SAN JOSE, Calif.--(BUSINESS WIRE)--Polycom, Inc. (Nasdaq: PLCM) today reported second quarter 2016 revenues of $288 million. On a GAAP basis, Polycom reported a net loss of $10 million, or 7 cents per share for the second quarter 2016. On a non-GAAP basis, Polycom reported net income of $29 million and earnings of 21 cents per diluted share. Polycom’s quarterly reconciliation of GAAP to non-GAAP performance is provided in the tables at the end of this press release.
“Polycom delivered solid operating performance despite a more challenging top line,” said Peter Leav, President and Chief Executive Officer. “Asia Pacific posted strong sequential growth, driven by higher revenues in China and Australia.”
| ($ in millions, except per share data) | Q2 2016 | ||||||||
| Revenues | $ | 287.8 | |||||||
| GAAP gross profit margin | 56.0 | % | |||||||
| GAAP operating expenses | $ | 162.7 | |||||||
| GAAP operating margin | (0.5 | )% | |||||||
| GAAP EPS | $ | (0.07 | ) | ||||||
| Non-GAAP gross profit margin | 57.4 | % | |||||||
| Non-GAAP operating expenses | $ | 128.7 | |||||||
| Non-GAAP operating margin | 12.7 | % | |||||||
| Non-GAAP EPS | $ | 0.21 | |||||||
“Polycom continued to exhibit sound financial management,” said Laura Durr, Chief Financial Officer. “We continue to generate positive operating cash flow and ended the quarter with $722 million in cash and investments.”
On a comparative basis, consolidated financial results were:
| ($ in millions, except per share data) | Q2 2016 | Q1 2016 | Q2 2015 | Quarter-Over-Quarter Change | Year-Over-Year Change | |||||||||||||||||||||||||
| Revenues | $ | 287.8 | $ | 290.1 | $ | 316.6 | (1 | )% | (9 | )% | ||||||||||||||||||||
| GAAP net (loss) income | $ | (10.0 | ) | $ | 3.3 | $ | 19.6 | (403 | )% | (151 | )% | |||||||||||||||||||
| GAAP EPS | $ | (0.07 | ) | $ | 0.02 | $ | 0.14 | (450 | )% | (150 | )% | |||||||||||||||||||
| Non-GAAP net income | $ | 29.4 | $ | 25.7 | $ | 29.9 | 14 | % | (2 | )% | ||||||||||||||||||||
| Non-GAAP EPS | $ | 0.21 | $ | 0.19 | $ | 0.22 | 11 | % | (5 | )% | ||||||||||||||||||||
The Americas declined both sequentially and year-over-year. Sequential and year-over-year results for EMEA were primarily impacted by foreign exchange. Asia Pacific grew sequentially as a result of growth in China and Australia, but was down on a year-over-year basis.
In terms of product category results, UC Group revenues declined sequentially and year-over-year, primarily as a result of lower UC Group revenues in the Americas and EMEA regions. UC Personal revenue increased sequentially and year-over-year. UC Platform revenue grew sequentially as a result of China, which had higher overall revenue this quarter.
On a geographic basis, consolidated revenues were comprised of:
| ($ in millions) | Q2 2016 | Q1 2016 | Q2 2015 | Quarter-Over-Quarter Change | Year-Over-Year Change | ||||||||||||||||||||||||||
| Americas | $ | 142.0 | $ | 155.5 | $ | 158.3 | (9 | )% | (10 | )% | |||||||||||||||||||||
| % of total revenues | 49 | % | 54 | % | 50 | % | |||||||||||||||||||||||||
|
Europe, Middle East & Africa
(EMEA) |
72.7 | 73.5 | 80.9 | (1 | )% | (10 | )% | ||||||||||||||||||||||||
| % of total revenues | 25 | % | 25 | % | 26 | % | |||||||||||||||||||||||||
| Asia Pacific | 73.1 | 61.1 | 77.4 | 20 | % | (6 | )% | ||||||||||||||||||||||||
| % of total revenues | 26 | % | 21 | % | 24 | % | |||||||||||||||||||||||||
| Totals * | $ | 287.8 | $ | 290.1 | $ | 316.6 | (1 | )% | (9 | )% | |||||||||||||||||||||
* may not foot due to rounding
By product category, inclusive of its service component, consolidated revenues were comprised of:
| ($ in millions) | Q2 2016 | Q1 2016 | Q2 2015 | Quarter-Over-Quarter Change | Year-Over-Year Change | |||||||||||||||||||||||||||
| UC Group Systems | $ | 171.4 | $ | 178.9 | $ | 195.2 | (4 | )% | (12 | )% | ||||||||||||||||||||||
| % of total revenues | 60 | % | 62 | % | 62 | % | ||||||||||||||||||||||||||
| UC Personal Devices | 68.8 | 67.8 | 66.8 | 1 | % | 3 | % | |||||||||||||||||||||||||
| % of total revenues | 24 | % | 23 | % | 21 | % | ||||||||||||||||||||||||||
| UC Platform | 47.6 | 43.4 | 54.6 | 10 | % | (13 | )% | |||||||||||||||||||||||||
| % of total revenues | 16 | % | 15 | % | 17 | % | ||||||||||||||||||||||||||
| Totals * | $ | 287.8 | $ | 290.1 | $ | 316.6 | (1 | )% | (9 | )% | ||||||||||||||||||||||
* may not foot due to rounding
In the second quarter of 2016, Polycom generated a total of $19 million in operating cash flow. Cash and investments at the end of the second quarter of 2016 totaled $722 million, of which approximately $297 million is located in the United States. Net of existing debt, cash and investments at the end of the second quarter of 2016 totaled $490 million.
Forward Looking Statements and Risk Factors
This release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding future profitability and operating cash flow. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact on our business of the recent announcement regarding the proposed acquisition of Polycom by entities affiliated with Siris Capital Group, LLC, the impact of competition on our product sales and on our customers and partners, and any resulting loss of business; the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources than we do; potential fluctuations in results and future growth rates; risks associated with global economic conditions and external market factors; the market acceptance of our products and changing market demands, including demands for differing technologies or product and services offerings; our ability to successfully implement process improvements and cost containment initiatives; changes to our strategic areas of focus and investment; our ability to successfully integrate our acquisitions into our business; possible delays in the development, availability and shipment of new products due to engineering, manufacturing or other delays; increasing costs and the availability of capital; changes in key sales and other personnel that may cause disruption to the business; the impact of restructuring actions; and the impact of global conflicts that may adversely impact our business. Many of these risks and uncertainties are discussed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.
GAAP to non-GAAP Reconciliation
To supplement our consolidated financial statements presented on a GAAP basis, Polycom uses non-GAAP measures of operating results, net (loss) income and (loss) income per share, which are adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Polycom’s underlying operational results and trends and our marketplace performance. The non-GAAP results are an indication of our baseline performance before gains, losses, or other charges that are considered by management to be outside of our core operating results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net (loss) income or diluted net (loss) income per share prepared in accordance with GAAP in the United States.
About Polycom
Polycom helps organizations unleash the power of human collaboration. More than 400,000 companies and institutions worldwide defy distance with secure video, voice and content solutions from Polycom to increase productivity, speed time to market, provide better customer service, expand education and save lives. Polycom and its global partner ecosystem provide flexible collaboration solutions for any environment that deliver the best user experience, the broadest multi-vendor interoperability and unmatched investment protection. Visit www.polycom.com or connect with us on Twitter, Facebook and LinkedIn to learn more.
© 2016 Polycom, Inc. All rights reserved. POLYCOM®, the Polycom logo, and the names and marks associated with Polycom’s products are trademarks and/or service marks of Polycom, Inc. and are registered and/or common law marks in the United States and various other countries. All other trademarks are property of their respective owners.
|
POLYCOM, INC. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) |
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| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
|
June 30,
2016 |
June 30,
2015 |
June 30,
2016 |
June 30,
2015 |
|||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||
| Product revenues | $ | 201,715 | $ | 221,896 | $ | 404,975 | $ | 455,583 | ||||||||||||||||||||
| Service revenues | 86,064 | 94,679 | 172,879 | 191,692 | ||||||||||||||||||||||||
| Total revenues | 287,779 | 316,575 | 577,854 | 647,275 | ||||||||||||||||||||||||
| Cost of revenues: | ||||||||||||||||||||||||||||
| Cost of product revenues | 94,029 | 95,752 | 189,084 | 197,021 | ||||||||||||||||||||||||
| Cost of service revenues | 32,478 | 34,898 | 63,669 | 71,509 | ||||||||||||||||||||||||
| Total cost of revenues | 126,507 | 130,650 | 252,753 | 268,530 | ||||||||||||||||||||||||
| Gross profit | 161,272 | 185,925 | 325,101 | 378,745 | ||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||||
| Sales and marketing | 82,505 | 89,433 | 161,968 | 180,292 | ||||||||||||||||||||||||
| Research and development | 43,981 | 46,545 | 87,051 | 95,882 | ||||||||||||||||||||||||
| General and administrative | 20,291 | 22,269 | 40,401 | 43,436 | ||||||||||||||||||||||||
| Amortization of purchased intangibles | 2,017 | 2,417 | 4,217 | 4,834 | ||||||||||||||||||||||||
| Restructuring costs | 6,007 | 343 | 13,509 | 367 | ||||||||||||||||||||||||
| Transaction-related costs | 7,887 | — | 12,131 | — | ||||||||||||||||||||||||
| Total operating expenses | 162,688 | 161,007 | 319,277 | 324,811 | ||||||||||||||||||||||||
| Operating (loss) income | (1,416 | ) | 24,918 | 5,824 | 53,934 | |||||||||||||||||||||||
| Interest and other income (expense), net | ||||||||||||||||||||||||||||
| Interest expense | (1,668 | ) | (1,523 | ) | (3,305 | ) | (3,007 | ) | ||||||||||||||||||||
| Other income (expense), net | 1,966 | 1,345 | 2,835 | 1,367 | ||||||||||||||||||||||||
| Interest and other income (expense), net | 298 | (178 | ) | (470 | ) | (1,640 | ) | |||||||||||||||||||||
| (Loss) income before provision for income taxes | (1,118 | ) | 24,740 | 5,354 | 52,294 | |||||||||||||||||||||||
| Provision for income taxes | 8,879 | 5,093 | 12,016 | 11,449 | ||||||||||||||||||||||||
| Net (loss) income | $ | (9,997 | ) | $ | 19,647 | $ | (6,662 | ) | $ | 40,845 | ||||||||||||||||||
| Basic net (loss) income per share | $ | (0.07 | ) | $ | 0.15 | $ | (0.05 | ) | $ | 0.30 | ||||||||||||||||||
| Diluted net (loss) income per share | $ | (0.07 | ) | $ | 0.14 | $ | (0.05 | ) | $ | 0.30 | ||||||||||||||||||
|
Number of shares used in computation of net (loss) income per
share: |
||||||||||||||||||||||||||||
| Basic | 135,700 | 134,057 | 134,934 | 134,417 | ||||||||||||||||||||||||
| Diluted | 135,700 | 137,347 | 134,934 | 138,290 | ||||||||||||||||||||||||
Note: As a result of the GAAP net loss in some of the periods presented, all potentially issuable common shares for those periods have been excluded from the diluted shares used in the computation of GAAP earnings per share as their effect is anti-dilutive.
|
POLYCOM, INC. Reconciliation of GAAP to Non-GAAP Net (Loss) Income (In thousands, except per share amounts) (Unaudited) |
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| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
|
June 30,
2016 |
March 31,
2016 |
June 30,
2015 |
June 30,
2016 |
June 30,
2015 |
|||||||||||||||||||||||||||||||
| GAAP net (loss) income | $ | (9,997 | ) | $ | 3,335 | $ | 19,647 | $ | (6,662 | ) | $ | 40,845 | |||||||||||||||||||||||
| Amortization of purchased intangibles | 2,117 | 2,300 | 2,517 | 4,417 | 5,591 | ||||||||||||||||||||||||||||||
| Restructuring costs | 6,007 | 7,502 | 343 | 13,509 | 367 | ||||||||||||||||||||||||||||||
| Transaction-related costs | 7,887 | 4,244 | — | 12,131 | — | ||||||||||||||||||||||||||||||
| Stock-based compensation expense | 21,606 | 11,480 | 9,711 | 33,087 | 18,943 | ||||||||||||||||||||||||||||||
| Effect of stock-based compensation on warranty rates | 235 | 106 | 80 | 341 | 133 | ||||||||||||||||||||||||||||||
|
Costs associated with CEO separation and related SEC
investigation |
— | — | 64 | — | 399 | ||||||||||||||||||||||||||||||
| Income tax effect of non-GAAP exclusions | 1,532 | (3,283 | ) | (2,415 | ) | (1,752 | ) | (4,096 | ) | ||||||||||||||||||||||||||
| Non-GAAP net income | $ | 29,387 | $ | 25,684 | $ | 29,947 | $ | 55,071 | $ | 62,182 | |||||||||||||||||||||||||
| GAAP net (loss) income per share: | |||||||||||||||||||||||||||||||||||
| Basic | $ | (0.07 | ) | $ | 0.02 | $ | 0.15 | $ | (0.05 | ) | $ | 0.30 | |||||||||||||||||||||||
| Diluted | $ | (0.07 | ) | $ | 0.02 | $ | 0.14 | $ | (0.05 | ) | $ | 0.30 | |||||||||||||||||||||||
| Non-GAAP net income per share: | |||||||||||||||||||||||||||||||||||
| Basic | $ | 0.22 | $ | 0.19 | $ | 0.22 | $ | 0.41 | $ | 0.46 | |||||||||||||||||||||||||
| Diluted | $ | 0.21 | $ | 0.19 | $ | 0.22 | $ | 0.40 | $ | 0.45 | |||||||||||||||||||||||||
|
Number of shares used in computation of GAAP net (loss)
income per share: |
|||||||||||||||||||||||||||||||||||
| Basic | 135,700 | 134,168 | 134,057 | 134,934 | 134,417 | ||||||||||||||||||||||||||||||
| Diluted | 135,700 | 137,292 | 137,347 | 134,934 | 138,290 | ||||||||||||||||||||||||||||||
|
Number of shares used in computation of non-GAAP net
income per share: |
|||||||||||||||||||||||||||||||||||
| Basic | 135,700 | 134,168 | 134,057 | 134,934 | 134,417 | ||||||||||||||||||||||||||||||
| Diluted | 138,012 | 137,292 | 137,347 | 137,652 | 138,290 | ||||||||||||||||||||||||||||||
Note: As a result of the GAAP net loss in some of the periods presented, all potentially issuable common shares for those periods have been excluded from the diluted shares used in the computation of GAAP earnings per share as their effect is anti-dilutive.
|
POLYCOM, INC. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) |
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|
June 30,
2016 |
December 31,
2015 |
|||||||||||||||
| ASSETS | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash and cash equivalents | $ | 576,516 | $ | 435,093 | ||||||||||||
| Short-term investments | 126,238 | 184,242 | ||||||||||||||
| Trade receivables, net | 154,212 | 187,888 | ||||||||||||||
| Inventories | 96,748 | 89,392 | ||||||||||||||
| Prepaid expenses and other current assets | 50,118 | 52,852 | ||||||||||||||
| Total current assets | 1,003,832 | 949,467 | ||||||||||||||
| Property and equipment, net | 93,123 | 101,853 | ||||||||||||||
| Long-term investments | 18,788 | 46,484 | ||||||||||||||
| Goodwill and purchased intangibles, net | 568,307 | 572,840 | ||||||||||||||
| Deferred taxes | 86,659 | 89,865 | ||||||||||||||
| Other assets | 20,994 | 21,738 | ||||||||||||||
| Total assets | $ | 1,791,703 | $ | 1,782,247 | ||||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| Accounts payable | $ | 78,444 | $ | 73,472 | ||||||||||||
| Accrued payroll and related liabilities | 32,977 | 38,781 | ||||||||||||||
| Taxes payable | 2,130 | 4,342 | ||||||||||||||
| Deferred revenue | 174,119 | 170,559 | ||||||||||||||
| Current portion of long-term debt | 5,717 | 5,717 | ||||||||||||||
| Other accrued liabilities | 74,607 | 85,095 | ||||||||||||||
| Total current liabilities | 367,994 | 377,966 | ||||||||||||||
| Long-term deferred revenue | 83,272 | 86,191 | ||||||||||||||
| Taxes payable | 10,382 | 9,983 | ||||||||||||||
| Deferred taxes | — | 135 | ||||||||||||||
| Long-term debt | 225,940 | 228,799 | ||||||||||||||
| Other non-current liabilities | 24,074 | 25,964 | ||||||||||||||
| Total liabilities | 711,662 | 729,038 | ||||||||||||||
| Stockholders' equity | 1,080,041 | 1,053,209 | ||||||||||||||
| Total liabilities and stockholders' equity | $ | 1,791,703 | $ | 1,782,247 | ||||||||||||
|
POLYCOM, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
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| Six Months Ended | ||||||||||||||||
|
June 30,
2016 |
June 30,
2015 |
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| Cash flows from operating activities: | ||||||||||||||||
| Net (loss) income | $ | (6,662 | ) | $ | 40,845 | |||||||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||||
| Depreciation and amortization | 23,663 | 27,210 | ||||||||||||||
| Amortization of purchased intangibles | 4,417 | 5,629 | ||||||||||||||
| Amortization of capitalized software development costs for products to be sold | 2,140 | 1,354 | ||||||||||||||
| Amortization of debt issuance costs | 267 | 266 | ||||||||||||||
| Amortization of discounts and premiums on investments, net | 645 | 1,090 | ||||||||||||||
| Write-down of excess and obsolete inventories | 5,477 | 6,810 | ||||||||||||||
| Stock-based compensation expense | 33,087 | 18,943 | ||||||||||||||
| Excess tax benefits from stock-based compensation expense | (1,405 | ) | (3,487 | ) | ||||||||||||
| Loss on disposal of property and equipment | 175 | 544 | ||||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||
| Trade receivables | 33,601 | 8,245 | ||||||||||||||
| Inventories | (12,880 | ) | (6,791 | ) | ||||||||||||
| Deferred taxes | (4,435 | ) | (2,744 | ) | ||||||||||||
| Prepaid expenses and other assets | 2,362 | 4,960 | ||||||||||||||
| Accounts payable | 4,058 | (19,229 | ) | |||||||||||||
| Taxes payable | 5,296 | 9,663 | ||||||||||||||
| Other accrued liabilities and deferred revenue | (17,540 | ) | (30,160 | ) | ||||||||||||
| Net cash provided by operating activities | 72,266 | 63,148 | ||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchases of property and equipment | (13,508 | ) | (23,922 | ) | ||||||||||||
| Capitalized software development costs for products to be sold | (1,446 | ) | (2,311 | ) | ||||||||||||
| Purchases of investments | (78,222 | ) | (107,675 | ) | ||||||||||||
| Proceeds from sale of investments | 13,937 | 6,892 | ||||||||||||||
| Proceeds from maturities of investments | 149,699 | 97,187 | ||||||||||||||
| Net cash provided by (used in) investing activities | 70,460 | (29,829 | ) | |||||||||||||
| Cash flows from financing activities: | ||||||||||||||||
|
Proceeds from issuance of common stock under employee option and
stock
purchase plans |
10,811 | 12,528 | ||||||||||||||
| Payments on debt | (3,126 | ) | (3,125 | ) | ||||||||||||
| Purchase and retirement of common stock under share repurchase plan | — | (64,999 | ) | |||||||||||||
|
Purchase and retirement of common stock for tax withholdings on
vesting of employee
stock-based awards |
(9,772 | ) | (11,769 | ) | ||||||||||||
| Excess tax benefits from stock-based compensation expense | 1,405 | 3,487 | ||||||||||||||
| Net cash used in financing activities | (682 | ) | (63,878 | ) | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (621 | ) | — | |||||||||||||
| Net increase (decrease) in cash and cash equivalents | 141,423 | (30,559 | ) | |||||||||||||
| Cash and cash equivalents, beginning of period | 435,093 | 443,132 | ||||||||||||||
| Cash and cash equivalents, end of period | $ | 576,516 | $ | 412,573 | ||||||||||||
|
POLYCOM, INC. Selected Summary Data (In millions except per share amounts and headcount) (Unaudited) |
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|
June 30,
2016 |
March 31,
2016 |
June 30,
2015 |
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| Balance Sheet Highlights | ||||||||||||||||||||
| Cash and investments | $ | 722 | $ | 713 | $ | 660 | ||||||||||||||
| Number of shares outstanding | 136 | 136 | 133 | |||||||||||||||||
| Cash and investments per share | $ | 5.31 | $ | 5.26 | $ | 4.95 | ||||||||||||||
| Debt | $ | 232 | $ | 233 | $ | 237 | ||||||||||||||
| Operating cash flow - quarterly | $ | 19 | $ | 53 | $ | 33 | ||||||||||||||
| Operating cash flow - trailing 12 months | $ | 129 | $ | 142 | $ | 188 | ||||||||||||||
| DSO (Days Sales Outstanding) | 49 | 51 | 46 | |||||||||||||||||
| Inventory turns - GAAP | 5.2 | 5.1 | 5.2 | |||||||||||||||||
| Inventory turns - non-GAAP | 5.1 | 5.1 | 5.2 | |||||||||||||||||
| Deferred revenue | $ | 257 | $ | 263 | $ | 260 | ||||||||||||||
| Share repurchases: | ||||||||||||||||||||
| Quarter-to-date share repurchases - shares | — | — | 1.9 | |||||||||||||||||
| Quarter-to-date share repurchases - dollars | $ | — | $ | — | $ | 25 | ||||||||||||||
| Year-to-date share repurchases - shares | — | — | 4.8 | |||||||||||||||||
| Year-to-date share repurchases - dollars | $ | — | $ | — | $ | 65 | ||||||||||||||
| Ending headcount | 3,176 | 3,275 | 3,553 | |||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||||||||
|
June 30,
2016 |
March 31,
2016 |
June 30,
2015 |
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| Income Statement Highlights | |||||||||||||||||||||||||||
| GAAP: | |||||||||||||||||||||||||||
| Revenues | $ | 288 | $ | 290 | $ | 317 | |||||||||||||||||||||
| Gross margin | 56.0 | % | 56.5 | % | 58.7 | % | |||||||||||||||||||||
| Operating expenses | $ | 163 | $ | 157 | $ | 161 | |||||||||||||||||||||
| Operating margin | (0.5 | )% | 2.5 | % | 7.9 | % | |||||||||||||||||||||
| Diluted EPS | $ | (0.07 | ) | $ | 0.02 | $ | 0.14 | ||||||||||||||||||||
| Non-GAAP: | |||||||||||||||||||||||||||
| Revenues | $ | 288 | $ | 290 | $ | 317 | |||||||||||||||||||||
| Gross margin | 57.4 | % | 57.2 | % | 59.2 | % | |||||||||||||||||||||
| Operating expenses | $ | 129 | $ | 133 | $ | 150 | |||||||||||||||||||||
| Operating margin | 12.7 | % | 11.3 | % | 11.9 | % | |||||||||||||||||||||
| Diluted EPS | $ | 0.21 | $ | 0.19 | $ | 0.22 | |||||||||||||||||||||
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POLYCOM, INC. Reconciliations of GAAP Measures to Non-GAAP Measures (In thousands) (Unaudited) |
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| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
|
June 30,
2016 |
March 31,
2016 |
June 30,
2015 |
June 30,
2016 |
June 30,
2015 |
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| GAAP cost of revenues used in inventory turns | $ | 126,507 | $ | 126,246 | $ | 130,650 | $ | 252,753 | $ | 268,530 | |||||||||||||||||||||||||
| Stock-based compensation expense | (3,506 | ) | (1,892 | ) | (1,382 | ) | (5,398 | ) | (3,645 | ) | |||||||||||||||||||||||||
| Effect of stock-based compensation expense on warranty rates | (235 | ) | (106 | ) | (80 | ) | (341 | ) | (133 | ) | |||||||||||||||||||||||||
| Amortization of purchased intangibles | (100 | ) | (100 | ) | (100 | ) | (200 | ) | (757 | ) | |||||||||||||||||||||||||
| Non-GAAP cost of revenues used in inventory turns | $ | 122,666 | $ | 124,148 | $ | 129,088 | $ | 246,814 | $ | 263,995 | |||||||||||||||||||||||||
| GAAP gross profit | $ | 161,272 | $ | 163,829 | $ | 185,925 | $ | 325,101 | $ | 378,745 | |||||||||||||||||||||||||
| Stock-based compensation expense | 3,506 | 1,892 | 1,382 | 5,398 | 3,645 | ||||||||||||||||||||||||||||||
| Effect of stock-based compensation expense on warranty rates | 235 | 106 | 80 | 341 | 133 | ||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 100 | 100 | 100 | 200 | 757 | ||||||||||||||||||||||||||||||
| Non-GAAP gross profit | $ | 165,113 | $ | 165,927 | $ | 187,487 | $ | 331,040 | $ | 383,280 | |||||||||||||||||||||||||
| Non-GAAP gross margin | 57.4 | % | 57.2 | % | 59.2 | % | 57.3 | % | 59.2 | % | |||||||||||||||||||||||||
| GAAP sales and marketing expense | $ | 82,505 | $ | 79,463 | $ | 89,433 | $ | 161,968 | $ | 180,292 | |||||||||||||||||||||||||
| Stock-based compensation expense | (7,550 | ) | (3,743 | ) | (2,698 | ) | (11,293 | ) | (5,311 | ) | |||||||||||||||||||||||||
| Non-GAAP sales and marketing expense | $ | 74,955 | $ | 75,720 | $ | 86,735 | $ | 150,675 | $ | 174,981 | |||||||||||||||||||||||||
| Non-GAAP sales and marketing expense as a percent of revenues | 26.0 | % | 26.1 | % | 27.4 | % | 26.1 | % | 27.0 | % | |||||||||||||||||||||||||
| GAAP research and development expense | $ | 43,981 | $ | 43,070 | $ | 46,545 | $ | 87,051 | $ | 95,882 | |||||||||||||||||||||||||
| Stock-based compensation expense | (4,912 | ) | (2,029 | ) | (1,915 | ) | (6,941 | ) | (4,488 | ) | |||||||||||||||||||||||||
| Non-GAAP research and development expense | $ | 39,069 | $ | 41,041 | $ | 44,630 | $ | 80,110 | $ | 91,394 | |||||||||||||||||||||||||
|
Non-GAAP research and development expense as a percent of
revenues |
13.6 | % | 14.1 | % | 14.1 | % | 13.9 | % | 14.1 | % | |||||||||||||||||||||||||
| GAAP general and administrative expense | $ | 20,291 | $ | 20,110 | $ | 22,269 | $ | 40,401 | $ | 43,436 | |||||||||||||||||||||||||
| Stock-based compensation expense | (5,638 | ) | (3,816 | ) | (3,716 | ) | (9,455 | ) | (5,499 | ) | |||||||||||||||||||||||||
|
Costs associated with CEO separation and related SEC
investigation |
— | — | (64 | ) | — | (399 | ) | ||||||||||||||||||||||||||||
| Non-GAAP general and administrative expense | $ | 14,653 | $ | 16,294 | $ | 18,489 | $ | 30,946 | $ | 37,538 | |||||||||||||||||||||||||
|
Non-GAAP general and administrative expense as a percent of
revenues |
5.1 | % | 5.6 | % | 5.8 | % | 5.4 | % | 5.8 | % | |||||||||||||||||||||||||
| GAAP total operating expenses | $ | 162,688 | $ | 156,589 | $ | 161,007 | $ | 319,277 | $ | 324,811 | |||||||||||||||||||||||||
| Stock-based compensation expense | (18,100 | ) | (9,588 | ) | (8,329 | ) | (27,689 | ) | (15,298 | ) | |||||||||||||||||||||||||
| Amortization of purchased intangibles | (2,017 | ) | (2,200 | ) | (2,417 | ) | (4,217 | ) | (4,834 | ) | |||||||||||||||||||||||||
| Restructuring costs | (6,007 | ) | (7,502 | ) | (343 | ) | (13,509 | ) | (367 | ) | |||||||||||||||||||||||||
| Transaction-related costs | (7,887 | ) | (4,244 | ) | — | (12,131 | ) | — | |||||||||||||||||||||||||||
|
Costs associated with CEO separation and related SEC
investigation |
— | — | (64 | ) | — | (399 | ) | ||||||||||||||||||||||||||||
| Non-GAAP total operating expenses | $ | 128,677 | $ | 133,055 | $ | 149,854 | $ | 261,731 | $ | 303,913 | |||||||||||||||||||||||||
| Non-GAAP total operating expenses as a percent of revenues | 44.7 | % | 45.9 | % | 47.3 | % | 45.3 | % | 47.0 | % | |||||||||||||||||||||||||
| GAAP operating (loss) income | $ | (1,416 | ) | $ | 7,240 | $ | 24,918 | $ | 5,824 | $ | 53,934 | ||||||||||||||||||||||||
| Stock-based compensation expense | 21,606 | 11,480 | 9,711 | 33,087 | 18,943 | ||||||||||||||||||||||||||||||
| Effect of stock-based compensation expense on warranty rates | 235 | 106 | 80 | 341 | 133 | ||||||||||||||||||||||||||||||
| Amortization of purchased intangibles | 2,117 | 2,300 | 2,517 | 4,417 | 5,591 | ||||||||||||||||||||||||||||||
| Restructuring costs | 6,007 | 7,502 | 343 | 13,509 | 367 | ||||||||||||||||||||||||||||||
| Transaction-related costs | 7,887 | 4,244 | — | 12,131 | — | ||||||||||||||||||||||||||||||
|
Costs associated with CEO separation and related SEC
investigation |
— | — | 64 | — | 399 | ||||||||||||||||||||||||||||||
| Non-GAAP operating income | $ | 36,436 | $ | 32,872 | $ | 37,633 | $ | 69,309 | $ | 79,367 | |||||||||||||||||||||||||
| Non-GAAP operating margin | 12.7 | % | 11.3 | % | 11.9 | % | 12.0 | % | 12.3 | % | |||||||||||||||||||||||||
|
POLYCOM, INC. Summary of Stock-Based Compensation Expense (In thousands) (Unaudited) |
|||||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||
|
June 30,
2016 |
June 30,
2015 |
June 30,
2016 |
June 30,
2015 |
||||||||||||||||||||||||
| Cost of product revenues | $ | 1,133 | $ | 505 | $ | 1,914 | $ | 1,460 | |||||||||||||||||||
| Cost of service revenues | 2,373 | 877 | 3,484 | 2,185 | |||||||||||||||||||||||
| Stock-based compensation expense in total cost of revenues | 3,506 | 1,382 | 5,398 | 3,645 | |||||||||||||||||||||||
| Sales and marketing | 7,550 | 2,698 | 11,293 | 5,311 | |||||||||||||||||||||||
| Research and development | 4,912 | 1,915 | 6,941 | 4,488 | |||||||||||||||||||||||
| General and administrative | 5,638 | 3,716 | 9,455 | 5,499 | |||||||||||||||||||||||
| Stock-based compensation expense in operating expenses | 18,100 | 8,329 | 27,689 | 15,298 | |||||||||||||||||||||||
| Total stock-based compensation expense | $ | 21,606 | $ | 9,711 | $ | 33,087 | $ | 18,943 | |||||||||||||||||||
