PLANTRONICS INC /CA/ - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number 1-12696

Plantronics, Inc.

(Exact name of registrant as specified in its charter)

Delaware	77-0207692
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

345 Encinal Street

Santa Cruz, California 95060

(Address of principal executive offices)

(Zip Code)

(831) 426-5858

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X ] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) Yes [X ] No [ ]

The number of shares outstanding of Plantronics’ common stock as of October 29, 2004 was 48,371,961.

Plantronics, Inc.

FORM 10-Q

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION	Page No.

Item 1. Financial Statements (unaudited):
Balance Sheets as of March 31, 2004 and September 30, 2004	3
Statements of Operations for the Three and Six Months Ended September 30, 2003 and 2004	4
Statements of Cash Flows for the Three and Six Months Ended September 30, 2003 and 2004	5
Notes to Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	30
Item 4. Controls and Procedures	32
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	33
Item 6. Exhibits	33
Signatures	35


	2

Part I -- FINANCIAL INFORMATION

Item 1. Financial Statements

PLANTRONICS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

		March 31,			September 30,
		2004			2004
ASSETS
Current assets:
Cash and cash equivalents	$	180,616		$	210,283
Marketable securities		-			4,000
Accounts receivable, net		64,999			73,892
Inventories		40,762			65,940
Deferred income taxes		13,967			8,046
Other current assets		10,283			10,750
Total current assets		310,627			372,911
Property, plant and equipment, net		42,124			49,959
Intangibles, net		3,440			3,326
Goodwill		9,386			9,386
Other assets		2,675			2,683
Total assets	$	368,252		$	438,265


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	19,075		$	29,206
Accrued liabilities		36,469			38,292
Income taxes payable		5,686			6,484
Total current liabilities		61,230			73,982
Deferred tax liability		7,719			8,121
Total liabilities		68,949			82,103


Stockholders' equity:
Preferred stock, $0.01 par value per share; 1,000 shares authorized, no shares outstanding		-			-
Common stock, $0.01 par value per share; 100,000 shares authorized, 63,635 shares and 64,037 shares outstanding at March 31, 2004 and September 30, 2004, respectively		636			641
Additional paid-in capital		248,495			260,075
Accumulated other comprehensive income		681			1,000
Retained earnings		347,629			392,253
		597,441			653,969
Less: Treasury stock (common: 16,029 and 15,974 shares at March 31, 2004 and September 30, 2004, respectively) at cost		(298,138	)		(297,807	)
Total stockholders' equity		299,303			356,162
Total liabilities and stockholders' equity	$	368,252		$	438,265

See Notes to Unaudited Condensed Consolidated Financial Statements


	3

PLANTRONICS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended				Six Months Ended
	September 30,				September 30,
		2003		2004		2003		2004
Net sales	$	95,117	$	130,220	$	187,903	$	261,590
Cost of sales		46,351		60,719		93,670		122,422
Gross profit		48,766		69,501		94,233		139,168

Operating expenses:
Research, development and engineering		8,247		10,838		16,852		20,882
Selling, general and administrative		22,984		25,305		44,137		54,225
Total operating expenses		31,231		36,143		60,989		75,107
Operating income		17,535		33,358		33,244		64,061
Interest and other income, net		141		913		633		1,248
Income before income taxes		17,676		34,271		33,877		65,309
Income tax expense		5,303		9,596		10,163		18,287
Net income	$	12,373	$	24,675	$	23,714	$	47,022

Basic earnings per common share (Note 5)	$	0.28	$	0.51	$	0.54	$	0.98
Shares used in basic per share calculations		44,052		47,977		43,861		47,851

Diluted earnings per common share (Note 5)	$	0.27	$	0.49	$	0.52	$	0.93
Shares used in diluted per share calculations		46,372		50,638		45,672		50,532

See Notes to Unaudited Condensed Consolidated Financial Statements


	4

PLANTRONICS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Six Months Ended
	September 30,
	2003			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	23,714		$	47,022
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,350			5,609
Deferred income taxes		-			6,323
Income tax benefit associated with stock option exercises		3,087			1,818
Loss on disposal of fixed assets		12			406
Changes in assets and liabilities					-
Accounts receivable, net		(1,530	)		(8,893	)
Inventory, net		(4,006	)		(25,178	)
Other current assets		138			(467	)
Other assets		51			(305	)
Accounts payable		4,647			10,131
Accrued liabilities		5,305			2,465
Income taxes payable		(5,829	)		798
Cash provided by operating activities		31,939			39,729

CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of marketable securities		5,020			-
Purchase of marketable securities		-			(4,000	)
Purchase of equity investment		(450	)		-
Capital expenditures and other assets		(4,946	)		(14,080	)
Cash (used for) investing activities		(376	)		(18,080	)

CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock		(1,833	)		-
Proceeds from sale of treasury stock		1,564			1,831
Proceeds from exercise of stock options		6,868			8,265
Payment of cash dividends					(2,398	)
Cash provided by financing activities		6,599			7,698
Effect of exchange rate changes on cash and cash equivalents		(761	)		320
Net increase in cash and cash equivalents		37,401			29,667
Cash and cash equivalents at beginning of the period		54,704			180,616
Cash and cash equivalents at end of the period	$	92,105		$	210,283

SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest	$	65		$	72
Income taxes	$	12,932		$	16,742

See Notes to Unaudited Condensed Consolidated Financial Statements


	5

PLANTRONICS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Plantronics, Inc. ("Plantronics," "we," or "our") have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. These financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, consistent in all material respects with those applied in our Annual Report on Form 10-K for the fiscal year ended March 31, 2004. The interim financial information is unaudited, but reflects all normal recurring adjustments which are, in the opinion of management, necessary to provide a fair statement of results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Certain prior period balances have been reclassified to conform to the current period presentation. The interim financial statements should be read in connection with the financial statements and notes thereto in our Annual Report on Form 10-K for the fiscal year ended March 31, 2004.

Subsequent to our earnings press release dated October 19, 2004, we reclassified approximately $1.7 million from operating cash flows to cash flows from investing activities on our Consolidated Statements of Cash Flows. This reduced our cash provided by operating activities from $8.1 million to $6.4 million and $41.5 million to $39.7 million for the three and six months ended September 30, 2004, respectively. There were no changes to our net increase in cash and cash equivalents line item on the Statement of Cash Flows or to the cash and cash equivalents line item on our Condensed Consolidated Balance Sheets.

2. PERIODS PRESENTED

Our fiscal year-end was April 3, 2004 and the second fiscal quarter-end was October 2, 2004. For purposes of presentation, we have indicated our accounting year as ending on March 31, and our interim quarterly periods as ending on the applicable month-end. Our fiscal quarters ended September 30, 2003 and September 30, 2004 each consisted of thirteen weeks.


	6

3. DETAILS OF CERTAIN BALANCE SHEET COMPONENTS (IN THOUSANDS)

March 31,

September 30,

2004

2004

Accounts receivable, net:

Accounts receivable

$

82,562

$

92,995

Less: sales returns, promotions and rebates

(14,027

)

(15,655

)

Less: allowance for doubtful accounts

(3,536

)

(3,448

)

$

64,999

$

73,892

Inventories:

Finished goods

$

23,543

$

37,683

Work in process

1,349

1,802

Purchased parts

15,870

26,455

$

40,762

$

65,940

Property, plant and equipment, net:

Land

$

6,039

$

6,014

Buildings and improvements (useful life 7-30 years

25,952

28,867

Machinery and equipment (useful life 2-10 years

61,462

65,230

93,453

100,111

Less: accumulated depreciation

(51,329

)

(50,152

)

$

42,124

$

49,959

Accrued liabilities:

Employee benefits

$

16,373

$

15,314

Accrued advertising and sales and marketing

3,101

4,571

Warranty accrual

6,795

6,340

Accrued losses on hedging instruments

1,937

1,753

VAT and other non-income tax accruals

2,945

2,542

Accrued other

5,318

7,772

$

36,469

$

38,292

4. FOREIGN CURRENCY TRANSACTIONS

The functional currency of our Mexican manufacturing operations and design center, foreign sales and marketing offices, and our foreign research and development facilities is the local currency of the respective operations. For these foreign operations, we translate assets and liabilities into United States dollars using period-end exchange rates in effect as of the balance sheet date and translate revenues and expenses using average monthly exchange rates. The resulting cumulative translation adjustments are included in "Accumulated Other Comprehensive Income" and as a separate component of stockholders' equity in the Consolidated Balance Sheets (see Note 9).

The functional currency of our European sales and logistics headquarters is the United States dollar. For this foreign operation, assets and liabilities are remeasured at the period-end or historical rates as appropriate. Revenues and expenses are remeasured at average monthly rates. Currency transaction gains and losses are recognized in current operations.

Plantronics has entered into foreign currency forward contracts, which typically mature in one month, to hedge a portion of our exposure to foreign currency fluctuations in expected foreign currency-denominated receivables, payables and cash balances. We record on the balance sheet at each reporting period the fair value of our forward contracts and record any fair value adjustments in results of operations. Gains and losses associated with currency rate changes on the contracts are recorded in results of operations, as other income (expense), offsetting transaction gains and losses on the related assets and liabilities. Plantronics does not enter into foreign currency forward contracts for trading purposes.


	7

As of September 30, 2004, we had foreign currency forward contracts of approximately €5.1 million and £1.9 million denominated in Euros and Great British Pounds, respectively. These forward contracts hedge against a portion of our expected foreign currency-denominated receivables, payables and cash balances. The following table summarizes our net currency position, and approximate U.S. dollar equivalent, at Septem ber 30, 2004 (local currency and dollar amounts in thousands):

Local Currency

USD Equivalent

Position

Maturity

EUR

5,086

6,300

Sell

1 month

GBP

1,896

3,400

Sell

1 month

Foreign currency transactions, net of the effect of hedging activity on forward contracts, resulted in a net loss of approximately $0.1 million for the fiscal quarter ended September 30, 2004, compared to neither a net gain nor loss for the fiscal quarter ended September 30, 2003, which is included in interest and other income, net in the results of operations.

Plantronics periodically hedges foreign currency forecasted transactions related to sales with currency options. These transactions are designated as cash flow hedges. The effective portion of the hedge gain or loss is initially reported as a component of accumulated other comprehensive income (loss) and subsequently reclassified into earnings when the hedged exposure affects earnings. Any ineffective portions of related gains or losses are recorded in the statements of operations immediately. On a monthly basis, Plantronics enters into option contracts with a one-year term. Plantronics does not purchase options for trading purposes. As of September 30, 2004, we had foreign currency put and call option contracts of approximately €36.4 million and £11.8 million. Our option contracts hedge a portion of our forecasted foreign denominated sales. The following table summarizes option positions at September 30, 2004 (in thousands):

	Balance Sheet						Income Statement						Income Statement
	Accumulated Other						Net Sales						Net Sales
	Comprehensive Income/(loss)						Three Months Ended September 30,						Six Months Ended September 30,

		March 31, 2004			September 30, 2004			2003			2004			2003			2004
Realized loss on closed transactions	$	-		$	-		$	(326	)	$	(925	)	$	(510	)	$	(1,413	)
Recognized but unrealized loss on open transactions		(1,937	)		(1,174	)		-			-			-			-
	$	(1,937	)	$	(1,174	)	$	(326	)	$	(925	)	$	(510	)	$	(1,413	)

Foreign currency transactions related to cash flow hedges on option contracts resulted in a net reduction to revenue of $0.9 million and $1.4 million for the three and six months ended September 30, 2004 and $0.3 million and $0.5 million for the three and six months ended September 30, 2003, respectively.

5. COMPUTATION OF EARNINGS PER COMMON SHARE

Basic Earnings Per Share ("EPS") is computed by dividing net income available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Basic EPS excludes the dilutive effect of stock options. Diluted EPS gives effect to all dilutive potential common shares outstanding during a period. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased using the proceeds from the assumed exercise of stock options.


	8

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended September 30, 2003 and 2004 (in thousands, except earnings per share):


	Three Months Ended				Six Months Ended
	September 30				September 30
		2003		2004		2003		2004

Net income	$	12,373	$	24,675	$	23,714	$	47,022

Weighted average shares-basic		44,052		47,977		43,861		47,851
Effect of potential dilutive employee stock options		2,320		2,661		1,811		2,681
Weighted average shares-diluted		46,372		50,638		45,672		50,532

Net income per share-basic	$	0.28	$	0.51	$	0.54	$	0.98

Net income per share-diluted	$	0.27	$	0.49	$	0.52	$	0.93

Dilutive potential common shares consist of outstanding employee stock options. Outstanding stock options to purchase approximately 2.1 million and 0.4 million shares of Plantronics' common stock at September 30, 2003 and September 30, 2004, respectively, were excluded from the computation of diluted earnings per share because they were out-of-the-money and therefore anti-dilutive. The higher average market value of Plantronics' common stock during the fiscal quarter ended September 30, 2004 versus the comparable period in 2003 contributed to the increased number of dilutive potential common shares included in the diluted earnings per share calculation.

6. PRO FORMA EFFECTS OF STOCK-BASED COMPENSATION

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans based on the fair value of options granted. We have elected to continue to account for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations, and to provide additional disclosures with respect to the pro forma effects of adoption had we recorded compensation expense as provided in SFAS 123 and Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure as it Relates to Interim Disclosures."

All options in the six months ended September 30, 2003 and 2004, respectively, were granted at an exercise price equal to the market value of Plantronics’ common stock on the date of grant. The following table sets forth net income and earnings per share amounts that would have been reported if Plantronics had applied the fair value recognition provisions of SFAS 123 to stock-based employee compensation for the three and six months ended September 30, 2003 and 2004 (in thousands, except earnings per share):

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2003			2004			2003			2004
Net income:
Net income - as reported	$	12,373		$	24,675		$	23,714		$	47,022
Less stock based compensation expense determined under fair value based method, net of taxes from:
Employee stock options plans		(3,121	)		(4,200	)		(6,527	)		(8,257	)
Employee stock purchase plans		(72	)		(100	)		(106	)		(176	)
Net income - pro forma	$	9,180		$	20,375		$	17,081		$	38,589

Basic net income per share - as reported	$	0.28		$	0.51		$	0.54		$	0.98
Basic net income per share - pro forma	$	0.21		$	0.42		$	0.39		$	0.81
Diluted net income per share - as reported	$	0.27		$	0.49		$	0.52		$	0.93
Diluted net income per share - pro forma	$	0.20		$	0.40		$	0.37		$	0.76


	9

The fair value of options at the date of grant was estimated using the Black-Scholes model. The following assumptions were used and the following weighted-average fair values resulted (share information and pro forma expense amounts are stated in thousands, current period pro forma expenses may not be an indicator of future expense):

	Stock Option						Stock Option						Employee						Employee
	Plans						Plans						Stock Purchase Plan						Stock Purchase Plan
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	September 30,						September 30,						September 30,						September 30,
	2003			2004			2003			2004			2003			2004			2003			2004
Expected dividend yield		0.0	%		0.5	%		0.0	%		0.5	%		0.0	%		0.5	%		0.0	%		0.5	%
Expected life (in years		6.0			5.0			6.0			5.1			0.5			0.5			0.5			0.5
Expected volatility		55.6	%		58.2	%		55.7	%		58.3	%		31.7	%		39.6	%		31.7	%		39.6	%
Risk-free interest rate		3.3	%		3.3	%		3.2	%		3.3	%		1.0	%		1.8	%		1.0	%		1.8	%

Weighted-average fair value	$	14.38		$	20.56		$	16.29		$	20.68		$	2.58		$	7.65		$	2.58		$	7.65

(in thousands)
Number of underlying shares		1,792			964			1,830			1,050			60			33			60			33
Amount included in pro forma expense, net of taxes		143			113			163			211			72			100			106			176

7. RESTRICTED COMMON STOCK AWARDS

In lieu of raises to certain of our executive officers, during the second quarter of fiscal 2005, Plantronics issued restricted stock awards, representing an aggregate of 45,500 shares, in accordance with the amended and restated 2003 Stock Plan, for which the exercise price payable by employees is $0.01 per share. Compensation cost for restricted stock awards is recognized in an amount equal to its fair value at the date of grant. Such expense is recorded on a straight-line basis over the vesting period of the award unless forfeited in the event of termination of employment, with the offsetting entry to additional paid-in capital. The amortized compensation expense for the quarter was minimal since the awards were granted on September 22, 2004, which resulted in a shorter amortization period.

8. CASH DIVIDEND PROGRAM

In the second quarter of fiscal 2005, the Company’s Board of Directors initiated a quarterly cash dividend of $0.05 per share. The Company declared a $0.05 per share cash dividend on July 20, 2004 which was paid in September 2004 in the aggregate amount of $2.4 million. The plan approved by the Board of Directors anticipates a total annual dividend of $0.20 per common share for fiscal 2005. The actual declaration of future dividends, and the establishment of record and payment dates, is subject to final determination by the Audit Committee of the Board of Directors of Plantronics each quarter after its review of our financial position.


	10

9. COMPREHENSIVE INCOME

Comprehensive income includes charges or credits to equity that are not the result of transactions with owners. The components of comprehensive income, net of tax, are as follows (in thousands):

	Three Months Ended						Six Months Ended
	September 30						September 30
	2003			2004			2003			2004
Net income	$	12,373		$	24,675		$	23,714		$	47,022

Unrealized gain/(loss) on hedges, for the three and six months ended September 30, 2003 and 2004, net of tax of ($95), $74, ($485) and ($329), respectively		(222	)		190			(1,132	)		(845	)
Foreign currency translation, for the three and six months ended September 30, 2003 and 2004, net of tax of $34, ($80), $256 and $418, respectively		79			(207	)		597			1,075
Other comprehensive income	$	12,230		$	24,659		$	23,179		$	47,252

10. PRODUCT WARRANTY OBLIGATIONS

Plantronics provides for the estimated costs of product warranties at the time revenue is recognized. The specific terms and conditions of those warranties vary depending upon the product sold. In the case of products manufactured by us, our warranties generally start from the delivery date and continue for up to two years depending on the product purchased. Factors that affect our warranty obligation include product failure rates, material usage, and service delivery costs incurred in correcting product failures. We assess the adequacy of our recorded warranty liabilities quarterly and make adjustments to the liability if necessary.

Changes in our warranty obligation, which are included as a component of "Accrued liabilities" on the condensed consolidated balance sheets, during the three and six months ended September 30, 2004, are as follows (in thousands):

Warranty liability at March 31, 2004	$	6,795
Warranty provision relating to product shipped during the quarter		2,606
Deductions for warranty claims processed		(2,413	)
Warranty liability at June 30, 2004	$	6,988
Warranty provision relating to product shipped during the quarter		1,530
Deductions for warranty claims processed		(2,178	)
Warranty liability at September 30, 2004	$	6,340

11. SEGMENTS AND ENTERPRISE-WIDE DISCLOSURES

SEGMENTS. We are engaged in the design, manufacture, marketing and sales of telecommunications equipment including headsets, telephone headset systems, and other specialty telecommunications products. Plantronics considers itself to operate in one business segment.


	11

PRODUCTS AND SERVICES. We focus on headsets for business and consumer applications, and other specialty products for the hearing impaired. With respect to headsets, we make products for office and contact center use, for use with mobile and cordless phones and for use with computers and gaming consoles. The following table presents net revenues by product group (in thousands):

	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2003		2004		2003		2004
Net revenues from unaffiliated customers:
Office and contact center	$	64,192	$	86,204	$	126,272	$	169,019
Mobile		18,370		28,815		36,888		63,273
Gaming and computer audio		5,679		8,515		11,142		15,508
Other specialty products		6,876		6,686		13,601		13,790
	$	95,117	$	130,220	$	187,903	$	261,590

MAJOR CUSTOMERS. No customer accounted for 10% or more of total revenues for the three and six months ended September 30, 2003 and 2004, nor did any customer account for 10% or more of accounts receivable from consolidated sales at the end of such periods.

GEOGRAPHIC INFORMATION. In geographical reporting, revenues are attributed to the geographical location of the sales and service organizations. The following table presents net revenues and long-lived assets by geographic area (in thousands) but may not actually reflect end-user markets:


	Three Months Ended				Six Months Ended
	September 30,				September 30,
	2003		2004		2003		2004
Net revenues from unaffiliated customers:

United States	$	64,929	$	89,375	$	129,853	$	178,464

Europe, Middle East and Africa		21,826		29,794		41,009		60,978
Asia Pacific and Latin America		6,010		7,902		11,405		15,397
Canada and Other International		2,352		3,149		5,636		6,751
Total International		30,188		40,845		58,050		83,126
	$	95,117	$	130,220	$	187,903	$	261,590

		March 31,		September 30,
		2004		2004
Long-lived assets:
United States	$	24,129	$	30,226
International		17,995		19,733
	$	42,124	$	49,959


	12

12. INTANGIBLES

Aggregate amortization expense relating to intangible assets for the three and six months ended September 30, 2003 was $0.2 million and $0.4 million, respectively. For the three and six months ended September 30, 2004, aggregate amortization expense was $0.2 million and $0.4 million, respectively. The following table presents information on acquired intangible assets (in thousands):

	March 31, 2004
	Gross Carrying		Accumulated			Net Carrying		Useful
Intangible assets	Amount		Amortization			Amount		Life

Technology	$	2,460	$	(1,103	)	$	1,357		7 years
State contracts		1,300		(418	)		882		7 years
Patents		1,170		(283	)		887		7 years
Trademarks		300		(96	)		204		7 years
Non-compete agreements		200		(90	)		110		5 years
Total	$	5,430	$	(1,990	)	$	3,440

		September 30, 2004
		Gross Carrying		Accumulated			Net Carrying		Useful
		Amount		Amortization			Amount		Life

Technology	$	2,000	$	(786	)	$	1,214		7 years
State contracts		1,300		(511	)		789		7 years
Patents		1,420		(369	)		1,051		7 years
Trademarks		300		(118	)		182		7 years
Non-compete agreements		200		(110	)		90		5 years
Total	$	5,220	$	(1,894	)	$	3,326

13. RECENT ACCOUNTING PRONOUNCEMENTS

In March 2004, the Financial Accounting Standards Board’s ("FASB") issued a proposed Statement, "Share-Based Payment, an amendment of SFAS Nos. 123 and 95," that addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for either equity instruments of the company or liabilities that are based on the fair value of the company’s equity instruments or that may be settled by the issuance of such equity instruments. The proposed statement would eliminate the ability to account for share-based compensation transactions using the intrinsic value method that the Company currently uses and generally would require that such transactions be accounted for using a "fair-value"-based method and recognized as expense in the Company’s consolidated sta tement of operations. The recommended effective date of the proposed statement is currently for any interim or annual period beginning after June 15, 2005. Should this proposed statement be finalized in its current form, it will have a significant impact on the Company’s consolidated statement of operations as we will be required to expense the "fair value" of the Company’s stock option grants and stock purchases under the Company’s employee stock purchase plan. In addition the proposed standard may have a significant impact on the Company’s consolidated cash flows from operations (no impact to the Company’s total consolidated cash flows) as, under this proposed standard, the Company will be required to reclassify a portion of the Company’s tax benefit on the exercise of employee stock options from cash flows from operating activities to cash flows from financing activities.

In March 2004, the FASB’s Emerging Issues Task Force ("EITF") reached a consensus on Issue No. 03-01, "The Meaning of Other-Than-Temporary Impairments and Its Application to Certain Investments" ("EITF 03-01"). EITF 03-01 provides new disclosure requirements for other-than-temporary impairments on debt and equity investments. Investors are required to disclose quantitative information about: (i) the aggregate amount of unr ealized losses, and (ii) the aggregate related fair values of investments with unrealized losses, segregated into time periods during which the investment has been in an unrealized loss position of less than 12 months and greater than 12 months. In addition, investors are required to disclose the qualitative information that supports their conclusion that the impairments noted in the qualitative disclosure are not other-than-temporary. The disclosure requirements of EITF 03-01 were effective December 31, 2003. EITF 03-01 is effective for the first fiscal year or interim period beginning after September 15, 2004. The adoption of EITF 03-01 is not expected to have a material impact on our financial condition, results of operations or cash flows.


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In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation of Variable Interest Entities," an Interpretation of ARB No. 51. FIN 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003 and in the quarter ending March 31, 2004 for arrangements entered into prior to February 1, 2003. Plantronics has not entered into any arrangements with entities it considers to be variable interest entities and as such the adoption of F IN 46 (as revised December 2003) did not have a material effect on our financial position, results of operations or cash flows.

14. SUBSEQUENT EVENTS

On October 19, 2004, we announced that our Board of Directors had declared a cash dividend of $0.05 per share of our common stock, payable on December 10, 2004 to shareholders of record on November 12, 2004. The plan approved by the Board of Directors on July 20, 2004, anticipates a total annual dividend of $0.20 per common share for fiscal 2005. The actual declaration of future dividends, and the establishment of record and payment dates, is subject to final determination by the Audit Committee of the Board of Directors of Plantronics each quarter after its review of our financial performance.


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

EXECUTIVE SUMMARY:

We are a leading worldwide designer, manufacturer and marketer of lightweight communications headsets, telephone headset systems and accessories for the business and consumer markets. In addition, we manufacture and market specialty telephone products, such as telephones for the hearing-impaired and other related products for people with special communications needs.

We are a global company and sell our broad range of communications products into more than 70 countries through a worldwide network of distributors, original equipment manufacturers ("OEM’s"), wireless carriers, retailers and telephony service providers. We have well-developed distribution channels in North America and Europe, where headset use is fairly widespread. Our distribution channels in other regions of the world are less mature and primarily serve the contact center markets in those regions.

During the second quarter of fiscal 2005, in comparison to the second quarter one year ago, our growth in revenues was geographically broad based and resulted primarily from increased adoption of our wireless headsets for business professionals as well as the success of the SupraPlus™ headset for the contact center markets. Headsets for mobile, cell and cordless phones were key drivers of the increase in revenues and revenues from Bluetooth based headsets grew 100% compared to the second quarter one year ago, which we believe demonstrates that the desire for wireless freedom is becoming mainstream.* During the first six months of fiscal year 2005 as compared to the same period one year ago, the growth in revenues was primarily driven by the ongoing worldwide adoption of headsets and successful new product i ntroductions. In addition, for the three and six month periods ended September 30, 2004, we were favorably affected by continued improvements in the major global economies, increased promotional activities, benefit from implementation of hands-free legislation and increased promotional activities coupled with increased market acceptance of Bluetooth technologies.

Our gross margins improved in the three and six month periods ended September 30, 2004 compared to the same periods one year ago due to benefits of increased volumes on largely fixed overhead, component cost reductions, lower requirements for warranty and inventory provisions, and favorable foreign exchange, despite a somewhat unfavorable product mix shift resulting from higher sales of lower margin mobile and computer products.

Our operating expenses increased in the three and six month periods ended September 30, 2004 compared to the same periods one year ago due, in part, to increased marketing programs globally, many of which were designed to assist in increasing sales of mobile headsets especially in places where new hands-free legislation had been enacted or was being enforced. We also increased expenditures to support the expansion of our worldwide sales team. In addition, we have continued to expand our research and development efforts with the goal of bringing more new products to market. Offsetting these expenses was a one time ben efit of $2 million from a favorable court ruling during the second fiscal quarter of 2005, which ended a lawsuit filed by one of our competitors.

In addition, during the quarter ended September 30, 2004, we generated $39.7 million in operating cash flows, which in part contributed to the increase in our liquidity and cash balances at September 30, 2004. Our net inventory balances increased $25.2 million from our fiscal year end 2004 and our inventory turns decreased from 5.2 to 3.7 turns. We increased our inventory balance in the second quarter of 2005 largely to support the increased revenue level we anticipate for the third quarter of 2005.* However, approximately $4 million of the increase is attributable to revenue opportunities that we thought were likely to occur in the second quarter, but which did not materialize. Finally, we have also increased our safety stocks on certain key components. We expect our inventory turns to improve in the third quar ter in comparison to the second quarter of 2005.*

We intend for the following discussion of our financial condition, results of operations and cash flows to provide information that will assist in understanding our financial statements.


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RESULTS OF OPERATIONS:

The following table sets forth items from the Unaudited Condensed Consolidated Statements of Operations as a percentage of net sales:

	Three Months Ended						Six Months Ended
	September 30,						September 30,
	2003			2004			2003			2004
Net sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales		48.7			46.6			49.9			46.8
Gross profit		51.3			53.4			50.1			53.2

Operating expenses:
Research, development and engineering		8.7			8.3			9.0			8.0
Selling, general and administrative		24.2			19.4			23.4			20.6
Total operating expenses		32.9			27.7			32.4			28.6
Operating income		18.4			25.7			17.7			24.5
Interest and other income, net		0.2			0.6			0.3			0.4
Income before income taxes		18.6			26.3			18.0			25.0
Income tax expense		5.6			7.4			5.4			7.0
Net income		13.0	%		18.9	%		12.6	%		18.0	%

Revenues for the quarter ended September 30, 2004, increased 36.9% to $130.2 million from $95.1 million for the same quarter in the prior year. Revenues were higher domestically by 38% and internationally by 35% and for all product lines with the exception of our specialty product line, which are principally our Clarity products sold for hearing impaired individuals. Our office and contact center products increased on the continued strength of our new products, particularly for wireless headsets for office applications and the SupraPlus. Revenues for our mobile products increased due to continued sales related to promotional offers that bundle our headsets with cell phones sold into the U.S. wireless carrier market and our Bluetooth enabled headsets. Gaming and computer audio revenues increased on headsets sold for use with various gaming and voice over IP applications.

For the six month period ended September 30, 2004, compared to the same six month period in the prior year, net sales were up both domestically by 37% and internationally by 43%, primarily driven by demand for office and contact center products, demand for mobile products including both wireless Bluetooth headsets and the MX150 mobile corded headset and favorable exchange rates. Net sales were up across all of our product lines.

GROSS PROFIT. Gross profit for the quarter ended September 30, 2004 increased by 42.5% to $69.5 million (53.4% of net sales), compared to $48.8 million (51.3% of net sales) for the quarter ended September 30, 2003.

As a percentage of revenues, gross margin for the quarter ended September 30, 2004 increased by 2.1 percentage points compared to the same period in the prior year , primarily due to cost reductions and improved economies of scale due to increased volume. Our productivity improvements have enabled us to hold manufacturing overhead costs fairly constant compared to a year ago despite significant increases in unit volume. In addition, a weaker U.S. dollar compared to the Euro and Great British Pound favorably affected revenues and thus gross margin. Partially offsetting these favorable factors was a higher percentage of revenues coming from lower margin mobile products as compared to the same period in the prior year.

Gross profit for the six months ended September 30, 2004 increased as a percentage of revenue by 3.1 percentage points compared to the same period in the prior year, primarily due to better manufacturing efficiencies on higher volumes, component cost reductions, and favorable foreign exchange rates offset a less favorable product mix with higher sales of lower margin mobile and computer products.

RESEARCH, DEVELOPMENT AND ENGINEERING. Research, development and engineering expenses for the quarter ended September 30, 2004 were $10.8 million (8.3% of net sales), compared to $8.2 million (8.7% of net sales) for the quarter ended September 30, 2003. The increase was primarily due to incremental spending on new product development particularly for Bluetooth and wireless office products.


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Research, development and engineering expenses for the six month period ended September 30, 2004 were $20.9 million (8.0% of net sales), compared to $16.9 million (9.0% of net sales) in the first six months of fiscal 2004. The increase in absolute dollars was anticipated, as well as the reduction as a percentage of revenues, as we continue to increase the level of commitment to our new product pipeline, but also continue to make process improvements.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative expenses for the quarter ended September 30, 2004 increased 10.1% to $25.3 million (19.4% of net sales), compared to $23.0 million (24.2% of net sales) for the quarter ended September 30, 2003. Costs were higher as a result of increased sales and marketing programs globally, particularly to generate demand for our cordless office, gaming and voice over IP products and programs to leverage hands-free regulatory laws. Additionally, we have expanded our world wide sales and marketing teams and unfavorable foreign exchange rates have also driven costs higher. These expenses were partially offset by a one time benefit of approximately $2 million from a favorable court ruling, which ended a lawsuit filed by one of our competitors. Additionally we had an advertising trial campaign that occurred in the same quarter in the prior year, but did not occur in the second quarter of fiscal 2005.

Selling, general and administrative expenses for the six month period ended September 30, 2004 increased 22.9% to $54.2 million, compared to $44.1 million for the same period one year ago, also driven by unfavorable foreign exchange rates and the increased level of spending to support new product launches, offset by the one time litigation settlement.

OPERATING INCOME. Operating income for the quarter ended September 30, 2004 increased by 90.2% to $33.4 million (25.7% of net sales), compared to $17.5 million (18.4% of net sales) for the quarter ended September 30, 2003.

Operating income for the six month period ended September 30, 2004 increased by 92.7% to $64.1 million compared to $33.2 million for the same period one year ago. The increases in both the three and six month periods were driven primarily by higher revenues and lower operating expenses as a percent of revenues.

INTEREST AND OTHER INCOME, NET. Interest and other income, net for the quarter ended September 30, 2004, was $0.9 million compared to $0.1 million for the quarter ended September 30, 2003. The increase from the quarter ended September 30, 2003 was driven primarily by interest income earned on higher average cash balances and approximately $0.3 million in interest received from a one time litigation settlement.

Interest and other income, net for the six month period ended September 30, 2004 was $1.2 million compared to $0.6 million for the same period one year ago. Compared to the prior year, the increase was primarily due to greater earned interest income and a one time litigation settlement.

INCOME TAX EXPENSE. Income tax expense for the three and six month periods ended September 30, 2004 was $9.6 million and $18.3 million compared to $5.3 million and $10.2 million for the three and six month periods ended September 30, 2003, which represented tax rates of 28.0% and 30.0%, respectively for the 2004 and 2003 periods.

FINANCIAL CONDITION AND CASH FLOWS:

OPERATING ACTIVITIES. During the six months ended September 30, 2004, we generated $39.7 million in cash from operating activities, primarily from $47.0 million in net income, an increase in accounts payable and accrued liabilities of $12.6 million, an increase in deferred income taxes of $6.3 million, depreciation and amortization of $5.6 million, an increase in accrued liabilities of $2.5 million, income tax benefit from stock option exercises of $1.8 million, an increase in income taxes payable of $0.8 million, offset by an increase in inventories of $25.2 million, an increase in accounts receivable of $8.9 million and an increase in other assets of $0.8 million. In comparison, during the six months ended September 30, 2003, we generated $31.9 million in cash from operating activities, primarily from $23.7 mi llion in net income, increases in accounts payable and accrued liabilities aggregating $10.0 million, depreciation and amortization of $6.4 million, and an income tax benefit from stock option exercises of $3.1 million, offset by a decrease in taxes payable of $5.8 million, an increase in inventory of $4.0 million and an increase in accounts receivable of $1.5 million.


	17

INVESTING ACTIVITIES. During the six months ended September 30, 2004, we incurred capital expenditures of $14.1 million principally for leasehold improvements at our corporate headquarters, machinery and equipment, tooling, computers and software. Additionally we purchased marketable securities primarily composed of an AAA fixed rate Federal Home Loan Banks bond for $4.0 million that matures in August of 2005. In comparison, during the six months ended September 30, 2003, we received $5.0 million from maturities of marketable securities and incurred capital expenditures of $4.9 million principally for building and leasehold improvements, machinery and equipment, and tooling and computers.

FINANCING ACTIVITIES. During the six months ended September 30, 2004, we did not repurchase any shares of our common stock under our stock repurchase plan. We reissued through employee benefit plans 55,730 shares of our treasury stock for $1.8 million. During the six months ended September 30, 2003, we repurchased 122,800 shares of our common stock under our stock repurchase plan for $1.8 million and reissued through employee benefit plans 108,088 shares of our treasury stock for $1.6 million. As of September 30, 2004, 142,600 shares remained available for repurchase under our stock repurchase plan. We received $8.3 million in proceeds from the exercise of stock options during the six months ended September 30, 2004 compared to $6.9 million in the six months ended September 30, 2003. During the s econd quarter of fiscal year 2005, we made our first dividend payment under the dividends policy adopted by our Board of Directors in July 2004 totaling $2.4 million.

LIQUIDITY AND CAPITAL RESOURCES. As of September 30, 2004, we had working capital of $299 million, including $210.3 million of cash and cash equivalents, compared to working capital of $249.4 million, including $180.6 million of cash and cash equivalents at March 31, 2004. During the next 12 to 18 months, we will continue to incur capital expenditures related to facilities, including, among other things, the construction of a factory and development center in China and the completion of planned upgrades in our corporate offices in Santa Cruz.* The factory construction in China is in the very early stages; we currently expect to break ground in December of 2004 and we estimate that the total cost of this ini tiative could range from $15 to $20 million.*

We have a revolving credit facility with a major bank for $75 million, including a letter of credit subfacility. The facility and subfacility both expire on July 31, 2005. As of October 29, 2004, we had no cash borrowings under the revolving credit facility and $1.8 million outstanding under the letter of credit subfacility. The amounts outstanding under the letter-of-credit subfacility were principally associated with purchases of inventory. The terms of the credit facility contain covenants that materially limit our ability to incur debt and pay dividends, among other matters. Under our current credit facility agreement, we have the ability to declare dividends so long as the aggregate amount of all such dividends declared or paid and common stock repurchased or redeemed in any four consecutive fiscal quarter periods shall not exceed 50% of the amount of cumulative consolidated net income in the eight consecutive fiscal quarter period ending with the fiscal quarter immediately preceding the date as of which the applicable distributions occurred. We are currently in compliance with the covenants and the dividend provision under this agreement.

On October 19, 2004, we announced that our Board of Directors had declared a cash dividend of $0.05 per share of our common stock, payable on December 10, 2004 to shareholders of record on November 12, 2004. The plan approved by the Board anticipates a total annual dividend of $0.20 per common share for fiscal 2005. The actual declaration of future dividends, and the establishment of record and payment dates, is subject to final determination by the Audit Committee of the Board of Directors of Plantronics each quarter after its review of our financial position.

We believe that our current cash and cash equivalents balance and cash provided by operations, will be sufficient to fund operations for at least the next twelve months.* However, any projections of future financial needs and sources of working capital are subject to uncertainty. See "Certain Forward-Looking Information" and "Risk Factors Affecting Future Operating Results" in this Quarterly Report for factors that could affect our estimates for future financial needs and sources of working capital.


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CRITICAL ACCOUNTING POLICIES AND ESTIMATES:

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon Plantronics’ consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases estimates and judgments on historical experience and on various other factors that Plantronics’ management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of as sets and liabilities. Actual results may differ from these estimates under different assumptions or conditions. Management believes the following critical accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

REVENUE RECOGNITION. We recognize revenue net of estimated product returns and expected payments to resellers for customer programs including cooperative advertising, marketing development funds, volume rebates, and special pricing programs. Estimated product returns are deducted from revenues upon shipment, based on historical return rates, the product stage relative to its expected life cycle, and assumptions regarding the rate of sell-through to end users from our various channels based on historical sell-through rates. Should product lives vary significantly from our estimates, or should a particular selling channel experience a higher than estimated return rate, or a slower sell-through rate causing inventory build-up, then our estimated returns, which net against revenue, may need to be revised. Reductions to revenue for expected and actual payments to resellers for volume rebates and pricing protection are based on actual expenses incurred during the period, on estimates for what is due to resellers for estimated credits earned during the period and any adjustments for credits based on actual activity. If market conditions warrant, Plantronics may take action to stimulate demand, which could include increasing promotional programs, decreasing prices, or increasing discounts. Such actions could result in incremental reductions to revenue and margins at the time such incentives are offered. To the extent that we reduce pricing, we may incur reductions to revenue for price protection based on our estimate of inventory in the channel that is subject to such pricing actions.

ACCOUNTS RECEIVABLE. We perform ongoing credit evaluations of our customers' financial condition and generally require no collateral from our customers. Plantronics maintains allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is reviewed monthly and adjusted if deemed necessary. If the financial condition of our customers should deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

INVENTORY. We write down the cost basis of our inventory for estimated excess and obsolete inventory based on projected future shipments using historical selling rates, and taking into account market conditions, inventory on-hand, purchase commitments, product development plans and life expectancy, and competitive factors. If markets for Plantronics’ products and corresponding demand in such markets decline, then additional write-downs may be necessary.

WARRANTY. We provide for the estimated cost of warranties at the time revenue is recognized. Our warranty obligation is affected by product failure rates and our costs to repair or replace the products. Should actual failure rates and costs differ from our estimates, revisions to our warranty obligation may be required.

GOODWILL AND INTANGIBLES. As a result of acquisitions we have made, we have goodwill and intangible assets on our balance sheet. These assets affect the amount of future amortization expense and possible impairment charges that we may incur. The determination of the value of goodwill and intangible assets, as well as the useful lives of amortizable intangible assets, requires management to make estimates and assumptions that affect our financial statements. We perform at least annual impairment reviews of goodwill and intangible assets. If actual or expected revenue significantly declines, we may be required to record an impairment charge.

DEFERRED TAXES. We record deferred tax assets at the amounts estimated to be realizable. While we have considered future taxable income and ongoing prudent and feasible tax planning strategies in assessing the value of the corresponding assets, if we were to determine that we would not be able to realize all or part of our net deferred tax assets in the future, then an adjustment would be required.


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CERTAIN FORWARD-LOOKING INFORMATION:

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"), and we may from time to time make oral forward-looking statements. These forward-looking statements may generally be identified by the use of such words as "expect," "anticipate," "believe," "intend," "plan," "will," or "shall," and include, among others, all of the statements marked in this Quarterly Report on Form 10-Q with an asterisk ("*"). These forward-looking statements are based on current expectations and entail various risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of risks and unc ertainties and other factors, including those set forth below under "Risk Factors Affecting Future Operating Results." When reading the sections titled "Results of Operations" and "Financial Condition," you should also read our unaudited condensed consolidated financial statements and related notes included elsewhere herein, our Annual Report on Form 10-K, and the section below entitled "Risk Factors Affecting Future Operating Results." We undertake no obligation to update any forward-looking statements to reflect any developments or events occurring after the date of this Quarterly Report.

RISK FACTORS AFFECTING FUTURE OPERATING RESULTS:

Investors or potential investors in our stock should carefully consider the risks described below. Our stock price will reflect the performance of our business relative to, among other things, our competition, expectations of securities analysts or investors, general economic and market conditions and industry conditions. You should carefully consider the following factors in connection with any investment in our stock. Our business, financial condition and results of operations could be materially adversely affected if any of the risks occur. Should any or all of the following risks materialize, the trading price of our stock could decline and investors could lose all or part of their investment.

If we do not match production to demand, we will be at risk of losing business or our margins could be materially adversely affected.

Historically, we have generally been able to increase production to meet increasing demand. However, the demand for our products is dependent on many factors and such demand is inherently difficult to forecast. We have experienced sharp fluctuations in demand, especially for headsets for wireless and cellular phones. Significant unanticipated fluctuations in demand could cause the following operating problems, among others:

If forecasted demand does not develop, we would have excess inventories of finished products, components and subassemblies and excess manufacturing capacity. In particular, given the trend of shorter cycles to product obsolescence it is likely we would be unable to sell these inventories and would have to write off some or all of our inventories of excess products and unusable components and subassemblies. In addition, excess manufacturing capacity could lead to higher production costs and lower margins.
Rapid increases in production levels to meet unanticipated demand could result in higher costs for components and subassemblies, increased expenditures for freight to expedite delivery of required materials, and higher overtime costs and other expenses. These higher expenditures could lower our profit margins. Further, if production is increased rapidly, there may be decreased manufacturing yields, which may also lower our margins. Therefore, we might not be able to increase production rapidly enough to meet unexpected demand. This could cause us to fail to meet customer expectations. There could be short-term losses of sales while we are trying to increase production. If customers turn to competitive sources of supply to meet their needs, there could be a long-term negative effect on our revenues.
Due to the lead times required to obtain certain raw materials, subassemblies, components and products from certain foreign suppliers, we may not be able to react quickly to changes in demand, potentially resulting in either excess inventories of such goods or shortages of the raw materials, subassemblies, components and products. Lead times are particularly long on silicon-based components incorporating radio frequency and digital signal processing technologies and such components are an increasingly important part of our product costs. Failure in the future to match the timing of purchases of raw materials, subassemblies, components and products to demand could increase our inventories and/or decrease our revenues, consequently materially adversely affecting our business, financial condition and results of operations.


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Product obsolescence, excess inventory and other asset impairment can negatively affect our results of operations.

We operate in a high technology industry which is subject to rapid and frequent technology and market demand changes. These changes can often render existing or developing technologies obsolete. In addition, the introduction of new products and any related actions to discontinue existing products can cause existing inventory to become obsolete. These obsolescence issues can require write-downs in inventory value when it is determined that the recorded value of existing inventory is greater than its fair market value. Also, the pace of change in technology development and in the release of new products has increased and is expected to continue to increase. If sales of one of these products have a negative effect on sales of another of our products, it could significantly increase the inventory levels of the negat ively impacted product. For each of our products, the potential exists for new products to render existing products obsolete, cause inventories of existing products to increase, cause us to discontinue a product or reduce the demand for existing products.

We have strong competitors and expect to face additional competition in the future.

The markets for our products are highly competitive. We compete with a variety of companies in the various markets for communications headsets. Currently, our single largest competitor is GN Netcom, a subsidiary of GN Great Nordic Ltd., a Danish telecommunications conglomerate. Internationally, Sennheiser Communications is a significant competitor in the computer, office and contact center market.

We currently operate principally in a multilevel distribution model - selling most of our products to distributors who, in turn, resell to dealers or end-customers. GN Netcom’s acquisitions indicate it may be moving towards a direct sales model, since six of their nine acquisitions were of companies employing direct sales and marketing models. While we believe that our business and our customers benefit from our current distribution structure, if GN Netcom or other competitors sell directly, they may offer lower prices, placing pricing pressure on our products, which could materially adversely affect our business and results of operations.

We also expect to face additional competition from companies that currently do not offer communications headsets. We believe that this is particularly true in the office, mobile, computer and residential markets. For example, the Sony-Ericsson joint venture competes formidably with several Bluetooth hands-free solutions. In addition, we manufacture branded products for a number of large household-name retailers. These retailers directly compete with Plantronics brand products, frequently within the same store. The effect of our retail customers competing directly with our own products has placed pressure on our margins and the negative impact this has on our business could increase in the future.

We anticipate other competition from consumer electronics companies that currently manufacture and sell mobile phones or computer peripheral equipment. These new competitors are likely to be larger, offer broader product lines, bundle or integrate with other products communications headset tops and bases manufactured by them or others, offer products containing bases that are incompatible with our headset tops and have substantially greater financial, marketing and other resources than we do. These companies have such scale, market share and direct consumer interface as the base equipment providers that we accessorize, that they have a great amount of influence over defining the categories in mobile phone, computer and office headsets in terms of price points and marketing. This affects our business by making our marketing efforts less effective than desired, dictates pricing of our products by influencing the broader market’s expectations thereby placing adverse pressure on our sales and margins.

We also expect to face additional competition from companies, principally located in the Far East, which offer very low cost headset products, including products which are modeled on, or are direct copies of our products. These new competitors are likely to offer very low cost products which may result in price pressure in the market. If market prices are substantially reduced by such new entrants into the headset market, our business, financial condition and results of operations could be materially adversely affected.


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A significant portion of our sales come from the contact center market and a decline in demand in that market could materially adversely affect our results.

We have historically derived a material amount of our net sales from the contact center market, and we expect that this market will continue to account for a significant portion of our net sales. Because of our reliance on the contact center market, we will be affected more by changes in the rate of contact center establishment and expansion and the communications products that contact center agents use than would a company serving a broader market. While we believe that this market may grow in future periods, this growth could be slow or revenues from this market could be flat or decline in response to various factors. Any decrease in the demand for contact centers and related headset products could cause a decrease in the demand for our products, which would materially adversely affect our business, financial condition and results of operations.

In addition, we are seeing a proliferation of speech-activated and voice interactive software in the market place. We have been re-assessing long-term growth prospects for the contact center market given the growth rate and the advancement of these new voice recognition-based technologies. Businesses that first embraced these new technologies to resolve labor shortages at the peak of the last economic up cycle are now increasing spending on these technologies in hopes of reducing total costs. We may experience a decline in our sales to the contact center market if businesses increase their adoption of speech-activated and voice interactive software as an alternative to customer service agents. Should this trend continue, it could cause a net reduction in contact center agents and our revenues to this market segm ent could decline rather than grow in future years.

We depend on the development of the office, mobile, computer and residential markets, and we could be materially adversely affected if they do not develop as we expect.

While the contact center market is still a substantial portion of our business, we believe that our future prospects will depend in large part on the growth in demand for headsets in the office, mobile, computer and residential markets. These communications headset markets are relatively new and continue to be developed. Moreover, we do not have extensive experience in selling headset products to customers in these markets. If the demand for headsets in these markets fails to develop, or develops more slowly than we currently anticipate, or if we are unable to effectively market our products to customers in these markets, it would have a material adverse effect on the potential demand for our products and on our business, financial condition and results of operations.

New product development is risky, and our business will be materially adversely affected if we do not respond to changing customer requirements and new technologies.

Historically, the technology used in lightweight communications headsets evolved slowly. New products have primarily offered stylistic changes and quality improvements, rather than significant new technologies. The technology used in hands-free communications devices, including our products, is evolving more rapidly now than it has historically and we anticipate that this trend may accelerate. We believe this is particularly true for our newer emerging technology products in the mobile, computer, residential and certain parts of the office markets. We believe products designed to serve these markets generally exhibit shorter lifecycles and are increasingly based on open standards and protocols. As we develop new generations of products more quickly, we expect that the pace of product obsolescence will, increase accordingly. The disposition of inventories of obsolete products may result in reductions to our operating margins and materially adversely affect our earnings and results of operations.

Our success depends upon our ability to enhance existing products, to respond to changing market requirements, and to develop and introduce in a timely manner new products that keep pace with technological developments and end-user requirements. The technologies, products and solutions that we choose to pursue may not become as commercially successful as we planned. We may experience difficulties in realizing the expected benefits from our investments in new technologies. If we are unable to develop, manufacture and market enhanced or new products in a timely manner in response to changing market conditions or customer requirements, including changing fashion trends and styles, it will materially adversely affect our business, financial condition and results of operations.


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Changes in regulatory requirements may adversely impact our margins as we comply with such changes or reduce our ability to generate revenues if we are unable to comply.

Our products must meet the requirements set by regulatory authorities in the numerous jurisdictions in which we sell them. As regulations and local laws change, we must modify, if possible, our products to address those changes. Regulatory restrictions may increase the costs to design and manufacture our products, resulting in a decrease in our margins or a decrease in demand for our products if the costs are passed along. Compliance with regulatory restrictions may affect the technical quality and capabilities of our products, reducing their marketability. New legislation prohibiting the use of phones while operating a motor vehicle may reduce demand for our products.

The failure of our suppliers to provide quality components or services in a timely manner could adversely affect our results.

Our growth and ability to meet customer demand depend in part on our capability to obtain timely deliveries of raw materials, components, subassemblies and products from our suppliers. We buy raw materials, components and subassemblies from a variety of suppliers and assemble them into finished products. We also have certain of our products manufactured for us by third party suppliers. The cost, quality, and availability of such goods are essential to the successful production and sale of our products. Obtaining raw materials, components, subassemblies and finished products entails various risks, including the following:

We obtain certain raw materials, subassemblies, components and products from single suppliers and alternate sources for these items are not readily available. To date, we have experienced only minor interruptions in the supply of these raw materials, subassemblies, components and products, none of which has significantly affected our results of operations. An interruption in supply from any of our single source suppliers in the future would materially adversely affect our business, financial condition and results of operations.

Most of our suppliers are not obligated to continue to provide us with raw materials, components and subassemblies. Rather, we buy most raw materials, components and subassemblies on a purchase order basis. If our suppliers experience increased demand or shortages, it could affect the availability or cost of needed inventories. In turn, this would affect our ability to manufacture and sell products that are dependent on those raw materials, components and subassemblies. If this occurs and we are not able to pass these increases on to our customers or to achieve operating efficiencies that would offset the increases, it would have a material adverse effect on our business, financial condition and results of operations.
Although we generally use standard raw materials, parts and components for our products, the high development costs associated with emerging wireless technologies permits us to work with only a single source of silicon chip-sets on any particular new product. We, or our chosen supplier of chip-sets, may experience challenges in designing, developing and manufacturing components in these new technologies which could affect our ability to meet time to market schedules. Due to our dependence on single suppliers for certain chip sets, we could experience higher prices, a delay in development of the chip-set, and/or the inability to meet our customer demand for these new products. Our business, operating results, financial condition or cash flows could therefore be materially adversely affected as a result of these factors.

The introduction of Bluetooth and other wireless headsets presents many significant manufacturing, marketing and other operational risks and uncertainties, including: developing and marketing these wireless headset products; unforeseen delays or difficulties in introducing and achieving volume production of such products; our dependence on third parties to supply key components, many of which have long lead times; and our ability to forecast demand and customer return rates accurately for this new product category for which relevant data is incomplete or not available. We have longer lead times with certain suppliers than commitments from some of our customers.

We sell our products through various channels of distribution that can be volatile.

We sell substantially all of our products through distributors, retailers, OEM’s and telephony service providers. Our existing relationships with these parties are not exclusive and can be terminated by either party without cause. Our channel partners also sell or can potentially sell products offered by our competitors. To the extent that our competitors offer our channel partners more favorable terms, such partners may decline to carry, de-emphasize or discontinue carrying our products. In the future, we may not be able to retain or attract a sufficient number of qualified channel partners. Further, such partners may not recommend, or continue to recommend, our products. In the future, our OEM customers or potential OEM customers may elect to manufacture their own products, similar to those we currently s ell to them. The inability to establish or maintain successful relationships with distributors, OEM’s, retailers and telephony service providers or to expand our distribution channels could materially adversely affect our business, financial condition and results of operations.


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As a result of the growth of our mobile headset business, our customer mix is changing and certain OEM’s, retailers and wireless carriers are becoming significant. This greater reliance on certain large customers could increase the volatility of our revenues and earnings. In particular, we have several large customers whose order patterns are difficult to predict. Offers and promotions by these customers may result in significant fluctuations of their purchasing activities over time. If we are unable to anticipate the purchase requirements of these customers, our quarterly revenues may be adversely affected and/or we may be exposed to large volumes of inventory that cannot be immediately resold to other customers.

In particular, we are obligated to absorb from our retailers products which have failed to sell as expected, and in some instances, such products may be returned to our inventory. Should product returns vary significantly from our estimate, then our allowance for estimated returns, which we record as a reduction of revenue, may need to be revised.

Our stock price may be volatile and the value of your investment in Plantronics stock could be diminished.

The market price for our common stock may continue to be affected by a number of factors, including:

the announcement of new products or product enhancements by us or our competitors;
the loss of services of one or more of our executive officers or other key employees;
quarterly variations in our or our competitors’ results of operations;
changes in our published forecasts of future results of operations;
changes in earnings estimates or recommendations by securities analysts;
developments in our industry; and
general market conditions.

Our quarterly operating results may fluctuate significantly and are not a good indicator of future performance.

Our quarterly operating results have fluctuated significantly in the past and may vary significantly in the future as a result of a number of factors, many of which are out of our control. These factors include:

market acceptance and transition of new product introductions, other new products launched in 2004, new products launched in the future, and product enhancements by us or our existing or potential new competitors;
difficult general economic conditions, as has been the case with the recent global economic uncertainty and downturn in technology spending, and specific economic conditions prevailing in the communications industry and other technology industries;
the prices and performance of our products and those of our existing or potential new competitors;
changes in our sales management and sales organization which could result in disruptions among our channel partners;
the timing and size of the orders for our products, in particular OEM demand is very volatile and difficult to forecast;
our distribution channels reducing their inventory levels;


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the level and mix of inventory that we hold to meet future demand;
slowing sales by our channel partners to their customers which places further pressure on our channel partners to minimize inventory levels and reduce purchases of our products;
the near and long-term impact of terrorist attacks and incidents and any military response or uncertainty regarding any military response to those attacks;
the shift in sales mix of products we sell to lower margin products;
fluctuations in the level of international sales and our exposure to international currency fluctuations in both revenues and expenses;
the cost and availability of components devices used in many of our products;
manufacturing costs;
the level and cost of warranty claims;
future changes in existing financial accounting standards or practices or taxation rules or practices;
the impact of disruptions in our operations, for any reason, including the recurrence of SARS or other similar event;
the impact of seasonality on our various product lines and geographic regions; and
adverse outcomes to litigation.

As a result of these and other factors, we believe that period-to-period comparisons of our historical results of operations are not a good predictor of our future performance. If our future operating results are below the expectations of stock market securities analysts or investors, our stock price will likely decline.

Changes in stock option accounting rules may adversely impact our operating results prepared in accordance with generally accepted accounting principles, our stock price and our competitiveness in the employee marketplace.

Technology companies like ours have a history of using broad based employee stock option programs to hire, incentivize and retain our workforce in a competitive marketplace. Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), allows companies the choice of either using a fair value method of accounting for options, which would result in expense recognition for all options granted, or using an intrinsic value method, as prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25"), with pro forma disclosure of the impact on net income (loss) of using the fair value option expense recognition method. We have elected to apply APB 25 and accordingly we generally do not recognize any expense with respect to employee stock options as long as such options are granted at exercise prices equal to the fair value of our common stock on the date of grant.

During March 2004 the FASB issued a proposed Statement, "Share-Based Payment, an amendment of FASB Statements No. 123 and 95." The proposed statement eliminates the treatment for share-based transactions using APB 25 and generally would require share-based payments to employees be accounted for using a fair-value-based method and recognized as expenses in our statements of operations. The proposed standard would require the modified prospective method be used, which would require that the fair value of new awards granted from the beginning of the year of adoption plus unvested awards at the date of adoption be expensed over the vesting term. In addition, the proposed statement encourages companies to use the "binomial" approach to value stock options, as opposed to the Black-Scholes option pricing model tha t we currently use to estimate the fair value of our options under SFAS 123 disclosure provisions.


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The recommended effective date the proposed standard is for any interim or annual period beginning after June 15, 2005. Should this proposed statement be finalized, it will have a significant impact on our consolidated statement of operations as we will be required to expense the fair value of our stock options rather than disclosing the impact on our consolidated results of operations within our footnotes in accordance with the disclosure provisions of SFAS 123 (see Note 13 of the Notes to the consolidated financial statements). This will result in lower reported earnings per share which could negatively impact our future stock price. In addition, should the proposal be finalized, this could impact our ability to utilize broad based employee stock plans to reward employees and could result in a competitive disadvantage to us in the employee marketplace. We believe that the expected expense related to the fair value of our stock options under the Binomial Model as proposed by the FASB will be slightly less than the Black-Scholes valuation approach.*

In addition, if stock options are expensed, it is our expectation that our use of restricted stock, restricted stock units and capped stock appreciation rights for employee awards will increase and our use of stock options will decrease. Although it is anticipated that such a change in the types of employee awards that are issued will create less dilution due to fewer aggregate shares issued, it is also expected that the amount of cash received by us from the exercise of stock options will decline and our financial condition and liquidity could be adversely affected as a result.

We have significant foreign operations and there are inherent risks in operating abroad.

During the second quarter of fiscal year 2005, approximately 31% of our net sales were derived from customers outside the United States. In addition, we conduct the majority of our headset assembly operations in our manufacturing facility located in Mexico, and we obtain most of the components and subassemblies used in our products from various foreign suppliers. A fire, flood or earthquake, political unrest or other disaster or condition affecting our facilities could have a material adverse effect on our business, financial condition and results of operations. We also purchase a growing number of turn-key products directly from Asia. The inherent risks of international operations, either in Mexico or in Asia, could materially adversely affect our business, financial condition and results of operations. The typ es of risks faced in connection with international operations and sales include, among others:

fluctuations in foreign exchange rates;
cultural differences in the conduct of business;
greater difficulty in accounts receivable collection;
unexpected changes in regulatory requirements;
tariffs and other trade barriers;
economic and political conditions in each country;
management and operation of an enterprise spread over various countries; and
the burden of complying with a wide variety of foreign laws.

Our success depends on our ability to assimilate new technologies in our products and to properly train our channel partners in the use of those products.

The markets for video and voice communications and network systems products are characterized by rapidly changing technology, evolving industry standards and frequent new product introductions. The success of our new products depends on several factors, including proper new product definition, product cost, timely completion and introduction of new products, proper positioning of new products in relation to our total product portfolio and their relative pricing, differentiation of new products from those of our competitors and market acceptance of these products. Additionally, properly addressing the complexities associated with compatibility issues, channel partner training, technical and sales support as well as field support are also factors that may affect our success in this market. When we take any significan t actions regarding our product offerings, or acquire new product offerings, it is important to educate and train our channel partners to avoid any confusion as to the desirability of the new product offering compared to our existing product offerings. We may not identify successful new product opportunities and develop and bring products to market in a timely manner or be successful in developing a service provider strategy. Additionally, we cannot assure you that competing technologies developed by others will not render our products or technologies obsolete or noncompetitive. Further, as we introduce new products that can or will render existing products obsolete, these product transition cycles may not go smoothly, causing an increased risk of inventory obsolescence and relationship issues with our channel partners. The failure of our new product development efforts, any inability to service or maintain the necessary third-party interoperability licenses, our inability to properly manage product transiti on and our inability to enter new markets, such as the service provider market, would harm our business and results of operations.

We face and might in the future face intellectual property infringement claims that might be costly to resolve.

We have from time to time received, and may in the future receive, communications from third parties asserting patent or other intellectual property rights covering our products. In addition, our industry is characterized by uncertain and conflicting intellectual property claims and vigorous protection and pursuit of intellectual property rights or positions which have resulted in significant and protracted and expensive litigation. We cannot assure you that we will prevail in any such litigation, that intellectual property claims will not be made against us in the future or that we will not be prohibited from using the technologies subject to any such claims or be required to obtain licenses and make corresponding royalty payments. In addition, the necessary management attention to, and legal costs associated w ith, litigation can have a significant adverse effect on our operating results and financial condition.

We have intellectual property rights that could be infringed by others.

Our success will depend in part on our ability to protect our copyrights, patents, trademarks, trade dress, trade secrets, and other intellectual property, including our rights to certain domain names. We rely primarily on a combination of nondisclosure agreements and other contractual provisions as well as patent, trademark, trade secret, and copyright laws to protect our proprietary rights. Effective trademark, patent, copyright, and trade secret protection may not be available in every country in which our products and media properties are distributed to customers. We currently hold 91 United States patents and additional foreign patents and will continue to seek patents on our inventions when we believe it to be appropriate. The process of seeking patent protection can be lengthy and expensive. Patents may n ot be issued in response to our applications, and patents that are issued may be invalidated, circumvented or challenged by others. If we are required to enforce our patents or other proprietary rights through litigation, the costs and diversion of management’s attention could be substantial. In addition, the rights granted under any patents may not provide us competitive advantages or be adequate to safeguard and maintain our proprietary rights. Moreover, the laws of certain countries do not protect our proprietary rights to the same extent as do the laws of the United States. If we do not enforce and protect our intellectual property rights, it could materially adversely affect our business, financial condition and results of operations.

We are exposed to potential lawsuits alleging defects in our products and/or hearing loss caused by our products.

The use of our products exposes us to the risk of product liability and hearing loss claims. These claims have in the past been, and are currently being, asserted against us. None of the previously resolved claims have materially affected our business, financial condition and results of operations, nor do we believe that any of the pending claims will have such an effect. Although we maintain product liability insurance, the coverage provided under our policies could be unavailable or insufficient to cover the full amount of any such claim. Therefore, successful product liability or hearing loss claims brought against us could have a material adverse effect upon our business, financial condition and results of operations.


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Our mobile headsets are used with mobile telephones. There has been continuing public controversy over whether the radio frequency emissions from mobile telephones are harmful to users of mobile phones. We believe that there is no conclusive proof of any health hazard from the use of mobile telephones but that research in this area is incomplete. We have tested our headsets through independent laboratories and have found that use of our headsets reduces radio frequency emissions at the user’s head to virtually zero. However, if research was to establish a health hazard from the use of mobile telephones or public controversy grows even in the absence of conclusive research findings, there could be an adverse impact on the demand for mobile phones, which reduces demands for headset products.

There is also continuing and increasing public controversy over the use of mobile telephones by operators of motor vehicles and we may be subject to claims arising from allegations that use of a mobile telephone and headset contributed to a motor vehicle accident. The coverage provided under our product liability as general liability policies could be unavailable or insufficient to cover the full amount of any such claim. Therefore, successful product liability claims brought against us could have a material adverse effect upon our business, financial condition and results of operations.

While we believe we comply with environmental laws and regulations, we are still exposed to potential risks from environmental matters.

We are subject to various federal, state, local and foreign environmental laws and regulations, including those governing the use, discharge and disposal of hazardous substances in the ordinary course of our manufacturing process. Although we believe that our current manufacturing operations comply in all material respects with applicable environmental laws and regulations, environmental legislation has been enacted and may in the future be enacted or interpreted to create environmental liability with respect to our facilities or operations. We have included in our financial statements a reserve of $1.5 million for possible environmental remediation of the site of one of our previous businesses. While no claims have been asserted against us in connection with this matter, such claims could be asserted in th e future and any liability that might result could exceed the amount of the reserve.

We are actively working to gain an understanding of the complete requirements concerning the removal of certain potentially environmentally sensitive materials from our products to comply with the European Union Directives on Restrictions on certain Hazardous Substances on electrical and electronic equipment ("ROHS") and on Waste Electrical and Electronic Equipment ("WEEE"). Some of our customers are requesting that we implement these new compliance standards sooner than the legislation would require. While we believe that we will have the resources and ability to fully meet our customers’ requests, and spirit of the ROHS and WEEE directives, if unusual occurrences arise or if we are wrong in our assessment of what it will take to fully comply, there is a risk that we will not be able to meet the aggressive schedule set by our customers or comply with the legislation as passed by the EU member states. If that were to happen, a material negative effect on our financial results may occur.

While we believe that we currently have adequate control structures in place, we are still exposed to potential risks from recent legislation requiring companies to evaluate controls under Section 404 of the Sarbanes Oxley Act of 2002.

We are working diligently toward evaluating our internal controls systems in order to allow management to report on, and our independent registered public accounting firm to attest to, our internal controls, as required by this legislation. We are performing the system and process evaluation and testing (and any necessary remediation) required in an effort to comply with the management certification and independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes Oxley Act. As a result, we have incurred and expect to incur additional expenses and consumption of management’s time. While we anticipate being able to fully implement the requirements relating to internal controls and all other aspects of Section 404 in a timely fashion, we cannot be certain as t o the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations since there is no precedent available by which to measure compliance adequacy. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by regulatory authorities, such as the Securities Exchange Commission or the New York Stock Exchange. Any such action could adversely effect our financial results.


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Future acquisitions involve material risks.

We may in the future acquire other companies. There are inherent risks in acquiring other companies or businesses that could materially adversely affect our business, financial condition and results of operations. The types of risks faced in connection with acquisitions include, among others:

cultural differences in the conduct of business;
difficulties in integration of the operations, technologies, and products of the acquired company;
the risk that the consolidation of the acquired company may not produce the enhanced efficiencies or be as successful as we may have anticipated;
the risk of diverting management’s attention from normal daily operations of the business;
difficulties in integrating the transactions and business information systems of the acquired company; and
the potential loss of key employees of the acquired company.

Mergers and acquisitions, particularly those of high-technology companies, are inherently risky, and no assurance can be given that future acquisitions will be successful and will not materially adversely affect our business, operating results or financial condition. We must also manage any acquisition related growth effectively. Failure to manage growth effectively and successfully integrate acquisitions made by us could materially harm our business and operating results.

Provisions in our charter documents and Delaware law and our adoption of a stockholder rights plan may delay or prevent a third party from acquiring us, which could affect the price at which you can sell your stock.

Our Board of Directors has the authority to issue preferred stock and to determine the price, rights, preferences, privileges and restrictions, including voting and conversion rights, of those shares without any further vote or action by the stockholders. The issuance of our preferred stock could have the effect of making it more difficult for a third party to acquire us. In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which could also have the effect of delaying or preventing our acquisition by a third party. Further, certain provisions of our Certificate of Incorporation and bylaws could delay or make more difficult a merger, tender offer or proxy contest, which could adversely affect the market price of our common stock.

In 2002, our Board of Directors adopted a stockholder rights plan, pursuant to which we distributed one right for each outstanding share of common stock held by stockholders of record as of April 12, 2002. Because the rights may substantially dilute the stock ownership of a person or group attempting to take us over without the approval of our board of directors, the plan could make it more difficult for a third party to acquire us, or a significant percentage of our outstanding capital stock, without first negotiating with our board of directors regarding such acquisition.


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Item 3. Quantitative and Qualitative Disclosures About Market Risk

The following discusses our exposure to market risk related to changes in interest rates and foreign currency exchange rates. This discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results could vary materially as a result of a number of factors including those set forth in "Risk Factors Affecting Future Operating Results."

INTEREST RATE RISK

At September 30, 2004, we had cash and cash equivalents totaling $210.3 million, compared to $180.6 million at March 31, 2004. At September 30, 2004, we had $4.0 million in marketable securities and none at March 31, 2004. Cash equivalents have an original or remaining maturity when purchased of ninety days or less; marketable securities have an original or remaining maturity when purchased of greater than ninety days, but less than one year. We believe we are not currently exposed to significant interest rate risk as our cash was invested in securities or interest bearing accounts with maturities of less than ninety days. The average maturity period for our investments at September 30, 2004, was less than three months. The taxable equivalent interest rates locked in on those investments averages approximately 2 .23%. Our investment policy requires that we only invest in deposit accounts, certificates of deposit or commercial paper with minimum ratings of A1/P1, money market mutual funds with minimum ratings of AAA, U.S. treasury bills, notes or bonds, federal agency bonds or notes, corporate bonds with minimum ratings of A/A, municipal bonds or notes with minimum ratings of A1/VMIG1, and auction rate preferred stock with a minimum rating of A/A.

Our $75 million revolving credit facility and letter of credit subfacility both expire on July 31, 2005. As of October 29, 2004, we had no cash borrowings under the revolving credit facility and $1.8 million outstanding under the letter of credit subfacility. If we choose to borrow under this facility in the future and market interest rates rise, then our interest payments would increase accordingly.

FOREIGN CURRENCY EXCHANGE RATE RISK

In the second quarter of fiscal 2005, approximately 31% of our net sales were derived from customers outside the United States, with 21% of total revenues denominated in foreign currencies, predominately the Euro and the Great British Pound. In fiscal year 2002, we implemented a hedging strategy to minimize the effect of these currency fluctuations. Specifically, we began to hedge our European transaction exposure, hedging both our Euro and Great British Pound positions. However, we can provide no assurance that exchange rate fluctuations will not materially adversely affect our business in the future.

As of September 30, 2004, we had foreign currency forward contracts of approximately €5.1 and £1.9 million denominated in Euros and Great British Pounds, respectively. These forward contracts hedge against a portion of our forecasted foreign currency-denominated receivables, payables and cash balances. The table below provides information about our financial instruments and underlying transactions that are sensiti ve to foreign currency exchange rates, including foreign currency forward-exchange contracts and nonfunctional currency-denominated receivables and payables. If these net exposed currency positions are subjected to either a 10% appreciation or 10% depreciation versus the U.S. dollar we could incur a loss of $0.9 million or a gain of $0.8 million.


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The table below presents the effect on our foreign currency transaction exposure of a hypothetical 10% appreciation and a 10% depreciation of the U.S. dollar against the indicated currencies.

September 30, 2004
(in millions)			Net
			Underlying		Net		FX		FX
			Foreign		Exposed		Gain (Loss)		Gain (Loss)
	USD Value		Currency		Long (Short)		From 10%		From 10%
	of Net FX		Transaction		Currency		Appreciation		Depreciation
Currency - forward contracts	Contracts		Exposures		Position		of USD		of USD
Euro	$	6.3	$	13.6	$	7.3	$	(0.8)	$	0.7
Great British Pound		3.4		4.4		1.0		(0.1)		0.1

Net position	$	9.7	$	18.0	$	8.3	$	(0.9)	$	0.8

As of September 30, 2004, we had foreign currency put and call option contracts of approximately €36.4 million and £11.8 million denominated in Euros and Great British Pounds, respectively. Our option contracts hedge against a portion of our forecasted foreign denominated sales. The table below provides information about our foreign currency option contracts that are sensitive to foreign currency exchange rates. If these exposed currency positions are subjected to either a 10% appreciation or 10% depreciation ver sus the U.S. dollar we could incur a gain of $5.8 million or a loss of $6.2 million.

The table below presents the impact on our currency option contracts of a hypothetical 10% appreciation and a 10% depreciation of the U.S. dollar against the indicated option contract type for cash flow hedges:

September 30, 2004
(in millions)
				FX		FX
				Gain (Loss)		Gain (Loss)
	USD Value			From 10%		From 10%
	of Net FX			Appreciation		Depreciation
Currency - option contracts	Contracts			of USD		of USD
Call options	$	(66.4	)	$	2.1	$	(5.2	)
Put options		63.5			3.7		(1.0	)

Net position	$	(2.9	)	$	5.8	$	(6.2	)


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Item 4. Controls And Procedures

(a) Evaluation of disclosure controls and procedures. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q were effective in ensuring that information required to be disclosed in reports that we file or submit under the Securities Excha nge Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b) Changes in internal control over financial reporting. There was no change in our internal control over financial reporting (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


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PART II. -- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The appeal in the lawsuit filed on February 8, 2001 in the Superior Court in Santa Clara County, California by GN Hello Direct, Inc. was concluded in our favor on August 10, 2004. We were awarded and received from GN Hello Direct, Inc. a payment of $3.1 million. Plantronics may be entitled to additional attorneys fees and costs. For more information see our form 10-K filed May 26, 2004.

ITEM 6. EXHIBITS

(a)	Exhibits. The following exhibits are filed as part of this Quarterly Report on Form 10-Q.

EXHIBITS INDEX
Exhibit Number	Description of Document
3.1	Amended and Restated By-Laws of the Registrant (incorporated herein by reference from Exhibit (3.1) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 21, 2002).
3.2.1	Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on January 19, 1994 (incorporated herein by reference from Exhibit (3.1) to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-12696), filed on March 4, 1994).
3.2.2	Certificate of Retirement and Elimination of Preferred Stock and Common Stock of the Registrant filed with the Secretary of State of Delaware on January 11, 1996 (incorporated herein by reference from Exhibit (3.3) of the Registrant’s Annual Report on Form 10-K (File No. 001-12696), filed on September 27, 1996).
3.2.3	Certificate of Amendment of Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on August 7, 1997 (incorporated herein by reference from Exhibit (3.1) to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 8, 1997).
3.2.4	Certificate of Amendment of Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on May 23, 2000 (incorporated herein by reference from Exhibit (4.2) to the Registrant’s Registration Statement on Form S-8 (File No. 001-12696), filed on October 31, 2000).
3.3	Registrant’s Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock filed with the Secretary of State of the State of Delaware on April 1, 2002 (incorporated herein by reference from Exhibit (3.6) to the Registrant’s Form 8-A (File No. 001-12696), filed on March 29, 2002).
4.1	Preferred Stock Rights Agreement, dated as of March 13, 2002 between the Registrant and Equiserve Trust Company, N.A., including the Certificate of Designation, the form of Rights Certificate and the Summary of Rights attached thereto as Exhibits A, B, and C, respectively (incorporated herein by reference from Exhibit (4.1) to the Registrant’s Form 8-A (File No. 001-12696), filed on March 29, 2002).
10.1*	Plantronics, Inc. Non-EMEA Quarterly Profit Sharing Plan (incorporated herein by reference from Exhibit (10.1) to the Registrant’s Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.2*	Form of Indemnification Agreement between the Registrant and certain directors and executives and Schedule of Other Documents Omitted (incorporated herein by reference from Exhibit (10.1) to PI Holdings Inc.’s Quarterly Report on Form 10-Q (File No. 33-26770), filed February 9, 1993).
10.3*	Form of Employment Agreement, Addendum to Employment Agreement and Second Addendum to Employment Agreement between the Registrant and certain executives; and Schedule of Other Documents Omitted (incorporated herein by reference from Exhibit (10.2) to PI Holdings Inc.’s Quarterly Report on Form 10-Q (File No. 33-26770), filed February 9, 1993).
10.4.1*	Regular and Supplemental Bonus Plan (incorporated herein by reference from Exhibit (10.4(a)) to the Registrant’s Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.4.2*	Overachievement Bonus Plan (incorporated herein by reference from Exhibit (10.4(b)) to the Registrant’s Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.5.1	Lease Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located in Tijuana, Mexico (translation from Spanish original) (incorporated herein by reference from Exhibit (10.5.1) of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 6, 2004).
10.5.2	Lease Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located in Tijuana, Mexico (translation from Spanish original) (incorporated herein by reference from Exhibit (10.5.2) of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 6, 2004).
10.5.3	Lease Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located in Tijuana, Mexico (translation from Spanish original) (incorporated herein by reference from Exhibit (10.5.3) of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 6, 2004).
10.5.4	Lease Agreement dated October 2004 between Finsa Portafolios, S.A. DE C.V.and Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located in Tijuana, Mexico (translation from Spanish original) (incorporated herein by reference from Exhibit (10.5.4) of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 6, 2004).
10.6	Lease dated December 7, 1990 between Canyge Bicknell Limited and Plantronics Limited, a subsidiary of the Registrant, for premises located in Wootton Bassett, The United Kingdom (incorporated herein by reference from Exhibit (10.32) to the Registrant’s Registration Statement on Form S-1 (as amended) (File No.33-70744), filed on October 20, 1993).
10.7*	Amended and Restated 2003 Stock Plan (incorporated herein by reference from the Registrant's Definitive Proxy Statement on Form 14-A (File No. 001-12696), filed on May 26, 2004).
10.8*	1993 Stock Option Plan (incorporated herein by reference from Exhibit (10.8) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 21, 2002).


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10.9 1*	1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (10.29) to the Registrant's Registration Statement on Form S-1 (as amended) (File No. 33-70744), filed on October 20, 1993).
10.9.2*	Amendment to the 1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (4.4) to the Registrant's Registration Statement on Form S-8 (File No. 333-14833), filed on October 25, 1996).
10.9.3*	Amendment No. 2 to the 1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (10.9(a)) to the Registrant's Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.9.4 *	Amendment No. 3 to the 1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (10.9(b)) to the Registrant's Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.9.5*	Amendment No. 4 to the 1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (10.9.5) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 21, 2002).
10.10.1*	2002 Employee Stock Purchase Plan (incorporated herein by reference from Exhibit (10.10.2) to the Registrant's Annual Report on Form 10-K (File Number 001-12696), filed on September 21, 2002).
10.11.1	Trust Agreement Establishing the Plantronics, Inc. Annual Profit Sharing/Individual Savings Plan Trust (incorporated herein by reference from Exhibit (4.3) to the Registrant's Registration Statement on Form S-8 (File No. 333-19351), filed on January 7, 1997).
10.11.2*	Plantronics, Inc. 401(k) Plan, effective as of April 2, 2000 (incorporated herein by reference from Exhibit (10.11) to the Registrant's Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.12*	Resolutions of the Board of Directors of Plantronics, Inc. Concerning Executive Stock Purchase Plan (incorporated herein by reference from Exhibit (4.4) to the Registrant's Registration Statement on Form S-8 (as amended) (File No. 333-19351), filed on March 25, 1997).
10.13.1*	Plantronics, Inc. Basic Deferred Compensation Plan, as amended August 8, 1996 (incorporated herein by reference from Exhibit (4.5) to the Registrant's Registration Statement on Form S-8 (as amended) (File No. 333-19351), filed on March 25, 1997).
10.13.2	Trust Agreement Under the Plantronics, Inc. Basic Deferred Stock Compensation Plan (incorporated herein by reference from Exhibit (4.6) to the Registrant's Registration Statement on Form S-8 (as amended) (File No. 333-19351), filed on March 25, 1997).
10.13.3	Plantronics, Inc. Basic Deferred Compensation Plan Participant Election (incorporated herein by reference from Exhibit (4.7) to the Registrant's Registration Statement on Form S-8 (as amended) (File No. 333-19351), filed on March 25, 1997).
10.14.1*	Employment Agreement dated as of October 4, 1999 between Registrant and Ken Kannappan (incorporated herein by reference from Exhibit (10.15) to the Registrant's Annual Report on Form 10-K405 (File No. 001-12696), filed on September 1, 2000).
10.14.2*	Employment Agreement dated as of November 1996 between Registrant and Don Houston (incorporated herein by reference from Exhibit (10.14.2) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 2, 2003).
10.14.3*	Employment Agreement dated as of March 1997 between Registrant and Barbara Scherer (incorporated herein by reference from Exhibit (10.14.4) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 2, 2003).
10.14.4*	Employment Agreement dated as of May 1998 between Registrant and Craig May (incorporated herein by reference from Exhibit (10.14.3) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 2, 2003).
10.14.5*	Employment Agreement dated as of May 2001 between Registrant and Joyce Shimizu (incorporated herein by reference from Exhibit (10.14.5) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 2, 2003).
10.14.6*	Employment Agreement dated as of June 2004 between Registrant and Mark Brier.
10.15.1	Credit Agreement dated as of October 31, 2003 between Registrant and Wells Fargo Bank N.A. (incorporated herein by reference from Exhibit (10.1) of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on November 7, 2003).
10.15.2	First Amendment to Credit Agreement dated as of August, 1, 2004, between Registrant and Wells Fargo Bank N.A.
10.16*	Restricted Stock Award Agreement dated as of October 12, 2004, between Registrant and certain of its executive officers (incorporated herein by reference from Exhibit (10.1) of the Registrant's Current Report on Form 8-K (File No. 001-12696), filed on October 14, 2004).
31.1	CEO’s Certification Pursuant to Rule 13a-14(a)/15d-14(a)
31.2	CFO’s Certification Pursuant to Rule 13a-14(a)/15d-14(a)
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the CEO and CFO
*	Indicates a management contract or compensatory plan, contract or arrangement in which any Director or any Executive Officer participates.


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PLANTRONICS, INC.


Date: November 5, 2004	By:	/s/ Barbara V. Scherer
	Barbara V. Scherer
	Senior Vice President - Finance and Administration and Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer of the Registrant)


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EXHIBITS

The following exhibits are filed as part of this Quarterly Report on Form 10-Q.

EXHIBITS INDEX
Exhibit Number	Description of Document
3.1	Amended and Restated By-Laws of the Registrant (incorporated herein by reference from Exhibit (3.1) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 21, 2002).
3.2.1	Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on January 19, 1994 (incorporated herein by reference from Exhibit (3.1) to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-12696), filed on March 4, 1994).
3.2.2	Certificate of Retirement and Elimination of Preferred Stock and Common Stock of the Registrant filed with the Secretary of State of Delaware on January 11, 1996 (incorporated herein by reference from Exhibit (3.3) of the Registrant’s Annual Report on Form 10-K (File No. 001-12696), filed on September 27, 1996).
3.2.3	Certificate of Amendment of Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on August 7, 1997 (incorporated herein by reference from Exhibit (3.1) to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 8, 1997).
3.2.4	Certificate of Amendment of Restated Certificate of Incorporation of the Registrant filed with the Secretary of State of Delaware on May 23, 2000 (incorporated herein by reference from Exhibit (4.2) to the Registrant’s Registration Statement on Form S-8 (File No. 001-12696), filed on October 31, 2000).
3.3	Registrant’s Certificate of Designation of Rights, Preferences and Privileges of Series A Participating Preferred Stock filed with the Secretary of State of the State of Delaware on April 1, 2002 (incorporated herein by reference from Exhibit (3.6) to the Registrant’s Form 8-A (File No. 001-12696), filed on March 29, 2002).
4.1	Preferred Stock Rights Agreement, dated as of March 13, 2002 between the Registrant and Equiserve Trust Company, N.A., including the Certificate of Designation, the form of Rights Certificate and the Summary of Rights attached thereto as Exhibits A, B, and C, respectively (incorporated herein by reference from Exhibit (4.1) to the Registrant’s Form 8-A (File No. 001-12696), filed on March 29, 2002).
10.1*	Plantronics, Inc. Non-EMEA Quarterly Profit Sharing Plan (incorporated herein by reference from Exhibit (10.1) to the Registrant’s Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.2*	Form of Indemnification Agreement between the Registrant and certain directors and executives and Schedule of Other Documents Omitted (incorporated herein by reference from Exhibit (10.1) to PI Holdings Inc.’s Quarterly Report on Form 10-Q (File No. 33-26770), filed February 9, 1993).
10.3*	Form of Employment Agreement, Addendum to Employment Agreement and Second Addendum to Employment Agreement between the Registrant and certain executives; and Schedule of Other Documents Omitted (incorporated herein by reference from Exhibit (10.2) to PI Holdings Inc.’s Quarterly Report on Form 10-Q (File No. 33-26770), filed February 9, 1993).
10.4.1*	Regular and Supplemental Bonus Plan (incorporated herein by reference from Exhibit (10.4(a)) to the Registrant’s Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.4.2*	Overachievement Bonus Plan (incorporated herein by reference from Exhibit (10.4(b)) to the Registrant’s Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.5.1	Lease Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located in Tijuana, Mexico (translation from Spanish original) (incorporated herein by reference from Exhibit (10.5.1) of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 6, 2004).
10.5.2	Lease Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located in Tijuana, Mexico (translation from Spanish original) (incorporated herein by reference from Exhibit (10.5.2) of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 6, 2004).
10.5.3	Lease Agreement dated May 2004 between Finsa Portafolios, S.A. DE C.V.and Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located in Tijuana, Mexico (translation from Spanish original) (incorporated herein by reference from Exhibit (10.5.3) of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 6, 2004).
10.5.4	Lease Agreement dated October 2004 between Finsa Portafolios, S.A. DE C.V.and Plamex, S.A. de C.V., a subsidiary of the Registrant, for premises located in Tijuana, Mexico (translation from Spanish original) (incorporated herein by reference from Exhibit (10.5.4) of the Registrant's Quarterly Report on Form 10-Q (File No. 001-12696), filed on August 6, 2004).
10.6	Lease dated December 7, 1990 between Canyge Bicknell Limited and Plantronics Limited, a subsidiary of the Registrant, for premises located in Wootton Bassett, The United Kingdom (incorporated herein by reference from Exhibit (10.32) to the Registrant’s Registration Statement on Form S-1 (as amended) (File No.33-70744), filed on October 20, 1993).
10.7*	Amended and Restated 2003 Stock Plan (incorporated herein by reference from the Registrant's Definitive Proxy Statement on Form 14-A (File No. 001-12696), filed on May 26, 2004).
10.8*	1993 Stock Option Plan (incorporated herein by reference from Exhibit (10.8) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 21, 2002).

10.9 1*	1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (10.29) to the Registrant's Registration Statement on Form S-1 (as amended) (File No. 33-70744), filed on October 20, 1993).
10.9.2*	Amendment to the 1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (4.4) to the Registrant's Registration Statement on Form S-8 (File No. 333-14833), filed on October 25, 1996).
10.9.3*	Amendment No. 2 to the 1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (10.9(a)) to the Registrant's Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.9.4 *	Amendment No. 3 to the 1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (10.9(b)) to the Registrant's Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.9.5*	Amendment No. 4 to the 1993 Director Stock Option Plan (incorporated herein by reference from Exhibit (10.9.5) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 21, 2002).
10.10.1*	2002 Employee Stock Purchase Plan (incorporated herein by reference from Exhibit (10.10.2) to the Registrant's Annual Report on Form 10-K (File Number 001-12696), filed on September 21, 2002).
10.11.1	Trust Agreement Establishing the Plantronics, Inc. Annual Profit Sharing/Individual Savings Plan Trust (incorporated herein by reference from Exhibit (4.3) to the Registrant's Registration Statement on Form S-8 (File No. 333-19351), filed on January 7, 1997).
10.11.2*	Plantronics, Inc. 401(k) Plan, effective as of April 2, 2000 (incorporated herein by reference from Exhibit (10.11) to the Registrant's Report on Form 10-K (File No. 001-12696), filed on September 1, 2001).
10.12*	Resolutions of the Board of Directors of Plantronics, Inc. Concerning Executive Stock Purchase Plan (incorporated herein by reference from Exhibit (4.4) to the Registrant's Registration Statement on Form S-8 (as amended) (File No. 333-19351), filed on March 25, 1997).
10.13.1*	Plantronics, Inc. Basic Deferred Compensation Plan, as amended August 8, 1996 (incorporated herein by reference from Exhibit (4.5) to the Registrant's Registration Statement on Form S-8 (as amended) (File No. 333-19351), filed on March 25, 1997).
10.13.2	Trust Agreement Under the Plantronics, Inc. Basic Deferred Stock Compensation Plan (incorporated herein by reference from Exhibit (4.6) to the Registrant's Registration Statement on Form S-8 (as amended) (File No. 333-19351), filed on March 25, 1997).
10.13.3	Plantronics, Inc. Basic Deferred Compensation Plan Participant Election (incorporated herein by reference from Exhibit (4.7) to the Registrant's Registration Statement on Form S-8 (as amended) (File No. 333-19351), filed on March 25, 1997).
10.14.1*	Employment Agreement dated as of October 4, 1999 between Registrant and Ken Kannappan (incorporated herein by reference from Exhibit (10.15) to the Registrant's Annual Report on Form 10-K405 (File No. 001-12696), filed on September 1, 2000).
10.14.2*	Employment Agreement dated as of November 1996 between Registrant and Don Houston (incorporated herein by reference from Exhibit (10.14.2) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 2, 2003).
10.14.3*	Employment Agreement dated as of March 1997 between Registrant and Barbara Scherer (incorporated herein by reference from Exhibit (10.14.4) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 2, 2003).
10.14.4*	Employment Agreement dated as of May 1998 between Registrant and Craig May (incorporated herein by reference from Exhibit (10.14.3) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 2, 2003).
10.14.5*	Employment Agreement dated as of May 2001 between Registrant and Joyce Shimizu (incorporated herein by reference from Exhibit (10.14.5) to the Registrant's Annual Report on Form 10-K (File No. 001-12696), filed on September 2, 2003).
10.14.6*	Employment Agreement dated as of June 2004 between Registrant and Mark Brier.
10.15.1	Credit Agreement dated as of October 31, 2003 between Registrant and Wells Fargo Bank N.A (incorporated herein by reference from Exhibit (10.1) of the Registrant's Annual Report on Form 10-Q (File No. 001-12696), filed on November 7, 2003).
10.15.2	First Amendment to Credit Agreement dated as of August, 1, 2004, between Registrant and Wells Fargo Bank N.A.
10.16*	Restricted Stock Award Agreement dated as of October 12, 2004, between Registrant and certain of its executive officers (incorporated herein by reference from Exhibit (10.1) of the Registrant's Current Report on Form 8-K (File No. 001-12696), filed on October 14, 2004).
31.1	CEO’s Certification Pursuant to Rule 13a-14(a)/15d-14(a)
31.2	CFO’s Certification Pursuant to Rule 13a-14(a)/15d-14(a)
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the CEO and CFO
*	Indicates a management contract or compensatory plan, contract or arrangement in which any Director or any Executive Officer participates.


	35