PLANTRONICS INC /CA/, S-3, 1999-01-08

PLANTRONICS INC /CA/
S-3, 1999-01-08
TELEPHONE & TELEGRAPH APPARATUS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 8, 1999

REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PLANTRONICS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
DELAWARE 77-0207692
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
</TABLE>

345 ENCINAL STREET

SANTA CRUZ, CALIFORNIA 95060
(831) 426-5858
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

S. KENNETH KANNAPPAN,

CHIEF EXECUTIVE OFFICER AND PRESIDENT
PLANTRONICS, INC.
345 ENCINAL STREET
SANTA CRUZ, CALIFORNIA 95060
(831) 426-5858
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

COPIES TO:

<TABLE>
<S> <C>
HENRY P. MASSEY, JR., ESQ. PETER E. WILLIAMS III, ESQ.
ERIC JOHN FINSETH, ESQ. JUSTIN L. BASTIAN, ESQ.
MICHAEL DE ANGELIS, ESQ. BRIAN D. MCALLISTER, ESQ.
WILSON SONSINI GOODRICH & ROSATI MORRISON & FOERSTER LLP
PROFESSIONAL CORPORATION 755 PAGE MILL ROAD
650 PAGE MILL ROAD PALO ALTO, CA 94304
PALO ALTO, CA 94304 (650) 813-5600
(650) 493-9300
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:

As soon as practicable after the effective date of this Registration Statement.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE

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<S> <C> <C> <C> <C>
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TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1)(2) PER SHARE OFFERING PRICE FEE(1)(2)
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Common Stock $0.01 par value......... 1,782,500 shares Not Applicable Not Applicable --
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</TABLE>

(1) Includes 1,000,000 shares that were previously registered on Registration
Statement on Form S-3 (No. 333-67781). A filing fee of $17,697 was
previously paid with respect to such shares.

(2) Also includes 782,500 shares that were previously registered on Registration
Statement on Form S-8 (No. 33-81980), relating to the Registrant's 1993
Stock Plan. The Registrant estimates that a filing fee of approximately
$549.55 was previously paid with respect to such shares and, pursuant to
Rule 457(h)(3), no additional filing fee is being paid at this time. Of
these shares, 432,822 shares are subject to employee stock options held by
Robert S. Cecil, the Registrant's former Chief Executive Officer and current
Chairman of the Board of Directors, and will be offered for resale by Mr.
Cecil. An additional 349,678 shares, including 232,500 shares that the
Underwriters have the option to purchase to cover over-allotments, if any,
are subject to employee stock options granted to Robert S. Cecil under the
Registrant's 1993 Stock Plan and subsequently transferred by gift by him to
his spouse, Louise M. Cecil. These shares are being registered for issuance
to Mrs. Cecil upon exercise of such options and for subsequent offer and
resale by her.

Pursuant to Rule 429, the prospectuses contained in this registration
statement are combined prospectuses relating to the earlier registration
statements referred to above.
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2

EXPLANATORY NOTE

This Registration Statement contains two prospectuses. The first prospectus
relates to the offer and sale by the Registrant to Louise M. Cecil of up to
349,678 shares of Common Stock of the Registrant pursuant to the exercise by her
of certain employee stock options transferred to her by gift by Robert S. Cecil.
The second prospectus relates to an underwritten public offering of Common Stock
of the Registrant by Louise M. Cecil, Robert S. Cecil and Citigroup Foundation,
including the shares which are the subject of the first prospectus.
<PAGE> 3

The information in this prospectus is not complete and may be changed.
Plantronics may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 8, 1999
P R O S P E C T U S

[PLANTRONICS LOGO]

UP TO 349,678 SHARES OF COMMON STOCK

WHICH PLANTRONICS MAY SELL UNDER THIS PROSPECTUS

Plantronics, Inc. may offer and sell up to 349,678 shares of Plantronics
common stock to you under this prospectus. Plantronics will only sell these
shares if, and to the extent, you exercise your options to purchase the shares
of Plantronics common stock.

If and when you exercise the options, in whole or in part, Plantronics will
issue shares to you at a per share price equal to the per share exercise price
under the option agreements which govern the options. Examine the option
agreements which cover the options you wish to exercise in order to determine
the applicable per share exercise price.

INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 3 OF THIS PROSPECTUS.

<TABLE>
<CAPTION>
PER SHARE PRICE: TOTAL PRICE:
---------------- ------------
<S> <C> <C> <C>
252,165 of your options: $ 0.90 $226,948.50
97,513 of your options: $2.735 $266,698.06
-----------
Total: 349,678 of your options: $493,646.56
</TABLE>

Plantronics common stock is listed on the New York Stock Exchange under the
ticker symbol "PLT". On January 7, 1999, the last reported sale price on the
NYSE of one share of Plantronics common stock was $85 3/4.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

-------------------------

The date of this prospectus is , 1999
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TABLE OF CONTENTS

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PAGE
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Plantronics' Address............ 2
Forward-Looking Statements...... 2
Risk Factors.................... 3
Information Incorporated by
Reference..................... 12
</TABLE>

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<CAPTION>
PAGE
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<S> <C>
How to Get Information About
Plantronics................... 12
Legal Matters................... 13
Experts......................... 13
</TABLE>

PLANTRONICS' ADDRESS

Plantronics' principal executive offices are located at 345 Encinal Street,
Santa Cruz, California 95060. Plantronics' telephone number at that location is
(831) 426-5858.

FORWARD-LOOKING STATEMENTS

This prospectus and the documents incorporated herein by reference contain
forward-looking statements. Plantronics bases these statements on its current
expectations, estimates and projections about its industry. Either the beliefs
of management, or assumptions made by management, form the basis for those
expectations, estimates and projections. The safe harbor created by Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 generally protects Plantronics from liability for these statements. You can
often recognize such forward-looking statements by words such as "anticipates,"
"expects," "intends," "plans," "believes," "seeks," "estimates," variations of
such words, and similar expressions.

These forward-looking statements do not guarantee future performance and
are subject to risks, uncertainties and assumptions that are difficult to
predict. The Risk Factors section immediately following this paragraph sets
forth some of such risks and uncertainties. The documents incorporated by
reference may also set forth risks and uncertainties. These risks and
uncertainties could cause actual results to differ materially and adversely from
those discussed in the forward-looking statements. Plantronics undertakes no
obligation to publicly update any of these forward-looking statements to reflect
new information or future events.

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RISK FACTORS

Investing in our common stock will provide you with an equity ownership
interest in Plantronics. As a Plantronics shareholder, you may be subject to
risks inherent in our business. The performance of your shares will reflect the
performance of our business relative to, among other things, our competition,
general economic and market conditions and industry conditions. The value of
your investment may increase or decline and could result in a loss. You should
carefully consider the following factors as well as other information contained
in this prospectus before deciding to invest in our common stock.

DEPENDENCE ON CALL CENTER MARKET SEGMENT

We have historically derived, and continue to derive, a substantial
majority of our net sales from the call center market segment. This market
segment has grown significantly in recent years as new call centers have
proliferated and existing call centers have expanded. While we believe this
market segment is continuing to grow, in the future this growth could slow or
revenues from this market segment could decline due to various factors. For
example, technological advances such as automated interactive voice response
systems could reduce or eliminate the need for call center agents in certain
applications. In addition, consumer resistance to telemarketing could adversely
affect growth in the call center market segment. Due to our reliance on the call
center market segment, we will be affected more by changes in the rate of call
center establishment and expansion and the communications products that call
center agents use than would a company serving a broader market. Any decrease in
the demand for call centers and related headset products could cause a decrease
in the demand for our products, which would materially adversely affect our
business, financial condition and results of operations.

FAILURE OF THE OFFICE, MOBILE, COMPUTER AND RESIDENTIAL MARKET SEGMENTS TO
DEVELOP

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

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY

Our quarterly results of operations may vary significantly in the future
for a variety of reasons, including the following:

- changes in demand for our products;

- timing and size of orders from customers;

- cancellations or delays of deliveries of components and subassemblies by
our suppliers;

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- variances in the timing and amount of engineering and operating expenses;

- distribution channel volume variations;

- delays in shipments of our products;

- product returns and customer credits;

- new product introductions by us or our competitors;

- entrance of new competitors;

- increases in the costs of our components and subassemblies;

- price erosion;

- changes in the mix of products sold by us;

- seasonal fluctuations in demand; and

- general economic conditions.

Each of the above factors is difficult to forecast and thus could have a
material adverse effect on our business, financial condition and results of
operations.

We generally ship most orders during the quarter in which they are
received, and, consequently, we do not have a significant backlog of orders. As
a result, quarterly net sales and operating results depend primarily on the
volume and timing of orders received during the quarter. It is difficult to
forecast orders for a given quarter. Since a large portion of our operating
expenses, including rent, salaries and certain manufacturing expenses, are fixed
and difficult to reduce or modify, if net sales do not meet our expectations,
our business, financial condition and results of operations could be materially
adversely affected.

Our operating results can also vary substantially in any period depending
on the mix of products sold and the distribution channels through which they are
sold. In the event that sales of lower margin products or sales through lower
margin distribution channels in any period represent a disproportionate share of
total sales during such period, our operating results would be materially
adversely affected.

We believe that period-to-period comparisons of our operating results are
not necessarily meaningful and should not be relied upon as indicative of future
operating results. In addition, our operating results in a future quarter or
quarters may fall below the expectations of securities analysts or investors,
and, as a result, the price of our common stock might fall.

WE MUST MATCH PRODUCTION TO DEMAND

Historically, we have seen steady increases in customer demand for our
products and have generally been able to increase production to meet that
demand. However, the demand for our products is dependent on many factors and
such demand is inherently difficult to forecast. Significant unanticipated
fluctuations in demand could cause the following operating problems, among
others:

- If demand increases beyond that forecasted, we would have to rapidly
increase production. We depend on suppliers to provide additional volumes
of components

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and subassemblies, and, therefore, might not be able to increase
production rapidly enough to meet unexpected demand. This could cause us
to fail to meet customer expectations. There could be short-term losses
of sales while we are trying to increase production. If customers turn to
competitive sources of supply to meet their needs, there could be a
long-term impact on our revenues.

- Rapid increases in production levels to meet unanticipated demand could
result in higher costs for components and subassemblies and higher
overtime costs and other expenses. These higher expenditures could lower
our profit margins. Further, if production is increased rapidly, there
may be decreased manufacturing yields, which may also lower our margins.

- If forecasted demand does not develop, we could have excess production or
excess capacity. Excess production could result in higher inventories of
finished products, components and subassemblies. If we were unable to
sell these inventories, we would have to write off some or all of our
inventories of obsolete products and unusable components and
subassemblies. Excess manufacturing capacity could lead to higher
production costs and lower margins.

Any of the foregoing problems could materially adversely affect our business,
financial condition and results of operations.

WE DEPEND ON OUR SUPPLIERS

We buy components and subassemblies from a variety of suppliers and
assemble them into finished products. The cost, quality, and availability of
such components are essential to the successful production and sale of our
products. Obtaining components and subassemblies entails various risks,
including the following:

- Prices of components and subassemblies may rise. If this occurs and we
are not able to pass these increases on to our customers or to achieve
operating efficiencies that would offset the increases, it would have a
material adverse effect on our business, financial condition and results
of operations.

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

- Most of our suppliers are not obligated to continue to provide us with
components and subassemblies. Rather, we buy most components and
subassemblies on a purchase order basis. If our suppliers experience
increased demand or shortages, it could affect deliveries to us. In turn,
this would affect our ability to manufacture and sell products that are
dependent on those components and subassemblies. This would materially
adversely affect our business, financial condition and results of
operations.

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'THE HEADSET MARKET IS HIGHLY COMPETITIVE

The market for our products is highly competitive. We compete with a
variety of companies in various segments of the communications headset market.
In the call center segment, the largest market segment in which we compete, our
two largest competitors, GN Netcom and ACS Wireless, Inc., recently merged to
form a single company. Although it is unclear how this merger will affect us,
the merged entity will have a broader product offering and greater marketing
presence than either of the two entities had separately. Moreover, the economies
of scale that may result from the merger could lead to increased pricing
pressures in our market.

We also anticipate that we will face additional competition from companies
that currently do not offer communications headsets. This is particularly true
in the office, mobile, computer and residential market segments. As these market
segments mature, we will face increased competition from consumer electronics
companies and other companies that currently manufacture and sell mobile phones
or computer peripheral equipment. These new competitors are likely to be larger,
offer broader product lines, bundle or integrate with other products
communications headset tops and bases manufactured by them or others, offer
products containing bases that are incompatible with our headset tops and have
substantially greater financial, marketing and other resources than we do.

We believe that important competitive factors for us are product
reliability, product features, customer service and support, reputation,
distribution, ability to meet delivery schedules, warranty terms, product life
and price. If we do not compete successfully with respect to any of these or
other factors it could materially adversely affect our business, financial
condition and results of operations. If we do not successfully develop and
market products that compete successfully with those of our competitors it would
materially adversely affect our business, financial condition and results of
operations.

NEW PRODUCT DEVELOPMENT IS RISKY; WE MUST RESPOND TO CHANGING CUSTOMER
REQUIREMENTS AND TECHNOLOGIES

Our product development efforts historically have been directed toward
enhancement of existing products and development of new products that capitalize
on our core capabilities. The success of new product introductions is dependent
on several factors, including the proper selection of new product features,
timely completion and introduction of new product designs, cost-effective
manufacture of such products, quality of new products and market acceptance. To
be successful in the future, we must develop new products, qualify these new
products, successfully introduce these products to the market on a timely basis,
and commence and sustain low-cost, volume production to meet customers' demands.
Although we attempt to determine the specific needs of headset users in our
target market segments, because almost all of our sales are indirect, we may not
always be able to timely and accurately predict end-user requirements. As a
result, our products may not be timely developed, designed to address current or
future end-user requirements, offered at competitive prices or accepted, which
could materially adversely affect our business, financial condition and results
of operations. Moreover, we generally incur substantial research and development
costs before the technical feasibility and commercial viability of a new product
can be ascertained. Accordingly, revenues from new products may not be
sufficient to recover the associated development costs.

Historically, the technology used in lightweight communications headsets
has evolved slowly. New products have primarily offered stylistic changes and
quality improvements,

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rather than significant new technologies. We anticipate that the technology used
in hands-free communications devices, including our products, will begin to
evolve more rapidly in the future. We believe that this is particularly true of
the office, mobile and residential market segments, which may require us to
develop new headset technologies to support cordless and wireless operation and
to interface with new communications and computing devices. As a result, our
success depends upon our ability to enhance existing products, to respond to
changing market requirements, and to develop and introduce in a timely manner
new products that keep pace with technological developments. If we are unable to
develop and introduce enhanced products or new products in a timely manner in
response to changing market conditions or customer requirements, it will
materially and adversely affect our business, financial condition and results of
operations.

WE DEPEND ON OUR DISTRIBUTION CHANNELS

We sell substantially all of our products through distributors, original
equipment manufacturers ("OEMs"), retailers and telephony service providers. Our
existing relationships with these parties are nonexclusive and can be terminated
by either party without cause. Our channel partners also sell or can potentially
sell products offered by our competitors. To the extent that our competitors
offer our channel partners more favorable terms, such partners may decline to
carry, de-emphasize or discontinue carrying our products. In the future, we may
not be able to retain or attract a sufficient number of qualified channel
partners. Further, such partners may not recommend, or continue to recommend,
our products. The inability to establish or maintain successful relationships
with distributors, OEMs, retailers and telephony service providers or to expand
our distribution channels could materially adversely affect our business,
financial condition or results of operations.

WE DEPEND ON S. KENNETH KANNAPPAN AND OTHER KEY PERSONNEL

Our success depends to a significant extent upon the services of a limited
number of executive officers and other key employees. On January 4, 1999, S.
Kenneth Kannappan was promoted to Chief Executive Officer of our company,
succeeding Robert S. Cecil in that capacity, and was appointed to our Board of
Directors. Mr. Kannappan joined our company in February 1995 and has held a
number of executive management positions, including President and Chief
Operating Officer. Mr. Kannappan has been assuming increasing responsibilities
for our day-to-day operations since his March 1998 appointment as President and
Chief Operating Officer. The unanticipated loss of the services of Mr. Kannappan
or one or more of our other executive officers or key employees could have a
material adverse effect upon our business, financial condition and results of
operations.

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<PAGE> 10

We also believe that our future success will depend in large part upon our
ability to attract and retain additional highly skilled technical, management,
sales and marketing personnel. Competition for such personnel is intense. We may
not be successful in attracting and retaining such personnel, and, our failure
to do so could have a material adverse effect on our business, operating results
or financial condition.

CITICORP VENTURE CAPITAL RETAINS SIGNIFICANT CONTROL

After this offering, our largest stockholder, Citicorp Venture Capital,
Ltd. ("CVC"), will beneficially own 4,509,168 shares of our common stock
(excluding any shares that may be owned by employees of CVC or its affiliates),
which will represent approximately 26.1% of the outstanding common stock. We
also have an agreement with CVC under which it is entitled to have up to three
of its designees serve on our Board of Directors, depending on the level of
CVC's continuing stock ownership. Messrs. Robert F. B. Logan, M. Saleem Muqaddam
and John Mowbray O'Mara are currently serving as CVC's designees under that
agreement. Accordingly, CVC has the ability to exert substantial influence on
the full Board of Directors, which currently consists of eight members. In
addition, our bylaws contain provisions that require a supermajority vote of the
Board of Directors to approve certain transactions, including amendments of our
Certificate of Incorporation and bylaws, mergers and sales of substantial
assets, acquisitions of other companies and sales of capital stock. These
provisions may have the effect of giving a small number of directors the ability
to block such transactions.

FUTURE SALES OF OUR COMMON STOCK BY CITICORP VENTURE CAPITAL, MR. AND MRS. CECIL
OR MANAGEMENT MAY DEPRESS OUR STOCK PRICE

Upon completion of this offering, we will have outstanding 17,265,906
shares of common stock (based upon shares outstanding as of December 31, 1998),
assuming no exercise of the underwriters' over-allotment option and no exercise
of outstanding options after December 31, 1998 other than exercises by Mr. and
Mrs. Cecil as described elsewhere in this prospectus. All of these shares will
be freely tradable except for 4,509,168 shares held by CVC and 433,254 shares
held by our executive officers and directors. These 4,942,422 shares, as well as
an additional 1,906,666 shares subject to outstanding stock options at December
31, 1998 held by executive officers, directors and Mrs. Cecil, are subject to
lockup agreements with the underwriters and cannot be sold for a period of 90
days after the offering without the prior written consent of Merrill Lynch,
Pierce, Fenner & Smith Incorporated. In addition, the holders of these shares or
options may only sell their shares in reliance on Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act"), or pursuant to an effective
registration statement filed with the Securities and Exchange Commission.
Certain of our current stockholders, including CVC and certain of our officers,
directors and key employees, also have contractual rights to require Plantronics
to register their shares for public sale. Sales of a substantial number of
shares of common stock in the public market following the offering, as well as
sales of shares issued upon exercise of stock options, by any of the officers,
directors or other stockholders mentioned above could adversely affect the
prevailing market price of the common stock and impair our ability to raise
capital through the sale of equity securities.

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RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS

Approximately 30.7% and 30.2% of our net sales in fiscal 1998 and the six
months ended September 30, 1998, respectively, were derived from customers
outside the United States. In addition, we conduct substantially all of our
headset assembly operations in our manufacturing facility located in Mexico, and
we obtain most of the components and subassemblies used in our products from
various foreign suppliers. The inherent risks of international operations,
particularly in Mexico, could materially adversely affect our business,
financial condition and results of operations. The types of risks faced in
connection with international operations and sales include:

- cultural difference in the conduct of business;

- greater difficulty in accounts receivable collection;

- unexpected changes in regulatory requirements;

- tariffs and other trade barriers;

- economic and political conditions in each country;

- management and operation of an enterprise spread over various countries;
and

- burden of complying with a wide variety of foreign laws.

A significant portion of our business is conducted in currencies other than
the U.S. dollar. As a result, fluctuations in exchange rates creates risk to us
in both the sale of our products and our purchase of supplies. Fluctuations in
the value of the currencies in which we conduct our business relative to the
U.S. dollar have caused and will continue to cause currency transaction gains
and losses. Although we do not currently engage in any hedging activities to
mitigate exchange rate risks, we continually evaluate programs to reduce our
foreign currency exposure. However, there can be no assurance that we will not
continue to experience currency losses in the future, nor can we predict the
effects of future exchange rate fluctuations on future operating results. To the
extent that sales to our foreign customers increase or transactions in foreign
currencies increase, our business, financial condition and results of operations
could be materially adversely affected by exchange rate fluctuations. In
addition, we cannot predict the potential consequences to our business of the
adoption of the Euro as a common currency in Europe.

WE DEPEND ON OUR PRINCIPAL MANUFACTURING FACILITY

Substantially all of our manufacturing operations are currently performed
in a single facility in Tijuana, Mexico. A fire, flood or earthquake, political
unrest or other disaster or condition affecting our facility could have a
material adverse effect on our business, financial condition and results of
operations. While we have developed a disaster recovery plan and believe we are
adequately insured with respect to this facility, we may not be able to
implement the plan effectively or on a timely basis or recover under applicable
insurance policies.

FAILURE OF ELECTRONIC SYSTEMS TO RECOGNIZE THE YEAR 2000

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applications and systems could fail or create erroneous results when addressing
dates on and after January 1, 2000. Our products do not address or utilize dates
in their operation, and, accordingly, our products should not fail due to the
year 2000 problem. However, we use and depend on information technology systems
(including business information computer systems and design and manufacturing
computer systems) and other machinery and equipment that includes embedded date
sensitive technology. We also depend on the proper functioning of date sensitive
electronic systems of third parties, such as customers and suppliers. The
failure of any of these systems to appropriately interpret the year 2000 could
have a material adverse effect on our business, financial condition and results
of operations. We are undertaking efforts to ensure that our business systems
and those of our suppliers and customers are compliant with the requirements of
the year 2000. However, our year 2000 program may not be effective or we may not
be able to implement it in a timely and cost-effective manner. Our year 2000
efforts may not, therefore, ensure against disruptions caused by the approach or
advent of the year 2000. The year 2000 problem is potentially very widespread,
and it is not possible to determine all the potential risks that we may face.
Our inability to remedy our own year 2000 problems or the failure of third
parties to do so may cause business interruptions or shutdowns, financial loss,
regulatory actions, harm to our reputation and exposure to liability.

RISKS OF INADEQUATE PROTECTION OF INTELLECTUAL PROPERTY AND INFRINGEMENT OF
RIGHTS OF OTHERS

Our success will depend in part on our ability to protect our proprietary
technology. We rely primarily on a combination of nondisclosure agreements and
other contractual provisions as well as patent, trademark, trade secret, and
copyright laws to protect our proprietary rights. We currently hold 33 United
States patents and additional foreign patents and intend to continue to seek
patents on our inventions when we believe it to be appropriate. The process of
seeking patent protection can be lengthy and expensive. Patents may not be
issued in response to our applications, and patents that are issued may be
invalidated, circumvented or challenged by others. If we are required to enforce
our patents or other proprietary rights through litigation, the costs and
diversion of management's attention could be substantial. In addition, the
rights granted under any patents may not provide us competitive advantages or be
adequate to safeguard and maintain our proprietary rights. Moreover, the laws of
certain countries do not protect our proprietary rights to the same extent as do
the laws of the United States. If we do not enforce and protect our intellectual
property rights, it could materially adversely affect our business, financial
condition and results of operations.

From time to time, third parties, including our competitors, may assert
patent, copyright and other intellectual property rights against us. Such
claims, if they are asserted, could result in costly litigation and diversion of
management's attention. In addition, we may not ultimately prevail in any such
litigation or be able to license any valid and infringed patents from such third
parties on commercially reasonable terms, if at all. Any infringement claim or
other litigation against us could materially adversely affect our business,
financial condition and results of operations.

PRODUCT LIABILITY EXPOSURE

The use of our products exposes us to the risk of product liability claims.
Product liability claims have in the past been, and are currently being,
asserted against us. None of the previously resolved claims have materially
affected our business, financial condition or

10
<PAGE> 13

results of operations, nor do we believe that any of the pending claims will
have such an effect. Although we maintain product liability insurance, the
coverage provided under our policies could be unavailable or insufficient to
cover the full amount of any such claim. Therefore, successful product liability
claims brought against us could have a material adverse effect upon our
business, financial condition and results of operations.

OUR STOCK PRICE MAY BE VOLATILE

The market price for our common stock may be affected by a number of
factors, including the announcement of new products or product enhancements by
us or our competitors, the loss of services of one or more or our executive
officers or other key employees, quarterly variations in our or our competitors'
results of operations, changes in earnings estimates or recommendation by
securities analysts, developments in our industry, sales of substantial numbers
of shares of our common stock in the public market, general market conditions
and other factors, including factors unrelated to our operating performance or
the operating performance of our competitors. In addition, stock prices for many
companies in the technology sector have experienced wide fluctuations that have
often been unrelated to the operating performances of such companies. Such
factors and fluctuations, as well as general economic, political and market
conditions, such as recessions, may materially adversely affect the market price
of our common stock.

ENVIRONMENTAL MATTERS

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

EFFECTS OF ANTITAKEOVER PROVISIONS

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

11
<PAGE> 14

INFORMATION INCORPORATED BY REFERENCE

This prospectus incorporates by reference the following documents and
information, all of which Plantronics has filed in the past with the SEC:

- Plantronics' Annual Report on Form 10-K for the fiscal year ended March
28, 1998.

- Plantronics' Quarterly Report on Form 10-Q for the quarterly period ended
June 27, 1998.

- Plantronics' Quarterly Report on Form 10-Q for the quarterly period ended
September 26, 1998.

- Item 1 of Plantronics' Registration Statement on Form 8-A, filed on
December 20, 1993, as amended on January 14, 1994 and November 7, 1997
(which in turn incorporates by reference the description of Plantronics'
common stock set forth in Plantronics' Registration Statement on Form S-1
(Reg. No. 33-70744), filed on October 20, 1993, as amended by Amendment
No. 1, filed on November 30, 1993, Amendment No. 2, filed on December 27,
1993, and Amendment No. 3, filed on January 18, 1994).

Unless Plantronics has filed a post-effective amendment to the registration
statement under the Securities Act which contains this prospectus indicating
that all of the shares have been sold or which deregisters all shares then
remaining unsold, all documents which Plantronics subsequently files under
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act shall be deemed to be
incorporated by reference in this prospectus and to be part of this prospectus
from the date of filing of such documents.

Plantronics will provide without charge to each person to whom a copy of
this prospectus is delivered, upon written or oral request, a copy of the
information that has been or may be incorporated by reference in this
prospectus, other than exhibits to such documents. Direct any request for such
copies to John A. Knutson, Vice President - Legal, Senior General Counsel and
Secretary, Plantronics, Inc., 345 Encinal Street, Santa Cruz, California 95060,
Tel: (831) 426-5858.

HOW TO GET INFORMATION ABOUT PLANTRONICS

Plantronics is subject to the informational requirements of the Exchange
Act and therefore files reports, proxy and information statements and other
information with the SEC. You can inspect many of such reports, proxy and
information statements and other information on the SEC's internet website at
http://www.sec.gov.

You can also inspect and copy such reports, proxy and information
statements and other information at the SEC's Public Reference Room, 450 Fifth
Street, N.W., Washington, D.C. 20549. You can obtain information on the
operation of the Public Reference Room by calling the SEC at tel:
1-800-SEC-0330. You can also inspect and copy such reports, proxy and
information statements and other information may also be inspected and copied at
the following Regional Offices of the SEC: New York Regional Office, Seven World
Trade Center, Suite 1300, New York, New York 10048; and Chicago Regional Office,
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Plantronics' common stock is listed on the NYSE, and you can

12
<PAGE> 15

inspect such reports, proxy and information statements and other information at
the offices of the NYSE, 20 Broad Street, New York, New York 10005.

This prospectus constitutes part of a registration statement on Form S-3
filed by Plantronics with the SEC under the Securities Act. This prospectus does
not contain all of the information set forth in the registration statement. For
further information with respect to Plantronics and the shares, you should refer
to the registration statement either at the SEC's website or at the addresses
set forth in the preceding paragraph. Statements in this prospectus concerning
any document filed as an exhibit to this prospectus are not necessarily
complete, and, in each instance, you should refer to the copy of such document
which has been filed as an exhibit to the registration statement. Each such
statement is qualified in its entirety by such reference.

No one is authorized to give any information or to make any representations
not contained in this prospectus in connection with any offering made by this
prospectus. If given or made, you must not rely on such information or
representations as having been authorized by Plantronics or by any other person.
This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any security other than the shares offered hereby. This prospectus
also does not constitute an offer to sell or a solicitation of an offer to buy
any of the shares offered hereby to any person in any jurisdiction in which it
is unlawful to make such an offer or solicitation. Neither delivery of this
prospectus, nor any sale or offer to sell shares hereunder, shall under any
circumstances create any implication that there has been no change in the
affairs of Plantronics since the date of this prospectus or that the information
contained in this prospectus is correct as of any time subsequent to the date of
this prospectus.

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for Plantronics by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California.

EXPERTS

The financial statements incorporated in this prospectus by reference to
Plantronics' Annual Report on Form 10-K for the fiscal year ended March 28, 1998
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of such firm as experts in
auditing and accounting.

13
<PAGE> 16

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 8, 1999
P R O S P E C T U S
1,550,000 SHARES

[PLANTRONICS LOGO]
COMMON STOCK
------------------------

All of the shares of Plantronics common stock are being offered by the
selling stockholders identified in this prospectus. Plantronics will not receive
any of the proceeds from the offering.

Our common stock trades on the New York Stock Exchange under the symbol
"PLT." On January 7, 1999, the last reported sale price of our common stock on
the New York Stock Exchange was $85 3/4 per share.

INVESTING IN THE COMMON STOCK INVOLVES RISKS WHICH ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
------------------------

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public Offering Price.......................... $ $
Underwriting Discount.......................... $ $
Proceeds to Selling Stockholders............... $ $
</TABLE>

The underwriters may also purchase up to an additional 232,500 shares from
one of the selling stockholders at the public offering price, less the
underwriting discount, within 30 days from the date of this prospectus to cover
over-allotments.

The shares of common stock will be ready for delivery in New York, New York
on or about , 1999.
------------------------

MERRILL LYNCH & CO. SALOMON SMITH BARNEY
HAMBRECHT & QUIST MCDONALD INVESTMENTS INC.
------------------------

The date of this prospectus is , 1999.
<PAGE> 17

INSIDE FRONT COVER

2
<PAGE> 18

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary..................................................... 4
Risk Factors................................................ 8
Use of Proceeds............................................. 17
Price Range of Common Stock................................. 17
Dividend Policy............................................. 17
Capitalization.............................................. 18
Selected Consolidated Financial Data........................ 19
Management's Discussion and Analysis of Financial Condition
and
Results of Operations..................................... 20
Business.................................................... 29
Management.................................................. 37
Ownership of Common Stock by Selling Stockholders and
Management................................................ 41
Underwriting................................................ 43
Information Incorporated by Reference....................... 45
How to Get Information About Plantronics.................... 46
Legal Matters............................................... 46
Experts..................................................... 46
Index to Consolidated Financial Statements.................. F-1
</TABLE>

-------------------------

FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations and projections about
future events. These forward-looking statements are subject to risks,
uncertainties, and assumptions about Plantronics, including, among other things:

- anticipated trends in our business, including trends in the call center,
office, mobile, computer and residential market segments;

- our intention to develop and introduce new products;

- our anticipated growth and growth strategies; and

- anticipated levels of headset adoption.

We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties, and assumptions, the forward-looking
events discussed in this prospectus might not occur.
-------------------------

You should rely only on the information contained in this prospectus. We
have not, and the selling stockholders and the underwriters have not, authorized
any other person to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. We
are not, and the selling stockholders and the underwriters are not, making an
offer to sell these securities in any jurisdiction where the offer or sale is
not permitted. You should assume that the information appearing in this
prospectus is accurate as of the date on the front cover of this prospectus
only. Our business, financial condition, results of operations and prospectus
may have changed since that date.
-------------------------

Plantronics, the logo design, Plantronics and the logo design together,
Clarity, Encore, FreeHand, Mirage, PLX, SoundGuard, StarSet, Supra and TriStar
are registered United States trademarks of Plantronics, Inc. CHS132 (and
family), CT-901, DuoSet, Headset Switcher, Practica, Quick Disconnect,
SoundGuard Plus, the clear and curved Plantronics Voice Tube, and Vista are
trademarks of Plantronics, Inc. Certain of the foregoing trademarks are
registered trademarks in certain foreign countries. This prospectus also
includes trademarks of companies other than Plantronics.

3
<PAGE> 19

SUMMARY

This summary may not contain all the information that may be important to
you. You should read the entire prospectus, including the financial data and
related notes, before making an investment decision. The terms "Plantronics",
"our company" and "we" as used in this prospectus refer to "Plantronics, Inc."
and its subsidiaries and predecessors as a combined entity, except where it is
made clear that such term means only the parent company. All share and per share
data in this prospectus has been adjusted to reflect a 2-for-1 split of our
common stock in September 1997. Our fiscal year end is the Saturday closest to
March 31. For purposes of presentation, we have shown our accounting year ending
on March 31 and our quarterly periods ending on the respective month end.

PLANTRONICS, INC.

Plantronics introduced the first lightweight communications headset in
1962. Since that time we have established ourselves as a world-leading designer,
manufacturer and marketer of lightweight communications headset products. We
manufacture a broad line of headsets designed for use with substantially all of
the different telephone systems currently in use. Our products are designed to
increase the productivity, effectiveness and comfort of telephone use. We
believe our customers and end-users recognize our headsets for their sound
quality, comfort, reliability and industry-leading safety. Historically, we have
sold products primarily for use in the call center market segment, but in recent
years we have been increasingly leveraging our expertise to become a leading
headset supplier to the office, mobile and residential market segments. Our
products are available through a global network of distributors, original
equipment manufacturers, retailers and telephony service providers.

The largest group of headset users is call center agents who are on the
phone throughout their work day. As the benefits of call centers become more
widely recognized and the system cost per agent declines, the establishment of
call centers is spreading to smaller organizations and international firms. The
office market segment, both corporate and small office/home office, has become
increasingly important for headset sales over the last five years. The
increasing and simultaneous use of telephones and computers by office workers
and a growing awareness of the benefits of headsets have contributed to the
growth of this market segment. Additional headset demand is emerging in the
mobile, computer and residential market segments.

Benefits of headset use include:

- hands-free communication to perform various tasks such as using a
computer, taking notes, organizing files, driving a car and completing
household chores;

- improved sound quality;

- relief of the repetitive stress and discomfort associated with placing a
handset between the shoulder and neck; and

- greater privacy than speakerphones.

We intend to extend our position as a leading worldwide supplier of
lightweight communications headsets and to promote increased headset use
globally. Our strategy to achieve these goals includes:

- extending our headset product leadership;

- driving headset adoption in the office, mobile, computer and residential
market segments;

- leveraging and strengthening our distribution channels; and

- driving stockholder value through low cost manufacturing.

Our product line consists of lightweight communications headsets, headset
accessories and services and specialty telephone products. Headsets consist of
two distinct units: the "top" and the "base." The top is the portion that the
user wears and that includes the speaker and microphone; and the base, or
amplifier adapter, interfaces with the telephone or other communications
equipment. We manufacture a broad line of headset top styles which can be worn
over the head, in the ear or on the ear. Our headsets offer either a voice tube
(our most popular style, suitable for the majority of environments) or a noise-
canceling microphone (for users working in very loud environments).
4
<PAGE> 20

Our headsets incorporate unique features that we believe offer compelling
performance advantages relative to competing products, including:

- greater comfort through the use of an extensive database of human factors
for the ergonomic design of headsets;

- better sound quality with what we believe are the industry's best
signal-to-noise ratios, the most powerful noise canceling performance and
the industry's only voice tube design; and

- increased durability and longer product life.

We sell our products to over 250 customers in more than 60 countries
through a network of distributors, original equipment manufacturers, retailers
and telephony service providers.

RECENT DEVELOPMENTS

We have called for the redemption, effective January 15, 1999, of all of
our 10% Senior Notes Due 2001. The aggregate outstanding principal amount of
these notes at that date will be approximately $65.1 million. The aggregate
redemption price including accrued interest will be approximately $69.6 million
plus expenses, which we will pay out of available cash. We will take a net
extraordinary charge of approximately $1.2 million, or approximately $0.07 per
diluted share, in the fourth quarter of our fiscal year ending March 31, 1999 in
connection with this transaction. This charge represents an early repayment fee
of approximately $1.3 million, the write-off of $0.4 million of unamortized debt
issuance costs, and estimated expenses of $0.3 million, net of taxes. Based on
current interest rates and the alternative of investing the cash, we expect the
transaction to increase diluted earnings per share by approximately $0.10 on an
annual pro forma basis.

Effective January 4, 1999, S. Kenneth Kannappan was promoted to Chief
Executive Officer of our company, succeeding Robert S. Cecil in that capacity,
and was appointed to our Board of Directors. Mr. Kannappan joined our company in
February 1995 and has held a number of executive management positions, including
President and Chief Operating Officer. Mr. Kannappan has been assuming
increasing responsibilities for our day-to-day operations since his March 1998
appointment as President and Chief Operating Officer. Mr. Cecil, who is 63,
continues to serve as Chairman of the Board of Directors and to be employed by
Plantronics on less than a full-time basis, providing guidance principally in
the areas of long-term strategy, management goals, recruitment of key executives
and budgetary matters. Mr. Cecil has advised us that he is suffering from a
serious illness, but that he believes it is currently stable. Although we and
Mr. Cecil believe he is presently able to perform effectively in his continuing
role as Chairman with us, his illness is unpredictable. Should his condition
deteriorate, he may have to reduce or possibly terminate his relationship with
us.

HOW TO REACH US

Our principal executive offices are located at 345 Encinal Street, Santa
Cruz, California 95060. Our telephone number at that address is (831) 426-5858.
Plantronics is incorporated in Delaware.
5
<PAGE> 21

THE OFFERING

<TABLE>
<S> <C>
Common Stock Offered:
Citigroup Foundation....................... 1,000,000 shares
Robert S. Cecil............................ 432,822 shares
Louise M. Cecil............................ 117,178 shares
Total.............................. 1,550,000 shares(1)
Shares Outstanding After the
Offering................................... 17,265,906 shares(1)
Use of Proceeds.............................. Plantronics will not receive any proceeds
from this offering. However, Plantronics
will receive $855,617 upon the exercise of
certain options to purchase 550,000 shares
of common stock to be sold by the selling
stockholders in this offering. We intend
to use such proceeds, net of expenses of
this offering, for working capital and
general corporate purposes.
Risk Factors................................. See "Risk Factors" for a discussion of
factors you should carefully consider
before deciding to invest in our common
stock.
NYSE Symbol.................................. "PLT"
</TABLE>

- ---------------
(1) Includes 550,000 shares to be issued to Robert S. and Louise M. Cecil upon
their exercise of certain stock options. If the underwriters' over-allotment
option is exercised in full, Louise M. Cecil will exercise stock options
for, and sell, an additional 232,500 shares. Shares outstanding after this
offering is based on the number of shares actually outstanding as of
December 31, 1998, and excludes 2,421,833 shares of common stock reserved
for issuance at December 31, 1998 under our stock incentive plans, less the
550,000 shares to be issued to Mr. and Mrs. Cecil and sold in this offering.
6
<PAGE> 22

SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
----------------------------------------
AS
ACTUAL PRO FORMA(1) ADJUSTED(2)
-------- ------------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 95,100 $ 28,450 $ 29,306
Working capital............................ 122,994 57,099 58,088
Total assets............................... 189,597 122,560 123,416
Long-term debt............................. 65,050 -- --
Total stockholders' equity................. 76,177 74,945 75,934
</TABLE>

- -------------------------

(1) Pro forma for the redemption on January 15, 1999 of our 10% Senior Notes Due
2001 as if such redemption had occurred on September 30, 1998. The
redemption includes a prepayment premium of $1.3 million, the write-off of
$0.4 million of unamortized debt issuance costs, and estimated expenses of
$0.3 million. Net redemption expenses less related tax benefits are expected
to total $1.2 million. This transaction will be reported as an extraordinary
item in the fourth quarter of our fiscal year ending March 31, 1999.

(2) As adjusted to reflect (i) the pro forma calculation described in footnote 1
above, (ii) approximately $1.2 million to be received by Plantronics from
the exercise of options to purchase 550,000 shares of common stock held by
Robert S. and Louise M. Cecil, and (iii) estimated expenses of the offering
payable by Plantronics of approximately $0.3 million, less related tax
benefits.
7
<PAGE> 23

RISK FACTORS

DEPENDENCE ON CALL CENTER MARKET SEGMENT

FAILURE OF THE OFFICE, MOBILE, COMPUTER AND RESIDENTIAL MARKET SEGMENTS TO
DEVELOP

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY

Our quarterly results of operations may vary significantly in the future
for a variety of reasons, including the following:

- changes in demand for our products;

- timing and size of orders from customers;

- cancellations or delays of deliveries of components and subassemblies by
our suppliers;

8
<PAGE> 24

- variances in the timing and amount of engineering and operating expenses;

- distribution channel volume variations;

- delays in shipments of our products;

- product returns and customer credits;

- new product introductions by us or our competitors;

- entrance of new competitors;

- increases in the costs of our components and subassemblies;

- price erosion;

- changes in the mix of products sold by us;

- seasonal fluctuations in demand; and

- general economic conditions.

Each of the above factors is difficult to forecast and thus could have a
material adverse effect on our business, financial condition and results of
operations.

WE MUST MATCH PRODUCTION TO DEMAND

- If demand increases beyond that forecasted, we would have to rapidly
increase production. We depend on suppliers to provide additional volumes
of components

9
<PAGE> 25

Any of the foregoing problems could materially adversely affect our business,
financial condition and results of operations.

WE DEPEND ON OUR SUPPLIERS

10
<PAGE> 26

THE HEADSET MARKET IS HIGHLY COMPETITIVE

NEW PRODUCT DEVELOPMENT IS RISKY; WE MUST RESPOND TO CHANGING CUSTOMER
REQUIREMENTS AND TECHNOLOGIES

Historically, the technology used in lightweight communications headsets
has evolved slowly. New products have primarily offered stylistic changes and
quality improvements,

11
<PAGE> 27

WE DEPEND ON OUR DISTRIBUTION CHANNELS

WE DEPEND ON S. KENNETH KANNAPPAN AND OTHER KEY PERSONNEL

12
<PAGE> 28

CITICORP VENTURE CAPITAL RETAINS SIGNIFICANT CONTROL

FUTURE SALES OF OUR COMMON STOCK BY CITICORP VENTURE CAPITAL, MR. AND MRS. CECIL
OR MANAGEMENT MAY DEPRESS OUR STOCK PRICE

13
<PAGE> 29

RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS

- cultural difference in the conduct of business;

- greater difficulty in accounts receivable collection;

- unexpected changes in regulatory requirements;

- tariffs and other trade barriers;

- economic and political conditions in each country;

- management and operation of an enterprise spread over various countries;
and

- burden of complying with a wide variety of foreign laws.

WE DEPEND ON OUR PRINCIPAL MANUFACTURING FACILITY

FAILURE OF ELECTRONIC SYSTEMS TO RECOGNIZE THE YEAR 2000

14
<PAGE> 30

RISKS OF INADEQUATE PROTECTION OF INTELLECTUAL PROPERTY AND INFRINGEMENT OF
RIGHTS OF OTHERS

PRODUCT LIABILITY EXPOSURE

15
<PAGE> 31

OUR STOCK PRICE MAY BE VOLATILE

The market price for our common stock may be affected by a number of
factors, including the announcement of new products or product enhancements by
us or our competitors, the loss of services of one or more of our executive
officers or other key employees, quarterly variations in our or our competitors'
results of operations, changes in earnings estimates or recommendation by
securities analysts, developments in our industry, sales of substantial numbers
of shares of our common stock in the public market, general market conditions
and other factors, including factors unrelated to our operating performance or
the operating performance of our competitors. In addition, stock prices for many
companies in the technology sector have experienced wide fluctuations that have
often been unrelated to the operating performances of such companies. Such
factors and fluctuations, as well as general economic, political and market
conditions, such as recessions, may materially adversely affect the market price
of our common stock.

ENVIRONMENTAL MATTERS

EFFECTS OF ANTITAKEOVER PROVISIONS

16
<PAGE> 32

USE OF PROCEEDS

We will not receive any proceeds from the sale of common stock in this
offering. However, in connection with the related exercise of stock options by
two of the selling stockholders, we will receive $855,617 ($1,491,504 if the
underwriters' over-allotment option is exercised in full), representing the
aggregate exercise price of such options after deducting estimated expenses of
the offering. We intend to use the net option exercise proceeds for working
capital and general corporate purposes. We also expect to receive a tax
deduction as a result of these option exercises in an amount equal to the fair
market value of the stock subject to the options on the exercise date less the
exercise prices of the options.

PRICE RANGE OF COMMON STOCK

Our common stock has been trading publicly on the New York Stock Exchange
under the symbol "PLT" since January 20, 1994. The table below sets forth the
range of quarterly high and low closing sales prices for our common stock on the
New York Stock Exchange during the calendar quarters indicated.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
1996
First Quarter.................................. $18 7/8 $16 3/16
Second Quarter................................. 20 1/4 17 11/16
Third Quarter.................................. 19 3/4 18 1/2
Fourth Quarter................................. 22 1/2 18 5/16
1997
First Quarter.................................. 24 7/8 21 1/2
Second Quarter................................. 25 3/16 20 3/8
Third Quarter.................................. 39 25 3/32
Fourth Quarter................................. 40 7/8 35 3/8
1998
First Quarter.................................. 42 3/4 39 1/4
Second Quarter................................. 51 1/2 39 13/16
Third Quarter.................................. 64 9/16 45 3/4
Fourth Quarter................................. 86 48 5/16
1999
First Quarter (through January 7, 1999)........ 86 3/4 84 3/4
</TABLE>

On January 7, 1999, the closing sale price of our common stock as reported
by the New York Stock Exchange was $85 3/4 per share. As of December 31, 1998,
there were approximately 99 stockholders of record of our common stock.

DIVIDEND POLICY

Plantronics has not paid any dividends in recent years. We currently intend
to retain any earnings for use in our business and do not anticipate paying any
cash dividends in the foreseeable future. In addition, our bank line of credit
restricts us from paying cash dividends on shares of our capital in an amount
greater than 50% of our cumulative net income (net of cumulative losses) for the
period commencing February 19, 1997 through the date of declaration.

17
<PAGE> 33

CAPITALIZATION

The following table sets forth our capitalization as of September 30, 1998,
(i) on an actual basis, (ii) on a pro forma basis to reflect the redemption on
January 15, 1999 of our 10% Senior Notes Due 2001 as if such redemption occurred
on September 30, 1998 and (iii) on an as adjusted basis to reflect the pro forma
calculations set forth in (ii) above and the proceeds received in connection
with this offering from the exercise of options held by certain of the selling
stockholders (assuming the underwriters' over-allotment option is not
exercised), less estimated offering expenses payable by us. This information
should be read in conjunction with our consolidated financial statements and the
notes thereto appearing elsewhere in this prospectus.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
--------------------------------------
PRO AS
ACTUAL FORMA(1) ADJUSTED(1)(2)
-------- -------- --------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Long-term debt............................ $ 65,050 $ -- $ --
-------- -------- --------
Stockholders' equity:
Common stock, $0.01 par value per share;
40,000,000 shares authorized,
16,550,563 shares issued and
outstanding, actual; 16,550,563
shares issued and outstanding, pro
forma; 17,100,563 shares issued and
outstanding, as adjusted(3).......... 177 177 182
Additional paid-in capital.............. 70,684 70,684 71,885
Cumulative translation adjustment....... (891) (891) (891)
Retained earnings....................... 41,439 40,207 39,990
-------- -------- --------
111,409 110,177 111,166
Less: Treasury stock (common: 1,121,160
shares) at cost...................... (35,232) (35,232) (35,232)
-------- -------- --------
Total stockholders' equity........... 76,177 74,945 75,934
-------- -------- --------
Total capitalization............ $141,227 $ 74,945 $ 75,934
======== ======== ========
</TABLE>

- -------------------------
(1) The redemption of Senior Notes includes an early repayment premium of $1.3
million, the write-off of unamortized debt issuance costs of $0.4 million
and estimated expenses of $0.3 million. Net redemption expenses less related
tax benefits are approximately $1.2 million.

(2) Reflects the $1.2 million to be received in connection with this offering
from the exercise of 550,000 options held by Robert S. and Louise M. Cecil,
less offering expenses payable by us estimated at $0.3 million. Net offering
expenses less related tax benefits are approximately $0.2 million.

(3) Excludes 4,273,290 shares of common stock reserved for issuance as of
September 30, 1998 under our stock incentive plans. Options to purchase
550,000 of these shares (782,500 if the underwriters' over-allotment option
is exercised in full) will be exercised by Robert S. and Louise M. Cecil in
connection with this offering.

18
<PAGE> 34

SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents our selected consolidated financial data for,
and as of the end of, each of the periods indicated. The selected consolidated
financial data for, and as of the end of, the fiscal years ended March 31, 1997
and 1998 and the consolidated statement of operations data for the fiscal year
ended March 31, 1996 have been derived from our audited consolidated financial
statements included elsewhere in this prospectus. The selected consolidated
balance sheet data for March 31, 1996 have been derived from our audited
consolidated financial statements not included in this prospectus. The selected
consolidated financial data for the six months ended September 30, 1997 and 1998
have been derived from our unaudited financial statements, and, in the opinion
of our management, include all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation of our financial position and
results of operations. The selected consolidated financial data, including our
operating results for the six months ended September 30, 1998, are not
necessarily indicative of the results that may be expected for fiscal year 1999
or any future period. The selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and our consolidated financial statements and notes
included elsewhere in this prospectus.

<TABLE>
<CAPTION>
SIX MONTHS ENDED
FISCAL YEARS ENDED MARCH 31, SEPTEMBER 30,
------------------------------ -------------------
1996 1997 1998 1997 1998
-------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales.......................... $182,959 $195,307 $236,112 $110,562 $141,210
Cost of sales...................... 86,887 90,567 108,514 50,959 64,089
-------- -------- -------- -------- --------
Gross profit....................... 96,072 104,740 127,598 59,603 77,121
-------- -------- -------- -------- --------
Operating expenses:
Research, development and
engineering................... 13,718 14,503 17,543 8,384 9,005
Selling, general and
administrative................ 34,845 39,898 47,682 22,842 27,862
-------- -------- -------- -------- --------
Total operating expenses...... 48,563 54,401 65,225 31,226 36,867
-------- -------- -------- -------- --------
Operating income................... 47,509 50,339 62,373 28,377 40,254
Interest expense, including
amortization of debt issuance
costs............................ 7,140 7,104 6,984 3,493 3,588
Interest and other income, net..... (1,385) (1,722) (2,243) (1,102) (1,693)
-------- -------- -------- -------- --------
Income before income taxes......... 41,754 44,957 57,632 25,986 38,359
Income tax expense................. 16,284 15,286 18,443 8,315 12,275
-------- -------- -------- -------- --------
Net income......................... $ 25,470 $ 29,671 $ 39,189 $ 17,671 $ 26,084
======== ======== ======== ======== ========
Basic earnings per common share.... $ 1.53 $ 1.75 $ 2.38 $ 1.07 $ 1.58
======== ======== ======== ======== ========
Shares used in basic per share
calculations..................... 16,593 17,003 16,481 16,450 16,494
======== ======== ======== ======== ========
Diluted earnings per common
share............................ $ 1.42 $ 1.67 $ 2.15 $ 0.98 $ 1.43
======== ======== ======== ======== ========
Shares used in diluted per share
calculations..................... 17,964 17,792 18,223 18,086 18,291
======== ======== ======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
MARCH 31,
------------------------------ SEPTEMBER 30,
1996 1997 1998 1998
-------- -------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents................ $ 26,787 $ 42,262 $ 64,901 $ 95,100
Working capital.......................... 48,554 63,341 98,759 122,994
Total assets............................. 108,661 127,241 165,475 189,597
Long-term debt........................... 65,050 65,050 65,050 65,050
Total stockholders' equity............... 1,415 20,882 53,436 76,177
</TABLE>

19
<PAGE> 35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

RESULTS OF OPERATIONS

The following table sets forth items, for the periods indicated, from our
Consolidated Statements of Operations as a percentage of net sales.

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEARS ENDED MARCH 31, SEPTEMBER 30,
----------------------- --------------
1996 1997 1998 1997 1998
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales............................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales......................... 47.5 46.4 46.0 46.1 45.4
----- ----- ----- ----- -----
Gross profit.......................... 52.5 53.6 54.0 53.9 54.6
----- ----- ----- ----- -----
Operating expenses:
Research, development and
engineering...................... 7.5 7.4 7.4 7.6 6.4
Selling, general and
administrative................... 19.0 20.4 20.2 20.6 19.7
----- ----- ----- ----- -----
Total operating expenses......... 26.5 27.8 27.6 28.2 26.1
----- ----- ----- ----- -----
Operating income...................... 26.0 25.8 26.4 25.7 28.5
Interest expense...................... 3.9 3.7 3.0 3.2 2.5
Interest and other income, net........ (0.7) (0.9) (1.0) (1.0) (1.2)
----- ----- ----- ----- -----
Income before income taxes............ 22.8 23.0 24.4 23.5 27.2
Income tax expense.................... 8.9 7.8 7.8 7.5 8.7
----- ----- ----- ----- -----
Net income............................ 13.9% 15.2% 16.6% 16.0% 18.5%
===== ===== ===== ===== =====
</TABLE>

SIX MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

Net Sales. Net sales for the six months ended September 30, 1998 increased
by 27.7% to $141.2 million, compared to $110.6 million for the six months ended
September 30, 1997. Domestic sales for the six months ended September 30, 1998
increased by 26.4% to $98.6 million, compared to $78.0 million for the six
months ended September 30, 1997. Domestic sales increased in all distribution
channels, with the highest percentage increase occurring in the OEM and retail
channels. International sales increased by 30.9% to $42.6 million for the six
months ended September 30, 1998,

20
<PAGE> 36

compared to $32.6 million for the six months ended September 30, 1997. Most of
this growth occurred in Europe and Canada, with sales in the Asia Pacific/Latin
America region growing at a slower rate, reflecting the continuing economic
slowdown in Asia.

Gross Profit. Gross profit for the six months ended September 30, 1998
increased by 29.4% to $77.1 million (54.6% of net sales), compared to $59.6
million (53.9% of net sales) for the six months ended September 30, 1997. The
increase in gross profit mainly reflects the overall increase in net sales. In
addition, we continued to focus on reducing product costs through design and
manufacturing efficiencies and by obtaining lower costs from suppliers.

Research, Development and Engineering. Research, development and
engineering expenses for the six months ended September 30, 1998 increased 7.4%
to $9.0 million (6.4% of net sales) compared to $8.4 million (7.6% of net sales)
for the six months ended September 30, 1997. The absolute dollar increase in
these expenses reflects increased investment in new product development and
technologies, in particular, for products designed for the office market
segment.

Selling, General and Administrative. Selling, general and administrative
expenses in the six months ended September 30, 1998 increased by 22.0% to $27.9
million (19.7% of net sales), compared to $22.8 million (20.6% of net sales) for
the six months ended September 30, 1997. The overall increase in selling,
general and administrative expenses in the six months ended September 30, 1998
was primarily from costs associated with higher worldwide unit sales and related
variable expenses, such as sales commissions and employee profit sharing, as
well as the expansion of sales and marketing programs. General and
administrative expenses also increased due to the addition of two senior
corporate executive positions. In addition, we increased our provision for
doubtful accounts in light of general economic conditions, particularly
international conditions.

Operating Income. Operating income increased by 41.9% to $40.3 million
(28.5% of net sales) for the six months ended September 30, 1998, compared to
operating income of $28.4 million (25.7% of net sales) for the six months ended
September 30, 1997. The increase in operating income as a percentage of net
sales was primarily due to: (i) higher net sales, (ii) the increase in gross
margin and (iii) a focused effort to limit the growth of operating expenses
relative to sales growth.

Interest Expense. For the six months ended September 30, 1998, interest
expense increased by 2.7% to $3.6 million, compared to $3.5 million for the six
months ended September 30, 1997.

We have called for the redemption, effective January 15, 1999, of all of
our 10% Senior Notes Due 2001. We will take a net extraordinary charge of
approximately $1.2 million, or approximately $0.07 per diluted share, in the
fourth quarter of fiscal 1999 in connection with this transaction. This charge
represents an early repayment fee of approximately $1.3 million and estimated
expenses, net of taxes. Based on current interest rates and the alternative of
investing the cash, we expect the transaction to increase diluted earnings per
share by approximately $0.10 on an annual pro forma basis.

Interest and Other Income. Interest and other income for the six months
ended September 30, 1998 increased by 53.6% to $1.7 million, compared to $1.1
million for the six months ended September 30, 1997. The increase was primarily
attributable to interest income derived from increases in cash and cash
equivalents.

21
<PAGE> 37

FISCAL YEARS ENDED MARCH 31, 1998, 1997 AND 1996

Net Sales. Net sales in fiscal 1998 increased 20.9% to $236.1 million,
compared to $195.3 million in fiscal 1997, which increased 6.7% over fiscal 1996
net sales of $183.0 million. In fiscal 1998 and fiscal 1997, net sales increased
both domestically and internationally. Domestic sales in fiscal 1998 increased
20.7% to $163.7 million from fiscal 1997, following an increase of 1.3% to
$135.7 million in fiscal 1997 over fiscal 1996 sales of $134.0 million. Our
growth in fiscal 1998 was primarily due to growth in the distribution channels,
substantial growth in small and large call centers, increased acceptance of
headsets in the office market segment, and new products. The increase in
domestic sales in fiscal 1997 was partially offset by a decline in sales to
Lucent Technologies, reflecting that customer's decision to reduce inventory
levels and to close certain retail outlets.

International sales, predominantly in Europe, increased by 21.4% to $72.4
million in fiscal 1998 compared to $59.6 million in fiscal 1997, which in turn
increased by 21.7% over fiscal 1996 sales of $49.0 million. International sales
accounted for 30.7%, 30.5% and 26.8%, respectively, of net sales in fiscal 1998,
fiscal 1997 and fiscal 1996. International sales grew more rapidly in Europe
than in the Asia Pacific/Latin America region in fiscal 1998 compared to fiscal
1997. Higher international sales in fiscal 1997 compared to fiscal 1996
primarily resulted from the expansion of sales in new geographic markets and
investment in customer focused marketing programs.

Gross Profit. Our gross profit increased 21.8% to $127.6 million (54.0% of
net sales) in fiscal 1998 compared to $104.7 million (53.6% of net sales) in
fiscal 1997, following an increase of 9.0% from $96.1 million (52.5% of net
sales) in fiscal 1996. The $31.5 million improvement in gross profit over the
three-year period was primarily due to additional revenues, improved
manufacturing efficiencies, and material and logistics cost reduction programs.
These initiatives, coupled with lower costs resulting from higher sales volumes,
enabled us to improve our gross margin by 1.5% over the three years.

Research, Development and Engineering. Research, development and
engineering expense increased 21.0% to $17.5 million (7.4% of net sales) in
fiscal 1998, compared to $14.5 million (7.4% of net sales) in fiscal 1997, which
in turn increased 5.7% from $13.7 million (7.5% of net sales) in fiscal 1996.
These expenses increased by approximately $3.0 million in fiscal 1998 compared
to fiscal 1997 and by $0.8 million in fiscal 1997 compared to fiscal 1996 due to
the creation of an engineering development team in Europe during fiscal 1997 and
its subsequent growth in fiscal 1998. In addition, in fiscal 1998 we increased
spending associated with new product development teams.

Selling, General and Administrative. Selling, general and administrative
expenses increased 19.5% to $47.7 million (20.2% of net sales) in fiscal 1998,
compared to $39.9 million (20.4% of net sales) in fiscal 1997, following an
increase of 14.5% to $34.8 million (19.0% of net sales) in fiscal 1996. These
expenses increased by $7.8 million in fiscal 1998 compared to fiscal 1997 due
principally to variable costs associated with higher unit sales worldwide,
increases in market research and planned increases in general and administrative
costs, including investments in a new business information system that was
implemented in the first quarter of fiscal 1998. The increase in spending in
fiscal 1997 compared to fiscal 1996 was primarily due to additional staffing in
sales and marketing worldwide and increased spending on international marketing
communications programs.

Operating Income. Operating income increased by 23.9% to $62.4 million
(26.4% of net sales) in fiscal 1998 compared to $50.3 million (25.8% of net
sales) in fiscal 1997, following an increase of 6.0% over $47.5 million (26.0%
of net sales) in fiscal 1996. In

22
<PAGE> 38

fiscal 1998, the increase in net sales was the primary reason for the increase
in operating income, together with continuing improvements in gross margin. In
addition, although operating expenses increased in fiscal 1998 compared to
fiscal 1997, they decreased slightly as a percentage of sales. Although
operating income in fiscal 1997 was $2.8 million higher than in fiscal 1996,
operating income as a percentage of sales declined slightly from the earlier
year, as sales grew at a slower rate than operating expenses.

Interest Expense. Interest expense was $7.0 million in fiscal 1998, $7.1
million in fiscal 1997 and $7.1 million in fiscal 1996. Included in interest
expense in fiscal 1998, fiscal 1997 and fiscal 1996 was $0.4 million, $0.5
million and $0.5 million, respectively, in non-cash deferred debt issuance costs
related to our 10% Senior Notes Due 2001 and revolving credit facility.

Interest and Other Income. Interest and other income increased by 30.3% to
$2.2 million in fiscal 1998 compared to $1.7 million in fiscal 1997, which in
turn increased by 24.3% compared to $1.4 million in fiscal 1996. The primary
reason for the increase was the growth in cash and cash equivalents over the
three year period.

Income Tax Expense. In fiscal 1998, fiscal 1997 and fiscal 1996, income tax
expense was $18.4 million, $15.3 million and $16.3 million, respectively,
representing effective tax rates of 32%, 34% and 39% respectively. The overall
effective tax rate fell over these periods due to the faster relative increase
in income in countries with tax rates lower than the United States.

23
<PAGE> 39

QUARTERLY RESULTS OF OPERATIONS

The following table presents certain unaudited quarterly financial
information for each of the eight quarters in the two-year period ended
September 30, 1998. In the opinion of our management, this information has been
presented on the same basis as the Consolidated Financial Statements appearing
elsewhere in this prospectus and includes all adjustments (consisting only of
normal recurring accruals) required to present fairly the financial results
presented herein. Results of operations for any previous quarter are not
necessarily indicative of results for any future quarter.
<TABLE>
<CAPTION>
QUARTER ENDED
---------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1996 1997 1997 1997
------------ --------- -------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales................... $50,309 $52,293 $54,023 $56,539
Cost of sales............... 23,548 24,147 24,956 26,003
------- ------- ------- -------
Gross profit................ 26,761 28,146 29,067 30,536
------- ------- ------- -------
Operating expenses:
Research, development and
engineering............. 3,637 4,133 3,989 4,395
Selling, general and
administrative.......... 10,020 10,525 11,467 11,375
------- ------- ------- -------
Total operating
expenses.............. 13,657 14,658 15,456 15,770
------- ------- ------- -------
Operating income............ 13,104 13,488 13,611 14,766
Interest expense, including
amortization of debt
issuance costs............ 1,763 1,790 1,754 1,737
Interest and other income,
net....................... (542) (504) (356) (744)
------- ------- ------- -------
Income before income
taxes..................... 11,883 12,202 12,213 13,773
Income tax expense.......... 4,040 4,149 3,908 4,407
------- ------- ------- -------
Net income.................. $ 7,843 $ 8,053 $ 8,305 $ 9,366
======= ======= ======= =======
Basic earnings per common
share..................... $ 0.48 $ 0.49 $ 0.51 $ 0.57
======= ======= ======= =======
Shares used in basic per
share calculations........ 16,256 16,323 16,399 16,500
======= ======= ======= =======
Diluted earnings per common
share..................... $ 0.44 $ 0.45 $ 0.47 $ 0.51
======= ======= ======= =======
Shares used in diluted per
share calculations........ 17,640 17,736 17,820 18,356
======= ======= ======= =======

<CAPTION>
QUARTER ENDED
---------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30,
1997 1998 1998 1998
------------ --------- -------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales................... $62,017 $63,533 $70,060 $71,150
Cost of sales............... 28,464 29,091 31,897 32,192
------- ------- ------- -------
Gross profit................ 33,553 34,442 38,163 38,958
------- ------- ------- -------
Operating expenses:
Research, development and
engineering............. 4,591 4,568 4,470 4,535
Selling, general and
administrative.......... 12,330 12,510 14,102 13,760
------- ------- ------- -------
Total operating
expenses.............. 16,921 17,078 18,572 18,295
------- ------- ------- -------
Operating income............ 16,632 17,364 19,591 20,663
Interest expense, including
amortization of debt
issuance costs............ 1,755 1,736 1,736 1,852
Interest and other income,
net....................... (447) (694) (485) (1,208)
------- ------- ------- -------
Income before income
taxes..................... 15,324 16,322 18,340 20,019
Income tax expense.......... 4,903 5,225 5,869 6,406
------- ------- ------- -------
Net income.................. $10,421 $11,097 $12,471 $13,613
======= ======= ======= =======
Basic earnings per common
share..................... $ 0.63 $ 0.67 $ 0.76 $ 0.82
======= ======= ======= =======
Shares used in basic per
share calculations........ 16,547 16,476 16,474 16,513
======= ======= ======= =======
Diluted earnings per common
share..................... $ 0.57 $ 0.61 $ 0.68 $ 0.74
======= ======= ======= =======
Shares used in diluted per
share calculations........ 18,383 18,243 18,213 18,341
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31,
1996 1997 1997 1997 1997 1998
------------ --------- -------- ------------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
AS A PERCENTAGE OF NET
SALES:
Net sales................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales............... 46.8 46.2 46.2 46.0 45.9 45.8
------- ------- ------- ------- ------- -------
Gross profit................ 53.2 53.8 53.8 54.0 54.1 54.2
------- ------- ------- ------- ------- -------
Operating expenses:
Research, development and
engineering............. 7.3 7.9 7.4 7.8 7.4 7.2
Selling, general and
administrative.......... 19.9 20.1 21.2 20.1 19.9 19.7
------- ------- ------- ------- ------- -------
Total operating
expenses.............. 27.2 28.0 28.6 27.9 27.3 26.9
------- ------- ------- ------- ------- -------
Operating income............ 26.0 25.8 25.2 26.1 26.8 27.3
Interest expense............ 3.5 3.5 3.3 3.1 2.8 2.7
Interest and other
income net................ (1.1) (1.0) (0.7) (1.4) (0.7) (1.1)
------- ------- ------- ------- ------- -------
Income before income
taxes..................... 23.6 23.3 22.6 24.4 24.7 25.7
Income tax expense.......... 8.0 7.9 7.2 7.8 7.9 8.2
------- ------- ------- ------- ------- -------
Net income.................. 15.6% 15.4% 15.4% 16.6% 16.8% 17.5%
======= ======= ======= ======= ======= =======

<CAPTION>
QUARTER ENDED
------------------------
JUNE 30, SEPTEMBER 30,
1998 1998
-------- -------------
<S> <C> <C>
AS A PERCENTAGE OF NET
SALES:
Net sales................... 100.0% 100.0%
Cost of sales............... 45.5 45.2
------- -------
Gross profit................ 54.5 54.8
------- -------
Operating expenses:
Research, development and
engineering............. 6.4 6.4
Selling, general and
administrative.......... 20.1 19.4
------- -------
Total operating
expenses.............. 26.5 25.8
------- -------
Operating income............ 28.0 29.0
Interest expense............ 2.5 2.6
Interest and other
income net................ (0.7) (1.7)
------- -------
Income before income
taxes..................... 26.2 28.1
Income tax expense.......... 8.4 9.0
------- -------
Net income.................. 17.8% 19.1%
======= =======
</TABLE>

24
<PAGE> 40

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

As of September 30, 1998, we had working capital of $123.0 million,
including $95.1 million of cash and cash equivalents, compared with working
capital of $98.8 million, including $64.9 million of cash and cash equivalents,
as of March 31, 1998. During the six months ended September 30, 1998, we
generated $40.0 million of cash from operating activities, due primarily to
$26.1 million in net income, decreases in inventory and increases in income
taxes payable. In comparison, we generated $16.8 million in cash from operating
activities for the six months ended September 30, 1997.

Net cash provided by operating activities was $39.2 million, $34.6 million
and $26.9 million in fiscal 1998, 1997 and 1996, respectively. Cash and cash
equivalents increased to $64.9 million at March 31, 1998 from $42.3 million at
March 31, 1997, and from $26.8 million at March 31, 1996. Net cash provided by
operating activities included net income of $39.2 million, $29.7 million and
$25.5 million in fiscal 1998, 1997 and 1996, respectively. Net cash provided by
operating activities in fiscal 1998 also included cash generated by increases in
accrued liabilities and deferred income taxes, which were primarily offset by
increases in inventory and accounts receivable. Net cash provided by operating
activities in fiscal 1997 also included cash generated by increases in deferred
income taxes, offset by an increase in inventory and a decrease in income taxes
payable. Net cash provided by operating activities in fiscal 1996 also included
cash generated as a result of increases in income taxes payable offset by an
increase in accounts receivable.

We have a $30.0 million revolving credit facility, including a $10.0
million letter of credit subfacility, with a major bank, both of which expire in
November 1999. As of September 30, 1998, we had no cash borrowings under the
revolving credit facility and $1.3 million outstanding under the letter of
credit subfacility. The amounts outstanding under the letter of credit
subfacility were principally associated with purchases of inventory. The terms
of the credit facility contain covenants that materially limit our ability to
incur debt, make capital expenditures and pay dividends, among other matters.
These covenants may adversely affect us to the extent we cannot comply with
them.

After the redemption of the 10% Senior Notes Due 2001, we believe that our
current cash balance and cash to be provided by operations, together with
available borrowing capacity under our revolving credit facility and letter of
credit subfacility, will be sufficient to fund operations for at least the next
12 months.

Investing Activities

Capital expenditures of $1.5 million in the six months ended September 30,
1998 were incurred principally in tooling to expand manufacturing capacity and
investments in computer and telephone equipment. Capital expenditures were $5.9
million, $8.2 million and $3.9 million in fiscal 1998, 1997 and 1996,
respectively. The decrease in capital expenditures in fiscal 1998 from fiscal
1997 was caused by the completion of a significant upgrade to our business
information systems which occurred primarily in fiscal 1997 and was completed in
the first quarter of fiscal 1998.

Financing Activities

In the six months ended September 30, 1998, we sold 19,510 shares of our
treasury stock for approximately $0.8 million and repurchased 178,000 shares of
our common stock for approximately $10.6 million. As of September 30, 1998,
approximately 10,000 shares

25
<PAGE> 41

remained available under the repurchase plan authorized in the third quarter of
fiscal 1998. During the second quarter of fiscal 1999 our Board of Directors
approved a plan to repurchase up to an additional 500,000 shares of common
stock. The total shares available for repurchase under the two plans as of
September 30, 1998 was approximately 510,000 shares.

We received $1.5 million in proceeds from the exercise of stock options
during the six months ended September 30, 1998. In July 1998, our stockholders
approved an increase of 1,300,000 shares of common stock issuable under our 1993
Stock Plan (the "1993 Stock Plan"). This increased the maximum aggregate number
of shares which may be optioned and sold under the 1993 Stock Plan to 5,459,242
shares.

In fiscal 1998, we repurchased 317,600 shares of our common stock for $13.2
million, received $1.2 million in proceeds from the exercise of stock options
and realized $1.3 million from the sale of 51,072 shares of treasury stock.
During fiscal 1997, we repurchased 701,226 shares of our common stock for $12.9
million and realized $1.8 million in proceeds from the exercise of stock options
and $0.1 million from the sale of 5,084 shares of treasury stock. During fiscal
1996, financing activities consisted of the receipt of $0.8 million in stock
option exercise proceeds.

YEAR 2000

STATE OF READINESS

Many existing electronic systems, including computer systems, use only the
last two digits to refer to a year. Therefore, these systems may recognize a
date using "00" as 1900 rather than the year 2000. If not corrected, many
computer and other electronic applications and systems could fail or create
erroneous results when addressing dates on and after January 1, 2000. Our
products do not address or utilize dates in their operation, and, accordingly,
our products should not fail due to the year 2000 problem. However, we use and
depend on information technology systems (including business information
computer systems and design and manufacturing computer systems) and other
machinery and equipment that include embedded date sensitive technology. We also
depend on the proper functioning of date sensitive electronic systems of third
parties, such as customers and suppliers. The failure of any of these systems to
appropriately interpret the year 2000 could have a material adverse effect on
our business, financial condition and results of operations. We are undertaking
efforts to ensure that our business systems and those of our suppliers and
customers are compliant with the requirements of the year 2000.

We have established a worldwide year 2000 task force, led by an Executive
Steering Committee of our senior management, including representatives of each
of our business segments and corporate functions, to oversee and regularly
review the status of our year 2000 compliance plan. Through our year 2000 task
force, we are proceeding with implementation of a formal year 2000 compliance
program. The compliance program addresses three key elements: (i) internal
infrastructure, addressing internal hardware and software and non-information
technology systems; (ii) supplier readiness, addressing the

26
<PAGE> 42

preparedness of our suppliers of goods and services; and (iii) customer
readiness, addressing the preparedness of our customer support and the
preparedness of our customers to transact business with us. In each of those
compliance areas, we are systematically performing a global risk assessment,
conducting testing, implementing upgrades, communicating with and assisting
suppliers and customers in raising awareness of the year 2000 issues and
developing contingency plans to mitigate known and unknown year 2000 risks. The
status of our compliance efforts in those three areas is set forth below:

Internal Infrastructure. We are assessing all internal applications
and computer software and hardware. Our key business information systems
have been made year 2000 compliant. Resources have been assigned to address
other applications, such as product testing and product design hardware and
software, based upon our determination of how critical each of those
systems is to our business operations and the time required to bring them
into full year 2000 compliance. We currently expect that all our critical
business information systems and other critical applications will be fully
year 2000 compliant by June 1999.

Supplier Readiness. This program focuses on minimizing the risks
associated with supplier year 2000 issues in two areas: (i) the suppliers'
business capability to continue providing products and services in and
after the year 2000 and (ii) the year 2000 readiness of products supplied
to us for our use. Requests for information and certification of compliance
have been and are being sent to our principal and critical suppliers. The
year 2000 task force is monitoring responses from suppliers and following
up where necessary and appropriate. We expect that we will have
certification from our principal and critical suppliers of goods and
services by July 1999.

Customer Readiness. This program focuses on ensuring that customers
are aware of the year 2000 issues and that customers are capable of placing
orders for our products, receiving products ordered and paying our invoices
for products sold and delivered. Requests for information and certification
of year 2000 compliance have been sent to our major customers. The year
2000 task force will follow up with customers where necessary and
appropriate. We expect that we will have certification from our principal
customers by August 1999.

Costs to Address Year 2000 Issues

We currently estimate that the aggregate cost of our year 2000 compliance
efforts will be approximately $1.2 million, of which approximately $0.3 million
has been incurred to date. The costs consist principally of (i) fees paid to
outside consultants and software programmers, (ii) purchase of telephone PBX
systems which require upgrades to be year 2000 compliant and (iii) purchase of
software and software upgrades to meet the year 2000 issue. The funds expended
and to be expended are being funded through operating cash flows. Approximately
$0.5 million of the total cost, related to the purchase of fixed assets, will be
capitalized, with the balance expensed as incurred.

Risks of the Year 2000 Issues

We currently believe that our internal year 2000 compliance efforts will be
successful and there will be no material impact to us by reason of the failure
or malfunction of any systems owned or operated by us or third parties with whom
we do business. However, our year 2000 program may not be effective or we may
not be able to implement it in a timely

27
<PAGE> 43

and cost-effective manner. Our year 2000 efforts may not, therefore, ensure
against disruptions caused by the approach or advent of the year 2000. The year
2000 problem is potentially very widespread, and it is not possible to determine
all the potential risks that we may face. Our inability to remedy our own year
2000 problems or the failure of third parties to do so may cause business
interruptions or shutdowns, financial loss, regulatory actions, harm to our
reputation and exposure to liability.

Contingency Plans

We are developing contingency plans to mitigate the potential disruptions
that may result from the year 2000 issue. We expect to substantially complete
our contingency planning by July 1999. These plans may include identifying and
securing alternate suppliers of ingredients, containers, packaging materials and
utilities, adjusting manufacturing facility production, shutdown and start-up
schedules, stockpiling of finished product inventories and other measures
considered appropriate by management. Once developed and approved, contingency
plans, and the related cost estimates, will be continually refined as additional
information becomes available.

28
<PAGE> 44

BUSINESS

OVERVIEW

INDUSTRY BACKGROUND

Headsets are used in call centers, offices, cars and homes and with various
terminal devices such as wireline, cellular and cordless telephones and
computers. Specifically, headsets:

- allow people to have both hands free to use a computer, take notes,
organize files, drive a car, complete household tasks or perform other
tasks while they talk on the telephone;

- provide increased sound quality to telephone users by reducing background
noise;

- relieve the repetitive stress and discomfort associated with placing a
telephone handset between the shoulder and neck; and

- provide greater privacy than speakerphones.

The largest group of headset users are call center agents who are on the
telephone throughout their work day. The number of call center agents has grown
as companies have sought to (i) focus on customer service to provide a
competitive advantage, (ii) reduce costs through the use of real-time
centralized information exchange and customer interaction, and (iii) make
greater use of cost-effective direct distribution models. As the benefits of
call centers become more widely recognized and the system cost per agent
declines, the establishment of call centers is spreading to smaller
organizations and international firms. Agent productivity in call centers is
important in minimizing costs and reducing customer wait time, and, therefore,
the ability to effectively and simultaneously use a telephone and keyboard is
critical. As the call center market segment has grown, the benefits of headsets
have become widely recognized as an essential component of a productive and safe
workplace.

The office market segment, both corporate and small office/home office
("SOHO"), has become an increasingly important market segment for headsets over
the last five years. The increasing and simultaneous use of telephones and
computers by office workers and a growing awareness of the benefits of headsets
have contributed to the growth of this market segment. Professionals who spend
significant time on the telephone have been early adopters of headset products.
These professionals include securities brokers, insurance agents, sales
executives, credit controllers, and purchasing agents. We believe that the level
of headset

29
<PAGE> 45

use in the office is low, providing a long-term opportunity to increase headset
sales to office workers.

Headset demand is also emerging in the mobile, computer and residential
market segments. Drivers increasingly seek the hands-free benefits of headsets,
as the use of mobile phones in cars continues to grow worldwide. Headsets are
also an important interface for computerized speech recognition programs, which
broaden the application of headsets from voice to written communication by
substituting voice for keyboard entry. Finally, the availability of low-cost
cordless phones with headset ports is beginning to facilitate headset adoption
in the residential market segment by individuals who want the ability to perform
multiple tasks while speaking on the telephone.

PLANTRONICS' STRATEGY

We intend to extend our position as a leading worldwide supplier of
lightweight communications headsets and to promote increased headset use
globally. Our strategy to achieve these goals includes:

Extend Headset Product Leadership. Since introducing the first lightweight
communications headset in 1962, we have developed the knowledge and
expertise to provide our customers with leading products and services. We
intend to focus on maintaining the highest standards of excellence in
comfort, ease of use, sound quality, durability, style and service. By
focusing on these core strengths relative to our existing and new market
segments, we plan to continue to be an industry leader in customer and end-
user satisfaction.

Drive Headset Adoption. We intend to work to increase awareness of our
headsets and to provide products people require to make their lives easier
and more productive. We will continue to educate potential users on the
benefits of headsets, to leverage the Plantronics brand name and to design
headsets appropriate for use in the environments in which prospective users
are operating. Accordingly, we are currently expanding our advertising and
promotional activities and are working with key OEMs and other channel
partners to facilitate the adoption of our products in the office, mobile,
computer and residential markets. We believe that the level of adoption of
headsets in these new market segments is low, providing a long-term
opportunity to increase our headset sales.

Strengthen Distribution Channels. Historically, we have developed and
maintained diverse distribution channel relationships to meet the different
purchasing requirements of our customers. We intend to leverage the
relationships we have developed with our existing channel partners,
including the leading telecommunications equipment manufacturers,
distributors, retailers, and contract stationers, to increase the rate of
headset adoption and sales. For example, we have recently increased co-
marketing activities with many of our channel partners. To capitalize on
new market segment opportunities, we intend to selectively broaden our
distribution. Thus, we have recently initiated relationships with leading
mobile phone service providers and distributors of mobile phones and
accessories.

Drive Stockholder Value Through Low Cost Manufacturing. We seek to provide
the highest value products while maintaining a focus on reducing
manufacturing and materials costs. Through a combination of (i) working
with suppliers to reduce component costs, (ii) redesigning products to
lower manufacturing costs, and (iii) reducing overhead as a percent of
revenue, we believe we are the low cost

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<PAGE> 46

producer in our principal market segments. We intend to maintain our focus
on minimizing manufacturing costs where possible. We believe this strategy
allows us to realize attractive profit margins and, when necessary, to
match competitors on price.

PRODUCTS AND TECHNOLOGY

Our product line consists of lightweight communications headsets, headset
accessories and services, and specialty telephone products. Our headsets
incorporate unique features that we believe offer compelling performance
advantages:

Comfort. We maintain what we believe is the industry's most extensive
database for the design of comfortable headsets. Our database includes
measurements from over 800 physical molds taken of different ear types. The
measurements are digitized and stored in a CAD/CAM database along with
critical head contour measurements. In addition, we study weight drag to
determine optimum weight distribution on the ear. We believe our focus on
ergonomics has been critical to our success in designing products which are
more comfortable, including our more recent adjustable Encore and TriStar
product families.

Sound Quality. In designing our products, we have conducted headset sound
quality (e.g. preference and intelligibility) research on substantially all
telephone systems in both listening and speaking modes. We believe we have
achieved the industry's best signal-to-noise ratios, the most powerful
noise cancelling performance (to block out background sounds in unusually
loud environments) and the only design (the trademark clear and curved
Plantronics Voice Tube) (the "Voice Tube") which does not require the
microphone boom to be positioned precisely for proper functioning and is
ideal for most office and call center environments. The Voice Tube design
has the additional benefits of a more attractive appearance, easy hygienic
replacement, and lighter weight. The Encore product family also
incorporates what we believe is the industry's only tone control in a
headset top.

Durability. We have over 30 years of experience understanding headset
durability and have successfully incorporated this knowledge into certain
product designs which we believe last one-and-a-half to two times longer
than the best comparable competitive products.

In addition to the features incorporated into our products, we provide
service, support, supplies and accessories. We believe our customer support and
service program provides our end users and customers with easier access to
Plantronics and is an important competitive advantage.

Headsets consist of two distinct units: the "top" and the "base." The top
is the portion that the user wears and that includes the speaker and microphone;
and the base, or amplifier adapter, interfaces with the telephone or other
communications equipment. Tops account for approximately two-thirds of our
business, while bases comprise the remaining one-third. Both units are required
in most applications; however, in some applications, the interface is built into
the telephone, computer or other communications equipment with which the headset
is being used, removing the need for an adapter.

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<PAGE> 47

We manufacture a broad line of headset top styles, which can be worn over
the head, in the ear or on either ear. Each headset offers either a Voice Tube
(our most popular solution, suitable for the majority of environments) or a
noise-canceling microphone (appropriate for users in very loud environments).
All telephone-based headset tops, in conjunction with their associated bases,
are designed for use with substantially all of the different telephone systems
currently available. Basic models include features such as user volume control,
a mute switch and quick-disconnect, which allows users to leave the phone
without removing their headsets or disconnecting their call.

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<PAGE> 48

Our principal headset top styles and major products in each category are as
follows:

<TABLE>
<CAPTION>
DESCRIPTION FEATURES
PRODUCT ----------- --------
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Over-the-Head Headsets with Ear Cushions
- ------------------------------------------------------------------------------------------------------
SUPRA Our most popular headset, ideal for Engineered for sound quality and
phone-intensive jobs and call center durability. Sound reception in one or
environments. both ears.
ENCORE Also used in call centers; designed User-controllable tone adjustment and
for near-universal fit and all-day powerful noise cancelling performance.
comfort.
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Behind-the-Ear Headsets
- ------------------------------------------------------------------------------------------------------
MIRAGE Uses a miniaturized behind-the-ear Rests gently on the ear, not in the
capsule with an adjustable receiver. ear. Can be worn on either ear.
STARSET Has an acoustic eartip that fits Ultra-lightweight, with an acoustic
gently in the outer portion of the seal
ear. to block out unwanted background
noise.
TRISTAR Stylish design for phone intensive Feather-weight ( 1/2 ounce), with
jobs and call center environments. maximum user adjustments designed for
stability, comfort and sound quality.
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
In-the-Outer-Portion-of-the-Ear Headset
- ------------------------------------------------------------------------------------------------------
FREEHAND Designed for business professionals, Small and unobtrusive, easy to put on
this headset features a small earbud and take off.
which rests comfortably in the ear.
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Convertible Headset
- ------------------------------------------------------------------------------------------------------
DUOSET Appropriate for business professionals Easily convertible from over-the-head
who want a headband for longer calls to over-the-ear for greater
as well as an over-the-ear headset for versatility.
intermittent phone use.
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Mobile Headsets
- ------------------------------------------------------------------------------------------------------
CHS LINE Available in various styles, including Reduces background noise and can be
over-the-head and over-the-ear. used with both cellular and PCS
phones.
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Cordless Headset
- ------------------------------------------------------------------------------------------------------
CT-901-HS 900 MHz cordless headset telephone. Provides extended cordless mobility
with hands-free convenience.
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
Bundled Headsets
- ------------------------------------------------------------------------------------------------------
SP/PLX SERIES Designed specially for the SOHO user; Offers comfort and ease of use.
sold with an adapter or telephone.
PRACTICA SERIES Designed for low to medium intensive Offers good sound quality and
phone users who require a less durability
expensive headset; sold with an at an attractive retail price.
adapter or telephone.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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<PAGE> 49

We sell a full range of adapters or "bases" designed to work with
substantially all telephone systems. Our adapters include the following:

- Vista Universal Modular Adapter -- compatible with single or multi-line
telephones; features the SoundGuard Plus system, which provides volume
control for improved audio comfort and clarity.

- Plug Prong Adapter -- designed for automatic call distribution systems.

- Headset Switcher Multimedia Adapter -- allows for use with a telephone or
computer by simply flipping a switch.

- E-10 Adapter (an in-line amplifier) -- designed for use directly on the
telephone line to reduce desk clutter.

- Mobile Phone Adapters -- designed for use with cellular and PCS phones
lacking built-in headset ports.

Headset accessories include replacement voice tubes, training cords, ear
cushions, eartips, in-use indicators, theft protection devices and background
noise suppressors. These products allow end users to revitalize their headset
tops to maintain maximum performance and comfort. We support our product
offering with a service center which addresses consumer questions and provides
access to our full suite of product offerings and refurbishment accessories.

Through our Walker Equipment Division we also manufacture and sell
specialty telephone products including amplified telephones and handsets and
telephone amplifier accessories for the hearing-impaired and line test
equipment. The Walker Equipment Division sells special amplified and
noise-canceling handsets for high-noise environments, as well as for entry and
elevator phones and for use in telephone booths and information kiosks. In
addition, the Clarity telephone is a full-featured, single line telephone
designed for hearing-impaired users. It features volume control circuitry,
oversized buttons, a ringer volume control and a light that flashes when the
telephone rings.

CUSTOMERS, SALES AND MARKETING

Our customers are primarily distributors, OEM partners and telephony
service providers who primarily sell our products in the call center and office
end-user market segments. Additionally, we sell into retail channels primarily
for the office market segment. We sell products to over 250 customers in more
than 60 countries.

Specialized headset distributors represent our largest distribution
channel. These distributors generally sell on a national basis, and the bulk of
their revenues are from headset sales. Electronics wholesalers represent our
second largest channel. They typically offer a wide variety of products from
multiple vendors to both resellers and end users.

OEMs supply to their customers automatic call distributor systems and other
telecommunications and computer equipment that utilize headsets. OEMs do not
typically manufacture their own headsets, and therefore they often distribute
Plantronics headsets on a private label or co-branded basis.

The telephony service provider channel is comprised of former Regional Bell
Operating Companies and Post, Telephone and Telegraph companies which purchase
headsets from us for use by their own agents. Certain of these service providers
also resell headsets to their customers.

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<PAGE> 50

The retail channel encompasses office supply and consumer electronics
retailers, warehouse clubs, consumer products and office supply distributors,
and catalog and mail order companies. Retailers primarily sell headsets to small
businesses, small offices and home offices. This channel is currently our
fastest growing area of distribution.

We also make direct sales to certain government agencies, including NASA
and the FAA. In addition, certain of our distributors are authorized resellers
under a GSA schedule price list and sell our products to government customers
under that agreement.

We maintain a sales force in the United States and in various overseas
countries to provide ongoing customer support and service. We also employ
manufacturers' representatives to assist in selling through the retail channel.

RESEARCH AND DEVELOPMENT

Since we introduced the original lightweight communications headset in
1962, the headset end-user has been the primary focus of our design efforts. We
maintain an extensive database of head and ear shapes to assist in the
development of our products. Our concern for "human factors" and our efforts to
design in comfort and safety have resulted in such product innovations as a
behind-the-ear capsule (containing both microphone and receiver) designed to fit
all users comfortably and the SoundGuard Plus system, which provides volume
control and improved audio comfort and quality.

We have a number of product development programs currently underway,
including a new generation of headset systems, computer and mobile products, a
wireless product family and several programs to both capitalize on and improve
our core technology. We supplement our in-house engineering capabilities through
selected contracting arrangements.

Research, development and engineering expenditures were $17.5 million,
$14.5 million and $13.7 million for fiscal years 1998, 1997, and 1996,
respectively. For the six months ended September 30, 1998, research, development
and engineering spending amounted to $9.0 million. We believe that investment in
research and development is important for us to maintain our position in the
industry and, therefore, intend to increase our spending for research,
development and engineering in subsequent fiscal years.

MANUFACTURING

The majority of our manufacturing operations consists of assembly and
testing, substantially all of which is performed at our facility in Mexico. We
have smaller manufacturing operations in California, Georgia and the United
Kingdom. In addition, we outsource the manufacture of a limited number of
products to third parties.

Finished goods are generally manufactured to meet forecasted customer
requirements. Special products and large orders submitted with short lead times
are manufactured to order. Since most manufacturing occurs prior to the receipt
of purchase orders, Plantronics maintains an inventory of finished goods in
addition to inventories of raw materials, work in process and subassemblies and
components.

Plantronics purchases components for its headset products, including
semi-custom integrated circuits, amplifier boards and other electrical
components, from suppliers in the United States, Mexico, Asia and Europe.
Although most of the items purchased are obtained, or are reasonably available,
from numerous sources, certain products and components are currently procured
only from single suppliers in order to obtain volume pricing.

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<PAGE> 51

COMPETITION

We believe that important competitive factors for us are product
reliability, product features, customer service and support, reputation,
distribution, ability to meet delivery schedules, warranty terms, product life
and price. Although we believe we compete successfully with respect to these
factors, if we do not compete successfully with respect to any of these or other
factors it could materially adversely affect our business, financial condition
and results of operations. If we do not successfully develop and market products
that compete successfully with those of our competitors it would materially
adversely affect our business, financial condition and results of operations.

FACILITIES

Our principal offices are located in Santa Cruz, California. We own three
buildings totaling approximately 160,000 square feet, of which approximately
31,500 square feet is leased to third parties through the year 2000. Our primary
production facilities are leased premises located in Tijuana, Mexico. Our Walker
Equipment Division leases offices and a small production facility in Ringgold,
Georgia. We also lease sales and administrative offices in various foreign
countries.

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<PAGE> 52

MANAGEMENT

The following table sets forth certain information, as of January 4, 1999,
with respect to the directors and executive officers of the Company:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert S. Cecil.............. 63 Chairman of the Board of Directors
S. Kenneth Kannappan......... 39 Chief Executive Officer, President and Director
Benjamin Brussell............ 38 Vice President -- Corporate Development
Donald S. Houston............ 44 Senior Vice President -- Sales
David Huddart................ 49 Senior Vice President -- Engineering and
Technology
Farhad Kashani............... 45 Senior Vice President -- Operations
John A. Knutson.............. 53 Vice President -- Legal, Senior General Counsel
and Secretary
H. Craig May................. 38 Senior Vice President -- Marketing
Barbara V. Scherer........... 42 Senior Vice President -- Finance and
Administration and Chief Financial Officer
Robert F.B. Logan(1)......... 66 Director
M. Saleem Muqaddam(1)........ 52 Director
John Mowbray O'Mara(2)....... 71 Director
Trude C. Taylor(2)........... 77 Director
J. Sidney Webb(2)............ 79 Director
David A. Wegmann(1).......... 52 Director
</TABLE>

- -------------------------
(1) Member of the Audit Committee

(2) Member of the Compensation Committee.

Mr. Cecil has served as Chairman of the Board of Directors since September
1993 and served as Chief Executive Officer of Plantronics from March 1992
through December 1998. Mr. Cecil, continues to be employed by Plantronics on
less than a full time basis, providing guidance principally in the areas of
long-term strategy, management goals, recruitment of key executives and
budgetary matters. Mr. Cecil has advised us that he is suffering from a serious
illness, but that he believes it is currently stable. Although we and Mr. Cecil
believe he is presently able to perform effectively in his continuing role as
Chairman with us, his illness is unpredictable. Should his condition
deteriorate, he may have to reduce or possibly terminate his relationship with
us. From March 1992 to March 1998, Mr. Cecil also served as President of the
Company. Mr. Cecil has a Bachelor of Science degree in Engineering from the
United States Naval Academy, and a Masters of Business Administration in Finance
from the Harvard Graduate School of Business Administration. Mr. Cecil also
serves on the Board of Directors of GT Group Telecom Inc., a Canadian company
which is a competitive local exchange carrier.

Mr. Kannappan serves as Chief Executive Officer and President and is a
director of Plantronics. He joined the Company in February 1995 as Vice
President -- Sales, responsible for OEM Sales and Asia Pacific/Latin America
Markets. He was promoted to Vice President -- Sales, responsible for United
States, Asian and Latin American Sales in September 1995. He was promoted to
Managing Director -- Plantronics Limited in England in March 1996. In March
1997, Mr. Kannappan returned from England and was promoted to Senior Vice
President responsible for Plantronics' Worldwide Operations, Mobile Division,
Walker Division and Plantronics Limited. In March 1998, Mr. Kannappan was
promoted to President and Chief Operating Officer. Prior to joining

37
<PAGE> 53

Plantronics, Mr. Kannappan was Senior Vice President of Investment Banking for
Kidder, Peabody & Co. Incorporated, where he was employed from August 1985
through January 1995. Mr. Kannappan has a Bachelor of Arts degree in Economics
from Yale University and a Masters of Business Administration from Stanford
University. Mr. Kannappan is also a director of Mattson Technology, Inc.

Mr. Brussell joined the Company in March 1998 as Vice
President -- Corporate Development. From March 1992 to March 1998 Mr. Brussell
was Vice President, Corporate Development at Storage Technology Corporation, a
leading provider of enterprise and network information storage systems. From
June 1990 until March 1992, Mr. Brussell acted as a consultant to Storage
Technology Corporation and other technology and health care industry companies.
From January 1985 to June 1990, Mr. Brussell held various positions with Salomon
Brothers, the last of which was Vice President, Corporate Finance, Technology
Group. Mr. Brussell has a Bachelor of Arts degree in Math/Economics from
Wesleyan University and a Masters Degree in Management from M.I.T. Sloan School
of Management. Mr. Brussell is a director of Box Hill Systems Corporation, a
manufacturer of high performance data storage systems.

Mr. Houston joined the Company in November 1996 as Vice President -- Sales
and was promoted to Senior Vice President -- Sales in March 1998. From March
1995 through October 1996, Mr. Houston served as Vice President -- Worldwide
Sales for Proxima Corporation, a designer, developer, manufacturer and marketer
of multimedia projection products. From 1985 until January of 1995, Mr. Houston
held a number of positions at Calcomp, Inc., which is engaged in the business of
manufacturing computer peripherals for the CAD and graphic market, including
Regional Sales Manager and most recently Vice President of Sales, Service and
Marketing. Prior to 1985, Mr. Houston held various sales and marketing
management positions with IBM Corporation. Mr. Houston is a graduate of the
University of Arizona with a Bachelor of Science degree in Business/Marketing.

Mr. Huddart was appointed Vice President -- Engineering and Technology in
April 1996, and became Senior Vice President -- Engineering and Technology in
March 1998. He joined Plantronics Limited in September 1994 as Engineering
Manager. From February 1994 to September 1994, Mr. Huddart was Engineering
Director of DHCL Ltd. and from June 1991 through February 1994 he was the
Technical Marketing and Sales Director for IST Laboratories Ltd., a developer of
electronic substrate interconnections. Mr. Huddart has a Bachelor of Science
degree from the University of North London Polytechnic and a Management Diploma
from Ashridge Management College.

Mr. Kashani joined the Company in February 1998 as Senior Vice President --
Operations. From August 1997 to February 1998, Mr. Kashani was Vice President of
Operations, Service and Quality with Wyse Technology, USA, and from December
1996 to July 1997, he was Vice President of Operations, Wyse Technology, Hsin
Chu, Taiwan. From 1994 to 1996, Mr. Kashani was Vice President of Operations,
Wyse Technology, USA; and from 1990 to 1994 he was Vice President of Operations
for Link Technologies, a subsidiary of Wyse Technology. Mr. Kashani has a
Bachelor of Science degree in Agricultural Engineering from Pahlavi University
and a Masters of Business Administration from the Iran Center for Management
Studies.

Mr. Knutson has served as Vice President -- Legal, Senior General Counsel
and Secretary since March 1994. Mr. Knutson was Managing Partner of the law firm
of Kenney, Burd, Knutson & Markowitz, San Francisco, California, from January
1991 until shortly before joining the Company. From August 1979 until December
1990, he practiced law with the law firm of Fisher & Hurst, San Francisco,
California, as a partner from April

38
<PAGE> 54

1982 to December 1986, and as Managing Partner from January 1987 to December
1990. After graduating from the University of California -- Hastings College of
Law with a Juris Doctorate degree and being admitted to the California Bar in
1974, Mr. Knutson practiced law in San Francisco with the Law Offices of Garrett
McEnerney until August 1979.

Mr. May joined the Company in May 1998 as Senior Vice
President -- Marketing. Mr. May was most recently with Dell Computer Corporation
from March 1998 to May 1998, responsible for Program Management of the Work
Stations Business Unit. Prior to that Mr. May was with Siemens Business
Communication Systems, Inc., as Director of Product Management, Desktops and
Mobility, from October 1993 to March 1998. Mr. May has a Bachelor of Science
degree in Electrical Engineering from the University of Houston.

Ms. Scherer joined the Company in March 1997, and in April 1997 was named
Vice President -- Finance & Administration and Chief Financial Officer. In March
1998, Ms. Scherer was promoted to Senior Vice President -- Finance &
Administration and Chief Financial Officer. From October 1996 until March 1997,
Ms. Scherer was Senior Vice President and Chief Financial Officer at Stream
Logic Corporation, a developer and manufacturer of data management products.
Before that she was Senior Vice President of Operations from April 1996 until
October 1996. StreamLogic Corporation filed voluntarily for protection under
Chapter 11 of the Federal Bankruptcy Code in June 1997. Prior to her employment
with StreamLogic Corporation, she held various positions spanning a nine year
career with Micropolis Corporation, a disk drive manufacturer, including, from
1995 until April 1996, Vice President -- Finance, Chief Financial Officer and
Treasurer. Ms. Scherer was a consultant with BCG from 1985 to 1987 and a Senior
Financial Analyst with ARCO from 1983 to 1985. Ms. Scherer is a graduate of the
University of California at Santa Barbara and received a Masters of Business
Administration from Yale School of Organization and Management.

Mr. Logan has more than 30 years of senior executive experience. Most
recently, he was chairman and CEO of Banc One Arizona and Bank One Arizona from
April 1995 to March 1996. From May 1993 to March 1995 he served as director of
Banc One Arizona and from January 1990 to April 1993 he was President and Chief
Operating Officer of Valley National, the predecessor of Bank One Arizona. Prior
to 1990 Mr. Logan was President and Chief Executive Officer of Alexander
Hamilton Life Insurance Company, Chief Financial Officer for Continental Grain
Company of New York, and Executive Vice President of the Merchant Banking Group
at Citicorp. Mr. Logan currently is a director of EABC, a broadcasting company,
York International Corporation, an air conditioning and refrigeration products
manufacturer, and Banc One Capital Partners, an investment partnership.

Mr. Muqaddam has served as a Vice President of CVC and its affiliated
investment companies since 1989. Previously he spent 15 years with Citibank,
N.A. and its affiliates in senior management positions. Mr. Muqaddam is a
director of Pamida Holdings Corporation, Chromcraft Remington Inc. and Fairwood
Corporation.

Mr. O'Mara has been a management consultant since May 1993. From May 1990
to May 1993, he served as Chairman of the Executive Committee of Quality Care
Systems, Inc., a provider of computer-based "expert" medical cost containment
systems. From August 1988 through December 1989, Mr. O'Mara served as Chairman
of the Board of Directors and Chief Executive Officer of Global Natural
Resources, Inc. Prior to 1988, Mr. O'Mara spent 22 years as an investment
banker, serving most recently as Managing

39
<PAGE> 55

Director for Chase Investment Bank, a subsidiary of Chase Manhattan Bank, N.A.
Mr. O'Mara is a director of Baldwin & Lyons, Inc. and The Midland Company.

Mr. Taylor has been a private investor since 1987 and a principal in TC
Associates, a management consulting firm, since 1984. He served as a director of
the Company's former operating subsidiary, Plantronics, Inc., from 1969 until
its merger into the Company in January 1994. He was Chairman of the Board of
Directors and a Director of Zehntel, Inc., a manufacturer of automated test
equipment and a former subsidiary of Plantronics, Inc. from 1984 to 1987, Chief
Executive Officer of Zehntel, Inc. from 1984 to 1985 and Chairman of the Board
of Directors, President and Chief Executive Officer of Electronic Memories and
Magnetics Corporation, a manufacturer of computer peripherals, from 1969 until
1984. He is also a director of Dense PAC Microsystems, Inc. and Xylan
Corporation.

Mr. Webb has been Chairman of the Board of Directors of The Titan
Corporation since 1984. The Titan Corporation designs, manufactures and installs
high technology information and electronic products and systems for government,
commercial and international clients. Mr. Webb was a director of the Company's
former operating subsidiary, Plantronics, Inc., from 1983 to 1989, and rejoined
the boards of directors of that corporation and the Company in January 1990. He
was a private investor and consultant from 1981 to 1984. Prior to that, he was
Vice Chairman of TRW, Inc. until 1981. He is currently a director of EIP
Microwave, Inc., Titan Corp. and Microfocus.

Mr. Wegmann has been a private investor since August 1988. Prior to that,
he was a Vice President of CVC.

Executive officers serve at the discretion of the Board of Directors. There
are no family relationships between any of the directors and executive officers
of the Company.

40
<PAGE> 56

OWNERSHIP OF COMMON STOCK BY
SELLING STOCKHOLDERS AND MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of the common stock as of December 31, 1998 and as adjusted
to reflect the sale of the 1,550,000 shares of common stock offered hereby by
the selling stockholders by (i) each selling stockholder, (ii) Citicorp Venture
Capital, Ltd., (iii) each director of Plantronics, (iv) certain executive
officers of Plantronics, and (v) all directors and executive officers of
Plantronics as a group. Except as otherwise noted, the stockholders named in the
table have sole voting and investment power with respect to all shares of common
stock shown as beneficially owned by them.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OF OWNED AFTER
OFFERING(1) SHARES OFFERING(1)(2)
------------------- BEING -------------------
NUMBER PERCENT OFFERED NUMBER PERCENT
--------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C>
Citigroup Foundation(3)........ 1,000,000 6.0% 1,000,000 -- --
Citicorp Center
153 East 53rd St.,
3rd Floor
New York, NY 10043
Robert S. and Louise M.
Cecil........................ 1,072,244 6.0% 550,000(5) 522,244 2.9%
337 Encinal Street
Santa Cruz, CA 95060
Citicorp Venture Capital,
Ltd.(4)...................... 4,509,168 27.0% -- 4,509,168 26.1%
399 Park Avenue,
14th Floor
New York, NY 10043
S. Kenneth Kannappan........... 93,312 * -- 93,312 *
Robert F.B. Logan.............. 3,500 * -- 3,500 *
M. Saleem Muqaddam............. 6,500 * -- 6,500 *
John Mowbray O'Mara............ 14,500 * -- 14,500 *
Trude C. Taylor................ 98,080 * -- 98,080 *
J. Sidney Webb(6).............. 29,200 * -- 29,200 *
David A. Wegmann............... 298,092 1.8% -- 298,092 1.7%
Donald S. Houston.............. 36,390 * -- 36,390 *
John A. Knutson................ 14,883 * -- 14,883 *
Barbara V. Scherer............. 38,810 * -- 38,810 *
All directors and executive
officers as a group (15
persons)..................... 1,734,413 9.6% 550,000(5) 1,184,413 6.6%
</TABLE>

- -------------------------
* Less than one percent.

(1) Includes stock subject to stock options held by directors and executive
officers that are exercisable within 60 days of December 31, 1998, as
follows: Mr. and Mrs. Cecil, 1,072,244 shares; Mr. Logan, 2,000 shares; Mr.
Muqaddam, 6,500 shares; Mr. O'Mara, 6,500 shares; Mr. Taylor, 6,500 shares;
Mr. Webb, 6,500 shares; Mr. Wegmann, 6,500 shares; Mr. Houston, 31,250
shares; Mr. Kannappan, 86,485 shares; Mr. Knutson, 12,863 shares, Ms.
Scherer, 36,667 shares; and all directors and officers as a group (15
persons), 1,301,159 shares (751,159 after the offering). Percent
calculations are based on 16,715,906 shares of common stock outstanding on
December 31, 1998.

41
<PAGE> 57

(2) Assumes the exercise by Mr. and Mrs. Cecil of options to purchase 432,822
shares and 117,178 shares, respectively. Assumes no exercise of the
underwriters' over-allotment option.

(3) Citigroup Foundation is a private charitable foundation affiliated with
Citigroup. The shares being offered by the foundation were acquired by gift
from Citicorp Venture Capital, Ltd.

(4) Citicorp Venture Capital, Ltd. is a wholly-owned subsidiary of Citibank,
N.A., which is in turn an indirect wholly-owned subsidiary of Citigroup.

(5) Of the shares offered by Robert S. and Louise M. Cecil, 432,822 shares will
be purchased by Mr. Cecil from the Company upon the exercise of employee
stock options and 117,178 shares will be purchased by Mrs. Cecil from the
Company upon the exercise of employee stock options transferred to her by
Mr. Cecil. If the underwriters' over-allotment option is exercised in full,
Mrs. Cecil will exercise stock options for, and sell, an additional 232,500
shares.

(6) Includes 22,700 shares held in the name of the Webb Family Trust.

42
<PAGE> 58

UNDERWRITING

Subject to the terms and conditions set forth in a purchase agreement (the
"Purchase Agreement") among Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), Salomon Smith Barney Inc., Hambrecht & Quist LLC and McDonald
Investments Inc. (the "Underwriters"), the Company and the Selling Stockholders,
the Selling Stockholders have agreed to sell to the Underwriters, and each of
the Underwriters severally and not jointly has agreed to purchase from the
Selling Stockholders, the number of shares of common stock set forth opposite
its name below.

<TABLE>
<CAPTION>
NUMBER OF
SHARES
UNDERWRITER ---------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................
Salomon Smith Barney Inc............................
Hambrecht & Quist LLC...............................
McDonald Investments Inc............................
---------
Total................................. 1,550,000
=========
</TABLE>

In the Purchase Agreement, the several Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all of the shares of
common stock being sold pursuant to such agreement if any of the shares of
common stock being sold pursuant to such agreement are purchased. In the event
of a default by an Underwriter, the Purchase Agreement provides that, in certain
circumstances, the purchase commitments of nondefaulting Underwriters may be
increased or the Purchase Agreement may be terminated.

The Underwriters have advised the Company and the Selling Stockholders that
the Underwriters propose initially to offer the shares of common stock to the
public at the public offering price set forth on the cover page of this
prospectus, and to certain dealers at such price less a concession not in excess
of $ per share of common stock. The Underwriters may allow, and such dealers
may reallow, a discount not in excess of $ per share of common stock on
sales to certain other dealers. After the public offering, the public offering
price, concession and discount may be changed.

One of the Selling Stockholders has granted an option to the Underwriters,
exercisable for 30 days after the date of this prospectus, to purchase up to an
aggregate of 232,500 additional shares of common stock at the public offering
price set forth on the cover page of this prospectus, less the underwriting
discount. The Underwriters may exercise this option solely to cover
over-allotments, if any, made on the sale of the common stock offered hereby. To
the extent that the Underwriters exercise this option, each Underwriter will be
obligated, subject to certain conditions, to purchase a number of additional
shares of common stock proportionate to such Underwriter's initial amount
reflected in the foregoing table.

43
<PAGE> 59

The following table shows the per share and total public offering price,
underwriting discount to be paid by the Selling Stockholders to the Underwriters
and the proceeds to the Selling Stockholders. This information is presented
assuming either no exercise or full exercise by the Underwriters of their
over-allotment option.

<TABLE>
<CAPTION>
WITHOUT WITH
PER SHARE OPTION OPTION
--------- ------- ------
<S> <C> <C> <C>
Public Offering Price...................... $ $ $
Underwriting Discount...................... $ $ $
Proceeds to the Selling Stockholders....... $ $ $
</TABLE>

The expenses of this offering (exclusive of the underwriting discount) are
estimated at $350,000 and are payable by the Company.

The shares of common stock are being offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part.

The Company, the Company's executive officers and directors, all of the
Selling Stockholders and certain other existing stockholders have agreed,
subject to certain exceptions, not to directly or indirectly (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant for the sale of
or otherwise dispose of or transfer any shares of common stock or securities
convertible into or exchangeable or exercisable for or repayable with common
stock, whether now owned or thereafter acquired by the person executing the
agreement or with respect to which the person executing the agreement thereafter
acquires the power of disposition, or file a registration statement under the
Securities Act with respect to the foregoing or (ii) enter into any swap or
other agreement that transfers, in whole or in part, the economic consequence of
ownership of the common stock whether any such swap or transaction is to be
settled by delivery of common stock or other securities, in cash or otherwise,
without the prior written consent of Merrill Lynch on behalf of the Underwriters
for a period of 90 days after the date of this prospectus.

The common stock is listed on the New York Stock Exchange under the symbol
"PLT."

Because more than ten percent of the net proceeds of the offering will be
paid to Citigroup Foundation, an affiliate of Salomon Smith Barney Inc. (a
member of the National Association of Securities Dealers, Inc. ("NASD")
participating in this offering), this offering will be conducted in accordance
with NASD Conduct Rule 2710(c)(8).

The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including certain liabilities under
the Securities Act, or to contribute to payments the Underwriters may be
required to make in respect thereof.

Until the distribution of the common stock is completed, rules of the
Securities and Exchange Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the common stock. As an
exception to these rules, the Underwriters are permitted to engage in certain
transactions that stabilize the price of the common stock. Such transactions
consist of bids or purchases for the purpose of pegging, fixing or maintaining
the price of the common stock.

44
<PAGE> 60

If the Underwriters create a short position in the common stock in
connection with the offering, i.e., if they sell more shares of common stock
than are set forth on the cover page of this prospectus, the Underwriters may
reduce that short position by purchasing common stock in the open market. The
Underwriters may also elect to reduce any short position by exercising all or
part of the over-allotment option described above.

In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the common stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Underwriters will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.

INFORMATION INCORPORATED BY REFERENCE

This prospectus incorporates by reference the following documents and
information, all of which Plantronics has filed in the past with the SEC:

- Plantronics' Annual Report on Form 10-K for the fiscal year ended March
28, 1998.

- Plantronics' Quarterly Report on Form 10-Q for the quarterly period ended
June 27, 1998.

- Plantronics' Quarterly Report on Form 10-Q for the quarterly period ended
September 26, 1998.

- Item 1 of Plantronics' Registration Statement on Form 8-A, filed on
December 20, 1993, as amended on January 14, 1994 and November 7, 1997
(which in turn incorporate by reference the description of Plantronics'
common stock set forth in Plantronics' Registration Statement on Form S-1
(Reg. No. 33-70744), filed on October 20, 1993, as amended by Amendment
No. 1, filed on November 30, 1993, Amendment No. 2, filed on December 27,
1993, and Amendment No. 3, filed on January 18, 1994).

Plantronics will provide without charge to each person to whom a copy of
this prospectus is delivered, upon written or oral request, a copy of the
information that has been or may be incorporated by reference in this
prospectus, other than exhibits to such documents. Direct any request for such
copies to John A. Knutson, Vice President -- Legal, Senior General Counsel and
Secretary, Plantronics, Inc., 345 Encinal Street, Santa Cruz, California 95060,
Tel: (831) 426-5858.

45
<PAGE> 61

HOW TO GET INFORMATION ABOUT PLANTRONICS

LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed
upon for Plantronics and the selling stockholders by Wilson Sonsini Goodrich &
Rosati, Professional Corporation, Palo Alto, California. Certain legal matters
relating to this offering will be passed upon for the underwriters by Morrison &
Foerster LLP, Palo Alto, California.

EXPERTS

The consolidated balance sheets as of March 31, 1997 and 1998 and the
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended March 31, 1998, included in the
prospectus have been included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

46
<PAGE> 62

PLANTRONICS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Stockholders' Equity (Deficit)... F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>

F-1
<PAGE> 63

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Plantronics, Inc.

In our opinion, the accompanying consolidated balance sheets and the
related statements of operations, of cash flows and of stockholders' equity
present fairly, in all material respects, the financial position of Plantronics,
Inc. and its subsidiaries at March 31, 1997 and 1998 and the results of their
operations and their cash flows for each of the three years in the period ended
March 31, 1998, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ PricewaterhouseCoopers LLP

San Jose, California
April 17, 1998

F-2
<PAGE> 64

PLANTRONICS, INC.

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
MARCH 31,
-------------------- SEPTEMBER 30,
1997 1998 1998
-------- -------- -------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 42,262 $ 64,901 $ 95,100
Accounts receivable, net................. 36,981 41,550 45,063
Inventory................................ 20,042 29,741 21,931
Deferred income taxes.................... 2,840 2,130 2,130
Other current assets..................... 909 1,774 1,488
-------- -------- --------
Total current assets............. 103,034 140,096 165,712
Property, plant and equipment, net......... 18,970 21,255 20,531
Other assets............................... 5,237 4,124 3,354
-------- -------- --------
Total assets..................... $127,241 $165,475 $189,597
======== ======== ========
LIABILITIES AND
STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable......................... $ 9,578 $ 8,327 $ 5,171
Accrued liabilities...................... 20,441 26,629 28,351
Income taxes payable..................... 9,674 6,381 9,196
-------- -------- --------
Total current liabilities........ 39,693 41,337 42,718
Deferred tax liabilities................... 1,616 5,652 5,652
Long-term debt............................. 65,050 65,050 65,050
-------- -------- --------
Total liabilities................ 106,359 112,039 113,420
-------- -------- --------
Commitments and contingencies (note 8)
Stockholders' equity:
Common stock, $0.01 par value per share;
40,000 shares authorized, 16,366,
16,449 and 16,551 (unaudited) shares
issued and outstanding................ 171 174 177
Additional paid-in capital............... 58,217 63,816 70,684
Cumulative translation adjustment........ (891) (891) (891)
Retained earnings (deficit).............. (23,834) 15,355 41,439
-------- -------- --------
33,663 78,454 111,409
Less: Treasury stock (common: 696, 963
and 1,121 (unaudited) shares) at
cost.................................. (12,781) (25,018) (35,232)
-------- -------- --------
Total stockholders' equity....... 20,882 53,436 76,177
-------- -------- --------
Total liabilities and
stockholders' equity.......... $127,241 $165,475 $189,597
======== ======== ========
</TABLE>

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

F-3
<PAGE> 65

PLANTRONICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except earnings per share)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED MARCH 31, SEPTEMBER 30,
------------------------------ -------------------
1996 1997 1998 1997 1998
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales...................... $182,959 $195,307 $236,112 $110,562 $141,210
Cost of sales.................. 86,887 90,567 108,514 50,959 64,089
-------- -------- -------- -------- --------
Gross profit................. 96,072 104,740 127,598 59,603 77,121
-------- -------- -------- -------- --------
Operating expenses:
Research, development and
engineering............... 13,718 14,503 17,543 8,384 9,005
Selling, general and
administrative............ 34,845 39,898 47,682 22,842 27,862
-------- -------- -------- -------- --------
Total operating
expenses.......... 48,563 54,401 65,225 31,226 36,867
-------- -------- -------- -------- --------
Operating income............... 47,509 50,339 62,373 28,377 40,254
Interest expense, including
amortization of debt issuance
costs........................ 7,140 7,104 6,984 3,493 3,588
Interest and other income,
net.......................... (1,385) (1,722) (2,243) (1,102) (1,693)
-------- -------- -------- -------- --------
Income before income taxes..... 41,754 44,957 57,632 25,986 38,359
Income tax expense............. 16,284 15,286 18,443 8,315 12,275
-------- -------- -------- -------- --------
Net income..................... $ 25,470 $ 29,671 $ 39,189 $ 17,671 $ 26,084
======== ======== ======== ======== ========
Basic earnings per common
share........................ $ 1.53 $ 1.75 $ 2.38 $ 1.07 $ 1.58
======== ======== ======== ======== ========
Shares used in basic per share
calculations................. 16,593 17,003 16,481 16,450 16,494
======== ======== ======== ======== ========
Diluted earnings per common
share........................ $ 1.42 $ 1.67 $ 2.15 $ 0.98 $ 1.43
======== ======== ======== ======== ========
Shares used in diluted per
share calculations........... 17,964 17,792 18,223 18,086 18,291
======== ======== ======== ======== ========
</TABLE>

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

F-4
<PAGE> 66

PLANTRONICS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
TOTAL
COMMON STOCK ADDITIONAL CUMULATIVE ACCUMULATED STOCKHOLDERS'
------------------- PAID-IN TRANSLATION EQUITY TREASURY EQUITY
SHARES AMOUNT CAPITAL ADJUSTMENT (DEFICIT) STOCK (DEFICIT)
---------- ------ ---------- ----------- ----------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT MARCH 31, 1995...... 16,418,642 $165 $54,652 $(558) $(78,975) $ -- $(24,716)
Stock option compensation
amortization................. -- -- 231 -- -- -- 231
Exercise of stock options...... 359,270 4 759 -- -- -- 763
Foreign currency translation
adjustment................... -- -- -- (333) -- -- (333)
Net income..................... -- -- -- -- 25,470 -- 25,470
---------- ---- ------- ----- -------- -------- --------
BALANCE AT MARCH 31, 1996...... 16,777,912 169 55,642 (891) (53,505) -- 1,415
Stock option compensation
amortization................. -- -- 146 -- -- -- 146
Exercise of stock options...... 284,442 2 1,832 -- -- -- 1,834
Income tax benefit associated
with stock options........... -- -- 597 -- -- -- 597
Purchase of treasury stock..... (701,226) -- -- -- -- (12,873) (12,873)
Sale of treasury stock......... 5,084 -- -- -- -- 92 92
Net income..................... -- -- -- -- 29,671 -- 29,671
---------- ---- ------- ----- -------- -------- --------
BALANCE AT MARCH 31, 1997...... 16,366,212 171 58,217 (891) (23,834) (12,781) 20,882
Stock option compensation
amortization................. -- -- (225) -- -- -- (225)
Exercise of stock options...... 348,958 3 1,220 -- -- -- 1,223
Income tax benefit associated
with stock options........... -- -- 4,279 -- -- -- 4,279
Purchase of treasury stock..... (317,600) -- -- -- -- (13,162) (13,162)
Sale of treasury stock......... 51,072 325 -- -- 925 1,250
Net income..................... -- -- -- -- 39,189 -- 39,189
---------- ---- ------- ----- -------- -------- --------
BALANCE AT MARCH 31, 1998...... 16,448,642 174 63,816 (891) 15,355 (25,018) 53,436
Exercise of stock options
(unaudited).................. 260,411 3 1,524 -- -- -- 1,527
Income tax benefit associated
with stock options (unaudited)... -- -- 4,929 -- -- -- 4,929
Purchase of treasury stock
(unaudited).................. (178,000) -- -- -- -- (10,568) (10,568)
Sale of treasury stock
(unaudited).................. 19,510 -- 415 -- -- 354 769
Net income (unaudited)......... -- -- -- -- 26,084 -- 26,084
---------- ---- ------- ----- -------- -------- --------
BALANCE AT SEPTEMBER 30, 1998
(unaudited).................. 16,550,563 $177 $70,684 $(891) $ 41,439 $(35,232) $ 76,177
========== ==== ======= ===== ======== ======== ========
</TABLE>

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

F-5
<PAGE> 67

PLANTRONICS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED MARCH 31, SEPTEMBER 30,
----------------------------- ------------------
1996 1997 1998 1997 1998
------- -------- -------- ------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income from operations.................. $25,470 $ 29,671 $ 39,189 $17,671 $ 26,084
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization of
property and equipment............. 2,367 2,935 3,632 1,772 2,272
Deferred income taxes................ (745) 2,789 4,746 -- --
Other non-cash charges, net.......... 758 649 (225) -- --
Changes in assets and liabilities:
Accounts receivable.................. (8,310) 1,624 (5,024) (3,633) (4,164)
Provision for doubtful accounts...... 575 (50) 455 110 651
Inventory............................ (1,150) (2,035) (9,699) (3,465) 7,810
Other current assets................. (426) 318 (865) 301 286
Other assets......................... 471 (459) 1,113 499 770
Accounts payable..................... 2,206 1,194 (1,251) 1,300 (3,156)
Accrued liabilities.................. 2,271 (251) 6,188 1,705 1,722
Income taxes payable................. 3,413 (1,769) 986 565 7,744
------- -------- -------- ------- --------
Cash provided by operating activities..... 26,900 34,616 39,245 16,825 40,019
------- -------- -------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................... (3,903) (8,195) (5,917) (3,946) (1,548)
------- -------- -------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock.............. -- (12,880) (13,162) (116) (10,568)
Proceeds from sale of treasury stock.... -- 99 1,250 567 769
Proceeds from exercise of stock
options.............................. 763 1,835 1,223 625 1,527
------- -------- -------- ------- --------
Cash provided by (used for) financing
activities.............................. 763 (10,946) (10,689) 1,076 (8,272)
------- -------- -------- ------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH... (333) -- -- -- --
------- -------- -------- ------- --------
Net increase in cash and cash
equivalents............................. 23,427 15,475 22,639 13,955 30,199
Cash and cash equivalents at beginning of
period.................................. 3,360 26,787 42,262 42,262 64,901
------- -------- -------- ------- --------
Cash and cash equivalents at end of
period.................................. $26,787 $ 42,262 $ 64,901 $56,217 $ 95,100
======= ======== ======== ======= ========
Supplemental disclosures:
Cash paid for:
Interest................................ $ 6,608 $ 6,577 $ 6,550 $ 3,267 $ 3,262
Income taxes............................ $13,557 $ 14,192 $ 12,439 $ 8,850 $ 5,764
Noncash operating and financing
activities:
Income tax benefit associated with stock
options.............................. $ -- $ 597 $ 4,279 $ -- $ 4,929
</TABLE>

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

F-6
<PAGE> 68

PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. THE COMPANY

Plantronics, Inc. (the "Company"), introduced the first lightweight
communications headset in 1962. Since that time, the Company has established
itself as a world-leading designer, manufacturer and marketer of lightweight
communications headset products.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Management's Use of Estimates and Assumptions

The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of financial
statements and the reported amounts of sales and expenses during the reporting
period. Actual results could differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of Plantronics
and its subsidiary companies. Intercompany transactions and balances have been
eliminated in consolidation.

Fiscal Year

The Company's fiscal year end is the Saturday closest to March 31. For
purposes of presentation, the Company has indicated its accounting year ending
on March 31 or the month-end for interim quarterly periods. Results of
operations for fiscal years 1996, 1997 and 1998 each included 52 weeks.

Cash, Cash Equivalents and Short-Term Investments

The Company considers all highly liquid investments with a maturity of 90
days or less at the date of purchase to be cash equivalents. Pursuant to the
provisions of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," management determines
the appropriate classification of debt and equity securities at the time of
purchase, and reassesses the classification at each reporting date. At March 31,
1998, all of the Company's short-term investments, consisting primarily of fixed
maturity debt securities, have been classified as "held to maturity." Under this

F-7
<PAGE> 69
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

classification, the investments are recorded at amortized cost. The Company's
cash and cash equivalents consist of the following:

<TABLE>
<CAPTION>
MARCH 31,
------------------
1997 1998
------- -------
(IN THOUSANDS)
<S> <C> <C>
Cash....................................................... $ 5,106 $ 9,662
Cash equivalents........................................... 37,156 55,239
------- -------
Cash and cash equivalents............................. $42,262 $64,901
======= =======
</TABLE>

Inventory

Inventory is stated at the lower of cost, determined on the first-in,
first-out method, or market.

Depreciation and Amortization

Depreciation and amortization of property, plant and equipment are
principally calculated using the straight-line method over the estimated useful
lives of the respective assets.

Deferred Debt Issuance Costs

Debt issuance costs are assigned to the various debt instruments and
amortized over the shorter of the terms of the respective debt agreements or an
estimated period the debt will be outstanding.

Revenue Recognition

Revenue is recognized when products are shipped. Provision is made for
estimated potential customer returns and warranty costs at the time of shipment.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of cash equivalents and trade
receivables. The Company's cash investment policies limit investments to those
that are short-term and low risk. Concentrations of credit risk with respect to
trade receivables are generally limited due to the large number of customers
comprising the Company's customer base and their dispersion across many
different geographic areas. The Company performs ongoing credit evaluations of
the financial condition of its customers and, generally, requires no collateral
from its customers. The Company maintains an allowance for uncollectible
accounts receivable based upon expected collectibility of all accounts
receivable.

Fair Value of Financial Instruments

The carrying values of the Company's financial instruments, including cash,
cash equivalents, accounts receivable, accrued expenses and liabilities,
approximate fair value due to their short maturities. The fair value of
long-term debt, including the current

F-8
<PAGE> 70
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

portion, was estimated by management based on current rates offered on the open
market for debt of the same remaining maturities. The fair value of the
long-term debt was not materially different from the carrying value of $65.1
million at March 31, 1998.

Income Taxes

The Company accounts for income taxes under the liability method, which
recognizes deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the tax basis of assets and
liabilities and their financial statement reported amounts. Tax credits are
accounted for as a reduction of tax expense in the year in which the credits
reduce taxes payable.

Foreign Operations and Currency Translation

The Company has foreign assembly and manufacturing operations in Mexico,
light assembly, research and development and sales and marketing in the United
Kingdom, an international finance, customer service and logistics headquarters
in the Netherlands, and sales offices in Canada, Asia, Europe, Australia and
South America. For fiscal 1997 and 1998, the functional currency of all foreign
operations was the US dollar. For fiscal 1996, the functional currency of all
foreign operations was the US dollar, with the exception of the operation
located in the United Kingdom. Accordingly, gains or losses arising from the
translation of foreign currency statements and transactions, except for the
operation in the United Kingdom in fiscal 1996, are included in determining
consolidated results of operations. Aggregate exchange gains (losses) for fiscal
1996, 1997 and 1998 were $0.3 million, $0.4 million and ($0.2) million,
respectively. Gains or losses arising from the translation of the United Kingdom
statements prior to fiscal 1997 were recorded as a separate component of
stockholders' equity.

Stock-Based Compensation

Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," ("SFAS 123"), encourages, but does not require,
companies to record compensation cost for stock-based employee compensation
plans based on the fair value of options granted. The Company has elected to
continue to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" and related interpretations, and to provide
additional disclosures with respect to the pro forma effects of adoption had the
Company recorded compensation expense as provided in SFAS 123 (see Note 10).

Earnings per Share

Effective December 27, 1997 the Company adopted Statement of Financial
Accounting Standards No. 128 "Earnings per Share," ("SFAS 128"). The new
standard requires presentation of both basic EPS and diluted EPS on the face of
the income statement. Basic EPS, which replaces primary EPS, is computed by
dividing net income available to common stockholders (numerator) by the weighted
average number of shares of common stock outstanding (denominator) during the
period. Unlike the computation of primary EPS, basic EPS excludes the dilutive
effect of stock options. Diluted EPS replaces

F-9
<PAGE> 71
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

fully diluted EPS and gives effect to all dilutive potential common stock
outstanding during a period.

The following is a reconciliation of the numerators and denominators of the
basic and diluted EPS computations for the periods presented below:

<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED MARCH 31, SEPTEMBER 30,
--------------------------- -----------------
1996 1997 1998 1997 1998
------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT (UNAUDITED)
PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Numerator for earnings per common
share -- net income............... $25,470 $29,671 $39,189 $17,671 $26,084
------- ------- ------- ------- -------
Denominator for basic earnings per
common share...................... 16,593 17,003 16,481 16,450 16,494
------- ------- ------- ------- -------
Effect of dilutive securities....... 1,371 789 1,742 1,636 1,797
------- ------- ------- ------- -------
Denominator for diluted earnings per
common share...................... 17,964 17,792 18,223 18,086 18,291
------- ------- ------- ------- -------
Net income per common share:
Basic............................... $ 1.53 $ 1.75 $ 2.38 $ 1.07 $ 1.58
======= ======= ======= ======= =======
Diluted............................. $ 1.42 $ 1.67 $ 2.15 $ 0.98 $ 1.43
======= ======= ======= ======= =======
</TABLE>

COMPREHENSIVE INCOME

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130"). This statement is effective for the Company's fiscal year ending March
31, 1999. The statement establishes presentation and disclosure requirements for
reporting comprehensive income. Comprehensive income includes charges or credits
to equity that are not the result of transactions with owners. Other than net
income, the only element of comprehensive income for all periods presented was
in fiscal 1996 and consisted of a foreign currency translation adjustment of
$0.3 million. Total comprehensive income for fiscal 1996 was $25.8 million.
Total comprehensive income was the same as net income for all other periods
presented.

Recent Accounting Pronouncements

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" ("SFAS 131"). The statement requires the
Company to report certain information about operating segments in its annual
financial statements. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. The Company
will adopt SFAS 131 beginning in fiscal 1999 and does not expect such adoption
to have a material effect on the consolidated financial statement disclosures.

F-10
<PAGE> 72
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Interim Financial Information

The accompanying consolidated balance sheet as of September 30, 1998 and
the consolidated statements of operations and of cash flows for the six months
ended September 30, 1997 and September 30, 1998 are unaudited. In the opinion of
management, such unaudited financial statements have been prepared on the same
basis as the audited financial statements referred to above and include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the Company's results of operations for the interim
periods. The data disclosed in the notes to the consolidated financial
statements as of such dates and for such periods are unaudited.

3. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS:

<TABLE>
<CAPTION>
MARCH 31,
-------------------- SEPTEMBER 30,
1997 1998 1998
-------- -------- -------------
(IN THOUSANDS) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
ACCOUNTS RECEIVABLE:
Accounts receivable from customers....... $ 38,278 $ 43,302 $ 47,466
Allowance for doubtful accounts.......... (1,297) (1,752) (2,403)
-------- -------- --------
$ 36,981 $ 41,550 $ 45,063
======== ======== ========
INVENTORY:
Finished goods........................... $ 11,056 $ 13,224 $ 12,010
Work in process.......................... 1,647 4,431 2,152
Purchased parts.......................... 7,339 12,086 7,769
-------- -------- --------
$ 20,042 $ 29,741 $ 21,931
======== ======== ========
PROPERTY, PLANT AND EQUIPMENT:
Land..................................... $ 4,693 $ 4,693 $ 4,693
Buildings and improvements (useful life
10-30 years).......................... 9,104 9,486 9,901
Machinery and equipment (useful life 2-8
years)................................ 25,949 31,484 32,617
-------- -------- --------
39,746 45,663 47,211
Less accumulated depreciation............ (20,776) (24,408) (26,680)
-------- -------- --------
$ 18,970 $ 21,255 $ 20,531
======== ======== ========
ACCRUALS:
Interest................................. $ 1,394 $ 1,386 $ 1,382
Employee benefits and other.............. 19,047 25,243 26,969
-------- -------- --------
$ 20,441 $ 26,629 $ 28,351
======== ======== ========
</TABLE>

F-11
<PAGE> 73
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. DEBT

Long-term debt, consisting of Senior Notes, was $65.1 million at the end of
fiscal 1996, 1997 and 1998. These Senior Notes are general unsecured obligations
of the Company that bear interest, payable semiannually, at a rate of 10% per
annum and will mature on January 15, 2001. The Senior Notes are redeemable, at
the Company's option, in whole or in part, at any time on or after January 15,
1999. Redemption prior to January 15, 2001 will be at a premium.

The Senior Note Indenture contains certain covenants that, among other
things, limit the ability of the Company and its subsidiaries to incur
indebtedness, pay dividends, issue preferred stock of subsidiaries, engage in
transactions with affiliates, create liens, engage in mergers and
consolidations, or make certain asset sales and investments. The Senior Note
Indenture also provides that holders of the Senior Notes have the right to
require that the Company repurchase their Senior Notes in the event of a "change
in control" and contain various customary events of default.

The Company has a one-year $20.0 million revolving unsecured credit
facility with Bank of America. The facility expires on February 17, 1999. The
facility includes a $10.0 million letter of credit subfacility. Combined
borrowings and commitments under both facilities cannot exceed $20.0 million.
Principal outstanding bears interest at the Company's choice of the Bank of
America base rate, the offshore rate or a CD rate plus a margin ranging from
0.000% to 1.375%, depending on the rate choice and performance level ratios.
There were no borrowings outstanding under the revolving credit facility at
March 31, 1998, however, at that date $2.3 million, associated with inventory
purchases and other matters, was committed under the letter of credit
subfacility. The revolving credit facility includes covenants relating to, among
other things, the maintenance of a maximum net funded debt ratio, a minimum
tangible net worth ratio and a maximum interest coverage ratio. The Company was
in compliance with the terms of the covenants as of March 31, 1998.

The revolving credit facility also expressly restricts the ability of the
Company to incur additional indebtedness (including contingent liabilities and
guarantees), grant additional liens, dispose of and acquire assets, incur lease
obligations, and make investments, including loans, joint ventures, and
acquisitions of other businesses. The Company is permitted to pay cash dividends
on shares of its capital stock in an amount not to exceed 50% of the Company's
cumulative net income (net of cumulative losses) for the period commencing
February 19, 1997 through the date of declaration.

5. COMMON AND TREASURY STOCK

Effect of Increase in Stock and Stock Split

In July 1997, the Company's stockholders approved an increase in the
authorized shares of Common Stock of Plantronics, Inc. to 40,000,000. On
September 2, 1997, the Company effected a two-for-one stock split in the form of
a stock dividend to stockholders of record as of August 18, 1997. All share, per
share, and capital in excess of par value amounts herein have been restated to
reflect the effect of this split.

During fiscal 1998 the Company purchased 317,600 shares of its Common Stock
in the open market at a total cost of $13.2 million and 51,072 shares were
reissued for $1.3 million.

F-12
<PAGE> 74
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6. INCOME TAXES

Income tax expense for fiscal 1996, 1997 and 1998 consisted of the
following:

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-----------------------------
1996 1997 1998
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Federal
Current........................................ $13,586 $ 8,744 $10,109
Deferred....................................... (827) 2,789 4,746
State............................................ 1,622 1,854 1,472
Foreign.......................................... 1,903 1,899 2,116
------- ------- -------
$16,284 $15,286 $18,443
======= ======= =======
</TABLE>

Pre-tax earnings of the foreign subsidiaries were $2.8 million, $8.2
million and $15.7 million for fiscal years 1996, 1997 and 1998, respectively.
Cumulative earnings of foreign subsidiaries which have been permanently
reinvested as of March 31, 1998 totaled $5.5 million.

The following is a reconciliation between statutory federal income taxes
and the total provision for taxes on pre-tax income:

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
-----------------------------
1996 1997 1998
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Tax expense at statutory rate.................... $14,614 $15,735 $20,171
Foreign operations taxed at different rates...... 910 (971) (4,364)
State taxes, net of federal benefit.............. 1,054 1,204 1,476
Other, net....................................... (294) (682) 1,160
------- ------- -------
$16,284 $15,286 $18,443
======= ======= =======
</TABLE>

F-13
<PAGE> 75
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Deferred tax liabilities (assets) represent the tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting and income tax purposes. Significant components of the Company's
deferred tax liabilities and assets are as follows:

<TABLE>
<CAPTION>
MARCH 31,
------------------
1997 1998
------- -------
(IN THOUSANDS)
<S> <C> <C>
Deferred gains on sales of properties...................... $ 2,740 $ 2,476
Deferred state tax......................................... -- 314
Unremitted earnings of certain subsidiaries................ -- 5,749
Other deferred tax liabilities............................. 333 1,111
------- -------
Gross deferred tax liabilities........................... 3,073 9,650
------- -------
Accruals and other reserves................................ (2,748) (5,670)
Deferred state tax deduction............................... (635) --
Other deferred tax assets.................................. (914) (458)
------- -------
Gross deferred tax assets................................ (4,297) (6,128)
------- -------
Total net deferred tax (assets) liabilities................ $(1,224) $ 3,522
======= =======
</TABLE>

7. EMPLOYEE BENEFIT PLANS

Subject to eligibility requirements, substantially all domestic employees
are covered by quarterly cash and annual deferred profit sharing plans. United
States employees also have the option of participating in a salary deferral plan
qualified under Section 401(k) of the Internal Revenue Code. The Quarterly
Profit Sharing Plan benefits are paid on the basis of profitability and the
relationship of each participating employee's base salary as a percent of all
participants' base salaries. The Annual Profit Sharing Plan benefits are based
on 10% of the Company's results of operations before interest and taxes,
adjusted for other items, minus quarterly profit sharing cash distributions and
administrative expenses, and are allocated to employees based on the
relationship of each participating employee's base salary as a percent of all
participants' base salaries. The Annual Profit Sharing Plan distributions
include a cash distribution and a tax deferred distribution made to individual
accounts of participants held in trust. The deferred portion is subject to a two
year vesting schedule based on an employee's date of hire. Total annual and
quarterly profit sharing contributions were $5.4 million, $5.5 million and $6.9
million for fiscal 1996, 1997 and 1998, respectively.

F-14
<PAGE> 76
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8. COMMITMENTS AND CONTINGENCIES

Minimum Future Rental Payments

The Company leases certain equipment and facilities under operating leases
expiring in various years through and after 2003. Minimum future rental payments
for the next five years under non-cancelable operating leases having remaining
terms in excess of 1 year as of March 31, 1998:

<TABLE>
<CAPTION>
AMOUNT
--------------
(IN THOUSANDS)
<S> <C>
1999............................................. $1,253
2000............................................. 1,118
2001............................................. 864
2002............................................. 420
2003............................................. 412
------
Total minimum future rental payments............. $4,067
======
</TABLE>

Rent expense for operating leases was approximately $1.1 million in fiscal
1996, $1.1 million in fiscal 1997 and $1.3 million in fiscal 1998.

Existence of Renewal Options

Certain operating leases provide for renewal options for periods from 1 to
3 years. In the normal course of business, operating leases are generally
renewed or replaced by other leases.

Claims and Litigation

In the opinion of management, litigation, contingent liabilities and claims
against the Company arising in the ordinary course of business are not expected
to involve any judgments or settlements which would be material to the Company's
consolidated financial condition or results of operations.

9. INDUSTRY SEGMENT AND FOREIGN OPERATIONS DATA

Business Segment

The Company operates in one industry segment and is engaged in developing,
manufacturing, marketing and servicing telecommunications equipment. No one
customer accounted for 10% or more of total revenue from consolidated sales for
fiscal year 1996, 1997 or 1998.

Geographic Segments

In geographical reporting, revenues are attributed to the geographical
location of the sales and service organizations, and costs directly and
indirectly incurred in generating revenues are similarly assigned.

F-15
<PAGE> 77
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
--------------------------------
1996 1997 1998
-------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
NET REVENUES FROM UNAFFILIATED CUSTOMERS:
United States............................... $133,957 $135,664 $163,684
International............................... 49,002 59,643 72,428
-------- -------- --------
$182,959 $195,307 $236,112
======== ======== ========
OPERATING INCOME:
United States............................... $ 35,365 $ 37,036 $ 44,916
International............................... 12,144 13,303 17,457
-------- -------- --------
$ 47,509 $ 50,339 $ 62,373
======== ======== ========
IDENTIFIABLE ASSETS:
United States............................... $ 91,400 $ 97,138 $121,627
International............................... 17,261 30,103 43,848
-------- -------- --------
$108,661 $127,241 $165,475
======== ======== ========
Intercompany transfers........................ $ 18,057 $ 49,575 $ 69,261
</TABLE>

Intercompany Transfers

The geographical reporting classification reflects the international
restructuring completed in fiscal 1997. The establishment of Plantronics B.V.
changed the ownership of inventory and the methodology of intercompany
transfers. In fiscal 1996 intercompany transfers were from the US to Europe.
Starting in the last quarter of fiscal 1996 intercompany transfers are from
Plantronics B.V. to the US and Japan. Intercompany transfers are at arm's length
prices sufficient to recover a reasonable profit.

10. STOCK OPTION PLANS AND STOCK PURCHASE PLANS

Stock Option Plan

In September 1993, the Board of Directors approved the PI Parent
Corporation 1993 Stock Plan (the "1993 Stock Plan"). Under the 1993 Stock Plan,
4,159,242 shares of Common Stock (which number is subject to adjustment in the
event of stock splits, reverse stock splits, recapitalization or certain
corporate reorganizations) are reserved for issuance to employees and
consultants of the Company, as approved from time to time by the Compensation
Committee of the Board of Directors. The reserved shares include 980,000 shares
which were authorized by the Board of Directors and approved by the stockholders
for issuance in 1997. The 1993 Stock Plan, which has a term of ten years,
provides for incentive as well as nonqualified stock options to purchase shares
of Common Stock. The Board of Directors may terminate the 1993 Stock Plan at any
time at its discretion.

Incentive stock options may not be granted at less than 100 percent of the
estimated fair market value, as determined by the Board of Directors, of the
Company's Common Stock at the date of grant and the option term may not exceed
10 years. For holders of 10 percent or more of the total combined voting power
of all classes of the Company's stock, incentive stock options may not be
granted at less than 110 percent of the estimated

F-16
<PAGE> 78
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

fair market value of the Common Stock at the date of grant and the option term
may not exceed five years. Nonqualified stock options may be granted at less
than fair market value. Options generally vest over 4 years.

In September 1993 the Compensation Committee of the Board of Directors
approved nonqualified options to certain executive officers to purchase 255,792
shares of Common Stock at an exercise price of $2.74 per share that were granted
upon the completion of the Company's initial public offering. Compensation
related to these options of $0.9 million based on the $6.25 per share offering
price was charged to expense over a four-year vesting period commencing January
1994 as the options were granted for future services. Options to purchase an
additional 289,252 shares were granted during fiscal 1994 to certain executive
officers at exercise prices ranging from $2.74 to $7.63 per share. Compensation
related to these options of $0.8 million was charged to expense over a four-year
vesting period. As of March 31, 1998, the total compensation expense was
amortized.

Directors' Stock Option Plan

In September 1993, the Board of Directors adopted a Directors' Stock Option
Plan (the "Directors' Option Plan") and reserved 40,000 shares of Common Stock
for issuance to non-employee directors of the Company. An additional 20,000
shares were authorized for issuance in 1997 under the Directors' Option Plan,
pursuant to Board of Directors' and stockholder approval. The Directors' Option
Plan provides that each non-employee director shall be granted an option to
purchase 4,000 shares of Common Stock on the later of the effective date of the
Company's initial public offering or the date on which the person becomes a
director. Thereafter, each non-employee director shall be granted an option to
purchase 1,000 shares of Common Stock each year. At the end of fiscal 1998,
options for 45,000 shares of Common Stock were outstanding under the Directors'
Option Plan. All options were granted at fair market value and accordingly, had
no compensatory impact. Options vest generally over a four-year period.

F-17
<PAGE> 79
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Stock option activity under the 1993 Stock Plan and the Directors' Stock
Option Plan are as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
SHARES --------------------------
AVAILABLE WEIGHTED
FOR GRANT SHARES AVERAGE PRICE
--------- --------- -------------
<S> <C> <C> <C>
BALANCE AT MARCH 31, 1995................. 106,780 3,094,526 $ 3.45
Granted................................. (206,820) 206,820 $16.22
Exercised............................... -- (359,270) $ 2.13
Canceled................................ 158,794 (158,794) $ 4.35
--------- --------- ------
BALANCE AT MARCH 31, 1996................. 58,754 2,783,282 $ 4.52
Authorized.............................. 1,000,000
Granted................................. (631,588) 631,588 $19.80
Exercised............................... -- (284,442) $ 6.45
Canceled................................ 111,048 (111,048) $ 6.49
--------- --------- ------
BALANCE AT MARCH 31, 1997................. 538,214 3,019,380 $ 7.46
Granted................................. (654,500) 654,500 $27.37
Exercised............................... -- (348,958) $ 3.49
Canceled................................ 233,010 (233,010) $18.53
--------- --------- ------
BALANCE AT MARCH 31, 1998................. 116,724 3,091,912 $11.29
========= ========= ======
EXERCISABLE AT MARCH 31, 1998............. 1,884,602
=========
</TABLE>

Significant option groups outstanding at March 31, 1998 and related
weighted average prices and lives are as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------ ----------------------
NUMBER WEIGHTED NUMBER
OUTSTANDING AVERAGE WEIGHTED EXERCISABLE WEIGHTED
AS OF REMAINING AVERAGE AS OF AVERAGE
MARCH 31, CONTRACTUAL EXERCISE MARCH 31, EXERCISE
RANGE OF EXERCISE PRICE 1998 LIFE PRICE 1998 PRICE
----------------------- ----------- ----------- -------- ----------- --------
<S> <C> <C> <C> <C> <C>
$ 0.90 - $ 0.90......... 732,944 5.49 $ 0.90 732,944 $ 0.90
2.74 - 2.74......... 814,161 5.81 2.74 814,161 2.74
3.13 - 18.44......... 736,177 7.58 14.70 321,956 11.00
18.63 - 41.69......... 808,630 9.18 26.22 15,541 19.72
--------- ---- ------ --------- ------
$ 0.90 - $41.69......... 3,091,912 7.04 $11.29 1,884,602 $ 3.57
========= ==== ====== ========= ======
</TABLE>

Fair Value Disclosures

All options in fiscal 1996, 1997 and 1998 were granted at an exercise price
equal to the fair market value of the Company's Common Stock at the date of
grant. The weighted average fair value at date of grant for options granted
during 1996, 1997 and 1998 were $5.43, $6.34 and $9.79 per share, respectively.
The fair value of options at date of grant was estimated using the Black-Scholes
model with the following assumptions for 1996; divided yield of 0%, an expected
life of 5 years, expected volatility of 24% and risk free interest rates of
5.9%. For 1997 the assumptions were: dividend yield of 0%, an expected

F-18
<PAGE> 80
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

life of 5 years, expected volatility of 17% and risk free interest rates of
6.6%. For 1998 the assumptions were: dividend yield of 0%, an expected life of 5
years, expected volatility of 28% and risk free interest rates of 5.6%.

Had compensation expense for the Company's stock-based compensation plans
been determined based on the methods prescribed by SFAS No. 123, the Company's
net income and net income per share would have been as follows:

<TABLE>
<CAPTION>
YEARS ENDED MARCH 31,
------------------------------------------
1996 1997 1998
---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
NET INCOME:
As reported........................ $25,470 $29,671 $39,189
Pro forma.......................... $25,390 $29,044 $37,381
NET INCOME PER SHARE:
As reported........................ $ 1.42 $ 1.67 $ 2.15
Pro forma.......................... $ 1.41 $ 1.63 $ 2.05
</TABLE>

Employee Stock Purchase Plan

On April 23, 1996 the Board of Directors of the Company approved the 1996
Employee Stock Purchase Plan (the "ESPP"), which was approved by the
stockholders on August 6, 1996, to provide certain employees with an opportunity
to purchase Common Stock through payroll deductions. The plan is a qualified
plan under applicable IRS guidelines and certain highly compensated employees
are excluded from participation. Under the ESPP, the purchase price of the
Common Stock will equal 95% of the market price of the Common Stock immediately
before the beginning of the applicable participation period. Each participation
period is 6 months long. Once purchased, the shares are restricted for 6 months.
During fiscal 1997, 581 shares were issued under the plan. The fair value of the
employee's purchase rights was estimated using the Black-Scholes model with the
following assumptions: dividend yield of 0%, an expected life of 6 months,
expected volatility of 17%, and risk free interest rates of 6.6%. The weighted-
average fair value of these purchase rights granted in fiscal 1997 was $2.27.
During fiscal 1998, 2,021 shares were issued under the plan. The fair value of
the employee's purchase rights was estimated using the Black-Scholes model with
the following assumptions: dividend yield of 0%, an expected life of 6 months,
expected volatility of 28%, and risk free interest rates of 5.6%. The
weighted-average fair value of these purchase rights granted in fiscal 1998 was
$4.85.

Senior Executive Stock Ownership Plan

In November, 1996 the Board of Directors approved a Senior Executive Stock
Purchase Plan, effective January 1, 1997, to encourage ownership of the
Company's Common Stock by senior executives. This is a voluntary plan in which
executives are encouraged to participate and achieve a target ownership over a 5
year period in annual increments of 20% or more. The target ownership is equal
to two times the Chief Executive Officer's base salary and one times the
individual Vice Presidents' base salary. To encourage participation, the
Company's Treasury Stock will be sold by the Company to executives under this
voluntary purchase program. The price will be equal to the greater

F-19
<PAGE> 81
PLANTRONICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

of: 95% of the price set by the Board of Directors on an annual basis or 85% of
the fair market value of the stock on the date of transaction. The various
vehicles that are available to executives to obtain ownership of the Company's
stock are as follows: 401(k) Plan contributions, personal IRA account purchases,
Deferred Compensation Plan contributions, outright purchase of stock or
exercising and holding vested stock options. The discounted price is not
applicable to exercising and holding of vested stock options.

11. SUBSEQUENT EVENTS (UNAUDITED)

Redemption of Senior Notes

On December 1, 1998 the Company announced its intention to redeem its 10%
Senior Notes Due 2001, effective January 15, 1999. The aggregate amount of
Senior Notes outstanding at that date will be $65,050,000. The aggregate
redemption price, including a 2% early redemption premium and accrued interest,
will be $69,603,500, which will be paid out of available cash. This transaction
will be reported as an extraordinary item in the fourth quarter of the Company's
1999 fiscal year financial statements.

Stock Option Plan

On July 30, 1998 the Company's stockholders approved an increase of
1,300,000 shares of common stock issuable under the 1993 Stock Plan.

Unsecured Credit Facility

Effective November 30, 1998, the Company increased its revolving unsecured
credit facility with Bank of America from $20.0 million to $30.0 million. The
facility expires on November 29, 1999. The facility includes a $10.0 million
letter of credit subfacility. Combined borrowings and commitments under both
facilities cannot exceed $30.0 million. All other terms and conditions of the
facility remain unchanged.

F-20
<PAGE> 82
APPENDIX - DESCRIPTION OF GRAPHICS

INSIDE FRONT COVER

COMPANY LOGO
Caption: "OFFICE AND CALL CENTER"

Photograph: Four persons in office environment viewing computer screens and
wearing Plantronics headsets.
Subcaption: "PRODUCTIVITY: Headsets free up users' hands for computer work or
other tasks."

Photograph: One person in call center environment viewing computer screen and
wearing a Plantronics headset.
Subcaption: "COMFORT: Headsets allow users to maintain a natural posture while
working."

Caption: "HEADSETS PROVIDE HANDS-FREE COMMUNICATIONS."

Photograph: Person driving a car and wearing a Plantronics headset.
Subcaption: "CLEAN, SAFE COMMUNICATIONS: Headsets enhance driver safety and
offer office-quality sound."

Photograph: Person delivering a package and using a cell phone with a
Plantronics headset.
Subcaption: "OVER THE HEAD"

Photograph: Person working outside using cell phone with a Plantronics headset.
Subcaption: "OVER THE EAR"
Subcaption: "MULTITASK: With a headset, there's no need to stop for a phone call
while working at home or on the run."

CAPTION: "MOBILE AND HOME"

INSIDE BACK COVER

COMPANY LOGO

Photograph: Two persons viewing computer screens while wearing Plantronics
headsets.

Graphic: Picture of ENCORE(R) headset.
Caption: "Encore(R) features tone control and a powerful noise-canceling
design."

Graphic: Picture of TRISTAR(R) headset.
Caption: "Feather-light at less than one-half ounce, with an acoustic seal
engineered for optimum sound quality."

Graphic: Picture of DUOSET(TM) headset.
Caption: "Easily converts from over-the-head to over-the-ear to accommodate the
user's preference."

Graphic: Picture of MIRAGE(R) headset.
Caption: "Easy on and off, rests gently on the ear."

Graphic: Picture of SUPRA(R) headset.
Caption: "Our most popular design. Durable model with adjustable headband and
cushioned receiver."

Graphic: Picture of FREEHAND(R) headset.
Caption: "Ultralightweight model designed for fast, easy on and off."

Caption: "Plantronics(R) offers a full line of headsets to meet different user
preferences in the call center, office, mobile, and residential market
segments. Most models are available with many options and accessories,
including voice tube or noise-canceling microphones and single or dual
receivers."
<PAGE> 83

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

1,550,000 SHARES

[PLANTRONICS LOGO]

COMMON STOCK

----------------------

P R O S P E C T U S
----------------------

MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
HAMBRECHT & QUIST
MCDONALD INVESTMENTS INC.

, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 84

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth costs and expenses, other than underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of Common Stock being registered. All amounts are estimates except the
registration fee and the NASD filing fee.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
---------
<S> <C>
Registration Fee............................................ $ --
NASD Filing Fee............................................. 15,584
Printing.................................................... 75,000
Legal Fees and Expenses..................................... 175,000
Accounting Fees and Expenses................................ 75,000
Transfer Agent Fees......................................... 2,000
Miscellaneous............................................... 7,416
--------
Total............................................. $350,000
========
</TABLE>

ITEM 15. INDEMNIFICATION

Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's Board of Directors to grant, indemnity to directors
and officers. This may under certain circumstances include indemnification for
liabilities arising under the Securities Act as well as for expenses incurred in
that regard. Article Nine of the Registrant's Certificate of Incorporation and
Article V of the Registrant's By-laws provide for indemnification of its
directors, officers, employees and other agents to the maximum extent permitted
by the Delaware General Corporation Law. The Registrant has also entered into
Indemnification Agreements with its officers and directors.

In addition, the Registrant is party to a Registration Agreement with
Citicorp Venture Capital, Ltd. and certain other stockholders, officers,
directors and key employees. The Registration Agreement grants certain holders
of the Registrant's common stock, including the selling stockholder, the right
to demand registration of their shares, and to participate in other
registrations which the Registrant may undertake. The Registrant filed this
prospectus with the SEC in order to fulfill its contractual obligations under
the Registration Agreement. Under the Registration Agreement, the Registrant has
agreed to indemnify the selling stockholders, and the selling stockholders have
agreed to indemnify the Registrant, against certain liabilities in connection
with this registration.

II-1
<PAGE> 85

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT
- ------- --------
<C> <S>
1.1 Form of Underwriting Agreement.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation, as to Legality of Securities Being Registered.
10.1 Amended and Restated Registration Agreement dated December
29, 1989, as amended, between the Registrant and certain
stockholders of the Registrant (incorporated by reference to
Exhibit 10.1 to the Registrant's Registration Statement on
Form S-3, Reg. No. 333-67781, filed November 23, 1998).
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
24.1* Power of Attorney by Robert S. Cecil and Louise M. Cecil.
</TABLE>

- -------------------------
* To be filed by amendment.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.

Insofar as indemnification by the Registrant for liabilities arising under
the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referenced in Item 15 of
this Registration Statement or otherwise, the Registrant has been advised that
in the opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer,
or controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.

The undersigned registrant hereby undertakes that:

- For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective; and

- For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at the time shall be
deemed to be the initial bona fide offering thereof.

II-2
<PAGE> 86

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant,
Plantronics, Inc., a corporation organized and existing under the laws of the
State of Delaware, certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Santa Cruz, State of California, on January 8,
1999.

PLANTRONICS, INC.

By: /s/ KEN KANNAPPAN
-----------------------------------
S. Kenneth Kannappan,
Chief Executive Officer and
President

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints each of S. Kenneth Kannappan and John A. Knutson,
acting individually or jointly and severally, his or her attorneys-in-fact, each
with the power of substitution, for him or her in any and all capacities, to
sign any amendment to this Registration Statement on Form S-3, and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming all that
either or both of said attorneys-in-fact, or any substitute or substitutes of
such attorney or attorneys-in-fact, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ KEN KANNAPPAN Chief Executive Officer, January 8, 1999
- ------------------------------- President and Director
S. Kenneth Kannappan (Principal Executive Officer)

/s/ BARBARA V. SCHERER Senior Vice President--Finance January 8, 1999
- ------------------------------- & Administration, and Chief
Barbara V. Scherer Financial Officer (Principal
Financial Officer, Principal
Accounting Officer)
</TABLE>

II-3
<PAGE> 87

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ ROBERT S. CECIL Chairman of the Board of January 8, 1999
- ------------------------------- Directors
Robert S. Cecil

/s/ R. LOGAN Director January 8, 1999
- -------------------------------
Robert F.B. Logan

/s/ M. SALEEM MUQADDAM Director January 8, 1999
- -------------------------------
M. Saleem Muqaddam

/s/ JOHN MOWBRAY O'MARA Director January 8, 1999
- -------------------------------
John Mowbray O'Mara

/s/ TRUDE C. TAYLOR Director January 8, 1999
- -------------------------------
Trude C. Taylor

/s/ J. SIDNEY WEBB Director January 8, 1999
- -------------------------------
J. Sidney Webb

/s/ DAVID A. WEGMANN Director January 8, 1999
- -------------------------------
David A. Wegmann
</TABLE>

II-4

<PAGE> 1

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
SECTION 1 REPRESENTATIONS AND WARRANTIES................................................2

SECTION 2 SALE AND DELIVERY TO UNDERWRITERS; CLOSING...................................10

SECTION 3 COVENANTS OF THE COMPANY.....................................................12

SECTION 4 PAYMENT OF EXPENSES..........................................................14

SECTION 5 CONDITIONS OF UNDERWRITERS'OBLIGATIONS.......................................15

SECTION 6 INDEMNIFICATION..............................................................18

SECTION 7 CONTRIBUTION.................................................................21

SECTION 8 REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY...............22

SECTION 9 TERMINATION OF AGREEMENT.....................................................22

SECTION 10 DEFAULT BY ONE OR MORE OF THE UNDERWRITERS...................................23

SECTION 11 DEFAULT BY ONE OR MORE OF THE SELLING STOCKHOLDERS OR THE COMPANY.
FAILURE OF A SELLING STOCKHOLDER TO SELL.....................................23

SECTION 12 NOTICES......................................................................24

SECTION 13 PARTIES......................................................................24

SECTION 14 GOVERNING LAW AND TIME.......................................................24

SECTION 15 EFFECT OF HEADINGS...........................................................24
</TABLE>

SCHEDULES
Schedule A - List of Underwriters
Schedule B - List of Selling Stockholders

Schedule C - Pricing Information
Schedule D - List of Subsidiaries
Schedule E - List of Persons subject to Lock-up

EXHIBITS
Exhibit A - Form of Opinion of Company's Counsel
Exhibit B - Form of Opinion for the Selling Stockholders
Exhibit C - Form of Lock-up Letter

<PAGE> 2

PLANTRONICS, INC.

(a Delaware corporation)

1,550,000 Shares of Common Stock

(Par Value $.01 Per Share)

PURCHASE AGREEMENT

January __, 1999

MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
Hambrecht & Quist LLC
McDonald Investments Inc.

as Representatives of the several Underwriters

North Tower
World Financial Center
New York, New York 10281-1209

Ladies and Gentlemen:

Plantronics, Inc., a Delaware corporation (the "Company"), and the
persons listed in Schedule B hereto (the "Selling Stockholders"), confirm their
respective agreements with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters", which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Merrill Lynch, Salomon Smith Barney Inc., Hambrecht & Quist
LLC and McDonald Investments Inc. are acting as representatives (in such
capacity, the "Representatives"), with respect to (i) the sale by the Selling
Stockholders, acting severally and not jointly, and the purchase by the
Underwriters, acting severally and not jointly, of the respective numbers of
shares of Common Stock, par value $.01 per share, of the Company ("Common
Stock") set forth in Schedules A and B hereto and (ii) the grant by the Selling
Stockholder indicated in Schedule B hereto (the "Option Securities Selling
Stockholder") to the Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of 232,500
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 1,550,000 shares of Common Stock (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the 232,500 shares of
Common Stock subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities."

<PAGE> 3

The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Securities as soon as the
Representatives deem advisable after this Agreement has been executed and
delivered.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-__________) covering
the registration of the Securities under the Securities Act of 1933, as amended
(the "1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information". Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information that was
used after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto, schedules thereto, if any, and the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, at the time it became effective and including the Rule 430A
Information is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final prospectus, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the
form first furnished to the Underwriters for use in connection with the offering
of the Securities is herein called the "Prospectus." For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment or supplement to any of the
foregoing shall be deemed to include the copy filed with the Commission pursuant
to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR").

All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.

SECTION 1. REPRESENTATIONS AND WARRANTIES.

(a) Representations and Warranties by the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Closing Time

2
<PAGE> 4

referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:

(i) Compliance with Registration Requirements. The Company meets
the requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement and any Rule 462(b) Registration Statement has become
effective under the 1933 Act and no stop order suspending the effectiveness of
the Registration Statement or any Rule 462(b) Registration Statement has been
issued under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are contemplated
by the Commission, and any request on the part of the Commission for additional
information has been complied with.

At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any Option Securities are purchased,
at the Date of Delivery), the Registration Statement, the Rule 462(b)
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the 1933 Act and
the 1933 Act Regulations and did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. Neither the
Prospectus nor any amendments or supplements thereto, at the time the Prospectus
or any such amendment or supplement was issued and at the Closing Time (and, if
any Option Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. The
representations and warranties in this subsection shall not apply to statements
in or omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in writing by
any Underwriter through Merrill Lynch expressly for use in the Registration
Statement or Prospectus.

Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations and each
preliminary prospectus and the Prospectus delivered to the Underwriters for use
in connection with this offering was identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.

(ii) Incorporated Documents. The documents incorporated or deemed
to be incorporated by reference in the Registration Statement and the
Prospectus, when they became effective or at the time they were or hereafter are
filed with the Commission, complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations or the 1934
Act and the rules and regulations of the Commission thereunder (the "1934 Act
Regulations"), as applicable, and, when read together with the other information
in the Prospectus, at the time the Registration Statement became effective, at
the time the Prospectus was issued and at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), did not and will not contain
an untrue statement of a material fact or omit

3
<PAGE> 5

to state a material fact required to be stated therein or necessary to make the
statements therein not misleading.

(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants as required by the 1933 Act and the
1933 Act Regulations.

(iv) Financial Statements. The financial statements included in
the Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of the Company and
its consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated therein.
The selected financial data and the summary financial information included in
the Prospectus present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial statements
included in the Registration Statement.

(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than those in the
ordinary course of business, which are material with respect to the Company and
its subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.

(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware and has corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this Agreement;
and the Company is duly qualified as a foreign corporation to transact business
and is in good standing in each other jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.

(vii) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of Regulation
S-X) (each a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its incorporation, has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the

4
<PAGE> 6

ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect; except as otherwise disclosed in the Registration Statement, all
of the issued and outstanding capital stock of each such Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable and is
owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of
the outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary. The only subsidiaries of the Company are (a) the subsidiaries listed
on Schedule D hereto and (b) certain other subsidiaries which, considered in the
aggregate as a single Subsidiary, do not constitute a "significant subsidiary"
as defined in Rule 1-02 of Regulation S-X.

(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the column
entitled "Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectus or pursuant
to the exercise of convertible securities or options referred to in the
Prospectus). The shares of issued and outstanding capital stock, including the
Securities to be purchased by the Underwriters from the Selling Stockholders,
have been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock, including the
Securities to be purchased by the Underwriters from the Selling Stockholders,
was issued in violation of the preemptive or other similar rights of any
securityholder of the Company.

(ix) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.

(x) Authorization and Description of Securities. The Common Stock
conforms to all statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments defining the
same; no holder of the Securities will be subject to personal liability by
reason of being such a holder; and the issuance of the Securities is not subject
to the preemptive or other similar rights of any securityholder of the Company.

(xi) Absence of Defaults and Conflicts. Neither the Company nor
any of its subsidiaries is in violation of its charter or by-laws or in default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which it or any of them may
be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (collectively, "Agreements and Instruments") except for
such defaults that would not result in a Material Adverse Effect; and the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated herein and in the Registration Statement
(including the issuance and sale of the Securities and the use of the proceeds
from the sale of the Securities as described in the Prospectus under the caption
"Use of Proceeds") and compliance by the Company with its obligations hereunder
have been duly authorized by all necessary corporate action and do not and will
not, whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or

5
<PAGE> 7

Repayment Event (as defined below) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any subsidiary pursuant to, the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter or by-laws of the Company or any
subsidiary or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any subsidiary or any of
their assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture or
other evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any subsidiary.

(xii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or imminent
labor disturbance by the employees of any of its or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case, may
reasonably be expected to result in a Material Adverse Effect.

(xiii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration Statement
(other than as disclosed therein), or which might reasonably be expected to
result in a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder; the aggregate of all
pending legal or governmental proceedings to which the Company or any subsidiary
is a party or of which any of their respective property or assets is the subject
which are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, could not reasonably be expected
to result in a Material Adverse Effect.

(xiv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the Prospectus
or the documents incorporated by reference therein or to be filed as exhibits
thereto which have not been so described and filed as required.

(xv) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, "Intellectual
Property") necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of

6
<PAGE> 8

any unfavorable decision, ruling or finding) or invalidity or inadequacy, singly
or in the aggregate, would result in a Material Adverse Effect.

(xvi) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the offering, issuance or sale of the Securities hereunder or
the consummation of the transactions contemplated by this Agreement, except such
as have been already obtained or as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws.

(xvii) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them; the Company and its subsidiaries are
in compliance with the terms and conditions of all such Governmental Licenses,
except where the failure so to comply would not, singly or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except when the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect would not have a Material Adverse Effect; and neither the Company nor any
of its subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.

(xviii) Title to Property. The Company and its subsidiaries have
good and marketable title to all real property owned by the Company and its
subsidiaries and good title to all other properties owned by them, in each case,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described in the
Prospectus or (b) do not, singly or in the aggregate, materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by the Company or any of its subsidiaries; and all of the
leases and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or any
of its subsidiaries holds properties described in the Prospectus, are in full
force and effect, and neither the Company nor any subsidiary has any notice of
any material claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any subsidiary under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises under
any such lease or sublease.

(xix) Compliance with Cuba Act. The Company has complied with,
and is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
(collectively, the "Cuba Act") or is exempt therefrom.

(xx) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse

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<PAGE> 9

Effect, (A) neither the Company nor any of its subsidiaries is in violation of
any federal, state, local or foreign statute, law, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending or
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of its subsidiaries and (D) there are no events or circumstances
that might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
subsidiaries relating to Hazardous Materials or any Environmental Laws.

(b) Representations and Warranties by the Selling Stockholders. Each
Selling Stockholder severally represents and warrants to each Underwriter as of
the date hereof, as of the Closing Time, and, if the Selling Stockholder is
selling Option Securities on a Date of Delivery, as of each such Date of
Delivery, and agrees with each Underwriter, as follows:

(i) Accurate Disclosure. To the best knowledge of such Selling
Stockholder, the representations and warranties of the Company contained in
Section 1(a) hereof are true and correct; such Selling Stockholder has reviewed
and is familiar with the Registration Statement and the Prospectus and neither
the Prospectus nor any amendments or supplements thereto includes any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; such Selling Stockholder is not prompted
to sell the Securities to be sold by such Selling Stockholder hereunder by any
information concerning the Company or any subsidiary of the Company which is not
set forth in the Prospectus.

(ii) Authorization of Agreements. Each Selling Stockholder has
the full right, power and authority to enter into this Agreement and a Power of
Attorney and Custody Agreement (the "Power of Attorney and Custody Agreement")
and to sell, transfer and deliver the Securities to be sold by such Selling
Stockholder hereunder. The execution and delivery of this Agreement and the
Power of Attorney and Custody Agreement and the sale and delivery of the
Securities to be sold by such Selling Stockholder and the consummation of the
transactions contemplated herein and compliance by such Selling Stockholder with
its obligations hereunder have been duly authorized by such Selling Stockholder
and do not and will not, whether with or without the giving of notice or passage
of time or both, conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any tax, lien, charge or encumbrance
upon the Securities to be sold by such Selling Stockholder or any property or
assets of such Selling Stockholder pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit

8
<PAGE> 10

agreement, note, license, lease or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder may be
bound, or to which any of the property or assets of such Selling Stockholder is
subject, nor will such action result in any violation of the provisions of the
charter or by-laws or other organizational instrument of such Selling
Stockholder, if applicable, or any applicable treaty, law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over such
Selling Stockholder or any of its properties.

(iii) Good and Marketable Title. Such Selling Stockholder has and
will at the Closing Time and, if any Option Securities are purchased, on the
Date of Delivery have good and marketable title to the Securities to be sold by
such Selling Stockholder hereunder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind, other
than pursuant to this Agreement; and upon delivery of such Securities and
payment of the purchase price therefor as herein contemplated, assuming each
such Underwriter has no notice of any adverse claim, each of the Underwriters
will receive good and marketable title to the Securities purchased by it from
such Selling Stockholder, free and clear of any security interest, mortgage,
pledge, lien, charge, claim, equity or encumbrance of any kind.

(iv) Due Execution of Power of Attorney and Custody Agreement.
Such Selling Stockholder has duly executed and delivered, in the form heretofore
furnished to the Representatives, the Power of Attorney and Custody Agreement
with ____________, ____________ and ____________, or any of them, as
attorney(s)-in-fact (the "Attorney(s)-in-Fact") and ____________, as custodian
(the "Custodian"); the Custodian is authorized to deliver the Securities to be
sold by such Selling Stockholder hereunder and to accept payment therefor; and
each Attorney-in-Fact is authorized to execute and deliver this Agreement and
the certificate referred to in Section 5(f) or that may be required pursuant to
Sections 5(l) and 5(m) on behalf of such Selling Stockholder, to sell, assign
and transfer to the Underwriters the Securities to be sold by such Selling
Stockholder hereunder, to determine the purchase price to be paid by the
Underwriters to such Selling Stockholder, as provided in Section 2(a) hereof, to
authorize the delivery of the Securities to be sold by such Selling Stockholder
hereunder, to accept payment therefor, and otherwise to act on behalf of such
Selling Stockholder in connection with this Agreement.

(v) Absence of Manipulation. Such Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is designed
to or which has constituted or which might reasonably be expected to cause or
result in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.

(vi) Absence of Further Requirements. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign, is necessary or
required for the performance by each Selling Stockholder of its obligations
hereunder or in the Power of Attorney and Custody Agreement, or in connection
with the sale and delivery of the Securities hereunder or the consummation of
the transactions contemplated by this Agreement, except such as may have
previously been made or obtained or as may be required under the 1933 Act or the
1933 Act Regulations or state securities laws.

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<PAGE> 11

(vii) Restriction on Sale of Securities. During a period of 90
days from the date of the Prospectus, such Selling Stockholder will not, without
the prior written consent of Merrill Lynch, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, any share of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock or file any
registration statement under the 1933 Act with respect to any of the foregoing
or (ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic consequence
of ownership of the Common Stock, whether any such swap or transaction described
in clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to the Securities to be sold hereunder.

(viii) Certificates Suitable for Transfer. Certificates for all
of the Securities to be sold by such Selling Stockholder pursuant to this
Agreement, in suitable form for transfer by delivery or accompanied by duly
executed instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with the Custodian with irrevocable
conditional instructions to deliver such Securities to the Underwriters pursuant
to this Agreement.

(ix) No Association with NASD. Neither such Selling Stockholder
nor any of his/her/its affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
or has any other association with (within the meaning of Article I, Section 1(m)
of the By-laws of the National Association of Securities Dealers, Inc. (the
"NASD")), any member firm of the NASD.

(c) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Stockholders as such and
delivered to the Representatives or to counsel for the Underwriters pursuant to
the terms of this Agreement shall be deemed a representation and warranty by
such Selling Stockholder to the Underwriters as to the matters covered thereby.

SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.

(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, each Selling Stockholder, severally and not jointly, agrees to sell to
each Underwriter, severally and not jointly, and each Underwriter, severally and
not jointly, agrees to purchase from each Selling Stockholder, at the price per
share set forth in Schedule C, that proportion of the number of Initial
Securities set forth in Schedule B opposite the name of such Selling
Stockholder, which the number of Initial Securities set forth in Schedule A
opposite the name of such Underwriter, plus any additional number of Initial
Securities which such Underwriter may become obligated to purchase pursuant to
the provisions of Section 10 hereof, bears to the total number of Initial
Securities, subject, in each case, to such adjustments among the Underwriters as
the

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<PAGE> 12

Representatives in their sole discretion shall make to eliminate any sales or
purchases of fractional securities.

(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Option Securities Selling Stockholder hereby grants an option to
the Underwriters, severally and not jointly, to purchase up to an additional
232,500 shares of Common Stock, as set forth in Schedule B, at the price per
share set forth in Schedule C, less an amount per share equal to any dividends
or distributions declared by the Company and payable on the Initial Securities
but not payable on the Option Securities. The option hereby granted will expire
30 days after the date hereof and may be exercised in whole or in part from time
to time only for the purpose of covering over-allotments which may be made in
connection with the offering and distribution of the Initial Securities upon
notice by the Representatives to such Option Securities Selling Stockholder
setting forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Securities. Any such time and date of delivery (a "Date
of Delivery") shall be determined by the Representatives, but shall not be later
than seven full business days after the exercise of said option, nor in any
event prior to the Closing Time, as hereinafter defined. If the option is
exercised as to all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase from the Option
Securities Selling Stockholders on a pro rata basis, as necessary, that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
each case to such adjustments as the Representatives in their discretion shall
make to eliminate any sales or purchases of fractional shares.

(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Wilson
Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304, or
at such other place as shall be agreed upon by the Representatives and the
Company and the Selling Stockholders, at 7:00 A.M. (California time) on the
third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given
day) business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives, the Company and
the Selling Stockholders (such time and date of payment and delivery being
herein called "Closing Time").

In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representatives,
the Company and the Option Securities Selling Stockholder, on each Date of
Delivery as specified in the notice from the Representatives to the Company and
the Option Securities Selling Stockholder.

Payment shall be made to the Selling Stockholders by wire transfer of
immediately available funds to a bank account designated by the Custodian
pursuant to each Selling Stockholder's Power of Attorney and Custody Agreement
against delivery to the Representatives for the respective accounts of the
Underwriters of certificates for the Securities

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<PAGE> 13

to be purchased by them. It is understood that each Underwriter has authorized
the Representatives, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase. Merrill Lynch, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.

(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.

SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:

(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
and will notify the Representatives immediately, and confirm the notice in
writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under Rule 424(b)
was received for filing by the Commission and, in the event that it was not, it
will promptly file such prospectus. The Company will make every reasonable
effort to prevent the issuance of any stop order and, if any stop order is
issued, to obtain the lifting thereof at the earliest possible moment.

(b) Filing of Amendments. The Company will give the Representatives
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), or any amendment, supplement
or revision to either the prospectus included in the Registration Statement at
the time it became effective or to the Prospectus, whether pursuant to the 1933
Act, the 1934 Act or otherwise, will furnish the Representatives with copies of
any such documents a reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall object.

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<PAGE> 14

(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated or deemed to be incorporated by
reference therein) and signed copies of all consents and certificates of
experts, and will also deliver to the Representatives, without charge, a
conformed copy of the Registration Statement as originally filed and of each
amendment thereto (without exhibits) for each of the Underwriters. The copies of
the Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.

(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such
number of copies of the Prospectus (as amended or supplemented) as such
Underwriter may reasonably request. The Prospectus and any amendments or
supplements thereto furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission pursuant to
EDGAR, except to the extent permitted by Regulation S-T.

(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement or amend or supplement the
Prospectus in order that the Prospectus will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters such number of copies of such amendment
or supplement as the Underwriters may reasonably request.

(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
as the Representatives may designate and to maintain such qualifications in
effect for a period of not less than one year from the later of the effective
date of the Registration Statement and any Rule 462(b) Registration Statement;
provided, however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as a
dealer in securities in

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<PAGE> 15

any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for a
period of not less than one year from the effective date of the Registration
Statement and any Rule 462(b) Registration Statement.

(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.

(h) Listing. The Company will use its best efforts to effect the listing
of the Securities on the New York Stock Exchange.

(i) Restriction on Sale of Securities. During a period of 90 days from
the date of the Prospectus, the Company will not, without the prior written
consent of Merrill Lynch, (i) directly or indirectly, offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase or otherwise
transfer or dispose of any share of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in whole
or in part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued or
options to purchase Common Stock granted pursuant to existing employee benefit
plans of the Company referred to in the Prospectus or (C) any shares of Common
Stock issued pursuant to any non-employee director stock plan or dividend
reinvestment plan.

(j) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.

SECTION 4. PAYMENT OF EXPENSES.

(a) Expenses. The Company and the Selling Stockholders will pay or cause
to be paid all expenses incident to the performance of their obligations under
this Agreement, including (i) the preparation, printing and filing of the
Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the preparation, printing
and delivery to the Underwriters of this Agreement, any Agreement among
Underwriters and such other documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Securities, (iii) the
preparation, issuance and delivery of the certificates for the Securities to the
Underwriters, including any stock or other transfer taxes and any stamp or other
duties payable upon the sale, issuance or delivery of the Securities

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<PAGE> 16

to the Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus and of the
Prospectus and any amendments or supplements thereto, (vii) the preparation,
printing and delivery to the Underwriters of copies of the Blue Sky Survey and
any supplement thereto, (viii) the fees and expenses of any transfer agent or
registrar for the Securities, (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities and (x)
the fees and expenses incurred in connection with the listing of the Securities
on the New York Stock Exchange.

(b) Expenses of the Selling Stockholders. The Selling Stockholders,
jointly and severally, will pay all expenses incident to the performance of
their respective obligations under, and the consummation of the transactions
contemplated by this Agreement, including (i) any stamp duties, capital duties
and stock transfer taxes, if any, payable upon the sale of the Securities to the
Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters, and (ii) the fees and disbursements of
their respective counsel and accountants.

(c) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Company and the Selling Stockholders shall reimburse
the Underwriters for all of their out-of-pocket expenses, including the
reasonable fees and disbursements of counsel for the Underwriters.

(d) Allocation of Expenses. The provisions of this Section shall not
affect any agreement that the Company and the Selling Stockholders may make for
the sharing of such costs and expenses.

SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any subsidiary of the Company or on behalf of any Selling Stockholder
delivered pursuant to the provisions hereof, to the performance by the Company
of its covenants and other obligations hereunder, and to the following further
conditions:

(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).

15
<PAGE> 17

(b) Opinion of Counsel for Company. At Closing Time, the Representatives
shall have received the favorable opinion, dated as of Closing Time, of Wilson
Sonsini Goodrich & Rosati, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or reproduced
copies of such letter for each of the other Underwriters to the effect set forth
in Exhibit A hereto and to such further effect as counsel to the Underwriters
may reasonably request.

(c) Opinion of Counsel for the Selling Stockholders. At Closing Time,
the Representatives shall have received the favorable opinion, dated as of
Closing Time, of Wilson Sonsini Goodrich & Rosati, counsel for the Selling
Stockholders, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such letter for each
of the other Underwriters to the effect set forth in Exhibit B hereto and to
such further effect as counsel to the Underwriters may reasonably request.

(d) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of Morrison & Foerster LLP, counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (i) , (ii), (v) (solely as to
preemptive or other similar rights arising by operation of law or under the
charter or by-laws of the Company), (vii) through (ix), inclusive, (xi), and the
penultimate paragraph of Exhibit A hereto. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other than the
laws of the State of New York, the federal law of the United States and the
General Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representatives. Such counsel may also state that, insofar
as such opinion involves factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company and its subsidiaries
and certificates of public officials.

(e) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Representatives shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at and as of
Closing Time, (iii) the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to Closing
Time, and (iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or are contemplated by the Commission.

(f) Certificate of Selling Stockholders. At Closing Time, the
Representatives shall have received a certificate of an Attorney-in-Fact on
behalf of each Selling Stockholder, dated as of Closing Time, to the effect that
(i) the representations and warranties of each Selling Stockholder contained in
Section 1(b) hereof are true and correct in all respects with the same force and
effect as though expressly made at and as of Closing Time and (ii) each Selling

16
<PAGE> 18

Stockholder has complied in all material respects with all agreements and all
conditions on its part to be performed under this Agreement at or prior to
Closing Time.

(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from PricewaterhouseCoopers
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.

(h) Bring-down Comfort Letter. At Closing Time, the Representatives
shall have received from PricewaterhouseCoopers LLP a letter, dated as of
Closing Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.

(i) Approval of Listing. At Closing Time, the Securities shall have been
approved for listing on the New York Stock Exchange, subject only to official
notice of issuance.

(j) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.

(k) Lock-up Agreements. At the date of this Agreement, the
Representatives shall have received an agreement substantially in the form of
Exhibit C hereto signed by the persons listed on Schedule E hereto.

(l) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company and the Selling Stockholders contained herein and the statements
in any certificates furnished by the Company, any subsidiary of the Company and
the Selling Stockholders hereunder shall be true and correct as of each Date of
Delivery and, at the relevant Date of Delivery, the Representatives shall have
received:

(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section 5(e) hereof
remains true and correct as of such Date of Delivery.

(ii) Certificate of Selling Stockholders. A certificate, dated
such Date of Delivery, of an Attorney-in-Fact on behalf of each Selling
Stockholder confirming that the certificate delivered at Closing Time pursuant
to Section 5(f) remains true and correct as of such Date of Delivery.

(iii) Opinion of Counsel for Company. The favorable opinion of
Wilson Sonsini Goodrich & Rosati, counsel for the Company, in form and substance
satisfactory

17
<PAGE> 19

to counsel for the Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(b) hereof.

(iv) Opinion of Counsel for the Selling Stockholders. The
favorable opinion of Wilson Sonsini Goodrich & Rosati, counsel for the Selling
Stockholders, in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option Securities to
be purchased on such Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(c) hereof.

(v) Opinion of Counsel for Underwriters. The favorable opinion of
Morrison & Foerster LLP, counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required by Section
5(d) hereof.

(vi) Bring-down Comfort Letter. A letter from
PricewaterhouseCoopers LLP, in form and substance satisfactory to the
Representatives and dated such Date of Delivery, substantially in the same form
and substance as the letter furnished to the Representatives pursuant to Section
5(g) hereof, except that the "specified date" in the letter furnished pursuant
to this paragraph shall be a date not more than five days prior to such Date of
Delivery.

(m) Additional Documents. At Closing Time and at each Date of Delivery
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Stockholders in connection with the
issuance and sale of the Securities as herein contemplated shall be satisfactory
in form and substance to the Representatives and counsel for the Underwriters.

(n) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option Securities
on a Date of Delivery which is after the Closing Time, the obligations of the
several Underwriters to purchase the relevant Option Securities, may be
terminated by the Representatives by notice to the Company at any time at or
prior to Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party except as
provided in Section 4 and except that Sections 1, 6, 7 and 8 shall survive any
such termination and remain in full force and effect.

SECTION 6. INDEMNIFICATION.

(a) Indemnification of Underwriters.

(1) The Company and the Selling Stockholders, jointly and
severally, agree to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act as follows:

18
<PAGE> 20

(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 430A Information or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of any
untrue statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;

(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such alleged untrue
statement or omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company and the Selling
Stockholders;

(iii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of that certain Amended and
Restated Registration Rights Agreement, dated as of December 29, 1989, by and
among the Company, Citicorp Venture Capital, Ltd., Kidder, Peabody Group, Inc.,
KP/Hanover Partners, 1988 L.P., David Wegmann, Neil J. Hynes, Trude C. Taylor,
Sidney Webb, The Equitable Life Assurance Society of the United States,
Equitable Deal Flow Fund, L.P., Tandem Insurance Group, Inc. and the individuals
named on Schedule I thereto, or any amendment thereto (the "Registration Rights
Agreement"); and

(iv) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
or arising out of the Registration Rights Agreement, to the extent that any such
expense is not paid under (i), (ii) or (iii) above; provided, however, that this
indemnity agreement shall not apply to any loss, liability, claim, damage or
expense to the extent arising out of any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through Merrill
Lynch expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information or any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto).

(2) Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who is a partner of an Underwriter
or who controls an underwriter within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act and who, at the date of this Agreement, is a
director or officer of the Company or controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the

19
<PAGE> 21

1934 Act, such indemnity agreement is subject to the undertaking of the Company
in the Registration Statement under Item 17 thereof.

(b) Indemnification of Company, Directors and Officers and Selling
Stockholders. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and each Selling
Stockholder against any and all loss, liability, claim, damage and expense
described in the indemnity contained in subsection (1) of this Section, as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), including the Rule 430A Information or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).

(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a)(1) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.

(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(1)(ii) effected without its written consent

20
<PAGE> 22

if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.

(e) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company and the Selling
Stockholders with respect to indemnification.

SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company and the
Selling Stockholders on the one hand and of the Underwriters on the other hand
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.

The relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Stockholders and the total
underwriting discount received by the Underwriters, in each case as set forth on
the cover of the Prospectus.

The relative fault of the Company and the Selling Stockholders on the
one hand and the Underwriters on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Selling Stockholders or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission

The Company, the Selling Stockholders and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this Section
7. The aggregate amount of losses, liabilities, claims, damages and expenses
incurred by an indemnified party and referred to above in this Section 7 shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by

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<PAGE> 23

any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue or alleged untrue statement or omission or
alleged omission.

Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.

No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.

For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company or any
Selling Stockholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company or
such Selling Stockholder, as the case may be. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.

The provisions of this Section shall not affect any agreement among the
Company and the Selling Stockholders with respect to contribution.

SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries or the Selling Stockholders submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company or the Selling Stockholders, and shall survive delivery of the
Securities to the Underwriters.

SECTION 9. TERMINATION OF AGREEMENT.

(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company and the Selling Stockholders, at any time at
or prior to Closing Time (i) if there has been, since the time of execution of
this Agreement or since the respective dates as of which information is given in
the Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Representatives, impracticable to market the Securities or to
enforce contracts for the sale of the

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<PAGE> 24

Securities, or (iii) if trading in any securities of the Company has been
suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the NASD or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.

(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.

SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representatives shall have the right, but not
the obligation, within 24 hours thereafter, to make arrangements for one or more
of the non-defaulting Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter.

No action pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.

In the event of any such default which does not result in a termination
of this Agreement, either (i) the Representatives or (ii) the Company and any
Selling Stockholder shall have the right to postpone the Closing Time or a Date
of Delivery for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangement.

SECTION 11. DEFAULT BY ONE OR MORE OF THE SELLING STOCKHOLDERS OR THE
COMPANY. FAILURE OF A SELLING STOCKHOLDER TO SELL. If a Selling Stockholder
shall fail at Closing Time or at a Date of Delivery to sell and deliver the
number of Securities which such Selling Stockholder or Selling Stockholders are
obligated to sell hereunder, and the remaining Selling Stockholders do not
exercise the right hereby granted to increase, pro rata or otherwise, the number
of Securities to be sold by them hereunder to the total number to be sold by all
Selling Stockholders as set forth in Schedule B hereto, then the Underwriters
may, at option of the Representatives, by notice from the Representatives to the
Company and the non-defaulting Selling Stockholders, either (i) terminate this
Agreement without any liability on the fault of any non-defaulting party except
that the provisions of Sections 1, 4, 6, 7 and 8 shall remain in full force and
effect or (ii) elect to purchase the Securities which the non-defaulting Selling
Stockholders have agreed to sell hereunder. No action taken pursuant to this
Section 11 shall relieve any Selling Stockholder so defaulting from liability,
if any, in respect of such default.

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<PAGE> 25

In the event of a default by any Selling Stockholder as referred to in
this Section 11, each of the Representatives, the Company and the non-defaulting
Selling Stockholders shall have the right to postpone Closing Time or Date of
Delivery for a period not exceeding seven days in order to effect any required
change in the Registration Statement or Prospectus or in any other documents or
arrangements.

SECTION 12. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives at North Tower, World
Financial Center, New York, New York 10281-1201 and 101 California Street, Suite
1420, San Francisco California 94111 attention of ____________________; notices
to the Company shall be directed to it at 345 Encinal Street, Santa Cruz,
California 95060, attention of _________________; and notices to the Selling
Stockholders shall be directed to _________________, attention of
______________________.

SECTION 13. PARTIES. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters, the Company and the Selling Stockholders
and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Company and the Selling
Stockholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Company and the Selling Stockholders
and their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Securities from any
Underwriter shall be deemed to be a successor by reason merely of such purchase.

SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

SECTION 15. EFFECT OF HEADINGS. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.

If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Attorney-in-Fact for
the Selling Stockholders a counterpart hereof, whereupon this instrument, along
with all counterparts, will become a binding agreement among the Underwriters,
the Company and the Selling Stockholders in accordance with its terms.

Very truly yours,

PLANTRONICS, INC.

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<PAGE> 26

By_________________________________

Title______________________________

By_________________________________

As Attorney-in-Fact acting on
behalf of the Selling Stockholders
named in Schedule B hereto

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
SALOMON SMITH BARNEY INC.
HAMBRECHT & QUIST LLC
McDONALD INVESTMENTS INC.

By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED

By__________________________________________
Authorized Signatory

For themselves and as Representatives of the
other Underwriters named in Schedule A hereto.

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<PAGE> 27

SCHEDULE A

<TABLE>
<CAPTION>
Number of
Initial
Name of Underwriter Securities
- ------------------- -----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.....................................
Salomon Smith Barney Inc.....................................
Hambrecht & Quist LLC........................................
McDonald Investments Inc.....................................
</TABLE>

26
<PAGE> 28

SCHEDULE B

<TABLE>
<CAPTION>
Number of Initial Maximum Number of Option
Securities to be Sold Securities to Be Sold
--------------------- -------------------------
<S> <C> <C>
Louise M. Cecil 117,178 232,500
Robert M. Cecil 432,822 ----------
The Citigroup Foundation 1,000,000 ----------
--------- ----------
Total 1,550,000 232,500
========= ==========
</TABLE>

27
<PAGE> 29

SCHEDULE C

PLANTRONICS, INC.
1,550,000 Shares of Common Stock
(Par Value $.01 Per Share)

1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $____________.

2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $____________, being an amount equal to the
initial public offering price set forth above less $_____________ per share;
provided that the purchase price per share for any Option Securities purchased
upon the exercise of the over-allotment option described in Section 2(b) shall
be reduced by an amount per share equal to any dividends or distributions
declared by the Company and payable on the Initial Securities but not payable on
the Option Securities.

28
<PAGE> 30

SCHEDULE D

List of subsidiaries

29
<PAGE> 31

SCHEDULE E

List of persons and entities
subject to lock-up

30
<PAGE> 32

Exhibit A

FORM OF OPINION OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO SECTION 5(b)

(i) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.

(ii) The Company has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the Purchase
Agreement.

(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.

(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant to
the Purchase Agreement or pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus or pursuant to the exercise of
convertible securities or options referred to in the Prospectus); the shares of
issued and outstanding capital stock of the Company, including the Securities to
be purchased by the Underwriters from the Selling Stockholders, have been duly
authorized and validly issued and are fully paid and non-assessable; and none of
the outstanding shares of capital stock of the Company was issued in violation
of the preemptive or other similar rights of any securityholder of the Company.

(v) The sale of the Securities by the Selling Stockholders is not
subject to the preemptive or other similar rights of any securityholder of the
Company.

(vi) Each Subsidiary has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and is
duly qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of each
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and, to the best of our knowledge, is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any securityholder of such Subsidiary.

31
<PAGE> 33

(vii) The Purchase Agreement has been duly authorized, executed and
delivered by the Company.

(viii) The Registration Statement, including any Rule 462(b)
Registration Statement, has been declared effective under the 1933 Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made in the
manner and within the time period required by Rule 424(b); and, to the best of
our knowledge, no stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been issued under the
1933 Act and no proceedings for that purpose have been instituted or are pending
or threatened by the Commission.

(ix) The Registration Statement, including any Rule 462(b) Registration
Statement, the Rule 430A Information, the Prospectus, excluding the documents
incorporated by reference therein, and each amendment or supplement to the
Registration Statement and Prospectus, excluding the documents incorporated by
reference therein, as of their respective effective or issue dates (other than
the financial statements and supporting schedules included therein or omitted
therefrom, as to which we need express no opinion) complied as to form in all
material respects with the requirements of the 1933 Act and the 1933 Act
Regulations.

(x) The documents incorporated by reference in the Prospectus (other
than the financial statements and supporting schedules included therein or
omitted therefrom, as to which we need express no opinion), when they became
effective or were filed with the Commission, as the case may be, complied as to
form in all material respects with the requirements of the 1933 Act or the 1934
Act, as applicable, and the rules and regulations of the Commission thereunder.

(xi) The form of certificate used to evidence the Common Stock complies
in all material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the New York Stock Exchange.

(xii) To the best of our knowledge, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation, to which the Company or
any subsidiary is a party, or to which the property of the Company or any
subsidiary is subject, before or brought by any court or governmental agency or
body, domestic or foreign, which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to materially and
adversely affect the properties or assets thereof or the consummation of the
transactions contemplated in the Purchase Agreement or the performance by the
Company of its obligations thereunder.

(xiii) The information in the Prospectus under "Risk Factors - Effects
of Future Sale of Common Stock by Management and Principal Stockholder" and
"Underwriters" and in the Registration Statement under Item 15, to the extent
that it constitutes matters of law, summaries of legal matters, the Company's
charter and bylaws or legal proceedings, or legal conclusions, has been reviewed
by us and is correct in all material respects.

(xiv) To the best of our knowledge, there are no statutes or regulations
that are required to be described in the Prospectus that are not described as
required.

32
<PAGE> 34

(xv) All descriptions in the Registration Statement of contracts and
other documents to which the Company or its subsidiaries are a party are
accurate in all material respects; to the best of our knowledge, there are no
franchises, contracts, indentures, mortgages, loan agreements, notes, leases or
other instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as exhibits thereto,
and the descriptions thereof or references thereto are correct in all material
respects.

(xvi) To the best of our knowledge, neither the Company nor any
subsidiary is in violation of its charter or by-laws and no default by the
Company or any subsidiary exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.

(xvii) No filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency, domestic or foreign (other than under the 1933 Act and the
1933 Act Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execution and delivery of the Purchase Agreement or for the offering, issuance,
sale or delivery of the Securities.

(xviii)The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated in the Purchase Agreement
and in the Registration Statement (including the issuance and sale of the
Securities and the use of the proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use Of Proceeds") and compliance
by the Company with its obligations under the Purchase Agreement do not and will
not, whether with or without the giving of notice or lapse of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined in Section 1(a)(xi) of the Purchase Agreement) under or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any subsidiary pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any other
agreement or instrument, known to us, to which the Company or any subsidiary is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any subsidiary is subject (except for such
conflicts, breaches or defaults or liens, charges or encumbrances that would not
have a Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or any subsidiary, or
any applicable law, statute, rule, regulation, judgment, order, writ or decree,
known to us of any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any subsidiary or any of their
respective properties, assets or operations.

(xix) The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.

33
<PAGE> 35

Nothing has come to our attention that would lead us to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information (except for financial statements and schedules and other financial
data included or incorporated by reference therein or omitted therefrom, as to
which we need make no statement), at the time such Registration Statement or any
such amendment became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
or any amendment or supplement thereto (except for financial statements and
schedules and other financial data included or incorporated by reference therein
or omitted therefrom, as to which we need make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).

34
<PAGE> 36

Exhibit B

FORM OF OPINION OF COUNSEL FOR THE SELLING STOCKHOLDER(S)
TO BE DELIVERED PURSUANT TO SECTION 5(c)

(i) No filing with, or consent, approval, authorization, license, order,
registration, qualification or decree of, any court or governmental authority or
agency, domestic or foreign, (other than the issuance of the order of the
Commission declaring the Registration Statement effective and such
authorizations, approvals or consents as may be necessary under state securities
laws, as to which we need express no opinion) is necessary or required to be
obtained by the Selling Stockholders for the performance by each Selling
Stockholder of its obligations under the Purchase Agreement or in the Power of
Attorney and Custody Agreement, or in connection with the offer, sale or
delivery of the Securities.

(ii) Each Power of Attorney and Custody Agreement has been duly executed
and delivered by the respective Selling Stockholders named therein and
constitutes the legal, valid and binding agreement of such Selling Stockholder.

(iii) The Purchase Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Stockholder.

(iv) Each Attorney-in-Fact has been duly authorized by the Selling
Stockholders to deliver the Securities on behalf of the Selling Stockholders in
accordance with the terms of the Purchase Agreement.

(v) The execution, delivery and performance of the Purchase Agreement
and the Power of Attorney and Custody Agreement and the sale and delivery of the
Securities and the consummation of the transactions contemplated in the Purchase
Agreement and in the Registration Statement and compliance by the Selling
Stockholders with its obligations under the Purchase Agreement have been duly
authorized by all necessary action on the part of the Selling Stockholders and
do not and will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default under or
result in the creation or imposition of any tax, lien, charge or encumbrance
upon the Securities or any property or assets of the Selling Stockholders
pursuant to, any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, license, lease or other instrument or agreement to which any
Selling Stockholder is a party or by which any Selling Stockholder may be bound,
or to which any of the property or assets of the Selling Stockholders may be
subject nor will such action result in any violation of the provisions of the
charter or by-laws of the Selling Stockholders, if applicable, or any law,
administrative regulation, judgment or order of any governmental agency or body
or any administrative or court decree having jurisdiction over such Selling
Stockholder or any of its properties.

(vi) To the best of our knowledge, each Selling Stockholder has valid
and marketable title to the Securities to be sold by such Selling Stockholder
pursuant to the Purchase Agreement,

35
<PAGE> 37

free and clear of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind, and has full right, power and authority to sell,
transfer and deliver such Securities pursuant to the Purchase Agreement. By
delivery of a certificate or certificates therefor such Selling Stockholder will
transfer to the Underwriters who have purchased such Securities pursuant to the
Purchase Agreement (without notice of any defect in the title of such Selling
Stockholder and who are otherwise bona fide purchasers for purposes of the
Uniform Commercial Code) valid and marketable title to such Securities, free and
clear of any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind.

36
<PAGE> 38

Exhibit C

FORM OF LOCK-UP FROM DIRECTORS, OFFICERS OR OTHER STOCKHOLDERS
PURSUANT TO SECTION 5(K)

MERRILL LYNCH & CO. December 30, 1998
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
Hambrecht & Quist LLC
McDonald Investments Inc.
C/O MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
North Tower
World Financial Center
New York, New York 10281-1209

Re: Proposed Public Offering by Plantronics

Dear Sirs:

The undersigned, a stockholder of Plantronics, Inc. (the "Company")
understands that Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") proposes to enter into a Purchase Agreement (the
"Purchase Agreement") with the Company and the Selling Stockholder(s) providing
for the public offering of shares (the "Securities") of the Company's common
stock, par value $0.01 per share (the "Common Stock"). In recognition of the
benefit that such an offering will confer upon the undersigned as a stockholder
of the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned agrees with each
underwriter to be named in the Purchase Agreement that, during the period
beginning on the above date and ending 90 days from the date of the Purchase
Agreement, the undersigned will not, without the prior written consent of
Merrill Lynch, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of or otherwise dispose
of or transfer any shares of the Company's Common Stock or any securities
convertible into or exchangeable or exercisable for Common Stock, whether now
owned or hereafter acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition or file any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap or transaction is to be settled by delivery of Common Stock or
other securities in cash or otherwise. In addition, the undersigned hereby
waives any right to

37
<PAGE> 39

receive notice of the proposed offering and related registration and to cause
the Company to include in the proposed registration any securities of the
undersigned.

Very truly yours,

Signature:_________________________

Print Name:

38
<PAGE> 40

================================================================================

PLANTRONICS, INC.

(a Delaware corporation)

1,550,000 Shares of Common Stock*

PURCHASE AGREEMENT

Dated: _______ __, 1999

================================================================================

* Plus an option to acquire up to 232,500 additional shares to cover
overallotments.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses
constituting part of this Registration Statement on Form S-3 of Plantronics,
Inc. of our report dated April 17, 1998 which appears in the Company's 1998
Annual Report to Stockholders, which is incorporated by reference in the
Company's Annual Report on Form 10-K for the fiscal year ended March 28, 1998.
We also consent to the references to us under the headings "Experts" in such
Prospectuses.

/s/ PricewaterhouseCoopers LLP

San Jose, California
January 8, 1999