Poly Announces Preliminary Fourth Quarter Fiscal Year 2020 Financial Results
SANTA CRUZ, Calif., May 27, 2020 /PRNewswire/ -- Plantronics, Inc. (NYSE: PLT) ("Poly" or the "Company") today announced preliminary fourth quarter and full fiscal year 2020 results for the period ending March 28, 2020. Preliminary highlights of the fourth quarter and full fiscal year include the following:
($ Millions, except percent and per-share data)(1) Q4 FY20 Q4 FY19 YTD FY20 YTD FY19(2)
GAAP Revenue $403 $468 $1,697 $1,675
GAAP Gross Margin (2.6) 46.2 32.5 41.5
% % % %
GAAP Operating Loss ($678) ($19) ($789) ($109)
GAAP Diluted EPS ($16.56) ($0.55) ($20.48) ($3.61)
Cash Flow from Operations $62 ($3) $78 $116
Non-GAAP Revenue $409 $488 $1,731 $1,759
Non-GAAP Gross Margin 49.4 55.0 51.9 52.8
% % % %
Non-GAAP Operating Income $48 $90 $247 $316
Non-GAAP Diluted EPS $0.30 $1.44 $3.13 $5.12
Adjusted EBITDA $60 $102 $293 $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. The Company's
preliminary unaudited financial results include an aggregate impairment charge relating to goodwill and long-lived assets
of approximately $648 million. Due to the complexity of the analysis resulting from economic uncertainty of COVID-19, the
Company is still in the process of finalizing the impairment assessment, including the design and operation of internal
controls, so actual results may differ materially from the preliminary unaudited results provided herein. The Company
expects to complete the impairment analysis and finalize the amount of the impairment charges in connection with the filing
of the Company's Form 10-K for the fiscal year ended March 28, 2020, which is currently expected to be filed on or around
June 3, 2020. The Company is relying on Release No. 34-88465 (the "Order") issued by the Securities and Exchange
Commission (the "SEC") on March 25, 2020, pursuant to Section 36 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act), which provides conditional relief to public companies unable to timely comply with their filing obligations
as a result of the novel coronavirus ("COVID-19") outbreak.
2 YTD FY19 results shown here do not reflect Polycom results for the three months ended June 30, 2018 due to the completion
of the Polycom acquisition on July 2, 2018.
"As the world responds to COVID-19, our better-than-anticipated fourth-quarter performance is a result of the team's dedication to delivering for our customers while safeguarding our employees," said Robert Hagerty, Chairman of the Poly Board of Directors and Interim Chief Executive Officer. "Poly solutions are more essential than ever, and we are well-positioned to meet the increased demand for endpoints that enable a global workforce that can work from anywhere."
Results Compared to February 4, 2020 Guidance
Q4 FY20 Results
Q4 FY20 Guidance Range(3)
GAAP Net Revenue
$403M
$354M - $394M
Non-GAAP Net Revenue
$409M
$360M - $400M
Adjusted EBITDA
$60M
$20M - $45M
Non-GAAP Diluted EPS $0.30
$(0.36) - $0.19
(3)The non-GAAP revenue guidance range shown here excludes the $6.1 million impact of purchase accounting
related to recording deferred revenue at fair value at the time of the acquisition.
"Increased demand for enterprise headsets allowed us to end the quarter with a strong cash balance and favorable working capital position," said Charles Boynton, Executive Vice President and Chief Financial Officer. "To maximize financial flexibility and liquidity, we have suspended the dividend, deferred a voluntary debt prepayment, and are aggressively managing our costs."
Highlights for the Fourth Quarter 2020
-- Demand for enterprise headsets increased in March as customers adjusted
to "work-from-home" mandates, resulting in quarter-end backlog of
approximately six weeks. Headset demand continues to remain elevated.
-- The Company's in-house manufacturing site in Tijuana, Mexico has resumed
production after reconfiguring to implement specific safety protocols.
Although periodic supply chain disruptions continue, the Company is
working with its suppliers to manage component shortage and minimize
production delays.
-- The Company ended fiscal Q4 with $226 million in cash and short-term
investments. In order to maintain maximum financial flexibility and
liquidity, the Company deferred a voluntary debt prepayment and
suspended the quarterly dividend.
-- On February 20, 2020, the Company amended its loan covenants related to
its revolving credit agreement, providing additional covenant headroom
for the remainder of calendar 2020.
-- Recently introduced products include:
-- Blackwire 8225, the first headset to incorporate advanced hybrid
active noise canceling and Poly Acoustic Fence technology to remove
distracting background noise
-- Voyager 4245, a purpose-built Microsoft Teams-certified headset
-- Trio C60 audio conferencing solution, offering flexibility and
versatility in an intuitive package
-- Launched Poly Lens, which combines seamless management and updating
tools with powerful insight into how Poly devices are actually being
used, providing greater control and simplicity to IT administrators.
-- Launched the new Poly Partner Program, bringing more than 15,000
partners from around the world together under one program. The new
program measures partners on more than just financial contribution and
is designed to drive mutual growth and profitability through the sale of
Poly products, solutions, and services.
-- The Company completed the sales of its Consumer Gaming assets.
-- In its fiscal Q1, the Company expect to book a restructuring charge of
$25 million to $35 million primarily related to office closures and
headcount reductions.
Impairment Charge
The Company's preliminary unaudited financial results include a non-cash impairment charge of $180 million relating to the Company's intangible assets and property, plant, and equipment related to long-lived assets in the voice asset group, as well as a non-cash impairment charge of $468 million to its goodwill related to an overall decline in the Company's earnings and a sustained decrease in its share price. Due to the complexity of the analysis resulting from economic uncertainty of COVID-19, the Company is still in the process of finalizing the impairment assessment, including the design and operation of internal controls, so actual results may differ materially from the preliminary unaudited results provided herein. The Company expects to complete the impairment analysis and finalize the amount of the impairment charges in connection with the filing of the Company's Form 10-K for the fiscal year ended March 28, 2020, which is currently expected to be filed on or around June 3, 2020.
The impairment charges do not affect the Company's cash position, cash flow from operations or debt covenants.
Poly Announces Suspension of Quarterly Dividend
On April 9, 2020, the Poly Board of Directors suspended the quarterly cash dividend.
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. Please refer to the Forward Looking Statements Safe Harbor section of this press release below.
The following represents the expected range of financial results for the first quarter 2021 inclusive of factory overhead underutilization due to lower production volumes, incremental freight due to supply chain disruptions, and the cost of factory reconfiguration (all amounts assuming currency rates remain stable):
Q1 FY21 Guidance
GAAP Net Revenue
$330M - $365M
Non-GAAP Revenue
$335M - $370M
Adjusted EBITDA(1)
$25M - $45M
Non-GAAP Diluted EPS1,2
$(0.18) - $0.22
1 Q1 Adjusted EBITDA and non-GAAP diluted EPS guidance excludes estimated intangibles amortization expense
of $32.4 million. 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.
2 EPS guidance assumes approximately 41 million diluted average weighted shares and a non-GAAP effective tax
rate of 18% to 20%.
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 results is provided at the end of this press release.
We have scheduled a webcast to discuss fourth quarter fiscal year 2020 financial results. The webcast will take place today, May 27, 2020, at 2:00 PM (Pacific Time). All interested investors and potential investors in Poly stock are invited to join. To listen to the webcast, please access the webcast link from our Investor Relations website at investor.poly.com.
A replay of the webcast will be available shortly after its conclusion and can be accessed from our Investor Relations website at investor.poly.com.
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP 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. These non-GAAP measures are adjusted from the most directly comparable GAAP measures to exclude, or include where applicable, the effect of purchase accounting on deferred revenue and inventory, charges associated with the optimization of our Consumer product line, stock-based compensation, acquisition related expenses, purchase accounting amortization and adjustments, restructuring and other related charges and credits, impairment charges, rebranding costs, other unusual and/or non-cash charges and credits, 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 adjust these amounts from our non-GAAP measures primarily because management does not believe they are consistent with the development of our target operating model. We believe that the use of non-GAAP 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 financial measures in assessing our performance and when planning, forecasting and analyzing future periods; however, non-GAAP 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.
Forward Looking Statements Safe Harbor
This press 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 our intentions, beliefs, projections, outlook, analyses or current expectations that are subject to many risks and uncertainties. Such forward-looking statements and the associated risks and uncertainties include, among others: (i) our beliefs with respect to the length and severity of the COVID-19 (coronavirus) outbreak, and its impact across our businesses, our operations and global supply chain, including (a) the potential impact on our ability to source necessary component parts from key suppliers and volatility in prices, including risks associated with our manufacturers which could continue to negatively affect our profitability and/or market share (b) our expectations that the virus has caused and will continue to cause, an increase in customer and partner demand, including increased demand in collaboration endpoints due to a global, work from anywhere workforce, (c) expectations related to our ability to timely supply the number of products to fulfill current and future customer demand, (d) the impact of the virus on our distribution partners, resellers, end-user customers and our production facilities, including our ability to obtain alternative sources of supply if our production facility or other suppliers are impacted by future shut downs, (e) the impact if global or regional economic conditions deteriorate further, on our customers and/or partners, including increased demand for pricing accommodations, delayed payments, delayed deployment plans, insolvency or other issues which may increase credit losses, and (f) the complexity of the forecast analysis, including scenario planning and the design and operation of internal controls; and (ii) our belief that we can manufacture or supply products in a timely manner to satisfy orders; (iii) expectations related to our customers' purchasing decisions and our ability to match product production to demand, particularly 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; (iv) risks associated with significant and abrupt changes in product demand which increases the complexity of management's evaluation of potential excess or obsolete inventory; (v) risks associated with the bankruptcy or financial weakness of distributors or key customers, or the bankruptcy of or reduction in capacity of our key suppliers; (vi) risks associated with the potential interruption in the supply of sole-sourced critical components, our ability to move to a dual-source model, and the continuity of component supply at costs consistent with our plans; (vii) expectations that our current cash on hand, additional cash generated from operations, together with sources of cash through our credit facility, either alone or in combination with our election to defer debt repayment until after the first quarter of fiscal year 2021 and our election to suspend our dividend payments, will meet our liquidity needs during and following the unknown duration and impact of the COVID-19 pandemic; (viii) expectations relating to our ability to generate sufficient cash flow from operations to meet our debt covenants and timely repay all principal and interest amounts drawn under our credit facility as they become due; (ix) risks associated with our channel partners' sales reporting, product inventories and product sell through since we sell a significant amount of products to channel partners who maintain their own inventory of our products; (x) risk and uncertainty related to the potential impact on our stock price and investor confidence as a result of the suspension of our dividend payment; (xi) our efforts to execute to drive sales and sustainable profitable revenue growth; (xii) our expectations for new products launches, the timing of their releases and their expected impact on future growth and on our existing products; (xiii) our belief that our new Partner Program will drive growth and profitability for both us and our partners through the sale of our product, services and solutions; (xiv) risks associated with forecasting sales and procurement demands, which are inherently difficult, particularly with continuing uncertainty in regional and global economic conditions; (xv) uncertainties attributable to currency fluctuations, including fluctuations in foreign exchange rates and/or new or greater tariffs on our products; (xvi) our expectations regarding our ability to control costs, streamline operations and successfully implement our various cost-reduction activities and realize anticipated cost savings under such cost-reduction initiatives; (xvii) expectations relating to our quarterly and annual earnings guidance, particularly as economic uncertainty due to COVID-19 puts further pressure on management judgments used to develop forward looking financial guidance and other prospective financial information; (xviii) estimates of GAAP and non-GAAP financial results for the fourth quarter and full Fiscal Year 2020, including net revenues, adjusted EBITDA, tax rates, intangibles amortization, impairment analysis, diluted weighted average shares outstanding and diluted EPS; (xix) our expectations of the impact of the acquisition of Polycom as it relates to our strategic vision and additional market and strategic partnership opportunities for our combined hardware, software and services offerings; (xx) our beliefs regarding the UC&C market, market dynamics and opportunities, and customer and partner behavior as well as our position in the market, including risks associated with the potential failure of our UC&C solutions to be adopted with the breadth and speed we anticipate; (xxi) our belief that the increased adoption of certain technologies and our open architecture approach has and will continue to increase demand for our solutions; (xxii) expectations related to the micro and macro-economic conditions in our domestic and international markets and their impact on our future business; (xxiii) our forecast and estimates with respect to tax matters, including expectations with respect to utilizing our deferred tax assets; (xxiv) our expectations regarding pending and potential future litigation, in addition to other matters discussed in this press release that are not purely historical data, and (xxv) our estimates regarding the amount of the goodwill and long-lived asset impairment charges to be recorded in our fourth quarter results, which are subject to change, including potentially materially, as the Company finalizes the impairment assessment, including the design and operation of internal controls.
We do not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.
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 17, 2019 and other filings with the Securities and Exchange Commission, as well as recent press releases.
Financial Summaries
The following related charts are provided:
-- Summary Unaudited Condensed Consolidated Financial Statements
-- Unaudited Reconciliations of GAAP Measures to Non-GAAP 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.
INVESTOR CONTACT:
Mike Iburg
Vice President, Investor Relations
(831) 458-7533
MEDIA CONTACT:
Edie Kissko
Senior Director and Head of Corporate Communications
(213) 369-3719
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 28, March 30, March 28, March 30,
2020 2019 2020 2019
Net revenues:
Net product revenues $
338,221 $
408,758 $
1,432,736 $
1,510,770
Net services revenues 64,822 59,730 264,254 163,765
Total net revenues 403,043 468,488 1,696,990 1,674,535
Cost of revenues:
Cost of product revenues 391,418 226,008 1,049,826 902,625
Cost of service revenues 21,953 25,949 94,929 77,771
Total cost of revenues 413,371 251,957 1,144,755 980,396
Gross profit (10,328) 216,531 552,235 694,139
Gross profit % (2.6) 46.2 32.5 41.5
%
%
%
%
Operating expenses:
Research, development, and
engineering 47,569 61,477 218,277 201,886
Selling, general, and
administrative 612,478 161,325 1,069,459 567,879
(Gain) loss, net from
litigation settlements 419 1,005 (721) 975
Restructuring and other related
charges 7,080 11,983 54,177 32,694
Total operating expenses 667,546 235,790 1,341,192 803,434
Operating loss (677,874) (19,259) (788,957) (109,295)
Operating loss % (168.2) (4.1) (46.5) (6.5)
%
%
%
%
Interest expense (22,378) (26,748) (92,640) (83,000)
Other non-operating income,
net (563) 2,870 111 6,603
Income before income taxes (700,815) (43,137) (881,486) (185,692)
Income tax benefit (37,995) (21,548) (69,401) (50,131)
Net loss $
(662,820) $
(21,589) $
(812,085) $
(135,561)
% of net revenues (164.5) (4.6) (47.9) (8.1)
%
%
%
%
Loss per common share:
Basic $
(16.56) $
(0.55) $
(20.48) $
(3.61)
Diluted $
(16.56) $
(0.55) $
(20.48) $
(3.61)
Shares used in computing
earnings per common
share:
Basic 40,025 39,089 39,658 37,569
Diluted 40,025 39,089 39,658 37,569
Effective tax rate (5.4) (50.0) (7.9) (27.0)
%
%
%
%
---
PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 28, March 30,
2020 2019
ASSETS
Cash and cash equivalents $
213,879 $
202,509
Short-term investments 11,841 13,332
Total cash, cash equivalents, and short-
term investments 225,720 215,841
Accounts receivable, net 246,835 337,671
Inventory, net 164,527 177,146
Other current assets 47,946 50,488
Total current assets 685,028 781,146
Property, plant, and equipment, net 165,858 204,826
Purchased intangibles, net 466,915 825,675
Goodwill 811,314 1,278,380
Deferred tax and other assets 143,157 26,508
Total assets $
2,272,272 $
3,116,535
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $
102,159 $
129,514
Accrued liabilities 373,666 398,715
Total current liabilities 475,825 528,229
Long-term debt, net of issuance costs 1,621,694 1,640,801
Long-term income taxes payable 98,319 83,121
Other long-term liabilities 144,152 142,697
Total liabilities 2,339,990 2,394,848
Stockholders' equity (67,718) 721,687
Total liabilities and stockholders'
equity $
2,272,272 $
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 28, March 30, March 28, March 30,
2020 2019 2020 2019
Cash flows from operating
activities
Net Loss $
(662,820) $
(21,589) $
(812,085) $
(135,561)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 57,632 58,606 230,262 201,369
Amortization of debt issuance cost 1,340 1,405 5,402 4,593
Stock-based compensation 15,596 11,225 57,095 41,934
Impairment of goodwill and long-
lived assets 648,231 648,231
Deferred income taxes (34,595) (9,945) (97,031) (49,932)
Provision for excess and obsolete
inventories 5,039 2,505 24,115 7,386
Restructuring charges 7,080 11,983 54,177 32,694
Cash payments for restructuring
charges (7,384) (18,241) (37,269) (29,463)
Other operating activities 8,334 570 11,534 9,640
Changes in assets and liabilities:
Accounts receivable, net (786) 25,631 33,848 (10,307)
Inventory, net 42,611 (18,200) (6,709) (7,182)
Current and other assets (288) 291 23,854 30,747
Accounts payable (21,078) (12,861) (31,768) 3,658
Accrued liabilities 165 (11,084) (46,741) 61,593
Income taxes 2,587 (23,491) 21,103 (45,122)
Cash provided (used) by operating
activities $
61,664 $
(3,195) $
78,019 $
116,047
Cash flows from investing
activities
Proceeds from sale of investments 1,996 5,501 2,173 131,300
Proceeds from maturities of
investments 131,017
Purchase of investments (95) (124) (1,067) (822)
Acquisitions, net of cash acquired (1,642,241)
Capital expenditures (5,896) (10,649) (22,880) (26,797)
Proceeds from sale of property,
plant, and equipment and assets 2,550 4,692
held for sale
Cash used for investing activities $
(1,445) $
(5,272) $
(17,082) $
(1,407,543)
Cash flows from financing
activities
Repurchase of common stock (8,397) (13,177)
Employees' tax withheld and paid
for restricted stock and
restricted (222) (207) (9,891) (14,070)
stock units
Proceeds from issuances under
stock-based compensation plans 5,869 805 12,486 15,730
Repayments of long-term debt (103,188) (25,000) (103,188)
Proceeds from debt issuance, net 1,244,713
Payment of cash dividends (6,060) (5,927) (23,970) (22,880)
Cash provided from (used for)
financing activities $
(413) $
(116,914) $
(46,375) $
1,107,128
Effect of exchange rate changes on
cash and cash equivalents (2,748) (266) (3,192) (3,784)
Net increase (decrease) in cash
and cash equivalents 57,058 (125,647) 11,370 (188,152)
Cash and cash equivalents at
beginning of period 156,821 328,156 202,509 390,661
Cash and cash equivalents at end
of period $
213,879 $
202,509 $
213,879 $
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 28, March 30, March 28, March 30,
2020 2019 2020 2019
GAAP Net revenues $
403,043 $
468,488 $
1,696,990 $
1,674,535
Deferred revenue purchase
accounting(1) 6,138 19,316 33,953 84,824
Non-GAAP Net revenues $
409,181 $
487,804 $
1,730,943 $
1,759,359
GAAP Gross profit $
(10,328) $
216,531 $
552,235 $
694,139
Purchase accounting
amortization(2) 31,018 31,118 122,553 114,361
Inventory valuation
adjustment - 30,395
Deferred revenue purchase
accounting(1) 6,138 19,316 33,953 84,824
Consumer optimization4 - 10,415
Integration and
Rebranding costs 42 435 1,211 1,057
Stock-based compensation 998 1,073 3,992 4,176
Impairment Charges 174,235 174,235
Non-GAAP Gross profit $
202,103 $
268,473 $
898,594 $
928,952
Non-GAAP Gross profit % 49.4 55.0 51.9 52.8
%
%
%
%
GAAP Research,
development, and
engineering $
47,569 $
61,477 $
218,277 $
201,886
Stock-based compensation (4,270) (3,822) (16,785) (11,699)
Integration and
Rebranding costs 59 (86) (2,381) (237)
Other adjustments(3) - (542)
Non-GAAP Research,
development, and
engineering $
43,358 $
57,569 $
198,569 $
189,950
GAAP Selling, general,
and administrative $
612,478 $
161,325 $
1,069,459 $
567,879
Integration and
Rebranding costs (2,338) (18,994) (44,625) (72,553)
Purchase accounting
amortization(2) (15,278) (15,281) (61,112) (45,838)
Stock-based compensation (10,328) (6,330) (36,318) (26,059)
Impairment Charges (473,996) (473,996)
Non-GAAP Selling,
general, and
administrative $
110,538 $
120,720 $
453,408 $
423,429
(1) Deferred revenue purchase accounting: Represents the impact
of fair value purchase accounting adjustments related to
deferred revenue
recorded in connection with the acquisition of Polycom on
July 2, 2018. The Company's deferred revenue primarily
relates to Service revenue
associated with non-cancelable maintenance support on
hardware devices which are typically billed in advance and
recognized ratably over
the contract term as those services are delivered. This
adjustment represents the amount of additional revenue that
would have been recognized
during the period absent the write-down to fair value
required under purchase accounting guidelines.
(2) Purchase accounting amortization: Represents the
amortization of purchased intangible assets recorded in
connection with the acquisition
of Polycom on July 2, 2018.
(3) Other adjustments: Excluded amounts represent executive
transition costs.
4 Consumer Optimization: Excluded amounts represent inventory
related reserves associated with optimizing the consumer
product portfolio.
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 28, March 30, March 28, March 30,
2020 2019 2020 2019
GAAP Operating
expenses $
667,546 $
235,790 $
1,341,192 $
803,434
Integration and
Rebranding costs (2,279) (19,080) (47,006) (72,790)
Purchase accounting
amortization(2) (15,278) (15,281) (61,112) (45,838)
Stock-based
compensation (14,598) (10,152) (53,103) (37,758)
Restructuring and
other related charges (7,080) (11,983) (54,176) (32,694)
Impairment Charges (473,996) (473,996)
Other adjustments(3) (419) (1,005) 201 (1,005)
Non-GAAP Operating
expenses $
153,896 $
178,289 $
652,000 $
613,349
GAAP Operating loss $
(677,874) $
(19,259) $
(788,957) $
(109,295)
Purchase accounting
amortization(2) 46,296 46,399 183,665 160,199
Inventory valuation
adjustment - 30,395
Deferred revenue
purchase
accounting(1) 6,138 19,316 33,953 84,824
Consumer optimization4 - 10,415
Integration and
Rebranding costs 2,321 19,515 48,217 73,847
Stock-based
compensation 15,596 11,225 57,095 41,934
Restructuring and
other related charges 7,080 11,983 54,176 32,694
Impairment Charges 648,231 648,231
Other adjustments(3) 419 1,005 (201) 1,005
Non-GAAP Operating
income $
48,207 $
90,184 $
246,594 $
315,603
(1) Deferred revenue purchase accounting: Represents the impact
of fair value purchase accounting adjustments related to
deferred revenue recorded in connection with the acquisition
of Polycom on July 2, 2018. The Company's deferred revenue
primarily relates to Service revenue associated with non-
cancelable maintenance support on hardware devices which are
typically billed in advance and recognized ratably over the
contract term as those services are delivered. This
adjustment
represents the amount of additional revenue that would have
been recognized during the period absent the write-down to
fair value required under purchase accounting guidelines.
(2) Purchase accounting amortization: Represents the amortization
of purchased intangible assets recorded in connection with
the acquisition of Polycom on July 2, 2018.
(3) Other adjustments: Excluded amounts represent immaterial
losses from litigation and gains from non-recurring sales
of
investments. Excluded amounts represent immaterial
adjustments for loss on sale of assets and write off of
indirect tax assets
and executive transition costs.
4 Consumer Optimization: Excluded amounts represent inventory
related reserves associated with optimizing the consumer
product portfolio.
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 28, March 30, March 28, March 30,
2020 2019 2020 2019
GAAP Net loss $
(662,820) $
(21,589) $
(812,085) $
(135,561)
Purchase accounting
amortization(2) 46,296 46,399 183,665 160,199
Inventory valuation
adjustment - 30,395
Deferred revenue
purchase
accounting(1) 6,138 19,316 33,953 84,824
Consumer optimization4 - 10,415
Integration and
Rebranding costs 2,321 19,515 48,217 73,847
Stock-based
compensation 15,596 11,225 57,095 41,934
Restructuring and
other related charges 7,080 11,983 54,176 32,694
Impairment Charges 648,231 648,231
Other adjustments(3) 419 (1,578) (201) (1,578)
Income tax effect of
above items (47,866) (16,938) (92,640) (73,872)
Income tax effect of
unusual tax items (3,503) (3) (11,557) 5 (5,744) (16,946) 5
Non-GAAP Net income $
11,892 $
56,776 $
125,083 $
195,936
GAAP Diluted earnings
per common share $
(16.56) $
(0.55) $
(20.48) $
(3.61)
Purchase accounting
amortization(2) 1.15 1.17 4.59 4.19
Inventory valuation
adjustment - 0.79
Deferred revenue
purchase
accounting(1) 0.15 0.49 0.85 2.22
Consumer optimization4 - 0.26
Stock-based
compensation 0.39 0.28 1.43 1.10
Integration and
Rebranding costs 0.06 0.50 1.21 1.93
Restructuring and
other related charges 0.18 0.30 1.36 0.85
Impairment Charges 16.11 16.21
Other adjustments(3) - (0.04) (0.01) (0.04)
Income tax effect (1.18) (0.73) (2.47) (2.37)
Effect of anti-
dilutive securities - 0.02 0.18 0.06
Non-GAAP Diluted
earnings per common $
0.30 $
1.44 $
3.13 $
5.12
share
Shares used in diluted earnings per
common share calculation:
GAAP 40,025 39,089 39,658 37,569
non-GAAP 40,235 39,523 39,978 38,271
---
(1) Deferred revenue purchase accounting: Represents the impact
of fair value purchase accounting adjustments related to
deferred
revenue recorded in connection with the acquisition of
Polycom on July 2, 2018. The Company's deferred revenue
primarily relates to
Service revenue associated with non-cancelable maintenance
support on hardware devices which are typically billed in
advance and
recognized ratably over the contract term as those services
are delivered. This adjustment represents the amount of
additional revenue
that would have been recognized during the period absent the
write-down to fair value required under purchase accounting
guidelines.
(2) Purchase accounting amortization: Represents the amortization
of purchased intangible assets recorded in connection with
the
acquisition of Polycom on July 2, 2018.
(3) Other adjustments: Excluded amounts represent immaterial
losses from litigation and gains from non-recurring sales
of investments.
Excluded amounts represent immaterial adjustments for loss on
sale of assets and write off of indirect tax assets and
executive transition
costs.
4 Consumer Optimization: Excluded amounts represent inventory
related reserves associated with optimizing the consumer
product
portfolio.
5 Excluded amounts primarily represent the release of tax
reserves as a result of legal entity integration activities.
PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
Three Months Ended Twelve Months
Ended
March 30, June 29, September 28, December 28, March 28, March 28,
2019 2019 2019 2019 2020 2020
GAAP Net loss $
(21,589) $
(44,871) $
(25,910) $
(78,483) $
(662,820) $
(812,084)
Tax provision (21,548) (7,577) (4,122) (19,708) (37,995) (69,402)
Interest Expense 26,748 23,932 23,797 22,533 22,378 92,640
Other Income and Expense (2,870) (333) 625 (967) 562 (113)
Deferred revenue purchase 19,316 12,159 8,524 7,131 6,138 33,952
accounting(1)
Consumer optimization(3) 10,415 10,415
Integration and Rebranding 19,515 25,890 11,329 8,677 2,321 48,217
costs
Stock-based compensation 11,225 12,904 14,693 13,902 15,596 57,095
Restructuring and other related 11,983 19,525 5,847 21,724 7,080 54,176
charges
Impairment charges 648,231 648,231
Other adjustments(2) 1,005 (1,162) 542 419 (201)
Depreciation and amortization 58,606 57,698 57,376 57,556 57,632 230,262
Adjusted EBITDA $
102,391 $
98,165 $
92,701 $
42,780 $
59,542 $
293,188
(1) Deferred revenue purchase accounting: Represents the
impact of fair value purchase accounting adjustments
related to deferred revenue recorded in connection with
the
acquisition of Polycom on July 2, 2018. The Company's
deferred revenue primarily relates to Service revenue
associated with non-cancelable maintenance support on
hardware
devices which are typically billed in advance and
recognized ratably over the contract term as those
services are delivered. This adjustment represents the
amount of additional
revenue that would have been recognized during the period
absent the write-down to fair value required under
purchase accounting guidelines.
(2) Other adjustments: Excluded amounts represent immaterial
losses from litigation and gains from non-recurring
sales of investments. Excluded amounts represent
immaterial
adjustments for loss on sale of assets and write off of
indirect tax assets and executive transition costs.
(3) Consumer Optimization: Excluded amounts represent
inventory related reserves associated with optimizing
the consumer product portfolio.
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SOURCE Plantronics, Inc.
