Science & Technology
Science and Technology
Science and Technology
Fri, July 16, 2010
Thu, July 15, 2010
PLEASANTON, CA--(Marketwire - July 15, 2010) - Polycom, Inc. (
Second quarter 2010 consolidated net revenues were a record $295 million, compared to $231 million for the second quarter of 2009. GAAP net income for the second quarter of 2010 was $13 million, or 14 cents per diluted share, compared to $15 million, or 18 cents per diluted share, for the same period last year. Non-GAAP net income for the second quarter of 2010 was $30 million, or 34 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.
For the six months ended June 30, 2010, net revenues were $571 million, compared to $456 million for the first six months of 2009. GAAP net income for the six months ended June 30, 2010 was $18 million, or 21 cents per diluted share, compared to GAAP net income of $23 million, or 28 cents per diluted share, for the same period last year. Non-GAAP net income for the period was $55 million, or 63 cents per diluted share, compared to $47 million, or 55 cents per diluted share, for the first six months of 2009.
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, consolidated net revenues for the second quarter of 2010 were comprised of:
-- 67 percent video solutions, or $197 million (53 percent video communications, or $157 million, and 14 percent network systems, or $40 million); and -- 33 percent voice communications, or $98 million.
On a product line basis, consolidated net revenues for the second quarter of 2009 were comprised of:
-- 70 percent video solutions, or $162 million (56 percent video communications, or $129 million, and 14 percent network systems, or $33 million); and -- 30 percent voice communications, or $69 million.
"We generated record revenues and growth accelerated in the second quarter, which I believe validates Polycom's strategic investments and confirms that our go-to-market strategy and innovative solutions are aligned with our customers and partners," said Andrew Miller, Polycom president and CEO. "The Polycom Open Collaboration Network, which includes other technology leaders such as Microsoft, IBM, and HP, is already driving significant revenues for our company by providing a beautifully integrated solution for our enterprise and public sector customers. We are also gaining traction with our service provider partners, as cloud-based delivery is increasingly being chosen by enterprises and other customers looking to increase their output and productivity through business-to-business unified collaboration solutions. As a result, we believe the network effect for video collaboration is becoming a reality, enabling a further extension of our solutions into small-to-medium businesses and, over time, into consumer and mobility."
"We generated significant, broad-based growth across our theatres globally, driven by record levels of customer demand and strength in the emerging markets. Importantly, we continued to experience sales productivity gains, which contributed to our revenue ramp and further improvements in our operating margin. The strategic investment plan that we outlined over the last three quarters continues to yield better-than-planned results through our go-to-market focus, breakthrough innovations, and strategic partnerships. We believe we are well positioned to continue capitalizing on what is proving to be an incredible market opportunity by leveraging the best development and sales engine in the industry. I am confident that we can continue to deliver strong growth, consistent market gains, and expanding operating margins," concluded Miller.
"In the second quarter, revenue growth accelerated, both sequentially and year-over-year," said Michael Kourey, Polycom executive vice president, finance and administration, and CFO. "This drove our strong operating performance and, coupled with continued improvements in working capital management, we generated second quarter positive operating cash flow of $40 million -- Polycom's 50th consecutive quarter of positive operating cash flow. We exited the second quarter with $485 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 validation of, future execution against and expected future gains from the Company's strategic investment plan, go-to-market strategy and product offerings, and the Company as being well positioned to capture market opportunity and deliver strong growth, market gains and expanding operating margins in future periods. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the fact that the Company's strategic investment plan may not yield the intended results or may take longer than originally anticipated to achieve such results, 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, 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 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 Mar. 31, 2010, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.
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.
As has been noted on the Company's web site since July 8, 2010, Polycom will hold a conference call today, July 15, 2010, at 5 p.m. EST/2 p.m. PST to discuss its second quarter earnings. Andrew Miller, president and CEO, and Michael Kourey, chief financial officer, 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 888.383.1618; and for callers outside of the US and Canada, by calling 212.231.2900. The pass code for the call is "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 21474590. A replay of the call will also be available on [ www.polycom.com ] for approximately 12 months.
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.
© 2010 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. GAAP to Non-GAAP Reconciliation (In thousands, except per share amounts) (Unaudited) Three Months Ended ------------------------------------ June 30, 2010 ------------------------------------ GAAP Excluded Non-GAAP ---------- --------- --------- Revenues: Product revenues $ 244,795 $ - $ 244,795 Service revenues 49,840 - 49,840 ---------- --------- --------- Total revenues 294,635 - 294,635 ---------- --------- --------- Cost of revenues: Cost of product revenues 99,001 4,011 (a) 94,990 Cost of service revenues 24,733 960 (b) 23,773 ---------- --------- --------- Total cost of revenues 123,734 4,971 118,763 ---------- --------- --------- Gross profit 170,901 (4,971) 175,872 ---------- --------- --------- Operating expenses: Sales and marketing 94,361 7,273 (b) 87,088 Research and development 36,240 2,367 (b) 33,873 General and administrative 20,205 6,194 (c) 14,011 Amortization of purchased intangibles 1,421 1,421 - Restructuring costs 1,524 1,524 - Litigation reserves and payments 1,235 1,235 - ---------- --------- --------- Total operating expenses 154,986 20,014 134,972 ---------- --------- --------- Operating income 15,915 (24,985) 40,900 Other income (expense), net 357 957 (d) (600) ---------- --------- --------- Income before provision for income taxes 16,272 (24,028) 40,300 Provision for income taxes 3,668 (6,496) 10,164 ---------- --------- --------- Net income $ 12,604 $ (17,532) $ 30,136 ========== ========= ========= Basic net income per share $ 0.15 $ (0.20) $ 0.35 ========== ========= ========= Diluted net income per share $ 0.14 $ (0.20) $ 0.34 ========== ========= ========= Weighted average shares outstanding for basic net income per share 85,158 85,158 ========== ========= Weighted average shares outstanding for diluted net income per share 88,244 88,244 ========== ========= Six Months Ended ----------------------------------- June 30, 2010 ----------------------------------- GAAP Excluded Non-GAAP --------- --------- --------- Revenues: Product revenues $ 472,852 $ - $ 472,852 Service revenues 97,937 - 97,937 --------- --------- --------- Total revenues 570,789 - 570,789 --------- --------- --------- Cost of revenues: Cost of product revenues 191,550 8,265 (a) 183,285 Cost of service revenues 49,019 2,139 (b) 46,880 --------- --------- --------- Total cost of revenues 240,569 10,404 230,165 --------- --------- --------- Gross profit 330,220 (10,404) 340,624 --------- --------- --------- Operating expenses: Sales and marketing 185,277 13,564 (b) 171,713 Research and development 70,145 5,449 (b) 64,696 General and administrative 36,187 8,691 (c) 27,496 Amortization of purchased intangibles 2,861 2,861 - Restructuring costs 3,273 3,273 - Litigation reserves and payments 1,235 1,235 - --------- --------- --------- Total operating expenses 298,978 35,073 263,905 --------- --------- --------- Operating income 31,242 (45,477) 76,719 Other income (expense), net (8,224) (5,573) (d) (2,651) --------- --------- --------- Income before provision for income taxes 23,018 (51,050) 74,068 Provision for income taxes 5,003 (13,599) 18,602 --------- --------- --------- Net income $ 18,015 $ (37,451) $ 55,466 ========= ========= ========= Basic net income per share $ 0.21 $ (0.44) $ 0.65 ========= ========= ========= Diluted net income per share $ 0.21 $ (0.42) $ 0.63 ========= ========= ========= Weighted average shares outstanding for basic net income per share 84,911 84,911 ========= ========= Weighted average shares outstanding for diluted net income per share 87,804 87,828 ========= ========= (a) For the three months ended June 30, 2010, the excluded amount includes $3,312 related to the amortization of purchased intangibles for core and existing technologies, $587 for stock-based compensation expense recorded during the period and $112 related to the effect of stock-based compensation on warranty expense rates. For the six months ended June 30, 2010, the excluded amount includes $6,675 related to the amortization of purchased intangibles for core and existing technologies, $1,357 for stock-based compensation expense recorded during the period and $233 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) For the three months ended June 30, 2010, the excluded amount includes $2,607 for stock-based compensation expense recorded during the period and $3,587 for severance, legal and other costs associated with the CEO transition in May 2010. For the six months ended June 30, 2010, the excluded amount includes $5,104 for stock-based compensation expense recorded during the period and $3,587 for severance, legal and other costs associated with the CEO transition in May 2010. (d) For the three months ended June 30, 2010, the excluded amount represents the net gain realized during the period on preferred equity securities for which we previously recognized a loss as the securities were deemed to be other than temporarily impaired. For the six months ended June 30, 2010, the excluded amount represents the loss recognized during the period on preferred securities considered to be other than temporarily impaired, net of any subsequent realized gains. POLYCOM, INC. GAAP to Non-GAAP Reconciliation (In thousands, except per share amounts) (Unaudited) Three Months Ended ----------------------------------- June 30, 2009 ----------------------------------- GAAP Excluded Non-GAAP --------- --------- --------- Revenues: Product revenues $ 188,419 $ - $ 188,419 Service revenues 42,272 - 42,272 --------- --------- --------- Total revenues 230,691 - 230,691 --------- --------- --------- Cost of revenues: Cost of product revenues 80,483 3,849 (a) 76,634 Cost of service revenues 19,591 617 (b) 18,974 --------- --------- --------- Total cost of revenues 100,074 4,466 95,608 --------- --------- --------- Gross profit 130,617 (4,466) 135,083 --------- --------- --------- Operating expenses: Sales and marketing 66,553 2,611 (b) 63,942 Research and development 28,075 1,888 (b) 26,187 General and administrative 12,728 1,602 (b) 11,126 Amortization of purchased intangibles 1,434 1,434 - Restructuring costs 427 427 - --------- --------- --------- Total operating expenses 109,217 7,962 101,255 --------- --------- --------- Operating income 21,400 (12,428) 33,828 Other expense, net (1,077) - (1,077) --------- --------- --------- Income before provision for income taxes 20,323 (12,428) 32,751 Provision for income taxes 4,998 (3,426) 8,424 --------- --------- --------- Net income $ 15,325 $ (9,002) $ 24,327 ========= ========= ========= --------- --------- --------- Basic net income per share $ 0.18 $ (0.11) $ 0.29 ========= ========= ========= --------- --------- --------- Diluted net income per share $ 0.18 $ (0.11) $ 0.29 ========= ========= ========= Weighted average shares outstanding for basic net income per share 83,753 83,753 ========= ========= Weighted average shares outstanding for diluted net income per share 85,054 85,054 ========= ========= Six Months Ended ----------------------------------- June 30, 2009 ----------------------------------- GAAP Excluded Non-GAAP --------- --------- --------- Revenues: Product revenues $ 371,713 $ - $ 371,713 Service revenues 84,388 - 84,388 --------- --------- --------- Total revenues 456,101 - 456,101 --------- --------- --------- Cost of revenues: Cost of product revenues 158,490 8,885 (a) 149,605 Cost of service revenues 40,060 1,370 (b) 38,690 --------- --------- --------- Total cost of revenues 198,550 10,255 188,295 --------- --------- --------- Gross profit 257,551 (10,255) 267,806 --------- --------- --------- Operating expenses: Sales and marketing 132,786 4,511 (b) 128,275 Research and development 56,528 3,761 (b) 52,767 General and administrative 26,317 3,477 (b) 22,840 Amortization of purchased intangibles 2,898 2,898 - Restructuring costs 6,844 6,844 - --------- --------- --------- Total operating expenses 225,373 21,491 203,882 --------- --------- --------- Operating income 32,178 (31,746) 63,924 Other expense, net (1,358) - (1,358) --------- --------- --------- Income before provision for income taxes 30,820 (31,746) 62,566 Provision for income taxes 7,470 (8,259) 15,729 --------- --------- --------- Net income $ 23,350 $ (23,487) $ 46,837 ========= ========= ========= --------- --------- --------- Basic net income per share $ 0.28 $ (0.28) $ 0.56 ========= ========= ========= --------- --------- --------- Diluted net income per share $ 0.28 $ (0.27) $ 0.55 ========= ========= ========= Weighted average shares outstanding for basic net income per share 83,689 83,689 ========= ========= Weighted average shares outstanding for diluted net income per share 84,652 84,652 ========= ========= (a) For the three months ended June 30, 2009, the excluded amount includes $3,354 related to the amortization of purchased intangibles for core and existing technologies, $421 for stock-based compensation expense recorded during the period and $74 related to the effect of stock-based compensation on warranty expense rates. For the six months ended June 30, 2009, the excluded amount includes $6,680 related to the amortization of purchased intangibles for core and existing technologies, $1,050 related to past license fees claims, $969 for stock-based compensation expense recorded during the period and $186 related to the effect of stock-based compensation on warranty expense rates. (b) Excluded amount represents stock-based compensation expense recorded during the period. POLYCOM, INC. Condensed Consolidated Balance Sheets (In thousands) (Unaudited) June 30, December 31, 2010 2009 ------------- ------------- ASSETS Current assets Cash and cash equivalents $ 248,889 $ 331,098 Investments 208,139 123,686 Trade receivables, net 133,818 132,813 Inventories 91,960 76,863 Deferred taxes 23,287 23,824 Prepaid expenses and other current assets 42,993 24,299 ------------- ------------- Total current assets 749,086 712,583 Property and equipment, net 95,990 81,252 Long-term investments 28,264 12,687 Goodwill 489,973 495,299 Purchased intangibles, net 35,838 46,255 Deferred taxes 27,432 23,943 Other assets 16,938 13,882 ------------- ------------- Total assets $ 1,443,521 $ 1,385,901 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 94,020 $ 87,233 Accrued payroll and related liabilities 24,458 23,707 Taxes payable - 617 Deferred revenue 89,720 79,504 Other accrued liabilities 53,821 52,360 ------------- ------------- Total current liabilities 262,019 243,421 Non-current liabilities Deferred revenue 49,880 46,787 Taxes payable 22,197 27,111 Deferred taxes 2,308 2,702 Other long-term liabilities 12,137 12,027 ------------- ------------- Total liabilities 348,541 332,048 Stockholders' equity 1,094,980 1,053,853 ------------- ------------- Total liabilities and stockholders' equity $ 1,443,521 $ 1,385,901 ============= ============= POLYCOM, INC. Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended Six Months Ended --------------------- -------------------- June 30, June 30, June 30, June 30, 2010 2009 2010 2009 ---------- --------- --------- --------- Revenues: Product revenues $ 244,795 $ 188,419 $ 472,852 $ 371,713 Service revenues 49,840 42,272 97,937 84,388 ---------- --------- --------- --------- Total revenues 294,635 230,691 570,789 456,101 ---------- --------- --------- --------- Cost of revenues: Cost of product revenues 99,001 80,483 191,550 158,490 Cost of service revenues 24,733 19,591 49,019 40,060 ---------- --------- --------- --------- Total cost of revenues 123,734 100,074 240,569 198,550 ---------- --------- --------- --------- Gross profit 170,901 130,617 330,220 257,551 ---------- --------- --------- --------- Operating expenses: Sales and marketing 94,361 66,553 185,277 132,786 Research and development 36,240 28,075 70,145 56,528 General and administrative 20,205 12,728 36,187 26,317 Amortization of purchased intangibles 1,421 1,434 2,861 2,898 Restructuring costs 1,524 427 3,273 6,844 Litigation reserves and payments 1,235 - 1,235 - ---------- --------- --------- --------- Total operating expenses 154,986 109,217 298,978 225,373 ---------- --------- --------- --------- Operating income 15,915 21,400 31,242 32,178 Other income (expense), net 357 (1,077) (8,224) (1,358) ---------- --------- --------- --------- Income before provision for income taxes 16,272 20,323 23,018 30,820 Provision for income taxes 3,668 4,998 5,003 7,470 ---------- --------- --------- --------- Net income $ 12,604 $ 15,325 $ 18,015 $ 23,350 ========== ========= ========= ========= ---------- --------- --------- --------- Basic net income per share $ 0.15 $ 0.18 $ 0.21 $ 0.28 ========== ========= ========= ========= ---------- --------- --------- --------- Diluted net income per share $ 0.14 $ 0.18 $ 0.21 $ 0.28 ========== ========= ========= ========= Weighted average shares outstanding for basic net income per share 85,158 83,753 84,911 83,689 ========== ========= ========= ========= Weighted average shares outstanding for diluted net income per share 88,244 85,054 87,804 84,652 ========== ========= ========= ========= POLYCOM, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Six Months Ended -------------------- June 30, June 30, 2010 2009 --------- --------- Cash flows from operating activities: Net income $ 18,015 $ 23,350 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 18,975 16,105 Amortization of purchased intangibles 9,536 9,579 Provision for doubtful accounts - 247 Provision for excess and obsolete inventories 1,551 2,395 Non-cash stock based compensation 27,612 14,088 Excess tax benefits from stock-based compensation (5,931) - Write down of investments other than temporarily impaired 6,530 - Loss on disposals of property and equipment 141 14 Changes in assets and liabilities, net of the effect of acquisitions: Trade receivables (1,005) 14,295 Inventories (16,648) 8,918 Deferred taxes (3,664) (1,492) Prepaid expenses and other assets (20,230) 633 Accounts payable 6,787 (1,498) Taxes payable 2,945 4,030 Other accrued liabilities 16,266 (17,071) --------- --------- Net cash provided by operating activities 60,880 73,593 --------- --------- Cash flows from investing activities: Purchase of property and equipment (33,596) (17,083) Purchases of investments (231,113) (268,245) Proceeds from sale and maturity of investments 133,361 244,619 --------- --------- Net cash used in investing activities (131,348) (40,709) --------- --------- Cash flows from financing activities: Proceeds from issuance of common stock under employee option and stock purchase plans 29,325 15,606 Repurchase of common stock (46,997) (15,375) Excess tax benefits from stock-based compensation 5,931 - --------- --------- Net cash provided by (used in) financing activities (11,741) 231 --------- --------- Net increase (decrease) in cash and cash equivalents (82,209) 33,115 Cash and cash equivalents, beginning of period 331,098 165,669 --------- --------- Cash and cash equivalents, end of period $ 248,889 $ 198,784 ========= =========
