EX-99.1 2 q320ex991earningsrelea.htm EXHIBIT 99.1 Exhibit


finalpolylogorgba03.jpg

Poly Announces Third Quarter Fiscal Year 2020 Financial Results
Company Begins Shipping Next-Gen Portfolio

SANTA CRUZ, Calif., - February 4, 2020 - Plantronics, Inc. (NYSE: PLT) ("Poly" or the "Company") today announced third quarter fiscal year 2020 results for the period ending December 31, 2019. Highlights of the third quarter include the following:
($ Millions, except percent and per-share data)1
Q3 FY20
Q3 FY19
 
YTD FY20
YTD FY192
GAAP Revenue

$384


$502

 

$1,294


$1,206

GAAP Gross Margin
37.4
%
42.9
%
 
43.5
%
39.6
%
GAAP Operating Income

($77
)

($25
)
 

($111
)

($90
)
GAAP Diluted EPS

($1.97
)

($1.06
)
 

($3.78
)

($3.08
)
Cash Flow from Operations

($17
)

$47

 

$16


$119

 
 
 
 
 
 
Non-GAAP Revenue

$392


$531

 

$1,322


$1,272

Non-GAAP Gross Margin
49.4
%
51.5
%
 
52.7
%
51.9
%
Non-GAAP Operating Income

$31


$93

 

$198


$225

Non-GAAP Diluted EPS

$0.30


$1.36

 

$2.85


$3.68

Adjusted EBITDA

$43


$105

 

$234


$256


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.

“While we are disappointed with our results this quarter, particularly Enterprise headsets, we have now begun shipping the first products built on our next-generation architecture for the cloud-connected world,” said Joe Burton, President and Chief Executive Officer. “As we ramp the new product portfolio and address our sales and channel distribution issues, we are committed to return to sustained profitable revenue growth.”


Results Compared to November 5, 2019 Guidance
 
Q3 FY20 Results
Q3 FY20 Guidance Range3
GAAP Net Revenue
$384M
$383M - $423M
Non-GAAP Net Revenue
$392M
$390M - $430M
Adjusted EBITDA
$43M
$33M - $53M
Non-GAAP Diluted EPS
$0.30
$0.01 - $0.31

3The non-GAAP revenue guidance range shown here excludes the $7.1 million impact of purchase accounting related to recording deferred revenue at fair value at the time of the acquisition.

“We reduced both channel and on-hand inventory in fiscal Q3,” said Chuck Boynton, Executive Vice President and Chief Financial Officer. “In addition, we are announcing the sale of our Consumer Gaming business, which we expect to improve margins and working capital. Lastly, we continue to optimize the remaining Consumer portfolio to improve focus and profitability.”




1




Highlights for the Third Quarter and Fiscal Year 2020

Recently introduced products now shipping for revenue include:
Studio X30 and X50 video bars with optional TC8 room controller
CCX 400 and 500 desktop phones designed for Microsoft Teams
Voyager 4200 and Voyager 5200 Office Series, EncorePro 300, and MDA 500QD


Many of Poly's most popular headset families now officially support Zoom for Zoom Meetings and Zoom Phone. The combined Poly portfolio now offers the broadest selection of Zoom certified and Zoom-supported end points available in the market today.


Poly announced the appointment of Carl Wiese as EVP and Chief Revenue Officer in charge of global sales. Wiese brings more than 30 years of experience in sales, marketing, services, and product management for enterprise technology leaders.


The Company has entered into a definitive agreement to sell its Consumer Gaming assets and expects the transaction to close by the end of March.



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 March 10, 2020, to all shareholders of record as of the close of market on February 20, 2020.

Business Outlook

The following statements are based on the Company's current expectations, and many of these statements are forward-looking. Actual results are subject to a variety of risks and uncertainties and may differ materially from the Company's expectations. Please refer to the Forward Looking Statements Safe Harbor section of this press release below.

The following represents the expected range of financial results for the fourth quarter 2020 (all amounts assuming currency rates remain stable):
 
Q4 FY20 Guidance
GAAP Net Revenue
$354M - $394M
Non-GAAP Net Revenue1
$360M - $400M
Adjusted EBITDA2
$20M - $45M
Non-GAAP Diluted EPS2,3
$(0.36) - $0.19

1 Q4 non-GAAP revenue guidance excludes anticipated purchase accounting adjustments of $6.1 million.
2 Q4 Adjusted EBITDA and non-GAAP diluted EPS guidance excludes estimated intangibles amortization expense of $46.3 million. With respect to adjusted EBITDA and diluted EPS guidance, the Company has determined that it is unable to provide quantitative reconciliations of these forward-looking non-GAAP measures to the most directly comparable forward-looking GAAP measures with a reasonable degree of confidence in their accuracy without unreasonable effort, as items including stock based compensation, acquisition and integration costs, litigation gains and losses, and impacts from discrete tax adjustments and tax laws are inherently uncertain and depend on various factors, many of which are beyond the Company's control.
3 EPS guidance assumes approximately 41 million diluted average weighted shares and a non-GAAP effective tax rate of 6% to 8%.







2



Conference Call and Earnings Presentation

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

We have scheduled a conference call to discuss third quarter fiscal year 2020 financial results. The conference call will take place today, February 4, 2020, 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 #8387169 will be available until April 5, 2020 at (855) 859-2056 for callers from North America and at (404) 537-3406 for all other callers.

Use of Non-GAAP Financial Information

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

Forward Looking Statements Safe Harbor

This 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 execute to drive sales and sustainable profitable revenue growth; (ii) our expectations for new products launches, the timing of their releases and their expected impact on future growth and on our existing products; (iii) our expectations to avoid business disruption due to potential global health issues, (iv) our expectations for synergies in the quarter and additional anticipated cost savings; (v) our expectations related to the sale of our gaming product line and further optimization of our Consumer product line; (vi) beliefs regarding the strategic and financial benefits of focusing on our Enterprise business, simplifying business processes and reducing working capital; (vii) our expectations for operating cash flow and debt; (viii) expectations relating to our Q-4 and full Fiscal Year 2020 earnings guidance; (ix) estimates of GAAP and non-GAAP financial results for the fourth quarter and full Fiscal Year 2020, including net revenues, purchase accounting adjustments, adjusted EBITDA, tax rates, intangibles amortization, and diluted weighted average shares outstanding and diluted EPS; (x) expectations related to our customers’ purchasing decisions and our ability to match product production to demand; (xi) our expectations of the impact of the acquisition of Polycom as it relates to our strategic vision and additional market and strategic partnership opportunities for our combined hardware and services offerings; (xii) our beliefs regarding


3



the UC&C market, market dynamics and opportunities, and customer and partner behavior as well as our position in the market; (xiii) our belief that the increased adoption of certain technologies and our open architecture approach has and will continue to increase demand for our solutions; (xiv) expectations related to the micro and macro-economic conditions in our domestic and international markets and their impact on our future business; (xv) our forecasts and expectations regarding liquidity, capital resources and results of operations along with our intentions concerning the repayment of our debt obligations and our ability to draw funds on our credit facility as needed; (xvi) our forecast and estimates with respect to tax matters, including expectations with respect to utilizing our deferred tax assets; (xvii) our expectations regarding pending and potential future litigation, 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 in how we use our cash and 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; (x) the challenges of sales execution across different product lines; (xi) our expectations regarding our the potential that our due diligence did not uncover risks and potential liabilities of Polycom;
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, distributors, VARs, 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 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


4



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;
risks associated with forecasting sales and procurement demands, which are 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;
seasonality in one or more of our product categories;
the potential impact to our results of operations from tax rulings and interpretations;
risks related to our forecasts and expectations regarding liquidity, capital resources and results of operations along with our intentions concerning the repayment of our debt obligations and our ability to draw funds on our credit facility as needed;
potential fluctuations in our cash provided by operating activities;
risks associated with our anticipated range of capital expenditures for the remainder of Fiscal Year 2020;
the sufficiency of our cash, cash equivalents, and cash from operations to sustain future operations and discretionary cash requirements;
our expenses and expenditures, including research, development and engineering as well selling, general and administrative;
changes in tax laws that could increase our future tax rate and payments related to unrecognized tax benefits and/or reduce our deferred tax assets;
risks related to our forecasts and estimates with respect to tax matters, including expectations with respect to utilizing our deferred tax assets;
if we are unable to generate sufficient amount of income, a substantial valuation allowance to reduce the deferred tax assets may be required;
our ability to pay future stockholder dividends or repurchase stock;
our beliefs concerning interest rates and foreign currency exchange rates, our exposure to changes in each, and the benefits and risks of our hedging activities;
the risks of global health issues impacting supply chain, distribution, product availability, sales execution and/or other business disruption to our business; and
risks related to adverse results in pending litigation or other regulatory proceedings.


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


5



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:

About Poly

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

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

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






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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
 
Nine Months Ended
 
 
 
December 31,
 
December 31,
 
 
 
2019
 
2018
 
2019
 
2018
 
Net revenues:
 
 
 
 
 
 
 
 
 
Net product revenues
 
$
316,633

 
$
445,441

 
$
1,094,515

 
$
1,102,012

 
Net services revenues
 
67,838

 
56,228

 
199,432

 
104,035

 
Total net revenues
 
384,471

 
501,669

 
1,293,947

 
1,206,047

 
Cost of revenues:
 
 
 
 
 
 
 
 
 
Cost of product revenues
 
220,469

 
259,673

 
658,408

 
676,616

 
Cost of service revenues
 
20,156

 
26,859

 
72,976

 
51,822

 
Total cost of revenues
 
240,625

 
286,532

 
731,384

 
728,438

 
Gross profit
 
143,846

 
215,137

 
562,563

 
477,609

 
Gross profit %
 
37.4
 %
 
42.9
 %
 
43.5
 %
 
39.6
 %
 
Operating expenses:
 
 
 
 
 
 
 
 
 
Research, development, and engineering
 
53,769

 
59,661

 
170,708

 
140,409

 
Selling, general, and administrative
 
144,978

 
168,053

 
457,004

 
406,553

 
(Gain) loss, net from litigation settlements
 

 

 
(1,162
)
 
(30
)
 
Restructuring and other related charges
 
21,724

 
12,130

 
47,096

 
20,711

 
Total operating expenses
 
220,471

 
239,844

 
673,646

 
567,643

 
Operating income
 
(76,625
)
 
(24,707
)
 
(111,083
)
 
(90,034
)
 
Operating income %
 
(19.9
)%
 
(4.9
)%
 
(8.6
)%
 
(7.5
)%
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
(22,533
)
 
(25,032
)
 
(70,262
)
 
(56,252
)
 
Other non-operating income, net
 
967

 
125

 
675

 
3,731

 
Income before income taxes
 
(98,191
)
 
(49,614
)
 
(180,670
)
 
(142,555
)
 
Income tax expense (benefit)
 
(19,708
)
 
(7,880
)
 
(31,406
)
 
(28,584
)
 
Net income (loss)
 
$
(78,483
)
 
$
(41,734
)
 
$
(149,264
)
 
$
(113,971
)
 
 
 
 
 
 
 
 
 
 
 
% of net revenues
 
(20.4
)%
 
(8.3
)%
 
(11.5
)%
 
(9.4
)%
 
 
 
 
 
 
 
 
 
 
 
Earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
$
(1.97
)
 
$
(1.06
)
 
$
(3.78
)
 
$
(3.08
)
 
Diluted
 
$
(1.97
)
 
$
(1.06
)
 
$
(3.78
)
 
$
(3.08
)
 
 
 
 
 
 
 
 
 
 
 
Shares used in computing earnings per common share:
 
 
 
 
 
 
 
 
 
Basic
 
39,784

 
39,314

 
39,535

 
37,063

 
Diluted
 
39,784

 
39,314

 
39,535

 
37,063

 
 
 
 
 
 
 
 
 
 
 
Effective tax rate
 
(20.1
)%
 
(15.9
)%
 
(17.4
)%
 
(20.1
)%
 


7



PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
 
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
 
December 31,
 
March 31,
 
 
 
2019
 
2019
 
ASSETS
 
 
 
 
 
Cash and cash equivalents
 
$
156,821

 
$
202,509

 
Short-term investments
 
15,317

 
13,332

 
Total cash, cash equivalents, and short-term investments
 
172,138

 
215,841

 
Accounts receivable, net
 
246,318

 
337,671

 
Inventory, net
 
215,038

 
177,146

 
Other current assets
 
54,533

 
50,488

 
Total current assets
 
688,027

 
781,146

 
Property, plant, and equipment, net
 
177,482

 
204,826

 
Purchased intangibles, net
 
688,258

 
825,675

 
Goodwill
 
1,279,897

 
1,278,380

 
Deferred tax and other assets
 
97,203

 
26,508

 
Total assets
 
$
2,930,867

 
$
3,116,535

 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

 
Accounts payable
 
$
122,314

 
$
129,514

 
Accrued liabilities
 
363,394

 
398,715

 
Total current liabilities
 
485,708

 
528,229

 
Long-term debt, net of issuance costs
 
1,620,354

 
1,640,801

 
Long-term income taxes payable
 
98,386

 
83,121

 
Other long-term liabilities
 
138,342

 
142,697

 
Total liabilities
 
2,342,790

 
2,394,848

 
Stockholders' equity
 
588,077

 
721,687

 
Total liabilities and stockholders' equity
 
$
2,930,867

 
$
3,116,535

 
 
 
 
 
 
 




8



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,
 
 
 
2019
 
2018
 
2019
 
2018
 
Cash flows from operating activities
 
 
 
 
 
 
 
 
 
Net Income
 
$
(78,483
)
 
$
(41,734
)
 
$
(149,264
)
 
$
(113,971
)
 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
57,556

 
55,117

 
172,630

 
142,763

 
Amortization of debt issuance cost
 
1,340

 
1,419

 
4,062

 
3,188

 
Stock-based compensation
 
13,902

 
11,719

 
41,499

 
30,709

 
Deferred income taxes
 
(17,369
)
 
(21,931
)
 
(66,171
)
 
(39,987
)
 
Provision for excess and obsolete inventories
 
13,394

 
2,073

 
19,076

 
4,881

 
Restructuring charges
 
21,724

 
12,130

 
47,096

 
20,711

 
Cash payments for restructuring charges
 
(6,936
)
 
(3,827
)
 
(29,885
)
 
(11,222
)
 
Other operating activities
 
(5,693
)
 
60

 
3,201

 
9,070

 
Changes in assets and liabilities:
 
 
 
 
 
 
 
 
 
Accounts receivable, net
 
30,856

 
(12,075
)
 
34,634

 
(35,938
)
 
Inventory, net
 
6,264

 
(5,362
)
 
(49,320
)
 
11,018

 
Current and other assets
 
14,790

 
33,149

 
24,142

 
30,456

 
Accounts payable
 
(45,600
)
 
(4,108
)
 
(10,690
)
 
16,519

 
Accrued liabilities
 
(15,212
)
 
33,172

 
(46,906
)
 
72,677

 
Income taxes
 
(7,744
)
 
(13,110
)
 
22,251

 
(21,631
)
 
Cash provided by operating activities
 
$
(17,211
)
 
$
46,693

 
$
16,355

 
$
119,243

 
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities
 
 
 
 
 
 
 
 
 
Proceeds from sale of investments
 
7

 
1,159

 
177

 
125,799

 
Proceeds from maturities of investments
 

 

 

 
131,017

 
Purchase of investments
 
(166
)
 
(162
)
 
(972
)
 
(698
)
 
Acquisitions, net of cash acquired
 

 
8,001

 

 
(1,642,241
)
 
Capital expenditures
 
(7,724
)
 
(8,613
)
 
(16,984
)
 
(16,148
)
 
Proceeds from sale of property and equipment
 

 

 
2,142

 

 
Cash provided by (used for) investing activities
 
$
(7,883
)
 
$
385

 
$
(15,637
)
 
$
(1,402,271
)
 
 
 
 
 
 
 
 
 
 
 
Cash flows from financing activities
 
 
 
 
 
 
 
 
 
Repurchase of common stock
 

 
(4,780
)
 

 
(4,780
)
 
Employees' tax withheld and paid for restricted stock and restricted stock units
 
(388
)
 
(521
)
 
(9,669
)
 
(13,863
)
 
Proceeds from issuances under stock-based compensation plans
 
1

 
53

 
6,617

 
14,925

 
Repayments of long-term debt
 

 

 
(25,000
)
 

 
Proceeds from debt issuance, net


 

 

 
1,244,713

 
Payment of cash dividends
 
(5,988
)
 
(5,971
)
 
(17,910
)
 
(16,953
)
 
Cash used for financing activities
 
$
(6,375
)
 
$
(11,219
)
 
$
(45,962
)
 
$
1,224,042

 
Effect of exchange rate changes on cash and cash equivalents
 
1,848

 
1,211

 
(444
)
 
(3,519
)
 
Net increase (decrease) in cash and cash equivalents
 
(29,621
)
 
37,070

 
(45,688
)
 
(62,505
)
 
Cash and cash equivalents at beginning of period
 
186,442

 
291,086

 
202,509

 
390,661

 
Cash and cash equivalents at end of period
 
$
156,821

 
$
328,156

 
$
156,821

 
$
328,156

 
 
 
 
 
 
 
 
 
 
 


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
 
Nine Months Ended
 

December 31,
 
December 31,
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
GAAP Net revenues
$
384,471

 
$
501,669

 
$
1,293,947

 
$
1,206,047

 
Deferred revenue purchase accounting
7,131

 
28,923

 
27,815

 
65,508

 
Non-GAAP Net revenues
$
391,602

 
$
530,592

 
$
1,321,762

 
$
1,271,555

 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
$
143,846

 
$
215,137

 
$
562,563

 
$
477,609

 
Purchase accounting amortization
30,819

 
27,575

 
91,535

 
83,243

 
Inventory valuation adjustment

 

 

 
30,395

 
Deferred revenue purchase accounting
7,131

 
28,923

 
27,815

 
65,508

 
Consumer optimization
10,415

 

 
10,415

 

 
Acquisition and integration fees
46

 
404

 
1,056

 
621

 
Stock-based compensation
1,019

 
1,067

 
2,994

 
3,103

 
Rebranding costs
54

 

 
113

 

 
Non-GAAP Gross profit
$
193,330

 
$
273,106

 
$
696,491

 
$
660,479

 
Non-GAAP Gross profit %
49.4
%
 
51.5
%
 
52.7
%
 
51.9
%
 
 
 
 
 
 
 
 
 
 
GAAP Research, development, and engineering
$
53,769

 
$
59,661

 
$
170,708

 
$
140,409

 
Stock-based compensation
(4,584
)
 
(2,887
)
 
(12,516
)
 
(7,877
)
 
Acquisition and integration fees
(538
)
 
(95
)
 
(2,439
)
 
(151
)
 
Other adjustments

 

 
(542
)
 

 
Non-GAAP Research, development, and engineering
$
48,647

 
$
56,679

 
$
155,211

 
$
132,381

 
 
 
 
 
 
 
 
 
 
GAAP Selling, general, and administrative
$
144,978

 
$
168,053

 
$
457,004

 
$
406,553

 
Acquisition and integration fees
(7,715
)
 
(21,775
)
 
(35,896
)
 
(53,558
)
 
Purchase accounting amortization
(15,278
)
 
(15,278
)
 
(45,834
)
 
(30,557
)
 
Stock-based compensation
(8,299
)
 
(7,765
)
 
(25,989
)
 
(19,729
)
 
Rebranding costs
(324
)
 

 
(6,392
)
 

 
Non-GAAP Selling, general, and administrative
$
113,362

 
$
123,235

 
$
342,893

 
$
302,709

 
 
 
 
 
 
 
 
 
 
GAAP Operating expenses
$
220,471

 
$
239,844

 
$
673,646

 
$
567,643

 
Acquisition and integration fees
(8,253
)
 
(21,870
)
 
(38,335
)
 
(53,709
)
 
Purchase accounting amortization
(15,278
)
 
(15,278
)
 
(45,834
)
 
(30,557
)
 
Stock-based compensation
(12,883
)
 
(10,652
)
 
(38,505
)
 
(27,606
)
 
Restructuring and other related charges
(21,724
)
 
(12,130
)
 
(47,096
)
 
(20,711
)
 
Rebranding costs
(324
)
 

 
(6,392
)
 

 
Other adjustments

 

 
620

 

 
Non-GAAP Operating expenses
$
162,009

 
$
179,914

 
$
498,104

 
$
435,060

 
 
 
 
 
 
 
 
 
 

     


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
 
Nine Months Ended
 
 
December 31,
 
December 31,
 
 
2019
 
2018
 
2019
 
2018
 
GAAP Operating income
$
(76,625
)
 
$
(24,707
)
 
$
(111,083
)
 
$
(90,034
)
 
Purchase accounting amortization
46,097

 
42,853

 
137,369

 
113,800

 
Inventory valuation adjustment

 

 

 
30,395

 
Deferred revenue purchase accounting
7,131

 
28,923

 
27,815

 
65,508

 
Consumer optimization
10,415

 

 
10,415

 

 
Acquisition and integration fees
8,299

 
22,274

 
39,391

 
54,330

 
Stock-based compensation
13,902

 
11,719

 
41,499

 
30,709

 
Restructuring and other related charges
21,724

 
12,130

 
47,096

 
20,711

 
Rebranding costs
378

 

 
6,505

 

 
Other adjustments

 

 
(620
)
 

 
Non-GAAP Operating income
$
31,321

 
$
93,192

 
$
198,387

 
$
225,419

 
 
 
 
 
 
 
 
 
 
GAAP Net income
$
(78,483
)
 
$
(41,734
)
 
$
(149,264
)
 
$
(113,971
)
 
Purchase accounting amortization
46,097

 
42,853

 
137,369

 
113,800

 
Inventory valuation adjustment

 

 

 
30,395

 
Deferred revenue purchase accounting
7,131

 
28,923

 
27,815

 
65,508

 
Consumer optimization
10,415

5 

 
10,415

5 

 
Acquisition and integration fees
8,299

 
22,274

 
39,391

 
54,330

 
Stock-based compensation
13,902

 
11,719

 
41,499

 
30,709

 
Restructuring and other related charges
21,724

 
12,130

 
47,096

 
20,711

 
Rebranding costs
378

 

 
6,505

 

 
Other adjustments

 

1 

(620
)
1, 2 

 
Income tax effect of above items
(17,021
)
 
(18,036
)
 
(45,015
)
 
(56,934
)
 
Income tax effect of unusual tax items
(482
)
3 
(4,028
)
4 
(2,001
)
3 
(5,387
)
4 

Non-GAAP Net income
$
11,960

 
$
54,101

 
$
113,190

 
$
139,160

 
 
 
 
 
 
 
 
 
 
GAAP Diluted earnings per common share
$
(1.97
)
 
$
(1.06
)
 
$
(3.78
)
 
$
(3.08
)
 
Purchase accounting amortization
1.16

 
1.08

 
3.46

 
3.01

 
Inventory valuation adjustment

 

 

 
0.80

 
Deferred revenue purchase accounting
0.18

 
0.73

 
0.70

 
1.73

 
Consumer optimization
0.26

 

 
0.26

 

 
Stock-based compensation
0.35

 
0.30

 
1.04

 
0.81

 
Acquisition and integration fees
0.21

 
0.56

 
0.99

 
1.44

 
Restructuring and other related charges
0.54

 
0.31

 
1.19

 
0.55

 
Rebranding costs
0.01

 

 
0.16

 

 
Other adjustments

 

 
(0.01
)
 

 
Income tax effect
(0.44
)
 
(0.57
)
 
(1.19
)
 
(1.65
)
 
Effect of anti-dilutive securities

 
0.01

 
0.03

 
0.07

 
Non-GAAP Diluted earnings per common share
$
0.30

 
$
1.36

 
$
2.85

 
$
3.68

 
 
 
 
 
 
 
 
 
 
Shares used in diluted earnings per common share calculation:
GAAP
39,784

 
39,314

 
39,535

 
37,063

 
non-GAAP
39,870

 
39,712

 
39,731

 
37,819

 


11



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.
5 
Excluded amounts represent inventory related reserves associated with optimizing the consumer product portfolio.


12



PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands)
 
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
 
December 31,
 
March 31,
 
June 30,
 
September 30,
 
December 31,
 
December 31,
 
 
 
2018
 
2019
 
2019
 
2019
 
2019
 
2019
 
GAAP operating income
 
$
(24,707
)
 
$
(19,259
)
 
$
(28,849
)
 
$
(5,610
)
 
$
(76,625
)
 
$
(130,343
)
 
Deferred revenue purchase accounting
 
28,923

 
19,316

 
12,159

 
8,524

 
7,131

 
47,130

 
Consumer optimization
 

 

 

 

 
10,415

 
10,415

 
Acquisition and integration fees
 
22,274

 
14,323

 
20,435

 
10,657

 
8,299

 
53,714

 
Stock-based compensation
 
11,719

 
11,225

 
12,904

 
14,693

 
13,902

 
52,724

 
Restructuring and other related charges
 
12,130

 
11,983

 
19,525

 
5,847

 
21,724

 
59,079

 
Rebranding costs
 

 
5,192

 
5,455

 
672

 
378

 
11,697

 
Other adjustments
 

 
1,005

 
(1,162
)
 
542

 

 
385

 
Depreciation and amortization
 
55,117

 
58,606

 
57,698

 
57,376

 
57,556

 
231,236

 
Adjusted EBITDA
 
$
105,456

 
$
102,391

 
$
98,165

 
$
92,701


$
42,780


$
336,037

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





13