Poly Announces Fourth Quarter and Fiscal Year 2019 Financial Results
SANTA CRUZ, Calif., May 7, 2019 /PRNewswire/ -- Plantronics, Inc. (NYSE: PLT) ("Poly") today announced fourth quarter and full fiscal year 2019 results for the period ending March 31, 2019. Highlights of the fourth quarter and full fiscal year include the following:
($ Millions, except percent
and per-share data)(1) Q4 FY18 Q4 FY19 FY18 FY19(2)
GAAP Revenue $216 $468 $857 $1,675
GAAP Gross Margin 52.8 46.2 51.2 41.5
% % % %
GAAP Operating Income $33 ($19) $124 ($109)
GAAP Diluted EPS $0.29 ($0.55) ($0.03) ($3.61)
Cash Flow from Operations $40 ($3) $121 $116
Non-GAAP Revenue $216 $488 $857 $1,759
Non-GAAP Gross Margin 53.2 55.0 51.9 52.8
% % % %
Non-GAAP Operating Income $47 $90 $168 $316
Non-GAAP Diluted EPS $1.05 $1.44 $3.55 $5.12
Adjusted EBITDA(3) $53 $102 $189 $357
1 For further information on
supplemental non-GAAP metrics refer
to the Use Of Non-GAAP And
Comparative Financial Information
and Unaudited Reconciliations Of
GAAP Measures To Non-GAAP Measures
sections below.
2 Full-year FY19 results reflect
three quarters of Polycom results
due to the completion of the Polycom
acquisition on July 2, 2018.
3 On a combined comparative basis,
which includes Polycom results for
Q1 FY19, FY19 Adjusted EBITDA was
$402 million.
"Fiscal 2019 confirms the business logic behind the merger of our two companies. We met our product delivery schedules, achieved or beat our financial commitments, and have demonstrated a real strength in execution," said Joe Burton, President and Chief Executive Officer. "I am incredibly pleased with our progress in integrating our teams, consolidating our systems, and relaunching as Poly. Our strategy positions us well to deliver on the goals outlined in our long-term model."
Results Compared to February 5, 2019 Guidance
Q4 FY19 Results
Q4 FY19 Guidance Range4
GAAP Net
Revenue
$468M
$456M - $486M
Non-GAAP Net
Revenue
$488M
$475M - $505M
Non-GAAP
Operating
Income
$90M
$75M - $90M
Non-GAAP
Diluted EPS $1.44
$1.00 - $1.30
4 Non-GAAP guidance ranges
shown here exclude the $19.3
million impact of purchase
accounting related to
recording deferred revenue
at fair value at the time of
the acquisition.
"I'm excited to join Poly's leadership team to help realize the tremendous market opportunity ahead of us," said Chuck Boynton, Executive Vice President and Chief Financial Officer. "Our FY19 results demonstrate the accretive power of this acquisition. We are entering FY20 with a strong balance sheet that will get stronger as we continue to pay down debt."
Highlights for the Fourth Quarter and Fiscal Year 2019
-- Plantronics and Polycom relaunch as Poly, a global technology company
that powers meaningful human connection and collaboration. Poly combines
legendary audio expertise and powerful video and conferencing
capabilities to overcome the distractions, complexity and distance that
make communication in and out of the workplace challenging.
-- Poly and Google Cloud announced a new strategic alliance making Poly VVX
x50 phones the first desktop phones certified for Google Voice for G
Suite.
-- Poly announced Trio integration with two Amazon Web Services solutions,
Amazon Alexa for Business and Chime, and also announced Voyager 4200 UC
headset integration with the Amazon Alexa app.
-- The Company expanded partnerships with both Zoom and GoToMeeting with
integrations across multiple products.
-- The Company revealed the upcoming Poly CCX Series desk phones offering
native Microsoft Teams integration.
-- Poly Studio won Best of Enterprise Connect for Best Communications and
Collaboration Device.
-- The Company's achieved its second consecutive quarter with trailing
twelve month EBITDA of over $400 million.
-- The Company completed its previously announced debt repayment of $100
million on its outstanding Term Loan B and ended fiscal year 2019 with a
net debt to Adjusted EBITDA ratio of 3.6x. In addition, during the
fourth fiscal quarter the Company repurchased approximately 233 thousand
shares at an average price of $36.02.
-- As of today, the Company has achieved a total of $73 million in annual
run-rate synergy capture. Through subsequent actions, the Company
expects to capture an additional $12 million by June 30, 2019, for a
total of $85 million since the close of the Polycom acquisition.
-- In an effort to align its strategy and focus on its core enterprise
markets, the Company announced that it intends to evaluate strategic
alternatives for its Consumer business. The Company has not yet
determined timing, structure, or financial impact of any potential
transaction.
Poly Announces Quarterly Dividend of $0.15
The Poly Board of Directors has declared a quarterly cash dividend of $0.15 per common share, to be paid on June 10, 2019, to all shareholders of record as of the close of market on May 20, 2019.
Business Outlook
The following statements are based on the Company's current expectations, and many of these statements are forward-looking. Actual results are subject to a variety of risks and uncertainties and may differ materially from the Company's expectations.
Poly currently expects the following range of financial results for the first quarter and full fiscal year of 2020 (all amounts assuming currency rates remain stable):
Q1 FY20 Guidance
FY20 Annual Guidance
GAAP
Net
Revenue
$471M - $501M +21% to +24%
Non-
GAAP
Net
Revenue1,2
$485M - $515M As-reported: +17.5% to 20%
Comparative: +1.5% to +3.5%
Adjusted
EBITDA(3)
$92M - $108M
$410M - $460M
Non-
GAAP
Diluted
EPS3,4
$1.15 - $1.45
Not provided
1 Q1 and full year FY20 non-GAAP
revenue guidance excludes purchase
accounting adjustments of $13.6
million and $38.0 million,
respectively.
(2) Standalone growth is based on
as reported FY19 non-GAAP net
revenues of $1,759 million.
Comparative growth is based on
combined comparative FY19 net
revenues of $2,038 million.
3 Q1 and full year FY20 Adjusted
EBITDA and non-GAAP diluted EPS
excludes estimated intangibles
amortization expense of $44.8
million and $179.2 million,
respectively.
4 EPS Guidance assumes
approximately 40 million diluted
average weighted shares and tax
rate of 18% to 20%.
With respect to adjusted EBITDA and diluted EPS guidance, the Company has determined that it is unable to provide quantitative reconciliations of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures with a reasonable degree of confidence in their accuracy without unreasonable effort, as items including stock based compensation, acquisition and integration costs, litigation gains and losses, and impacts from discrete tax adjustments and tax laws are inherently uncertain and depend on various factors, many of which are beyond the Company's control. Our business is inherently difficult to forecast, particularly with continuing uncertainty in regional economic conditions, currency fluctuations, customer cancellations and rescheduling, and there can be no assurance that expectations of incoming orders over the balance of the current quarter will materialize.
The Company's business is inherently difficult to forecast, particularly with continuing uncertainty in regional economic conditions, currency fluctuations, customer cancellations and rescheduling, and there can be no assurance that expectations of incoming orders over the balance of the current quarter will materialize.
Conference Call and Earnings Presentation
Poly is providing an earnings presentation in combination with this press release. The presentation is offered to provide shareholders and analysts with additional detail for analyzing results. The presentation will be available in the Investor Relations section of our corporate website at investor.poly.com along with this press release. A reconciliation of our GAAP to non-GAAP and historical combined comparative results is provided at the end of this press release.
We have scheduled a conference call to discuss fourth quarter and fiscal year 2019 financial results. The conference call will take place today, May 7, 2019, at 2:00 PM (Pacific Time). All interested investors and potential investors in Poly stock are invited to participate. To listen to the call, please dial in five to ten minutes prior to the scheduled starting time and refer to the "Poly Conference Call." The dial-in from North America is (888) 301-8736 and the international dial-in is (706) 634-7260.
The conference call will also be simultaneously webcast and can be accessed from the Investor Relations section of our website. A replay of the call with the conference ID #55437195 will be available until June 6, 2019 at (855) 859-2056 for callers from North America and at (404) 537-3406 for all other callers.
Use of Non-GAAP and Combined Comparative Financial Information
To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP, and where applicable, combined comparative measures of operating results, including non-GAAP net revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, adjusted EBITDA, and non-GAAP diluted EPS, which exclude certain unusual or non-cash expenses and charges that are included in the most directly comparable GAAP measure. These unusual or non-cash expenses and charges include the effect, where applicable, of purchase accounting on deferred revenue and inventory, stock-based compensation, acquisition related expenses, purchase accounting amortization and adjustments, restructuring and other related charges and credits, asset impairments, executive transition charges, rebranding costs, gains or losses from litigations settlements, unusual and/or irregular gains or losses from the sale of investments, and the impact of participating securities, all net of any associated tax impact. We also exclude tax benefits from the release of tax reserves, discrete tax adjustments including transfer pricing, tax deduction and tax credit adjustments, and the impact of tax law changes. We exclude these amounts from our non-GAAP and combined comparative measures primarily because management does not believe they are consistent with the development of our target operating model. Combined comparative results refer to the results for periods prior to the acquisition of Polycom, which were prepared by combining the non-GAAP results of as if they had been combined during that period. These prior period results are presented on a non-GAAP as-reported basis, with immaterial adjustments to align the treatment of non-GAAP adjustments for comparative purposes. We believe that the use of non-GAAP and combined comparative financial measures provides meaningful supplemental information regarding our performance and liquidity and helps investors compare actual results with our historical and long-term target operating model goals as well as our performance as a combined company. We believe presenting non-GAAP net revenue provides meaningful supplemental information regarding how management views the performance of the business and underlying performance of our individual product categories. We believe that both management and investors benefit from referring to these non-GAAP and combined comparative financial measures in assessing our performance and when planning, forecasting and analyzing future periods; however, non-GAAP and combined comparative financial measures are not meant to be considered in isolation of, or as a substitute for, or superior to, net revenues, gross margin, operating expenses, operating income, operating margin, net income or EPS prepared in accordance with GAAP.
Safe Harbor
This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to: (i) our believe or expectations regarding our ability to deliver on goals set out in our long-term model; (ii) our expectations on the market opportunities for our business; (iii) belief that our balance sheet will become stronger in fiscal year 2020; (iv) our beliefs regarding our anticipated integration synergies and the timing when we expect to achieve them; (v) our expectations in connection with our Consumer business; (vi) estimates of GAAP and non-GAAP financial results for the first quarter and full year Fiscal Year 2020, including net revenues, purchase accounting adjustments, adjusted EBITDA, tax rates, intangibles amortization, and diluted weighted average shares outstanding and diluted EPS, in addition to other matters discussed in this press release that are not purely historical data. We do not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.
Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated by such statements. Among the factors that could cause actual results to differ materially from those contemplated are:
-- Regarding the Polycom acquisition: (i) we may be unable to integrate
Polycom's business within our own in a timely and cost-efficient manner
or do so without adversely impacting operations, including new product
launches; (ii) expected synergies or operating efficiencies may fail to
materialize in whole or part or may not occur within expected
time-frames; (iii) the acquisition and our subsequent integration
efforts may adversely impact relationships with customers, suppliers and
strategic partners and their operating results and businesses generally
(including the diversion of management time on transaction-related
issues); (iv) we may be unable to retain and hire key personnel; (v) our
increased leverage as a result of the transaction is substantially
greater than prior to the acquisition which may pose risks, including
reduced flexibility to make changes in our operations in response to
business or economic conditions, increased borrowing costs, as well as
penalties or costs should we fail to comply with terms of the financial
agreements such as debt ratios and financial and operation performance
targets; (vi) negative effects on the market price of our common stock
as a result of the transaction, particularly in light of the issuance of
our stock in the transaction; (vii) our financial reporting including
those resulting from the adoption of new accounting pronouncements and
associated system implementations in the context of the transaction, our
ability to forecast financial results of the combined company and that
we may be unable to successfully integrate our reporting system causing
an adverse impact to our ability to make timely and accurate filings
with the SEC and other domestic and foreign governmental agencies;
(viii) the potential impact of the transaction on our future tax rate
and payments based on on our global entity consolidation efforts and our
ability to quickly and cost effectively integrate foreign operations;
(ix) the challenges of integrating the supply chains of the two
companies; and (x) the potential that our due diligence did not uncover
risks and potential liabilities of Polycom;
-- Micro and macro-economic conditions in our domestic and international
markets;
-- the nature and extent of competition we face, particularly subsequent to
the acquisition of Polycom as it relates to our ability to adapt to new
competitors and changing markets;
-- the impact of customer brand preferences on Consumer and Enterprise
market demands;
-- the impact of our adoption of a new corporate branding identity,
including any confusion or harm to our reputation resulting therefrom;
-- the impact of integration, restructuring and disaggregation activities
on our operations, including on employees, suppliers and customers from
the potential or actual announcement of any acquisitions or
divestitures;
-- our ability to realize and achieve positive financial results projected
to arise in the our key markets from UC&C adoption could be adversely
affected by a variety of factors including the following: (i) as UC&C
becomes more widely adopted, the risk that competitors will offer
solutions that will effectively commoditize our products which, in turn,
will reduce the sales prices for those products; (ii) our plans are
dependent upon adoption of our UC&C solution by major platform providers
and any proprietary solutions of competitors, and our influence over
such providers and the marketing in general with respect to the
functionality of their platforms or their product offerings, their rate
of deployment, and their willingness to integrate their platforms and
product offerings with our solutions is limited; (iii) delays or
limitations on our ability to timely introduce solutions that are cost
effective, feature-rich, stable, and attractive to our customers within
forecasted development budgets; (iv) our successful implementation and
execution of new and different processes involving the design,
development, and manufacturing of complex electronic systems composed of
hardware, firmware, and software that works seamlessly and continuously
in a wide variety of environments and with multiple devices; (v) failure
of UC&C solutions generally, or our solutions in particular, to be
adopted with the breadth and speed we anticipate; (vi) our sales model
and expertise must successfully evolve to support complex integration of
hardware, software, and services with UC&C infrastructure consistent
with changing customer purchasing expectations; (vii) as UC&C becomes
more widely adopted we anticipate that competition for market share will
increase, particularly given that some competitors may have superior
technical and economic resources; (viii) sales cycles for UC&C
deployments are longer and becoming more complex; (ix) our inability to
timely and cost-effectively adapt to changing business requirements may
impact our profitability in this market and our overall margins; and (x)
our failure to expand our technical support capabilities to support the
complex and proprietary platforms in which our UC&C products are and
will be integrated;
-- failure to match production to demand given long lead times and the
difficulty of forecasting unit volumes and acquiring the component parts
and materials to meet demand without having excess inventory or
incurring cancellation charges;
-- volatility in prices and availability of components from our suppliers,
including our manufacturers located in APAC, have in the past and could
in the future negatively affect our profitability and/or market share;
-- fluctuations in foreign exchange rates;
-- new or greater tariffs on our products;
-- the bankruptcy or financial weakness of distributors or key customers,
or the bankruptcy of or reduction in capacity of our key suppliers;
-- additional risk factors including: interruption in the supply of
sole-sourced critical components, continuity of component supply at
costs consistent with our plans, and the inherent risks of our
substantial foreign operations; and
-- seasonality in one or more of our product categories.
For more information concerning these and other possible risks, please refer to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 9, 2018 and other filings with the Securities and Exchange Commission, as well as recent press releases. The Securities and Exchange Commission filings can be accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html.
Financial Summaries
The following related charts are provided:
-- Summary Unaudited Condensed Consolidated Financial Statements
-- Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
-- Unaudited Reconciliations of GAAP Measures to Trailing Twelve Months
EBITDA
-- Unaudited Reconciliations of GAAP Measures to Non-GAAP Combined
Comparative Measures
About Poly
Poly is a global communications company that powers meaningful human connection and collaboration. Poly combines legendary audio expertise and powerful video and conferencing capabilities to overcome the distractions, complexity and distance that make communication in and out of the workplace challenging. Poly believes in solutions that make life easier when they work together and with our partner's services. Our headsets, software, desk phones, audio and video conferencing, analytics and services are used worldwide and are a leading choice for every kind of workspace. For more information, please visit: www.poly.com.
Poly and the propeller design are trademarks of Plantronics, Inc. All other trademarks are the property of their respective owners.
PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Twelve Months Ended
March 31,
March 31,
2018 2019 2018 2019
Net revenues:
Net product revenues $
216,143 $
408,757 $
856,903 $
1,510,769
Net services revenues 59,730 163,765
Total net revenues 216,143 468,488 856,903 1,674,535
Cost of revenues:
Cost of product revenues 102,068 226,008 417,788 902,624
Cost of service revenues 25,949 77,771
Total cost of revenues 102,068 251,957 417,788 980,395
Gross profit 114,075 216,531 439,115 694,140
Gross profit % 52.8 46.2 51.2 41.5
%
%
%
%
Operating expenses:
Research, development, and
engineering 21,791 61,477 84,193 201,886
Selling, general, and
administrative 59,265 161,325 229,390 567,878
(Gain) loss, net from
litigation settlements (125) 1,005 (420) 975
Restructuring and other related
charges 13 11,983 2,451 32,694
Total operating expenses 80,944 235,790 315,614 803,433
Operating income 33,131 (19,259) 123,501 (109,293)
Operating income % 15.3 (4.1) 14.4 (6.5)
%
%
%
%
Interest expense (7,393) (26,748) (29,297) (83,000)
Other non-operating income,
net 793 2,870 6,023 6,601
Income before income taxes 26,531 (43,137) 100,227 (185,692)
Income tax expense (benefit) 16,677 (21,548) 101,096 (50,131)
Net income (loss) $
9,854 $
(21,589) $
(869) $
(135,561)
% of net revenues 4.6 (4.6) (0.1) (8.1)
%
%
%
%
Earnings per common share:
Basic $
0.30 $
(0.55) $
(0.03) $
(3.61)
Diluted $
0.29 $
(0.55) $
(0.03) $
(3.61)
Shares used in computing
earnings per common share:
Basic 32,231 39,089 32,345 37,569
Diluted 32,924 39,089 32,345 37,569
Effective tax rate 62.9 50.0 100.9 27.0
%
%
%
%
---
PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31, March 31,
2018 2019
ASSETS
Cash and cash equivalents $
390,661 $
202,509
Short-term investments 269,313 13,331
Total cash, cash equivalents, and
short-term investments 659,974 215,840
Accounts receivable, net 152,888 337,671
Inventory, net 68,276 177,146
Other current assets 18,588 50,489
Total current assets 899,726 781,146
Property, plant, and equipment, net 142,129 204,826
Purchased intangibles, net 825,675
Goodwill 15,498 1,278,380
Deferred tax and other assets 19,534 26,508
Total assets $
1,076,887 $
3,116,535
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $
45,417 $
129,514
Accrued liabilities 80,097 398,715
Total current liabilities 125,514 528,229
Long-term debt, net of issuance costs 492,509 1,640,802
Long-term income taxes payable 87,328 83,121
Other long-term liabilities 18,566 142,696
Total liabilities 723,917 2,394,848
Stockholders' equity 352,970 721,687
Total liabilities and stockholders'
equity $
1,076,887 $
3,116,535
PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended Twelve Months Ended
March 31,
March 31,
2018 2019 2018 2019
Cash flows from operating
activities
Net Income $
9,854 $
(21,589) $
(869) $
(135,561)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 5,284 58,606 21,178 201,369
Amortization of debt issuance cost 363 1,405 1,450 4,593
Stock-based compensation 7,912 11,225 33,959 41,934
Deferred income taxes (3,026) 18,181 7,464 (21,806)
Provision for excess and obsolete
inventories 1,443 2,505 3,456 7,386
Restructuring charges 13 11,699 2,451 32,410
Cash payments for restructuring
charges (31) (18,035) (2,942) (29,257)
Other operating activities 340 570 (305) 9,640
Changes in assets and liabilities:
Accounts receivable, net (9,085) 25,631 (12,238) (10,307)
Inventory, net (3,732) (18,200) (13,309) (7,182)
Current and other assets 586 291 (2,480) 30,747
Accounts payable 101 (12,861) 2,884 3,658
Accrued liabilities 11,531 (11,006) (4,164) 61,671
Income taxes 18,226 (51,617) 84,613 (73,248)
Cash provided by operating
activities $
39,779 $
(3,196) $
121,148 $
116,048
Cash flows from investing
activities
Proceeds from sale of investments 143,164 5,501 197,575 131,300
Proceeds from maturities of
investments 64,674 211,663 131,017
Purchase of investments (140,441) (124) (373,281) (822)
Acquisitions, net of cash acquired (1,642,241)
Capital expenditures (3,065) (10,649) (12,468) (26,797)
Cash provided by (used for)
investing activities $
64,332 $
(5,272) $
23,489 $
(1,407,543)
Cash flows from financing
activities
Repurchase of common stock (33) (8,397) (52,948) (13,177)
Employees' tax withheld and paid
for restricted stock and
restricted stock units (243) (207) (11,429) (14,070)
Proceeds from issuances under
stock-based compensation plans 10,481 805 23,927 15,730
Proceeds from revolving line of
credit 8,000
Repayments of revolving line of
credit (8,000)
Repayments of long-term debt (103,188) (103,188)
Proceeds from debt issuance, net 1,244,713
Payment of cash dividends (4,988) (5,927) (19,996) (22,880)
Cash provided by (used for)
financing activities $
5,217 $
(116,914) $
(60,446) $
1,107,128
Effect of exchange rate changes on
cash and cash equivalents 1,040 (265) 4,500 (3,784)
Net increase (decrease) in cash and
cash equivalents 110,368 (125,647) 88,691 (188,152)
Cash and cash equivalents at
beginning of period 280,293 328,156 301,970 390,661
Cash and cash equivalents at end of
period $
390,661 $
202,509 $
390,661 $
202,509
PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
Three Months Ended Twelve Months Ended
March 31,
March 31,
2018 2019 2018 2019
GAAP Net revenues $
216,143 $
468,488 $
856,903 $
1,674,535
Deferred revenue purchase
accounting - 19,316 84,824
Non-GAAP Net revenues $
216,143 $
487,804 $
856,903 $
1,759,359
GAAP Gross profit $
114,075 $
216,531 $
439,115 $
694,140
Purchase accounting
amortization - 31,118 114,361
Inventory valuation
adjustment - 30,395
Deferred revenue purchase
accounting - 19,316 84,824
Acquisition and
integration fees - 435 1,056
Stock-based compensation 913 1,073 3,622 4,176
Other adjustments - 1,585
Non-GAAP Gross profit $
114,988 $
268,473 $
444,322 $
928,952
Non-GAAP Gross profit % 53.2 55.0 51.9 52.8
%
%
%
%
GAAP Research,
development, and
engineering $
21,791 $
61,477 $
84,193 $
201,886
Stock-based compensation (1,913) (3,822) (8,071) (11,699)
Acquisition and
integration fees - (86) (237)
Purchase accounting
amortization - (80)
Non-GAAP Research,
development, and
engineering $
19,878 $
57,569 $
76,042 $
189,950
GAAP Selling, general,
and administrative $
59,265 $
161,325 $
229,390 $
567,878
Acquisition and
integration fees (6,252) (13,802) (6,252) (67,360)
Purchase accounting
amortization - (15,281) (45,838)
Stock-based compensation (5,086) (6,330) (22,266) (26,059)
Rebranding costs - (5,192) (5,192)
Other adjustments - (549)
Non-GAAP Selling,
general, and
administrative $
47,927 $
120,720 $
200,323 $
423,429
GAAP Operating expenses $
80,944 $
235,790 $
315,614 $
803,433
Acquisition and
integration fees (6,252) (13,888) (6,252) (67,597)
Purchase accounting
amortization - (15,281) (80) (45,838)
Stock-based compensation (6,999) (10,152) (30,337) (37,758)
Restructuring and other
related charges (13) (11,983) (2,451) (32,694)
Rebranding costs - (5,192) (5,192)
Other adjustments - (1,005) (549) (1,005)
Non-GAAP Operating
expenses $
67,680 $
178,289 $
275,945 $
613,349
( )
PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)
Three Months Ended
Twelve Months Ended
March 31,
March 31,
2018 2019 2018 2019
GAAP Operating income $
33,131 $
(19,259) $
123,501 $
(109,293)
Purchase accounting
amortization 46,399 80 160,199
Inventory valuation
adjustment 30,395
Deferred revenue
purchase accounting 19,316 84,824
Acquisition and
integration fees 6,252 14,323 6,252 68,653
Stock-based
compensation 7,912 11,225 33,959 41,934
Restructuring and
other related charges 13 11,983 2,451 32,694
Rebranding costs 5,192 5,192
Other adjustments 1,005 2,134 1,005
Non-GAAP Operating
income $
47,308 $
90,184 $
168,377 $
315,603
GAAP Net income $
9,854 $
(21,589) $
(869) $
(135,561)
Purchase accounting
amortization 46,399 80 160,199
Inventory valuation
adjustment 30,395
Deferred revenue
purchase accounting 19,316 84,824
Acquisition and
integration fees 6,252 14,323 6,252 68,653
Stock-based
compensation 7,912 11,225 33,959 41,934
Restructuring and
other related charges 13 11,983 2,451 32,694
Rebranding costs 5,192 5,192
Other adjustments (1,578) (1) 2,134 (2) (1,578) (1)
Income tax effect of
above items (2,572) (16,938) (9,016) (73,872)
Income tax effect of
unusual tax items 13,142 (3) (11,557) 4 82,080 5 (16,944) 4
Non-GAAP Net income $
34,601 $
56,776 $
117,071 $
195,936
GAAP Diluted earnings
per common share $
0.29 $
(0.55) $
(0.03) $
(3.61)
Purchase accounting
amortization 1.17 4.19
Inventory valuation
adjustment 0.79
Deferred revenue
purchase accounting 0.49 2.22
Stock-based
compensation 0.24 0.28 1.03 1.10
Acquisition and
integration fees 0.19 0.36 0.19 1.79
Restructuring and
other related charges 0.30 0.07 0.85
Rebranding costs 0.13 0.14
Other adjustments (0.04) 0.07 (0.04)
Income tax effect 0.32 (0.73) 2.22 (2.37)
Effect of
participating
securities 0.01
Effect of anti-
dilutive securities 0.03 0.06
Non-GAAP Diluted
earnings per common
share $
1.05 $
1.44 $
3.55 $
5.12
Shares used in diluted earnings per common share calculation:
GAAP 32,924 39,089 32,345 37,569
non-GAAP 32,924 39,523 32,976 38,271
---
(1) Excluded amounts represent
immaterial losses from
litigation and gains from non-
recurring sales of investments.
(2) Excluded amounts represent
immaterial adjustments for loss
on sale of assets and write off
of indirect tax assets and
executive transition costs.
(3) Excluded amounts represent $13.0
million due to change in tax
law and the release of tax
reserves.
4 Excluded amounts primarily
represent the release of tax
reserves as a result of legal
entity integration activities.
5 Excluded amounts represent $89.4
million due to change in tax
law, immaterial tax benefits
resulting from the correction
of an immaterial error in the
first quarter of fiscal year
2018, and the release of tax
reserves.
PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)(1)
Three Months Ended Twelve Months Ended
March 31,
March 31,
2018 2019 2018 2019
GAAP Operating income $
33,131 $
(19,259) $
123,501 $
(109,293)
Inventory valuation
adjustment - 30,395
Deferred revenue
purchase accounting - 19,316 84,824
Acquisition and
integration fees 6,252 14,323 6,252 68,653
Stock-based
compensation 7,912 11,225 33,959 41,934
Restructuring and
other related charges 13 11,983 2,451 32,694
Rebranding costs - 5,192 5,192
Other adjustments - 1,005 2,134 1,005
Depreciation and
amortization 5,284 58,606 21,178 201,369
Adjusted EBITDA $
52,592 $
102,391 $
189,475 $
356,773
(1) This table reflects as-
reported results in both
current and historical
periods. Twelve months
ended March 31, 2019
results reflect three
quarters of Polycom results
due to the completion the
acquisition of Polycom on
July 2, 2018. Prior year
periods do reflect no
Polycom results.
PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP OPERATING INCOME TO COMBINED COMPARATIVE TRAILING TWELVE MONTHS ADJUSTED EBITDA
($ in thousands)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
Three Months Ended Twelve Months Ended
June 30, September 30, December 31, March 31, March 31,
2018(1) 2018 2018 2019 2019
Plantronics GAAP
operating income $
20,649 $
(85,976) $
(24,707) $
(19,259) $
(109,293)
Polycom GAAP operating
income(2) (30,589) N/A N/A N/A (30,589)
Combined comparative
operating income
before adjustments (9,940) (85,976) (24,707) (19,259) (139,882)
Deferred revenue
purchase accounting - 36,585 28,923 19,316 84,824
Inventory valuation
adjustment - 30,395 30,395
Acquisition and
integration fees 12,901 26,253 22,274 14,323 75,751
Stock-based
compensation 8,150 10,840 11,719 11,225 41,934
Restructuring and
other related charges 2,847 7,261 12,130 11,983 34,221
Rebranding costs - 5,192 5,192
Other adjustments(3) 43,446 1,005 44,451
Depreciation and
amortization 29,231 82,398 55,117 58,606 225,352
Adjusted EBITDA $
86,635 $
107,756 $
105,456 $
102,391 $
402,238
(1) Polycom results shown in these
periods are prior to the close of
the acquisition on July 2, 2018.
These results are shown here to
arrive at combined comparative
historical results.
(2) Prepared in accordance with U.S.
GAAP and Polycom's significant
accounting policies prior to the
closing of the acquisition on July
2, 2018, and further adjusted in
accordance with U.S. GAAP for
subsequent events occurring after
the balance sheet date of June 30,
2018. Refer to footnote 3 for
further information.
(3) Includes losses from litigation
settlements and immaterial
adjustments to conform historical
Polycom results to Plantronics
non-GAAP policy. In the period
ended June 30, 2018, this includes
litigation settlements of
approximately $37 million related
to the settlement of a previously
disclosed FCPA matter and
approximately $6 million related
other legal settlements, both of
which were recognized as
subsequent events. More
information on these and other
legal matters is available in Note
7. Commitments and Contingencies
within our Form 10-Q filed on
February 6, 2019.
PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP COMBINED COMPARATIVE NET REVENUES
($ in thousands)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
Three Months Ended Twelve Months Ended
June 30, September 30, December 31, March 31, March 31,
2018 2018 2018 2019 2019
Enterprise
Headsets $
167,642 $
169,978 $
173,479 $
169,783 $
680,882
Consumer
Headsets 53,667 58,053 69,665 48,432 229,817
Voice(1) 106,280 121,309 116,700 106,577 450,866
Video(1) 92,001 85,922 85,597 83,966 347,486
Services(1) 80,829 47,807 56,228 59,730 244,594
Deferred
revenue
purchase
accounting - 36,585 28,923 19,316 84,824
Non-GAAP net
revenue $
500,419 $
519,654 $
530,592 $
487,804 $
2,038,469
(1) Voice, Video, and Services
revenue categories were
introduced with the
acquisition of Polycom on July
2, 2018. Historical Polycom
revenues in the three months
ended June 30, 2018 period are
included in these results to
arrive at combined comparative
net revenues for the three
months ended June 30, 2018 and
twelve months ended March 31,
2019.
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SOURCE Plantronics, Inc.
