Science & Technology
Science and Technology
Science and Technology
Wed, October 21, 2009
Tue, October 20, 2009 
PLEASANTON, CA--(Marketwire - October 20, 2009) - Polycom, Inc. (
Third quarter 2009 consolidated net revenues were $243 million, compared to $231 million for the second quarter of 2009 and to $276 million for the third quarter of 2008. Non-GAAP net income for the third quarter of 2009 was $27 million, or 31 cents per diluted share. This compares to Non-GAAP net income of $24 million, or 29 cents per diluted share, for the second quarter of 2009 and to Non-GAAP net income of $32 million, or 37 cents per diluted share, for the third quarter of 2008. GAAP net income for the third quarter of 2009 was $14 million, or 16 cents per diluted share, compared to $15 million, or 18 cents per diluted share, for the second quarter of 2009, and to $18 million, or 21 cents per diluted share, for the third quarter of 2008.
For the nine months ended Sept. 30, 2009, net revenues were $699 million, compared to $806 million for the first nine months of 2008. Non-GAAP net income for the period was $74 million, or 86 cents per diluted share, compared to $95 million, or $1.08 per diluted share, for the first nine months of 2008. GAAP net income for the nine months ended Sept. 30, 2009 was $37 million, or 44 cents per diluted share, compared to GAAP net income of $50 million, or 57 cents per diluted share, for the same period last year.
The reconciliation between GAAP net income and Non-GAAP net income is provided in the tables at the end of this release.
On a product line basis, including applicable service revenues, consolidated net revenues for the third quarter of 2009 were comprised of:
-- 68 percent video solutions, or $165 million (53 percent video communications, or $130 million, and 15 percent network systems, or $35 million); and -- 32 percent voice communications, or $78 million.
This compares to the third quarter of 2008, in which consolidated net revenues were comprised of:
-- 65 percent video solutions, or $178 million (52 percent video communications, or $144 million, and 12 percent network systems, or $34 million); and -- 35 percent voice communications, or $98 million.
"We are particularly pleased with our results for the third quarter as recent initiatives to improve our go-to-market strategy, coupled with our steadfast commitment to delivering superior innovation, contributed to strong sequential revenue growth," said Robert Hagerty, Polycom chairman and CEO. "Under the leadership of Andy Miller, our new executive vice president of Global Field Operations, we swiftly executed several actions to improve and intensify customer ownership and support across the enterprise, government, and service provider sectors. Specifically, we made sales management changes, drove new enhancements to our sales analytics, and developed specific programs with our various partners to improve both channel and Polycom margins through deeper customer engagement. These efforts have already yielded a higher level of visibility with our customers and partners alike and, for instance, contributed to the fast turnaround in voice revenue growth."
"Polycom continues to lead the industry in product innovation, most recently with improvements to our higher margin network infrastructure solution, which contributed to our significant growth and key customer wins during the third quarter. High customer adoption is being driven by our platform's unique advantages, namely superior HD video quality, flexible port configuration, scalability and redundancy. With this new platform, customers can easily manage large HD video networks across their telepresence, room-based, and desktop video installations. As a result of the early success of our new solution and driven by increased customer demand for even larger video networks, we announced the expansion of this product line with our new Polycom RMX and RSS™ 4000 products, which will begin shipping this quarter."
"With an improving go-to-market execution, continued success in product innovation, broad strategic and service provider partnerships, and the industry's most open solution, we believe Polycom is best suited to capture the rapid adoption of business-to-business (B2B) unified collaboration (UC) over the coming quarters and years," Hagerty concluded.
"Broad customer demand drove sequential revenue growth, increased deferred revenues, and a sharp sequential increase in order backlog in the third quarter," said Michael Kourey, Polycom senior vice president, finance and administration, and CFO. "As a result of this top-line performance and our proactive inventory reductions, we generated positive operating cash flow of over $39 million, representing Polycom's 47th consecutive quarter of positive operating cash flow. Our sound balance sheet continues to underpin solid fundamentals and, net of $20 million in share repurchases in Q3, we exited the quarter with $408 million in cash and investments and no debt."
About Polycom
Polycom, Inc. (
This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 regarding future events, future demand for our products, and the future performance of the Company, including statements regarding the intended results of actions taken in the Company's worldwide sales organization, the factors believed to be contributing to turnaround in our voice revenue growth and to our revenue growth and customer wins generally, the drivers of customer adoption and Polycom as being best suited to capture the rapid adoption of B2B unified collaboration in future periods. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact of competition on our product sales and for our customers and partners, 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 general economic conditions, including the continuation and prolonged impact of the crisis in the worldwide financial markets and the global recession, the market acceptance of Polycom's products and changing market demands, including demands for differing technologies or product and services offerings, possible delays in the development, availability and shipment of new products, increasing costs and differing uses of capital, changes in key personnel and our sales organization that may cause disruption to the business, the impact of recent restructuring actions, and the impact of global conflicts such as those in the Middle East that may adversely impact our business. Many of these risks and uncertainties are discussed in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.
As has been noted on the Company's web site since Oct. 13, 2009, Polycom will hold a conference call today, Oct. 20, 2009, at 5 p.m. EDT/2 p.m. PT to discuss its third quarter earnings. Robert Hagerty, chairman, president and CEO, Michael Kourey, chief financial officer, and Andrew Miller, executive vice president of global field operations, will host the conference call. You may participate by viewing the webcast at [ www.polycom.com ] or, for callers in the US and Canada, by calling 800.950.7243; and for callers outside of the US and Canada, by calling 212.231.2901, with the passcode being Polycom. A replay of the call will also be available at [ www.polycom.com ] or, for callers in the US and Canada, at 800.633.8284; and for callers outside of the US and Canada, at 402.977.9140. The access number for the replay is 21438721. A replay of the call will also be maintained on our website for twelve months at [ www.polycom.com ] under Investor Relations - Earnings Calls-Archives.
Polycom reserves the right to modify future product plans at any time. Products and/or related specifications referenced in this press release are not guaranteed and will be delivered on a when and if available basis.
© 2009 Polycom, Inc. All rights reserved. POLYCOM®, the Polycom "Triangles" 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. Non-GAAP Condensed Consolidated Statements of Operations Excluding Stock-based compensation expense, Effect of stock-based compensation expense on warranty rates, Impact to cost of sales from purchase accounting adjustments to inventory, Acquisition-related costs, Purchased in-process research and development costs, Amortization and impairment of purchased intangibles, Restructuring costs, Litigation reserves and payments, Gain (loss) on strategic investments, and Income tax effect of the preceding adjustments (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended -------------------- -------------------- September September September September 30, 30, 30, 30, 2009 2008 2009 2008 --------- --------- --------- ---------- Revenues: Product revenues $ 198,955 $ 235,397 $ 570,668 $ 691,693 Service revenues 44,064 40,379 128,452 114,584 --------- --------- --------- ---------- Total revenues 243,019 275,776 699,120 806,277 --------- --------- --------- ---------- Cost of revenues: Cost of product revenues 80,338 91,085 229,943 270,536 Cost of service revenues 19,769 18,653 58,459 54,770 --------- --------- --------- ---------- Total cost of revenues 100,107 109,738 288,402 325,306 --------- --------- --------- ---------- Gross profit 142,912 166,038 410,718 480,971 --------- --------- --------- ---------- Operating expenses: Sales and marketing 68,277 78,614 196,552 221,813 Research and development 27,335 31,756 80,102 97,394 General and administrative 11,291 13,399 34,131 38,819 --------- --------- --------- ---------- Total operating expenses 106,903 123,769 310,785 358,026 --------- --------- --------- ---------- Operating income 36,009 42,269 99,933 122,945 Interest and other income (expense), net (637) (689) (1,995) 4,493 --------- --------- --------- ---------- Income before provision for income taxes 35,372 41,580 97,938 127,438 Provision for income taxes 8,709 9,833 24,438 32,242 --------- --------- --------- ---------- Non-GAAP net income $ 26,663 $ 31,747 $ 73,500 $ 95,196 ========= ========= ========= ========== Basic net income per share $ 0.32 $ 0.38 $ 0.88 $ 1.10 ========= ========= ========= ========== Diluted net income per share $ 0.31 $ 0.37 $ 0.86 $ 1.08 ========= ========= ========= ========== Weighted average shares outstanding for basic net income per share 84,189 84,278 83,855 86,387 ========= ========= ========= ========== Weighted average shares outstanding for diluted net income per share 86,199 86,194 85,168 88,215 ========= ========= ========= ========== Use of Non-GAAP Financial Information To supplement our consolidated financial statements presented on a GAAP basis, Polycom uses non-GAAP measures of operating results, net income and 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. For example, 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 income or diluted net income per share prepared in accordance with generally accepted accounting principles in the United States. POLYCOM, INC. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended -------------------- -------------------- September September September September 30, 30, 30, 30, 2009 2008 2009 2008 --------- --------- --------- ---------- Revenues: Product revenues $ 198,955 $ 235,397 $ 570,668 $ 691,693 Service revenues 44,064 40,379 128,452 114,584 --------- --------- --------- ---------- Total revenues 243,019 275,776 699,120 806,277 --------- --------- --------- ---------- Cost of revenues: Cost of product revenues 84,288 95,249 242,778 283,383 Cost of service revenues 20,509 19,509 60,569 57,527 --------- --------- --------- ---------- Total cost of revenues 104,797 114,758 303,347 340,910 --------- --------- --------- ---------- Gross profit 138,222 161,018 395,773 465,367 --------- --------- --------- ---------- Operating expenses: Sales and marketing 70,819 81,562 203,605 231,465 Research and development 29,004 34,456 85,532 105,891 General and administrative 13,556 16,101 39,873 46,023 Acquisition-related costs - - - 162 Amortization of purchased intangibles 1,446 1,775 4,344 5,412 Restructuring costs 4,632 4,382 11,476 8,836 Litigation reserves and payments 700 - 700 7,401 --------- --------- --------- ---------- Total operating expenses 120,157 138,276 345,530 405,190 --------- --------- --------- ---------- Operating income 18,065 22,742 50,243 60,177 Interest and other income (expense), net (637) (689) (1,995) 4,493 --------- --------- --------- ---------- Income before provision for income taxes 17,428 22,053 48,248 64,670 Provision for income taxes 3,722 4,111 11,192 14,680 --------- --------- --------- ---------- Net income $ 13,706 $ 17,942 $ 37,056 $ 49,990 ========= ========= ========= ========== Basic net income per share $ 0.16 $ 0.21 $ 0.44 $ 0.58 ========= ========= ========= ========== Diluted net income per share $ 0.16 $ 0.21 $ 0.44 $ 0.57 ========= ========= ========= ========== Weighted average shares outstanding for basic net income per share 84,189 84,278 83,855 86,387 ========= ========= ========= ========== Weighted average shares outstanding for diluted net income per share 86,199 86,194 85,168 88,215 ========= ========= ========= ========== POLYCOM, INC. GAAP to Non-GAAP Reconciliation (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended ---------------------------- ----------------------------- September 30, 2009 September 30, 2009 ---------------------------- ----------------------------- GAAP Excluded Non-GAAP GAAP Excluded Non-GAAP -------- -------- -------- -------- --------- -------- Revenues: Product revenues $198,955 $ - $198,955 $570,668 $ - $570,668 Service revenues 44,064 - 44,064 128,452 - 128,452 -------- -------- -------- -------- --------- -------- Total revenues 243,019 - 243,019 699,120 - 699,120 -------- -------- -------- -------- --------- -------- Cost of revenues: Cost of product revenues 84,288 3,950(a) 80,338 242,778 12,835(c) 229,943 Cost of service revenues 20,509 740(b) 19,769 60,569 2,110(b) 58,459 -------- -------- -------- -------- --------- -------- Total cost of revenues 104,797 4,690 100,107 303,347 14,945 288,402 -------- -------- -------- -------- --------- -------- Gross profit 138,222 (4,690) 142,912 395,773 (14,945) 410,718 -------- -------- -------- -------- --------- -------- Operating expenses: Sales and marketing 70,819 2,542(b) 68,277 203,605 7,053(b) 196,552 Research and development 29,004 1,669(b) 27,335 85,532 5,430(b) 80,102 General and administ- rative 13,556 2,265(b) 11,291 39,873 5,742(b) 34,131 Acquisition- related costs - - - - - - Amortizat- ion of purchased intangibles 1,446 1,446 - 4,344 4,344 - Restructuring costs 4,632 4,632 - 11,476 11,476 - Litigation reserves and payments 700 700 - 700 700 - -------- -------- -------- -------- --------- -------- Total operating expenses 120,157 13,254 106,903 345,530 34,745 310,785 -------- -------- -------- -------- --------- -------- Operating income 18,065 (17,944) 36,009 50,243 (49,690) 99,933 Interest and other income (expense), net (637) - (637) (1,995) - (1,995) -------- -------- -------- -------- --------- -------- Income before provision for income taxes 17,428 (17,944) 35,372 48,248 (49,690) 97,938 Provision for income taxes 3,722 (4,987) 8,709 11,192 (13,246) 24,438 -------- -------- -------- -------- --------- -------- Net income $ 13,706 $(12,957) $ 26,663 $ 37,056 $ (36,444) $ 73,500 ======== ======== ======== ======== ========= ======== Basic net income per share $ 0.16 $ (0.16) $ 0.32 $ 0.44 $ (0.44) $ 0.88 ======== ======== ======== ======== ========= ======== Diluted net income per share $ 0.16 $ (0.15) $ 0.31 $ 0.44 $ (0.42) $ 0.86 ======== ======== ======== ======== ========= ======== Weighted average shares outstanding for basic net income per share 84,189 84,189 83,855 83,855 ======== ======== ======== ======== Weighted average shares outstanding for diluted net income per share 86,199 86,199 85,168 85,168 ======== ======== ======== ======== (a) Excluded amount includes $3,386 related to the amortization of purchased intangibles for core and existing technologies, $469 for stock- based compensation expense recorded during the period and $95 related to the effect of stock-based compensation on warranty expense rates. (b) Excluded amount represents stock-based compensation expense recorded during the period. (c) Excluded amount includes $10,066 related to the amortization of purchased intangibles for core and existing technologies, $1,050 related to past license fees claims, $1,437 for stock-based compensation expense recorded during the period and $282 related to the effect of stock-based compensation on warranty expense rates. POLYCOM, INC. GAAP to Non-GAAP Reconciliation (In thousands, except per share amounts) (Unaudited) Three Months Ended Nine Months Ended ---------------------------- ------------------------------ September 30, 2008 September 30, 2008 ---------------------------- ------------------------------ GAAP Excluded Non-GAAP GAAP Excluded Non-GAAP -------- -------- -------- --------- --------- --------- Revenues: Product revenues $235,397 $ - $235,397 $ 691,693 $ - $ 691,693 Service revenues 40,379 - 40,379 114,584 - 114,584 -------- -------- -------- --------- --------- --------- Total revenues 275,776 - 275,776 806,277 - 806,277 -------- -------- -------- --------- --------- --------- Cost of revenues: Cost of product revenues 95,249 4,164(a) 91,085 283,383 12,847(c) 270,536 Cost of service revenues 19,509 856(b) 18,653 57,527 2,757(b) 54,770 -------- -------- -------- --------- --------- --------- Total cost of revenues 114,758 5,020 109,738 340,910 15,604 325,306 -------- -------- -------- --------- --------- --------- Gross profit 161,018 (5,020) 166,038 465,367 (15,604) 480,971 -------- -------- -------- --------- --------- --------- Operating expenses: Sales and marketing 81,562 2,948(b) 78,614 231,465 9,652(b) 221,813 Research and development 34,456 2,700(b) 31,756 105,891 8,497(b) 97,394 General and administr- ative 16,101 2,702(b) 13,399 46,023 7,204(b) 38,819 Acquisition- related costs - - - 162 162 - Amortization of purchased intangibles 1,775 1,775 - 5,412 5,412 - Restructuring costs 4,382 4,382 - 8,836 8,836 - Litigation reserves and payments - - - 7,401 7,401 - -------- -------- -------- --------- --------- --------- Total operating expenses 138,276 14,507 123,769 405,190 47,164 358,026 -------- -------- -------- --------- --------- --------- Operating income 22,742 (19,527) 42,269 60,177 (62,768) 122,945 Interest and other income (expense), net (689) - (689) 4,493 - 4,493 -------- -------- -------- --------- --------- --------- Income before provision for income taxes 22,053 (19,527) 41,580 64,670 (62,768) 127,438 Provision for income taxes 4,111 (5,722) 9,833 14,680 (17,562) 32,242 -------- -------- -------- --------- --------- --------- Net income $ 17,942 $(13,805) $ 31,747 $ 49,990 $ (45,206) $ 95,196 ======== ======== ======== ========= ========= ========= Basic net income per share $ 0.21 $ (0.17) $ 0.38 $ 0.58 $ (0.52) $ 1.10 ======== ======== ======== ========= ========= ========= Diluted net income per share $ 0.21 $ (0.16) $ 0.37 $ 0.57 $ (0.51) $ 1.08 ======== ======== ======== ========= ========= ========= Weighted average shares outstanding for basic net income per share 84,278 84,278 86,387 86,387 ======== ======== ========= ========= Weighted average shares outstanding for diluted net income per share 86,194 86,194 88,215 88,215 ======== ======== ========= ========= (a) Excluded amount includes $3,419 related to the amortization of purchased intangibles for core and existing technologies, $652 for stock-based compensation expense recorded during the period and $93 related to the effect of stock-based compensation on warranty expense rates. (b) Excluded amount represents stock-based compensation expense recorded during the period. (c) Excluded amount includes $10,360 related to the amortization of purchased intangibles for core and existing technologies, $2,102 for stock-based compensation expense recorded during the period and $385 related to the effect of stock-based compensation on warranty expense rates. POLYCOM, INC. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) September 30, December 31, 2009 2008 ------------- ------------- ASSETS Current assets Cash and cash equivalents $ 244,517 $ 165,669 Investments 151,843 152,407 Trade receivables, net 124,678 126,497 Inventories 69,358 89,730 Deferred taxes 25,203 29,295 Prepaid expenses and other current assets 29,750 34,207 ------------- ------------- Total current assets 645,349 597,805 Property and equipment, net 79,041 77,294 Long-term investments 11,626 6,420 Goodwill 496,112 495,083 Purchased intangibles, net 51,261 65,369 Deferred taxes 23,184 19,415 Other assets 13,112 16,298 ------------- ------------- Total assets $ 1,319,685 $ 1,277,684 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 58,262 $ 57,731 Accrued payroll and related liabilities 19,657 28,711 Deferred revenue 76,606 69,238 Other accrued liabilities 50,160 58,402 ------------- ------------- Total current liabilities 204,685 214,082 Non-current liabilities Deferred revenue 43,159 43,285 Taxes payable 28,575 35,878 Deferred taxes 2,763 2,638 Other long-term liabilities 12,151 13,459 ------------- ------------- Total liabilities 291,333 309,342 Stockholders' equity 1,028,352 968,342 ------------- ------------- Total liabilities and stockholders' equity $ 1,319,685 $ 1,277,684 ============= ============= POLYCOM, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Nine Months Ended ------------------------ September September 30, 30, 2009 2008 ----------- ----------- Cash flows from operating activities: Net income $ 37,056 $ 49,990 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 24,931 20,620 Amortization of purchased intangibles 14,405 15,779 Provision for doubtful accounts 247 570 Provision for excess and obsolete inventories 3,124 2,510 Non-cash stock based compensation 21,772 30,212 Excess tax benefits from stock-based compensation (1,638) (4,487) Write down of investments other than temporarily impaired - 921 Loss on disposals of property and equipment 90 102 Changes in assets and liabilities, net of the effect of acquisitions: Trade receivables 1,572 4,395 Inventories 17,248 (23,542) Deferred taxes 1,460 1,447 Prepaid expenses and other assets 213 (9,131) Accounts payable 531 (8,935) Taxes payable 2,974 (1,278) Other accrued liabilities (10,974) 36,995 ----------- ----------- Net cash provided by operating activities 113,011 116,168 ----------- ----------- Cash flows from investing activities: Purchase of property and equipment (25,994) (35,287) Purchases of investments (408,413) (313,695) Proceeds from sale and maturity of investments 400,087 278,888 Net cash paid in purchase acquisitions - - ----------- ----------- Net cash used in investing activities (34,320) (70,094) ----------- ----------- Cash flows from financing activities: Proceeds from issuance of common stock under employee option and stock purchase plans 33,958 51,854 Repurchase of common stock (35,439) (222,458) Excess tax benefits from stock-based compensation 1,638 4,487 ----------- ----------- Net cash provided by (used in) financing activities 157 (166,117) ----------- ----------- Net increase (decrease) in cash and cash equivalents 78,848 (120,043) Cash and cash equivalents, beginning of period 165,669 279,560 ----------- ----------- Cash and cash equivalents, end of period $ 244,517 $ 159,517 =========== ==========
