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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):
February 5, 2019

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 February 5, 2019, Plantronics, Inc. ("the Company"), a Delaware corporation, issued a press release reporting its results of operations and financial condition for the third quarter of Fiscal Year 2019, which ended on December 31, 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 February 5, 2019, the Company announced in its press release titled "Plantronics Announces Third 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 March 8, 2019 to stockholders of record at the close of business on February 20, 2019.

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: 
February 5, 2019
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


396629034_pltlogopra67.jpg
PRESS RELEASE
INVESTOR CONTACT:
Mike Iburg
Vice President, Investor Relations
(831) 458-7533
MEDIA CONTACT:
Shannon Shamoon
Manager, Marketing Buzz and Brand
(831) 201-9142


Plantronics Announces Third Quarter Fiscal Year 2019 Financial Results
Growth in Desktop Phones, Audio Conferencing, and Headsets Drive Strong Financial Results; Company Leverages Polycom Acquisition to Expand Into Large New Category - the Huddle Room
SANTA CRUZ, Calif., - February 5, 2019 - Plantronics, Inc. (NYSE: PLT) today announced third quarter results for the period ending December 31, 2018. On July 2, 2018, Plantronics completed the acquisition of Polycom, which is reflected in these results. Highlights of the third quarter include the following (in millions, except percent and per share data, comparisons are against Plantronics' third quarter Fiscal Year 2018):

 
GAAP
YoY Change
 
 
Non-GAAP1
YoY Change
Revenue

$501.7

+122
 %
 
Revenue

$530.6

+134
%
GM%
42.9
%
-750 bps

 
GM%
51.5
%
+70 bps

Op Inc $

($24.7
)
-167
 %
 
Op Inc $

$93.2

+108
%
Diluted EPS

($1.06
)
-31
 %
 
Diluted EPS

$1.36

+34
%
Op CF

$46.7

+59
 %
 
EBITDA

$105.5

+111
%


Performance Against November 6, 2018 Guidance

 
Q3 FY19 Actual Results
Performance
Q3 FY19 Guidance Range2
GAAP Net Revenue
$502M
Exceeded Midpoint
$481M - $511M
Non-GAAP Net Revenue
$531M
Exceeded Midpoint
$510M - $540M
Non-GAAP Operating Income
$93M
At High End
$79M - $94M
Non-GAAP Diluted EPS
$1.36
Exceeded Range
$1.10 - $1.35


“We continue to make progress on our ongoing product roadmap, integration plans, and financial goals, meeting or exceeding our guidance targets, with operating income and EBITDA more than doubling as result of the acquisition,” said Joe Burton, President and Chief Executive Officer. “The launch of Polycom Studio, the first in a family of multi-media video solutions designed specifically for the Huddle Room, is just one example of how we are leveraging our innovative engineering and design to address specific customer needs in this fast-growing segment of the UC&C market.”

“We remain on track to deliver on our cost synergy targets and are pleased by the $45M of run-rate annualized cost synergies achieved to date as we continue to execute on our integration plans,” said Pam Strayer, Executive Vice President and Chief Financial Officer. “Revenue growth in desktop phones, audio conferencing, and headsets, coupled with expense reductions drove strong profitability for the third quarter.”

1For further information on supplemental non-GAAP metrics refer to the Use of Non-GAAP and Comparative Information and Unaudited Reconciliations GAAP Measures to Non-GAAP Measures sections below.

2Non-GAAP guidance ranges shown here have been adjusted to exclude the $28.9 million impact of purchase accounting related to recording deferred revenue at fair value at the time of the acquisition.


1



Highlights for the Third Quarter of Fiscal Year 2019

Double-digit revenue growth in Desktop Phones, Audio Conferencing, UC Headsets, and Consumer Headsets. The rapid adoption of recently introduced products, such as the VVX x50 family of Open SIP desktop phones, were strong contributors to revenue growth.

The Company announced Polycom Studio, the first in a family of video solutions designed specifically for huddle rooms and smaller conference rooms. This plug-and-play USB video bar delivers board-room quality to smaller meeting spaces with robust features, plug-and-play simplicity, and great value. The Company expects to announce new additions to this portfolio in the next several months.

Tom Puorro has joined the Company as Executive Vice President, General Manager, Group Systems. In this role, Puorro will have responsibility for all aspects of voice and video group solutions. Puorro joins Plantronics from Cisco, where he most recently served as VP & GM of Cisco's Unified Communications Technology Group.

In January 2019, the Company made a debt repayment of $50 million on its outstanding Term Loan B and expects to make an additional $50 million repayment by the end of the current March quarter. In addition, as of yesterday's close of market, the Company has repurchased 347 thousand shares of common stock at a total cost of $12.6 million since re-initiating the share repurchase program in November.
  
As of December 31, 2018, the Company had achieved a total of $26 million in annual run-rate synergy capture. Through subsequent actions in January, the Company has captured an additional $19 million as of today's date, for a total of $45 million since the close of the Polycom acquisition. With over half of the first-year cost synergies completed to date, the Company is on track to achieve its first-year cost synergy commitment of $85M on-time and on-target. As of the most recent quarter-end, the Company's trailing twelve month EBITDA was approximately $400 million on a combined comparative basis.

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 March 8, 2019, to all shareholders of record as of the close of market on February 20, 2019.

Business Outlook

The following statements are based on the Company's current expectations, and many of these statements are forward-looking. Actual results are subject to a variety of risks and uncertainties and may differ materially from the Company's expectations.

Plantronics currently expects the following range of financial results for the fourth quarter of Fiscal Year 2019 (all amounts assuming currency rates remain stable):

GAAP net revenues of $456 million to $486 million, which are expected to be reduced by $19 million due to purchase accounting adjustments. Excluding these adjustments, non-GAAP net revenues are expected to be $475 to $505 million.
Changes in foreign currency rates are expected to negatively impact net revenue by approximately $6 million in the March quarter compared to the prior year. Excluding this impact, non-GAAP net revenues are forecasted to grow $9 million or 2% at the midpoint of the guidance range.
Non-GAAP operating income of $75 million to $90 million.
Assuming a non-GAAP tax rate of 19.5% to 20.5% and approximately 40 million diluted average weighted shares outstanding:
Non-GAAP diluted EPS of $1.00 to $1.30.

With respect to Plantronics operating income 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



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

Conference Call and Prepared Remarks

Plantronics is providing an earnings presentation in combination with its press release. The presentation is offered to provide shareholders and analysts with additional detail for analyzing results in advance of the quarterly conference call. The presentation 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 at the end of this press release.

We have scheduled a conference call to discuss third quarter of Fiscal Year 2019 financial results. The conference call will take place today, February 5, 2019, at 2:00 PM (Pacific Time). All interested investors and potential investors in Plantronics 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 and can be accessed from the Investor Relations section of our website. A replay of the call with the conference ID #55437194 will be available until April 4, 2019 at (855) 859-2056 for callers from North America and at (404) 537-3406 for all other callers.

Use of Non-GAAP and Combined Comparative Financial Information

To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP, and where applicable, combined comparative measures of operating results, including non-GAAP net revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income and non-GAAP diluted EPS, which exclude certain unusual or non-cash expenses and charges that are included in the most directly comparable GAAP measure. These unusual or non-cash expenses and charges include the effect, where applicable, of purchase accounting on deferred revenue and inventory, stock-based compensation, acquisition related expenses, purchase accounting amortization and adjustments, restructuring and other related charges and credits, asset impairments, executive transition charges, and the impact of participating securities, all net of any associated tax impact. We also exclude tax benefits from the release of tax reserves, discrete tax adjustments including transfer pricing, tax deduction and tax credit adjustments, and the impact of tax law changes. We exclude these amounts from our non-GAAP and combined comparative measures primarily because management does not believe they are consistent with the development of our target operating model. Combined comparative results refer to the results for periods prior to the Plantronics and Polycom combination, which were prepared by combining the non-GAAP results of as if they had been combined during that period. These prior period results are presented on a non-GAAP as-reported basis, with immaterial adjustments to align the treatment of non-GAAP adjustments for comparative purposes. We believe that the use of non-GAAP and combined comparative financial measures provides meaningful supplemental information regarding our performance and liquidity and helps investors compare actual results with our historical and long-term target operating model goals as well as our performance as a combined company. We believe presenting non-GAAP net revenue provides meaningful supplemental information regarding how management views the performance of the business and underlying performance of our individual product categories. We believe that both management and investors benefit from referring to these non-GAAP and combined comparative financial measures in assessing our performance and when planning, forecasting and analyzing future periods; however, non-GAAP and combined comparative financial measures are not meant to be considered in isolation of, or as a substitute for, or superior to, net revenues, gross margin, operating expenses, operating income, operating margin, net income or EPS prepared in accordance with GAAP.

Safe Harbor

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to: (i) our expectations regarding our ability to successfully achieve anticipated integration synergies; (ii) our expectations for product announcements and releases; (iii) our estimates concerning debt reduction actions and timing; (iv) estimates of GAAP and non-GAAP financial results for the fourth quarter of Fiscal Year 2019, including net revenues, purchase accounting adjustments, operating income, tax rates, the impact of foreign exchange rates on revenues, 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.



3



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 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.


4




For more information concerning these and other possible risks, please refer to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 9, 2018 and other filings with the Securities and Exchange Commission, as well as recent press releases. The Securities and Exchange Commission filings can be accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html.

Financial Summaries

The following related charts are provided:
Summary Unaudited Condensed Consolidated Financial Statements
Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
Unaudited Reconciliations of GAAP Measures to Trailing Twelve Months EBITDA
Unaudited Reconciliations of GAAP Measures to Non-GAAP Combined Comparative Measures

About 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. 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



5



PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
December 31,
 
December 31,
 
 
 
2017
 
2018
 
2017
 
2018
 
Net Revenues:
 
 
 
 
 
 
 
 
 
Net product revenues
 
$
226,534

 
$
445,441

 
$
640,760

 
$
1,102,012

 
Net services revenues
 

 
56,228

 

 
104,035

 
Total net revenues
 
226,534

 
501,669

 
640,760

 
1,206,047

 
Cost of revenues:
 
 
 
 
 
 
 
 
 
Cost of product revenues
 
112,409

 
259,673

 
315,720

 
676,616

 
Cost of service revenues
 

 
26,859

 

 
51,822

 
Total cost of revenues
 
112,409

 
286,532

 
315,720

 
728,438

 
Gross profit
 
114,125

 
215,137

 
325,040

 
477,609

 
Gross profit %
 
50.4
 %
 
42.9
 %
 
50.7
 %
 
39.6
 %
 
Operating expenses:
 
 
 


 
 
 
 
 
Research, development, and engineering
 
21,257

 
59,661

 
62,402

 
140,409

 
Selling, general, and administrative
 
56,196

 
168,053

 
170,125

 
406,553

 
(Gain) loss, net from litigation settlements
 
(15
)
 

 
(295
)
 
(30
)
 
Restructuring and other related charges (credits)
 
(84
)
 
12,130

 
2,438

 
20,711

 
Total operating expenses
 
77,354

 
239,844

 
234,670

 
567,643

 
Operating income
 
36,771

 
(24,707
)
 
90,370

 
(90,034
)
 
Operating income %
 
16.2
 %
 
(4.9
)%
 
14.1
 %
 
(7.5
)%
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(7,341
)
 
(25,032
)
 
(21,904
)
 
(56,252
)
 
Other non-operating income, net
 
2,490

 
125

 
5,230

 
3,731

 
Income before income taxes
 
31,920

 
(49,614
)
 
73,696

 
(142,555
)
 
Income tax expense (benefit)
 
81,424

 
(7,880
)
 
84,419

 
(28,583
)
 
Net income (loss)
 
$
(49,504
)
 
$
(41,734
)
 
$
(10,723
)
 
$
(113,971
)
 
 
 
 
 
 
 
 
 
 
 
% of net revenues
 
(21.9
)%
 
(8.3
)%
 
(1.7
)%
 
(9.4
)%
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
$
(1.54
)
 
$
(1.06
)
 
$
(0.33
)
 
$
(3.08
)
 
Diluted
 
$
(1.54
)
 
$
(1.06
)
 
$
(0.33
)
 
$
(3.08
)
 
 
 
 
 
 
 
 
 
 
 
Shares used in computing earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
32,075

 
39,314

 
32,384

 
37,063

 
Diluted
 
32,075

 
39,314

 
32,384

 
37,063

 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
255.1
 %
 
15.9
 %
 
114.6
 %
 
20.1
 %
 


6



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

 
$
328,156

 
Short-term investments
 
269,313

 
13,422

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

 
341,578

 
Accounts receivable, net
 
152,888

 
363,837

 
Inventory, net
 
68,276

 
160,219

 
Other current assets
 
18,588

 
48,229

 
Total current assets
 
899,726

 
913,863

 
Property, plant, and equipment, net
 
142,129

 
212,138

 
Goodwill
 
15,498

 
1,272,619

 
Purchased intangibles, net
 

 
871,599

 
Deferred tax assets
 
17,950

 
4,741

 
Other assets
 
1,584

 
22,821

 
Total assets
 
$
1,076,887

 
$
3,297,781

 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

 
Accounts payable
 
$
45,417

 
$
146,067

 
Accrued liabilities
 
80,097

 
452,194

 
Total current liabilities
 
125,514

 
598,261

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

 
1,727,660

 
Long-term income taxes payable
 
87,328

 
93,150

 
Other long-term liabilities
 
18,566

 
134,492

 
Total liabilities
 
723,917

 
2,553,563

 
Stockholders' equity
 
352,970

 
744,218

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

 
$
3,297,781

 
 
 
 
 
 
 




7



PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
 
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
December 31,
 
December 31,
 
 
 
2017
 
2018
 
2017
 
2018
 
Cash flows from operating activities
 
 
 
 
 
 
 
 
 
Net Income
 
$
(49,504
)
 
$
(41,734
)
 
$
(10,723
)
 
$
(113,971
)
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
5,151

 
55,117

 
15,894

 
142,763

 
Amortization of debt issuance cost
 
362

 
1,419

 
1,087

 
3,188

 
Stock-based compensation
 
8,029

 
11,719

 
26,047

 
30,709

 
Deferred income taxes
 
6,106

 
(21,931
)
 
10,490

 
(39,987
)
 
Provision for excess and obsolete inventories
 
1,113

 
2,073

 
2,013

 
4,881

 
Restructuring charges (credits)
 
(84
)
 
12,130

 
2,438

 
20,711

 
Cash payments for restructuring charges
 
(482
)
 
(3,827
)
 
(2,911
)
 
(11,222
)
 
Other operating activities
 
496

 
60

 
(645
)
 
9,070

 
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
(4,399
)
 
(12,075
)
 
(3,153
)
 
(35,938
)
 
Inventory, net
 
(3,733
)
 
(5,362
)
 
(9,577
)
 
11,018

 
Current and other assets
 
1,473

 
33,149

 
(3,066
)
 
30,456

 
Accounts payable
 
(422
)
 
(4,108
)
 
2,783

 
16,519

 
Accrued liabilities
 
(6,307
)
 
33,172

 
(15,695
)
 
72,677

 
Income taxes
 
74,277

 
(13,110
)
 
66,387

 
(21,631
)
 
Cash provided by operating activities
 
$
32,076

 
$
46,693

 
$
81,369

 
$
119,243

 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Proceeds from sale of investments
 
23,516

 
1,159

 
54,411

 
125,799

 
Proceeds from maturities of investments
 
40,328

 

 
146,989

 
131,017

 
Purchase of investments
 
(98,891
)
 
(162
)
 
(232,840
)
 
(698
)
 
Acquisitions, net of cash acquired
 

 
8,001

 

 
(1,642,241
)
 
Capital expenditures
 
(2,651
)
 
(8,613
)
 
(9,403
)
 
(16,148
)
 
Cash provided by (used for) investing activities
 
$
(37,698
)
 
$
385

 
$
(40,843
)
 
$
(1,402,271
)
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Repurchase of common stock
 
(13,693
)
 
(4,780
)
 
(52,915
)
 
(4,780
)
 
Employees' tax withheld and paid for restricted stock and restricted stock units
 
(397
)
 
(521
)
 
(11,186
)
 
(13,863
)
 
Proceeds from issuances under stock-based compensation plans
 
1,496

 
53

 
13,446

 
14,925

 
Proceeds from debt issuance, net


 

 

 
1,244,713

 
Payment of cash dividends
 
(4,951
)
 
(5,971
)
 
(15,008
)
 
(16,953
)
 
Cash provided by (used for) financing activities
 
$
(17,545
)
 
$
(11,219
)
 
$
(65,663
)
 
$
1,224,042

 
Effect of exchange rate changes on cash and cash equivalents
 
344

 
1,211

 
3,460

 
(3,519
)
 
Net increase in cash and cash equivalents
 
(22,823
)
 
37,070

 
(21,677
)
 
(62,505
)
 
Cash and cash equivalents at beginning of period
 
303,116

 
291,086

 
301,970

 
390,661

 
Cash and cash equivalents at end of period
 
$
280,293

 
$
328,156

 
$
280,293

 
$
328,156

 
 
 
 
 

 
 
 

 


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
 
Nine Months Ended
 

December 31,
 
December 31,
 
 
2017
 
2018
 
2017
 
2018
 
 
 
 
 
 
 
 
 
 
GAAP Net Revenues
$
226,534

 
$
501,669

 
$
640,760

 
$
1,206,047

 
Deferred revenue purchase accounting
$

 
$
28,923

 
$

 
$
65,508

 
Non-GAAP Net Revenues
$
226,534

 
$
530,592

 
$
640,760

 
$
1,271,555

 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
114,125

 
$
215,137

 
$
325,040

 
$
477,609

 
Purchase accounting amortization

 
27,575

 

 
83,243

 
Inventory valuation adjustment

 

 

 
30,395

 
Deferred revenue purchase accounting

 
28,923

 

 
65,508

 
Acquisition and integration fees

 
404

 

 
621

 
Stock-based compensation
917

 
1,067

 
2,709

 
3,103

 
Other adjustments1

 

 
1,585

 

 
Non-GAAP Gross profit
$
115,042

 
$
273,106

 
$
329,334

 
$
660,479

 
Non-GAAP Gross profit %
50.8
%
 
51.5
%
 
51.4
%
 
51.9
%
 
 
 
 
 
 
 
 
 
 
GAAP Research, development, and engineering
$
21,257

 
$
59,661

 
$
62,402

 
$
140,409

 
Stock-based compensation
(2,049
)
 
(2,887
)
 
(6,158
)
 
(7,877
)
 
Acquisition and integration fees

 
(95
)
 

 
(151
)
 
Purchase accounting amortization

 

 
(80
)
 

 
Non-GAAP Research, development, and engineering
$
19,208

 
$
56,679

 
$
56,164

 
$
132,381

 
 
 
 
 
 
 
 
 
 
GAAP Selling, general, and administrative
$
56,196

 
$
168,053

 
$
170,125

 
$
406,553

 
Acquisition and integration fees

 
(21,775
)
 

 
(53,558
)
 
Purchase accounting amortization

 
(15,278
)
 

 
(30,557
)
 
Stock-based compensation
(5,063
)
 
(7,765
)
 
(17,180
)
 
(19,729
)
 
Other adjustments2

 

 
(549
)
 

 
Non-GAAP Selling, general, and administrative
$
51,133

 
$
123,235

 
$
152,396

 
$
302,709

 
 
 
 
 
 
 
 
 
 
GAAP Operating expenses
$
77,354

 
$
239,844

 
$
234,670

 
$
567,643

 
Acquisition and integration fees

 
(21,870
)
 

 
(53,709
)
 
Purchase accounting amortization

 
(15,278
)
 
(80
)
 
(30,557
)
 
Stock-based compensation
(7,112
)
 
(10,652
)
 
(23,338
)
 
(27,606
)
 
Restructuring and other related (charges) credits
84

 
(12,130
)
 
(2,438
)
 
(20,711
)
 
Other adjustments

 

 
(549
)
 

 
Non-GAAP Operating expenses
$
70,326

 
$
179,914

 
$
208,265

 
$
435,060

 
 
 
 
 
 
 
 
 
 
1 
Includes immaterial adjustments for loss on sale of assets and write off of indirect tax assets.
2 
Includes immaterial adjustments for executive transition costs.

     


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
 
Nine Months Ended
 
 
December 31,
 
December 31,
 
 
2017
 
2018
 
2017
 
2018
 
GAAP Operating income
$
36,771

 
$
(24,707
)
 
$
90,370

 
$
(90,034
)
 
Purchase accounting amortization

 
42,853

 
80

 
113,800

 
Inventory valuation adjustment

 

 

 
30,395

 
Deferred revenue purchase accounting

 
28,923

 

 
65,508

 
Acquisition and integration fees

 
22,274

 

 
54,330

 
Stock-based compensation
8,029

 
11,719

 
26,047

 
30,709

 
Restructuring and other related charges (credits)
(84
)
 
12,130

 
2,438

 
20,711

 
Other adjustments

 

 
2,134

 

 
Non-GAAP Operating income
$
44,716

 
$
93,192

 
$
121,069

 
$
225,419

 
 
 
 
 
 
 
 
 
 
GAAP Net income
$
(49,504
)
 
$
(41,734
)
 
$
(10,723
)
 
$
(113,971
)
 
Purchase accounting amortization

 
42,853

 
80

 
113,800

 
Inventory valuation adjustment

 

 

 
30,395

 
Deferred revenue purchase accounting

 
28,923

 

 
65,508

 
Acquisition and integration fees

 
22,274

 

 
54,330

 
Stock-based compensation
8,029

 
11,719

 
26,047

 
30,709

 
Restructuring and other related charges (credits)
(84
)
 
12,130

 
2,438

 
20,711

 
Other adjustments

 

 
2,134

 

 
Income tax effect of above items
2,067

 
(18,036
)
 
(6,444
)
 
(56,934
)
 
Income tax effect of unusual tax items
72,599

(1 
) 
(4,028
)
(2 
) 
68,938

(3 
) 
(5,387
)
(2 
) 
Non-GAAP Net income
$
33,107

 
$
54,101

 
$
82,470

 
$
139,160

 
 
 
 
 
 
 
 
 
 
GAAP Diluted earnings per common share
$
(1.54
)
 
$
(1.06
)
 
$
(0.33
)
 
$
(3.08
)
 
Purchase accounting amortization

 
1.08

 

 
3.01

 
Inventory valuation adjustment

 

 

 
0.80

 
Deferred revenue purchase accounting

 
0.73

 

 
1.73

 
Stock-based compensation
0.25

 
0.30

 
0.79

 
0.81

 
Acquisition and integration fees

 
0.56

 

 
1.44

 
Restructuring and other related charges (credits)

 
0.31

 
0.07

 
0.55

 
Other adjustments

 

 
0.07

 

 
Income tax effect
2.29

 
(0.57
)
 
1.90

 
(1.65
)
 
Effect of anti-dilutive securities
0.02

 
0.01

 

 
0.07

 
Non-GAAP Diluted earnings per common share
$
1.02

 
$
1.36

 
$
2.50

 
$
3.68

 
 
 
 
 
 
 
 
 
 
Shares used in diluted earnings per common share calculation:
GAAP
32,075

 
39,314

 
32,384

 
37,063

 
non-GAAP
32,496

 
39,712

 
32,945

 
37,819

 
1 
Excluded amounts represent $74.6 million due to change in tax law, and the release of tax reserves.
2 
Excluded amounts represent tax benefits resulting from the release of tax reserves and tax return true-ups.
3 
Excluded amounts represent $74.6 million due to change in tax law, tax benefits resulting from the correction of an immaterial error in the first quarter and the release of tax reserves.


10



PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP COMBINED COMPARATIVE MEASURES
($ in thousands)
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
December 31,
 
 
20181
 
20181
 
2018
 
2018
 
2018
 
Plantronics GAAP operating income
$
33,131

 
$
20,649

 
$
(85,976
)
 
$
(24,707
)
 
(56,903
)
 
Polycom GAAP Operating income2
19,095

 
12,246

 
N/A
 
N/A
 
31,341

 
Combined comparative operating income before adjustments
52,226

 
32,895

 
(85,976
)
 
(24,707
)
 
(25,562
)
 
Deferred revenue purchase accounting

 

 
36,585

 
28,923

 
65,508

 
Inventory valuation adjustment

 

 
30,395

 

 
30,395

 
Acquisition and integration fees
10,660

 
12,901

 
26,253

 
22,274

 
72,088

 
Stock-based compensation
7,912

 
8,150

 
10,840

 
11,719

 
38,621

 
Restructuring and other related charges
179

 
2,847

 
7,261

 
12,130

 
22,417

 
Non-recurring legal-related and other matters3
603

 
609

 

 

 
1,212

 
Depreciation and amortization
29,259

 
29,233

 
82,398

 
55,117

 
196,007

 
EBITDA
$
100,839

 
$
86,635

 
$
107,756

 
$
105,456

 
$
400,686

 
 
 
 
 
 
 
 
 
 
 
 

1 
Polycom results shown in these periods are prior to the close of the acquisition on July 2, 2018. These results are shown here to arrive at combined comparative historical results.
2 
Prepared in accordance with U.S. GAAP and Polycom's significant accounting policies 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.
3 
Includes immaterial adjustments to conform historical Polycom results to Plantronics non-GAAP policy.



11



PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP COMBINED COMPARATIVE MEASURES
($ in thousands)
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
 
 
 
 
 
 
Three Months Ended
 
Three Months Ended
 
 
December 31,
 
March 31,
 
 
2017
 
2018
 
 
 
 
 
 
Enterprise Headsets
$
167,640

 
$
164,587

 
Consumer Headsets
58,894

 
51,556

 
Voice1
105,510

 
110,590

 
Video1
104,190

 
81,730

 
Services1
81,820

 
78,920

 
Combined comparative net revenues
$
518,054

 
$
487,383

 
 
 
 
 
 
Plantronics GAAP Gross profit
$
114,125

 
$
114,075

 
Polycom GAAP gross profit2
160,730

 
158,569

 
Combined comparative gross profit before adjustments
$
274,855

 
$
272,644

 
Stock-based compensation
917

 
913

 
Purchase accounting amortization

 
338

 
Combined comparative adjusted gross profit
$
275,772

 
$
273,895

 
Combined comparative adjusted gross profit %
53.2
%
 
56.2
%
 
 
 
 
 
 
Plantronics GAAP Operating income
$
36,771

 
$
33,131

 
Polycom GAAP Operating income2
(26,304
)
 
19,095

 
Combined comparative operating income before adjustments
$
10,467

 
$
52,226

 
Amortization of Polycom Goodwill and intangibles
56,021

 
14,774

 
Stock-based compensation
8,029

 
7,912

 
Acquisition and integration fees
2,783

 
10,660

 
Restructuring and other related (charges) credits
2,974

 
179

 
Non-recurring legal-related and other matters3
977

 
603

 
Combined adjusted operating income
$
81,251

 
$
86,354

 
Combined adjusted operating profit %
15.7
%
 
17.7
%
 
1 
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.
2 
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.
3 
Includes immaterial adjustments to conform historical Polycom results to Plantronics non-GAAP policy.




12
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