Press Release Details

Revenue and Earnings per Share Meet Guidance; Unified Communications Net Revenues Grow 22% Year-over-Year, 36% Year-to-Date

SANTA CRUZ, Calif.--(BUSINESS WIRE)--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 Relations
Genevieve Haldeman, 831-458-7343 (Media)
Vice President of Global Communications