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Section 1: 8-K (8-K)

Document
false0000914025PLANTRONICS INC 0000914025 2019-11-04 2019-11-04


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

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
COMMON STOCK, $0.01 PAR VALUE
 
PLT
 
New York Stock Exchange

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

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 5, 2019, Plantronics, Inc. ("the Company"), a Delaware corporation, issued a press release and accompanying Company overview presentation reporting its results of operations and financial condition for the second quarter of Fiscal Year 2020, which ended on September 30, 2019, a copy of these documents are furnished as Exhibits 99.1 and 99.2, respectively, 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 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On November 4, 2019, Plantronics, Inc. (the “Company”) announced that the employment of Jeff Loebbaka, Executive Vice President, Global Sales of the Company, will terminate on December 2, 2019 (“Separation Date”).  In connection with his departure, Mr. Loebbaka has agreed to continue providing services to the Company to ensure an orderly transition of his responsibilities, for which he will continue to receive his present base salary and all existing employee benefits through the Separation Date.  Under the Company's executive severance policy currently in effect, Mr. Loebbaka will also receive the following benefits pursuant to a severance agreement that contains a customary general release of claims in favor of the Company:

A lump sum payment equal to 12 months of his base salary in effect as of his last day of employment, plus an additional lump-sum payment of $20,000;
100% of his at target annual cash bonus for fiscal year 2020;
If he elects, reimbursement for the amount of COBRA premiums for him and his eligible dependents for 12 months or until such earlier date on which he becomes eligible for health coverage from another employer; and
12 months of outplacement assistance.

Item 7.01 Regulation FD Disclosure

On November 5, 2019, the Company announced in its press release titled "Plantronics Announces Second Quarter Fiscal Year 2020 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, 2019 to stockholders of record at the close of business on November 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
99.1
99.2







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 5, 2019
PLANTRONICS, INC.
 
 
 
 
 
 
By:
/s/ Charles D. Boynton
 
 
Name:
Charles D. Boynton
 
 
Title:
Executive Vice President and Chief Financial Officer



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


400839463_finalpolylogorgba03.jpg

Poly Announces Second Quarter Fiscal Year 2020 Financial Results
Launches largest product refresh in Company history and introduces all-new offerings for ecosystem partners

SANTA CRUZ, Calif., - November 5, 2019 - Plantronics, Inc. (NYSE: PLT) ("Poly" or the "Company") today announced second quarter fiscal year 2020 results for the period ending September 30, 2019. Highlights of the second quarter include the following:
($ Millions, except percent and per-share data)1
Q2 FY20
Q2 FY19
 
YTD FY20
YTD FY192
GAAP Revenue

$462


$483

 

$909


$704

GAAP Gross Margin
44.6
%
31.6
%
 
46.0
%
37.3
%
GAAP Operating Income

($6
)

($86
)
 

($34
)

($65
)
GAAP Diluted EPS

($0.65
)

($2.21
)
 

($1.80
)

($2.01
)
Cash Flow from Operations

$25


$40

 

$34


$73

 
 
 
 
 
 
Non-GAAP Revenue

$470


$520

 

$930


$741

Non-GAAP Gross Margin
52.4
%
53.2
%
 
54.1
%
52.3
%
Non-GAAP Operating Income

$81


$96

 

$167


$132

Non-GAAP Diluted EPS

$1.24


$1.51

 

$2.55


$2.31

Adjusted EBITDA3

$93


$108

 

$191


$149


1 For further information on supplemental non-GAAP metrics refer to the Use Of Non-GAAP And Comparative Financial Information and Unaudited Reconciliations Of GAAP Measures To Non-GAAP Measures sections below.
2 YTD FY19 results shown here do not reflect Polycom results for the three months ended June 30, 2018 due to the completion of the Polycom acquisition on July 2, 2018.
3 Trailing twelve months Adjusted EBITDA of $399 million.

“In light of the challenges of the past two quarters we are aggressively taking steps to drive long-term profitable growth,” said Joe Burton, President and Chief Executive Officer. “Over the last few months we have announced a record number of new products that are just beginning to ship now with the full rollout over the next few quarters.”


Results Compared to August 6, 2019 Guidance
 
Q2 FY20 Results
Q2 FY20 Guidance Range3
GAAP Net Revenue
$462M
$456M - $496M
Non-GAAP Net Revenue
$470M
$465M - $505M
Adjusted EBITDA
$93M
$94M - $110M
Non-GAAP Diluted EPS
$1.24
$1.20 - $1.50

3 The non-GAAP revenue guidance ranges shown here exclude the $8.5 million impact of purchase accounting related to recording deferred revenue at fair value at the time of the acquisition.

“During the second quarter, we made further progress reducing our debt and managing corporate spend,” said Chuck Boynton, Executive Vice President and Chief Financial Officer. “As we analyze inventory levels across our value chain, in light of the evolving macroeconomic conditions and significant product transitions underway, we believe it is prudent to reduce channel inventory at this time by reducing sales to channel partners. This reduction will primarily impact our fiscal Q3 results and is incorporated into the guidance we are providing today.”


1



Highlights for the Second Quarter and Fiscal Year 2020

At Zoom's annual user conference, Poly announced the Studio X family, two new purpose-built all-in-one video bars designed to dramatically simplify the video conferencing experience. Combined with the Poly Studio and Poly G7500 the Company now has a full portfolio of software-driven video endpoints positioned to capture the rapid growth in the video conferencing market.

At Microsoft Ignite, Poly announced the CCX line of business desk phones, combining Microsoft Teams with premium voice quality. All CCX phones integrate Teams contact lists, calendars, meetings, and a dedicated Teams button for activating Cortana skills. The Company also announced that Poly Studio, Trio family, CCX phones, Calisto speakerphones, and Voyager 4200/5200 are now certified for Microsoft Teams.

Tata Communications and Poly will offer a range of managed services to support enterprises on their entire Microsoft Teams transition.

8x8, ScanSource, and Poly are joining forces to launch CloudFuel, a program designed to accelerate and simplify the process of transitioning from legacy on-premise communication systems to cloud-based solutions.

Poly introduced the next generation of the Company’s lineup of popular Savi wireless headsets. The enhanced Savi Office and UC Series offer more wearing styles, a unique close conversation limiting feature and active noise canceling (ANC).

Poly announced that multiple headsets are now certified to work with Google Voice for G Suite, the new cloud-based business telephony service built for G Suite customers.

Amazon Alexa for Business is now built into the Voyager 5200 and Voyager 4200 UC Series. Tile is also now integrated into these headsets, allowing users to “ring” and locate the headset when its been misplaced.

Poly introduced an all-new true wireless lineup to its award-winning BackBeat line. These true wireless earbuds are extremely lightweight, and each pair comes with a compact carrying case, which includes additional charging capabilities.

The Company made a debt repayment of $25 million against its outstanding Term Loan B.

Poly Investor Day is scheduled for November 20, 2019. The morning event is specifically designed for institutional investors and equity analysts.

For the full lineup of product announcements in the quarter, please see Poly's corporate blog at poly.blog.com.

Poly Announces Quarterly Dividend of $0.15

The Poly Board of Directors has declared a quarterly cash dividend of $0.15 per common share, to be paid on December 10, 2019, to all shareholders of record as of the close of market on November 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.

In its fiscal third quarter, the Company expects to reduce channel inventory by approximately $65 million by reducing sales to channel partners, and has adjusted its financial guidance accordingly. The following represents the expected range of financial results for the third quarter and full fiscal year of 2020 (all amounts assuming currency rates remain stable):


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Q3 FY20 Guidance
FY20 Annual Guidance
GAAP Net Revenue
$383M - $423M
$1.72B - 1.81B
Non-GAAP Net Revenue1
$390M - $430M
$1.76B - $1.84B
Adjusted EBITDA2
$33M - $53M
$283M - $323M
Non-GAAP Diluted EPS2,3
$0.01 - $0.31
$2.94 - $3.74

1 Q3 and full year FY20 non-GAAP revenue guidance excludes anticipated purchase accounting adjustments of $7.1 million and $34.0 million, respectively.
2 Q3 and full year FY20 Adjusted EBITDA and non-GAAP diluted EPS excludes estimated intangibles amortization expense of $45.8 million and $182.8 million, respectively. With respect to adjusted EBITDA and diluted EPS guidance, the Company has determined that it is unable to provide quantitative reconciliations of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures with a reasonable degree of confidence in their accuracy without unreasonable effort, as items including stock based compensation, acquisition and integration costs, litigation gains and losses, and impacts from discrete tax adjustments and tax laws are inherently uncertain and depend on various factors, many of which are beyond the Company's control.
3 EPS guidance assumes approximately 40 million diluted average weighted shares and a non-GAAP effective tax rate of 16% to 18%.

Conference Call and Earnings Presentation

Poly is providing an earnings presentation in combination with this press release. The presentation is offered to provide shareholders and analysts with additional detail for analyzing results. The presentation will be available in the Investor Relations section of our corporate website at investor.poly.com along with this press release. A reconciliation of our GAAP to non-GAAP and historical combined comparative results is provided at the end of this press release.

We have scheduled a conference call to discuss second quarter fiscal year 2020 financial results. The conference call will take place today, November 5, 2019, at 2:00 PM (Pacific Time). All interested investors and potential investors in Poly stock are invited to participate. To listen to the call, please dial in five to ten minutes prior to the scheduled starting time and refer to the “Poly Conference Call.”  The dial-in from North America is (888) 301-8736 and the international dial-in is (706) 634-7260.

The conference call will also be simultaneously webcast and can be accessed from the Investor Relations section of our website. A replay of the call with the conference ID #4337595 will be available until January 5, 2020 at (855) 859-2056 for callers from North America and at (404) 537-3406 for all other callers.

Use of Non-GAAP and Combined Comparative Financial Information

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


3



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.

Forward Looking Statements 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 efforts to drive long-term profitable growth; (ii) our expectations for new products launches, the timing of their releases and their expected impact on future growth; (iii) our expectations to reduce channel inventory materially in third quarter of Fiscal Year 2020; (iv) our expectations for operating cash flow and debt; (v) estimates of GAAP and non-GAAP financial results for the third quarter and full year Fiscal Year 2020, including net revenues, purchase accounting adjustments, adjusted EBITDA, tax rates, intangibles amortization, and diluted weighted average shares outstanding and diluted EPS, in addition to other matters discussed in this press release that are not purely historical data. We do not assume any obligation to update or revise any such forward-looking statements, whether as the result of new developments or otherwise.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those contemplated by such statements. Among the factors that could cause actual results to differ materially from those contemplated are:

Regarding the Polycom acquisition: (i) we may be unable to integrate Polycom's business within our own in a timely and cost-efficient manner or do so without adversely impacting operations, including new product launches; (ii) expected synergies or operating efficiencies may fail to materialize in whole or part or may not occur within expected time-frames; (iii) the acquisition and our subsequent integration efforts may adversely impact relationships with customers, suppliers and strategic partners and their operating results and businesses generally (including the diversion of management time on transaction-related issues); (iv) we may be unable to retain and hire key personnel; (v) our increased leverage as a result of the transaction is substantially greater than prior to the acquisition which may pose risks, including reduced flexibility to make changes in our operations in response to business or economic conditions, increased borrowing costs, as well as penalties or costs should we fail to comply with terms of the financial agreements such as debt ratios and financial and operation performance targets; (vi) negative effects on the market price of our common stock as a result of the transaction, particularly in light of the issuance of our stock in the transaction; (vii) our financial reporting including those resulting from the adoption of new accounting pronouncements and associated system implementations in the context of the transaction, our ability to forecast financial results of the combined company and that we may be unable to successfully integrate our reporting system causing an adverse impact to our ability to make timely and accurate filings with the SEC and other domestic and foreign governmental agencies; (viii) the potential impact of the transaction on our future tax rate and payments based on our global entity consolidation efforts and our ability to quickly and cost effectively integrate foreign operations; (ix) the challenges of integrating the supply chains of the two companies; and (x) the potential that our due diligence did not uncover risks and potential liabilities of Polycom;
Micro and macro-economic conditions in our domestic and international markets;
the nature and extent of competition we face, particularly subsequent to the acquisition of Polycom as it relates to our ability to adapt to new competitors and changing markets;
the impact of product transitions underway which are replacing or upgrading nearly every major product in our product portfolio;
the impact of customer brand preferences on Consumer and Enterprise market demands;
the impact of our adoption of a new corporate branding identity, including any confusion or harm to our reputation resulting therefrom;
the impact of ongoing integration, restructuring and disaggregation activities on our operations, including on employees, suppliers and customers from the Polycom acquisition;
our ability to realize and achieve positive financial results projected to arise in the our key markets from UC&C adoption could be adversely affected by a variety of factors including the following: (i) as UC&C becomes more widely adopted, the risk that competitors will offer solutions that will effectively commoditize our products which, in turn, will reduce the sales prices for those products; (ii) our plans are dependent upon adoption of our UC&C solution by major platform providers and any proprietary solutions of


4



competitors, and our influence over such providers and the marketing in general with respect to the functionality of their platforms or their product offerings, their rate of deployment, and their willingness to integrate their platforms and product offerings with our solutions is limited; (iii) delays or limitations on our ability to timely introduce solutions that are cost effective, feature-rich, stable, and attractive to our customers within forecasted development budgets; (iv) our successful implementation and execution of new and different processes involving the design, development, and manufacturing of complex electronic systems composed of hardware, firmware, and software that works seamlessly and continuously in a wide variety of environments and with multiple devices; (v) failure of UC&C solutions generally, or our solutions in particular, to be adopted with the breadth and speed we anticipate; (vi) our sales model and expertise must successfully evolve to support complex integration of hardware, software, and services with UC&C infrastructure consistent with changing customer purchasing expectations; (vii) as UC&C becomes more widely adopted we anticipate that competition for market share will increase, particularly given that some competitors may have superior technical and economic resources; (viii) sales cycles for UC&C deployments are longer and becoming more complex; (ix) our inability to timely and cost-effectively adapt to changing business requirements may impact our profitability in this market and our overall margins; and (x) our failure to expand our technical support capabilities to support the complex and proprietary platforms in which our UC&C products are and will be integrated;
risks associated with our channel partners' sales reporting, product inventories, and product sell-through since we sell a significant amount of products to channel partners who maintain their own inventory of our products;
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;
forecasting sales and procurement demands is inherently difficult, particularly with continuing uncertainty in regional and global economic conditions as well as currency fluctuations, and there can be no assurance that expectations of incoming orders over the balance of the current quarter will materialize;
volatility in prices and availability of components from our suppliers, including our manufacturers located in APAC, have in the past and could in the future negatively affect our profitability and/or market share;
fluctuations in foreign exchange rates;
new or greater tariffs on our products;
the bankruptcy or financial weakness of distributors or key customers, or the bankruptcy of or reduction in capacity of our key suppliers;
additional risk factors including: interruption in the supply of sole-sourced critical components, continuity of component supply at costs consistent with our plans, and the inherent risks of our substantial foreign operations; and
seasonality in one or more of our product categories.

For more information concerning these and other possible risks, please refer to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 17, 2019 and other filings with the Securities and Exchange Commission, as well as recent press releases. The Securities and Exchange Commission filings can be accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html.

Financial Summaries

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

About Poly

Poly is a global communications company that powers meaningful human connection and collaboration. Poly combines legendary audio expertise and powerful video and conferencing capabilities to overcome the distractions, complexity and distance that make communication in and out of the workplace challenging. Poly believes in solutions that make life easier when they work together and with our partner’s services. Our headsets, software, desk phones, audio and video conferencing, analytics and services are used worldwide and are a leading choice for every kind of workspace. For more information, please visit: www.poly.com.


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Poly and the propeller design are trademarks of Plantronics, Inc. All other trademarks are the property of their respective owners.

INVESTOR CONTACT:
Mike Iburg
Vice President, Investor Relations
(831) 458-7533
 
MEDIA CONTACT:
Edie Kissko
Senior Director and Head of Corporate Communications
(213) 369-3719







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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,
 
 
 
2019
 
2018
 
2019
 
2018
 
Net revenues:
 
 
 
 
 
 
 
 
 
Net product revenues
 
$
395,137

 
$
435,262

 
$
777,882

 
$
656,571

 
Net services revenues
 
66,572

 
47,807

 
131,594

 
47,807

 
Total net revenues
 
461,709

 
483,069

 
909,476

 
704,378

 
Cost of revenues:
 
 
 
 
 
 
 
 
 
Cost of product revenues
 
229,323

 
305,477

 
437,939

 
416,943

 
Cost of service revenues
 
26,315

 
24,963

 
52,820

 
24,963

 
Total cost of revenues
 
255,638

 
330,440

 
490,759

 
441,906

 
Gross profit
 
206,071

 
152,629

 
418,717

 
262,472

 
Gross profit %
 
44.6
 %
 
31.6
 %
 
46.0
 %
 
37.3
 %
 
Operating expenses:
 
 
 
 
 
 
 
 
 
Research, development, and engineering
 
57,415

 
57,047

 
116,939

 
80,748

 
Selling, general, and administrative
 
148,419

 
174,297

 
312,027

 
238,500

 
(Gain) loss, net from litigation settlements
 

 

 
(1,162
)
 
(30
)
 
Restructuring and other related charges
 
5,847

 
7,261

 
25,372

 
8,581

 
Total operating expenses
 
211,681

 
238,605

 
453,176

 
327,799

 
Operating income
 
(5,610
)
 
(85,976
)
 
(34,459
)
 
(65,327
)
 
Operating income %
 
(1.2
)%
 
(17.8
)%
 
(3.8
)%
 
(9.3
)%
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(23,797
)
 
(23,893
)
 
(47,729
)
 
(31,220
)
 
Other non-operating income, net
 
(625
)
 
1,610

 
(292
)
 
3,606

 
Income before income taxes
 
(30,032
)
 
(108,259
)
 
(82,480
)
 
(92,941
)
 
Income tax expense (benefit)
 
(4,122
)
 
(21,550
)
 
(11,699
)
 
(20,703
)
 
Net income (loss)
 
$
(25,910
)
 
$
(86,709
)
 
$
(70,781
)
 
$
(72,238
)
 
 
 
 
 
 
 
 
 
 
 
% of net revenues
 
(5.6
)%
 
(17.9
)%
 
(7.8
)%
 
(10.3
)%
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
$
(0.65
)
 
$
(2.21
)
 
$
(1.80
)
 
$
(2.01
)
 
Diluted
 
$
(0.65
)
 
$
(2.21
)
 
$
(1.80
)
 
$
(2.01
)
 
 
 
 
 
 
 
 
 
 
 
Shares used in computing earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
39,584

 
39,281

 
39,411

 
35,938

 
Diluted
 
39,584

 
39,281

 
39,411

 
35,938

 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
(13.7
)%
 
(19.9
)%
 
(14.2
)%
 
(22.3
)%
 


7



PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
 
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
 
September 30,
 
March 31,
 
 
 
2019
 
2019
 
ASSETS
 
 
 
 
 
Cash and cash equivalents
 
$
186,442

 
$
202,509

 
Short-term investments
 
14,378

 
13,332

 
Total cash, cash equivalents, and short-term investments
 
200,820

 
215,841

 
Accounts receivable, net
 
337,077

 
337,671

 
Inventory, net
 
228,363

 
177,146

 
Other current assets
 
55,160

 
50,488

 
Total current assets
 
821,420

 
781,146

 
Property, plant, and equipment, net
 
186,638

 
204,826

 
Purchased intangibles, net
 
734,355

 
825,675

 
Goodwill
 
1,279,897

 
1,278,380

 
Deferred tax and other assets
 
89,704

 
26,508

 
Total assets
 
$
3,112,014

 
$
3,116,535

 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

 
Accounts payable
 
$
169,701

 
$
129,514

 
Accrued liabilities
 
427,647

 
398,715

 
Total current liabilities
 
597,348

 
528,229

 
Long-term debt, net of issuance costs
 
1,619,015

 
1,640,801

 
Long-term income taxes payable
 
92,831

 
83,121

 
Other long-term liabilities
 
143,713

 
142,697

 
Total liabilities
 
2,452,907

 
2,394,848

 
Stockholders' equity
 
659,107

 
721,687

 
Total liabilities and stockholders' equity
 
$
3,112,014

 
$
3,116,535

 
 
 
 
 
 
 




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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,
 
 
 
2019
 
2018
 
2019
 
2018
 
Cash flows from operating activities
 
 
 
 
 
 
 
 
 
Net Income
 
$
(25,910
)
 
$
(86,709
)
 
$
(70,781
)
 
$
(72,238
)
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
57,376

 
82,398

 
115,074

 
87,646

 
Amortization of debt issuance cost
 
1,361

 
1,407

 
2,722

 
1,769

 
Stock-based compensation
 
14,693

 
10,840

 
27,597

 
18,990

 
Deferred income taxes
 
(15,657
)
 
(22,688
)
 
(48,802
)
 
(18,056
)
 
Provision for excess and obsolete inventories
 
1,844

 
2,196

 
3,604

 
2,808

 
Restructuring charges
 
5,847

 
7,261

 
25,372

 
8,581

 
Cash payments for restructuring charges
 
(5,291
)
 
(6,560
)
 
(22,949
)
 
(7,395
)
 
Other operating activities
 
6,929

 
9,284

 
8,894

 
9,010

 
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
(17,667
)
 
(29,165
)
 
3,778

 
(23,863
)
 
Inventory, net
 
(13,275
)
 
16,780

 
(55,584
)
 
16,380

 
Current and other assets
 
(6,146
)
 
(5,674
)
 
9,352

 
(2,693
)
 
Accounts payable
 
(1,482
)
 
14,939

 
34,910

 
20,627

 
Accrued liabilities
 
14,168

 
46,805

 
(29,616
)
 
39,505

 
Income taxes
 
8,427

 
(646
)
 
29,995

 
(8,521
)
 
Cash provided by operating activities
 
$
25,217

 
$
40,468

 
$
33,566

 
$
72,550

 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Proceeds from sale of investments
 

 

 
170

 
124,640

 
Proceeds from maturities of investments
 

 

 

 
131,017

 
Purchase of investments
 
(155
)
 
(142
)
 
(806
)
 
(536
)
 
Acquisitions, net of cash acquired
 

 
(1,616,692
)
 

 
(1,650,242
)
 
Capital expenditures
 
(4,753
)
 
(3,667
)
 
(9,260
)
 
(7,535
)
 
Proceeds from sale of property and equipment
 
2,142

 

 
2,142

 

 
Cash provided by (used for) investing activities
 
$
(2,766
)
 
$
(1,620,501
)
 
$
(7,754
)
 
$
(1,402,656
)
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Employees' tax withheld and paid for restricted stock and restricted stock units
 
(660
)
 
(307
)
 
(9,281
)
 
(13,342
)
 
Proceeds from issuances under stock-based compensation plans
 
6,027

 
4,314

 
6,616

 
14,872

 
Repayments of long-term debt
 
(25,000
)
 

 
(25,000
)
 

 
Proceeds from debt issuance, net


 
1,244,713

 

 
1,244,713

 
Payment of cash dividends
 
(5,982
)
 
(5,968
)
 
(11,922
)
 
(10,982
)
 
Cash used for financing activities
 
$
(25,615
)
 
$
1,242,752

 
$
(39,587
)
 
$
1,235,261

 
Effect of exchange rate changes on cash and cash equivalents
 
(2,298
)
 
(2,675
)
 
(2,292
)
 
(4,730
)
 
Net increase (decrease) in cash and cash equivalents
 
(5,462
)
 
(339,956
)
 
(16,067
)
 
(99,575
)
 
Cash and cash equivalents at beginning of period
 
191,904

 
631,042

 
202,509

 
390,661

 
Cash and cash equivalents at end of period
 
$
186,442

 
$
291,086

 
$
186,442

 
$
291,086

 
 
 
 
 
 
 
 
 
 
 


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,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
GAAP Net revenues
$
461,709

 
$
483,069

 
$
909,476

 
$
704,378

 
Deferred revenue purchase accounting
8,524

 
36,585

 
20,683

 
36,585

 
Non-GAAP Net revenues
$
470,233

 
$
519,654

 
$
930,159

 
$
740,963

 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
206,071

 
$
152,629

 
$
418,717

 
$
262,472

 
Purchase accounting amortization
30,716

 
55,668

 
60,716

 
55,668

 
Inventory valuation adjustment

 
30,395

 

 
30,395

 
Deferred revenue purchase accounting
8,524

 
36,585

 
20,683

 
36,585

 
Acquisition and integration fees
88

 
217

 
1,010

 
217

 
Stock-based compensation
997

 
1,073

 
1,975

 
2,036

 
Rebranding costs
23

 

 
59

 

 
Non-GAAP Gross profit
$
246,419

 
$
276,567

 
$
503,160

 
$
387,373

 
Non-GAAP Gross profit %
52.4
%
 
53.2
%
 
54.1
%
 
52.3
%
 
 
 
 
 
 
 
 
 
 
GAAP Research, development, and engineering
$
57,415

 
$
57,047

 
$
116,939

 
$
80,748

 
Stock-based compensation
(4,213
)
 
(2,768
)
 
(7,932
)
 
(4,990
)
 
Acquisition and integration fees
(560
)
 
(56
)
 
(1,901
)
 
(56
)
 
Other adjustments
(542
)
 

 
(542
)
 

 
Non-GAAP Research, development, and engineering
$
52,100

 
$
54,223

 
$
106,564

 
$
75,702

 
 
 
 
 
 
 
 
 
 
GAAP Selling, general, and administrative
$
148,419

 
$
174,297

 
$
312,027

 
$
238,500

 
Acquisition and integration fees
(10,009
)
 
(25,980
)
 
(28,181
)
 
(31,783
)
 
Purchase accounting amortization
(15,278
)
 
(15,279
)
 
(30,556
)
 
(15,279
)
 
Stock-based compensation
(9,483
)
 
(6,999
)
 
(17,690
)
 
(11,964
)
 
Rebranding costs
(649
)
 

 
(6,068
)
 

 
Non-GAAP Selling, general, and administrative
$
113,000

 
$
126,039

 
$
229,532

 
$
179,474

 
 
 
 
 
 
 
 
 
 
GAAP Operating expenses
$
211,681

 
$
238,605

 
$
453,176

 
$
327,799

 
Acquisition and integration fees
(10,569
)
 
(26,036
)
 
(30,082
)
 
(31,839
)
 
Purchase accounting amortization
(15,278
)
 
(15,279
)
 
(30,556
)
 
(15,279
)
 
Stock-based compensation
(13,696
)
 
(9,767
)
 
(25,622
)
 
(16,954
)
 
Restructuring and other related charges
(5,847
)
 
(7,261
)
 
(25,372
)
 
(8,581
)
 
Rebranding costs
(649
)
 

 
(6,068
)
 

 
Other adjustments
(542
)
 

 
620

 

 
Non-GAAP Operating expenses
$
165,100

 
$
180,262

 
$
336,096

 
$
255,146

 
 
 
 
 
 
 
 
 
 

     


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,
 
 
2019
 
2018
 
2019
 
2018
 
GAAP Operating income
$
(5,610
)
 
$
(85,976
)
 
$
(34,459
)
 
$
(65,327
)
 
Purchase accounting amortization
45,994

 
70,947

 
91,272

 
70,947

 
Inventory valuation adjustment

 
30,395

 

 
30,395

 
Deferred revenue purchase accounting
8,524

 
36,585

 
20,683

 
36,585

 
Acquisition and integration fees
10,657

 
26,253

 
31,092

 
32,056

 
Stock-based compensation
14,693

 
10,840

 
27,597

 
18,990

 
Restructuring and other related charges
5,847

 
7,261

 
25,372

 
8,581

 
Rebranding costs
672

 

 
6,127

 

 
Other adjustments
542

 

 
(620
)
 

 
Non-GAAP Operating income
$
81,319

 
$
96,305

 
$
167,064

 
$
132,227

 
 
 
 
 
 
 
 
 
 
GAAP Net income
$
(25,910
)
 
$
(86,709
)
 
$
(70,781
)
 
$
(72,238
)
 
Purchase accounting amortization
45,994

 
70,947

 
91,272

 
70,947

 
Inventory valuation adjustment

 
30,395

 

 
30,395

 
Deferred revenue purchase accounting
8,524

 
36,585

 
20,683

 
36,585

 
Acquisition and integration fees
10,657

 
26,253

 
31,092

 
32,056

 
Stock-based compensation
14,693

 
10,840

 
27,597

 
18,990

 
Restructuring and other related charges
5,847

 
7,261

 
25,372

 
8,581

 
Rebranding costs
672

 

 
6,127

 

 
Other adjustments
542

1 

1 

(620
)
1, 2 

 
Income tax effect of above items
(12,511
)
 
(34,032
)
 
(27,994
)
 
(38,898
)
 
Income tax effect of unusual tax items
499

3 
(1,260
)
4 
(1,519
)
3 
(1,359
)
4 

Non-GAAP Net income
$
49,006

 
$
60,280

 
$
101,229

 
$
85,059

 
 
 
 
 
 
 
 
 
 
GAAP Diluted earnings per common share
$
(0.65
)
 
$
(2.21
)
 
$
(1.80
)
 
$
(2.01
)
 
Purchase accounting amortization
1.16

 
1.78

 
2.30

 
1.93

 
Inventory valuation adjustment

 
0.76

 

 
0.83

 
Deferred revenue purchase accounting
0.21

 
0.92

 
0.52

 
0.99

 
Stock-based compensation
0.37

 
0.27

 
0.70

 
0.52

 
Acquisition and integration fees
0.27

 
0.66

 
0.78

 
0.87

 
Restructuring and other related charges
0.15

 
0.18

 
0.64

 
0.23

 
Rebranding costs
0.02

 

 
0.15

 

 
Other adjustments
0.01

 

 
(0.02
)
 

 
Income tax effect
(0.32
)
 
(0.89
)
 
(0.75
)
 
(1.09
)
 
Effect of participating securities

 

 

 

 
Effect of anti-dilutive securities
0.02

 
0.04

 
0.03

 
0.04

 
Non-GAAP Diluted earnings per common share
$
1.24

 
$
1.51

 
$
2.55

 
$
2.31

 
 
 
 
 
 
 
 
 
 
Shares used in diluted earnings per common share calculation:
GAAP
39,584

 
39,281

 
39,411

 
35,938

 
non-GAAP
39,664

 
39,920

 
39,653

 
36,795

 
1 
Includes Executive transition costs and losses due to litigation settlements.
2 
Excluded amounts represent immaterial gains from litigation.
3 
Excluded amounts represent changes in tax law and the release of tax reserves.
4 
Excluded amounts represent tax benefits resulting from the release of tax reserves and tax return true-ups.


11



PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP OPERATING INCOME TO ADJUSTED EBITDA
($ in thousands)
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
 
September 30,
 
December 31,
 
March 31,
 
June 30,
 
September 30,
 
September 30,
 
 
 
2018
 
2018
 
2019
 
2019
 
2019
 
2019
 
GAAP operating income
 
$
(85,976
)
 
$
(24,707
)
 
$
(19,259
)
 
$
(28,849
)
 
$
(5,610
)
 
$
(78,425
)
 
Deferred revenue purchase accounting
 
36,585

 
28,923

 
19,316

 
12,159

 
8,524

 
68,922

 
Inventory valuation adjustment
 
30,395

 

 

 

 

 

 
Acquisition and integration fees
 
26,253

 
22,274

 
14,323

 
20,435

 
10,657

 
67,689

 
Stock-based compensation
 
10,840

 
11,719

 
11,225

 
12,904

 
14,693

 
50,541

 
Restructuring and other related charges
 
7,261

 
12,130

 
11,983

 
19,525

 
5,847

 
49,485

 
Rebranding costs
 

 

 
5,192

 
5,455

 
672

 
11,319

 
Other adjustments
 

 

 
1,005

 
(1,162
)
 
542

 
385

 
Depreciation and amortization
 
82,398

 
55,117

 
58,606

 
57,698

 
57,376

 
228,797

 
Adjusted EBITDA
 
$
107,756

 
$
105,456

 
$
102,391

 
$
98,165

 
$
92,701

 
$
398,713

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





12
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

q2fy20earningspresentati
POLY COMPANY OVERVIEW November 5, 2019 NYSE:PLT © 2019 Plantronics Inc. All rights reserved. 1


 
FORWARD LOOKING STATEMENTS This presentation 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) expectations for the UC&C market and Enterprise TAM and our ability to differentiate ourselves and take advantage of the opportunities based on our positioning, product portfolio and launch dates; (ii) expectations regarding synergies from previous integration efforts and anticipation for additional synergies, accretion and long-term operating model targets, and our ability to attain them in the timeframes expected; (iii) beliefs regarding what is required to succeed in the UCC market and our strategy to achieve success; (iv) our expectations for tariff mitigation and resolution of transitory issues and the timeframes in which we believe we can achieve them; (v) expectations for end user and software analytics and services, the positioning of our product portfolio and the potential for near-term gains; (vi) expectations regarding debt repayment actions and timing; (vii) our expectations to reduce channel inventory materially in the third quarter of Fiscal Year 2020 and its impact on guidance; (viii) estimates of GAAP and non-GAAP financial results for the third quarter and full year Fiscal Year 2020, including net revenues, purchase accounting adjustments, adjusted EBITDA, tax rates, intangibles amortization, and diluted weighted average shares outstanding and diluted EPS, gross margins, operating expenses, income and margins, in addition to other matters discussed in this presentation 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. The factors that could cause actual results to differ are discussed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on May 17, 2019, in our reports on Form 10-Q and Form 8-K filed with the SEC as well as our other public disclosures, including our press releases. Please also refer to the Safe Harbor included in our press release regarding our results for Q2 FY20 filed with the SEC on Form 8-K on November 5, 2019. The SEC filings and our press releases can be accessed on our website at investor.poly.com. © 2019 Plantronics Inc. All rights reserved. 2


 
USE OF NON-GAAP INFORMATION To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP, and where applicable, combined comparative measures of operating results, including non-GAAP net revenues, non-GAAP gross profit, non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income, adjusted EBITDA, and non-GAAP diluted EPS, which exclude certain unusual or non-cash expenses and charges that are included in the most directly comparable GAAP measure. These unusual or non-cash expenses and charges include the effect, where applicable, of purchase accounting on deferred revenue and inventory, stock-based compensation, acquisition related expenses, purchase accounting amortization and adjustments, restructuring and other related charges and credits, asset impairments, executive transition charges, rebranding costs, gains or losses from litigations settlements, unusual and/or irregular gains or losses from the sale of investments, and the impact of participating securities, all net of any associated tax impact. We also exclude tax benefits from the release of tax reserves, discrete tax adjustments including transfer pricing, tax deduction and tax credit adjustments, and the impact of tax law changes. We exclude these amounts from our non-GAAP and combined comparative measures primarily because management does not believe they are consistent with the development of our target operating model. Combined comparative results refer to the results for periods prior to the 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. A reconciliation between GAAP and Non-GAAP measures for all periods presented in this document is included as an appendix to this document. Other historical reconciliations are available at investor.poly.com. © 2019 Plantronics Inc. All rights reserved. 3


 
Learn about our corporate strategy, financial update, product and partner news. FY21 outlook to be updated at our FY20 Investor Day on November 20, 2019. For dial-in and webcast information, please visit investor.poly.com. WEDNESDAY, NOVEMBER 20, 2019 8:30 AM - 1:00 PM ET © 2019 Plantronics Inc. All rights reserved. 4


 
OVERVIEW & STRATEGY © 2019 Plantronics Inc. All rights reserved. 5


 
PLANTRONICS + POLYCOM. NOW POLY. Poly is the global communications company that powers authentic human connection and collaboration. One to one, one to many, many to many. © 2019 Plantronics Inc. All rights reserved. 6


 
A COMPELLING INVESTMENT OPPORTUNITY $40B UC&C1 Market UC&C Market Leader Strategic Innovator • We operate in a $40B UC&C • Approximately $2B in annual • Reinventing the UC&C industry market with strong growth drivers revenues and over $400M TTM through product integration, EBITDA software and analytics • Rise in open architectures creates need for a unified endpoint • Platform-agnostic, intelligent • Valuable business insights available solutions through unique software and • Cloud deployments on rise with high demand for analytics and • Synergy execution ahead of analytics capabilities insights schedule • We address a $7B Enterprise TAM growing at 7% 1 Frost & Sullivan, March 2018. © 2019 Plantronics Inc. All rights reserved. 7


 
THREE FUNDAMENTAL INDUSTRY DRIVERS On-Premise to Move to Open Rise of Mobile Cloud UCC Offices Working © 2019 Plantronics Inc. All rights reserved. 8


 
OUR STRATEGY Deliver a comprehensive set of endpoints for the UC&C market and differentiate through software Management Analytics Interoperability Video Conference Desktop Headsets Software Services © 2019 Plantronics Inc. All rights reserved. 9


 
COST OPTIMIZATION THROUGH FLEXIBLE At Acquisition Current Model MANUFACUTURING 1 China China • Core expertise in hybrid manufacturing strategy allows for Mexico rapid production movement Rest of Asia Rest of Asia Mexico (Singapore, (Singapore, • Further mitigation efforts Thailand, Laos, Philippines, Taiwan) Taiwan, Vietnam, 2 expected to address List 4 tariffs Laos) • Inherent flexibility between Americas and Asia through dual Other Other sourcing 1 Chart scale is based on product manufacturing origin shipped to customers during FY2019. Excludes Consumer products. 2 Based on tariffs announced on August 1, 2019 © 2019 Plantronics Inc. All rights reserved. 10


 
SOFTWARE OVERVIEW Provide a better user experience and drive productivity Poly Manager Pro Monitoring, managing and maintaining a headset environment remotely, all while saving time and resources Data Analytics Device Management Monitoring Customers Quality Health and Safety Poly Device Insights Management Service Remote provisioning, managing, and troubleshooting phones, all while saving time and resources © 2019 Plantronics Inc. All rights reserved. 11


 
BROADER UC MARKET AND ECOSYSTEM Key Partners Our platform agnostic and best-in-class unified endpoint strategy differentiates us © 2019 Plantronics Inc. All rights reserved. 12


 
POLY ADDRESSES A $7B ENTERPRISE TAM GROWING AT 7% Software Analytics and Services provide further upside TAM CAGR TAM1 CY18-CY22 Commentary • Product portfolio well-positioned to $7.0B +7% capitalize on market growth • Potential for market share gains based $5.3B $2.7B +4% on near-term product introductions Poly is uniquely positioned as a market leader with broad Video $2.3B $0.6B +10% product offerings in • Capitalize on differentiated market large and growing end position as a high quality, platform markets Audio Conf $0.4B $1.9B +9% agnostic, intelligent endpoint provider SIP $1.3B Phones • Maintain market leadership, capitalize $1.8B +8% Enterprise $1.3B on growth in UC&C Headsets 2018 2022 1 Frost & Sullivan, Synergy, Wainhouse. © 2019 Plantronics Inc. All rights reserved. 13


 
NEW PRODUCT & PARTNER ANNOUNCEMENTS © 2019 Plantronics Inc. All rights reserved. 14


 
NEW PRODUCTS ACROSS THE PORTFOLIO ANNOUNCED OR COMING SOON © 2019 Plantronics Inc. All rights reserved. 15


 
INTRODUCING POLY STUDIO X30 AND X50 RADICALLY SIMPLE VIDEO BAR POWERING YOUR FAVORITE MEETING SERVICE © 2019 Plantronics Inc. All rights reserved. 16


 
THE ALL-NEW POLY VIDEO FAMILY Modular solution All-in-one USB All-in-one video bars for larger rooms Smart Systems STUDIO STUDIO X30 AND X50 G7500 MEDIALIGN Best low-cost alternative for Studio X30: Best for huddle Best for large customized Best for global turnkey BYOD workflows rooms and small offices conference rooms deployments with G7500 Studio X50: Best for small to medium sized rooms © 2019 Plantronics Inc. All rights reserved. 17


 
INTRODUCING THE CCX FAMILY THE NEW STANDARD FOR INTELLIGENT COMMUNICATIONS IN DESKTOP PHONES FOR MICROSOFT TEAMS © 2019 Plantronics Inc. All rights reserved. 18


 
INTRODUCING POLY TRIO 8300 SMART CONFERENCE PHONE FOR SMALL MEETING ROOMS © 2019 Plantronics Inc. All rights reserved. 19


 
INTRODUCING THE NEXT GENERATION OF SAVI WIRELESS HEADSETS POLY IS THE FIRST ENTERPRISE HEADSET COMPANY TO OFFER A DECT™ HEADSET WITH ACTIVE NOISE CANCELING © 2019 Plantronics Inc. All rights reserved. 20


 
Q2 FY20 EARNINGS RESULTS © 2019 Plantronics Inc. All rights reserved. 21


 
Q2 FY20 FINANCIAL OVERVIEW Non-GAAP Revenue of $470 million: • Driven by factors that are transitory in nature (e.g. aging video portfolio, Skype-to-Teams transition) and macro conditions. Non-GAAP gross margins of 52.4%, down 80 bps Y/Y. • Geographic mix and pricing programs impacted margins. Company expects margins to improve in FY21 with the transition to new portfolio announced in Q3 FY20. New portfolio begins to ship now with full rollout over the next few quarters. Non-GAAP operating expenses of $165 million, down $15 million Y/Y. • Cost synergies, lower variable compensation, and FX benefits. Non-GAAP operating margin of 17.3%, down 120 bps Y/Y, with TTM EBITDA of $399 million. Non-GAAP EPS of $1.24. © 2019 Plantronics Inc. All rights reserved. 22


 
NON-GAAP REVENUE BY CATEGORY & REGION ($MM) $520 $520 $470 $81 $460 $460 $470 Services APAC $98 $75 $77 $80 $91 $89 Video $61 $90 EMEA $138 $118 $131 $121 Voice $104 $99 Consumer $58 $44 Headsets $43 AMER $284 $262 $248 Enterprise $170 $175 $163 Headsets Q2 FY19 Q1 FY20 Q2 FY20 Q2 FY19 Q1 FY20 Q2 FY20 © 2019 Plantronics Inc. All rights reserved. 23


 
NON-GAAP OPERATING DETAILS ($MM) $277 $246 $96 $180 $165 $81 53.2% 52.4% 34.7% 35.1% 18.5% 17.3% Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 Q2 FY19 Q2 FY20 Gross Profit Operating Expenses Operating Income • Y/Y Decline of $31M or 80 • Y/Y decline of $15M or 8%. • Operating income decline basis points of $15M or 16% driven by • Gross profit margin lower gross margins decline driven by partially offset by lower geographic mix. operating expenses. © 2019 Plantronics Inc. All rights reserved. 24


 
TRAILING TWELVE MONTHS ADJUSTED EBITDA ($MM) TTM EBITDA: $399M $108 $105 $102 $98 $93 Q2 FY19 Q3 FY19 Q4 FY19 Q1 FY20 Q2 FY20 © 2019 Plantronics Inc. All rights reserved. 25


 
CASH & INVESTMENTS BRIDGE Q1 -Q2 FY20 ($MM) 201 © 2019 Plantronics Inc. All rights reserved. 26


 
DE-LEVERAGING PROGRESS ($MM) Q2 FY19 Q2 FY20 REPAID $128 MILLION OF DEBT IN THE LAST 12 MONTHS Gross Debt $1,775 $1,647 Cash & $306 $201 Investments $1,469 $1,446 Net Debt $1,469 $1,446 3.8x $1,100 3.6x 2.2x >$500 $391 $399 Q2 FY19 Q2 FY20 LTM Net Debt TTM Adj. EBITDA Net Leverage © 2019 Plantronics Inc. All rights reserved. 27


 
GUIDANCE & LONG TERM MODEL © 2019 Plantronics Inc. All rights reserved. 28


 
Q3 AND FY20 GUIDANCE (AS OF NOV 5, 2019) Q3 FY20 Guidance FY20 Guidance GAAP Net Revenue $383M - $423M $1.72B to $1.81B Non-GAAP Net Revenue1 $390M - $430M $1.76B to $1.84B Adjusted EBITDA2 $33M - $53M $283M - $323M Non-GAAP Diluted EPS2,3 $0.01 - $0.31 $2.94 - $3.74 1 Q3 and full year FY20 non-GAAP revenue guidance includes purchase accounting adjustments of $7.1 million and $34 million, respectively. 2 Q3 and full year FY20 Adjusted EBITDA and non-GAAP diluted EPS excludes estimated intangibles amortization expense of $45.8 million and $182.8 million, respectively. 3 EPS Guidance assumes approximately 40 million diluted average weighted shares and a non-GAAP effective tax rate of 16% to 18%. Poly does not intend to update these targets during the quarter or to report on its progress toward these targets. Poly will not comment on these targets to analysts or investors except by its press release announcing its third quarter fiscal year 2020 results or by other public disclosure. Any statements by persons outside Poly speculating on the progress of the third quarter or full fiscal year 2020 will not be based on internal company information and should be assessed accordingly by investors. With respect to adjusted EBITDA and diluted EPS guidance, the Company has determined that it is unable to provide quantitative reconciliations of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures with a reasonable degree of confidence in their accuracy without unreasonable effort, as items including stock based compensation, acquisition and integration costs, litigation gains and losses, and impacts from discrete tax adjustments and tax laws are inherently uncertain and depend on various factors, many of which are beyond the Company's control. Our business is inherently difficult to forecast, particularly with continuing uncertainty in regional economic conditions, currency fluctuations, customer cancellations and rescheduling, and there can be no assurance that expectations of incoming orders over the balance of the current quarter will materialize. © 2019 Plantronics Inc. All rights reserved. 29


 
4 Quarter Rolling Q3 Q4 Q1 Q2 Forecast ($MM) FY20 FY20 FY21 FY21 Revenue – Deferred GAAP PURCHASE Revenue Fair Value $7.1 $6.1 $5.1 $4.2 Adjustment ACCOUNTING COGS - Intangibles FORECAST $30.5 $30.5 $30.5 $29.4 Amortization1 SG&A - Intangibles $15.3 $15.3 $15.3 $15.3 Amortization 1 Subject to change as In-Process technology assets are placed into service. © 2019 Plantronics Inc. All rights reserved. 30


 
Long-Term Model Revenue % Growth Rate 5 - 8% LONG-TERM Non-GAAP Gross Margin 52 - 54% OPERATING MODEL Non-GAAP Operating Margin 21 - 24% Adj. EBITDA > $500M/yr Operating Cash Flow > $300M/yr © 2019 Plantronics Inc. All rights reserved. 31


 
SUPPLEMENTAL DATA & GAAP TO NON-GAAP RECONCILIATIONS © 2019 Plantronics Inc. All rights reserved. 32


 
COMBINED COMPARATIVE NON -GAAP INFORMATION Combined Comparative Basis1 Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 FY19 Q1 FY20 Q2 FY20 Q2 Y/Y Revenue $500M $520M $531M $488M $2,038M $460M $470M -10% Gross Profit $268M $277M $273M $268M $1,086M $257M $246M -11% Gross Margin 53.5% 53.2% 51.5% 55.0% 53.3% 55.8% 52.4% -80 bps Op. Expense $196M $180M $180M $178M $734M $171M $165M -8% Op. Income $72M $96M $93M $90M $352M $86M $81M -16% Op. Margin 14.4% 18.5% 17.6% 18.5% 17.3% 18.6% 17.3% -120 bps Diluted EPS NMF $1.51 $1.36 $1.44 $5.12 $1.32 $1.24 -18% Adj. EBITDA $86M $108M $105M $102M $402M $98M $93M -14% Op. Cash $75M $40M $47M -$3M $159M $8M $25M -38% Flow 1 Combined comparative results include Polycom results in historical periods prior to the closing of the acquisition for comparative purposes. See reconciliations to our GAAP results for additional details. © 2019 Plantronics Inc. All rights reserved. 33


 
AS-REPORTED NON-GAAP INFORMATION Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 FY19 Q1 FY20 Q2 FY20 Q2 Y/Y Revenue $221M $520M $531M $488M $1,759M $460M $470M -10% Gross Profit $111M $277M $273M $268M $929M $257M $246M -11% Gross Margin 50.1% 53.2% 51.5% 55.0% 52.8% 55.8% 52.4% -80 bps Op. Expense $75M $180M $180M $178M $613M $171M $165M -8% Op. Income $36M $96M $93M $90M $316M $86M $81M -16% Op. Margin 16.2% 18.5% 17.6% 18.5% 18.0% 18.6% 17.3% -120 bps Diluted EPS $0.74 $1.51 $1.36 $1.44 $5.12 $1.32 $1.24 -18% Adj. EBITDA $42M $108M $105M $102M $402M $98M $93M -14% Op. Cash $32M $40M $47M -$3M $116M $8M $25M -38% Flow © 2019 Plantronics Inc. All rights reserved. 34


 
TRENDED NON-GAAP REVENUE DATA Revenue by Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 FY19 Q1 FY20 Q2 FY20 Q1 Y/Y Category Voice1 $106M $121M $117M $107M $451M $104M $99M -19% Video1 $92M $89M $88M $86M $355M $61M $90M +2% Services1 $81M $81M $82M $77M $321M $77M $75M -7% Enterprise Headsets $168M $170M $173M $170M $681M $175M $163M -4% Consumer Headsets $54M $58M $70M $48M $230M $44M $43M -26% Total Revenue $500M $520M $531M $488M $2,038M $460M $470M -10% Revenue by Geography Americas $265M $284M $278M $255M $1,082M $261M $248M -13% EMEA $138M $138M $153M $142M $571M $119M $131M -5% APAC $97M $98M $99M $92M $386M $80M $91M -7% Total Revenue $500M $520M $531M $488M $2,038M $460M $470M -10% 1 Combined comparative results include Polycom results in historical periods prior to the closing of the acquisition for comparative purposes. See reconciliations to our GAAP results for additional details. © 2019 Plantronics Inc. All rights reserved. 35


 
ADJUSTED ENTERPRISE AND CONSUMER HEADSET REVENUE COMPARISON Q1 FY19 Q2 FY19 Q3 FY19 Q4 FY19 FY19 Q1 FY20 Q2 FY20 Q1 Y/Y As Reported: Enterprise $168M $170M $173M $170M $681M $175M $163M -4% Headsets As Reported: Consumer $54M $58M $70M $48M $230M $44M $43M -26% Headsets Adjusted Enterprise $186M $187M $190M $185M $748M $187M $173M -7% Headsets1 Adjusted Consumer $36M $41M $53M $33M $163M $32M $33M -20% Headsets1 FY19 average Adjusted Consumer Headsets gross margins of ~25% 1 For informational purposes related to our announcement to explore strategic alternatives for the Consumer business, Consumer Headsets and Enterprise Headsets shown here have been adjusted in all periods presented to reclassify revenues from the Mono Premium Bluetooth subcategory from As Reported Consumer Headsets into As Reported Enterprise Headsets. © 2019 Plantronics Inc. All rights reserved. 36


 
Unaudited Reconciliations of GAAP net revenue to non-GAAP net revenue ($ in thousands) Three Months Ended September 30, December 31, March 31, June 30, September 30, 2018 2018 2019 2019 2018 Net revenues from unaffiliated customers: Enterprise Headsets $ 169,978 $ 173,479 $ 169,783 $ 175,084 $ 162,933 Consumer Headsets 58,053 69,665 48,432 43,566 43,359 Voice 121,309 116,700 106,577 103,847 98,453 Video 85,922 85,597 83,966 60,248 90,392 Services 47,807 56,228 59,730 65,022 66,572 Total GAAP net revenues $ 483,069 $ 501,669 $ 468,488 $ 447,767 $ 461,709 Deferred revenue purchase accounting 36,585 28,923 19,316 12,159 8,524 Total non-GAAP net revenues $ 519,654 $ 530,592 $ 487,804 $ 459,926 $ 470,233 Net revenues by geographic area from unaffiliated customers: Americas $ 266,641 $ 265,119 $ 246,157 $ 255,940 $ 245,283 EMEA 128,957 146,388 137,955 116,979 128,973 APAC 87,471 90,162 84,376 74,848 87,453 Total GAAP net revenues $ 483,069 $ 501,669 $ 468,488 $ 447,767 $ 461,709 Deferred revenue purchase accounting 36,585 28,923 19,316 12,159 8,524 Total non-GAAP net revenues $ 519,654 $ 530,592 $ 487,804 $ 459,926 $ 470,233


 
Unaudited Reconciliations of GAAP measures to non-GAAP Historical Combined Comparative Measures ($ in thousands) Three Months Ended June 30 2018 Revenue by Product: Enterprise Headsets $ 167,642 Consumer Headsets 53,667 Voice1 106,280 Video1 92,001 Services1 80,829 Combined comparative total net revenues $ 500,419 Revenue by Region: Plantronics Americas net revenues $ 130,848 Polycom Americas net revenues1 133,976 Combined comparative Americas net revenues $ 264,824 Plantronics EMEA net revenues $ 63,589 Polycom EMEA net revenues1 74,726 Combined comparative EMEA net revenues $ 138,315 Plantronics APAC net revenues $ 26,871 Polycom APAC net revenues1 70,409 Combined comparative APAC net revenues $ 97,280 Combined comparative total net revenues $ 500,419 1 Voice, Video, and Services categories were introduced with the acquisition of Polycom on July 2, 2018. Historical Polycom revenues are prepared in accordance with U.S. GAAP and Polycom's significant accounting policies prior to the closing of the acquisition on July 2, 2018 and are shown here to arrive at combined comparative historical net revenues.


 
Unaudited Reconciliations of GAAP measures to non-GAAP Historical Combined Comparative Measures (continued) ($ in thousands) Plantronics GAAP gross profit $ 109,843 Polycom GAAP gross profit1 156,599 Combined comparative gross profit before adjustments $ 266,442 Stock-based compensation 963 Purchase accounting amortization 436 Other adjustments2 — Combined comparative adjusted gross profit $ 267,841 Combined comparative adjusted gross profit % 53.5% Plantronics GAAP operating income $ 20,649 Polycom GAAP operating income1 (30,589) Combined comparative operating income before adjustments $ (9,940) Amortization of Polycom goodwill and intangibles amortization 14,802 Stock-based compensation 8,150 Acquisition and integration fees 12,901 Restructuring and other related charges 2,847 Non-recurring legal-related and other adjustments2 43,446 Combined adjusted operating income $ 72,206 Combined adjusted operating profit % 14.4%


 
Unaudited Reconciliations of GAAP measures to Combined Comparative Adjusted EBITDA ($ in thousands) Three Months Ended June 30, 20181 Plantronics GAAP operating income $ 20,649 Polycom GAAP operating income2 (30,589) Combined comparative operating income before adjustments (9,940) Acquisition and integration fees 12,901 Stock-based compensation 8,150 Restructuring and other related charges 2,847 Other adjustments3 43,446 Depreciation and amortization4 29,231 Adjusted EBITDA 86,635 Unaudited Reconciliations of GAAP measures to non-GAAP Historical Combined Comparative Measures (continued) ($ in thousands) Three Months Ended June 30 2018 Plantronics Cash Flow from Operations $ 32,082 Polycom Cash Flow from Operations1 $ 43,059 Combined Comparative Cash Flow from Operations $ 75,141 1 Polycom results shown in these periods are prior to the close of the acquisition on July 2, 2018. These results are shown here to arrive at combined comparative historical results. 2 Prepared in accordance with U.S. GAAP and Polycom's significant accounting policies prior to the closing of the acquisition on July 2, 2018, and further adjusted in accordance with U.S. GAAP for subsequent events occurring after the balance sheet date of June 30, 2018. Refer to footnote 3 for further information. Includes losses from litigation settlements and immaterial adjustments to conform historical Polycom results to Plantronics non-GAAP policy. In the period ended June 30, 2018, this 3 includes litigation settlements of approximately $37 million related to the settlement of a previously disclosed FCPA matter and approximately $6 million related other legal settlements, both of which were recognized as subsequent events. More information on these and other legal matters is available in Note 7. Commitments and Contingencies within our Form 10-Q filed on February 6, 2019. 4 In the three months ending December 31, 2017, March 31, 2018, and June 30, 2018, depreciation and amortization includes amortization of Polycom goodwill in accordance with U.S. GAAP and Polycom's significant accounting policies prior to the closing of the acquisition on July 2, 2018.


 
PLANTRONICS, INC. UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES ($ in thousands, except per share data) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA - AS REPORTED Three Months Ended, June 30, September 30, December 31, March 31, June 30, September 30, 2018 2018 2018 2019 2019 2019 GAAP Net revenues $ 221,309 $ 483,069 $ 501,669 $ 468,488 $ 447,767 $ 461,709 Deferred revenue purchase accounting — 36,585 28,923 19,316 12,159 8,524 Non-GAAP Net revenues $ 221,309 $ 519,654 $ 530,592 $ 487,804 $ 459,926 $ 470,233 GAAP Gross profit $ 109,843 $ 152,629 $ 215,137 $ 216,531 $ 212,646 $ 206,071 Purchase accounting amortization — 55,668 27,575 31,118 30,000 30,716 Inventory valuation adjustment — 30,395 — — — — Deferred revenue purchase accounting — 36,585 28,923 19,316 12,159 8,524 Acquisition and integration fees — 217 404 435 922 88 Stock-based compensation 963 1,073 1,067 1,073 978 997 Rebranding costs — — — — 36 23 Non-GAAP Gross profit $ 110,806 $ 276,567 $ 273,106 $ 268,473 $ 256,741 $ 246,419 Non-GAAP Gross profit % 50.1% 53.2% 51.5% 55.0% 55.8% 52.4% GAAP Operating expenses $ 89,194 $ 238,605 $ 239,844 $ 235,790 $ 241,495 $ 211,681 Acquisition and integration fees (5,803) (26,036) (21,870) (13,888) (19,513) (10,569) Purchase accounting amortization — (15,279) (15,278) (15,281) (15,278) (15,278) Stock-based compensation (7,187) (9,767) (10,652) (10,152) (11,926) (13,696) Restructuring and other related charges (1,320) (7,261) (12,130) (11,983) (19,525) (5,847) Rebranding costs — — — (5,192) (5,419) (649) Other adjustments — — — (1,005) 1,162 (542) Non-GAAP Operating expenses $ 74,884 $ 180,262 $ 179,914 $ 178,289 $ 170,996 $ 165,100


 
PLANTRONICS, INC. UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES ($ in thousands, except per share data) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA - AS REPORTED (CONTINUED) Three Months Ended June 30, September 30, December 31, March 31, June 30, September 30, 2018 2018 2018 2019 2019 2019 GAAP Operating income $ 20,649 $ (85,976) $ (24,707) $ (19,259) $ (28,849) $ (5,610) Purchase accounting amortization — 70,947 42,853 46,399 45,278 45,994 Inventory valuation adjustment — 30,395 — — — — Deferred revenue purchase accounting — 36,585 28,923 19,316 12,159 8,524 Acquisition and integration fees 5,803 26,253 22,274 14,323 20,435 10,657 Stock-based compensation 8,150 10,840 11,719 11,225 12,904 14,693 Restructuring and other related charges 1,320 7,261 12,130 11,983 19,525 5,847 Rebranding costs — — — 5,192 5,455 672 Other adjustments — — — 1,005 (1,162) 542 Non-GAAP Operating income $ 35,922 $ 96,305 $ 93,192 $ 90,184 $ 85,745 $ 81,319 GAAP Diluted earnings per common share $ 0.42 $ (2.21) $ (1.06) $ (0.55) $ (1.14) $ (0.65) Purchase accounting amortization — 1.78 1.08 1.17 1.15 1.16 Inventory valuation adjustment — 0.76 — — — — Deferred revenue purchase accounting — 0.92 0.73 0.49 0.31 0.21 Stock-based compensation 0.24 0.27 0.30 0.28 0.33 0.37 Acquisition and integration fees 0.17 0.66 0.56 0.36 0.52 0.27 Restructuring and other related charges 0.04 0.18 0.31 0.30 0.49 0.15 Rebranding costs — — — 0.13 0.14 0.02 Other adjustments — — — (0.04) (0.03) 0.01 Income tax effect (0.14) (0.89) (0.57) (0.73) (0.46) (0.32) Effect of participating securities 0.01 — — — — — Effect of anti-dilutive securities — 0.04 0.01 0.03 0.01 0.02 Non-GAAP Diluted earnings per common share $ 0.74 $ 1.51 $ 1.36 $ 1.44 $ 1.32 $ 1.24 Shares used in diluted earnings per common share calculation: GAAP 33,534 39,281 39,314 39,089 39,239 39,584 non-GAAP 33,534 39,920 39,712 39,523 39,523 39,664


 
PLANTRONICS, INC. UNAUDITED RECONCILIATIONS OF GAAP OPERATING INCOME TO ADJUSTED EBITDA ($ in thousands) UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA Twelve Months Three Months Ended Ended September December September September June 30, 30, 31, March 31, June 30, 30, 30, 2018 2018 2018 2019 2019 2019 2019 GAAP operating income $ 20,649 $ (85,976) $ (24,707) $ (19,259) $ (28,849) $ (5,610) $ (78,425) Deferred revenue purchase accounting — 36,585 28,923 19,316 12,159 8,524 68,922 Inventory valuation adjustment — 30,395 — — — — — Acquisition and integration fees 5,803 26,253 22,274 14,323 20,435 10,657 67,689 Stock-based compensation 8,150 10,840 11,719 11,225 12,904 14,693 50,541 Restructuring and other related charges 1,320 7,261 12,130 11,983 19,525 5,847 49,485 Rebranding costs — — — 5,192 5,455 672 11,319 Other adjustments — — — 1,005 (1,162) 542 385 Depreciation and amortization 5,248 82,398 55,117 58,606 57,698 57,376 228,797 Adjusted EBITDA $ 41,170 $ 107,756 $ 105,456 $ 102,391 $ 98,165 $ 92,701 $ 398,713


 
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