PLANTRONICS INC /CA/ - FORM 8-K - EX-99.1 - EXHIBIT 99-1 PRESS RELEASE Q3FY11

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8-K - PLANTRONICS FORM 8-K - PLANTRONICS INC /CA/	form8-k.htm

PRESS RELEASE

FOR INFORMATION, CONTACT:

Greg Klaben

Vice President of Investor Relations

(831) 458-7533

FOR RELEASE at 1 P.M. PST

February 1, 2011

Plantronics Announces Third Quarter Fiscal 2011 Results

Revenue In-Line with Guidance, Non-GAAP Operating Income and EPS Exceed Guidance

SANTA CRUZ, CA – February 1, 2011 - Plantronics, Inc. (NYSE: PLT) today announced third quarter fiscal 2011 net revenues of $181.6 million, a 9% increase compared with net revenues of $165.9 million in the third quarter of fiscal 2010. Net revenues were within the guidance range of $180 million - $185 million provided on November 2, 2010. Plantronics' GAAP diluted earnings per share from continuing operations was $0.64 in the third quarter of fiscal 2011 compared with $0.47 in the same quarter of the prior year. Non-GAAP diluted earnings per share from continuing operations for the third quarter of fiscal 2011 increased 32% to $0.66 from $0.50 in the same quarter of the prior year. The difference between GAAP and non-GAAP earnings per share from continuing operations for the third quarter of fiscal 2011 includes stock-based compensation charges, restructuring and other related costs, purchase accounting amortization, all net of associated tax impact, and a tax benefit from expiration of certain statutes of limitations.

“We continue to see growth in our core Office and Contact Center market in all geographies as a result of improving global economic conditions,” stated Ken Kannappan, President & CEO. “We are increasingly well positioned to benefit from expected strong growth in the Unified Communications market over the next several years.”

“We generated approximately $29 million in cash flow from operations in the current quarter and repurchased over 280,000 shares of our common stock while maintaining a strong cash position with over $414 million in cash, cash equivalents and short-term investments. We also had $18.1 million in long-term investments at the end of the quarter,” stated Barbara Scherer, SVP Finance and Administration & CFO.

Improved economic conditions and the trend toward Unified Communications (“UC”) drove a 19% increase in net revenues of Office and Contact Center products compared to the third quarter of fiscal 2010. OCC net revenues were $122.9 million in the third quarter of fiscal 2011, compared with $103.1 million in the third quarter of fiscal 2010. Revenues of UC products were $13.5 million for the quarter ended December 31, 2010 and $36.6 million for the nine months ended December 31, 2010.

Mobile net revenues were $43.2 million in the third quarter of fiscal 2011, a decrease of 8% from $47.0 million in the third quarter of fiscal 2010. Gaming and Computer Audio net revenues were $10.5 million in the third quarter of fiscal 2011, a decrease of 5% from $11.1 million in the third quarter of fiscal 2010.

GAAP operating income in the third quarter of fiscal 2011 was $36.5 million, resulting in an operating margin of 20.1%. This compares to GAAP operating income of $27.8 million and an operating margin of 16.7% in the prior year quarter. Non-GAAP operating income in the third quarter of fiscal 2011 was $40.6 million compared to previously provided guidance of $37.5 million to $40.5 million and resulted in a non-GAAP operating margin of 22.4%. In the prior year quarter, non-GAAP operating income was $31.8 million with a non-GAAP operating margin of 19.2%.

Plantronics completed the sale of Altec Lansing, its Audio Entertainment Group (“AEG”) segment, effective as of December 1, 2009. All results of operations related to AEG (including the loss on the sale) were classified as discontinued operations for all periods presented.

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.

Plantronics’ business is inherently difficult to forecast, particularly with continuing uncertainty in global economic conditions, and there can be no assurance that the incoming orders it expects to receive over the balance of the current quarter will materialize.

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. In addition, our incoming order rate tends to be low during the last two weeks of December and the first half of January and then rises significantly into February and March.

Net revenues in the fourth quarter of fiscal 2011 are expected to be lower than the third quarter of fiscal 2011 due to seasonally lower demand for our consumer products. The March quarter has historically been a weaker quarter for consumer products than the December quarter and we expect that pattern to recur.

Subject to the foregoing, we are currently expecting the following range of financial results for continuing operations for the fourth quarter of fiscal 2011:

·	Net revenues of $167 million - $172 million;

·	Non-GAAP operating income of $40.0 million to $42.0 million inclusive of a $5.1 million gain related to our agreement to dismiss litigation involving the alleged theft of our trade secrets by a competitor and in exchange for a full release and settlement of the claims;

·	Non-GAAP diluted earnings per share of $0.58 - $0.62;

·	EPS cost of stock-based compensation to be approximately $0.06; and

·	GAAP diluted earnings per share of $0.52 to $0.56.

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 press release announcing its fourth quarter fiscal 2011 results or by other public disclosure. Any other statements speculating on the progress of the fourth quarter fiscal 2011 will not be based on internal information and should be assessed accordingly by investors.

Dividend Announcement

Plantronics also announced that its Board of Directors declared a quarterly dividend of $0.05 per share. The dividend will be payable on March 10, 2011 to stockholders of record at the close of business on February 22, 2011.

Conference Call Scheduled to Discuss Financial Results

Plantronics has scheduled a conference call to discuss third quarter fiscal 2011 results. The conference call will take place on Tuesday, February 1, 2011 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 #23921083 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.

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Use of Non-GAAP Financial Information

Plantronics excludes non-recurring transactions and non-cash expenses and charges such as restructuring and other related charges, the release of tax reserves due to the expiration of certain statutes of limitations, stock-based compensation expenses related to stock options, restricted stock and employee stock purchases, purchase accounting amortization and impairment of goodwill and long-lived assets from non-GAAP income from continuing operations, non-GAAP earnings per diluted share from continuing operations, non-GAAP operating income, non-GAAP gross margin, non-GAAP operating margin and non-GAAP effective tax rate on continuing operations. 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 by management as part of Plantronics’ 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, but non-GAAP financial measures are not meant to be considered in isolation or as a substitute for, or superior to, income from operations, net income or earnings per share 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) the UC market, including our position in the UC market, (ii) our estimates of GAAP and non-GAAP financial results for the fourth quarter of fiscal 2011, including revenue, operating income and earnings per share; (iii) our estimated stock-based compensation expense for the fourth quarter of fiscal 2011; (iv) trends and our predictions regarding ordering patterns for the fourth quarter of fiscal 2011, 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;

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) UC solutions may not be adopted with the breadth and speed in the marketplace that we currently anticipate; (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) our plans are dependent upon adoption of our UC solution by major platform providers 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, their rate of deployment, and their willingness to integrate their platforms with our solutions, and our support expenditures may substantially increase over time due to the complex nature of the platforms developed by the major UC providers as these platforms continue to evolve and become more commonly adopted;

·	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;

·	volatility in prices from our suppliers, including our manufacturers located in China, have and could negatively affect our profitability and/or market share;

·	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;

·	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

·	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.

For more information concerning these and other possible risks, please refer to Plantronics Annual Report on Form 10-K filed with the Securities and Exchange Commission on June 1, 2010, 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

·	Unaudited GAAP to Non-GAAP Statements of Operations Reconciliations for the Three and Nine Months ended December 31, 2010 and December 31, 2009

·	Summary Unaudited Statements of Operations and Related Data on a Non-GAAP Basis for Continuing Operations

About Plantronics

Plantronics is a global leader in audio communications for businesses and consumers. We have pioneered new trends in audio technology for 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, the logo design, and Clarity 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. / 345 Encinal Street / P.O. Box 1802 / Santa Cruz, California 95061-1802

831-426-6060 / Fax 831-426-6098

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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,
		2010			2009			2010			2009

Net revenues	$	181,585		$	165,935		$	510,525		$	451,555
Cost of revenues		85,777			85,566			239,310			238,251
Gross profit		95,808			80,369			271,215			213,304
Gross profit %		52.8	%		48.4%			53.1	%		47.2	%

Research, development and engineering		16,373			14,780			46,480			41,991
Selling, general and administrative		43,319			37,502			118,747			103,599
Restructuring and other related charges		(428	)		332			(428	)		1,767
Total operating expenses		59,264			52,614			164,799			147,357
Operating income		36,544			27,755			106,416			65,947
Operating income %		20.1	%		16.7	%		20.8	%		14.6	%

Interest and other income (expense), net		(20	)		1,422			615			3,653
Income from continuing operations before income taxes		36,524			29,177			107,031			69,600
Income tax expense from continuing operations		4,972			5,974			24,104			17,562
Income from continuing operations, net of tax		31,552			23,203			82,927			52,038
Discontinued operations:
Loss from operations of discontinued AEG segment (including loss on sale of AEG)		-			(515	)		-			(30,292	)
Income tax benefit on discontinued operations		-			(562	)		-			(11,408	)
Loss on discontinued operations		-			47			-			(18,884	)
Net income	$	31,552		$	23,250		$	82,927		$	33,154

% of net revenues		17.4	%		14.0	%		16.2	%		7.3	%

Earnings (loss) per common share:
Basic
Continuing operations	$	0.66		$	0.48		$	1.74		$	1.07
Discontinued operations	$	-		$	-		$	-		$	(0.39	)
Net income	$	0.66		$	0.48		$	1.74		$	0.68

Diluted
Continuing operations	$	0.64		$	0.47		$	1.68		$	1.06
Discontinued operations	$	-		$	-		$	-		$	(0.38	)
Net income	$	0.64		$	0.47		$	1.68		$	0.67

Shares used in computing earnings (loss) per common share:
Basic		47,649			48,632			47,621			48,632
Diluted		49,431			49,625			49,271			49,304

Tax rate from continuing operations		13.6	%		20.5	%		22.5	%		25.2	%

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


UNAUDITED CONSOLIDATED BALANCE SHEETS

	December 31,		March 31,
	2010		2010
ASSETS
Cash and cash equivalents	$	257,887	$	349,961
Short-term investments		156,419		19,231
Total cash, cash equivalents, and short-term investments		414,306		369,192
Accounts receivable, net		111,514		88,328
Inventory, net		64,032		70,518
Deferred income taxes		11,065		10,911
Other current assets		21,007		21,782
Assets held for sale		-		8,861
Total current assets		621,924		569,592
Long-term investments		18,091		-
Property, plant and equipment, net		67,376		65,700
Intangibles, net		2,539		3,449
Goodwill		14,005		14,005
Other assets		1,913		2,605
Total assets	$	725,848	$	655,351

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	22,216	$	23,779
Accrued liabilities		51,078		45,837
Total current liabilities		73,294		69,616
Deferred tax liability		2,981		551
Long-term income taxes payable		11,916		12,926
Other long-term liabilities		946		924
Total liabilities		89,137		84,017
Stockholders' equity		636,711		571,334
Total liabilities and stockholders' equity	$	725,848	$	655,351

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

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended										Nine Months Ended
	December 31, 2010										December 31, 2010
	GAAP			Excluded				Non-GAAP			GAAP			Excluded				Non-GAAP

Net revenues	$	181,585		$	-			$	181,585		$	510,525		$	-			$	510,525
Cost of revenues		85,777			(787	)	(1)		84,990			239,310			(2,317	)	(1)		236,993
Gross profit		95,808			787				96,595			271,215			2,317				273,532
Gross profit %		52.8	%						53.2	%		53.1	%						53.6	%

Research, development and engineering		16,373			(967	)	(1)		15,406			46,480			(2,938	)	(1)		43,542
Selling, general and administrative		43,319			(2,715	)	(1)		40,604			118,747			(7,679	)	(1)		111,068
Restructuring and other related charges		(428	)		428		(2)		-			(428	)		428		(2)		-
Total operating expenses		59,264			(3,254	)			56,010			164,799			(10,189	)			154,610
Operating income		36,544			4,041				40,585			106,416			12,506				118,922
Operating income %		20.1	%						22.4	%		20.8	%						23.3	%

Interest and other income (expense), net		(20	)		-				(20	)		615			-				615
Income from continuing operations before income taxes		36,524			4,041				40,565			107,031			12,506				119,537
Income tax expense from continuing operations		4,972			3,011		(3)		7,983			24,104			5,610		(3)		29,714
Income from continuing operations, net of tax	$	31,552		$	1,030			$	32,582		$	82,927		$	6,896			$	89,823

% of net revenues		17.4	%						17.9	%		16.2	%						17.6	%

Diluted earnings per common share from continuing operations	$	0.64						$	0.66		$	1.68						$	1.82
Shares used in diluted per share calculations		49,431							49,431			49,271							49,271

(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 and $1,602 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 from continuing operations, which are adjusted to exclude non-recurring and non-cash expenses and charges, such as restructuring and other related charges, stock-based compensation expenses related to stock options, restricted stock and employee stock purchases, purchase accounting amortization, impairment of goodwill and long-lived assets, and tax benefits from the expiration of certain statutes of limitations. Plantronics does not believe these expenses and charges are reflective of ongoing operating results and are not part of our target operating model. We have presented non-GAAP statements that only show our results to the income from continuing operations after tax line. 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.

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

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
	Three Months Ended										Nine Months Ended
	December 31, 2009										December 31, 2009
	GAAP			Excluded				Non-GAAP			GAAP			Excluded				Non-GAAP

Net revenues	$	165,935		$	-			$	165,935		$	451,555		$	-			$	451,555
Cost of revenues		85,566			(698	)	(1)		84,868			238,251			(7,202	)	(2)		231,049
Gross profit		80,369			698				81,067			213,304			7,202				220,506
Gross profit %		48.4	%						48.9	%		47.2	%						48.8	%

Research, development and engineering		14,780			(825	)	(1)		13,955			41,991			(2,453	)	(1)		39,538
Selling, general and administrative		37,502			(2,219	)	(1)		35,283			103,599			(6,435	)	(1)		97,164
Restructuring and other related charges		332			(332	)	(3)		-			1,767			(1,767	)	(3)		-
Total operating expenses		52,614			(3,376	)			49,238			147,357			(10,655	)			136,702
Operating income		27,755			4,074				31,829			65,947			17,857				83,804
Operating income %		16.7	%						19.2	%		14.6	%						18.6	%

Interest and other income, net		1,422			-				1,422			3,653			-				3,653
Income from continuing operations before income taxes		29,177			4,074				33,251			69,600			17,857				87,457
Income tax expense from continuing operations		5,974			2,303		(4)		8,277			17,562			4,826		(4)		22,388
Income from continuing operations, net of tax	$	23,203		$	1,771			$	24,974		$	52,038		$	13,031			$	65,069

% of net revenues		14.0	%						15.1	%		11.5	%						14.4	%

Diluted earnings per common share from continuing operations	$	0.47						$	0.50		$	1.06						$	1.32
Shares used in diluted per share calculations		49,625							49,625			49,304							49,304

(1) Excluded amount represents stock-based compensation and purchase accounting amortization.

(2) Excluded amount represents stock-based compensation, purchase accounting amortization and $5,205 of accelerated depreciation on assets related to restructuring activity.

(3) Excluded amount represents restructuring and other related charges.

(4) Excluded amount represents tax benefit from stock-based compensation, purchase accounting amortization and restructuring and other related charges and $1,156 related to a tax benefit from expiration

of certain statutes of limitations.

Use of Non-GAAP Financial Information

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Summary of Unaudited Statements of Operations and Related Data - Non-GAAP on Income From Continuing Operations
($ in thousands, except per share data)

		Q110			Q210			Q310			Q410			Q111			Q211			Q311
Net revenues	$	141,162		$	144,458		$	165,935		$	162,282		$	170,685		$	158,255		$	181,585
Cost of revenues		72,036			74,145			84,868			73,771			80,484			71,519			84,990
Gross profit		69,126			70,313			81,067			88,511			90,201			86,736			96,595
Gross profit %		49.0	%		48.7	%		48.9	%		54.5	%		52.8	%		54.8	%		53.2	%

Research, development and engineering		12,850			12,733			13,955			14,842			13,923			14,213			15,406
Selling, general and administrative		31,058			30,823			35,283			37,821			36,273			34,191			40,604
Operating expenses		43,908			43,556			49,238			52,663			50,196			48,404			56,010

Operating income		25,218			26,757			31,829			35,848			40,005			38,332			40,585
Operating income %		17.9	%		18.5	%		19.2	%		22.1	%		23.4	%		24.2	%		22.4	%

Income from continuing operations before income taxes		26,565			27,641			33,251			35,300			39,623			39,349			40,565
Income tax expense from continuing operations		7,172			6,939			8,277			9,129			10,711			11,020			7,983
Income tax expense as a percent
of income from continuing operations before taxes		27.0	%		25.1	%		24.9	%		25.9	%		27.0	%		28.0	%		19.7	%

Income from continuing operations, net of tax	$	19,393		$	20,702		$	24,974		$	26,171		$	28,912		$	28,329		$	32,582

Diluted EPS - continuing operations	$	0.40		$	0.42		$	0.50		$	0.53		$	0.58		$	0.58		$	0.66
Diluted shares outstanding		48,665			49,567			49,625			49,562			49,714			48,524			49,431

Net revenues from unaffiliated customers:
Office and Contact Center	$	95,923		$	93,503		$	103,096		$	111,875		$	117,580		$	117,951		$	122,949
Mobile		32,310			34,665			46,951			35,830			38,657			27,581			43,208
Gaming and Computer Audio		8,810			9,015			11,072			10,363			9,325			8,179			10,544
Clarity		4,119			7,275			4,816			4,214			5,123			4,544			4,884

Net revenues by geographic area
from unaffiliated customers:
Domestic	$	88,789		$	93,370		$	99,157		$	96,803		$	103,992		$	96,100		$	104,299
International		52,373			51,088			66,778			65,479			66,693			62,155			77,286

Balance Sheet accounts and metrics:
Accounts receivable, net 1	$	88,350		$	103,003		$	113,291		$	88,328		$	96,850		$	94,989		$	111,514
Days sales outstanding (DSO) 1		56			64			61			49			51			54			55
Inventory, net 2	$	90,258		$	78,026		$	70,914		$	70,518		$	78,224		$	69,845		$	64,032
Inventory turns 2		3.2			3.8			4.8			4.2			4.1			4.1			5.3

1 Accounts receivable, net is presented on a consolidated basis including discontinued operations as Plantronics does not maintain balance by segment; DSO is calculated on revenues from continuing operations and consolidated Accounts receivable.
2 Inventory, net and inventory turns reflect amounts in continuing operations only.

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PLANTRONICS INC /CA/ - FORM 8-K - EX-99.1 - EXHIBIT 99-1 PRESS RELEASE Q3FY11 - February 1, 2011

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