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Plantronics Announces Second Quarter Fiscal 2010 Results
Second Quarter Revenues and EPS Exceed Guidance; Company Achieves Targeted Gross & Operating Margins
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| PLT | 27.20 | 0.00 |
SANTA CRUZ, CA--(Marketwire - 10/27/09) - Plantronics, Inc. (NYSE:PLT - News) today announced second quarter fiscal 2010 net revenues of $167.4 million compared with $216.9 million in the second quarter of fiscal 2009. Net revenues were above the previously provided guidance of $155 million to $160 million. Plantronics' GAAP loss per share was $0.02 in the second quarter of fiscal 2010, primarily due to non-cash asset impairment charges, compared with diluted earnings per share of $0.36 in the same quarter of the prior year. Non-GAAP diluted earnings per share for the second quarter of fiscal 2010 were $0.40 compared with $0.44 in the second quarter of fiscal 2009 and were greater than the previously provided non-GAAP guidance of $0.27 to $0.32. The difference between GAAP and non-GAAP earnings (loss) per share for the second quarter of fiscal 2010 includes a $15.6 million impairment charge, net of tax on our Audio Entertainment Group ("AEG") long-lived assets, restructuring and other related costs, purchase accounting amortization and the cost of stock-based compensation.
Plantronics also announced that its Board of Directors declared a quarterly dividend of $0.05 per share. The dividend is payable on December 10, 2009 to stockholders of record at the close of business on November 20, 2009.
"Revenues were above expectations as we experienced stable demand in our Office & Contact Center business and increased demand in our consumer markets. Our improved cost structure allowed us to achieve our long-term targeted gross and operating margins at the current revenue level," stated Ken Kannappan, President & CEO. "Our new corporate organizational structure along with the pending sale of Altec Lansing, our AEG segment, will produce better and more efficient corporate alignment to target our top market opportunity, Unified Communications ("UC"), providing an excellent earnings growth opportunity ahead as UC adoption becomes more substantial."
Audio Communications Group (ACG) Non-GAAP Results
(Office & Contact Center, Mobile, Gaming and Computer & Clarity)
Comparisons are to the Same Quarter in the Prior Year
Second quarter fiscal 2010 net revenues of $144.4 million decreased 26% compared with $195.3 million in the prior year quarter, but increased 2% from $141.1 million in the first quarter of fiscal 2010. General economic weakness led to declines in net revenues in all major geographies and most product groups compared with the prior year quarter. Revenues in the U.S., Asia Pacific and Latin America regions improved sequentially.
Office and Contact Center net revenues were $93.5 million, a decrease of 22% from $119.5 million in the second quarter of fiscal 2009 and a sequential decrease of 3% from $95.9 million in the prior quarter. Bluetooth headset net revenues were $33.3 million, a decrease of 42% from the year ago quarter of $57.4 million, and a sequential increase of 10% from $30.3 million. The prior year quarter was stronger in part due to higher demand driven by hands-free legislation in California and Washington states which was partially offset by higher average selling prices in the second quarter of fiscal 2010. The Discovery 975 Bluetooth headset, introduced during the quarter, received positive editorial and consumer reviews and is now available through a number of top consumer electronics retailers.
Gross margin in the second quarter of fiscal 2010 was 48.7% compared with 47.9% in the second quarter of the prior year. The improvement was primarily due to a favorable product mix, lower freight costs, and lower requirements for excess and obsolete inventory provisions, partially offset by higher manufacturing costs as a result of lower production volumes.
Actions taken by the Company earlier this calendar year continued to have a beneficial effect, with operating expenses down by 22% from $55.6 million in the prior year quarter to $43.6 million in the current quarter. As a result of the leaner cost structure, operating income was $26.7 million resulting in an 18.5% operating margin. While these results were down from the second quarter in the prior year, the results are within the Company's long term target model for this business.
The Company continues to believe that the implementation of UC technologies by large corporations will be a significant long-term driver of office headset adoption, and, as a result, a key long-term driver of revenue and profit growth. Our UC portfolio continued to enjoy strong customer and partner reception. The Company expects that there will be a significantly higher level of growth in UC enabled products compared to headsets for desk phones in the future, and continues to believe that revenue from headset sales related to UC will be material to the Company beginning in fiscal 2011.
Audio Entertainment Group (AEG) Non-GAAP Results
(Docking Audio, PC Audio & Other)
Comparisons are to the Same Quarter in the Prior Year
Second quarter fiscal 2010 net revenues of $23.0 million increased 7% from $21.5 million in the prior year quarter driven by higher sales of Docking Audio products in all major geographies, and were up 21% sequentially from $19.0 million in the prior quarter. In addition, we experienced higher PC Audio sales in Asia and EMEA, which were offset by lower PC Audio sales in the U.S.
Gross margin increased to 20.9% from 9.0% as a result of improved product mix and margins along with lower requirements for excess and obsolete inventory provisions. This was partially offset by higher freight charges, royalty costs and other manufacturing costs.
Operating expenses declined by 12% from $6.5 million in the prior year quarter to $5.7 million in the current quarter, and the operating loss decreased from $4.6 million in the prior year quarter to $0.9 million in the current quarter.
On October 2, 2009, the Company entered into an Asset Purchase Agreement to sell Altec Lansing, its AEG segment, to an affiliate of Prophet Equity LP, a Southlake, Texas based private equity firm ("Prophet"). On October 23, 2009, the Company and Prophet entered into a letter agreement which amended the Asset Purchase Agreement to provide that the closing date for the sale of the AEG segment will be extended to not later than December 1, 2009.
Subsequent to the closing of the sale of the AEG segment, the Company will report all future and historical AEG segment results as discontinued operations in its financial statements beginning in the third quarter of fiscal 2010.
Business Outlook
Continuing Operations (Excludes Audio Entertainment Group business segment due to pending sale expected to be completed no later than December 1, 2009)
The following statements are based on current expectations. As described in "Safe Harbor" below, many of these statements are forward-looking. Actual results are subject to a variety of risks and uncertainties and may differ materially from the forward-looking statements.
Plantronics has a "book and ship" business model whereby it ships most orders to customers within 48 hours of its receipt of those orders, and, therefore, the level of backlog does not provide reliable visibility into potential future revenues. The Company's business is inherently difficult to forecast, and there can be no assurance that the incoming orders it expects to receive over the balance of the quarter will materialize. With continuing uncertainty resulting from the global economic conditions, the Company's business remains difficult to forecast. The December quarter tends to be characterized by an increase in incoming sales orders during October which diminishes in December.
Net revenues in the third quarter of fiscal 2010 are expected to be higher than the second quarter of fiscal 2010 and the third quarter of fiscal 2009, primarily based on the fact that the December quarter has historically been a stronger quarter than the September quarter and the current bookings trend supports our belief that revenues will be in the ranges below.
Subject to the foregoing, we are currently expecting the following range of financial results for continuing operations (excludes AEG due to the pending sale expected to be completed no later than December 1, 2009) for the third quarter of fiscal 2010:
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-- Net revenues of $155 million - $160 million;
-- Non-GAAP operating income of $26 million to $29 million;
-- Non-GAAP earnings per share of $0.38 - $0.42;
-- Non-GAAP consolidated tax rate to be approximately 26%;
-- The EPS cost of stock-based compensation to be approximately $0.05;
and
-- GAAP earnings per share of $0.33 to $0.37.
If these results are achieved, the performance compared with Q3 Fiscal 2009 would be revenue growth of approximately 2% to 5% and Non-GAAP operating income growth of 189% to 222%.
Plantronics does not intend to update these targets during the quarter or to report on its progress toward these targets. Plantronics will not comment on these targets to analysts or investors except by its next press release announcing its third quarter fiscal 2010 results or by other public disclosure. Any statements by persons outside Plantronics speculating on the progress of the third quarter fiscal 2010 will not be based on internal Company information and should be assessed accordingly by investors.
Conference Call Scheduled to Discuss Actual Financial Results
Plantronics has scheduled a conference call to discuss second quarter fiscal 2010 results. The conference call will take place Tuesday, October 27th at 2:00 PM (PDT). All interested investors and potential investors in Plantronics 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 "Plantronics Conference Call." Participants from North America should call (888) 301-8736 and other participants should call (706) 634-7260.
A replay of the call with the conference ID #22257821 will be available for 72 hours at (800) 642-1687 for callers from North America and at (706) 645-9291 for all other callers. The conference call will also be simultaneously web cast at www.plantronics.com under Investor Relations, and the web cast of the conference call will remain available at the Plantronics website for thirty days.
Use of Non-GAAP Financial Information
Plantronics excludes non-recurring transactions and non-cash expenses and charges such as restructuring and other related charges, certain tax credits and the release of certain tax reserves, stock-based compensation expenses related to stock options, awards and employee stock purchases, purchase accounting amortization and impairment of goodwill and long-lived assets from non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating income, non-GAAP gross margin, non-GAAP operating margin and non-GAAP effective tax rate. Plantronics excludes these expenses from its non-GAAP measures primarily because Plantronics does not believe they are reflective of ongoing operating results and are not considered as part of its target operating model. Plantronics believes that the use of non-GAAP financial measures provides meaningful supplemental information regarding its performance and liquidity, and helps investors compare actual results to its long-term target operating model goals. Plantronics believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning, forecasting and analyzing future periods.
Safe Harbor
This release contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements relating to (i) implementation of UC technologies by large enterprises as a significant driver of headset adoption, and, its effect on our revenue and profit growth; (ii) our products, including the Discovery 975 and the Savi Office and Savi Go headsets; (iii) revenue from headset sales related to UC and its materiality to the Company beginning in fiscal 2011; (iv) growing adoption and deployment of UC in general and our expectation that this will be advantageous for headset sales; (v) seasonality during the December quarter and its effect on our financial results; (vi) our estimates of GAAP and non-GAAP financial results for the third quarter of fiscal 2010, including revenue and earnings per share; (vii) our estimated tax rate for the third quarter of fiscal 2010; (viii) our estimated stock-based compensation expense for the third quarter of fiscal 2010; (ix) the anticipated closing of the sale of the AEG segment no later than December 1, 2009, as well as other matters discussed in this press release that are not purely historical data. Plantronics does 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:
�
-- economic conditions in both the domestic and international markets;
-- fluctuations in foreign exchange rates;
-- the bankruptcy or financial weakness of distributors or key customers,
or the bankruptcy of or reduction in capacity of our key suppliers;
-- the effect of restructuring actions on GAAP results;
-- our ability to realize our UC plans and to achieve the financial
results projected to arise from UC adoption could be adversely affected by
the following factors: (i) as UC becomes more widely adopted, the risk that
competitors will offer solutions that will effectively commoditize our
headsets which, in turn, will reduce the sales prices for our headsets;
(ii) our plans are dependent upon adoption of our UC solution by major
platform providers such as Microsoft, Avaya, IBM and Cisco, and we have a
limited ability to influence such providers with respect to the
functionality of their platforms, their rate of deployment, and their
willingness to integrate their platforms with our solutions; (iii) the
development of UC solutions is technically complex and this may delay or
obstruct our ability to introduce solutions to the market on a timely basis
and that are cost effective, feature rich, stable and attractive to our
customers; (iv) as UC becomes more widely adopted we anticipate that
competition for market share will increase, and some competitors may have
superior technical and economic resources, and (v) UC solutions may not be
adopted with the breadth and speed in the marketplace that we currently
anticipate;
-- failure to match production to demand given long lead times and the
difficulty of forecasting unit volumes and acquiring the component parts to
meet demand without having excess inventory or incurring cancellation
charges;
-- further impairment losses on the carrying value of our intangible
assets and goodwill could be recognized if it is determined the value is
not recoverable which would adversely affect our financial results;
-- volatility in prices from our suppliers, including our manufacturers
located in China, have and could negatively affect our profitability and/or
market share;
-- the consummation of the sale of the AEG segment is subject to certain
closing conditions which may not be met and, in the event the sale does not
close, our business may be materially and adversely affected;
-- in the event the sale of the AEG segment is consummated, the effects
of the sale, including the level of cash flow and the timing of the receipt
of any cash flow resulting from such sale are uncertain; and
-- additional risk factors including: interruption in the supply of sole-
sourced critical components, continuity of component supply at costs
consistent with our plans, the inherent risks of our substantial foreign
operations, and problems which might affect our manufacturing facilities in
Mexico, and unexpected delays and uncertainties affecting our ability to
realize targeted expense reductions and annualized savings by outsourcing
the manufacturing of our Bluetooth products in China to GoerTek, Inc.
For more information concerning these and other possible risks, please refer to the Company's Annual Report on Form 10-K filed May 26, 2009, quarterly reports filed on Form 10-Q and other filings with the Securities and Exchange Commission as well as recent press releases. These filings can be accessed over the Internet at http://www.sec.gov/edgar/searchedgar/companysearch.html.
Financial Summaries
The following related charts are provided:
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-- Summary Unaudited Condensed Consolidated Financial Statements
-- Summary Unaudited Condensed Statements of Operations by Segment
-- Unaudited GAAP to Non-GAAP Statements of Operations Reconciliations
for the three and six months ended September 30, 2009 and September 30,
2008
-- Summary Unaudited Statements of Operations and Related Data on a Non-
GAAP Basis
About Plantronics
Plantronics is a world leader in personal audio communications for professionals and consumers. From unified communication solutions to Bluetooth headsets, Plantronics delivers unparalleled audio experiences and quality that reflect our nearly 50 years of innovation and customer commitment. Plantronics is used by every company in the Fortune 100 and is the headset of choice for air traffic control, 911 dispatch and the New York Stock Exchange. For more information, please visit www.plantronics.com or call (800) 544-4660.
Altec Lansing, Clarity, Plantronics, the logo design and Savi are trademarks or registered trademarks of Plantronics, Inc. The Bluetooth name and the Bluetooth trademarks are owned by Bluetooth SIG, Inc. and are used by Plantronics, Inc. under license. All other trademarks are the property of their respective owners.
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PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data and percentages)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- ----------------------
2008 2009 2008 2009
---------- ---------- ---------- ----------
Net revenues $ 216,856 $ 167,415 $ 436,020 $ 327,540
Cost of revenues 123,083 94,729 251,368 187,298
---------- ---------- ---------- ----------
Gross profit 93,773 72,686 184,652 140,242
Gross profit % 43.2% 43.4% 42.3% 42.8%
Research, development
and engineering 18,850 15,179 38,545 30,258
Selling, general and
administrative 47,745 37,439 96,143 74,921
Restructuring and other
related charges (140) 857 235 1,454
Impairment of long-lived
assets - 25,194 - 25,194
---------- ---------- ---------- ----------
Total operating
expenses 66,455 78,669 134,923 131,827
---------- ---------- ---------- ----------
Operating income
(loss) 27,318 (5,983) 49,729 8,415
Operating income
(loss) % 12.6% (3.6%) 11.4% 2.6%
Interest and other income
(expense), net (3,170) 884 (1,630) 2,231
---------- ---------- ---------- ----------
Income (loss) before
income taxes 24,148 (5,099) 48,099 10,646
Income tax expense
(benefit) 6,500 (4,353) 9,957 742
---------- ---------- ---------- ----------
Net income (loss) $ 17,648 $ (746) $ 38,142 $ 9,904
========== ========== ========== ==========
% of net revenues 8.1% (0.4%) 8.7% 3.0%
Earnings (loss) per
common share:
Basic $ 0.36 $ (0.02) $ 0.78 $ 0.20
Diluted $ 0.36 $ (0.02) $ 0.77 $ 0.20
Shares used in computing
earnings (loss) per
share:
Basic 48,796 48,737 48,738 48,632
Diluted 49,489 48,737 49,362 49,118
Tax rate 26.9% 85.4% 20.7% 7.0%
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31, September 30,
2009 2009
---------- ----------
ASSETS
Cash and cash
equivalents $ 158,193 $ 244,170
Short-term investments 59,987 24,999
---------- ----------
Total cash, cash
equivalents, and
short-term
investments 218,180 269,169
Accounts receivable, net 83,657 103,003
Inventory, net 119,296 100,024
Deferred income taxes 12,486 12,765
Other current assets 29,936 17,191
Assets held for sale - 9,267
---------- ----------
Total current assets 463,555 511,419
Long-term investments 23,718 22,015
Property, plant and
equipment, net 95,719 71,224
Intangibles, net 26,575 4,067
Goodwill 14,005 14,005
Other assets 9,548 10,978
---------- ----------
Total assets $ 633,120 $ 633,708
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Accounts payable $ 32,827 $ 34,315
Accrued liabilities 53,143 54,005
---------- ----------
Total current
liabilities 85,970 88,320
Deferred tax liability 8,085 -
Long-term income taxes
payable 12,677 14,215
Other long-term
liabilities 1,021 991
---------- ----------
Total liabilities 107,753 103,526
Stockholders' equity 525,367 530,182
---------- ----------
Total liabilities and
stockholders' equity $ 633,120 $ 633,708
========== ==========
AUDIO COMMUNICATIONS GROUP
SUMMARY CONDENSED FINANCIAL STATEMENTS
(in thousands, except percentages)
UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- ----------------------
2008 2009 2008 2009
---------- ---------- ---------- ----------
Net revenues $ 195,349 $ 144,458 $ 393,876 $ 285,620
Cost of revenues 102,603 76,527 211,960 152,685
---------- ---------- ---------- ----------
Gross profit 92,746 67,931 181,916 132,935
Gross profit % 47.5% 47.0% 46.2% 46.5%
Research, development
and engineering 16,879 13,542 34,076 27,211
Selling, general and
administrative 42,358 32,913 85,308 66,097
Restructuring and other
related charges - 857 - 1,435
---------- ---------- ---------- ----------
Total operating
expenses 59,237 47,312 119,384 94,743
---------- ---------- ---------- ----------
Operating income $ 33,509 $ 20,619 $ 62,532 $ 38,192
Operating income % 17.2% 14.3% 15.9% 13.4%
AUDIO ENTERTAINMENT GROUP
SUMMARY CONDENSED FINANCIAL STATEMENTS
(in thousands, except percentages)
UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- ----------------------
2008 2009 2008 2009
---------- ---------- ---------- ----------
Net revenues $ 21,507 $ 22,957 $ 42,144 $ 41,920
Cost of revenues 20,480 18,202 39,408 34,613
---------- ---------- ---------- ----------
Gross profit 1,027 4,755 2,736 7,307
Gross profit % 4.8% 20.7% 6.5% 17.4%
Research, development
and engineering 1,971 1,637 4,469 3,047
Selling, general and
administrative 5,387 4,526 10,835 8,824
Restructuring and other
related charges (140) - 235 19
Impairment of long-lived
assets - 25,194 - 25,194
---------- ---------- ---------- ----------
Total operating
expenses 7,218 31,357 15,539 37,084
---------- ---------- ---------- ----------
Operating loss $ (6,191) $ (26,602) $ (12,803) $ (29,777)
Operating loss % (28.8%) (115.9%) (30.4%) (71.0%)
PLANTRONICS, INC.
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
(in thousands, except per share data and percentages)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September 30, 2009 September 30, 2009
------------------------------ ------------------------------
GAAP Excluded Non-GAAP GAAP Excluded Non-GAAP
-------- -------- -------- -------- -------- --------
Net
revenues $167,415 $ - $167,415 $327,540 $ - $327,540
Cost of
revenues 94,729 (2,422)(2) 92,307 187,298 (6,605)(3) 180,693
-------- -------- -------- -------- -------- --------
Gross
profit 72,686 2,422 75,108 140,242 6,605 146,847
Gross
profit % 43.4% 44.9% 42.8% 44.8%
Research,
development
and
engineer-
ing 15,179 (854)(1) 14,325 30,258 (1,700)(1) 28,558
Selling,
general
and
adminis-
trative 37,439 (2,472)(1) 34,967 74,921 (5,061)(1) 69,860
Restructuring
and other
related
charges 857 (857)(4) - 1,454 (1,454)(4) -
Impairment
of
long-lived
assets 25,194 (25,194)(5) - 25,194 (25,194)(5) -
-------- -------- -------- -------- -------- --------
Total
operating
expenses 78,669 (29,377) 49,292 131,827 (33,409) 98,418
-------- -------- -------- -------- -------- --------
Operat-
ing
income
(loss) (5,983) 31,799 25,816 8,415 40,014 48,429
Operat-
ing
income
(loss) % (3.6%) 15.4% 2.6% 14.8%
Interest
and other
income
(expense),
net 884 - 884 2,231 - 2,231
-------- -------- -------- -------- -------- --------
Income
(loss)
before
income
taxes (5,099) 31,799 26,700 10,646 40,014 50,660
Income tax
expense
(benefit) (4,353) 11,056 (6) 6,703 742 12,430 (6) 13,172
-------- -------- -------- -------- -------- --------
Net
income
(loss) $ (746) $ 20,743 $ 19,997 $ 9,904 $ 27,584 $ 37,488
======== ======== ======== ======== ======== ========
% of net
revenues (0.4%) 11.9% 3.0% 11.4%
Diluted
earnings
(loss) per
common
share $ (0.02) $ 0.42 $ 0.40 $ 0.20 $ 0.56 $ 0.76
Shares used
in diluted
per share
calculat-
ions 48,737 49,567 (7) 49,567 49,118 49,118 49,118
AUDIO COMMUNICATIONS GROUP
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
(in thousands, except percentages)
UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September 30, 2009 September 30, 2009
------------------------------ ------------------------------
GAAP Excluded Non-GAAP GAAP Excluded Non-GAAP
-------- -------- -------- -------- -------- --------
Net
revenues $144,458 $ - $144,458 $285,620 $ - $285,620
Cost of
revenues 76,527 (2,382)(2) 74,145 152,685 (6,504)(3) 146,181
-------- -------- -------- -------- -------- --------
Gross
profit 67,931 2,382 70,313 132,935 6,504 139,439
Gross
profit % 47.0% 48.7% 46.5% 48.8%
Research,
development
and
engineer-
ing 13,542 (809)(1) 12,733 27,211 (1,628)(1) 25,583
Selling,
general
and
adminis-
trative 32,913 (2,090)(1) 30,823 66,097 (4,216)(1) 61,881
Restructuring
and other
related
charges 857 (857)(4) - 1,435 (1,435)(4) -
-------- -------- -------- -------- -------- --------
Total
operating
expenses 47,312 (3,756) 43,556 94,743 (7,279) 87,464
-------- -------- -------- -------- -------- --------
Operat-
ing
income $ 20,619 $ 6,138 $ 26,757 $ 38,192 $ 13,783 $ 51,975
Operat-
ing
income % 14.3% 18.5% 13.4% 18.2%
AUDIO ENTERTAINMENT GROUP
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
(in thousands, except percentages)
UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September 30, 2009 September 30, 2009
------------------------------ ------------------------------
GAAP Excluded Non-GAAP GAAP Excluded Non-GAAP
-------- -------- -------- -------- -------- --------
Net
revenues $ 22,957 $ - $ 22,957 $ 41,920 $ - $ 41,920
Cost of
revenues 18,202 (40)(1) 18,162 34,613 (101)(1) 34,512
-------- -------- -------- -------- -------- --------
Gross
profit 4,755 40 4,795 7,307 101 7,408
Gross
profit % 20.7% 20.9% 17.4% 17.7%
Research,
development
and
engineering 1,637 (45)(1) 1,592 3,047 (72)(1) 2,975
Selling,
general
and
adminis-
trative 4,526 (382)(1) 4,144 8,824 (845)(1) 7,979
Restructuring
and other
related
charges - - - 19 (19)(4) -
Impairment
of
long-lived
assets 25,194 (25,194)(5) - 25,194 (25,194)(5) -
-------- -------- -------- -------- -------- --------
Total
operating
expenses 31,357 (25,621) 5,736 37,084 (26,130) 10,954
-------- -------- -------- -------- -------- --------
Operat-
ing
loss $(26,602) $ 25,661 $ (941) $(29,777) $ 26,231 $ (3,546)
Operat-
ing
loss % (115.9%) (4.1%) (71.0%) (8.5%)
(1) Excluded amount represents stock-based compensation and purchase
accounting amortization.
(2) Excluded amount represents stock-based compensation, purchase
accounting amortization and $1,707 of accelerated depreciation on
assets related to restructuring activity.
(3) Excluded amount represents stock-based compensation, purchase
accounting amortization and $5,205 of accelerated depreciation on
assets related to restructuring activity.
(4) Excluded amount represents restructuring and other related charges.
(5) Excluded amount represents impairment of long-lived assets
(6) Excluded amount represents tax benefit from stock-based compensation,
purchase accounting amortization, restructuring and other related
charges, and impairment of long-lived assets.
(7) As the Company incurred a GAAP net loss for the period, the inclusion
of stock options in the shares used for computing diluted earnings per
share would have been anti-dilutive and would have reduced the net loss
per share. However, as we have non-GAAP net income, the diluted shares
used for the Non-GAAP diluted earnings per share includes the effect of
stock options.
Use of Non-GAAP Financial Information
To supplement our consolidated financial statements presented on a GAAP
basis, Plantronics uses non-GAAP measures of operating results, which are
adjusted to exclude non-recurring and non-cash expenses and charges, such
as restructuring and other related charges, certain tax credits and the
release of certain tax reserves, stock-based compensation expenses related
to stock options, awards and employee stock purchases, purchase accounting
amortization and impairment of goodwill and long-lived assets. Plantronics
does not believe these expenses and charges are reflective of ongoing
operating results and are not part of our target operating model. At the
segment level, we have presented non-GAAP statements that only show our
results to the operating income line. On a consolidated basis, we have
presented full non-GAAP statement of operations. The non-GAAP financial
measures should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the financial
results calculated in accordance with GAAP and the reconciliations to those
financial statements should be carefully evaluated. The non-GAAP financial
measures used by Plantronics may be calculated differently from, and
therefore may not be comparable to, similarly titled measures used by other
companies.
PLANTRONICS, INC.
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
(in thousands, except per share data and percentages)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September 30, 2008 September 30, 2008
------------------------------ ------------------------------
GAAP Excluded Non-GAAP GAAP Excluded Non-GAAP
-------- -------- -------- -------- -------- --------
Net
revenues $216,856 $ - $216,856 $436,020 $ - $436,020
Cost of
revenues 123,083 (1,793)(1) 121,290 251,368 (3,614)(1) 247,754
-------- -------- -------- -------- -------- --------
Gross
profit 93,773 1,793 95,566 184,652 3,614 188,266
Gross
profit % 43.2% 44.1% 42.3% 43.2%
Research,
development
and
enginee-
ring 18,850 (1,039)(1) 17,811 38,545 (2,074)(1) 36,471
Selling,
general
and
adminis-
trative 47,745 (3,412)(1) 44,333 96,143 (6,830)(1) 89,313
Restructuring
and other
related
charges (140) 140 (2) - 235 (235)(2) -
-------- -------- -------- -------- -------- --------
Total
operating
expenses 66,455 (4,311) 62,144 134,923 (9,139) 125,784
-------- -------- -------- -------- -------- --------
Operat-
ing
income 27,318 6,104 33,422 49,729 12,753 62,482
Operat-
ing
income % 12.6% 15.4% 11.4% 14.3%
Interest
and other
income
(expense),
net (3,170) - (3,170) (1,630) - (1,630)
-------- -------- -------- -------- -------- --------
Income
before
income
taxes 24,148 6,104 30,252 48,099 12,753 60,852
Income
tax
expense 6,500 2,192 (3) 8,692 9,957 6,074 (4) 16,031
-------- -------- -------- -------- -------- --------
Net
income $ 17,648 $ 3,912 $ 21,560 $ 38,142 $ 6,679 $ 44,821
======== ======== ======== ======== ======== ========
% of net
revenues 8.1% 9.9% 8.7% 10.3%
Diluted
earnings
per common
share $ 0.36 $ 0.08 $ 0.44 $ 0.77 $ 0.14 $ 0.91
Shares
used in
diluted
per share
calculat-
ions 49,489 49,489 49,489 49,362 49,362 49,362
AUDIO COMMUNICATIONS GROUP
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
(in thousands, except percentages)
UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September 30, 2008 September 30, 2008
------------------------------ ------------------------------
GAAP Excluded Non-GAAP GAAP Excluded Non-GAAP
-------- -------- -------- -------- -------- --------
Net
revenues $195,349 $ - $195,349 $393,876 $ - $393,876
Cost of
revenues 102,603 (883)(1) 101,720 211,960 (1,791)(1) 210,169
-------- -------- -------- -------- -------- --------
Gross
profit 92,746 883 93,629 181,916 1,791 183,707
Gross
profit % 47.5% 47.9% 46.2% 46.6%
Research,
development
and
engineer-
ing 16,879 (1,001)(1) 15,878 34,076 (1,994)(1) 32,082
Selling,
general
and
adminis-
trative 42,358 (2,584)(1) 39,774 85,308 (5,165)(1) 80,143
Restructuring
and other
related
charges - - - - - (2) -
-------- -------- -------- -------- -------- --------
Total
operating
expenses 59,237 (3,585) 55,652 119,384 (7,159) 112,225
-------- -------- -------- -------- -------- --------
Operat-
ing
income $ 33,509 $ 4,468 $ 37,977 $ 62,532 $ 8,950 $ 71,482
Operat-
ing
income % 17.2% 19.4% 15.9% 18.1%
AUDIO ENTERTAINMENT GROUP
UNAUDITED GAAP TO NON-GAAP RECONCILIATION
(in thousands, except percentages)
UNAUDITED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
September 30, 2008 September 30, 2008
------------------------------ ------------------------------
GAAP Excluded Non-GAAP GAAP Excluded Non-GAAP
-------- -------- -------- -------- -------- --------
Net
revenues $ 21,507 $ - $ 21,507 $ 42,144 $ - $ 42,144
Cost of
revenues 20,480 (910)(1) 19,570 39,408 (1,823)(1) 37,585
-------- -------- -------- -------- -------- --------
Gross
profit 1,027 910 1,937 2,736 1,823 4,559
Gross
profit % 4.8% 9.0% 6.5% 10.8%
Research,
development
and
engineer-
ing 1,971 (38)(1) 1,933 4,469 (80)(1) 4,389
Selling,
general
and
adminis-
trative 5,387 (828)(1) 4,559 10,835 (1,665)(1) 9,170
Restructuring
and other
related
charges (140) 140 (2) - 235 (235)(2) -
-------- -------- -------- -------- -------- --------
Total
operating
expenses 7,218 (726) 6,492 15,539 (1,980) 13,559
-------- -------- -------- -------- -------- --------
Operat-
ing
loss $ (6,191) $ 1,636 $ (4,555) $(12,803) $ 3,803 $ (9,000)
Operat-
ing
loss % (28.8%) (21.2%) (30.4%) (21.4%)
(1) Excluded amount represents stock-based compensation and purchase
accounting amortization.
(2) Excluded amount represents restructuring and other related charges.
(3) Excluded amount represents tax benefit from stock-based compensation,
purchase accounting amortization and restructuring and other related
charges.
(4) Excluded amount represents tax benefit from stock-based compensation,
purchase accounting amortization, restructuring and other related
charges and $1,735 related to a tax benefit from expiration of certain
statutes of limitations.
Use of Non-GAAP Financial Information
To supplement our consolidated financial statements presented on a GAAP
basis, Plantronics uses non-GAAP measures of operating results, which are
adjusted to exclude non-recurring and non-cash expenses and charges, such
as restructuring and other related charges, certain tax credits and the
release of certain tax reserves, stock-based compensation expenses related
to stock options, awards and employee stock purchases, purchase accounting
amortization and impairment of goodwill and long-lived assets. Plantronics
does not believe these expenses and charges are reflective of ongoing
operating results and are not part of our target operating model. At the
segment level, we have presented non-GAAP statements that only show our
results to the operating income line. On a consolidated basis, we have
presented full non-GAAP statement of operations. The non-GAAP financial
measures should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and the financial
results calculated in accordance with GAAP and the reconciliations to those
financial statements should be carefully evaluated. The non-GAAP financial
measures used by Plantronics may be calculated differently from, and
therefore may not be comparable to, similarly titled measures used by other
companies.
Summary of Unaudited Statements of Operations and Related Data- Non-GAAP
(in thousands, except per share data and percentages)
Q109 Q209 Q309 Q409
Net revenues $ 219,164 $ 216,856 $ 182,836 $ 146,763
Cost of revenues 126,464 121,290 120,581 95,517
Gross profit 92,700 95,566 62,255 51,246
Gross profit % 42.3% 44.1% 34.0% 34.9%
Research, development and
engineering 18,660 17,811 17,810 13,938
Selling, general and
administrative 44,980 44,333 40,271 33,633
Operating expenses 63,640 62,144 58,081 47,571
Operating income 29,060 33,422 4,174 3,675
Operating income % 13.3% 15.4% 2.3% 2.5%
Income before income taxes 30,600 30,252 2,675 3,260
Income tax expense (benefit) 7,339 8,692 (1,338) 2,714
Income tax expense (benefit)
as a percent of income
before taxes 24.0% 28.7% (50.0%) 83.3%
Net income $ 23,261 $ 21,560 $ 4,013 $ 546
Diluted shares outstanding 49,245 49,489 48,449 48,431
Diluted earnings per share $ 0.47 $ 0.44 $ 0.08 $ 0.01
Net revenues from unaffiliated
customers:
Audio Communication Group
Office and Contact Center $ 122,803 $ 119,530 $ 101,694 $ 85,642
Mobile 59,882 60,911 36,011 30,615
Gaming and Computer Audio 9,621 8,977 8,531 6,923
Clarity 6,221 5,931 6,380 4,918
Audio Entertainment Group 20,637 21,507 30,220 18,665
Net revenues by geographic area
from unaffiliated customers:
Domestic $ 134,402 $ 139,856 $ 107,799 $ 90,182
International 84,762 77,000 75,037 56,581
Balance Sheet accounts and
metrics:
Accounts receivable, net $ 130,530 $ 115,032 $ 106,463 $ 83,657
Days sales outstanding 54 48 52 51
Inventory, net $ 136,974 $ 163,433 $ 137,563 $ 119,296
Inventory turns 3.7 3.0 3.5 3.2
FY09 Q110 Q210
Net revenues $ 765,619 $ 160,125 $ 167,415
Cost of revenues 463,852 88,386 92,307
Gross profit 301,767 71,739 75,108
Gross profit % 39.4% 44.8% 44.9%
Research, development and
engineering 68,219 14,233 14,325
Selling, general and
administrative 163,217 34,893 34,967
Operating expenses 231,436 49,126 49,292
Operating income 70,331 22,613 25,816
Operating income % 9.2% 14.1% 15.4%
Income before income taxes 66,787 23,960 26,700
Income tax expense (benefit) 17,407 6,469 6,703
Income tax expense (benefit)
as a percent of income
before taxes 26.1% 27.0% 25.1%
Net income $ 49,380 $ 17,491 $ 19,997
Diluted shares outstanding 48,589 48,665 49,567
Diluted earnings per share $ 1.02 $ 0.36 $ 0.40
Net revenues from unaffiliated
customers:
Audio Communication Group
Office and Contact Center $ 429,669 $ 95,923 $ 93,503
Mobile 187,419 32,310 34,665
Gaming and Computer Audio 34,052 8,810 9,015
Clarity 23,450 4,119 7,275
Audio Entertainment Group 91,029 18,963 22,957
Net revenues by geographic area
from unaffiliated customers:
Domestic $ 472,239 $ 98,787 $ 104,027
International 293,380 61,338 63,388
Balance Sheet accounts and
metrics:
Accounts receivable, net $ 83,657 $ 88,350 $ 103,003
Days sales outstanding 50 55
Inventory, net $ 119,296 $ 108,898 $ 100,024
Inventory turns 3.2 3.7
Contact:
FOR INFORMATION, CONTACT:
Greg Klaben
Vice President of Investor Relations
(831) 458-7533
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