PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Net revenues
Cost of revenues
Gross profit
Gross profit %
$
Three Months Ended
September 30,
2014
2015
215,805
$
215,017
$
97,978
104,047
117,827
110,970
54.6%
51.6%
Six Months Ended
September 30,
2014
2015
432,467
$
421,375
199,930
203,047
232,537
218,328
53.8%
51.8%
Research, development and engineering
Selling, general and administrative
Gain from litigation settlements
Total operating expenses
Operating income
Operating income %
23,769
60,350
(4,150)
79,969
37,858
17.5%
22,609
54,296
(31)
76,874
34,096
15.9%
46,289
116,779
(6,150)
156,918
75,619
17.5%
45,803
109,974
(907)
154,870
63,458
15.1%
Interest expense
Other non-operating income and (expense), net
Income before income taxes
Income tax expense
Net income
(142)
(543)
37,173
9,752
27,421
(7,320)
(2,138)
24,638
6,742
17,896
(150)
485
75,954
19,861
56,093
(10,061)
(2,423)
50,974
11,850
39,124
$
% of net revenues
Earnings per common share:
Basic
Diluted
$
12.7%
$
$
0.66
0.65
Shares used in computing earnings per common share:
Basic
Diluted
41,765
42,505
Effective tax rate
26.2%
1
$
8.3%
$
$
0.53
0.52
33,590
34,245
27.4%
$
13.0%
$
$
1.35
1.32
41,692
42,560
26.1%
9.3%
$
$
1.09
1.07
35,796
36,676
23.2%
PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
UNAUDITED CONSOLIDATED BALANCE SHEETS
March 31,
2015
ASSETS
Cash and cash equivalents
Short-term investments
Total cash, cash equivalents and short-term investments
Accounts receivable, net
Inventory, net
Deferred tax assets
Other current assets
Total current assets
Long-term investments
Property, plant and equipment, net
Goodwill and purchased intangibles, net
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable
Accrued liabilities
Total current liabilities
Long-term debt, net of issuance costs
Long-term income taxes payable
Revolving line of credit
Other long-term liabilities
Total liabilities
Stockholders' equity
Total liabilities and stockholders' equity
$
$
$
$
2
September 30,
2015
276,850
97,859
374,709
136,581
56,676
6,564
28,124
602,654
107,590
139,413
16,077
10,308
876,042
$
32,781
62,041
94,822
—
12,984
34,500
6,339
148,645
727,397
876,042
$
$
$
304,836
119,607
424,443
139,939
57,760
6,518
30,464
659,124
81,132
143,188
15,952
7,791
907,187
43,172
60,764
103,936
488,884
12,574
—
8,831
614,225
292,962
907,187
PLANTRONICS, INC.
SUMMARY CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
Six Months Ended
September 30,
September 30,
2014
2015
2014
2015
Cash flows from operating activities
Net Income
$
27,421
$
17,896
$
56,093
$
39,124
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
Amortization of debt issuance cost
Stock-based compensation
4,464
4,833
9,088
—
362
—
483
7,387
8,832
13,692
16,882
(1,684)
(3,150)
1,769
2,807
565
1,084
Excess tax benefit from stock-based compensation
(692)
(759)
Deferred income taxes
(946)
(1,339)
Provision for excess and obsolete inventories
186
Other operating activities
682
9,819
(1,685)
(1,500)
(1,104)
3,037
Accounts receivable, net
10,999
(11,404)
(1,632)
(2,825)
Inventory, net
(1,136)
(2,524)
(5,119)
(2,166)
Current and other assets
(1,961)
(2,931)
(2,190)
4,058
8,158
9,016
Changes in assets and liabilities:
Accounts payable
2,163
Accrued liabilities
(3,251)
Income taxes
679
(456)
42,493
Cash provided by operating activities
6,883
(7,771)
(3,725)
2,907
(6,144)
671
22,974
72,031
66,448
Cash flows from investing activities
Proceeds from sale of investments
15,937
8,454
20,951
24,829
Proceeds from maturities of investments
30,375
14,980
81,275
40,405
(44,358)
(17,757)
(99,225)
(61,591)
Purchase of investments
Acquisitions, net of cash acquired
(150)
Capital expenditures
Cash used for investing activities
—
(150)
—
(6,107)
(9,126)
(13,419)
(13,092)
(4,303)
(3,449)
(10,568)
(9,449)
(6,479)
(188,776)
(18,917)
(473,220)
(6,235)
(10,499)
Cash flows from financing activities
Repurchase of common stock
Employees' tax withheld and paid for restricted stock and restricted
stock units
(448)
Proceeds from issuances under stock-based compensation plans
(596)
8,592
5,994
11,424
9,071
Proceeds from revolving line of credit
—
—
—
155,749
Repayments of revolving line of credit
—
—
—
(190,249)
—
488,401
Proceeds from bonds issuance, net
—
Payment of cash dividends
Excess tax benefit from stock-based compensation
(5,158)
692
Effect of exchange rate changes on cash and cash equivalents
(1,121)
Net increase (decrease) in cash and cash equivalents
32,979
Cash and cash equivalents at beginning of period
(189,046)
(1,022)
268,229
3
304,836
3,150
(24,880)
(28,583)
(430)
35,525
475,379
$
(10,986)
1,684
(1,058)
(170,543)
235,250
$
(12,836)
759
(4,090)
Cash used for financing activities
Cash and cash equivalents at end of period
(1,269)
(6,447)
27,986
232,704
$
268,229
276,850
$
304,836
PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
GAAP Gross profit
Stock-based compensation
Non-GAAP Gross profit
Non-GAAP Gross profit %
$
GAAP Research, development and engineering
Stock-based compensation
Purchase accounting amortization
Non-GAAP Research, development and engineering
$
GAAP Selling, general and administrative
Stock-based compensation
Non-GAAP Selling, general and administrative
$
GAAP Operating expenses
Stock-based compensation
Purchase accounting amortization
Non-GAAP Operating expenses
$
$
Three Months Ended
September 30,
2014
2015
Six Months Ended
September 30,
2014
2015
117,827
$
668
118,495
$
54.9%
232,537
$
1,203
233,740
$
54.0%
$
$
$
4
23,769
(2,115)
(61)
21,593
$
60,350
(4,604)
55,746
$
79,969
(6,719)
(61)
73,189
$
$
$
$
110,970
$
879
111,849
$
52.0%
22,609
(2,619)
(63)
19,927
$
54,296
(5,334)
48,962
$
76,874
(7,953)
(63)
68,858
$
$
$
$
46,289
(3,866)
(111)
42,312
$
116,779
(8,623)
108,156
$
156,918
(12,489)
(111)
144,318
$
$
$
$
218,328
1,658
219,986
52.2%
45,803
(4,978)
(125)
40,700
109,974
(10,246)
99,728
154,870
(15,224)
(125)
139,521
PLANTRONICS, INC.
UNAUDITED RECONCILIATIONS OF GAAP MEASURES TO NON-GAAP MEASURES
($ in thousands, except per share data)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DATA (CONTINUED)
Three Months Ended
September 30,
2014
2015
37,858
$
34,096
7,387
8,832
61
63
45,306
$
42,991
GAAP Operating income
Stock-based compensation
Purchase accounting amortization
Non-GAAP Operating income
$
GAAP Net income
Stock-based compensation
Purchase accounting amortization
Income tax effect of above items
Income tax effect of unusual tax items
Non-GAAP Net income
$
GAAP Diluted earnings per common share
Stock-based compensation
Income tax effect
$
0.65
0.17
(0.05)
$
0.52
0.26
(0.08)
$
1.32
0.32
(0.10)
$
1.07
0.46
(0.17)
Non-GAAP Diluted earnings per common share
$
0.77
$
0.70
$
1.54
$
1.36
Shares used in diluted earnings per common share
calculation
(1)
$
$
27,421
7,387
61
(2,250)
(74)
32,545
$
(1)
42,505
$
17,896
8,832
63
(2,656)
(177)
23,958
34,245
$
Six Months Ended
September 30,
2014
2015
75,619
$
63,458
13,692
16,882
111
125
89,422
$
80,465
$
$
(1)
$
56,093
13,692
111
(4,050)
(347)
65,499
42,560
$
(1)
$
39,124
16,882
125
(4,994)
(1,171)
49,966
(1)
36,676
Excluded amount represents tax benefits from the release of tax reserves.
Use of Non-GAAP Financial Information
To supplement our condensed consolidated financial statements presented on a GAAP basis, we use non-GAAP measures of operating results,
which are adjusted to exclude certain non-cash expenses and charges from non-GAAP operating income, non-GAAP operating margin and nonGAAP diluted EPS, including stock-based compensation related to stock options, restricted stock and employee stock purchases made under
our employee stock purchase plan, purchase accounting amortization, accelerated depreciation, and early lease termination charges, all net of
the associated tax impact, tax benefits from the release of tax reserves, transfer pricing, tax deduction and tax credit adjustments, and the impact
of tax law changes. We exclude these expenses from our non-GAAP measures primarily because Plantronics’ management does not believe
they are part of our target operating model. We believe that the use of non-GAAP financial measures provides meaningful supplemental
information regarding our performance and liquidity and helps investors compare actual results with our long-term target operating model goals.
We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and
when planning, forecasting and analyzing future periods; however, non-GAAP financial measures are not meant to be considered in isolation
or as a substitute for, or superior to, gross margin, operating income, operating margin, net income or EPS prepared in accordance with GAAP.
As a company with significant global operations and sales, fluctuations in foreign currency exchange rates may have a material effect on our
reported results. Consequently, we also present supplemental metrics as identified in the reconciliation within this release “on a constant currency
basis” which excludes the impact of currency exchange rate fluctuations. The constant currency presentation, which is a non-GAAP measure,
is intended to supplement our reported operating results and, when considered in conjunction with the corresponding GAAP measures, facilitate
a better understanding of changes in the metrics from period to period and the core operations of the Company. We calculate constant currency
percentages by removing any hedge gains or losses from the particular metric in the current period and then converting our current period local
currency financial results using the foreign currency exchange rates in effect during the prior year period and comparing these adjusted amounts
to the corresponding current period metric.
We are also presenting additional “Adjusted Non-GAAP” metrics. These metrics are calculated on a constant currency basis and exclude the
impact of our Q2 FY16 customer discount reserve adjustment. We have reconciled these Adjusted Non-GAAP metrics within the tables at
the end of this press release.
5
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and other Unaudited GAAP Data
($ in thousands, except per share data)
Q115
GAAP Gross profit
Stock-based compensation
Non-GAAP Gross profit
Non-GAAP Gross profit %
$
GAAP Operating expenses
Stock-based compensation
Purchase accounting amortization
Non-GAAP Operating expenses
$
GAAP Operating income
Stock-based compensation
Purchase accounting amortization
Non-GAAP Operating income
Non-GAAP Operating income %
$
GAAP Income before income taxes
Stock-based compensation
Purchase accounting amortization
Non-GAAP Income before income taxes
$
GAAP Income tax expense
Income tax effect of above items
Income tax effect of unusual tax items
Non-GAAP Income tax expense
Non-GAAP Income tax expense as a % of Non-GAAP Income before
income taxes
$
$
$
$
$
$
Q215
114,710
$
535
115,245
$
53.2%
76,949
(5,770)
(50)
71,129
Q315
117,827
$
668
118,495
$
54.9%
$
79,969
(6,719)
(61)
73,189
$
$
$
Q415
119,916
$
685
120,601
$
52.0%
79,302
(6,745)
(64)
72,493
Q116
109,166
$
695
109,861
$
54.7%
Q216
107,358
$
779
108,137
$
52.4%
110,970
879
111,849
52.0%
$
76,314
(6,774)
(63)
$
77,996
(7,271)
(62)
$
76,874
(7,953)
(63)
$
69,477
$
70,663
$
68,858
37,761
$
6,305
50
44,116
$
20.4%
37,858
$
7,387
61
45,306
$
21.0%
40,614
$
7,430
64
48,108
$
20.8%
32,852
$
7,469
63
40,384
$
20.1%
29,362
$
8,050
62
37,474
$
18.2%
34,096
8,832
63
42,991
20.0%
38,781
6,305
50
45,136
$
37,173
7,387
61
44,621
$
38,596
7,430
64
46,090
$
30,701
7,469
63
38,233
$
26,336
8,050
62
34,448
$
24,638
8,832
63
33,533
10,109
1,800
273
12,182
$
9,752
2,250
74
12,076
$
8,212
2,204
2,028
12,444
$
4,877
2,252
489
7,618
$
5,108
2,338
994
8,440
$
$
$
27.0%
27.1%
6
$
$
27.0%
$
$
19.9%
$
$
24.5%
$
$
6,742
2,656
177
9,575
28.6%
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures and other Unaudited GAAP Data (Continued)
($ in thousands, except per share data)
Q115
GAAP Net income
Stock-based compensation
Purchase accounting amortization
Income tax effect of above items
Income tax effect of unusual tax items
Non-GAAP Net income
$
GAAP Diluted earnings per common share
Stock-based compensation
Income tax effect
Non-GAAP Diluted earnings per common share
$
$
$
Shares used in diluted earnings per common share calculation
Q215
Q315
Q415
Q116
Q216
28,672 $
6,305
50
(1,800)
(273)
32,954 $
27,421 $
7,387
61
(2,250)
(74)
32,545 $
30,384 $
7,430
64
(2,204)
(2,028)
33,646 $
25,824 $
7,469
63
(2,252)
(489)
21,228 $
8,050
62
(2,338)
(994)
17,896
8,832
63
(2,656)
(177)
30,615
26,008
23,958
0.68 $
0.15
(0.05)
0.78 $
0.65 $
0.17
(0.05)
0.77 $
0.71 $
0.18
(0.10)
0.79 $
0.61 $
0.17
(0.06)
42,466
42,505
42,700
0.72
$
$
42,482
$
0.55 $
0.21
(0.09)
0.67
$
38,943
0.52
0.26
(0.08)
0.70
34,245
SUMMARY OF UNAUDITED GAAP DATA
($ in thousands)
Net revenues from unaffiliated customers:
Enterprise
Consumer
Total net revenues
$
$
152,354
64,308
216,662
$
124,467
92,195
216,662
$
150,765
63
60,968
6.7
$
$
156,680
59,125
215,805
$
123,697
92,108
215,805
$
140,427
59
63,551
6.2
$
$
161,591
70,190
231,781
$
123,092
108,689
231,781
$
157,322
61
57,724
7.8
$
$
148,660
52,102
200,762
$
116,351
84,411
200,762
$
136,581
61
56,676
6.5
$
$
151,757
54,601
206,358
$
117,578
88,780
206,358
$
127,160
55
55,918
7.1
$
$
160,468
54,549
215,017
Net revenues by geographic area from unaffiliated customers:
Domestic
International
Total net revenues
$
$
$
$
$
$
$
123,803
91,214
215,017
Balance Sheet accounts and metrics:
Accounts receivable, net
Days sales outstanding (DSO)
Inventory, net
Inventory turns
$
$
$
7
$
$
$
$
139,939
59
57,760
7.2
Summary of Unaudited Reconciliations of GAAP Measures to Non-GAAP Measures
($ in millions, except per share data)
Net Revenues
Net Revenues as reported (GAAP)
Less Hedge Gains
Impact of Year over Year Foreign Currency Exchange Rate Movements
Constant Currency Revenues (Non-GAAP)
Impact of Customer Reserve Adjustment
Adjusted Revenues (Non-GAAP)
Q2'15 ($)
215.8
—
—
—
—
$
215.8
$
Operating Income
Operating Income as reported (GAAP)
Stock-based compensation & Purchase accounting amortization
Non-GAAP Operating Income
Less Hedge Gains, net
Impact of Year over Year Foreign Currency Exchange Rate Movements
Constant Currency Operating Income (Non-GAAP)
Impact of Customer Reserve Adjustment
Adjusted Operating Income (Non-GAAP)
Q2'16 ($)
215.0
(2.2)
10.5
223.3
3.6
$
226.9
$
Q2'15 ($)
37.9
7.4
45.3
—
—
—
—
$
45.3
Q2'15 (%)
17.6%
$
Diluted Earnings per Common Share ("EPS")
Diluted EPS (GAAP)
Stock-based compensation
Income Tax Effect
Non-GAAP Diluted EPS
Less Hedge Gains, net of tax
Impact of Year over Year Foreign Currency Exchange Rate Movements, net of tax
Constant Currency Diluted EPS (Non-GAAP)
Impact of Customer Reserve Adjustment, net of tax
Adjusted Diluted EPS (Non-GAAP)
8
$
$
Q2'15 ($)
0.65
0.17
(0.05)
0.77
—
—
—
—
0.77
21.0%
21.0%
$
$
Q2'16 ($)
0.52
0.26
(0.08)
0.70
(0.05)
0.16
0.81
0.08
0.89
$
$
Change ($)
(0.8)
11.1
Q2'16 ($)
34.1
8.9
43.0
(1.0)
4.3
46.3
3.6
$
49.9
$
$
$
Change ($)
(0.13)
Change (%)
0%
5%
Q2'16 (%)
15.9 %
20.0 %
20.7 %
22.0 %
Change (%)
(20)%
(0.07)
(9)%
0.12
16 %