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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):
November 6, 2018

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 November 6, 2018, 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 2019, which ended on September 30, 2018, 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 November 6, 2018, the Company announced in its press release titled "Plantronics Announces Second Quarter Fiscal Year 2019 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 10, 2018 to stockholders of record at the close of business on November 20, 2018.

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: 
November 6, 2018
PLANTRONICS, INC.
 
 
 
 
 
 
By:
/s/ Pamela Strayer
 
 
Name:
Pamela Strayer
 
 
Title:
Executive Vice President and Chief Financial Officer



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


395660874_pltlogopra67.jpg
PRESS RELEASE
INVESTOR CONTACT:
Mike Iburg
Vice President, Investor Relations
(831) 458-7533
MEDIA CONTACT:
Jim Cullinan
Vice President, Marketing Buzz and Brand
(408) 586-3920


Plantronics Announces Second Quarter Fiscal Year 2019 Financial Results
Polycom acquisition doubles net revenues; Voice and Headsets drive comparative y/y growth

SANTA CRUZ, Calif., - November 6, 2018 - Plantronics, Inc. (NYSE: PLT) today announced second quarter results for the period ending September 30, 2018. On July 2, 2018, Plantronics completed the acquisition of Polycom, which is reflected in these results. Highlights of the second quarter include the following (comparisons are against the second quarter Fiscal Year 2018):
  
GAAP net revenues were $483 million, growing over 100% from the prior year period as a result of the Polycom acquisition. GAAP net revenues were negatively impacted by $37 million of purchase accounting adjustments made at the time of the Polycom acquisition under U.S. GAAP. The revenue guidance range provided to investors on August 7, 2018, excluded the impact of purchase accounting. Adjusting for the purchase accounting impact, net revenues for the second fiscal quarter were within the guidance range of $500 million to $530 million.
GAAP gross margin was 31.6% compared with 51.2%.
Non-GAAP gross margin was 49.7% compared with 51.6%. Excluding the revenue impact of purchase accounting adjustments, which reduced gross margins by 3.5%, comparative gross margins were within the long-term target range of 52% - 54%.
GAAP operating income was $(86.0) million compared with $30.2 million.
Non-GAAP operating income was $59.7 million compared with $39.4 million. Excluding the revenue impact of purchase accounting adjustments, operating income was above the guidance range for the quarter of $74 million to $86 million.
GAAP diluted earnings per share ("EPS") were $(2.21) compared with $0.59.
Non-GAAP diluted EPS was $0.80, flat to the prior year quarter. Excluding the revenue impact of purchase accounting adjustments, which reduced non-GAAP diluted EPS by $0.71, non-GAAP diluted EPS were above the guidance range for the quarter of $1.00 to $1.25.

Performance Against August 7, 2018 Guidance
 
Q2 FY19 Non-GAAP Adjusted for Purchase Accounting
Q2 FY19 Guidance Range
Net Revenue
$520M
$500M - $530M
Operating Income
$96M
$74M - $86M
Diluted EPS
$1.51
$1.00 - $1.25

Results in the above table are shown on a non-GAAP basis, excluding purchase accounting adjustments, which is consistent with the guidance issued in the Business Outlook section of the August 7, 2018 earnings press release. For further information on reconciling these results to Plantronics GAAP results for the quarter refer to the Revenue Adjustment section below.

Year-over-year GAAP Results
395660874_gaapchartsa01.jpg




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Year-over-year Non-GAAP and Combined Comparative Results*
395660874_nongaapcharts.jpg
395660874_chartlabelsa07.jpg

*To provide results on a comparative basis, Plantronics combined comparative results for the current period adjust our non-GAAP results to exclude purchase accounting adjustments made to net revenue at the time of the Polycom acquisition under U.S. GAAP. For the prior period, combined comparative results include both Plantronics and Polycom non-GAAP results reported in the period. Due to lack of comparability in foreign currency derivatives, interest expense, effective tax rate, and diluted weighted average shares, the Company has not provided historical combined comparative diluted earnings per share. See the tables in the Revenue Adjustment section below and at the end of this press release for the reconciliation of GAAP to non-GAAP and combined comparative results.

Revenue Adjustment

As part of the purchase accounting adjustments made at the time of the acquisition of Polycom under U.S. GAAP, net revenues were reduced by $37 million related to fair value adjustments to deferred revenue. The table below illustrates the impact of non-GAAP and combined comparative adjustments to the condensed consolidated statement of operations:

Reconciliation of GAAP to Non-GAAP Further Adjusted for Purchase Accounting

 
GAAP
Purchase Accounting Amortization
Inventory Valuation Adjustments
Acquisition and Integration Fees
Stock-based Compensation
Restructuring and other related charges
Tax Items and diluted shares
Non-GAAP
Revenue purchase accounting adjustments
Non-GAAP as further adjusted for purchase accounting
Net revenues
$
483,069







$
483,069

36,585

$
519,654

Gross profit
$
152,629

55,668

30,395

217

1,073



$
239,982

36,585

$
276,567

Gross margin
31.6
 %






49.7
%
 
53.2
%
Operating Profit
$
(85,976
)
70,947

30,395

26,253

10,840

7,261


$
59,720

36,585

$
96,305

Operating margin
(17.8
)%
 
 
 
 
 
 
12.4
%
 
18.5
%
Diluted EPS
$
(2.21
)
1.78

0.76

0.66

0.27

0.18

(0.64
)
$
0.80

0.71

$
1.51


When reviewing the financial results presented herein, management believes that investors should consider the above impacts in order to better understand the performance of the business and comparability of results, especially in light of the purchase of Polycom and the related significant impact on the company’s financial statements and results of operations.


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Highlights for the Second Quarter of Fiscal Year 2019

“The combined company delivered solid results above the midpoint of our guidance in our first consolidated quarter,” stated Joe Burton, President and Chief Executive Officer. "We believe that these results demonstrate the very beginning of our compelling opportunity as a combined company, driven by unified communications. As we integrate and bring new products to market, leveraging our combined strengths, we further believe that we are positioning the company for both near-term and long-term success."

"We are executing well as we bring the two organizations together, capturing synergies by integrating both the systems and
functions while still delivering on our business objectives," stated Pam Strayer, Executive Vice President and Chief Financial Officer. "The integration continues on track and our initial results as a combined company validate the leverage inherent in the model."

The company announced the Polycom VVX x50 series of business SIP phones providing significant advancements in price/performance with robust features and great value. These next-generation models, coupled with Polycom Device Management Service for Service Providers (PDMS-SP), our cloud-based device management and analytics platform, provide real opportunities for ITSPs worldwide to offers world-class phones to their end customers with the ability to centrally manage, provision, and troubleshoot.

At Microsoft Ignite, the largest Microsoft user conferences, Plantronics announced Elara, a smart phone workstation for mobile-first worker. Elara creates a new level of productivity for workers and comes with one-touch Microsoft Teams integration, a built-in dial pad, convenient headset integration, and can be configured with a wireless charging pad, speakerphone, and handset.
  
The company announced the largest consumer headset product launch in our company's history. These eight new headsets, including the Backbeat Fit 3100, Plantronics first truly wireless sport headset, address the needs of runners, travelers, and gamers with the audio quality and durability that they have come to expect from Plantronics.

Plantronics Announces Quarterly Dividend of $0.15

The Plantronics Board of Directors has declared a quarterly cash dividend of $0.15 per common share, to be paid on December 10, 2018, to all shareholders of record as of the close of market on November 20, 2018.

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 our expectations.

We currently expect the following range of financial results for the third quarter of Fiscal Year 2019 (all amounts assuming currency rates remain stable):

GAAP net revenues of $481 million to $511 million, which are reduced by $29 million due to purchase accounting adjustments;
Non-GAAP operating income of $50 million to $65 million, which is reduced by $29 million due to purchase accounting adjustments;
Assuming a non-GAAP tax rate of 19% and approximately 40 million diluted average weighted shares outstanding:
Non-GAAP diluted EPS of $0.53 to $0.78, which are reduced by $0.57 due to the after-tax effect of $29 million of purchase accounting adjustments.

With respect to our operating income and diluted EPS guidance, we have determined that we are 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, 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 our 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.


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Conference Call and Prepared Remarks

Plantronics is providing an earnings overview in combination with its press release. The overview is offered to provide shareholders and analysts with additional detail for analyzing results in advance of our quarterly conference call. The overview will be available in the Investor Relations section of our corporate website at investor.plantronics.com along with this press release. A reconciliation of our GAAP to non-GAAP and historical combined comparative results is provided in the tables above and at the end of this press release.

We have scheduled a conference call to discuss second quarter of Fiscal Year 2019 financial results. The conference call will take place today, November 6, 2018, 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.

The conference call will also be simultaneously webcast in the Investor Relations section of our website. A replay of the call with the conference ID #55437193 will be available until January 5, 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 gross profit, non-GAAP operating income, non-GAAP net income 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 stock-based compensation, acquisition related expenses, purchase accounting amortization and adjustments, 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 and combined comparative measures primarily because management does not believe they are part of our target operating model. 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 long-term target operating model goals. 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, 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 expectations regarding near and long-term success based on the integration of Polycom and prospects for the products developed; (ii) estimates of GAAP and non-GAAP financial results for the third quarter of Fiscal Year 2019, including net revenues, purchase accounting adjustments, operating income, tax rates, 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:
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&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 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


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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 more complex UC&C 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&C products are and will be integrated;
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 may adversely impact ours or Polycom's relationships with respective customers, suppliers and strategic partners and their operating results and businesses generally (including the diversion of management time on transaction-related issues); (iv) each company may be unable to retain and hire all or a portion of their respective key personnel; (v) legal and regulatory enforcement matters that are pending at Polycom may adversely impact the results of the combined company; (vi) our increased leverage as a result of the transaction will be 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; (vii) 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; (viii) 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; (ix) the potential impact of the transaction on our future tax rate and payments based on the consolidation global entity and our ability to quickly integrate foreign operations; (x) the challenges of integrating the supply chains of the two companies; and (xi) the potential that our due diligence did not uncover risks and potential liabilities of Polycom;
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;
new or greater tariffs on our products;
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 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
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 leader in the communications industry. Plantronics technology creates rich, natural, people-first audio and collaboration experiences so good ideas can be shared and heard-wherever, whenever and however they happen.


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The company’s portfolio of integrated communications and collaboration solutions spans headsets, software, desk phones, audio and video conferencing, analytics and services. Our solutions are used worldwide by consumers and businesses alike and are the leading choice for every kind of workspace. For more information visit plantronics.com.

Plantronics and Polycom are registered trademarks 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
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,
 
 
 
2017
 
2018
 
2017
 
2018
 
Net Revenues:
 
 
 
 
 
 
 
 
 
Net product revenues
 
$
210,300

 
$
435,262

 
$
414,226

 
$
656,571

 
Net services revenues
 

 
47,807

 

 
47,807

 
Total net revenues
 
210,300

 
483,069

 
414,226

 
704,378

 
Cost of revenues:
 
 
 
 
 
 
 
 
 
Cost of product revenues
 
102,668

 
305,477

 
203,311

 
416,943

 
Cost of service revenues
 

 
24,963

 

 
24,963

 
Total cost of revenues
 
102,668

 
330,440

 
203,311

 
441,906

 
Gross profit
 
107,632

 
152,629

 
210,915

 
262,472

 
Gross profit %
 
51.2
%
 
31.6
 %
 
50.9
%
 
37.3
 %
 
Operating expenses:
 
 
 


 
 
 
 
 
Research, development, and engineering
 
19,932

 
57,047

 
41,145

 
80,748

 
Selling, general, and administrative
 
57,696

 
174,297

 
113,929

 
238,500

 
(Gain) loss, net from litigation settlements
 
(104
)
 

 
(280
)
 
(30
)
 
Restructuring and other related charges (credits)
 
(51
)
 
7,261

 
2,522

 
8,581

 
Total operating expenses
 
77,473

 
238,605

 
157,316

 
327,799

 
Operating income
 
30,159

 
(85,976
)
 
53,599

 
(65,327
)
 
Operating income %
 
14.3
%
 
(17.8
)%
 
12.9
%
 
(9.3
)%
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(7,260
)
 
(23,893
)
 
(14,563
)
 
(31,220
)
 
Other non-operating income, net
 
1,826

 
1,610

 
2,740

 
3,606

 
Income before income taxes
 
24,725

 
(108,259
)
 
41,776

 
(92,941
)
 
Income tax expense (benefit)
 
4,772

 
(21,550
)
 
2,995

 
(20,703
)
 
Net income (loss)
 
$
19,953

 
$
(86,709
)
 
$
38,781

 
$
(72,238
)
 
 
 
 
 
 
 
 
 
 
 
% of net revenues
 
9.5
%
 
(17.9
)%
 
9.4
%
 
(10.3
)%
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
$
0.59

 
$
(2.21
)
 
$
1.16

 
$
(2.01
)
 
Diluted
 
$
0.59

 
$
(2.21
)
 
$
1.14

 
$
(2.01
)
 
 
 
 
 
 
 
 
 
 
 
Shares used in computing earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
32,570

 
39,281

 
32,538

 
35,938

 
Diluted
 
32,809

 
39,281

 
33,111

 
35,938

 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
19.3
%
 
(19.9
)%
 
7.2
%
 
(22.3
)%
 


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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
 
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
 
March 31,
 
September 30,
 
 
 
2018
 
2018
 
ASSETS
 
 
 
 
 
Cash and cash equivalents
 
$
390,661

 
$
291,086

 
Short-term investments
 
269,313

 
14,705

 
Total cash, cash equivalents, and short-term investments
 
659,974

 
305,791

 
Accounts receivable, net
 
152,888

 
354,066

 
Inventory, net
 
68,276

 
156,908

 
Other current assets
 
18,588

 
57,584

 
Total current assets
 
899,726

 
874,349

 
Property, plant, and equipment, net
 
142,129

 
216,802

 
Goodwill
 
15,498

 
1,334,534

 
Purchased intangibles, net
 

 
914,455

 
Deferred tax assets
 
17,950

 
5,320

 
Other assets
 
1,584

 
24,647

 
Total assets
 
$
1,076,887

 
$
3,370,107

 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

 
Accounts payable
 
$
45,417

 
$
149,917

 
Accrued liabilities
 
80,097

 
407,777

 
Total current liabilities
 
125,514

 
557,694

 
Long-term debt, net of issuance costs
 
492,509

 
1,726,241

 
Deferred tax liability
 
1,976

 
115,887

 
Long-term income taxes payable
 
87,328

 
95,228

 
Other long-term liabilities
 
16,590

 
84,997

 
Total liabilities
 
723,917

 
2,580,047

 
Stockholders' equity
 
352,970

 
790,060

 
Total liabilities and stockholders' equity
 
$
1,076,887

 
$
3,370,107

 
 
 
 
 
 
 




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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,
 
 
 
2017
 
2018
 
2017
 
2018
 
Cash flows from operating activities
 
 
 
 
 
 
 
 
 
Net Income
 
$
19,953

 
$
(86,709
)
 
$
38,781

 
$
(72,238
)
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
5,361

 
82,398

 
10,743

 
87,646

 
Amortization of debt issuance cost
 
363

 
1,407

 
725

 
1,769

 
Stock-based compensation
 
8,762

 
10,840

 
18,018

 
18,990

 
Deferred income taxes
 
(2,222
)
 
(32,322
)
 
4,384

 
(27,690
)
 
Provision for excess and obsolete inventories
 
371

 
2,196

 
900

 
2,808

 
Restructuring charges (credits)
 
(51
)
 
7,261

 
2,522

 
8,581

 
Cash payments for restructuring charges
 
(524
)
 
(6,560
)
 
(2,429
)
 
(7,395
)
 
Other operating activities
 
(1,644
)
 
9,284

 
(1,141
)
 
9,010

 
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
(5,219
)
 
(29,165
)
 
1,246

 
(23,863
)
 
Inventory, net
 
(3,603
)
 
16,780

 
(5,844
)
 
16,380

 
Current and other assets
 
(1,835
)
 
(61,439
)
 
(4,539
)
 
(58,458
)
 
Accounts payable
 
2,216

 
14,939

 
3,205

 
20,627

 
Accrued liabilities
 
9,079

 
46,805

 
(9,388
)
 
39,505

 
Income taxes
 
5,401

 
64,753

 
(7,890
)
 
56,878

 
Cash provided by operating activities
 
$
36,408

 
$
40,468

 
$
49,293

 
$
72,550

 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Proceeds from sale of investments
 
9,324

 

 
30,895

 
124,640

 
Proceeds from maturities of investments
 
48,363

 

 
106,661

 
131,017

 
Purchase of investments
 
(50,670
)
 
(142
)
 
(133,949
)
 
(536
)
 
Acquisitions, net of cash acquired
 

 
(1,616,692
)
 

 
(1,650,242
)
 
Capital expenditures
 
(3,705
)
 
(3,667
)
 
(6,752
)
 
(7,535
)
 
Cash provided by (used for) investing activities
 
$
3,312

 
$
(1,620,501
)
 
$
(3,145
)
 
$
(1,402,656
)
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Repurchase of common stock
 
(25,730
)
 

 
(39,222
)
 

 
Employees' tax withheld and paid for restricted stock and restricted stock units
 
(304
)
 
(307
)
 
(10,789
)
 
(13,342
)
 
Proceeds from issuances under stock-based compensation plans
 
2,746

 
4,314

 
11,950

 
14,872

 
Proceeds from debt issuance, net


 
1,244,713

 

 
1,244,713

 
Payment of cash dividends
 
(5,043
)
 
(5,968
)
 
(10,057
)
 
(10,982
)
 
Cash provided by (used for) financing activities
 
$
(28,331
)
 
$
1,242,752

 
$
(48,118
)
 
$
1,235,261

 
Effect of exchange rate changes on cash and cash equivalents
 
1,243

 
(2,675
)
 
3,116

 
(4,730
)
 
Net increase in cash and cash equivalents
 
12,632

 
(339,956
)
 
1,146

 
(99,575
)
 
Cash and cash equivalents at beginning of period
 
290,484

 
631,042

 
301,970

 
390,661

 
Cash and cash equivalents at end of period
 
$
303,116

 
$
291,086

 
$
303,116

 
$
291,086

 
 
 
 
 

 
 
 

 


8




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,
 
 
2017
 
2018
 
2017
 
2018
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
107,632

 
$
152,629

 
$
210,915

 
$
262,472

 
Purchase accounting amortization

 
55,668

 

 
55,668

 
Inventory valuation adjustment

 
30,395

 

 
30,395

 
Acquisition and integration fees

 
217

 

 
217

 
Stock-based compensation
890

 
1,073

 
1,792

 
2,036

 
Loss on sale of assets

 

 
899

 

 
Impairment of indirect tax asset

 

 
686

 

 
Non-GAAP Gross profit
$
108,522

 
$
239,982

 
$
214,292

 
$
350,788

 
Non-GAAP Gross profit %
51.6
%
 
49.7
%
 
51.7
%
 
49.8
%
 
 
 
 
 
 
 
 
 
 
GAAP Research, development, and engineering
$
19,932

 
$
57,047

 
$
41,145

 
$
80,748

 
Stock-based compensation
(2,008
)
 
(2,768
)
 
(4,109
)
 
(4,990
)
 
Acquisition and integration fees

 
(56
)
 

 
(56
)
 
Purchase accounting amortization
(17
)
 

 
(80
)
 

 
Non-GAAP Research, development, and engineering
$
17,907

 
$
54,223

 
$
36,956

 
$
75,702

 
 
 
 
 
 
 
 
 
 
GAAP Selling, general, and administrative
$
57,696

 
$
174,297

 
$
113,929

 
$
238,500

 
Acquisition and integration fees

 
(25,980
)
 

 
(31,783
)
 
Purchase accounting amortization

 
(15,279
)
 

 
(15,279
)
 
Stock-based compensation
(5,864
)
 
(6,999
)
 
(12,117
)
 
(11,964
)
 
Executive transition costs
(549
)
 

 
(549
)
 

 
Non-GAAP Selling, general, and administrative
$
51,283

 
$
126,039

 
$
101,263

 
$
179,474

 
 
 
 
 
 
 
 
 
 
GAAP Operating expenses
$
77,473

 
$
238,605

 
$
157,316

 
$
327,799

 
Acquisition and integration fees

 
(26,036
)
 

 
(31,839
)
 
Purchase accounting amortization
(17
)
 
(15,279
)
 
(80
)
 
(15,279
)
 
Stock-based compensation
(7,872
)
 
(9,767
)
 
(16,226
)
 
(16,954
)
 
Executive transition costs
(549
)
 

 
(549
)
 

 
Restructuring and other related (charges) credits
51

 
(7,261
)
 
(2,522
)
 
(8,581
)
 
Non-GAAP Operating expenses
$
69,086

 
$
180,262

 
$
137,939

 
$
255,146

 
 
 
 
 
 
 
 
 
 
     
     


9




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,
 
 
2017
 
2018
 
2017
 
2018
 
GAAP Operating income
$
30,159

 
$
(85,976
)
 
$
53,599

 
$
(65,327
)
 
Purchase accounting amortization
17

 
70,947

 
80

 
70,947

 
Inventory valuation adjustment

 
30,395

 

 
30,395

 
Acquisition and integration fees

 
26,253

 

 
32,056

 
Stock-based compensation
8,762

 
10,840

 
18,018

 
18,990

 
Restructuring and other related charges (credits)
(51
)
 
7,261

 
2,522

 
8,581

 
Loss on sale of assets

 

 
899

 

 
Impairment of indirect tax asset

 

 
686

 

 
Executive transition costs
549





549




 
Non-GAAP Operating income
$
39,436

 
$
59,720

 
$
76,353

 
$
95,642

 
 
 
 
 
 
 
 
 
 
GAAP Net income
$
19,953

 
$
(86,709
)
 
$
38,781

 
$
(72,238
)
 
Purchase accounting amortization
17

 
70,947

 
80

 
70,947

 
Inventory valuation adjustment

 
30,395

 

 
30,395

 
Acquisition and integration fees

 
26,253

 

 
32,056

 
Stock-based compensation
8,762

 
10,840

 
18,018

 
18,990

 
Restructuring and other related charges (credits)
(51
)
 
7,261

 
2,522

 
8,581

 
Loss on sale of assets

 

 
899

 

 
Impairment of indirect tax asset

 

 
686

 

 
Executive transition costs
549

 

 
549

 

 
Income tax effect of above items
(3,066
)
 
(25,736
)
 
(8,511
)
 
(30,602
)
 
Income tax effect of unusual tax items


(1,260
)
(2 
) 
(3,661
)
(1 
) 
(1,359
)
2 

Non-GAAP Net income
$
26,164

 
$
31,991

 
$
49,363

 
$
56,770

 
 
 
 
 
 
 
 
 
 
GAAP Diluted earnings per common share
$
0.59

 
$
(2.21
)
 
$
1.14

 
$
(2.01
)
 
Purchase accounting amortization

 
1.78

 

 
1.93

 
Inventory valuation adjustment

 
0.76

 

 
0.83

 
Stock-based compensation
0.27

 
0.27

 
0.54

 
0.52

 
Acquisition related fees

 
0.66

 

 
0.87

 
Restructuring and other related charges (credits)

 
0.18

 
0.08

 
0.23

 
Executive transition costs
0.02

 

 
0.02

 

 
Loss on sale of assets

 

 
0.03

 

 
Impairment of indirect tax asset

 

 
0.02

 

 
Income tax effect
(0.10
)
 
(0.68
)
 
(0.37
)
 
(0.87
)
 
Effect of participating securities
0.02

 

 
0.03

 

 
Effect of anti-dilutive securities

 
0.04

 

 
0.04

 
Non-GAAP Diluted earnings per common share
$
0.80

 
$
0.80

 
$
1.49

 
$
1.54

 
 
 
 
 
 
 
 
 
 
Shares used in diluted earnings per common share calculation:
GAAP
32,809

 
39,281

 
33,111

 
35,938

 
non-GAAP
32,809

 
39,920

 
33,111

 
36,795

 
1 
Excluded amounts represent tax benefits resulting from the correction of an immaterial error in the first quarter and the release of tax reserves.
2 
Excluded amounts represent tax benefits resulting from the release of tax reserves and tax return true-ups


10





PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP COMBINED MEASURES
($ in millions)
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
 
 
 
 
Three Months Ended
 
 
September 30,
 
 
2017
 
 
 
 
Enterprise Headsets
$
162.9

 
Consumer Headsets
47.4

 
Voice*
113.6

 
Video*
107.7

 
Services*
80.5

 
Combined comparative net revenues
$
512.1

 
 
 
 
Plantronics GAAP Gross profit
$
107.6

 
Polycom GAAP gross profit**
175.5

 
Combined comparative gross profit before adjustments
$
283.1

 
Stock-based compensation
0.9

 
Combined comparative adjusted gross profit
$
284.0

 
Combined comparative adjusted gross profit %
55.5
%
 
 
 
 
Plantronics GAAP Operating income
$
30.2

 
Polycom GAAP Operating income**
57.9

 
Combined comparative operating profit before adjustments
$
88.1

 
Stock-based compensation
7.9

 
Acquisition and integration fees
0.5

 
Purchase accounting amortization
0.7

 
Executive transition costs
0.5

 
Restructuring and other related (charges) credits
0.7

 
Non-recurring legal-related and other matters***
1.4

 
Combined adjusted operating income
$
99.8

 
Combined adjusted operating profit %
19.5
%
 
*
Categories were introduced with the acquisition of Polycom on July 2, 2018. Historical Polycom revenues are shown here to arrive at combined comparative historical net revenues.
**
Prepared in accordance with U.S. GAAP and Polycom's significant accounting policies as noted in Footnote 1. Basis of Presentation and Footnote 2. Summary of Significant Accounting Policies of exhibit 99.2 in form 8-K/A filed by Plantronics on August, 31, 2018.
***
Includes immaterial adjustments to conform historical results to Plantronics non-GAAP policy.




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