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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange act of 1934


Date of Report (Date of earliest event reported):
July 27, 2017

PLANTRONICS, INC.

(Exact name of Registrant as Specified in its Charter)

Delaware
1-12696
77-0207692
(State or Other Jurisdiction of Incorporation)
 (Commission file number)
(I.R.S. Employer Identification No.)

345 Encinal Street
Santa Cruz, California 95060
(Address of Principal Executive Offices including Zip Code)

(831) 426-5858
(Registrant's Telephone Number, Including Area Code)

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 2.02 Results of Operations and Financial Condition

On October 31, 2017, Plantronics, Inc. ("the Company"), a Delaware corporation, issued a press release reporting its results of operations and financial condition for the second quarter of Fiscal Year 2018, which ended on September 30, 2017, a copy of which is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information contained in this Item 2.02 as well as Exhibit 99.1, attached hereto, is intended to be furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 7.01 Regulation FD Disclosure

On October 31, 2017, the Company announced in its press release titled "Plantronics Announces Second Quarter Fiscal Year 2018 Financial Results" that its Board of Directors had declared a cash dividend of $0.15 per share of the Company's common stock, payable on December 8, 2017 to stockholders of record at the close of business on November 20, 2017.

Item 9.01 Financial Statements and Exhibits

The following exhibits are filed as part of this Current Report on Form 8-K:
Exhibit Number
Description






SIGNATURE

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

 
  
 
 
Date: 
October 31, 2017
PLANTRONICS, INC.
 
 
 
 
 
 
By:
/s/ Pamela Strayer
 
 
Name:
Pamela Strayer
 
 
Title:
Senior Vice President and Chief Financial Officer




(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


390871226_pltlogopra36.jpg
PRESS RELEASE
INVESTOR CONTACT:
Greg Klaben
Vice President of Investor Relations
(831) 458-7533
MEDIA CONTACT:
George Gutierrez
Sr. Director, Global Communications & Content Strategy
(831) 458-7537


Plantronics Announces Second Quarter Fiscal Year 2018 Financial Results
Q2 Results Exceed Guidance, Reflecting Record Enterprise Revenue

SANTA CRUZ, Calif., - October 31, 2017 - Plantronics, Inc. (NYSE: PLT) today announced second quarter Fiscal Year 2018 financial results. Highlights of the second quarter include the following (comparisons are against the second quarter Fiscal Year 2017):
  
Net revenues were $210.3 million, a decrease of 2.7% compared with $216.2 million, and above our guidance range of $200 million to $210 million
GAAP gross margin was 51.2% compared with 51.1%
Non-GAAP gross margin was 51.6% compared with 51.4%
GAAP operating income was $30.2 million compared with $32.0 million
Non-GAAP operating income was $39.4 million compared with $42.3 million
GAAP diluted earnings per share (“EPS”) was $0.59 compared with $0.63, and above our guidance range of $0.47 to $0.57
Non-GAAP diluted EPS was $0.80 compared with $0.82, and above our guidance range of $0.61 to $0.71

Year-over-year GAAP Results
390871226_q218ex991_chart-27926.jpg390871226_q218ex991_chart-28960.jpg390871226_q218ex991_chart-29978.jpg390871226_q218ex991_chart-30822.jpg
Year-over-year Non-GAAP Results
390871226_q218ex991_chart-31597.jpg390871226_q218ex991_chart-32462.jpg390871226_q218ex991_chart-33380.jpg

390871226_chartlabels.jpg


A reconciliation between our GAAP and non-GAAP results is provided in the tables at the end of this press release.


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"We have been making investments to capitalize on long-term growth opportunities in software, analytics, and soundscaping that complement our hardware business," stated Joe Burton, President and Chief Executive Officer. "By innovating in these key areas we are deepening our customer relationships by offering intelligent solutions that provide valuable insights."

"Our SaaS and Soundscaping opportunities represent long-term revenue growth for us at favorable margins," stated Pam Strayer, Senior Vice President and Chief Financial Officer. "We expect these opportunities, combined with our continued focus on improving profitability, and the favorable resolution of the GN litigation, to drive improvements to our operating margins in both the short and long term."

Financial Highlights for the Second Quarter Fiscal Year 2018:

Revenue

Total net revenues for the second quarter of Fiscal Year 2018 were $210.3 million, down 2.7%, or $5.9 million compared to the second quarter last year. Enterprise net revenues of $162.9 million were up 5.4%, or $8.4 million, driven by growth of our UC revenues which were partially offset by a slight decline in non-UC headset revenues. Consumer net revenues were $47.4 million, down 23.1%, or $14.2 million, primarily driven by lower stereo Bluetooth revenues and the divestiture of our Clarity business. The continued decline of the mono Bluetooth market also negatively impacted Consumer revenues; however, our market share remains stable.

Total net revenues for the first half of Fiscal Year 2018 of $414.2 million were down 5.7%, or $25.1 million, compared to the first half of Fiscal Year 2017. Enterprise net revenues of $317.5 million were up 2.3%, or $7.1 million. Consumer net revenues were $96.7 million, a decrease of 24.9%, or $32.1 million. The increase in Enterprise revenues was driven by growth in UC revenues partially offset by declines in non-UC headset revenues.

Litigation

On October 18, 2017, we received a favorable verdict in the antitrust action brought by GN Netcom, Inc. in the U.S. District Court for the District of Delaware. Fees related to GN litigation were $6.3 million in the second quarter of Fiscal Year 2018, or an unfavorable impact of 300 basis points on operating margins. In the year-to-date period, GN related fees were $9.6 million, or an unfavorable impact of 240 basis points on operating margins.

“We are thrilled to have received a favorable jury verdict in the GN litigation in Delaware," stated Joe Burton, President and Chief Executive Officer. "We look forward to moving forward through the rest of our fiscal year with greater visibility and clarity, and with validation of our position that Plantronics has always operated fairly and lawfully in a highly competitive marketplace.”

Operating Expense

Total GAAP operating expenses for the second quarter of Fiscal Year 2018 were $77.5 million, down 1.3%, or $1.0 million compared to the prior year period. Total GAAP operating expenses for the first half of Fiscal Year 2018 were $157.3 million, down 1.9%, or $3.0 million compared to the prior year period.

Total Non-GAAP operating expenses for the second quarter of Fiscal Year 2018 were $69.1 million, which was flat compared to the prior year period. Total GAAP operating expenses for the first half of Fiscal Year 2018 were $137.9 million, down 4.3%, or $6.3 million compared to the prior year period.

GAAP and Non-GAAP operating expenses were down and flat, respectively, for the quarter, and down year-to-date, primarily due to lower employee compensation costs, driven primarily by lower variable compensation, as well as savings from restructuring actions and cost control initiatives. These decreases were partially offset by increased expenses related to the GN litigation.

Operating Income

GAAP operating income for the second quarter was $30.2 million, a decrease of 5.6%, or $1.8 million from the prior year quarter. As a percentage of revenues, GAAP operating income for the second quarter was 14.3%, compared to 14.8% in the prior year quarter. GAAP operating income for the first half of Fiscal Year 2018 was $53.6 million, a decrease of 15.2%, or $9.6 million. As a percentage of revenues, GAAP operating income for the first half of Fiscal Year 2018 was 12.9%, compared to 14.4% in the first half of Fiscal Year 2017.



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Non-GAAP operating income for the second quarter was $39.4 million, a decrease of 6.7%, or $2.8 million. As a percentage of revenue, Non-GAAP operating income for the second quarter was 18.8%, compared to 19.6% in the prior year quarter. Non-GAAP operating income for the first half of Fiscal Year 2018 was $76.4 million, a decrease of 5.7%, or $4.6 million. As a percentage of revenues, Non-GAAP operating income was 18.4% in both the first half of Fiscal Year 2018 and 2017.

The decrease in GAAP and Non-GAAP operating income in the quarter- and year-to-date periods was primarily due to lower revenues partially offset by declines in operating expenses, as discussed above.

Earnings Per Share

Beginning in the second quarter of Fiscal Year 2018, we started applying the two-class method of calculating earnings per share for GAAP results. Non-GAAP diluted earnings per share continues to be reported under the treasury stock method.

GAAP diluted EPS for the second quarter was $0.59, down $0.04 and 6.3% compared to the prior year quarter.

Non-GAAP diluted EPS for the second quarter was $0.80, down $0.02 and 2.4% compared to the prior year quarter.

We repurchased approximately 589,000 shares of our common stock in the second quarter of Fiscal Year 2018 for approximately $25.7 million.

Balance Sheet and Cash Flow Highlights

We finished the second quarter of Fiscal Year 2018 with $606 million in cash and investments and generated $36 million in cash flow from operations during the quarter, which was flat compared to the prior year quarter.

Of the $606 million in cash and investments at the end of the second quarter of Fiscal Year 2018, $26 million was held domestically.

Capital expenditures for the second quarter and first half of Fiscal Year 2018 were $3.7 million and $6.8 million, or 1.8% and 1.6% of revenues, respectively. Our long-term expectation for capital expenditures is approximately 2.5% of revenues.

Plantronics Announces Quarterly Dividend of $0.15

We are also announcing that we have declared a quarterly dividend of $0.15 per common share, to be paid on December 8, 2017 to all shareholders of record as of the close of business on November 20, 2017.

Upcoming Events

Plantronics will be presenting at the Raymond James 2017 Technology Investors Conference on December 5, 2017. Information on how to access the presentation webcast can be found at investor.plantronics.com under Upcoming Events.
Business Outlook

The following statements are based on our 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 our expectations.

We currently expect the following range of financial results for the third quarter of Fiscal Year 2018 (all amounts assuming currency rates remain stable):

Net revenues of $215 million to $225 million;
GAAP operating income of $29 million to $34 million;
Non-GAAP operating income of $37 million to $42 million, excluding the impact of $8 million from stock-based compensation.
Assuming approximately 32 million diluted average weighted shares outstanding:
GAAP diluted EPS of $0.55 to $0.65;
Non-GAAP diluted EPS of $0.75 to $0.85; and
Cost of stock-based compensation, effect of participating securities, and GAAP only related tax charges to be approximately $0.20 per diluted share.

Please see our updated Investor Relations Presentation available on our corporate website at investor.plantronics.com.


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We have a “book and ship” business model whereby we fulfill the majority of orders received within 48 hours of receipt of those orders. However, our backlog is occasionally subject to cancellation or rescheduling by our customers on short notice with little or no penalty. Therefore, there is a lack of meaningful correlation between backlog at the end of a fiscal period and net revenues in a succeeding fiscal period.

Our business is inherently difficult to forecast, particularly with continuing uncertainty in regional economic conditions and currency fluctuations, and there can be no assurance that expectations of incoming orders over the balance of the current quarter will materialize.


Conference Call and Prepared Remarks

Plantronics is providing a copy of prepared remarks in combination with its press release. These remarks are offered to provide shareholders and analysts with additional time and detail for analyzing results in advance of our quarterly conference call. The remarks will be available in the Investor Relations section of our website along with this press release.

We have scheduled a conference call to discuss second quarter Fiscal Year 2018 financial results. The conference call will take place today, October 31, 2017 at 2:00 PM (Pacific Time). All interested investors and potential investors in our 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 “Plantronics Conference Call.”  The dial-in from North America is (888) 301-8736 and the international dial-in is (706) 634-7260.

A replay of the call with the conference ID #55437189 will be available until December 31, 2017 at (855) 859-2056 or (800) 585-8367 for callers from North America and at (404) 537-3406 for all other callers. The conference call will also be simultaneously webcast in the Investor Relations section of our corporate website at investor.plantronics.com, and the webcast of the conference call will remain available on our website for one month. A reconciliation between our GAAP and non-GAAP results is provided in the tables at the end of this press release.

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 operating income, non-GAAP net income and non-GAAP diluted EPS which exclude certain non-cash expenses and charges that are included in the most directly comparable GAAP measure. These non-cash charges and expenses include stock-based compensation related to stock options, restricted stock and employee stock purchases made under our employee stock purchase plan, purchase accounting amortization, restructuring and other related charges and credits, asset impairments, executive transition charges, 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 expenses from our non-GAAP measures primarily because management does not believe they are part 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 long-term target operating model goals.  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 or as a substitute for, or superior to, gross margin, 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 belief that innovations in software, analytics and soundscaping will provide valuable insights to our customers and represent long-term revenue growth opportunities at favorable margins; (ii) our expectations that operating margins will improve in the short and long terms based on our focus on profitability, innovations, and resolution of our litigation with GN; (iii) our belief that we will have greater business visibility and clarity as a result of the verdict in the GN litigation; (iv) our expectations for long-term capital expenditures; (vii) estimates of GAAP and non-GAAP financial results for the third quarter of Fiscal Year 2018, including net revenues, operating income and diluted EPS; (viii) our estimates of stock-based compensation, as well as the impact of non-cash expenses on Non-GAAP operating income and diluted EPS for the third quarter of Fiscal Year 2018; and (vii) our estimate of weighted average shares outstanding for the third quarter of Fiscal Year 2018, 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.


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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:
Micro and macro-economic conditions in our domestic and international markets;
our ability to realize and achieve positive financial results projected to arise in the Enterprise market from UC adoption could be adversely affected by a variety of factors including the following: (i) as UC becomes more widely adopted, the risk that competitors will offer solutions that will effectively commoditize our headsets which, in turn, will reduce the sales prices for our headsets; (ii) our plans are dependent upon adoption of our UC solution by major platform providers and strategic partners such as Microsoft Corporation, Cisco Systems, Inc., Avaya, Inc., Alcatel-Lucent, and Huawei, and our influence over such providers 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 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 and software with UC infrastructure consistent with changing customer purchasing expectations; (vii) as UC 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; (vii) (viii) sales cycles for more complex UC deployments are longer as compared to our traditional Enterprise products; (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 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 from our suppliers, including our manufacturers located in China, have in the past and could in the future negatively affect our profitability and/or market share;
fluctuations in foreign exchange rates;
with respect to our stock repurchase program, prevailing stock market conditions generally, and the price of our stock specifically;
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 10, 2017 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
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and Other Unaudited GAAP Data

About Plantronics

Plantronics is an audio pioneer and a global leader in the communications industry. We create intelligent and adaptive solutions that support our customers’ most important needs: experiencing and facilitating simple and clear communications while enjoying distraction-free environments.  Our solutions are used worldwide by consumers and businesses alike, and are an optimal choice for open office environments. From Unified Communications and customer service ecosystems, to data analytics and Bluetooth headsets, Plantronics delivers high-quality communications solutions that our customers count on today, while relentlessly innovating on behalf of their future. For more information visit plantronics.com.


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Plantronics is a registered trademark of Plantronics, Inc. The Bluetooth name and the Bluetooth trademarks are owned by Bluetooth SIG, Inc. and are used by Plantronics, Inc. under license. All other trademarks are the property of their respective owners.


PLANTRONICS, INC. / 345 Encinal Street / P.O. Box 1802 / Santa Cruz, California 95060
831-426-6060 / Fax 831-426-6098


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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2016
 
2017
 
2016
 
2017
 
Net revenues
 
$
216,183

 
$
210,300

 
$
439,289

 
$
414,226

 
Cost of revenues
 
105,737

 
102,668

 
215,770

 
203,311

 
Gross profit
 
110,446

 
107,632

 
223,519

 
210,915

 
Gross profit %
 
51.1
%
 
51.2
%
 
50.9
%
 
50.9
%
 
 
 
 
 


 
 
 
 
 
Research, development, and engineering
 
22,379

 
19,932

 
44,723

 
41,145

 
Selling, general, and administrative
 
56,875

 
57,696

 
112,662

 
113,929

 
(Gain) loss, net from litigation settlements
 
(349
)
 
(104
)
 
4,390

 
(280
)
 
Restructuring and other related charges (credits)
 
(415
)
 
(51
)
 
(1,463
)
 
2,522

 
Total operating expenses
 
78,490

 
77,473

 
160,312

 
157,316

 
Operating income
 
31,956

 
30,159

 
63,207

 
53,599

 
Operating income %
 
14.8
%
 
14.3
%
 
14.4
%
 
12.9
%
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(7,257
)
 
(7,260
)
 
(14,545
)
 
(14,563
)
 
Other non-operating income, net
 
1,340

 
1,826

 
3,692

 
2,740

 
Income before income taxes
 
26,039

 
24,725

 
52,354

 
41,776

 
Income tax expense
 
5,565

 
4,772

 
11,493

 
2,995

 
Net income
 
$
20,474

 
$
19,953

 
$
40,861

 
$
38,781

 
 
 
 
 
 
 
 
 
 
 
% of net revenues
 
9.5
%
 
9.5
%
 
9.3
%
 
9.4
%
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.59

 
$
1.27

 
$
1.16

 
Diluted
 
$
0.63

 
$
0.59

 
$
1.24

 
$
1.14

 
 
 
 
 
 
 
 
 
 
 
Shares used in computing earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
32,281

 
32,570

 
32,269

 
32,538

 
Diluted
 
32,726

 
32,809

 
32,865

 
33,111

 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
21.4
%
 
19.3
%
 
22.0
%
 
7.2
%
 


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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
 
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
 
March 31,
 
September 30,
 
 
 
2017
 
2017
 
ASSETS
 
 
 
 
 
Cash and cash equivalents
 
$
301,970

 
$
303,116

 
Short-term investments
 
178,179

 
197,278

 
Total cash, cash equivalents, and short-term investments
 
480,149

 
500,394

 
Accounts receivable, net
 
141,177

 
139,683

 
Inventory, net
 
55,456

 
60,999

 
Other current assets
 
22,195

 
33,310

 
Total current assets
 
698,977

 
734,386

 
Long-term investments
 
127,176

 
105,251

 
Property, plant, and equipment, net
 
150,307

 
146,830

 
Goodwill and purchased intangibles, net
 
15,577

 
15,498

 
Deferred tax and other assets
 
25,122

 
20,417

 
Total assets
 
$
1,017,159

 
$
1,022,382

 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

 
Accounts payable
 
$
42,885

 
$
45,619

 
Accrued liabilities
 
74,285

 
68,434

 
Total current liabilities
 
117,170

 
114,053

 
Long-term debt, net of issuance costs
 
491,059

 
491,784

 
Long-term income taxes payable
 
11,729

 
11,997

 
Other long-term liabilities
 
15,045

 
16,881

 
Total liabilities
 
635,003

 
634,715

 
Stockholders' equity
 
382,156

 
387,667

 
Total liabilities and stockholders' equity
 
$
1,017,159

 
$
1,022,382

 
 
 
 
 
 
 




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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
 
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2016
 
2017
 
2016
 
2017
 
Cash flows from operating activities
 
 
 
 
 
 
 
 
 
Net Income
 
$
20,474

 
$
19,953

 
$
40,861

 
$
38,781

 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
5,119

 
5,361

 
10,265

 
10,743

 
Amortization of debt issuance cost
 
363

 
363

 
725

 
725

 
Stock-based compensation
 
7,903

 
8,762

 
16,316

 
18,018

 
Deferred income taxes
 
(2,391
)
 
(2,222
)
 
2,499

 
4,384

 
Provision for excess and obsolete inventories
 
902

 
371

 
1,674

 
900

 
Restructuring charges (credits)
 
(415
)
 
(51
)
 
(1,463
)
 
2,522

 
Cash payments for restructuring charges
 
(948
)
 
(524
)
 
(3,736
)
 
(2,429
)
 
Other operating activities
 
1,071

 
(1,644
)
 
(849
)
 
(1,141
)
 
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
(3,837
)
 
(5,219
)
 
(8,366
)
 
1,246

 
Inventory, net
 
384

 
(3,603
)
 
(1,102
)
 
(5,844
)
 
Current and other assets
 
(1,659
)
 
(1,835
)
 
(2,331
)
 
(4,539
)
 
Accounts payable
 
(2,935
)
 
2,216

 
4,120

 
3,205

 
Accrued liabilities
 
11,814

 
9,079

 
10,444

 
(9,388
)
 
Income taxes
 
431

 
5,401

 
(2,305
)
 
(7,890
)
 
Cash provided by operating activities
 
36,276

 
36,408

 
66,752

 
49,293

 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Proceeds from sale of investments
 
51,155

 
9,324

 
125,504

 
30,895

 
Proceeds from maturities of investments
 
29,500

 
48,363

 
63,853

 
106,661

 
Purchase of investments
 
(85,638
)
 
(50,670
)
 
(192,349
)
 
(133,949
)
 
Capital expenditures
 
(6,612
)
 
(3,705
)
 
(14,191
)
 
(6,752
)
 
Cash provided by (used for) investing activities
 
(11,595
)
 
3,312

 
(17,183
)
 
(3,145
)
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Repurchase of common stock
 
(8,189
)
 
(25,730
)
 
(26,828
)
 
(39,222
)
 
Employees' tax withheld and paid for restricted stock and restricted stock units
 
(331
)
 
(304
)
 
(9,123
)
 
(10,789
)
 
Proceeds from issuances under stock-based compensation plans
 
5,019

 
2,746

 
5,752

 
11,950

 
Payment of cash dividends
 
(5,001
)
 
(5,043
)
 
(9,971
)
 
(10,057
)
 
Other financing activities
 
761

 

 
761

 

 
Cash used for financing activities
 
(7,741
)
 
(28,331
)
 
(39,409
)
 
(48,118
)
 
Effect of exchange rate changes on cash and cash equivalents
 
42

 
1,243

 
(971
)
 
3,116

 
Net increase in cash and cash equivalents
 
16,982

 
12,632

 
9,189

 
1,146

 
Cash and cash equivalents at beginning of period
 
227,473

 
290,484

 
235,266

 
301,970

 
Cash and cash equivalents at end of period
 
$
244,455

 
$
303,116

 
$
244,455

 
$
303,116

 
 
 
 
 

 
 
 

 


9




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
 
Six Months Ended
 

September 30,
 
September 30,
 
 
2016
 
2017
 
2016
 
2017
 
GAAP Gross profit
$
110,446

 
$
107,632

 
$
223,519

 
$
210,915

 
Stock-based compensation
778

 
890

 
1,620

 
1,792

 
Loss on sale of assets

 

 

 
899

 
Impairment of indirect tax asset

 

 

 
686

 
Non-GAAP Gross profit
$
111,224

 
$
108,522

 
$
225,139

 
$
214,292

 
Non-GAAP Gross profit %
51.4
%
 
51.6
%
 
51.3
%
 
51.7
%
 
 
 
 
 
 
 
 
 
 
GAAP Research, development, and engineering
$
22,379

 
$
19,932

 
$
44,723

 
$
41,145

 
Stock-based compensation
(2,408
)
 
(2,008
)
 
(4,892
)
 
(4,109
)
 
Purchase accounting amortization
(63
)
 
(17
)
 
(125
)
 
(80
)
 
Non-GAAP Research, development, and engineering
$
19,908

 
$
17,907

 
$
39,706

 
$
36,956

 
 
 
 
 
 
 
 
 
 
GAAP Selling, general, and administrative
$
56,875

 
$
57,696

 
$
112,662

 
$
113,929

 
Stock-based compensation
(4,717
)
 
(5,864
)
 
(9,804
)
 
(12,117
)
 
Executive transition costs
(2,759
)
 
(549
)
 
(2,759
)
 
(549
)
 
Non-GAAP Selling, general, and administrative
$
49,399

 
$
51,283

 
$
100,099

 
$
101,263

 
 
 
 
 
 
 
 
 
 
GAAP Operating expenses
$
78,490

 
$
77,473

 
$
160,312

 
$
157,316

 
Stock-based compensation
(7,125
)
 
(7,872
)
 
(14,696
)
 
(16,226
)
 
Executive transition costs
(2,759
)
 
(549
)
 
(2,759
)
 
(549
)
 
Restructuring and other related (charges) credits
415

 
51

 
1,463

 
(2,522
)
 
Purchase accounting amortization
(63
)
 
(17
)
 
(125
)
 
(80
)
 
Non-GAAP Operating expenses
$
68,958

 
$
69,086

 
$
144,195

 
$
137,939

 
 
 
 
 
 
 
 
 
 
     
     


10




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
 
Six Months Ended
 
 
September 30,
 
September 30,
 
 
2016
 
2017
 
2016
 
2017
 
GAAP Operating income
$
31,956

 
$
30,159

 
$
63,207

 
$
53,599

 
Stock-based compensation
7,903

 
8,762

 
16,316

 
18,018

 
Restructuring and other related charges (credits)
(415
)
 
(51
)
 
(1,463
)
 
2,522

 
Loss on sale of assets

 

 

 
899

 
Impairment of indirect tax asset

 

 

 
686

 
Executive transition costs
2,759



549


2,759



549

 
Purchase accounting amortization
63

 
17

 
125

 
80

 
Non-GAAP Operating income
$
42,266

 
$
39,436

 
$
80,944

 
$
76,353

 
 
 
 
 
 
 
 
 
 
GAAP Net income
$
20,474

 
$
19,953

 
$
40,861

 
$
38,781

 
Stock-based compensation
7,903

 
8,762

 
16,316

 
18,018

 
Executive transition costs
2,759

 
549

 
2,759

 
549

 
Restructuring and other related charges (credits)
(415
)
 
(51
)
 
(1,463
)
 
2,522

 
Loss on sale of assets

 

 

 
899

 
Impairment of indirect tax asset

 

 

 
686

 
Purchase accounting amortization
63

 
17

 
125

 
80

 
Income tax effect of above items
(3,839
)
 
(3,066
)
 
(6,592
)
 
(8,511
)
 
Income tax effect of unusual tax items
(53
)
(1 
) 


(139
)
(1 
) 
(3,661
)
(2 
) 
Non-GAAP Net income
$
26,892

 
$
26,164

 
$
51,867

 
$
49,363

 
 
 
 
 
 
 
 
 
 
GAAP Diluted earnings per common share
$
0.63

 
$
0.59

 
$
1.24

 
$
1.14

 
Stock-based compensation
0.24

 
0.27

 
0.50

 
0.54

 
Executive transition costs
0.08

 
0.02

 
0.08

 
0.02

 
Restructuring and other related charges (credits)
(0.01
)
 

 
(0.04
)
 
0.08

 
Loss on sale of assets

 

 

 
0.03

 
Impairment of indirect tax asset

 

 

 
0.02

 
Income tax effect
(0.12
)
 
(0.10
)
 
(0.20
)
 
(0.37
)
 
Effect of participating securities(3)

 
0.02

 

 
0.03

 
Non-GAAP Diluted earnings per common share
$
0.82

 
$
0.80

 
$
1.58

 
$
1.49

 
 
 
 
 
 
 
 
 
 
Shares used in diluted earnings per common share calculation
32,726

 
32,809

 
32,865

 
33,111

 
(1) 
Excluded amounts represent tax benefits from the release of tax reserves.
(2) 
Excluded amounts represent tax benefits resulting from the correction of an immaterial error in the first quarter and the release of tax reserves.
(3) 
Includes approximately $0.4 million and $0.9 million of net income for the three and six months ended September 30, 2017, respectively, associated with the application of the two-class method for computing diluted earnings per share.






11



Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and other Unaudited GAAP Data
($ in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q117
 
Q217
 
Q317
 
Q417
 
Q118
 
Q218
 
GAAP Gross profit
 
$
113,073

 
$
110,446

 
$
110,180

 
$
107,671

 
$
103,283

 
$
107,632

 
Stock-based compensation
 
842

 
778

 
794

 
830

 
902

 
890

 
Loss on sale of assets
 

 

 

 

 
899

 

 
Impairment of indirect tax asset
 

 

 

 

 
686

 

 
Non-GAAP Gross profit
 
$
113,915

 
$
111,224

 
$
110,974

 
$
108,501


$
105,770

 
$
108,522

 
Non-GAAP Gross profit %
 
51.1
%
 
51.4
%
 
47.6
%
 
51.9
%
 
51.9
%
 
51.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating expenses
 
$
81,822

 
$
78,490

 
$
78,322

 
$
77,660

 
$
79,843

 
$
77,473

 
Stock-based compensation
 
(7,571
)
 
(7,125
)
 
(7,895
)
 
(7,704
)
 
(8,354
)
 
(7,872
)
 
Restructuring and other related (charges) credits
 
1,048

 
415

 
(113
)
 
(1,241
)
 
(2,573
)
 
51

 
Executive transition costs
 

 
(2,759
)
 

 

 

 
(549
)
 
Purchase accounting amortization
 
(62
)
 
(63
)
 
(62
)
 
(63
)
 
(63
)
 
(17
)
 
Non-GAAP Operating expenses
 
$
75,237

 
$
68,958

 
$
70,252

 
$
68,652


$
68,853

 
$
69,086

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating income
 
$
31,251

 
$
31,956

 
$
31,858

 
$
30,011

 
$
23,440

 
$
30,159

 
Stock-based compensation
 
8,413

 
7,903

 
8,689

 
8,534


9,256

 
8,762

 
Restructuring and other related charges (credits)
 
(1,048
)
 
(415
)
 
113

 
1,241

 
2,573

 
(51
)
 
Loss on sale of assets
 

 

 

 

 
899

 

 
Impairment of indirect tax asset
 

 

 

 

 
686

 

 
Executive transition costs
 

 
2,759

 

 

 

 
549

 
Purchase accounting amortization
 
62

 
63

 
62

 
63


63

 
17

 
Non-GAAP Operating income
 
$
38,678

 
$
42,266

 
$
40,722

 
$
39,849


$
36,917

 
$
39,436

 
Non-GAAP Operating income %
 
17.3
%
 
19.6
%
 
17.5
%
 
19.1
%
 
18.1
%
 
18.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Income before income taxes
 
$
26,315

 
$
26,039

 
$
24,963

 
$
24,348

 
$
17,051

 
$
24,725

 
Stock-based compensation
 
8,413

 
7,903

 
8,689

 
8,534


9,256

 
8,762

 
Restructuring and other related charges (credits)
 
(1,048
)
 
(415
)
 
113

 
1,241

 
2,573

 
(51
)
 
Loss on sale of assets
 

 

 

 

 
899

 

 
Impairment of indirect tax asset
 

 

 

 

 
686

 

 
Executive transition costs
 

 
2,759

 

 

 

 
549

 
Purchase accounting amortization
 
62

 
63

 
62

 
63


63

 
17

 
Non-GAAP Income before income taxes
 
$
33,742

 
$
36,349

 
$
33,827

 
$
34,186


$
30,528

 
$
34,002

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Income tax expense (benefit)
 
$
5,928

 
$
5,565

 
$
2,742

 
$
4,831

 
$
(1,777
)
 
$
4,772

 
Income tax effect of above items
 
2,753

 
3,839

 
3,012

 
2,202

 
5,445

 
3,066

 
Income tax effect of unusual tax items
 
86

 
53

 
2,002

 
479

 
3,661

 

 
Non-GAAP Income tax expense
 
$
8,767

 
$
9,457

 
$
7,756

 
$
7,512


$
7,329

 
$
7,838

 
Non-GAAP Income tax expense as a % of Non-GAAP Income before income taxes
 
26.0
%
 
26.0
%
 
22.9
%
 
22.0
%
 
24.0
%
 
23.1
%
 


12



Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and other Unaudited GAAP Data (Continued)
($ in thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q117
 
Q217
 
Q317
 
Q417
 
Q118
 
Q218
 
GAAP Net income
 
$
20,387

 
$
20,474

 
$
22,221

 
$
19,517

 
$
18,828

 
$
19,953

 
Stock-based compensation
 
8,413

 
7,903

 
8,689

 
8,534

 
9,256

 
8,762

 
Restructuring and other related charges (credits)
 
(1,048
)
 
(415
)
 
113

 
1,241

 
2,573

 
(51
)
 
Loss on sale of assets
 

 

 

 

 
899

 

 
Impairment of indirect tax asset
 

 

 

 

 
686

 

 
Executive transition costs
 

 
2,759

 

 

 

 
549

 
Purchase accounting amortization
 
62

 
63

 
62

 
63

 
63

 
17

 
Income tax effect of above items
 
(2,753
)
 
(3,839
)
 
(3,012
)
 
(2,202
)
 
(5,445
)
 
(3,066
)
 
Income tax effect of unusual tax items
 
(86
)
 
(53
)
 
(2,002
)
 
(479
)
 
(3,661
)
 

 
Non-GAAP Net income
 
$
24,975

 
$
26,892

 
$
26,071

 
$
26,674


$
23,199

 
$
26,164

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Diluted earnings per common share
 
$
0.62

 
$
0.63

 
$
0.68

 
$
0.59

 
$
0.57

 
$
0.59

 
Stock-based compensation
 
0.26

 
0.24

 
0.26

 
0.26

 
0.28

 
0.27

 
Restructuring and other related charges (credits)
 
(0.03
)
 
(0.01
)
 

 
0.04

 
0.08

 

 
Loss on sale of assets
 

 

 

 

 
0.03

 

 
Impairment of indirect tax asset
 

 

 

 

 
0.02

 

 
Executive transition costs
 

 
0.08

 

 

 

 
0.02

 
Income tax effect
 
(0.09
)
 
(0.12
)
 
(0.15
)
 
(0.08
)
 
(0.28
)
 
(0.10
)
 
Effect of participating securities
 

 

 

 

 

 
0.02

 
Non-GAAP Diluted earnings per common share
 
$
0.76

 
$
0.82

 
$
0.79

 
$
0.81


$
0.70

 
$
0.80

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares used in diluted earnings per common share calculation
 
32,818

 
32,726

 
32,826

 
33,056

 
33,211

 
32,809

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SUMMARY OF UNAUDITED GAAP DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
($ in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenues from unaffiliated customers:
 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise
 
$
155,897

 
$
154,542

 
$
157,345

 
$
160,870

 
$
154,605

 
$
162,907

 
Consumer
 
67,209

 
61,641

 
75,588

 
48,084

 
49,321

 
47,393

 
Total net revenues
 
$
223,106

 
$
216,183

 
$
232,933

 
$
208,954


$
203,926

 
$
210,300

 
Net revenues by geographic area from unaffiliated customers:
 
 
 
 
 
 
 
 
 
 
 
 
 
Domestic
 
$
128,238

 
$
119,062

 
$
123,719

 
$
111,196

 
$
108,810

 
$
111,095

 
International
 
94,868

 
97,121

 
109,214

 
97,758

 
95,116

 
99,205

 
Total net revenues
 
$
223,106

 
$
216,183

 
$
232,933

 
$
208,954


$
203,926

 
$
210,300

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet accounts and metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
$
133,155

 
$
136,779

 
$
141,297

 
$
141,177

 
$
134,833

 
$
139,683

 
Days sales outstanding (DSO)
 
54

 
57

 
55

 
61

 
60

 
60

 
Inventory, net
 
$
53,912

 
$
52,686

 
$
58,026

 
$
55,456

 
$
57,571

 
$
60,999

 
Inventory turns
 
8.2

 
8.0

 
8.5

 
7.3

 
7.0

 
6.7

 


13
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