Exhibit 99.1
Contact: | Michael R. Kourey, CFO |
| Polycom, Inc. |
| 925-924-5742 |
| mkourey@polycom.com |
POLYCOM REPORTS SECOND QUARTER RESULTS
Sequential Revenue Growth of 7% to $99.4 Million
Pro Forma Earnings of 8 Cents Per Share
PLEASANTON, Calif. – July 17, 2003 – Polycom®, Inc. (NASDAQ: PLCM), the world’s leader in video and voice conferencing, conference bridges, and integrated web collaboration solutions, today reported its operating results for the second quarter ended June 30, 2003.
Second quarter consolidated net revenues were $99.4 million, compared to $122.2 million recorded for the second quarter of 2002. Pro forma net income in the second quarter was $8.1 million, or 8 cents per diluted share. This compares to pro forma net income of $15.6 million, or 15 cents per diluted share, for the second quarter of 2002. Pro forma financial measures exclude acquisition-related costs, purchased in-process research and development, amortization of purchased intangibles, restructure costs, litigation settlement, gain (loss) on strategic investments, income tax effect of the preceding adjustments, loss from discontinued operations, net of taxes, and loss from sale of discontinued operations, net of taxes. GAAP net income for the second quarter of 2003 was $1.6 million, or 2 cents per diluted share, compared to GAAP net income of $5.6 million, or 6 cents per diluted share, for the same period last year.
For the six months ended June 30, 2003, net revenues were $192.4 million, compared to $254.5 million for the first six months of 2002. Pro forma net income for the period was $9.8 million, or 10 cents per diluted share, compared to $38.4 million, or 38 cents per diluted share for the first six months of 2002. The GAAP net loss for the six months ended June 30, 2003 was $0.8 million, or a 1 cent net loss per diluted share, compared to GAAP net income of $20.1 million, or 20 cents per diluted share, for the same period last year.
Prior year revenue and pro forma net income figures include certain reclassifications primarily to reflect the effect of discontinued operations associated with the sale of the network access product line which occurred in January of this year. Network access revenue and related expenses, net of taxes, are shown as discontinued operations in the financial statements.
The reconciliation of the GAAP statement of operations amounts to the respective pro forma figures, for the three and six months ended June 30, 2003 and 2002 is set forth at the end of this press release.
On a product line basis, consolidated net revenues for the second quarter of 2003 were comprised of 58 percent video communications, or $57.6 million; 18 percent network systems, or $17.3 million; 19 percent voice communications, or $19.2 million; and 5 percent iPowerÔ-related services or $5.3 million. This compares to the second quarter of 2002, in which consolidated net
revenues were comprised of 59 percent video communications, or $72.6 million; 19 percent network systems, or $22.8 million; 17 percent voice communications, or $20.4 million; and 5 percent iPower-related services, or $6.4 million.
“We are pleased with the broad-based sequential improvement in end-user demand for Polycom’s unique end-to-end collaboration solutions,” stated Robert Hagerty, president and CEO. “IP connectivity continues to increase in enterprise, and key demand drivers such as ROI-driven commercial applications and public sector uses such as court systems, distance learning, medical, and homeland security, make these video, voice, and web collaboration solutions mission-critical in organizations around the world.”
Hagerty continued, "In addition to the recent sequential improvements in customer demand, Polycom is beginning to realize the benefits of our new, high-touch sales model. With this sales model, Polycom is building complete sales and service relationships with both our private and public sector customers worldwide. We are working in tandem with our channel to deliver the Polycom Office solution to our end user customers rapidly and cost effectively—improving their productivity and agility, delivering tangible improvements to their bottom line."
“With the sequential revenue and gross margin improvements in the second quarter, Polycom’s pro forma operating margin grew sequentially to 9.5%,” said Michael Kourey, senior vice president, finance and administration, and CFO. “This significant sequential profitability growth, coupled with an improvement in DSO to 45 days, drove our operating cash flow to $22 million for the quarter. With this twenty-first consecutive quarter of positive operating cash flow, Polycom now has a record $530 million in cash and investments and no debt.”
About Polycom
Polycom, Inc. is the world’s technology leader of high-quality, easy-to-use video, voice, data and web conferencing and collaboration solutions. The Polycom Office™ is our continued commitment to make distance communications as natural and interactive as being there by providing best-in-class conferencing solutions that are interoperable, integrated and intuitive to the user. The Polycom Office is based on industry standards and supported by an open architecture that promotes interoperability in multi-vendor environments and complements leading network infrastructure platforms. For additional information call 1-800-POLYCOM (765-9266) or +1-408-526-9000, or visit the Polycom website at www.polycom.com.
As has been noted on the Company’s web site since July 8, 2003, Polycom will hold a conference call today at 5:00 p.m. ET/2:00 p.m. PT to discuss its second quarter results. Robert Hagerty, chairman, president and CEO, and Michael Kourey, chief financial officer, will host the conference. You may participate by viewing the webcast at www.polycom.com or, for callers in the US and Canada, call 800.840.6217; and for callers outside of the US and Canada, call 212.346.6387, with the pass code being Polycom. A replay of the call will also be available through July 24, 2003 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 21154644. A replay
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of the call will also be maintained on our website at www.polycom.com under Investor Relations – Archived Conference Calls for twelve months.
Polycom, the Polycom logo, and ViewStation are registered trademarks and iPower and The Polycom Office are trademarks of Polycom in the U.S. and various countries. ©2002, Polycom, Inc. All rights reserved.
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POLYCOM, INC.
Pro Forma Condensed Consolidated Statements of Operations
Excluding Acquisition-related costs, Purchased in-process R&D, Amortization of purchased intangibles,
Restructure costs, Litigation settlements, Gain (loss) on strategic investments,
Loss from discontinued operations and Gain (loss) from sale of discontinued operations
(In thousands, except per share amounts)
(Unaudited)
| | Three Months Ended | | Six Months Ended | |
| | June 30,
2003 | | June 30,
2002 | | June 30,
2003 | | June 30,
2002 | |
| | | | | | | | | |
Net revenues | | $ | 99,434 | | $ | 122,195 | | $ | 192,354 | | $ | 254,450 | |
Cost of net revenues | | 40,301 | | 51,277 | | 78,934 | | 104,759 | |
Gross profit | | 59,133 | | 70,918 | | 113,420 | | 149,691 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Sales and marketing | | 24,245 | | 25,531 | | 50,909 | | 48,734 | |
Research and development | | 17,820 | | 18,403 | | 37,640 | | 37,248 | |
General and administrative | | 7,583 | | 8,525 | | 15,315 | | 16,318 | |
Total operating expenses | | 49,648 | | 52,459 | | 103,864 | | 102,300 | |
| | | | | | | | | |
Operating income | | 9,485 | | 18,459 | | 9,556 | | 47,391 | |
| | | | | | | | | |
Interest income, net | | 2,071 | | 2,359 | | 4,504 | | 4,170 | |
Other income (expense), net | | (430 | ) | 333 | | (624 | ) | 366 | |
| | | | | | | | | |
Income before provision for income taxes | | 11,126 | | 21,151 | | 13,436 | | 51,927 | |
Provision for income taxes | | 3,004 | | 5,541 | | 3,628 | | 13,488 | |
Pro forma net income | | $ | 8,122 | | $ | 15,610 | | $ | 9,808 | | $ | 38,439 | |
| | | | | | | | | |
Basic net income per share | | $ | 0.08 | | $ | 0.16 | | $ | 0.10 | | $ | 0.39 | |
Diluted net income per share | | $ | 0.08 | | $ | 0.15 | | $ | 0.10 | | $ | 0.38 | |
| | | | | | | | | |
Weighted average shares outstanding for basic net income per share | | 98,940 | | 100,211 | | 99,126 | | 98,834 | |
| | | | | | | | | |
Weighted average shares outstanding for diluted net income per share | | 99,977 | | 101,564 | | 100,004 | | 100,788 | |
Use of Pro Forma Financial Information
To supplement our consolidated financial statements presented on a GAAP basis, Polycom uses pro forma 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 pro forma 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 pro forma 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.
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POLYCOM, INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| | Three Months Ended | | Six Months Ended | |
| | June 30,
2003 | | June 30,
2002 | | June 30,
2003 | | June 30,
2002 | |
| | | | | | | | | |
Net revenues | | $ | 99,434 | | $ | 122,195 | | $ | 192,354 | | $ | 254,450 | |
Cost of net revenues | | 40,301 | | 51,277 | | 78,934 | | 104,759 | |
Gross profit | | 59,133 | | 70,918 | | 113,420 | | 149,691 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Sales and marketing | | 24,245 | | 25,531 | | 50,909 | | 48,734 | |
Research and development | | 17,820 | | 18,403 | | 37,640 | | 37,248 | |
General and administrative | | 7,583 | | 8,525 | | 15,315 | | 16,318 | |
Acquisition-related costs | | 115 | | 1,530 | | 188 | | 2,723 | |
Purchased in-process research and development | | — | | 900 | | — | | 900 | |
Amortization of purchased intangibles | | 4,397 | | 4,411 | | 8,795 | | 8,339 | |
Restructure costs | | 4,326 | | — | | 5,029 | | — | |
Litigation settlements | | 65 | | — | | 65 | | (257 | ) |
Total operating expenses | | 58,551 | | 59,300 | | 117,941 | | 114,005 | |
| | | | | | | | | |
Operating income (loss) | | 582 | | 11,618 | | (4,521 | ) | 35,686 | |
| | | | | | | | | |
Interest income, net | | 2,071 | | 2,359 | | 4,504 | | 4,170 | |
Gain (loss) on strategic investments | | 101 | | (4,044 | ) | (114 | ) | (4,627 | ) |
Other income (expense), net | | (430 | ) | 333 | | (624 | ) | 366 | |
| | | | | | | | | |
Income (loss) from continuing operations before provision for (benefit from) income taxes | | 2,324 | | 10,266 | | (755 | ) | 35,595 | |
Provision for (benefit from) income taxes | | 660 | | 2,641 | | (178 | ) | 9,218 | |
Income (loss) from continuing operations | | 1,664 | | 7,625 | | (577 | ) | 26,377 | |
| | | | | | | | | |
Loss from discontinued operations, net of taxes | | — | | (1,992 | ) | (676 | ) | (6,236 | ) |
Gain (loss) from sale of discontinued operations, net of taxes | | (70 | ) | — | | 427 | | — | |
Net income (loss) | | $ | 1,594 | | $ | 5,633 | | $ | (826 | ) | $ | 20,141 | |
| | | | | | | | | |
Basic net income (loss) per share: | | | | | | | | | |
Net income (loss) per share from continuing operations | | $ | 0.02 | | $ | 0.08 | | $ | (0.01 | ) | $ | 0.26 | |
Loss per share from discontinued operations, net | | — | | (0.02 | ) | (0.01 | ) | (0.06 | ) |
Gain (loss) per share from sale of discontinued operations, net | | — | | — | | 0.01 | | — | |
Basic net income (loss) per share | | $ | 0.02 | | $ | 0.06 | | $ | (0.01 | ) | $ | 0.20 | |
| | | | | | | | | |
Diluted net income (loss) per share: | | | | | | | | | |
Net income (loss) per share from continuing operations | | $ | 0.02 | | $ | 0.08 | | $ | (0.01 | ) | $ | 0.26 | |
Loss per share from discontinued operations, net | | — | | (0.02 | ) | (0.01 | ) | (0.06 | ) |
Gain (loss) per share from sale of discontinued operations, net | | — | | — | | 0.01 | | — | |
Diluted net income (loss) per share | | $ | 0.02 | | $ | 0.06 | | $ | (0.01 | ) | $ | 0.20 | |
| | | | | | | | | |
Weighted average shares outstanding for basic net income (loss) per share | | 98,940 | | 100,211 | | 99,126 | | 98,834 | |
| | | | | | | | | |
Weighted average shares outstanding for diluted net income (loss) per share | | 99,977 | | 101,564 | | 99,126 | | 100,788 | |
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POLYCOM, INC.
GAAP to Pro Forma Reconciliation
(In thousands, except per share amounts)
(Unaudited)
| | Three Months Ended
June 30, 2003 | | Six Months Ended
June 30, 2003 | |
| | GAAP | | Excluded | | Pro Forma | | GAAP | | Excluded | | Pro forma | |
| | | | | | | | | | | | | |
Net revenues | | $ | 99,434 | | $ | — | | $ | 99,434 | | $ | 192,354 | | $ | — | | $ | 192,354 | |
Cost of net revenues | | 40,301 | | — | | 40,301 | | 78,934 | | — | | 78,934 | |
Gross profit | | 59,133 | | — | | 59,133 | | 113,420 | | — | | 113,420 | |
| | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | |
Sales and marketing | | 24,245 | | — | | 24,245 | | 50,909 | | — | | 50,909 | |
Research and development | | 17,820 | | — | | 17,820 | | 37,640 | | — | | 37,640 | |
General and administrative | | 7,583 | | — | | 7,583 | | 15,315 | | — | | 15,315 | |
Acquisition-related costs | | 115 | | 115 | | — | | 188 | | 188 | | — | |
Amortization of purchased intangibles | | 4,397 | | 4,397 | | — | | 8,795 | | 8,795 | | — | |
Restructure costs | | 4,326 | | 4,326 | | — | | 5,029 | | 5,029 | | — | |
Litigation settlements | | 65 | | 65 | | — | | 65 | | 65 | | — | |
Total operating expenses | | 58,551 | | 8,903 | | 49,648 | | 117,941 | | 14,077 | | 103,864 | |
| | | | | | | | | | | | | |
Operating income (loss) | | 582 | | (8,903 | ) | 9,485 | | (4,521 | ) | (14,077 | ) | 9,556 | |
| | | | | | | | | | | | | |
Interest income, net | | 2,071 | | — | | 2,071 | | 4,504 | | — | | 4,504 | |
Gain (loss) on strategic investments | | 101 | | 101 | | — | | (114 | ) | (114 | ) | — | |
Other expense, net | | (430 | ) | — | | (430 | ) | (624 | ) | — | | (624 | ) |
| | | | | | | | | | | | | |
Income (loss) from continuing operations before provision for (benefit from) income taxes | | 2,324 | | (8,802 | ) | 11,126 | | (755 | ) | (14,191 | ) | 13,436 | |
Provision for (benefit from) income taxes | | 660 | | (2,344 | ) | 3,004 | | (178 | ) | (3,806 | ) | 3,628 | |
Income (loss) from continuing operations | | 1,664 | | (6,458 | ) | 8,122 | | (577 | ) | (10,385 | ) | 9,808 | |
| | | | | | | | | | | | | |
Loss from discontinued operations, net of taxes | | — | | — | | — | | (676 | ) | (676 | ) | — | |
Gain (loss) from sale of discontinued operations, net of taxes | | (70 | ) | (70 | ) | — | | 427 | | 427 | | — | |
Net income (loss) | | $ | 1,594 | | $ | (6,528 | ) | $ | 8,122 | | $ | (826 | ) | $ | (10,634 | ) | $ | 9,808 | |
| | | | | | | | | | | | | |
Basic net income (loss) per share: | | | | | | | | | | | | | |
Net income (loss) per share from continuing operations | | $ | 0.02 | | $ | (0.06 | ) | $ | 0.08 | | $ | (0.01 | ) | $ | (0.11 | ) | $ | 0.10 | |
Loss per share from discontinued operations, net | | — | | — | | — | | (0.01 | ) | (0.01 | ) | — | |
Gain (loss) per share from sale of discontinued operations, net | | — | | — | | — | | 0.01 | | 0.01 | | — | |
Basic net income (loss) per share | | $ | 0.02 | | $ | (0.06 | ) | $ | 0.08 | | $ | (0.01 | ) | $ | (0.11 | ) | $ | 0.10 | |
| | | | | | | | | | | | | |
Diluted net income (loss) per share: | | | | | | | | | | | | | |
Net income (loss) per share from continuing operations | | $ | 0.02 | | $ | (0.06 | ) | $ | 0.08 | | $ | (0.01 | ) | $ | (0.11 | ) | $ | 0.10 | |
Loss per share from discontinued operations, net | | — | | — | | — | | (0.01 | ) | (0.01 | ) | — | |
Gain (loss) per share from sale of discontinued operations, net | | — | | — | | — | | 0.01 | | 0.01 | | — | |
Diluted net income (loss) per share | | $ | 0.02 | | $ | (0.06 | ) | $ | 0.08 | | $ | (0.01 | ) | $ | (0.11 | ) | $ | 0.10 | |
| | | | | | | | | | | | | |
Weighted average shares outstanding for basic net income (loss) per share | | 98,940 | | | | 98,940 | | 99,126 | | | | 99,126 | |
| | | | | | | | | | | | | |
Weighted average shares outstanding for diluted net income (loss) per share | | 99,977 | | | | 99,977 | | 99,126 | | | | 100,004 | |
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| | Three Months Ended
June 30, 2002 | | Six Months Ended
June 30, 2002 | |
| | GAAP | | Excluded | | Pro Forma | | GAAP | | Excluded | | Pro forma | |
| | | | | | | | | | | | | |
Net revenues | | $ | 122,195 | | $ | — | | $ | 122,195 | | $ | 254,450 | | $ | — | | $ | 254,450 | |
Cost of net revenues | | 51,277 | | — | | 51,277 | | 104,759 | | — | | 104,759 | |
Gross profit | | 70,918 | | — | | 70,918 | | 149,691 | | — | | 149,691 | |
| | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | |
Sales and marketing | | 25,531 | | — | | 25,531 | | 48,734 | | — | | 48,734 | |
Research and development | | 18,403 | | — | | 18,403 | | 37,248 | | — | | 37,248 | |
General and administrative | | 8,525 | | — | | 8,525 | | 16,318 | | — | | 16,318 | |
Acquisition-related costs | | 1,530 | | 1,530 | | — | | 2,723 | | 2,723 | | — | |
Purchased in-process research and development | | 900 | | 900 | | — | | 900 | | 900 | | — | |
Amortization of purchased intangibles | | 4,411 | | 4,411 | | — | | 8,339 | | 8,339 | | — | |
Litigation settlement | | — | | — | | — | | (257 | ) | (257 | ) | — | |
Total operating expenses | | 59,300 | | 6,841 | | 52,459 | | 114,005 | | 11,705 | | 102,300 | |
| | | | | | | | | | | | | |
Operating income | | 11,618 | | (6,841 | ) | 18,459 | | 35,686 | | (11,705 | ) | 47,391 | |
| | | | | | | | | | | | | |
Interest income, net | | 2,359 | | — | | 2,359 | | 4,170 | | — | | 4,170 | |
Loss on strategic investments | | (4,044 | ) | (4,044 | ) | — | | (4,627 | ) | (4,627 | ) | — | |
Other income, net | | 333 | | — | | 333 | | 366 | | — | | 366 | |
| | | | | | | | | | | | | |
Income from continuing operations before provision for income taxes | | 10,266 | | (10,885 | ) | 21,151 | | 35,595 | | (16,332 | ) | 51,927 | |
Provision for income taxes | | 2,641 | | (2,900 | ) | 5,541 | | 9,218 | | (4,270 | ) | 13,488 | |
Income from continuing operations | | 7,625 | | (7,985 | ) | 15,610 | | 26,377 | | (12,062 | ) | 38,439 | |
| | | | | | | | | | | | | |
Loss from discontinued operations, net of taxes | | (1,992 | ) | (1,992 | ) | — | | (6,236 | ) | (6,236 | ) | — | |
Net income | | $ | 5,633 | | $ | (9,977 | ) | $ | 15,610 | | $ | 20,141 | | $ | (18,298 | ) | $ | 38,439 | |
| | | | | | | | | | | | | |
Basic net income per share: | | | | | | | | | | | | | |
Net income per share from continuing operations | | $ | 0.08 | | $ | (0.08 | ) | $ | 0.16 | | $ | 0.26 | | $ | (0.13 | ) | $ | 0.39 | |
Loss per share from discontinued operations, net | | (0.02 | ) | (0.02 | ) | — | | (0.06 | ) | (0.06 | ) | — | |
Basic net income per share | | $ | 0.06 | | $ | (0.10 | ) | $ | 0.16 | | $ | 0.20 | | $ | (0.19 | ) | $ | 0.39 | |
| | | | | | | | | | | | | |
Diluted net income per share: | | | | | | | | | | | | | |
Net income per share from continuing operations | | $ | 0.08 | | $ | (0.07 | ) | $ | 0.15 | | $ | 0.26 | | $ | (0.12 | ) | $ | 0.38 | |
Loss per share from discontinued operations, net | | (0.02 | ) | (0.02 | ) | — | | (0.06 | ) | (0.06 | ) | — | |
Diluted net income per share | | $ | 0.06 | | $ | (0.09 | ) | $ | 0.15 | | $ | 0.20 | | $ | (0.18 | ) | $ | 0.38 | |
| | | | | | | | | | | | | |
Weighted average shares outstanding for basic net income per share | | 100,211 | | | | 100,211 | | 98,834 | | | | 98,834 | |
| | | | | | | | | | | | | |
Weighted average shares outstanding for diluted net income per share | | 101,564 | | | | 101,564 | | 100,788 | | | | 100,788 | |
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POLYCOM, INC.
Condensed Consolidated Balance Sheets
(In thousands)
| | June 30,
2003 | | December 31,
2002 | |
| | (Unaudited) | | | |
ASSETS | | | | | |
Current assets | | | | | |
Cash and cash equivalents | | $ | 197,364 | | $ | 155,191 | |
Short-term investments | | 9,466 | | 38,670 | |
Trade receivables, net | | 48,659 | | 65,470 | |
Inventories | | 25,477 | | 32,308 | |
Deferred taxes | | 28,089 | | 29,787 | |
Prepaid expenses and other current assets | | 21,114 | | 16,622 | |
Total current assets | | 330,169 | | 338,048 | |
| | | | | |
Property and equipment, net | | 28,737 | | 28,428 | |
Long-term investments | | 322,877 | | 319,147 | |
Goodwill | | 297,076 | | 300,039 | |
Purchased intangibles, net | | 24,032 | | 32,827 | |
Deferred taxes | | 53,475 | | 53,446 | |
Other assets | | 8,291 | | 4,939 | |
Total assets | | $ | 1,064,657 | | $ | 1,076,874 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
Current liabilities | | | | | |
Accounts payable | | $ | 31,548 | | $ | 29,788 | |
Accrued payroll and related liabilities | | 8,943 | | 7,540 | |
Taxes payable | | 43,737 | | 44,338 | |
Deferred revenue | | 16,795 | | 16,950 | |
Other accrued liabilities | | 28,490 | | 36,519 | |
Total current liabilities | | 129,513 | | 135,135 | |
| | | | | |
Long-term liabilities | | 36,254 | | 37,996 | |
Total liabilities | | 165,767 | | 173,131 | |
| | | | | |
Stockholders’ equity | | 898,890 | | 903,743 | |
Total liabilities and stockholders’ equity | | $ | 1,064,657 | | $ | 1,076,874 | |
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POLYCOM, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
| | Six Months Ended | |
| | June 30,
2003 | | June 30,
2002 | |
| | | | | |
Cash Flows from operating activities: | | | | | |
Net income (loss) | | $ | (826 | ) | $ | 20,141 | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | | |
Gain from sale of discontinued operations, net of taxes | | (427 | ) | — | |
Depreciation and amortization | | 7,763 | | 7,413 | |
Amortization of purchased intangibles | | 8,795 | | 8,339 | |
Provision for doubtful accounts | | 521 | | 2,611 | |
Provision for excess and obsolete inventories | | 1,136 | | 3,883 | |
Tax benefit from exercise of stock options | | 496 | | 1,941 | |
Loss on strategic investments | | 114 | | 4,627 | |
Amortization of unearned stock-based compensation | | 182 | | 296 | |
Purchase of in-process research and development | | — | | 900 | |
| | | | | |
Changes in assets and liabilities, net of the effect of acquisitions: | | | | | |
Trade receivables | | 16,290 | | 532 | |
Inventories | | 6,722 | | 10,817 | |
Deferred taxes | | — | | 257 | |
Prepaid expenses and other assets | | (4,149 | ) | (5,442 | ) |
Accounts payable | | 1,760 | | 11,137 | |
Taxes payable | | (846 | ) | 4,985 | |
Other accrued liabilities | | (5,777 | ) | (19,766 | ) |
Net cash provided by operating activities | | 31,754 | | 52,671 | |
| | | | | |
Cash flows from investing activities: | | | | | |
Purchase of property and equipment | | (8,111 | ) | (7,251 | ) |
Purchase of licensed technology | | (3,528 | ) | — | |
Purchases of investments | | (452,040 | ) | (226,310 | ) |
Proceeds from sale and maturity of investments | | 477,228 | | 80,700 | |
Proceeds from sale of discontinued operations | | 1,200 | | — | |
Purchase of convertible note receivable | | (522 | ) | — | |
Net cash received in purchase acquisitions | | — | | 93 | |
Net cash provided by (used in) investing activities | | 14,227 | | (152,768 | ) |
| | | | | |
Cash flows from financing activities: | | | | | |
Proceeds from stock offering, net of issuance costs | | — | | 237,495 | |
Proceeds from issuance of common stock under employee option and stock purchase plans | | 3,107 | | 4,221 | |
Purchase of treasury stock | | (6,915 | ) | (4,207 | ) |
Net cash provided by (used in) financing activities | | (3,808 | ) | 237,509 | |
| | | | | |
Net increase in cash and equivalents | | 42,173 | | 137,412 | |
Cash and cash equivalents, beginning of period | | 155,191 | | 126,832 | |
Cash and cash equivalents, end of period | | $ | 197,364 | | $ | 264,244 | |
9
