Polycom Reports Third Quarter 2009 Earnings

Consolidated Revenues Grow Over 5 Percent Quarter-to-Quarter; All Product Lines and Geographic Theatres Generate Sequential Revenue Growth

• Press Release
• Source: Polycom
• On 4:05 pm EDT, Tuesday October 20, 2009

PLEASANTON, CA--(Marketwire - 10/20/09) - Polycom, Inc. (NASDAQ:PLCM - News), the global leader in telepresence, video and voice communications solutions, today reported its earnings for the third quarter ended Sept. 30, 2009.

Third quarter 2009 consolidated net revenues were $243 million, compared to $231 million for the second quarter of 2009 and to $276 million for the third quarter of 2008. Non-GAAP net income for the third quarter of 2009 was $27 million, or 31 cents per diluted share. This compares to Non-GAAP net income of $24 million, or 29 cents per diluted share, for the second quarter of 2009 and to Non-GAAP net income of $32 million, or 37 cents per diluted share, for the third quarter of 2008. GAAP net income for the third quarter of 2009 was $14 million, or 16 cents per diluted share, compared to $15 million, or 18 cents per diluted share, for the second quarter of 2009, and to $18 million, or 21 cents per diluted share, for the third quarter of 2008.

For the nine months ended Sept. 30, 2009, net revenues were $699 million, compared to $806 million for the first nine months of 2008. Non-GAAP net income for the period was $74 million, or 86 cents per diluted share, compared to $95 million, or $1.08 per diluted share, for the first nine months of 2008. GAAP net income for the nine months ended Sept. 30, 2009 was $37 million, or 44 cents per diluted share, compared to GAAP net income of $50 million, or 57 cents per diluted share, for the same period last year.

The reconciliation between GAAP net income and Non-GAAP net income is provided in the tables at the end of this release.

On a product line basis, including applicable service revenues, consolidated net revenues for the third quarter of 2009 were comprised of:

�
--  68 percent video solutions, or $165 million (53 percent video
    communications, or $130 million, and 15 percent network systems, or $35
    million); and
--  32 percent voice communications, or $78 million.
    

This compares to the third quarter of 2008, in which consolidated net revenues were comprised of:

�
--  65 percent video solutions, or $178 million (52 percent video
    communications, or $144 million, and 12 percent network systems, or $34
    million); and
--  35 percent voice communications, or $98 million.
    

"We are particularly pleased with our results for the third quarter as recent initiatives to improve our go-to-market strategy, coupled with our steadfast commitment to delivering superior innovation, contributed to strong sequential revenue growth," said Robert Hagerty, Polycom chairman and CEO. "Under the leadership of Andy Miller, our new executive vice president of Global Field Operations, we swiftly executed several actions to improve and intensify customer ownership and support across the enterprise, government, and service provider sectors. Specifically, we made sales management changes, drove new enhancements to our sales analytics, and developed specific programs with our various partners to improve both channel and Polycom margins through deeper customer engagement. These efforts have already yielded a higher level of visibility with our customers and partners alike and, for instance, contributed to the fast turnaround in voice revenue growth."

"Polycom continues to lead the industry in product innovation, most recently with improvements to our higher margin network infrastructure solution, which contributed to our significant growth and key customer wins during the third quarter. High customer adoption is being driven by our platform's unique advantages, namely superior HD video quality, flexible port configuration, scalability and redundancy. With this new platform, customers can easily manage large HD video networks across their telepresence, room-based, and desktop video installations. As a result of the early success of our new solution and driven by increased customer demand for even larger video networks, we announced the expansion of this product line with our new Polycom RMX and RSS(TM) 4000 products, which will begin shipping this quarter."

"With an improving go-to-market execution, continued success in product innovation, broad strategic and service provider partnerships, and the industry's most open solution, we believe Polycom is best suited to capture the rapid adoption of business-to-business (B2B) unified collaboration (UC) over the coming quarters and years," Hagerty concluded.

"Broad customer demand drove sequential revenue growth, increased deferred revenues, and a sharp sequential increase in order backlog in the third quarter," said Michael Kourey, Polycom senior vice president, finance and administration, and CFO. "As a result of this top-line performance and our proactive inventory reductions, we generated positive operating cash flow of over $39 million, representing Polycom's 47th consecutive quarter of positive operating cash flow. Our sound balance sheet continues to underpin solid fundamentals and, net of $20 million in share repurchases in Q3, we exited the quarter with $408 million in cash and investments and no debt."

About Polycom

Polycom, Inc. (NASDAQ:PLCM - News) is the global leader in telepresence, video, and voice solutions and a visionary in communications that empower people to connect and collaborate everywhere. Please visit www.polycom.com for more information.

This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 regarding future events, future demand for our products, and the future performance of the Company, including statements regarding the intended results of actions taken in the Company's worldwide sales organization, the factors believed to be contributing to turnaround in our voice revenue growth and to our revenue growth and customer wins generally, the drivers of customer adoption and Polycom as being best suited to capture the rapid adoption of B2B unified collaboration in future periods. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the impact of competition on our product sales and for our customers and partners, the impact of increased competition due to consolidation in our industry or competition from companies that are larger or that have greater resources than we do, potential fluctuations in results and future growth rates, risks associated with general economic conditions, including the continuation and prolonged impact of the crisis in the worldwide financial markets and the global recession, the market acceptance of Polycom's products and changing market demands, including demands for differing technologies or product and services offerings, possible delays in the development, availability and shipment of new products, increasing costs and differing uses of capital, changes in key personnel and our sales organization that may cause disruption to the business, the impact of recent restructuring actions, and the impact of global conflicts such as those in the Middle East that may adversely impact our business. Many of these risks and uncertainties are discussed in the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and in other reports filed by Polycom with the SEC. Polycom disclaims any intent or obligations to update these forward-looking statements.

As has been noted on the Company's web site since Oct. 13, 2009, Polycom will hold a conference call today, Oct. 20, 2009, at 5 p.m. EDT/2 p.m. PT to discuss its third quarter earnings. Robert Hagerty, chairman, president and CEO, Michael Kourey, chief financial officer, and Andrew Miller, executive vice president of global field operations, will host the conference call. You may participate by viewing the webcast at www.polycom.com or, for callers in the US and Canada, by calling 800.950.7243; and for callers outside of the US and Canada, by calling 212.231.2901, with the passcode being Polycom. A replay of the call will also be available at www.polycom.com or, for callers in the US and Canada, at 800.633.8284; and for callers outside of the US and Canada, at 402.977.9140. The access number for the replay is 21438721. A replay of the call will also be maintained on our website for twelve months at www.polycom.com under Investor Relations - Earnings Calls-Archives.

Polycom reserves the right to modify future product plans at any time. Products and/or related specifications referenced in this press release are not guaranteed and will be delivered on a when and if available basis.

� 2009 Polycom, Inc. All rights reserved. POLYCOM�, the Polycom "Triangles" logo and the names and marks associated with Polycom's products are trademarks and/or service marks of Polycom, Inc. and are registered and/or common law marks in the United States and various other countries. All other trademarks are property of their respective owners.

�
                              POLYCOM, INC.
         Non-GAAP Condensed Consolidated Statements of Operations
    Excluding Stock-based compensation expense, Effect of stock-based
   compensation expense on warranty rates, Impact to cost of sales from
 purchase accounting adjustments to inventory, Acquisition-related costs,
  Purchased in-process research and development costs, Amortization and
   impairment of purchased intangibles, Restructuring costs, Litigation
  reserves and payments, Gain (loss) on strategic investments, and Income
                  tax effect of the preceding adjustments
                 (In thousands, except per share amounts)
                                (Unaudited)



                                 Three Months Ended     Nine Months Ended
                                --------------------  --------------------
                                September  September  September  September
                                   30,        30,        30,        30,
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ----------

 Revenues:
     Product revenues           $ 198,955  $ 235,397  $ 570,668  $  691,693
     Service revenues              44,064     40,379    128,452     114,584
                                ---------  ---------  ---------  ----------
             Total revenues       243,019    275,776    699,120     806,277
                                ---------  ---------  ---------  ----------

 Cost of revenues:
     Cost of product revenues      80,338     91,085    229,943     270,536
     Cost of service revenues      19,769     18,653     58,459      54,770
                                ---------  ---------  ---------  ----------
             Total cost of
              revenues            100,107    109,738    288,402     325,306
                                ---------  ---------  ---------  ----------

 Gross profit                     142,912    166,038    410,718     480,971
                                ---------  ---------  ---------  ----------

 Operating expenses:
     Sales and marketing           68,277     78,614    196,552     221,813
     Research and development      27,335     31,756     80,102      97,394
     General and
      administrative               11,291     13,399     34,131      38,819
                                ---------  ---------  ---------  ----------
             Total operating
              expenses            106,903    123,769    310,785     358,026
                                ---------  ---------  ---------  ----------

 Operating income                  36,009     42,269     99,933     122,945

 Interest and other income
  (expense), net                     (637)      (689)    (1,995)      4,493
                                ---------  ---------  ---------  ----------

 Income before provision for
  income taxes                     35,372     41,580     97,938     127,438
 Provision for income taxes         8,709      9,833     24,438      32,242
                                ---------  ---------  ---------  ----------
 Non-GAAP net income            $  26,663  $  31,747  $  73,500  $   95,196
                                =========  =========  =========  ==========

 Basic net income per share     $    0.32  $    0.38  $    0.88  $     1.10
                                =========  =========  =========  ==========
 Diluted net income per share   $    0.31  $    0.37  $    0.86  $     1.08
                                =========  =========  =========  ==========

 Weighted average shares
  outstanding for basic
  net income per share             84,189     84,278     83,855      86,387
                                =========  =========  =========  ==========

 Weighted average shares
  outstanding for diluted
  net income per share             86,199     86,194     85,168      88,215
                                =========  =========  =========  ==========

Use of Non-GAAP Financial Information

To supplement our consolidated financial statements presented on a GAAP
basis, Polycom uses non-GAAP measures of operating results, net income and
income per share, which are adjusted to exclude certain costs, expenses,
gains and losses we believe appropriate to enhance an overall understanding
of our past financial performance and also our prospects for the future.
These adjustments to our current period GAAP results are made with the
intent of providing both management and investors a more complete
understanding of Polycom's underlying operational results and trends and
our marketplace performance. For example, the non-GAAP results are an
indication of our baseline performance before gains, losses or other
charges that are considered by management to be outside of our core
operating results. In addition, these adjusted non-GAAP results are among
the primary indicators management uses as a basis for our planning and
forecasting of future periods. The presentation of this additional
information is not meant to be considered in isolation or as a substitute
for net income or diluted net income per share prepared in accordance with
generally accepted accounting principles in the United States.


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



                                 Three Months Ended     Nine Months Ended
                                --------------------  --------------------
                                September  September  September  September
                                   30,        30,        30,        30,
                                  2009       2008       2009       2008
                                ---------  ---------  ---------  ----------


 Revenues:
     Product revenues           $ 198,955  $ 235,397  $ 570,668  $  691,693
     Service revenues              44,064     40,379    128,452     114,584
                                ---------  ---------  ---------  ----------
             Total revenues       243,019    275,776    699,120     806,277
                                ---------  ---------  ---------  ----------

 Cost of revenues:
     Cost of product revenues      84,288     95,249    242,778     283,383
     Cost of service revenues      20,509     19,509     60,569      57,527
                                ---------  ---------  ---------  ----------
             Total cost of
              revenues            104,797    114,758    303,347     340,910
                                ---------  ---------  ---------  ----------

 Gross profit                     138,222    161,018    395,773     465,367
                                ---------  ---------  ---------  ----------

 Operating expenses:
     Sales and marketing           70,819     81,562    203,605     231,465
     Research and development      29,004     34,456     85,532     105,891
     General and administrative    13,556     16,101     39,873      46,023
     Acquisition-related
      costs                             -          -          -         162
     Amortization of purchased
      intangibles                   1,446      1,775      4,344       5,412
     Restructuring costs            4,632      4,382     11,476       8,836
     Litigation reserves
      and payments                    700          -        700       7,401
                                ---------  ---------  ---------  ----------
             Total operating
              expenses            120,157    138,276    345,530     405,190
                                ---------  ---------  ---------  ----------

 Operating income                  18,065     22,742     50,243      60,177

 Interest and other income
  (expense),  net                    (637)      (689)    (1,995)      4,493
                                ---------  ---------  ---------  ----------

Income before provision for
 income taxes                      17,428     22,053     48,248      64,670
 Provision for income taxes         3,722      4,111     11,192      14,680
                                ---------  ---------  ---------  ----------
 Net income                     $  13,706  $  17,942  $  37,056  $   49,990
                                =========  =========  =========  ==========

 Basic net income per share     $    0.16  $    0.21  $    0.44  $     0.58
                                =========  =========  =========  ==========

 Diluted net income per share   $    0.16  $    0.21  $    0.44  $     0.57
                                =========  =========  =========  ==========

 Weighted average shares
  outstanding for basic
  net income per share             84,189     84,278     83,855      86,387
                                =========  =========  =========  ==========

 Weighted average shares
  outstanding for diluted
  net income per share             86,199     86,194     85,168      88,215
                                =========  =========  =========  ==========


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



                    Three Months Ended             Nine Months Ended
               ----------------------------  -----------------------------
                    September 30, 2009             September 30, 2009
               ----------------------------  -----------------------------
                 GAAP    Excluded  Non-GAAP    GAAP    Excluded   Non-GAAP
               --------  --------  --------  --------  ---------  --------

  Revenues:
    Product
     revenues  $198,955  $      -  $198,955  $570,668  $       -  $570,668
    Service
     revenues    44,064         -    44,064   128,452          -   128,452
               --------  --------  --------  --------  ---------  --------
      Total
       revenues 243,019         -   243,019   699,120          -   699,120
               --------  --------  --------  --------  ---------  --------

  Cost of
   revenues:
    Cost of
     product
     revenues    84,288  3,950(a)    80,338   242,778  12,835(c)   229,943
    Cost of
     service
     revenues    20,509    740(b)    19,769    60,569   2,110(b)    58,459
               --------  --------  --------  --------  ---------  --------
      Total
       cost
       of
       revenues 104,797     4,690   100,107   303,347     14,945   288,402
               --------  --------  --------  --------  ---------  --------

  Gross profit  138,222    (4,690)  142,912   395,773    (14,945)  410,718
               --------  --------  --------  --------  ---------  --------

  Operating
   expenses:
    Sales and
     marketing   70,819  2,542(b)    68,277   203,605   7,053(b)   196,552
    Research
     and
     development 29,004  1,669(b)    27,335    85,532   5,430(b)    80,102
    General
     and
     administ-
     rative      13,556  2,265(b)    11,291    39,873   5,742(b)    34,131
    Acquisition-
     related
     costs            -         -         -         -          -         -
    Amortizat-
     ion of
     purchased
     intangibles  1,446     1,446         -     4,344      4,344         -
    Restructuring
     costs        4,632     4,632         -    11,476     11,476         -
    Litigation
     reserves
     and
     payments       700       700         -       700        700         -
               --------  --------  --------  --------  ---------  --------
      Total
       operating
       expenses 120,157    13,254   106,903   345,530     34,745   310,785
               --------  --------  --------  --------  ---------  --------

  Operating
   income        18,065   (17,944)   36,009    50,243    (49,690)   99,933

  Interest and
   other
   income
   (expense),
    net            (637)        -      (637)   (1,995)         -    (1,995)
               --------  --------  --------  --------  ---------  --------

Income before
 provision for
 income taxes    17,428   (17,944)   35,372    48,248    (49,690)   97,938
  Provision
   for income
   taxes          3,722    (4,987)    8,709    11,192    (13,246)   24,438
               --------  --------  --------  --------  ---------  --------
  Net income   $ 13,706  $(12,957) $ 26,663  $ 37,056  $ (36,444) $ 73,500
               ========  ========  ========  ========  =========  ========

  Basic net
   income per
   share       $   0.16  $  (0.16) $   0.32  $   0.44  $   (0.44) $   0.88
               ========  ========  ========  ========  =========  ========

  Diluted net
   income per
   share       $   0.16  $  (0.15) $   0.31  $   0.44  $   (0.42) $   0.86
               ========  ========  ========  ========  =========  ========

  Weighted
   average
   shares
   outstanding
   for basic
   net income
   per share     84,189              84,189    83,855               83,855
               ========            ========  ========             ========

  Weighted
   average
   shares
   outstanding
   for diluted
   net income
   per share     86,199              86,199    85,168               85,168
               ========            ========  ========             ========

(a) Excluded amount includes $3,386 related to the amortization of
purchased intangibles for core and existing technologies, $469 for stock-
based compensation expense recorded during the period and $95 related to
the effect of stock-based compensation on warranty expense rates.

(b) Excluded amount represents stock-based compensation expense recorded
during the period.

(c) Excluded amount includes $10,066 related to the amortization of
purchased intangibles for core and existing technologies, $1,050 related to
past license fees claims, $1,437 for stock-based compensation expense
recorded during the period and $282 related to the effect of stock-based
compensation on warranty expense rates.


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



                    Three Months Ended             Nine Months Ended
               ----------------------------  ------------------------------
                    September 30, 2008             September 30, 2008
               ----------------------------  ------------------------------
                 GAAP    Excluded  Non-GAAP    GAAP    Excluded   Non-GAAP
               --------  --------  --------  --------- ---------  ---------


  Revenues:
   Product
    revenues   $235,397  $      -  $235,397  $ 691,693 $       -  $ 691,693
   Service
    revenues     40,379         -    40,379    114,584         -    114,584
               --------  --------  --------  --------- ---------  ---------
     Total
      revenues  275,776         -   275,776    806,277         -    806,277
               --------  --------  --------  --------- ---------  ---------

  Cost of
   revenues:
   Cost of
    product
    revenues     95,249  4,164(a)    91,085    283,383 12,847(c)    270,536
   Cost of
    service
    revenues     19,509    856(b)    18,653     57,527  2,757(b)     54,770
               --------  --------  --------  --------- ---------  ---------
     Total
      cost of
      revenues  114,758     5,020   109,738    340,910    15,604    325,306
               --------  --------  --------  --------- ---------  ---------

  Gross profit  161,018    (5,020)  166,038    465,367   (15,604)   480,971
               --------  --------  --------  --------- ---------  ---------

  Operating
   expenses:
   Sales and
    marketing    81,562  2,948(b)    78,614    231,465  9,652(b)    221,813
   Research
    and
    development  34,456  2,700(b)    31,756    105,891  8,497(b)     97,394
   General and
    administr-
    ative        16,101  2,702(b)    13,399     46,023  7,204(b)     38,819
   Acquisition-
    related
    costs             -         -         -        162       162          -
   Amortization
    of
    purchased
    intangibles   1,775     1,775         -      5,412     5,412          -
   Restructuring
    costs         4,382     4,382         -      8,836     8,836          -
   Litigation
    reserves
    and
    payments          -         -         -      7,401     7,401          -
               --------  --------  --------  --------- ---------  ---------
     Total
      operating
      expenses  138,276    14,507   123,769    405,190    47,164    358,026
               --------  --------  --------  --------- ---------  ---------

  Operating
   income        22,742   (19,527)   42,269     60,177   (62,768)   122,945

  Interest and
   other
   income
   (expense),
   net             (689)        -      (689)     4,493         -      4,493
               --------  --------  --------  --------- ---------  ---------

Income before
 provision for
 income taxes    22,053   (19,527)   41,580     64,670   (62,768)   127,438
  Provision
   for income
   taxes          4,111    (5,722)    9,833     14,680   (17,562)    32,242
               --------  --------  --------  --------- ---------  ---------
  Net income   $ 17,942  $(13,805) $ 31,747  $  49,990 $ (45,206) $  95,196
               ========  ========  ========  ========= =========  =========

  Basic net
   income per
   share       $   0.21  $  (0.17) $   0.38  $    0.58 $   (0.52) $    1.10
               ========  ========  ========  ========= =========  =========

  Diluted net
   income per
   share       $   0.21  $  (0.16) $   0.37  $    0.57 $   (0.51) $    1.08
               ========  ========  ========  ========= =========  =========

  Weighted
   average
   shares
   outstanding
   for basic
   net income
   per share     84,278              84,278     86,387               86,387
               ========            ========  =========            =========

  Weighted
   average
   shares
   outstanding
   for diluted
   net income
   per share     86,194              86,194     88,215               88,215
               ========            ========  =========            =========

(a) Excluded amount includes $3,419 related to the amortization of
purchased intangibles for core and existing technologies, $652 for
stock-based compensation expense recorded during the period and $93 related
to the effect of stock-based compensation on warranty expense rates.

(b) Excluded amount represents stock-based compensation expense recorded
during the period.

(c) Excluded amount includes $10,360 related to the amortization of
purchased intangibles for core and existing technologies, $2,102 for
stock-based compensation expense recorded during the period and $385
related to the effect of stock-based compensation on warranty expense
rates.



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

                                                September 30, December 31,
                                                    2009          2008
                                                ------------- -------------

 ASSETS
 Current assets
     Cash and cash equivalents                  $     244,517 $     165,669
     Investments                                      151,843       152,407
     Trade receivables, net                           124,678       126,497
     Inventories                                       69,358        89,730
     Deferred taxes                                    25,203        29,295
     Prepaid expenses and other current
      assets                                           29,750        34,207
                                                ------------- -------------
        Total current assets                          645,349       597,805

 Property and equipment, net                           79,041        77,294
 Long-term investments                                 11,626         6,420
 Goodwill                                             496,112       495,083
 Purchased intangibles, net                            51,261        65,369
 Deferred taxes                                        23,184        19,415
 Other assets                                          13,112        16,298
                                                ------------- -------------
        Total assets                            $   1,319,685 $   1,277,684
                                                ============= =============



 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities
     Accounts payable                           $      58,262 $      57,731
     Accrued payroll and related liabilities           19,657        28,711
     Deferred revenue                                  76,606        69,238
     Other accrued liabilities                         50,160        58,402
                                                ------------- -------------
        Total current liabilities                     204,685       214,082

 Non-current liabilities
 Deferred revenue                                      43,159        43,285
 Taxes payable                                         28,575        35,878
 Deferred taxes                                         2,763         2,638
 Other long-term liabilities                           12,151        13,459
                                                ------------- -------------
        Total liabilities                             291,333       309,342

 Stockholders' equity                               1,028,352       968,342
                                                ------------- -------------
        Total liabilities and stockholders'
         equity                                 $   1,319,685 $   1,277,684
                                                ============= =============



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

                                                      Nine Months Ended
                                                  ------------------------
                                                   September    September
                                                      30,          30,
                                                      2009         2008
                                                  -----------  -----------


   Cash flows from operating activities:
   Net income                                     $    37,056  $    49,990
   Adjustments to reconcile net income
    to net cash provided by operating activities:
      Depreciation and amortization                    24,931       20,620
      Amortization of purchased intangibles            14,405       15,779
      Provision for doubtful accounts                     247          570
      Provision for excess and obsolete
       inventories                                      3,124        2,510
      Non-cash stock based compensation                21,772       30,212
      Excess tax benefits from stock-based
       compensation                                    (1,638)      (4,487)
      Write down of investments other than
       temporarily impaired                                 -          921
      Loss on disposals of property and equipment          90          102

      Changes in assets and liabilities, net of
       the effect of acquisitions:
           Trade receivables                            1,572        4,395
           Inventories                                 17,248      (23,542)
           Deferred taxes                               1,460        1,447
           Prepaid expenses and other assets              213       (9,131)
           Accounts payable                               531       (8,935)
           Taxes payable                                2,974       (1,278)
           Other accrued liabilities                  (10,974)      36,995
                                                  -----------  -----------
   Net cash provided by operating activities          113,011      116,168
                                                  -----------  -----------

   Cash flows from investing activities:
       Purchase of property and equipment             (25,994)     (35,287)
       Purchases of investments                      (408,413)    (313,695)
       Proceeds from sale and maturity of
        investments                                   400,087      278,888
       Net cash paid in purchase acquisitions               -            -
                                                  -----------  -----------
   Net cash used in investing activities              (34,320)     (70,094)
                                                  -----------  -----------

   Cash flows from financing activities:
       Proceeds from issuance of common stock
        under employee option and stock purchase
        plans                                          33,958       51,854
       Repurchase of common stock                     (35,439)    (222,458)
       Excess tax benefits from stock-based
        compensation                                    1,638        4,487
                                                  -----------  -----------
   Net cash provided by (used in) financing
    activities                                            157     (166,117)
                                                  -----------  -----------

   Net increase (decrease) in cash and cash
    equivalents                                        78,848     (120,043)
   Cash and cash equivalents, beginning of period     165,669      279,560
                                                  -----------  -----------
   Cash and cash equivalents, end of period       $   244,517  $   159,517
                                                  ===========   ==========

 
Investor Contact:
Michael R. Kourey
CFO
Polycom, Inc.
925-924-5742
Email Contact
Press Contact:
Caroline Japic
Polycom, Inc.
408-474-2265
Email Contact