Plantronics (POLY) 8-K Plantronics Reports Record Revenues

Exhibit 99.1

PRESS RELEASE

Plantronics Reports Record Revenues

FOR INFORMATION, CONTACT: Jon Alvarado Treasurer and Director, Investor Relations (831) 458-7533 FOR IMMEDIATE RELEASE January 24, 2006

SANTA CRUZ, CA - January 24, 2006 - Plantronics, Inc., (NYSE: PLT)today reported third quarter revenues of $222.5 million and earnings per share of $0.46, above the guidance it provided on November 1, 2005. Record revenues of $161.5 million were achieved by the Audio Communications Group (“ACG”) and revenues from the Audio Entertainment Group added $61 million to the total.

Audio Communications Group

ACG’s record revenues of $161.5 million were up approximately 7% from $150.6 million in the year ago quarter. Revenue growth was driven by our wireless office headsets which represented about 25% of total ACG revenues in comparison to approximately 13% a year ago. Demand for our office wireless headsets was up both in North America and also in EMEA. The Voyager 510S contributed to the increase, but the CS50 and CS60 product families also continued to grow and accounted for the majority of the growth, even in comparison to the September quarter.

On the strength of our new Bluetooth consumer headset line, revenues from Bluetooth headsets for cell phone applications were up sharply versus a year ago, though revenues from corded mobile headsets were down resulting in lower overall revenues from mobile headsets in comparison to the third quarter a year ago. Our line of Bluetooth headsets has enjoyed a good reception in the market and the Pulsar 590 and the Explorer 320 were both Best of Innovations award honorees at the International Consumer Electronics show. In addition, the Discovery 640 received the prestigious Industry Forum (iF) Design Award, a competition that critiques more than 2,000 products from 37 countries.

Finally, in comparison to a year ago, gaming and computer product revenues were down in comparison to the all-time high reached in the third quarter of 2005 which had been primarily driven by the exclusive promotion of a gaming headset for use with Halo 2.

Ken Kannappan, President and Chief Executive Officer, noted, “The benefits of freedom and mobility continue to be validated, both by the growth in wireless office products, and the reception to our Bluetooth line of mobile headsets. Our branding and advertising campaign has increased awareness and consideration of Plantronics and we are cautiously optimistic about the results to date.”

Gross margins for the Audio Communications Group were approximately 46.4%, down from 50.1% a year ago but up from 45.5% in the September quarter and in line with our expectations. Relative to the year ago quarter, the principal reason for the decline was higher manufacturing costs, in part the result of expanding capacity for anticipated future growth and in part the result of yields and unit cost on new products not yet at target levels. Higher warranty costs and larger provisions for excess and obsolete inventory were the other key factors for the decline relative to a year ago, though warranty costs were stable relative to the September quarter and requirements for E&O were lower than the September quarter. Finally, in comparison to the September quarter, progress was made on improving yields and reducing manufacturing costs.

Operating expenses were up $5.5 million versus the year ago quarter with the principal drivers being the $3.3 million spent during the quarter on our national advertising campaign partially offset by reductions in other marketing programs, and expansion of R&D. As a result of higher revenues and improved efficiencies in some areas, our total operating expenses increased by just 1.4 points to 30.4% of revenues despite the substantial increase in branding, advertising and demand generation activities and the $2 million increase in spending for new product development.

Audio Entertainment Group

Driven by strong sales of the inMotion™ portable audio line of products, Altec Lansing achieved record revenues of $61 million. (Revenues of Altec Lansing products account for all the revenues of the Audio Entertainment Group.) In accordance with purchase accounting, we recorded non-cash charges of approximately $4.2 million, including $3.3 million to cost of goods sold, and $0.9 million in S, G&A principally for amortization of intangible assets acquired. Including these non-cash charges associated with purchase accounting, the acquisition was accretive to earnings per share by $0.05 in the quarter.

“The transition to digital media, a key element of our Audio Entertainment strategy, continues to accelerate at a rapid pace. Digital music downloads grew 146% in 2005 vs. 2004. Apple sold 14 million iPods in the 4th quarter, 2-3 million more than the most optimistic forecasts, and demand for speakers for these digital players continues to grow with consumers choosing the Altec Lansing line in record numbers,” said Ken Kannappan.

Balance Sheet and Cash Flow

Our balance sheet is presented on a consolidated basis, including the assets and liabilities of both our principal business segments. Highlights for the quarter include that we repurchased 798,500 shares of stock for a total of $22.4 million, paid down $9 million on our line of credit and generated $8.5 million in cash flow from operations. Principally as a result of these factors, our cash and short term investments amounted to $58.2 million in comparison to $91.2 million as of September 30, 2005. We had strong cash collections, a full quarter of Altec Lansing revenues, and reduced our days sales outstanding to 51 in comparison to 60 for the September quarter. Inventory performance also improved from 4 turns in the September quarter to 4.8 turns in the December quarter as a result of a full quarter of Altec Lansing and a reduction of Altec Lansing inventory after a seasonally strong quarter for which they had built inventory in September.

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Business Outlook

The following statements are based on current information and expectations. For the fourth quarter, we currently estimate that:

· Revenues for the fourth quarter of fiscal 2006 will be approximately $200 to $210 million in total bringing fiscal year revenues to approximately $744 to $754 million. We expect ACG revenues to increase modestly and AEG revenues to decline sharply. (AEG’s revenues are almost entirely derived from retail channels and the consumer audio business is highly seasonal with the December quarter being the strongest historically.)  

·Earnings per share for the fourth quarter of fiscal 2006 will be in a range of $0.39 to $0.44. We expect earnings from ACG to increase but to be offset by decreases within AEG. Included in these estimates is our expectation that we will incur $1.8 million in purchase accounting related charges for amortization of intangible assets acquired, against which no tax benefit is available. Based on our estimated range for the fourth quarter, full year EPS are expected to be in the range of $1.56 to $1.61.

Plantronics does not intend to update these estimates except by its next press release announcing its fourth quarter and fiscal year 2006 results, which we plan to release on Tuesday, May 2, 2006. Any statements by persons outside Plantronics speculating on the final outcome of the fourth quarter and the fiscal year will not be based on internal Company information and should be assessed accordingly by investors.

We have been evaluating the potential to repatriate cash from offshore earnings and profits under the American Jobs Creation Act, and also evaluating borrowing offshore within that same context. Our analysis is now complete and we have decided not to repatriate cash under this program.

Conference Call Scheduled to Discuss Financial Results

Plantronics has scheduled a conference call to discuss the contents of this release. The conference call will take place today, Tuesday, January 24, 2006 at 2:00 PM (PST). 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. 

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A replay of the call with the conference ID #4413105 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

This release contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Specific forward-looking statements include our estimates of revenues and earnings for the fourth quarter of fiscal 2006. These forward-looking statements involve a number of risks and uncertainties, and are based on current information and management judgment.

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

· Our operating results are difficult to predict;  

· The market for our products is characterized by rapidly changing technology, short product life cycles, and frequent new product introductions, and we may not be able to develop, manufacture or market new products in response to changing customer requirements and new technologies;  

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

· The inability to successfully develop, manufacture and market new products and achieve volume shipment schedules to meet demand;  

· If demand for iPod products decreases, demand for certain of our portable products could be negatively affected;   

· If Apple does not renew or cancels our licensing agreement, our products may not be compatible with iPods, resulting in loss of revenues and excess inventories, which would negatively impact our financial results;  

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

· 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;  

· 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: 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 manufacturing facilities in Mexico or in China, further terrorist acts, our nation's response to terrorist attacks and the effects of these activities on capital and consumer spending, and the loss of the services of key executives and employees.  

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For more information concerning these and other possible risks, please refer to the Company's Annual Report on Form 10-K filed on May 31, 2005, quarterly reports filed on Form 10-Q and other filings with the Securities and Exchange Commission as well as recent press releases. These filings can be accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html

Financial Summaries

The following related charts are provided:

· Summary Unaudited Condensed Consolidated Financial Statements

· Summary Unaudited Condensed Statements of Operations by Segment

· Summary Unaudited Statements of Operations and Related Data

About Plantronics

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

Plantronics, Altec Lansing, Clarity, VolumeLogic and Sound Innovation are either registered trademarks or trademarks 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. / 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
		Quarter Ended						Nine Months Ended
		December 31,			December 31,			December 31,			December 31,
		2004			2005			2004			2005
Net revenues	$	150,583		$	222,512		$	412,173		$	543,646
Cost of revenues		75,150			128,486			197,572			302,469
Gross profit		75,433			94,026			214,601			241,177
Gross profit %		50.1	%		42.3	%		52.1	%		44.4	%
Research, development and engineering		11,989			15,980			32,871			45,868
Selling, general and administrative		31,642			43,130			85,867			110,845
Total operating expenses		43,631			59,110			118,738			156,713
Operating income		31,802			34,916			95,863			84,464
Operating income %		21.1	%		15.7	%		23.3	%		15.5	%
Interest and other income (expense), net		2,145			(596	)		3,393			667
Income before income taxes		33,947			34,320			99,256			85,131
Income tax expense		9,505			12,307			27,792			27,713
Net income	$	24,442		$	22,013		$	71,464		$	57,418
% of Net revenues		16.2	%		9.9	%		17.3	%		10.6	%
Diluted earnings per common share	$	0.48		$	0.46		$	1.41		$	1.18
Shares used in diluted per share calculations		51,365			48,165			50,811			48,768
UNAUDITED CONSOLIDATED BALANCE SHEETS
		March 31,			December 31,
		2005			2005
ASSETS
Cash and cash equivalents	$	78,398		$	58,191
Short term investments		164,416			-
Total cash, cash equivalents, and
short term investments		242,814			58,191
Accounts receivable, net		87,558			126,169
Inventory, net		60,201			106,573
Deferred income taxes		8,675			14,130
Other current assets		7,446			15,604
Total current assets		406,694			320,667
Property, plant and equipment, net		59,745			86,792
Intangibles, net		2,948			111,283
Goodwill		9,386			54,003
Other assets		9,156			8,828
	$	487,929		$	581,573
LIABILITIES AND STOCKHOLDERS' EQUITY
Line of credit	$	-		$	32,057
Accounts payable		20,316			50,568
Accrued liabilities		39,775			49,691
Income taxes payable		11,080			14,687
Total current liabilities		71,171			147,003
Deferred tax liability		8,109			28,913
Long-term liability		2,930			1,866
Total liabilities		82,210			177,782
Stockholders' equity		405,719			403,791
	$	487,929		$	581,573

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AUDIO COMMUNICATIONS GROUP
SUMMARY CONDENSED FINANCIAL STATEMENTS
(in thousands, except per share data)
UNAUDITED STATEMENTS OF OPERATIONS
		Quarter Ended						Nine Months Ended
		December 31,			December 31,			December 31,			December 31,
		2004			2005			2004			2005
Net revenues	$	150,583		$	161,519		$	412,173		$	460,728
Cost of revenues		75,150			86,598			197,572			244,217
Gross profit		75,433			74,921			214,601			216,511
Gross profit %		50.1	%		46.4	%		52.1	%		47.0	%
Research, development and engineering		11,989			13,936			32,871			41,873
Selling, general and administrative		31,642			35,193			85,867			98,969
Total operating expenses		43,631			49,129			118,738			140,842
Operating income		31,802			25,792			95,863			75,669
Operating income %		21.1	%		16.0	%		23.3	%		16.4	%
Interest and other income (expense), net		2,145			858			3,393			2,841
Income before income taxes		33,947			26,650			99,256			78,510
Income tax expense		9,505			7,195			27,792			21,197
Net income	$	24,442		$	19,455		$	71,464		$	57,313
% of Net revenues		16.2	%		12.0	%		17.3	%		12.4	%
Diluted earnings per common share	$	0.48		$	0.40		$	1.41		$	1.18
Shares used in diluted per share calculations		51,365			48,165			50,811			48,768
AUDIO ENTERTAINMENT GROUP
SUMMARY CONDENSED FINANCIAL STATEMENTS
(in thousands, except per share data)
UNAUDITED STATEMENTS OF OPERATIONS
					Quarter Ended						Nine Months Ended
					December 31,						December 31,
					2005						2005
Net revenues				$	60,993					$	82,918
Cost of revenues					41,888						58,252
Gross profit					19,105						24,666
Gross profit %					31.3	%					29.7	%
Research, development and engineering					2,044						3,995
Selling, general and administrative					7,937						11,876
Total operating expenses					9,981						15,871
Operating income					9,124						8,795
Operating income %					15.0	%					10.6	%
Interest and other income (expense), net					(1,454	)					(2,174	)
Income before income taxes					7,670						6,621
Income tax expense					5,112						6,516
Net income				$	2,558					$	105
% of  Net revenues					4.2	%					0.1	%
Diluted earnings per common share				$	0.05					$	0.00
Shares used in diluted per share calculations					48,165						48,768

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Summary of Unaudited Statements of Operations and Related Data
		Q104			Q204			Q304			Q404			FY04			Q105			Q205			Q305			Q405			FY05			Q106			Q206 *			Q306			FY06 *
Net revenues	$	92,786		$	95,117		$	107,622		$	121,440		$	416,965		$	131,370		$	130,220		$	150,583		$	147,822		$	559,995		$	148,909		$	172,225		$	222,512		$	543,646
Cost of revenues		47,319			46,351			51,381			55,944			200,995			61,703			60,719			75,150			73,965			271,537			75,760			98,223			128,486			302,469
Gross profit		45,467			48,766			56,241			65,496			215,970			69,667			69,501			75,433			73,857			288,458			73,149			74,002			94,026			241,177
Gross profit %		49.0	%		51.3	%		52.3	%		53.9	%		51.8	%		53.0	%		53.4	%		50.1	%		50.0	%		51.5	%		49.1	%		43.0	%		42.3	%		44.4	%
Research, development and engineering		8,605			8,247			8,834			9,774			35,460			10,044			10,838			11,989			12,345			45,216			13,766			16,122			15,980			45,868
Selling, general and administrative		21,153			22,984			23,649			27,970			95,756			28,920			25,305			31,642			30,754			116,621			29,892			37,823			43,130			110,845
Operating expenses		29,758			31,231			32,483			37,744			131,216			38,964			36,143			43,631			43,099			161,837			43,658			53,945			59,110			156,713
Operating income		15,709			17,535			23,758			27,752			84,754			30,703			33,358			31,802			30,758			126,621			29,491			20,057			34,916			84,464
Operating income %		16.9	%		18.4	%		22.1	%		22.9	%		20.3	%		23.4	%		25.6	%		21.1	%		20.8	%		22.6	%		19.8	%		11.6	%		15.7	%		15.5	%
Income before income taxes		16,201			17,676			25,170			27,452			86,499			31,038			34,271			33,947			31,104			130,360			29,723			21,088			34,320			85,131
Income tax expense		4,860			5,303			7,551			6,506			24,220			8,691			9,596			9,505			5,048			32,840			8,025			7,381			12,307			27,713
Income tax expense as a percent
of income before taxes		30.0	%		30.0	%		30.0	%		23.7	%		28.0	%		28.0	%		28.0	%		28.0	%		16.2	%		25.2	%		27.0	%		35.0	%		35.9	%		32.6	%
Net income		11,341			12,373			17,619			20,946			62,279			22,347			24,675			24,442			26,056			97,520			21,698			13,707			22,013			57,418
Diluted shares outstanding		45,077			46,372			47,501			50,068			47,492			50,428			50,638			51,365			51,026			50,821			49,335			49,007			48,165			48,768
EPS	$	0.25		$	0.27		$	0.37		$	0.42		$	1.31		$	0.44		$	0.49		$	0.48		$	0.51		$	1.92		$	0.44		$	0.28		$	0.46		$	1.18
Net revenues from unaffiliated customers:
Audio Communication Group
Office and Contact Center		62,080			64,192			66,776			80,840			273,888			82,815			86,204			92,470			104,846			366,335			105,425			107,475			114,290			327,190
Mobile		18,518			18,370			29,528			25,914			92,330			34,458			28,815			35,469			26,520			125,262			26,868			26,682			29,973			83,523
Gaming and Computer		5,463			5,679			5,807			6,752			23,701			6,992			8,515			15,259			9,038			39,804			9,344			8,906			9,419			27,669
Other specialty products		6,725			6,876			5,511			7,934			27,046			7,105			6,686			7,385			7,418			28,594			7,272			7,237			7,837			22,346
Audio Entertainment Group		-			-			-			-			-			-			-			-			-			-			-			21,925			60,993			82,918
Net revenues by geographical area from unaffiliated customers:
Domestic		64,924			64,929			66,484			80,880			277,217			89,088			89,375			100,587			96,480			375,530			96,685			113,431			139,033			349,149
International		27,862			30,188			41,138			40,560			139,748			42,282			40,845			49,996			51,342			184,465			52,224			58,794			83,479			194,497
Balance Sheet accounts and metrics:
Accounts receivable, net **		49,285			51,364			63,612			64,344			64,344			68,039			73,345			89,178			87,558			87,558			88,576			115,078			126,169			126,169
Days sales outstanding		48			49			53			52						47			51			53			53						54			60			51
Inventory, net		37,510			37,764			39,178			40,762			40,762			47,418			65,940			75,074			60,201			60,201			56,441			99,167			106,573			106,573
Inventory turns		5.0			4.9			5.2			5.2						5.2			3.7			4.0			4.9						5.4			4.0			4.8
* Includes Altec Lansing since the acquisition as of August 18, 2005.
** Certain balances related to other receivables have been reclassified from accounts receivable, net to other current assets, to represent March 31, 2005 classifications.

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