SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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



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



Delaware	77-0207692
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)



Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

As of ~~January~~July 29, 2016, ~~33,651,309~~33,185,164 shares of the registrant's common stock were outstanding.

Plantronics®, Clarity®, and Simply Smarter Communications® are trademarks or registered trademarks of Plantronics, Inc.

DECT™ is a trademark of ETSI registered for the benefit of its members in France and other jurisdictions.

The Bluetooth name and the Bluetooth® trademarks are owned by Bluetooth SIG, Inc. and are used by Plantronics, Inc. under

license. All other trademarks are the property of their respective owners.

~~Table of Contents~~

Part I -- FINANCIAL INFORMATION

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

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 ("Securities Act") and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act"). Forward-looking statements may generally be identified by the use of such words as "anticipate," "believe," “could,” "expect," "intend," “may,” "plan," "potential," "shall," "will," “would,” or variations of such words and similar expressions, or the negative of these terms. Specific forward-looking statements contained within this Form 10-Q include, but are not limited to, statements regarding (i) how our new cloud-based service offerings complement our existing and future hardware offerings, (ii) our belief that our "as-a-service" offerings will expand the reach of our solutions portfolio and grow our business, (iii) our intention to provide customer data insight through software and service solutions, (iv) the Unified Communications ("UC") market, including adoption of UC products, our position, and timing and growth expectations in this market, (v) our expectations regarding the impact of our Simply Smarter Communications technology solutions in the UC market, (vi) our intentions regarding investments in long-term growth opportunities and our core research and development effort, (vii) our intentions regarding the focus of our sales, marketing and customer services and support teams on UC, (viii) the future of UC technologies, including the transition of businesses to UC-supported systems, the effect on headset adoption and use, the effects on enterprises that adopt UC and our expectations concerning our revenue opportunity and profit growth, (ix) our expectations for the expansion of key strategic alliances, (x) our position in the Enterprise and Consumer markets, (xi) our belief that our revenues may be materially affected by fluctuations in exchange rates, the global economy and consumer spending, (xii) our expectations regarding the global economy, as well as our investment strategies and focus, (xiii) the maintenance of our reputation in the industry, (xiv) our expenses, including research, development and engineering expenses and selling, general and administrative expenses, (xv) fluctuations in our cash provided by operating activities as a result of various factors including fluctuations in revenues and operating expenses, timing of product shipments, accounts receivable collections, inventory and supply chain management, and the timing and amount of taxes and other payments, (xvi) our future tax rate and payments related to unrecognized tax benefits, (xvii) our anticipated range of capital expenditures for the remainder of fiscal year 2017 and the sufficiency of our cash, cash equivalents, and cash from operations to sustain future operations and discretionary cash requirements, (xviii) our planned investment of and need for our foreign cash and our ability to repatriate that cash, (xix) our ability to draw funds on our credit facility as needed, (xx) future fluctuations in our cash provided by operating activities, (xxi) the sufficiency of our capital resources to fund operations, and (xxii) the outcome and effect of legal proceedings, as well as other statements regarding our future operations, financial condition and prospects and business strategies. Such forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. Factors that could cause actual results and events to differ materially from such forward-looking statements are included, but not limited to, those discussed in this Quarterly Report on Form 10-Q; in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on May 16, 2016; and other documents filed with the SEC. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

OVERVIEW

We are a leading designer, manufacturer, and marketer of lightweight communications headsets, telephone headset systems, other communication endpoints, and accessories for the worldwide business and consumer markets under the Plantronics brand. In addition, we manufacture and market specialty telephone products under our Clarity brand, such as telephones for the hearing impaired, and other related products for people with special communication needs. Our major product categories are Enterprise, which includes headsets optimized for Unified Communications (“UC”), other corded and cordless communication headsets, audio processors, and telephone systems; and Consumer, which includes Bluetooth and corded products for mobile device applications, personal computer and gaming headsets, and specialty products marketed for hearing impaired individuals.

We ship our products to approximately 80 countries through a network of distributors, retailers, resellers, wireless carriers, original equipment manufacturers, and telephony service providers. We have well-developed distribution channels in North America, Europe, and in some parts of the Asia Pacific region where use of our products is widespread. Our distribution channels in other geographic regions are less mature, and while we primarily serve contact centers in those regions, we continue to expand into the office, mobile, and gaming and computer audio markets in those regions and other international locations.



Net Revenues (in millions)	Operating Income (in millions)

Compared to the prior year quarter, net revenues increased 8.1% to $223.1 million. The increase in net revenues was primarily driven by higher revenues within our Consumer product category, which grew 23.1% from the year ago period. Net revenues within our Enterprise product category also increased, growing by 2.7% from the year ago period. We generate approximately 40% to 45% of our revenues from international sales; therefore, the impact of currency movements on our net revenues can be significant. In addition, in some international locations where we sell in United States Dollar ("USD") we also face additional pricing pressure, discounting, and lost business as the stronger USD negatively impacts buying decisions. While the overall impact of foreign exchange fluctuations on our net revenues was not material, unfavorable impacts from the global economy and consumer spending together with exchange rate fluctuations could continue to negatively impact our net revenues in the remainder of our fiscal year 2017.

~~Item~~ Our first quarter operating profit increased by 6.4% to $31.3 million when compared to the prior year quarter, due primarily to increased revenues, partially offset by a $5.0 million litigation charge related to discovery sanctions imposed by the court in the GN Netcom, Inc. ("GN") anti-trust case (for further information about our material legal proceedings, refer to Note 6, Commitments and Contingencies, of the accompanying notes to condensed consolidated financial statements). Net income for the first quarter decreased 4.0% to $20.4 million, representing approximately 9.1% of our net revenues. The decrease from the prior year period was primarily due to higher interest expense in the first quarter of fiscal year 2017 driven by a full quarter of interest expense on the 5.50% Senior Notes (described below) compared with only one month of such expense in the year ago quarter.

Revenues from our Consumer products channel are seasonal and typically strongest in our third fiscal quarter, which includes the majority of the holiday shopping season. Additionally, other factors directly impact our Consumer product category performance, such as consumer preferences, changes in consumer confidence and other macroeconomic factors, fluctuations in foreign currency rates relative to the USD, product life-cycles (including the introduction and pace of adoption of new technology), and the competitive retail environment.

While our Consumer business has been impacted in recent quarters by a decline in sales volumes in our mono Bluetooth products as the category matures and declines, we did experience growth in the product line during the first quarter of fiscal year 2017 driven by the launch of our premium Voyager 5200 model. Additionally, the unit volumes in our stereo Bluetooth product line increased when compared to the year ago period, driven primarily by the newly launched BackBeat FIT refresh and BackBeat Go3. Although we have been building our stereo product portfolio over the last several years, it is not yet as robust as our mono Bluetooth product portfolio. As a result of continued decline in the mono Bluetooth market and consumers' increased preference toward stereo Bluetooth products, we have reduced the amount we expect to invest in our non-premium mono Bluetooth portfolio while shifting that investment toward additional stereo Bluetooth products.

In the first quarter of fiscal year 2017 we launched a preliminary release of our new peripheral "as-a-service" offerings. We anticipate these cloud-based service offerings will complement our existing and future suites of hardware products as we move toward a hybrid business model of hardware, software, and services. We believe that our "as-a-service" offerings will allow us to expand the reach of our solutions portfolio and grow our business. During fiscal year 2017, we will continue to strive to transform data into actionable insights for our customers through software and service solutions that offer reporting on asset management, usage, and conversation/acoustic health.

Looking forward to the remainder of fiscal year 2017, UC continues to be our primary focus area. With the vast majority of the UC opportunity still ahead of us, we believe we are in the early stage of a potentially long period of growth. We believe UC represents our key long-term driver of revenue and profit growth, as we anticipate UC systems will become more commonly adopted by enterprises to reduce costs and improve collaboration. We believe growth of UC will increase overall headset adoption in enterprise environments, and we expect most of the growth in our Enterprise product category over the next five years to come from headsets designed for UC.

We remain cautious about the macroeconomic environment due to global economic and geopolitical uncertainty, which makes it difficult for us to gauge what impact the economy may have on our future business. Moreover, the UC market has not matured as quickly as we had initially anticipated. We will continue to monitor and prioritize expenditures that further our strategic long-term growth opportunities, including the use of software and services as part of our portfolio. UC will also remain the central focus of our sales force, marketing group, and other customer service and support teams as we continue investing in key strategic alliances and integrations with major UC vendors.

RESULTS OF OPERATIONS

Year-over-year Increase / (Decrease)(Q1 FY16 to Q1 FY17)

NET REVENUES (in millions)

Enterprise products represent our largest source of both revenues and unit volumes. Net revenues may vary due to seasonality, the timing of new product introductions and discontinuation of existing products, discounts and other incentives, and channel mix. Net revenues derived from sales into the Consumer products retail channel typically account for a seasonal increase in net revenues in the third quarter of our fiscal year.

Net revenues increased in the three months ended June 30, 2016 compared to the same period a year ago due primarily to higher revenues within our Consumer product category driven by the launch of new products within the quarter. This increase in consumer product revenues may reflect some load-in effects as our retail channel partners place higher initial orders; however, our retail channel inventory levels remain within a normal range for our business. Net revenues within our Enterprise product category also increased, driven by unit growth in our UC product category, which was partially offset by volume declines in our core Enterprise (non-UC) product category. While we may experience foreign exchange fluctuations in our net revenues during the remainder of fiscal year 2017, the overall foreign exchange impact during our first quarter was not material.

Geographic Information (in millions)

Compared to the same period in the prior year, U.S. net revenues increased 9.1% in the three months ended June 30, 2016due to solid growth in our domestic Consumer product sales, driven by newly launched stereo and mono Bluetooth products and growth in UC product revenues. These increases were partially offset by a decrease in core Enterprise product revenues.

International Consumer net revenues also increased with the majority of the increase attributable to newly launched stereo Bluetooth products and growth in UC product revenues. Hedging gains impacting revenue have diminished from $3.5 million in the prior year quarter to $0.2 million in the current quarter as currency rates have stabilized and last year's 12 month forward hedging rolls off. In addition, while we may experience foreign exchange fluctuations in our net revenues during the remainder of our fiscal year, the overall foreign exchange impact during our first quarter was not material.

COST OF REVENUES AND GROSS PROFIT

Cost of revenues consists primarily of direct manufacturing and contract manufacturer costs, warranty expense, freight expense, depreciation, duty expense, charge for excess and obsolete inventory, royalties, and an allocation of overhead expenses, including facilities, IT, and human resources.



	Three Months Ended
	June 30,						Increase
(in thousands, except percentages)	2015			2016			(Decrease)
Net revenues	$	206,358		$	223,106		$	16,748	8.1	%
Cost of revenues	99,000			110,033			11,033		11.1	%
Gross profit	$	107,358		$	113,073		$	5,715	5.3	%
Gross profit %	52.0		%	50.7		%

Compared to the prior year period, gross profit as a percentage of net revenues decreased in the three months ended June 30, 2016 due primarily to a product mix shift within Enterprise toward more UC sales, which carry lower margins than our non-UC Enterprise products, and a product mix from Enterprise to Consumer. The decrease was partially offset by favorable material cost reductions.

There are significant variances in gross profit percentages between our higher and lower margin products; therefore, small variations in product mix, which can be difficult to predict, can have a significant impact on our gross profit. Gross profit may also vary based on distribution channel, return rates, and other factors.

RESEARCH, DEVELOPMENT, AND ENGINEERING

Research, development, and engineering costs are expensed as incurred and consist primarily of compensation costs, outside services, including legal fees associated with protecting our intellectual property, expensed materials, travel expenses, depreciation, and an allocation of overhead expenses, including facilities, IT, and human resources.



	Three Months Ended
	June 30,						Increase
(in thousands, except percentages)	2015			2016			(Decrease)
Research, development, and engineering	$	23,194		$	22,344		$	(850	)	(3.7	)%
% of net revenues	11.2		%	10.0		%

During the three months ended June 30, 2016, research, development, and engineering expenses decreased compared to the same prior year period due primarily to decreased compensation and employee-related costs driven by lower headcount.

SELLING, GENERAL, AND ADMINISTRATIVE

Selling, general, and administrative expenses consist primarily of compensation costs, marketing costs, travel expenses, litigation and professional service fees, and allocations of overhead expenses, including facilities, IT, and human resources.



	Three Months Ended
	June 30,						Increase
(in thousands, except percentages)	2015			2016			(Decrease)
Selling, general, and administrative	$	55,678		$	55,787		$	109	0.2	%
% of net revenues	27.0		%	25.0		%

Compared to the same period a year ago, selling, general, and administrative expenses increased in the three months ended June 30, 2016 due primarily to increased legal fees related to on-going litigation, partially offset by decreased compensation and employee-related costs driven by lower headcount.

(GAIN) LOSS, NET FROM LITIGATION SETTLEMENTS



	Three Months Ended
	June 30,						Increase
(in thousands, except percentages)	2015			2016			(Decrease)
(Gain) loss, net from litigation settlements	$	(876	)	$	4,739		$	5,615	(641.0	)%
% of net revenues	0.4		%	2.1		%

In the first quarter of fiscal year 2017 we recorded a $5 million litigation charge within operating income related to discovery sanctions ordered by the court in the GN anti-trust case. This charge was partially offset by immaterial gains from unrelated patent/intellectual property cases. See Note 6, Commitments and Contingencies for further information regarding on-going litigation.

INTEREST EXPENSE

Interest expense of $2.7 million and $7.3 million for the three months ended June 30, 2015 and 2016, respectively, was primarily related to the 5.50% Senior Notes (as defined below) and included an immaterial amount in amortization of debt issuance costs.

INCOME TAX EXPENSE



	Three Months Ended
	June 30,						Increase
(in thousands except percentages)	2015			2016			(Decrease)
Income before income taxes	$	26,336		$	26,315		$	(21	)	(0.1	)%
Income tax expense	5,108			5,928			820			16.1	%
Net income	$	21,228		$	20,387		$	(841	)	(4.0	)%
Effective tax rate	19.4		%	22.5		%

Our effective tax rate for the three months ended June 30, 2016 was 22.5% compared to 19.4% in the prior year period. The increase in the effective tax rate for the three months ended June 30, 2016 is due primarily to a shift in our geographic mix of income from lower tax jurisdictions to higher tax jurisdictions and the favorable closure of audits in various jurisdictions resulting in a tax benefit in the year ago period. The increases were partially offset by a decrease from the federal research and development credit, which was permanently reinstated in December 2015.

We and our subsidiaries are subject to taxation in the U.S. as well as various foreign and state jurisdictions. All U.S. federal tax matters have been concluded for tax years prior to fiscal year 2013. The California Franchise Tax Board completed its examination of our 2007 and 2008 tax years. We have received a Notice of Proposed Assessment and responded by filing a protest letter. The amount of the proposed assessment is not material. Foreign income tax matters for material tax jurisdictions have been concluded for tax years prior to fiscal year 2011, except for the United Kingdom, which has been concluded for tax years prior to fiscal year 2015.

FINANCIAL CONDITION



Operating Cash Flow (in millions)	Investing Cash Flow(in millions)	Financing Cash Flow (in millions)

Our primary source of liquidity is cash provided by operating activities and, on occasion, financing obtained from capital markets.

We believe that internally generated cash flows are generally sufficient to support our businesses operations, capital expenditures, restructuring activities, principal and interest payment of debt, income tax payments and the payment of stockholder dividends, in addition to investments and share repurchases. We expect that cash provided by operating activities will fluctuate in future periods as a result of a number of factors, including fluctuations in our revenues and operating expenses, the timing of product shipments during the quarter, accounts receivable collections, inventory and supply chain management, and the timing and amount of tax, interest, annual bonus, and other payments.

As of June 30, 2016, we had a revolving credit facility available to provide up to $100.0 million of additional financing. The credit facility expires in May 2019.

Operating Activities

Net cash provided by operating activities during the three months ended June 30, 2016 decreased from the prior year period primarily due to an increase in accounts receivable driven by higher revenues, and lower net income after adjusting for non-cash items - primarily non-cash restructuring charges/payments and the remeasurement of our non-designated hedge instruments. These decreases were partially offset by an increase in accrued liabilities related to the $5 million litigation charge related to discovery sanctions ordered by the court in the GN anti-trust case taken during the quarter.

Investing Activities

Net cash used for investing activities during the three months ended June 30, 2016 decreased compared to the prior year period due primarily to a net increase in cash received from the sale/maturity of investments partially offset by an increase in capital expenditures.

We estimate total capital expenditures for fiscal year 2017 will be approximately $25.0 million to $30.0 million. Large capital expenditures during the year include costs associated with the purchase and related construction of a new smarter working office for our European headquarters in the Netherlands as well as costs associated with building and leasehold improvements at our U.S. headquarters, the implementation of a manufacturing execution system at our facility in Mexico, and other IT-related expenditures. The remainder of the anticipated capital expenditures for fiscal year 2017 consist primarily of capital investment in our manufacturing capabilities, including tooling for new products. We will continue to evaluate new business opportunities and new markets. Our future growth within the existing business or new opportunities and markets may require us to obtain additional financing or make additional capital expenditures to support such growth.

Financing Activities

Net cash used for financing activities during the three months ended June 30, 2016 increased from the prior year period. This increase was driven by the non-recurrence of net proceeds received from issuance of $500.0 million aggregate principal amount of 5.50% senior notes (the “5.50% Senior Notes”) in the year ago period partially offset by a decrease in cash used for repurchases of our common stock.

On August 2, 2016, we announced that our Audit Committee of the Board ("the Audit Committee") had declared a cash dividend of $0.15 per share, payable on September 9, 2016 to stockholders of record at the close of business on August 19, 2016. We expect to continue paying a quarterly dividend of $0.15 per share; however, the actual declaration of dividends and the establishment of record and payment dates are subject to final determination by the Audit Committee each quarter after its review of our financial performance and financial position.

Liquidity and Capital Resources

Our primary discretionary cash requirements have historically been for repurchases of our common stock and to fund stockholder dividends. As a result of the issuance of the 5.50% Senior Notes, we have contractually required interest payments of approximately $13.8 million each November and May through the life of the notes. These payments require use of our domestic cash.

In the third quarter of our fiscal year 2016 we approved a restructuring plan intended to optimize our organization and manage expenses to gain or improve operating efficiencies and profitability. We expect to make cash payments totaling approximately $1.8 million under this plans in fiscal year 2017, of which approximately $0.4 million will require use of our domestic cash.

In October 2012, GN brought an antitrust action against Plantronics, Inc., alleging violations of the Sherman Act, the Clayton Act, and Delaware common law. In July 2016, we were ordered to pay sanctions related to certain discovery matters in the litigation consisting of monetary sanctions in the form of reasonable fees and costs incurred by GN in connection with the disputes leading to the motion for sanctions in an amount to be determined, and punitive sanctions in the amount of $3 million. As a result, for the three months ended June 30, 2016, we have accrued a $5 million charge within accrued liabilities on our condensed consolidated balance sheet. We expect to make a $3 million payment related to this liability in the second quarter of fiscal year 2017 which will require the use of our domestic cash. The timing of any additional payments is not yet known. The court also awarded additional non-monetary sanctions, including possible evidentiary sanctions and adverse inference jury instructions at trial. We believe the order may be appealed and reversed upon a favorable resolution of the antitrust case and we are not accruing any financial damages related to the underlying antitrust case. We believe that the underlying antitrust action is without merit and are vigorously defending ourselves; however, if GN prevails in its antitrust suit against us, we could be required to pay substantial damages, which would have a material adverse effect on our financial position, statement of cash flows, and results of operations.

At June 30, 2016, we had working capital of $505.1 million, including $399.4 million of cash, cash equivalents and short-term investments, compared with working capital of $487.8 million, including $395.3 million of cash, cash equivalents and short-term investments at March 31, 2016.

Our cash and cash equivalents as of June 30, 2016 consisted of bank deposits with third party financial institutions. We monitor bank balances in our operating accounts and adjust the balances as appropriate. Cash balances are held throughout the world, including substantial amounts held outside of the U.S. As of June 30, 2016, of our $399.4 million of cash, cash equivalents, and short-term investments, $24.5 million was held domestically while $374.9 million was held by foreign subsidiaries, approximately 90% of which were based in USD-denominated investments. The costs to repatriate our foreign earnings to the U.S. would be material; however, our intent is to indefinitely reinvest earnings from foreign operations and our current plans do not require us to repatriate earnings from foreign operations to fund our U.S. operations because we generate sufficient domestic operating cash flow and have access to external funding under our revolving line of credit.

Our short and long-term investments are intended to establish a high-quality portfolio that preserves principal and meets liquidity needs. As of June 30, 2016, our investments were composed of Mutual Funds, US Treasury Notes, Government Agency Securities, Commercial Paper, Corporate Bonds, and Certificates of Deposits ("CDs").

From time to time, depending on market conditions, our Board has authorized plans under which we may repurchase shares of our common stock in the open market or through privately negotiated transactions. During the three months ended June 30, 2016, we repurchased 441,738 shares of our common stock in the open market as part of these publicly announced repurchase programs. The total cost of these repurchases was $18.6 million, with an average price of $42.19 per share. In addition, we withheld 199,686 shares with a total value of $8.8 million in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under our stock plans.

As of June 30, 2016, there remained 192,273 shares authorized for repurchase under the stock repurchase program approved by the Board on January 29, 2016. For more information regarding our stock repurchase programs, refer to Note 9, Common Stock Repurchases, of the accompanying notes to condensed consolidated financial statements (unaudited) in this Quarterly Report on Form 10-Q.

In May 2011, we entered into a credit agreement with Wells Fargo Bank, National Association ("the Bank"), which was most recently amended in May 2016 (as amended, the "Amended Credit Agreement") to extend the term of the Credit Agreement by one year to May 9, 2019, and to waive a default under the Credit Agreement in effect as of March 31, 2016 in which our debt to EBITDA ratio minimally exceeded the previously agreed upon ratio of 3:1. The breach of the covenant was primarily a result of the restructuring expenses recorded in the third and fourth quarters of fiscal year 2016.

The Amended Credit Agreement provides for a $100.0 million unsecured revolving credit facility. Revolving loans under the Credit Agreement will bear interest, at our election, at (i) the Bank’s announced prime rate less 1.20% per annum or (ii) a daily one-month LIBOR rate plus 1.40% per annum. Principal, together with all accrued and unpaid interest, on the revolving loans is due and payable on May 9, 2019. We are also obligated to pay a commitment fee of 0.37% per annum on the average daily unused amount of the revolving line of credit, which fee shall be payable quarterly in arrears. We may prepay the loans and terminate the commitments under the Credit Agreement at any time, without premium or penalty, subject to the reimbursement of certain costs. As of June 30, 2016, we had no outstanding borrowings under the line of credit. The line of credit requires us to comply with the following two financial covenant ratios, in each case at each fiscal quarter end and determined on a rolling four-quarter basis:

maximum ratio of funded debt to earnings before interest, taxes, depreciation and amortization ("EBITDA"); and,

minimum EBITDA coverage ratio, which is calculated as interest payments divided by EBITDA.

In addition, we and our subsidiaries are required to maintain unrestricted cash, cash equivalents, and marketable securities plus availability under the Credit Agreement at the end of each fiscal quarter of at least $300.0 million. The Credit Agreement contains customary events of default that include, among other things, payment defaults, covenant defaults, cross-defaults with certain other indebtedness, bankruptcy and insolvency defaults, and judgment defaults. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement.

On May 2, 2016, we received a waiver from the lender for noncompliance with the minimum EBITDA covenant at March 31, 2016. Pursuant to the terms of the waiver and amendment to the Credit Agreement, the $16.2 million of restructuring charges recorded in our fiscal year 2016 will be excluded from the lender’s rolling four-quarter EBITDA calculation. This exclusion of restructuring charges does not automatically extend to any such future charges, should they be incurred. The breach was not considered to be a cross-default on our 5.50% Senior Notes and as such had no impact on the amount or timing of amounts payable related to those debt instruments. As of June 30, 2016, we were in compliance with all ratios and covenants by a substantial margin.

Our liquidity, capital resources, and results of operations in any period could be affected by repurchases of our common stock, the payment of cash dividends, the exercise of outstanding stock options, restricted stock grants under stock plans, and the issuance of common stock under our Employee Stock Purchase Plan (“ESPP”). We receive cash from the exercise of outstanding stock options under our stock plan and the issuance of shares under our ESPP. However, the resulting increase in the number of outstanding shares from these equity grants and issuances could affect our earnings per share. We cannot predict the timing or amount of proceeds from the sale or exercise of these securities or whether they will be exercised, forfeited, canceled, or will expire.

We believe that our current cash and cash equivalents, short-term investments, cash provided by operations, and the availability of additional funds under the Credit Agreement will be sufficient to fund operations for at least the next 12 months; however, any projections of future financial needs and sources of working capital are subject to uncertainty. Readers are cautioned to review the risks, uncertainties, and assumptions set forth in this Quarterly Report on Form 10-Q, including the section entitled “Certain Forward-Looking Information” and the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, filed with the SEC on May 16, 2016, and other periodic filings with the SEC, any of which could affect our estimates for future financial needs and sources of working capital.

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments, or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides us with financing and liquidity support, market risk, or credit risk support.

A substantial portion of the raw materials, components, and subassemblies used in our products are provided by our suppliers on a consignment basis. These consigned inventories are not recorded on our consolidated balance sheet until we take title to the raw materials, components, and subassemblies, which occurs when they are consumed in the production process. Prior to consumption in the production process, our suppliers bear the risk of loss and retain title to the consigned inventory. The terms of the agreements allow us to return parts in excess of maximum order quantities to the suppliers at the supplier’s expense. Returns for other reasons are negotiated with the suppliers on a case-by-case basis and to date have been immaterial. If our suppliers were to discontinue financing consigned inventory, it would require us to make cash outlays and we could incur expenses which, if material, could negatively affect our business and financial results. As of March 31, 2016 and June 30, 2016, we had off-balance sheet consigned inventories of $41.1 million and $43.6 million, respectively.

Unconditional Purchase Obligations

We utilize several contract manufacturers to procure raw materials, components, and subassemblies for our products. We provide these contract manufacturers with demand information that typically covers periods up to 13 weeks, and they use this information to acquire components and build products. We also obtain individual components for our products from a wide variety of individual suppliers. Consistent with industry practice, we acquire components through a combination of purchase orders, supplier contracts, and open orders based on projected demand information. As of June 30, 2016, we had outstanding off-balance sheet third-party manufacturing, component purchase, and other general and administrative commitments of $164.2 million, including off-balance sheet consigned inventories of $43.6 million as discussed above.

CRITICAL ACCOUNTING ESTIMATES

For a complete description of what we believe to be the critical accounting estimates used in the preparation of our condensed consolidated financial statements, refer to our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, filed with the SEC on May 16, 2016. There have been no changes to our critical accounting estimates during the three months ended June 30, 2016.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued additional guidance regarding the measurement of credit losses on financial instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. The guidance is effective our fiscal year ending March 31, 2021 with early adoption permitted beginning in the first quarter of fiscal 2020. We are currently evaluating the impact the adoption of this standard will have on our results of operations, financial position, and cash flows.

In March 2016, the FASB issued additional guidance regarding share-based compensation, which outlines new provisions intended to simplify various aspects related to accounting for share-based payments and their presentation in the financial statements. The guidance is effective our fiscal year ending March 31, 2018. Early adoption is permitted. We are currently evaluating the impact the adoption of this standard will have on our results of operations, financial position, and cash flows.

In February 2016, the FASB issued additional guidance regarding both operating and financing leases, requiring lessees to recognize on their balance sheets “right-of-use assets” and corresponding lease liabilities, measured on a discounted basis over the lease term. Virtually all leases will be subject to this treatment except leases that meet the definition of a “short-term lease.” For expense recognition, the dual model requiring leases to be classified as either operating or finance leases has been retained from the prior standard. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. Classification will use criteria very similar to those applied in current lease accounting, but without explicit bright lines. Extensive additional quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater insight into the extent of expense recognized and expected to be recognized. The new lease guidance will essentially eliminate off-balance sheet financing. The guidance is effective for our fiscal year ending March 31, 2020. The new standard must be adopted using a modified retrospective transition that provides for certain practical expedients and requires the new guidance to be applied at the beginning of the earliest comparative period presented. While we are not yet in a position to assess the full impact of the application of the new standard, we expect that the impact of recording the lease liabilities and the corresponding right-to-use assets may have a significant impact on our total assets and liabilities with a minimal impact on our equity.

In January 2016, the FASB issued additional guidance regarding the recognition and measurement of financial assets and liabilities. Changes to the current model primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. We are required to adopt the standard in the first quarter of our fiscal year ending March 31, 2019, early adoption is not permitted under the standard. We are currently evaluating what impact, if any, the adoption of this standard will have on our results of operations, financial position, and cash flows.

In July 2015, the FASB issued additional guidance regarding the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. We are required to adopt the standard in the first quarter of our fiscal year ending March 31, 2018, but may elect to adopt earlier as permitted under the standard. The adoption is not expected to have a material impact on our results of operations, financial position, or cash flows.

In May 2014, the FASB issued additional guidance regarding revenue from contracts with customers. Under the new standard, revenue will be recognized at the time a good or service is transferred to a customer for the amount of consideration received for that specific good or service. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. In March 2016, the FASB issued additional guidance concerning "Principal versus Agent" considerations (reporting revenue gross versus net); in April 2016, the FASB issued additional guidance on identifying performance obligations and licensing; and in May 2016, the FASB issued additional guidance on collectability, noncash consideration, presentation of sales tax, and transition. These updates are intended to improve the operability and understandability of the implementation guidance and have the same effective date and transition requirements as the greater "contracts with customers" standard. We are required to adopt the standard, as amended, in the first quarter of our fiscal year ending March 31, 2019 although, under the standard, we may adopt as early as the first quarter of our fiscal year ending March 31, 2018. Presently, we are not yet in a position to assess the application date. We are currently evaluating what impact, if any, the adoption of this standard will have on our consolidated results of operations, financial position, and cash flows.

Financial Statements.

PLANTRONICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)


	March 31, 2015			December 31, 2015			March 31, 2016			June 30, 2016
ASSETS
Current assets:
Cash and cash equivalents	$	276,850		$	219,091		$	235,266		$	227,473
Short-term investments	97,859			166,257			160,051			171,899
Accounts receivable, net	136,581			136,402			128,219			133,155
Inventory, net	56,676			55,650			53,162			53,912
Deferred tax assets	6,564			6,548
Other current assets	28,124			28,403			20,297			26,151
Total current assets	602,654			612,351			596,995			612,590
Long-term investments	107,590			135,164			145,623			132,270
Property, plant, and equipment, net	139,413			145,349			149,735			151,863
Goodwill and purchased intangibles, net	16,077			15,890			15,827			15,765
Other assets	10,308			8,767
Deferred tax and other assets							25,257			19,450
Total assets	$	876,042		$	917,521		$	933,437		$	931,938

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	32,781		$	39,738		$	39,133		$	46,817
Accrued liabilities	62,041			63,161			70,034			60,670
Total current liabilities	94,822			102,899			109,167			107,487
Long term debt, net of issuance costs	—			489,246			489,609			489,971
Long-term income taxes payable	12,984			12,219			11,968			12,464
Revolving line of credit	34,500			—
Other long-term liabilities	6,339			9,730			10,294			11,448
Total liabilities	$	148,645		$	614,094		$	621,038		$	621,370
Commitments and contingencies (Note 6)
Stockholders' equity:
Common stock	$	783		$	792		$	793		$	799
Additional paid-in capital	717,848			754,918			769,489			778,209
Accumulated other comprehensive income	10,120			2,432			3,759			5,216
Retained earnings	209,960			249,338			257,291			272,708
Total stockholders' equity before treasury stock	938,711			1,007,480			1,031,332			1,056,932
Less: Treasury stock, at cost	(211,314		)	(704,053		)	(718,933		)	(746,364		)
Total stockholders' equity	727,397			303,427			312,399			310,568
Total liabilities and stockholders' equity	$	876,042		$	917,521		$	933,437		$	931,938

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Table of Contents~~

PLANTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(Unaudited)


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended June 30,
	2014			2015			2014			2015			2015			2016
Net revenues	$	231,781		$	225,735		$	664,248		$	647,110		$	206,358		$	223,106
Cost of revenues	111,865			116,219			311,795			319,266			99,000			110,033
Gross profit	119,916			109,516			352,453			327,844			107,358			113,073
Operating expenses:
Research, development, and engineering	22,991			20,811			69,280			66,614			23,194			22,344
Selling, general, and administrative	57,977			53,715			174,756			163,689			55,678			55,787
Gain from litigation settlements	(1,666		)	(91		)	(7,816		)	(998		)
(Gain) loss, net from litigation settlements													(876		)	4,739
Restructuring and other related charges	—			8,433			—			8,433			—			(1,048		)
Total operating expenses	79,302			82,868			236,220			237,738			77,996			81,822
Operating income	40,614			26,648			116,233			90,106			29,362			31,251
Interest expense	(59		)	(7,217		)	(209		)	(17,278		)	(2,741		)	(7,288		)
Other non-operating income and (expense), net	(1,959		)	398			(1,474		)	(2,025		)	(285		)	2,352
Income before income taxes	38,596			19,829			114,550			70,803			26,336			26,315
Income tax expense	8,212			3,541			28,073			15,391			5,108			5,928
Net income	$	30,384		$	16,288		$	86,477		$	55,412		$	21,228		$	20,387

Earnings per common share:
Basic	$	0.73		$	0.50		$	2.07		$	1.60		$	0.56		$	0.63
Diluted	$	0.71		$	0.49		$	2.03		$	1.56		$	0.55		$	0.62

Shares used in computing earnings per common share:	Shares used in computing earnings per common share:												Shares used in computing earnings per common share:
Basic	41,901			32,579			41,780			34,723			38,002			32,243
Diluted	42,700			33,259			42,674			35,588			38,943			32,818

Cash dividends declared per common share	$	0.15		$	0.15		$	0.45		$	0.45		$	0.15		$	0.15

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Table of Contents~~

PLANTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(Unaudited)


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended June 30,
	2014			2015			2014			2015			2015			2016
Net income	$	30,384		$	16,288		$	86,477		$	55,412		$	21,228		$	20,387
Other comprehensive income (loss):
Foreign currency translation adjustments	54			34			128			585			(12		)	(254		)
Unrealized gains (losses) on cash flow hedges:
Unrealized cash flow hedge gains (losses) arising during the period	508			1,330			3,604			(3,484		)	(2,838		)	954
Net (gains) losses reclassified into income for revenue hedges	(1,220		)	(1,739		)	(61		)	(7,474		)	(3,538		)	(160		)
Net (gains) losses reclassified into income for cost of revenue hedges	63			1,238			(149		)	3,182			773			727
Net unrealized gains (losses) on cash flow hedges	(649		)	829			3,394			(7,776		)	(5,603		)	1,521
Unrealized gains (losses) on investments:
Unrealized holding gains (losses) during the period	(258		)	(637		)	(223		)	(845		)	(82		)	314

Aggregate income tax benefit (expense) of the above items	66			150			(13		)	348			132			(124		)
Other comprehensive income (loss)	(787		)	376			3,286			(7,688		)	(5,565		)	1,457
Comprehensive income	$	29,597		$	16,664		$	89,763		$	47,724		$	15,663		$	21,844

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Table of Contents~~

PLANTRONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Nine Months Ended						Three Months Ended
	December 31,						June 30,
	2014			2015			2015			2016
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	86,477		$	55,412		$	21,228		$	20,387
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	13,975			14,838			4,986			5,146
Amortization of debt issuance costs	—			845			121			362
Stock-based compensation	21,122			24,599			8,050			8,413
Excess tax benefit from stock-based compensation	(2,988		)	(3,300		)	(2,391		)	(339		)
Deferred income taxes	1,654			2,185			4,146			4,890
Provision for excess and obsolete inventories	992			1,319			402			772
Non-cash restructuring charges	—			8,433
Restructuring charges							—			(1,048		)
Cash payments for restructuring charges							—			(2,788		)
Other operating activities	484			5,896			4,537			(1,920		)
Changes in assets and liabilities, net of effect of acquisition:
Accounts receivable, net	(18,479		)	1,279			8,579			(4,529		)
Inventory, net	(920		)	(352		)	358			(1,486		)
Current and other assets	(4,680		)	(264		)	(2,869		)	(672		)
Accounts payable	2,395			5,744			4,958			7,055
Accrued liabilities	3,464			(3,841		)	(6,212		)	(1,370		)
Income taxes	(3,120		)	(8,770		)	(2,419		)	(2,736		)
Cash provided by operating activities	100,376			104,023			43,474			30,137
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of investments	72,564			56,890			16,375			74,349
Proceeds from maturities of investments	102,175			51,895			25,425			34,353
Purchase of investments	(172,757		)	(206,110		)	(43,834		)	(106,711		)
Acquisition, net of cash acquired	(150		)	—
Capital expenditures	(19,214		)	(20,977		)	(3,966		)	(7,579		)
Cash used for investing activities	(17,382		)	(118,302		)	(6,000		)	(5,588		)
CASH FLOWS FROM FINANCING ACTIVITIES
Repurchase of common stock	(27,443		)	(482,776		)	(284,444		)	(18,639		)
Employees' tax withheld and paid for restricted stock and restricted stock units	(7,306		)	(10,804		)	(9,903		)	(8,792		)
Proceeds from issuances under stock-based compensation plans	17,821			9,854			3,077			733
Proceeds from revolving line of credit	—			155,749			155,749			—
Repayments of revolving line of credit	—			(190,249		)	(190,249		)	—
Proceeds from bonds issuance, net of issuance costs	—			488,401			489,670			—
Payment of cash dividends	(19,296		)	(16,034		)	(5,828		)	(4,970		)
Excess tax benefit from stock-based compensation	2,988			3,300			2,391			339
Cash used for financing activities	(33,236		)	(42,559		)
Cash provided by (used for) financing activities							160,463			(31,329		)
Effect of exchange rate changes on cash and cash equivalents	(2,112		)	(921		)	592			(1,013		)
Net increase (decrease) in cash and cash equivalents	47,646			(57,759		)	198,529			(7,793		)
Cash and cash equivalents at beginning of period	232,704			276,850			276,850			235,266
Cash and cash equivalents at end of period	$	280,350		$	219,091		$	475,379		$	227,473

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Table of Contents~~

PLANTRONICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed consolidated financial statements ("financial statements") of Plantronics, Inc. ("Plantronics" or "the Company") have been prepared on a basis consistent with the Company's March 31, ~~2015~~2016 audited consolidated financial statements and include all adjustments, consisting of normal recurring adjustments, necessary to fairly state the information set forth herein. Certain information and footnote disclosures normally included in financial statements prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to interim financial information and in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. The financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, ~~2015~~2016, which was filed with the SEC on May ~~15, 2015.~~16, 2016. The results of operations for the interim period ended ~~December 31, 2015~~June 30, 2016 are not necessarily indicative of the results to be expected for the entire fiscal year or any future period.

The financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.

The Company’s fiscal year ends on the Saturday closest to the last day of March. The Company’s current fiscal year ends on April ~~2, 2016~~1, 2017 and consists of 5352 weeks. The Company's prior fiscal year ended on ~~March 28, 2015~~April 2, 2016 and consisted of 5253 weeks. The Company’s results of operations for the three ~~and nine~~ months ended ~~December 26, 2015~~July 2, 2016 and ~~December~~June 27, ~~2014~~2015 both contain 13 ~~and 39 weeks, respectively.~~weeks. For purposes of presentation, the Company has indicated its accounting year as ending on March 31 and its interim quarterly periods as ending on the applicable calendar month end.

2. RECENT ACCOUNTING PRONOUNCEMENTS

Recently Issued Pronouncements

In ~~January~~June 2016, the Financial Accounting Standards Board ("FASB") issued additional guidance regarding the measurement of credit losses on financial instruments, which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. The guidance is effective for the Company's fiscal year ending March 31, 2021 with early adoption permitted beginning in the first quarter of fiscal year 2020. The Company is currently evaluating the impact the adoption of this standard will have on its results of operations, financial position, and cash flows.

In March 2016, the FASB issued additional guidance regarding share-based compensation, which outlines new provisions intended to simplify various aspects related to accounting for share-based payments and their presentation in the financial statements. The guidance is effective for the Company's fiscal year ending March 31, 2018. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this standard will have on its results of operations, financial position, and cash flows.

In February 2016, the FASB issued additional guidance regarding both operating and financing leases, requiring lessees to recognize on their balance sheets “right-of-use assets” and corresponding lease liabilities, measured on a discounted basis over the lease term. Virtually all leases will be subject to this treatment except leases that meet the definition of a “short-term lease.” For expense recognition, the dual model requiring leases to be classified as either operating or finance leases has been retained from the prior standard. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. Classification will use criteria very similar to those applied in current lease accounting, but without explicit bright lines. Extensive additional quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater insight into the extent of expense recognized and expected to be recognized. The new lease guidance will essentially eliminate off-balance sheet financing. The guidance is effective for the Company's fiscal year ending March 31, 2020. The new standard must be adopted using a modified retrospective transition that provides for certain practical expedients and requires the new guidance to be applied at the beginning of the earliest comparative period presented. While we are not yet in a position to assess the full impact of the application of the new standard, the Company expects that the impact of recording the lease liabilities and the corresponding right-to-use assets may have a significant impact on its total assets and liabilities with a minimal impact on its equity.

In January 2016, the FASB issued additional guidance regarding the recognition and measurement of financial assets and liabilities. Changes to the current GAAP model primarily affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the FASB clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The Company is required to adopt the standard in the first quarter of its fiscal year ending March 31, 2019, but may elect to adopt earlier as permitted under the standard. The Company is currently evaluating what impact, if any, the adoption of this standard will have on its results of operations, financial position, and cash flows.

In November 2015, the FASB issued additional guidance on balance sheet classification of deferred taxes as part of its simplification initiative. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. The Company is required to adopt the standard in the first quarter of its fiscal year ending March 31, 2018, but currently plans to early adopt the guidance on a prospective basis effective the fourth quarter of its fiscal year ending March 31, 2016. The new guidance may impact the Company's balance sheet presentation and working capital, but is not expected to have a material impact on the Company's results of operations or cash flows.

In July 2015, the FASB issued additional guidance regarding the subsequent measurement of inventory by requiring inventory to be measured at the lower of cost and net realizable value. The Company is required to adopt the standard in the first quarter of its fiscal year ending March 31, 2018, but may elect to adopt earlier as permitted under the standard. The adoption is not expected to have a material impact on the Company's results of operations, financial position, or cash flows.

In May 2014, the FASB issued additional guidance regarding revenue from contracts with customers. While the standard supersedes existing revenue recognition guidance, it closely aligns with current GAAP. Under the new standard, revenue will be recognized at the time a good or service is transferred to a customer for the amount of consideration received for that specific good or service. Entities may use a full retrospective approach or report the cumulative effect as of the date of adoption. In March 2016, the FASB issued additional guidance concerning "Principal versus Agent" considerations (reporting revenue gross versus net); in April 2016, the FASB issued additional guidance on identifying performance obligations and licensing; and in May 2016, the FASB issued additional guidance on collectability, noncash consideration, presentation of sales tax, and transition. These updates are intended to improve the operability and understandability of the implementation guidance and have the same effective date and transition requirements as the greater "contracts with customers" standard. The Company is required to adopt the standard, as amended, in the first quarter of its fiscal year ending March 31, ~~2018~~2019 although, under the standard, it may adopt as early as the first quarter of its fiscal year ending March 31, ~~2017.~~2018. Presently, the Company is not yet in a position to assess the application date. The Company is currently evaluating what impact, if any, the adoption of this standard will have on its ~~results of operations, financial position, and cash flows.~~

~~Table of Contents~~

In April 2015, the FASB issued additional guidance regarding fees paid in cloud computing arrangements. The guidance requires registrants to account for fees paid in a cloud computing arrangement that includes a software license element consistent with the acquisition of other software licenses. Cloud computing arrangements without software licenses are to be accounted for as a service contract. The Company is required to adopt the standard in the first quarter of its fiscal year ending March 31, 2017. The Company is currently evaluating what impact, if any, the adoption of this standard will have on itsconsolidated results of operations, financial position, and cash flows.

3. CASH, CASH EQUIVALENTS, AND INVESTMENTS

The following tables summarize the Company’s cash and available-for-sale securities’ adjusted cost, gross unrealized gains, gross unrealized losses, and fair value by significant investment category recorded as cash and cash equivalents, short-term, or long-term investments as of ~~December 31, 2015~~June 30, 2016 and March 31, ~~2015~~2016 (in thousands):


December 31, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash & Cash Equivalents		Short-term investments (due in 1 year or less)		Long-term investments (due in 1 to 3 years)
June 30, 2016																Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Cash & Cash Equivalents		Short-term investments (due in 1 year or less)		Long-term investments (due in 1 to 3 years)
Cash	$	209,379	$	—	$	—		$	209,379	$	209,379	$	—	$	—	$	215,580	$	—	$	—		$	215,580	$	215,580	$	—	$	—
Level 1:
Mutual Funds	9,497		1		(546		)	8,952		—		8,952		—		10,871		131		(362		)	10,640		—		10,640		—
US Treasury Notes	39,822		—		(96		)	39,726		4,006		16,000		19,720		24,024		53		—			24,077		—		13,978		10,099
Subtotal	49,319		1		(642		)	48,678		4,006		24,952		19,720		34,895		184		(362		)	34,717		—		24,618		10,099
Level 2:
Government Agency Securities	70,680		1		(178		)	70,503		—		20,919		49,584		61,399		79		(3		)	61,475		—		8,533		52,942
Commercial Paper	40,196		—		—			40,196		4,199		35,702		295		57,167		—		—			57,167		11,893		45,274		—
Corporate Bonds	143,139		22		(375		)	142,786		—		77,221		65,565		141,424		396		(57		)	141,763		—		76,240		65,523
Certificates of Deposits ("CDs")	8,970		—		—			8,970		1,507		7,463		—		20,940		—		—			20,940		—		17,234		3,706
Subtotal	262,985		23		(553		)	262,455		5,706		141,305		115,444		280,930		475		(60		)	281,345		11,893		147,281		122,171

Total cash, cash equivalents and investments measured at fair value	$	521,683	$	24	$	(1,195	)	$	520,512	$	219,091	$	166,257	$	135,164	$	531,405	$	659	$	(422	)	$	531,642	$	227,473	$	171,899	$	132,270

As of ~~December 31, 2015~~June 30, 2016 and March 31, ~~2015,~~2016, with the exception of assets related to the Company's deferred compensation plan, all of the Company's investments are classified as available-for-sale securities. The carrying value of available-for-sale securities included in cash equivalents approximates fair value because of the short maturity of those instruments. For more information regarding the Company's deferred compensation plan, refer to Note 4, Deferred Compensation, of the accompanying notes to condensed consolidated financial statements (unaudited) in this Quarterly Report on Form 10-Q.

The Company did not incur any material realized or unrealized gains or losses in the three ~~and nine~~ months ended ~~December 31,~~June 30, 2015 and ~~2014~~.2016.

There were no transfers between fair value measurement levels during the three ~~and nine~~ months ended ~~December 31,~~June 30, 2015 and ~~2014.~~2016.

All financial assets and liabilities are recognized or disclosed at fair value in the financial statements or the accompanying notes thereto. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

The Company's Level 1 financial assets consist of Mutual Funds and US Treasury Notes. The fair value of Level 1 financial instruments is measured based on the quoted market price of identical securities.

The Company's Level 2 financial assets and liabilities consist of Government Agency Securities, Commercial Paper, Corporate Bonds, and Certificates of Deposits ("CDs"), derivative foreign currency contracts, and long-term debt. The fair value of Level 2 investment securities is determined based on other observable inputs, including multiple non-binding quotes from independent pricing services. Non-binding quotes are based on proprietary valuation models that are prepared by the independent pricing services and use algorithms based on inputs such as observable market data, quoted market prices for similar securities, issuer spreads, and internal assumptions of the broker. The Company corroborates the reasonableness of non-binding quotes received from the independent pricing services using a variety of techniques depending on the underlying instrument, including: (i) comparing them to actual experience gained from the purchases and maturities of investment securities, (ii) comparing them to internally developed cash flow models based on observable inputs, and (iii) monitoring changes in ratings of similar securities and the related impact on fair value. The fair value of Level 2 derivative foreign currency contracts is determined using pricing models that use observable market inputs. For more information regarding the Company's derivative assets and liabilities, refer to Note ~~12,~~11, Foreign Currency Derivatives, of the accompanying notes to condensed consolidated financial statements (unaudited) in this Quarterly Report on Form 10-Q. The fair value of Level 2 long-term debt is determined based on inputs that were observable in the market, including the trading price of the notes when available. For more information regarding the Company's long-term debt, refer to Note 7, Debt, of the accompanying notes to condensed consolidated financial statements (unaudited) in this Quarterly Report on Form 10-Q.

The Company's unsecured revolving credit facility falls under the Level 3 hierarchy. The fair value of the Company’s line of credit approximates its carrying value because the interest rate is a variable rate that approximates rates currently available to the Company.

4. DEFERRED COMPENSATION

As of ~~December 31, 2015,~~June 30, 2016, the Company held investments in mutual funds totaling ~~$9.0~~$10.6 million, all of which related to debt and equity securities that are held in a rabbi trust under non-qualified deferred compensation plans. The total related deferred compensation liability was ~~$9.0~~$10.6 million at ~~December 31, 2015.~~June 30, 2016. The fair value of debt and equity securities held in the rabbi trust at March 31, ~~2015~~2016 was ~~$5.5~~$9.5 million. The total related deferred compensation liability at March 31, ~~2015~~2016 was ~~$5.5~~$9.5 million.

The securities are classified as trading securities and are recorded on the ~~Consolidated Balance Sheets~~condensed consolidated balance sheets under "Short-term investments". The liability is recorded on the ~~Consolidated Balance Sheets~~condensed consolidated balance sheets under “Other long-term liabilities”.

~~Table of Contents~~

5. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS

Accounts receivable, net:


	March 31,			December 31,			March 31,			June 30,
(in thousands)	2015			2015			2016			2016
Accounts receivable	$	159,397		$	170,912		$	163,834		$	171,191
Provisions for returns	(6,194		)	(7,708		)	(7,314		)	(8,722		)
Provisions for promotions, rebates, and other	(15,401		)	(26,134		)	(27,737		)	(28,664		)
Provisions for doubtful accounts and sales allowances	(1,221		)	(668		)	(564		)	(650		)
Accounts receivable, net	$	136,581		$	136,402		$	128,219		$	133,155

Accrued Liabilities:

March 31, December 31,
(in thousands) 2015 2015
Employee compensation and benefits $ 31,888
$ 22,133
Accrued interest on 5.50% Senior Notes —
3,098
Warranty obligation 7,717
8,721
VAT/Sales tax payable 4,749
4,298
Restructuring and other related charges⁽¹⁾
—
8,433
Accrued other 17,687
16,478
Accrued liabilities $ 62,041
$ 63,161

~~(1) Refer to Note 9,~~ ~~Restructuring and Other Related Charges, for more information on the Company's restructuring activity.~~



	March 31,		June 30,
(in thousands)	2016		2016
Employee compensation and benefits	$	22,955	$	21,114
Accrued interest on 5.50% Senior Notes	10,501		3,587
Warranty obligation	8,537		8,581
VAT/Sales tax payable	4,894		4,358
Restructuring and other related charges	5,783		1,790
Accrued other	17,364		21,240
Accrued liabilities	$	70,034	$	60,670

The Company's warranty obligation is included as a component of accrued liabilities on the condensed consolidated balance sheets. Changes in the warranty obligation during the ~~nine~~three months ended ~~December 31,~~June 30, 2015 and ~~2014~~2016 were as follows:

~~Table of Contents~~

6. COMMITMENTS AND CONTINGENCIES

Unconditional Purchase Obligations

The Company purchases materials and services from a variety of suppliers and manufacturers. During the normal course of business and to manage manufacturing operations and general and administrative activities, the Company may enter into firm, non-cancelable, and unconditional purchase obligations for which amounts are not recorded on the consolidated balance sheets. As of ~~December 31, 2015~~June 30, 2016, the Company had outstanding off-balance sheet third-party manufacturing, component purchase, and other general and administrative commitments of ~~$139.7~~$164.2 million.

Other Guarantees and Obligations

In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to customers, vendors, lessors, business partners, purchasers of assets or subsidiaries and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company's breach of agreements or representations and warranties made by the Company, services to be provided by the Company, intellectual property infringement claims made by third parties or, with respect to the sale of assets of a subsidiary, matters related to the Company's conduct of business and tax matters prior to the sale. From time to time, the Company indemnifies customers against combinations of loss, expense, or liability arising from various triggering events relating to the sale and use of its products and services.

In addition, the Company also provides protection to customers against claims related to undiscovered liabilities, additional product liability, or environmental obligations. In addition, the Company has entered into indemnification agreements with its directors and certain of its officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers of the Company. The Company maintains director and officer liability insurance, which may cover certain liabilities arising from its obligation to indemnify its directors and officers in certain circumstances. It is not possible to determine the aggregate maximum potential loss under these agreements due to the limited history of prior claims and the unique facts and circumstances involved in each particular claim. Such indemnification obligations might not be subject to maximum loss clauses. Historically, the Company has not incurred material costs as a result of obligations under these agreements and it has not accrued any liabilities related to such indemnification obligations in the condensed consolidated financial statements.

Claims and Litigation

On October 12, 2012, GN Netcom, Inc. ("GN") sued ~~Plantronics, Inc.~~the Company in the United States ("U.S.") District Court for the District of Delaware, alleging violations of the Sherman Act, the Clayton Act, and Delaware common law. In its complaint, GN specifically alleges four causes of action: monopolization, attempted monopolization, concerted action in restraint of trade, and tortious interference with business relations. GN claims that the Company dominates the market for headsets sold into contact centers in the U.S. and that a critical channel for sales of headsets to contact centers is through a limited network of specialized independent distributors (“SIDs”). GN asserts that the Company attracts SIDs through exclusive distributor agreements and alleges that the use of these agreements is illegal.

On July 6, 2016, the Court in GN Netcom, Inc. v. Plantronics, Inc. ordered the following sanctions against the Company as they relate to certain discovery matters in the litigation: (1) monetary sanctions in the form of reasonable fees and costs incurred by GN in connection with the discovery disputes leading to the motion for sanctions; (2) punitive sanctions in the amount of $3 million; (3) possible evidentiary sanctions; and (4) instructions to the jury that it may draw an adverse inference that emails destroyed by the Company would have been favorable to GN’s case and/or unfavorable to the Company's defense. As a result, during the three months ended June 30, 2016, the Company has accrued $3 million for the punitive sanctions and an additional $2 million, representing the Company’s best estimate of reasonable fees and costs incurred by GN in connection with the disputes leading to the motion for sanctions, for a total of $5 million. This amount is included within accrued liabilities on its condensed consolidated balance sheet. The Company ~~denies each~~believes the order may be appealed and reversed upon a favorable resolution of the ~~allegations in~~underlying antitrust case.

The Company believes that the ~~complaint~~underlying antitrust action is without merit and is vigorously defending itself. ~~Given~~However, following the ~~preliminary nature~~court order described above, there exists an increased risk of the ~~case,~~jury finding in favor of the ~~Company is unable to estimate an amount or range of any reasonably possible losses resulting from these allegations.~~

~~During the quarter ended December 26, 2015, 2015, GN Netcom (“GN”) and the Company commenced the briefing on a motion for sanctions against Plantronics for spoliation of evidence.~~plaintiff. The ~~briefing was concluded in early January. A court~~ date for ~~a hearing on~~further proceedings of the ~~motion for sanctions~~underlying antitrust case has not yet been scheduled. ~~There exists a reasonable possibility~~The Company is unable to provide an estimate of the court issuing a sanction; however, the Company has not yet received any pertinent information relevant to the monetary amounts to be claimed by GN in their motion for sanctions. As such, the Company cannot reasonably estimate apossible loss or range of ~~losses~~possible loss resulting from these allegations and has not accrued any ~~such sanctions, which may or may not be material~~financial damages relating to the ~~Company’s financial condition, results of operations, or cash flows.~~antitrust case.

In addition to the specific matters discussed above, the Company is involved in various legal proceedings arising in the normal course of conducting business. For such legal proceedings, where applicable, the Company has accrued an amount that reflects the aggregate liability deemed probable and estimable, but this amount is not material to the Company's financial condition, results of operations, or cash flows. With respect to proceedings for which no accrual has been made, the Company is not able to estimate an amount or range of any reasonably possible additional losses because of the preliminary nature of many of these proceedings, the difficulty in ascertaining the applicable facts relating to many of these proceedings, the variable treatment of claims made in many of these proceedings, and the difficulty of predicting the settlement value of many of these proceedings. However, based upon the Company's historical experience, the resolution of these proceedings is not expected to have a material effect on the Company's financial condition, results of operations or cash flows. The Company may incur substantial legal fees, which are expensed as incurred, in defending against these legal proceedings.

~~Table of Contents~~

7. DEBT

5.50% Senior Notes

In May 2015, ~~Plantronics~~the Company issued $500.0 million aggregate principal amount of 5.50% senior notes (the “5.50% Senior Notes”). The 5.50% Senior Notes mature on May 31, 2023, and bear interest at a rate of 5.50% per annum, payable semi-annually on May 15 and November 15 of each year, commencing on November 15, 2015. The Company received net proceeds of $488.4 million from the issuance of the 5.50% Senior Notes, net of issuance costs of $11.6 million which are being amortized to interest expense over the term of the 5.50% Senior Notes using the effective interest method.

The fair value of the 5.50% Senior Notes was determined based on inputs that were observable in the market, including the trading price of the 5.50% Senior Notes when available (Level 2). The estimated fair value and carrying value of the 5.50% Senior Notes were as follows:


	March 31, 2015		December 31, 2015		March 31, 2016				June 30, 2016
(in thousands)	Fair Value	Carrying Value	Fair Value	Carrying Value	Fair Value		Carrying Value		Fair Value		Carrying Value
5.50% Senior Notes	—	—	500,000	489,246	$	493,440	$	489,609	$	496,250	$	489,971

The Company may redeem all or a part of the 5.50% Senior Notes, upon not less than 30 or more than a 60 day notice; however, the applicable redemption price will be determined as follows:



	Redemption Period Requiring Payment of:		Redemption Up To 35% Using Cash Proceeds From An Equity Offering⁽³⁾:
	Make-Whole⁽¹⁾	Premium⁽²⁾	Date	Specified Price
5.50% Senior Notes	Prior to May 15, 2018	On or after May 15, 2018	Prior to May 15, 2018	105.500%

⁽¹⁾If the Company redeems the notes prior to the applicable date, the redemption price is principal plus a make-whole premium equal to the present value of the remaining scheduled interest payments as described in the applicable indenture, together with accrued and unpaid interest.

⁽²⁾If the Company redeems the notes on or after the applicable date, the price is principal plus a premium which declines over time as specified in the applicable indenture, together with accrued and unpaid interest.

⁽³⁾If the Company redeems the notes prior to the applicable date with net cash proceeds of one or more equity offerings, the price is equal to the amount specified above, together with accrued and unpaid interest, subject to a maximum redemption of 35% of the aggregate principal amount of the respective note being redeemed.

In addition, upon the occurrence of certain change of control triggering events, the Company may be required to repurchase the 5.50% Senior Notes, at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the date of repurchase. The 5.50% Senior Notes contain restrictive covenants that, among other things, limit ~~Plantronics'~~the Company's ability to create certain liens and enter into sale and leaseback transactions; create, assume, incur, or guarantee additional indebtedness of ~~Plantronics’~~its subsidiaries without such subsidiary guaranteeing the 5.50% Senior Notes on an unsecured unsubordinated basis; and consolidate or merge with, or convey, transfer or lease all or substantially all of the assets of ~~Plantronics~~the Company and its subsidiaries to another person. As of ~~December 31, 2015,~~June 30, 2016, the Company was in compliance with all covenants.

Revolving Credit Agreement

On May ~~15, 2015,~~9, 2011, the Company entered into ~~an Amended and Restated Credit Agreement (the “Credit Agreement”)~~a credit agreement with Wells Fargo Bank, National Association ~~(the “Bank”~~("the Bank")~~. The~~, which was most recently amended on May 2, 2016 (as amended, the "Amended Credit Agreement") to extend the term of the Credit Agreement ~~amended~~by one year to May 9, 2019, and ~~restated~~to waive a default under the ~~Company’s existing~~ Credit Agreement ~~dated~~in effect as of ~~May 9, 2011, by~~March 31, 2016 in which the Company's debt to EBITDA ratio minimally exceeded the previously agreed upon ratio of 3:1. The breach of the covenant was primarily a result of the restructuring expenses recorded in the third and ~~between the Company and Bank to provide~~fourth quarters of fiscal year 2016.

The Amended Credit Agreement provides for a $100.0 million unsecured revolving credit facility. ~~The proceeds of loans under the Credit Agreement may be used to finance stock repurchases, and for general corporate purposes.~~

Revolving loans under the Credit Agreement will bear interest, at the Company’s election, at (i) the Bank’s announced prime rate less 1.20% per annum or (ii) a daily one-month LIBOR rate plus 1.40% per annum. Interest is payable quarterly in arrears on the first day of each April, July, October and January, commencing July 1, 2015. Principal, together with all accrued and unpaid interest, on the revolving loans is due and payable on May 9, ~~2018.~~2019. The Company is also obligated to pay a commitment fee of 0.37% per annum on the average daily unused amount of the revolving line of credit, which fee shall be payable quarterly in arrears on the first day of each April, July, October and January, commencing July 1, 2015.

~~Table of Contents~~

The Company may prepay the loans and terminate the commitments under the Credit Agreement at any time, without premium or penalty, subject to the reimbursement of certain costs. As of ~~December~~March 31, ~~2015~~2016 and June 30, 2016, the Company had no ~~outstanding borrowings under the line of credit. As of March 31, 2015 the Company had $34.5 million in~~ outstanding borrowings under the line of credit.

The Credit Agreement contains customary affirmative and negative covenants, including, among other things, covenants limiting the ability of the Company to incur debt, make capital expenditures, grant liens, merge or consolidate, and make investments. The Credit Agreement also requires the Company to comply with certain financial covenants, including (i) a maximum ratio of funded debt to EBITDA and (ii) a minimum EBITDA coverage ratio, in each case, tested as of each fiscal quarter and determined on a rolling four-quarter basis. In addition, the Company and its subsidiaries are required to maintain unrestricted cash, cash equivalents and marketable securities plus availability under the Credit Agreement at the end of each fiscal quarter of at least $300.0 million. The Credit Agreement contains customary events of default that include, among other things, payment defaults, covenant defaults, cross-defaults with certain other indebtedness, bankruptcy and insolvency defaults, and judgment defaults. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement.

On May 2, 2016, the Company received a waiver from the lender for noncompliance with the minimum EBITDA covenant at March 31, 2016. Pursuant to the terms of the waiver and amendment to the Credit Agreement, the $16.2 million of restructuring charges recorded in the Company's fiscal year 2016 will be excluded from the lender’s rolling four-quarter EBITDA calculation. This exclusion of restructuring charges does not automatically extend to any such future charges, should they be incurred. The breach was not considered to be a cross-default on the Company's 5.50% Senior Notes and as such had no impact on the amount or timing of amounts payable related to those debt instruments. As of ~~December 31, 2015,~~June 30, 2016, the Company was in compliance with all ratios and covenants.

8. STOCK-BASED COMPENSATION

The Company recognizes the grant-date fair value of stock-based compensation as compensation expense using the straight-line attribution approach over the service period for which the stock-based compensation is expected to vest. The following table summarizes the amount of stock-based compensation included in the condensed consolidated statements of operations:


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended June 30,
(in thousands)	2014			2015			2014			2015			2015			2016
Cost of revenues	$	685		$	811		$	1,888		$	2,469		$	779		$	842

Research, development and engineering	2,068			2,286			5,934			7,264			2,359			2,484
Selling, general and administrative	4,677			4,620			13,300			14,866			4,912			5,087
Stock-based compensation included in operating expenses	6,745			6,906			19,234			22,130			7,271			7,571
Total stock-based compensation	7,430			7,717			21,122			24,599			8,050			8,413
Income tax benefit	(2,188		)	(2,238		)	(6,216		)	(7,202		)	(2,322		)	(2,772		)
Total stock-based compensation, net of tax	$	5,242		$	5,479		$	14,906		$	17,397		$	5,728		$	5,641

The following is a summary of the Company’s stock option activity during the ~~nine~~three months ended ~~December 31, 2015~~June 30, 2016:

Options Outstanding

Number of
Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual Life

Aggregate
Intrinsic
Value
(in thousands) (in dollars) (in years) (in thousands)
Outstanding at March 31, 2015 1,558
$ 36.59

Options granted 287
$ 53.55

Options exercised (224 ) $ 30.79

Options forfeited or expired (36 ) $ 46.66

Outstanding at December 31, 2015 1,585
$ 40.25
4.0 $ 14,910
Vested or expected to vest at December 31, 2015 1,544
$ 39.95
3.9 $ 14,881
Exercisable at December 31, 2015 1,091
$ 35.52
3.1 $ 14,279



	Options Outstanding
	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(in thousands)		(in dollars)		(in years)	(in thousands)
Outstanding at March 31, 2016	1,461		$	41.24
Options granted	136		$	42.42
Options exercised	(27	)	$	27.25
Options forfeited or expired	—		$	24.11
Outstanding at June 30, 2016	1,570		$	41.58	3.9	$	7,109
Vested or expected to vest at June 30, 2016	1,536		$	41.44	3.9	$	7,094
Exercisable at June 30, 2016	1,102		$	38.48	3.0	$	6,932

The total intrinsic value of options exercised during the ~~nine~~three months ended ~~December 31,~~June 30, 2015 and ~~2014~~2016 was ~~$5.6~~$2.5 million and ~~$11.6~~$0.4 million, respectively. Intrinsic value is defined as the amount by which the fair value of the underlying stock exceeds the exercise price at the time of option exercise. The total cash received as a result of stock option exercises during the ~~nine~~three months ended ~~December 31, 2015~~June 30, 2016 was ~~$6.9~~$0.7 million, net of taxes.

~~Table of Contents~~

As of ~~December 31, 2015~~June 30, 2016, total unrecognized compensation cost related to unvested stock options was ~~$4.5~~$4.3 million, which is expected to be recognized over a weighted average period of 2.1 years.

Restricted Stock

Restricted stock consists of awards of restricted stock and restricted stock ~~units ("RSUs").~~units. The following is a summary of the Company’s restricted stock activity during the ~~nine~~three months ended ~~December 31, 2015~~June 30, 2016:


	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
	(in thousands)				(in thousands)
Non-vested at March 31, 2015	1,290		$	42.67
Non-vested at March 31, 2016					1,187		$	48.95
Restricted stock granted	656		$	54.98	589		$	43.97
Restricted stock vested	(561	)	$	41.77	(527	)	$	46.77
Restricted stock forfeited	(65	)	$	46.66	(18	)	$	49.08
Non-vested at December 31, 2015	1,320		$	48.98
Non-vested at June 30, 2016					1,231		$	47.50

The weighted average grant-date fair value of awards of restricted stock is based on the quoted market price of the Company's common stock on the date of grant. The weighted average grant-date fair value of restricted stock granted during the ~~nine~~three months ended ~~December 31,~~June 30, 2015 and ~~2014~~2016 was ~~$54.98~~$54.97 and ~~$45.16,~~$43.97, respectively. The total fair value of restricted stock that vested during the ~~nine~~three months ended ~~December 31,~~June 30, 2015 and ~~2014~~2016 was ~~$23.4~~$19.5 million and ~~$17.0~~$24.7 million, respectively.

As of ~~December 31, 2015~~June 30, 2016, total unrecognized compensation cost related to unvested restricted stock was ~~$42.0~~$47.6 million, which is expected to be recognized over a weighted average period of ~~1.7~~2.2 years.

Valuation Assumptions

The Company estimates the fair value of stock options and Employee Stock Purchase Plan (“ESPP”) shares using a Black-Scholes option valuation model. At the date of grant, the Company estimated the fair value of each stock option grant and purchase right granted under the ESPP using the following weighted average assumptions:

⁽¹⁾No purchase rights were granted under the ESPP during the three months ended ~~December 31,~~June 30, 2015 and ~~2014.~~

~~9. RESTRUCTURING AND OTHER RELATED CHARGES~~

The Company initiated a restructuring plan during the third quarter of fiscal year 2016. Under the plan, the Company reduced costs by eliminating 125 positions in the U.S., Mexico, China, and Europe, all of which will take effect in the fourth quarter of the Company's fiscal year 2016. These actions were designed to better align expenses to the Company’s revenue and gross margin profile and position the Company for improved operating performance.

The Company expects to incur pre-tax charges of approximately $12.6 million, consisting of $8.4 million for severance and related benefits recorded during the third quarter of fiscal year 2016, and 5.8 million for benefits related to a one-time enhancement of our existing early retirement program to be recognized in the fourth quarter of fiscal year 2016. These charges are expected to be offset by a reduction in fiscal year 2016 stock-based compensation expense of $1.6 million attributable to stock award forfeitures resulting from the restructuring action. The Company anticipates the restructuring plan will be substantially complete by the end of the fourth quarter of fiscal year 2016.

~~The following table summarizes the Company's restructuring activities for the nine months ended December 31, 2015:~~

(in thousands) Involuntary termination benefits
Balance at March 31, 2015 $ —

Charges included in operating expense 8,433

Cash payments during the period —

Balance at December 31, 2015 $ 8,433

The activity in the table above excludes the impact of the stock award forfeitures which were recognized in the functional line items within the Company's condensed consolidated statement of operations in which they were originally recorded.

~~10.~~9. COMMON STOCK REPURCHASES

From time to time, the Company's Board of Directors (the "Board") has authorized programs under which the Company may repurchase shares of its common stock, depending on market conditions, in the open market or through privately negotiated transactions. Repurchased shares are held as treasury stock until they are retired or re-issued. Repurchases by the Company pursuant to Board-authorized programs during the ~~nine~~three months ended ~~December 31,~~June 30, 2015 and ~~2014~~2016 are discussed below. As of ~~December 31, 2015~~June 30, 2016, there remained ~~37,686~~192,273 shares authorized for repurchase under a repurchase program approved by the Board on ~~May 21, 2015~~January 29, 2016 and there were no remaining shares authorized under previously approved programs.

In the ~~nine~~three months ended ~~December 31,~~June 30, 2015 and ~~2014~~,2016, the Company repurchased ~~8,673,366~~5,132,784 shares and ~~596,290~~441,738 shares, respectively, of its common stock in the open market for a total cost of ~~$482.8~~$284.4 million and ~~$27.4~~$18.6 million, respectively, and at an average price per share of ~~$55.66~~$55.42 and ~~$46.02,~~$42.19, respectively. In addition, the Company withheld shares valued at ~~$10.8~~$9.9 million and ~~$7.3~~$8.8 million in the ~~nine~~three months ended ~~December 31,~~June 30, 2015, and ~~2014,~~2016, respectively, in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under the Company's stock plans. The amounts withheld were equivalent to the employees' minimum statutory tax withholding requirements and are reflected as a financing activity within the Company's condensed consolidated statements of cash flows. These share withholdings have the same effect as share repurchases by the Company as they reduce the number of shares that would have otherwise been issued in connection with the vesting of shares subject to the restricted stock grants.

~~11.~~10. ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income ("AOCI"), net of immaterial tax effects, are as follows:

Accumulated unrealized gain (loss) on cash flow hedges⁽¹⁾

⁽¹⁾Refer to Note ~~12,~~11, Foreign Currency Derivatives, which discloses the nature of the Company's derivative assets and liabilities as of ~~December~~March 31, ~~2015~~2016 and ~~March 31, 2015~~June 30, 2016.

~~12.~~11. FOREIGN CURRENCY DERIVATIVES

The Company's foreign currency derivatives consist primarily of foreign currency forward exchange contracts, option contracts, and cross-currency swaps. The Company does not purchase ~~options~~derivative financial instruments for speculative trading purposes. The derivatives expose the Company to credit risk to the extent the counterparties may be unable to meet the terms of the derivative instrument. The Company's maximum exposure to loss that it would incur due to credit risk if parties to derivative contracts failed completely to perform according to the terms of the contracts was equal to the carrying value of the Company's derivative assets as of ~~December 31, 2015~~June 30, 2016. The Company seeks to mitigate such risk by limiting its counterparties to large financial institutions. In addition, the Company monitors the potential risk of loss with any one counterparty resulting from this type of credit risk on an ongoing basis.

The Company enters into master netting arrangements with counterparties when possible to mitigate credit risk in derivative transactions. A master netting arrangement may allow each counterparty to net settle amounts owed between the Company and the counterparty as a result of multiple, separate derivative transactions. As of ~~December 31, 2015~~June 30, 2016, the Company has International Swaps and Derivatives Association (ISDA) agreements with four applicable banks and financial institutions which contain netting provisions. Plantronics has elected to present the fair value of derivative assets and liabilities on the Company's condensed consolidated balance sheet on a gross basis even when derivative transactions are subject to master netting arrangements and may otherwise qualify for net presentation. For each counterparty, if netted, the Company would offset the asset and liability balances of all derivatives at the end of the reporting period. Derivatives not subject to master netting agreements are not eligible for net presentation. As of ~~December 31, 2015 and~~ March 31, ~~2015,~~2016 and June 30, 2016, no cash collateral had been received or pledged related to these derivative instruments.

The gross fair value of ~~our~~the Company's outstanding derivative contracts at the end of each period was as follows:

Non-Designated Hedges

As of ~~December 31, 2015~~June 30, 2016, the Company had foreign currency forward contracts denominated in Euros ("EUR"), British Pound Sterling ("GBP"), Australian Dollars ("AUD"), and Canadian Dollars ("CAD"). The Company does not elect to obtain hedge accounting for these forward contracts. These forward contracts hedge against a portion of the Company’s foreign currency-denominated cash balances, receivables, and payables. The following table summarizes the notional value of the Company’s outstanding foreign exchange currency contracts and approximate U.S. Dollar ("USD") equivalent at ~~December 31, 2015~~June 30, 2016:

Effect of Non-Designated Derivative Contracts on the Condensed Consolidated Statements of Operations

The effect of non-designated derivative contracts recognized in ~~interest~~other non-operating income and ~~other income,~~(expense), net in the condensed consolidated statements of operations was as follows:

The Company hedges a portion of the forecasted EUR and GBP denominated revenues with costless collars. On a monthly basis, the Company enters into option contracts with a six to eleven month term. Collar contracts are scheduled to mature at the beginning of each fiscal quarter, at which time the instruments convert to forward contracts. The Company also enters into cash flow forwards with a three month term. Once the hedged revenues are recognized, the forward contracts become non-designated hedges to protect the resulting foreign monetary asset position for the Company.

AsThe notional value of ~~December 31, 2015,~~ the ~~Company had foreign currency~~Company's outstanding EUR and GBP option ~~contracts of approximately €60.2 million~~ and £18.8 million. As of March 31, 2015, the Company had foreign currency option contracts of approximately €67.9 million and £28.6 million. As of December 31, 2015, the Company had foreign currency forward contracts at the end of ~~approximately €21.6 million and £5.1 million. As of March 31, 2015, the Company had no such instruments.~~ each period was as follows:



(in millions)	March 31, 2016		June 30, 2016
	EUR	GBP	EUR	GBP
Option contracts	€59.4	£18.4	€59.6	£18.5
Forward contracts	€23.9	£9.1	€22.4	£8.9

The Company will reclassify all amounts accumulated in other comprehensive income into earnings within the next twelve months.

Cross-currency Swaps

The Company hedges a portion of the forecasted Mexican Peso (“MXN”) denominated expenditures with a cross-currency swap. A loss of ~~$2.6~~$1.4 million, net of tax, in AOCI as of ~~December 31, 2015~~June 30, 2016 is expected to be reclassified to cost of revenues during the next 12 months due to the recognition of the hedged forecasted expenditures. As of ~~December 31, 2015 and~~ March 31, ~~2015,~~2016 and June 30, 2016, the Company had foreign currency swap contracts of approximately MXN ~~$445.1~~481.0 million and MXN ~~431.9~~491.9 million, respectively.

The following table summarizes the notional value of the Company’s outstanding MXN cross-currency swaps and approximate USD Equivalent at ~~December 31, 2015~~June 30, 2016:

Effect of Designated Derivative Contracts on AOCI and Condensed Consolidated Statements of Operations

The following table presents the pre-tax effects of derivative instruments designated as cash flow hedges on accumulated other comprehensive income and the condensed consolidated statements of operations for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2015 and ~~2014~~:2016:

During the three ~~and nine~~ months ended ~~December 31,~~June 30, 2015 and ~~2014~~2016 the Company recognized an immaterial gain on the ineffective portion of its cash flow hedges, which is reported in ~~interest~~other non-operating income and ~~other income~~ (expense), net in the condensed consolidated statements of operations.

~~13.~~12. INCOME TAXES

The Company and its subsidiaries are subject to taxation in the U.S. and in various foreign and state jurisdictions. The effective tax rate for the three ~~and nine~~ months ended ~~December 31, 2015~~June 30, 2016 was ~~17.9% and 21.7%~~22.5% compared to ~~21.3% and 24.5%~~19.4% for the same period in the prior year.

The ~~decrease~~increase in the effective tax rate for the three months ended ~~December 31, 2015~~June 30, 2016 is due primarily to ~~larger~~a shift in our geographic mix of income from lower tax ~~reserve releases in~~jurisdictions to higher tax jurisdictions and the current year caused by the expiration of various statutes, as well as interest related to the 5.50% Senior Notes during the current period. The decrease in the effective tax rate for the nine months ended December 31, 2015 is due primarily to lower domestic earnings resulting from the interest expense on the 5.50% Senior Notes and thenonrecurring favorable closure of audits in various jurisdictions which resulted in a tax ~~audit~~benefit in the ~~current year.~~year ago period. The ~~effective tax rates differ~~increases were partially offset by a decrease from the ~~statutory rate due primarily to the impact of foreign operations taxed at different statutory rates, tax credits, state taxes,~~federal research and ~~other factors.~~

~~On July 27, 2015,~~development credit, which was permanently reinstated in Altera Corp. v. Commissioner, the U.S. Tax Court issued an opinion related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision was issued by the Tax Court on December 1, 2015. The Internal Revenue Service may appeal the decision within 90 days. At this time, the U.S. Department of the Treasury has not withdrawn the requirement to include stock-based compensation in inter-company cost-sharing arrangements from its regulations. Accordingly, due to the uncertainty surrounding the status of the current regulations, questions related to the scope of potential benefits, and the risk of the Tax Court's decision being overturned on appeal, the Company has not recorded any associated benefit as of the three or nine months ended December 31, 2015. The Company will continue to monitor ongoing developments and potential impacts to our financial statements.

Included in long-term income taxes payable in the condensed consolidated balance sheets as of ~~December 31, 2015 and~~ March 31, ~~2015~~2016 and June 30, 2016 were unrecognized tax benefits of ~~$12.5~~$12.7 million and ~~$12.8~~$13.1 million, respectively, which would favorably impact the effective tax rate in future periods if recognized. The Company’s continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense in the condensed consolidated statements of operations. The accrued interest related to unrecognized tax benefits was $1.6 million and $1.8 million as of ~~December 31, 2015 and~~ March 31, ~~2015.~~2016 and June 30, 2016, respectively. No penalties have been accrued.

The Company ~~has effectively settled~~and its subsidiaries are subject to taxation in the ~~examination by the Internal Revenue Service~~U.S. and various foreign and state jurisdictions. All U.S. federal tax matters have been concluded for ~~its 2010~~ tax ~~year.~~years prior to fiscal year 2013. The California Franchise Tax Board completed its examination of the Company's 2007 and 2008 tax years. The Company received a Notice of Proposed Assessment and responded by filing a protest letter. The amount of the proposed assessment is not material. Foreign income tax matters for material tax jurisdictions have been concluded for tax years prior to fiscal year 2011, except infor the United Kingdom, ~~where tax matters have~~which has been concluded for tax years prior to fiscal year ~~2014.~~2015.

The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations; however, the outcome of such examinations cannot be predicted with certainty. If any issues addressed in the tax examinations are resolved in a manner inconsistent with the Company's expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. The timing of any resolution and/or closure of tax examinations is not certain.

13. COMPUTATION OF EARNINGS PER COMMON SHARE

The Company has a share-based compensation plan under which employees, non-employee directors, and consultants may be granted share-based awards, including shares of restricted stock on which non-forfeitable dividends are paid on unvested shares. As such, shares of restricted stock are considered participating securities under the two-class method of calculating earnings per share. The two-class method of calculating earnings per share did not have a material impact on the Company's earnings per share calculation for the three ~~and nine~~ month periods ending ~~December 31,~~June 30, 2015 and ~~2014~~.2016.

The following table sets forth the computation of basic and diluted earnings per common share for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2015 and ~~2014~~:2016:

~~15.~~14. REVENUE AND MAJOR CUSTOMERS

The Company designs, manufactures, markets, and sells headsets for business and consumer applications, and other specialty products for the hearing impaired. With respect to headsets, it makes products for use in offices and contact centers and, with mobile ~~and~~devices, cordless phones, ~~and with~~ computers, and gaming consoles.

The following table presents net revenues by product group for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2015 and ~~2014~~:2016:

For reporting purposes, revenue is attributed to each geographic region based on the location of the customer. Other than the U.S., no country accounted for 10% or more of the Company's net revenues for the three ~~and nine~~ months ended ~~December 31,~~June 30, 2015 or ~~2014~~. and 2016. The following table presents net revenues by geography:

No customer accounted for more than 10% of net revenues for the three ~~and nine~~ months ended ~~December 31, 2015 or 2014.~~

June 30, 2015. One customer, Ingram Micro Group, accounted for 10.1% of ~~total~~ net ~~accounts receivable at December 31, 2015.~~ revenues for the three months ended June 30, 2016.

One customer, ~~D&H Distributing,~~SYNNEX Corporation, accounted for ~~11.1%~~11.2% of total net accounts receivable at March 31, ~~2015.~~2016. One customer, Ingram Micro Group, accounted for 11.5% of total net accounts receivable at June 30, 2016.

~~16.~~15. SUBSEQUENT EVENTS

On ~~February 1,~~August 2, 2016, the Company announced that ~~the~~its Audit Committee had declared and approved the payment of a dividend of $0.15 per share on ~~March 10,~~September 9, 2016 to holders of record on ~~February~~August 19, 2016.

~~Item 2. Management’s Discussion~~the Company will retire from his role as CEO effective October 1, 2016 and ~~Analysis~~that Joseph Burton, currently serving as the Company’s Executive Vice President and Chief Commercial Officer, will succeed Mr. Kannappan, effective as of ~~Financial Condition and Results of Operations.~~October 2, 2016.

~~CERTAIN FORWARD-LOOKING INFORMATION:~~

~~This Quarterly Report on Form 10-Q contains forward-looking statements within~~In connection with this transition, the meaning of Section 27A of the Securities Act of 1933 ("Securities Act") and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act"). Forward-looking statements may generally be identified by the use of such words as "anticipate," "believe," “could,” "expect," "intend," “may,” "plan," "potential," "shall," "will," “would,” or variations of such words and similar expressions, or the negative of these terms. Specific forward-looking statements contained within this Form 10-Q include, but are not limitedCompany expects to statements regarding (i) our expectations for new product launches, new Consumer product market share positioning in fiscal year 2016 and beyond, (ii) the Unified Communications ("UC") markets, including adoption of UC products, and our position, timing and growth expectations in these markets, (iii) our restructuring actions and the expected effects and benefits thereof, (iv) our expectations regarding the impact of our Simply Smarter Communications® technology solutionsrecognize a $2.2 million charge in the UC market, (v) our intentions regarding investments in long-term growth opportunities and our core research and development effort, (vi) our intentions regarding the focus of our sales, marketing and customer services and support teams on UC, (vii) the future of UC technologies, including the transition of businesses to UC-supported systems, the effect on headset adoption and use, the effects on enterprises that adopt UC and our expectations concerning our revenue opportunity and profit growth, (viii) our expectations for the expansion of key strategic alliances, (ix) our position in the Enterprise and Consumer markets, (x) our belief that our revenues may be materially affected by fluctuations in exchange rates, the global economy and consumer spending, (xi) our long-term strategy to invest in UC and the relationship of added functionality to successful product launches, (xii) our expectations regarding the worldwide economy, as well as our investment strategies and focus, (xiii) the maintenance of our reputation in the industry, (xiv) our expenses, including research, development and engineering expenses and selling, general and administrative expenses, (xv) fluctuations in our cash provided by operating activities as a result of various factors including fluctuations in revenues and operating expenses, timing of product shipments, accounts receivable collections, inventory and supply chain management, and the timing and amount of taxes and other payments, (xvi) our future tax rate and payments related to unrecognized tax benefits, (xvii) our anticipated range of capital expenditures for the remainder of fiscal year 2016 and the sufficiency of our cash, cash equivalents, and cash from operations to sustain future operations and discretionary cash requirements, (xviii) our planned investment of and need for our foreign cash and our ability to repatriate that cash, (xix) our ability to draw funds on our credit facility as needed, (xx) future fluctuations in our cash provided by operating activities, (xxi) the sufficiency of our capital resources to fund operations, and (xxii) the outcome and effect of legal proceedings, as well as other statements regarding our future operations, financial condition and prospects and business strategies. Such forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. Factors that could cause actual results and events to differ materially from such forward-looking statements are included, but not limited to, those discussed in this Quarterly Report on Form 10-Q; in Part I, "Item 1A. Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended March 31, 2015, filed with the Securities and Exchange Commission (“SEC”) on May 15, 2015; and other documents filed with the SEC. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

We are a leading designer, manufacturer, and marketer of lightweight communications headsets, telephone headset systems, other communication endpoints, and accessories for the worldwide business and consumer markets under the Plantronics brand. Our major product categories are Enterprise, which includes headsets optimized for Unified Communications (“UC”), other corded and cordless communication headsets, audio processors, and telephone systems; and Consumer, which includes Bluetooth® and corded products for mobile phone applications, personal computer ("PC") and gaming headsets, and products manufactured under our Clarity brand.

We ship our products to approximately 80 countries through a network of distributors, retailers, wireless carriers, original equipment manufacturers (“OEMs”), and telephony service providers. We have well-developed distribution channels in North America, Europe, and in some parts of the Asia Pacific region where use of our products is widespread. Our distribution channels in other geographic regions are less mature, and while we primarily serve contact centers in those regions, we continue to expand into the office, mobile, and gaming and computer audio markets in those regions and other international locations.

Compared to the prior year quarter, net revenues decreased 2.6% to $225.7 million. Operating profit decreased 34.4% to $26.6 million, due primarily to the effect of restructuring charges taken in the current quarter, adverse impacts of fluctuations in foreign currency exchange rates, and the impact of a non-recurring, favorable litigation settlement in the year ago quarter. The adverse fluctuations in foreign currency exchange rates negatively impacted our net revenues but favorably impacted our operating expenses, although to a lesser degree, for a net unfavorable impact of $2.7 million our operating profit. These items were partially offset by a reduction in variable compensation expense due to lower profitability.

We delivered $16.3 million in net income, representing approximately 7.2% of our net revenues. The decrease in net revenues was driven primarily by lower revenues within our Enterprise product category, which declined 2.1% from the year ago period, and was further impacted by a 3.9% decrease from the year ago period in our Consumer product category.

Compared to the other foreign currencies in which we sell, a stronger U.S. Dollar ("USD") decreased net revenues by approximately $7.2 million and $23.4 million, net of the effects of hedging, in the three and nine months ended December 31, 2015, respectively, compared to the same periods a year ago. We generate approximately 45% of our revenues from international sales; therefore, the impact of currency movements on our net revenues can be significant. In addition, in some international locations where we sell in USD we also face additional pricing pressure, discounting, and lost business as the stronger dollar negatively impacts buying decisions. We expect that exchange rate fluctuations will continue to negatively impact our net revenues in the remaining quarter of our fiscal year 2016, together with unfavorable impacts from the global economy and consumer spending. We continually work to offset currency movements through hedging strategies designed to minimize the volatility of results and dampen large fluctuations. However, significant and sustained currency moves cannot be managed by hedges alone and currency exchange rate fluctuations could continue to adversely impact our earnings in future periods.

Revenues from our Consumer products channel are seasonal and typically strongest in our third fiscal quarter, which includes the majority of the holiday shopping season. Additionally, other factors directly impact our Consumer product category performance, such as consumer preferences, changes in consumer confidence and other macroeconomic factors, product life-cycles (including the introduction and pace of adoption of new technology), and the competitive retail environment.

~~Our Consumer business continues to be impacted by a decline in sales volumes in our Mono~~ ~~Bluetooth~~ ~~products as the category continues to decline. The unit volumes in our Stereo~~ ~~Bluetooth~~ ~~category increased when compared to the year ago period~~, driven by both newly launched as well as legacy products, whose sales increased due primarily to holiday promotions. We anticipate that these newer products and other planned investments in the Consumer category will allow us to better compete in these consumer product categories as they continue to expand. While we have been building our Stereo portfolio over the last several years, it is not yet as robust as our Mono ~~Bluetooth~~ ~~portfolio of products. As a result of these market changes, we have reduced the amount we expect to invest in non-premium Mono~~ ~~Bluetooth~~ ~~portfolio while shifting that investment toward additional Stereo~~ ~~Bluetooth~~ ~~products.~~

~~During the third~~second quarter of fiscal ~~year 2016 we initiated a restructuring plan~~2017 related to better align expenses to our revenue and gross margin profile and position us for improved operating performance. Under that plan, we reduced costs through voluntary and involuntary elimination of certain positions throughout the organization in the U.S., Mexico, China, and Europe. The restructuring actions will result in pre-tax charges of approximately $12.6 million.

~~Looking forward to the final quarter of fiscal year 2016, UC continues~~cash payments to be our primary focus area. With the vast majority of the UC opportunity still ahead of us, we believe we are in the beginning stage of a potentially long period of growth. We believe UC represents our key long-term driver of revenuemade for severance and profit growth, as we anticipate UC systems will become more commonly adopted by enterprises to reduce costs and improve collaboration. Growth of UC will increase overall headset adoption in enterprise environments, and we expect most of the growth in our Enterprise product category over the next five years to come from headsets designed for UC.

We remain cautious about the macroeconomic environment, based on uncertainty around fiscal policy in the U.S., as well as broader economic uncertainty in many parts of Europe and Asia Pacific, which makes it difficult for us to gauge what impact the economy may have on our future business, and the fact that the UC opportunity has not matured as quickly as we initially anticipated. We will continue to monitor our expenditures and prioritize expenditures that further our strategic long-term growth opportunities such as innovative product development in our core research and development efforts, including the use of software and services as part of our portfolio. UC will also remain the central focus of our sales force, marketing group, and other customer service and support teams as we continue investing in key strategic alliances and integrations with major UC vendors.

~~RESULTS OF OPERATIONS~~

Three Months Ended
December 31, Increase Nine Months Ended
December 31, Increase
(in thousands, except percentages) 2014 2015 (Decrease) 2014 2015 (Decrease)
Net revenues from unaffiliated customers:
Enterprise $ 161,591
$ 158,251
$ (3,340 ) (2.1 )% $ 470,625
$ 470,476
$ (149 ) — %
Consumer 70,190
67,484
(2,706 ) (3.9 )% 193,623
176,634
(16,989 ) (8.8 )%
Total net revenues $ 231,781
$ 225,735
$ (6,046 ) (2.6 )% $ 664,248
$ 647,110
$ (17,138 ) (2.6 )%

Compared to the other foreign currencies in which we sell, a stronger U.S. Dollar ("USD") decreased net revenues by approximately $7.2 million and $23.4 million, net of the effects of hedging, in the three and nine months ended December 31, 2015, respectively, compared to the same periods a year ago. These decreases impacted our consolidated year on year growth rate for the three and nine months ended December 31, 2015 by 3.1% and 3.5%, respectively. The impact to our Enterprise product category for the three and nine months ended December 31, 2015 was $4.7 million and $16.1 million, respectively, which impacted growth rates for the three and nine months ended December 31, 2015 by 2.9% and 3.4%, respectively. The impact to our Consumer product category for the three and nine months ended December 31, 2015 was $2.5 million and $7.3 million, respectively, which impacted growth rates by 3.5% and 3.8%, respectively.

Net revenues decreased in the three months ended December 31, 2015 over the same period a year ago due primarily to lower revenues in our Enterprise product category driven by a reduction in our Core Enterprise revenues, partially offset by an increase in our UC revenues. Revenues within our Consumer product category also decreased year on year, driven by reductions in sales volumes in our mono ~~Bluetooth~~ ~~category as the category continues to decline driven in part by smaller shelf space allocated to the category in favor of the faster growing Stereo~~ ~~Bluetooth~~ ~~category.~~

~~The unit volumes in our Stereo~~ ~~Bluetooth~~ category increased when compared to the year ago period driven by both newly launched as well as legacy products, whose sales increased due primarily to holiday promotions. We anticipate that these newer products and other planned investments in the Consumer category will allow us to better compete in these consumer product categories as they continue to expand.

Decreases in net revenues in the nine months ended December 31, 2015 over the same period a year ago due primarily to lower revenues within our Consumer product category. While we have been building our stereo portfolio over the last several years, it is not yet as robust as our mono ~~Bluetooth~~ ~~portfolio of products. As a result of these market changes, we have reduced the amount we expect to invest in non-premium mono~~ ~~Bluetooth~~ ~~portfolio while shifting that investment toward additional Stereo~~ ~~Bluetooth~~ ~~products.~~

~~Geographic Information~~

Three Months Ended
December 31, Increase Nine Months Ended
December 31, Increase
(in thousands, except percentages) 2014 2015 (Decrease) 2014 2015 (Decrease)
Net revenues from unaffiliated customers:
U.S. $ 123,092
$ 122,075
$ (1,017 ) (0.8)% $ 371,256
$ 363,456
$ (7,800 ) (2.1)%
As a percentage of net revenues 53.1 % 54.1 %

55.9 % 56.2 %
Europe and Africa 63,940
62,292
(1,648 ) (2.6)% 164,760
164,117
(643 ) (0.4)%
Asia Pacific 28,778
27,506
(1,272 ) (4.4)% 84,011
82,240
(1,771 ) (2.1)%
Americas, excluding U.S. 15,971
13,862
(2,109 ) (13.2)% 44,221
37,297
(6,924 ) (15.7)%
Total international net revenues 108,689
103,660
(5,029 ) (4.6)% 292,992
283,654
(9,338 ) (3.2)%
As a percentage of net revenues 46.9 % 45.9 %

44.1 % 43.8 %
Total net revenues $ 231,781
$ 225,735
$ (6,046 ) (2.6)% $ 664,248
$ 647,110
$ (17,138 ) (2.6)%

~~Compared to the same period in the prior year, U.S. net revenues decreased slightly in the three months ended December 31, 2015due to a low single digit decrease in our domestic Consumer product sales, driven by a decrease in our Mono~~ ~~Bluetooth~~ product revenues. This decrease was partially offset by an increase in Enterprise product revenues, driven primarily by UC revenues. For the three months ended December 31, 2015, year on year exchange rate fluctuations in foreign currencies in which we sell decreased net revenues by $7.2 million. This decrease impacted our Europe and Africa region by $4.9 million, our Asia Pacific region by $1.8 million, and our Americas region (excluding U.S.) by $0.5 million. These decreases translate to year on year growth rate impacts of 8%, 6%, and less than 1%, respectively.

~~In the nine months ended December 31, 2015, U.S. net revenues decreased mainly as the result of decline in the Consumer category, driven primarily by a decrease in our Mono~~ ~~Bluetooth~~ product revenues, partially offset by an increase in Enterprise net revenues, as a result of growth in UC. International net revenues decreased due primarily to our Enterprise category, driven mainly by a contraction in our traditional office and contact center products, partially offset by growth in UC due to continued adoption of UC solutions. International Consumer net revenues also decreased slightly with the majority of the decrease attributable to Mono ~~Bluetooth~~ ~~products.~~

~~COST OF REVENUES AND GROSS PROFIT~~

Three Months Ended Nine Months Ended
December 31, Increase December 31, Increase
(in thousands, except percentages) 2014 2015 (Decrease) 2014 2015 (Decrease)
Net revenues $ 231,781
$ 225,735
$ (6,046 ) (2.6 )% $ 664,248
$ 647,110
$ (17,138 ) (2.6 )%
Cost of revenues 111,865
116,219
4,354
3.9 % 311,795
319,266
7,471
2.4 %
Gross profit $ 119,916
$ 109,516
$ (10,400 ) (8.7 )% $ 352,453
$ 327,844
$ (24,609 ) (7.0 )%
Gross profit % 51.7 % 48.5 %

53.1 % 50.7 %

Compared to the respective prior year periods, gross profit as a percentage of net revenues decreased in the three and nine months ended December 31, 2015 due primarily to the weakening of foreign currencies relative to the USD, which has negatively impacted margins on our international product sales. While the majority of our cost of revenues is denominated in USD, we did experience slight gains of $1.0 million and $2.9 million, net of hedging activities, in our cost of revenues for the three and nine months ended December 31, 2015, respectively, due to the impacts of fluctuations in foreign currency exchange rates.

Product mix from Enterprise to Consumer, as is typical in our third quarter, and a product mix shift within Enterprise toward more UC sales, which carry lower margins than our non-UC Enterprise products also unfavorably impacted our cost of revenues. These unfavorable items were partially offset by favorable regional mix.

There are significant variances in gross profit percentages between our higher and lower margin products; therefore, small variations in product mix, which can be difficult to predict, can have a significant impact on gross profit. Gross profit may also vary based on distribution channel, return rates, and other factors.

~~RESEARCH, DEVELOPMENT, AND ENGINEERING~~

Three Months Ended Nine Months Ended
December 31, Increase December 31, Increase
(in thousands, except percentages) 2014 2015 (Decrease) 2014 2015 (Decrease)
Research, development, and engineering $ 22,991
$ 20,811
$ (2,180 ) (9.5 )% $ 69,280
$ 66,614
$ (2,666 ) (3.8 )%
% of net revenues 9.9 % 9.2 %

10.4 % 10.3 %

During the three and nine months ended December 31, 2015, research, development, and engineering expenses decreased compared to the same prior year periods due primarily to a reduction in variable compensation expense due to lower profitability and a favorable impact due to foreign currency fluctuations. These items were partially offset by higher equity-based compensation expense resulting from restricted stock grants made after May 2013, which vest over three years, compared to restricted stock grants made prior to May 2013, which vest over four years.

~~SELLING, GENERAL, AND ADMINISTRATIVE~~

Three Months Ended Nine Months Ended
December 31, Increase December 31, Increase
(in thousands, except percentages) 2014 2015 (Decrease) 2014 2015 (Decrease)
Selling, general, and administrative $ 57,977
$ 53,715
$ (4,262 ) (7.4 )% $ 174,756
$ 163,689
$ (11,067 ) (6.3 )%
% of net revenues 25.0 %
23.8 %

26.3 %
25.3 %

Compared to the same period a year ago, selling, general, and administrative expenses decreased in the three and nine months ended December 31, 2015 due primarily to a reduction in variable compensation expense due to lower profitability and a favorable impact due to foreign currency fluctuations. These decreases were partially offset by higher equity-based compensation expense resulting from the shorter vesting schedule of restricted stock grants made after May 2013 compared to restricted stock grants made prior to May 2013 and an increase in bad debt expenserelated benefits. Total charges related to ~~RadioShack's bankruptcy proceedings.~~

~~INTEREST EXPENSE~~

Interest expense of $7.2 million and $17.3 million for the three and nine months ended December 31, 2015, respectively, was primarily related to the 5.50% Senior Notes and included an immaterial amount in amortization of debt issuance costs. Interest expense for the three and nine months ended December 31, 2014 was immaterial and did not include such costs.

~~RESTRUCTURING AND OTHER RELATED CHARGES~~

Three Months Ended Nine Months Ended
December 31, Increase December 31, Increase
(in thousands, except percentages) 2014 2015 (Decrease) 2014 2015 (Decrease)
Restructuring and other related charges $ —
$ 8,433
$ 8,433
100.0 % $ —
$ 8,433
$ 8,433
100.0 %
% of net revenues — % 3.7 % — % 1.3 %

In the third quarter of fiscal year 2016 we initiated a restructuring plan intended to streamline and focus our efforts in order to more closely align our cost structure with our projected future revenue streams, which will better position us for improved operating performance and profitability. This measure was taken as a part of a broader effort to optimize the organization around our long-term strategic initiatives while adjusting for current macroeconomic business conditions and will involve the reduction of approximately 125 positions. These staff reductionsthis transition are expected to be ~~substantially complete by the end of fiscal year 2016.~~

~~In connection with this plan, we expect~~up to ~~record pre-tax charges of~~ approximately ~~$12.6~~$8.0 million, consisting of ~~$8.4~~$4.7 million in stock-based compensation charges and $3.3 million related to cash payments to be made for severance and related benefits recorded during the third quarter of our fiscal year 2016, and $5.8 million to be recognized in fourth quarter of fiscal year 2016 for benefits related to a one-time enhancement of our existing early retirement program. Thesebenefits. Actual charges are expected to be offset by a reduction in our fiscal year 2016 stock-based compensation expense of $1.6 million attributable to stock award forfeitures resulting from the restructuring action. Projected annual saving from this plan are in the range of approximately $15 to $16 million and will enable us to reduce our cost structure to better support our long-term profitability targets and maintain our competitiveness. See Note 9, ~~Restructuring and Other Related Charges~~ ~~for further information~~could vary depending on ~~restructuring costs.~~

~~INCOME TAX EXPENSE~~

Three Months Ended Nine Months Ended
December 31, Increase December 31, Increase
(in thousands except percentages) 2014
2015 (Decrease) 2014
2015 (Decrease)
Income before income taxes $ 38,596
$ 19,829
$ (18,767 ) (48.6 )% $ 114,550
$ 70,803
$ (43,747 ) (38.2 )%
Income tax expense 8,212
3,541
(4,671 ) (56.9 )% 28,073
15,391
(12,682 ) (45.2 )%
Net income $ 30,384
$ 16,288
$ (14,096 ) (46.4 )% $ 86,477
$ 55,412
$ (31,065 ) (35.9 )%
Effective tax rate 21.3 % 17.9 %

24.5 % 21.7 %

Our effective tax rate for the three and nine months ended December 31, 2015 was 17.9% and 21.7%, respectively, compared to 21.3% and 24.5%, respectively, in the same prior year periods. The decrease in the effective tax rate for the three months ended December 31, 2015 is due primarily to larger tax reserve releases in the current year caused by the expiration of various statutes, as well as interest related to the 5.50% Senior Notes during the current period. The decrease in the effective tax rate for the nine months ended December 31, 2015 is due primarily to lower domestic earnings resulting from the interest expense on the 5.50% Senior Notes and the favorable closure of a tax audit in the current year.

On July 27, 2015, in Altera Corp. v. Commissioner, the U.S. Tax Court issued an opinion related to the treatment of stock-based compensation expense in an intercompany cost-sharing arrangement. A final decision was issued by the Tax Court on December 1, 2015. The Internal Revenue Service may appeal the decision within 90 days. At this time, the U.S. Department of the Treasury has not withdrawn the requirement to include stock-based compensation in inter-company cost-sharing arrangements from its regulations. Accordingly, due to the uncertainty surrounding the status of the current regulations, questions related to the scope of potential benefits, and the risk of the Tax Court's decision being overturned on appeal, we have not recorded any associated benefit as of the three or nine months ended December 31, 2015. We will continue to monitor ongoing developments and potential impacts to our financial statements.

We and our subsidiaries are subject to taxation in the U.S. and in various foreign and state jurisdictions. We have effectively settled the examination by the Internal Revenue Service for our 2010 tax year. The California Franchise Tax Board completed its examination of our 2007 and 2008 tax years. We received a Notice of Proposed Assessment and responded by filing a protest letter. The amount of the proposed assessment is not material. Foreign income tax matters for material tax jurisdictions have been concluded for tax years prior to fiscal year 2011, except in the United Kingdom where tax matters have been concluded for tax years prior to fiscal year 2014.

~~FINANCIAL CONDITION~~

~~The table below provides a summary of our condensed consolidated cash flow information for the periods presented:~~

Nine Months Ended
December 31,
(in thousands) 2014 2015 Change
Net cash provided by operating activities $ 100,376
$ 104,023
$ 3,647
Net cash used for investing activities (17,382 ) (118,302 ) (100,920 )
Net cash used for financing activities (33,236 ) (42,559 ) (9,323 )
Effect of exchange rate changes on cash and cash equivalents (2,112 ) (921 ) 1,191
Net increase (decrease) in cash and cash equivalents $ 47,646
$ (57,759 ) $ (105,405 )

~~Our primary source of liquidity is cash provided by operating activities and, on occasion, financing obtained from capital markets.~~

~~We believe~~future event contingencies that internally generated cash flows are generally sufficient to support our operating businesses, capital expenditures, restructuring activities, principal and interest payment of debt, income tax payments and the payment of stockholder dividends, in addition to investments and share repurchases. We expect that cash provided by operating activities will fluctuate in future periods as a result of a number of factors, including fluctuations in our revenues and operating expenses, the timing of product shipments during the quarter, accounts receivable collections, inventory and supply chain management, and the timing and amount of tax and other payments.

During the nine months ended December 31, 2015, we obtained $488.4 million from debt financing compared to no such transactions in the year ago period. A portion of the proceeds were used to repay all outstanding amounts under the revolving line of credit agreement. The remainder of the proceeds are available for share repurchases and general corporate purposes. As of December 31, 2015, we had revolving credit facilities available that provide for up to $100.0 million of additional financing. The credit facility expires in May 2018.

~~Operating Activities~~

~~Net cash provided by operating activities during the nine months ended~~ ~~December 31, 2015~~ increased from the same prior year period primarily due to a decrease in Accounts Receivable driven by a shorter cash conversion cycle, partially offset by lower net income after adjusting for non-cash items - primarily non-cash restructuring charges, stock-based compensation, and the remeasurement of our non-designated hedge instruments.

~~Investing Activities~~

~~Net cash used for investing activities during the nine months ended~~ ~~December 31, 2015~~ ~~increased from the same prior year period due primarily to a net increase in cash used for the purchase of investments.~~

We estimate total capital expenditures for fiscal year 2016 will be approximately $30.0 million to $35.0 million related to costs associated with the purchase and related construction of a new smarter working office for our European headquarters in the Netherlands as well as costs associated with building and leasehold improvements at our U.S. headquarters, the implementation of a manufacturing execution system at our facility in Mexico, and other IT-related expenditures. The remainder of the anticipated capital expenditures for fiscal year 2016 consist primarily of capital investment in our manufacturing capabilities, including tooling for new products. We will continue to evaluate new business opportunities and new markets; as a result, our future growthexist within the ~~existing business or new opportunities and markets may require us to obtain additional financing or make additional capital expenditures to support that growth.~~

~~Financing Activities~~

Net cash used for financing activities during the nine months ended December 31, 2015 increased from the same prior year period. This increase was driven by net proceeds received from issuance of the 5.50% Senior Notes partially offset by an increase in the level of common stock repurchases.

On February 1, 2016, we announced that our Audit Committee of the Board ("the Audit Committee") had declared a cash dividend of $0.15 per share, payable on March 10, 2016 to stockholders of record at the close of business on February 19, 2016. We expect to continue paying a quarterly dividend of $0.15 per share; however, the actual declaration of dividends and the establishment of record and payment dates are subject to final determination by the Audit Committee each quarter after its review of our financial performance and financial position.

~~Liquidity and Capital Resources~~

Our primary discretionary cash requirements have historically been for repurchases of our common stock and to fund stockholder dividends. As a result of the issuance of the 5.50% Senior Notes, we will have contractually required interest payments of approximately $13.8 million each November and May through the life of the notes.

In the third quarter of our fiscal year 2016 we approved a restructuring plan intended to optimize the organization and manage expenses to gain or improve operating efficiencies and profitability. We expect to make cash payments totaling approximately $14.3 million under these plans in the fourth quarter of our fiscal year 2016 and the first half of our fiscal year 2017, of which approximately $7.8 million will require use of our domestic cash.

At ~~December 31, 2015~~, we had working capital of $509.5 million, including $385.3 million of cash, cash equivalents and short-term investments, compared with working capital of $507.8 million, including $374.7 million of cash, cash equivalents and short-term investments at ~~March 31, 2015~~.

~~Our cash and cash equivalents as of~~ ~~December 31, 2015~~ consisted of bank deposits with third party financial institutions and Commercial Paper. We monitor bank balances in our operating accounts and adjust the balances as appropriate. Cash balances are held throughout the world, including substantial amounts held outside of the U.S. As of ~~December 31, 2015~~, of our $385.3 million of cash, cash equivalents, and short-term investments, $27.7 million was held domestically while $357.6 million was held by foreign subsidiaries, approximately 90% of which were based in U.S. dollar-denominated investments. The costs to repatriate our foreign earnings to the U.S. would be material; however, our intent is to permanently reinvest earnings from foreign operations and our current plans do not require us to repatriate earnings from foreign operations to fund our U.S. operations because we generate sufficient domestic operating cash flow and have access to external funding under our revolving line of credit.

~~Our short and long-term investments are intended to establish a high-quality portfolio that preserves principal and meets liquidity needs. As of~~ ~~December 31, 2015, our investments were composed of Mutual Funds and US Treasury Notes, Government Agency Securities, Commercial Paper, Corporate Bonds, and Certificates of Deposits ("CDs").~~

From time to time, depending on market conditions, our Board has authorized plans under which we may repurchase shares of our common stock in the open market or through privately negotiated transactions. During the nine months ended December 31, 2015, we repurchased 8,673,366 shares of our common stock in the open market as part of these publicly announced repurchase programs. The total cost of these repurchases was $482.8 million, with an average price of $55.66 per share. In addition, we withheld 194,432 shares with a total value of $10.8 million in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under our stock plans.

~~As of~~ ~~December 31, 2015~~, there remained 37,686 shares authorized for repurchase under the stock repurchase program approved by the Board on May 21, 2015. For more information regarding our stock repurchase programs, refer to Note 10, ~~Common Stock Repurchases, of the accompanying notes to condensed consolidated financial statements (unaudited) in this Quarterly Report on Form 10-Q.~~

In May 2015, we entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, National Association (the “Bank”). The Credit Agreement amends and restates our existing Credit Agreement, dated as May 2011. The Credit Agreement provides for a $100.0 million unsecured revolving credit facility to augment our financial flexibility. Our obligations under the Credit Agreement are required to be guaranteed by the Company’s domestic subsidiaries, subject to certain exceptions.

Revolving loans under the Credit Agreement will bear interest, at our election, at (i) the Bank’s announced prime rate less 1.20% per annum or (ii) a daily one-month LIBOR rate plus 1.40% per annum. Principal, together with all accrued and unpaid interest, on the revolving loans is due and payable on May 9, 2018. The Company is also obligated to pay a commitment fee of 0.37% per annum on the average daily unused amount of the revolving line of credit, which fee shall be payable quarterly in arrears. The Company may prepay the loans and terminate the commitments under the Credit Agreement at any time, without premium or penalty, subject to the reimbursement of certain costs. As of December 31, 2015 the Company had no outstanding borrowings under the line of credit. The line of credit requires us to comply with the following two financial covenant ratios, in each case at each fiscal quarter end and determined on a rolling four-quarter basis:

In addition, we and our subsidiaries are required to maintain unrestricted cash, cash equivalents and marketable securities plus availability under the Credit Agreement at the end of each fiscal quarter of at least $300.0 million. The Credit Agreement contains customary events of default that include, among other things, payment defaults, covenant defaults, cross-defaults with certain other indebtedness, bankruptcy and insolvency defaults, and judgment defaults. The occurrence of an event of default could result in the acceleration of the obligations under the Credit Agreement. As of December 31, 2015, we were in compliance with all ratios and covenants by a substantial margin.

Our liquidity, capital resources, and results of operations in any period could be affected by repurchases of our common stock, the payment of cash dividends, the exercise of outstanding stock options, restricted stock grants under stock plans, and the issuance of common stock under our ESPP. We receive cash from the exercise of outstanding stock options under our stock plan and the issuance of shares under our ESPP. However, the resulting increase in the number of outstanding shares from these equity grants and issuances could affect our earnings per share. We cannot predict the timing or amount of proceeds from the sale or exercise of these securities or whether they will be exercised, forfeited, canceled, or will expire.

We believe that our current cash and cash equivalents, short-term investments, cash provided by operations, and the availability of additional funds under the Credit Agreement will be sufficient to fund operations for at least the next 12 months; however, any projections of future financial needs and sources of working capital are subject to uncertainty. Readers are cautioned to review the risks, uncertainties, and assumptions set forth in this Quarterly Report on Form 10-Q, including the section entitled “Certain Forward-Looking Information” and the risk factors set forth in our Annual Report on Form 10-K for the fiscal year ended March 31, 2015, filed with the SEC on May 15, 2015, and other periodic filings with the SEC, any of which could affect our estimates for future financial needs and sources of working capital.

~~OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS~~

A substantial portion of the raw materials, components, and subassemblies used in our products are provided by our suppliers on a consignment basis. These consigned inventories are not recorded on our consolidated balance sheet until we take title to the raw materials, components, and subassemblies, which occurs when they are consumed in the production process. Prior to consumption in the production process, our suppliers bear the risk of loss and retain title to the consigned inventory. The terms of the agreements allow the Company to return parts in excess of maximum order quantities to the suppliers at the supplier’s expense. Returns for other reasons are negotiated with the suppliers on a case-by-case basis and to date have been immaterial. If our suppliers were to discontinue financing consigned inventory, it would require us to make cash outlays and we could incur expenses which, if material, could negatively affect our business and financial results. As of ~~December 31, 2015~~ ~~and~~ ~~March 31, 2015, we had off-balance sheet consigned inventories of $50.1 million and $33.4 million, respectively.~~

Our contractual obligations as disclosed in our Annual Report on Form 10-K for the year ended March 31, 2015 have changed due to the issuance of the 5.50% Senior Notes and repayment of all outstanding amounts under the revolving line of credit agreement.

~~Unconditional Purchase Obligations~~



PART I. FINANCIAL INFORMATION	Page No.

~~Item 1.~~ Management's Discussion and Analysis of Financial Condition and Results of Operations	3

Overview	3

Results of Operations	5

Financial Condition	8

Contractual Obligations	11

Critical Accounting Estimates	11

Financial Statements (Unaudited):	13

Condensed Consolidated Balance Sheets as of March 31, ~~2015~~2016 and ~~December 31, 2015~~June 30, 2016	313

Condensed Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~December 31, 2014~~June 30, 2015 and ~~2015~~2016	414

Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~December 31, 2014~~June 30, 2015 and ~~2015~~2016	515

Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~December 31, 2014~~June 30, 2015 and ~~2015~~2016	616

Notes to Condensed Consolidated Financial Statements	717

~~Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations~~	21

~~Item 3.~~ Quantitative and Qualitative Disclosures About Market Risk	3031

~~Item 4.~~ Controls and Procedures	32

PART II. OTHER INFORMATION

~~Item 1.~~ Legal Proceedings	3233

~~Item 1A.~~ Risk Factors	3233

~~Item 2.~~ Unregistered Sales of Equity Securities and Use of Proceeds	33

~~Item 6.~~ Exhibits	35

SIGNATURES	36


	Nine Months Ended December 31,						Three Months Ended June 30,
(in thousands)	2014			2015			2015			2016
Warranty obligation at beginning of period	$	7,965		$	7,717		$	7,717		$	8,537
Warranty provision related to products shipped	7,880			6,942			2,247			2,357
Deductions for warranty claims processed	(6,960		)	(6,490		)	(2,251		)	(2,427		)
Adjustments related to preexisting warranties	(561		)	552			470			114
Warranty obligation at end of period	$	8,324		$	8,721		$	8,183		$	8,581


(in thousands)	March 31, 2015		December 31, 2015		March 31, 2016		June 30, 2016
Derivative Assets (recorded in 'Other current assets')
Non-designated hedges	$	1,891	$	225	$	33	$	915
Cash flow hedges	11,372		1,964		1,952		3,327
Total Derivative Assets	$	13,263	$	2,189	$	1,985	$	4,242

Derivative Liabilities (recorded in 'Other accrued liabilities')
Derivative Liabilities (recorded in 'Accrued liabilities')
Non-designated hedges	$	1	$	749	$	1,163	$	374
Cash flow hedges	3,913		3,341		3,255		2,288
Total Derivative Liabilities	$	3,914	$	4,090	$	4,418	$	2,662


(in thousands)	Local Currency		USD Equivalent		Position	Maturity	Local Currency		USD Equivalent		Position	Maturity
EUR	€	32,000	$	34,918	Sell EUR	1 month	€	26,900	$	30,000	Sell EUR	1 month
GBP	£	4,900	$	7,289	Sell GBP	1 month	£	4,060	$	5,392	Sell GBP	1 month
AUD	A$	11,680	$	8,430	Sell AUD	1 month	A$	13,600	$	10,168	Sell AUD	1 month
CAD	C$	2,860	$	2,059	Sell CAD	1 month	C$	2,470	$	1,913	Sell CAD	1 month


	Three Months Ended December 31,						Nine Months Ended December 31,						Three Months Ended June 30,
(in thousands)	2014			2015			2014			2015			2015			2016
Gain (loss) included in AOCI as of beginning of period	$	2,601		$	(2,900	)	$	(1,442	)	$	5,705		$	5,705		$	(1,106	)

Amount of gain (loss) recognized in OCI (effective portion)	508			1,330			3,604			(3,484		)
Amount of gain (loss) recognized in other comprehensive income (“OCI”) (effective portion)													(2,838		)	954

Amount of gain (loss) reclassified from OCI into net revenues (effective portion)	1,220			1,739			61			7,474			3,538			160
Amount of gain (loss) reclassified from OCI into cost of revenues (effective portion)	(63		)	(1,238		)	149			(3,182		)	(773		)	(727		)
Total amount of gain (loss) reclassified from AOCI to income (loss) (effective portion)	1,157			501			210			4,292			2,765			(567		)

Gain (loss) included in AOCI as of end of period	$	1,952		$	(2,071	)	$	1,952		$	(2,071	)
Gain included in AOCI as of end of period													$	102		$	415



(in thousands)	Involuntary termination benefits
Balance at March 31, 2015	$	—
Charges included in operating expense	8,433
Cash payments during the period	—
Balance at December 31, 2015	$	8,433


Currency - forward contracts	Position	USD Value of Net Foreign Exchange Contracts		Foreign Exchange Gain From 10% Appreciation of USD		Foreign Exchange Loss From 10% Depreciation of USD			Position	USD Value of Net Foreign Exchange Contracts		Foreign Exchange Gain From 10% Appreciation of USD		Foreign Exchange Loss From 10% Depreciation of USD
EUR	Sell Euro	$	34.9	$	3.5	$	(3.5	)	Sell EUR	$	30.0	$	3.0	$	(3.0	)
GBP	Sell GBP	$	7.3	$	0.7	$	(0.7	)	Sell GBP	$	5.4	$	0.5	$	(0.5	)
AUD	Sell AUD	$	8.4	$	0.9	$	(0.9	)	Sell AUD	$	10.2	$	0.2	$	(0.2	)
CAD	Sell CAD	$	2.1	$	0.2	$	(0.2	)	Sell CAD	$	1.9	$	1.0	$	(1.0	)


Currency - option contracts	USD Value of Net Foreign Exchange Contracts		Foreign Exchange Gain From 10% Appreciation of USD		Foreign Exchange Loss From 10% Depreciation of USD			USD Value of Net Foreign Exchange Contracts		Foreign Exchange Gain From 10% Appreciation of USD		Foreign Exchange Loss From 10% Depreciation of USD
Call options	$	99.1	$	0.5	$	(3.2	)	$	97.6	$	0.5	$	(3.2	)
Put options	$	91.3	$	3.7	$	(0.9	)	$	90.0	$	3.8	$	(1.3	)
Forwards	$	31.4	$	3.1	$	(3.1	)	$	38.3	$	3.7	$	(3.7	)


Currency - cross-currency swap contracts	USD Value of Net Foreign Exchange Contracts		Foreign Exchange Loss From 10% Appreciation of USD			Foreign Exchange Gain From 10% Depreciation of USD		USD Value of Net Foreign Exchange Contracts		Foreign Exchange Loss From 10% Appreciation of USD			Foreign Exchange Gain From 10% Depreciation of USD
Position: Buy MXN	$	28.2	$	(2.2	)	$	2.7	$	27.8	$	(2.3	)	$	2.8



	Total Number of Shares Purchased ¹		Average Price Paid per Share ²		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ¹	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs⁶
September 27, 2015 to October 24, 2015	70,369	³	$	52.19	69,348	149,587
October 25, 2015 to November 21, 2015	73,388	⁴	$	53.24	69,901	79,686
November 22, 2015 to December 26, 2015	43,256	⁵	$	52.73	42,000	37,686



1		On ~~May 21, 2015,~~January 29, 2016, the Board of Directors authorized a new program to repurchase ~~4,000,000~~1,000,000 shares of our common stock.

2		"Average Price Paid per Share" reflects open market repurchases of common stock only.

3		Includes ~~1,021 shares~~ 675 shares that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under our stock plans.

4		~~Include~~Includes 41,003 s~~s 3,487 shares~~hares that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under our stock plans.

5		Includes 158,008 s~~1,256 shares~~hares that were tendered to us in satisfaction of employee tax withholding obligations upon the vesting of restricted stock granted under our stock plans.

6		These shares reflect the available shares authorized for repurchase under the program.



Item Number	Page(s)
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements	13	-	30

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	3	-	12

Item 3. Quantitative and Qualitative Disclosures about Market Risk	31	-	32

Item 4. Control and Procedures	33

PART II. OTHER INFORMATION

Item 1. Legal Proceedings	33

Item 1A. Risk Factors	33

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	34

Item 6. Exhibits	35

Signatures	36



		PLANTRONICS, INC.

Date:	~~February 1,~~August 2, 2016	By:	/s/ Pamela Strayer
		Name:	Pamela Strayer
		Title:	Senior Vice President and Chief Financial Officer