Cost of sales		38,810			40,735			44,290			44,730			168,565			47,319			46,351			51,381			55,944			200,995			61,703			60,719			75,150			73,965			271,537
Gross profit		41,458			41,635			42,521			43,329			168,943			45,467			48,766			56,241			65,496			215,970			69,667			69,501			75,433			73,857			288,458
Gross profit %		51.6	%		50.5	%		49.0	%		49.2	%		50.1	%		49.0	%		51.3	%		52.3	%		53.9	%		51.8	%		53.0	%		53.4	%		50.1	%		50.0	%		51.5	%

Research, development and engineering		8,250			8,164			9,004			8,459			33,877			8,605			8,247			8,834			9,774			35,460			10,044			10,838			11,989			12,345			45,216
Selling, general and administrative		19,606			19,763			20,939			20,297			80,605			21,153			22,984			23,649			27,970			95,756			28,920			25,305			31,642			30,754			116,621
Operating expenses		27,856			27,927			29,943			28,756			114,482			29,758			31,231			32,483			37,744			131,216			38,964			36,143			43,631			43,099			161,837

Operating income		13,602			13,708			12,578			14,573			54,461			15,709			17,535			23,758			27,752			84,754			30,703			33,358			31,802			30,758			126,621
Operating income %		16.9	%		16.6	%		14.5	%		16.5	%		16.1	%		16.9	%		18.4	%		22.1	%		22.9	%		20.3	%		23.4	%		25.6	%		21.1	%		20.8	%		22.6	%

Income before income taxes		14,535			13,980			13,144			15,101			56,760			16,201			17,676			25,170			27,452			86,499			31,038			34,271			33,947			31,104			130,360
Income tax expense		4,361			2,450			3,943			4,530			15,284			4,860			5,303			7,551			6,506			24,220			8,691			9,596			9,505			2,369			30,161

Income tax expense as a percent of income before taxes		30.0	%		17.5	%		30.0	%		30.0	%		26.9	%		30.0	%		30.0	%		30.0	%		23.7	%		28.0	%		28.0	%		28.0	%		28.0	%		7.6	%		23.1	%

Net income		10,174			11,530			9,201			10,571			41,476			11,341			12,373			17,619			20,946			62,279			22,347			24,675			24,442			28,735			100,199
Diluted shares outstanding		47,722			47,298			46,197			45,190			46,584			45,077			46,372			47,501			50,068			47,492			50,428			50,638			51,365			51,026			50,821
EPS	$	0.21		$	0.24		$	0.20		$	0.23		$	0.89		$	0.25		$	0.27		$	0.37		$	0.42		$	1.31		$	0.44		$	0.49		$	0.48		$	0.56		$	1.97

Net revenues from unaffiliated customers:
Office and contact center		61,568			59,742			58,644			64,404			244,358			62,080			64,192			66,776			80,840			273,888			82,815			86,204			92,469			104,847			366,335
Mobile		10,125			11,779			16,145			12,039			50,088			18,518			18,370			29,528			25,914			92,330			34,458			28,815			35,469			26,519			125,261
Gaming and Computer		2,605			4,429			5,679			5,781			18,494			5,463			5,679			5,807			6,752			23,701			6,992			8,515			15,259			9,037			39,803
Other specialty products		5,970			6,420			6,343			5,835			24,568			6,725			6,876			5,511			7,934			27,046			7,105			6,686			7,386			7,419			28,596

Net revenues by geographical area
from unaffiliated customers:
Domestic		55,614			57,426			57,013			58,889			228,942			64,924			64,929			66,484			80,880			277,217			89,088			89,375			100,587			96,480			375,530
International		24,654			24,944			29,798			29,170			108,566			27,862			30,188			41,138			40,560			139,748			42,282			40,845			49,996			51,342			184,465

Balance Sheet accounts and metrics:
Accounts receivable, net**		43,450			50,445			50,946			49,605			49,605			49,285			51,364			63,612			64,344			64,344			68,039			73,345			89,178			87,558			87,558
Days sales outstanding		49			55			53			51						48			49			53			52						47			51			53			53
Inventory, net		37,695			35,659			34,884			33,758			33,758			37,510			37,764			39,178			40,762			40,762			47,418			65,940			75,074			60,201			60,201
Inventory turns		4.1			4.6			5.1			5.3						5.0			4.9			5.2			5.2						5.2			3.7			4.0			4.9