Polycom Reports Fourth Quarter and Fiscal Year 2011 Earnings

Q4 Revenue Growth of 20 Percent Year-Over-Year to a Record $407 Million; Q4 Operating Cash Flow Growth of 192 Percent Year-Over-Year to a Record $122 Million

Marketwired

PLEASANTON, CA--(Marketwire -01/23/12)- Polycom, Inc. (NASDAQ: PLCM - News), the global leader in standards-based unified communications (UC), today reported its earnings for the fourth quarter and fiscal year ended December 31, 2011.

Fourth quarter 2011 consolidated net revenues were a record $407 million, compared to $340 million for the fourth quarter of 2010. GAAP net income for the fourth quarter of 2011 was $50 million, or 28 cents per diluted share, compared to $33 million, or 19 cents per diluted share, for the same period last year. Non-GAAP net income for the fourth quarter of 2011 was $74 million, or 41 cents per diluted share, compared to non-GAAP net income of $43 million, or 24 cents per diluted share, for the fourth quarter of 2010. Note that the share and per share data for all periods presented in this release have been adjusted to reflect the two-for-one stock split that was effective July 1, 2011.

For the year ended December 31, 2011, net revenues were $1.5 billion, compared to $1.2 billion for the year ended December 31, 2010. GAAP net income for the year ended December 31, 2011 was $136 million, or 75 cents per diluted share, compared to GAAP net income of $68 million, or 39 cents per diluted share, for the same period last year. Non-GAAP net income for the year ended December 31, 2011 was $213 million, or $1.18 per diluted share, compared to $133 million, or $0.75 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 geographic basis, consolidated net revenues for the fourth quarter of 2011 were comprised of:

 
--  48 percent Americas, or $193.8 million, an increase of 7 percent
    year-over-year;
--  27 percent Europe, Middle East, and Africa, or $109.7 million, an
    increase of 28 percent year-over-year; and
--  25 percent Asia Pacific, or $103.5 million, an increase of 42 percent
    year-over-year.

"2011 closed strong with full-year revenues of $1.5 billion, driven by particular strength in sales of the Polycom® RealPresence™ Platform and broad geographic growth," said Andrew Miller, Polycom president and CEO. "Enabled by Polycom's innovations, we experienced unprecedented demand for our secure, interoperable, unified collaboration solutions by both enterprise and service provider customers. Leveraging our industry-leading technology and powerful network of strategic partners, Polycom's cloud, mobility, and software-driven infrastructure strategy is beginning to yield and we look forward to another year of solid growth in 2012."

"Polycom generated 20 percent year-over-year revenue growth in Q4, which drove revenues, operating profits, and operating cash flow to record levels," said Michael Kourey, Polycom's executive vice president, finance and administration, and CFO. "We are pleased to have achieved significant operating margin expansion and unprecedented operating cash flow of $122 million in the fourth quarter. Net of the strategic acquisitions and stock repurchases in the period, Polycom exited 2011 with $592 million in cash and investments and no debt."

Q4 2011 Business Highlights

 
--  Strong revenue growth in both Europe and Asia Pacific with emerging
    geographies up over 40 percent year-over-year
--  North American sales management structure with key leadership hires in
    place
--  Polycom RealPresence Platform generated revenue growth of 45 percent
    year-over-year
--  Acquired ViVu, Inc., a video collaboration software company,
    reinforcing Polycom's cloud and software strategy
--  Launched Polycom® RealPresence™ Mobile software for Apple®
    iPad® 2 and the leading Android devices
--  Expanded Microsoft® Lync™ integration with new Polycom® CX7000
    unified group video collaboration system

Earnings Call Details

Polycom will hold a conference call today, Jan. 23, 2012, at 5 p.m. EST/2 p.m. PST to discuss its fourth quarter earnings. You may participate by viewing the webcast at www.polycom.com/investors or, for callers in the US and Canada, by calling 888.227.5826; and for callers outside of the US and Canada, by calling 303.223.2680. 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 21572693. A replay of the call will be available on www.polycom.com for approximately 12 months.

Forward Looking Statements

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 expected growth for Polycom in 2012. 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 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 integrate our acquisitions into our business; possible delays in the development, availability and shipment of new products; increasing costs and differing uses of capital; changes in key personnel that may cause disruption to the business; any disruptive impact to us that may result from new executive hires; 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 the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.

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.

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 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.

About Polycom

Polycom is the global leader in standards-based unified communications (UC) solutions for telepresence, video, and voice, powered by the Polycom RealPresence platform. The RealPresence platform interoperates with the broadest range of business, mobile and social applications and devices. More than 400,000 organizations trust Polycom solutions to collaborate and meet face to face from any location for more productive and effective engagement with colleagues, partners, customers and prospects. Polycom, together with its broad partner ecosystem, provides customers with the best TCO, scalability, and security -- on-premises, hosted or cloud delivered. Visit www.polycom.com or connect with Polycom on Twitter, Facebook, and LinkedIn.

© 2012 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
                                   ----------------------------------
                                           December 31, 2011
                                   ----------------------------------
                                     GAAP     Excluded       Non-GAAP
                                   ---------  ---------      ---------

 Revenues:
    Product revenues               $ 318,425  $       -      $ 318,425
    Service revenues                  88,582          -         88,582
                                   ---------  ---------      ---------
       Total revenues                407,007          -        407,007
                                   ---------  ---------      ---------

 Cost of revenues:
    Cost of product revenues         128,712      4,022 (a)    124,690
    Cost of service revenues          34,268        929 (b)     33,339
                                   ---------  ---------      ---------
       Total cost of revenues        162,980      4,951        158,029
                                   ---------  ---------      ---------

 Gross profit                        244,027     (4,951)       248,978
                                   ---------  ---------      ---------

 Operating expenses:
    Sales and marketing              114,897      8,213 (b)    106,684
    Research and development          53,951      4,403 (b)     49,548
    General and administrative        20,908      4,249 (c)     16,659
    Amortization of purchased
     intangibles                       3,738      3,738              -
    Restructuring costs                4,657      4,657              -
    Acquisition-related costs          1,764      1,764              -
                                   ---------  ---------      ---------
       Total operating expenses      199,915     27,024        172,891
                                   ---------  ---------      ---------

 Operating income                     44,112    (31,975)        76,087

 Other income (expense), net           1,666        421 (d)      1,245
                                   ---------  ---------      ---------

 Income before provision for
  income taxes                        45,778    (31,554)        77,332
 Provision for (benefit from)
  income taxes                        (3,795)    (7,105)(e)      3,310
                                   ---------  ---------      ---------
 Net income                        $  49,573  $ (24,449)     $  74,022
                                   =========  =========      =========

 Basic net income per share        $    0.28  $   (0.14)     $    0.42
                                   =========  =========      =========

 Diluted net income per share      $    0.28  $   (0.13)     $    0.41
                                   =========  =========      =========

 Weighted average shares outstanding
  for basic net income per share     176,729                   176,729
                                   =========                 =========

 Weighted average shares
  outstanding for diluted
    net income per share             179,331                   179,331
                                   =========                 =========


                                             Twelve Months Ended
                                   ---------------------------------------
                                              December 31, 2011
                                   ---------------------------------------
                                       GAAP     Excluded         Non-GAAP
                                   -----------  ---------      -----------

 Revenues:
    Product revenues               $ 1,207,787  $       -      $ 1,207,787
    Service revenues                   288,011          -          288,011
                                   -----------  ---------      -----------
       Total revenues                1,495,798          -        1,495,798
                                   -----------  ---------      -----------

 Cost of revenues:
    Cost of product revenues           481,634     15,233 (a)      466,401
    Cost of service revenues           116,808      3,904 (b)      112,904
                                   -----------  ---------      -----------
       Total cost of revenues          598,442     19,137          579,305
                                   -----------  ---------      -----------

 Gross profit                          897,356    (19,137)         916,493
                                   -----------  ---------      -----------

 Operating expenses:
    Sales and marketing                435,614     27,404 (b)      408,210
    Research and development           201,067     15,394 (b)      185,673
    General and administrative          82,901     17,297 (c)       65,604
    Amortization of purchased
     intangibles                         9,831      9,831                -
    Restructuring costs                  9,396      9,396                -
    Acquisition-related costs            9,688      9,688                -
                                   -----------  ---------      -----------
       Total operating expenses        748,497     89,010          659,487
                                   -----------  ---------      -----------

 Operating income                      148,859   (108,147)         257,006

 Other income (expense), net            (1,639)       (79)(d)       (1,560)
                                   -----------  ---------      -----------

 Income before provision for
  income taxes                         147,220   (108,226)         255,446
 Provision for (benefit from)
  income taxes                          11,406    (30,799)(e)       42,205
                                   -----------  ---------      -----------
 Net income                        $   135,814  $ (77,427)     $   213,241
                                   ===========  =========      ===========

 Basic net income per share        $      0.77  $   (0.44)     $      1.21
                                   ===========  =========      ===========

 Diluted net income per share      $      0.75  $   (0.43)     $      1.18
                                   ===========  =========      ===========

 Weighted average shares outstanding
  for basic net income per share       176,426                     176,426
                                   ===========                 ===========

 Weighted average shares outstanding
  for diluted net income per share     181,195                     181,195
                                   ===========                 ===========

(a) For the three months ended December 31, 2011, the excluded amount
includes $3,043 related to the amortization of purchased intangibles for
core and existing technologies, $798 for stock-based compensation expense
recorded during the period and $181 related to the effect of stock-based
compensation on warranty expense rates. For the twelve months ended
December 31, 2011, the excluded amount includes $11,911 related to the
amortization of purchased intangibles for core and existing technologies,
$2,815 for stock-based compensation expense recorded during the period and
$507 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 December 31, 2011, the excluded amount
includes $4,336 for stock-based compensation expense recorded during the
period and ($87) adjustment for the legal costs related to the
indemnification of a former officer of the Company. For the twelve months
ended December 31, 2011, the excluded amount includes $15,745 for
stock-based compensation expense recorded during the period and $1,552 for
the legal costs related to the indemnification of a former officer of the
Company.

(d) Excluded amount represents the impairment or recovery of an investment
in a private company.

(e) For the three months ended December 31, 2011 the excluded amount
represents the tax impact on expenses which are excluded in items (a)-(d)
above, as well as $2,124 related to the adoption of deferred tax accounting
in certain foreign subsidiaries.  For the twelve months ended December 31,
2011, the excluded amount represents the tax impact on expenses which are
excluded in items (a) - (d) above, as well as a $7,487 benefit related to
the resolution of a multi-year tax audit and $2,124 related to the adoption
of deferred tax accounting in certain foreign subsidiaries.




                              POLYCOM, INC.
                      GAAP to Non-GAAP Reconciliation
                 (In thousands, except per share amounts)
                                (Unaudited)

                                           Three Months Ended
                                   ----------------------------------
                                           December 31, 2010
                                   ----------------------------------
                                     GAAP    Excluded       Non-GAAP
                                   --------- ---------      ---------

 Revenues:
    Product revenues               $ 282,607 $       -      $ 282,607
    Service revenues                  57,024         -         57,024
                                   --------- ---------      ---------
       Total revenues                339,631         -        339,631
                                   --------- ---------      ---------

 Cost of revenues:
    Cost of product revenues         109,856     4,092 (a)    105,764
    Cost of service revenues          26,830       952 (b)     25,878
                                   --------- ---------      ---------
       Total cost of revenues        136,686     5,044        131,642
                                   --------- ---------      ---------

 Gross profit                        202,945    (5,044)       207,989
                                   --------- ---------      ---------

 Operating expenses:
    Sales and marketing              104,717     5,928 (b)     98,789
    Research and development          40,568     2,479 (b)     38,089
    General and administrative        19,034     3,918 (c)     15,116
    Amortization of purchased
     intangibles                       1,380     1,380              -
    Restructuring costs                1,565     1,565              -
    Litigation reserves and
     payments                              -         -              -
                                   --------- ---------      ---------
       Total operating expenses      167,264    15,270        151,994
                                   --------- ---------      ---------

 Operating income                     35,681   (20,314)        55,995

 Other income (expense), net             159         -            159
                                   --------- ---------      ---------

 Income before provision for
  income taxes                        35,840   (20,314)        56,154
 Provision for income taxes            2,714   (10,200)(e)     12,914
                                   --------- ---------      ---------
 Net income                        $  33,126 $ (10,114)     $  43,240
                                   ========= =========      =========

 Basic net income per share        $    0.19 $   (0.06)     $    0.25
                                   ========= =========      =========

 Diluted net income per share      $    0.19 $   (0.06)     $    0.24
                                   ========= =========      =========

 Weighted average shares outstanding
  for basic net income per share     172,378                  172,378
                                   =========                =========

 Weighted average shares outstanding
  for diluted net income per share   178,296                  178,296
                                   =========                =========

                                             Twelve Months Ended
                                   ---------------------------------------
                                              December 31, 2010
                                   ---------------------------------------
                                       GAAP     Excluded         Non-GAAP
                                   -----------  ---------      -----------

 Revenues:
    Product revenues               $ 1,010,955  $       -      $ 1,010,955
    Service revenues                   207,534          -          207,534
                                   -----------  ---------      -----------
       Total revenues                1,218,489          -        1,218,489
                                   -----------  ---------      -----------

 Cost of revenues:
    Cost of product revenues           401,319     16,402 (a)      384,917
    Cost of service revenues           101,220      3,940 (b)       97,280
                                   -----------  ---------      -----------
       Total cost of revenues          502,539     20,342          482,197
                                   -----------  ---------      -----------

 Gross profit                          715,950    (20,342)         736,292
                                   -----------  ---------      -----------

 Operating expenses:
    Sales and marketing                387,208     26,586 (b)      360,622
    Research and development           148,991     10,266 (b)      138,725
    General and administrative          74,661     16,931 (c)       57,730
    Amortization of purchased
     intangibles                         5,647      5,647                -
    Restructuring costs                  8,139      8,139                -
    Litigation reserves and
     payments                            1,235      1,235                -
                                   -----------  ---------      -----------
       Total operating expenses        625,881     68,804          557,077
                                   -----------  ---------      -----------

 Operating income                       90,069    (89,146)         179,215

 Other income (expense), net            (7,772)    (5,324)(d)       (2,448)
                                   -----------  ---------      -----------

 Income before provision for
  income taxes                          82,297    (94,470)         176,767
 Provision for income taxes             13,888    (30,311)(e)       44,199
                                   -----------  ---------      -----------
 Net income                        $    68,409  $ (64,159)     $   132,568
                                   ===========  =========      ===========

 Basic net income per share        $      0.40  $   (0.38)     $      0.78
                                   ===========  =========      ===========

 Diluted net income per share      $      0.39  $   (0.36)     $      0.75
                                   ===========  =========      ===========

 Weighted average shares outstanding
  for basic net income per share       170,662                     170,662
                                   ===========                 ===========

 Weighted average shares outstanding
  for diluted net income per share     176,370                     176,370
                                   ===========                 ===========

(a) For the three months ended December 31, 2010, the excluded amount
includes $3,351 related to the amortization of purchased intangibles for
core and existing technologies, $620 for stock-based compensation expense
recorded during the period and $121 related to the effect of stock-based
compensation on warranty expense rates. For the twelve months ended
December 31, 2010, the excluded amount includes $13,347 related to the
amortization of purchased intangibles for core and existing technologies,
$2,588 for stock-based compensation expense recorded during the period and
$467 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 December 31, 2010, the excluded amount
includes $3,789 for stock-based compensation expense recorded during the
period and $129 for costs associated with the CEO transition in May 2010.
For the twelve months ended December 31, 2010, the excluded amount includes
$12,797 for stock-based compensation expense recorded during the period and
$4,134 for severance, legal and other costs associated with the CEO
transition in May 2010.

(d) For the twelve months ended December 31, 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.

(e) For the three and twelve months ended December 31, 2010, the excluded
amount represents the tax impact on expenses which are excluded in items
(a)-(d) above, as well as $8,008 related to a one-time provision true-up
during the quarter.



                              POLYCOM, INC.
                   Condensed Consolidated Balance Sheets
                             (In thousands)
                               (Unaudited)

                                                  December 31, December 31,
                                                      2011         2010
                                                  ------------ ------------

 ASSETS
 Current assets
    Cash and cash equivalents                     $    375,441 $    324,188
    Short-term investments                             159,426      170,154
    Trade receivables, net                             219,557      154,507
    Inventories                                        107,613      113,994
    Deferred taxes                                      40,153       32,357
    Prepaid expenses and other current assets           51,375       41,884
                                                  ------------ ------------
       Total current assets                            953,565      837,084

 Property and equipment, net                           130,047      110,321
 Long-term investments                                  56,772       41,316
 Goodwill and purchased intangibles                    663,070      519,685
 Deferred taxes                                         20,930       18,388
 Other assets                                           20,421       20,611
                                                  ------------ ------------
       Total assets                               $  1,844,805 $  1,547,405
                                                  ============ ============



 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities
    Accounts payable                              $    113,922 $     90,890
    Accrued payroll and related liabilities             40,650       35,222
    Deferred revenue                                   143,091      104,919
    Other accrued liabilities                           61,502       54,651
                                                  ------------ ------------
       Total current liabilities                       359,165      285,682

 Non-current liabilities
 Deferred revenue                                       83,143       55,292
 Taxes payable                                          16,845       16,690
 Deferred taxes                                          2,274        2,057
 Other non-current liabilities                          13,262       12,714
                                                  ------------ ------------
       Total liabilities                               474,689      372,435

 Stockholders' equity                                1,370,116    1,174,970
                                                  ------------ ------------
       Total liabilities and stockholders' equity $  1,844,805 $  1,547,405
                                                  ============ ============



                              POLYCOM, INC.
              Condensed Consolidated Statements of Operations
                 (In thousands, except per share amounts)
                                (Unaudited)

                           Three Months Ended       Twelve Months Ended
                        ------------------------  ------------------------
                        December 31, December 31, December 31, December 31,
                            2011         2010         2011         2010
                        -----------  ------------ -----------  -----------


 Revenues:
    Product revenues    $   318,425  $    282,607 $ 1,207,787  $ 1,010,955
    Service revenues         88,582        57,024     288,011      207,534
                        -----------  ------------ -----------  -----------
       Total revenues       407,007       339,631   1,495,798    1,218,489
                        -----------  ------------ -----------  -----------

 Cost of revenues:
    Cost of product
     revenues               128,712       109,856     481,634      401,319
    Cost of service
     revenues                34,268        26,830     116,808      101,220
                        -----------  ------------ -----------  -----------
       Total cost of
        revenues            162,980       136,686     598,442      502,539
                        -----------  ------------ -----------  -----------

 Gross profit               244,027       202,945     897,356      715,950
                        -----------  ------------ -----------  -----------

 Operating expenses:
    Sales and marketing     114,897       104,717     435,614      387,208
    Research and
     development             53,951        40,568     201,067      148,991
    General and
     administrative          20,908        19,034      82,901       74,661
    Amortization of
     purchased intangibles    3,738         1,380       9,831        5,647
    Restructuring costs       4,657         1,565       9,396        8,139
    Acquisition-related
     expenses                 1,764             -       9,688            -
    Litigation reserves
     and payments                 -             -           -        1,235
                        -----------  ------------ -----------  -----------
       Total operating
        expenses            199,915       167,264     748,497      625,881
                        -----------  ------------ -----------  -----------

 Operating income            44,112        35,681     148,859       90,069

 Other income
  (expense), net              1,666           159      (1,639)      (7,772)
                        -----------  ------------ -----------  -----------

 Income before provision
  for income taxes           45,778        35,840     147,220       82,297
 Provision for (benefit
  from) income taxes         (3,795)        2,714      11,406       13,888
                        -----------  ------------ -----------  -----------
 Net income             $    49,573  $     33,126 $   135,814  $    68,409
                        ===========  ============ ===========  ===========

 Basic net income per
  share                 $      0.28  $       0.19 $      0.77  $      0.40
                        ===========  ============ ===========  ===========

 Diluted net income per
  share                 $      0.28  $       0.19 $      0.75  $      0.39
                        ===========  ============ ===========  ===========

 Weighted average shares
  outstanding for basic
  net income per share      176,729       172,378     176,426      170,662
                        ===========  ============ ===========  ===========

 Weighted average shares
  outstanding for diluted
  net income per share      179,331       178,296     181,195      176,370
                        ===========  ============ ===========  ===========




                              POLYCOM, INC.
             Condensed Consolidated Statements of Cash Flows
                              (In thousands)
                                (Unaudited)

                                                    Twelve Months Ended
                                                  ------------------------
                                                 December 31,  December 31,
                                                      2011         2010
                                                  -----------  -----------

 Cash flows from operating activities:
 Net income                                     $   135,814  $    68,409
 Adjustments to reconcile net income to net
  cash provided by operating activities:
    Depreciation and amortization                    52,564       41,440
    Amortization of purchased intangibles            21,742       18,994
    Provision for excess and obsolete
     inventories                                      8,567        5,712
    Non-cash stock based compensation                65,262       56,177
    Impairment of private company investments            79            -
    Excess tax benefits from stock-based
     compensation                                   (13,430)     (11,618)
    Write down of investments other than
     temporarily impaired                                 -        6,530
    Loss on disposals of property and equipment       1,537          143

    Changes in assets and liabilities, net of
     the effect of acquisitions:
        Trade receivables                           (63,009)     (21,694)
         Inventories                                  2,545      (42,843)
         Deferred taxes                             (12,446)      (3,537)
         Prepaid expenses and other assets           (3,190)     (29,537)
         Accounts payable                            22,816        3,657
         Taxes payable                               13,496        2,770
         Other accrued liabilities                   67,298       48,797
                                                -----------  -----------
 Net cash provided by operating activities          299,645      143,400
                                                -----------  -----------

 Cash flows from investing activities:
     Purchases of property and equipment            (69,279)     (69,331)
     Purchases of investments                      (372,567)    (374,946)
     Proceeds from sale of investments               41,461      102,079
     Proceeds from maturities of investments        326,332      199,622
     Net cash paid in purchase acquisitions        (163,630)           -
                                                -----------  -----------
 Net cash used in investing activities             (237,683)    (142,576)
                                                -----------  -----------

 Cash flows from financing activities:
     Proceeds from issuance of common stock under
      employee option and stock purchase plans       40,798       64,854
     Repurchase of common stock                     (64,937)     (84,206)
     Excess tax benefits from stock-based
      compensation                                   13,430       11,618
                                                -----------  -----------
 Net cash used in financing activities              (10,709)      (7,734)
                                                -----------  -----------

 Net increase (decrease) in cash and cash
  equivalents                                        51,253       (6,910)
 Cash and cash equivalents, beginning of period     324,188      331,098
                                                -----------  -----------
 Cash and cash equivalents, end of period       $   375,441  $   324,188
                                                ===========  ===========
Contact:
Investor
Laura Graves
Polycom, Inc.
925.924.5630
laura.graves@polycom.com
Press
Shawn Dainas
Polycom, Inc.
925.924.5676
shawn.dainas@polycom.com

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